High Court of KeralaSingle Judge2021-11-19Writ petitions allowed; bank directed to remit ...

SRI A.K. PURUSHOTHAMAN and S. SIDHARTHAKUMAR v. KANNUR DISTRICT CO-OPERATIVE BANK (PRESENTLY THE KERALA STATE CO-OPERATIVE BANK) and OTHERS

Case / Petition Number:WP(C) Nos.11877/2020 & 11845/2020

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Amit Rawal
Judgment Date: 2021-11-19
Court Decision / Holding: Writ petitions allowed; Bank directed to remit the balance gratuity amounts to the petitioners after obtaining LIC cooperation within a total period of 45 days; LIC to remit expeditiously within one month; Bank to disburse to petitioners within 15 days thereafter; if delay occurs, interest as provided under the Payment of Gratuity Act will apply.
Final Disposition: Writ petitions allowed; bank directed to remit the balance amounts to the petitioners within 45 days, after securing LIC cooperation; LIC to remit promptly; otherwise interest under the Payment of Gratuity Act will be payable.

Parties to the Case

Appellants / Petitioners

Sri A.K. Purushothaman
P. Sidharthakumar

Respondents

Kannur District Co-operative Bank (presently the Kerala State Co-operative Bank)
The Managing Director, Kerala State Co-operative Bank
The Divisional Manager, LIC of India, Kozhikode Division

Legal Representation & Advocates

Counsels for Petitioners

• Viju Thomas
• Smt. Meena John

Counsels for Respondents

• Sri. M. Sasindran
• Dr. Abraham P. Meachinkara

Case Synopsis & Summary

This writ petition concerns gratuity payable under a Group Gratuity Cash Accumulation Scheme administered through a Master Policy with LIC, in respect of employees of the Kannur District Co-operative Bank. The petitioners contend that the gratuity rights arise under the statutory Payment of Gratuity Act and are not bound by the terms of the newer master policy, which allegedly caps gratuity at Rs. 20,00,000. In WP(C)11845/2020, the petitioner was paid Rs. 22,84,593 with a balance of Rs. 2,40,806 due; in WP(C)11877/2020, Rs. 20,00,000 was paid and Rs. 19,91,944 remained payable. The bank had remitted amounts to LIC, which were subsequently refunded back to the bank, and the bank claimed that under the new agreement the gratuity is capped. The petitioners rely on a Full Bench judgment in Chandrasekharan Nair G. & Others v. Kerala State Co-operative Bank, etc., and on earlier dismissals in related matters, to argue that the statutory gratuity must be honored beyond contractual cap. The respondents urge maintainability issues under Section 69 of the Kerala Co-operative Societies Act and under Section 7 of the Payment of Gratuity Act, citing BCH Electric Limited to justify the cap. After hearing, the High Court holds that the employee’s entitlement is governed by the old policy and the statutory gratuity framework, not the new master policy. The court directs the bank to remit the balance amounts within a specified time, with LIC cooperation, and warns of interest if non-compliance occurs.

Provisions of Law Cited

Payment of Gratuity Act, 1972 (Section 7)Kerala Co-operative Societies Act, Section 69Article 226 of the Constitution of IndiaCentral Gratuity Act (as referred to in judgment)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners argued that gratuity under the old policy/Act framework is not subject to the cap imposed by the newer Master Policy with LIC. They relied on the Full Bench Chandrasekharan Nair G. judgment to contend that statutory gratuity governs and cannot be curtailed by master policy terms. The bank’s actions of remitting gratuity amounts to LIC and then refunding are improper and contrary to the statutory entitlement; the remedy should be payment of the balance under the Payment of Gratuity Act, with interest if delayed.

Contentions of Respondents

The respondents contended maintainability concerns under Section 69 of the Kerala Co-operative Societies Act and Section 7 of the Payment of Gratuity Act, suggesting the issue falls under statutory remedies rather than Article 226. They relied on BCH Electric Limited to justify adherence to the master policy cap and argued that the old matters were governed by the new agreement terms. They urged that the bank’s liability should be limited to the amounts under the master policy, pending LIC’s compliance.

