Employees covered under the Payment of Gratuity Act are entitled to higher gratuity terms than those specified in inconsistent state rules.

J U D G M E N T

The petitioner retired from service of the 1st respondent Co-

operative Bank on 31.05.2017, on attaining the age of superannuation, after rendering a total service of 30 years. At the time of retirement, the petitioner was disbursed with a sum of ₹10,00,000/- towards gratuity. The grievance of the petitioner in this writ petition is that, in terms of the policy taken by the 1st respondent Bank with the 3rd respondent Life Insurance Corporation of India, the gratuity amount payable to him comes to ₹13,21,667/-. Though the said amount has already been transferred by the Life Insurance Corporation to the 1st respondent Bank, as evident from Ext.P1 communication dated 12.06.2017 of the 3rd respondent, the 1st respondent Bank decided to pay the petitioner only a sum of ₹10 lakhs as gratuity, for the time being, in the light of Circular No.5/2016 issued by the Registrar of Co-operative Societies.

2. Heard the learned counsel for the petitioner and also the learned counsel for the respondent Bank representing respondents 1 and 2.

3. The issue raised in this writ petition regarding the entitlement of the employees of the Co-operative Societies covered by the provisions under the 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 of this Court in Chandrasekharan Nair G. and others v. Kerala State Co-operative Agricultural and Rural Development Bank Ltd. and others (2017 (4) KLT 276).

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 Section 4(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 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 therewith contained in any other enactment or instrument or contract. The overriding effect of the Central Act over other enactments is explicit from Section 14 of the Central Act which is to the following effect:

"14. Act to override other enactments, etc.- The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act."

6. The co-operative societies wherein the employees are engaged is Entry 32 of List II - State List and gratuity to which a claim is laid is Entry 24 of List III - Concurrent List of the Seventh Schedule to the Constitution of India. The Central Act which is the law made by the Parliament shall prevail over the law made by the Legislature of the State i.e. the second proviso to Rule 59(iii) of the Rules. The inconsistency between laws made by Parliament and laws made by the Legislatures of States can be