Deena Nath v. National Fertilizers Ltd.
Rule established
Payment of Gratuity Act, 1972 applies to all employees who have completed 5 years of continuous service. Termination of service for any reason (including retrenchment) does not disentitle an employee from gratuity if the qualifying period is met. Forfeiture under Section 4(6) applies only for specific acts of misconduct.
Facts
- Deena Nath worked for National Fertilizers Ltd. for over 5 years
- Service terminated by way of retrenchment
- Employer refused to pay gratuity on grounds of termination
Issue
- Whether an employee retrenched after 5 years of service is entitled to gratuity.
Held
- Gratuity is a statutory right, not a discretionary benefit
- Entitlement vests on completion of 5 years of continuous service
- Reason for termination (resignation, retirement, retrenchment, death) is immaterial
- Forfeiture limited to Section 4(6) grounds only
- Employee entitled to gratuity
Ratio Decidendi
Once an employee completes the qualifying period of continuous service under the Payment of Gratuity Act, the right to gratuity vests. Forfeiture is an exception limited to misconduct involving moral turpitude or wilful destruction of employer's property.
How to use it in an exam
- Authority on vesting of gratuity rights
- Useful for Labour Law II Part B on Gratuity Act
- Key line: "In Deena Nath v. National Fertilizers (1992), the Supreme Court held that gratuity is a statutory right vesting on completion of 5 years and cannot be denied merely because service was terminated by retrenchment."
Source
Source: AIR 1992 SC 457
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.