- 1 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF JANUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO. 13955 OF 2012 (L-PG) BETWEEN: THE NATIONAL SEEDS CORPORATION LTD (A. GOVT. OF INDIA UNDERTAKING) REPRESENTED BY ITS REGIONAL MANAGER UAS CAMPUS, HEBBAL BENGALURU-560 024. &PETITIONER (BY SRI. ANANDA V., ADVOCATE FOR SRI. JAGADEESH MUNDARAGI, ADVOCATE) AND: 1. THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT 1972 AND REGIONAL LABOUR COMMISSIONER (CENTRAL) 'SHARAM SADAN', III CROSS, III MAIN, II PHASE, TUMAKUR ROAD, YESHWANTHPUR BENGALURU-560 022. 2. THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT 1972 AND ASSISTANT LABOUR COMMISSIONER (CENTRAL) 'SHARAM SADAN' III CROSS, III MAIN, II PHASE, TUMAKUR ROAD, YESHWANTHPUR, BENGALURU-560 022. 3. SRI K.V. RAMA REDDY S/O LATE SRI VENKATASWAMY NOW AGED ABOUT 61 YEARS Digitally signed by GEETHA P G Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 WAS WORKING AS ASSISTANT GRADE-II NATIONAL SEEDS CORPORATION LTD R/AT NO.68, PANTHARAPALYA NAYANDAHALLI, MYSORE ROAD BENGALURU-560 039 SINCE HE DIED HIS LRS. 3(a) SMT. RATHNAMMA W/O LATE K.V. RAMA REDDY AGED ABOUT 57 YEARS. 3(b) SMT. BIYAMMA W/O LATE VENKATASWAMY AGED ABOUT 89 YEARS. 3(b)(i) SRI K.V. NARAYANASWAMY S/O LATE VENKATASWAMY AGED ABOUT 72 YEARS NO.19, 2ND MAIN, KALYAN NAGAR MUDALAPALYA, NAGARABHAVI MAIN ROAD BENGALURU-560 072. 3(b)(ii) SRI K.V. BYRA REDDY S/O LATE VENKATASWAMY AGED ABOUT 65 YEARS NO.66, 2ND CROSS, 2ND MAIN METRO LAYOUT NAGARABHAVI MAIN ROAD BENGALURU-560 072. 3(b)(iii) SRI K.V. SHIVA REDDY S/O LATE VENKATASWAMY AGED ABOUT 62 YEARS OPP: LAKSHMI CHICKEN CENTRE RAITHARASEVA BANK DODDABALLAPURA MAIN ROAD BENGALURU-560 072. 3(c) SRI R. PRATAP REDDY - 3 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 S/O LATE K.V. RAMA REDDY AGED ABOUT 43 YEARS. 3(d) SRI R. NAGENDRA REDDY S/O LATE K.V. RAMA REDDY AGED ABOUT 41 YEARS. 3(e) SMT. VANITHA D/O LATE K.V. RAMA REDDY AGED ABOUT 38 YEARS ALL ARE RESIDING AT NO.3 VENKATESHAPPA BUILDING TATA NAGAR, KODIGEHALLI BENGALURU-560 092. &RESPONDENTS (BY SRI. M. RAJAKUMAR, AGA FOR R1 & R2; SMT. RASHMI K., ADVOCATE FOR SRI. M. SUBRAHMANYA BHAT, ADV. FOR R3 (A,C,D,E); V/O DATED 12.03.2025, NOTICE TO R3(B)(I & II) IS HELD SUFFICIENT) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH ORDER PASSED IN APPLICATION NO.48(13) 2008/B3 BY THE R2 THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT 1972, AND ASSISTANT LABOUR COMMISSIONER (CENTRAL) BY ITS ORDER DATED 6.2.2009 VIDE ANNEXURE-B AND THE ORDER PASSED BY THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT 1972 AND REGIONAL LABOUR COMMISSIONER (CENTRAL) IN APPEAL NO.36(12)/2008 - B2 DATED 29.02.2012 VIDE ANNEXURE-E. THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE - 4 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 ORAL ORDER 1. Heard the learned counsel appearing for the petitioner and learned counsel appearing for the legal representatives of respondent No.3. 2. This petition is filed assailing the order dated 06.02.2009 passed by respondent No.2- the Controlling Authority under the Payment of Gratuity Act, 1972 and the order dated 29.02.2012 passed by the Appellate Authority, whereby the Appellate Authority confirmed the original order of the Controlling Authority. 3. The application filed by the contesting private respondents is allowed and the petitioner before this Court is directed to pay a sum of Rs.1,87,978/- along with simple interest at the rate of 10% per annum with effect from 27.11.2007 till the date of final payment to the original respondent No.3. 4. The Appellate Authority by dismissing the appeal filed by the petitioner has confirmed the order of respondent No.2. 5. It is not in dispute that a sum of Rs.1,87,978/- was withheld by the petitioner, the employer - respondent No.3 on - 5 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 the premise that the petitioner / Employer is entitled to forfeit the said amount towards the loss caused to the petitioner on account of negligence on the part of respondent No.3. 6. The admitted facts are as under:- Respondent No.3 faced a domestic enquiry at the hands of the petitioner on charges of negligence in credit sales and violation of the Rules and conditions governing his employment. 7. The charges are held to be proved and respondent No.3 is removed from employment. The order is questioned by raising a dispute before the Labour Court. The Labour Court has confirmed the order of dismissal. The said order of the Labour Court has attained finality. 8. The finding in the domestic enquiry report indicate that the petitioner sustained a loss of Rs.63.37 lakhs on account of credit supplies and heavy shortages of seeds, which happened during the tenure of respondent No.3, who was in-charge of the store. - 6 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 9. It is also admitted that the petitioner lodged a criminal case against respondent No.3 and respondent No.3 was convicted for the offence of criminal breach of trust. 10. In this background, the petitioner withheld the aforementioned amount from the gratuity payable to respondent No.3. Respondent No.3 filed an application before the Controlling Authority for the payment of the said amount. The Controlling Authority overruling the objection raised by respondent No.3, directed the petitioner to pay the said amount. The Appellate Authority also confirmed the said order, by rejecting the petitioner's contention. 