Recovery of gratuity from retired employees is impermissible under the Payment of Gratuity Act when payments were made mistakenly.

JUDGMENT :

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. Admit, learned advocate, Ms.Ashlesh M. Patel waives service of notice of admission.

2. The present appeal emanates from the judgment dated 21.09.2023 passed by the learned Single Judge in the captioned writ petition whereby the learned Single Judge had allowed the writ petition and set aside the recovery of gratuity amount initiated by the respondent – Board.

3. The facts which are not dispute and as recorded by the learned Single Judge are that the respondent employees were serving under the appellant – Corporation and have retired between 01.01.2016 and 28.03.2018 and/or legal heirs of such employees who have expired during such period, are subjected to recovery of amount of excess payment of gratuity by the action of the appellant. It is case of the appellants that such employees were by mistake paid an increased amount of gratuity and when the appellant realized that it was by mistake and on instructions of the State Government, it initiated action for recovery of excess payment of gratuity and such action has been set aside by the learned Single Judge by placing reliance on the judgment of Supreme Court in the case of State of Punjab V/s. Rafiq Masih reported in (2015) 4 SCC 334.

4. Learned Senior Advocate Mr. Mihir Joshi with learned Advocate Mr. Keyur Gandhi appearing for the appellant has submitted that the directions issued by the Supreme Court in the case of Rafiq Masih (supra) would not apply in the case of respondent employees since they were paid gratuity by mistake after they retired.

5. It is contended that the appellant initially had passed a resolution increasing the maximum limit of retirement gratuity from 10 lakhs to 20 lakhs by placing reliance on Gujarat Civil Services (Pension) Rules, 2002 more particularly Rule 18 and thereafter when it was realized that the employees of the appellant Board are not governed by the pension Rules, but by the Payment of Gratuity Act, 1972, pursuant to which the ceiling limit from Rs.10 lakhs to Rs.20 lakhs was increased which was decided by the appellant to recover the excess amount of gratuity. It is submitted that the Board resolved in its meeting to increase in gratuity vide resolution dated 15.10.2016 to the extent of Rs.20 lakhs and necessary permission was sought from the State Government in this regard. The State Government rejected such request for sanction of funds clarifying that the employees of the Board are governed by provisions of Gratuity Act and hence the resolution dated 15.10.2016 passed by the appellant Board resolving to increase the maximum limit of gratuity of Rs.20 lakhs will not apply. It is submitted that the appellant Board requested the State Government to give permission to give the effect of Amendment Act from 2018 in the Payment of Gratuity of Act to increase the maximum limit to Rs.20 lakhs as per the Payment of Gratuity (Amendment) Act, 2018 and thereafter such permission was granted by the State Government. He submitted that thereafter the appellant Board issued an order dated 18.11.2019 sanctioning the payment of difference in benefits to the respondents and such gratuity amount was calculated and granted on enhanced rate. It is submitted that the employees who had retired between the period from January, 2016 to March, 2018 were conferred the enhanced amount of gratuity by mistake since the provisions of the Amendment Act which was introduced vide notification dated 29.03.2018 will not be entitled to gratuity on the maximum ceiling limit of Rs.20 lakhs.

6. It is submitted that in case of Rafiq Masih, the excess payment made to the employees was on account of wrongful fixation of salary consequent upon upward revision of pay scales or payment of allowances for which employees were not authorized. In none of the judgments which have been considered by the Supreme Court in the case of Rafiq Masih, the recovery of the amounts by the concerned employer pertains to the arrears of gratuity, and