Kerala High Court
Thomas Kurian vs Idukki District Co-Operative Bank Ltd. ... on 25 February, 2003
Equivalent citations: (2003)IIILLJ1026KER
JUDGMENT R. Rajendra Babu, J.
1. The petitioner, who retired from the service of the first respondent, Idukki District Co-operative Bank Limited as the General Manager, filed this original petition for quashing exhibit P-8 arbitration proceedings pending before the arbitrator and also to declare that the question regarding gratuity has to be decided by the fourth respondent, the Controlling Authority constituted under the Payment of Gratuity Act of 1972 (for short hereinafter referred to as "the Gratuity Act"), in exhibit P-12 application pending before him.
2. The petitioner who was an employee of the first respondent- bank, retired from service, as General Manager, after 35 years of service. According to him, his last drawn salary was Rs. 24,400 per month and in view of the provisions of the Gratuity Act, he was eligible for an amount of Rs. 4,92,692 towards gratuity, but the first respondent disbursed only an amount of Rs. 4,27,000 and hence he was entitled to a further amount of Rs. 65,692. It was further alleged that on March 22, 2002, the first respondent-bank issued a notice informing him that an excess amount of Rs. 77,000 was disbursed to the petitioner towards gratuity and the above amount was liable to be returned with interest at the rate of 18 per cent. and later the bank filed exhibit P-8 arbitration case before the arbitrator for recovery of the alleged excess amount. It was further alleged that as the matter would relate to the quantum of gratuity payable to an employee it has to be adjudicated by the controller in accordance with the provisions of the Gratuity Act and accordingly the petitioner filed exhibit P-12 application before the Controlling Authority claiming the balance amount due towards gratuity. As exhibit P-12 is pending before the competent authority, the arbitration proceedings before the arbitrator cannot be proceeded with and hence the petitioner filed this original petition for quashing exhibit P-8 proceedings pending before the arbitrator and also for declaring that the Controlling Authority constituted under the Gratuity Act is the competent authority to decide the dispute regarding the quantum of gratuity.
3. Heard learned counsel for the petitioner, first respondent and also the learned Government Pleader.
4. The question for consideration is whether the proceedings pending before the arbitrator instituted at the instance of the first respondent-bank, claiming return of the excess amount paid to the petitioner towards gratuity has to be proceeded or whether exhibit P-12 proceedings initiated by the petitioner before the fourth respondent, the authority constituted under the Gratuity Act has to be proceeded. Admittedly, the petitioner retired from the service of the first respondent-bank on December 31, 2000, and at the time of retirement he was working as the General Manager. According to the petitioner, he was drawing a salary of Rs. 24,400 per month and by fixing the gratuity payable to him in accordance with Section 4(2) of the Gratuity Act he would have been entitled to a total amount of Rs. 4,92, 692 but he was paid only Rs. 4,27,000 and hence he was entitled to the balance. Learned counsel for the respondent submitted that the above contention of the petitioner cannot be accepted as in view of Sub-section (3) of Section 4 of the Gratuity Act, the maximum gratuity payable to an employee was only Rs. 3.5 lakhs.
Sub-section (3) says:
"(3) The amount of gratuity payable to an employee shall not exceed (three lakhs and fifty thousand) rupees."
5. It was further submitted that the petitioner was the General Manager at the time of his retirement and he himself was" responsible for drawing an amount in excess of the limit prescribed under Sub-section (3) and in pursuance of the audit objections proceedings had been initiated for recovery of the excess amount drawn by him. Learned counsel for the petitioner submitted that in view of Sub-section (5) of Section 4 of the Gratuity Act the petitioner was entitled to an amount in excess of the sum prescribed under Sub-section (3). If there was any other provision in the bye-laws of the bank or agreement or contract with the employer and in view of the specific provision in the service regulations of the society, the petitioner was entitled to an amount in excess of the ceiling prescribed under Sub-section (3) of Section 4 of the Act. Clause 21(A) of the Revised Service Regulations of the first respondent-bank which deals with the payment of gratuity reads:
"The employees shall be paid gratuity at the rate of 15 days salary (salary at the rate computed for earned leave drawn at the time of leaving the service for the completed year of service) and provided further that this; shall not apply to persons who ceased to be in service on account of death or permanent disability. For this purpose the provision of the Payment of Gratuity Act (Central Act) or this provision, whichever is beneficial will be applicable."
6. Learned counsel for the petitioner submitted that in view of the provision in Clause 21(A) "For this purpose the Payment of Gratuity Act (Central Act) or this provision, whichever is beneficial will be applicable", the petitioner would be entitled to the amount of gratuity calculated in accordance with the above provision in the service regulation. But by exhibit P-1 circular issued by the Registrar of Co-operative Societies the gratuity had been limited to the amount payable in accordance with the provisions of the Gratuity Act. In view of exhibit P-1 Circular No. 25/99, dated June 22, 1999, an employee would be entitled to claim gratuity payable only in accordance with the provisions of the Gratuity Act and he was not entitled to any amount in excess of the same. As the amount paid to the petitioner towards gratuity was in excess of the amount fixed under Sub-section (3) of Section 4 of the Act, the audit department objected to the excess payment and in pursuance of the same, exhibit P-4 notice was issued to the petitioner for refund of the excess amount. The petitioner filed objections contending that he was entitled to furthermore amount in view of the provisions in the revised service regulations. As the petitioner was not ready to repay the excess amount collected by him, the bank filed arbitration proceedings before the arbitrator and thereafter the petitioner filed exhibit P-12 application before the Controlling Authority constituted under Section 3 of the Gratuity Act claiming further amount. Learned counsel for the first respondent submitted that the maximum amount payable under Sub-section (3) of Section 4 of the Gratuity Act is Rs. 3.5 lakhs and the bank is not disputing the petitioner's claim for Rs. 3.5 lakhs. The Controlling Authority constituted under the Gratuity Act can consider the claim of an employee in accordance with the provisions of the Gratuity Act and can sanction me maximum amount or Rs. 3.5 lakhs prescribed under Sub-section (3). In view of Section 5 of the Act, the Controlling Authority can allow in excess of the maximum prescribed under Sub-section (3), if there, was any provision in the bye-law or any agreement with the employer entitling for higher amount. But in the present case, by exhibit P-1 circular, the gratuity payable to an employee was limited to the amount payable under the Gratuity Act. The Controlling Authority constituted under the Gratuity Act is incompetent to consider the legality or propriety of exhibit P-1 circular as he does not have any authority or jurisdiction to consider the same. When the right to get the maximum amount of gratuity under the Gratuity Act is not disputed by the bank, the Controlling Authority has no jurisdiction in adjudicating the dispute regarding the excess amount paid to the employee. As the dispute is relating to the payment of an amount in excess of the amount prescribed under Sub-section (3) of Section 4 of the Gratuity Act and that being a dispute between the employer and employee, it has to be adjudicated by the arbitrator under Section 69 of the Co-operative Societies Act. The Co-operative Societies Act envisages a dispute between the employer and the former employee also to be decided by arbitration. Hence, exhibit P-8 proceedings initiated by the bank before the arbitrator is in accordance with law and has to be proceeded with. In the present case, the Controlling Authority cannot have any jurisdiction in the matter, as the dispute relates to the claim regarding the excess amount paid which is beyond the purview of the Gratuity Act. Hence, the reliefs prayed for in this original petition cannot be allowed.
7. The arbitration case pending before the arbitrator shall be proceeded with whereas the proceedings before the controller, i.e. exhibit P-12 proceedings shall be dropped. The original petition is disposed of accordingly.