M/S. Techtran Polylenses LTD. vs. Authority Under The Payment Of Gratuity Act And Assistant Commissioner Of Labour

Held

The High Court held that the Controlling Authority under the Payment of Gratuity Act, 1972, has the jurisdiction to pass orders directing the issuance of NOCs for the release of gratuity amounts, as these fall within its mandate to ensure payment of gratuity. The Court found that Section 14 of the Gratuity Act, 1972, clearly states that the Act overrides any other enactment, instrument, or contract inconsistent with its provisions. Relying on the Supreme Court's decision in Y.K. Singla vs. Punjab National Bank, the Court emphasized that the Gratuity Act has a superior status. Therefore, the provisions of the Gratuity Act cannot be ignored, and the Gratuity Act prevails over the group gratuity policy with LIC and any trust deeds. The Court concluded that the petitioner company is liable to issue the NOC for the payment of gratuity amounts from the fund managed by LIC, as directed by the Controlling Authority. The judgments relied upon by the petitioner concerning the Insolvency and Bankruptcy Code were distinguished as not applicable to the facts of these cases, which squarely fall under the Gratuity Act, 1972. Consequently, all writ petitions were dismissed as devoid of merits.

Facts

The petitioners, M/s. Techtran Polylenses Limited, filed multiple writ petitions challenging orders passed by the Authority under the Payment of Gratuity Act, 1972 (Controlling Authority). These orders directed the petitioner company to issue No Objection Certificates (NOCs) for the release of gratuity amounts. The gratuity amounts were purportedly paid by the earlier management of the petitioner company and were held by the Life Insurance Corporation of India (LIC), the Gratuity Fund Manager. The petitioner contended that the Controlling Authority lacked jurisdiction to decide issues related to Section 4(5) of the Act and that the Gratuity Act should not override trust deeds or group schemes with LIC. The respondents, including the employees claiming gratuity and the State, argued for the applicability of the Gratuity Act.

Key Issues

1. Whether the Controlling Authority under the Payment of Gratuity Act, 1972, has the jurisdiction to decide issues concerning Section 4(5) of the Act, which pertains to whether any award or agreement or contract is more beneficial to employees than the gratuity provided under the Act? 2. Whether the provisions of the Payment of Gratuity Act, 1972, override other enactments, instruments, or contracts, including group gratuity policies with LIC? Petitioner's arguments: The petitioner argued that the Controlling Authority exceeded its jurisdiction by delving into matters beyond its purview, specifically regarding Section 4(5) of the Act. They contended that the Act does not confer such jurisdiction on the Controlling Authority and that the court's order could not have granted this jurisdiction. The petitioner also relied on judgments concerning the Insolvency and Bankruptcy Code, 2016, to argue about the liability of dues by changed management. They asserted that trust deeds and group schemes with LIC should be considered binding. Revenue/State's arguments: The respondents, particularly the employees and the State, relied on Section 14 of the Gratuity Act, which states that the Act overrides other enactments and instruments. They argued that the Gratuity Act, 1972, has superior status and its provisions cannot be ignored, especially concerning the entitlement of employees to gratuity. They cited the Supreme Court's decision in Y.K. Singla vs. Punjab National Bank, which held that the Gratuity Act prevails over other provisions and contracts.