C. V. Paul and K. Shakunthala v Eastern Ad Service Co-operative Bank Ltd and Board of Management of the Eastern Ad Service Co-operative Bank Ltd and Life Insurance Corporation of India

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V WEDNESDAY, THE 6[TH] DAY OF DECEMBER 2023 / 15TH AGRAHAYANA, 1945`** ## **`WP(C) NO. 11085 OF 2022`** ``` PETITIONERS: ``` ``` 1C.V.PAUL, AGED61YEARS S/O.C.P.VARGHESE,RESIDINGATCHERUPARAMBILHOUSE, P.O.THEYYATHUMPADAM.EDAKARA,MALAPPURAMDISTRICT, 679331. 2K.SHAKUNTHALA, D/O.GOVINDAN,KEEZHEDATHHOUSE,EDAKKARAP.O, NILAMBUR,MALAPPURAMDISTRICT-679331 BYADVP.V.BABY ``` ``` RESPONDENTS: ``` ``` 1EASTERNADSERVICECO-OPERATIVEBANKLTD.NO.D1946, EDAKKARAP.O,NILAMBUR,MALAPPURAMDISTRICT,679331, REPRESENTEDBYITSSECRETARY. 2BOARDOFMANAGEMENTOFTHEEASTERNADSERVICE CO-OPERATIVEBANKLTD., NO.D1946,EDAKKARAP.O,NILAMBUR,MALAPPURAM DISTRICT-679331,REPRESENTEDBYITSPRESIDENT. 3THEMANAGER, LIFEINSURANCECORPORATIONOFINDIA,JEEVANPRAKASH, 8THFLOOR,HUSOORROAD,KOZHIKODE-673001. BYADVS. SAHASRANAMANPB T.S.HARIKUMAR(K/782/1989) ``` W.P(C) No.11085 of 2022 -2- ``` SRI.OVMANIPRASAD,SCFOREASTERNADSERVICE CO-OPERATIVEBANK SRI.SEASWARAN,SCFORLIC ``` ``` THISWRITPETITION(CIVIL)HAVINGCOMEUPFOR ADMISSIONON06.12.2023,THECOURTONTHESAMEDAY DELIVEREDTHEFOLLOWING: ``` W.P(C) No.11085 of 2022 -3- ## **J U D G M E N T** The petitioners state that they are the former employees of the East Ernad Service Co-operative Bank Ltd., Malappuram. They attained superannuation on 31.12.2019 and 31.5.2013, respectively, while they were working in the post of Secretary. It is contended that both of them had rendered over 3 decades of service in the Bank. 2. The petitioners contend that respondents 1 and 2 have secured a Group Insurance Policy with the Life Insurance Corporation of India. On their retirement, the petitioners were paid Rs. 10 lakhs and 20 lakhs, respectively, being the amount received from the LIC. They contend that the eligibility of the petitioners to receive gratuity is based on a calculation as mentioned in Rule 59 of the Kerala Co-operative Societies Rules read with Section 4 (2) of the Payment of Gratuity Act, 1972. They assert that in view of the law laid down in **Chandrasekharan Nair G. and Others v. Kerala State Co-operative Agricultural and Rural Development Bank Ltd. and Others[1]** , if on retirement, the LIC has paid only the prescribed amount of 10 Lakhs, and 20 Lakhs > 1 [2017 (4) KLT 276] W.P(C) No.11085 of 2022 -4- respectively, but if the employee is entitled to higher amounts, the higher amount has to be paid in view of Section 4 and 5 of the Act. Accordingly, they preferred Exts. P1 and P2 representations claiming the balance amount due to the petitioners. They state that their request was rejected by Ext.P3 order wherein it is stated that their entitlement is limited to the amounts received from the LIC. Impugning Exhibit P3 order, this writ petition is filed seeking the following reliefs:- i. Issue a writ of certiorari, or other appropriate writ, order or direction, calling for the records leading to Ext P3 issued by the 1st respondent based on the decisions of the 2nd respondent and quash the same. ii. Declare that the petitioners are entitled to receive gratuity as stated in Ext P1 & P2 towards balance gratuity. iii. Issue a writ of mandamus, writ, order or direction, directing the 1st & 2nd respondents to pay to the petitioners amounts mentioned in Exts P1 & P2 towards balance gratuity along with interest @ 9% per annum from the respective dates of retirement of the petitioners till payment. 3. The respondents 1 and 2 have filed a counter affidavit contending that this Court cannot entertain the claim for payment of a higher amount of gratuity in a writ petition filed under Article 226 of the Constitution of India. The amount due to the petitioners as per the master policy has been disbursed to them, and accordingly, no further amounts are due. W.P(C) No.11085 of 2022 -5- 4. A counter affidavit has been filed by the 3rd respondent wherein it is stated that the gratuity was paid in terms of the master policy. It is further stated that in view of the law laid down in **Chandrasekharan Nair** , the liability to pay the balance amount of gratuity over and above the ceiling limit will be with the employer and not the LIC. 5. I have heard the learned counsel appearing for the petitioners and the learned standing counsel appearing for the respondents. 