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PETITIONER: MANAGEMENT OF TOURNAMULLA ESTATE

       Vs.

RESPONDENT: WORKMEN

DATE OF JUDGMENT26/03/1973

BENCH: GROVER, A.N. BENCH: GROVER, A.N. DWIVEDI, S.N. VAIDYIALINGAM, C.A.

CITATION:  1973 AIR 2344            1973 SCR  (3) 762  1973 SCC  (2) 502

ACT: Labour    Law--Gratuity   Scheme--Workmen   dismissed    for misconduct--Gratuity whether can be forfeited.

HEADNOTE: Clause  (4)  of the Scheme of gratuitty  applicable  to  the appellant  Estate provided that a dispute regarding a  claim for payment of gratuity of a workman who had been  dismissed for  misconduct  shall be referred to the Labour  Court  for decision.   One  of  workmen of the  appellant  was  charge- sheeted  in respect of riotous and disorderly behaviour  for having  assaulted  a  tea-maker inside the  factory  of  the appellant.  A departmental enquiry was held and being  found guilty  of misconduct he was dismissed.  As a dispute  arose about the payment of gratuity the matter was referred to the Labour  Court.  Before the Labour Court it was not  disputed that  the  dismissal  of  the  workman  was  on  account  of misconduct  consisting of riotous and  disorderly  behaviour and assaulting a tea-maker.  The Labour Court, relying  upon the  decision  of  this Court in State of  Punjab  v.  Suraj Prakash  Kapur, [1962] 2 S.C.R. 711 decided the question  in favour  of the workman.  Appeal by special leave, was  filed in this Court.  Allowing the appeal, HELD : According to the decision of this Court in the  Delhi Cloth  Mills  case misconduct could be of three  kinds,  (1) technical misconduct which leaves no trial of  indiscipline; (2)  misconduct  resulting  in  damage  to  the   employer’s property  which  might  be  compensated  by  forfeiture   of gratuity or a part thereof, and (3) serious misconduct  such as  acts  of  violence  against  the  management  or   other employees  or disorderly behaviour in or near the  place  of the employment, which though not directly causing damage  is conducive  to grave indiscipline.  The first should  involve no  forfeiture,  the  second may involve  forfeiture  of  an amount  equal to the loss directly suffered by the  employer in consequence of the misconduct, and the third will  entail forfeiture of the gratuity payable to the workman.  In other words, according to this decision, if a workman is guilty of a  serious  misconduct  of the  third  category,  then:  his gratuity can be forfeited in its entirety. [764D] The  decision in the Delhi Cloth Mills as applicable to  the

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facts of the present case and the appeal must accordingly be allowed. State  of  Punjab v. Suraj Parkash Kapur,  etc.,  [1962]  2. S.C.R. 711 applied. Delhi Cloth & General Mills Co. Ltd. v. Workmen and  Others, etc. [1969] 2 S.C.R. 307, referred to. (ii) The contention that the Labour Court did not apply  its mind  to the nature and degree of the  misconduct  committed and  therefore the matter should be remitted to  that  court for  decision in accordance with law, could not be  accepted because  the  facts were not in dispute  before  the  Labour Court. [765D]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 698 of 1968. 763 Appeal by special leave from the Award dated August 10. 1967 of  the  Labour  Court,  (Kerala  State),  Quilon,  Camp  at Calicut,  in Industrial Dispute No. 70 of 1965 published  in the Kerala Govt.  Gazette No. 39 dated 3-10-67. G.  B.  Pal,,  Bhuvanesh Kumari and 0. C.  Mathur,  for  the appellant. A. S. Nambiyar, for the respondent. The Judgment of the Court was delivered by GROVER, J.-This is an appeal by special leave from An  award of the Labour Court, Quilon (Kerala State). The  point before us is simple.  The workman  concerned  was charge-sheeted   in  respect  of  riotous   and   disorderly behaviour for having assaulted a tea maker Shri U. M.  Abdul Kadar  on May 29, 1965, inside the factory.  A  departmental enquiry  was  held wherein, it is said, he was  given  every opportunity  to fully participate.  He was found  guilty  of misconduct  by  the domestic tribunal  and  was  accordingly dismissed.   There was a scheme of gratuity in force,  which was  and is not challenged by the respondent.  Clause  4  of that scheme, which is called "Terms of Agreement",  provides that  if a dispute arises regarding a claim for  payment  of gratuity of a workman who has been dismissed for misconduct, such a dispute shall be referred to the labour court  having jurisdiction, for decision.  As a dispute arose with  regard to  the payment of gratuity, the matter was referred to  the Labour  court.  Before that court, in the statement of  case submitted  by the Secretary of the Malabar  Estate  Workers’ Union, it was stated in clause (c) as follows :               "The   worker   was  not  paid   gratuity   on               dismissal,  in spite of making a  request  for               the   same.   There  is  a   gratuity   scheme               applicable to this estate and as per the terms               of  the scheme if a dispute  arises  regarding               the   payment  of  gratuity  to  a   dismissed               workman,  the same is left open to be  decided               by this Court.  The allegations of  misconduct               levelled  against  the  worker  in  this  case               cannot  be considered to be one which  by  its               nature   disentitles  the  worker   to   claim               gratuity.  Even if the allegation is true  the               same  does not involve any question  of  moral               turpitude or. cause any financial loss to  the               company.  Any allegations of misconduct do not               impose   (sic)  disentitle  the  workmen   for               gratuity.  Hence in this particular case it is               submitted  that  the worker  is  entitled  for               gratuity as claimed.  The worker has put in 18

