Supreme Court settles gratuity eligibility for deceased employees: State of U.P. vs. Smt. Priyanka (2023)

Introduction

Date of the Judgment: 9 February 2023
Citation: 2023 INSC 107
Judges: M.R. Shah, J. and B.V. Nagarathna, J.

Can the family of a government employee be denied gratuity benefits simply because the employee passed away before formally opting for retirement at the age of 60? The Supreme Court of India recently addressed this crucial question in a case involving the State of Uttar Pradesh. The core issue revolved around whether the failure of a deceased employee to exercise the option to retire at 60 years of age disqualifies their family from receiving death-cum-retirement gratuity. The bench, comprising Justices M.R. Shah and B.V. Nagarathna, delivered the judgment.

Case Background

Dr. Vinod Kumar, the husband of the respondent, Smt. Priyanka, was employed as a Lecturer. He began his service on July 2, 2001, and passed away while still in service on August 11, 2009. Following his death, Smt. Priyanka applied for the gratuity that was due to her husband. However, her claim was rejected by the State of Uttar Pradesh on the grounds that her husband had not opted for retirement at the age of 60 years while he was still in service.

Timeline

Course of Proceedings

The initial rejection of Smt. Priyanka’s gratuity claim led her to file a writ petition before the High Court of Judicature at Allahabad. The learned Single Judge, relying on previous decisions of the High Court, ruled in her favor. The judge noted that if Dr. Vinod Kumar had lived, he would have retired in 2026, had he opted for retirement at 60 years of age. The court directed the State to calculate the gratuity amount and pay it to Smt. Priyanka, along with 8% interest per annum from the date of her application until the date of payment. The court specifically stated that the fact that Dr. Kumar had not opted for retirement at 60 years of age should be ignored. The State of Uttar Pradesh appealed this decision to the Division Bench of the High Court, which upheld the Single Judge’s order.

Legal Framework

The judgment refers to a Government Order dated 16.09.2009, which allowed employees to opt for retirement at the age of 60 years. The court noted that the deceased, Dr. Vinod Kumar, would have had the option to exercise this choice on or before 1.7.2010, but he passed away before this date. The core issue revolves around the interpretation of this order and whether the option was a mandatory requirement for the family to receive gratuity.

Arguments

Arguments by the Appellants (State of U.P.):

• The State argued that the High Court erred in directing them to pay gratuity to Smt. Priyanka.
• It was submitted that the deceased employee did not exercise the option to retire at 60 years, which was a mandatory requirement under the government orders.
• The State contended that the benefit of death-cum-retirement gratuity cannot be sanctioned to the respondent because the deceased failed to exercise the option.

Arguments by the Respondent (Smt. Priyanka):

• The respondent argued that the High Court was correct in granting the benefit of death-cum-retirement gratuity.
• It was submitted that the deceased was entitled to exercise the option to retire at 60 years, which was available up to 01.07.2010, but he died before he could exercise this option.
• The respondent argued that in the peculiar circumstances of the case, the benevolent scheme of gratuity should be extended to her as the heir of the deceased.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue before the court was:

• Whether the family of a deceased employee is entitled to death-cum-retirement gratuity when the employee dies before opting for retirement at the age of 60 years.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific case laws or books in this judgment. The primary authority considered was the Government Order dated 16.09.2009.

Judgment

The Court held that the respondent would be entitled to the benefit of the Government Order dated 16.9.2009 and would be entitled to the benefit of death-cum-retirement gratuity being the heirs of the deceased employee. The court emphasized that it was not the case of the appellants that if the deceased employee would have exercised the option, even then he would not have been entitled to the benefit of death-cum-retirement gratuity under the scheme. The court reiterated that death-cum-retirement gratuity is a benevolent scheme and should be extended to the respondent, who is the heir of the deceased employee.

The Supreme Court stated, “There is hence no merit in this appeal.” The Court further observed, “The High Court has rightly observed that the respondent would be entitled to the benefit of the Government Order dated 16.9.2009 and would be entitled to the benefit of death-cum-retirement gratuity being the heirs of the deceased employee.” The court also noted, “The death-cum-retirement gratuity is the benevolent scheme and the same is extended to the respondent being heirs/dependent of the deceased employee by the learned Single Judge, confirmed by the Division Bench.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the benevolent nature of the gratuity scheme and the fact that the employee died before he could exercise the option to retire at 60 years. The court emphasized that the purpose of such schemes is to provide financial security to the family of the deceased employee. The court also noted that the State did not argue that the employee would have been ineligible for gratuity even if he had exercised the option. This suggests that the court viewed the option as a procedural requirement rather than a substantive condition for eligibility.

Key Takeaways

• The family of a deceased employee is entitled to death-cum-retirement gratuity even if the employee dies before exercising the option to retire at 60 years.
• The gratuity scheme is considered a benevolent scheme aimed at providing financial security to the family of the deceased employee.
• The court emphasized that procedural requirements should not override the purpose of such welfare schemes.

Directions

The Supreme Court dismissed the appeal and imposed a cost of Rs. 50,000/- on the State of Uttar Pradesh, payable to the respondent within four weeks.

Development of Law

The judgment reinforces the principle that welfare schemes should be interpreted in a manner that benefits the intended beneficiaries. It clarifies that a procedural requirement, such as opting for retirement at a specific age, should not be a barrier to receiving benefits when the employee dies before fulfilling that requirement. The ratio decidendi is that the death-cum-retirement gratuity is a benevolent scheme and the same is extended to the respondent being heirs/dependent of the deceased employee.

Conclusion

The Supreme Court dismissed the appeal filed by the State of Uttar Pradesh, upholding the High Court’s decision to grant gratuity to the family of the deceased employee. The Court emphasized the benevolent nature of the gratuity scheme and the fact that the employee’s death occurred before he could exercise his option to retire at 60 years of age. This judgment ensures that the families of deceased employees receive the financial benefits they are entitled to, even if the employee could not complete all procedural requirements before their death.