Case Note & Summary
The judgment concerns two writ petitions filed by Vidarbha Konkan Gramin Bank, a Regional Rural Bank constituted under the Regional Rural Banks Act, 1976. The bank challenged orders of the Appellate Authority under the Payment of Gratuity Act, 1972, which had allowed gratuity claims of two retired employees, Rajkumar Ghanshyamdas Makhija and Vishwas Banduji Ghaote, without applying the ceiling of Rs.10,00,000/- under the Act of 1972. The bank argued that the employees were entitled to gratuity only under the Act of 1972 with the ceiling, while the employees contended that they were entitled to gratuity under the Vidarbha Gramin Bank Officers and Employees Service Regulations, 2013, which had no such ceiling and included dearness allowance and other allowances in the definition of 'Pay'. The court examined the provisions of the Regional Rural Banks Act, 1976, particularly Section 30, which empowers the Board of Directors to frame regulations for service conditions, including gratuity. The court noted that the Regulations of 2013 were framed under this section and provided a comprehensive scheme for gratuity. The court held that the Regulations are a complete code governing gratuity for the bank's employees, and therefore, the ceiling under the Payment of Gratuity Act, 1972 does not apply. The court further held that the definition of 'Pay' in the Regulations includes dearness allowance and other allowances, and thus they must be included in the calculation of gratuity. Consequently, the court dismissed both writ petitions, upholding the orders of the Appellate Authority.
Headnote
A) Gratuity - Entitlement under Service Regulations vs. Payment of Gratuity Act, 1972 - Ceiling - The question was whether employees of a Regional Rural Bank are entitled to gratuity under the Payment of Gratuity Act, 1972 with a ceiling of Rs.10,00,000/- or under the Vidarbha Gramin Bank Officers and Employees Service Regulations, 2013 without any ceiling. The Court held that the Regulations, framed under Section 30 of the Regional Rural Banks Act, 1976, are a complete code governing gratuity, and the ceiling under the Act of 1972 does not apply. (Paras 2-3) B) Gratuity - Calculation - Definition of 'Pay' - Inclusion of Dearness Allowance - The dispute included whether dearness allowance and other allowances should be included in 'Pay' for gratuity calculation under the Regulations. The Court held that the definition of 'Pay' in the Regulations includes dearness allowance and other allowances, and thus they must be included in the calculation. (Para 2)
Issue of Consideration
Whether the contesting respondents are entitled to payment of gratuity under the Payment of Gratuity Act, 1972 with an upper ceiling of Rs.10,00,000/- or under the Vidarbha Gramin Bank Officers and Employees Service Regulations, 2013 without any such ceiling, and whether dearness allowance and other allowances are required to be included in the expression 'Pay' as defined in the said Regulations.
Final Decision
Both writ petitions are dismissed. The orders of the Appellate Authority under the Payment of Gratuity Act, 1972 are upheld. The respondents are entitled to gratuity under the Vidarbha Gramin Bank Officers and Employees Service Regulations, 2013 without the ceiling under the Payment of Gratuity Act, 1972, and dearness allowance and other allowances are to be included in the calculation of 'Pay'.
Law Points
- Gratuity entitlement under service regulations prevails over Payment of Gratuity Act
- 1972 ceiling
- Dearness allowance and other allowances included in 'Pay' for gratuity calculation under Regulations
- Service Regulations framed under Section 30 of Regional Rural Banks Act
- 1976 are a complete code
