1. The petitioner is a retired employee of the 1st respondent Bank. The petitioner had, on retirement, made an application to the 1st respondent Bank for gratuity and admittedly, he was paid Rs.10 Lakhs as gratuity for the service rendered; which is the maximum permissible under the Payment of Gratuity Act, 1972 (for brevity 'the Gratuity Act') as has been amended w.e.f. 24.05.2010. The payment was opposed by the Life Insurance Corporation (for brevity 'LIC'), with whom the 1st respondent Bank insured its gratuity liability.

2. The short contention of the petitioner based on Ext.P2 communication of the LIC to the respondent Bank, is that, in fact, the eligible claim of gratuity was Rs.14,37,772/-where as the claim submitted by the Bank was for only Rs.10 Lakhs. The petitioner relies on Ext.P2 communication from the LIC. The petitioner having received the amounts payable as per the Gratuity Act was again before the 1st respondent Bank for disbursing the balance amount due, as has been noticed in Ext.P2. The 1st respondent Bank declined the same by Ext.P4 wherein it was contended that as per Rule 59 of the Kerala Co-operative Societies Rules (for brevity 'the Rules'), there is a stipulation that the gratuity paid shall not exceed 15 months pay and the 2nd proviso to Rule 59 of the Rules prohibits payment of gratuity in excess of the amounts which an employee is eligible as per the Gratuity Act.

3. The petitioner assails the decision of the respondent Bank on the ground that when a Scheme provides for better benefits then, as per sub section 5 of Section 4 of the Gratuity Act the rights of the employee to receive such amounts shall not be affected. The petitioner also relies on Ext.P5 judgment of a learned single Judge of this Court and the decisions reported in Retnavalli v. Ambalapadu Service Co-operative Bank Ltd. (2005 (3) KLT 320) and Nedupuzha Service Co-operative Bank Ltd. v. Rugmini (2011 (3) KLT 134). It is the contention of the learned counsel for the petitioner that this Court and the Honourable Supreme Court consistently held that though the payment of gratuity is regulated by the Gratuity Act; any scheme, award or contract which entitle the employee to better benefits than that provided under the Gratuity Act shall not be affected and the employee's entitlement under such scheme, award or contract cannot be curtailed on the strength of the provision in the Gratuity Act prescribing the maximum limit.

4. The learned counsel for the respondent Bank would submit that the liability of the employer to pay gratuity is statutorily fixed on the employer and there is no award or scheme or any contract with the employees of the 1st respondent Bank entitling them to any better benefit than that are prescribed under the Gratuity Act. The 1st respondent Bank, noticing its recurring liability for payment of gratuity to the employees, had enrolled in a premium linked policy with the LIC which shifts the liability of payment of gratuity to the LIC, the insurer. The contract between the 1st respondent Bank, the insured and the LIC is for payment of gratuity on the retirement of the employees; with the unique advantage of the sum assured under the gratuity policy being fully paid to an employee who dies while in service. However, it is contended that being premium linked, the liability of the LIC is only to the extent of the premium paid by the respondent Bank; the insured and it cannot be over and above that prescribed under the Gratuity Act especially in view of the amendment brought into Rule 59 of the Rules by addition of the 2nd proviso in the year 2010, w.e.f. 02.11.2010.

5. The learned counsel appearing for the LIC supports the argument of the 1st respondent Bank; but, contends that if more premium is paid they have no objection in paying the higher amounts due under the policy. However, in the present case, the premium paid was only to cover the liability of a maximum of Rs.10 Lakhs and the LIC, the insured, cannot be