1 CGHC010197792019 2026:CGHC:30669 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPL No. 141 of 2019 1. The Chairman Cum Managing Director Dena Bank Dena Corporate Centre, C -10, G - Block, Bandra Kurla, Complex, Bandra (East), Mumbai - 400051. 2. The Branch Manager Dena Bank, Vyapar Vihar Branch, Bilaspur, District Bilaspur Chhattisgarh. (Now The Dena Bank Has Been Amalgamated With Bank Of Baroda In Term Of Gazette Of India Notification No. GSR No. 2E Dated 02-01-2019 w.e.f. 01-04-2019 And Having Its Head Office Situated At Baroda (Gujarat). ... Petitioner(s) versus 1. Shri V. Srinivas Rao(Dead) Through Legal Heirs As Per Hon'ble Court Order Dated 08/07/2022 1.1 - A. Smt. Vedula Satyawati Rao W/o Late Shri V. Srinivas Rao Aged About 55 Years R/o Flat No. 407, Tulip, JP Park, Near Old Power House, Torwa Bilaspur (C.G.) 495004 1.2 - B Shri Vedula Balaji Rao S/o Late Shri V Srinivas Rao Aged About 29 Years R/o Flat No. 407, Tulip JP Park, Near Old Power House, Torwa Bilaspur (C.G.) 495004 2. Appellate Authority Under The Payment Of Gratuity Act, 1972 And Deputy Chief Labour Commissioner (C), Government Of India, Ministry Of Labour And Employment, Raipur Chhattisgarh. 3. Controlling Authority Under The Payment Of Gratuity Act, 1972 And Regional Labour Commissioner (Central) Bilaspur Chhattisgarh. ... Respondent(s) For Petitioner : Mr. Vindo Deshmukh, Advocate For Lrs. of Respondent No. 1 : Mr. Gary Mukhopadhyay, Advocate Hon'ble Shri Justice Rakesh Mohan Pandey Order on Board 20.07 .2026 1. The original respondent No. 1, who was an employee of the Bank died SIDDHANT TAMRAKAR Digitally signed by SIDDHANT TAMRAKAR Date: 2026.07.22 15:53:43 +0530 2 during the pendency of this petition and his wife and son have been substituted in this petition. 2. The petitioners have challenged order passed by the Appellate Authority under the Payment of Gratuity Act, 1972 dated 20.05.2019 in Case No. PGA- 40/2018, whereby, the appeal preferred by the petitioners was dismissed. 3. The facts in brief are that the original respondent No. 1 Shri V. Srinivas Rao was then the Officer of the petitioners/Bank posted at Vyapar Vihar Branch under Raipur Zone. He has placed under suspension vide order dated 08.05.2013, and subsequently, article of charge was issued on 31.07.2013 making allegations that he committed fraud and misappropriated funds by debiting various GL heads, sharing his finacle password with Shri Rajrndra Prasad Pasi on many occasions and further failed to discharge his duties with utmost integrity, honesty, devotion and diligence. 4. Employee filed reply; after full fledged inquiry enquiry report was submitted before the disciplinary authority. Second show-cause notice was issued to the employee and the disciplinary authority concurred with the findings recorded by the enquiry officer and inflicted penalty of compulsory retirement vide order dated 28.12.2015. The employee preferred an appeal before the appellate authority, which was dismissed vide order dated 15.04.2017. A show-cause notice under Section 4(6)(a) of Payment of Gratuity Act, 1972(for short “Act, 1972”) with regard to forfeiture of gratuity amount was also served upon the employee on 28.06.2017, which was duly replied. The employee approached the Controlling Authority claiming therein amount of gratuity and his application was allowed by the authority concerned vide order dated 16.05.2018, whereby, the petitioners herein were directed to 3 make payment of Rs. 7,84,278/-. 5. The petitioners challenged the order passed by the Controlling Authority by filing an appeal before the Appellant Authority under the Act of 1972, which was dismissed vide order dated 20.05.2019 and against said order this petition has been preferred. 6. Mr. Vinod Deshmukh, Advocate appearing for the petitioners would argue that the employee was inflicted with penalty of compulsory retirement and categorical findings were recorded by the disciplinary authority to the effect that he caused loss to the Bank to the extent of Rs. 23,00,000/-. It is contended that in the notice issued under Section 4(6)(a) of Act of 1972 these facts were specifically mentioned. It is argued that the appellant authority affirmed the penalty inflicted upon the original respondent No. 1. He would submit that as there was specific finding with regard to loss caused to the employer, therefore, the original respondent No. 1 was not entitled for grant of gratuity amount. It is argued that though this fact was specifically pleaded in the reply filed before the Controlling Authority, but defence of the petitioners was turned down only on the ground that in the notice issued under Section 4(6)(a) of the Act of 1972, the extent of loss or damage caused by the employee was not disclosed or mentioned. He would submit that finding recorded by the Controlling Authority and affirmed by the Appellant Authority are perverse and bad in law. He would pray to allow this petition. 