Important points:
The mandate of Section 4A of the Gratuity Act, which provides for a compulsory insurance to be taken by an employer/establishment to cover its liability for payment of amounts towards gratuity under the Act, irrefragably takes in all such liability, either under Section 4(3) or under Section 4(5) of the said Act.

I hear a rather bewildering submission made on behalf of a Co-operative Bank; though not made directly but indirectly, that they are entitled to retain for themselves certain amounts, concededly received at their own request from the Life Insurance Corporation of India (LIC for short hereinafter), towards gratuity payable to the petitioners herein, under a Group Gratuity Insurance Scheme, asserting that the petitioners are not entitled to such amounts under the Payment of Gratuity Act.

2. The respondent-Kozhikode District Co-operative Bank contends very vehemently, in defence to the claims of the petitioners for their full gratuity, that even though the LIC has paid these amounts to them, admittedly as per their own requisition, the petitioners cannot claim any amounts in excess of the statutory limit of Rs.10 lakhs, they being disentitled to such amounts under the Payment of Gratuity Act; and consequently, that they are entitled to appropriate it to themselves.

3. This Court cannot offer imprimatur to the afore contention and I will presently state the reasons that guide me in this view; but after I record the most necessary facts.

4. The petitioners say that they have retired from the services of the 1st respondent-District Co-operative Bank, a Society registered under the provisions of the Kerala Co-operative Societies Act and Rules (hereinafter referred to as the “KCS Act” and “KCS Rules” for short).

5. The petitioners say that they superannuated from service on various dates after 2014 and that they are entitled to the full amounts paid to the respondent Bank by the Life Insurance Corporation of India (LIC for short), the 3rd respondent herein, under a policy of insurance, obtained by the Bank from them, under the provisions of Section 4A of the Payment of Gratuity Act, 1972 (Gratuity Act for short), to cover the amounts of gratuity payable to their employees. They say that since the Bank has more than 10 employees, the provisions of the Gratuity Act applies; and therefore, that going by Section 4(5) thereof, they are entitled to receive better terms of gratuity, than that are statutorily eligible to them, because the Bank had voluntarily paid a higher premium and had intimated the LIC for higher pay-outs to each of them, based on which the amounts, claimed by them in this writ petition, were paid by the LIC to the Bank against their individual names.

6. The petitioners allege that even though the LIC had paid more than Rs.10 lakhs against each of their names to the Bank, they were paid only Rs.10 lakhs, ostensibly because the statutory ceiling of gratuity at that time, as notified by the Central Government under Section 4(3) of the Gratuity Act, was only that sum; and consequently, that the Bank has appropriated the balance amounts for their own purposes. The petitioners rely on the Full Bench judgment of this Court in Chandrasekharan Nair G. v. Kerala State Co-operative Agricultural and Rural Development Bank Ltd. [2017 (4) KLT 276 (FB)], to assert that they are entitled to the entire pay-out made by the LIC to the Bank under their individual names; and therefore, that the Bank be directed to pay the balance amounts, after deducting Rupees Ten Lakhs already paid to each of them, along with interest as ordered in the afore judgment.

7. Sri. P.C. Sasidharan, the learned Standing Counsel for the 1st respondent-Bank, in refutation of the above submissions, contends that Section 4(3) of the Gratuity Act makes it indubitable that the amount of Gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government from time to time. He says that at the time the petitioners retired, the upper ceiling under this provision was admittedly Rs.10 lakhs and axiomatically that they are not entitled to any amount over this figure, notwithstanding the fact that the LIC might have paid the Bank higher amounts against the names of each of the petitioners.

8. Sri. P.C. Sasidharan then reads Section 4A