KERALA STATE CO-OPERATIVE BANK LTD. v. THE COURT OF DEPUTY LABOUR COMMISSIONER (AUTHORITY UNDER PAYMENT OF GRATUITY ACT, 1972) AND M. ABDUL RASHEED

**C.R.** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS** **MONDAY, THE 01ST DAY OF FEBRUARY 2021 / 12TH MAGHA,1942** ## **WP(C).No.36465 OF 2016(G)** ## **PETITIONER :** **THE KERALA STATE CO-OPERATIVE BANK LTD., CO-BANK TOWERS, PALAYAM, THIRUVANANTHAPURAM – 695 033, REPRESENTED BY THE MANAGING DIRECTOR.** **BY ADVS.** **SRI.GEORGE POONTHOTTAM, SC, KERALA STATE CO.OP BANK LTD.** **SRI.GILBERT GEORGE CORREYA, SC, KERALA STATE CO-OPERATIVE BANK** ## **RESPONDENTS :** **1 THE COURT OF DEPUTY LABOUR COMMISSIONER, (AUTHORITY UNDER PAYMENT OF GRATUITY ACT 1972), KOZHIOKDE. 2 M. ABDUL RASHEED, MATTUMMAL HOUSE, P.C. COLONY, EDAVANNA, MALAPPURAM DISTRICT – 676 541.** **BY GOVT.PLEADER SMT.POOJA SURENDRAN R2 BY ADV.SHRI.JAWAHAR JOSE** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.36465 OF 2016(G)** 2 ## **“C.R.”** ## **JUDGMENT** Dated this the 1st day of February 2021 Petitioner challenges an order issued by the Controlling Authority under the Payment of Gratuity Act, 1972 (for short, 'the Act') directing the writ petitioner to pay to the 2[nd] respondent the gratuity quantified. 2. The 2[nd] respondent retired as the Deputy General Manager of the writ petitioner Bank on 30.06.2010. He served in the Bank from 1975 onwards and no disciplinary proceedings were ever initiated against the petitioner till the date of his retirement. However, on the day of his retirement, a notice styled as 'Memorandum' was issued to him, which is produced as Ext.P1 directing him to show cause as to why disciplinary proceedings should not be initiated for an alleged gross negligence and dereliction of duty, alleged to have been committed by him. Though disciplinary proceedings were never initiated, 2[nd] respondent's gratuity was not paid alleging negligence and dereliction of duty in respect of a loan sanctioned in 2003. **WP(C).No.36465 OF 2016(G)** 3 3. Since even after the lapse of four years the gratuity was not paid to the petitioner, he filed an application as Ext.P2 before the controlling authority, on the basis of which after considering Ext.P3 objection filed by the writ petitioner, the impugned order Ext.P4 was issued. 4. A perusal of Ext.P4 order evinces that though the gratuity calculated as per the Act amounted to Rs.14,94,231/-, in view of the limits prescribed under the Act, the entire amount of gratuity totalling to Rs.10,00,000/-was directed to be paid within 30 days. 5. I have heard Adv.Gilbert George Correya for the petitioner as well as Adv.Jawahar Jose for the 2[nd] respondent and Adv. Pooja Surendran, the learned Government Pleader. 6. Adv.Gilbert George Correya submitted that the controlling authority ought to have been guided by Rule 10 of the Payment of Gratuity Rules which enjoins the applicant to file the application claiming gratuity within 90 days and since such an application was not preferred, Ext.P4 was bad in law. It is further submitted by the counsel for the petitioner that even though Ext.P1 notice was issued, proposing to initiate proceedings against the 2[nd] respondent, he never participated, due to which the proposed **WP(C).No.36465 OF 2016(G)** 4 disciplinary proceedings did not continue. 7. The learned counsel for the 2[nd] respondent, on the other hand contends that by virtue of the statutory prescription under Section 7 of the Act, the employer was bound to determine the quantum of gratuity payable on termination of the employment, irrespective of whether an application for payment of gratuity was filed by the employee or not. Relying upon the decision of this Court in _**Neelakandan Namboothiri v. State of Kerala [2001 (1) KLT 896]**_ as well as the decision in _**P.Galemma and others v. Appellate Authority under payment of Gratuity Act [II L.L.N. 645]**_ it was contended that Rule 10 cannot control the statutory prescription under Section 7 read with Section 4 of the Act. 8. Though petitioner retired on 30.06.2010, the notice Ext.P1 asking him to show cause as to why disciplinary proceedings shall not be initiated was dated 29.06.2010, which is claimed by the petitioner to have been served only on 30.06.2010-the date of retirement. Thus petitioner had not been terminated from service by virtue of any act, wilful omission or negligence causing damage or loss or such other conditions as specified in Section 4(6) of the Act. The only method in which gratuity due to an employee can be detained or refused is by virtue of Section 4(6) of the Act. Section 4 **WP(C).No.36465 OF 2016(G)** 5 read with Section 7 of the Act creates an obligation upon the employer to pay the gratuity due to an employee on the date of termination of his employment after carrying out the quantification. This is a statutory duty vested upon the employer. This statutory duty cannot be abdicated by an employer on the ground that the employee has not preferred an application as contemplated under Rule 10 of the Payment of Gratuity (Central) Rules, 1972. 