Whether mere coverage of benefits, under any other law by itself, will suffice to exclude a person from the definition of ‘employee’ under the Gratuity Act, 1972? The Kerala High Court (Ernakulam Bench) answered in the negative and held that an establishment is bound to pay gratuity unless a specific exemption has been obtained from the appropriate Government.
Emphasising that the Gratuity Act is a Central Statute that has an overriding effect over other laws, the Court pointed out that the mere fact that the gratuity is mentioned among many other benefits offered under the Scheme will not disentitle the retired abkari workers of the Kerala State Beverages Corporation (appellants-BEVCO) from seeking the payment of gratuity under the Gratuity Act.
The Court clarified that exclusion from the definition of employee under Section 2 (e) of the Gratuity Act requires two aspects to co-exist, i.e., he must be holding a post under the Central Government or a State Government and must be governed by another Act or by any Rules providing for gratuity payment. The latter part alone cannot be extrapolated to deny entitlement to gratuity.
The Division Bench comprising Justice Sushrut Arvind Dharmadhikari and Justice Syam Kumar V.M. observed that a classification of employees of the Corporation unilaterally, without a comparative study of the benefits accruing under two statutes, is not a proper method to be adopted, especially since a statutory right to gratuity is denied based on such tentative classification.
The Bench also negated the opinion of the Single Judge regarding unjust enrichment, and emphasised that any denial of a statutory right through a manner or method beyond what is envisaged under law is improper and unsustainable. Receipt of amounts/emoluments under a scheme/fund evolved under law, and simultaneous receipt of a statutorily ordained gratuity cannot be termed unjust enrichment.
The Bench referred to Section 2 (e) of the Gratuity Act to note that exclusion from the term ‘employee’ envisaged in this section is with respect to persons who hold a post under the Central Government or a State Government and are governed by any other Act or by any Rules providing for payment of gratuity. At the same time, the Bench quoted Section 4(5) of the Gratuity Act to observe that it preserves better gratuity benefits and ensures that the minimum gratuity prescribed by the Act does not prevent employees from claiming more favourable benefits from awards, agreements contracts with the employer.
The Bench also referred to Section 14 of the Gratuity Act, which ensures that the provisions of the Gratuity Act will prevail over any other law, Rule, contract or instrument that is inconsistent with the stipulations therein. The benefits and protections of the Gratuity Act thus cannot be taken away by agreements or regulations that offer fewer benefits, and the same applies to all employees to whom the Act is applicable.
Accordingly, the Bench directed the respondent corporation to pay gratuity to the appellants based on their eligibility under the relevant Service Rules as well as under the Gratuity Act.
Briefly, the appellants, who are retired abkari workers of the Kerala State Beverages (M&M) Corporation, had approached this Court with the common grievance that the respondent corporation had declined them gratuity payable under the Payment of Gratuity Act, 1972, for the purported reason that terminal benefits were already being paid to them by the Kerala Abkari Workers Welfare Fund Board (KAWWF).
The Single Judge of this Court, however, refused to entertain the grievance by holding that if the contentions of the appellants are accepted, the same would amount to double payment of gratuity, i.e., one under the Welfare Fund and the other under the Gratuity Act, thus leading to unlawful enrichment.
Appearances:
Advocates Deepu Thankan, Vineetha Bose, Cindia S., and Ummul Fida, for the Appellants
Advocates S. Krishnamoorthy and Naveen T., for the Respondents
