Supreme Court of India· 17 February 2025

How does the meaning of offence in the General Clauses Act bear on forfeiture of gratuity under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972?

Western Coal Fields Ltd. v. Manohar Govinda Fulzele & Anr.

CIVIL APPEAL NO.2608 of 2025 · CIVIL APPEAL NO.2608 of 2025
Coram: K. Vinod Chandran; Sudhanshu Dhulia

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Answer

An offence means any act or omission made punishable by any law for the time being. That definition does not call for a conviction, which alone could only follow evidence led in a criminal proceeding, so a misconduct proved in a departmental enquiry may still constitute an offence involving moral turpitude.

Headnote

Payment of Gratuity Act, 1972 — s.4(5) — s.4(6)(b)(ii) — General Clauses Act — Forfeiture of gratuity — Offence involving moral turpitude — Conviction not required — Departmental enquiry — Extent of forfeiture — Payment of Gratuity Act, 1972 — s.4(6)(b)(ii) — Forfeiture needs no conviction — Held: Section 4(6)(b)(ii) requires only that the act for which the employee is terminated constitutes an offence involving moral turpitude. The words "duly established in a Court of Law" cannot be supplied to the provision, and the contrary interpretation was obiter. (¶9) General Clauses Act — Offence — Standard of proof in a departmental enquiry — Held further: An offence is any act or omission made punishable by law and does not call for a conviction. A departmental enquiry proceeds on preponderance of probabilities, not on proof beyond reasonable doubt. (¶10) Payment of Gratuity Act, 1972 — s.4(6) — Notice before forfeiture — Held further: The Disciplinary or Appointing Authority must decide whether the misconduct constitutes such an offence. Notice must issue to the terminated employee, who may represent on that question and on the extent of forfeiture, which turns on the gravity of the misconduct. (¶10) Payment of Gratuity Act, 1972 — s.4(6)(b)(ii) — Suppression of date of birth — Extent of forfeiture — Held further: An appointment obtained by suppressing the actual date of birth is itself illegal, and forfeiture of the entire gratuity was upheld. Where conductors misappropriated meagre amounts, forfeiture is confined to 25%; appeals allowed with that modification. (¶13, 15)

In the Court's own words

Paragraph 10As has been argued by the learned Solicitor General and the learned Counsel appearing for MSRTC, sub-clause (ii) of Section 4(6)(b) enables forfeiture of gratuity, wholly or partially, if the delinquent employee is terminated for any act which constitutes an offence involving moral turpitude, if the offence is committed in the course of his employment. An ‘Offence’ as defined in the General Clauses Act, means ‘any act or omission made punishable by any law for the time being’ and does not call for a conviction; which definitely can only be on the basis of evidence led in a criminal proceeding. The standard of proof required in a criminal proceeding is quite different from that required in a disciplinary proceeding; the former being regulated by a higher standard of ‘proof beyond reasonable doubt’ while the latter governed by ‘preponderance of probabilities’. The provision of forfeiture of gratuity under the Act does not speak of a conviction in a criminal proceeding, for an offence involving moral turpitude. On the contrary, the Act provides for such forfeiture; in cases where the delinquent employee is terminated for a misconduct, which constitutes an offence involving moral turpitude. Hence, the only requirement is for the Disciplinary Authority or the Appointing Authority to decide as to whether the misconduct could, in normal circumstances, constitute an offence involving moral turpitude, with a further discretion conferred on the authority forfeiting gratuity, to decide whether the forfeiture should be of the whole or only a part of the gratuity payable, which would depend on the gravity of the misconduct. Necessarily, there should be a notice issued to the terminated employee, who should be allowed to represent both on the question of the nature of the misconduct; whether it constitutes an offence involving moral turpitude, and the extent to which such forfeiture can be made. There is a notice issued and consideration made in the instant appeals; the efficacy of which, has to be considered by us separately .

Acts & Sections

s.4(6)(b)(ii) Payment of Gratuity Act, 1972s.4(5) Payment of Gratuity Act, 1972s.4(1) Payment of Gratuity Act, 1972General Clauses Act, 1897

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Also decided in this judgment

Under the Payment of Gratuity Act, 1972, must an offence involving moral turpitude be established by conviction in a criminal court before gratuity is forfeited under Section 4(6)(b)(ii)?What is the status of the observation in Union Bank of India v. C.G. Ajay Babu that an offence involving moral turpitude must be duly established in a Court of Law before gratuity is forfeited under the Payment of Gratuity Act, 1972?What standard of proof distinguishes a disciplinary proceeding from a criminal proceeding when gratuity is forfeited under the Payment of Gratuity Act, 1972?What procedure must precede forfeiture of gratuity under Section 4(6) of the Payment of Gratuity Act, 1972?Does the authority forfeiting gratuity under the Payment of Gratuity Act, 1972 have a discretion as to whether the forfeiture is whole or partial?Does suppression of material information at the time of appointment amount to moral turpitude for the purposes of forfeiture of gratuity?Does an employer's failure to initiate a criminal proceeding on the fraud defeat forfeiture of gratuity under the Payment of Gratuity Act, 1972?Is misappropriation of meagre amounts by an employee an offence involving moral turpitude under the Payment of Gratuity Act, 1972, and does the smallness of the amount matter?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections