Sanchayita Lahkar

The High Court of Kerala Division Bench of Justice Sushrut Arvind Dharmadhikari and Justice Syam Kumar V.M. held that retired abkari workers of the State Beverages Corporation, who had already received terminal benefits under the State Abkari Workers Welfare Fund law, are also entitled to gratuity as a statutory right under the Payment of Gratuity Act. Allowing a batch of writ appeals filed by the workers against the earlier single bench decision, the Court set aside the denial of gratuity on the ground of alleged double benefits and directed the Corporation to disburse gratuity in accordance with the applicable service provisions and the central statute within three months. The dispute centred on whether welfare fund payments could bar claims under the gratuity law.

Appellants, who are retired abkari workers of the 1st respondent Kerala State Beverages (Manufacturing and Marketing) Corporation Ltd., filed writ petitions alleging that the 1st respondent declined to pay them gratuity under the Payment of Gratuity Act, 1972, citing that they were already receiving terminal benefits from the 3rd respondent Kerala Abkari Workers Welfare Fund Board under the Kerala Abkari Workers Welfare Fund Act and Scheme, 1990. They sought directions for gratuity under the Gratuity Act and under Rule 76 of the Corporation’s Service Rules.

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The learned Single Judge dismissed the writ petitions on the ground that accepting the workers’ plea would result in double payment of gratuity, one from the Welfare Fund and another under the Gratuity Act, leading to unlawful enrichment, prompting the present appeals. In appeal, the appellants relied on Sections 2(e), 5 and 14 of the Gratuity Act, contending that they fall within the definition of “employee”, that the Act has overriding effect, and that no exemption had been granted to the establishment.

The 1st respondent contended that abkari workers are governed by the Welfare Fund legislation, which provides gratuity, pension, provident fund and other benefits under Section 3 and clause 36 of the Scheme, and relied on a Government Order and a bilateral settlement (Exts. R1(a) and R1(b)), as well as a comparative benefits chart in the counter affidavit, to assert that claims under the Gratuity Act are barred.

The Court first set out the test under Section 2(e) of the Payment of Gratuity Act. It observed: “It follows from the above settled position of law as discernible from the statutory provisions and the precedents that exclusion from the definition of employee under Section 2 (e) requires two aspects to co-exist, ie, he must be holding a post under the Central Government or a State Government and must be governed by another Act or by any Rules providing for gratuity payment. The latter part alone cannot be extrapolated to deny entitlement to gratuity… Mere coverage of benefits, under any other law by itself will not suffice to exclude a person from the definition of employee. The former part that is, he should be holding a post under Central or State Government must also be satisfied. The learned Single Judge erred in this respect.”

On exemption and overriding effect, the Bench stated: “As regards the question of exemption, it is trite that an establishment is bound to pay gratuity unless a specific exemption has been obtained from the appropriate Government.”

It further recorded: “If the Government has not issued such exemption, the entitlement to claim and receive gratuity continues to vest in the employee and cannot be denied. It is also relevant to note in this context that the Gratuity Act is a social welfare legislation, and when social security legislations are being interpreted, they are to be interpreted liberally, giving the widest possible meaning which the language permit.”

Addressing classification and unjust enrichment, the Court observed: “Unilateral classification which found approval in the impugned judgment cannot be justified especially when it denies the statutory right to gratuity. The conclusion regarding unjust enrichment too cannot be sustained as any denial of statutory right through a manner or method beyond what is envisaged under law is improper and unsustainable. Receipt of amounts/emoluments under a scheme/fund evolved under law and simultaneous receipt of a statutorily ordained gratuity cannot be termed unjust enrichment. If the State perceives it as double benefit the power to exemption ought to have been invoked as envisaged in law. On the said ground too, the Writ Appeal has to be allowed.”

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The Court directed: “In view of the above, we find that the reasoning of the learned Single Judge is erroneous and the impugned judgment is to be set aside. It is hereby ordered so and the appeals are allowed. Respondents are directed to pay gratuity to the appellants herein based on their eligibility under the relevant Service Rules of the respondent Corporation as well under the Gratuity Act. Necessary steps in the said direction shall be taken by the 1st respondent Corporation expeditiously, at any rate, within a period of three months from the date of receipt of a copy of this judgment.”

Advocates Representing the Parties

For the Petitioners: Shri. Deepu Thankan, Smt. Vineetha Bose, Smt. Cindia S., Smt. Ummul Fida,

For the Respondents: Sri. Naveen T., Standing Counsel; Sri. S. Krishnamoorthy, Advocate.

Case Title: Manoharan D. & Others v. Kerala State Beverages (Manufacturing and Marketing) Corporation & Others
Neutral Citation: 2025:KER:93236
Case Number: WA Nos.951/2024, 1220/2024, 1222/2024
Bench: Justice Sushrut Arvind Dharmadhikari, Justice Syam Kumar V.M.