ADVS. MATHEW A KUZHALANADAN SMT.ANITHA MATHAI MUTHIRENTHY SRI.SUDEEP ARAVIND PANICKER KUM.APARNA SATHIANATHAN v. Rafiq Masih (AIR 2015 SC 696) & Ors.

BY ADVS. MATHEW A KUZHALANADAN SMT.ANITHA MATHAI MUTHIRENTHY SRI.SUDEEP ARAVIND PANICKER KUM.APARNA SATHIANATHAN RESPONDENT/S: 1 2 STATE OF KERALA REPRESENTED BY ITS SECRETARY, INDUSTRIES (K) DEPARTMENT, THIRUVANANTHAPURAM. KERALA STATE BAMBOO CORPORATION LIMITED REPRESENTED BY ITS MANAGING DIRECTOR, P.B.NO.20, ANGAMALY SOUTH, ERNAKULAM-683573. BY ADVS. SRI.M.N.RADHAKRISHNA MENON SMT.LATHA ANAND THIS WRIT APPEAL HAVING COME UP FOR HEARING ON

22.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA NO. 1389 OF 2019 4 JUDGMENT Amit Rawal, J. Present appeal is directed against the judgment of the Single Bench whereby the action of the respondent, Corporation in deducting the amount from the gratuity of the appellants, petitioners with regard to the special allowance subject to the reimbursement by the Government has not been accepted.

Appellants, petitioners were in the employment of Kerala State Bamboo Corporation Ltd. and were being paid regular wages. Every year, the employer had been extending the benefit of special advance with the Government consent. For a particular period, the Government did not sanction the advance. All the fifteen (15) appellants-petitioners worked in the plant works of the Corporation and retired from the service in the beginning of 2001. Since the previous special grants during the service was not reimbursed by the Government, the employer adjusted the amount from the gratuity. WA NO. 1389 OF 2019 5

The contention of the appellant is that none of the provisions of the Payment of Gratuity Act envisage such recovery, particularly, Section 4(6) of the Act as no exception has been carved out or any eventuality as culled out therein ever occurred. In support of the contentions relied upon the judgment of State of Punjab v. Rafiq Masih (AIR 2015 SC 696), Allahabad Bank v. A.C Aggarwal (2013 (3) ALJ 274), Allahabad Bank and Ors. v. All India Allahabad Bank Retired Emps. Assn. and Ors. (2010 (2) SCC 44) and Mathew K.C v. Plantation Corporation of Kerala Ltd. And Ors (2000 (3) SCT 539, Kerala).

In all these aforementioned judgments, it has been held that the gratuity is payable to an employee either on termination or superannuation from the service and can be deducted or forfeited only in those circumstances as enumerated in Section 4(6) of the Payment of Gratuity Act. The stand of the Corporation was supported by the judgment of the Supreme Court in High Court of Punjab and Haryana & Ors v. Jagdev Singh (AIR 2016 SC 3523) and also of this Court in K.P Krishnan Kutty v. State of Kerala and Ors. (2022 (5) KLT 481). The contentions, aforementioned, of the appellants did WA NO. 1389 OF 2019 6 not find merit before the Single Bench.

Learned counsel for the appellants submitted that the learned Single Judge has not appreciated the judgments cited at bar and as well as the statutory provisions in correct perspective. In all the aforementioned cited judgments, the gratuity, which is earned over and above the wages drawn by the employer has been held to be payable to an employee on superannuation or termination except the circumstances warranted under Section 4(6) of the Act. Special allowance sought to be recovered paid to the employees, was not on misrepresentation or fraud and therefore cannot be deducted from gratuity in view of the ratio decidendi culled out in State of Punjab v. Rafiq Masih (AIR 2015 SC 696).

The learned counsel for the respondent relied upon paragraph 8, 9, 10 and 11 of the judgment in High Court of Punjab and Haryana & Ors (supra) and K.P Krishnan Kutty (supra) and urged this Court for dismissal of the appeal by upholding the findings of the Single Bench. Section 4 of the payment of gratuity Act reads thus: WA NO. 1389 OF 2019 7

4. Payment of gratuity (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-- (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: 1[Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] Explanation.-- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned: Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of 2[an employee who is employed in a seasonal establishment and who is not so employed throughout the year], the employer shall pay the gratuity at the rate of seven days' wages for each season. 3[Explanation.-- In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

(3) The amount of gratuity payable to an employee shall not exceed 4[5[such amount as may be notified by the Central Government from time to time] . WA NO. 1389 OF 2019 8 (4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced. (5) Nothing in this section shall affect the right of an employee receive better terms of gratuity under any award or agreement or contract with the employer. (6) Notwithstanding anything contained in sub-section (1),-- (a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee 6[may be wholly or partially forfeited]-- (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act violence on his part, or (ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

