Amended regulations on deductions from retirement gratuity do not apply retroactively to loans granted before their enactment, preserving previously established employee consents.

JUDGMENT :

GOPINATH P., J.

1. These writ petitions are filed by certain Employees’ Co-operative Societies being aggrieved by the fact that despite there being an agreement as contemplated by the provisions of Section 37 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as the '1969 Act') and inspite of the fact that the petitioner-Societies have the right to recover amounts due to it from the Death-cum-Retirement Gratuity (hereinafter referred to as the ‘DCRG’) payable on the retirement of employees who have availed loans from the petitioners-Societies, the competent authority is now refusing to deduct the amounts due to the Societies from the DCRG on account of the amendment to the Rulings under Rule 3 of Part III of the Kerala Service Rules (hereinafter referred to as the ‘KSR’) w.e.f. 01.02.2025, which contemplates that the recovery from the DCRG shall be made only upon obtaining fresh written consent from the employee concerned at the time of his retirement.

2. Sri. P. C. Sasidharan, the learned counsel representing the petitioners in these matters, asserts that the petitioners are Employees’ Cooperative Societies. It is submitted that all the members of the petitioner Societies are Government employees serving in various departments under the Government of Kerala. It is submitted that these Societies advance loans to their members after the members execute an agreement in terms of Section 37 of the 1969 Act and after they execute an undertaking that any amount remaining due from them at the time of their retirement can be recovered from the DCRG payable to them by the Government. It is submitted that in several cases the loans availed remain unpaid even at the time of retirement, and therefore, the petitioner Societies must recover the amounts due to them from the DCRG. It is pointed out that Ruling No.1 under Rule 3 of Part III of the KSR specifically empowers the competent authority to recover amounts due to the Society from the DCRG payable to an employee, provided there is a consent for such recovery in writing. It is pointed out that, with the amendment introduced w.e.f. 01.02.2025, a further requirement that a fresh consent in writing should be obtained at the time of retirement has been incorporated, practically undoing or making invalid the consent earlier given by the employee in question at the time of availing the loan. It is submitted that this has caused serious prejudice to the Societies. It is submitted that, at any rate, the provision cannot be extended to cases where loans were sanctioned before 01.02.2025 on the strength of an undertaking that the amounts due to the Society can be recovered from the DCRG.

3. Sri. Antony Mukkath, the learned Senior Government Pleader appearing for the official respondents in these cases, would submit that recovery from gratuity is not contemplated even by the provisions of Section 37 of the 1969 Act. It is submitted that of the 1969 Act contemplates recovery from salaries or wages, and that gratuity does not fall within the definition of salaries or wages. It is submitted that gratuity is an amount paid to an employee for long years of dedicated service, and to provide sustenance to the employee after retirement. It is submitted that it was in such circumstances that Ruling No.1 under Rule 3 of Part III of the KSR was amended, making it mandatory that the consent for recovery from the DCRG must be obtained at the time of retirement, even if such consent had been obtained earlier at the time of availing the loan. It is submitted that a Division Bench of this Court in Surendran v. Mavelikara Primary Co-operative Agricultural and Rural Development Bank Ltd. , 2005 KHC 1796 , had taken the view that the word 'salary' used in Section 37 of the 1969 Act does not include DCRG.

4. The learned counsel a