Employee Can Claim Gratuity "Either" Under 1972 Act Or The Bank Regulations, Not Under Both Statutes : Rajasthan HC

The Rajasthan High Court has observed that an employee must receive gratuity, either under the Payment Of Gratuity Act 1972 or under the Regulations framed by the bank, whichever is more beneficial.However, an employee can not choose computation of gratuity under one statute and seek benefits of other provisions under another statute.The observation was made by a division bench of Chief Justice Akil Qureshi and Justice Rameshwar Vyas while dealing with a clutch of petitions raising a question as to whether employees of the Gramin Bank can claim benefits the 1972 Act or under Rajasthan Marudhara Gramin Bank (Officers and Employees) Service Regulations, 2010, or both.It held,"the scheme of gratuity under the Act of 1972 and under the regulations framed by the bank are different. For example, the Act of 1972 prescribes the ceiling beyond which the gratuity would not be paid irrespective of the computation. There is no such ceiling prescribed under the regulations. However, the regulations have other inherent limitations in computation of gratuity such as the gratuity computation would not exceed 15 months' salary upto 30 years of service, after which an additional benefit of half month's salary would be added to the payable gratuity. The employee, therefore, can claim gratuity either under the Act of 1972 or under the regulations framed by the bank, but cannot claim the benefit under both the statutes."Another question before the Bench was whether there is a distinction between bank 'employees' and 'officers' under the 2010 Regulations.In this regard, the Court observed,"The regulation 72, thus, at every stage makes a clear distinction between an officer and an employee for computation of gratuity...When it comes to officers the gratuity is payable on the basis of last pay drawn. In comparison in case of an employee, the gratuity would be calculated on the basis of average basic pay, dearness allowance, special allowance and officiating allowance payable during 12 months preceding death, disablement, retirement etc." The bench observed that the term 'pay' defined under the Regulations is different from salary and dearness allowance is excluded for the purpose of the meaning of the term 'pay'. The court clarified that the definition of term 'pay' which does not refer to dearness allowance and the term 'salary' is defined as to mean aggregate of pay and dearness allowance. Referring to the Regulation 72(3), the court observed that it refers to the computation of gratuity for an officer to be based on last pay drawn, it necessarily excludes the dearness component, which makes it clear from the interpretation and interplay of the terms 'pay', 'salary' and 'emoluments' and it is further clear when we compare the computation provision for gratuity payable to an employee as contained in the third proviso to the said sub-regulation. The court observed that these regulations leave no manner of doubt that when it comes to computation of gratuity payable to an officer of the bank, the dearness allowance would not form part of the pay. The court rejected the views of Madhya Pradesh High Court in All India Gramin Bank Pensioners Organization Unit Rewa v. Madhyanchal Gramin Bank [2018]. Though the decisions of the High Court were carried in appeal before the Supreme Court, mere dismissal of the SLP would not form a precedent which would bind the other High Courts, remarked the court. Facts Rajasthan Gramin Bank had filed a writ petition challenging an order of the Single Judge which had dismissed its plea against the order passed by the Appellate Authority under the Payment of Gratuity Act, 1972, partly confirming the order of the Controlling Authority. The respondent-Kheem Singh Rathore was a retired officer of the bank and at his retirement, the bank had paid him a gratuity of Rs.10,30,319/-. Later, he approached the Controlling Authority, which allowed his plea alleging that while calculating the gratuity, the bank had not taken into account the dearness allowance component of his pay. The said authority opined that the dearness allowance component ought to have been taken into account while computing the last pay drawn for the purpose of payment of gratuity. It was held that for every completed year of service beyond 30 years, the applicant would receive an additional gratuity at the rate of salary for one and a half months. The Controlling Authority also opined that such distinction would be opposed to the equality clause under Article 14. The bank opposed his application on the ground that the gratuity paid to him is as per the regulations framed by the bank. The bank had pointed out that for the purpose of computing gratuity, the regulations framed make a distinction between an officer and other employees. The bank challenged this order in the Appellate authority, which partly allowed that for the purpose of computing gratuity payable...

Employee Can Claim Gratuity "Either" Under 1972 Act Or The Bank Regulations, Not Under Both Statutes : Rajasthan HC

ANIRUDH VIJAY

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