1. Petitioner approached this Court in March, 2002 assailing communications dated 21/04/2001, 07/06/2001 and 23/01/2002. These orders attempt to recover amount of Rs. 44,422/- alleging that petitioner has been paid that amount in excess as gratuity.
2. This Court has after hearing respective Counsel stayed that recovery and interim orders are continuing even today. Petitioner expired during pendency of writ petition and his legal heirs have been brought on record on 22/08/2017.
3. The relevant regulations of respondent-Life Insurance Corporation of India, which deal with gratuity are the Life Insurance Corporation of India (Agents) Regulations, 1972. As per regulation no. 11, gratuity benefits admissible in case of agents are to be worked out as given in Schedule VI. It is not in dispute before us that the provisions of Rule 2(2) of the said Schedule are relevant in present matter.
4. Before dealing with these legal provisions, it needs to be noted that there are two categories of agents working with Life Insurance Corporation, one is full time employees for whom age of superannuation as stipulated is 60 years and there are few freelancers like deceased-petitioner, for whom there is no age of superannuation. However, as jointly stated before us, such freelancers are paid gratuity, only till their reaching 65 years of age. After that age, though they may continue to do business as agent and earn commission, they will not get gratuity. As this is not the controversy between the parties, we are not required to conclude in this respect.
5. Petitioner born on 08/03/1935, started work as LIC agent in 1982, when he was 47 years old. He completed 15 years as agent in 1997 and at that juncture he was 62 years old. He completed 65 years of his age in 2000. He has expired during pendency of this petition on 05/03/2017.
6. In this situation, Shri Shashikant Borkar, learned Counsel for petitioner submits that petitioner has been rightly paid gratuity by accepting his work till he attained age of 65 years for calculating qualifying service. He points out that deceased-petitioner could not have earned gratuity when he reached 60 years of age and as such recourse to provisions of Rule 2(2) in present matter is erroneous.
7. Shri Anil Kilor, learned Counsel for respondent on the other hand submits that payment of gratuity at 65 years of age is an exception made out only for those, who opt for that age for determination of their eligibility in terms of sub-rule (2). This option needs to be exercised before agent completes 60 years of his age and in present matter, petitioner has submitted that option later on i.e. after he had completed even 60 years of his age.
8. We have perused relevant provisions, which read as under :
- 2. (1) An agent shall be eligible for gratuity :
- (i) if he has worked continually and for fifteen or more qualifying years, and
- (a) he is not below sixty years of age; or
- (b) his agency ceases or stands terminated under any of the provisions of these regulations for any reasons other than an accepted reason;
- or
- (ii) if he has been confirmed in his appointment, and:
- (a) he dies while his agency is subsisting,
- or
- (b) his appointment as agent is terminated under clause (c) of sub-regulation (1) of regulation 16.
- (2) As Agent may, before he has attained the age of 59 years, by notice in writing to the Divisional manager, request that his eligibility for gratuity may be determined on completion of 65 years of age, and in that case sub-clause (1)(i) shall have effect as it in item (a) thereof, for the word "Sixty" the word "Sixty-five" had been substituted, and the relevant date shall be computed accordingly.
- (3) Gratuity admissible to an agent shall be at the eligible rate for each qualifying year for the first fifteen qualifying years and at half the eligible rate for the subsequent ten qualifying years, provided the maximum amount of gratuity payable shall not exceed Rs. 50,000/-."
9. It is not in dispute that figure of Rs. 50,000/- appearing in sub-rule (3) has been amended to Rs. 1,00,000/- with effect from 01/02/2000. The same amendment also hikes age of 59 years mentioned in sub-rule (2) to 60 years and, therefore, expects agent like petitioner to exercise option before he attains the age of 60 years.
10. Rule supra, therefore, shows that provisions contained in sub-rule (1)(ii) and sub-rule(2) are relevant for deciding this controversy. As per sub-rule (3), for 15 years of service, a agent gets normal gratuity while for qualifying service beyond 15 years, gratuity is payable at half of the normal rate. Correctness of calculations in petitioner''s case is not in dispute before us.
11. Question to be answered is, whether in terms of sub-rule (2), deceased-petitioner could have exercised an option and asked for determination of his gratuity on completion of 65 years of his age. Request to be made in sub-rule (2) has been mentioned as above in the audit objection as also in communication dated 07/08/2001 by respondents.
12. When provisions of Rule 2 are read together, it is apparent that gratuity payment after competition of 15 years of qualifying service and 60 years age is a normal rule and upon an express request made by agent, eligibility can be determined after he reaches 65 years of age. However, even in that event for service put in beyond 15 years, here gratuity is at 50% of the normal rate.
13. Eligibility for earning normal gratuity is continuous service for 15 or more years coupled with age at that juncture not being below 60 years. In other words, agent who is below 60 years cannot claim gratuity. Similarly, agent who has put in less than 15 years of qualifying service also cannot claim gratuity. Hence, request or option under sub-rule (2) supra can only be made by a person who has put in 15 years of qualifying service and also is expected to get gratuity after he reaches 60 years of his age. Such a person, therefore, in advance has to inform his employer that his eligibility for gratuity may be determined after he reaches 65 years of his age. At the time of exercising this option or making request, he could not have completed age of 60 years. Thus, option is to be given before completing age of 60 years.
14. Option can be exercised by a person who has got right to elect between two different situations or choices. In the present facts, when petitioner became LIC agent in 1982, he was already 47 years old. Thus, he could not have and did not complete 15 years of qualifying service when he reached 60 years of his age. He reached that age in March, 1995 and at that time his qualifying service is only at 13 years. Hence, at that juncture, he was not eligible for gratuity at all. Put more succinctly, before attaining the age of 60 years also, he was not entitled to claim gratuity at all. He completes 15 years of service only in 1997 and at that time, he was 62 years old. He becomes eligible for the first time in 1997 only. It is, therefore, obvious that he had no opportunity or right to exercise option under sub-rule (2) at all. The alleged option or request in sub-rule (2) is not open and not attracted in his case.
15. Petitioner, after he became eligible, requested his employer to count his gratuity at the age of 65 years and that has been done accordingly. It is not the case of employer that after 15 years of service, for remaining 3 years i.e. for service put in by petitioner as agent between March, 1997 to March, 2000, his gratuity has been wrongly calculated. This excess has been worked out only on the strength of alleged failure on part of deceased-agent to exercise option before he attained age of 60 years.
16. As noted supra, petitioner had no option before he attained age of 60 years or even before he attained age of 62 years to choose. He became eligible for gratuity in terms of Rule 2 for the first time in March,1997. We, therefore, find audit objection raised in his case erroneous and misconceived.
17. Respondents have not pointed out that petitioner could not have been paid any gratuity for service rendered by him after March, 1997 till March,2000. We, therefore, find in these facts the recovery as worked out, unsustainable. Gratuity is a provision introduced in law for well being of an employee and the object or purpose behind it needs to be preserved while adopting the liberal approach in welfare jurisdiction.
18. We, therefore, find that alleged omission or failure of petitioner to exercise option before he attains age of 60 years cannot be a ground to order recovery from him particularly when the amount was already released and paid to him. It cannot be said that he has committed any wrong or played any fraud on his employer. With open eyes, the employer has released gratuity. Hence, in any case, following the principles in case of State of Punjab & others v. Rafiq Masih (White Washer) and others, reported in (2015) 4 SCC 334, the recovery cannot be sustained. Hence, we quash and set aside the impugned communications dated 23rd January, 2002, 7th June, 2001 and 21st April, 2001.
19. Rule is made absolute accordingly. No costs.
