KERALA AGRICULTURAL UNIVERSITY v. THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 (DEPUTY LABOUR COMMISSIONER), KOZHIKODE; ABOOBACKER K., S/O MUHAMMED, KANATHIL KOTTAMMEL HOUSE, KODIYATHUR P.O., MUKKOM-VIA, KOZHIKODE DISTRICT, PIN-673602; THE JOINT DIRECTOR, LOCAL FUND AUDIT, KERALA AGRICULTURAL UNIVERSITY, VELLANIKKARA, THRISSUR-680656

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR** **MONDAY, THE 10TH DAY OF JULY 2017/19TH ASHADHA, 1939** **WP(C).No. 17741 of 2016 (P) ---------------------------** - **PETITIONER: -----------** **KERALA AGRICULTURAL UNIVERSITY, KAU P.O., VELLANIKKARA, THRISSUR-680656, REPRESENTED BY ITS REGISTRAR.** **BY SRI.BABU JOSEPH KURUVATHAZHA,SC SRI.ROBSON PAUL, SC** **RESPONDENTS:** - **------------** **1. THE CONTROLLING AUTHORITY, UNDER THE PAYMENT OF GRATUITY ACT, 1972 (DEPUTY LABOUR COMMISSIONER), KOZHIKODE-673001.** **2. ABOOBACKER K., S/O.MUHAMMED, KANATHIL KOTTAMMEL HOUSE, KODIYATHUR P.O., MUKKOM-VIA, KOZHIKODE DISTRICT, PIN-673602.** **3. THE JOINT DIRECTOR, LOCAL FUND AUDIT, KERALA AGRICULTURAL UNIVERSITY, VELLANIKKARA, THRISSUR-680656.** **R1 & R3 BY ADV. GOVERNMENT PLEADER SRI.C.P.PRADEEP R2 BY ADVS.SRI.R.SANJITH SMT.C.S.SINDHU KRISHNAH** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10-07-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **mbr/** ## **WP(C).No. 17741 of 2016 (P) ----------------------------** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXT. P1: TRUE COPY OF THE NOTIFICATION NO. 31811/AG P4/72/AD DATED 15-6-72 ISSUED BY THE GOVERNMENT.** **EXT. P2: TRUE COPY OF THE LETTER NO.LF(LAU)P1/211/09 DATED 28-2-2009 ISSUED BY THE 3RD RESPONDENT.** **EXT.P2(A): TRUE COPY OF THE LETTER DATED 3-5-2014 ISSUED BY THE COMPTROLLER.** **EXT. P3: TRUE COPY GC 06/14 FILED BY THE 2ND RESPONDENT BEFORE THE 1ST RESPONDENT. EXT. P4: TRUE COPY OF THE NOTICE DATED 21-4-2014 ISSUED BY THE 1ST RESPONDENT.** - **EXT. P5: TRUE COPY OF THE STATEMENT OF FACTS DATED 12-3-2015 FILED BY THE COMPTROLLER.** - **EXT. P6: TRUE COPY OF THE ORDER DATED 24-8-2015 ISSUED BY THE 1ST RESPONDENT.** ## **RESPONDENTS' EXHIBITS:** - **EXT.R2(1): TRUE COPY OF THE ORDER PROVISIONALLY SANCTIONING PENSION AND FAMILY PENSION, DEATH CUM RETIREMENT GRATUITY, COMMUNICATION OF PENSION, ANTICIPATORY PENSION ISSUED TO THE 2ND RESPONDENT.** **EXT.R2(2): TRUE COPY OF THE MODIFIED PENSIONARY ORDER.** **EXT.R2(3): TRUE COPY OF THE SANCTION ORDER.** **EXT.R2(4): TRUE COPY OF THE REPRESENTATION DATED 24.6.09. EXT.R2(5): TRUE COPY OF THE REPRESENTATION DATED 17.8.10.** - **EXT. R3A: TRUE COPY OF CLAUSE NO.4 OF NOTIFICATION NO.3181/AGP4/72/AD DATED 15.6.1972.** - **EXT. R3B: TRUE COPY OF THE LETTER NO.LF(KAU)P1-66/08 DATED 10.7.2008.** - **EXT. R3C: TRUE COPY OF THE LETTER NO.LF(KAU)P1/211/09 DATED 28.2.2009.** **//TRUE COPY//** **P.S. TO JUDGE** **mbr/** ## **A.K.JAYASANKARAN NAMBIAR, J.** **............................................................. W.P.(C).No.17741 Of 2016 -( P) ............................................................. Dated this the 10[th] day of July, 2017** ## **J U D G M E N T** The Kerala Agricultural University represented by its Registrar is the petitioner in this writ petition. The facts in the writ petition would indicate that the 2[nd] respondent was an employee of the University, who retired with effect from 31.12.2007. It would appear that the service conditions of the 2[nd] respondent, while he was an employee of the University, were governed by the provisions of the Kerala Service Rules. At the time of his retirement, the petitioner University fixed the retirement benefits of the 2[nd] respondent by quantifying the Death cum retirement gratuity (DCRG) payable @ Rs.3,30,000/-, the pension @ Rs.8,888/and the commuted value of pension @ Rs.4,87,178/-. The commuted value of pension, as also the monthly pension payment, were paid, and are continued to be paid by the petitioner University. When it came to the payment of DCRG to the 2[nd] respondent, however, the petitioner University took note of an -2- ## **W.P.