Failure To Consider Counsel's Medical Condition And Passing Ex-Parte Order Violates Natural Justice Warrants Setting Aside Appellate Authority's Order: Kerala HC

Kerala High Court: A Single Judge Bench of Justice N. Nagaresh set aside the Appellate Authority's ex-parte order in a gratuity dispute between HDFC Bank and its former Vice President. The court found that the Authority's failure to grant reasonable adjournments despite valid medical certificates violated principles of natural justice. The case concerned whether “personal pay” should be included in gratuity calculations under the Payment of Gratuity Act, 1972. The court directed a fresh hearing, emphasizing the need to properly consider the distinction between “personal pay” and “allowances” under Section 2(s) of the Act. Background Mr. Unnikrishna Pillai served as Vice President at HDFC Bank from September 2006 to March 2023. Upon his resignation, the bank paid him ₹5,94,554 as gratuity, calculating it solely based on his basic pay. Dissatisfied, the petitioner approached the Controlling Authority, claiming an additional ₹7,22,308 by arguing that his “personal pay” component should also be included in the gratuity calculation. The Controlling Authority ruled in the petitioner's favor, finding that while the Payment of Gratuity Act excludes “personal allowances,” the term “personal pay” used by the bank was distinct and should be included in gratuity calculations. HDFC Bank appealed this decision, and the petitioner filed a counter-appeal. The Appellate Authority ultimately reversed the Controlling Authority's order, leading to the present writ petition. Arguments The petitioner contended that the Appellate Authority's order was passed ex-parte, despite legitimate requests for adjournments supported by medical certificates. His counsel argued that the order merely reproduced the bank's contentions without considering the petitioner's arguments. On the substantive issue, the petitioner maintained that Section 2(s) of the Payment of Gratuity Act only excludes “allowances” from wage calculations, and “personal pay” does not fall within this exclusion. HDFC Bank defended its position by highlighting that it had already provided the petitioner with ₹22.99 lakhs towards a superannuation fund, which was a gratuitous payment beyond statutory requirements. The bank also emphasized that it paid EPF contributions on the entire basic pay rather than limiting it to ₹15,000 as required by law. The bank argued that repeated adjournment requests justified the Appellate Authority's decision to proceed with the order. Court's Reasoning Firstly, the court noted that the petitioner had initially appeared in person but later engaged counsel due to the complex legal issues involved. The counsel's appearances and adjournment requests were well-documented, including medical certificates proving serious pulmonary ailment. Further, the court found several procedural irregularities in the Appellate Authority's handling of the matter. Despite the submission of medical certificates, the Authority granted only short adjournments, disregarding the serious nature of counsel's illness. The final adjournment request was not even formally addressed before passing the order. On the substantive issue, the court observed that the Appellate Authority's order failed to adequately address whether “personal pay” should be treated differently from “allowances” under Section 2(s) of the Payment of Gratuity Act. The court noted that this distinction required careful consideration, as the Act specifically excludes “allowances” but does not explicitly address “personal pay.” Moreover, the court emphasized that since two appeals were filed against the same Controlling Authority order (one by the bank and one by the petitioner), they should have been heard together for a comprehensive resolution of the dispute. The Appellate Authority's failure to do so, combined with its handling of adjournment requests, led the court to conclude that justice had not been served. The court ultimately held that considering the complexity of the legal issues involved and the legitimate reasons for seeking adjournments, the Appellate Authority should have granted reasonable time for the petitioner's counsel to recover and present arguments effectively. The failure to do so resulted in injustice to the petitioner, warranting the order's setting aside. Case Title: Unnikrishna Pillai P. V. v HDFC Bank Ltd. and Others Citation: 2024 LiveLaw (Ker) 678 Counsel for the Petitioner: Adv. Nanda Surendran Counsel for the Respondents: Mr. K.K. Chandran Pillai (Sr.) with Mr. K. Sudhinkumar, Mr. P. Benny Thomas, Mr. D. Prem Kamath, Mr. Tom Thomas, Mr. Abel Tom Benny, Mr. Aaron Zacharias Benny, Ms. Praisy Thomas, Ms. Amrutha Selvam, and Mr. Bharath Nair, Mr. T.C. Krishna, DSGI In Charge Click Here To Read/Download The Order

Failure To Consider Counsel's Medical Condition And Passing Ex-Parte Order Violates Natural Justice Warrants Setting Aside Appellate Authority's Order: Kerala HC

Pranav Kumar

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