The Hindu Business Line : Gratuity could not be denied even if money was owed to employer: HC

Chennai, Dec. 7 Gratuity due to employees on their superannuation could not be deprived just because they owed money to employer under various circumstances, the Madurai Bench of Madras High Court has ruled. Gratuity could be denied only under Section 4(6)(b) of Payment of Gratuity Act, 1972 which stipulated that if the employment was severed by a termination order for available grounds.

Dismissing writ petition from TN Civil Supplies Corporation, Chennai, challenging decision of the Controlling Authority under Gratuity Act (Asst Commissioner of Labour, Tiruchy) rejecting contention of petitioner that since two retired employees (R. Chandrababu and R. Sabapathy) owed large amounts of money to the corporation on account of loss incurred by organisation, their claim for gratuity should be rejected, Mr Justice K. Chandru held that it was not as if petitioner was helpless. The petitioner had allowed the employees to retire from service, and no departmental action was taken by imposing penalty. Even otherwise, the corporation could have instituted appropriate civil proceedings against the employees to recover the amounts.

Stressing that provisions of Gratuity Act had to be interpreted in such manner as intended by objects with which Parliament had enacted the law, the Judge ruled that in any event, problem of petitioner-corporation could not be solved by having adjustments against gratuity payable. Therefore, there was no illegality or infirmity in the order passed by 1st respondent (Assistant Commissioner of Labour).

The two employees were relieved from service. During their employment, it was found by petitioner that they had huge arrears of amount payable to corporation on account of loss incurred by the corporation. Though amounts due were quantified, petitioner did not take any action against employees. The two employees approached the Controlling Authority for claiming gratuity. But petitioner took the stand that the employees owed large amounts to it, and hence no gratuity need to be paid to them.

Petitioner’s arguments were rejected by Controlling Authority on two grounds. This was not a case where gratuity was deprived on exercise of power under Section 4(6)(b) of the Act. The petitioner was entitled to make recoveries as employees themselves had agreed to pay back the amounts.

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