(C).No.17741 Of 2016 -( P)** objection that was raised by the Local Fund Audit Department, which stated that an amount of Rs.1,80,000/- had been mistakenly paid to the 2[nd] respondent, consequent to an erroneous fixation of increment amounts to the petitioner, pursuant to a pay revision effected in 1992. The audit objection itself was in 2009, and the quantification of the amounts found payable by the 2[nd] respondent was done in the year 2014. On account of the delay occasioned by the petitioner in effecting payment of the DCRG amounts that were found payable to the 2[nd] respondent, the 2[nd] respondent approached the controlling authority under the Payment of Gratuity Act, 1972. By Ext.P6 order dated 24.08.2015, the controlling authority found that an amount of Rs.48,334/- had already been paid by the petitioner University to the 2[nd] respondent, over and in addition to an amount of Rs.1,50,000/that was paid even earlier. The controlling authority thereafter found that, in the absence of any dispute between the parties, with regard to the quantum of DCRG payable to the 2[nd] respondent, and in the absence of any provision under the Payment of Gratuity Act that enabled an employer to deduct any amount due from the gratuity of an employee except in terms of Section 4 (6) of the Act, -3- ## **W.P.(C).No.17741 Of 2016 -( P)** the petitioner was liable to pay the balance amount outstanding (Rs.1,01,666/-) to the 2[nd] respondent, together with interest at the statutory rate of 10% per annum, and compound interest at the rate of 15% per annum in the event of non-payment within the time stipulated in Ext.P6 order. Ext.P6 order of the controlling authority is impugned in the writ petition by the petitioner University. 2. Counter affidavits have been filed on behalf of the 1[st] and 3[rd] respondents. In the counter affidavit filed on behalf of the 3[rd] respondent, the stand taken is that, the 2[nd] respondent did not come under the ambit of the term “employee”, under the Payment of Gratuity Act, 1972, and therefore, Ext.P6 order is one that is passed without jurisdiction. With regard to the audit report, it is stated that the Director of Local Fund Audit found that excess amounts had been paid to the 2[nd] respondent, pursuant to an erroneous fixation of the allowances due to the 2[nd] respondent, consequent to the pay revision that took place in 1992. It is the said amount that was sought to be recovered from the 2[nd] respondent through Ext.R3(C) communication issued on -4- **W.P.(C).No.17741 Of 2016 -( P)** 28.02.2009. The averments in the counter affidavit filed on behalf of the 1[st] respondent are to the effect that, the Payment of Gratuity Act would apply to the 2[nd] respondent, and Ext.P6 order is sought to be justified on the grounds stated therein. 3. I have heard the learned counsel appearing for the petitioner, the learned Government Pleader appearing for the respondents 1 and 3 and the learned counsel for the 2[nd] respondent. 4. On a consideration of the facts and circumstances of the case as also the submissions made across the bar, I find from a perusal of Ext.P6 order that is impugned in this writ petition that, the 1[st] respondent controlling authority correctly finds that there was no dispute with regard to the amount payable to the 2[nd] respondent by way of gratuity. It was thereafter found that there was no provision under the Payment of Gratuity Act, 1972, that enabled an employer to deduct any amount due from the gratuity of an employee, except in terms of Section 4(6) of the Payment of Gratuity Act. It is not in dispute in the instant case that, the -5- ## **W.P.(C).No.17741 Of 2016 -( P)** deduction that was sought to be made by the petitioner, from the amounts due to the 2[nd] respondent by way of gratuity, were not of the nature contemplated in Section 4(6) of the Payment of Gratuity Act. Under the said circumstances, I find that, there is no warrant for interfering with Ext.P6 order in these proceedings under Article 226 of the constitution of India. 