S. Viswanathamallan and M. Balaji v. Kerala State Co-operative Bank Ltd.

**WP(C) NO.18946 OF 2020** **1** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V WEDNESDAY, THE 30[TH] DAY OF MARCH 2022 / 9TH CHAITHRA, 1944** **WP(C) NO.18946 OF 2020** ## **PETITIONERS:** 1 S.VISWANATHAMALLAN 57/B,KUNDELATTU HOUSE,S.L.PURAM.P.O, CHERTHALA,PIN-688523,ALAPUZHA DISTRICT. 2 M.C.BALAJI, KAILAS,KANJAVELY.P.O,KOLLAM, PIN-691602,KOLLAM DISTRICT. BY ADVS. MOHAN IDICULLA ABRAHAM SMT.ELIZABETH MATHAI IDICULLA SRI.RACHEL JOSEPH SRI.MARTIN D.ALUMKARA SMT.NIKHITHA T.S. ## **RESPONDENT:** THE KERALA STATE CO-OPERATIVE BANK LTD. COBANK TOWERS,PALAYAM, THIRUVANANTHAPURAM,PIN-695033. REPRESENTED BY ITS MANAGING DIRECTOR. BY SRI.GILBERT GEORGE CORREYA, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C) NO.18946 OF 2020** **2** ## **JUDGMENT** The petitioners contend that they are employees who have retired from the respondent bank after rendering service for decades. Their grievance in this writ petition concerns their entitlement to better terms of gratuity in terms of Section 4(5) of the Payment of Gratuity Act, 1972. The edifice on which they have structured their claim is the law laid down by a Full Bench of this Court in **Chandrasekharan Nair v. Kerala State Co-operative Agricultural and Rural Development Bank** [2017 (4) KLT 276]. 2. The petitioners contend that they are all covered by Appendix IV of the Staff Regulations issued by the Kerala State Co-operative Bank Ltd., the respondent herein. Appendix IV of the Staff Regulations deals with the Gratuity Rules. Rule 3(5) (d) (e) reads as follows: e) On termination of a member’s service in the Bank under circumstances in sub-clauses 1 to 3 (c) supra the amount of gratuity payable shall be the amount equal to one month’s pay for every year of service, provided that the amount so payable shall never exceed 15 month’s pay. 3. According to the petitioners, Rule 59 of the Kerala Co-operative Societies Act and Rules as amended on 2.11.2010 stipulates that the amount **WP(C) NO.18946 OF 2020** **3** of gratuity payable shall not exceed the amount which an employee is eligible as per the Payment of Gratuity Act, 1972 or under the Kerala Co-operative Societies Act and Rules, irrespective of the amount received out of any scheme chosen or implemented by society. The petitioners had retired subsequent to the amendment brought as aforesaid. By applying Rule 59, the gratuity amount due to the petitioners was limited to Rs.10 lakhs. 4. According to the petitioners, the 1st petitioner approached the respondent and submitted Ext.P4 requesting that the gratuity may not be limited to Rs.10 lakhs and made a further request for disbursement of the amounts to which he was actually entitled. The petitioners rely on a judgment of a Full Bench of this Court in **Chandrasekharan Nair** (supra) and contend that an employee of a Co-operative Society, who is covered both under the Payment of Gratuity Act, 1972 and the Kerala Co-operative Societies Rules, 1969, framed under the Kerala Co-operative Societies Act, 1969 is entitled to a higher amount, if he has opted in terms of Section 4(5) of the Payment of Gratuity Act even if a lesser amount is due under Section 4(2) thereof. It is stated that following the judgment of the Full Bench in **Chandrasekharan Nair** (supra), a learned Single Judge of this Court had occasion to consider an identical question raised by a group of retired employees of the respondent herein and it was held by Ext.P3 judgment that the employees are entitled to gratuity beyond the limit of Rs.10 lakhs set by the respondent. It is submitted **WP(C) NO.18946 OF 2020** **4** that the above judgment was followed by a learned Single Judge of this Court and by judgment dated 21.08.2019 in W.P.(C) No.1023 of 2019, directions were issued to the respondent Society to pay the balance of the eligible amount of gratuity as per Appendix IV to the Kerala State Co-operative Bank Staff Regulations along with interest at the rate of 9% from the date of retirement of the petitioners therein until it has actually paid. While doing so, the respondent Society was also directed to take into account any retrospective revision of salary applicable to the petitioners. The petitioners contend that they are also entitled to the very same reliefs. It is on these assertions that the petitioners are before this Court seeking the following reliefs: (i) issue a writ of mandamus or any other appropriate writ, order, or direction directing the respondent to pay each petitioner higher gratuity as provided in Rule 5(e) of Exhibit P1 Gratuity Rules, over and above the gratuity amount paid to each petitioner at the time of retirement,on the basis of the law settled by the Full Bench reported in 2017(4) KLT 276 and Exhibit P3 judgment of this Honourable Court and affirmed by the Honourable Supreme Court of India vide Exhibit P6 order, taking also into account the salary revision implemented with effect from 01.04.2012. (ii) direct the respondent to pay interest at the rate of 9% per annum to each petitioner on the eligible higher amount of gratuity from the date of retirement till the date of payment. 