[Cites 6, Cited by 0]
Kerala High Court
The Kerala State Co-Operative Bank Ltd vs P.Sidharthakumar on 6 February, 2026
W.A. Nos. 1745 of 2021 & 58 of 2022
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR.JUSTICE P. V. BALAKRISHNAN
FRIDAY, THE 6TH DAY OF FEBRUARY 2026 / 17TH MAGHA, 1947
WA NO. 1745 OF 2021
(AGAINST THE ORDER/JUDGMENT DATED 19.11.2021 IN WP(C)
NO.11845 OF 2020 OF HIGH COURT OF KERALA)
APPELLANTS/RESPONDENT NO.S 1 & 2 :
1 THE KERALA STATE CO-OPERATIVE BANK LTD.
REPRESENTED BY ITS GENERAL MANAGER, REGIONAL
OFFICE, KANNUR-670 001, (FORMER KANNUR DISTRICT CO-
OPERATIVE BANK ) (PRESENTLY THE KERALA STATE CO-
OPERATIVE BANK LTD ), REPRESENTED BY THE GENERAL
MANAGER (I/C) DISTRICT OFFICE, P.B.NO 35, KANNUR
DSITRICT-670 001)
2 THE DEPUTY GENERAL MANAGER,
THE KERALA STATE CO-OPERATIVE BANK, HEAD OFFICE, PB
NO.6515, CO-BANK TOWERS, PALAYAM,
THIRUVANANTHAPURAM,PN-695 028
BY ADV SRI.GILBERT GEORGE CORREYA
RESPONDENTS/ WRIT PETITIONERS & RESPONDENT NO.3:
1 P.SIDHARTHAKUMAR
AGED 61 YEARS
S/O. LATE GOPALAN NAIR, SIGIL NIVAS, CHETTIPEETIKA,
PALLIKUNNU P.O., KANNUR-670 004. (DECEASED ON
27/10/2021).LEGAL HEIRS IMPLEADED.
2 THE DIVISIONAL MANAGER,
LIC OF INDIA, KOZHIKODE DIVISION, DIVISIONAL OFFICE
( P& GS ) DEPARTMENT, 7TH FLOOR, JEEVAN PRAKASH,
KOZHIKODE-673 001. ADDL.R3,R4 & R5 IMPLEADED.
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3 ADDL.R3:SMT.SHYLAJA,
AGED 54 YEARS,W/O.LATE SRI.P.SIDHARTHAKUMAR,SIGIL
NIVAS, CHETTIPEETIKA,PALLIKUNNU P.O.,KANNUR-670
004.
4 ADDL.R4:SRI.SIGIL P.,
AGED 32 YEARS,S/O.LATE SRI.P.SIDHARTHAKUMAR,SIGIL
NIVAS,CHETTIPEETIKA, PALLIKUNNU P.O.,KANNUR-670
004.
5 ADDL.R5:SRI.ADARSH P.,
AGED 28 YEARS,S/O.LATE SRI.P.SIDHARTHAKUMAR,SIGIL
NIVAS,CHETTIPEETIKA, PALLIKUNNU P.O.,KANNUR-670
004. (LEGAL HEIRS OF DECEASED R1 IS IMPLEADED AS
ADDL.R3,R4 & R5 AS PER ORDER DATED 15/02/2022 IN
I.A.1/2022 IN WA 1745/2021).
BY ADVS.
DR.ABRAHAM P.MEACHINKARA
SMT.M.MEENA JOHN
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
03.02.2026, ALONG WITH WA.58/2022, THE COURT ON 6.2.2026
DELIVERED THE FOLLOWING:
W.A. Nos. 1745 of 2021 & 58 of 2022
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR.JUSTICE P. V. BALAKRISHNAN
FRIDAY, THE 6TH DAY OF FEBRUARY 2026 / 17TH MAGHA, 1947
WA NO. 58 OF 2022
(AGAINST THE JUDGMENT DATED 19.11.2021 IN WP(C) NO.11845
OF 2020 OF HIGH COURT OF KERALA)
APPELLANTS/LEGAL HEIRS OF THE PETITIONER IN WPC:
1 SMT. SHYLAJA,
AGED 54 YEARS
W/O. LATE P. SIDHARTHAKUMAR, 'SIGIL NIVAS'
CHETTIPEETIKA PALLIKUNNU P.O., KANNUR 670 004.
