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TMI Blog2006 (6) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was linked with a policy of Life Insurance Corporation of India who were on its roll on and from 1.12.1975. In terms of the said scheme, the rate of gratuity was to be calculated on one month s salary .for every completed years of service with ceiling limit of 20 months salary. It was operative from 1975 to 19.7.1996. The employees of the Bank accepted the said scheme and availed the benefits thereof. The said scheme was amended providing for payment of gratuity at the rate of 26 days salary for every completed year of service with a ceiling limit of ₹ 1.7 lakhs. The said scheme was operative from May, 1994 to 24.9.1997. Yet again, a scheme was floated raising the ceiling limit of ₹ 1.7 lakhs to ₹ 2.50 lakhs. Payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent shall be taken to be the wages as so reduced. (5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. In terms of the provisions of the said Act, the ceiling limit of the amount of gratuity was raised to 2.50 lakhs. The rate of gratuity, however, was to be determined at the rate of 15 days salary for every completed year of service. The said ceiling limit, however, was later on increased to 3.50 lakhs by reason of an amendment made by Payment of Gratuity (Amendment) Act, 1998 (for short, 1998 Act ), which was given a retrospective effect from September, 1997. Respondents retired during the currency of the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t view of the matter, statutory term shall prevail over the contractual term. Having regard to the Sub-sections of Section 4, unless that portion of the contractual term, which is contrary to or inconsistent with the statutory term, shall stand deleted so as to give way to the intention of the Parliament. The learned counsel would contend that for the aforementioned purpose the contract can be severed upon applying the doctrine of blue pencil . It is not in dispute that Appellant-Bank had its own gratuity scheme. The said scheme constituted one of the terms of contract of employment between the parties. Under the scheme, employees were entitled to gratuity on the following terms : (i) eligibility to receive gratuity Minimum 5 ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pencil through them, as opposed to changing, adding, or rearranging words. (Black, 7th Edn., 1999) This doctrine holds that if Courts can render an unreasonable restraint reasonable by scratching out the offensive portions of the covenant, they should do so and then enforce the remainder. Traditionally, the doctrine is applicable only if the covenant in question is applicable, so that the unreasonable portions may be separated. E.P.I, of Cleveland, Inc. v. Basler, 12 Ohio App2d 16:230 NE2d 552, 556. Blue pencil rule/test. - Legal theory that permits a judge to limit unreasonable aspects of a covenant not to compete. Severance of contract. - severance can be effected when the part severed can be removed by running a blue pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Statute , to us it appears that the question should be considered from the point of view of the nature of the scheme as also the fact that the parties agreed to the terms thereof. When better terms are offered, a workman takes it as a part of the package. He may volunteer therefor, he may not. Sub-Section (5) of Section 4 of the 1972 Act provides for a right in favour of the workman. Such a right may be exercised by the workman concerned. He need not necessarily do it. It is the right of individual workman and not all the workmen. When the expression terms has been used, ordinarily it must mean all the terms of the contract . While interpreting even a beneficent statute, like, Payment of Gratuity Act, we are of the opinion that eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sk of litigation which in nine cases out of ten he is very ill-able to afford, should he venture to act upon his own opinion as to how far the restraint upon him would be held by the court to be reasonable, while it may give the covenantee the full benefit of unreasonable provisions if the covenanter is unable to face litigation. It is significant that in the event the amount of gratuity is calculated at the rate of 26 days salary for every completed year of service, vis-a-vis, 15 days5 salary therefor, the tenure of an employee similarly situate will vary. Whereas in the former case an employee may receive the entire amount of gratuity while working for a lesser period, in the latter case an employee drawing the same salary will ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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