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"What the petitioner failed to appreciate is that the order which was passed on April 21, 2004 was on the basis of the directions of this Court and after giving the petitioner full opportunity of hearing. No order of compulsory retirement leads to automatic reduction of pension or complete denial of gratuity and provident fund. A cut in pension can only be imposed after the punishing authority has applied its mind on the nature of misconduct. Similarly, denial of gratuity and leave encashment can also be effected but not without conscious application of mind.

occasioned by way of penalty on account of misconduct committed by an employee established in the regular departmental enquiry against such delinquent employee.

15. We are, therefore, of the opinion that Regulation 46(1) of the Officers' Regulations would not apply when termination is occasioned by way of compulsory retirement by way of punishment on account of misconduct proved against such an employee after regular departmental enquiry. To that extent, the judgment of Division Bench in Ashwani Kumar Sharma (supra) does not lay down correct law and is hereby overruled.

Therefore, it is clear that when a person is found guilty of the charge of theft, it means, he has acted dishonestly and from this it follows that he has committed an offence involving moral turpitude." LPA-566-2012 - 14 -

11. In the case of The Management of Tournamulla Estate v/s Workmen, AIR 1973 SC 2344, before the enactment of the Gratuity Act, the Supreme Court noted that in Delhi Cloth & General Mills Co. Ltd. v/s Workmen, AIR 1970 SC 919, noted the object of having a gratuity scheme which is to provide a retiring benefit to workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer, and therefore, it was not correct to say that no misconduct, however grave, may not be visited with forfeiture of gratuity. Various kind of misconducts were thereafter noted, which were (1) technical misconduct which leaves no trail of indiscipline, (2) misconduct resulting in damage to the employer's property which might be compensated by forfeiture of gratuity or part thereof, and (3) serious misconduct such as acts of violence against the management or other employees or riotous or disorderly behaviour in or near the place of employment, which, though not directly causing damage, is conducive to grave indiscipline. The Court observed that the first should involve no forfeiture, the second may involve forfeiture of the amount equal to the loss directly suffered by the employer in consequences of the misconduct and the third will entail forfeiture of gratuity due to the workman. Thus, it would be clear that even before the Gratuity Act has come into force, the Supreme Court had noted that gratuity could be forfeited. Object of paying gratuity has been sufficiently set out in the judgment of the Supreme Court in the case of U. P. State Sugar Corporation Ltd. & Ors. v Kamal Swaroop Tondon, 2008 II CLR 563, where the Court observed as under:

In the present case, no doubt the respondent is given the punishment of compulsory retirement after holding an enquiry, however, there is no LPA-566-2012 - 20 -

decision of the Board of Trustees and the decision is taken by the Bank.

It is the Board of Trustees which is supposed to take such a decision as provided in Rule 17 of the Provident Fund Rules.

29. As far as Rule 18 is concerned, the Bank is given the right to recover from the contribution made by the Bank, i.e., employer's share, in case of any loss or damage resulting to the Bank. Here also it is the Board, i.e., Board of Directors which is entitled to declare the amount of loss or damage so resulting. In the instant case, there is no declaration by the Board of Directors. Furthermore, this Rule applies only when the contributor is "dismissed" for fraud or misconduct. This Rule does not apply when he is "retired" from the Bank even by imposing the penalty of "compulsory retirement". Whereas, Rule 17 mentions the punishment of dismissal and also includes the retirement, the element of retirement i.e. penalty of compulsory retirement as a consequence of fraud or misconduct is conspicuously absent in Rule 18. It is, thus, clear that Rule 18 would not apply in the present case where the punishment imposed is not that of dismissal but that of compulsory retirement. Therefore the appellant-bank cannot forfeit the employer's contribution in the instant case. The action of the appellant-bank in forfeiting the employer's share is not correct and is, therefore, set aside. However, liberty is given to the Trustees of the Fund to proceed in the matter in accordance with Rule 17 of the UCO Bank Employees' Provident Fund Rules.