Vincent Y. v. State of Kerala and others

## **`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. 6786 OF 2022`** ## **`PETITIONER:`** ``` VINCENT Y., AGED 61 YEARS S/O. YOHANNAN, SUHALAYAM, THEKKUMBHAGOM, CHAVARA P.O., KOLLAM, KOLLAM DISTRICT-691584. ``` ``` BY ADV I.VINAYAKUMARI ``` ## **`RESPONDENTS:`** - `1 STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001.` - `2 THE REGISTRAR OF CO-OPERATIVE SOCIETIES, JAWAHAR SAHAKARANA BHAVAN, DPI JUNCTION, THYCAUD P.O., THIRUVANANTHAPURAM-14.` - `3 THE JOINT DIRECTOR OF CO-OPERATIVE AUDIT, KERALA STATE CO-OPERATIVE DEPARTMENT, CHAVARA UNIT, KARUNGAPPALLY CIRCLE, KOLLAM DISTRICT, KERALA STATE.` - `4 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (AUDIT), KOLLAM-691584.` - `5 THE THEKKUMBHAGOM SERVICE CO-OPERATIVE BANK LIMITED NO. 1731, REPRESENTED BY ITS SECRETARY, CHAVARA SOUTH P.O., KOLLAM-691584, KOLLAM DISTRICT.` - `6 THE MANAGING COMMITTEE OF THE THEKKUMBHAGOM SERVICE CO-OPERATIVE BANK LIMITED NO.1731, REPRESENTED BY ITS PRESIDENT, CHAVARA SOUTH P.O., KOLLAM-691584, KOLLAM DISTRICT.` ``` W.P.(C) No.6786 of 20222 ``` ``` 7THE MANAGER, LIFE INSURANCE CORPORATION OF INDIA, DIVISIONAL OFFICE, PATTOM, THIRUVANANTHAPURAM DISTRICT, KERALA-695004. ``` ``` BY ADV PRAMOD KUMAR ``` ``` SRI S EASWARAN, SC ``` ``` THISWRITPETITION(CIVIL)HAVINGCOMEUPFORADMISSIONON 30.03.2022,THECOURTONTHESAMEDAYDELIVEREDTHE FOLLOWING: ``` ``` W.P.(C) No.6786 of 2022 ``` ``` 3 ``` ## **J U D G M E N T** The petitioner states that he joined the service of the Thekkumbhagom Service Co-operative Bank Ltd. in the year 7.2.1984 and after working for about 35 years attained superannuation on 31.05.2019. It is contended that the 5th respondent had entered into a Group Gratuity Cash Accumulation Scheme with the Life Insurance Corporation of India, as per which, the employees are entitled to the entire amount due under the Special Terms of Gratuity, irrespective of any restriction regarding the quantum. On the retirement of the petitioner, the LIC has paid a sum of Rs.22,58,025/- towards the full amount of gratuity due to the petitioner as is evident from Ext.P2 letter. However, the bank has paid only a sum of Rs. 20 lakhs to the petitioner on the premise that the maximum amount of gratuity payable under the Payment of Gratuity Act cannot be more than Rs. 20 lakhs. Ext.P3 Fund Transfer Account details of the 5th respondent bank would reveal the said fact. The petitioner contends that the balance amount of Rs. 2,58,025/- is retained by the bank in Suspense Account and Ext.P4 certificate to that effect has been issued by the Bank. The petitioner contends that the LIC has credited a further sum of Rs. 4,23,251/- towards the balance amount of gratuity due to the petitioner in view of the pay revision effected in the 5th respondent bank. Ext.P5 is the letter issued by ``` W.P.(C) No.6786 of 2022 ``` ``` 4 ``` the LIC to the Secretary of the bank, intimating the said fact. As the petitioner is entitled to the full amount of gratuity without any deduction, he submitted Ext.P6 request. However, the same was responded to by the President of the Society that the amounts can be disbursed only pursuant to court orders. Ext.P8 is the certificate issued by the bank to the petitioner intimating that a sum of Rs.6,81,276/- was received from the Life Insurance Corporation towards Group Gratuity and the same is retained in a Suspense account. The petitioner relies 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. The petitioner has also sought for interest for the delayed payment. 