5. In the statement filed by the respondent bank, it is contended that the principles laid down in **Chandrasekharan Nair** (supra) cannot be **WP(C) NO.18946 OF 2020** **5** applied to the facts and circumstances of this case. It is further stated that the Kerala State Co-operative Bank Staff Regulations had come into force with effect from 16.2.1968 prior to the enactment of any Central or State legislation on gratuity. The Kerala Co-operative Societies Act, 1969 and the Payment of Gratuity Act, 1972 were enacted subsequently and therefore the staff regulations would be amenable and subject to the aforementioned enactments. It is further stated that the respondent society had not enrolled themselves with the Gratuity Insurance Scheme under the Life Insurance Corporation of India and therefore the principles laid down in **Chandrasekharan Nair** (supra) based on such a policy cannot be applied to the instant case. It is also stated that the petitioners have to be relegated to the statutory remedy under Section 69 of the Co-operative Societies Act. 6. I have heard Sri. Mohan Idiculla Abraham, the learned counsel appearing for the petitioners and Sri. Gilbert Geroge Correya, the learned standing counsel appearing for the respondent. 7. The issue raised in this writ petition is squarely covered in the judgment rendered by a learned Single Judge of this Court in W.P.(C) No.27507/2013 filed by a section of employees of the respondent bank. In the said case, employees who are similarly placed as the petitioners herein were paid gratuity as per the provisions of the Payment of Gratuity Act, 1972 read with the Gratuity Rules contained in Appendix IV of the Kerala State Co- **WP(C) NO.18946 OF 2020** **6** operative Bank Staff Regulations. Later, they were issued with notices informing them that they are only entitled to a maximum amount of Rs.10 lakhs by way of gratuity and they were asked to return the amount received in excess of Rs.10 lakhs. Such a demand was made relying on the proviso to Rule 59(iii) of the Kerala Co-operative Societies Rules which came into effect from 2.11.2010. 8. A learned Single Judge, after considering the entire facts and circumstances, took the view that Section 4(5) of the Payment of Gratuity Act which enables an employee to opt for a better term of gratuity will prevail over the second proviso to Rule 59(iii) of the Rules. This conclusion was arrived at on the basis of the law laid down by this Court in **Chandrasekharan Nair** (supra). It was held that retired employees of the respondent bank would be entitled for payment of a higher amount of gratuity in terms of the Gratuity Rules contained in Appendix IV of the Kerala State Co-operative Bank Staff Regulations, in view of Section 4(5) of the Payment of Gratuity Act, notwithstanding the fact that only a lesser amount is due under Section 4(2) thereof. Ext.P3 judgment rendered by the learned Single Judge was followed by another learned Single Judge in Judgment dated 21.08.2019 in W.P.(C) No.1023/2019. 9. A Division Bench of this Court in the judgment dated 12.07.2018 in W.A. No.524 of 2018 and connected cases, noticing the law laid down by **WP(C) NO.18946 OF 2020** **7** the Full Bench in **Chandrasekharan Nair** (supra) held that, in view of the second proviso, with regard to societies to which the Payment of Gratuity Act is applicable, in view of Section 4(5) thereof, if a better term of gratuity is available, the restriction under the first proviso does not apply. However, in cases of societies to which the Payment of Gratuity Act is not applicable, since there is no provision in the Co-operative Societies Act or Rules akin to Section 4(5) of the Gratuity Act, the maximum amount payable cannot, in view of the first and second provisos, exceed fifteen months pay as stipulated in first proviso even if any special scheme has been opted by the society for payment of gratuity. The Division Bench held further that, when the eligibility of the respective employees, who are the writ petitioners, to claim gratuity is not under challenge, the employees need not be relegated for further adjudication proceedings under Section 7 of the Payment of Gratuity Act. The Division Bench has also held that, though non-payment gratuity was in view of the circulars in vogue and on a bonafide misinterpretation of the law, the omission could not be considered willful or deliberate. However, since the amounts due to the employees were in the hands of the employers who were enjoying the benefit of the same they are bound to pay simple interest for the delayed payment 10. I am of the view that in view of the law laid down by this Court in the above judgments, the petitioners are entitled to succeed. **WP(C) NO.18946 OF 2020** **8** Resultantly, this writ petition will stand allowed. The following directions are issued. a) The respondent Society shall disburse the petitioners the balance of the eligible amounts of gratuity as per Appendix IV to the Kerala State Co-operative Bank Staff Regulations, along with interest of 9% as has been ordered in **Chandrasekharan Nair** (supra), from the date of the petitioners' retirement until it is actually paid. b) The amount as ordered above, shall be disbursed as expeditiously as possible, in any event, within an outer limit of three months from the date of receipt of a copy of this judgment. c) While disbursing the amount, the respondent shall take into account any retrospective revision of salary applicable to the petitioners and extend the benefits of the same to the petitioners. **Sd/-** **RAJA VIJAYARAGHAVAN V** **JUDGE** IAP **WP(C) NO.18946 OF 2020** **9** ## **APPENDIX OF WP(C) 18946/2020** PETITIONERS EXHIBITS: EXHIBIT P1 TRUE COPY OF THE APPENDIX IV GRATUITY RULES OF THE KERALA STATE CO-OPERATIVE BANK STAFF REGULATIONS. EXHIBIT P2 TRUE COPY OF THE RELEVANT EXTRACT OF G.O. (P)NO.172/2010/CO-OP.DATED 2.11.2010. EXHIBIT P3 TRUE COPY OF THE JUDGMENT OF THIS HONOURABLE COURT IN W.P(C)NO.27507/2013,DATED 07.12.2017. EXHIBIT P4 TRUE COPY OF THE REPRESENTATION SENT BY THE 1ST PETITIONER TO THE RESPONDENT,DATED 09.03.2020. EXHIBIT P5 TRUE COPY OF THE REPRESENTATION SENT BY THE 2ND PETITIONER TO THE RESPONDENT, DATED 03.03.2020. EXHIBIT P6 TRUE COPY OF THE ORDER OF THE HONOURABLE SUPREME COURT OF INDIA IN SLP(C)NOs.9446 TO 9451/2018 DATED 11.05.2018.