Gratuity is to be Calculated from the date on which it becomes Payable and not from the date of Disbursement: Kerala HC [Read Order]

In a major decision, the Kerala High Court observed that the gratuity is to be calculated from the date on which it becomes payable and not from the date of disbursement.

The petitioner, Rajendra Prasad, is a retired Regional Engineer from the Kerala State Housing Board. Aggrieved by the withholding of Death-cum-Retirement Gratuity (DCRG), the petitioner approached the Kerala High Court and the Court, directed the Board to disburse the DCRG withheld, together with the salary for the month of May 2002 within a period of one month from the date of receipt of the judgment. The entitlement of the petitioner to claim interest for the delay in disbursement of DCRG and pay for last month was left open.

According to the petitioner, the DCRG was determined and disbursed to him as per the 'then existing rule' and in view of the amendment introduced to section 4(3) of the Payment of Gratuity Act, 1972 by Act 15 of 2010 with effect from 17.05.2010, he is entitled to the maximum gratuity of Rs.10,00,000/- (Ten lakhs).

Therefore, the petitioner has filed the writ petition for a direction to the respondents to disburse the DCRG as provided under section 4(3) of the Payment of Gratuity Act, 1972, amended by Act 15 of 2010 and for 9% interest for 9 years and 11 months on the amount of gratuity.

As per section 4 of the Payment of Gratuity Act, 1972, the gratuity shall be payable to an employee on the termination of his employment.

A Single Bench of the Kerala High Court of Justice Murali Purushothaman noted that the petitioner is an employee coming within the ambit of section 2(e) of the Payment of Gratuity Act, 1972. Though he is governed by the provisions of the Kerala Service Rules, section 14 of the Payment of Gratuity Act, 1972 provides that the provisions of the Payment of Gratuity Act and the rules made thereunder shall have an overriding effect on other enactments.

The Court observed that “Even if it is assumed that the petitioner's claim for gratuity was under the Payment of Gratuity Act, 1972, the maximum amount of gratuity payable under the said Act has to be determined with respect to the date on which the gratuity became payable and not on the date on which sanction was accorded for payment of DCRG or the date on which the amount was actually disbursed to him.”

To Read the full text of the Order CLICK HERE

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