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2025 Supreme(Online)(Ker) 12913
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN &
THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN MONDAY, THE 19 TH DAY OF MAY 2025 / 29TH VAISAKHA, 1947 RP NO. 307 OF 2024 AGAINST THE JUDGMENT DATED 17.10.2023 IN WA NO.1705 OF 2022 OF HIGH COURT OF KERALA REVIEW PETITIONERS/APPELLANTS:
1 NARAYANAN NAIR,AGED 73 YEARS RETIRED ACCOUNTANT, THE MULIYAR SERVICE CO-
OPERATIVE BANK LTD., P.O. KANTHALLUR, KASARAGOD DISTRICT. S/O A.KUNHIRAMAN NAIR, R/AT RAMANILAYAM, 5TH MILE, P.O.KOLATHUR, CHENGALA VIA, KASARAGOD DISTRICT., PIN - 671541
2 OMANA, W/O T. NARAYANAN, R/AT NOOVAMBAYAL HOUSE, P.O. MULIYAR, MULIYAR VILLAGE, KASARAGOD DISTRICT., PIN - 671542
3 SUJATHA,D/O T. NARAYANAN, R/AT NOOVAMBAYAL HOUSE, P.O.MULIYAR, MULIYAR VILLAGE, KASARAGOD DISTRICT, PIN - 671542
4 ANEESHKUMAR,S/O T. NARAYANAN, R/A NOOVAMBAYAL HOUSE, P.O.MULIYAR, MULIYAR VILLAGE, KASARAGOD DISTRICT., PIN - 671542
5 SUDHEESHKUMAR,S/O T. NARAYANAN, R/AT NOOVAMBAYAL HOUSE, P.O.MULIYAR, MULIYAR VILLAGE, KASARAGOD DISTRICT., PIN - 671542 BY ADV KODOTH SREEDHARAN RESPONDENTS/RESPONDENTS:
1 THE JOINT REGISTRAR (GENERAL), CO-OPERATIVE SOCIETIES, KASARAGOD, PIN - 671323
2 THE DEPUTY LABOUR COMMISSIONER,GRATUITY CONTROLLING AUTHORITY, OFFICE OF THE DEPUTY LABOUR COMMISSIONER, KASARAGOD, PIN - 671323
3 THE MULIYAR SERVICE CO-OPERATIVE BANK LTD., KANATHUR. P.O. MULIYAR, KASARAGOD DISTRICT, REPRESENTED BY ITS SECRETARY, PIN - 671542
4 LIFE INSURANCE CORPORATION OF INDIA LTD. (LIC)
REPRESENTED BY ITS MANAGER, LIFE INSURANCE CORPORATION OF INDIA LTD., JEEVAN JYOTHI, M.G.
ROAD, KASARAGOD DISTRICT, PIN - 671121 THIS REVIEW PETITION HAVING COME UP FOR ADMISSION ON
17.02.2025, THE COURT ON 19.05.2025 DELIVERED THE FOLLOWING:
Employees must accept all provisions of the applicable gratuity statute, including upper limits, when claiming benefits under the Payment of Gratuity Act.
Headnote:
(A) Payment of Gratuity Act, 1972 - Section 4(5) - Kerala Co-operative Societies Rules, 1969 - Review petition concerning gratuity calculation for retired employees of a co-operative bank - The court examined the applicability of the first and second provisos to Rule 59, determining that the first proviso's upper limit must be adhered to when calculating gratuity, as it does not conflict with Section 4(5) of the Payment of Gratuity Act. The review petitioners argued that the calculation based on the first proviso was erroneous, but the court found no grounds for review. (Paras 2, 5, 8, 11)
(B) Legal Principles - The court emphasized that if an employee opts for better gratuity terms under the Central Act, they must accept all provisions, including upper limits. The court also clarified that the Full Bench's ruling did not address the first proviso's implications. (Paras 4, 8)
Facts of the case:
The review petitioners, retired employees of a co-operative bank, contested the gratuity calculation based on the first proviso to Rule 59, claiming it was contrary to the Full Bench's interpretation in a previous case. The first appellant's gratuity was capped at the statutory limit, while the second appellant's calculation under the State Rules was found more beneficial.
