Forfeiture of Gratuity of Bank Regional Manager – Bombay HC
Judgment dated 4.11.2025 of the High Court of Bombay, Nagpur Bench, in Writ Petition No.154 of 2022 of the General Manager (HRM), Bank of Maharashtra Vs. Shri Prakash Vishnu Shinde and others
Payment of Gratuity Act
Does penalty of compulsory retirement amount to “termination of service” under Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972, to forfeit gratuity.
The petitioner- Bank of Maharashtra had initiated departmental inquiry against respondent no.1 Regional Manager, Goa. He was placed under suspension. However, he retired on superannuation and the inquiry culminated in compulsory retirement punishment.
By the order dated 29.4.2016, the petitioner Bank had forfeited the gratuity of the respondent no.1.
Respondent nos.2 and 3 allowed the application for the respondent no.1 and set-aside the order of gratuity forfeiture.
The question is whether the order of compulsory retirement amount to termination of services to sustain the gratuity forfeiture.
Section 4(6)(b)(ii) of the Payment of Gratuity Act shows that the forfeiture gratuity order can be passed only if services are terminated on account of an involving moral turpitude. If punishment other than termination of services is imposed, then gratuity cannot be forfeited under the said provision.
The Bank of Maharashtra Officers’ Service Regulations, 1979, Bank of Maharashtra Officer Employees (Discipline and Appeal) Regulations, 1976 and the Bank of Maharashtra (Employees’) Pension Regulations, 1995, will be relevant answering the issue.
Regulation 46 of the BoM Officers Service Regulations deal with gratuity. Therefore, even under the said Regulations, the right to receive gratuity can be denied only in case of termination. The Discipline and Appeal Regulations clearly show that compulsory retirement is a majority penalty. However, compulsory retirement is not punitive under Regulation 20(1)(a) of the Service Regulations.
HELD that the orders of both the respondent nos.2 and 3 are unsustainable in law and therefore, quashed.
