M/S. Waterhealth India Private ... vs Asst. Commissioner Labour ...
2022 Latest Caselaw 1702 Tel

  THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
                                                    AND
                THE HON'BLE SRI JUSTICE B.VIJAYSEN REDDY

                                 W.A.Nos.53, 54, 55 & 56 of 2022

JUDGMENT: (Per the Hon'ble the Chief Justice Satish Chandra Sharma)


          The present appeals arise out of Common Order

dated 24.11.2021, passed by the learned Single Judge in

W.P.Nos.3807, 3812, 3818 and 3850 of 2021.


2.        The facts of the case reveal that the writ petitions were

preferred by the present appellant being aggrieved by orders

dated 09.12.2020, passed by respondent No.1/controlling authority

under the Payment of Gratuity Act, 1972 (for short 'the Gratuity

Act'), directing payment of gratuity to the employees i.e.,

respondent No.2 in the present appeals.

3. The undisputed facts of the case reveal that the appellant

before this Court is a registered company under the Companies Act

and respondent No.2 in the appeals were appointed on various

posts. It is also not in dispute that the employees, who were ::2::

serving the company, have put in more than ten years of service

and submitted their resignation on 31.01.2020. The employees

were relieved on the same date i.e., on 31.01.2020 meaning thereby,

that the resignations was accepted by the employer. They were

later on reengaged as consultants and separate agreements were

executed on 01.02.2020. The agreements were terminated later i.e.,

on 07.04.2020. The employees were not paid gratuity in terms of

the statutory provisions as contained under the Gratuity Act and in

those circumstances, they have approached the controlling

authority, who directed payment of gratuity.

4. Learned counsel for the appellant has argued before this

Court that the employees have caused loss to the company; that an

FIR has also been registered against them and therefore, they are

not entitled for payment of gratuity.

5. Learned Single Judge has repelled the aforesaid contention.

Paragraphs 7, 8 and 9 of the order passed by the learned Single

Judge read as under:

::3::

"7. Counsel for the unofficial respondents further contended that before accepting the resignation of the unofficial respondents on 31.01.2020, the petitioner Company, being an employer, ought to have ascertained as to whether any loss has been caused to them or not by the unofficial respondents and, admittedly, in the present writ petitions, even as on today, there is no finding by the petitioner as to how much loss has been caused to them by the unofficial respondents and, as such, the 1st respondent authority has rightly passed the impugned orders in favour of the unofficial respondents by duly taking into account the judgment rendered by the Honourable Supreme Court in Union Bank of India and others v. C.G. Ajay Babu and another1, wherein it was held as under:

"In the present case, there is no conviction of the respondent for the misconduct which according to the Bank is an offence involving moral turpitude. Hence, there is no justification for the forfeiture of gratuity on the ground stated in the order dated 20-4-2004 that the "misconduct proved against you amounts to acts involving moral turpitude". At the risk of redundancy, we may state that the requirement of the statute is not the proof of misconduct of acts involving moral turpitude but the acts should constitute an offence involving moral turpitude and such offence should be duly established in a court of law."

8. Counsel for the unofficial respondents had further contended that the case of the unofficial respondents stand on a better footing than the facts dealt by the Hon'ble Supreme Court because the counsel for the petitioner has never argued

(2018) 9 SCC 529 ::4::

that the unofficial respondents were involved in a criminal case involving moral turpitude; that admittedly, as on the date of accepting the resignation i.e., on 31.1.2020 or even if the termination is taken into account i.e., the termination of the services of the unofficial respondents as Consultants vide proceedings dated 07.04.2020, no where the employer has come to the conclusion as to what is the loss caused to them by the unofficial respondents, and in the absence of the same, the petitioner Company could not have forfeited the gratuity or denied gratuity; and that admittedly, looked from any angle, the unofficial respondents are entitled for payment of gratuity in terms of Section 4(1) of the Act, therefore, there are no merits and these writ petitions are liable to be dismissed.

