The Managing Director, Kerala Financial Corporation v. V. AUGASTHIALINGOM and The Kerala Lok Ayukta

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** **FRIDAY, THE 11TH DAY OF APRIL 2014/21ST CHAITHRA, 1936** ## **WA.No. 1445 of 2012 ()** **----------------------AGAINST THE JUDGMENT DATED 25-05-2012 IN WP(C).NO. 23333/2011. .......** **APPELLANT/PETITIONER IN WP(C):** **----------------------------------------------------** **THE MANAGING DIRECTOR, KERALA FINANCIAL CORPORATION, VELLAYAMBALAM, THIRUVANANTHAPURAM.** **BY ADV. SRI.MILLU DANDAPANI, SC, K.F.C.** **RESPONDENTS/RESPONDENTS 1 & 2 IN WP(C) :** **-----------------------------------------------------------------------** **1. V. AUGASTHIALINGOM, S/O.K.A. VELAYUDHAN, PRATHYAKSHA, T.C.21/539, NEDUMKADU, KARAMANA P.O., THIRUVANANTHAPURAM- 695 002.** **2. THE KERALA LOK AYUKTA, LEGISLATIVE COMPLEX, VIKAS BHAVAN P.O., THIRUVANANTHAPURAM - 695 033.** **R1 BY ADVS. SRI.DEVAN RAMACHANDRAN,** **SRI.K.M.ANEESH,** **SRI.K.SANTHOSH KUMAR (KALIYANAM), SRI.S.NIKHIL SANKAR, SRI.ADARSH KUMAR, SRI.A.AHZAR.** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 14/03/2014, THE COURT ON 11/04/2014 DELIVERED THE FOLLOWING:** **rs.** ## **WA.No. 1445 of 2012** ## **APPENDIX** ## **PETITIONER'S ANNEXURES:-** ## **ANNEXURE A** **COPY OF THE STATEMENT CONTAINING THE DETAILS OF SUCH PAYMENT OF DIFFERENCE IN GRATUITY PAID TO THE EMPLOYEES RETIRED DURING THE PERIOD FROM 01/07/2001 TO 31/07/2007.** ## **RESPONDENT'S ANNEXURES:-** **NIL.** **//TRUE COPY//** **P.S. TO JUDGE** **rs.** THOTTATHIL B.RADHAKRISHNAN & A.MUHAMED MUSTAQUE, JJ. ---------------------------------------------------W.A.No.1445 of 2012 ---------------------------------------------------Dated this the 11[th] day of April, 2014 ## JUDGMENT ## Muhamed Mustaque, J. - 1.This appeal is filed by the Kerala Financial Corporation (hereinafter referred to as, the “Corporation”), aggrieved by the dismissal of the writ petition filed by them, challenging an order of the Upa Lok Ayukta in a matter relating to the disbursal of the gratuity amount claimed by the first respondent. - 2.The first respondent herein, a former employee under the Corporation, approached the Kerala Upa Lok Ayukta raising grievance that even though he is entitled for an enhanced gratuity from `3.5 lakhs to `4.5 lakhs based on a settlement arrived between the Corporation and its Employees' Union, produced as Ext.P2 in the writ petition, he was not given the benefit on the reason that he retired from the service of the W.A.No.1445 of 2012 2 Corporation on 31.07.2006. Ext.P2 settlement was arrived between the Corporation and the Union on 28.07.2007. There is no dispute as to the facts involved in this case. The Corporation is of the view that since the first respondent retired much prior to the settlement, he is not entitled for the benefit of the enhanced rate of gratuity based on the provisions in the settlement as well as based on law that is applicable. - 3.The Upa Lok Ayukta heard the matter and after interpreting the provisions of the settlement, took a view that the first respondent is entitled for the enhanced gratuity amount. - 4.Challenging the order of the Upa Lok Ayukta, the Corporation filed the writ petition on two grounds, one is relating to the jurisdiction of the Upa Lok Ayukta to entertain the complaint in the nature of disbursal of the retirement benefits and the other is on the ground that the provisions under the settlement deed do not enable the Corporation to grant enhanced gratuity amount to 7the first respondent. The learned single Judge W.A.No.1445 of 2012 3 dismissed the writ petition taking the view that in the light of the decision of this Court in Director, Economics and Statistics v. Subramani Pillai [2007(3) KLT 366], which was affirmed by a Division Bench of this Court in K.S.R.T.C. v. Padmavathy [2008 (1) KLT 584], the Lok Ayukta has the jurisdiction to entertain complaints relating to the claims for retiral benefits including gratuity. The learned single Judge has also scanned through the various provisions for the settlement and came to the conclusion that the first respondent is entitled for the enhanced gratuity amount. - 5.Challenging the judgment of the learned single Judge, the learned counsel for the appellant/Corporation addressed on the various points relating to the interpretation of the settlement, including the point on prospective operation of the settlement agreement. The learned counsel for the appellant also relied on the decisions of Hon'ble Supreme Court in State Government Pensioners' Association and Others v. State of Andhra