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
Chandrasekharan Nair G. & Others v. Kerala State Co-operative Agricultural and Rural Development Bank Ltd. & Others	2017 (4) KLT 276	Positive	Full Bench decision cited as controlling authority; holds that statutory gratuity under the Act governs and is not constrained by master policy terms.
BCH Electric Limited v. Pradeep Mehra	2020 KHC 6365	Distinguished	Relied upon by respondents; court distinguishes it due to different terms/conditions of contract/master policy.
W.P.(C) No. 30566/2019	W.P.(C) 30566/2019 (Kerala HC)	Mentioned Only	Judgment cited in exhibits; not central to the decision but referenced as prior authority.
W.P.(C) No. 524/2018	W.P.(C) 524/2018 (Kerala HC)	Mentioned Only	Earlier related cases dismissed relying on Full Bench judgment; mentioned in judgment.

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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 AMIT RAWAL** **FRIDAY, THE 19[TH] DAY OF NOVEMBER 2021 / 28TH KARTHIKA, 1943** ## **WP(C) NO. 11877 OF 2020** ## **PETITIONER:** SRI. A.K.PURUSHOTHAMAN, AGED 60 YEARS S/O. LATE RAGHAVAN NAMBIAR, VANAMALA MUNDAYAD P.O. KANNUR DISTRICT 670 594. BY ADVS. VIJU THOMAS SMT.M.MEENA JOHN ## **RESPONDENTS:** 1 THE KANNUR DISTRICT CO-OPERATIVE BANK (PRESENTLY THE KERALA STATE CO-OPERATIVE BANK), REP. BY THE REGIONAL MANAGER, KANNUR DISTRICT 670 001. 2 THE MANAGING DIRECTOR, THE KERALA STATE CO OPERATIVE BANK, CO-BANK TOWERS, PALAYAM, THIRUVANANTHAPURAM . 3 THE DIVISIONAL MANAGER, L.I.C. OF INDIA, KOZHIKODE DIVISION, DIVISIONAL OFFICE, ( P AND GS) DEPARTMENT, 7TH FLOOR, JEEVAN PRAKASH, KOZHIKODE 673 001. BY ADVS. SRI.M.SASINDRAN, SC, KANNUR DISTRICT CO.OPERATIVE BANK SRI.M.SASINDRAN DR.ABRAHAM P.MEACHINKARA, SC, EPF ORG. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.11.2021, ALONG WITH WP(C).11845/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C)Nos.11877/2020 & 11845/2020** **2** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE AMIT RAWAL FRIDAY, THE 19[TH] DAY OF NOVEMBER 2021 / 28TH KARTHIKA, 1943** **WP(C) NO. 11845 OF 2020** ## **PETITIONER:** P.SIDHARTHAKUMAR AGED 61 YEARS S/O. LATE GOPALAN NAIR, SIGIL NIVAS, CHETTIPEETIKA, PALLIKUNNU P.O., KANNUR, PIN670 004. BY ADVS. VIJU THOMAS SMT.M.MEENA JOHN ## **RESPONDENTS:** 1 THE KANNUR DISTRICT CO OPERARTIVE BANK (PRESENTLY THE KERALA STATE CO-OPERATIVE BANK) REPRESENTED BY THE GENERAL MANAGER (I/C), DISTRICT OFFICE, P.B.NO.35, KANNUR DISTRICT, PIN-670 001. 2 THE DEPUTY GENERAL MANAGER THE KERALA STATE CO-OPERATIVE BANK LTD., HEAD OFFICE, P.B.NO.6515, COBANK TOWERS, PALAYAM, THIRUVANANTHAPURAM, PIN-695 028. 3 THE DIVISIONAL MANAGER L.I.C OF INDIA, KOZHIKODE DIVISION, DIVISIONAL OFFICE, (P AND GS) DEPARTMENT, 7TH FLOOR, JEEVAN PRAKASH, KOZHIKODE-673 001. BY ADVS. SRI.M.SASINDRAN, SC, KANNUR DISTRICT CO.OP. BANK SRI.M.SASINDRAN DR.ABRAHAM P.MEACHINKARA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.11.2021, ALONG WITH WP(C).11877/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C)Nos.11877/2020 & 11845/2020** **3** ## **JUDGMENT** [WP(C) Nos.11877/2020, 11845/2020] This order shall dispose of two writ petitions bearing Nos.11877/2020 and 11845/2020. 