Madras High Court
Sri Akilaa Spinning Mills Private Ltd vs The Appellate Authority on 17 February, 2025
W.P.No.3339 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 17.02.2025
CORAM
THE HONOURABLE DR.JUSTICE A.D.MARIA CLETE
Writ Petition No. 3339 of 2020
and
W.M.P.No.3870 of 2020
Sri Akilaa Spinning Mills Private Ltd.,
Unit – II, Kapparathampatti,
Jalakandapuram, Salem – 636 501. … Petitioner
Vs.
1. The Appellate Authority
Under Payment of Gratuity Act, 1972
Additional Commissioner of Labour,
Coimbatore.
2. The Controlling Authority
Under Payment of Gratuity Act, 1972
Salem.
3. Thiru.D.Mani,
S/o. Duraisamy,
No.17/14, Methai street,
Ammapet, Salem – 636 003.
.... Respondents
Prayer: To issue a Writ under Article 226 of the Constitution of India in the
nature of Writ of Certiorari or other appropriate writ or order or direction,
call for the records in AGA 76/2019 on the file of the Appellate authority
Under Payment of Gratuity Act, 1972 / Additional Commissioner of Labour,
Coimbatore, the first respondent herein, quash the order dated 31.12.2019.
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W.P.No.3339 of 2020
Prayer in W.M.P.No.3870 of 2020: Writ Miscellaneous Petition is filed
praying to grant interim stay of the order dated 31.12.2019 passed by the
Appellate Authority Under Payment of Gratuity Act, 1972 / Additional
Commissioner of Labour, Coimbatore, the first respondent herein in AGA
76/2019 pending disposal of the writ petition.
For Petitioner : Mr.M.R.Raghavan
For R1 & R2 : Mr.K.Suresh,
Government Advocate
For R3 : Mr.S.V.Navin Prabhu
for K.V.Shanmuganathan
ORDER
The writ petitioner, a textile mill management in Salem, has filed the
present writ petition challenging the order of the 1st Respondent – Appellate
Authority under the Payment of Gratuity Act, 1972. The impugned order
modifies the decision of the 2nd Respondent – Controlling Authority under
the P.G. Act, before whom the 3rd Respondent – employee had initially filed
an application for gratuity.
2. The 3rd Respondent – employee filed an application under Section
7 of the Payment of Gratuity Act before the 2nd Respondent, seeking
gratuity amounting to Rs. 3,67,500/-, along with interest at 24%. He claimed
that he was appointed by the Petitioner Management on 15.01.2003 and that
his services were terminated on 16.04.2017. He further stated that his last
drawn salary was Rs. 45,000/-.
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3. The Petitioner Management contested the claim, stating that the 3rd
Respondent was employed only from 01.05.2006 and had stopped reporting
to work from 01.04.2017. It was further contended that his last drawn wages
were Rs.28,500/-, along with a special allowance of Rs.10,000/-. The 3rd
Respondent had already received gratuity advances of Rs.52,530/- in 2013,
Rs.41,680/- in 2014, Rs.26,990/- in 2015, and Rs.46,200/- in 2016, totaling
Rs.1,67,400/-.
4. However, the 2nd Respondent – Controlling Authority determined
that the 3rd Respondent was entitled to a total gratuity of Rs. 2,30,192/-.
After deducting the gratuity advance of Rs. 1,67,400/- already received, the
authority directed that the balance amount of Rs. 62,792/- be paid to him.
5. Aggrieved by the order, the 3rd Respondent appealed before the 1st
Respondent – Appellate Authority, which allowed the appeal and held that
the 3rd Respondent was entitled to Rs.2,30,192/- without any deductions, as
per the order dated 31.12.2019.
6. The Petitioner contended that the Appellate Authority should not
have disregarded the relevant records concerning the gratuity advance
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payments made to the 3rd Respondent – employee. It was argued that the
amounts paid to the 3rd Respondent should have been adjusted against the
total gratuity payable, treating them as adjustments rather than deductions.
7. The learned counsel argued that the two judgments relied upon by
the Appellate Authority were erroneous and not applicable to the facts of the
present case. In the Allahabad High Court judgment in Bankey Bihari
Chauhan v. State of U.P. & Ors. (MANU/UP/0219/2015), the Court
explicitly held that any adjustment or recovery made without following
statutory requirements would be contrary to Section 4(6) of the Payment of
Gratuity Act. Based on this, the authority concluded that the adjustment of
gratuity advances in the present case was also not permissible.
