Karnataka High Court
J.B. Micheal D'Souza vs Appellate Authority Under Payment Of ... on 2 July, 2001
Equivalent citations: [2002(92)FLR1200], ILR2002KAR1396, (2001)IILLJ1450KANT
ORDER
The Court
1. This writ petition is by the ex-employee of the third respondent-Bank challenging the order of the Appellate Authority i.e., the first respondent under which the order of the second respondent has been set aside.
2. The facts in this case are as follows.-
The third respondent-Bank issued a notice dated 30-6-1998 intimating that the gratuity payable to him has been forfeited under Section-4(6)(a) of the Payment of Gratuity Act, 1972 (for short, 'Act'). As against this order the petitioner filed a petition under Section 7 of the Act claiming payment of gratuity. The said application was allowed by the Controlling Authority directing the third respondent-Bank to pay Rs. 84,561 to the petitioner. In the said order the Controlling Authority has not awarded any interest as required under Section 7(3)(a) of the Act. As against the order of the Controlling Authority directing the third respondent to pay the gratuity, the third respondent preferred an appeal before the Appellate Authority. The petitioner has also preferred an appeal to the Appellate Authority insofar as it relates to non-awarding of the interest is concerned. The Appellate Authority clubbed both the cases and passed a common order allowing the appeal filed by the third respondent-Bank and dismissed the appeal filed by the petitioner. This order has been questioned by the petitioner in this writ petition.
3. Sri Rajagopal, learned Counsel for the petitioner, submitted that third respondent-Bank having not afforded any opportunity before passing an order forfeiting the amount payable to the petitioner, the Controlling Authority is right in setting aside the said order by ordering payment of gratuity and he further submits that since the said order is in accordance with the law decided by this Court, the Appellate Authority was not right in setting aside the order of the Controlling Authority. In support of this contention he relied upon the decision of this Court in M/s. Bharath Gold Mines Limited v Regional Labour Commissioner. In the said case this Hon'ble Court has held as follows.-
"Before concluding, it is necessary to observe that though complying with rules of natural justice was unnecessary, for forfeiting Gratuity under Section 4(6)(b) of the Act as it stood when the decision was taken by the appellant as it provided that the gratuity shall stand wholly forfeited under circumstances specified in clauses (i) and (ii), the position has since changed in view of the amendment of Section 4(6)(b)(ii) of the Act with effect from 1-7-1984. After the amendment, it reads thus:
"4(6) Notwithstanding anything contained in sub-section (1)--
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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".
(emphasis supplied) The change brought about is emphasised. In view of this significant change it appears to us that an employer has to take an independent decision after the termination of service of an employee as to whether the gratuity payable should at all be forfeited in cases which all under sub-clause (i) or (ii) and if so, to what extent. The decision must necessarily depend on the facts and circumstances of the case, such as, the length and past record of service, extent and magnitude of the offence and other relevant considerations, Therefore, it follows that the decision has to be taken after giving notice of the proposal to the employee concerned and after due consideration of the reply furnished, if any".
In the said case it is held that in order to forfeit the amount under Section 4(6)(b) of the Act, the employer is required to give notice of proposal to an employee concerned and after due consideration of the reply, if any filed by the concerned employee, may determine whether the gratuity payable may be wholly or partially forfeited. In the instant case, the third respondent forfeited the gratuity payable to the petitioner under Section 4(6)(a) of the Act. Section 4(6)(a) of the Act reads as follows.-
"4. Payment of Gratuity.-
(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".
(emphasis supplied) From the reading of that it is clear that the employer may forfeit the amount to the extent of damage or loss so caused. So in order to ascertain what is the damage caused to forfeit the amount payable, the damage or loss so caused is required to be assessed. In order to assess necessarily, the employer should give a notice of the proposed action before passing any order to forfeit the amount. In the instant case since no such notice has been issued by the third respondent to the petitioner, in my opinion, the entire matter requires reconsideration.
4. Admittedly, the third respondent-Bank passed an order forfeiting the amount by order dated 30-6-1998, copy of which is produced as Annexure-C. Learned Counsel for the third respondent submits that the third respondent will treat the order dated 30-6-1998 at Annexure-C as notice and pursuant to the said notice, he has no objection in granting some time to the petitioner to file objection, if any by this Court.
In view of the said statement I pass the following order.-
(i) Writ petition is allowed;
(ii) The order of the Controlling Authority and the Appellate Authority which are impugned in this writ petition are quashed;
(iii) The third respondent is directed to treat the order dated 30-6-1998 produced as Annexure-C as a show-cause notice to the petitioner;
(iv) The petitioner is given six weeks time from today to file reply if any to the third respondent;
(v) In the event the petitioner files reply pursuant to Annexure-C, the third respondent is directed to consider the objection if any and to pass appropriate order in accordance with law,
(vi) No costs.