Enhanced Gratuity Cannot Be Withheld Pending Clarification | HC

Case Details: Som Nath vs. Punjab State Water Resources Management and Development Corporation Ltd. [2025] 181 taxmann.com 785 (HC - Punjab & Haryana)

Judiciary and Counsel Details

• Deepinder Singh Nalwa, J.
• A.S Walia, Adv. for the Petitioner.
• Ms Monika Sharma, Adv. for the Respondent.

Facts of the Case

In the instant case, the petitioner retired from the respondent corporation on 30.9.2019. He claimed gratuity of about Rs. 18.96 lakhs under Bye Law No. 18 of the Employees Service Bye Laws and the Payment of Gratuity Act, 1972, as amended w.e.f. 29.3.2018, enhancing ceiling to Rs. 20 lakhs.

The corporation paid Rs. 10 lakhs and declined the balance of about Rs. 8.96 lakhs. The petitioner submitted a representation for balance, received no decision, and then filed a writ petition in which the High Court directed the corporation to pass a speaking order on his representation and, if any benefit was found due, to release it.

In compliance, the corporation issued an impugned order stating that clarification on gratuity was pending with the Finance Department/Directorate of Public Enterprises and Disinvestment, and that a decision would be taken upon receipt of such clarification.

It was noted that the amendment to the Payment of Gratuity Act, 1972, would automatically apply to the respondent-Corporation and would constitute a statutory obligation for the respondent-Corporation to comply with the provisions of the Payment of Gratuity Act, 1972.

Further, the letter dated 13-9-2019 issued by the Government of Punjab, Department of Finance, did not deny the claim for enhanced payment of gratuity; it only suggested obtaining the Finance Department’s concurrence, and thus it could not contravene the statutory provisions of the Payment of Gratuity Act, 1972.

High Court Held

The High Court held that the petitioner was entitled to the balance amount of gratuity under the amendment to the Payment of Gratuity Act, 1972. Thus, the impugned order was to be quashed, and the respondent was to be directed to recalculate the gratuity in terms of the amendment made in the Payment of Gratuity Act, 1972.

List of Cases Referred to

• Som Nath v. Punjab State Water Resources Management and Development Corporation Ltd. [CWP-9061-2022, dated 11-5-2022] (para 2)
• Yadbinder Pal Singh v. Punjab Water Resource Management and Development Corporation Ltd. [CWP No. 1691 of 2019, dated 29-8-2023] (para 8).