To deny gratuity, termination must be for misconduct making an offence involving moral turpitude: SC


In order to deny gratuity to an employee, it is not enough that the alleged misconduct of the employee constitutes an offence involving moral turpitude as per the report of the domestic inquiry. There must be termination on account of the alleged misconduct, which constitutes an offence involving moral turpitude. This has been held by a two-judge bench of the Supreme Court comprising Justice Kurian Joseph and Justice Rohinton Fali Nariman in the case of Jorsingh Govind Vanjari v. Divisional Controller Maharashtra, State Road Transport Corporation, Jalgaon Division, Jalgaon [Civil Appeal No. 11807 Of 2016 (Arising out of S.L.P.(C) No. 26366 of 2016), decided on 6 December 2016].

In this case, the charge against the appellant was that he had collected fare from six passengers while he was working as a conductor on 06.09.2001 in bus No. MH-20/J-4714 on its trip from Chalisgaon to Patanagaon, without issuing tickets. The inspecting team also found that there was a shortage of cash in his cash bag. A domestic inquiry followed and the inquiry officer found the appellant guilty, and on that basis, he was terminated from service.

The Labour Court found that as the alleged passengers had not been examined, an opportunity of cross examining them was not availed to the appellant. Despite of not examining the witnesses the enquiry officer considered their statements recorded on the spot and concluded that, charges of misconduct had been proved against the appellant. Moreover, it was also held that the one and the same authority had issued charge sheet, conducted enquiry and suggested the punishment. Accordingly, serious prejudice was caused to the appellant in as much as one and the same authority is not expected to play the role of Enquiry Officer and disciplinary authority, which is inconsistent to the provisions of law. Accordingly, with biased mind enquiry had been conducted.

The Labour Court further observed that those 6 persons were illiterate persons and inspecting squad as per their whims recorded their statements, as well as S.T. cash was found less by Rs.56. Had the appellant actually recovered the amount from the very six passengers, then Rs.36/- ought to have been found excess in his cash bag. However, contrary to this, amount was found less with the appellant and hence Respondent by making false allegations issued false charge sheet, conducted enquiry. Principles of natural justice had not been observed by the first party.

It was also held that once findings of the enquiry officer were held perverse by the (labour) court, then burden lies on Respondent to prove the misconduct by leading evidence before the court. But, instead of leading evidence in support of alleged misconduct of the appellant, the Corporation did not lead any oral evidence before the court, on the contrary filed pursis of closing their evidence. Therefore, it was crystal clear that, the misconduct of the appellant was not proved before the (Labour) Court by the Corporation.

Therefore, the Reference was answered in favour of the appellant by the Labour Court setting aside the dismissal order. However, taking note of the fact that the appellant had crossed the age of superannuation, instead of reinstatement, 50 per cent of the back wages from the date of termination till the date of superannuation with all other service benefits were granted.

However, on appeal by the Corporation, Bombay High Court took the view that the Labour Court went wrong in deciding the preliminary issue concerning the fairness of the inquiry and deciding all further issues in one stroke. In these circumstances, the high court held the appellant would not be entitled to the gratuity but a one-time compensation of an amount equivalent to 50 per cent of the back wages, would be just and proper.

On appeal, the Supreme Court held that the High Court had gone wrong in holding that the Labour Court did not follow the procedure. It was seen from the award that the management had not sought for an opportunity for leading evidence. And despite granting an opportunity, no evidence was adduced after the Labour Court held that the findings of the inquiry officer were perverse. Therefore, the Labour Court could not be faulted for answering the Reference in favour of the appellant.

The Supreme Court also held that the High Court itself has granted compensation since the Court felt that the termination was unjustified and since reinstatement was not possible on account of superannuation. In case, the High Court was of the view that termination was justified, it could not have ordered for payment of any compensation.

Observing, as mentioned above, that in order to deny gratuity to an employee, there must be termination on account of the alleged misconduct, which constitutes an offence involving moral turpitude, the Supreme Court set aside the order of the high court and the award of the Labour Court was restored.

Read full order of the court:


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