2 SIGIL.P.,
AGED 32 YEARS
S/O. LATE P. SIDHARTHAKUMAR, 'SIGIL NIVAS'
CHETTIPEETIKA , PALLIKUNNU P.O., KANNUR 670 004.
3 ADARSH.P.,
AGED 28 YEARS
S/O. LATE P. SIDHARTHAKUMAR, 'SIGIL NIVAS'
CHETTIPEETIKA PALLIKUNNU P.O., KANNUR 670 004.
BY ADVS.
SRI.VIJU THOMAS
SMT.M.MEENA JOHN
RESPONDENTS/RESPONDENTSS:
1 THE KANNUR DISTRICT CO-OPERATIVE BANK,
(PRESENTLY THE KERALA STATE CO OPERATIVE BANK) REP.
BY THE GENERAL MANAGER, KANNUR DISTRICT 670 001.
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2 THE DEPUTY GENERAL MANAGER,
THE KERALA STATE CO OPERATIVE BANK LTD, HEAD OFFICE
, P.B. NO. 6515, CO BANK TOWERS, PALAYAM,
THIRUVANANTHAPURAM 695 028.
3 THE DIVISIONAL MANAGER,
L.I.C. OF INDIA, KOZHIKODE DIVISION, DIVISIONAL
OFFICE (P & GS), DEPARTMENT, , 7TH FLOOR, JEEVAN
PRAKASH, KOZHIKODE 673 001.
BY ADV DR.ABRAHAM P.MEACHINKARA
ADV.GILBERT GEORGE CORREYA (SC FOR BANK)
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
03.02.2026, ALONG WITH WA.1745/2021, THE COURT ON
6.2.2026 DELIVERED THE FOLLOWING:
W.A. Nos. 1745 of 2021 & 58 of 2022
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SUSHRUT ARVIND DHARMADHIKARI,
&
P.V.BALAKRISHNAN,JJ.
-------------------------------------
W.A. Nos. 1745 of 2021 & 58 of 2022
---------------------------------
Dated this the 6th day of February 2026
COMMON JUDGMENT
P.V.BALAKRISHNAN,J
These intra-court appeals are filed challenging the judgment
dated 19.11.2021 passed by the learned Single Judge in W.P.(C)
No.11845/2020. W.A.No.1745/2021 is filed by the respondents 1
and 2 and W.A.No.58 of 2022 is filed by the legal heirs of the
petitioner in W.P.(C)No.11845/2020.
2. The parties are hereinafter referred to as in their status in
the writ petition, for convenience.
3. The writ petition was filed by the petitioner aggrieved by
the non payment of the entire amount of gratuity payable to him
under Section 4(5) of the Payment of Gratuity Act (hereinafter
referred to as 'the Act' for short). The petitioner joined the service
of the first respondent bank on 05.05.1980 and retired from
service on 30.04.2017, after completing 37 years of service. After
retirement, even though retirement benefits were sanctioned to
the petitioner, the gratuity was not paid in full. The petitioner is
entitled to an amount of Rs.25,25,399/- towards gratuity under the
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"Cannanore District Co-operative Central Bank Employees Group
Gratuity and Life Assurance Scheme". Initially the first respondent
raised a claim for an amount of Rs.22,84,593/- under the Master
Policy No.3839, on behalf of the petitioner, from the 3 rd respondent
LIC. Accordingly, the 3rd respondent credited the said amount to the
account of the first respondent bank and the entire amount was
paid to the petitioner, in two installments. At the time of retirement
of the petitioner, the gratuity corresponding to DA increased with
effect from 01.01.2017 was not received by the petitioner. The said
amount was sanctioned subsequently and the first respondent
bank, claimed an additional amount of Rs.2,40,806/- from the 3 rd
respondent, in proportion to the increase in DA. The said amount
was also credited to the account of the first respondent, by the LIC
on 08.11.2017. But, the first respondent, failed to pay the amount
to the petitioner. Later, the 2nd respondent issued Ext.P4 order to
the first respondent Bank stating that it has resolved to remit the
excess amount received on account of arrears of gratuity of the
petitioner corresponding to the DA increase, over and above the
existing ceiling limit of 20 Lakhs to the LIC. According to the
petitioner, he is entitled to receive the balance amount of
Rs.2,40,806/-, with interest. It is in such circumstances, the
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petitioner approached this Court by filing the afore writ petition
seeking the following reliefs:
"b) Issue a writ of Certiorari to quash Exhibit-P4 order
issued by the 2nd respondent since it is legally not
sustainable.
c) Issue a writ of mandamus or any other appropriate
writ, order or direction commanding the 3 rd respondent
LIC to re-credit the balance amount of gratuity
amounting to Rs.2,40,806/-, as per Master Policy
No.3839 to the account of the 1 st respondent bank, in
case the said amount is remitted back to the 3 rd
respondent LIC by the 1st respondent and then to
release the same to the petitioner together with
interest at the rate of 9% per annum."
