WESTERN COAL FIELDS LTD.versusMANOHAR GOVINDA FULZELE & ANR.

                  [2025] 3 S.C.R. 183 : 2025 INSC 233

                       Western Coal Fields Ltd.
                                 v.
                    Manohar Govinda Fulzele & Anr.
                        (Civil Appeal No. 2608 of 2025)
                                17 February 2025
           [Sudhanshu Dhulia and K. Vinod Chandran,* JJ.]


                             Issue for Consideration
       Whether forfeiture of gratuity is permissible in the event of
       termination of service on misconduct, which can be categorised
       as an act constituting an offence involving moral turpitude; without
       there being any conviction in a criminal case or even a criminal
       proceeding having been initiated.

                                    Headnotes†
       Payment of Gratuity Act, 1972 – s.4(6)(b)(ii) – Interpretation:
       Held: Under the Act, for forfeiture of gratuity, conviction in a criminal
       proceeding is not necessitated, if the misconduct alleged and proved
       constitutes an offence involving moral turpitude – In case of PSU, the
       employee was proceeded against for the misconduct of producing
       a fraudulent ‘date of birth certificate’ to obtain appointment – It has
       been proved that he supressed his actual date of birth – Thus,
       the appointment itself was illegal – Decision of the PSU forfeiting
       entire gratuity of the terminated employee upheld – However, in
       case of conductors in appeals filed by MSRTC, the act alleged
       and proved is of misappropriation of meagre amounts, Appointing
       Authority directed to limit the forfeiture to 25% of the gratuity payable
       and release the balance amounts to the respondent employees.
       [Paras 11, 13, 15]

       Misappropriation – Misappropriation of fares collected from
       passengers, if an offence involving moral turpitude:
       Held: Misappropriation is an act constituting an offence involving
       moral turpitude – Even if the amounts misappropriated are minimal it
       would constitute a misconduct warranting termination. [Paras 13, 15]
       Words and Phrases – ‘Offence’ – General Clauses Act. [Para 10]

* Author
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       Payment of Gratuity Act, 1972 – s.4(6)(b)(ii) – Words “duly
       established in a Court of Law” cannot be supplied – Relying
       on C.G. Ajay Babu case, the impugned judgments held that
       the forfeiture of gratuity is not permissible under the 1972 Act:
       Held: The interpretation of sub-clause (b)(ii) of sub-section (6)
       of s.4 was uncalled for in C.G. Ajay Babu since the provisions of
       the s.4 including sub-section(6) was inapplicable to the employer
       Bank and its employee, by virtue of sub-section (5) of s.4 – The
       interpretation was an obiter making a reference unnecessary –
       Furthermore, s.4(6)(b)(ii) does not make it a requirement that the
       misconduct alleged and proved in a departmental enquiry should
       not only constitute an offence involving moral turpitude, but also
       should be duly established in a Court of Law – The words “duly
       established in a Court of Law” cannot be supplied to the provision.
       [Para 9]

                                 Case Law Cited
       Union Bank of India and Ors. v. C.G. Ajay Babu [2018] 9 SCR 995 :
       (2018) 9 SCC 529; Jaswant Singh Gill v. Bharat Coking Coal Ltd
       [2006] Supp. 8 SCR 1064: (2007) 1 SCC 663; Mahanadi Coalfields
       Ltd. v. Rabindranath Choubey (2020) 18 SCC 71; Devendra
       Kumar v. State of Uttaranchal [2013] 8 SCR 471 : (2013) 9 SCC
       363 – referred to.

                                   List of Acts
       Payment of Gratuity Act, 1972; General Clauses Act.

