Karnataka High Court
The Area Manager vs The Chief Deputy Labour Commissioner on 16 June, 2025
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WP No. 27875 of 2018
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF JUNE, 2025
BEFORE
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
WRIT PETITION NO. 27875 OF 2018 (L-PG)
BETWEEN:
1. THE AREA MANAGER
FOOD CORPORATION OF INDIA
DISTRICT OFFICE
K R PURAM COMPLEX
BANGALORE-560016.
...PETITIONER
(BY SRI. K S BHEEMAIAH.,ADVOCATE)
AND:
1. THE CHIEF DEPUTY LABOUR COMMISSIONER
(CENTRAL) & APPELLATE AUTHORITY
Digitally "SHRAM SADAN", III CROSS
signed by C III MAIN, II PHASE
HONNUR SAB TUMKUR ROAD
Location: YESHWANTHPUR
HIGH COURT
OF BANGALORE-560022.
KARNATAKA
2. THE ASST. LABOUR COMMISSIONER
(CENTRAL) AND CONTROLLING AUTHORITY
UNDER PAYMENT OF GRATUITY ACT
"SHRAM SADAN", III CROSS
III MAIN, II PHASE, TUMKUR ROAD
YESHWANTHPUR
BANGALORE-560022.
3. SRI K S SRINIVASAIAH
MAJOR
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WP No. 27875 of 2018
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AGED ABOUT 61 YEARS
S/O SRI SINGARAIAH
NO.404, 7TH CROSS
GANDHINAGAR
MANDYA-571041.
...RESPONDENTS
(BY SMT. SHUBHA S. CGC FOR R1 AND R2;
SMT. CHANDRAKALA, ADVOCATE FOR R3)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE
RECORDS ON THE FILE OF THE RESPONDENT NO.1, APPELLATE
AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972,
AND DY. CHIEF LABOUR COMMISSIONER (CENTRAL), AT
BANGALORE, IN APPEAL NO.36(46) 2017-B1 DTD 8.5.18
ANNEXURE-A AND APPEAL NO.36(45) 2017-B1 DTD 28.3.2018
ANNEXURE-B RESPECTIVELY, AND ALSO ON THE FILE OF THE
2ND RESPONDENT IN GRATUITY APPLICATION NO.48(107)
2015-B3 DTD 27.4.17 ANNEXURE-C AND ETC.;
THIS PETITION, COMING ON FOR FINAL HEARING, THIS
DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
ORAL ORDER
Heard the learned counsel appearing for the
petitioner and the learned counsel appearing for 3rd
respondent.
2. This petition is filed impugning the order dated
08.05.2018 marked at Annexure - A. The Appellate
Authority under the Payment of Gratuity Act, 1972 (for
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short "Act of 1972") has dismissed the appeal filed by
the petitioner - Corporation and confirmed the order
passed by the Controlling Authority.
3. In terms of the very same order dated
28.03.2018, the appeal filed by the employee is also
dismissed, thereby the order passed by the Controlling
Authority is confirmed.
4. In terms of the order dated 27.04.2017, the
Controlling Authority has accepted the employee's claim
for payment of interest on delayed payment of gratuity in
part, and directed the Corporation/employer to pay
interest at a rate of 10% p.a. on the delayed period from
01.06.2015 to 20.12.2016 on the gratuity amount of
Rs.10,00,000/-.
5. Certain facts are not in dispute.
6. Respondent No.3 joined the petitioner -
Corporation as a Watchman on 23.07.1976. On
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02.06.2014, 3rd respondent was suspended on the
allegation of forgery and misappropriation. The suspension
order was revoked on 31.10.2014. On 31.05.2015, 3rd
respondent - employee has attained the age of
superannuation.
7. It is relevant to mention that on 30.09.2015,
CBI had arrested 3rd respondent for commission of alleged
offences under Sections 409, 468 and 201 of the Indian
Penal Code r/w Sections 13(2) and 13(1)(c) and (d) of the
Prevention of Corruption Act, 1988.
8. It is submitted that 3rd respondent - employee
is convicted for the offences under Sections 409, 468 and
201 of the IPC r/w Sections 13(2) and Section 13(1)(c)
and (d) of the Prevention of Corruption Act, 1988. It is
further submitted that the employee has filed an appeal
before this Court and the appeal is pending and the
sentence is suspended.
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9. On 30.05.2015, a day before the retirement,
disciplinary action was initiated against 3rd respondent and
vide order dated 26.09.2016, the Disciplinary Authority
dropped the proceedings against 3rd respondent.
10. Since disciplinary proceedings against 3rd
respondent - employee was dropped, 3rd respondent filed
an application for payment of gratuity as 3rd respondent
had attained the age of superannuation on 31.05.2015.
The application was filed on 23.12.2016.
11. 2nd respondent i.e., the Controlling Authority
directed the petitioner - Corporation to pay the employee,
interest at a rate of 10% p.a. from 01.06.2015 to
20.12.2016, on Rs.10,00,000/-.
12. It is not in dispute that on 20.12.2016, full
gratuity amount of Rs.10,00,000/- was paid to 3rd
respondent - employee.
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13. Aggrieved by the said order awarding interest,
the petitioner - Corporation had filed an appeal on the
premise that 3rd respondent is not entitled to any interest.
3rd respondent - employee had filed an appeal before the
Appellate Authority to award interest for a larger period
than that was awarded by 2nd respondent. As already
noticed, both appeals are dismissed confirming the order
passed by the Controlling Authority. Respondent No.3 has
accepted the order passed by the Appellate Authority.
