Sabareessan P. and others v Nilambur Co-operative Urban Bank Limited and others

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V WEDNESDAY, THE 23[RD] DAY OF MARCH 2022 / 2ND CHAITHRA, 1944`** ``` WP(C) NO. 2703 OF 2022 ``` ## **`PETITIONER/S:`** ``` 1SABAREESSAN.P., AGED 60 YEARS S/O.M.P. BALAKRISHNAN NAIR, SOUHRUDAM, VEETTIKUTH, NILAMBUR P.O., MALAPPURAM DISTRICT 679 329. 2C. KUNHIMUHAMMED, AGED 58 YEARS S/O. MOIDEENKUTTY, CHALIYATHODIKA HOUSE, OLD CHANDAKUNNU, NILAMBUR, MALAPPURAM DISTRICT, 679 329. 3JAYAN K.K., AGED 58 YEARS S/O.M.K. BALAKRISHNAN NAIR, SREEPADAM, THAMPANANGADI, VALLUVANGAD SOUTH P.O., MALAPPURAM DISTRICT 676 521. BY ADVS. K.M.SATHYANATHA MENON KAVERY S THAMPI ``` ## **`RESPONDENT/S:`** ``` 1NILAMBUR CO-OPERATIVE URBAN BANK LIMITED, NO. F. 1043, HEAD OFFICE NIALAMBUR, MALAPPURAM DISTRICT, 679 329, REPRESENTED BY ITS GENERAL MANAGER. 2STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO DEPARTMENT OF CO - OPERATION, SECRETARIAT, THIRUVANANTHAPURAM 695 001. 3ADDL.R3. THE DIVISIONAL MANAGER ``` ``` WP(C) NO. 2703 OF 2022 ``` ``` 2 ``` ``` LIFE INSURANCE CORPORATION OF INDIA, P& GS DEPARTMENT, DIVISIONAL OFFICE, P& GS DEPARTMENT, 7TH FLOOR, JEEVAN FLOOR, KOZHIKODE-673001 ``` ``` BY ADVS. T.RAMESH BABU P.B.SAHASRANAMAN T.S.HARIKUMAR ``` ``` SMT SURYA BINOY SR GP ``` ``` THISWRITPETITION(CIVIL)HAVINGCOMEUPFORADMISSION ON23.03.2022,THECOURTONTHESAMEDAYDELIVEREDTHE FOLLOWING: ``` ``` WP(C) NO. 2703 OF 2022 ``` ``` 3 ``` ## **`JUDGMENT`** The petitioners are before this Court seeking directions to the 1st respondent to disburse the amounts received by them from the Life Insurance Corporation of India (LIC) in terms of the New Group Gratuity Cash Accumulation Scheme (GGCA). The petitioners rely on a judgment of this Court in **Chandrasekharan Nair v. Kerala State Co-operative Agricultural and Rural Development Bank** [2017 (4) KLT 276] and contends that in cases where gratuity is linked with LIC policies, the employees are entitled to the entire amount due under the Special Terms of Gratuity, irrespective of any restriction regarding the quantum. They have also sought for payment of interest for the delayed payment. 2. The petitioners contend that they had retired from the service of the 1st respondent Bank while working in various posts. On their retirement, the 1st petitioner was paid a sum of Rs. 20,98,066/- and the petitioners 2 and 3 were paid a sum of Rs. 20 lakhs each by limiting the amount to the ceiling limit as prescribed in the Payment of Gratuity Amendment Act, 2018. They contend that the 1st respondent Society had enrolled in the GGCA scheme and in terms of the master policy, the 1st respondent received ``` WP(C) NO. 2703 OF 2022 ``` ``` 4 ``` Rs.20,98,066/- insofar as it concerns the 1st petitioner, Rs.30,80,610/insofar as it concerns the 2nd petitioner and Rs.21,68,957/- insofar as it concerns the 3rd petitioner. While so, the 1st petitioner was subsequently extended with a benefit of pay revision and a further sum of Rs. 5,19,999/was disbursed to the 1st respondent towards his gratuity amount. 