                                List of Keywords
       Forfeiture of gratuity; Termination of service; Misconduct; Offence
       involving moral turpitude; No conviction in a criminal case/no criminal
       proceeding initiated; Public Sector Undertaking (PSU); Maharashtra
       State Road Transport Corporation (MSRTC); Fraudulent ‘date
       of birth certificate’; Actual date of birth supressed; Appointment
       illegal; Entire gratuity forfeited; Delinquent employee; Terminated
       employee; Conductors; Misappropriation; Misappropriation of
       meagre amounts, Appointing authority; Disciplinary authority;
       Misappropriation of fares collected from passengers; Nature of
       the misconduct; Extent of forfeiture; ‘Offence’; “duly established
       in a Court of Law”.
[2025] 3 S.C.R.                                                            185

        Western Coal Fields Ltd. v. Manohar Govinda Fulzele & Anr.


                                  Case Arising From
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2608 of 2025
      From the Judgment and Order dated 29.01.2020 of the High Court
      of Judicature at Bombay at Nagpur in WP No. 6006 of 2016

                                Appearances for Parties
      Tushar Mehta, Solicitor General, Ms. Mayuri Raghuvanshi, Vyom
      Raghuvanshi, Ms. Akanksha Rathore, Ms. Kinjal Sharma, Uddyam
      Mukherjee, Swapnil Pattanayak, Agnibha Chatterjee, Advs. for the
      Appellant.
      Pratik R. Bombarde, Devendra Singh, Jitendra Kumar, Rohit Verma,
      Ms. Kirti Anand, Naman Tandon, Siddharth Dharmadhikari, Aaditya
      Aniruddha Pande, Advs. for the Respondent.

                         Judgment / Order of the Supreme Court

                                      Judgment

      K. Vinod Chandran, J.

      Leave granted.
2.    The question raised in the above cases is the permissibility of forfeiture
      of gratuity, in the event of termination of service on misconduct, which
      can be categorised as an act constituting an offence involving moral
      turpitude; without there being any conviction in a criminal case or
      even a criminal proceeding having been initiated.
3.    The appellant in one of the appeals is a Public Sector Undertaking1
      on whose behalf learned Solicitor General Mr. Tushar Mehta appears.
      The other appeals are by the Maharashtra State Road Transport
      Corporation2 for whom Ms. Mayuri Raghuvanshi, learned Standing
      Counsel appears. Impugned judgments found the forfeiture of gratuity
      to be not permissible under the Payment of Gratuity Act, 1972 (the
      Act) relying on the decision of this Court in Union Bank of India and




1    For brevity ‘PSU’
2    For brevity ‘MSRTC’
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       Ors. vs. C.G. Ajay Babu.3 On behalf of the contesting respondent in
       the appeal filed by the PSU, Mr. Shivaji M. Jadhav appears to defend
       the reasoning in the judgment and none appears for the respondent
       in the appeals filed by the MSRTC; though served with notice.
4.     Before we look into the facts of the separate cases, we have to
       dwell upon the law as declared in C.G. Ajay Babu.3 C.G. Ajay
       Babu3 was a case in which a delinquent employee, while working as
       Branch Manager in a Bank was dismissed from service pursuant to
       allegations of misconduct being proved against him in a departmental
       proceeding. The misconducts alleged and proved were the failure
       to take steps to ensure and protect the interests of the Bank, failure
       to discharge duties with utmost devotion, diligence and honesty
       and for acts unbecoming of an Officer employee. Further show
       cause notice was issued threatening forfeiture of gratuity, on the
       ground that the misconducts proved, amounts to acts involving
       moral turpitude. The challenge made against the dismissal before
       the High Court failed, but the forfeiture was held to be bad. The
       forfeiture was upset, on the finding that, there was no allegation
       of financial loss caused to the bank; which was the only ground
       on which gratuity could be forfeited as per the Bipartite Settlement
       regulating the conduct and behaviour of the employees of the Bank;
       including disbursal of gratuity.
5.     A Division Bench of this Court found that sub-section (5) of Section
       4 of the Act is a non obstante clause which does not affect the right
       of an employee to receive better terms of gratuity, under any award,
       agreement or contract with the employer. While sub-section (5)
       made inapplicable the other provisions of Section 4, sub-section (6);
       which deals with forfeiture of gratuity, despite being a non obstante
       provision made inapplicable only the provisions of sub-section (1);
       which created the statutory right for gratuity on an employee,
       limited for the purposes of forfeiture. It was held that, insofar as the
       delinquent employee having been in the service of a bank, which
       service is regulated by the Bipartite Settlement, which also contains
       provisions for payment of gratuity and its forfeiture, sub-section (6)
       of Section 4 of the Act is inapplicable to the employees of the bank.
       The Settlement providing for better terms of gratuity also provided for