9. This Court, having considered the rival submissions made by learned counsel for respective parties, is of the considered view that the 1st respondent authority has rightly passed the impugned orders in favour of the unofficial respondents and if the petitioner Company is aggrieved by any of the findings recorded by the 1st respondent authority, they have a remedy in the form of an appeal before the appellate authority under the Act. Without exhausting the said remedy, the petitioner filed the present writ petitions. Even the contention of the petitioner that the loss caused to them by the unofficial respondents is under investigation, cannot be accepted because the petitioner Company is relying on the police investigation to ascertain what is the loss caused to them. The petitioner Company ought to have come to a definite conclusion at the time of accepting the resignation of the unofficial respondents i.e., on 31.01.2020 as to what is the loss caused to them by the unofficial respondents. Admittedly, in the present writ petitions, at the time of accepting the resignation of the ::5::

unofficial respondents, the petitioner employer was not in a position to come to a conclusion as to what is the loss caused to them by the unofficial respondents. Even if the argument of the petitioner Company that vide proceedings, dated 07.04.2020, they have terminated the consultancy services of the unofficial respondents, which was the subsequent employment of the unofficial respondents in the form of re- engagement as Consultants vide agreement dated 01.02.2020 after accepting their resignation by the petitioner, is to be accepted, even at the time of termination of consultancy services of the unofficial respondents also, the petitioner Company has not come to a conclusion as to what is the loss caused to them by the unofficial respondents, which would demonstrate that the petitioner Company had terminated the services of the unofficial respondents without there being any material and it would lead to another issue, but for the present, we are confined about the payment of gratuity under the Act. If the argument of the petitioner Company that they would be relying on criminal investigation and also on the so called domestic enquiry, which is yet to be constituted, so as to ascertain what is the actual loss which has been caused to the petitioner Company by the unofficial respondents, is to be accepted, it may lead to chaotic situation and it might take several months or years to come to a conclusion whether the unofficial respondents have caused any financial loss to the petitioner Company. That is not the object of the Act. As and when an employee is terminated, the employer must pay gratuity in terms of Section 4(1) of the Act. Therefore, looked from any angle, these writ petitions are devoid of merits and they are liable to be dismissed.

::6::

6. The statutory provisions governing the field as contained

under Section 4 of the Gratuity Act reads as under:

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,

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

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

[Provided further that in case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is minor, the share of such minor, shall be deposited with the Controlling Authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] Explanation.- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned:

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his ::7::

employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:

Provided further that in the case of [an employee who is employed in a seasonal establishment, and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.

[Explanation.-In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.] (3) The amount of gratuity payable to an employee shall not exceed [such amount as may be notified by the Central Government from time to time].

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

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

(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.

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

::8::

(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."

7. The aforesaid statutory provision of law makes it very clear

that an employee, after his retirement or resignation, is entitled for

gratuity. All the employees in these cases have resigned from their

respective posts on 31.01.2020. The resignations were accepted

and the employee-employer relationship came to an end on the

moment the resignations were accepted. The period of service put

in by the employees till their resignations was more than ten years

and they were certainly entitled for gratuity.

8. Learned counsel for the appellant has vehemently argued

before this Court that the employees have indulged in some fraud

and an FIR has also been registered against them.

9. However, the fact remains that there is no order passed by

the employer in respect of misconduct till date. The services of the ::9::

employees have not been terminated on account of any act, willful

omission or negligence causing any damage or loss or destruction

of property belonging to the employer and therefore, the gratuity

cannot be forfeited.

10. Learned counsel for the employees has argued before this

Court that after engaging the employees as consultants, their

contract was terminated. The engagement of the employees as

consultants vide proceedings dated 07.04.2020 has nothing to do

with their earlier employment, as it was a subsequent engagement

of the employees. Therefore, termination of contract will not come

in way in the matter of payment of gratuity.

11. The other important aspect of the case is that under the

Gratuity Act, the order passed by the controlling authority is an

appealable order. Section 7(7) of the Gratuity Act provides for

appeal against order of the controlling authority and there is a

mandatory requirement of depositing the entire amount equal to

the amount of gratuity while preferring the appeal. It appears that

in order to escape the requirement of such deposit, straight away ::10::

the writ petitions were preferred before this Court. The learned

Single Judge has decided the matter on merits and therefore, at this

juncture, the question of granting the relief in the present appeal

does not arise.

12. Writ Appeals are, accordingly, dismissed.

13. No costs.

As a sequel, miscellaneous petitions, pending if any, stand

dismissed.

______________________________ SATISH CHANDRA SHARMA, CJ

_____________________ B.VIJAYSEN REDDY, J Date: 01-04-2022 LUR