MANAGEMENT OF KSRTC TH. CHIEF LAW OFFICER versus R. KRISHNA REDDY

Citation: [2006] SUPP. 8 S.C.R. 255 · Decided: 01-11-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

-
MANAGEMENT OF KSRTC TH. CHIEF LAW OFFICER 
A 
v. 
R. KRISHNA REDDY 
NOVEMBER I, 2006 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
B 
Payment of Gratuity Act, 1972-ss. 2(s) & 4-Gratuity--Computation 
of-Appellant-Corporation had its own scheme of paying gratuity-Settlement 
between workers and Appellant-Corporation providing that rates of DA C 
shall be on par with rates sanctioned by State Government to its employees 
from time to time and that if State Government merged any portion of DA, 
that portion so merged will also be reckoned by Appellant-Corporation for 
determining gratuity-State Government merged part of DA with Basic Pay 
for which a G.O. was issued-Claim by retiree, for gratuity in terms of the 
said G.0.-Maintainability of-Held: Maintainable-High Court right in U 
holding that relief cannot be denied on the hyper-techincal view that the 
G.O. only speaks of "addition" of DA to Basic pay and not "merger" of DA-
Consequence of "merger" not different from that of "addition". 
Appellant, a Statutory Corporation had its own scheme of paying gratuity 
at the rate of30 days' basic pay for each completed year of service. Government E 
Servants are however entitled to gratuity calculated on the basis of 15 day's 
basic pay. A Settlement arrived at between workers and Management of 
Appellant-Corporation provided that the rates of Dearness Allowance shall 
be on par with the rates sanctioned by the State Government to its employees 
from time to time and from the same date and further that if the State F 
Government merged any portion of Dearness Allowance being paid to its 
employees, that portion of the Dearness Allowance so merged ~ill also be 
reckoned by Appellant-corporation for determining Gratuity ~ayable to its 
employees State Government merged a part of the Dearness Allowance with 
the Basic Pay wherefor a Government Order was issued on 28.11.1995. 
Respondent retired as a Traffic Inspector in 1996 pursuant to which he 
claimed gratuity in terms ofG.O. dated 28.11.1995. The claim was allowed by 
the Assistant Labour Commissioner, but the order was reversed in appeal. 
Respondent filed writ petition, on which the High Court held that relief cannot 
255 
G 
H 
256 
SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R. 
A pe denied to him on the hyper-technical view that the G.O. only speaks of 
"addition' of Dearness Allowance to the Basic pay and not "merger" of 
Dearness Allowance. Holding that there is no difference in meaning of the 
two words, namely "addition" and "merger" which are synonymous, the Court 
allowed the writ petition. Hence the present appeal. 
B 
Dismissing the appeal, the Court 
HELD: 1. Gratuity is payable in terms of Section 4 of the Payment of 
Gratuity Act, 1972 to an employee inter alia on his superannuation after he 
has rendered continuous service for not less than five years. Sub-section (2) 
C of Section 4 of the Act envisages that for every completed year of service, the 
employer shall pay gratuity to an employee at the rate of 15 days' wages based 
on the rate of wages last drawn by the employee concerned. Sub-section (5) of 
Section 4 inter alia provides that the provisions contai~ed therein shall not 
affect- the right of an employee to receive better terms of gratuity under any 
award or agreement or contract with the employer. What is, therefore, payablt 
D by way of gratuity in terms of the scheme was 30 days wages for each 
completed year of service. [261-C, D, E) 
2.1. As was rightly held by the High Court, different terminologies used 
did not make any material difference. Section 4 of the Act itself contemplates 
implementation of a settlement. Settlement, therefore, entered into by and 
E between the parties was required to be interpreted having regard to the 
intention of the parties. What was contemplated by the parties was that the 
rates of Dearness Allowance would be at par with the rate sanctioned by the 
State Government to its employees from time to dme and from the same date. 
It was never contemplated that a different amount of gratuity shall be payable 
F to an employee who retires prior to the revision of scale of pay although the 
terms of the settlement are applicable to his case. (262-B-C) 
2.2. What was necessary to be taken inti) account was the merger of 
any portion of the Dearness Allowance •.vith pay which was being paid to its 
employees. In such an event that portion of the Dearness Allowance was also 
G to be reckoned at appropriate level by the ap

Excerpt shown. Read the full judgment & AI analysis in Lexace.