[Cites 6, Cited by 0]
Kerala High Court
The Manager (P&Gs) vs Kerala Ayurvedic Co-Operative Society ... on 9 January, 2026
WA Nos.1766/2025, 1767/2025, 1771/2025
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2026:KER:936
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
FRIDAY, THE 9TH DAY OF JANUARY 2026 / 19TH POUSHA, 1947
WA NO. 1766 OF 2025
AGAINST THE JUDGMENT DATED 18.03.2025 IN WP(C) NO.8388 OF 2024 OF HIGH COURT OF
KERALA
APPELLANT/S:
THE MANAGER (P&GS)
LIFE INSURANCE CORPORATION OF INDIA, DIVISIONAL OFFICE, KOZHIKODE DIVISION,
PALAYAM KOZHIKODE - PIN - 673001
BY ADV SMT.T.K. SREEKALA
RESPONDENT/S:
1 KERALA AYURVEDIC CO-OPERATIVE SOCIETY LIMITED F 1654
MEENCHANDA, KOZHIKODE, KERALA, REPRESENTED BY ITS SECRETARY SHRI.RIJESH.
P, S/O JAYAPALAN, AGED 37 YEARS, RESIDING AT PANIKKAL HOUSE, NALLALAM P.O,
AREEKKAD, KOZHIKODE, KERALA - 673027., PIN - 673018
2 STATE OF KERALA
REPRESENTED BY THE PRINCIPAL SECRETARY, DEPARTMENT OF CO-OPERATION,
GOVERNMENT SECRETARIAT, THIRUVANATHAPURAM, PIN - 695001
3 LABOUR COMMISSIONER
LABOURCOMMISSIONARATE, THOZHIL BHAVAN, THIRUVANANTHAPURAM, PIN -
695001
4 DEPUTY LABOUR COMMISSIONER
CIVIL STATION, ERINJIPALAM, KOZHIKODE, PIN - 673020
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5 KOYA. K
KODAKKATTU HOUSE, KOTAMPARAMBU P.O, KOZHIKODE, PIN - 673008
BY ADVS.
SRI.PRATHAP. S.R.K.-R1
SRI SUNILKUMAR KURIAKOSE, GP R2 TO R4
SRI.K.RAKESH ROSHAN - R5
SMT.THUSHARA.V
THIS WRIT APPEAL HAVING RESERVED ON 07.10.2025, ALONG WITH WA.1767/2025, 1771/2025,
THE COURT ON 09.01.2026 DELIVERED THE FOLLOWING:
WA Nos.1766/2025, 1767/2025, 1771/2025
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
FRIDAY, THE 9TH DAY OF JANUARY 2026 / 19TH POUSHA, 1947
WA NO. 1767 OF 2025
AGAINST THE JUDGMENT DATED 18.03.2025 IN WP(C) NO.43689 OF 2023 OF HIGH COURT OF
KERALA
APPELLANT/S:
THE MANAGER (P&GS)
LIFE INSURANCE CORPORATION OF INDIA, DIVISIONAL OFFICE, KOZHIKODE DIVISION,
PALAYAM KOZHIKODE, PIN - 673001
BY ADV SMT.T.K. SREEKALA
RESPONDENT/S:
1 KERALA AYURVEDIC CO-OPERATIVE SOCIETY LIMITED F 1654
AGED 37 YEARS
MEENCHANDA, KOZHIKODE, KERALA - 673018 REPRESENTED BY ITS SECRETARY
SHRI.RIJESH. P, S/O JAYAPALAN, RESIDING AT PANIKKAL HOUSE, NALLALAM P.O,
AREEKKAD, KOZHIKODE, KERALA, PIN - 673027
2 STATE OF KERALA REPRESENTED BY THE PRINCIPAL SECRETARY
DEPARTMENT OF CO-OPERATION, GOVERNMENT SECRETARIAT,
THIRUVANATHAPURAM, PIN - 695001
3 THE LABOUR COMMISSIONER
LABOUR COMMISSIONARATE, THOZHIL BHAVAN, THIRUVANANTHAPURAM, PIN -
695005
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4 THE DEPUTY LABOUR COMMISSIONER
CIVIL STATION, ERINJIPALAM, KOZHIKODE -, PIN - 673020
5 BABU.P
AGED 62 YEARS
S/O AANDI, PAYOUT HOUSE, KOOTTAMPARAMBU P.O, KOZHIKODE, PIN - 673008
BY ADVS.
