Karnataka High Court

Shri S.N. Shankar vs The Chairma And Managing Director on 19 August, 2025

   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 19th DAY OF AUGUST, 2025

                        PRESENT

       THE HON'BLE MRS. JUSTICE ANU SIVARAMAN

                           AND

         THE HON'BLE MR. JUSTICE RAJESH RAI K

           WRIT APPEAL NO.399 OF 2023 (L-PG)


BETWEEN:

SHRI S.N. SHANKAR
AGED ABOUT 68 YEARS,
C/O S.N. SREERAM,
NO. 80/2, 4TH CROSS,
SOMESHWARA TEMPLE STREET,
LALBAGH SIDDAPURA,
BANGALORE - 560001.

                                           ...APPELLANT

(BY SRI. S VITTAL SHETTY, ADVOCATE)

AND:

THE CHAIRMAN AND MANAGING DIRECTOR
INDIAN BANK,
H.O., NO.66, RAJAJI SALAI,
CHENNAI - 600 001.

                                          ...RESPONDENT

(BY SRI. UDAYA SHANKAR RAI P, ADVOCATE)

     THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER DATED
07.02.2023, PASSED BY THE LEARNED SINGLE JUDGE IN WRIT
PETITION No.19046/2015 AND RESTORE THE ORDER DATED
13.02.2015, PASSED BY THE APPELLATE AUTHORITY UNDER THE
PAYMENT OF GRATUITY ACT, IN GRATUITY APPEAL No.01/2014-
B2, WITH DIRECTION TO THE RESPONDENT BANK FOR PAYMENT
 -

                                  2




OF GRATUITY AMOUNT WITH INTEREST @ 10% P.A. FROM
08.10.2004, WHEN IT BECAME DUE FOR PAYMENT TILL ACTUAL
DATE OF PAYMENT.

      THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT ON 11.08.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:


CORAM:      HON'BLE MRS. JUSTICE ANU SIVARAMAN
            and
            HON'BLE MR. JUSTICE RAJESH RAI K


                       CAV JUDGMENT

(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)

This writ appeal is preferred by the dismissed

employee challenging the Order dated 07.02.2023, passed

by the learned Single Judge in Writ Petition No.19046/2015,

allowing the Writ Petition filed by the Employer - Bank

against an order passed in the Gratuity Appeal by the

Appellate Authority under the Payment of Gratuity Act, 1972

('Gratuity Act' for short). The order dated 13.02.2015

passed in the Gratuity Appeal was set aside and the order of

forfeiture of gratuity made by the employer was confirmed.

2. We have heard Shri. S. Vittal Shetty, learned

counsel appearing for the appellant and Shri. Udaya Shankar

Rai. P, learned counsel appearing for the respondent.

3. The learned counsel appearing for the appellant

submits that there was no financial loss caused to the Bank

on account of the alleged misconduct committed by the

appellant and that the conviction against him is still pending

in appeal before this Court. It is submitted that in the

absence of the conviction being confirmed, the learned

Single Judge was not justified in having found that the

appellant was guilty of grave misconduct for an offence

involving moral turpitude.

4. It is contended that the Apex Court in Jorsingh

Govind Vanjari v. Divisional Controller, Maharashtra

State Road Transport Corporation, Jalgaon Division,

Jalgaon reported in (2017) 2 SCC 12 and Union Bank of

India v. C.G. Ajay Babu reported in (2018) 9 SCC 529,

has held that forfeiture of Gratuity under Section 4(6)(b)(ii)

of the Gratitude Act is possible only if there is a conviction

by a Criminal Court for an offence which involves moral

turpitude.

