The Payment of Gratuity Act's provisions prevail over conflicting State laws, ensuring employees can receive gratuity amounts exceeding statutory limits under specific conditions.

J U D G M E N T

The petitioner, who retired from the service of the 1st respondent Society while working as Internal Auditor on 31.3.2007, with a pay of ₹40,202/-, is before this Court in this writ petition filed under Article 226 of the Constitution of India seeking a writ of certiorari to quash Ext.P1 notice dated 9.12.2010 issued by the 1st respondent Society and seeking a declaration that he is not liable to re-pay the amount obtained as gratuity from the Life Insurance Corporation, the 2nd respondent herein, under the Group Gratuity Scheme.

2. The petitioner retired from service on superannuation on 31.3.2007, while working as Internal Auditor in the 1st respondent Co-operative Society. The employees of the 1st respondent Co-operative Society, in the matter of payment of gratuity, are covered by the Group Gratuity Scheme with the Life Insurance Corporation of India. On 10.5.2007, the petitioner was disbursed with a sum of ₹3,50,000/- towards gratuity, which was followed by a further payment of ₹40,202/- on 30.6.2016, as received from the 2nd respondent Life Insurance Corporation. Later, the petitioner was issued with Ext.P1 notice dated 9.12.2010 of the 1st respondent Society, whereby, he was asked to pay back the aforesaid sum of ₹40,202/- alleging that it was an excess payment as per the audit objection.

3. On 21.7.2011 when this writ petition came up for admission, this Court admitted the matter on file and issued urgent notice to the respondent by speed post. This Court has also granted an interim stay of Ext.P1 notice for a period of one month and the said interim order was revived and extended for a period of one month on 27.9.2011. The Life Insurance Corporation of India was impleaded as additional 2nd respondent by the order dated 27.9.2011 in I.A.No.15412/2011.

4. Heard the learned counsel for the petitioner, the learned counsel for the 1st respondent Society and also the learned counsel for the 2nd respondent Life Insurance Corporation of India.

5. 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 effe