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Termination of the employment is the highest punishment awarded to the employee. Termination depends on the gravity of the misconduct. If the employee is terminated then where is the question of entitlement of the terminal benefits? Employee is entitled for the terminal benefits provided the separation is under normal circumstances and not abnormal circumstances like "misconduct".
Your query is on one importance sentence i.e. "appointment letter states that if the company terminated the employee the employer has to pay one month salary or give the employee a 1 month notice period". I have doubt on the inclusion of clause of this kind in the appointment letter. Please read it once again. No employer will include clause of this kind in the appointment letter.
24th May 2016 From India, Bangalore
24th May 2016 From India, Mumbai
But these things are subject to many other factors that we don't know at the moment. Like whether this is a workman under ID act or a senior manager, what is the misconduct, and various other factors. Each factor has a significant impact on the final decision and the maintainablity of the same in a court. So please take the professional help of a lawyer or a senior labour consultant who can study the matter in its entirety and guide you.
25th May 2016 From India, Mumbai