5.Before parting with this case, I must also take note of the contention of the learned Government Pleader, appearing on behalf of the 3[rd] respondent, that the 2[nd] respondent did not come within the purview of the Payment of Gratuity Act, 1972 for the purposes of seeking redressal of his grievance under the said Act. Reference is made to the definition of an employee under the said Act to contend that, the Act would apply only to employees, who hold a post under the Central Government or a State Government and are governed by any other Act or Rules providing for payment of gratuity. It is the contention of the 3[rd] respondent that, the 2[nd] respondent having been an employee of the University, to whom the provisions of the Kerala Service Rules (KSR) were made applicable, would fall outside the ambit of the term employee for -6- ## **W.P.(C).No.17741 Of 2016 -( P)** the purposes of the Payment of Gratuity Act. I am afraid, I cannot accept the said contention on behalf of the 3[rd] respondent. The definition of an employee under the Payment of Gratuity Act clearly excludes only those who hold a post under the Central Government or a State Government and are governed by any other Act or Rules providing for Payment of Gratuity Act. The use of the word 'and' indicates that the exclusion must satisfy the twin conditions of a person holding a post under the Central Government or State Government as also being governed by any other Act or Rules providing for payment of gratuity. In the instant case, while it could be argued that the KSR provided for a payment of gratuity, the 2[nd] respondent did not satisfy the other condition, of holding a post under the Central Government or State Government. Resultantly, I do not see any ground for interference with Ext.P6 order on the said contention. 7.I must, however, comment on the sad predicament of the 2[nd] respondent, who had to to endure an inordinate delay in getting his gratuity dues, on account of the audit objection raised by the Local Fund Audit Department. As already noted, the audit -7- ## **W.P.(C).No.17741 Of 2016 -( P)** objection was in respect of an alleged erroneous fixation of benefits in respect of the 2[nd] respondent, as early as in 1992. The audit objection itself is seen raised only in the year 2009. The audit department, that supervises payments made by any public establishment or Government department is expected to act within a reasonable period in the matter of detecting any discrepancy or irregularity in payments made to employees or other persons. The inordinate delay, of more than 16 years, cannot by any stretch of imagination be considered reasonable. An employee will be justified in assuming that the payments made to him/her by the employer are in order, if no audit objection is raised within a reasonable period, and in the absence of any collusion between the employee and the employer. On the facts of the instant case, I am of the view that the audit objection raised by the Local Fund Audit Department cannot be a justification for denying payment of the balance amounts of gratuity to the 2[nd] respondent. For all the above reasons, the writ petition in its challenge against Ext.P6 order is dismissed, and the petitioner is directed to effect payment of the balance amounts due to the 2[nd] respondent, as directed in Ext.P6 order, within one month from the date of receipt of a copy -8- ## **W.P.(C).No.17741 Of 2016 -( P)** of this judgment. 9.I make it clear that nothing in this judgment shall prevent the petitioner University from initiating any steps for recovery of any other excess amount paid to the 2[nd] respondent while he was in service, through any means other than deduction from the gratuity payable. While resorting to any such steps however, the petitioner shall ensure that the decision of the Supreme Court in **State of Punjab v. Rafiq Masih (White Washer)[2015 (1) KLT 429 (SC)]** is taken note of. Sd/- **A.K.JAYASANKARAN NAMBIAR JUDGE** mns/10.07.17