Authority: Supreme Court of India

Order Date: July 28, 2026

Case Overview

  • Parties: Appellant Prabhat Kumar Singh (along with co‑appellants Anil Sahadeo Kadam, Nilesh Afre, Shrikant B. Chinchkar) vs. Accu Pack Engineering Pvt. Ltd (respondent).
  • The appellants were employed in the Production Planning and Control Department of Accu Pack since 2007 and resigned at different times; Prabhat Kumar Singh’s resignation was accepted on 03‑10‑2018 effective 03‑11‑2018, others’ resignations were never accepted.
  • The company issued a termination letter on 14‑11‑2018 without any prior inquiry. Earlier, on 05‑11‑2018, a show‑cause notice was served alleging misconduct causing a loss of not less than Rs 50 lakhs, but no reply was filed by the appellants.
  • The appellants filed applications under Section 8 of the Payment of Gratuity Act, 1972. The Controlling Authority, on 18‑04‑2022, allowed the gratuity claims, holding that Section 4(6)(b)(ii) – which requires proof of loss involving moral turpitude and a conviction – was not satisfied. The FIR lodged by the company did not give the employer authority to withhold gratuity.
  • The Appellate Authority set aside the Controlling Authority order on 24‑03‑2023; the High Court affirmed that order.
  • The respondent argued that the appellants admitted misconduct and that the loss amounted to the price differential (Rs 3,600 vs Rs 6,900 per unit) in a side business, claiming a loss of Rs 50 lakhs.
  • The Court observed that the termination was not preceded by an inquiry, denying the appellants an opportunity to contest the alleged loss.
  • The FIR investigation report dated 05‑02‑2020 concluded that the accused had established a separate company in the complainant’s wife’s name, obtained work orders, received Rs 11,90,244, with Rs 3,01,400 still outstanding, and found no financial loss or misappropriation to the complainant. The matter was treated as civil, and summary approval was recommended.
  • The show‑cause notice’s loss figure of Rs 50 lakhs was unsupported by any audit or calculation; the Controlling Authority was not presented with such evidence.
  • Citing Permali Wallance Ltd. v. State of Madhya Pradesh, the Court affirmed that forfeiture of gratuity is limited to proven damage, and the respondent failed to produce proof.

Final Outcome

  • The Supreme Court allowed the appeals, set aside the High Court and Appellate Authority orders, and restored the Controlling Authority order dated 18‑04‑2022 granting gratuity.
  • The restored order must be complied with within two months from the date of the order (i.e., by 28‑September‑2026).
  • All pending applications, if any, stand disposed of.

Topics: Gratuity, Employment Law