Ravi Bhushan Kumar Nagpur vs Life Insurance Corpn. Of India & ...
2017 Latest Caselaw 9625 Bom

wp.1194.02.jud                                 1

      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                NAGPUR BENCH, NAGPUR

                        WRIT PETITION NO.1194 OF 2002

Petitioner               :         Ravi Bhushan Kumar {dead},
                                   through L.Rs.

                                1] Mrs. Tripti wd/o Ravi Bhushan Kumar,
                                   Age 63 years, Occupation : Business.

                                2] Adv. Bhanu Bhushan Kumar,
                                   Age 42 years, Occupation : Law Practitioner.

                                3] Dhruv Ravi Bhushan Kumar,
                                   Age 40 years, Occupation : Business.

                                   All legal heirs of Ravi Bhushan Kumar and
                                   residents of Plot No.33, Friends Colony,
                                   Katol Road, Nagpur.

                                   -- Versus --

Respondents              : 1] Life Insurance Corporation of India,
                              a company registered under the Companies
                              Act, 1960, having its registered office at the
                              LIC of India, Western zone, Yogakshama,
                              East Wing, Bombay : 400 021,
                              through its Zonal Manager/Chairman-cum-
                              Managing Director.

                             2] Life Insurance Corporation of India,
                                Nagpur Divisional Office,
                                National Insurance Building, S.V. Patel Marg,
                                Post Box No.63, Nagpur : 400 001.

           =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
            Shri Shashikant Borkar, Advocate for the Petitioner
                 Shri A.S. Kilor, Advocate the Respondents.
           =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=

                         CORAM           :   B.P. DHARMADHIKARI &
                                             MRS. SWAPNA JOSHI, JJ.

DATE : 14th DECEMBER, 2017.

ORAL JUDGMENT :- (Per B.P. Dharmadhikari, j.)

Petitioner approached this Court in March, 2002 assailing

communications dated 21/04/2001, 07/06/2001 and 23/01/2002.

These orders attempt to recover amount of Rs.44,422/- alleging that

petitioner has been paid that amount in excess as gratuity.

02] This Court has after hearing respective Counsel stayed

that recovery and interim orders are continuing even today. Petitioner

expired during pendency of writ petition and his legal heirs have been

brought on record on 22/08/2017.

03] The relevant regulations of respondent-Life Insurance

Corporation of India, which deal with gratuity are the Life Insurance

Corporation of India (Agents) Regulations, 1972. As per regulation

no.11, gratuity benefits admissible in case of agents are to be worked

out as given in Schedule VI. It is not in dispute before us that the

provisions of Rule 2(2) of the said Schedule are relevant in present

matter.

04] Before dealing with these legal provisions, it needs to be

noted that there are two categories of agents working with Life

Insurance Corporation, one is full time employees for whom age of

superannuation as stipulated is 60 years and there are few freelancers

like deceased-petitioner, for whom there is no age of superannuation.

However, as jointly stated before us, such freelancers are paid

gratuity, only till their reaching 65 years of age. After that age,

though they may continue to do business as agent and earn

commission, they will not get gratuity. As this is not the controversy

between the parties, we are not required to conclude in this respect.

05] Petitioner born on 08/03/1935, started work as LIC agent

in 1982, when he was 47 years old. He completed 15 years as agent

in 1997 and at that juncture he was 62 years old. He completed 65

years of his age in 2000. He has expired during pendency of this

petition on 05/03/2017.

06] In this situation, Shri Shashikant Borkar, learned Counsel

for petitioner submits that petitioner has been rightly paid gratuity by

accepting his work till he attained age of 65 years for calculating

qualifying service. He points out that deceased-petitioner could not

have earned gratuity when he reached 60 years of age and as such

recourse to provisions of Rule 2(2) in present matter is erroneous.

07] Shri Anil Kilor, learned Counsel for respondent on the other

hand submits that payment of gratuity at 65 years of age is an

exception made out only for those, who opt for that age for

determination of their eligibility in terms of sub-rule (2). This option

needs to be exercised before agent completes 60 years of his age and

in present matter, petitioner has submitted that option later on i.e.

after he had completed even 60 years of his age.

08] We have perused relevant provisions, which read as

under :

2. (1) An agent shall be eligible for gratuity :

(i) if he has worked continually and for fifteen or more qualifying years, and

(a) he is not below sixty years of age; or

(b) his agency ceases or stands terminated under any of the provisions of these regulations for any reasons other than an accepted reason;

or

(ii) if he has been confirmed in his appointment, and:

(a) he dies while his agency is subsisting, or

(b) his appointment as agent is terminated under clause (c) of sub-regulation (1) of regulation 16.

(2) As Agent may, before he has attained the age of 59 years, by notice in writing to the Divisional manager, request that his eligibility for gratuity may be determined on completion of 65 years of age, and in that case sub-clause

(1)(i) shall have effect as it in item (a) thereof, for the word "Sixty" the word "Sixty-five" had been substituted, and the relevant date shall be computed accordingly.

