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2026 Supreme(Online)(Ker) 22792
IN THE HIGH COURT OF KERALA AT ERNAKULAM
N. Nagadesh, Johnson John, JJ
THE KOLLAM DISTRICT CO-OPERATIVE BANK LIMITED – Appellant
Versus
DAVID KUTT .K.G. – Respondent
WA NO. 593 OF 2020 | WA NO. 626 OF 2020 | WA NO. 627 OF 2020 | WA NO. 723 OF 2020 | WA NO. 844 OF 2020
For the Appellants/Petitioners: SRI.P.C.SASIDHARAN
For the Respondents: SRI.M.GOPIKRISHNAN NAMBIAR, SRI.P.B.SAHASRANAMAN, SRI.K.JOHN MATHAI, SRI.JOSON MANAVALAN, SRI.KURYAN THOMAS, SRI.PAULOSE C. ABRAHAM, SRI.T.S.HARIKUMAR, SRI.E.K.NANDAKUMAR (SR.), SRI.T.K.VIPINDAS, SR.GOVERNMENT PLEADER, SMT.MARY BEENA JOSEPH, SR.GOVERNMENT PLEADER
Employees enrolled in a Group Gratuity Insurance Scheme before 2018 are entitled to the full accumulated amount without the statutory cap of ₹10 lakhs imposed post-amendment.
Headnote:(A) Payment of Gratuity Act, 1972 - Section 4(2) and 4(5) - Group Gratuity Insurance policy - Employees entitled to accumulated Gratuity amount exceeding ₹10 lakhs due to earlier policy terms and statutory amendments - Court ruled that employer retains liability despite Insurance policy, and employees should be compensated without exceeding the statutory cap post-2018 amendments. (Paras 3, 4, 8, 9)
(B) Writ Appeal - Scope and authority of appeals - The court reaffirmed that Full Bench decisions shall guide outcomes where policy disputes arise regarding Gratuity insurance, confirming lower court's judgment with respect to employee entitlements. (Paras 4, 6, 9)
Facts of the case:
Writ Appeals arose from claims of employees of a bank who contested restrictions on Gratuity payout after retirement, asserting they were entitled to accumulations under a Group Gratuity Insurance policy that previously did not have a cap up to 2018.
Findings of Court:
The common judgment affirmed that employees enrolled before the amendment in 2018 are entitled to the full accumulated amount as Gratuity without limitation. The bank's contention of financial liability due to past settlements was considered but not upheld.
Issues: Whether the amendment of the Gratuity Act imposes limits on payments accumulated prior to its enactment and if past settled claims can be reopened for higher payouts.
Ratio Decidendi: Liability for Gratuity rests with the employer despite Group Insurance policies, with the Full Bench clarifying that employees are entitled to claimed amounts without statutory limits prior to 2018.
Result: Writ appeals dismissed.
| Table of Content |
|---|
| 1. initiation of writ appeals due to gratuity payout dispute. (Para 1 , 2) |
| 2. claim for higher payout based on prior judgment. (Para 3) |
| 3. legal standing on gratuity before amendment. (Para 4) |
| 4. bank's argument against reopening settled cases. (Para 5 , 6) |
| 5. clarification on gratuity liability based on insurance. (Para 7 , 8 , 9) |
J U D G M E N T
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Nagaresh, J.
These writ appeals arise out of the common judgment delivered by a learned Single Judge in W.P.(C) Nos.20994/2018, 21117/2018, 22015/2018, 22091/2018 and 22101/2018. The 3rd respondent in the writ petitions-Kollam District Co-operative Bank Limited is the appellant. The writ petitions were filed by employees of the appellant-Bank who claimed that they are entitled to a higher payout in view of the Group Gratuity Insurance policy taken by the appellant-Bank from the LIC of India.
2. The employees contended that the appellant-Bank has taken a Group Gratuity Insurance policy. Amounts more than ₹10 lakhs are accumulated in the name of the employees under the Group Gratuity Insurance Scheme. However, on retirement, the employees were paid only ₹10 lakhs towards Gratuity holding that there is an upper limit of ₹10 lakhs for payment of Gratuity.
3. The employees urged that in the Full Bench judgment inChandrasekharan Nair v. Kerala State Co- operative Agricultural and Rural Development Bank Limited [2017 (4) KLT 276] , it was held that the employees are entitled to higher payout because the Group Gratuity Insurance policy taken by the appellant-Bank did not limit the payment to ₹10 lakhs.
4. The learned Single Judge held that the policy in question did not contain any restriction as to the amount of Gratuity payable until the year 2018. In the year 2018, consequent to the amendment to Section 4 (2) of the Payment of Gratuity Act , a limit was placed therein in consonance with the statutory limit. As the employees in the writ petitions were enrolled in the Group Gratuity Insurance Scheme before 2018, they are entitled to the accumulated amount as Gratuity, without any upper limit. As regards payment of interest, the learned Single Judge held that the employees will have to raise a dispute under Section 69 of the Kerala Co-operative Societies Act , 1969 or to approach the Controlling Authority under the for this purpose.
5. Aggrieved by the common judgment dated 14.08.2019 in W.P.(C) No.20994/2018 and connected cases, the Bank has filed these appeals. The appellant urged that in terms of the Group Gratuity Insurance policy, the entire contribution is made by the appellant and there is no employee contribution. No employee is denied the benefit of Gratuity. Though the Full Bench has laid down the law that the employer cannot retain the amounts received in excess of ₹10 lakhs, the first proviso to the Rule has not been interfered with. The entitlement of Gratuity is statutorily provided in the Rules which mandates that the Gratuity shall not exceed 50 months pay.
6. The appellant submitted that a large number of employees have retired from the service of the appellant and their cases are settled. If the entire settled cases are compelled to be reopened, it would cause huge financial liability on the appellant-Bank.
7. We have heard the learned counsel for the appellant and the learned counsel appearing for the employees. We have also heard the learned Standing Counsel appearing for the LIC of India.
8. A Full Bench of this Court in Chandrasekharan Nair (supra) considered the question as to whether employees can be pinned down to the amount of Gratuity specified in the Payment of Gratuity Act , 1972. This Court held that merely because an employer has subscribed to Group Gratuity Insurance Scheme, the liability to pay Gratuity does not get shifted to the Insurer. The effect is only that the maturity value of the master policy would go to the credit of the dues of the employees. Any amount in excess of the Gratuity due would also go to the employee.
