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2019 Supreme(Del) 274
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rekha Palli, J.
M/s BCH Electric Limited - Petitioner
Versus
Pradeep Mehra - Respondent
W.P.(C) 3385, 3485, 3498, 3508 of 2018
Decided On : 06-02-2019
For the Petitioner: Mr. Sandeep Sethi, Sr. Adv. with Mr.Gulshan Chawla, Adv.
For the Respondent: Mr. J.P. Cama, Sr. Adv. with Mr. Kunal Gosain, Mr. Utsav Jain, Advs.
Employees can claim gratuity in excess of the ceiling limit prescribed under the Payment of Gratuity Act, 1972, if entitled to better terms of gratuity under an award, or an agreement/contract with the employer, as per Section 4(5) of the Act.
Headnote:
Payment of Gratuity - Claim for Gratuity in Excess of Ceiling Limit - Section 4(3), Section 4(5), Section 7(4)(a), Section 7(4)(b) - The court held that the employee was entitled to gratuity in excess of the ceiling limit prescribed under Section 4(3) of the Payment of Gratuity Act, 1972, as per the terms of his contract with the employer and the provisions of Section 4(5). The Controlling Authority had jurisdiction to decide claims in excess of the ceiling limit, and the petitioner's plea was rejected. The writ petitions were dismissed with no order as to costs.
Fact of the Case:
The respondent, a Chief Executive Officer, claimed gratuity in excess of the ceiling limit prescribed under the Payment of Gratuity Act, 1972, after resigning from the petitioner/corporation. The petitioner disputed the claim, leading to orders from the Controlling Authority and Appellate Authority.
Finding of the Court:
The court found that the respondent was entitled to gratuity in excess of the ceiling limit as per the terms of his contract and Section 4(5) of the Act. The Controlling Authority had jurisdiction to decide claims in excess of the ceiling limit, and the petitioner's plea was rejected. The writ petitions were dismissed with no order as to costs.
Issues: I. Can the respondent claim gratuity in excess of the ceiling limit prescribed under Section 4(3) of the Payment of Gratuity Act, 1972? II. Does the Controlling Authority have the jurisdiction to decide claims in excess of the ceiling limit prescribed under Section 4(3)?
Ratio Decidendi: The court interpreted Section 4(5) of the Act, which allows employees to receive better terms of gratuity under an award, or an agreement/contract with the employer, exempting them from the ceiling limit under Section 4(3). It held that the Controlling Authority had jurisdiction to decide claims in excess of the ceiling limit, and the petitioner's plea was rejected.
Final Decision: The writ petitions were dismissed with no order as to costs.
REKHA PALLI, J.
1. The present batch of four writ petitions impugns identical but separate orders passed by the statutory authorities under the Payment of Gratuity Act, 1972 (hereinafter referred to as ‘PG Act’), upholding the claim of the respondents/employees to receive gratuity beyond the ceiling limit prescribed under Section 4(3) of the said Act. Since the petitions raise common issues with similar prayers, they are being decided by a common judgment. However, for the sake of convenience, only the facts of WP(C) No.3385/2018 are being referred to here-in-below.
2. Vide the present petition under Articles 226 and 227 of the Constitution of India, the petitioner inter alia impugns the order dated 31.07.2017 passed by the Controlling Authority under the Payment of Gratuity Act, 1972 (hereinafter referred to as ‘PG Act’), whereby the petitioner was directed to pay the respondent a sum of Rs.1,73,75,000/- as gratuity alongwith simple interest at the rate of 10% per annum on the said amount for delayed payment. The petitioner also impugns the order dated 23.03.2018 passed by the Appellate Authority, confirming the aforesaid order dated 31.07.2017 of the Controlling Authority.
3. The facts emerging from the record that are necessary for the adjudication of the present petition are as follows. The respondent who was the Chief Executive Officer (hereinafter referred to as “CEO”) of the petitioner/corporation w.e.f. 12.06.2000, resigned from the said post on 01.06.2012 after admittedly rendering 12 years of service with the petitioner/Corporation. After the respondent tendered his resignation, the petitioner sent a letter dated 09.08.2012 to him enclosing a cheque of Rs.10,19,452/-, out of which Rs.10,00,000/- was allegedly towards the maximum amount of gratuity payable to him under the prevailing laws and the remaining was the interest calculated thereon. It is the respondent’s case that as against the amount actually paid to him by the petitioner, he was entitled to a total of Rs.1,83,75,000/- as gratuity for the entire period of his service. He, therefore, wrote three letters dated 31.08.2012, 24.09.2012 and 19.10.2012 to the petitioner claiming a sum of Rs.1,83,75,000/- as gratuity, but to no avail.
4. Aggrieved by the amount of gratuity paid to him by the petitioner, the respondent filed a claim application before the Controlling Authority under Section 7 of the PG Act, praying for a direction to the petitioner to pay him a further sum of Rs.1,73,75,000/- towards the balance amount payable to him as gratuity. Upon taking cognizance of the respondent’s application, the Controlling Authority proceeded to fix the matter for recording the evidence of the parties. However, on 07.11.2014, the parties categorically submitted before the Controlling Authority that the pleadings and documents already on record were sufficient for the disposal of the application, as only a question of law needed to be decided therein. In the light of the joint request made by the parties to expedite the proceedings by foregoing the stage of recording evidence, the Controlling Authority directed the parties to file their respective affidavits of admission/denial.
5. Pursuant to the order dated 07.11.2014 passed by the Controlling Authority, the respondent filed his affidavit of admission/denial on 05.12.2014 and the petitioner filed its reply thereto on 09.01.2015, on which date the matter was fixed for arguments. Consequently, on 31.07.2017, the Controlling Authority, passed the impugned order allowing the respondent’s claim for gratuity and directed the petitioner to pay him Rs.1,73,75,000/- over and above the gratuity amount already paid to him, alongwith simple interest at the rate of 10% per annum for delayed payment.
6. Aggrieved by the aforesaid order passed by the Controlling Authority, the petitioner preferred an appeal before the Appellate Authority which was also dismissed vide order dated 23.03.2018. It is in these circumstances that the p
