Gratuity under Act, 1972 - nature of.

JUDGMENT

G. S. Singhvi, J.:- The question which arises for consideration in this appeal filed against the order of the Allahabad High Court is whether the respondent, who had sought voluntary retirement from service and was paid gratuity by the appellant under the Payment of Gratuity Act, 1972 (for short, ‘the 1972 Act’) along with Contributory Provident Fund is entitled to pension.

2. The appellant’s predecessor, i.e., Allahabad Bank Ltd. was established in 1865. Its employees were given pensionary benefits w.e.f. 14.3.1890. After 22 years, the Board of Directors of the appellant’s predecessor passed Resolution dated 2.3.1912 vide which the benefit of Contributory Provident Fund was extended to the employees. The appellant’s predecessor was nationalized in 1969 along with 13 other commercial banks through the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1970, which was repealed by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (for short, ‘the 1970 Act’). Section 12(2) of that Act reads as under:

“Save as otherwise provided in sub-section (1), every officer or other employee of an existing bank shall become, on the commencement of this Act, an officer or other employee, as the case may be, of the corresponding new bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertaking of the existing bank had not been transferred to and vested in the corresponding new bank and continue to do so unless and until his employment in the corresponding new bank is terminated or until his remuneration, terms or conditions are duly altered by the corresponding new bank.”

3. In 1974, the appellant framed a scheme titled ‘Allahabad Bank Employees’ Pension Scheme (Old)’ (for short, ‘the Old Pension Scheme’). Thereafter, circular dated 10.3.1975 was issued and the employees/officers were given the choice to opt for payment of gratuity or pension under the Old Pension Scheme. After four years, the appellant framed the Allahabad Bank (Officers’) Service Regulations, 1979 (for short, ‘the Regulations’). In terms of clause 46 of the Regulations, the officers became entitled to gratuity equivalent to one month pay for every completed year of service subject to a maximum of 15 months. The proviso to Regulation 46 postulated payment of additional gratuity at the rate of half month’s pay for each completed year of service to those who had completed more than 30 years service. After 20 years, the appellant notified Allahabad Bank Employees’ Pension Regulations, 1995. 4. The respondent joined service as Clerk in 1961. He was promoted as an officer with effect from 10.08.1970 and was granted Middle Management Scale-III in September, 1993. After serving the appellant for almost 40 years, the respondent applied for voluntary retirement under the Voluntary Retirement Scheme, 2000. His application was accepted by the competent authority and he was relieved from service w.e.f. 30.04.2001. He was paid gratuity under the 1972 Act along with the amount of Contributory Provident Fund. The respondent made representations dated 30.7.2001, 6.10.2001 and 20.10.2001 for grant of pension but the concerned authority of the appellant did not give any response. However, in reply to the notice sent by the respondent, the appellant informed him vide letter dated 24.11.2001 that he can get benefit under the Old Pension Scheme subject to the condition of refund of the amount of gratuity already paid to him and submission of an irrevocable undertaking that he will be getting pension in lieu of the gratuity. The relevant portions of that letter are extracted below: “In response to your above notice of the 9th instant we have to advise that your client is entitled to old pension in lieu of Gratuity provided he fulfils the relevant criteria as required by the bank which are as under :-