Court ruling on liability for gratuity payment

Our Legal Correspondent Chennai | Updated on March 13, 2011

With the Tamil Nadu Government having entrusted the electricity supply to the Tamil Nadu Electricity Board in Coimbatore Corporation, hitherto done by the civic body, a ticklish question arose as to whose responsibility it was to pay the terminal benefits to the employees who had resigned from the establishment concerned.

The issue assumed significance with the Government issuing an order exempting the Coimbatore Corporation from any liability for payment of gratuity to its employees. When one J. Shunmugham, who was an employee of the civic body and looking after power supply to the residents, resigned his job on April 12, 1993, and demanded gratuity payment, the Corporation declined to accept any liability to make the payment.

Employees attached to electricity supply wing of the Corporation were absorbed by the Electricity Board following the Government order.

When the said employee resigned from service, he demanded settlement of gratuity dues by the Corporation. He argued that as he had resigned the post on April 12, 1993, the question of the Government take-over was not there. Hence, the liability in the absence of any law could not be passed on to the Electricity Board. The Corporation filed a writ petition challenging the order dated October 28, 2004, of the Appellate Authority (under Payment of Gratuity Act) agreeing with the contention of R-3 (employee).

Mr Justice K. Chandru, who heard the petition, noted that R-3 was not an employee of the Electricity Board when the order of the absorption of employees of the Corporation was passed.

Once there was a direction by the Controlling Authority (under the Gratuity Act), then, in the light of the conditional order issued by the Tamil Nadu Government, this case had to be taken as a ‘settled matter' before the exemption order came to be issued. It was no doubt that the Government had exempted the petitioner-establishment from application of Gratuity Act from October 11, 1973, the Judge observed. But, while granting exemption (from July 15, 2005), the Government had stated that by virtue of the order, already settled cases could not be reopened.

The Appellate Authority found that in the present case, the liability to pay gratuity only vested with the petitioner Corporation, as resignation of R-3 was accepted only by that establishment.

In the light of the above, the writ petition was misconceived, and accordingly, would stand dismissed.

Published on March 13, 2011

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