- Case
- PRABHAT KUMAR SINGH v. ACCU PACK ENGINEERING PVT. LTD (Bombay High Court, 02-04-2025)
- Law
- Constitution of India, General Clauses Act, Payment of Gratuity Act.
Facts: Four employees (Petitioners) of Accu Pack Engineering Pvt. Ltd. allegedly floated a fictitious partnership firm (M/s. Meck Kraft Industries) in their wives' names. They then procured goods manufactured by M/s. Samurai Engineering through this firm and sold them to their employer at inflated prices (200%-300% higher), causing financial loss to the company. The employer terminated their services and forfeited their gratuity.
Procedural Posture: The Petitioners challenged the Appellate Authority's order, which had upheld the employer's decision to forfeit their gratuity. The Controlling Authority had initially allowed the Petitioners' applications for gratuity, but the Appellate Authority reversed this decision. The Petitioners then filed writ petitions before the High Court challenging the Appellate Authority's order under Article 227 of the Constitution of India.
Issue: Are the Petitioners entitled to gratuity after their services were terminated for allegedly causing financial loss to the employer by procuring spare parts through a fictitious firm floated in their wives' names and selling them at exorbitant rates? Specifically, was the forfeiture of gratuity justified under Section 4(6)(a) of the Payment of Gratuity Act, 1972?
Holding: No, the Petitioners are not entitled to gratuity. The High Court upheld the Appellate Authority's order, finding no error in its decision to allow the forfeiture of gratuity. The writ petitions were dismissed.
Reasoning: The Court reasoned that the employer had sufficiently proved before the Controlling Authority that the Petitioners caused financial loss through the supply of spare parts at exorbitant costs via the partnership firm in their wives' names. The Court emphasized that the Petitioners admitted to the transactions and did not dispute the formation of the firm or the procurement of parts through it. The Court distinguished the case from instances involving moral turpitude under Section 4(6)(b)(ii) of the Gratuity Act, stating that the forfeiture was justified under Section 4(6)(a) due to the direct financial loss caused by the Petitioners' actions. The Court also noted that the Petitioners did not adequately respond to the show cause notices issued by the employer. The Court refused to exercise its extraordinary jurisdiction under Article 227 of the Constitution, stating that granting relief to the Petitioners would reward their illegal activities.
