The Management, Vaiyampatti Primary Agricultural Co-operative Bank, vs The Appellate Tribunal

S. Nagamuthu, J.—The petitioner is a Cooperative Society governed by the Tamil Nadu Cooperative Societies Act. The third respondent was employed under the petitioner. The third respondent retired from service on 31.03.2006. But his gratuity on retirement under section 4 of the Payment of Gratuity Act, 1972 has not been paid. Therefore, the third respondent made a claim before the Controlling Authority under the Payment of Gratuity Act, 1972, the second respondent herein. In his claim, he had stated that his last drawn salary was Rs. 6,935/-. He had put in 33 years of service. But, just before his retirement his salary was reduced to Rs. 6,198/-. The third respondent further claimed that based on the monthly wages of Rs. 6,935/- he is entitled for gratuity with interest. The second respondent by his proceedings in Gratuity Case No. 11/10 dated 04.03.2011, allowed the petition and directed the petitioner to pay Rs. 1,32,031/- with interest at the rate of 10% p.a. from 01.04.2006.

Challenging the said order, the petitioner filed appeal to the Tribunal, viz. the first respondent herein. The first respondent by his order dated 08.12.2011, in Gratuity Appeal No. 18/2011, dismissed the said appeal with a cost of Rs. 2,000/-. Challenging the same, the petitioner is before this Court, with this Writ Petition.

I have heard the learned counsel for the petitioner, the learned Government Advocate for the second respondent and the learned counsel for the third respondent and also perused the records carefully.

Though very many grounds have been raised in this Writ Petition, the learned counsel for the petitioner would focus his claim primarily on two grounds. The first and the foremost ground raised is that the Payment of Gratuity Act, 1972 is not applicable to the petitioner because there were only five employees employed by the petitioner. As per Section 1(3)(b) of the Payment of Gratuity Act, 1972, the learned counsel has pointed out that 10 or more persons should have been employed for applying the said Act. In order to convince the Court, the learned counsel for the petitioner relied on the Salary Register showing the salary paid to the employees for the month of March, 2006.

But the learned counsel for the third respondent would submit that this plea was neither taken before the second respondent nor before the first respondent. Therefore, according to him, it is not open for the petitioner to make such a new plea before this Court. The learned counsel for the third respondent further submitted that no document was produced except A1, which would not go to show that only five persons were employed for ever. He would therefore submit that this ground should be rejected.

I have considered this submission.

As per Section 1(3)(b) of the Payment of Gratuity Act, 1972, it is an essential requirement that there should have been ten or more persons working in the establishment or were employed on any day of the preceding twelve months. Here, in this case, except producing the Salary Register for the month of March, 2006, the petitioner has not produced any document to show the number of employees working under the petitioner during the preceding 12 months before 31.03.2006. Therefore, based on the said document it can be held that in the month of March, 2006, there were only five persons employed, but it cannot be held that ten or more persons were not employed before March, 2006. Further, it is seen that the said plea was neither taken before the first respondent nor the second respondent. As rightly contended by the learned counsel for the third respondent, the petitioner has raised a new plea before this Court. In view of the same, the first ground raised by the petitioner is rejected.

Secondly, the learned counsel for the petitioner submitted that the respondents 1 and 2 have taken the monthly wages of the petitioner as Rs. 6,935/-, whereas, as a matter of fact his last drawn wages was Rs. 6,198/-.

A perusal of the pleadings of the third respondent would go to show that he has admitted that previously he was drawing a monthly wages of Rs. 6,935/-, but subsequently before his retirement it was drastically reduced to Rs. 6,198/-. Therefore, it is admitted by the third respondent himself that he was drawing a salary of Rs. 6,198/-. As a matter of fact, he has made a positive admission that though his wages were reduced to Rs. 6,198/-, with heavy heart, he had received that as last drawn salary. Therefore, his last drawn salary is Rs. 6,198/-. But the learned counsel for the third respondent disputed the same. According to him, the third respondent''s last drawn pay is Rs. 6,935/- and though it was reduced to Rs. 6,198/-, it should be taken as Rs. 6,935/-.

I have considered this submission.

In my considered opinion, the authority under the Payment of Gratuity Act, 1972 is not competent to decide the correctness of the wages. Reducing of wages and benefits, which may amount to unfair labour practices, against which the remedy of the third respondent is before the Labour Court. As far as the competent Authority is concerned, he has to go only by the last drawn salary. Admittedly, his last drawn wages is Rs. 6,198/-. Therefore, the gratuity should be calculated only on that basis. If that is done, the amount of gratuity shall be calculated as Rs. 6,198 x 15 x 33/26 = Rs. 1,18,000/-. Therefore, the amount of gratuity should be modified to Rs. 1,18,000/-.

Turning to the interest ordered by the authorities, the learned counsel for the petitioner would submit that it is on the higher side. He would further pointed out that the claim itself was made belatedly.

But the learned counsel for the third respondent would submit that on the retirement of the third respondent, it was the duty of the petitioner to pay the Gratuity, without there being any demand. Since he had failed, as per Section 7(3A) of the Payment of the Gratuity Act, 1972, the third respondent is entitled for the interest.

A perusal of the said provision would go to show that it is the bounden duty of the petitioner to have paid the gratuity immediately on the retirement of the third respondent. Since the petitioner failed, the third respondent is entitled for interest. According to the said provision, the interest shall be not exceeding 10% p.a. Going by the nature of the business of the Society and the economic status of the Society and all the attendant circumstances, I am of the view that the interest to be paid is fixed as 6% p.a.

In the result, the Writ Petition is partly allowed and the impugned orders of the respondents 1 and 2 are modified with a direction to the petitioner to pay a sum of Rs. 1,18,000/- (Rupees One Lakh and Eighteen Thousand only) as gratuity to the petitioner with simple interest at the rate of 6% p.a. from 01.04.2006 till date of payment. The cost of Rs. 2,000/- imposed by the first respondent is confirmed. It is brought to my notice that the petitioner has already deposited the award amount of Rs. 1,32,031/- to the credit of the second respondent. Out of the said amount, the third respondent is entitled to withdraw Rs. 1,20,000/- and the simple interest at the rate of 6% p.a. on Rs. 1,18,000/-. The balance amount, if any will be refunded to the petitioner. If the said amount does not satisfy the modified award, the petitioner is directed to deposit the balance amount before the second respondent within a period of eight weeks from the date of receipt of a copy of this order. No costs.