SRI.PRATHAP. S.R.K.-R1
SRI SUNILKUMAR KURIAKOSE, GP R2 TO R4
SRI.K.RAKESH ROSHAN - R5
THIS WRIT APPEAL HAVING RESERVED ON 07.10.2025, ALONG WITH WA.1766/2025 AND
CONNECTED CASES, THE COURT ON 09.01.2026 DELIVERED THE FOLLOWING:
WA Nos.1766/2025, 1767/2025, 1771/2025
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2026:KER:936
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
FRIDAY, THE 9TH DAY OF JANUARY 2026 / 19TH POUSHA, 1947
WA NO. 1771 OF 2025
AGAINST THE JUDGMENT DATED 18.03.2025 IN WP(C) NO.8278 OF 2024 OF HIGH COURT OF
KERALA
APPELLANT/S:
THE MANAGER (P&GS)
LIFE INSURANCE CORPORATION OF INDIA, DIVISIONAL OFFICE, KOZHIKODE DIVISION,
PALAYAM KOZHIKODE -, PIN - 673001
BY ADV SMT.T.K. SREEKALA
RESPONDENT/S:
1 KERALA AYURVEDIC CO-OPERATIVE SOCIETY LIMITED F 1654
AGED 37 YEARS
MEENCHANDA, KOZHIKODE, KERALA - 673018 REPRESENTED BY ITS SECRETARY
SHRI. RIJESH P, S/O JAYAPALAN, RESIDING AT PANIKKAL HOUSE, NALLALAM P.O,
AREEKKAD, KOZHIKODE, KERALA, PIN - 673027
2 STATE OF KERALA
REPRESENTED BY THE PRINCIPAL SECRETARY, DEPARTMENT OF CO-OPERATION,
GOVERNMENT SECRETARIAT, THIRUVANATHAPURAM, PIN - 695001
3 THE LABOUR COMMISSIONER
LABOUR COMMISSIONARATE, THOZHIL BHAVAN, THIRUVANANTHAPURAM -, PIN -
695005
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4 THE DEPUTY LABOUR COMMISSIONER
CIVIL STATION, ERINJIPALAM, KOZHIKODE -, PIN - 673020
5 JANAKI.T
W/O BABU.P, PAYYOTTU HOUSE, KOTAMPARAMBU P.O, KOZHIKODE, PIN - 673008
BY ADVS.
SRI.PRATHAP. S.R.K.-R1
SRI SUNILKUMAR KURIAKOSE, GP R2 TO R4
SRI.K.RAKESH ROSHAN - R5
THIS WRIT APPEAL HAVING RESERVED ON 07.10.2025, ALONG WITH WA.1766/2025 AND
CONNECTED CASES, THE COURT ON 09.01.2026 DELIVERED THE FOLLOWING:
WA Nos.1766/2025, 1767/2025, 1771/2025
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JUDGMENT
[WA Nos.1766/2025, 1767/2025, 1771/2025]
Sushrut Arvind Dharmadhikari, J.
Regard being had to the similitude of the matters, these Writ
Appeals have been heard analogously and are decided by a common
judgment.
2. The present intra-court appeals under Section 5 of the Kerala
High Court Act, 1958, assail the judgment dated 18.03.2025 passed in
W.P.(C) Nos. 8278 and 8388 of 2024 and 43689 of 2023, whereby the
learned Single Judge disposed of the writ petitions with a direction to
the Life Insurance Corporation, the appellant herein, to pay the gratuity
amount to the retired employees along with statutory interest.
2.1 The appellant was the fourth respondent in the writ petition;
the first respondent herein was the petitioner, and respondent Nos. 2 to
5 herein were respondent Nos. 1, 2, 3, and 5 in the writ petition.
Facts:
3. The brief facts of the case are that the Kerala Ayurvedic Co-
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operative Society Limited has a Group Gratuity Cash Accumulation
Scheme bearing No. 604000832 under the LIC's New Group Gratuity Cash
Accumulation Scheme (GGCAS), which commenced with effect from
01.03.2010. The said Group Gratuity Policy was taken by the Kerala
Ayurvedic Co-operative Society Limited to provide gratuity benefits to
its employees in accordance with the terms and conditions of their
employment. The members covered under the Scheme are only the
beneficiaries thereof.
4. The Kerala Ayurvedic Co-operative Society Limited filed the
writ petitions seeking the following reliefs:
"a) Issue a writ of mandamus or any other appropriate writ or order
quashing Ext.P6 Order as it is passed without considering that the
Petitioner - Society is enrolled in a Scheme with the 4th respondent to
meet the gratuity liabilities of its employees;
b) Issue a writ of mandamus or any other appropriate writ, order or
direction directing the 4th respondent to pay eligible gratuity to the 5th
respondent from the Group Gratuity Cum Life Assurance Scheme in
which the Petitioner Society enrolled to pay gratuity to its retired
employees;"
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5. The appellant filed a counter affidavit specifically pleading
that it is not liable to pay interest in terms of the conditions of the Policy.
