Employee Can Claim Gratuity "Either" Under 1972 Act Or The Bank Regulations, Not Under Both Statutes : Rajasthan HC

The bench observed that the term 'pay' defined under the Regulations is different from salary and dearness allowance is excluded for the purpose of the meaning of the term 'pay'. The court clarified that the definition of term 'pay' which does not refer to dearness allowance and the term 'salary' is defined as to mean aggregate of pay and dearness allowance.

Referring to the Regulation 72(3), the court observed that it refers to the computation of gratuity for an officer to be based on last pay drawn, it necessarily excludes the dearness component, which makes it clear from the interpretation and interplay of the terms 'pay', 'salary' and 'emoluments' and it is further clear when we compare the computation provision for gratuity payable to an employee as contained in the third proviso to the said sub-regulation.

The court observed that these regulations leave no manner of doubt that when it comes to computation of gratuity payable to an officer of the bank, the dearness allowance would not form part of the pay.

The court rejected the views of Madhya Pradesh High Court in All India Gramin Bank Pensioners Organization Unit Rewa v. Madhyanchal Gramin Bank [2018]. Though the decisions of the High Court were carried in appeal before the Supreme Court, mere dismissal of the SLP would not form a precedent which would bind the other High Courts, remarked the court.

Facts

Rajasthan Gramin Bank had filed a writ petition challenging an order of the Single Judge which had dismissed its plea against the order passed by the Appellate Authority under the Payment of Gratuity Act, 1972, partly confirming the order of the Controlling Authority. The respondent-Kheem Singh Rathore was a retired officer of the bank and at his retirement, the bank had paid him a gratuity of Rs.10,30,319/-.

Later, he approached the Controlling Authority, which allowed his plea alleging that while calculating the gratuity, the bank had not taken into account the dearness allowance component of his pay. The said authority opined that the dearness allowance component ought to have been taken into account while computing the last pay drawn for the purpose of payment of gratuity. It was held that for every completed year of service beyond 30 years, the applicant would receive an additional gratuity at the rate of salary for one and a half months. The Controlling Authority also opined that such distinction would be opposed to the equality clause under Article 14.

The bank opposed his application on the ground that the gratuity paid to him is as per the regulations framed by the bank. The bank had pointed out that for the purpose of computing gratuity, the regulations framed make a distinction between an officer and other employees. The bank challenged this order in the Appellate authority, which partly allowed that for the purpose of computing gratuity payable to the applicant concerned, dearness allowance should be taken into account. Being aggrieved, the bank further challenged the said orders before the Single bench of this High Court, which dismissed its plea.

Arguments

The counsel for the bank raised following grounds:

(i) Any employee or officer of the bank can claim benefit of gratuity payable under the regulations or under the Act of 1972 but cannot take benefit under both sets of provisions.

(ii) The language used in the regulations framed by the bank, is clear and permit no ambiguity. There is a clear distinction between an officer and an employee of the bank when it comes to computation of gratuity.

(iii) The applicants had accepted the gratuity paid by the bank at the time of retirement. Thereafter, they filed applications before the Controlling Authority without filing applications for condonation of delay or independently also explaining delay caused in filing such applications. The Controlling Authority entertained their applications ignoring the delay.

In contrast, the learned counsel for the employees opposed the appeal on following ground:

(i) The Act of 1972 as well as the regulations framed by the bank for payment of gratuity are beneficial welfare legislations. The Court should adopt liberal interpretation and give benefit to the employee to the extent possible.

(ii) The regulations of the bank have been correctly interpreted by the authorities under the Act of 1972 and by the learned Single Judge which requires no interference.

(iii) The scope of the appeal against an order passed by the learned Single Judge in exercise of writ jurisdiction is extremely narrow.

(iv) As per the Act of 1972, the onus is on the bank to pay gratuity to a retiring employee at the correct rates. If there is any lapse on the part of the bank, the employer cannot raise the ground of limitations.

(v) The Controlling Authority was correct that for every completed year of service beyond 30 years, an additional amount at the rate of one and half month's salary would be payable. The Appellate Authority and the learned Single Judge erred in reversing this finding of the Controlling Authority.

Findings

The court opined that circumstances under which the Baroda Rajasthan Kshetriya Gramin Bank had taken a decision to include dearness allowance is not clear. Unless the Board of Directors of the present bank had taken a decision to include the dearness allowance component for computation of last pay drawn, the same cannot be forced upon it, which in any case is opposed to the Regulations framed by the bank, added the court.

The court, however, also observed that the Appellate Authority and the Single Judge were correct in reversing the decision of the Competent Authority in relation to its interpretation on additional benefit payable to a retiring officer having more than 30 years of service. The court further observed that such benefit as per the correct interpretation of the regulation would be an additional amount calculated at the rate of one half month's pay for every completed year of service beyond 30 years.

The court, while allowing the appeals, ruled,

"In the result, all the appeals are allowed. Resultantly, the judgment of the learned Single Judge and the orders passed by the Controlling Authority as well as the Appellate Authority are set aside. If the bank has deposited any amount before this court or the Authorities under the Act of 1972 pursuant to the impugned orders and judgment, the same shall be returned to the bank."

Case Title: Rajasthan Marudhara Gramin Bank Jodhpur, Through Its Chairman v. The Appellate Authority Under Payment Of Gratuity Act 1972, And The Deputy Chief Labour Commissioner (Central), Ajmer (Raj.)

Citation: 2022 LiveLaw (Raj) 43

Counsel for Appellant: R.N. Mathur, Sr. Adv. assisted by Mr. Bhavit Sharma

Counsel for Respondents: S.P. Sharma, Mr. Mukesh Singh Rajpurohit, ASG, Mr. Narpat Singh, Mr. Om Singh, Mr. Prakash Choudhary

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