In Brief
A bank dismissed an employee and forfeited his gratuity, claiming the misconduct involved moral turpitude. The High Court allowed the gratuity, finding no financial loss to the bank and relying on a bank settlement limiting forfeiture to cases of misconduct causing financial loss. The Supreme Court upheld this. It held that forfeiture of gratuity is not automatic upon dismissal; it requires strict compliance with statutory conditions. Forfeiture under section 4(6)(b)(ii) of the Gratuity Act for moral turpitude requires criminal conviction, not merely a disciplinary finding. Moreover, the bipartite settlement providing better terms—restricting forfeiture to cases of financial loss—overrides the statute, and an employee must be offered the entire contract or statute, not a hybrid selection. Since there was neither financial loss nor criminal conviction, forfeiture was unjustified.
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