Introduction

The Calcutta High Court has ruled that an employee’s decision to seek alternative employment—even with a rival company—cannot be treated as misconduct or moral turpitude. Justice Shampa Dutt (Paul), while hearing a plea by M/s Xpro India Limited challenging gratuity payment to a retired employee, held that such actions are neither dishonest nor immoral and therefore cannot trigger penal consequences under employment law.

Case Background

• M/s Xpro India Limited appealed against orders of the Controlling Authority and Appellate Authority that had directed payment of gratuity to its former employee.

• The company alleged that the employee held secret meetings with a competitor, disclosed confidential product manufacturing details, and persuaded colleagues to help the rival set up its production system.

• Based on an enquiry officer’s findings, the company terminated the employee, treating his conduct as misconduct amounting to moral turpitude and invoked Section 4(6) of the Payment of Gratuity Act, 1972 to deny gratuity.

Employer’s Allegations

• Employee breached agreement by collaborating with a competitor.

• Attended multiple meetings with the rival company before resigning and later joined them.

• Act was classified as misconduct involving moral turpitude.

• Company argued gratuity was forfeitable under Section 4(6) of the Payment of Gratuity Act.

Orders by Authorities

• Both the Controlling Authority and the Appellate Authority rejected the employer’s stand.

• They found insufficient evidence of statutory breach and ruled gratuity is a protected right unless clear grounds under law exist.

• Directed the company to release gratuity payments, prompting the employer to approach the High Court.

Court’s Analysis

• Justice Shampa Dutt found procedural lapses in the company’s internal enquiry.

• Noted lack of witness testimony and call records to substantiate allegations.

• Criticised the enquiry officer’s findings as an abuse of power unsupported by verifiable evidence.

• Held that pursuing better career opportunities, even with a rival, is not dishonest or immoral conduct.

• Declared that seeking new employment—proven or otherwise—does not amount to moral turpitude.

Legal Reasoning

• Section 4(6) of the Payment of Gratuity Act permits forfeiture only if:

  • Employer’s property is damaged,

  • Misconduct involves disorderly/riotous behaviour, or

  • The employee commits an offence of moral turpitude.

• Court held none of these grounds were met.

• The employer failed to prove loss or damage caused by the employee.

• Therefore, denial of gratuity was unjustifiable.

Decision and Directions

• High Court dismissed Xpro India Limited’s petition.

• Directed the company to pay full gratuity with accrued interest to the employee within two months.

• Reaffirmed that statutory rights like gratuity cannot be denied on vague allegations.

Representation

• Petitioner (Company): Advocates Nayan Rakshit and Nilay Rakesh.

• State: Advocates Avijit Sarkar and Abdus Salam.

• Respondent (Employee): Advocates Atanu Biswas and Mrinal S.

Conclusion

The Calcutta High Court reinforced that seeking better opportunities, even with competitor firms, is an employee’s basic right and does not amount to misconduct or moral turpitude. By safeguarding gratuity as a statutory right, the Court emphasized that employment mobility is essential to personal liberty and economic development, and workers cannot be arbitrarily deprived of such entitlements.