2. I have heard Smt. Vinayakumari I, the learned counsel appearing for the petitioner and Sri. S.Easwaran, the learned Standing Counsel appearing for the LIC. 3. Though the notice issued to respondents 5 and 6 has been served, they have not chosen to enter appearance. 4. In **Chandrasekharan Nair** (supra), the Full Bench held thus; ``` W.P.(C) No.6786 of 2022 ``` ``` 5 ``` “(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.” 5. The records made available before this Court reveal that out of a total sum of Rs.26,81,276/- received from the LIC by the bank, the petitioner was paid only a sum of Rs.20 lakhs. The balance amount of Rs.6,81,276/- is retained by the bank in a suspense account. The Full Bench of this Court has held 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(3) of the Kerala Co-operative Societies Rules. In other words, the employee is entitled to the higher amount if he has opted in terms of Section 4(5) of the Central Act even if a lesser amount is due under Section 4(2) thereof. In view of the law laid down above, the petitioner is entitled to the entire amount due under the policy and the amount retained by the bank in the suspense account is to be released to the petitioner. ``` W.P.(C) No.6786 of 2022 ``` ``` 6 ``` 6. 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 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 ``` W.P.(C) No.6786 of 2022 ``` ``` 7 ``` interest at the rate of 6% per annum. 7. In view of the law laid down in the above precedents, the petitioner is entitled to succeed. This writ petition will stand allowed. There will be a direction to respondents 5 and 6 to disburse the sum of Rs.6,81,276/- being the amount received from the LIC and retained in the suspense account to the petitioner 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** NS ``` W.P.(C) No.6786 of 2022 ``` ``` 8 ``` ## **`APPENDIX OF WP(C) 6786/2022`** ``` PETITIONER’S EXHIBITS: Exhibit P1A TRUE COPY OF THE PENSION PAYMENT ORDER NO.1094/KLM SHOWING THE GENERAL INFORMATION ABOUT THE PETITIONER. Exhibit P2A TRUE COPY OF THE LETTER DATED 27/05/2019 OF THE LIC SENT TO THE BANK TOWARDS RS.22,58,025/- OF THE TOTAL AMOUNT OF GRATUITY DUE TO THE PETITIONER AT THE TIME OF HIS RETIREMENT. Exhibit P3A TRUE COPY OF THE STATEMENT OF A/C OF THE PETITIONER IN THE 5TH RESPONDENT BANK IN WHICH STATING RS.20 LAKH ONLY WAS CREDITED DATED 28/05/2019 TO THE PETITIONER'S A/C TOWARDS HIS GRATUITY. Exhibit P4A TRUE COPY OF A CERTIFICATE (NO.40/2020-21 DATED 10.08.2020) GIVEN TO THE PETITIONER BY THE BANK AS PER HIS REQUEST. Exhibit P5A TRUE COPY OF THE LETTER DATED 24/09/2021 OF THE LIC SENT TO THE 5TH RESPONDENT IN WHICH STATING RS.4,23,251/- WAS CREDITED TO THE BANK A/C TOWARDS THE BALANCE AMOUNT OF GRATUITY DUE TO THE PETITIONER. Exhibit P6A TRUE COPY OF THE REQUEST LETTER DATED 28/10/2021 MADE BY THE PETITIONER BEFORE THE 5TH RESPONDENT IN ORDER TO GET HIS TOTAL BALANCE AMOUNT OF GRATUITY CLAIM REFUNDED BY THE LIC TO THE BANK. Exhibit P7A TRUE COPY OF THE REPLY LETTER DATED 17/11/2021 GIVEN TO THE PETITIONER BY THE 5TH RESPONDENT BANK TOWARDS HIS BALANCE AMOUNT OF GRATUITY. Exhibit P8A TRUE COPY OF THE CERTIFICATE DATED 25/11/2021 GIVEN TO THE PETITIONER BY THE ``` ``` W.P.(C) No.6786 of 2022 ``` ``` 9 ``` ``` SECRETARY OF 5TH RESPONDENT BANK IN WHICH STATING RS.6,81,276/- BALANCE GRATUITY DUE TO THE PETITIONER, WAS RECEIVED FROM THE LIC. ``` ``` Exhibit P9A TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN WPC NO.38626/2018 DATED 20/06/2019 IN WHICH DECIDED TOWARDS EACH PETITIONER'S FULL AMOUNT OF GRATUITY RECEIVED FROM THE LIC BY THE 5TH RESPONDENT BANK. ``` ``` RESPONDENTS’ EXHIBITS ``` ``` NIL ```