IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN TUESDAY, THE 22ND JUNE 2010 / 1ST ASHADHA 1932 WP(C).No. 29015 of 2006(D) -------------------------- PETITIONER(S): --------------- G.SIMON, S/O. GEORGE, KIZHAKKEVILA PUTHEN VEEDU, ERAM, KARAMCODE P.O., CHATHANNOOR. BY ADV. SRI.C.RAJENDRAN RESPONDENT(S): --------------- 1. STATE OF KERALA, REPRESENTED BY SECRETARY TO CORPORATION, SECRETARIAT, THIRUVANANTHAPURAM. 2. JOINT REGISTRAR, JILLA CO-OPERATIVE SOCIETIES, KOLLAM. 3. THE UNIT INSPECTOR, CHATHANNOOR, OFFICE OF THE COURT-OPERATIVE ASSISTANT REGISTRAR GENERAL OFFICE, KOLLAM. (ADDRESS OF THE 3RD RESPONDENT CORRECTED) THE ADDRESS OF THE 3RD RESPONDENT CORRECTED AS: THE UNIT INSPECTOR, CHATHANNOOR, OFFICE OF THE CO-OPERATIVE ASSISTANT REGISTRAR GENERAL, KOLLAM. AS PER ORDER DATED 20-08-2009 IN IA 9510/2009. 4. THE SECRETARY, CHATHANNOOR SERVICE CO-OPERATIVE BANK, CHATHANNOOR, KOLLAM. 5. THE REGIONAL PROVIDENT FUND COMMISSIONER, REGIONAL OFFICE, BHAVASHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 6. ENFORCEMENT OFFICER, EMPLOYEES PROVIDENT ORGANIZATION, DISTRICT OFFICE, HOSPITAL ROAD, KOLLAM. ADV. SRI.N.N. SUGUNAPALAN, SC, P.F. FOR R1 & R2 SMT.T.N.GIRIJA, SC,EPF ORGANISATION FOR R1 & R2 SRI.B.SURESH KUMAR FOR R3 & R4 GOVERNMENT PLEADER SRI.P.M.MANOJ THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P(C)No.29015/2006 APPENDIX PETITIONER'S EXHIBITS: EXT.P1. TRUE PHOTOCOPY OF THE JUDGMENT DATED 25.5.1989 IN W.A.NO.782/87 EXT.P2. TRUE PHOTOCOPY OF THE JUDGMENT DATED 29-10-96 IN O.P.NO.11488/90 EXT.P3. TRUE PHOTOCOPY OF THE PETITION DATED 5.6.2006 EXT.P4. TRUE PHOTOCOPY OFO THE NOTICE DATED NIL. / TRUE COPY / P.S.TO JUDGE P.N.RAVINDRAN, J. ----------------------------------------- W.P(C).No.29015 of 2006 ----------------------------------------- Dated this the 22nd day of June, 2010 JUDGMENT The petitioner was appointed as Salesman in a ration shop run by the Chathannoor Service Co-operative Bank Ltd., on 10-3-1965. He was dismissed from service with effect from 1.3.1980. The petitioner thereupon raised a dispute and the Government referred the said dispute to the Labour Court, Kollam, where it was taken on file as I.D.No.10 of 1981. By award passed on 4.2.1987 the Labour Court held that the order dismissing the petitioner from service cannot be sustained and directed reinstatement of the petitioner in service with full backwages, continuity in service and other service benefits. 2. The employer challenged the said award by filing O.P.No.6640 of 1987 in this Court. The said original petition was dismissed. The employer thereupon filed Writ Appeal No.782 of 1987. In the writ appeal the employer contended that though they were running five ration shops, all the five ration shops were closed on 29.6.1986 and therefore, the petitioner cannot be reinstated in service or wages paid after 29.6.1986. Taking note of the said contention the Division Bench of this Court passed Ext.P1 judgment in Writ Appeal No.782 of 1987 whereby the employer was directed to deposit in the W.P(C).No.29015 of 2006 -:2:- Labour Court the entire backwages from 1.3.1980 to 29-6-1986 as a condition for setting aside the award and remitting the matter to the Labour Court for fresh determination of the appropriate relief to be granted. This Court however upheld the finding of the Labour Court that the order dismissing the petitioner was illegal. The matter was remitted to the Labour Court for the limited purpose of deciding whether, having regard to the closure of the establishment, the petitioner can be reinstated in service. 3. Pursuant to Ext.P1 judgment the employer deposited the wages payable to the petitioner during the period from 1.3.1980 to 29.6.1986. The Labour Court thereafter passed a revised award on 28.11.1989 holding that the petitioner is not entitled to reinstatement for the reason that the ration shop has been closed. The petitioner unsuccessfully challenged the said award by filing O.P.No.11488 of 1990. He thereafter moved the employer and the Joint Registrar of Co-operative Societies (General) Kollam claiming payment of gratuity for the service rendered by him from 10.3.1965 till 29.6.1986 by filing Ext.P3 representation dated 5.6.2006. The Joint Registrar of Co- operative Societies, in turn, forwarded it to the Assistant Registrar of Co-operative Societies, (General) Kollam, who issued Ext.P4 notice to W.P(C).No.29015 of 2006 -:3:- the Secretary, Chathannoor Service Co-operative Bank Limited calling upon him to submit a report regarding the benefits payable to the petitioner. This writ petition was thereupon filed on 3.11.2006 seeking the following reliefs:- “i. To issue a writ of mandamus or any other writ, order or direction compelling and commanding the respondent Nos.1 to 4 to take immediate steps for the disbursement of the gratuity and other retirement benefits to the petitioner. ii. To issue a writ of mandamus or any other writ order or direction compelling and commanding the respondents to take steps immediately for disbursing the pension to the petitioner with arrears and interest. 