‘Can’t forfeit dismissed employee’s gratuity unless employer incurs financial loss’: Chhattisgarh HC

The bench of Justice Narendra Kumar Vyas at the Chhattisgarh High Court (HC) has ruled that the forfeiture of the gratuity of a dismissed employee will be permissible only if the act of misconduct on the part of the employee has caused financial loss to the employer.

The honourable high court has stated that an employer cannot forfeit the gratuity amount without following the principles of natural justice and without determining the extent of damages or loss caused to the employer.

The judgement came in favour of the appellant in the Siyaram Basanti vs Chhattisgarh Rajya Gramin Bank case.

Siyaram Basanti, a dismissed employee of Chhattisgarh Rajya Gramin Bank had appealed to the High Court that after 33 years of service his gratuity, provident fund and leave encashment, which he is entitled to, have been unreasonably withheld by the respondent Bank.

The employee in question, Siyaram Basanti was dismissed by the Chhattisgarh Rajya Gramin Bank following a departmental enquiry. Basanti was initially appointed as branch manager, and thereafter he was promoted twice, to officer scale II and then officer scale I.

The honourable HC has now directed the Bank to release the gratuity and leave encashment of the petitioner within one month.

The bench also noted that the gratuity amount could not have been forfeited without notice being issued to the employee which was done by the bank in the case.

The High Court stated that the payment of gratuity in the facts of the case is in accordance with regulation 72 of the Regulations of 2013, and therefore, the forfeiture can only be for the reason and to the extent permissible by the proviso to regulation 72(2).