Excess salary payment.
This query is : Resolved
Quick Summary
16 April 2026
sir
The subject is stated herein below:
1. The company is a 100% Govt undertaking.
2. One of its employee by fabrication in past able to manage two excess increments.
3.It was identified only after his retirement wherein he claimed gratuity 'under payment of gratuity act 1972'.
My query is:
As the company being entitled of the excess amount drawn by the employee by fabrication , can the company hold the gratuity amount as "LIEN' until the employee release such excess amount?
Regards
Abhijit
The subject is stated herein below:
1. The company is a 100% Govt undertaking.
2. One of its employee by fabrication in past able to manage two excess increments.
3.It was identified only after his retirement wherein he claimed gratuity 'under payment of gratuity act 1972'.
My query is:
As the company being entitled of the excess amount drawn by the employee by fabrication , can the company hold the gratuity amount as "LIEN' until the employee release such excess amount?
Regards
Abhijit
16 April 2026
The company generally cannot hold the gratuity as a "lien" or withhold it for the recovery of excess payments, even in cases involving fabrication, unless specific statutory conditions under the Payment of Gratuity Act, 1972 are met.
Under Section 13 of the Act, gratuity is protected from attachment by any court decree or order.
The Act has an "overriding effect" (Section 14) over other laws or contracts, meaning internal company rules cannot easily bypass these protections.
A "lien" is typically not a valid legal ground to withhold statutory gratuity for unrelated dues.
Since the fabrication was discovered after retirement, the company faces a procedural challenge. In a 100% Govt undertaking, the "employer-employee" relationship officially ends at superannuation. Without a pending disciplinary inquiry initiated before retirement (and rules allowing its continuation), a summary "lien" is often viewed by courts as impermissible.
Under Section 13 of the Act, gratuity is protected from attachment by any court decree or order.
The Act has an "overriding effect" (Section 14) over other laws or contracts, meaning internal company rules cannot easily bypass these protections.
A "lien" is typically not a valid legal ground to withhold statutory gratuity for unrelated dues.
Since the fabrication was discovered after retirement, the company faces a procedural challenge. In a 100% Govt undertaking, the "employer-employee" relationship officially ends at superannuation. Without a pending disciplinary inquiry initiated before retirement (and rules allowing its continuation), a summary "lien" is often viewed by courts as impermissible.
16 April 2026
Thanks to Sir Dhirajlal Rambhia for instant reply
Abhijit
Abhijit
16 April 2026
Sir
Section 4(6) of Gratuity Act 1972 states Gratuity may be forfeited in some cases.
So as U/s 13 prohibit attachment, can we deduct the amount from his gratuity and balance will be released.
Regards
abhijit
Section 4(6) of Gratuity Act 1972 states Gratuity may be forfeited in some cases.
So as U/s 13 prohibit attachment, can we deduct the amount from his gratuity and balance will be released.
Regards
abhijit
16 April 2026
Yes, in some cases...
To make the withholding legal and avoid a successful challenge by the employee, the company must:
Issue a Show-Cause Notice: The employee must be given a fair chance to explain why the amount should not be withheld.
Prove the Misconduct: A formal finding (via inquiry) must establish that the fabrication occurred and led to the specific financial loss.
Proportionality: The amount withheld should ideally be limited to the actual excess amount drawn plus any interest/damages, rather than arbitrarily seizing the entire gratuity if the loss was smaller.
To make the withholding legal and avoid a successful challenge by the employee, the company must:
Issue a Show-Cause Notice: The employee must be given a fair chance to explain why the amount should not be withheld.
Prove the Misconduct: A formal finding (via inquiry) must establish that the fabrication occurred and led to the specific financial loss.
Proportionality: The amount withheld should ideally be limited to the actual excess amount drawn plus any interest/damages, rather than arbitrarily seizing the entire gratuity if the loss was smaller.
16 April 2026
Under Section 4(6) of the Act, an employer can forfeit or withhold gratuity in specific scenarios:
Financial Loss: If the employee's service is terminated for an act, willful omission, or negligence that causes financial loss to the employer, gratuity can be forfeited to the extent of that loss.
Moral Turpitude: If the service is terminated for an act involving moral turpitude (such as fabrication of records or fraud), the gratuity can be forfeited wholly or partially.
Financial Loss: If the employee's service is terminated for an act, willful omission, or negligence that causes financial loss to the employer, gratuity can be forfeited to the extent of that loss.
Moral Turpitude: If the service is terminated for an act involving moral turpitude (such as fabrication of records or fraud), the gratuity can be forfeited wholly or partially.
17 April 2026
My sincere thanks to Sir Dhirajlal Rambhia for elaborately & lucidly explain the entire matter. It clear all doubt.
Regards
Abhijit
Regards
Abhijit
17 April 2026
You are welcome.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Reporting Income under Section 44ADA
- Itr 1 processing
- Building and other construction workers welfare cess act 1996
- ITR validation error - Balance sheet is not filled
- Bank Accounts in Balance Sheet for ITR 3
- ITR 1: Details for showing Exempt Income
- TDS ON CASH WITHDRAWALS...
- In Exports Sales HSN details where to fill
- TDS 194R on GST effected
- Income of an individual
- ITR 3 FILING OF AN INDIVIDUAL (PARTNER IN A PARTNERSHIP fIRM)
- Annual return of gst limit
- Delisted shares sold in off market/ Rebate u/s87A
- Error whiling application of GST REFUND (ANNEXURE B)
- While filing GSTR9 accountant couldn't entered the ITC values in Table 6, in 9C it is not accepting
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