Findings of Court:
The court upheld the Division Bench's findings, concluding that the gratuity calculation under the State Rules provided a better benefit for the second appellant, and dismissed the review petition.
Issues: The primary issue was whether the gratuity calculation should adhere to the upper limit set by the first proviso to Rule 59 or if the provisions of the Payment of Gratuity Act should prevail.
Ratio Decidendi: The court ruled that an employee must accept all provisions of the applicable statute when claiming gratuity, including any upper limits, and that the first proviso to Rule 59 remains valid and applicable.
Result: The Review Petition is dismissed.
ORDER
C.Jayachandran, J.
The petitioners in the Writ Petition, who were the appellants in the Writ Appeal, are the review petitioners. They have retired from the second respondent Service Co-operative Bank on 30.06.2006 and 31.05.2017 respectively. The issue involved is in respect of the gratuity payable to them. The Writ Petition was disposed of by a learned single Judge, directing the petitioners to approach the Service Co-operative Bank concerned, with their claim, followed by a further direction to the bank to pass appropriate orders therein, after taking into account the dictum laid down 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 (FB)]. Dissatisfied, the review petitioners herein filed Writ Appeals, which were considered by a Division Bench, of which, one among us was a Member. The Writ Appeals were disposed of by judgment dated 17.10.2023, dismissing the Appeal as against the first appellant, but allowing the same insofar as the second appellant is concerned. In holding so, the Division Bench took stock of the interpretation of the Full Bench inChandrasekharan Nair (supra) insofar as the second proviso to Rule 59 of The Kerala Co-operative Societies Rules, 1969 ('the Rules', for short); however, upholding the mandate of the first proviso of the Rules, which stipulates an upper limit of fifteen months' pay as gratuity. The Division Bench construed the Rules as an instrument, which provides for better terms of gratuity for the purpose of Section 4 (5) of the Payment of Gratuity Act, 1972 .
2. Now, the Review Petition is preferred on the premise that the calculation based on the first proviso to Rule 59 is legally wrong, which is an error apparent on the face of the record. The calculation shown in paragraph no.2 of the Review Petition indicates that the review petitioners seek a calculation in terms of the 'Explanation' to Section 4 (2) of the Payment of Gratuity Act, however, without any reference to the said 'Explanation' and without explaining as to how that provision would apply in a case covered by the Rules. It is also canvassed that the application of the first proviso to Rule 59 is contrary to the dictum laid down by the Full Bench in Chandrasekharan Nair (supra).
3. Having heard the learned counsel for the review petitioners, as also, the contesting respondent/ Society, we will first examine the proposition laid down by the Full Bench in Chandrasekharan Nair (supra). It is important to note that reference to the Full Bench was occasioned by the Division Bench, which doubted the correctness of the decision in Nedupuzha Service Co-Operative Bank Ltd. v. Rukmini [2011(3) KLT 134]. In the Reference Order, the Division Bench specifically pointed out the incongruity between the second proviso to Rule 59(iii) of the Rules (substituted with effect from 02.11.2010) and Section 4 (5) of the Payment of Gratuity Act. For a correct understanding of the issue before the Full Bench, it is relevant to note that (5) of the Payment of Gratuity Act contemplates that, nothing contained in will affect the right of an employee to receive better terms of gratuity under any award, agreement or contract with the employer. However, the second proviso to Rule 59(iii) of the Rules stipulates that the amount of gratuity payable to an employee shall not exceed the eligible amount as per the Payment of Gratuity Act or under the Rules, whichever is applicable, irrespective of the amount received out of any scheme chosen or implemented by a Society for that purpose. Thus, there is a clear dichotomy between the provisions contained in (5) of the Payment of Gratuity Act and the second proviso to Rule 59(iii) of the Rules, the former contemplating a right in favour of the employee to receive better terms of gratuity under an award/agreement or contract with the employer; whereas the latter dislodging such right of the employee and pinning hi