7. On the other hand, Mr. Gary Mukhopadhyay, Advocate appearing for legal representatives of respondent No. 1 would oppose. He would contend that in the Section 4(6)(a) of Act, 1972 word ‘terminated’ has been used. He would contend that if services of an employee have been terminated for any act, 4 willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, in such a situation, amount of gratuity can be forfeited to the extent of the damage or loss so caused. He would contend that the original respondent No. 1 was inflicted with penalty of compulsory retirement and his services were never terminated, therefore, the notice issued by the petitioners herein under Section 4(6)(a) of Act of 1972 was not competent. It is also argued that the Controlling Authority and Appellant Authority under the Act of 1972 have recorded concurrent finding, and therefore, this petition deserves to be dismissed. 8. I have heard learned counsel for the parties and perused the record. 9. Section 4 of Payment of Gratuity Act, 1972 deals with payment of gratuity, is reproduced herein-below :- 4. Payment of gratuity .-(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,- (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: [Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] [ Substituted by Act 22 5 of 1987, Section 4 (w.e.f. 1.2.1991).] Explanation .-For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement. (2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned: Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of [an employee who is employed in a seasonal establishment and who is not so employed throughout the year] [ Substituted by Act 25 of 1984, Section 3, for " an employee employed in a seasonal establishment" (w.e.f. 1.7.1984).], the employer shall pay the gratuity at the rate of seven days' wages for each season. [ Explanation .-In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.] [ Inserted by Act 22 of 1987, Section 4 (w.e.f. 1.2.1991).] (3) The amount of gratuity payable to an employee shall not exceed [such amount as may be notified by the Central Government from time to time]. [ Substituted 'ten lakh rupees' by Act No. 12 of 2018, dated 28.3.2018.] (4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced. 6 (5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. (6) Notwithstanding anything contained in sub- section (1),- (a) the gratuity of an employee, whose services have been terminated for any act, willful 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; (b) the gratuity payable to an employee [may be wholly or partially forfeited] [ Substituted by Act 25 of 1984, Section 3, for " shall be wholly forfeited" (w.e.f. 1.7.1984).]- (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.[* * *] [ Sub-Section (7) omitted by Act 34 of 1994, Section 3 (w.e.f. 24.5.1994).]” 10. Bare reading of above-quoted provision would make it clear that gratuity would be payable to an employee on the termination of his employment, if such an employee has continuously served for period of five years. The expression ‘termination’ given in the section has been clarified. Termination denotes superannuation, retirement, resignation and death or disablement due to accident or disease. Section 4(6) (a) of Act of 1972 states that gratuity of an employee can be forfeited if his services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction 7 of, property belonging to the employer. The word ‘termination’ used in Section 4(6)(a) cannot be treated as penalty of termination from services. 11. The conjoint reading of Section 4(1) and Section 4(6)(a) of Act of 1972 would make it clear that the expression ‘termination’ used in Section 4(6)(a) does not refer to termination of services of an employee in departmental enquiry rather it indicates termination of services of an employee on account of superannuation, retirement, resignation, disablement etc. Therefore, it was not imperative on the part of the petitioners to take a decision with regard to forfeiture of amount of gratuity in a case only where penalty of termination of services has been inflicted. If act of an employee fulfills conditions mentioned in Section 4(6)(a) of the Act, 1972, such decision can be taken. 12. If decision has been taken by the employer to forfeit gratuity on account of damage or loss caused to the employer disorderly or violent conduct by employee or any act, which constitutes offence involving moral turpitude, decision with regard to forfeiture of gratuity can be taken. 13. In the present case, there is categorical finding recorded by the disciplinary authority that the original respondent No. 1 caused financial loss to the Bank on account of his willful omission and negligence. Further, a notice under Section 4(6)(a) of Act of 1972 was duly served upon the employee and it was replied. The order of penalty of compulsory retirement inflicted by the disciplinary authority was affirmed by the appellate authority and said order has not been assailed subsequently, and thus, it attained finality. 14. It appears that the petitioners have taken decision to forfeit gratuity in 8 accordance with Section 4(6) of Act of 1972, therefore, in my opinion, the order was passed by the appellate authority dated 20.05.2019 is not sustainable in the eyes of law and is hereby set-aside. 15. Accordingly, this petition is hereby allowed. Sd/- (Rakesh Mohan Pandey) JUDGE $iddhant