6. I find that identical issues had come up for consideration before a Division Bench of this Court and by judgment dated 14.7.2023 in Writ Appeal No.758 of 2022 and connected cases, the matter was decided in favor of the employees. The petitioners herein are similarly placed as the petitioners therein. The very same objections raised by the respondents therein in that matter were noticed by the Division Bench and the same was rejected by holding as under: 6. The learned counsel for the appellant Sri. Gilbert George Correya argues that the judgment in Chandrasekharan Nair (supra) is clearly distinguishable. He also argued that going by Section 7 of the Payment of Gratuity Act an appeal is provided against the order of the controlling authority and if at all the petitioners are aggrieved about the quantum of gratuity they should have taken recourse to alternate remedy. It is also argued by the learned counsel that Ext.P1 Regulations W.P(C) No.11085 of 2022 -6- came into force on 16.02.1968 prior to the enactment of the Central or the State Regulations of Gratuity and after the coming into force of the Kerala Co-operative Societies Act, 1969, the petitioners would be bound by that. He also relied on the judgments in Thalassery Co-operative Rural Bank Ltd. v. Mukundan [2021 (1) KLT 663] and Y.K.Singla v. Punjab National Bank and others [(2013) 3 SCC 472] to support his contentions. He also argued that there was no choice for the writ petitioners since they are subject to the provisions of the Payment of Gratuity Act, 1972, and that there was no agreement, award or contract that has been entered into for the “better terms” and in the absence of the same the bank cannot be directed to make excess payments. The learned counsel further submitted that the learned single Judge has not appreciated the application of Section 4(5) of the Payment of Gratuity Act,1972 as well as the second proviso to Rule 59(iii) of the Kerala Cooperative Societies Act, 1969 , in the correct perspective. 7. On going through the judgments referred and relied on by the learned single Judge, we are in complete agreement with the finding that the matter in issue is squarely covered by the judgment in Chandrasekharan Nair (supra) as well as WP(C)No.1023 of 2019, WA No.524 of 2018 and WP(C)No.27507 of 2013. These judgments against the very same bank cover the issue on all fours and we are in complete agreement with the proposition laid down in them. We also note that the judgment in WP(C)No. 27507 of 2013 and WP(C)No.1023 of 2019 have become final in the absence of a challenge to the same by the bank and after accepting the same, it was not open to the appellant to contend against the findings in those cases over again. 8. The learned counsel for the appellant however argues that going by the judgment in BCH Electric Limited v. Pradeep Mehra (2020 KHC 6365), it must be taken that the view taken by the Full Bench in Chandrasekharan Nair (supra) has been changed. We do not think that the said submission is correct. The Supreme Court in the said judgment clearly found that for Section 4(5) of the Payment of Gratuity Act to get W.P(C) No.11085 of 2022 -7- attracted, there must be better terms of gratuity available and extended to an employee 'under any award or agreement or contract with the employer' as against what has been provided for under and in terms of the Act. In other words, as against what is made applicable by the Act, if better terms are available under any such arrangement with the employer, Section 4(5) stipulates that nothing in Section 4 shall affect the right of any employee to receive such better terms. Thus when two choices are available, one under the provisions of the Payment of Gratuity Act and the other under such arrangement with the employer and if the latter offers better terms, the employee cannot be denied the right to receive those higher benefits. This we feel is in consonance with the judgment in Chandrasekharan Nair (supra) and not against it. That apart, the Supreme Court in BCH Electric Limited (supra) clearly found on facts that in that case there was no such choice available to the employees or no scheme existed which provided for better terms and in the absence of two alternatives one in terms of the Act and one as per the award or agreement or contract with the employer, the employees cannot get the benefit of Section 4(5) of the Act. The judgment of the Supreme Court is thus clearly distinguishable as the Supreme Court itself holds that in that case the employees are covered by the provisions of the Act even according to the trust deed therein, the amount of gratuity had to be calculated in accordance with the provisions of the Act. We therefore, reject the contentions of the learned counsel for the appellant that the judgment in BCH Electric Limited (supra) is a shift from the view taken in Chandrasekharan Nair (supra). 