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Judgment
This writ petition is for quashing the order of the first respondent dated October 20, 1986 in P.G. Nos. 5 to 9 of 1986 and to direct the second
respondent to pay the amount of gratuity payable to the petitioners.
The case of the petitioners is that originally they including the deceased V. Pitchai (3rd Petitioner) retired from service from Cauvery Spinning
and Weaving Mill Limited (Now under Liquidation). They have been working continuously without any interruption. Hence they were entitled for
gratuity. The third respondent paid the amounts based on their arbitrary and illegal a calculations. Taking advantage of their superior and
dominating position subsequently, the Labour Union Leaders advised them that the payment of gratuity was not in conformity with the provisions of
the Payment of Gratuity Act. Management deleted certain years of service in total years of service on the ground that they did not work for 240
days in those years. Hence the petitioners filed claim petition before the second respondent. The third respondent contended that the gratuity paid
to them was in full quit receipts Hence. They were precluded from claiming any further amounts. The second respondent directed the third
respondent to pay the balance of gratuity to the petitioners. The third respondent filed appeals before the first respondent. By a common order
dated October 26, 1986 the first respondent allowed the appeals on the ground that having passed full quit receipts, the petitioners were estopped
from claiming any further amount. The order of the first respondent is illegal. During the pendency of the appeal, the third respondent company
went into liquidation. The Official Liquidator, High Court has taken charge. Hence the writ petition is for the relief mentioned above.
No counter-affidavit has been filed on behalf of the respondents.
Learned counsel for the petitioners vehemently contended that the first respondent has seriously erred bolding that the receipts were issued by
the petitioners in full quit of their claim and they are estopped in law. He further contended that the management has erred in computing the 240
days in a particular year and t deleting some years for calculating the total years of service.
The submission of the learned counsel for the petitioners is that the receipts issued by the petitioners stating to be in full quit and Settlement of
their claims cannot be construed to operate as estoppel against the petitioners for claiming further amounts. According to the learned counsel for
the petitioner Section 17(1)(2) and (3) of the Act are mandatory provisions. Section 7(2)(b) of the Act is mandatory in nature the employer is
bound to determine the amount of gratuity and arrange to pay them within the time prescribed. Section 14 of the payment of Gratuity Act 1972, is
very relevant. It is as follows :
The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in to any
enactment other than this Act, or in any instrument or contract having effect by virtue of any enactment other than this Act.
Relying upon the said Section, learned if, counsel for the petitioners contends that the receipts issued by the petitioners are mere agreements to
receive the amounts. Hence they cannot override the provisions of Section 7(2) and (3) of the Act. The agreements which are receipts agreeing to
receive lesser amounts are agreement, contrary to the provisions of the Payment of Gratuity Act 1972, because when the provisions contemplate
higher amount agreeing to receive the lesser amount is hit by Section 14 of the Payment of Gratuity Act, 1972.
As per the said Section anything inconsistent contained in any enactment or in any instrument or contract shall be superseded by the provisions
of the Payment of Gratuity Act, 1972. In the instant case, the employees uniformly admitted in the cross examination that they singed Exhibit P-1.
There was no dispute. They accepted the gratuity giving full quit receipt. The acceptance in full quit tantamounts to settlement. The acceptance or
settlement is not against the provisions of the Act. Section 14 of the Payment of Gratuity Act, 1972 contemplates a contract inconsistent with the
provisions of the Act. But the receipts issued voluntarily accepting the amounts cannot be construed to be a contract. A contract is an agreement
between the two parties to do or not to do something in future. But the, settlement is putting an end to such an agreement. Further the receipts
cannot be said to be inconsistent with the provisions of the Act. Now what is contended is that they have received a lesser amount than the amount
which they could have claimed, if a proper calculation was made.
It is not their case that the management made the calculation of its own without giving an opportunity for them to calculate or arrive at the exact
amount. After having voluntarily and whole-heatedly received the amount it is not fair on their part to reagitate the same. Learned counsel for the
petitioner cited number of authorities and contended that the workmen are not estopped from raising the dispute relating to the amounts paid to
them.