2. The case of the petitioners in both the cases is that the Kannur District Co-operative bank had obtained a Group Gratuity Cash Accumulation Scheme commenced with effect from 01.08.1972 for the gratuity benefits of their employees as per terms and conditions of employment. The members covered under the scheme are only beneficiaries whereas the contract was between Master Policy holder and LIC. On retirement of the petitioner in W.P(C).11845/20, respondent released an amount of Rs.22,84,593/- and the remaining is Rs.2,40,806/- whereas in W.P(C).11877/20, the amount released to the petitioner therein is Rs.20,00,000/- and Rs.19,91,944/- is liable to be paid. Learned counsel for the petitioners submits that the controversy in this case is covered by the Full Bench judgment of this Court reported in _**Chandrasekharan Nair G. & Others** v._ _**Kerala State Co-operative Agricultural and Rural Development Bank Ltd. & Others**_ [2017 (4) KLT 276]. Even the writ appeal **WP(C)Nos.11877/2020 & 11845/2020** **4** No.524/2018 and connected cases were also dismissed relying upon the Full Bench judgment. The judgment cited by the respondents in _**BCH Electric Limited**_ v. _**Pradeep Mehra**_ [2020 KHC 6365] would not be applicable as it had different terms and conditions of the contract/master policy. Bank has entered into new agreement with the LIC only on 10.12.2020 by remitting the amount of Rs.20,00,000/- but in respect of the old matters, the amount paid by the LIC to the respective petitioners has been drawn by the bank. 3. On the other hand Sri.M.Sasindran raised the objection of maintainability of the writ petitions on account of nonavailment of efficacious remedy under Section 69 of the Kerala Co-operative Societies Act or under Section 7 of the Payment of Gratuity Act as limited liability has been paid and the remaining amount is disputed which cannot be adjudicated under Article 226 of the Constitution of India. Once the employees are covered under the Act they are entitled to the amount under the Act and not under the master policy in view of the ratio culled out in the ## _**BCH Electric Limited**_ (supra). 4. I have heard the learned counsel for the parties and **WP(C)Nos.11877/2020 & 11845/2020** **5** appraised the paper books. 5. Concededly, in W.P.(C)No.11845/2020 petitioner has been paid a sum of Rs.22,84,593/- and the balance of Rs.2,40,806/- is to be paid. This fact has been reiterated by the learned counsel representing the LIC and in other matter after having paid Rs.20,00,000/- sum of Rs.19,91,944/- is liable to be paid as acknowledged by the LIC. I am of the view that the Cooperative Bank cannot rely upon the terms and conditions of the new agreement/master policy entered into between the LIC but the employee would be governed by the old policy where there is no restriction of the amount of payment of gratuity as fixed under the Payment of Gratuity Act. In other words, if it all the insurance amount after receipt of the payment of the amount of gratuity is more, the State Co-operative Bank cannot limited it to Rs.20,00,000/- they are liable to pay it either from their own funds or from what they received from the LIC. In both the cases the amount has been remitted by the LIC to bank but bank has refunded back to the LIC. Such an action of the bank is totally uncalled for arbitrary and illegal for the reason of the dictum laid down in the Full Bench judgment cited above. **WP(C)Nos.11877/2020 & 