2009 (12) TMI 1024 - SC - Indian Laws

Summary

Issues Involved:
1. Entitlement to gratuity under the Payment of Gratuity Act, 1972.
2. Validity of the option for pension in lieu of gratuity.
3. Applicability of exemption under Section 5 of the Payment of Gratuity Act.
4. Jurisdiction of the Controlling Authority under Section 7 of the Payment of Gratuity Act.
5. Comparison of benefits under the Pension Scheme and the Payment of Gratuity Act.

Detailed Analysis:

1. Entitlement to Gratuity under the Payment of Gratuity Act, 1972:
The primary issue was whether retired employees of the appellant bank were entitled to payment of gratuity under the Payment of Gratuity Act, 1972. The court emphasized that gratuity is a statutory right under Section 4(1) of the Act, which cannot be waived or taken away except through an exemption granted by the appropriate Government under Section 5 of the Act. The court noted that the appellant bank did not succeed in obtaining such an exemption.

2. Validity of the Option for Pension in Lieu of Gratuity:
The bank contended that employees who opted for the pension scheme voluntarily were not entitled to gratuity. The court rejected this argument, stating that pension and gratuity are separate retiral benefits and one does not exclude the other. The court cited precedents emphasizing that statutory rights like gratuity cannot be waived by private agreements or options exercised by employees.

3. Applicability of Exemption under Section 5 of the Payment of Gratuity Act:
The court discussed that the power to exempt an establishment from the provisions of the Act lies with the appropriate Government, which must be convinced that the employees are receiving benefits not less favorable than those under the Act. The bank's failure to obtain such an exemption meant it could not unilaterally decide that its pension scheme was more beneficial.

4. Jurisdiction of the Controlling Authority under Section 7 of the Payment of Gratuity Act:
The court examined the role of the Controlling Authority, noting that it is responsible for determining the amount of gratuity payable and resolving disputes related to gratuity claims. However, the Controlling Authority does not have the jurisdiction to decide whether the terms of gratuity under any award or agreement are more beneficial than those under the Act. This jurisdiction lies exclusively with the appropriate Government under Section 5.

5. Comparison of Benefits under the Pension Scheme and the Payment of Gratuity Act:
The court dismissed the bank's argument that the pension scheme was more beneficial than the gratuity payable under the Act. The court clarified that the comparison should be between the terms of gratuity under any award or agreement and the gratuity payable under the Act, not between pension benefits and gratuity. The court found that the bank's pension scheme did not provide for gratuity, and thus, employees were entitled to claim gratuity under the Act.

Conclusion:
The Supreme Court dismissed the appeal, affirming that retired employees were entitled to gratuity under the Payment of Gratuity Act, 1972, irrespective of their option for pension. The court emphasized that statutory rights under welfare legislation cannot be waived by private agreements or options and that the appropriate Government's exemption is necessary to relieve an employer from the obligation of paying gratuity. The court also set aside the order of the Controlling Authority, stating it lacked jurisdiction to compare pension benefits with statutory gratuity rights. The judgment applies to employees who retired between January 1, 1986, and October 31, 1992.