No doubt, sub Section 6 of Section 4 is an exception whereby gratuity payable to the employee on the basis of termination or superannuation can be withheld if the circumstances narrated therein exists. None of the circumstances in this instant case are attracted for stopping the advancement of special allowance through gratuity. All employees had executed undertakings. Similar circumstances arose in the High Court of Punjab and Haryana WA NO. 1389 OF 2019 9 & Ors v. Jagdev Singh (AIR 2016 SC 3523) wherein paragraph 10 to 12 reads thus: 10 In State of Punjab & Ors etc. vs. Rafiq Masih (White Washer) etc1. this Court held that while it is not possible to postulate all situations of hardship where payments have mistakenly been made by an employer, in the following situations, a recovery by the employer would be impermissible in law: “(i) Recovery from employees belonging to Class-III and Class-IV service (or Group 'C' and Group 'D' service).

In K.P Krishnan Kutty v. State of Kerala and Ors. (2022 (5) KLT 481) the Division Bench laid down as under (paragraph 14, 18 and 19):

The next decision referred to is Jagdev Singh (Supra). In this case the respondent therein claimed the benefit of situation no. (ii) in White Washer (Supra). The Apex court held that the same would have no application because an undertaking had been specifically furnished by the officer at the time when his pay had been initially revised accepting that any payment found to have been made in excess would be liable to be adjusted. While opting for the benefit of the revised pay scale, the Respondent was clearly put to notice of the fact that a future re-fixation or revision may warrant an adjustment of the excess payment, if any, made. The officer had furnished the undertaking while opting for the revised pay scale and so he is bound by the same. Holding so, recovery of excess payments made, was permitted to be made in reasonable instalments.

It is true that this Court in Vinod Kumar (Supra) rejected the argument advanced on behalf of the State that, Jagdev Singh (Supra) is a complete departure from the principles laid down in White Washer (Supra). This Court held that in Jagdev Singh (Supra) the apex Court has only clarified that in cases of recovery from retired employees or employees who are due to retire with in a year of the order of recovery, there would be no bar on ordering recovery, if the employee concerned had executed an undertaking agreeing to refund any excess payment(s). Hence it has been concluded that one cannot read Jagdev Singh (Supra) as having laid down the proposition that in every case where there is an undertaking given by the employee agreeing to refund the amount, recovery can be ordered from the employee concerned whatever be the point of time that such payment had been made. It was also noticed that it cannot be overlooked that, there is not even a suggestion in Jagdev Singh (Supra) that in the event of there being an undertaking to refund excess pay, none of the situations envisaged under items (i) to (v) of White Washer (Supra) can be pressed into service. Therefore, what has been concluded based on Jagdev Singh (Supra) is that, even in case of employees falling under categories (i) and (ii) of White Washer case (Supra), there would be no bar in initiating recovery against them if the employee concerned WA NO. 1389 OF 2019 11 had executed an undertaking agreeing to refund any excess payment.

In Jagdev Singh (Supra) the Apex court was dealing with the case of an employee falling under situation no. (ii) referred to in paragraph 18 of White Washer case (Supra), i.e., recovery from retired employees or employees who are due to retire within a year of the order of recovery. It was held that the principle enunciated in proposition (ii) cannot apply to a situation where the officer to whom the payment was made in the first instance was clearly placed on notice that any payment found to have been made in excess would be required to be refunded. The officer in the said case had furnished an undertaking while opting for the revised pay scale and therefore he was held to be bound by the undertaking. Similar is the situation in the case on hand also. Copies of the undertaking alleged to have been given by the petitioner to the officer in- charge of the District/Sub Treasury agreeing to refund any excess payments made to him was handed over by the learned Senior Government Pleader for our perusal during the course of arguments. These documents are not disputed by the petitioner. That being the position, it is evident that he had been placed on notice that, in the event of payments disbursed to him found to be in excess, would be required to be refunded. The petitioner has no case that he has not submitted such an undertaking. The undertaking seems to have been given before the initial pension had been disbursed to him pursuant to his superannuation.

There is no quarrel to the ratio decidendi culled out in State of Punjab v. Rafiq Masih (AIR 2015 SC 696) in the instant case. There was no misrepresentation willfully or voluntarily on behalf of the appellants in obtaining the grant of special allowance entitling the management to recover the amount in the manner and mode as noted above. But under circumstances where the benefit of pay and other factor was accorded on misreading and misinterpretation of the WA NO. 1389 OF 2019 12 provisions of the law. Here, the transaction involved was duly notified and noticing the consequences thereof, the appellants had executed the undertakings. It squarely falls within the ratio extracted in High Court of Punjab and Haryana & Ors v. Jagdev Singh (AIR 2016 SC 3523) . We do not find any ambiguity or perversity in the judgment of the Single Bench. No ground for interference is made out. Writ appeal stands dismissed. Sd/- AMIT RAWAL JUDGE Sd/- C.S. SUDHA JUDGE