K.V. Johny Kumarappillil v. Idukki District Co-operative Bank Ltd. & Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE S.SIRI JAGAN** **& THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN** **MONDAY, THE 16TH DAY OF DECEMBER 2013/25TH AGRAHAYANA, 1935** ## **WA.No. 541 of 2012 () IN WP(C).15762/2010 -------------------------------------------** **AGAINST THE ORDER/JUDGMENT IN WP(C) 15762/2010 of HIGH COURT OF KERALA DATED 06.03.2012** ## **APPELLANT(S)/PETITIONER:** **------------------------------------------** ## **K.V.JOHNY KUMARAPPILLIL HOUSE, NADUKANDAM, KOLANI POST THODUPUZHA, IDUKKI DISTRICT.** ## **BY ADV. SRI.P.V.BABY** ## **RESPONDENT(S)/RESPONDENTS:** **-------------------------------------------------** **1. THE IDUKKI DISTRICT CO-OPERATIVE BANK LTD. HEAD OFFICE, IDUKKI COLONY P.O. REPRESENTED BY ITS GENERAL MANAGER-685602.** ## **2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES THIRUVANANTHAPURAM-695001.** **3. THE DISTRICT LABOUR OFFICER IDUKKI, THODUPUZHA-685603.** **R1 BY ADV. SRI.JOICE GEORGE, SC,IDUKKI D.CO-OP.BANK R3 BY GOVERNMENT PLEADER** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 16-12-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **S.Siri Jagan & K. Ramakrishnan, JJ ============================== W.A.No.541 of 2012** ## **=============================== Dated this, the 16[th ] day of December, 2013.** ## **J U D G M E N T** ## S.Siri Jagan, J. The appellant is the petitioner in W.P.(C) No.15762/2010. He was working as a driver in the service of the first respondent-Cooperative Bank. While he was working as a driver on 18.05.1989, he was dismissed from service after conducting a domestic enquiry and finding him guilty of misconducts alleged against him. He raised an Industrial Dispute which was referred to the Labour Court, Ernakulam, as I.D.No. 12/1995 for adjudication. After adjudication, the labour court came to the finding that the punishment of dismissal is disproportionate to the gravity of the misconduct found to have been committed by him. Consequently, the Labour Court directed reinstatement of the appellant without back wages, but with continuity of service. Pursuant to the said award, which was later challenged by the appellant in a writ petition and a writ appeal regarding the question of back wages, the appellant was reinstated in service by the first respondent on 07.04.2003. He continued in service till January 2009 and retired from service on 31.01.2009. The first respondent bank had W.A.No.541 of 2012 : 2 : entered into a contract of group insurance with the Life Insurance Corporation for payment of gratuity due to the employees of the first respondent-bank. As per the policy, the Life Insurance Corporation forwarded a cheque for Rs.5,16,757/- towards gratuity due to the appellant. But, the first respondent bank paid only Rs.2,88,080/-, after deducting the amount of gratuity for the period during which the appellant was kept out of service after his dismissal from service till the date of reinstatement as per the award in the I.D. Claiming the balance amount also as gratuity, the appellant filed Ext.P7 application before the Controlling Authority under the Payment of Gratuity Act. By Ext.P10, the Controlling Authority dismissed the application holding that the appellant is not entitled to gratuity for the period during which he was not in service pursuant to the disciplinary proceedings. The appellant challenged the order of the controlling authority by filing W.P.(C).No.15762/10 contending that he is entitled to have the period during which he was kept out of service pursuant to his dismissal, till reinstatement on 07.04.2003 also as service for the purpose of calculating gratuity. It was also contended that in view of the decision of this court in ## **Retnavalli v. Ambalapadu Service Co-operative Bank Ltd,** W.A.No.541 of 2012 : 3 : **2005 (3) KLT 320,** which was affirmed in W.A.No.1250 of 2004, the employee is entitled to the entire amount paid by the Life Insurance Corporation towards the maturity value of the policy, towards gratuity. The learned Single Judge dismissed the writ petition rejecting both grounds relying on Ext.R1(a) award of the Labour Court, which denied him monetary benefits for the period during which he was kept out of service. The appellant is challenging the judgment of the learned Single Judge in this appeal. 2. The contention of the appellant is that the denial of monetary benefits for the period during which he was kept out of service only means that he will not be entitled to back wages and arrears of any amounts due on his reinstatement, on account of notional fixation of pay taking into account increments which became due during the period during which he was kept out of service. He would contend that the fact that he was given continuity of service shows that he was entitled to have the period during which he was kept out of service, also as service except for the purpose of awarding back wages and for all other purposes, the period will have to be treated as service. It is also contended that even apart from the same, in view of the decision in Retnavalli's case W.A.No.541 of 2012 : 4 : (supra), which has been confirmed by Division Bench of this court, the first respondent-Bank cannot withhold any part of the maturity value forwarded by the Life Insurance Corporation of India to the bank towards gratuity due to the petitioner under the Group Gratuity Policy taken by the first respondent from the Life Insurance Corporation of India. He, therefore, submits that the judgment of the learned Single Judge is liable to be set aside and the writ petition is liable to be allowed granting the prayers in the writ petition. 