Or
In the alternative, commanding the 1st respondent to
disburse the balance amount of gratuity amounting to
Rs.2,40,806/- as per Master Policy No.3839 together
with interest at the rate of 9% per annum, in case the
said amount is with the 1st respondent bank.
4. The learned Single Judge by a common judgment dated
19.11.2021 passed in this case and in W.P.(C)No.11877/2020
allowed the writ petition in the following manner:
"Respondent bank is directed to remit the
amount of Rs.2,40,806/- and Rs.19,91,944/- to the
respective petitioners after making request to the LIC
to whom they refunded back. Let the request is made
to the LIC within a period of two weeks from today.
Thereafter, the learned counsel representing the LIC
submits that they would remit the amount as
expeditiously as possible within a period of another
one month and thereafter, the bank would disburse
the same to the petitioners within another period of 15
days i.e., total period of 45 days. In case, the
aforementioned amount after completion of the
formality is not remitted by the bank to the
petitioners, it will entail interest as provided under the
Payment of Gratuity Act."
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5. Heard Adv. Meena John, the learned counsel appearing for
the legal heirs of the writ petitioner, Adv. Gilbert George Correya,
the learned counsel appearing for the bank and Adv. Abraham
P.Meachinkara, the learned standing counsel appearing for the LIC.
6. The learned counsel appearing for the legal heirs of the writ
petitioner submitted that even though the learned single judge has
ordered the bank to disburse the amount of Rs.2,40,806/-, after
getting the amount from LIC, no amount towards interest has been
granted. She also submitted that the writ petitioner had retired
from service as early as in April, 2017 and since, the money legally
due to him has not been paid by the bank, it is liable to pay
interest. She further contended that the writ petitioner is also
eligible for an additional gratuity of Rs.3,83,014/- as per pay
revision, which came into effect from 01.04.2017 and the learned
single judge neither accepted the additional documents produced to
support this contention nor allowed this claim.
7. Per contra, the learned counsel for the bank submitted that
even though Exts.R1(a), as varied by Ext.R1(b), is applicable to the
employees, including the writ petitioner in this case, the writ
petitioner is entitled only to the gratuity fixed as per Section 4(3) of
the Act. According to the learned counsel, since the Master Policy
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specifically states that it is subject to the Gratuity Act, the
employees are only entitled to the benefits under the Act i.e., for
an amount of Rs.20 Lakhs, which is the ceiling fixed under the Act.
He argued that, it is considering the fact that the petitioner has
already been paid an amount in excess of Rs.20 Lakhs, the amount
of Rs.2,40,806/- was remitted back to the LIC. He also argued that
at the time when the writ petitioner retired from service, it was an
Administrative Committee that was at the helm of affairs in the
bank and during that period, the employees themselves had filed
the claim form before the LIC, claiming exaggerated amounts,
leading to the LIC remitting the amount to the bank. He submitted
that even if it is otherwise so, the amount which has been paid as
gratuity to the petitioner, is beyond the maximum of 20 months
salary, as prescribed in clause 8 of Ext.R1(b) policy, and therefore,
the impugned judgment cannot be sustained. He also submitted
that the writ petitioner has executed Annexure II (in WA
No.1745/2021) letter of Indemnity, in favour of the bank to make
good all the losses, if any, incurred by the bank due to withdrawal
of gratuity claim in excess of the limit prescribed by clause 8 of
Ext.R1(b) Scheme and therefore, the bank is entitled to recover the
excess gratuity paid.
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8. The learned counsel for the LIC submitted that the LIC has
no role in computing the amount of gratuity to which the
employees are entitled and that it will only pay the amount on the
basis of the demand made by the Bank. He also submitted that it is
the bank that calculates the amount due to each of the employees
and intimates the same to the LIC and the LIC will only make the
payment and nothing more. He further submitted that in the
instant case, the LIC has paid an amount of Rs.2,40,806/-, apart
from a sum of Rs.22,84,593/- to the bank and it has remitted back
Rs.2,40,806/-, stating that the same is excess amount.