3    (2018) 9 SCC 529
[2025] 3 S.C.R.                                                           187

       Western Coal Fields Ltd. v. Manohar Govinda Fulzele & Anr.


      its forfeiture when the misconduct results in financial losses to the
      bank and only to the extent of the loss; while specifically prohibiting
      forfeiture of gratuity for dismissal on any other ground. The order
      of the High Court was upheld finding that the forfeiture; in the teeth
      of the provisions of the Bipartite Settlement, could not have been
      carried out by the bank.
6.    Having held the forfeiture to be bad, the Bench also looked at the
      provision for forfeiture under Section 4(6) of the Act and specifically
      found that “the requirement of the statute is not the proof of misconduct
      of acts involving moral turpitude but the act should constitute an
      offence involving moral turpitude and such offence should be duly
      established in a Court of Law” (sic Para 19). The Court placed
      reliance on another judgment of this Court in Jaswant Singh Gill
      vs. Bharat Coking Coal Ltd.4
7.    Jaswant Singh Gill,4 an employee of a PSU; the services in which
      were regulated by the Conduct, Discipline and Appeal Rules, 19785,
      retired during the pendency of disciplinary proceedings, with the
      gratuity payable withheld, due to the pending proceedings. On
      finalization of the disciplinary proceedings, the appellant was found
      guilty of misconduct relatable to the role played in causing shortages
      in stock and concealing it from the higher authorities, which was
      held to be a very serious misconduct warranting punishment of
      dismissal; which, however, was not imposed considering the fact that
      the employee had superannuated. The Disciplinary Authority hence
      imposed the punishment of forfeiture of the entire gratuity, which
      was challenged unsuccessfully before the High Court. This Court
      found that the provision in the CDA Rules to withhold the gratuity
      of an employee retiring, against whom disciplinary proceedings
      are pending, and the provision to recover from the gratuity, the
      whole or part of any pecuniary loss caused to the company were
      contrary to the provisions under Section 4 of the Gratuity Act, which
      provisions of the Act prevail over the CDA Rules. It was held that
      though the CDA Rules provided for disciplinary proceeding to be
      continued after superannuation, the major penalty of dismissal
      could not have been imposed after superannuation. Looking


4    (2007) 1 SCC 663
5    For brevity ‘CDA Rules’
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       at sub-section (6) of Section 4; which takes away the accrued,
       vested right under sub-section (1), its application was held to be
       possible only when the conditions incorporated therein are fulfilled.
       A scrupulous observation of the provisions of sub-section (6) would
       indicate that such forfeiture could be effected only in the event of
       termination for reason of wilful omission or negligence causing loss
       to the employer (clause (a)); or if the termination is on account of
       riotous or disorderly or any other act of violence (clause b(i)); or if
       the employee has been terminated for any act which constitutes an
       offence involving moral turpitude (clause b(ii), none of which were
       satisfied in that case. Jaswant Singh Gill,4 according to us, did
       not find that forfeiture of gratuity under Section 4(6)(b)(ii) is only
       possible if there is a conviction by a criminal court for an offence,
       which alone could result in the misconduct being treated as one
       constituting moral turpitude.
8.     Further Jaswant Singh Gill 4 was overruled by a three Judge Bench
       in Mahanadi Coalfields Ltd. vs. Rabindranath Choubey 6 wherein
       it was held that even when an employee retires during the pendency
       of disciplinary proceedings, the services are deemed to be continued,
       for the purpose of continuation of the proceedings, as per rules.
       The delinquent employee since deemed to be in service, even a
       major penalty of termination could be imposed on the delinquent
       employee, who has superannuated during the pendency of the
       proceedings. We cannot but reiterate that, Jaswant Singh Gill 4 had
       not considered the issue as to whether there could be a forfeiture of
       gratuity if the delinquent employee is found to have committed an
       offence involving moral turpitude; even when there is no conviction
       entered by a Criminal Court on the very same offence.
9.     With all the respect at our command, the interpretation in C.G.
       Ajay Babu 3 does not come out of the statutory provision; Section
       4(6)(b)(ii) of the Act. Normally we would have referred the matter for
       consideration by a Larger Bench, but, as we noticed, the statutory
       provision does not make it a requirement that the misconduct alleged
       & proved in a departmental enquiry should not only constitute an
       offence involving moral turpitude, but also should be duly established
       in a Court of Law. The words “duly established in a Court of Law”


