In a significant judgment safeguarding employees statutory rights, the Madhya Pradesh High Court at Jabalpur has directed the Central Madhya Pradesh Gramin Bank to pay gratuity to the widow of a dismissed bank officer within 60 days. Justice Vivek Jain, delivering the order on October 6, 2025, ruled that gratuity cannot be withheld merely because an employee was dismissed from service, especially when no criminal conviction exists.
"The bank could have, at the most, forfeited gratuity to the extent of loss caused. But since the alleged defalcation amount was already refunded, there was no justification for withholding gratuity," the bench observed.
Background
The case was filed by Smt. Babita Mor, widow of late Rajesh Mor, a bank officer dismissed in 2017 after being accused of not opening a branch on time and misappropriating ₹1 lakh. Following his dismissal, Mr. Mor's appeal was rejected by the bank, and he passed away a few weeks later.
When Babita Mor applied for her husband’s gratuity, the bank denied her claim, citing Section 4(6)(b) of the Payment of Gratuity Act, 1972 and Clause 72(e) of its Service Regulations, 2010, which permit forfeiture of gratuity in cases of dismissal for misconduct. Her repeated representations were rejected, leading her to approach the High Court.
Her counsel, Advocate Ashish Trivedi, argued that since the alleged loss was repaid by the deceased officer, the bank had suffered no damage and therefore had no authority to withhold the statutory benefit.
Court's Observations
Justice Jain meticulously analyzed the interplay between the Payment of Gratuity Act, 1972, and the bank's internal regulations. The bench noted that the Act, being a central welfare legislation, overrides any conflicting service rule by virtue of Section 14, which states that its provisions will prevail over any inconsistent regulations or contracts.
"The Payment of Gratuity Act is a complete code in itself. Any rule or service regulation inconsistent with its provisions cannot take away the statutory right of gratuity," the judge remarked.
The court relied on two major Supreme Court precedents - Jaswant Singh Gill v. Bharat Coking Coal Ltd. (2007) and Union Bank of India v. C.G. Ajay Babu (2018) - to clarify that forfeiture of gratuity can occur only under specific conditions:
- When there is a proven financial loss to the employer, and only to that extent, or
- When the employee is convicted for an offence involving moral turpitude during employment.
In this case, the bench pointed out that no criminal proceedings were ever initiated against Mr. Mor, nor was he convicted by any court. Therefore, the bank’s claim of "moral turpitude" held no ground.
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"The requirement of the statute is not proof of misconduct but conviction for an offence involving moral turpitude," Justice Jain observed, quoting from the Supreme Court’s ruling in Ajay Babu's case.
Decision
Concluding that the bank acted beyond its legal authority, the High Court set aside the bank's forfeiture order and directed it to calculate and release the gratuity amount due to the deceased officer, along with 6% annual interest from the date of his death until actual payment.
The court also granted liberty to the petitioner to approach the controlling authority under the Gratuity Act if she faced any grievance regarding the calculation.
With this ruling, the court reaffirmed the principle that gratuity is a vested right, not a privilege at the mercy of the employer. Unless an employee causes proven financial damage or is convicted of a serious criminal offence, gratuity cannot be denied even in cases of dismissal.
Case Title:- Smt. Babita Mor vs. Central Madhya Pradesh Gramin Bank
Case Number:- Writ Petition No. 21393 of 2021
Date of Order: 6th October, 2025
Counsel for Petitoner: Shri Ashish Trivedi
Counsel for Respondent (Bank): Shri Vikram Johri
