In a significant judgment reinforcing employee rights, the Madhya Pradesh High Court has held that the Payment of Gratuity Act, 1972 overrides any conflicting service regulations of an organization in the case of Smt. Babita Mor vs Central Madhya Pradesh Gramin BankWP No. 21393/2021 decided on October 6, 2025.(2025 LLR WEB 542)
The case involved a widow whose husband, a bank employee, was dismissed for misconduct and later passed away. The bank denied her gratuity claim citing its internal regulations and alleged misconduct involving moral turpitude.
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Justice Vivek Jain, allowing the petition, ruled that gratuity can be forfeited only in cases of conviction for an offence involving moral turpitude or for proven financial loss to the employer. Since there was no conviction or established loss, the forfeiture was found illegal.
“Statutory right to gratuity accrues upon meeting the criteria under the Act and cannot be nullified by internal rules,” the court observed.
The bank was directed to pay full gratuity with interest within 60 days, reaffirming that the Payment of Gratuity Act takes precedence over service regulations in case of any inconsistency.