(3) Gratuity admissible to an agent shall be at the eligible rate for each qualifying year for the first fifteen qualifying years and at half the eligible rate for the subsequent ten qualifying years, provided the maximum amount of gratuity payable shall not exceed Rs.50,000/-."

09] It is not in dispute that figure of Rs.50,000/- appearing in

sub-rule (3) has been amended to Rs.1,00,000/- with effect from

01/02/2000. The same amendment also hikes age of 59 years

mentioned in sub-rule (2) to 60 years and, therefore, expects agent

like petitioner to exercise option before he attains the age of 60 years.

10] Rule supra, therefore, shows that provisions contained in

sub-rule (1)(ii) and sub-rule(2) are relevant for deciding this

controversy. As per sub-rule (3), for 15 years of service, a agent gets

normal gratuity while for qualifying service beyond 15 years, gratuity

is payable at half of the normal rate. Correctness of calculations in

petitioner's case is not in dispute before us.

11] Question to be answered is, whether in terms of sub-rule

(2), deceased-petitioner could have exercised an option and asked for

determination of his gratuity on completion of 65 years of his age.

Request to be made in sub-rule (2) has been mentioned as above in

the audit objection as also in communication dated 07/08/2001 by

respondents.

12] When provisions of Rule 2 are read together, it is apparent

that gratuity payment after competition of 15 years of qualifying

service and 60 years age is a normal rule and upon an express

request made by agent, eligibility can be determined after he reaches

65 years of age. However, even in that event for service put in

beyond 15 years, here gratuity is at 50% of the normal rate.

13] Eligibility for earning normal gratuity is continuous service

for 15 or more years coupled with age at that juncture not being

below 60 years. In other words, agent who is below 60 years cannot

claim gratuity. Similarly, agent who has put in less than 15 years of

qualifying service also cannot claim gratuity. Hence, request or option

under sub-rule (2) supra can only be made by a person who has put in

15 years of qualifying service and also is expected to get gratuity after

he reaches 60 years of his age. Such a person, therefore, in advance

has to inform his employer that his eligibility for gratuity may be

determined after he reaches 65 years of his age. At the time of

exercising this option or making request, he could not have completed

age of 60 years. Thus, option is to be given before completing age of

60 years.

14] Option can be exercised by a person who has got right to

elect between two different situations or choices. In the present facts,

when petitioner became LIC agent in 1982, he was already 47 years

old. Thus, he could not have and did not complete 15 years of

qualifying service when he reached 60 years of his age. He reached

that age in March, 1995 and at that time his qualifying service is only

at 13 years. Hence, at that juncture, he was not eligible for gratuity at

all. Put more succinctly, before attaining the age of 60 years also, he

was not entitled to claim gratuity at all. He completes 15 years of

service only in 1997 and at that time, he was 62 years old. He

becomes eligible for the first time in 1997 only. It is, therefore,

obvious that he had no opportunity or right to exercise option under

sub-rule (2) at all. The alleged option or request in sub-rule (2) is not

open and not attracted in his case.

15] Petitioner, after he became eligible, requested his

employer to count his gratuity at the age of 65 years and that has

been done accordingly. It is not the case of employer that after 15

years of service, for remaining 3 years i.e. for service put in by

petitioner as agent between March, 1997 to March, 2000, his gratuity

has been wrongly calculated. This excess has been worked out only

on the strength of alleged failure on part of deceased-agent to

exercise option before he attained age of 60 years.

16] As noted supra, petitioner had no option before he

attained age of 60 years or even before he attained age of 62 years to

choose. He became eligible for gratuity in terms of Rule 2 for the first

time in March,1997. We, therefore, find audit objection raised in his

case erroneous and misconceived.

17] Respondents have not pointed out that petitioner could

not have been paid any gratuity for service rendered by him after

March, 1997 till March,2000. We, therefore, find in these facts the

recovery as worked out, unsustainable. Gratuity is a provision

introduced in law for wellbeing of an employee and the object or

purpose behind it needs to be preserved while adopting the liberal

approach in welfare jurisdiction.

18] We, therefore, find that alleged omission or failure of

petitioner to exercise option before he attains age of 60 years cannot

be a ground to order recovery from him particularly when the amount

was already released and paid to him. It cannot be said that he has

committed any wrong or played any fraud on his employer. With open

eyes, the employer has released gratuity. Hence, in any case,

following the principles in case of State of Punjab & others vs. Rafiq

Masih (White Washer) and others, reported in (2015) 4 SCC 334, the

recovery cannot be sustained. Hence, we quash and set aside the

impugned communications dated 23 rd January, 2002, 7th June, 2001

and 21st April, 2001.

19] Rule is made absolute accordingly. No costs.

                         JUDGE                               JUDGE
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