Employee Compulsorily Retired for Moral Turpitude Not Entitled to Gratuity | HC

Case Details: General Manager (HRM) vs. Prakash Vishnu Shinde [2025] 180 taxmann.com 275 (HC-Bombay)

Judiciary and Counsel Details

• Rohit W. Joshi, J.
• Mrs Renuka Puranik Nalamwar, Adv. for the Petitioner.
• Jaiprakash Sawant & V.A. Bramhe, Advs. for the Respondent.

Facts of the Case

In the Instant case law, the Respondent was in the employment with the petitioner-bank as the Regional Manager. A departmental enquiry was initiated against him, and he was placed under suspension. While the enquiry was pending, the respondent attained the age of superannuation. However, enquiry continued even after his retirement and punishment of compulsory retirement was imposed on the respondent.

The Petitioner forfeited the gratuity of the respondent. Then, the Respondent approached the Controlling Authority under The Payment of Gratuity Act, 1972, challenging the action of the petitioner denying his claim for gratuity.

The Controlling Authority allowed an application filed by the respondent holding that the respondent was entitled to receive the gratuity amount with interest for delayed payment and, accordingly, directed the petitioner to pay said amount to the respondent with accrued interest thereon.

On appeal, the Appellate Authority dismissed the appeal preferred by the petitioner. Then, an appeal was made before the High Court.

It was noted that after conducting the departmental enquiry against the respondent, punishment of compulsory retirement was imposed by the petitioner-employer.

High Court Held

The High Court observed that every employee is eligible for the gratuity on his retirement, but in case of termination of service by way of punishment, after completion of 10 years of service, the employee concerned will not be entitled to receive the gratuity.

Further High court observed that, the order of compulsory retirement will amount to termination of service by way of penalty and such termination by way of compulsory retirement, if made on account of misconduct relating to the moral turpitude during course of the employment will attract section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, and in such a situation, The employer will be entitled to pass the order for forfeiture of the gratuity.

The High Court held that the services of the respondent-employee were terminated by way of compulsory retirement after holding an enquiry against him and in said enquiry, charges relating to the moral turpitude during course of the employment were held to be proved and, accordingly, order of punishment of compulsory retirement was passed, it must be held that the respondent was not entitled to receive the gratuity

Therefore, the impugned orders passed by the Controlling Authority and the Appellate Authority were unsustainable and were to be quashed.

List of Cases Reviewed

• Western Coal Fields Ltd. v. Manohar Govinda Fulzele [2025] 2 taxmann.com 2235 (SC)/(2025) SCC OnLine SC 345 (para 9)
• UCO Bank v. Anju Mathur [2013] 3 taxmann.com 1210 (Punjab & Haryana)/2013 SCC OnLine P&H 5014
• Chairman and Managing Director, Central Bank of India v. Appellate Authority under Payment of Gratuity Act [Writ Petition No.1375 of 2018, dated 4-9-2023] (para 24)
• Chairman-cum Managing Director, Mahanadi Coalfields Limited v. Rabindranath Choubey [2020] 5 taxmann.com 916 (SC)/(2020) 18 SCC 71 (para 26)
• Jorsingh Govind Vanjari v. Divisional Controller M.S.R.TC., Jalgaon [2017] 12 taxmann.com 891 (SC)/2017 (2) SCC 12 (para 27)
• AIR India Ltd. v. Dharman K. Patil [2022] 11 taxmann.com 1360 (Bombay)/2022(1) CLR 314 (para 32) distinguished

List of Cases Referred to

• Western Coal Fields Ltd. v. Manohar Govinda Fulzele [2025] 2 taxmann.com 2235 (SC) (para 9)
• Union Bank of India v. C.G. Ajay Babu (2018) 9 SCC 529 (para 9)
• Union of India v. Tulsiram Patel (1985) 3 SCC 398 (para 23)
• UCO Bank v. Anju Mathur [2013] 3 taxmann.com 1210 (Punjab & Haryana) (para 24)
• Chairman and Managing Director, Central Bank of India v. Appellate Authority under Payment of Gratuity Act [Writ Petition No.1375 of 2018, dated 4-9-2023] (para 24)
• Chairman-cum Managing Director, Mahanadi Coalfields Limited v. Rabindranath Choubey [2020] 5 taxmann.com 916 (SC) (para 26)
• Jorsingh Govind Vanjari v. Divisional Controller M.S.R.TC. [2017] 12 taxmann.com 891 (SC) (para 27)
• Chairman and Managing Director, Bank of Maharashtra v. Shri Kishore s/o. Shankarrao Khadatkar 2022(6) ALL MR 431 (para 28)
• Vasant B. Bhujbal v. Controlling Authority 2021(3) Mh.L.J. 585 (para 29)
• Nanubhai Nichhabhai Desai v. Deputy General Manager, UCO Bank [2017] 4 taxmann.com 1700 (Bombay) (para 29)
• AIR India Ltd. v. Dharman K. Patil [2022] 11 taxmann.com 1360 (Bombay) (para 32).