Dr. C. Renuka vs Kerala State Council for Science [21 May, 2010]

Facts: 

The writ petition was filed by 20 petitioners, who had entered the service as Scientist under the Kerala Forest Research Institute (KFRI)- the 3rd respondent, which comes under Kerala State Council for Science, Technology and Environment (KSCSTE), which is a registered society under the Societies Registration Act, 1955 - the 1st respondent. The petitioners claimed to have distinguished service and accomplishments to their credit in the scientific career. After the registration of the Council, it formulated their own separate rules for regulating the service conditions and other allied matters. The payment of gratuity and other benefits have also been regulated by Rule 14 of Section 2 of Part 1 of the rules made. The gratuity has been linked with the Life Insurance Corporation (LIC), where the 3rd respondent pays premium and LIC pays gratuity amount to 3rd respondent. The Payment of Gratuity Act, 1972 envisaged a maximum limit of 10 lakhs but the rules evidenced by the 1st and 3rd respondent mentions about calculating gratuity by some other formula which does not place any ceiling. There was pay revision by the government which came into effect from 1 January 2006. 


Issues: 

Whether the maximum ceiling on payment of gratitude would be applicable? 


Contention of Parties: Petitioners contends that the state government (4th respondent) has no power to interfere in matters pertaining to grant of gratuity. 


Holding: 

If was ordered that the Labor Secretary to Government of Kerala should file an affidavit within 6 weeks from the date when copy of judgement is produced, in which the present position is mentioned along with the steps that are taken. The affidavit should also state that whether the group gratuity will be to the benefit employers along with the employees, who may be greatly relieved in the management of payment of gratuity. The Chief Executive officer of the Council issued orders for clearing all doubts. It ordered that gratuity shall be paid without any upper limit. The matter was then taken to Government of Kerala so that permission may be taken for payment of gratuity without ceiling, and in the meantime, it was said that until state government’s decision, the ceiling of 10 lakhs would be applicable. 


Rationale: 

Referring to K.P. Varghese v. LIC of India, the court stated that the amounts paid by LIC to the employer which finally enabled to seek recovery of the policy amount. The court discussed about scope and ambit of the terms and conditions which may regulate a contract. The Court stated that Parliament in its wisdom recognized the tie up between the insurance company and the employer. The Court held that since the petitioners are enjoying the advantages of as per Government of India revised pay orders. There is no role of the Central Government to prescribe regarding the limitation of gratuity to revised pay scale at Rs. 10 lakhs have no application to the employees of both the 1st and 3rd respondent. The court observed that the State Government has not taken appropriate decision to make Section 4A effective, which related to the Payment of Gratuity Act, 1972. The court said that such a progressive and beneficial legislation is given less attention and there is no financial commitment to the Government with respect to such subordinate legislation.