Madras High Court
R.Tara vs Union Of India on 6 November, 2025
W.P.No.25548 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 06.11.2025
CORAM
THE HONOURABLE MR.JUSTICE HEMANT CHANDANGOUDAR
W.P.No.25548 of 2023
and
W.M.P.No.24941 of 2023
R.Tara
W/o.G.Srinivasan ... Petitioner
vs.
1. Union of India
Ministry of Labour
Represented by Secretary
Shram Shakti Bhawan, Rafi Marg
New Delhi - 110 001.
2. The Deputy Chief Labour Commissioner (Central)
5th Floor, Shastri Bhawan
Chennai-600 006.
3. The General Manager
State Bank of India
LHO St.Marks Road
Bangalore - 560 001. ... Respondents
Writ Petition filed under Article 226 of the Constitution of India
seeking a Writ of Certiorarified Mandamus, to call for the records relating to
Page Nos.1/16
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W.P.No.25548 of 2023
the impugned orders of the respondent No.2 in G.A.No.46/2022 dated
20.04.2023 and G.A.No.45(15)2019-B4 dated 29.09.2022 and quash the
same and consequentially, direct the respondent No.3 to pay the petitioner,
the remaining entitled Gratuity amount of Rs.23,83,711/- along with
compound interest @ 10% on arrears of Gratuity payable with effect from her
date of entitlement @ 01.05.2017 based on the last drawn salary drawn by
the petitioner in April 2017 till the date of final settlement.
For Petitioner : Mr.G.Srinivasan
For Respondents : Dr.D.Simon
Senior Central Government
Standing Counsel, R1 & R2
Mr.S.Mukesh, for R3
*****
ORDER
The captioned Writ Petition (hereinafter referred to as “the Writ
Petition” or “WP” for the sake of brevity, convenience, and clarity) has been
filed seeking issuance of a Writ of Certiorarified Mandamus, to quash the
order dated 29.09.2022 passed by the Controlling Authority and Assistant
Labour Commissioner (Central), Chennai in G.A. No. 45(15)2019-B4, and
the order dated 20.04.2023 passed by the Appellate Authority in G.A. No.
46/2022.
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2. By the aforesaid orders, the claim made by the petitioner in Form
‘N’ under the Payment of Gratuity Act, 1972 (hereinafter referred to as “the
Act, 1972”) seeking enhanced payment of gratuity and interest on delayed
payment, came to be rejected.
3. The brief facts of the case are as follows:
3.1. The petitioner joined the services of the State Bank of Mysore on
21.07.1984 and retired on 30.04.2017 after opting for Voluntary Retirement
under the Voluntary Retirement Scheme (VRS) floated by the Bank. Upon
retirement, the petitioner was paid a sum of Rs.10,00,000/- towards gratuity,
in addition to other terminal benefits.
3.2. Aggrieved by the limitation of gratuity payment to
Rs. 10,00,000/-, the petitioner preferred an application before the Controlling
Authority under the provisions of the Act, 1972, seeking a direction to the
third respondent to pay the differential gratuity amount as per the applicable
service regulations of the Bank.
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3.3. The third respondent entered appearance and filed a detailed
objection statement contending, inter alia, that the petitioner was entitled
only to a maximum gratuity of Rs.10,00,000/-, as prescribed under sub-
section (3) of Section 4 of the Act, 1972, which represents the ceiling limit
notified by the Central Government.
3.4. After affording opportunity of hearing to both parties, the
Controlling Authority, by order dated 29.09.2022, dismissed the petitioner’s
claim holding that the ceiling limit prescribed under Section 4(3) of the Act,
1972, would apply to the petitioner, and hence, the petitioner was not entitled
to any amount over and above Rs. 10,00,000/-.
3.5. Aggrieved by the same, the petitioner preferred an appeal before
the Appellate Authority, which also came to be dismissed by order dated
20.04.2023. The petitioner has, therefore, approached this Court invoking its
writ jurisdiction under Article 226 of the Constitution of India.
4. Mr. G. Srinivasan, learned counsel appearing for the petitioner,
contended that the service regulations of the third respondent–Bank, namely,
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the State Bank of Mysore (Payment of Gratuity to Employees) Regulations,
1975 [hereinafter "said Regulations" for the sake of brevity, convenience and
clarity], provide for more beneficial terms of gratuity as compared to the
provisions of the Act, 1972.