4. The 4th respondent, the Secretary of the Chathannoor Service Co-operative Bank Limited, has filed a counter affidavit stating that the petitioner was never admitted as a member of the Kerala Co- operative Societies Employees Self Financing Pension Scheme, 1994 and the Employees Provident Fund Pension Scheme, 1995, which were introduced long after he ceased to be in service. It is, however, conceded that the bank was maintaining its own provident fund and that remittances have been made upto 1.3.1980 by the petitioner. It is also stated that the sum of Rs.9862/- which represents the W.P(C).No.29015 of 2006 -:4:- contribution made by the petitioner to the provident fund till 1.3.1980 and the accrued interest as on 31-3-2006 has been remitted in the Kollam District Co-operative Bank. Though the claim of the petitioner for payment of pension is disputed, the 4th respondent does not dispute his entitlement for payment of gratuity. 5. I heard Sri.C.Rajendran, learned counsel appearing for the petitioner, Sri.B.Suresh Kumar, learned counsel appearing for the bank and the learned Government Pleader appearing for the official respondents. Section 62 of the Kerala Co-operative Societies Act, 1969 stipulates that employees of co-operative societies shall be entitled to gratuity at such rates and on such conditions as may be prescribed. Rule 59 of the Kerala Co-operative Societies Rules, 1969 deals with payment of gratuity. The said rule reads as follows:- “59. Gratuity. - Every society shall make in its bye-laws provision for payment of gratuity to its employees and frame regulations for its administration. Among other matters such regulations shall provide for the following-- (i) all monthly paid employees on the permanent establishment shall be eligible for gratuity; (ii) service rendered by employees must be continuous and satisfactory. W.P(C).No.29015 of 2006 -:5:- (iii) when an employee who has put in at least 5 years satisfactory service is retired voluntarily from service or if he is permanently disabled while in service or if he dies while in service the society shall pay to him or to his legal heirs as the case may be a gratuity not exceeding half months pay for every completed year of service; Provided that in no case shall the gratuity exceed fifteen months pay.” As per rule 59 all monthly paid employees are eligible for gratuity provided their service is continuous and satisfactory. However, it is stipulated that the gratuity shall not exceed 15 months pay. In view of the finding of the Labour Court that the petitioner was wrongfully dismissed from service, the petitioner's service cannot be said to be unsatisfactory. He was also entitled to be treated as in service from 1.3.1980 till the establishment was closed down on 29.6.1986. Therefore, on the terms of section 62 of the Kerala Co-operative Societies Act, 1969 read with rule 59 of the Kerala Co-operative Societies Rules, 1969 the petitioner is entitled to gratuity for the service rendered by him during the period from 10-3-1965 to 29.6.1986. However, the proviso to rule 59 stipulates that the W.P(C).No.29015 of 2006 -:6:- gratuity shall not exceed fifteen months pay. The provision in the byelaws of the bank regarding payment of gratuity reads as follows:- “10. When an employee who has, put in at least 10 years satisfactory service in the bank retires from service, or if he dies while in service it shall be competent for the Board of Management to sanction him or his heirs, as the case may be, a gratuity determined according to the following scales. i) For a person who has Rs.1000/- or more in his Provident Fund account inclusive of the Bank's contribution and exclusive of any loan taken by him – Nil. ii) For a person who has less than Rs.1000/- exclusive of any loan taken by him, the difference Rs.1000/- and the amount to his credit in the Provident Fund account including the bank's contribution subject to a maximum of three times his substantive pay on the date of his retirement or death while in service as the case may be.” Going by rule 10 the petitioner will be entitled only to the sum of Rs.1000/- as gratuity. 