2014 (2) TMI 629 - HC - Indian Laws

Difference in payment of gratuity amount - Competent authority allowed the application filed by petitioner determining the total gratuity payable by the petitioner-corporation at Rs.4,59,078/- and if not paid within 30 days simple interest at 10% p.a. was granted - Held that - While arriving at the above period service of 4 years 6 months and 12 days rendered by third respondent has been deducted from out of the total number of years of service i.e., 33 years 5 months and 17 days and then arrived at active years of service at 28 years 11 months. Corporation also found that amount of gratuity payable under the Gratuity Act, was Rs.2,53,855/- and the gratuity payable under the regulation being more beneficial to the employee, said amount was determined. Controlling authority as well as appellate authority have rightly rejected the said contention of the corporation by taking into consideration the definition of the word Rs.continuous service and holding that there is no interruption in service rendered by third respondent. Said finding is based on scrutiny of records and not being contrary to Exhibit R-1, I do not find any other good ground to interfere with the said finding in exercise of writ jurisdiction. In that view of the matter the finding of the controlling authority by taking active years of service at 33 years 5 months deserves to be accepted. Petitioner Corporation shall ascertain from the office of the Commissioner of Income Tax, the income tax deductable on the gratuity amount prevalent during the said relevant period and pay the balance amount to third respondent from out of the amount already deposited before the controlling authority - However, Controlling authority shall forthwith pay the difference of gratuity in so far as active years of service is concerned and amount that has been deducted towards group insurance and identity card charges as determined herein above to the third respondent forthwith - Decided partly in favour of petitioner.

Summary

Issues:
1. Calculation of gratuity amount and deductions made by the corporation.
2. Contention regarding deduction of income tax and active service years.
3. Validity of orders passed by the controlling authority and appellate authority.

Analysis:

Issue 1: Calculation of gratuity amount and deductions made by the corporation:
The petitioner-corporation determined the total gratuity payable to the employee based on the active years of service, last basic pay, and deductions. The corporation contended that certain periods of absence, leave without wages, and suspension should be deducted from the total active service. However, the corporation did not produce orders confirming the unauthorised absence. The controlling authority and appellate authority rejected the corporation's claim due to lack of evidence supporting the deductions. The total amount of gratuity payable was calculated, and deductions towards income tax and group insurance were made. The corporation paid the balance amount to the employee, which was not disputed by the respondent's counsel.

Issue 2: Contention regarding deduction of income tax and active service years:
The petitioner-corporation deducted income tax from the gratuity amount payable to the employee. The court clarified that income tax deduction beyond the prescribed limit is not permissible. The corporation was directed to ascertain the tax-exempted amount and pay the balance to the employee within a specified timeline. Additionally, the deduction made towards group insurance and identity card charges was deemed impermissible under section 14 of the Gratuity Act. The court upheld the rejection of these deductions by the authorities.

Issue 3: Validity of orders passed by the controlling authority and appellate authority:
The main dispute between the employee and the corporation centered around the deduction of active service years due to periods of absence. The corporation claimed that certain periods should be deducted based on unauthorised absence, leave without wages, and suspension. However, the absence of supporting orders led to the rejection of this claim by the authorities. The court upheld the decision of the authorities, emphasizing that there was no interruption in the service rendered by the employee. The court accepted the active years of service as determined by the authorities, leading to the recalculated total gratuity payable to the employee.

In conclusion, the court partially allowed the writ petition, directing the corporation to adjust the gratuity amount based on the correct calculation of active service years and permissible deductions. The court emphasized adherence to the law in determining the gratuity payable to the employee and instructed prompt payment of the adjusted amount to the employee.