Industrial Relations And Labour Laws
Junior Manager (hr)

In a very recent judgement in Vithal Rangnath Darekar Vs New India Insurance Company Ltd [2012 LLR 1027], the Bombay High Court has ruled that the right to receive gratuity is a statutory right and the gratuity cannot be forfeited due to conviction by criminal court for an offence (ie, kidnapping a girl) since such act does not come under purview of section 4(6)(b) of the Payment of Gratuity Act, 1972.

Section 4(6)(b) deals with forfeiture of gratuity and it reads as follows:

“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.”

In the instant case, the petitioner was a sub staff of the respondent company and he was convicted for an offense of kidnapping a girl under section 363 and 344 of Indian Penal Code, directing to undergo rigorous imprisonment for four years together with fine. On the ground of his conviction by criminal court his services were terminated by the employer. He had rendered a service of 19 years and 2 months. He moved an application for gratuity before the Controlling Authority which, in turn, was rejected on the ground that the applicant has been convicted for an offence involving moral turpitude. He then challenged the decision before the High Court.

The High Court observed that the act of kidnapping a girl has nothing to do with the act of employment. The expression in section 4(6)(b)(ii) clearly suggests that such act involving moral turpitude must be caused in the ‘course of employment’. An employee is acting in the course of employment only when he is doing something in discharge of a duty imposed upon him by his contract of service.


9th October 2012 From India, Kannur
Dear Sir,
Thanks for sharing the information.Does this mean a person can conduct any crime outside his employment and still holds his claim for gratuity? I had learnt that gratuity is for awarding the meritorious service of an individual not merely the length of service..
10th October 2012 From India, Asansol
In the past also such interpretations of section 4(6)(b) have come. The recent judgement also supports that misconducts which have no relation with employment are out of purview of Gratuity Act and as such no employee shall be denied the benefit just on the ground that he has done a misconduct which is not during the course of employment.
10th October 2012 From India, Kannur
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