9. The learned counsel also argues based on the judgment in Thalassery Co-operative Rural Bank Ltd. (supra) that the writ petitioners had an alternate remedy both under the Payment of Gratuity Act as well as under the Kerala Co-operative Societies Act and that any dispute in connection with the employment had to be settled by resorting to the alternate remedy. We do not accept the said contention as in this case there is no factual dispute that needs resolution and the matter in issue W.P(C) No.11085 of 2022 -8- is squarely covered in favour of the writ petitioners and in such circumstances relegating the petitioners to avail alternate remedy is onerous and harsh. It is pertinent to note that the bank is enjoined to act as a model employer whose actions on all fronts, including in the matter of payment of gratuity to its employees, must be informed by fairness in action. Having accepted the judgments mentioned above, the bank cannot adopt double standards while dealing with the similarly situated employees. The learned counsel also attempted to argue that Ext.P1 Regulations cannot be held to be an award or agreement or contract. We hold that Ext.P1 Regulations should definitely be an instrument or contract having the force of law which regulate the payment of gratuity to the writ petitioners. The non-obstante clause contained in sub section (5) of Section 4 of the Payment of Gratuity Act had overriding effect over all the other sub sections under Section 4 and Ext.P1 must be taken as a contract within the meaning of Section 4(5) of the Payment of Gratuity Act. No other contentions are urged. (emphasis supplied) 7. It was held by this Court that if better terms are available under any arrangement with the employer, Section 4(5) stipulates that nothing in Section 4 shall affect the right of any employee to receive such better terms. Thus, when two choices are available, one under the provisions of the Payment of Gratuity Act and the other under such arrangement with the employer, and if the latter offers better terms, the employee cannot be denied the right to receive those higher benefits. Insofar as availing of alternate remedy is concerned, the Division Bench held that there is no factual dispute that needs resolution and the matter W.P(C) No.11085 of 2022 -9- in issue is squarely covered in favor of the writ petitioners, and in such circumstances, relegating the petitioners to avail alternate remedy is onerous and harsh. The Bank is enjoined to act as a model employer whose actions on all fronts, including in the matter of payment of gratuity to its employees, must be informed by fairness in action. It was held that the Bank cannot adopt double standards while dealing with similarly situated employees. I am of the view that the principles laid down by the Division Bench in Writ Appeal No.758 of 2022 would apply on all fours in the instant case as well. In that view of the matter, this petition will stand allowed. There will be a direction to the respondents to disburse the balance eligible gratuity to the petitioners. Needful shall be done within a period of three months from the date of receipt of a certified copy of this judgment. If the balance amount is not paid as ordered above, the same shall carry interest at the rate of 7% p.a. from the date on which the amount became due. ## **Sd/-** ## **RAJA VIJAYARAGHAVAN V, JUDGE** IAP W.P(C) No.11085 of 2022 -10- ## **`APPENDIX OF WP(C) 11085/2022`** ``` PETITIONERS’EXHIBITS: ``` ``` ExhibitP1 ``` ``` ATRUEPHOTOCOPYOFTHEREPRESENTATIONDATED 7.12.2021SUBMITTEDBYTHE1STPETITIONERTO THE1STRESPONDENT. ``` ``` ExhibitP2 ``` ``` ATRUECOPYOFTHEREPRESENTATIONDATED 10.12.2021SUBMITTEDBYTHE2NDPETITIONER TOTHE1STRESPONDENT. ``` ``` ExhibitP3ATRUECOPYOFTHECOMMUNICATIONDATED 2.3.2022ISSUEDBYTHE1STRESPONDENTAND RECEIVEDBYTHEPETITIONERS. ``` ``` RESPONDENTS’EXHIBITS: ``` ``` EXHIBIT.R.3(A)TRUECOPYOFTHEBANKRESOLUTIONDATED 18-11-2010 ``` ``` EXHIBIT.R.3(B)TRUECOPYOFTHECLAIMINTIMATIONFORM, DATED18-11-2019PERTAININGTOTHE1ST PETITIONERPREFERREDBYTHEEMPLOYERBANK ``` ``` EXHIBIT.R.3(C)TRUECOPYOFTHECLAIMINTIMATIONFORM, DATED11-05-2013INRESPECTOF2ND PETITIONERSUBMITTEDBYTHEBANK ``` ``` EXHIBIT.R.3(D)TRUECOPYOFTHEDISCHARGERECEIPTDATED 18-11-2019ACKNOWLEDGINGRECEIPTOFGRATUITY AMOUNTOFRS.20LAKHSINFULLSATISFACTION ANDDISCHARGEOFTHECLAIMBYTHEEMPLOYER BANKINRESPECTOFTHE1STPETITIONER ``` ``` EXHIBIT.R.3(E)TRUECOPYOFTHEDISCHARGERECEIPTDATED 11-05-2013ACKNOWLEDGINGRECEIPTOFGRATUITY AMOUNTOFRS.10LAKHSINFULLSATISFACTION ANDDISCHARGEOFTHECLAIMBYTHEEMPLOYER BANKINRESPECTOFTHE2NDPETITIONER ```