State Can't Claim Financial Incapacity To Withhold Gratuity, Not Giving Benefits To Retired Employees Violates Article 21: AP High Court

The Court was dealing with a case where terminal benefits were denied to retired employees of Krishna District Cooperative Central Bank (DCCB) (Respondent 1)— an institution falling within the ambit of “State” under Article 12, on the grounds that Primary Agricultural Cooperative Society (PACS)-(Respondent 3)— to which the petitioners were initially deputed, expressed financial incapacity to release its contributory share.

The court also remarked that unfortunately age old traditional, moral, cultural values of showing respect to the senior citizens was slowly declining with time in modern society.

Referring to a Memorandum of Intent of 2013 which prescribed the scheme pertaining to payment of terminal benefits to retired employees, Justice Maheswara Rao Kuncheam held,

“…respondents 1, 3 & 4, being the 'State' within the meaning of Article 12 of the Constitution of India coupled with the fact that specific terms and conditions in Memorandum of Intent dated 11.01.2013, the said respondents 1, 3 & 4, are bound to release the terminal benefits to the petitioner. A mere financial incapacity or paucity of funds cannot be a valid defence for non-fulfilment of such statutory obligations, more particularly, when the employees rendered their services, as such, they are entitled to terminal benefits under law.”

As the petitioners were senior citizens, the court said:

“…all the petitioners are septuagenarians, octogenarians, and nonagenarians. Owing to their old age, they are naturally more vulnerable to health problems and other unforeseen issues. It is indeed unfortunate that the age old traditional, moral, cultural values of showing respect and extending dignity to the senior citizens are gradually declining with time in our modern society. The very notion of the family itself is deteriorating as people tend to give greater importance to financial affairs rather than the human values and emotional connections".

The court said that it had come across numerous claims by the senior citizens under various statutes, wherein, they seek to assert their rightful entitlement to terminal benefits during the final phase of their lives.

The court said that the respondent bank had extracted work from the petitioners during their tenure of service; despite lapse of over 14 years from the age of superannuation of the petitioners and also in the absence of any legal impediments, the respondents had not paid them their terminal benefits.

"This act of the respondents shirking their statutory obligation to release the terminal benefits due, which also equally amounts to violation of the petitioners' statutory and constitutional rights under the vistas of Article 21 of the Constitution of India," the court remarked. 

Background

The petitioners were retired employees of DCCB, who were initially allotted to PACS till 01.03.2009, post which they rejoined services of DCCB from 02.03.2009 and provided their unblemished service till retirement. However, upon retirement, they were denied terminal benefits on the ground that the share towards terminal benefits from PACS had not been released.

Aggrieved by the denial of terminal benefits, the petitioners approached the High Court.

Findings

At the outset, the Court referred to Section 4(1) of Payment of Gratuity Act, 1972- as per which once an employee has rendered continuous services for not less than five years, on his superannuation or retirement, he/she shall be entitled to gratuity.

Section 7 prescribes that if the employer fails to pay gratuity amount within thirty days from the date it becomes payable to the person, then the interest from that date would also become payable.

As the right to receive gratuity is a statutory right which bars the respondents from taking away the same without the procedure prescribed by law and in the absence of any legal impediments, the Court held,

“…this Court, without any hesitation, unequivocally rules that the petitioners' right to interest on delayed payment is statutory in nature and not subject to the discretion of the respondent authorities.”

“When the employees are entitled to the statutory entitlements, the same cannot be deprived, unless there is any legal impediment, especially in the event of lapse of time prescribed under the statutory framework.”, the Court added.

With respect to the alleged financial incapacity of PACS which barred it from releasing its share towards terminal benefits, the Court observed,

“… the respondents 1, 3 and 4 fall within the ambit of Article 12 of the Constitution of India. The 2nd respondent being the State of Andhra Pradesh exercises the supervisory authority as well as direct control over the other respondents. Viewed from any perspective, the contention of the 1st respondent DCCB that the 3rd respondent did not pay its share of the amounts towards the terminal benefits of the petitioners is legally untenable and also liable to be depreciated in view of the undisputed fact that all the petitioners are in twilight of their lives.”

It said that DCCB and PACS were jointly and severally liable for payment of terminal benefits and directed them to release the same with interest of 10% from the date on which the amount became payable.

The court also imposed cost of Rs. 10,000 on Respondents 1-3 each to the petitioners.

Case Title: Chittiboyina Bharata Rao v. The Krishna District Cooperative Central Bank Ltd and Ors

WRIT PETITION NO: 8465/2016

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