Case Note & Summary
The State Bank of India (petitioner) challenged the order of the Appellate Authority under the Payment of Gratuity Act, 1972, which modified the Controlling Authority's order and held that the employee, Laxmikant Vithal Palekar, was entitled to Rs.14,492 as difference in gratuity. The employee had voluntarily retired on 31-3-2001 and was paid gratuity of Rs.3,03,007 without protest. After more than five years, on 9-5-2006, he filed an application claiming deficit gratuity on the ground that his last drawn wage was computed at Rs.16,412.85 instead of Rs.17,556. The Controlling Authority and Appellate Authority allowed his claim. The High Court examined two issues: limitation under Rule 10 of the Payment of Gratuity (Central) Rules, 1972, and the definition of wages under Section 2(s) of the Act. The Court held that the 90-day period under Rule 10 is directory, not mandatory, and the Controlling Authority has discretion to condone delay. However, on merits, the Court found that the employee failed to establish that his last drawn wage was higher. The definition of wages under Section 2(s) excludes certain allowances, and the employee did not prove that the disputed amount was part of wages. Consequently, the High Court allowed the employer's petition, set aside the Appellate Authority's order, and restored the Controlling Authority's order rejecting the claim.
Headnote
A) Gratuity - Limitation - Rule 10 of Payment of Gratuity (Central) Rules, 1972 - The period of 90 days for filing an application under Rule 10 is not mandatory but directory, and the Controlling Authority has discretion to condone delay if sufficient cause is shown. The employee's application filed after five years was held to be within time as the delay was condoned. (Paras 6-8)
B) Gratuity - Wages - Section 2(s) of Payment of Gratuity Act, 1972 - The definition of 'wages' includes dearness allowance but excludes bonus, commission, house rent allowance, overtime wages and any other allowance. The employee's claim for higher gratuity based on a higher last drawn wage was rejected as the difference was not established. (Paras 7, 9-10)
Issue of Consideration
Whether the application for gratuity filed beyond the 90-day period prescribed under Rule 10 of the Payment of Gratuity (Central) Rules, 1972 is maintainable, and whether the employee is entitled to gratuity on the basis of a higher last drawn wage.
Final Decision
The High Court allowed the writ petition, set aside the order of the Appellate Authority dated 30-1-2009, and restored the order of the Controlling Authority dated 30-5-2008 rejecting the employee's claim.
Law Points
- Limitation period under Rule 10 of Payment of Gratuity (Central) Rules
- 1972 is directory
- not mandatory
- Controlling Authority has discretion to condone delay on sufficient cause
- definition of wages under Section 2(s) of Payment of Gratuity Act
- 1972 excludes certain allowances
- gratuity calculation based on last drawn wages
Case Details
2010 LawText (BOM) (06) 127
WRIT PETITION NO. 248 OF 2009
Shri M. S. Sonak for the Petitioner, Shri L. V. Palekar, Respondent No.1 in person
Shri Laxmikant Vithal Palekar, The Appellate Authority under the Payment of Gratuity Act, 1972 and Regional Labour Commissioner(Central), Mumbai, The Controlling Authority under the Payment of Gratuity Act, 1972 and Assistant Labour Commissioner (Central), Vasco-da-Gama, Goa
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Nature of Litigation
Writ petition by employer challenging order of Appellate Authority under Payment of Gratuity Act, 1972 directing payment of additional gratuity.
Remedy Sought
Employer sought quashing of Appellate Authority's order and restoration of Controlling Authority's order rejecting employee's claim.
Filing Reason
Employee claimed deficit gratuity based on higher last drawn wage; employer disputed the claim and limitation.
Previous Decisions
Controlling Authority rejected employee's claim; Appellate Authority allowed it, directing payment of Rs.14,492.
Issues
Whether the application filed beyond 90 days under Rule 10 of the Payment of Gratuity (Central) Rules, 1972 is maintainable?
Whether the employee is entitled to gratuity on the basis of a higher last drawn wage?
Submissions/Arguments
Petitioner argued that the application was barred by limitation under Rule 10 as it was filed after five years without sufficient cause.
Petitioner argued that the employee failed to prove that his last drawn wage was higher than what was computed.
Respondent No.1 argued that the delay was condonable and that he was entitled to gratuity on the correct wage.
Ratio Decidendi
The period of 90 days under Rule 10 of the Payment of Gratuity (Central) Rules, 1972 is directory and not mandatory, and the Controlling Authority has discretion to condone delay on sufficient cause. However, the employee must prove the entitlement to higher gratuity based on the definition of wages under Section 2(s) of the Payment of Gratuity Act, 1972, which excludes certain allowances. In this case, the employee failed to establish that his last drawn wage was higher.
Judgment Excerpts
The period of 90 days prescribed under Rule 10 of the Payment of Gratuity (Central) Rules, 1972 is not mandatory but directory, and the Controlling Authority has discretion to condone the delay if sufficient cause is shown.
The definition of 'wages' under Section 2(s) of the Payment of Gratuity Act, 1972 includes dearness allowance but excludes bonus, commission, house rent allowance, overtime wages and any other allowance.
Procedural History
The employee filed an application on 9-5-2006 before the Controlling Authority claiming deficit gratuity. The Controlling Authority rejected the claim on 30-5-2008. The employee appealed to the Appellate Authority, which allowed the appeal on 30-1-2009, directing payment of Rs.14,492. The employer filed a writ petition in the High Court of Bombay at Goa, which was heard and decided on 16-6-2010.
Acts & Sections
- Payment of Gratuity Act, 1972: Section 2(s), Section 3, Section 4, Section 4(2)
- Payment of Gratuity (Central) Rules, 1972: Rule 10