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             years of service and as such he is entitled to               get at the rate of 15 days wages based on last               draw  wage rate for every completed  years  of               service." 764 In reply, which was filed by the management, the facts which have  been set out above and the circumstances in which  the dismissal was directed, were fully given.  Before the Labour court,  there seems to have been no dispute whatsoever  that the  dismissal of the respondent workman was on  account  of misconduct   consisting,  of  behaving  in  a  riotous   and disorderly   manner  and  having  assaulted  a   tea   maker (supervisor).   The Labour court, however, referred  to  the judgment  of this Court in State of Punjab v. Suraj  Parkash Kapur,  etc.  (1)  in which the  general  argument  was  not accepted that in all cases where services of an employee are terminated  for misconduct, gratuity should not be  paid  to him.   However, this Court has had occasion to  consider  in detail the various circumstances in which gratuity would  be liable to forfeiture for misconduct of a particular  nature. It  was laid down in Delhi Cloth & General Mills Co.,  Ltd., v. Workmen and Others, etc. (2) that the object of having  a gratuity scheme is to provide a retiring benefit to  workmen who  have  rendered  long and  unblemished  service  to  the employer  and thereby contributed to the prosperity  of  the employer,  and it is, therefore, not correct to say that  no misconduct   however  grave,  .-may  not  be  visited   with forfeiture of gratuity.  Misconduct could be of three kinds, (1)   technical   misconduct  which  leaves  no   trail   of indiscipline,  (2)  misconduct resulting in  damage  to  the employer’s property which might be compensated by,forfeiture of  gratuity  or part thereof, and (3)  ,serious  misconduct such  as  acts of violence against the management  or  other employees or riotous or disorderly behaviour in or near  the place  of  employment, which, though  not  directly  causing damage,  is  conducive  to grave  indiscipline.   The  first should  involve  no  forfeiture,  the  second  may   involve forfeiture of the amount equal to the loss directly suffered by  the  employer in consequence of the misconduct  and  the third will entail forfeiture of gratuity due to the workman. In other words, according to this decision, if a workman  is guilty of a serious misconduct of the third category,  then, his gratuity can be forfeited in its entirety. In  yet another case in Remington Rand of India Ltd. v.  The Workmen,(3) one of the questions was whether a provision can be  made  in a gratuity scheme that if the misconduct  is  a gross one, involving violence, riotous behaviour, etc.,  the qualifying  period  should be limited to  fifteen  years  of continuous service.  The earlier decision in Delhi Cloth and General Mills Ltd., was discussed and reference was made  to it.  The Court expressed agreement with the decision in  the earlier case that matters which had impact on the discipline and  the  working  of  the  concern,  require  a   different treatment in the matter of forfeiture of gratuity.  It is (1) [1962] 2 S.C.R. 711.      (2) [1969] 2 S.C.R. 307. (3) [1970] 2 S.C.R. 935. 765 significant that in S. 4 (6) (b) of the Payment of  Gratuity Act, it has been provided as follows :               "the gratuity payable to an employee shall  be               wholly  forfeited(i) if the services  of  such               employee have been terminated for his  riotous               or  disorderly  conduct or any  other  act  of               violence on his part. " Although the provisions of this statute would not govern the

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decision  of  the  present  case,  the  importance  of   the enactment  lies  ill the fact that the principle  which  was laid  down  in  the Delhi Cloth Mills case  with  regard  to forfeiture  of gratuity in the event of commission of  gross misconduct   of  the  nature  mentioned  above,   has   been incorporated in the statute itself.  Even otherwise, such  a rule is conducive to industrial harmony and is in consonance with public policy. Learned  counsel  for the respondents has not been  able  to show  how the rule laid down in the Delhi Cloth  Mills  case would not be applicable if the concerned workman was  guilty of  the  kind  of  misconduct  mentioned  above.   His  sole contention has been that the Labour court did not apply  its mind  to the nature and degree of the disconduct  committed, and, therefore, the matter should be remitted to that  court for  a decision in accordance with law.  In our opinion,  it is  not  necessary to send the matter to the  labour  court, because the facts were not in dispute before it. For  the reasons given above, the appeal is allowed and  the award  of  the  Labour Court is set  aside.   It  is  hereby declared that the concerned workman will not be entitled  to the  gratuity  earned  by  him.   The  respondents  will  be entitled to costs in view of the order already made by  this Court on February 1, 1968. G.C.                       Appeal allowed. 766