Calcutta High Court: In a case related to payment of outstanding gratuity with interest under the Payment of Gratuity Act, 1972, a single-judge bench comprising of Raja Basu Chowdhury,* J., held that gratuity should be paid in accordance with the Payment of Gratuity Act, 1972 and the West Bengal Cooperative Societies Act, 2006. The Court stated that the agreement between the petitioner and the employees’ association, which set a lower limit for gratuity payment than stipulated by the Act, was not valid and could not override the provisions of the Payment of Gratuity Act.
Brief Facts
The petitioner, a Primary Co-operative Agriculture and Rural Development Bank, challenges an order issued by the Appellate Authority under the Payment of Gratuity Act. The Controlling Authority ordered the petitioner to pay the outstanding gratuity with interest, and the petitioner appealed this decision. The Appellate Authority, in its impugned order dated 31-08-2022, upheld the Controlling Authority’s decision.
The dispute arises from the gratuity payment to respondent 4, who retired from the petitioner’s employment after approximately 33 years and then filed a claim for additional gratuity. The petitioner contends that the gratuity was disbursed in accordance with an agreement, while respondent 4 seeks payment based on the Payment of Gratuity Act’s provisions.
Moot Point
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Whether the agreement between the petitioner and respondent 4, which set an upper limit for gratuity payments, is legally enforceable and can supersede the provisions of the Payment of Gratuity Act?
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Whether the petitioner is bound to make gratuity payments in accordance with the Payment of Gratuity Act?
Parties’ Contentions
The Petitioner contended that the agreement between the parties is valid and binding. The petitioner cited the right of an employer to make gratuity payments in accordance with an agreement and relied on relevant judgments to support their position. It was contended that the maximum permissible gratuity has already been disbursed.
Respondent 4 contended that the Payment of Gratuity Act and related rules mandate gratuity payments according to the Act’s provisions. Respondent 4 refuted the validity of the agreement, asserting that it conflicts with the Act and the Contract Act, 1872. It was argued that the agreement lacks the characteristics of a settlement under the Industrial Disputes Act, 1947.
Court’s Decision
The agreement between the petitioner and respondent 4, which provided for an upper limit on gratuity payments, was contrary to Section 4(5) of the Payment of Gratuity Act. This agreement could not override the provisions of the Act. The Court held that this contradiction rendered the agreement unenforceable in this context.
The Court emphasized that gratuity must be paid in accordance with the Payment of Gratuity Act’s provisions, regardless of any agreements between the parties.
The court dismissed the petitioner’s claims and upheld the orders passed by the Controlling Authority and the Appellate Authority. Consequently, the writ petition was dismissed.
[Burdwan Co-operative Agriculture & Rural Development Bank Ltd. v. State of W.B., 2023 SCC OnLine Cal 3059, order dated 25-09-2023]
*Judgment by Justice Raja Basu Chowdhury
Advocates who appeared in this case :
Mr. Saikat Banerjee and Mr. Arnab Ray, Counsel for the Petitioner
Mr. Jayanta Samanta and Mr. Manas Kumar Sadhu, Counsel for the State
Mr. Indranath Mitra and Mr. Saukha Biswas, Counsel for the Respondent 4