In Bennet Coleman & Co (P) Ltd v. Punya to Priya Das Gupta 1969 XI LLJ 554 (SC) it is found that though the receipt given by the employee
mentioned that it was in full settlement of all his claim on the very same date in his letter is Exhibit W-4 he protested that though he wanted to clarify
in that receipt that it was in full settlement of the salary and dearness allowance for the twenty days of October, 1963 and gratuity only he was not
allowed to make reservation. Although he had already preferred his claim for compensation for one month''s leave due to him, the company let in
evidence to controvert the statement made in Ex. W-4. Only in those circumstances, the Court held that the workmen were not estopped in the
said case. Further in the said judgment it is stated that u/s 115 of the Evidence Act, the representation which estops a person making it from acting
contrary to it is one on the belief of which the other Persons act in a manner he would not have done but for it and on believing it to be true. Such a
conclusion is difficult in the face of the uncontradicted statements in the letter Exhibit W-4.
The said case is not helpful because the robation period was fixed as six months, which was contrary to the Standing Orders providing for two
months probation only. The certified Standing Orders are pursuant to the Industrial. Employment (Standing Orders Act 1946). Therefore, the
contract for six months probation was held to be inconsistent and not valid
In Management of Pudukottah Textile Limited Vs. A. Ganapathi, Etc., Etc., the Supreme Court has held that first series of letters and Ex-M1
were not voluntarily executed. Secondly it has held that they were not shown to constitute a settlement or relinquishment within the Scope of the
Act, therefore, this could not be relied upon. In our case, first there is no dispute about the voluntarily signing the receipt and receiving the amount.
Secondly, immediately after the superannuation, the management has calculated the amount due to the workmen. The workmen have accepted the
amount without a demur. Even though the controlling authority has chosen to state that there was an element of protest the Appellate Authority has
categorically stated that they have not lodged any protest. The Appellate Authority has held so after referring to the evidence of the employees.
Therefore, we can take it that signing of the receipts by the employees were voluntary and there was no protest whatsoever till they filed the
present claim petitions before the Controlling Authority, at instance of the Labour leaders.
It is not in evidence that the employees agreed or contracted to receive an amount which is less than what was due to them. It is also not the
case of the employees that the employer knowing that they were entitled to higher amount bargained and pursuaed the employees to receive the
lesser amount. Only in such circumstances, it can be said that there was an agreement or a contract which is inconsistent on with the provisions of
the Act in question. In the course of giving effect to the provisions of the Act viz Section 7 of the Payment of Gratuity Act, the parties have arrived
at a settlement with reference to the amount due to them. Such a settlement is not an agreement or contract which can be said to be inconsistent
with the provisions of the Act. For the same reason, the receipts cannot be said to be instruments inconsistent with the provisions of the Act. On
the other hand, the receipt must be construed to be an instrument, issued while giving effect to the provisions of the Act. Even if the employees can
be said to have received a lesser amount under the instrument, it will tantamount to relinquishment within the scope of the Act. Therefore, the
dictums contained in para 37 in the aforesaid judgment in the is following words.
Unless it be shown that they constitute a settlement or relinquishment, within the scope of the Act.
squarely applies to our case.
Som Prakash Rekhi v. Union of India : (1981)ILLJ79SC in the said case the pension of the employee was sought to be reduced on account of
the receipt of the gratuity and provident fund. Regulation 16 provides for a cut in certain eventualities from the pension. Even though the
Regulations 16 acquired a statutory force, the Supreme Court held that it operates contrary to the provisions of Provident Fund Act and the
Payment of Gratuity Act. Hence, it must fail. The facts of the said case are different from our case. Hence, the said case cannot help the
petitioners.
Jeevanlal (1929) Limited and Others Vs. Controlling Authority Under the Payment of Gratuity Act and Others, in the said case, Section 14 of
the Act has been set out and the constitutional validity of the Section has also been upheld. It is also not a case where the employees received the
gratuity voluntarily and in full quit of their claim in respect thereof.
