When Payment Of Gratuity Act Is Applicable In Any Establishment, Calculation Must Be Made As Per Limits Prescribed By Central Govt. From Time To Time: Tripura HC

The Tripura High Court observed that any establishment, where the provisions of the Payment of Gratuity Act, 1972 is applicable, automatically, the calculation shall have to be made as per the limits as is prescribed by the Central Government from time to time.

The Court observed thus in a writ petition filed by a retired employee of a society ran under the administrative control of Tribal Welfare Department, Government of Tripura.

A Single Bench of Justice S.D. Purkayastha held, “the law is now settled that when in any establishment, the provisions of the Payment of Gratuity Act, 1972 is applicable, automatically, the calculation shall have to be made as per the limits as is prescribed by the Central Government from time to time."

Senior Advocate P. Roy Barman appeared for the petitioner while Addl. GA D Sharma appeared for the respondents.

Facts of the Case -

The petitioner was an employee of Tripura Tribal Welfare Residential Educational Institution (society) and its main object of the same was to establish, maintain, control, and running of the Eklavya Model Residential School (EMR), Residential School and Ashram School in Tribal Sub-Plan area of the State. The said employee went on retirement in 2022 from the post of Principal and as a matter of gratuity Rs. 3.50 lakhs was paid to him.

The dispute arose between the parties regarding quantum of actual amount of gratuity payable to the employee. In the writ petition, the employee in view of the notification issued by the Central Government making the maximum ceiling limit of gratuity to the extent of Rs. 20 lakhs by virtue of the provisions of Section 4(3) of the Payment of Gratuity Act, 1972, claimed that his gratuity should be paid in terms of the notification.

The High Court in view of the facts and circumstances of the case noted, “Section 14 of the Act gives an overriding effect upon all other enactment or rule made thereunder other than this Act or any instrument or contract having effect by virtue of any enactment other than the Act of 1972. The sixth meeting of Board of Governors has categorically decided to introduce the said Act in their establishment. Section 4, Sub Section 3 of the Act envisages further that the amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government from time to time.”

The Court added that the primary responsibility of the payment of gratuity is upon the society and not upon the Central Government.

“Mr. Sharma, learned Addl. GA though referred the provision of Section 4(5) of the Act to the effect that nothing in the provision of Section 4 of the Act shall affect the right of an employee to receive the better terms of gratuity under any award or agreement or contract with the employer. However, the said provision itself is indicative of the fact that the Act being a beneficial legislation, the entitlement of an employee cannot be reduced below the prescribed ceiling limit under Section 4(3) of the Act, under any award, agreement or contract, rather this provision approves receiving of a better gratuity than what is notified by the Central Government”, it further said.

Accordingly, the High Court allowed the writ petition and directed the respondents to make payment of gratuity to the petitioner treating the maximum ceiling limit to be Rs. 20 lakhs along with an interest @ 7% per annum within three months.

Cause Title- Dr. Prashant Kumar v. The State of Tripura & Ors.

Appearance:

Petitioner: Senior Advocate P. Roy Barman and Advocate K. Nath.

Respondents: Addl. GA D. Sharma

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