Employees Who Resigned Or Retired After 5 Years' Service Entitled To Gratuity : Supreme Court

The Supreme Court on Tuesday (December 9) held that an employee who resigns or opts for voluntary retirement is entitled to gratuity under the Payment of Gratuity Act, 1972, provided he has completed at least five years of continuous service.

A bench of Justice Rajesh Bindal and Justice Manmohan directed the Delhi Transport Corporation to pay gratuity to the family of the Appellant-employee (now dead), who had served about 30 years and resigned due to family reasons. He was denied gratuity and other retirement benefits such as pension and leave encashment after resigning from the service.

While upholding the High Court's decision to not grant a pension as the Appellant resigned from the services forfeiting his past service as per Rule 26 of the Central Civil Services (Pension) Rules, 1972, the judgment authored by Justice Bindal held that the Appellant's legal heirs are entitled to payment of gratuity in terms of Section 4 of the Payment of Gratuity Act, 1972, which says “an employee who had rendered not less than five years of service will be entitled to payment of gratuity, regardless of the fact that he had retired or resigned from service.”

Since the Respondent-DTC was not exempted from the application of the Payment of Gratuity Act, the Court held Appellant's legal heirs are entitled to receive gratuity in terms of the provisions of the 1972 Act for the service rendered by him.

Cause Title: ASHOK KUMAR DABAS (DEAD THROUGH LEGAL HEIRS) VERSUS DELHI TRANSPORT CORPORATION

Citation : 2025 LiveLaw (SC) 1186

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Appearance:

For Petitioner(s) : Mr. Anil Mittal, Adv. Mr. Narender Kumar Verma, AOR

For Respondent(s) : Mr. Aviral Saxena, AOR Mr. Abhinav Sharma, Adv. Mr. Paritosh Goyal, Adv.