3. In view of the law laid down by this Court in **Chandrasekharan Nair (supra),** Exts.P1 to P3 applications were submitted before the 1st respondent seeking disbursal of the amounts retained by the 1st respondent. In response, Exts.P4 to P6 was issued by the bank rejecting their request. Immediately thereafter, Ext.P7 letter was issued by the 1st respondent demanding the sum of Rs. 98,066/-paid to the 1st petitioner over and above the ceiling limit. It is on these assertions and pleadings that this writ petition is filed seeking the following reliefs: “i. Issue a writ of certiorari or other appropriate writ or order or direction, call for the original of Ext. P4 to Ext.P6, Ext P7 and Ext P9 and quash the same. ii. To declare that the petitioners 1 to 3 are entitled to receive the amount of Rs.5,19,999/-, Rs.10,80,610/-, Rs.1,68,957/- respectively received by the 1st respondent from the Life Insurance Corporation of India and being the balance amount payable to the petitioners 1 to 3 in terms of the policy taken by the Bank with the Life Insurance Corporation of India with 10% per annum from the date of retirement of petitioners; ``` WP(C) NO. 2703 OF 2022 ``` ``` 5 ``` iii) Issue a writ of mandamus or any other appropriate writ order or direction, directing the 1st respondent to pay the amount of Rs.5,19,999/-, Rs.10,80,610/- and Rs.1,68,957/- to petitioners 1 to 3 respectively received by the 1st respondent from the Life Insurance Corporation of India and being the balance amount payable to petitioners 1 to 3 in terms of the policy taken by the Bank with the Life Insurance Corporation of India together with interest at the rate of 10% per annum from the date of retirement of petitioners.” 4. In the counter affidavit filed by the 1st respondent Bank, it is stated that the amount paid by the LIC as per the GGCA Scheme over and above the ceiling limit is retained in a suspense account and they are prepared to disburse the amount. 5. In the counter affidavit filed by the 3rd respondent, the details of the amount paid to the 1st respondent insofar as it concerns the petitioners herein have been detailed. They have stated that the amount disbursed by the LIC insofar as it concerns the 1st petitioner is Rs. 20,98,066/- on 27.3.2019 and Rs. 5,19,999/- on 28.6.2021. Insofar as the 2nd petitioner is concerned, an amount of Rs. 30,80,610/- was disbursed on 26.04.2021 and insofar as the 3rd petitioner is concerned a sum of Rs. 21,68,957/- was disbursed on 26.05.2021. 6. I have heard Sri. K. M. Sathyanatha Menon, the learned counsel ``` WP(C) NO. 2703 OF 2022 ``` ``` 6 ``` appearing for the petitioners, Sri. T. Ramesh Babu, the learned counsel appearing for the 1st respondent and Sri. P.B. Sahasranaman, the learned Standing Counsel appearing for the LIC and have considered the submissions advanced. 7. In Chandrasekharan Nair (supra), the Full Bench held thus; “(i) In cases where gratuity is linked with LIC policies, it will be considered as, 'a right to receive better terms of gratuity', in terms of Section 4(5) of the Payment of Gratuity Act. (ii) The employee shall be entitled to the entire amount due under the policy. (iii) The mere fact that the employee is not eo-nominee a party to the agreement with the LIC is of no consequence. This is on the principle that a beneficiary under a contract in trust is eligible for the benefits under the contract. (iv) The above is the law for Societies with more than ten employees, to which 'The Payment of Gratuity Act, 1972' applies in terms of Section 1(3) (c) of that Act.” ## 8. In view of the law laid down above, the petitioners are entitled to the entire amount due under the policy and the excess amount, if any, received by the employer society would have to be returned to the employee. 