1. Rajendra Pai H. v. Canara Bank and Anr.

(1998) ILLJ 577 Ker

6. Even under the Payment of Gratuity Act, the gratuity can be withheld only
under the circumstances mentioned in Section 4(6) of the Act. It contemplates
three circumstances mentioned in Section 4(6) (a) and Section 4(6)(b)(i) and (ii).
Under Section 4(6) (a), if the act or wilful omission for which the service of the
employee is terminated has caused damage or loss, then the gratuity shall be
forefeited to the extent of the damage or loss so caused. The other circumstances
are when the services of the employee have been terminated for his riotous or
disorderly conduct and if the services of the employee have been terminated for
any moral turpitude. Clause (b) does not apply to the facts of the case. Under
Clause (a) gratuity can be withheld if the act for which the services are
terminated has resulted in loss to the Bank. Here the amount is withheld as
damages for occupying the quarters of the Bank. This is not in any way connected
with the conduct for which the petitioner's services were terminated. Hence, that
amount cannot be withheld from the gratuity of the petitioner. I am supported in
my view by the decision taken in Permali Wallance Ltd. v. State of M.P. and Ors.
(1996-II-LLJ-515) (M.P.).

2. Brundaban Sahu v. A.S.R.T. Corporation Ltd., (1993) 1 LLN 129: (1992) 2 CLR 256:
(1993) III LLJ (Supp) 208: 1992 LLR 696 (Ori HC).
Withholding of gratuity of an employee compulsorily retired from service will not be
justified.

3. Gopalkrishna v. Karnataka Soaps & Detergents Ltd., 1996 LLR 306 (Kar HC).
Gratuity of an employee cannot be withheld even if disciplinary proceeding is pending
against him.

4. Lt. Col. A. V. Tiwari (Retd.) v. The Secretary Ministry of Welfare, Government of

India, 1996 LLR 1092 (All HC).
Gratuity of an employee cannot be withheld by an employer.

5. KC. Mathew v. Plantation Corporation of Kerala, Ltd., 2000 LIC 1519: (2000) 4 LLN
450: (2000) II LLJ 637: (2000) 4 LLN 450: (2000) II LLJ 637: 2001 LLR 123 (Ker HC).
Gratuity of an employee can be withheld only in case of his dismissal and not otherwise.

6. Rajendra Kumar Nangia v. Rashtriya Chemicals & Fertilizers Ltd., (2002) 1 LLJ 648:
2002 LLR 266 (Bom HC).
Mere pendency of criminal case shall not disentitle an employee from receiving Gratuity.

7. Raghubir Singh v. Indian Red Cross Society, 2008 LLR 849 (P&H HC).
Withholding of gratuity without hearing the employee is not legal. Raghuhir
8. Ramsiya Yadav v. State of UP (Writ Appeal No. 36165/2014)

It was laid in Special Appeal Defective No.416 of 2014 (State of U.P. & 3
Others v. Faini Singh), that It was considered that there is power with the State
Government to withhold gratuity in a case where there are allegations of serious
crime or grave misconduct or any pecuniary loss caused to the Government by
misconduct or negligence
during the service including services rendered on re-employment after retirement.
It was held that the object of these powers clearly demonstrates that these powers
have to be exercised with circumspection and caution and have to be utilized for
the purpose for which they have been vested in the State Government. Such
powers cannot be used mechanically on the pendency of any judicial proceedings.
The delay in judicial proceedings is also required to be taken into consideration
and counted for the purposes of exercise of such powers.
The petitioner will be entitled for gratuity only after the criminal proceeding
against him are culminated.