5. He submitted that, in terms of sub-section (5) of Section 4 of the
Act, 1972, nothing in the said section shall affect the right of an employee to
receive better terms of gratuity under any award, agreement, or contract with
the employer. Therefore, the ceiling prescribed under sub-section (3) of
Section 4 cannot restrict the gratuity payable to the petitioner, as the Bank’s
service regulations constitute a more beneficial scheme.
6. In support of his contention, learned counsel for the petitioner placed
reliance on the judgment of the Hon’ble Supreme Court in Y.K. Singla v.
Punjab National Bank and Others, Civil Appeal No. 9087 of 2012, wherein
it was held that the ceiling prescribed under Section 4(3) of the Act, 1972,
would not restrict payment of higher gratuity if the service conditions or
regulations of the employer provide for better terms.
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7. Per contra, Mr. S. Mukesh, learned counsel appearing for the third
respondent–Bank, submitted that the petitioner’s gratuity entitlement was
computed strictly in accordance with the Act, 1972, and the relevant
Government notifications issued thereunder.
8. He contended that, as per the notification issued by the Ministry of
Labour and Employment, Government of India, the maximum gratuity
payable under Section 4(3) of the Act, 1972, is restricted to Rs. 10,00,000/-
with effect from 24.05.2010, and the said limit was in force as on the date of
the petitioner’s retirement. Therefore, the Bank rightly limited the gratuity
payment to Rs. 10,00,000/-.
9. Learned counsel further submitted that the petitioner had, at the time
of retirement, opted to receive gratuity in terms of the Act, 1972, and
therefore, cannot subsequently claim higher benefits by invoking sub-section
(5) of Section 4 of the Act.
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10. In support of his submissions, he placed reliance on the judgment
of the Hon’ble Supreme Court in Beed District Central Co-operative Bank
Ltd. v. State of Maharashtra and Others, Civil Appeal No. 4327 of 2006,
wherein it was held that where the employee has received gratuity as per the
Act, he cannot subsequently claim higher gratuity under any other scheme,
unless expressly reserved.
11. The rival contentions of the parties and the materials available on
record have been carefully considered.
12. Admittedly, the petitioner was initially employed with the State
Bank of Mysore, which later merged with the State Bank of India.
Consequently, the petitioner’s service conditions continued to be governed by
the said Regulations, which are in pari materia with the provisions of the the
Act, 1972, but do not prescribe any ceiling limit on the gratuity payable to the
employees.
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13. It is pertinent to note that sub-section (2) of Section 4 of the Act,
1972, stipulates that 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.
14. The expression “wages” as amended is defined under Section 2(s)
of the Act, 1972, to mean all emoluments earned by an employee while on
duty or on leave in accordance with the terms and conditions of his
employment, and which are paid or payable to him in cash, including
dearness allowance, but excluding any bonus, commission, or other similar
payments. However, the respondent-Bank has not carried out any
corresponding amendment to the definition of "wages" or "pay" in its Service
Regulations. Nevertheless, in the counter affidavit filed by the Bank, it has
been specifically stated that the Bank has adopted the amendments made to
the Act 1972, from time to time.
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15. Therefore, the mere omission to formally amend the definition of
"pay" in the Service Regulations in pari materia with the statutory definition
will not disentitle the petitioner from claiming inclusion of dearness
allowance within the meaning of "pay" for the purpose of computation of
gratuity. The substantive right conferred by the Statute cannot be defeated by
the Bank's failure to make a corresponding amendment in its internal
regulations.
16. The inclusion of dearness allowance within the definition of wages
was introduced by Amending Act 25 of 1984, which came into effect on
01.07.1984. In the present case, it appears that the third respondent–Bank,
while calculating the gratuity amount, excluded dearness allowance and other
admissible allowances from the computation. This action is contrary to the
statutory definition of wages under Section 2(s) of the Act, 1972, as well as
to the deemed adoption of the said amendment under the Bank's own
regulations.
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17. As a result, the amount of gratuity paid to the petitioner stands
considerably reduced. The comparative computation of gratuity payable to
the petitioner, both under the Act, 1972, and under the said Regulations, has
been tabulated by the Controlling Authority in the impugned order, which
reads as follows:
Gratuity Calculation:
As per Bank Regulation As per Payment of Gratuity Act
Entitlements Rs.P Entitlements Rs.