9. In Ext.P10 judgment rendered by a Division Bench of this Court, their Lordships, after referring to the law laid down by the Full Bench in ``` WP(C) NO. 2703 OF 2022 ``` ``` 7 ``` 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 at the rate of 6% per annum. ``` WP(C) NO. 2703 OF 2022 ``` ``` 8 ``` 10. In view of the law laid down in the above precedent, the petitioners are entitled to succeed. This writ petition will stand allowed. Exhibits-P4 to P6, Ext.P7 and P9 will stand quashed. There will be a direction to the 1st respondent to forthwith disburse the amounts received from the LIC less the amount already paid to the respective petitioners together with interest at the rate of 6% p.a. from the date on which the amounts were received by the bank from the LIC. The entire exercise shall be completed expeditiously, in any event, within a period of two months from the date of receipt of a copy of this judgment. ``` Sd/- ``` ``` RAJA VIJAYARAGHAVAN V ``` ``` JUDGE ``` ``` avs ``` ``` WP(C) NO. 2703 OF 2022 ``` ``` 9 ``` ## **`APPENDIX OF WP(C) 2703/2022`** ## **`PETITIONER EXHIBITS`** |`Exhibit P1`|`TRUE COPY OF THE APPLICATION SUBMITTED BY THE`| |---|---| ||`IST PETITIONER BEFORE THE CHAIRMAN OF IST`| ||`RESPONDENT BANK DATED 23.07.2021.`| |`Exhibit P2`|`TRUE COPY OF THE APPLICATION SUBMITTED BY THE`| ||`2ND PETITIONER BEFORE THE CHAIRMAN OF IST`| ||`RESPONDENT BANK DATED 23.07.2021.`| |`Exhibit P3`|`TRUE COPY OF THE APPLICATION SUBMITTED BY THE`| ||`3RD PETITIONER BEFORE THE CHAIRMAN OF IST`| ||`RESPONDENT BANK DATED 23.07.2021.`| |`Exhibit P4`|`TRUE COPY OF THE REPLY ISSUED TO THE IST`| ||`PETITIONER BY THE IST RESPONDENT DATED`| ||`11.08.2021.`| |`Exhibit P5`|`TRUE COPY OF THE REPLY ISSUED TO THE I 2ND`| ||`PETITIONER BY THE IST RESPONDENT DATED`| ||`11.08.2021.`| |`Exhibit P6`|`TRUE COPY OF THE REPLY ISSUED TO THE 3RD`| ||`PETITIONER BY THE IST RESPONDENT DATED`| ||`11.08.2021.`| |`Exhibit P7`|`TRUE COPY OF THE COMMUNICATION ISSUED TO THE`| ||`IST PETITIONER BY THE IST RESPONDENT DATED`| ||`11.08.2021.`| |`Exhibit P8`|`TRUE COPY OF THE REPLY SUBMITTED BY THE IST`| ||`PETITIONER TO EXT. P7 DATED 31.08.2021.`| |`Exhibit P9`|`TRUE COPY OF THE COMMUNICATION ISSUED BY THE`| ||`IST RESPONDENT TO THE IST PETITIONER DATED`| ||`7.9.2021.`| |`Exhibit P10`|`TRUE COPY OF THE JUDGMENT IN W.A. NO. 524 OF`| ||`2018 AND CONNECTED CASES DATED 12.07.2018.`| ``` WP(C) NO. 2703 OF 2022 ``` ``` 10 ``` ``` Exhibit P11TRUE COPY OF THE JUDGMENT IN WRIT PETITION (CIVIL) NO. 23983 OF 2018 DATED 2.08.2 018. ``` ## **`RESPONDENT EXHIBITS`** ``` THE TRUE COPY OF THE STATEMENT FOR DETAILS OF EXHIBIT R1(a) PAYMENTS OF GRATUITY AMOUNT AND THE DATE ``` EXHIBIT R1(b) `THE TRUE COPY OF THE CIRCULAR NO. 5/2016 DT.26/2/2016` Exhibit R3 (a) `TRUE COPY OF THE COST AND BENEFIT SCHEDULE FOR THE ARD 01/11/2020` ``` TRUE COPY OF THE CLAIM INITIATION FORM DATED Exhibit. R3 (b)09/06/2021 ``` ``` TRUE COPY OF THE CLAIM INTIMATION FORM DATED09.06.2021 PERTAINING TO THE 1ST Exhibit.R.3 (c) PETITIONER PREFERED BY THE RESPONDENT BANK TRUE COPY OF THE STAMPED DISCHARGE FORM DATED 09.06.2021 ACKNOWLEDGING THE RECEIPT OF THE AMOUNT IN FULL AND FINAL SETTLEMENT OF CLAIM Exhibit.R.3 (d) BY THE RESPONDENT BANK IN RESPECT OF THE 1ST PETITIONER . TRUE COPY OF THE LETTER DATED 28.06.2021 ISSUED BY THIS RESPONDENT INTIMATING THE BANK Exhibit.R.3 (e) THE RELEASE OF ADDITIONAL GRATUITY CLAIM PERTAINING TO THE 1ST PETITIONER. ```