9. Section 4 of the Act exposits the obligation upon an employer to pay the gratuity due to an employee on termination of his employment. The quantification and other modalities of the said obligation are specified in Section 7. When Section 4 is read along with Section 7 of the Act, it is explicit that even without an application made by the employee, the employer is bound to quantify and pay the gratuity on termination of his employment. 10. Payment of gratuity is a statutory obligation and is not made dependent on an application. The Act does not contemplate the payment of gratuity to be dependent on an application by the employee. This is all the more evident from Section 7(2) of the Act, which specifies that, as soon as the gratuity becomes payable, the employer shall, whether an application has been made or not, determine the amount of gratuity. Rule 10 cannot **WP(C).No.36465 OF 2016(G)** **==> picture [7 x 7] intentionally omitted <==** control Section 4 or Section 10(2) of the Act as it is only a subordinate legislation. It is elementary that the rules cannot control the terms of a statute. Hence the delay in preferring an application under Rule 10 of the Rules cannot be detrimental to the entitlement of gratuity due to the 2[nd] respondent. 11. The decisions relied upon by the counsel for 2[nd] respondent are relevant. In the decision reported in _**P.Galemma and others v. Appellate Authority under payment of Gratuity Act [II L.L.N. 645]**_ , it has been held as follows :- _13. As soon as the gratuity becomes payable, the employer is under a statutory obligation to determine the amount of gratuity payable and give notice to the person entitled to receive the same and also intimate the Controlling Authority of the amount so determined. This obligation is placed upon the employer and he has to perform it whether the employee makes a demand for the said gratuity or not. This is clear from Sub-sec. (2) of S.7. Subsection (3) of S.7 obliges the employer to pay the amount so determined to the persons entitled to receive the same. At the same time, the Act entitles the employee to whom the gratuity is payable to file an application before the employer within such time and in such form as may be prescribed. Rule 7 is made in pursuance of and as contemplated by S.7(1). Rule 7(1) provides_ **WP(C).No.36465 OF 2016(G)** 7 _that such an application by an employee before an employer shall be made “ordinarily within thirty days from the date the gratuity became payable.” if we read sub-rule (1) and sub-rule (5) of rule 7 together, it is clear that not so much importance is attached to the time-limit of thirty days prescribed by rule 7(1)._ 12. Similarly, in the decision reported in _**Neelakandan Namboothiri v. State of Kerala [2001 (1) KLT 896]**_ , it was held that the Payment of Gratuity Act is a beneficial piece of legislation entitled to get a liberal interpretation and the liability under the Act is to be seen as an obligation which the employer has to obligatorily discharge. I respectfully agree with the said two decisions. 13. Admittedly, no proceedings against the 2[nd] respondent had been initiated or concluded prior to his retirement or thereafter. It is submitted across the Bar that, even till date, no disciplinary proceedings have been initiated against the 2[nd] respondent. In such circumstances, the claim of the writ petitioner that there was a delay in preferring the application to the Controlling Authority, contrary to the period specified in Rule 10 has no basis. Accordingly, there is no merit in this writ petition. The learned counsel for the respondent seeks indulgence of this Court for a direction for immediate payment of the gratuity **WP(C).No.36465 OF 2016(G)** 8 already quantified. Taking note of the fact that this is a writ petition filed by the Bank challenging Ext.P4, it is not proper to pass such an order, stipulating a time limit for payment of the gratuity amount, in the absence of separate prayer by the respondent through appropriate proceedings. However, taking note of the circumstances, this Court is of the view that since the lis has been concluded by this judgment, the writ petitioner being a body created under a statute will ordinarily abide by its obligations without fail. The writ petition is dismissed. Sd/- **BECHU KURIAN THOMAS, JUDGE** ## RKM The words “Section 10(2)” appearing in paragraph 10 of the judgment dated 21.12.2020 in W.P.(C).No.36465/2016(G) is corrected as “Section 7(2)” as per the order dated 01.02.2021 in W.P.(C).No.36465/2016. Sd/- **Vacation Officer** **WP(C).No.36465 OF 2016(G)** 9 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** |**P1**|**TRUE**<br>**COPY**<br>**OF**<br>**THE**<br>**MEMO**<br>**NO.**| |---|---| ||**P&E/DA/1538/1375/2010-11 DATED 29/06/2010**| ||**ISSUED TO THE 2ND RESPONDENT.**| |**P2**|**TRUE COPY OF THE APPLICATION DATED**| ||**17/12/2015 ALONG WITH THE AFFIDAVIT**| ||**TO CONDONE THE DELAY.**| |**P3**|**TRUE COPY OF THE STATEMENT FILED BY THE**| ||**2ND RESPONDENT BEFORE THE IST RESPONDENT**| ||**DATED 27/04/2015.**| |**P4**|**TRUE COPY OF THE ORDER IN GC 06/2015**| ||**DATED 24/02/2016 PASSED BY THE IST**| ||**RESPONDENT.**|