9. Chairman cum Managing Director, Mahanidhi Coalfield Ltd. v. Rabindranath

Choubey, Civil Appeal No. 9693/13 in SLP (C) 31583/13

17. It is because of the reason that a statutory right accrued, thus, cannot be
impaired by reason of a rule which does not have the force of statute. It will bear
repetition to state that the Rules framed by Respondent No. 1 or its holding
company are not statutory in nature.
18. Power to withhold penalty contained in Rule 34.3 of the Rules must be
subject to the provisions of the Act. Gratuity becomes payable as soon as the
employee retires. The only condition therefore is rendition of five years
continuous service. A statutory right accrued, thus, cannot be impaired by reason
of a rule which does not have the force of a statute. It will bear repetition to state
that the Rules framed by Respondent No. 1 or its holding company are not
statutory in nature. The Rules in any event do not provide for withholding of
retrial benefits or gratuity.
19(ii) Gratuity Act gives right to an employee to receive gratuity on rendition of
5 years continuous service. Gratuity become payable as soon as the employee
retires. This statutory right which accrues to an employee cannot be impaired by
reason of a rule which does not have the force of a statute. Therefore, Rule 34.3
of the CDA Rules, which is non-statutory in nature, is contrary to the provisions
of the Gratuity Act. As such, gratuity cannot be withheld on the retirement of an
 employee even if departmental proceedings were initiated against him before his
retirement and are pending at the time of retirement.
24. Thus for invoking Clause (a) or (b) of sub-section 6 of Section 4 necessary
pre-condition is the termination of service on the basis of departmental enquiry or
conviction in a criminal case. This provision would not get triggered if there is no
termination of services.
25. If such a charge is proved and punishment of dismissal is given thereupon,
the provisions of Section 4(6) of the Payment of Gratuity would naturally get
attracted and it would be within the discretion of the appellant to forfeit the
gratuity payable to the respondent. As a corollary one can safely say that the
employer has right to withhold the gratuity pending departmental inquiry.
However, as explained above, this course of action is available only if
disciplinary authority has necessary powers to impose the penalty of dismissal
upon the respondent even after his retirement. Having regard to our discussion
above of Jaswant Singh Gill (supra) and Ram Lal Bhaskar (supra), this issue
needs to be considered authoritatively by a larger Bench. We, therefore, are of the
opinion that present appeal be decided by a Bench of three Judges.

10. D.V. Kapoor v. Union of India AIR 1990 SC 1923

"The right to gratuity is also a statutory right. The appellant was not charged
with nor was given an opportunity that his gratuity would be withheld as a
@page-SC1927 measure of punishment. No provision of law has been brought to
our notice under which, the. President is empowered to withhold gratuity as well,
after his retirement as a measure of punishment. Therefore, the order to withhold
the gratuity as a measure of penalty is obviously illegal and is devoid of
jurisdiction."

11. Jaswant Singh Gill v. Bharat Coking Coal Ltd., (2007) 1 SCC 2006

Power to withhold penalty contained in Rule 34.3 of the Rules must be subject to
the provisions of the Act. Gratuity becomes payable as soon as the employee
retires. The only condition therefor is rendition of five years continuous service.

A statutory right accrued, thus, cannot be impaired by reason of a rule which

does not have the force of a statute. It will bear repetition to state that the Rules
framed by Respondent No. 1 or its holding company are not statutory in nature.
The Rules in any event do not provide for withholding of retrial benefits or
gratuity.
13. The Act provides for a closely neat scheme providing for payment of
gratuity. It is a complete code containing detailed provisions covering the
essential provisions of a scheme for a gratuity. It not only creates a right to
payment of gratuity but also lays down the principles for quantification thereof as
also the conditions on which he may be denied therefrom. As noticed
hereinbefore, sub-section (6) of Section 4 of the Act contains a non- obstante
clause vis-a-vis sub-section (1) thereof. As by reason thereof, an accrued or
vested right is sought to be taken away, the conditions laid down thereunder must
be fulfilled. The provisions contained therein must, therefore, be scrupulously
observed. Clause (a) of Sub-section (6) of Section 4 of the Act speaks of
termination of service of an employee for any act, willful omission or negligence
causing any damage. However, the amount liable to be forfeited would be only to
the extent of damage or loss caused. The disciplinary authority has not quantified
the loss or damage. It was not found that the damages or loss caused to
Respondent No. 1 was more than the amount of gratuity payable to the appellant.
Clause (b) of Sub-section (6) of Section 4 of the Act also provides for forfeiture of
the whole amount of gratuity or part in the event his services had been terminated
for his riotous or disorderly conduct or any other act of violence on his part or if
he has been convicted for an offence involving moral turpitude. Conditions laid
down therein are also not satisfied.
14. Termination of services for any of the causes enumerated in Sub- section (6)
of Section 4 of the Act, therefore, is imperative.