The learned Single Judge, by the impugned judgment dated 18.03.2025,
disposed of the writ petitions with a direction to the appellant to pay the
gratuity amount to the retired employees along with statutory interest,
and further observed that, if there is any shortfall in respect of the
amount received from the Kerala Ayurvedic Co-operative Society
Limited, the appellant would be at liberty to recover the same from the
Kerala Ayurvedic Co-operative Society Limited.
6. Hence, the appellant has filed the writ appeal contending that
the directions issued by the learned Single Judge are wholly erroneous
and unwarranted, having regard to the position of the Life Insurance
Corporation under the Master Policy issued pursuant to the Group
Gratuity Cash Accumulation Scheme.
Appellant's submission:
7. The learned counsel for the appellant contended that the
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learned Single Judge erred in directing the appellant to pay interest as
well. It is an admitted position that the first respondent did not remit
the subscription amount to the appellant on the due date. However, in
light of the interim order passed by this Court on 30.10.2024, the first
respondent was directed to pay the deficit amount of ₹5 lakhs to the
appellant, and thereafter the appellant was directed to pay the gratuity
amount to the retired employees, as the deficit was only ₹5 lakhs.
7.1 Subsequently, when the matter again came up for hearing,
this Court, by order dated 03.03.2025, directed payment of the balance
deficit amount of ₹5 lakhs. In compliance with the said order, the first
respondent-Society paid the deficit amount of ₹5 lakhs to the appellant
on 17.03.2025.
8. The learned counsel submitted that, in terms of the
conditions of the Policy as well as Section 7(3-A) of the Payment of
Gratuity Act, 1972 (for short, 'Act of 1972'), the liability to pay interest
rests with the first respondent-employer and not with the appellant.
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Therefore, the judgment passed by the learned Single Judge is liable to
be modified.
Respondent's submission:
9. Per contra, the learned counsel for the first respondent
opposed the prayer and submitted that the appellant is the authority
responsible for disbursing gratuity to the retired employees. Therefore,
the learned Single Judge was justified in directing the appellant to pay
interest as well. The first respondent, being registered under the Kerala
Co-operative Societies Act, is governed by specific provisions relating to
the payment of gratuity and is bound to comply with the stipulations
contained in the Rules.
9.1 Section 4A of the Act of 1972 makes it mandatory for the first
respondent to comply with the statutory provisions. Therefore, the
judgment impugned in the writ appeals calls for no interference, and the
writ appeals deserve to be dismissed.
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Issue:
10. The question that arises for consideration is whether, under
the facts and circumstances of the case, the appellant or the first
respondent has the primary liability to pay the gratuity amount along
with interest to the retired employees of the first respondent and
thereafter recover any shortfall from the Co-operative Society?
Discussion and Analysis:
11. Heard Ms. T.K. Sreekala, learned counsel for the appellant;
Mr. Pratap S.R.K., learned Standing Counsel for the first respondent; Mr.
Sunilkumar Kuriakose, learned Government Pleader for respondents 2
to 4; and Mr. K. Rakesh Roshan, learned counsel for the fifth respondent.
12. Before dealing with the contentions raised by the learned
counsel on both sides, it is apposite to refer to the relevant provisions of
the Policy as well as the Act of 1972 in order to arrive at a correct
conclusion.
12.1 As per the Master Policy under LIC's New Group Gratuity Cash
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Accumulation Plan, General Conditions, Clause 13 provides as follows:
"13. Notwithstanding anything herein contained to the contrary, the
Corporations' liability to the Grantees under this policy shall be limited
to the Life Cover Benefit under this plan effected in respect of the
Members subject to the terms and condition applicable to them and
Policy Account Value standing to the credit of the Grantees."
12.2 Schedule II of the Master Policy, which deals with the
contribution and management of the policy account, is as follows:
"SCHEDULE II - Contribution and Management of Policy Account
1. Contributions: Such amount as is required to secure the Life Cover
Benefit and Gratuity Benefits in respect of the members of the scheme.
The amount payable towards past service Gratuity Benefit may be wholly
paid on the date of entry or partly on the date of entry and partly on
Annual Renewal Date as specified in the scheme rules and amount
payable every year as required to secure the Gratuity Benefit relating to
the current year service as per AS-15(Revised).
The Contribution is payable on the due date, being the date on which is
the Member is admitted to the benefits of the policy and on each Annual
Renewal Date. The payment of Contribution shall be continued until the
Normal Retirement Date of each member unless otherwise specified
under the policy.
2. Management of Policy Account: All the Contributions paid by the
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Grantees will be credited to the maintained Policy Account.
A single Policy Account shall be maintained in respect of all contributions
received from Grantees.
Member's Gratuity Benefits shall be paid out of the Policy Account of the
scheme on the happening of the events as described in the scheme rules."