9. In the instant case, the writ petitioner has retired from
service on 30.04.2017. It is an admitted fact that the bank has
paid the writ petitioner an amount of Rs.22,84,593/- towards
gratuity, immediately on his retirement. It is also an admitted fact
that thereafter, consequent to the revision of DA of employees with
effect from 01.01.2017, the bank has raised a claim of
Rs.2,40,806/- before the LIC, as gratuity arrears to be paid to the
petitioner and that the LIC has remitted the said amount also in
the account of the bank. It is not in dispute, that the bank has not
released the said amount to the petitioner and had remitted it back
to the LIC, by stating that it is excess amount. The contention of
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the learned counsel for the bank that they are only liable to pay
gratuity, as fixed under Section 4 (3) of the Act and since, an
amount in excess of Rs.20 Lakhs, as stipulated therein, has already
been paid to the petitioner, the amount of Rs.2,40,806/- has been
remitted back to the LIC, does not have any legs to stand. This is
because, as on the date of retirement of the petitioner, the amount
of gratuity which the bank was liable to pay, as per Section 4(3) of
the Act, was only Rs.10 Lakhs and not Rs.20 Lakhs. There is no
explanation forthcoming from the side of the bank, as to on what
basis the sum of Rs. 20 Lakhs and more, was paid to the petitioner.
10. Be that as it may, it is the contention of the writ petitioner
that, since Ext.R1(b) Group Gratuity Scheme provides better
gratuity than prescribed under Section 4(2) of the Act, the scheme
falls under the purview of Section 4(5) of the Act and, therefore, he
is entitled to the benefit of the entire amount paid by LIC to the
bank. On the other hand, the case of the bank is that even if
gratuity is calculated as per the terms of Ext.R1(b) Scheme, the
writ petitioner will not be entitled to the amount claimed, since he
has already received excess amount than that. It is his contention
that going by Clause 8 of Ext.R1(b), the maximum gratuity which
the writ petitioner is entitled is 20 months salary and the amount
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which has already been paid, is more than that.
11. A perusal of Ext.R1(b) shows that it does not in any
manner restrict the liability to pay gratuity to the amount
prescribed under Section 4(3) of the Act. On the other hand, Clause
8 of the Scheme would show that the LIC, upon retirement of an
employee, is liable to pay a gratuity equal to 15 days salary for
each completed year of service, subject to a maximum of 20
months salary. A Full Bench of this Court in Chandrasekharan
Nair G. and others v. Kerala State Co-operative Agricultural
and Rural Development Bank Ltd. and others [2017 (5) KHC
15] [which was confirmed by the Hon'ble Apex Court in
SLP(C)No.009439-009444/2018 dated 11.05.2018] has
categorically held that any benefit in excess of the gratuity amount
prescribed, covered by a contract of insurance availed by the
employer, will also go to the employee, since the contract of
insurance will fall within the ambit of Section 4(5) of the Act. The
relevant portion of the dictum laid down in Chandrasekharan
Nair's case (supra) is extracted below.
''3. The liability to pay gratuity to an employee is always on
the employer under S.4(2) of the Central Act and is at the
rate of fifteen days' wages for every completed year of
service or part thereof in excess of six months. This does
not however affect the right of the employee to receive
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better terms of gratuity under any award or agreement or
contract with the employer under S.4(5) of the Central Act.
The employee need not necessarily be an eo- nominee
party to the award or agreement or contract which could
be entered into by any one duly authorised by him. S.4(5)
of the Central Act has been widely couched to take in
service conditions regulating the terms of gratuity to which
the employee is entitled to receive.''..........
....................................................................................
"5. The liability to pay gratuity does not get shifted to the
insurer by the compulsory insurance and the effect is only
that the maturity value of the master policy would go to the
credit of the dues of the employee. Any amount in excess
of the gratuity due would also go to the employee since the
contract of insurance would fall within the ambit of S.4(5)
of the Central Act. Any deficit in the amount due as gratuity
to the employee after payment by the insurer has to be
met by the employer only as the liability squarely rests on
him under S.4(2) of the Central Act. The insurer cannot be
made liable to pay any amount in excess of the maturity
value of the master policy as the same would be dependent
on the premium paid to him. The compulsory insurance
under S.4A of the Central Act is only to facilitate the
employer to discharge his liability and the premium paid is
part of the wages only. Of course the wording of the second
proviso to R.59(iii) of the Rules give rise to a doubt that the
employee would be pinned down to the amount of gratuity
specified in the Central Act. Such an interpretation would
render S.4(5) of the Central Act otiose whereunder the
employee has a right to receive better terms of gratuity
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under any award or agreement or contract with the
employer. The provisions of the Central Act or any rule
made thereunder shall have effect notwithstanding
anything inconsistent therewith contained in any other
enactment or instrument or contract."