11845/2020** **6** Accordingly, writ petitions are allowed. Respondent bank is directed to remit the amount of Rs.2,40,806/- and Rs.19,91,944/- to the respective petitioners after making request to the LIC to whom they refunded back. Let the request is made to the LIC within a period of two weeks from today. Thereafter the learned counsel representing the LIC submits that they would remit the amount as expeditiously as possible within a period of another one month and thereafter, the bank would disburse the same to the petitioners within another period of 15 days ie., total period of 45 days. In case, the aforementioned amount after completion of the formality is not remitted by the bank to the petitioners, it will entail interest as provided under the Payment Gratuity Act. Sd/- **AMIT RAWAL JUDGE** nak **7** ## **WP(C)Nos.11877/2020 & 11845/2020** ## **APPENDIX OF WP(C) 11877/2020** |PETITIONER EXHIBITS|| |---|---| |EXHIBIT P1|A TRUE COPY OF THE SAID INTIMATION| ||LETTER NO. PNGS/U585322/3839/879 DATED| ||22/10/2018 BY THE 3RD RESPONDENT.| |EXHIBIT P2|A TRUE COPY OF THE REQUEST DATED| ||2/1/2020 SENT TO THE 2ND RESPONDENT BY| ||REGISTERED POST.| |EXHIBIT P3|A TRUE COPY OF THE ACKNOWLEDGEMENT CARD| ||DATED 9/1/2020 RECEIVED FROM THE 2ND| ||RESPONDENT.| |EXHIBIT P4|A TRUE COPY OF THE JUDGMENT DATED| ||11/12/2019 IN WPC NO. 30566/2019 OF| ||HOBLE HIGH COURT OF KERALA.| |RESPONDENT EXHIBITS|| |EXHIBIT R3 A|TRUE COPY OF THE CLAIM COMMUNICATION| ||REGARDING CLAIM FROM FOR GROUP GRATUITY| ||WITH RESPECT OF PETITIONER FOR THE| ||AMOUNT RS.38,29,372/- SUBMITTED BY THE| ||1ST RESPONDENT BANK DATED 10.10.2018| |EXHIBIT R3 B|TRUE COPY OF TRANSFER OF RS.38,29,372/-| ||WITH RESPECT TO THE PETITIONER'S| ||GRATUITY CLAIM TO THE 1ST RESPONDENT| ||BANK THROUGHT RTGS DATED 22.10.2018| |EXHIBIT R3 C|TRUE COPY OF ADDITIONAL CLAIM| ||COMMUNICATION REGARDING CLAIM FROM FOR| ||GROUP GRATUITY WITH RESPECT OF| ||PETITIONER FOR THE AMOUNT RS.1,62,572/-| ||SUBMITTED BY THE 1ST RESPONDENT BANK| ||DATED 1.7.2019| |EXHIBIT R3 D|TRUE COPY OF TRANSFER OF RS.1,62,575/-| ||WITH RESPECT TO THE PETITIONER'S| ||GRATUITY CLAIM TO THE 1ST RESPONDENT| ||BANK THROUGHT RTGS DATED 15-7-2019| |EXHIBIT R(a):|A TRUE COPY OF THE MASTER POLICY NO.G1| ||3839.| |EXHIBIT R1(b):|A TRUE COPY OF THE DEED OF VARIATION| ||DATED 14/02/1994.| |Exhibit R3(E)|TRUE COPY OF THE BANK RESOLUTION NO. 890| |Exhibit R3(F)|TRUE COPY OF THE LETTER FROM DGM, KERALA| **WP(C)Nos.11877/2020 & 11845/2020** **8** - BANK TO THE GENERAL MANAGER, KERALA BANK, KANNUR DATED 19/12/2020 COMMUNICATING THE DECISION FIXING THE GRATUITY CEILING AS RS. 20,00,000/- - Exhibit R3(G) TRUE COPY OF THE LETTER DATED 09/12/2020 FROM GENERAL MANAGGER, KERALA BANK ADDRESSED TO LIC OF INDIA COMMUNICATING THIS DECISIONAND REQUESTING THE LICE TO INCORPORATE THEIR DECISION OF FIXING THE GRATUITY CEILING OF RS.20,00,000/- AS PER CENTRAL GRATUITY ACT INSTEAD OF THE EXISTING UNLIMITED PATTERN, FOR ALL MEMBERS - Exhibit R(H) TRUE COPY OF THE DETAILED LIST OF ALL CLAIM SETTLED TO THE 1ST RESPONDENT BANK AS PER THEIR DEMAND IN RESPECT OF THE EMPLOYEES WHO RETIRED FOR THE PERIOD FROM 01/08/2018 TO 31/07/2019 - Exhibit R(I) TRUE COPY OF THE LETTER DATED 18/08/2020 OF THE 1ST RESPONDENT BANK ADDRESSED TO THE 3RD RESPONDENT LIC REMITTING EXCESS AMOUNT OF RS.53,08,176/- TO THE LIC GGCA