12.3 Sub-section (3-A) of Section 7 of the Act of 1972, reads as
follows:
"(3-A) If the amount of gratuity payable under sub-section (3) is not paid
by the employer within the period specified in sub-section (3), the
employer shall pay, from the date on which the gratuity becomes payable
to the date on which it is paid, simple interest at such rate, not exceeding
the rate notified by the Central Government from time to time for
repayment of long-term deposits, as that Government may, by
notification specify:
Provided that no such interest shall be payable if the delay in the
payment is due to the fault of the employee and the employer has
obtained permission in writing from the controlling authority for the
delayed payment on this ground."
13. From a plain reading of Clause 13 of the General Conditions of
the Master Policy, the appellant's liability to the grantees under the
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policy is limited to the Life Cover Benefit under the plan effected in
respect of the members, subject to the terms and conditions applicable
to them, and the Policy Account Value standing to the credit of the
grantees.
13.1 As per Schedule II - Contribution and Management of Policy
Account, the contribution is payable on the due date, being the date on
which a member is admitted to the benefits of the policy and on each
Annual Renewal Date. This means that the employer, i.e., the first
respondent, is liable to deposit the premium on the due date. As per
Clause 13 of the General Conditions, the liability of the appellant is also
limited to the Life Cover Benefit. Whoever is at fault in failing to make
the payment of the premium on the due date is liable to pay interest in
accordance with Section 7(3-A) of the Act of 1972.
14. In the present case, admittedly the first respondent did not
deposit the premium on the due date. Therefore, the liability to pay
interest rests with the first respondent and not the appellant. The
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learned Single Judge, without considering the aforementioned
provisions contained in the General Conditions and Schedule-II of the
Policy, erroneously held that the appellant would be liable to pay
statutory interest.
15. As per sub-section (3-A) of Section 7 of the Act of 1972, if the
employer fails to pay the gratuity within the stipulated time, it shall be
liable to pay simple interest from the date on which the gratuity
becomes payable until the date of actual payment, at such rate, not
exceeding the rate notified by the Central Government from time to time
for repayment of long-term deposits, as may be specified by the
Government by notification.
15.1 In the present case, there is no default on the part of the
retired employees. Therefore, in terms of the proviso to sub-section (3-
A) of Section 7 of the Act of 1972, the first respondent is liable to pay the
statutory interest. Accordingly, we are of the considered opinion that
the learned Single Judge erred in directing the appellant to pay the
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statutory interest.
Conclusion:
16. In view of the aforesaid, we modify the directions contained
in paragraph 6 of the impugned judgment as follows:
16.1 In accordance with the legal provisions referred to above, the
appellant/LIC shall pay the gratuity amount to the retired employees, if
not already paid, as per their entitlement, within a period of one month
from the date of receipt of the certified copy of this judgment.
16.2 With regard to the statutory interest payable under sub-
section (3-A) of Section 7 of the Act of 1972, the first respondent-Society
shall pay the interest to the retired employees in these writ appeals from
the date on which it became payable until the date of actual payment,
within a period of one month from the date of receipt of the certified
copy of this judgment.
Result:
17. With the aforementioned modifications, the writ appeals
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stand finally disposed of. All interlocutory applications relating to
interim matters stand closed. A copy of the judgment may be placed on
records of W.A. Nos.1767 and 1771 of 2025.
Sd/-
SUSHRUT ARVIND DHARMADHIKARI
JUDGE
Sd/-
SYAM KUMAR V.M.
JUDGE
jjj
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APPENDIX OF WA NO. 1766 OF 2025
PETITIONER ANNEXURES
Annexure A TRUE COPY OF THE LETTER ISSUED TO THE 1ST RESPONDENT -
SOCIETY DATED 25.04.2025
Annexure B TRUE COPY OF THE REPRESENTATION RECEIVED FROM THE 5TH
RESPONDENT DATED 05.05.2025
WA Nos.1766/2025, 1767/2025, 1771/2025
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APPENDIX OF WA NO. 1767 OF 2025
PETITIONER ANNEXURES
Annexure A TRUE COPY OF THE LETTER ISSUED TO THE 1ST RESPONDENT -
SOCIETY DATED 25.04.2025
Annexure B TRUE COPY OF THE REPRESENTATION RECEIVED FROM THE 5TH
RESPONDENT DATED 05.05.2025
WA Nos.1766/2025, 1767/2025, 1771/2025
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APPENDIX OF WA NO. 1771 OF 2025
PETITIONER ANNEXURES
Annexure A TRUE COPY OF THE LETTER ISSUED TO THE 1ST RESPONDENT -
SOCIETY DATED 25.04.2025
Annexure B TRUE COPY OF THE REPRESENTATION RECEIVED FROM THE 5TH
RESPONDENT DATED 05.05.2025