6. Section 4 of the Payment of Gratuity Act, 1972 stipulates that gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than W.P(C).No.29015 of 2006 -:7:- five years, on his superannuation or on his retirement or resignation or on his death or disablement due to accident or disease. In the instant case though the petitioner was dismissed from service, the order of dismissal was found to be illegal by the Labour Court and the award of the Labour Court was upheld by this Court. Therefore, the petitioner cannot be denied payment of gratuity. As per sub-section (2) of section 4 of the Payment of Gratuity Act, the employer has to pay gratuity to an employee at the rate of 15 days' wages based on the rate of wages last drawn by the employee. The Explanation to sub- section (2) of section 4 of the Payment of Gratuity Act stipulates that in the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen. Sub-section (3) of section 4 of the Payment of Gratuity Act, as it stood in force prior to 1994, stipulates that the amount of gratuity payable to an employee shall not exceed fifty thousand rupees. The said provision was amended raising the limit to Rs.1,00,000/- by Act 34 of 1994 and still later to rupees three lakhs and fifty thousand by Act 11 of 1998 with retrospective effect from 24.9.1997. 7. In the instant case, the petitioner was governed by sub- W.P(C).No.29015 of 2006 -:8:- section (3) of section 4 as it stood in force on 29-6-1986. sub-section (5) of section 4 of the Payment of Gratuity Act stipulates that nothing in section 4 shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. The provisions contained in rule 59 of the Kerala Co- operative Societies Rules, 1969 and in the byelaws referred to above do not contemplate payment of a better rate of gratuity to the petitioner. As held by the Division Bench of this Court in Anappara Karinkallu Thozhilali Sahayam Co-op. Society Ltd. v. Many, 2004 (1) KLT 189 the Payment of Gratuity Act will apply only in the absence of a better provision for payment of gratuity than that provided in the said Act. Section 14 of the Payment of Gratuity Act, 1972 also fortifies the said conclusion. In other words, as held by the Division Bench in Anappara Karinkallu Thozhilali Sahayam Co-op. Society Ltd. v. Many, 2004 (1) KLT 189, if the gratuity, which the petitioner is entitled to receive under the Payment of Gratuity Act, is higher than what he will be entitled to receive under section 61 of the Kerala Co- operative Societies Act read with rule 59 of the Kerala Co-operative Societies Rules and byelaw 10 referred to above, he will be entitled to receive the better terms of gratuity under the Payment of Gratuity Act, W.P(C).No.29015 of 2006 -:9:- 1972. I am therefore, of the considered opinion that the petitioner is entitled to have the gratuity payable to him determined and paid applying the Explanation to sub-section (2) of section 4 of the Payment of Gratuity Act, 1972 for the service rendered by him during the period from 10.3.1965 to 29-6-1986. However, in the absence of any pleading or proof to the effect that the petitioner was a member of the pension fund administered by the Society or by the Pension Board or by the Employees Provident Funds Organization, he cannot claim or be granted the relief of payment of pension. In the result I allow the writ petition and declare that the petitioner is entitled to payment of gratuity calculated in accordance with the Explanation to sub-section (2) of section 4 of the Payment of Gratuity Act, 1972 for the service rendered by him during the period from 10-3-1965 to 29-6-1986. The 4th respondent shall compute the gratuity in accordance with the said provision, having regard to the wages which the petitioner would have drawn in the month of June 1986, had he continued in service giving full effect to the award of the Labour Court and pay the same to the petitioner expeditiously and in any event within two months from the date on which the petitioner produces a certified copy of this judgment before the fourth W.P(C).No.29015 of 2006 -:10:- respondent. The petitioner will also be entitled to interest at the applicable rates in terms of section 9 of the Payment of Gratuity Act, 1972. The claim for payment of pension is declined. P.N.RAVINDRAN, Judge. ahg. P.N.RAVINDRAN, J. --------------------------- W.P(C).No.29015 of 2006 ---------------------------- JUDGMENT 22nd June, 2010