The Kerala High Court has held that gratuity serves as a retirement or terminal benefit ensuring immediate financial support and therefore can't be paid in installments.

The Court was considering a Writ Petition against an order for payments of gratuity in installments.

The single-bench of Justice Murali Purushothaman observed, "While pension is payable periodically, gratuity is paid only once on termination of employment. The law does not provide for payment of gratuity in installments as the purpose of gratuity is to serve as a retirement or terminal benefit ensuring immediate financial support to the employee or their dependents, as the case may be. It provides financial protection during the autumn years of a retired employee's life."

The Petitioner was represented by Advocate D. Reetha while the Respondent was represented by Advocate K.P. Sreekumar.

The Respondent-Employee retired from the Petitioner-Establishment on superannuation application under Rule 10(1) of the Kerala Payment of Gratuity Rules, 1973 before the Controlling Authority, contending that the employer refused to pay the full gratuity due to him. Accordingly, an order was passed under Section 7(4) of the Act directing the Petitioner to pay the Respondent the balance gratuity amount within 30 days from the date of receipt of the order. No appeal was preferred against the same under Section 7(7) of the Act and since the amount ordered was not paid to the Respondent, the Controlling Authority issued Show- Cause Notice directing the petitioner to show cause why action should not be taken to recover the amount under Section 8 of the Act. The Petitioner, in the reply, asked for permission to pay the amount ordered in 12 equal installments. The request of the Petitioner was rejected and he was directed to pay the gratuity ordered within 7 days. The Petitioner preferred the present Petition against the same.

The Court at the outset considered the relevant Sections of the The Payment of Gratuity Act, 1972 and referred to Supreme Court's decision in Maniben Maganbhai Bhariya v. District Development Officer, Dahod and Others wherein the object and scope of the Act was considered.

The Court arrived at the conclusion that gratuity amount cannot be payed in installments to the employee due to financial contraints of the employer.

"'Gratuity' is a gratuitous lump sum payment given by an employer to an employee upon the termination of his employment due to superannuation, retirement, resignation, death, or disablement caused by an accident or disease. While pension is payable periodically, gratuity is paid only once on termination of employment.......Financial distress of the employer is not at all an excuse for denying or delaying payment of gratuity, which provides socio-economic security to the employee. Gratuity is to be paid in lump sum, that too, within 30 days from the date it becomes payable," the Court observed.

The Petition was accodingly rejected.

Cuase Title: Sadhoo Beedi Enterprises vs. The Controlling Authority (2024:KER:91694)

Appearances:

Petitioner- Advocate D. Reetha, Advocate P.V. Vinod, Advocate Shiyas K.R.

Respondents- Advocate K.P. Sreekumar, Advocate P.M. Satheesh, Government Pleader Anima N

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Kerala High CourtJustice Murali Purushothaman

Sheetal Joon