11. Learned counsel for the petitioner referred to the judgment of the Hon'ble Apex Court in the case of UNION BANK OF INDIA AND OTHERS v. C.G.AJAY BABU AND ANOTHER1. Referring to paragraph No.15 of the said judgment, it is urged that an employee can, under law, forfeit the gratuity amount to the extent of any damage or loss caused to the employer by invoking sub-Section (6)(a) of Section 4 of the Payment of Gratuity Act, 1972. 1 2018 (9) SCC 529 - 7 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 12. Learned counsel appearing for the legal representatives of respondent No.3 would raise the following contentions:- a. The proceedings are not initiated against respondent No.3 under the Payment of Gratuity Act, 1972 to recover the amount. b. There is no wilful neglect or wilful omission on the part of respondent No.3 as such, the amount cannot be recovered. c. There is no adjudication in the criminal proceedings relating to the actual loss said to have been caused to the petitioner. 13. The Court has considered the contentions raised at the Bar and perused the records. 14. To substantiate the contention that there is no proceedings under the Payment of Gratuity Act, 1972 and to recover the gratuity amount, learned counsel for the petitioner would refer to the judgment of the Co-ordinate Bench of this Court in the case of CENTRAL WAREHOUSING - 8 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 CORPORATION v. SRI.G.C.BAT AND ANOTHER2. This Court has perused the said judgment. From the said judgment, it is noticed that it is not forthcoming as to whether there was any adjudication on the actual loss caused to the employer in those proceedings. 15. In the instant case, it can be seen from the order of the Disciplinary Authority that the petitioner has sustained a loss of Rs.63.37 lakhs on account of negligence on the part of respondent No.3. Thus, the contention that a separate proceeding is required to be initiated to ascertain the loss suffered by the petitioner cannot be accepted. The loss has already been ascertained and the said order passed by the Disciplinary Authority has attained finality and is upheld by the jurisdictional Labour Court. 16. As far as the contention that there is no wilful negligence or omission on the part of respondent No.3 is concerned, the Court has to take a view that the Authority has come to the conclusion that there is willful negligence on the part of respondent No.3 as it is the finding in the disciplinary enquiry. 2 W.P.No.102635 of 2024 disposed of on 10.01.2025 - 9 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 Apart from that sub-Section (6)(1)(a) of Section 4 of the Act, 1972 reads as under:- "(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." 17. From the aforementioned provision, it is apparent that the gratuity can be forfeited to the extent of loss or damage in three situations:- a. Any act resulting in loss or damage. b. Wilful omission resulting in loss or damage. c. Negligence resulting in loss or damage. 18. As already noticed, the Authority has already held that there is negligence on the part of respondent No.3. Apart from negligence or wilful omission, the employer is also entitled to forfeit the amount for the loss caused by an employee due to any act. - 10 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 19. This being the position, there is no justification for holding that sub-Section (6)(1)(a) of Section 4 of the Act, 1972 in the facts and circumstances of the present case prevents the employer to forfeit the amount. 20. This being the position, the Court is of the view that the contention of the learned counsel appearing for the legal representatives of respondent No.3 that fresh proceedings under the Act of 1972 should be held to ascertain the loss ad that a notice under the Act of 1972 should be issued to seek an explanation from respondent No.3 cannot be accepted at all. Even it is assumed that respondent No.3 was issued a show cause notice, he cannot give any explanation, for the simple reason that the finding of the domestic enquiry that he has caused the loss, has already attained finality. Under the circumstances, the writ petition succeeds. Hence, the following:- ORDER i. The writ petition is allowed. ii. The impugned order dated 06.02.2009 passed by second respondent vide Annexure -B and the order - 11 - HC-KAR NC: 2026:KHC:1930 WP No. 13955 of 2012 dated 29.02.2012 passed by first respondent vide Annexure-'E' are hereby quashed. iii. Respondent Nos.3 (a) and 3(b) shall repay the entire amount received from the petitioner. iv. However, in the peculiar facts of the case, respondent No.3 is no more and the amount is in the hands of the legal representatives of respondent No.3, three months time is granted to the legal representatives of deceased-respondent No.3 to repay the amount. v) In case the amount is not paid in three months, then respondent Nos.3(a) and 3(b) are liable to pay the said amount to the petitioner along with interest at the rate of 6% per annum from the date of receipt of certified copy of this order till the date of payment. Sd/- (ANANT RAMANATH HEGDE) JUDGE VMB List No.: 1 Sl No.: 14