Pradesh [(1986) 3 SCC 501] and Kusumam Hotels Private Limited v. W.A.No.1445 of 2012 4 ## Kerala State Electricity Board and Others[(2008) 13 SCC 213]. - 6.We have also heard the counsel for the first respondent Sri.Devan Ramachandran, who supported the judgment of the learned single Judge with reference to the Scheme of the settlement and also under the Gratuity Act, 1972. - 7.The first question that arises for consideration is as to whether Ext.P2 memorandum of settlement, envisages an enhanced compensation for a retired employee like the first respondent. The first respondent admittedly retired on 31.07.2006. Ext.P2 memorandum of settlement between the Corporation and the Employees Union was on 28.07.2007. The provision for the enhanced gratuity as provided under Clause-14 of the memorandum of settlement (Ext.P2) is as follows: - “Existing system of calculation will continue subject to the condition that the maximum limit is enhanced from `3.5 lakhs to `4.5 lakhs.” - 8.In Clause-D, the period of validity is mentioned as follows: W.A.No.1445 of 2012 5 “The settlement will be in operation from 1.7.2001 to 30.6.2011. - (i) Pay revision shall take effect from 1.7.2001 for 10 years up to 30.6.2011. (ii)Allowances revision shall have prospective effect, ie., from 1.8.2007.” 9.There is no stipulation in the settlement agreement that the enhanced gratuity is only for the employees, who are on the rolls as on the date of settlement. On the other hand, the period of validity mentioned as above, clearly indicates that the settlement intended to operate in respect of the measures provided under the scheme and for the period commencing from 1.7.2001 to 30.6.2011. We are also not impressed with the argument that the period of validity mentioned in Clause-D is only with reference to the pay revision and allowances. The learned counsel for the Corporation relies on the Miscellaneous Provision in Ext.P2 states as follows: “(i) The benefit of settlement will be extended to the employees who joined in the Corporation after 1.7.2001 and who are on the rolls of the Corporation on the date of agreement (28.7.2007).” W.A.No.1445 of 2012 6 10.We are of the view that the above provision is intended to include a class of employees for the benefit of settlement and it does not operate to exclude any class of employees, who are entitled to the benefit based on the validity period mentioned in Clause-D. The above provision cannot override the general provisions which otherwise indicates that the retired employee like the first respondent is also entitled for the enhanced gratuity amount. If there is any repugnancy among various clauses in the memorandum of settlement, we are of the view, one favouring the employee should be followed. It is therefore, necessary to uphold the claim of the employee based on the clause relating to the period of validity. The Corporation also relied on Ext.P3 issued by the Managing Director, implementing the pay revision for the period mentioned in the settlement. In Ext.P3, it is mentioned that the gratuity revision shall be effected only from 1.8.2007. In fact, it is observed by the learned single Judge that such a clause in Ext.P3 is contrary to Ext.P2 settlement. Ext.P3 cannot run in counter or militate W.A.No.1445 of 2012 7 against the provisions under the settlement in Ext.P2. Ext.P3 is an order implementing the terms and conditions agreed between the Corporation and the Union in Ext.P2. Therefore, Ext.P3 has to be in consonance with Ext.P2. We are of the view that the learned single Judge is right in discarding and ignoring Ext.P3 to the extent in which the gratuity revision is ordered to be operative only with effect from 1.8.2007. 11.The judgments cited by the learned standing counsel for the Corporation as referred above have no application with regard to the issues involved in this appeal. The above judgments govern the field in respect of prospective effect of the enhanced gratuity agreed under the relevant settlement. Since we are of the view that the first respondent is entitled for enhancement of gratuity based on Ext.P2 memorandum of settlement, with reference to the terms and conditions under the settlement, the said decisions have no bearing to the facts involved in this case. W.A.No.1445 of 2012 8 We do not find any error or illegality in the judgment passed by the learned single Judge, confirming the order passed by the Upa Lok Ayukta. In view of the discussion as above, the writ appeal is liable to be dismissed. Accordingly, we dismiss the appeal. No costs. ## THOTTATHIL B.RADHAKRISHNAN, JUDGE A.MUHAMED MUSTAQUE, JUDGE ln