Kerala High Court
V.T.Sebastian vs Vazhikadavu Service Co-Operative Bank ... on 25 March, 2024
WP(C) No.11071/2022 1 / 16
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE BASANT BALAJI
Monday, the 25th day of March 2024 / 5th Chaithra, 1946
WP(C) NO. 11071 OF 2022 (H)
PETITIONERS:
1. V.T.SEBASTIAN, AGED 62 YEARS, S/O. THOMAS, RESIDING AT VALOLICKAL
HOUSE, P.O. PALEMADU, NILAMBUR, MALAPPURAM DISTRICT-676 542.
2. ELSAMMA K.C, W/O. VARGHESE KOSHY, CHITTIAZHUTHU HOUSE, EDAKKARA P.O,
NILAMBUR, MALAPPURAM DISTRICT-676 542.
RESPONDENTS:
1. VAZHIKADAVU SERVICE CO-OPERATIVE BANK LTD. NO. F 1668, MANIMOLY
P.O, MALAPPURAM DISTRICT- 679 333, REPRESENTED BY ITS SECRETARY.
2. BOARD OF MANAGEMENT OF THE VAZHIKADAVU SERVICE CO-OPERATIVE BANK
LTD. NO. F 1668, MANIMOOLY P.O, MALAPPURAM DISTRICT 679 333,
REPRESENTED BY ITS PRESIDENT.
3. THE MANAGER, LIFE INSURANCE OF CORPORATION OF INDIA, JEEVAN PRAKASH,
8TH FLOOR, HUSOOR ROAD, KOZHIKODE 673 001.
Writ petition (civil) praying inter alia that in the circumstances
stated in the affidavit filed along with the WP(C) the High Court be
pleased to direct the 1st and 2nd respondents to pay to the petitioners
amounts mentioned in Exts.P1 and P2 towards balance gratuity along with
interest @ 9% p.a from the respective dates of retirement of the
petitioners till payment.
This petition coming on for orders upon perusing the petition and
the affidavit filed in support of WP(C) and upon hearing the arguments of
M/S P.V.BABY, A.N.SANTHOSH, Advocates for the petitioners, SRI.K.RAKESH,
Advocate for respondents 1 and 2, M/S SAHASRANAMAN PB, T.S.HARIKUMAR,
Advocates for the 3rd respondent, the court passed the following:
WP(C) No.11071/2022 2 / 16
WPC 13236/23, 11071/22, 5056/23 and 1464/24
-1-
BASANT BALAJI, J.
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W.P.(C) Nos. 11071 of 2022, 13236 of 2023,
5056 of 2023 and 1464 of 2024
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ORDER
(Dated this the 25th day of March 2024) The Writ petitions are filed by the retired employees of the Co-operative bank for a direction to pay balance gratuity along with interest from the respective dates of retirement of the petitioners till actual payment of the same. These writ petitions are materially connected. As such, it is felt desirable to pass a common order.
2. For the narrative purpose, the facts and the documents from W.P.(C) No.13236 of 2023 are taken as the basis.
Petitioners retired from the service of the 1st respondent bank on various dates on superannuation. The bank had a group WP(C) No.11071/2022 3 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -2- gratuity scheme for payment of gratuity to the employees. From the group gratuity the LIC paid Rs.10 Lakhs each to the bank towards gratuity of the petitioners. On retirement, the petitioners were paid only the amounts received from the LIC towards gratuity. Requesting for the payment of balance gratuity, the petitioners submitted representations before the bank. Committee of the bank as per resolution No. 11 decided not to consider the applications of the petitioners. Aggrieved by the decision above, the petitioners filed these Writ Petitions.
3. Petitioners submit that they are eligible to get gratuity as provided under Rule 59 of the Kerala Co-operative Societies Rules,1969 (For short 'the Societies Rules') and the balance amount as per the calculation was only claimed by the petitioners in Ext.Nos.P1 and P2. In view of the decision rendered by the full bench in Chandrasekharan Nair v. The State Co-operative WP(C) No.11071/2022 4 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -3- Rural Development Bank Ltd. reported in 2017 (4) KLT 276, the petitioners are entitled to get the balance amount as claimed by the petitioners towards gratuity and the denial of the said benefits are illegal, submitted by the counsel for the petitioners.
