Gratuity Is A Statutory Right, Cannot Be Denied On Vague Allegations Of Abandonment: Calcutta High Court Directs Employer To Pay Pending Gratuity With Interest

In a recent judgment delivered on April 3, 2025, in the case of M/s Duckback Information Systems Pvt. Ltd. vs Union of India & Ors. [WPA 24220 of 2024], the Calcutta High Court upheld the employee’s right to gratuity and dismissed the employer's writ petition challenging the award. Justice Shampa Dutt (Paul) categorically held that gratuity, being a beneficial piece of social security legislation, cannot be withheld on mere allegations of abandonment without legal proof. 
 
The Court observed, “The case of the petitioner that the employee had abandoned his services is without basis and has no merit being not substantiated.” 
 
 The dispute arose when the employee (Respondent No.5) who served as a Sales 
Executive and later as Business Head (equivalent to Chief Operating Officer) in 
M/s Duckback Information Systems Pvt. Ltd., tendered his resignation on April 10, 2013, and subsequently claimed gratuity under the Payment of Gratuity Act, 1972. 
 
The employer denied the claim alleging that the employee had abandoned the service and was not entitled to gratuity. The Controlling Authority (Assistant Labour Commissioner, Central) by order dated 03.03.2020 directed the employer to pay an amount of Rs. 3,63,461/- along with 10% interest. 
 
On appeal, the Appellate Authority (Deputy Chief Labour Commissioner, Central) upheld the award on 08.07.2024, holding that there was no evidence of willful misconduct or abandonment that could attract forfeiture under Section 4(6) of the Act. 
 
The employer then filed this writ petition before the High Court challenging the orders of both authorities. 
 
The Court examined the resignation letter dated 10.04.2013, duly acknowledged by the employer on 12.04.2013, and noted that the petitioner never took any legal steps when it was alleged that the employee stopped attending office. 
 
Justice Shampa Dutt (Paul) held: “The stand of the petitioner that the employee had not tendered a valid resignation is not substantiated, more so as there are no documents to show that the petitioner took necessary steps as per law when it is alleged that the private respondent stopped attending office.” 
 
The Court reiterated that gratuity is a statutory right and can only be forfeited under specific circumstances prescribed under Section 4(6) of the Payment of Gratuity Act, such as: 
 
•    Willful misconduct, 
•    Acts causing financial loss, 
•    Riotous behavior, 
•    Conviction for an offence involving moral turpitude committed during employment. 
 
Finding no such circumstances proven, the Court declined to interfere with the well-reasoned orders of the authorities. 

 “Payment of Gratuity is a social security enactment which can be forfeited only with regard to certain provisions laid down under Section 4(6) of the Payment of Gratuity Act.” 
 
The High Court dismissed the writ petition, upholding the Appellate Authority’s direction for immediate payment of gratuity with statutory interest. 
 
“The well reasoned order dated 08.07.2024 passed by the appellate authority being in accordance with law requires no interference.” 
 
 Further, the Court directed the petitioner company:  “The petitioner is directed to pay the gratuity amounting to Rs. 3,63,461/- along with statutory interest till payment within 30 days from the date of this order.” 
 
The Court also rejected the petitioner’s oral prayer for a stay of the order, noting: “Considering that the issue in the present case relates to gratuity and the petitioner is running from pillar to post since 2013 and the relief prayed for being under a beneficiary legislation, the prayer for stay stands rejected in the interest of justice.” 
 
Date of Decision: 03.04.2025