The court affirmed that gratuity payments are capped by law unless better terms are specified in agreements, and the statutory interest applies to unpaid gratuity.

JUDGMENT

Anu Sivaraman, J.

This writ appeal is preferred by the two former employees of the 3rd respondent Co-operative Society, who were the writ petitioners in W.P.(C) No.25144/2022. While the appeal was pending, the 2nd appellant passed away and additional appellants 3 to 6 were impleaded by order dated 13.9.2023 in I.A. No.1/2023 in the writ appeal.

2. The contention in the writ petition was that the petitioners were entitled to the higher amount of gratuity received from the LIC over and above the maximum amount payable as notified under Section 4 (3) of the Payment of Gratuity Act (for short, 'the Act'). They contended specifically that a higher amount had been received from the LIC towards the policy taken by the Society for payment of gratuity to them and therefore, the said higher amount is liable to be released to them. They contended that in the light of the judgment of the Full Bench inChandrasekharan Nair G. and others v. Kerala State Co-operative Agricultural and Rural Development Bank Ltd. and others [2017 (4) KLT 276] , they are entitled to the higher amounts released by the LIC.

3. When the matter came up along with other connected cases for disposal in terms of the judgment of the Full Bench, the learned counsel appearing for the 3rd respondent submitted that the 3rd respondent had not been put on notice before the writ petition was disposed of and that a counter affidavit may be permitted to be filed. Thereafter, a counter affidavit was placed on record by the 3rd respondent. It is stated therein that the 1st appellant had retired from service on 30.6.2006. He had a continuous service of 41 years 1month and 15 days and his last pay drawn was Rs.17,087/-. It is submitted that in view of Rule 59 of the Kerala Co-operative Societies Rules (for short, 'the Rules') and limiting the amount payable as per the 1st proviso thereto, the 1st appellant would be entitled only to an amount of Rs.2,56,305/- as gratuity. It is submitted that the 3rd respondent had received only an amount of Rs.1,61,946/- from the LIC on 7.6.2006. However, the 3rd respondent had paid an amount of Rs.3,50,000/- to the 1st appellant by recouping Rs.1,88,054/- from their own funds. Ext.R3(c) communication is produced to show that only an amount of Rs.1,61,946/- was received by the 3rd respondent from the LIC towards the payment of gratuity to the 1st appellant.

4. It is stated that the 2nd appellant retired from service on 31.5.2017 and he had a continuous service of 34 years and 8 months and his last drawn salary was Rs.69,597/-. The 2nd appellant is entitled to Rs.10,43,955/- as gratuity. However, in accordance with the 2nd proviso, it is stated that he is entitled to receive only Rs.10 lakhs as gratuity. Ext.R3(d) is produced and relied on to contend that only Rs.10 lakhs was forwarded by the LIC to the bank in respect of the gratuity due to the 2nd appellant.

5. It is stated that Section 4 (3) of the Act determines the amount to be paid to an employee as gratuity. As the 1st appellant retired on 30.6.2006, he is entitled only to Rs.3,50,000/- as gratuity as on the date of his retirement as notified under (3) of the Act. It is further stated that the 2nd appellant retired on 31.5.2017 and he is entitled only to Rs.10 lakhs as per (3).

6. The learned counsel for the appellants submits that Rule 59 of the Rules provides for better terms of gratuity payable to employees of Co-operative Societies. It is contended that since the amount payable under Rule 59 is higher than the amount provided as cap by notifications under Section 4 (3) of the Act, the appellants are entitled to the said higher amounts. Reliance is placed on a judgment of the Full Bench as also a Division Bench of this Court inGeneral Manager, Malappuram District Co-operative Bank v. C.T.Janardhanan and others [2018 (5) KHC 73] and of the Apex Court inSingla Y. K. v. Punjab National Bank and others [2012 KHC 4765] in support of the contentions.

7. The learned counsel for the 3rd re