SCHEME POLICY NO. GGCA 3839, AS THE EXCESS GRATUITY RECEIVED PETITIONER EXHIBITS Exhibit P5 A TRUE COPY OF THE PROCEEDING NO.KNR/RO/HR/PAY REVISION/2021-22 DATED 23/3/2021 OF THE GENERAL MANAGER, KERALA BANK, KANNUR Exhibit P6 A TRUE COPY OF THE REQUEST DATED 18/9/2021 SUBMITTED BEFORE THE 1ST RESPONDENT BANK. **9** ## **WP(C)Nos.11877/2020 & 11845/2020** ## **APPENDIX OF WP(C) 11845/2020** |PETITIONER EXHIBITS|| |---|---| |EXHIBIT P1|A TRUE COPY OF THE REQUEST DATED| ||19/06/2018 SUBMITTED BY THE PETITIONER| |EXHIBIT P2|A TRUE COPY OF THE INTIMATIN DATED| ||29/2/20 RECEIVED BY THE PETITIONER| |EXHIBIT P3|A TRUE COPY OF THE INTIMATION LETTER| ||NO.A & F/2019-20 DATED 10/03/2020| ||RECEIVED BY THE PETITIONER FROM THE 1ST| ||RESPONDENT BANK| |EXHIBIT P4|A TRUE COPY OF THE ORDR NO.KSCB/(P&E)/85| ||DATED 05/05/2020 ISSUED TO THE 1ST| ||RESPONDENT BANK BY THE 2ND RESPONDENT| |EXHIBIT P5|A TRUE COPY OF THE JUDGMENT DATED| ||11/12/2019 IN WP/9C) NO.30566/2016 OF| ||HON’BLE HIGH COURT OF KERALA| |RESPONDENT EXHIBITS|| |EXHIBIT R3 A|TRUE COPY OF THE CLAIM COMMUNICATION| ||REGARDING CLAIM FROM FOR GROUP GRATUITY| ||WITH RESPECT OF PETITIONER FOR THE| ||AMOUNT RS.22,84,593/- SUBMITTED BY THE| ||1ST RESPONDENT BANK DATED 20.04.2017| |EXHIBIT R3 B|TRUE COPY OF TRANSFER OF RS.22,84,593/-| ||WITH RESPECT TO THE PETITIONER'S| ||GRATUITY CLAIM TO THE 1ST RESPONDENT| ||BANK THROUGHT RTGS DATED 25.4.2017| |EXHIBIT R3 C|TRUE COPY OF ADDITIONAL CLAIM| ||COMMUNICATION REGARDING CLAIM FROM FOR| ||GROUP GRATUITY WITH RESPECT OF| ||PETITIONER FOR THE AMOUNT RS.2,40,806/-| ||SUBMITTED BY THE 1ST RESPONDENT BANK| ||DATED 24.10.2017| |EXHIBIT R3 D|TRUE COPY OF TRANSFER OF RS.2,40,806/-| ||WITH RESPECT TO THE PETITIONER'S| ||GRATUITY CLAIM TO THE 1ST RESPONDENT| ||BANK THROUGHT RTGS DATED 4-11-2017| |EXHIBIT R(a):|A TRUE COPY OF THE MASTER POLICY NO.G1| ||3839.| |EXHIBIT R1(b):|A TRUE COPY OF THE DEED OF VARIATION| ||DATED 14/02/1994.| |Exhibit R3(E)|TRUE COPY OF THE BANK RESOLUTION NO. 890| **WP(C)Nos.11877/2020 & 11845/2020** **10** |Exhibit R3(F)|TRUE COPY OF THE LETTER FROM DGM, KERALA| |---|---| ||BANK TO THE GENERAL MANAGER, KERALA| ||BANK, KANNUR DATED 9/12/2020| ||COMMUNICATING THE DECISION FIXING THE| ||GRATUITY CEILING AS RS. 20,00,000/-| |Exhibit R3(G)|TRUE COPY OF THE LETTER DATED 10/12/2020| ||FROM GENERAL MANAGGER, KERALA BANK| ||ADDRESSED TO LIC OF INDIA COMMUNICATING| ||THIS DECISION AND REQUESTING THE LICE TO| ||INCORPORATE THEIR DECISION OF FIXING THE| ||GRATUITY CEILING OF RS.20,00,000/- AS| ||PER CENTRAL GRATUITY ACT INSTEAD OF THE| ||EXISTING UNLIMITED PATTERN, FOR ALL| ||MEMBERS| |Exhibit R3(H)|TRUE COPY OF THE DETAILED LIST OF ALL| ||CLAIM SETTLED TO THE 1ST RESPONDENT BANK| ||AS PER THEIR DEMAND IN RESPECT OF THE| ||EMPLOYEES WHO RETIRED FOR THE PERIOD| ||FROM 01/08/2016 TO 31/07/2017| |Exhibit R3(I)|TRUE COPY OF THE LETTER DATED 27/05/2020| ||OF THE 1ST RESPONDENT BANK ADDRESSED TO| ||THE 3RD RESPONDENT LIC REMITTING EXCESS| ||AMOUNT OF RS.2,40,806/- OF SHRI| ||SIDHARTHA KUMAR TO THE GRATUITY POLICY| ||NO. GGCA 3839| |PETITIONER EXHIBITS|| |Exhibit P6|A TRUE COPY OF THE PROCEEDING| ||NO.KNR/RO/HR/PAY REVISION/2021-22 DATED| ||23/3/2021 OF THE GENERAL MANAGER, KERALA| ||BANK, KANNUR| |Exhibit P7|A TRUE COPY OF THE REQUEST DATED| ||20/9/2021 SUBMITTED BEFORE THE 1ST| ||RESPONDENT BANK.|