4. A counter affidavit has been filed by the 3rd respondent LIC of India opposing the reliefs sought for in this Writ Petition. A reading of the counter affidavit would show that the Group Gratuity policy was taken by the Employer Bank for the purpose of settling the gratuity benefits of its employees as per the terms and conditions of employment. The contract is between the 1st respondent, master policy holder and the insurer LIC of India. The parties are governed by the terms and conditions in the Master Policy. The petitioner No.1 and 2 were members of the said Scheme. The members covered under the scheme are only beneficiaries and are not parties to the contract. WP(C) No.11071/2022 5 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -4- The petitioners have no legally enforceable right against the respondent Corporation, nor has got any statutory duty, which can be legally enforced under Article 226 of the Constitution of India.
5. Further contended that the Master Policy No. 602000286 was renewed for ARD 01.03.2016 and 01.03.2017 with Gratuity ceiling of Rs.10 Lakhs, as desired by the Master Policyholder and the Premium collected by this 3rd respondent Corporation was commensurate to the gratuity ceiling fixed by the Employer Bank.
6. Accordingly, the gratuity claim in respect of the petitioners were settled by the LIC on receipt of claim requirement from Employer Bank and the amounts were transferred to the Bank Account of the 1st respondent on 21.04.2017 and 14.05.2016.
WP(C) No.11071/2022 6 / 16WPC 13236/23, 11071/22, 5056/23 and 1464/24 -5-
7. It is further stated that in view of the law laid down in Chandrasekharan Nair Case ( Supra), the liability to pay the balance amount of gratuity over and above the ceiling limit will be with the employer and not the LIC.
8. In a separate statement presented by the 1st respondent on 16.02.2024, it is stated that the writ petition is not maintainable either on facts or in law and the petitioners are not entitled to any of the reliefs sought for by them in the writ petition.
9. It is stated in the statement that the 1st respondent being an establishment coming within the purview of Payment of Gratuity Act, 1972 ( for short 'the Gratuity Act'), the 1st respondent had joined a Group Gratuity cum Life Assurance Policy with the Life Insurance Corporation of India, as per the mandate under Section 4A of the Gratuity Act for the purpose of WP(C) No.11071/2022 7 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -6- payment of gratuity to the employees of the 1st respondent at the time of their retirement. Accordingly, after retirement both the petitioners were paid a sum of Rs. 10,00,000/- each, which was the maximum gratuity amount payable to them as per the provisions of Section 4 of the Gratuity Act as it stood then at the relevant time of retirements of the petitioners.
10. Further stated that the petitioners have been given the maximum amount of gratuity payable to them, as per the best terms available to them. The respondent employer paid the entire amount received from the 3rd respondent without any deductions.
11. In fact the petitioner ought to have applied to the 1st respondent in the present case under the provisions of Rule 7 of the Payment of Gratuity Rules, 1972 within the time limits prescribed therein. In case their grievance is not redressed by the employer, they could have approached the Controlling Authority WP(C) No.11071/2022 8 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -7- under provisions of Rule 10. Instead of following such established procedure, the petitioners have chosen to prefer two representations after a gap of 5 years and 6 years respectively, after their retirement and thereafter directly approached this Hon'ble Court and for that reason, the present writ petition is liable to be dismissed.
12. Heard the learned counsel for the petitioners, the learned Standing counsel for the LIC, the respective counsel for the respondents and also the Government pleader.
13. The question involved in these Writ Petitions is as to whether the petitioners are entitled to higher gratuity more than the limits fixed as per Section 4(3) of the Gratuity Act and also the 2nd proviso to Rule 59(iii) of the Societies Rules.
14. A full bench of this court in Chandrasekharan (supra) has held that the liability to pay gratuity to an employee is always WP(C) No.11071/2022 9 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -8- on the employer under Section 4(2) of the Central Act and is at the rate of fifteen day's wages for every completed years of service or part thereof in excess of 6 months. The employee need not necessarily be a eo-nominee party to the award or agreement or contract which could be entitled to by anyone duly authorized by him. The liability to pay gratuity does not get shifted to the insurer by the compulsory insurance and the effect is only that the maturity value of the master policy would go to the credit of the dues of the employee and any amount in excess of the gratuity due would also go to the employee since the contract of insurance would fall within the ambit of Section 4(5) of the Central Act. Any deficit in the amount due as gratuity to the employee after payment by the insurer has to be met by the employer only as the liability squarely rests on him under Section 4(2) of the Central Act. The insurer cannot be made WP(C) No.11071/2022 10 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -9- liable to pay any amount in excess of the maturity value of the master policy as the same would be dependent on the premium paid to him. Section 4(5) of the Central Act enables an employee to opt for a better terms of gratuity will prevail over the second proviso to Rule 59(iii) of the Societies Rules.
