PAYMENT OF GRATUITY: MAXIMUM LIMIT NOT APPLICABLE TO RETIRED STATE ENGINEER: Entitlement to Claim Interest for Delayed Disbursement – KERALA HC

07 May 2024 8:19 AM

By: Admin

In a recent judgment, the Kerala High Court, presided over by the Honorable Mr. Justice Murali Purushothaman, addressed the issue of gratuity payment to a retired Regional State Engineer from the Kerala State Housing Board. The court ruled that the maximum gratuity limit under the Payment of Gratuity Act, 1972, does not apply to the petitioner, K. Rajendra Prasad, as he is governed by the Kerala Service Rules. The court emphasized that the provisions of the Payment of Gratuity Act hold precedence over other enactments.

The court stated, "The employees of the Board can claim gratuity under the Payment of Gratuity Act, 1972, and not under the Kerala Service Rules. They cannot have gratuity under the KSR with the ceiling limit payable under the Payment of Gratuity Act, 1972 and vice versa."

The petitioner had sought the maximum gratuity of Rs. 10,00,000/- under section 4(3) of the Act, as amended in 2010. However, the court clarified that the maximum gratuity amount is determined based on the date on which the gratuity becomes payable and not the date of sanction or disbursement. Therefore, the petitioner's claim for the maximum amount was dismissed.

Regarding the delayed disbursement of the petitioner's Death-Cum-Retirement Gratuity (DCRG), the court left open the entitlement to claim interest. The petitioner was advised to approach the Kerala State Housing Board for interest, and the board was directed to consider the representation and pass appropriate orders within two months.

This judgment serves as a significant clarification on the applicability of gratuity provisions for employees under the Kerala State Housing Board. The court's ruling ensures the precedence of the Payment of Gratuity Act, 1972, in determining gratuity entitlement, bringing clarity to similar cases in the future.

"The employees of the Board can claim gratuity in terms of section 4(3) [of the Payment of Gratuity Act, 1972]...they cannot claim gratuity available under the KSR."

The petitioner's counsel expressed satisfaction with the court's decision, stating, "While we respect the court's ruling, we will pursue the petitioner's entitlement to claim interest for the delayed disbursement of DCRG as directed."

Date of Decision: May 22, 2023

RAJENDRA PRASAD REGIONAL vs STATE OF KERALA