The main legal point established in the judgment is that the right to receive gratuity on retirement is a vested right and cannot be retrospectively altered by an amendment to the standing orders.

P.A. Mohammed, J.

The central point posed before us here relates to the power of the appellant-company to cut down the amount of gratuity payable to the respondents-employees by invoking the provisions contained in the Payment of Gratuity (Amendment) Act, 1994.

2. The respondent herein filed Writ Petition, O.P. No. 619 of 1998, praying for a declaration to the appellant herein to pray the balance amount of gratuity available to them. They further prayed for a declaration that they are eligible for the gratuity limiting the maximum to 20 months' wages pursuant to Ext. P1 Standing Orders framed by the Company.

3. The respondents 1 to 3 joined the service of the appellant-company on 23.1.1959,1.12.1956 and 1.3.1960 respectively. Ext. P1 is the Standing Orders provided for employees who are classified by the Management as managerial personnel and such other employees as are not 'workmen' as defined in the

Industrial Disputes Act, 1947 as amended from time to time. By virtue of this Standing Order which is applicable to them respondents are eligible to have gratuity limiting 20 months' wages at the time of retirement. When the gratuity payable to the respondent was actually worked out, it was limited to Rs.1 lakh each. Though the respondents filed an objection it remained unconsidered. It was in the above circumstances the above Writ Petition was filed by the respondents.

4. The learned Single Judge while disposing of the Writ Petition observed that the respondents had retired from service in the year 1996 and 1997 and that the amount of gratuity was due to them on the date of retirement. The Court further held that the claim for payment of gratuity on the date of retirement had become a 'vested right' and therefore, the appellant was not entitled to deprive that right retrospectively. In that view of the matter the learned judge directed the appellant to pay the balance amount to the respondents within three months from the date of receipt of a copy of the judgment. It appears, the appellant-company is dissatisfied with the impugned judgment. Hence the present appeal has been filed.

5. Clause 1 l(iii) of the Standing Orders prescribes that the amount of gratuity payable to an employee shall not exceed twenty months wages. This provision contains better terms of gratuity. Sub-s.(5) of S.4 of the Payment of Gratuity Act provides that nothing contained in the Section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. In view of this provision the right of the employee to receive better terms of gratuity under the Standing Orders is well preserved.

6. The counsel for the appellant brings to our notices. 3 of the Payment of Gratuity (Amendment) Act, 1998 came into force with effect from 24.5.1995. By the said amendment sub-s.(3) of S.4 of the original Act was amended as below.

"(3) The amount of gratuity payable to an employee shall not exceed one lakh".

However, this provision is unavailable to the appellant in view of the provisions contained in sub-s.(5) thereof as we have already found.

7. What is now pleaded by the learned counsel appearing for the appellant is that Ext. P1 Standing Orders had been amended with retrospective effect so as to take away the rights already accrued to the employees irrespective of the ceiling limit. The right to receive the gratuity by an employee on retirement is a vested right and it cannot be destroyed by amending the Standing Orders retrospectively. As earlier said the respondents have retired from service in the year 1996 and 1997 and the right to receive the gratuity by them on retirement is well protected. In the industrial jurisprudence gratuity came to be recognised as a retrial benefit available as of right to an employee for long, continuous and meritorious service whether such retirement is the result of superannuation, physical disability or otherwise.

8. The counsel for the appellant has brought to our no