High Court of KeralaSingle Judge2014-02-25Writ petition allowed; gratuity payment ordered...

S. Saseendran Nair v. State of Kerala, Coir Development Director, Coir Project Officer Chirayinkezu, Kandiyapuram Coir Inspector, Kandall Coir Vyavasaya Co-operative Society Ltd.

Case / Petition Number:WP(C).No. 1034 of 2013 (D)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: A. V. Ramakrishna Pillai
Judgment Date: 2014-02-25
Court Decision / Holding: Writ petition allowed. 4th respondent directed to countersign the cheque for payment of gratuity Rs 1,27,905 deposited in A/c No. 8049, Kazhakkoottam Branch, District Co-operative Bank, Thiruvananthapuram within three months from the date of judgment; petitioner may produce a copy of the judgment to the concerned within one month; the judgment will not bar the respondents from pursuing any outstanding liability separately.
Final Disposition: Writ petition allowed; gratuity payment ordered; procedural safeguards regarding liability left open for separate action.

Parties to the Case

Appellants / Petitioners

S. Saseendran Nair
Anupama

Respondents

The State of Kerala represented by Secretary to Government Department of Industries, Government Secretariat Thiruvananthapuram-695001
Coir Development Director, Office of the Coir Development Director, NANDAVANAM PALAYAM, THIRUVANANTHAPURAM-695001
Coir Project Officer ChirayinKeezhu, Mass Towers, Attingal P.O., Thiruvananthapuram-695101
Kaniyapuram Coir Inspector Chittattumukku P.O., Kaniyapuram Thiruvananthapuram-695588
Kandal Coir Vyavasaya Co-Operative Society Ltd No. T-707, Kaniyapuram P.O., Thiruvananthapuram represented by its President-695301

Legal Representation & Advocates

Counsels for Petitioners

• Sri. M. Rajagopalan Nair
• Sri. G. Biju

Counsels for Respondents

• Sunitha Vinod (Govt. Pleader)

Case Synopsis & Summary

Petitioner S. Saseendran Nair, former Secretary of Kandall Coir Vyavasaya Co-operative Society Ltd, approached this Court seeking gratuity payable on demitting office on 30 April 2010. The society’s managing committee, per Ext.P1, resolved to release a gratuity of Rs 1,27,905 and the government had allocated funds for payment, with the amount deposited in a bank. However, the fourth respondent did not countersign the cheque, and respondents 3 and 4 gave no timely response despite Ext.P4 directing the Coir Development Director to arrange payment. The respondents argued that gratuity should be released only if there is no liability to the institution or the government; they pointed to an audit certificate Ext.R3(a), which objected to establishment contingencies in several years, and contended that liability had not been fixed by an enquiry under Section 68 of the Kerala Co-operative Societies Act, 1969. The court examined Ext.R3(a) and found it did not establish the petitioner’s liability or imply an order for forfeiture. It noted that no enquiry under Section 68 had fixed liability, hence the petitioner’s entitlement to gratuity could not be defeated. Citing Dhanalakshmi Bank Ltd. v. Ramachandran, the court held that gratuity is a statutory right and not subservient to the employer’s common law rights. The petition was allowed, directing the 4th respondent to countersign the cheque for Rs 1,27,905 deposited in Kazhakkoottam District Co-op Bank within three months, with liberty to the petitioner to produce the judgment. The court also clarified that liability, if any, could be pursued separately.

Provisions of Law Cited

Kerala Co-operative Societies Act, 1969 - Sections 65, 66Kerala Co-operative Societies Act, 1969 - Section 68Payment of Gratuity Act

Legal Doctrines & Maxims

Gratuity is a statutory right and is not subservient to the employer's common law rights (as stated in Dhanalakshmi Bank Ltd. v. Ramachandran)
Right to participate in an enquiry under Section 68 of the Kerala Co-operative Societies Act, 1969 when liability is in question.

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contended that the gratuity amount had been resolved and allocated for payment, with funds deposited; despite Ext.P4 directing payment, the respondents failed to act, and no liability against the petitioner had been fixed through any Section 68 inquiry. They argued gratuity under the Payment of Gratuity Act is a statutory right and cannot be withheld without due process.

