Friday, November 12, 2010



DATED: 04/10/2010


W.P.(MD)No.8946 of 2006

The Management,
Kumbakonam Central Cooperative Bank Ltd.,
No.2, TSR Big Street6,
Kumbakonam 612 001.
... Petitioner



2.The Assistant Commissioner of Labour (Gratuity),
Office of the Deputy Commissioner of Laboutr,
Abdul Salem Street,
Kaja Nagar,

3.The Joint Commissioner of Labour,
Appellate Authority under
The Payment of Gratuity,
... Respondents


Petition filed under Article 226 of the Constitution of India praying
for the issuance of a Writ of Certiorari, calling for the entire records
relating to the order dated 04.01.2006 in P.G.Appeal No.34 of 2004 on the file
of the 3rd respondent and quash the same.

!For Petitioner ... Mr.K.Jayaraman
^For Respondents ... Mr.V.Ilanchezian for R1
Mr.S.C.Herold Singh,G.A.
For R2


The petitioner is a management of the Central Cooperative Bank,
Kumbakonam. Aggrieved by the order passed by the 3rd respondent, the Appellate
Authority under the Payment of Gratuity Act, 1972, the Writ petition came to be

2.The first respondent was working as an Assistant General Manager in the
petitioner Bank. He joined in the Bank originally as a Supervisor on 27.08.1956
and after putting in 38 years of service, he retired from service on 30.04.1984.
He was paid gratuity amount of Rs.1,97,198/- as per the byelaws of the Society
and the same was credited into the account of the first respondent on
27.10.1995. The first respondent was not satisfied with the quantum of gratuity
paid, because according to him, 3 years period of his service has been omitted
on some untenable grounds and the last drawn wages calculated by the Bank was
not proper. While the Bank calculated the last drawn salary at Rs.9,766/-, the
first respondent claimed the last drawn salary at Rs.9,916/-.

3.Aggrieved by the reduced payment of gratuity, he filed an application
before the 2nd respondent, the Controlling Authority. The 2nd respondent took
up the case as P.G.No.32 of 1998 and issued notice to the petitioner Bank.
Before the 2nd respondent, the 1st respondent claimed the differential gratuity
and also interest as per law. The Writ petitioner filed a counter and disputed
the claim on three grounds. The first ground that under the provisions of the
Payment of Gratuity Act, there is a ceiling and therefore, he cannot claim more
than what is under the Act and whereas, the Bank has paid the amount in terms of
the byelaw. The second ground that the petitioner's entire service does not
satisfactory and he had suffered suspension on two occasions. That was during
1974, 1976 and 1977-1979 and for that suspension period, he is not eligible for
any gratuity. The third ground that the last drawn wages calculated was in
accordance with the records of the Bank.

4.The 2nd respondent by an order dated 22.06.1999 held that there was no
dispute regarding the last drawn wages at Rs.9,916/- as both sides have
succeeded and once 38 years of service was accepted in the absence of any
statutory disqualification, the first respondent is eligible to get gratuity and
since the amount of gratuity has already been paid, was less than the statutory,
he is eligible for getting the differential amount. It must be noted that
before the 2nd respondent only the 1st respondent adduced evidence and the
petitioner Bank did not adduce any evidence. However, aggrieved by the order
passed by the 2nd respondent dated 22.06.1999, an appeal under Section 7(7) of
the Payment of Gratuity Act has been filed before the 3rd respondent, the
Appellate Authority. As a condition precedent, the amount ordered by the
Authority has also been deposited. On receiving the appeal, the 2nd respondent
took up the appeal as P.G.A.No.10 of 2000 and ordered notice to the first
respondent. It is by an order dated 31.10.2000, the 2nd respondent dismissed
the appeal. He found that the defence relating to the statutory and the maximum
amount prescribed was not considered by the Controlling Authority. Therefore,
he remitted the matter for fresh disposal. On such remittance, the 2nd
respondent heard the matter and concluded that the workmen is entitled to claim
the differential gratuity and he has not passed on any full and final receipt.

5.Even though the statutory which was prescribed the maximum was
Rs.50,000/-, the bank itself has paid as per the guidelines and another Manager
by name Mr.Jayaraman was paid Rs.5,00,0000/- as gratuity and therefore, there
was no bar under the Act to claim a higher gratuity as per the contract between
the parties. Though he pointed out the example of the said Jayaraman, Manager,
the same is not acceptable, since the statutory payment has been made and hence
by an order dated 29.03.2004, he held against the first respondent. Thereafter,
the first respondent filed an appeal before the third respondent which was taken
on file as P.G.A.No.34 of 2004 and after notice to the petitioner Bank and also
a counter being filed dated NIL December 2004, the third respondent, the
Appellate Authority allowed the appeal by an order dated 04.01.2006 and he found
that the first respondent is eligible to get an additional payment of
Rs.22,529/- and also interest from the date of retirement till the date of

6.Attacking the same, the petitioner Bank has raised three contentions.
The first contention was that the period of suspension, which he is undergone in
1974, 1976 and 1979 cannot be taken as a continuous service. This argument
overlooks the definition of continuous service provided under Section 2(A).
Wherein even a discontinued service, he is treated as a continuous service. But
reading of section 2(A) does not show a suspension inflected by an employer can
be omitted, to be counted as a continuous service. Because while suspending an
employee, the contract of employment does not come to an end. But it continues.
By an order of suspension, the employer only prevent the workmen from reporting
to work and therefore, the said contention cannot be accepted.

7.With reference to the last drawn wages, it has been considered by the
Controlling Authority in the first round of litigation and the last drawn wages
was accepted. The other question that beyond the statutory payment, the
employer need not pay any amount also cannot be accepted. Since under Section
14, the Act only overrides other enactment, which are inconsistent and if under
the byelaw, if any amounts are paid over and above the statutory payment, then
the maximum pointed under the Act cannot be cited as an example. The last
question with reference to payment of interest. The act very clearly says that
the liability to pay gratuity arises under Section 4(1) and if any one of the
contingencies set out in 4(1) mentioned, then the payment of gratuity become an
imperative from that moment. Therefore, if any gratuity is not paid on the day
when it becomes payable, then Section 7(3)(A) provides for interest. Therefore,
the Appellate Authority has correctly held that the workmen is eligible for
interest for the reduced payment of gratuity.

8.In the light of the above, there is no case made out to entertain the
Writ petition. It must also be noted that it is not as if that the first
respondent worked only for a few years, but he had worked for 30 years
continuously in the Bank and for paltry sum of Rs.22,529/- it is unnecessary for
the Bank to file such a Writ petition.

9.In the light of the above, there is no case made out. Hence, the Writ
petition stands dismissed. No costs.



1.The Assistant Commissioner of Labour (Gratuity),
Office of the Deputy Commissioner of Laboutr,
Abdul Salem Street,
Kaja Nagar,

2.The Joint Commissioner of Labour,
Appellate Authority under
The Payment of Gratuity,

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