6    (2020) 18 SCC 71
[2025] 3 S.C.R.                                                          189

      Western Coal Fields Ltd. v. Manohar Govinda Fulzele & Anr.


     cannot be supplied to the provision. Moreover, as we observed; the
     interpretation of sub-clause (b)(ii) of sub-section (6) of Section 4
     was uncalled for in C.G. Ajay Babu3 since the provisions of the
     Section 4, including sub-section (6) was found to be inapplicable to
     the employer Bank and its employee, by virtue of sub-section (5) of
     Section 4. The interpretation, hence, with due respect was an obiter
     making a reference unnecessary.
10. As has been argued by the learned Solicitor General and the learned
    Counsel appearing for MSRTC, sub-clause (ii) of Section 4(6)(b)
    enables forfeiture of gratuity, wholly or partially, if the delinquent
    employee is terminated for any act which constitutes an offence
    involving moral turpitude, if the offence is committed in the course of
    his employment. An ‘Offence’ as defined in the General Clauses Act,
    means ‘any act or omission made punishable by any law for the time
    being’ and does not call for a conviction; which definitely can only be
    on the basis of evidence led in a criminal proceeding. The standard
    of proof required in a criminal proceeding is quite different from that
    required in a disciplinary proceeding; the former being regulated
    by a higher standard of ‘proof beyond reasonable doubt’ while the
    latter governed by ‘preponderance of probabilities’. The provision of
    forfeiture of gratuity under the Act does not speak of a conviction in
    a criminal proceeding, for an offence involving moral turpitude. On
    the contrary, the Act provides for such forfeiture; in cases where the
    delinquent employee is terminated for a misconduct, which constitutes
    an offence involving moral turpitude. Hence, the only requirement is
    for the Disciplinary Authority or the Appointing Authority to decide as to
    whether the misconduct could, in normal circumstances, constitute an
    offence involving moral turpitude, with a further discretion conferred on
    the authority forfeiting gratuity, to decide whether the forfeiture should
    be of the whole or only a part of the gratuity payable, which would
    depend on the gravity of the misconduct. Necessarily, there should be
    a notice issued to the terminated employee, who should be allowed
    to represent both on the question of the nature of the misconduct;
    whether it constitutes an offence involving moral turpitude, and the
    extent to which such forfeiture can be made. There is a notice issued
    and consideration made in the instant appeals; the efficacy of which,
    has to be considered by us separately .
11. As far as, the PSU is concerned, we find that the appellant was
    proceeded against for the misconduct of producing a fraudulent
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       ‘date of birth certificate’ to obtain appointment. The learned Counsel
       for the respondent argued that he has served almost 22 years in
       the PSU and that gratuity is the fruits of his service; which was
       otherwise unblemished, and is also a statutory right as per the Act,
       which cannot be denied to him on termination. The learned ASG,
       however, points out the appellant would not have obtained the
       appointment if his actual date of birth had been disclosed at the time
       of appointment. The appellant, in fact was born in 1953, as proved
       at the enquiry, while the date of birth submitted for his appointment
       was of the year 1960. The very substratum of the appointment having
       been removed, the appellant cannot plead for any leniency and the
       terminated employee deserves no sympathy asserts the Learned
       ASG, who also relies on the decision of this Court in Devendra
       Kumar vs. State of Uttaranchal7 to contend that a suppression of
       material information at the time of selection or appointment would
       constitute an offence involving moral turpitude.
12. Devendra Kumar7 was a case where the services of the delinquent
    employee were terminated for reason of suppressing material
    information regarding pending criminal cases against him, at the
    time of appointment. This Court held that when an appointment
    is obtained by employing fraud; the question is not whether the
    applicant is suitable for the post but whether the appointment was
    obtained by supressing material information. It was held that even if
    the offence alleged in the case pending against the applicant would
    not involve moral turpitude, suppressing such information would
    amount to moral turpitude.
13. In the present case it has been proved that the petitioner supressed
    his actual date of birth. The failure of the employer to initiate a criminal
    proceeding on the fraud employed by way of the the fabricated/
    forged certificate produced for the purpose of employment, does
    not militate against the forfeiture. Obviously, as coming out from the
    provision, no conviction in a criminal proceeding is necessitated, if
    the misconduct alleged & proved constitutes an offence involving
    moral turpitude. The very same reasoning applies in the appeals
    by the MSRTC were the delinquent employees, conductors in