14. Learned counsel appearing for the petitioner
submits that there was no obligation for the petitioner -
Corporation to pay the full amount of gratuity as the
petitioner - Corporation was entitled to forfeit the entire
amount of gratuity or part of the amount of gratuity under
Section 4 (6)(a) of Act of 1972. It is urged that 3rd
respondent has caused loss to the petitioner/Corporation
and the petitioner is justified in forfeiting the interest.
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15. It is the submission of the learned counsel
appearing for the petitioner that if the employee's services
have been terminated for any act which constitutes an
offence involving moral turpitude, and if that act is
committed during the course of employment then the
petitioner - Corporation is entitled to forfeit the gratuity
either wholly or partially.
16. Learned counsel appearing for 3rd respondent
on the other hand would contend that the gratuity amount
payable to respondent No.3 was not paid in time and
under the Act of 1972 the employer is required to pay
interest on the delayed payment. It is her further
submission that sub-section (6) of Section 4 is not
applicable to the case on hand as there is no adjudication
relating to alleged damages suffered by the petitioner.
Thus, it is urged that the petition be dismissed.
17. This Court has considered the contentions
raised at the bar and perused the records.
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18. There is no dispute that 3rd respondent was
employee of the petitioner/Corporation. He has attained
the age of superannuation on 31.05.2015. A day before
his retirement, i.e. on 30.05.2015, the disciplinary enquiry
was initiated against 3rd respondent by framing the
charges. The charge memo was issued in October, 2014.
The proceeding was dropped vide order dated 26.09.2016.
Sub-section (6) of Section 4 of Act of 1972, reads as
under:-
"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:
xxxx
xxxx
xxxx
xxxx
xxxx
(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, shall be forfeited
to the extent of the damage or loss so caused.
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(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."
19. On a reading of the aforementioned provision, it
is evident that under Section 4(6)(1)(a) of Act of 1972,
the gratuity payable to a employee whose services have
been terminated for an act, wilful omission or negligence
causing any damages for loss or destruction of the
property belonging to the petitioner, shall be forfeited to
the extent loss or damages.
20. To invoke Section 4(6)(a) of Act of 1972, the
employer must establish that employee has been
terminated for an act, wilful omission or negligence for
causing any damage or loss or destruction of the property
belonging to the petitioner.
21. Admittedly, the disciplinary enquiry initiated
against 3rd respondent was dropped. There is no finding
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relating to the loss or destruction of the property or
damage caused to the property of the employer.
Admittedly, 3rd respondent was not terminated from
service and 3rd respondent has attained the age of
superannuation.
22. This being the position, Section 4(6)(a) of Act
of 1972 has no application.
23. As far as Section 4(6)(b)(i) of Act of 1972 is
concerned, it is noticed that in case, the employee has not
been terminated for riotous or disorderly conduct or any
other act of violence on his part. Such an allegation is not
made against 3rd respondent.
24. As far as Section 4(6)(b)(ii) of Act of 1972 is
concerned, in case an employee is terminated for any act
which constituted an offence involving moral turpitude and
if that such an offence is committed in the course of an
employment, then the employer has the right to forfeit the
part or whole of the gratuity amount.
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25. As already noticed, the employer has not
terminated the employee/3rd respondent for any
misconduct alleged against him. On the other hand, it is
noticed that in the disciplinary enquiry initiated against 3rd
respondent/ employee, was dropped and 3 rd respondent
had attained the age of superannuation thereafter.
26. It is not in dispute that 3rd respondent-
employee who was the accused in Special Criminal Case
No.500/2015 on the file of XLVI Additional Sessions Judge,
Bengaluru is convicted for the offences under Sections 409
and 201 of IPC read with Section 13(2), 13(1)(c) & (d) of
Prevention of Corruption Act, 1988 vide judgment dated
27.11.2017. It is not in dispute that an appeal is filed
against the State challenging the order of conviction as
well as sentence and sentence is suspended by the
Appellate Court.
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27. It is further relevant to note that by the time 3rd
respondent was convicted, he had already attained the
age of superannuation.
28. This being the position, Section 4 of Act of 1972
does not enable the petitioner/Corporation to deduct the
gratuity amount payable to 3rd respondent.
29. As can be noticed from the records, admittedly
the gratuity amount is not paid within 30 days from the
date of attaining superannuation. On an application moved
by 3rd respondent/employee, the Controlling Authority
passed an order to pay interest from the date of
retirement till the date on which the gratuity amount was
paid. 3rd respondent retired on 31.05.2015. The amount
is paid on 20.12.2016 i.e. after one and half years from
the date of retirement.
30. Under Section 7(3) of Act of 1972, the
petitioner has 30 days time to make payment from the
date of retirement. Thus, the amount becomes due from
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01.07.2015 and the amount is paid on 20.12.2016. Thus,
the petitioner is liable to pay interest from 01.07.2015 till
20.12.2016. However, the Controlling Authority has
awarded interest from 01.06.2015 to 20.12.2016 instead
of 01.07.2015. To that extent, the impugned order is to be
set-aside. It is stated that the said amount which is
payable to 3rd respondent is not paid by the petitioner.
Hence, the interest due to 3rd respondent shall be paid
within 45 days from the date of receipt of the copy of this
order. In case, such amount is not paid, the petitioner
shall pay interest at 6% p.a. on the amount due from the
date of this order till payment.
Hence, the following:-
ORDER
(i) The petition is allowed-in-part. The petitioner
shall pay interest on Rs.10,00,000/- from
01.07.2015 to 20.12.2016.
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(ii) The interest due to 3rd respondent shall be paid
within 45 days from the date of receipt of the
copy of this order.
(iii) In case, such amount is not paid, the petitioner
shall pay interest at 6% p.a. on the amount due
from the date of this order till payment.
No order as to costs.
Sd/-
(ANANT RAMANATH HEGDE)
JUDGE
GSR/CHS
