Gratuity Is To Be Calculated From Date It Became Payable Not From Date Of Disbursement: Kerala HC
|The Kerala High Court has held that the maximum amount of gratuity payable to an employee as per the Payment of Gratuity Act of 1972 has to be determined with respect to the date on which the gratuity becomes payable and not the date on which the amount was actually disbursed.
A bench of Justice Murali Purushothaman observed, “The gratuity is payable to an employee on the termination of his employment. The gratuity payable to an employee shall not exceed the maximum that is notified under the respective enactments as on the date on which the gratuity becomes payable. Even if it is assumed that the petitioner's claim for gratuity was under the Payment of Gratuity Act, 1972, the maximum amount of gratuity payable under the said Act has to be determined with respect to the date on which the gratuity became payable and not on the date on which sanction was accorded for payment of DCRG or the date on which the amount was actually disbursed to him”.
Advocate Rajan Joseph appeared for the petitioner, Advocate C.N.Prabhakaran, Government Pleader appeared for the State.
In the present matter the petitioner retired as Regional Engineer from the Kerala State Housing Board on May 31, 2002.
On May 20,2006, the Board sanctioned the pensionary benefits of the petitioner, but withheld his DCRG amounting to Rs.2,57,400/- and also the last pay for the month of May, 2002 amounting to Rs.21,712/- towards his liability on account of audit objections.
Resultantly, on approaching the High Court, it directed the Board to disburse the DCRG withheld, together with the salary for the month May, 2002 within a period of one month.
However, the entitlement of the petitioner to claim interest for the delay in disbursement of Death cum Retirement Gratuity (DCRG) and pay for last month was left open.
Accordingly, the Board accorded sanction for payment of DCRG and the last month's pay.
However, the petitioner contended that the DCRG disbursed as per the 'then existing rule' and in accordance with the amendment introduced to Section 4(3) of the Payment of Gratuity Act, 1972 by Act 15 of 2010 with effect from May 17,2010, and he is entitled to the maximum gratuity of Rs.10,00,000/- (Ten lakhs).
Therefore, sought directions to disburse the DCRG as provided under Section 4(3) of the Payment of Gratuity Act, 1972, amended by Act 15 of 2010 and for 9% interest for 9 years and 11 months on the amount of gratuity.
The bench noting that the gratuity became payable to the petitioner with effect from May 31, 2002, as per the mandates of Section 4 of the Payment of Gratuity Act, 1972, observed, “He has to claim gratuity either under the Payment of Gratuity Act, 1972 or under the KSR (Kerala Service Rules). If he claims gratuity under the Payment of Gratuity Act, 1972, the amount will be determined under section 4 of the said Act, subject to the maximum amount notified under Section 4 (3). If he claims under the KSR, the amount of DCRG will be determined under Rule 68 of the said Rules, subject to the maximum provided therein. He cannot have gratuity under the KSR with the ceiling limit payable under the Payment of Gratuity Act, 1972 and vice versa”.
Holding that the bench further held that there is no merit in the contention of the petitioner that he is entitled to the maximum gratuity of Rs.10,00,000/- as per Section 4(3) of the Payment of Gratuity Act, 1972, as amended by Act 15 of 2010.
Cause Title: K Rajendra Prasad v State of Kerala & Ors.
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