SATHISH NINAN, J.

What is the gratuity payable to employees of a Society covered by an LIC linked policy scheme where the Society is governed by the Payment of Gratuity Act, 1972, has been answered by a Full Bench of this Court in Chandrasekharan Nair v. Kerala State Co-operative Agricultural and Rural Development Bank Ltd. [2017 (4) KLT 276 (F.B).]. The judgment of the Full Bench was affirmed by a three Judges Bench of the Apex Court in SLP(C) No. 009446-009451/2018 after notice to the other side on admission.

2. In Chandrasekharan Nair v. Kerala State Cooperative Agricultural and Rural Development Bank Ltd. (supra), the Full Bench held thus;

“(i) In cases where gratuity is linked with LIC policies, it will be considered as, 'a right to receive better terms of gratuity', in terms of Section 4(5) of the Payment of Gratuity Act.

(ii) The employee shall be entitled to the entire amount due under the policy.

(iii) The mere fact that the employee is not eo-nominee a party to the agreement with the LIC is of no consequence. This is on the principle that a beneficiary under a contract in trust is eligible for the benefits under the contract.

(iv) The above is the law for Societies with more than ten employees, to which 'The Payment of Gratuity Act, 1972' applies in terms of Section 1(3) (c) of that Act.”

3. The appellant societies in all these appeals contain more than ten employees and therefore, Payment of Gratuity Act, 1972 (hereinafter referred to as the “Gratuity Act”), applies.

4. The challenge in these writ appeals are mainly three fold,

(i) First proviso to Rule 59 of the Kerala Co-operative Societies Rules restricts the eligible gratuity to 15 months pay.

(ii) There has been no adjudication in terms of Section of the Gratuity Act, 1972.

(iii) The non-payment was in view of relevant circulars in the regard and hence they cannot be mulcted with the liability to pay interest.

5. Sub Rule (iii) to Rule 59 of The Kerala Cooperative Societies Rules and the provisos thereto read as follows:-

“(iii) when an employee who has put in at least 5 years satisfactory service is retired voluntarily from service or if he is permanently disabled while in service or if he dies while in service the society shall pay to him or to his legal heirs as the case may be a gratuity not exceeding half months pay for every completed year of service.

Provided that in no case shall the gratuity exceed fifteen months pay.

Provided further that the amount of gratuity payable shall not exceed the amount which an employee is eligible as per the Payment of Gratuity Act, 1972 (Central Act 39 of 1972) or under the Act and these Rules, whichever is applicable irrespective of the amount received out of any scheme chosen or implemented by a society for the purpose.”

The first proviso puts a cap on the maximum amount of gratuity payable. The second proviso provides that, notwithstanding any scheme chosen by the Bank, as regards societies covered by the Gratuity Act, the maximum amount payable will be the eligible amount under the Gratuity Act; as regards societies covered by the Societies Act, the maximum amount payable shall be the maximum amount eligible under that Act. Interpreting the second proviso, the Full Bench held that, in cases where the Gratuity Act applies, in view of Section 4(5) thereof, the entire amount due under the Scheme shall be payable to the employee. Section 4(5) of the Gratuity Act acknowledges the right of the employee to receive better terms of gratuity irrespective of the restrictions regarding the quantum fixed in Section 4 of that Act. Therefore, as held by the Full Bench, in view of the second proviso, with regard to societies to which the Payment of Gratuity Act is applicable, in view of Section 4(5) thereof, if a better term of gratuity is available, the restriction under the first proviso does not apply. However, in cases of societies to which the Payment of Gratuity Act is not applicable, since there is no provision in the Co-operative S