Contentions of Respondents

Respondents argued gratuity could be paid only if there is no liability to the institution or government. They relied on audit Ext.R3(a) showing contingencies and contended liability had not been fixed by Section 68 inquiry; they maintained the petitioner is not entitled to gratuity until such liability is determined.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Dhanalakshmi Bank Ltd. v. Ramachandran	2012 (2) KLT 170	Positive	Court relies on this precedent to hold gratuity as a statutory right not subject to employer’s common law rights.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR. JUSTICE A.V.RAMAKRISHNA PILLAI** **TUESDAY, THE 25TH DAY OF FEBRUARY 2014/6TH PHALGUNA, 1935** ## **WP(C).No. 1034 of 2013 (D)** ## **---------------------------** ## **PETITIONER :** **--------------------** **S. SASEENDRAN NAIR, ANUPAMA, NETTAYAKONAM, KAZHAKUTTOM P.O. THIRUVANANTHAPURAM.** **BY ADVS.SRI.M.RAJAGOPALAN NAIR SRI.G.BIJU** ## **RESPONDENT(S) :** - **----------------------------** **1. THE STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT DEPARTMENT OF INDUSTRIES, GOVERNMENT SECRETARIAT THIRUVANANTHAPURAM-695001.** ## **2. COIR DEVELOPMENT DIRECTOR** - **OFFICE OF THE COIR DEVELOPMENT DIRECTOR, NANDAVANAM PALAYAM, THIRUVANANTHAPURAM-695001.** **3. COIR PROJECT OFFICER CHIRAYYINKEEZHU, MASS TOWERS, ATTINGAL P.O. THIRUVANANTHAPURAM-695101.** **4. KANIYAPURAM COIR INSPECTOR CHITTATTUMUKKU P.O., KANIYAPURAM THIRUVANANTHAPURAM-695588.** **5. THE KANDAL COIR VYAVASAYA CO-OPERATIVE SOCIETY LTD NO. T-707, KANIYAPURAM P.O., THIRUVANANTHAPURAM** **REPRESENTED BY ITS PRESIDENT-695301.** **R1 TO R4 BY GOVT. PLEADER SMT. SUNITHA VINOD** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25-02-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Mn** **...2/-** ## **WP(C).No. 1034 of 2013 (D)** ## **APPENDIX** ## **PETITIONERS' EXHIBITS :** **--------------------------------------** |**EXT.P1**|**TRUE COPY OF THE RESOLUTION DATED 4-4-2011 OF THE KANDAL**| |---|---| ||**COIR VYAVASAYA CO-OPERATIVE SOCIETY LTD. NO. T. 707.**| |**EXT.P2**|**TRUE COPY OF THE ALLOCATION MADE BY 2ND RESPONDENT**| ||**DIRECTOR DATED 22-2-2011.**| |**EXT.P3**|**TRUE COPY OF THE LETTER ADDRESSED TO THE 4TH RESPONDENT**| ||**BY THE PRESIDENT OF 5TH RESPONDENT SOCIETY DATED 6-5-2011.**| |**EXT.P4**|**TRUE COPY OF THE LETTER DATED 14-11-2011 SENT BY THE 2ND**| ||**RESPONDENT TO THE PROJECT OFFICER (COIR) CHIRAYINKEEZHU.**| |**EXT.P5**|**TRUE COPY OF THE REPRESENTATION MADE BY PETITIONER TO THE**| ||**3RD RESPONDENT DATED 11-5-2011.**| |**EXT.P6**|**TRUE COPY OF THE LAWYER'S NOTICE DATED 22-2-2012 SENT BY**| ||**PETITIONER TO THE 2ND RESPONDENT.**| |**EXT.P7**|**TRUE COPY OF THE REPLY TO EXT.P6 SENT BY 3RD RESPONDENT**| ||**DATED 29-2-2012.**| |**EXT.P8**|**COPY OF THE AUDIT REPORT FOR 2010-11.**| |**RESPONDENTS' EXHIBITS :**|| |**-------------------------------------------**|| |**EXT. R3(a)**|**COPY OF THE AUDIT REPORT.**| **//TRUE COPY//** **P.A. TO JUDGE Mn** **A.V. RAMAKRISHNA PILLAI, J. -------------------------------------------------W.P.(C) No. 1034 of 2013 -------------------------------------------------Dated this the 25[th] day of February, 2014** ## **J U D G M E N T** Aggrieved by the negation and refusal on the part of the respondents to pay the gratuity payable to the petitioner, who demitted his office as Secretary of the 5[th] respondent Society on 30.04.2010, the petitioner has come up before this Court. 2. The petitioner was the former Secretary of the 5[th] respondent Society. He demitted his office on 30.04.2010 after serving the Society for about 30 years. The case of the petitioner is that though the Managing Committee of the Society, as per Ext.P1, resolved to release the gratuity amount of 1,27,905/- due to the₹ petitioner finding that he was not having any liability towards the respondent Society and the Government has allocated funds for the payment of gratuity and consequently, the amount is deposited with the bank, the W.P.(C) No. 1034 of 2013 **==> picture [20 x 8] intentionally omitted <==** 4[th] respondent is not countersigning the cheque for payment of gratuity due to the petitioner. The petitioner further alleges that even after Ext.P4 direction from the Coir Development Director, there is no response on the part of respondents 3 and 4. It is in this context, the petitioner has come up before this Court. 