Employer obligations under statutory gratuity laws cannot be bypassed by internal rules limiting payments.

JUDGMENT

The petitioner, the Principal of Sree Chitra Thirunal College of Engineering, Thiruvananthapuram, an unaided Engineering College functioning under the management of KSRTC, has preferred this writ petition challenging Exhibit P3 order passed by the Controlling Authority under the Payment of Gratuity Act, 1972 (hereinafter referred to as ‘the Act’), which was affirmed by the Appellate Authority through Exhibit P4 order.

2. It is the contention of the petitioner institution that, as per Exhibit P1 [Sree Chitra Thirunal College of Engineering (SCTCE) Employees Gratuity Scheme Rules], in particular Clause (VI), the gratuity payable to an employee is limited to Rs. 7 lakhs. In the instant case, the 4^th respondent employee was granted Rs. 7 lakhs as gratuity, which was accepted without demur. The application preferred by the 4^th respondent was disposed of by the Authorities, finding his entitlement under the Act.

3. It is contended that, based on Exhibit P1 Rules, which determine the limit of the gratuity payable to an employee in the Institution, the provisions of the Act will not apply. It is also their contention that the petitioner is a Government cost-sharing Engineering College and the students’ fee is regulated by the Government, and only 50% of the total seats are filled with a regulated fee, and the remaining seats alone are filled with a full fee. They contend that the fee structure is fixed by the Government, and even the fee collected from the students is not sufficient to meet the expenses of the College. It is also contended that the petitioner is contributing an amount of Rs. 3,90,000/- towards the gratuity fund to meet the contribution of 112 staff members, and if the gratuity amount is raised, the petitioner will have to contribute more than Rs. 1 Crore annually, imposing a huge liability, which the petitioner institution cannot bear.

4. A counter affidavit is filed on behalf of the 4th respondent, stating that the main objection raised by the petitioner before the Authorities is that the amount to be paid as gratuity to the 4^th respondent is covered by Exhibit P1 Rules. The other contention raised was regarding the financial burden of the petitioner Institution. These contentions were answered by the Authorities and found to be legally unsustainable by Exhibits P3 and P4 orders. It is also argued that Section 14 of the Act overrides the provisions of all other enactments. Reliance is also placed on Section 4 (5) of the Act, which entitles the employee to take advantage of the higher gratuity payable under the Act. The provision entitles the employee to receive better terms of gratuity. It is also contended that the petitioner institution is not one exempted from the operation of Section 5 of the Act.

5. Learned counsel appearing for the petitioner places reliance on the judgment of the Supreme Court, N. Manoharan V. The Administrative O 2026 INSC 143 , to contend that the petitioner Institution is similarly situated and that the employee cannot claim a higher gratuity after accepting the gratuity fixed as per Exhibit P1, without any protest.

6. Learned counsel appearing for the 4^th respondent place reliance on the judgment of the Division Bench of this Court in Kerala State Co- operative Bank Ltd V. S. Viswanathamallam & Ors.; 2022 (3) KLJ 502 and Manoharan D. V. Kerala State Beverages (Manufacturing and Marketing) Corporation; 2025 KHC OnLIne 2313 to contend that the 4^th respondent is entitled to higher gratuity under the Act. It is also argued that, therefore, the impugned orders need not be interfered with by this Court.

7. Having considered the rival submissions, I am not inclined to accept the contentions on behalf of the petitioner for more reasons th