7   (2013) 9 SCC 363
[2025] 3 S.C.R.                                                           191

      Western Coal Fields Ltd. v. Manohar Govinda Fulzele & Anr.


     the stage carriages operated by the MSRTC were found to have
     indulged in misappropriation of fares collected from passengers.
     Misappropriation definitely is an act constituting an offence involving
     moral turpitude.
14. Now we come to the question of whether the forfeiture of gratuity
    of the terminated employees should be only partly or wholly. Insofar
    as the PSU is concerned, the appointment itself was invalid for
    reason of suppression of the actual date of birth and production
    of a forged certificate. We extract paragraph 25 from Devendra
    Kumar7 Judgment:
           “25. More so, if the initial action is not in consonance with
           law, the subsequent conduct of a party cannot sanctify
           the same. Sublato fundamento cadit opus — a foundation
           being removed, the superstructure falls. A person having
           done wrong cannot take advantage of his own wrong
           and plead bar of any law to frustrate the lawful trial by a
           competent court. In such a case the legal maxim nullus
           commodum capere potest de injuria sua propria applies.
           The persons violating the law cannot be permitted to urge
           that their offence cannot be subjected to inquiry, trial or
           investigation. (Vide Union of India v. Major General Madan
           Lal Yadav [(1996) 4 SCC 127 : 1996 SCC (Cri) 592 : AIR
           1996 SC 1340] and Lily Thomas v. Union of India [(2000)
           6 SCC 224 : 2000 SCC (Cri) 1056] .) Nor can a person
           claim any right arising out of his own wrongdoing (jus ex
           injuria non oritur).”
15. The appointment itself being illegal, there is no question of the
    terminated employee seeking fruits of his employment by way of
    gratuity. We uphold the decision of the PSU forfeiting his entire gratuity.
    However, in the case of conductors (Civil Appeal No._____________
    @SLP (C) No.21957 of 2022), we see that the act alleged and
    proved is of misappropriation of meagre amounts. It is trite that
    even if minimal amounts are misappropriated it would constitute a
    misconduct warranting termination, as held by this Court. However,
    on the question of forfeiture of gratuity, we are of the opinion that
    the Appointing Authority should have taken a more sympathetic
    approach. We do not propose to send back the matter for fresh
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       consideration but direct the Appointing Authority to limit the forfeiture
       to 25% of the gratuity payable and release the balance amounts to
       the respondent employees.
16. We allow the appeals with the above modification in so far as the
    extent of gratuity forfeited in two appeals. Parties to bear their own
    costs.
17. Pending application(s), if any, shall stand disposed of.

       Result of the case: Appeals allowed.



       †
           Headnotes prepared by: Divya Pandey