If so, in the light of the dictum laid down in Chandrasekharan
Nair's case, if the amount arrived at by calculating the gratuity as
per clause 8 of Ext.R1(b) is more than the amount already paid to
the writ petitioner, definitely he will be entitled to that amount. In
the instant case, it can be seen that the amount that has been paid
to the petitioner is not on the basis of the Payment of Gratuity Act.
Ext.R3(A)1 also does not show that the claim has been made on
the basis of a calculation as stipulated in Ext.R(1)(b) Scheme. It is
only if a calculation is made as per the terms of Ext.R1(b) policy, it
can be decided whether it provides better terms of gratuity than
under the Act.
12. Therefore, considering all the afore facts and
circumstances, we are of the view that these writ appeals can be
allowed by giving a direction to the 1 st respondent Bank to calculate
the gratuity of the writ petitioner in terms of Clause 8 of Ext.R1(b)
gratuity scheme, and if the amount thus calculated is more than
the amount, which has been paid to the writ petitioner, make a
claim before the LIC to disburse the excess amount. We are also of
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the view that thereafter, the bank can be directed to disburse the
excess amount thus received from LIC to the legal heirs of the writ
petitioner, along with interest at the rate of 9% per annum from
the date of retirement of the writ petitioner, till payment. It is made
clear that, at the time of computation of the gratuity as directed
afore, the bank shall also take into consideration the pay revision
benefits which are applicable to the writ petitioner.
13. In the result, these writ appeals are allowed in part as
follows;
1. The judgment dated 19.11.2021 passed by the
learned Single Judge in W.P.(C)No.11845 of 2020 is set
aside.
2. W.P.(C)No.11845 of 2020 is allowed in part as
follows;
a) The 1st respondent Bank is directed to compute the
gratuity of the writ petitioner as per Clause 8 of
Ext.R1(b) Gratuity Scheme, within a period of one
month from the date of receipt of a certified copy of
this judgment, by also taking into account the pay
revision benefits available to him;
b) If the amount thus arrived at is in excess of the
amount already paid to the writ petitioner, the 1 st
respondent Bank shall submit a claim to the 3 rd
respondent LIC for the excess amount, within a further
period of ten days;
c) On receipt of the claim from the 1 st respondent bank
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for excess amount, the 3rd respondent LIC shall pay the
said amount to the 1st respondent bank within a period
of two weeks therefrom;
d) Thereafter, the 1st respondent bank shall disburse
the excess amount thus received from LIC, to the
appellants in WA No.58 of 2022 with 9% interest p.a.
from the date of retirement of the writ petitioner, till
payment, within a period of two weeks;
e) In case it is found that the amount calculated as per
Clause 8 of Ext.R1(b) is less than the amount already
disbursed to the writ petitioner, the 1 st respondent bank
will not be entitled to recover the excess amount from
the appellants in W.A.No.58 of 2022;
f) The 1st respondent bank shall also furnish a copy of
the calculation statement prepared by it as ordered in
Clause 2(a) above to the appellants in W.A.No.58/2022
within a period of one month from the date of receipt of
a certified copy of this judgment;
g) In case the appellants in W.A.No.58/2022 has any
dispute regarding the computation of gratuity amount
by the 1st respondent bank, they will be at liberty to
approach the competent authority under Section 7 of
the Gratuity Act to get their grievance redressed, and
the said authority shall take a decision on it as per law.
Sd/-
SUSHRUT ARVIND DHARMADHIKARI
Judge
Sd/-
P.V.BALAKRISHNAN
Judge
dpk
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APPENDIX OF WA NO. 1745 OF 2021
PETITIONER ANNEXURES
Annexure I True copy of the Letter dated 17.08.2018
Annexure II . True copy of the Indemnity Bond dated
13.07.2017
Annexure III True copy of the Proceedings dated
31.07.2017