15. Section 4(2) of the Gratuity Act stipulates that for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned.
16. Sub Section 3 to Section 4 of the Gratuity Act limits the amount of gratuity payable to an employee to the amount as notified by the Central Government from time to time. Sub Section 5 states that nothing in the section shall affect the right WP(C) No.11071/2022 11 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -10- of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
17. Rule 59 of the Societies Rules deals with Gratuity. It provides for payment of gratuity to employees and frame regulations for its administration under the Rules. As per Rule 59(i) all monthly paid employee on the permanent establishment shall be eligible for gratuity. Rule 59(iii) states that when an employee has put in at least 5 years of satisfactory service, is retired voluntarily from service or if he is permanently disabled while in service or if he dies while in service, the society shall pay to him or to his legal heirs as the case may be, a gratuity not exceeding half months' pay for every completed year of service. The first proviso limits the gratuity to 15 months' pay. The second proviso, which is inserted with effect from 2.11.2010, further limits that the amount of gratuity payable WP(C) No.11071/2022 12 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -11- shall not exceed the amount which an employee is eligible as per the Gratuity Act or under the Act and the Rules, whichever is applicable irrespective of the amount received out of any scheme chosen or implemented by a society for the purpose.
18. It is seen that a learned Single Judge of this Court in the judgment reported in O.K. Sailaja v. Koyilandy Co-operative Agricultural and Rural Development Bank Ltd. (2023 SCC Online Ker 10785), in which the petitioner in that case claimed gratuity over and above the ceiling limit fixed by the Payment of Gratuity Act and the learned Single Judge allowed the Writ petition and directed payment of the amounts due to the petitioners within two months from the date of receipt of a copy of the judgment, and in default, with interest at the rate of 6% per annum from the date on which the amount became due. The said judgment has been challenged in W.A. No.2097 of 2023 by WP(C) No.11071/2022 13 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -12- the Koyilandy Co-operative Agricultural and Rural Development Bank and the Division Bench of this court has stayed further proceedings pursuant to the judgment for a period of 3 months, which has been extended by order dated 9.2.2024 till next posting.
19. Another Division Bench of this court in W.A. Nos.758 of 2022 and connected cases reported in Kerala State Co- operative Bank Ltd. v. S. Viswanathamallan [2022 SCC OnLine Ker 3603], which was filed by a Bank challenging the judgment of a learned Single Judge which directed payment of gratuity in excess of Rs.10 lakhs, dismissed the appeal of the Bank holding that in that in view of the Appendix IV of the Kerala State Cooperative Bank Staff Regulations and Section 4(5) of the Gratuity Act, notwithstanding the fact that only a lesser amount is due under Section 4(2) thereof. Ext.P1 WP(C) No.11071/2022 14 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -13- Regulations, which came into application on 16.2.1968 prior to the enactment of the Central or the State Regulations of Gratuity and therefore, the petitioners will be eligible to gratuity in excess of the limit prescribed. The said judgment was also challenged by the bank before the Apex Court in SLP No.18734 - 18739/2022 and the apex court has passed an order on 7.11.2022 as follows:
"List the petition along with SLP (C) No.2828- 2829 of 2020.
In the meantime, the matter shall not be precipitated in the High Court."
20. It is to be noted that in none of these Writ Petitions, there is any pleading to the effect that there is a special scheme enabling the petitioners to claim better gratuity with the employer under Section 4(5) of the Payment of Gratuity Act. WP(C) No.11071/2022 15 / 16 WPC 13236/23, 11071/22, 5056/23 and 1464/24 -14-
21. The counsel for the petitioners in these cases also argues that the petitioners are entitled to better gratuity amount irrespective of the ceiling fixed by Section 4(3) of the Payment of Gratuity Act and the bank has to pay the balance amount of gratuity over and above the limit fixed by the Gratuity Act. The said question is now being considered by a Division Bench of this court in W.A. No.2097 of 2023. Hence, the propriety demands that these Writ Petitions are also to be heard by the Division Bench dealing with W.A. No.2097 of 2023.
Therefore, the Registry is directed to place these matters before the Hon'ble the Chief Justice for further orders to post along with W.A. No.2097 of 2023.
SD/-
BASANT BALAJI, JUDGE.
dl/ 25-03-2024 /True Copy/ Assistant Registrar WP(C) No.11071/2022 16 / 16 APPENDIX OF WP(C) 11071/2022 Exhibit P1 A TRUE COPY OF THE REPRESENTATION DATED 16.12.2021 SUBMITTED BY THE 1ST PETITIONER TO THE 2ND RESPONDENT. Exhibit P2 A TRUE COPY OF THE REPRESENTATION DATED 23.2.2022 SUBMITTED BY THE 2ND PETITIONER TO THE 2ND RESPONDENT. 25-03-2024 /True Copy/ Assistant Registrar