HIGH COURT OF MEGHALAYA AT SHILLONG
W. Diengdoh, J.
Salina Rahman & Ors. - Appellants
Versus
State of Meghalaya & Ors. - Respondents
WP(C) No. 317 of 2018
Decided On : 29-11-2022
Gratuity - Employment Dispute - Payment of Gratuity Act, 1972, Meghalaya Shop and Establishment Act 2004 - Section 7 of the Payment of Gratuity Act, 1972 - Section 1(3) of the Payment of Gratuity Act, 1972 - CACA Rules, 1980 - [Summary of Acts and Sections: The court discussed the applicability of the Payment of Gratuity Act, 1972 and the Meghalaya Shop and Establishment Act 2004 to the MECOFED. It also considered the provisions of Section 7 of the Payment of Gratuity Act, 1972 and Section 1(3) of the same Act, along with the CACA Rules, 1980. The court analyzed the issue of payment of gratuity to employees who opted for voluntary retirement and those in regular service till retirement, and the principle of delay, laches, acquiescence, and estoppel.]
Fact of the Case:
The petitioners, employees of MECOFED, sought payment of gratuity after their services were terminated upon reaching retirement age. The dispute arose from the acceptance of a Voluntary Retirement Scheme (VRS) by some employees, leading to the payment of gratuity to them. The petitioners, who did not opt for VRS, demanded gratuity, citing a long-standing demand and a Supreme Court order directing payment to VRS optees.
Finding of the Court:
The court found that MECOFED is liable to provide gratuity to its employees under the Payment of Gratuity Act, 1972. However, it held that the petitioners, except for two, were not entitled to gratuity due to delay and laches. Relief was granted to petitioners No. 1 and No. 4 for payment of gratuity.
Issues: The main issues were the applicability of the Payment of Gratuity Act, 1972 to MECOFED and whether the petitioners' claim was barred by delay, laches, acquiescence, and estoppel.
Ratio Decidendi: The court held that MECOFED is an 'Establishment' under the Payment of Gratuity Act, 1972 and is liable for gratuity payment. It also found that the petitioners, except for two, were not entitled to gratuity due to delay and laches.
Final Decision: The court directed MECOFED to provide gratuity to petitioners No. 1 and No. 4 after proper calculation, and disposed of the petition, partly granting the relief sought.
JUDGMENT
1. This petition preferred under Article 226 of the Constitution of India comes with a prayer for direction by this Court for issue of a writ of mandamus or order of such nature directing the respondents-authority to make payment of gratuity along with interest to the petitioners herein.
2. The petitioners are employees at various posts under the Meghalaya State Co-operative Marketing & Consumer's Federation Limited (hereinafter referred to as MECOFED) Lumdiengjri, Shillong-02, East Khasi Hills District, Meghalaya during various tenures till retirement on the due date.
3. The crux of the challenge in this writ petition has its genesis in a retirement package, termed as the Voluntary Retirement Scheme (VRS) which is also referred as the 'Golden Handshake Scheme' offered by the respondent authority during the year 2001-2002 which was accepted by some of the employees, about 95 of them, but was declined by the petitioners who had chosen to continue in service, after which having completed their due tenure of service, the petitioners' services came to be terminated by their reaching the retirement age in the usual course.
4. It is the case of the petitioners that since the inception of MECOFED, the subject of 'payment of gratuity' has been a long pending demand of the employees and to that effect several representations have been made by the employees. However, it was when the matter on the issue reached the Supreme Court wherein in its order dated 02.04.2018 in Special Leave Petition (Civil) Diary No. 35923/2017 it was directed that the respondent No. 3 herein is to pay 'Gratuity' to the employees who had accepted the Voluntary Retirement Scheme, that the respondent paid the gratuity to the employees who had accepted the VRS (Voluntary Retirement Scheme).
5. On coming to know of the decision of the respondent to pay gratuity to only those employees who had accepted the VRS, several employees, including the petitioners approached the respondent-authority with an application dated 19.06.2018 to also demand payment of gratuity to them, but to no response, prompting the petitioners to approach this Court. Hence this petition.
6. The respondent No. 3 is the only one who has filed the affidavit-in-opposition as the respondents No. 1 & 2 respectively have submitted that the main contender in this lis is the respondent No. 3 and as such, no affidavit was filed on their behalf.
7. The respondent No. 3 in the affidavit-in-opposition has, at the outset stated that the petitioners have come before this Court with unclean hands inasmuch as they have suppressed material facts and have given misleading statements. The petition is also hit by inordinate delay and laches, acquiescence and waiver as the petitioners approached this Court only after more than 10 years after they have retired from service without any complaint or otherwise about their alleged entitlement to gratuity knowing fully well that the service rules does not provide for the same.
8. It is also averred that the MECOFED being a Co-operative Society registered under the Meghalaya Cooperative Societies Act, 2015, does not come under the purview of the Payment of Gratuity Act, 1972 and the service conditions of the employees are governed by the 'Classification, Appointment, Control and Appeal Rules, 1980' (CACA Rules) wherein under these rules, there is no provision for payment of gratuity to its employees since the inception of the Society.
9. It is also stated that the Society has been incurring loss since 1982-83 with a huge debt liability towards the Meghalaya Co-Operative Apex Bank for which even the regular salary to the employees could not be paid. Accordingly, a scheme was devised to work out a better retirement package to the employees which is in the form of the Golden Handshake/Voluntary Retirement Scheme calling upon those employees who wanted to opt for this scheme to be retired from service on payment of certain benefits.
10. That the 95 employees who has opted for th
Allahabad Bank & Anr. vs. All India Allahabad Bank Retired Employees Association: (2010) 2 SCC 44
Inder Jit Gupta vs. Union of India & Ors.: (2001) 6 SCC 637
K.C. Sharma & Ors. vs. Union of India (1997) 6 SCC 721
Shiba Shankar Mohapatra & Ors. vs. State of Orissa & Ors.: (2010) 12 SCC 471
Shiv Dass vs. Union of India: (2007) 9 SCC 274
State of Mysore vs. V.K. Kangan AIR 1975 SC 2190
State of Uttar Pradesh & Ors. vs. Arvind Kumar Srivastava & Ors.: (2015) 1 SCC 347
Y.K. Singla vs. Punjab National Bank & Ors: (2013) 3 SCC 472
The main legal point established is that MECOFED is liable to provide gratuity to its employees under the Payment of Gratuity Act, 1972, and the principle of delay and laches can bar employees' entit....
The court established that compliance with statutory timelines for gratuity payments negates entitlement to interest on delayed payments when no timely claims are made.
Interpreting Act unequivocally indicate that payment of gratuity would not depend upon employee filing an application before employer demanding gratuity but will have to be paid immediately on cessat....
Retired employees are entitled to gratuity and interest on delayed payments, with the court having no discretion to deny interest under the Payment of Gratuity Act.
Employer cannot withhold gratuity for unauthorized retention of quarters post-retirement; statutory interest of 10% applies for delayed payment.
The Gratuity Act provides overriding rights for gratuity claims that cannot be denied unless specifically exempted by law, even when alternative welfare benefits exist.
The central legal point established in the judgment is the duty of the employer to settle retirement benefits, including gratuity, in a timely manner as per the provisions of the Payment of Gratuity ....
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