1. Introduction

The case of M/S Hindustan Everest Tools Ltd v. Inderjeet & Another addressed critical issues concerning the forfeiture of gratuity under the Payment of Gratuity Act, 1972. The plaintiffs, M/S Hindustan Everest Tools Ltd., sought to quash an order that favored the workmen's entitlement to gratuity following an industrial dispute that led to strikes and absenteeism. The core contention revolved around whether the employer had the authority to forfeit gratuity without a formal termination order, relying instead on instances of workplace misconduct and prolonged absence.

2. Summary of the Judgment

The Punjab & Haryana High Court, presided over by the bench on March 6, 2020, dismissed the 13 writ petitions filed by M/S Hindustan Everest Tools Ltd. The court found merit in the workmen’s submissions, emphasizing that the prerequisites for forfeiting gratuity under Section 4(6) of the Act were not satisfied. Specifically, the employer failed to pass a definitive order terminating the employees' services, a crucial condition for invoking gratuity forfeiture. Consequently, the court upheld the appellate authority's decision in favor of the workmen, entitling them to gratuity.

3. Analysis

3.1 Precedents Cited

The petitioner referenced the Vijay S. Sathaye Vs. Indian Airlines Ltd. judgment and other notable cases like Jaswant Singh Gill v. M/s Bharat Coking Coal Ltd. to substantiate their claims regarding the forfeiture of gratuity. However, the court found these references inapplicable, noting that the circumstances in these cases differed significantly from the present case. In the Vijay S. Sathaye case, the conditions for voluntary retirement schemes did not align with the involuntary termination contexts necessary for gratuity forfeiture under Section 4(6) of the Act.

3.2 Legal Reasoning

The court meticulously analyzed Section 4(6) of the Payment of Gratuity Act, 1972, highlighting that forfeiture is permissible only when specific conditions are met, notably the termination of services due to acts causing damage or loss to the employer. The absence of a formal termination order was a pivotal factor leading to the dismissal of the writ petitions. The court emphasized the "no adding words to the statute" principle, rejecting the petitioner's argument to interpret "abandonment of service" as a basis for forfeiture without explicit termination.

3.3 Impact

This judgment underscores the judiciary's stance on strict compliance with statutory provisions governing gratuity. Employers must adhere to the procedural prerequisites outlined in the Act, ensuring that any forfeiture of gratuity is backed by a formal termination order. The decision acts as a precedent, reinforcing employee protections and limiting employers’ discretion in forfeiting gratuity absent clear contractual or statutory grounds.

4. Complex Concepts Simplified

• Gratuity: A monetary benefit provided by employers to employees as a token of appreciation for their services, typically after completing five years of continuous service.
• Forfeiture of Gratuity: The legal process where an employer can deny or reduce the gratuity payment under specific conditions, such as misconduct or negligence by the employee.
• Section 4(6) of the Act: A provision that allows for the forfeiture of gratuity if an employee's services are terminated due to acts causing damage or loss to the employer.
• Termination Order: A formal declaration by the employer ending the employment of an employee, which is a prerequisite for invoking forfeiture of gratuity under the Act.
• Abandonment of Service: When an employee is absent from work without valid reasons or permission, potentially leading to termination.

5. Conclusion

The decision in M/S Hindustan Everest Tools Ltd v. Inderjeet & Another reinforces the necessity for employers to strictly adhere to the procedural mandates stipulated in the Payment of Gratuity Act, 1972. By upholding the requirement for a clear termination order before forfeiting gratuity, the court has fortified employee rights against arbitrary decisions by employers. This judgment serves as a critical reference point for future cases, ensuring that the sanctity of employee benefits is maintained unless unequivocally justified by law.