Basic pay 51490.00 Basic Pay 51490.00
Special Pay Nil Special Pay Nil
FPA-Basic 1310.00 FPA 1310.00
PQA-Basic 670.00 FPA-DA 143.00
PQA 670.00
PQA-DA 314.23
DA 24148.81
53470.00 x 16 (yrs 78076.04 x 32 yrs x
855520.00 1441404.00
Maximum payable 1000000.00
18. The payment of gratuity in the present case has been confined to
Rs.10,00,000/- on the ground that sub-section (3) of Section 4 of the Act,
1972, prescribes the maximum amount of gratuity payable as notified by the
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Central Government. However, sub-section (5) of Section 4 of the Act 1972
expressly stipulates that nothing contained in this section shall affect the right
of an employee to receive better terms of gratuity under any award,
agreement, or contract with the employer.
19. In the instant case, the regulation governing payment of gratuity
under the third respondent–Bank does not restrict the maximum gratuity
payable to the petitioner, nor does it incorporate the ceiling prescribed under
sub-section (3) of Section 4 of the Act 1972. Accordingly, sub-section (3) of
Section 4 of the Act 1972 cannot be made applicable to the petitioner.
20. Therefore, the decision relied upon by the learned counsel for the
second respondent in Beed District Central Cooperative Bank Ltd. v. State
of Maharashtra & Others is distinguishable on facts. In the said case, it was
held that either the contract or the Statute must be given effect to in its
entirety, as the provisions of the Act envisage a single self-contained scheme
that cannot be selectively applied. Sub-section (5) of Section 4 of the Act
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1972 does not contemplate that a workman can simultaneously claim the
benefit of a better contractual term while also invoking certain portions of the
statutory scheme.
21. In the present case, the petitioner, at the time of employment, was
governed by the regulations of the third respondent–Bank, and he had
specifically opted to receive gratuity under those regulations. The Hon’ble
Supreme Court in Y.K. Singla v. Punjab National Bank & Others (Civil
Appeal No. 9087 of 2012), at paragraph 20, held that to determine which
provision either the Act 1972 or the relevant service regulations would apply
to an employee’s claim, it is necessary to refer to Section 14 of the Gratuity
Act.
22. The Apex Court further ruled that Section 14 leaves no room for
doubt that the provisions of the Gratuity Act have an overriding effect over
any other enactment. However, where an employee’s gratuity is not regulated
under the Act, and where superior terms are available under an award,
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agreement, or regulation, the employee has the statutory right under Section
4(5) to opt for such better terms. The expression “instrument” or “contract
having the force of law” must necessarily include the relevant service
regulations, such as the 1995 Regulations in that case, which governed
payment of gratuity to the employees. Thus, the Supreme Court clarified that
an employee has a statutory choice to be governed by an alternative provision
that offers better terms, and such an option is fully protected under the Act.
23. In the light of the principles laid down by the Hon’ble Supreme
Court and the decisions referred to above, this Court holds that the petitioner
is entitled to the benefit of better terms of gratuity under sub-section (5) of
Section 4 of the Act 1972. The authorities concerned, however, have
erroneously applied sub-section (3) of Section 4 of the Act 1972.
Consequently, this Court is of the considered view that the petitioner is
entitled to the benefit of gratuity in accordance with the regulations of the
third respondent–Bank. The impugned orders passed by the authorities
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concerned, therefore, cannot be legally sustained and are liable to be set
aside.
24. Accordingly, the captioned WP stands allowed. The impugned
orders dated 29.09.2022 passed by the Controlling Authority and the
Assistant Labour Commissioner (Central), Chennai, in G.A. No.
45(15)/2019-B4, and dated 20.04.2023 passed by the second respondent in
G.A. No. 46/2022, are hereby set aside.
25. It is admitted that the petitioner has already received a sum of
Rs.10,00,000/- towards gratuity. However, he is entitled to an additional sum
of Rs.4,41,404/-, as computed and admitted by the third respondent–Bank,
which is extracted in the order of the Controlling Authority.
26. The third respondent–Bank is directed to pay the said additional
amount of Rs.4,41,404/- to the petitioner, together with interest at the rate of
6% per annum from 01.01.2021 until the date of actual realization. The said
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exercise shall be completed within two months from the date of uploading of
this order in the official website of this Court.
27. Consequently, the connected Miscellaneous Petition stands closed.
There shall be no order as to costs.
06.11.2025
Index : Yes / No
Neutral Citation : Yes / No
Speaking / Non-speaking
mk
To
1. Union of India
Ministry of Labour
Reprsented by Secretary
Shram Shakti Bhawan, Rafi Marg
New Delhi - 110 001.
2. The Deputy Chief Labour Commissioner (Central)
5th Floor, Shastri Bhawan
Chennai-600 006.
3. The General Manager
State Bank of India
LHO St.Marks Road, Bangalore - 560 001.
HEMANT CHANDANGOUDAR, J.,
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mk
06.11.2025
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