The Supreme Court ruled that Gratuity is an inalienable right of an employee and not a bounty offered by the management,
A Bench of Justices S B Sinha and H S Bedi said that when a benefit is extended to a group of employees, the same cannot be denied to the other group of employees, if they were entitled to the benefit under the scheme.
The Apex Court dismissed an appeal filed by the Life Insurance Corporation of India (LIC) observing that “An employee is entitled to gratuity if it is not a bounty. Gratuity is payable on successful tenure of service,”
LIC had filed the appeal against a Karnataka High Court ruling which had held that the corporation’s Chairman does not enjoy any unbridled powers to fix pay scales and other benefits for the employees.
Earlier, the Gujarat and Kerala High Court had ruled in favour of the High Court but the Karnataka High Court gave contrary ruling following which the corporation had appealed in the Apex Court.
The Chairman or the other authorities can invoke the powers only as delegated to them under the relevant statute.
The dispute was related to fixation of reduced gratuity to officers who had retired prior to August one, 1994 and according to an order passed by the Chairman, those employees who retired prior to August one, 1994, were entitled to reduced gratuity based on the pay scale.
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