Employees are entitled to better gratuity terms beyond statutory limits under specific conditions mandated by the Payment of Gratuity Act.

J U D G M E N T

The petitioner, who retired from service on attaining the age of superannuation on 31.8.2016 while holding the post of Secretary of the 2nd respondent Service Co-operative Bank, has filed this writ petition under Article 226 of the Constitution of India, seeking a writ of mandamus commanding the respondents to disburse forthwith the balance gratuity amounting Rs.2,77,730/-, in excess of Rs.10,00,000/- received by the 2nd respondent Bank from the 3rd respondent Life Insurance Corporation (LIC). The further reliefs sought for in this writ petition are a declaration that the petitioner is entitled to receive Rs.12,77,730/- as gratuity on his retirement from service; and a writ of mandamus commanding the 1st respondent Joint Registrar (General) to consider and dispose of Ext.P2 representation dated 23.4.2018 in the light of a Full Bench decision of this Court in Chandrasekharan Nair G. and others v. Kerala State Cooperative Agricultural and Rural Development Bank Ltd.

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and others ( 2017 (4) KLT 276 ).

2. On 21.6.2018, when this writ petition came up for admission, notice on admission was ordered to 2nd respondent, learned Government Pleader took notice for the 1st respondent and the learned Standing Counsel took notice for the 3rd respondent.

3. A counter affidavit has been filed on behalf of the 3rd respondent LIC, wherein it has been stated that as per the Master Policy taken by the 2nd respondent Bank for discharging the gratuity liability of its employees, the amount of gratuity payable to the petitioner, who retired from service on 31.8.2016, was only Rs.10,00,000/-. In order to substantiate the said contention, they have produced Ext.R3(a)-claim form, R3(b)-cost benefit schedule and R3(c)-discharge form.

4. Heard the learned counsel for the petitioner, the learned Senior Government Pleader appearing for the 1st respondent, the learned counsel for the 2nd respondent Bank and also the learned Standing counsel for the 3rd respondent LIC. 5. The sole issue that arises for consideration in this writ petition is as to whether the petitioner is entitled to receive :-3-:

gratuity in excess of the statutory limit of Rs.10,00,000/-

prescribed under Section 4 (3) of the Payment of Gratuity Act .

6. The entitlement of the employees of Co-operative Societies covered by the provisions under payment of Gratuity Act to receive better terms under Section 4 (5) of the said Act is now settled by the decision of the Full Bench in Chandrasekharan Nair G. 's case cited supra. Paragraphs 5 to 8 of the said decision read thus;

“5. The liability to pay gratuity does not get shifted to the insurer by the compulsory insurance and the effect is only that the maturity value of the master policy would go to the credit of the dues of the employee. Any amount in excess of the gratuity due would also go to the employee since the contract of insurance would fall within the ambit of Section 4 (5) of the Central Act. Any deficit in the amount due as gratuity to the employee after payment by the insurer has to be met by the employer only as the liability squarely rests on him under (2) of the Central Act. The insurer cannot be made liable to pay any amount in excess of the maturity value of the master policy as the same would be dependent on the premium paid to him. The compulsory insurance under S.4A of the Central Act is only to facilitate the employer to discharge his liability and the premium paid is part of the wages only. Of course the wording of the second proviso to Rule 59(iii) of the Rules gives rise to a doubt that :-4-:

the employee would be pinned down to the amount of gratuity specified in the Central Act. Such an interpretation would render Section 4 (5) of the Central Act otiose whereunder the employee has a right to receive better terms of gratuity under any award or agreement or contract with the employer. The provisions of the Central Act or any rule made thereunder shall have effect notwithstanding anything inconsistent the