3. Respondents 1 to 4 have filed a detailed counter affidavit, wherein they have stated that the petitioner has the right to get the eligible gratuity amount only if there is no liability/dues to the institution or to the Government. In the first counter affidavit, it is stated that the audit certificate up to the year 2008-09 only was received and; the audit for the period 2009-10 and 201011 have to be obtained before releasing the gratuity. In the additional counter affidavit submitted by the respondents, now, they have taken the stand that the copy of the audit certificate for the year 2010-11 was received by the 3[rd] respondent on 13.02.2014, which is produced and marked as Ext.R3(a). In Ext.R3(a) audit W.P.(C) No. 1034 of 2013 **==> picture [20 x 8] intentionally omitted <==** report, certain establishment contingencies were objected for the years, 2005-06, 2006-07, 2007-08 and 2010-11. 4. I have heard the learned counsel for the petitioner and the learned Government Pleader in the matter quite in extenso. 5. The main objection raised by the State in disbursing the gratuity amount is the objection pointed out in Ext.R3(a) audit report. It is true that in Ext.R3(a), objections regarding the expenses relating to establishment contingency during the years, 2005-06, 2006-07, 2007-08 and 2010-11, were objected. However, Ext.R3(a) does not reflect the liability of the petitioner towards the respondent Society. The stand taken by the respondents is that an enquiry has been conducted under Sections 65 and 66 of the Kerala Co-operative Societies Act, 1969. If, at all, the petitioner has any outstanding liability, the same has to be fixed on the basis of an enquiry conducted under Section 68 of the Kerala W.P.(C) No. 1034 of 2013 ..4.. ## Co-operative Societies Act, 1969, which reads as follows; “68. Surcharge:--(1) If in the course of an audit, inquiry, inspection or the winding up of a society, it is found that any person, who is or was entrusted with the organisation or management of such society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to this Act and the rules or the bye-laws, or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has misappropriated or fraudulently retained any money or other property belonging to such society or has destroyed or caused the destruction of the records, the Registrar may, of his own motion or on the application of the committee, liquidator or any creditor, inquire himself or direct any person authorised by him by an order in writing in this behalf, to inquire into the conduct of such person. (2) Where an inquiry is made under sub-section(1), the Registrar may, after giving the person concerned an opportunity of being heard, by order in writing, require him to repay or restore the money or other property or any part thereof, with interest at such rate, or to pay contribution and costs or compensation to such extent, as the Registrar may consider just and equitable.” 6. The respondent has no case that such an enquiry has been conducted and liability has been fixed. In such a proceeding, the petitioner has to be given an opportunity to participate. Evidently, that has not been done. The amount now due from the Society to the petitioner is under the Payment of Gratuity Act. This Court in **Dhanalakshmi Bank Ltd. v. Ramachandran** [2012 (2) KLT 170] observed that the right to receive W.P.(C) No. 1034 of 2013 **==> picture [20 x 8] intentionally omitted <==** gratuity is a statutory right and it is not subservient to the common law rights of the employer. In that case also, the bank had no case that an order forfeiting the gratuity has been passed with notice to the employee. The petitioner in this case also, stands on the same footing. As the liability of the petitioner has not been fixed in a proceeding initiated under Section 68 of the Act and as no order forfeiting the gratuity has been passed consequent to the same, the petitioner is entitled to get the relief as prayed for in this writ petition. Therefore, the writ petition is allowed. The 4[th] respondent is directed to countersign the cheque for payment of gratuity amount of 1,27,905/-₹ payable to the petitioner deposited in A/c No.8049 of Kazhakkoottam branch of District Co-operative Bank, Thiruvananthapuram within a period of three months from today. To facilitate this, the petitioner shall be at liberty to produce a copy of this judgment before the respondent W.P.(C) No. 1034 of 2013 **==> picture [20 x 8] intentionally omitted <==** concerned within a period of one month from today. It is hereby made clear that this judgment will not stand in the way of the respondents in proceeding against the petitioner legally if the petitioner is having any outstanding liability with the respondent Society. Sd/- **A.V. RAMAKRISHNA PILLAI, JUDGE** bka/-