8. In the Calcutta High Court judgment relied upon by the authority,
in United Bank of India v. Bidyut Baran Haldar & Ors.
(MANU/WB/0051/2018), it was explicitly stated in paragraph 27 as
follows:
“ It is abundantly clear that the gratuity payable to a
superannuated employee cannot be withheld or adjusted or
forfeited except in the circumstance mentioned in the said Act.
…. circumstances are mentioned in Sec. 4(6) of the said Act.”
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9. Therefore, the authority rightly relied on the said judgment. The
learned counsel referred to the following two judgments of this Court in
support of their contention:
1.The Nagapattinam Import and Export Corporation,
Nagapattinam, Thanjavur District. Vs. K.Lakshmi reported in 1993
(1) LLJ 873
2. Madesh & Ors. Vs. Krishnan & Anr. reported in 1998 (2) LLN
10. In the first case, the subject matter fell under the Workmen’s
Compensation Act, 1923 (now Employees' Compensation Act, 1923). In
that case, the learned judge also relied on Section 28 of the Act, and based
on the facts, the deduction was credited, as the employee had acknowledged
it through a receipt.
11. In the second case, the matter once again arose under the same
Act, and it was specifically determined as follows:
“The employer has let in evidence by examining witnesses
who were witnesses to O.Ps 1 and 2 and therefore a total sum
of Rs.5,000 has been proved. Therefore, the claimant will be
entitled to the amount awarded minus Rs.5,000 which has
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been already paid by the employer towards compensation.”
12. However, under the Gratuity Act, Section 4(6) permits only
limited instances of denial or recovery of gratuity. Section 14 of the Act
overrides any of the contract or a law contrary to the scheme of the Act. The
Act explicitly states that gratuity becomes payable only upon the
employee’s superannuation, termination, or resignation after completing
five years of service. There is no provision for an advance payment of
gratuity, as the right to receive gratuity arises only when one of these three
conditions is met.
13. The 3rd Respondent argued that the Appellate Authority had
thoroughly examined the evidence on record and correctly computed the
gratuity amount payable as Rs.2,30,192/-, based on the admitted monthly
wages. It was further contended that the authority rightly disregarded Ex.
M1 to Ex. M4, which were submitted by the Petitioner Management, as the
3rd Respondent – employee had not admitted the signatures on the vouchers
and had denied receiving any gratuity advance from the employer.
Accordingly, the 3rd Respondent sought the dismissal of the writ petition.
14. The 3rd Respondent approached the Appellate Authority
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challenging the findings of the Controlling Authority regarding both the last
drawn wages and the alleged advance payments received from the employer.
In its order, the Appellate Authority upheld the Petitioner Management’s
stance that the last drawn wages of the 3rd Respondent were Rs.28,500/-
and that the Rs.10,000/- paid as a special allowance could not be considered
as wages under Section 2(s) of the Payment of Wages Act.
15. Regarding the deductions/adjustments of Rs.1,67,400/-, the
Appellate Authority referred to Section 4(6) of the Payment of Gratuity Act,
and held that there can be deductions/adjustment or forfeiture made on the
gratuity amount of the employee whose services are terminated for any act
as stipulated under Section 4(6) of the Act. Accordingly, the Appellate
Authority set aside the order of the Controlling Authority directing payment
of Rs.62,792/- payable after deduction of Rs. 1,67,400/- from the computed
gratuity amount of Rs. 2,30,192/- and ordered for payment of Rs. 2,30,192/-
.
16. The order of the Appellate Authority does not suffer any error,
the writ petition is misconceived. Therefore the Writ Petition in
WP.No.3339 of 2020 is dismissed. Consequently WMP. No.3870 of 2020 is
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also dismissed. No costs.
17.02.2025
Index : Yes / No
Neutral Citation : Yes / No
Speaking Order : Yes / No
av
DR. A.D.MARIA CLETE, J.
av
Copy to
1. The Appellate Authority
Under Payment of Gratuity Act, 1972
Additional Commissioner of Labour,
Coimbatore.
2. The Controlling Authority
Under Payment of Gratuity Act, 1972
Salem.
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and
17.02.2025
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