Case: INDIAN OVERSEAS BANK Vs. THE REGIONAL LABOUR COMMISSIONER (C) AND APPELLATE AUTHORITY AND ORS

3. The brief facts of the case necessary to be noticed for deciding the present appeal are as follows:The third respondent joined the appellant-Bank on 30th December, 1957 and retired as an officer of the bank on 31st May, 1994. The gratuity payable to the third respondent at the time of retirement as per section 4(3) of the Payment of Gratuity Act, 1972 was Rs. 1,00,000/- (Rupees one lac) which was the maximum gratuity payable under the Act in 1994 till substituted and increased to Rs. 3,50,000/- in 1998 by an amendment, more than three years after the termination of his employment. A settlement was arrived at between the Indian Banks Association and the Apex Level Officers Association. According to these terms of settlement, the payment of arrears of gratuity would be effective w.e.f. 1st November, 1994. The third respondent was paid his arrears of salary consequent upon revision w.e.f 1st July, 1993 till 31st May, 1994. As far as gratuity was concerned, the benefit of the revised salary was to be taken into account only for employees who retired on or after 1st November, 1994. The respondent No.3 was informed that his gratuity has been paid as per his last basic pay and nothing was due to him. The third respondent filed an application before the Controlling Authority claiming an amount of Rs. 85,400/- with interest being the difference in gratuity based on the revised salary. The difference in cut-off date for gratuity was challenged by various similarly situated employees before the High Court of Madras. The High Court vide judgment dated 31st August, 2002 upheld the cut-off date 1st November, 1994 for gratuity. The Controlling Authority by order dated 21st March, 2003 directed the payment of difference in gratuity based on the salary revision as Rs. 85,400/-. The bank filed an appeal which was dismissed on 27th April, 2005. Thereafter the Writ Petition was filed before the High Court which was dismissed on 20th November, 2007. A Writ Appeal filed by the bank also met the same fate4. Aggrieved by the aforesaid judgment, the Bank has come up in this appeal.

Reasoning:
We are sure that the third respondent must have received the different in the amount of gratuity, which was already allowed to him7. The High Court in the impugned judgment has taken the view that in the settlement entered into in respect of revision of salary a subsequent cut-off date was 1st November, 1994 for the purpose of gratuity, which is unsustainable8. The Division Bench has taken the view that fixation of cut-off date for payment of gratuity is unsustainable. In the present case the cut-off date was 1st November, 1994 which was the date fixed for computation of payment of gratuity in the revised pay scale on the basis of settlement relied upon by the respondents as well as the bank9. The cut-off date for revision of the wages is a different concept than payment of gratuity on a particular date. As per the provisions of the Payment of Gratuity Act, 1972 which were existing on the date of retirement of the third respondent, the maximum gratuity payment was Rs. 1,00,000/- (Rupees one lac). The Full Bench of the Kerala High Court had considered all aspects of the matter including the divergent views taken by different High Courts and has upheld the cut-off date. The judgment of this court in the case of Central Bank (supra) has also referred to the judgment of the Kerala High Court with approval in paragraph 5 of the judgment. Although learned counsel for the appellant is correct in his submission that no further consideration has been made in the said judgment, the judgment of this Court in the case of Central Bank (supra) has clearly upheld fixation of cut-off date for different purposes, which is clear from paragraph 8 of the judgment11. The Association of Employees filed a Writ Petition in the Patna High Court, which writ petition was allowed on 21.08.1996. Notifications in questions were quashed and Government was directed to reconsider the matter in accordance with law. The judgment was although challenged in this Court but the special leave petition was summarily dismissed by this Court on 20.01.1997. The Governor of Bihar issued an Ordinance namely "the Bihar State Government Employees Revision of Pension, Family Pension and Death-cum-Retirement Gratuity (Validation and Enforcement) Ordinance, 2000", which was subsequently replaced by the Bihar Act 3 of 2001. The Act validated the revision of pension and gratuity in accordance with earlier two resolutions dated 19.04.1990. A writ petition was filed in the High Court challenging the Ordinance, which was struck down by the High Court. The challenge to the Ordinance and the Act on the ground of violation of Article 14, i.e. cut-off date for payment of the pensionary benefits w.e.f. 01.03.1989 was repelled by this Court. In Paragraph No. 17, this Court held:-"17................The only ground on which Article 14 has been put forward by the learned counsel for the respondent is that the fixation of the cut-off date for payment of the revised benefits under the two notifications concerned was arbitrary and it resulted in denying arrears of payments to certain sections of the employees. This argument is no longer res integra. It has been held in a catena of judgments that fixing of a cut-off date for granting of benefits is well within the powers of the Government as long as the reasons therefor are not arbitrary and are based on some rational consideration."12. Thus, this Court held that the fixation of date for payment of financial benefits, w.e.f. 01.03.1989, does not suffer from any infirmity, even though the effective date of the notification was fixed as 01.01.1986. The above ratio fully supports the view, which we have taken above.