3. On the other hand, the learned counsel for the first respondent-bank stroutly opposes this appeal. It is submitted that once the Labour Court has denied him all monetary benefits for the period prior to the date of his reinstatement, he is not entitled to any monetary benefits from the first respondent-bank for the said period, which includes gratuity for the period also. Therefore, according to the learned counsel for the first respondent, there is no merit in the writ appeal and the same is liable to be dismissed. 4. We have considered the rival contentions in detail. 5. It is not in dispute before us that under the group gratuity policy, the Life Insurance Corporation of India had forwarded a cheque for Rs.5,16,757/- as gratuity payable to W.A.No.541 of 2012 : 5 : the appellant. Of course, the appellant has the case that the total amount due to him towards gratuity taking into account his entire service is Rs.5,43,655/-. At the outset, we are of opinion that in view of the decision in Retnavalli's case (supra), the first respondent cannot withhold any part of the insurance amount forwarded by the Life Insurance Corporation as per the Group Gratuity Policy issued by the Life Insurance Corporation in respect of the gratuity payable to the employee. The fact that the Life Insurance Corporation forwarded a cheque of Rs.5,16,757/- shows that, that amount has been calculated as per the policy issued by the Life Insurance Corporation, commensurate with the premium paid by first respondent in respect of the appellant's service with the bank. As such, even without going into the other question as to whether the appellant is entitled to reckon the period during which he was kept out of service also for the purpose of calculating gratuity, the appellant is entitled to the entire amount of Rs.5,16,757/forwarded by the Life Insurance Corporation towards gratuity payable to the appellant. 6. Apart from that, we are of opinion that the appellant is entitled to succeed on the second question also. The operative portion of the award in I.D.No.12 of 1995 of the W.A.No.541 of 2012 : 6 : ## Labour Court has been extracted in the impugned judgment, which reads as follows: _“In the result, an award is passed finding that the dismissal of Sri K.V.Johny, Driver, Idukki District Cooperative Bank Limited, the workman involved in the present case is not justifiable. The management is directed to reinstate the workman into service without back wages but with continuity in service. It is made clear that the workman is not entitled to get any monetary benefits prior to the date of reinstatement considering the continuity in service._ _This award will take effect one month after its publication in the notice board and pronouncing in open Court.”_ We have no doubt in our mind that the same does not in any way deny the petitioner the right to reckon the period during which he was kept out of service from 18.05.1989, when he was dismissed from service pursuant to disciplinary proceedings till he was reinstated in service on 07.04.2003 pursuant to the award in the I.D for the purpose of gratuity. The learned Single Judge has rightly held that for the purpose of deciding this question, the definition of 'continuous service' in the payment of Gratuity Act read with Section 25-B of the Industrial Disputes Act has no relevance. Continuity of service and continuous service are two different concepts. When the Labour Court directs reinstatement of a workman without back W.A.No.541 of 2012 : 7 : wages, but with continuity of service, that only means that for the period during which the workman was kept out of service will not count for payment of back wages and arrears of monetary benefits for that period. But, that period has to be notionally counted for all other purposes like grant of increment, pay revision, gratuity etc. In other words, his pay on reinstatement has to be re-fixed, taking in to account, the period during which he was kept out of service also. But, he will not be entitled to any arrears of wages during that period on account of such fixation of pay. That would automatically mean that the period during which he was kept out of service would count as service for payment of gratuity and pension as well. This is very clear from the fact that, even according to the first respondent in W.P.(C).No.33446/04 filed by the appellant himself, this court had directed the first respondent to grant the appellant notional benefits treating the broken period as service, pursuant to which the bank themselves had given the appellant benefits of pay revision and annual increment notionally, taking in to account the said period as well. As such, there cannot be any dispute that the period from 18.05.1989 till 07.04.2003 has to be reckoned as service for the purpose of computing gratuity. The wording in the W.A.No.541 of 2012 : 8 : award in I.D.No.12 of 1995 cannot be construed to deny him that benefit. Accordingly, the impugned judgment of the learned Single Judge is set aside and the writ petition is allowed quashing Ext.P10 order of the 3[rd] respondent. It is declared that the appellant is entitled to the entire amount forwarded by the Life Insurance Corporation of India under the Group Gratuity Scheme namely Rs.5,16,757/-. The appellant is entitled to interest also on that amount under Sub section (3A) of Section 7 of the Payment of Gratuity Act. We fix the rate of interest as 9%. The interest would be payable only on the balance amount due after deducting Rs.2,88,080/- already paid. The said amount shall be paid to the petitioner within a period of 3 months. Accordingly, the appeal is allowed as above. Sd/- ## **S. Siri Jagan, Jugde.** Sd/- ## **K.Ramakrishnan, Judge.** Bb _[True copy]_ _P.A to Judge_