IMPORTANT POINT
The court established that the interpretation of gratuity provisions must favor the employee, ensuring better terms under the applicable regulations.

JUDGMENT :

(Raja Basu Chowdhury, J.) :

1. The present writ petition seeks to challenge the order dated 21st December, 2022 passed by the Appellate Authority within the meaning of Payment of Gratuity Act, 1972. The petitioners also challenge the consequential relief granted in favour of the respondent no. 3. To appreciate the controversy, it is necessary to summarise the facts leading to the determination made by the Appellate Authority.

2. The respondent no.3 was an employee of the petitioner no.1, which is a public sector undertaking incorporated under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970.

3. In exercise of powers conferred by Section 19 read with Subsection (2) of Section 12 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, a service regulation, namely, The Canara Bank (Officers’) Service Regulations, 1979 (hereinafter referred to as the “said Regulation”) was framed by the Board of Directors of the Canara Bank in consultation with the Reserve Bank of India and with previous sanction of the Central Government. The said Regulation has a statutory force. Both the petitioners as well as the respondent no.3 are governed by such Regulation.

4. The respondent no.3 had joined the service of petitioner no.1 (hereinafter referred to as the “Bank”) sometimes on 2nd June, 1980 and was superannuated from service on 31st August, 2017, after completion of 37 years, 2 months and 29 days.

5. Consequent upon the retirement of the respondent no.3, as per the said Regulation, the Bank had computed gratuity both under the provisions of Payment of Gratuity Act, as also as per the provisions of the said Regulation, and also by taking note of the stipulations contained in Section 4(5) of the Payment of Gratuity Act, 1972 (hereinafter referred to as the “said Act”), the maximum permissible amount under the said Act was considered to be beneficial to the respondent no.3 and accordingly, a sum of Rs.10,00,000/-was paid to the respondent no.3 on 1st September, 2017. However, since according to the respondent no.3, despite the said Regulation being far more beneficial the same had been wrongly interpreted so as to deny the benefits thereunder to the said respondent, an application in Form-N was filed before the Controlling Authority on 3rd December, 2021, inter alia, praying for determination of the amount of gratuity and for payment of the shortfall.

6. The Controlling Authority by interpreting the provisions of the said Act, the said Regulation and having found that in terms of the said Regulation, a sum of Rs.9,52,380/-was payable, while in terms of the said Act, the respondent no.3 was entitled to maximum of Rs.10,00,000/-and the respondent no. 3 having been disbursed the maximum permissible amount under the said Act, did not find any infirmity on the part of the bank in disbursal of Rs.10,00,000/-in favor of the respondent no. 3 and accordingly, disposed of such proceeding.

7. Being aggrieved the respondent no.3 had preferred a statutory appeal. The appellate authority, however, having found that the provisions of the said Regulation having been wrongly interpreted, there being a computation error, determined an additional sum of Rs.3,12,740/-to be due and payable to the respondent no.3 and accordingly, directed disbursal thereof, along with prevalent rate of interest on the said amount from the due date till actual payment. Challenging the said order, the present writ petition has been filed.

8. Mr. Mukherjee, learned advocate representing the writ petitioners, by drawing attention of this Court to the said Regulation and in particular Regulation 46, submits that in terms of the said Regulation an officer is entitled to one month pay for every completed year of service subject to maximum of 15 months pay. Provided, however, when the officer has completed more than 30 years of service, he shall be eligible by way of gratuity for an additional amount at the rate of one half of month’s