Pallavan Transport Corporation, (Metro) Madras-2 Vs. Presiding Officer, I Additional Labour Court, Madras, T.K. Krishnamurthy and
Others, in the said decision from the materials placed it could not be spelt out that the workmen agreed to waive their right or acquiesced
consciously and intentionally. Therefore, it was held that the mere receipt of retirement benefits with nothing more to indicate abandonment of their
legitimate rights would not amount to acquiescence or wavier. The learned Judge has further held that there was no specific plea or proof of neither
a case of acquiescence nor a case of waiver adduced by the petitioner. Hence, he was not called upon to dwell upon these aspects. As we have
stated above. We have found that the receipts issued by the petitioners were voluntary and in full quit and settlement of the gratuity payable to
them. At this juncture, we will consider a single Judge decision of this Court in Andhra Laundry v. Addl. Lab. Court XXXIII F.J. 431 known as
Andhra Laundry case, Justice Venkatadri, has held that since there is no provision in the Industrial Disputes Act, preventing the parties from
contracting out the statutes as far as the closure of compensation is concerned, the employees have waived their right by contracting out the statute
SC and there was no prohibition for such contracting out. Learned counsel for the petitioners pointed out that the said decision is prior to the
Payment of Gratuity Act, 1972. Since I have taken the view that the receipts passed on by the employees will not amount to contracting out of the
statute, but a voluntary acceptance of the amounts during the course of working out the provisions of Section 7 of the Payment of Gratuity Act,
1972 by way of settlement, the question of contracting out does not arise at all in this case.
I have no doubt that the receipts have been issued in working out the provisions of Section 7 of the Payment of Gratuity Act.1971, when the
employees retired from service in 1983. It is evident from the extract from the order of the Appellate Authority :
Receipts which are marked as Exhibit R-1 stating received the amount of gratuity in full and final settlement of his claim for gratuity due as per
details mentioned above. In the above said Exhibit, against column-4 number of continuous service it was mentioned as eligible for gratuity. The
applicants have not protested the eligible years of gratuity mentioned in the receipt at the time of receipt of gratuity amount on September 16, 1983
. In their sworn statement they uniformly admitted in the cross examination that they signed in Exhibit R-1 after reading its contents that they were
aware of it that the said exhibit was not obtained by coercion and they had not lodged any protest for it"".
The above submission shows that the employer followed the procedure laid down u/s 7(2) of the Payment of Gratuity Act, 1972. There was also
no dispute as contemplated u/s 7(4)(a) of the Payment of Gratuity Act. In the Circumstances, the principles of acquiescence and waiver will also
arise because the employees felt that there was no dispute at, the time of accepting the amounts. Strictly speaking in this sense, the waiver or
estoppel or acquiescence is with reference to the future dispute only. The word full settlement of the claim contained in the receipts, prevents the
employees from raising the dispute after receipt of amounts in future.
Admittedly, as per the finding of the Appellate Authority there was no dispute at the time of receipt of the amounts. Yet the management has
taken ''the full quit'' receipts to avoid future dispute. Assuming that the receipts are settlements, but agreements not to raise the dispute relating to
their claims in future, such agreements are not hit by Section 14, read with sub-sections (a)(b) and (c) of Section 7(4) of the Act. If there was a
dispute at the time of receipt of the amount, and yet the employees agreed not to raise a dispute at that time, and received amount, then the
agreement will be contrary or inconsistent with the provisions of the Act. Therefore, the full quit receipts containing an agreements not to raise a
dispute in future are valid agreement or contract and not hit by Section 14 of the Act. From another angle also the cases can be looked into. Sub-
section (5) of Section 4 of the Payment of Gratuity Act 1972, is as follows :
Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the
employer"".
It is possible that due to exigencies, the family circumstances and other factors, the employees thought that the receiving of the amounts in full
settlement of their claim for gratuity immediately was better. Therefore even if it is found that they had been paid a lesser amounts the full quit made
by the employees are valid and protected as per sub-section (5) of Section 4 of the Payment of Gratuity Act 1972. For the foregoing reasons, I
am of the view that the petitioners after having issued full quit receipts, voluntarily and without any protest are not entitled to reagitate it once again.
Hence the writ petition deserves to be dismissed. Accordingly it is dismissed. However there will be no order as to costs.