NDLI: Bch Electric Limited Vs. Pradeep Mehra

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Payment of Gratuity Act 1972
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Payment of Gratuity Act, 1972 (39 of 1972)
Case(s) Referred	Referred Case 0 Referred Case 1
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Payment of Gratuity Act, 1972: ss.4(3), 4(5) – Respondentappointed as Chief Operating Officer resigned after putting 12 yearsof service – His last drawn monthly wage was Rs.24.50 lacs – Claimmade by him for gratuity of Rs.1.83 crores – Appellant-employerheld that respondent was entitled to maximum of Rs.10 lacs as gratuity– The Authorities under the Act and the High Court accepted theclaim preferred by the respondent – Challenge against – Held: s.4(3)stipulates that the amount of gratuity payable to an employee shallnot exceed certain limit and thus puts a cap on the amount payabletowards gratuity – However, s.4(5) states that nothing in this Sectionshall affect the right of an employee to receive better terms of gratuityunder “any award or agreement or contract with the employer” –Thus, as against what is made applicable by the Act, if better termsare available under any arrangement with the employer, s.4(5)stipulates that nothing in s.4 shall affect the right of any employeeto receive such better terms – This means when two choices areavailable, one under provisions of the Act and one under sucharrangement with the employer and if the latter offers better terms,the employee cannot be denied right to receive those higher benefits– In the instant case, Rule 6(b) of the Rules framed under the Schemeof the appellant-Company stipulates that notwithstanding theScheme of the Company, if any member is covered by the Act, theamount of gratuity shall be calculated in accordance with theprovisions of the Act – Similarly, the Appendix to the Schemeprescribes the rates at which the gratuity is to be paid – Thus, theintent of the Trust Deed and the Scheme is clear that the governingprinciples as regards the amount to be calculated and the rates tobe applied have to be in accordance with the provisions of the Act,if an employee is covered by the provisions of the Act – If the amountis to be so calculated according to the provisions of the Act, in caseof employees covered by the provisions of the Act, there is no otheralternative which is offered by the Company or which is part of anyaward or agreement or contract entered into between the employerand employees – Thus, no reliance could be placed on s.4(5) of theAct to submit that the employees are entitled to some greateradvantage than what is available under the Act – Appellant wasright in going by the provisions of the Act and by the ceilingprescribed u/s.4(3) of the Act – The Authorities under the Act andthe High Court erred in accepting the claim preferred by therespondent – Any mistakes on its part in making some extra paymentsto some of the other employees would not create a right in favour ofrespondent in the face of the stipulations in the Trust Deed and theScheme.
Judge	Honble Mr. Justice Uday Umesh Lalit
Neutral Citation	2020 INSC 379
Petitioner	Bch Electric Limited
Respondent	Pradeep Mehra
SCR	[2020] 10 S.C.R. 1
Judgement Date	2020-04-29
Case Number	2379

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