Payment Of Gratuity Act Applies To Zilla Parishad Employees: Bombay HC

Bombay High Court (Nagpur Bench): A single judge bench of Justice M.S. Jawalkar held that the Payment of Gratuity Act, 1972, applies to Zilla parishad employees. However, the court explained that Section 4(6) of the Act allows the withholding or forfeiture of gratuity if an employee faces criminal proceedings that involve moral turpitude. Background Pradeep Pokale retired from the Amaravati Zilla Parishad in 2020. At that time, he was under suspension because of a pending criminal trial under the Prevention of Corruption Act, and was also facing multiple departmental enquiries. Despite this, in 2022, he filed an application before the Controlling Authority under the Payment of Gratuity Act, for Rs. 20 lakhs as gratuity. In 2023, the Controlling Authority allowed his application, and ordered the Zilla Parishad to pay Rs. 20 lakhs along with 10% interest. Aggrieved, the Zilla Parishad filed a writ petition challenging this order. They argued that as per the State Government's resolution dated 01 March 2019, gratuity for Zilla Parishad employees was capped at ₹14,00,000. Arguments The Zilla Parishad argued that the Payment of Gratuity Act does not apply to its employees. They argued that Pokale's service conditions were governed by the 1982 Pension Rules, and under Rule 130, gratuity can be withheld if there is a pending departmental enquiry or a criminal proceeding. They explained that since there is a pending criminal trial under the Prevention of Corruption Act, withholding the payment is justified. Relying on Chairman-cum-Managing Director, Mahanadi CoalFields Ltd. v. Rabindranath Choubey (Civil Appeal No. 9693 of 2013), they argued that gratuity can be withheld during pending proceedings even after superannuation. Pradeep Pokale argued that the writ petition was not maintainable as there is a statutory appeal under Section 7(7) of the Payment of Gratuity Act with a strict limitation period. He argued that the Zilla Parishad had skipped that appeal and tried to bypass the statutory scheme by filing a writ petition. He further argued that the Payment of Gratuity Act is a beneficial legislation and applies to all Zilla Parishad employees, as no specific exemption is granted against them. Citing Purushottam Kashinath Kulkarni v. State of Maharashtra (W.P. No. 2630 of 2014), he argued that an employer cannot avoid paying gratuity if there is no specific exemption under the Act. Court's Reasoning The court noted that Section 4(5) of the Act allows an employee to get better terms under other gratuity schemes. However, the court held that it does not take away the entitlement under the Act, unless a specific exemption is granted by the State govt under Section 5. Noting that the Zilla Parishad had not obtained any such exemption, the court ruled that the Payment of Gratuity Act, 1972 applied to Zilla Parishad employees. Further, the court referred to Section 4(6) of the Act. The court noted that it allows an employer to forfeit gratuity if the employee's services were terminated for acts that involve moral turpitude, riotous behavior or cause any loss to the employer. Since Pokale was facing a pending criminal trial under the Prevention of Corruption Act, the court ruled that these questions had to be invoked and adjudicated. Finding that the controlling authority had failed to consider this issue as per Section 4(6) of the Gratuity Act, the court remanded the matter back for reconsideration. Thus, the court partly allowed the writ petition. The court held that though the Payment of Gratuity Act applies to all Zilla Parishad employees, the question of forfeiture under Section 4(6) had to be decided. Decided on: 09-06-2025 Neutral Citation: 2025:BHC-NAG:5300 Counsel for the Petitioners: Shri Milind Rathi Counsel for the Respondent: Shri S.T. Harkare Click Here To Read/Download The Order

Payment Of Gratuity Act Applies To Zilla Parishad Employees: Bombay HC

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Payment Of Gratuity Act Applies To Zilla Parishad Employees: Bombay HC

Pranav Kumar

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