SC in the case of Western Coal Fields Ltd. vs. Manohar Govinda Fulzele (Civil Appeal No. 2608 of 2025), recently ruled that gratuity can be forfeited if an employee’s termination is due to misconduct involving moral turpitude, even without a criminal conviction. Emphasizing the provisions of the Payment of Gratuity Act, 1972, the Court clarified that forfeiture is justified when an employee is dismissed for misconduct that constitutes an offense involving moral turpitude. In such cases, the disciplinary authority holds the discretion to determine whether the misconduct falls within this category, irrespective of the absence of a formal criminal conviction. This ruling underscores that an employer’s right to withhold gratuity is not contingent on the outcome of criminal proceedings but rather on the nature and severity of the misconduct as assessed by the disciplinary authority.
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