Management of Tournamulla Estate Vs.
Workmen  INSC 53 (26 March 1973)
CITATION: 1973 AIR 2344 1973 SCR (3) 762 1973
SCC (2) 502
Labour Law--Gratuity Scheme--Workmen
dismissed for misconduct--Gratuity whether can be forfeited.
Clause (4) of the Scheme of gratuity
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,
 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 facts of the present case and the appeal must
accordingly be allowed.
State of Punjab v. Suraj Parkash Kapur, etc.,
S.C.R. 711 applied.
Delhi Cloth & General Mills Co. Ltd. v.
Workmen and Others, etc.  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]
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 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)  2 S.C.R.
711. (2)  2 S.C.R. 307.
(3)  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
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 dis-conduct 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.