Case Note & Summary
The petitioner, V. Janagambal, was appointed as a saleswoman in the 3rd respondent cooperative credit society on 08.01.1985 through employment exchange. She worked there until 10.08.1989, when she was transferred to the 2nd respondent cooperative credit society vide order dated 10.08.1989. She continued working in the 2nd respondent society until her superannuation on 31.10.2018. Upon retirement, the respondents computed and paid terminal benefits including gratuity amounting to Rs.10,34,292/-, but excluded the period of service from 08.01.1985 to 10.08.1989 (four years and ten days) rendered in the 3rd respondent society. The petitioner made a representation to the 1st respondent (Deputy Registrar) requesting inclusion of that period, but it was rejected vide order dated 05.08.2019. Aggrieved, she filed the present writ petition seeking quashing of that order and direction to pay gratuity for the excluded period. The court considered the issue of whether the prior service period should be included for gratuity computation. The petitioner argued that the transfer was a continuous service and gratuity is a statutory right. The respondents contended that the period was not covered under the Payment of Gratuity Act. The court held that the transfer between cooperative societies does not break continuity of service, and the petitioner is entitled to gratuity for the entire period of service from 08.01.1985 to 31.10.2018. The court allowed the writ petition, quashed the impugned order, and directed the respondents to pay gratuity for the period from 08.01.1985 to 10.08.1989 within eight weeks.
Headnote
A) Gratuity - Continuous Service - Transfer - The petitioner, a saleswoman, was transferred from the 3rd respondent society to the 2nd respondent society and continued service until superannuation. The court held that the period of service from 08.01.1985 to 10.08.1989 in the transferor society must be included for gratuity computation, as transfer does not break continuity of service under Section 4 of the Payment of Gratuity Act, 1972. (Paras 2-6)
B) Cooperative Societies - Terminal Benefits - Section 110 of Tamil Nadu Cooperative Societies Act, 1983 - The court directed the respondents to pay gratuity for the entire service period including the prior service in the transferor society, relying on the principle that gratuity is a statutory right and cannot be denied due to transfer. (Paras 5-6)
Issue of Consideration
Whether the period of service rendered by the petitioner in the transferor cooperative society from 08.01.1985 to 10.08.1989 should be included for computation of gratuity under the Payment of Gratuity Act, 1972, when the petitioner was transferred to another cooperative society and continued service until superannuation.
Final Decision
The writ petition is allowed. The impugned order in Na.Ka.No.2538/2018/PAS dated 05.08.2019 passed by the 1st respondent is quashed. The respondents are directed to pay the gratuity for the period of service rendered by the petitioner from 08.01.1985 to 10.08.1989 within a period of eight weeks from the date of receipt of a copy of this order.
Law Points
- Gratuity payable for entire continuous service
- transfer between cooperative societies does not break continuity
- Payment of Gratuity Act
- 1972 Section 4
- Tamil Nadu Cooperative Societies Act
- 1983 Section 110
Case Details
J. Sathya Narayana Prasad
Mr. R. Rajarajan (for petitioner), Mr. S. Ravi Kumar (Special Government Pleader for R1), Mr. P. Singaram (for R2 & R3)
1. The Deputy Registrar (Co-op) Society, Tindivanam, Villupuram District; 2. The Sathambadi Primary Agricultural Co-operative Credit Society Limited; 3. The Secretary, Co-operative Bank – CL-SPL-139, Kannalam, Melmalaiyanur Taluk, Villupuram District
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition under Article 226 of the Constitution of India seeking a writ of certiorarified mandamus to quash an order rejecting gratuity for prior service period and to direct payment of terminal benefits including gratuity.
Remedy Sought
Petitioner sought quashing of the impugned order dated 05.08.2019 passed by the 1st respondent and direction to respondents to pay terminal benefits including gratuity for the period of service from 08.01.1985 to 10.09.1989.
Filing Reason
The petitioner's gratuity for the period of service from 08.01.1985 to 10.08.1989 in the 3rd respondent society was not included in the computation of terminal benefits upon her superannuation, and her representation was rejected.
Previous Decisions
The 1st respondent rejected the petitioner's claim for gratuity for the prior service period vide order Na.Ka.No.2538/2018/PAS dated 05.08.2019.
Issues
Whether the period of service rendered by the petitioner in the 3rd respondent cooperative society from 08.01.1985 to 10.08.1989 should be included for computation of gratuity under the Payment of Gratuity Act, 1972, when the petitioner was transferred to the 2nd respondent society and continued service until superannuation.
Submissions/Arguments
Petitioner's counsel argued that the transfer between cooperative societies does not break continuity of service, and gratuity is a statutory right that must be paid for the entire period of service.
Respondents contended that the period of service in the 3rd respondent society was not covered under the Payment of Gratuity Act and therefore not payable.
Ratio Decidendi
The transfer of an employee between cooperative societies does not break the continuity of service for the purpose of gratuity under the Payment of Gratuity Act, 1972. The employee is entitled to gratuity for the entire period of continuous service, including the period served in the transferor society.
Judgment Excerpts
The petitioner was appointed as a saleswoman in the 3rd respondent society through employment exchange in the year 1985.
The terminal benefits including gratuity to the tune of Rs.10,34,292/- was granted to the petitioner. However the gratuity was not paid for the period of service rendered by the petitioner from 08.01.1985 to 10.08.1989 and was rejected by the first respondent vide order in Na.Ka.No.2538/2018/PAS dated 05.08.2019.
The court held that the transfer between cooperative societies does not break continuity of service, and the petitioner is entitled to gratuity for the entire period.
Procedural History
The petitioner was appointed on 08.01.1985 in the 3rd respondent society, transferred to the 2nd respondent society on 10.08.1989, and superannuated on 31.10.2018. Terminal benefits were paid excluding the period from 08.01.1985 to 10.08.1989. Representation to the 1st respondent was rejected on 05.08.2019. The petitioner filed W.P.No.5328 of 2020 on an unspecified date, which was allowed on 10.01.2025.
Acts & Sections
- Payment of Gratuity Act, 1972: Section 4
- Tamil Nadu Cooperative Societies Act, 1983: Section 110
- Constitution of India: Article 226
