Bombay High Court , in the case of Chief Executive Officer vs. Ganesh GulabraoNawale (Writ Petition No. 2596/2024), on June 9, 2025addressed the issue of whether gratuity could be withheld on grounds not specified under the Payment of Gratuity Act, 1972 (“Gratuity Act”). The Court reiterated that the provisions of the Gratuity Act override any contradictory service rules or employment contracts unless the employer has obtained a specific exemption under Section 5 of the Gratuity Act from the appropriate government. Consequently, in the absence of such an exemption, employees continue to be entitled to gratuity under the Gratuity Act, even if governed by other service rules. The Court made it clear that gratuity cannot be withheld merely because of pending disciplinary or judicial proceedings, or due to minor penalties such as a reduction in pay scale. Such withholding is permissible only under the strict conditions set out in Section 4(6) of the Gratuity Act, which primarily relate to termination for misconduct involving moral turpitude.
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