Gratuity Payable On Resignation From Employment After 5 Years Of Continuous Service: SC [Read Judgment]

The Supreme Court has observed that the gratuity under the Payment of Gratuity Act shall be payable on resignation from employment after 5 years of continuous service.

The bench comprising Justices R. Banumathi and AS Bopanna noted that the term 'termination' in Section 4 of the Act would include resignation as well.

The Court was considering an appeal filed by Rajasthan State Road Transport Corporation Ltd. against the High court judgment which had allowed the writ petition filed by the wife of a deceased employee claiming the retiral benefits.

After his application seeking voluntary retirement was not acted upon, the employee had submitted his resignation as he claimed to be under depression and his health condition had further deteriorated. This resignation was accepted. It was after he died, his wife approached the High Court. The High Court directed to treat it as voluntarily retirement and release the retiral benefits to which he was entitled.

Allowing the appeal, the bench observed that pending disciplinary proceedings if an application for voluntary retirement is submitted there would be no absolute right seeking for acceptance since the employer if keen on proceeding with the inquiry would be entitled not to consider the application for voluntary retirement. However, the bench observed:

" As rightly pointed out by the learned counsel for the respondents, Section 4(1)(b) of the Payment of Gratuity Act, 1972 provides that the gratuity shall be payable if the termination of employment is after 5 years of continuous service and such termination would include resignation as well. In that view, if the gratuity amount has not been paid to the respondent's husband, the liability to pay the same would subsist and the respondent No.1 will be entitled to receive the same in accordance with the provisions of the Act. In that regard it is directed that the appellants shall accordingly calculate the gratuity and pay the same to the respondent No.1, if already not paid. Such payment shall be made within four weeks from this date" 

Case no.:  CIVIL APPEAL NO. 2236  OF 2020
Case name: Rajasthan State Road Transport Corporation Ltd. Vs. Smt. Mohani Devi & Anr.
Coram: Justices R. Banumathi and AS Bopanna
Counsel: Advocates Dr. Ritu Bhardwaj and S. Mahendran

Click here to Read/Download Judgment

Read Judgment