5. The learned counsel appearing for the

respondent, on the other hand, submits that the appellant's

services had been terminated for the commission of an

offence involving moral turpitude and that the charges of

fraudulent acts were found proved in the disciplinary

enquiry. It is submitted that in respect of the very same

charges, criminal prosecution was launched against the

appellant under the provisions of Section 120B of the Indian

Penal Code, 1860 read with Section 13(1)(b) and 13(2) of

the Prevention of Corruption Act, 1988 and that the

appellant had been convicted to undergo rigorous

imprisonment with fine. It is contended that the said

conviction in the special case has not been set aside by any

Court and that the finding in the Disciplinary Enquiry is

concluded as against the petitioner, even if he is acquitted in

appeal in the criminal case.

6. The learned counsel would also place reliance on

the decision of the Apex Court in Western Coal Fields

Limited v. Manohar Govinda Fulzele reported in 2025

INSC 233, to contend that the judgment in C.G. Ajay

Babu's case (supra) which is relied on by the learned

counsel for the appellant has been held to be obiter dicta

and the Bench has held that where an offence involving

moral turpitude is proved even in disciplinary proceedings,

forfeiture of gratuity is permissible.

7. We have considered the contentions advanced.

Section 4(1)(a) to(c) and (6)(b)(i) and (ii) of the Gratuity

Act reads as follows:-

"4. Payment of gratuity.- (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease:

xxxxx

(6) Notwithstanding anything contained in sub-section (1),-

(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer

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shall be forfeited to the extent of the damage or loss so caused;

(b) the gratuity payable to an employee [may be wholly or partially forfeited]-

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment."

8. The Apex Court in Jorsingh Govind Vanjari's

case (supra), had held that in order to deny gratuity to an

employee, there must be termination of his services on

account of alleged misconduct which constitutes an offence

involving moral turpitude.

9. In C.G. Ajay Babu's case (supra), the Apex

Court has further held that the offence involving moral

turpitude should be one punishable under law and it is only

when the employee is convicted by a Court of competent

jurisdiction for an offence involving moral turpitude that an

order of forfeiture of gratuity can be passed by the

employer. However, a later Bench of the Apex Court in

Western Coal Fields Limited's case (supra), has

considered the finding in C.G. Ajay Babu's case (supra),

and has held as follows:

"8. Further Jaswant Singh Gill was overruled by a three Judge Bench in Mahanadi Coalfields Ltd. vs. Rabindranath Choubey wherein it was held that even when an employee retires during the pendency of disciplinary proceedings, the services are deemed to be continued, for the purpose of continuation of the proceedings, as per rules. The delinquent employee since deemed to be in service, even a major penalty of termination could be imposed on the delinquent employee, who has superannuated during the pendency of the proceedings. We cannot but reiterate that Jaswant Singh Gill had not considered the issue as to whether there could be a forfeiture of gratuity if the delinquent employee is found to have committed an offence involving moral turpitude; even when there is no conviction entered by a Criminal Court on the very same offence.

9. With all the respect at our command, the interpretation in C.G. Ajay Babu does not come out of the statutory provision; Section (4)(6)(b)(ii) of the Act. Normally we would have referred the matter for consideration by a Larger Bench, but, as we noticed, the statutory provision does not make it a requirement that the misconduct alleged & proved in a departmental enquiry should not only constitute an offence involving moral turpitude, but also should be duly established in

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a Court of Law. The words "duly established in a Court of Law" cannot be supplied to the provision. Moreover, as we observed; the interpretation of sub-clause (b)(ii) of sub-section (6) of Section 4 was uncalled for in C.G. Ajay Babu since the provision of the Section 4, including sub-section (6) was found to be in applicable to the employer Bank and its employee, by virtue of sub-section (5) of Section 4. The interpretation, hence, with due respect was an obiter making a reference unnecessary."

10. Having considered the contentions advanced, we

notice that in the instant case, the appellant has been

convicted by a competent Criminal Court for an offence

involving moral turpitude. The only contention of the

appellant is that the said conviction is pending in appeal

before this Court. Even if that were to be so, there is a

finding in the disciplinary proceedings conducted against the

appellant that the appellant had committed grave

irregularities and that he had committed offences involving

moral turpitude. The appellant has been dismissed from

service on the basis of the said findings in the enquiry and

the dismissal has become final.