Employer Cannot Forfeit Gratuity Without Recovery Proceedings: Karnataka High Court

The Karnataka High Court ruled that gratuity cannot be forfeited without initiating proper recovery proceedings. Central Warehousing Corporation dismissed G.C. Bhat for alleged misappropriation of ₹1.71 crore and withheld his gratuity of ₹7.88 lakh.

The Controlling Authority directed payment with 10% interest, which the corporation challenged.

Justice Suraj Govindaraj emphasized that dismissal alone doesn’t justify forfeiture; recovery proceedings must be conducted, offering the employee a fair opportunity to contest.

The court extended the deadline for gratuity payment to January 31, 2025, and advised the corporation to ensure recovery proceedings are pursued in similar future cases.