Union Bank Of India vs C.G. Ajay Babu

The Supreme Court addressed whether forfeiture of gratuity under The Payment of Gratuity Act, 1972 is automatic upon dismissal from service. It held that forfeiture is permissible only if the misconduct leading to dismissal caused financial loss to the employer, as per Section 4(6)(a) and (b) of the Act. The Court upheld the High Court's ruling that the respondent was entitled to gratuity since no financial loss was established, thereby affirming the principle that forfeiture must be proportionate to the loss incurred.