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APHC010454692015

IN THE HIGH COURT OF ANDHRA PRADESH

AT AMARAVATI

(Special Original Jurisdiction)

FRIDAY,THE SECOND DAY OF JANUARY

TWO THOUSAND AND TWENTY SIX

PRESENT

THE HONOURABLE SRI JUSTICE MAHESWARA RAO KUNCHEAM

WRIT PETITION NO: 20248 OF 2015

Between:

1. Tella Bhaskara Rao, S/o. Sri Ramulu, Hindu, aged about 63 years, R/o.

Sambara Village and Post, Makkuva Mandal, Vizainagaram District

...Petitioner

AND

1. The State of Andhra Pradesh Rep by its Principal, Secretary, Department of

Cooperation, Secretariat Buildings, Hyderabad.

2. Sambara Primary Agricultural Cooperative Society, Rep. by its President,

Sambara Village & Post, Mukkava Mandal, Vizainagaram District.

3. Sambara Primary Agricultural Cooperative Society, Rep. by its Chief

Executive Officer, Sambara Village & Post, Mukkava Mandal, Vizainagaram

District.

4. The Chief Executive Officer, The District Central Cooperative Bank,

Vizainagaram, Vizainagaram District.

5. The Divisional Cooperative Officer, Vizainagaram, Vizainagaram District.

...Respondents

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Petition under Article 226 of the Constitution of India praying that in the

circumstances stated in the affidavit filed therewith, the High Court may be

pleased to Issue a writ or order direction more particularly one in the nature of

Writ of Mandamus under Art. 226 of Constitution of India, declaring the action

of respondents though the petitioner is entitled for arrears of salary of

Rs.2,28,260/- and Gratuity, Encashment of Earned Leave not releasing retiral

benefits to the petitioner till date without any valid reasons prolonging the issue

with a malafide intention is as illegal, arbitrary and void. Consequently

directing the respondents to release the arrears of salary and terminal benefits

with interest of the petitioner as he entitled to pass

IA NO: 1 OF 2015(WPMP 26106 OF 2015

Petition under Section 151 CPC praying that in the circumstances stated

in the affidavit filed in support of the petition, the High Court may be pleased to

directing the respondents to release the petitioner's arrears of salary of

Rs.2,28,260/- and terminal benefits of the Gratuity and Encashment Earned

Leave amounts with immediate effect and to pass

IA NO: 1 OF 2016(WVMP 4321 OF 2016

Petition under Section 151 CPC praying that in the circumstances stated

in the affidavit filed in support of the petition, the High Court may be pleased to

vacate interim orders passed in W.P.No.20248 of 2015 dated 07.07.2015 and

pass

Counsel for the Petitioner: A PADMA

Counsel for the Respondents: GP FOR COOPERATION (AP)

Counsel for the Respondents:K V RAJASREE

Counsel for the Respondents:V UMA DEVI

The Court made the following order:

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THE HONOURABLE SRI JUSTICE MAHESWARA RAO KUNCHEAM

WRIT PETITION No.20248 of 2015

ORDER:

The present writ petition is filed by the petitioner under Article 226 of the

Constitution of India seeking the following main relief:

“to declare the action of the respondents though the petitioner is

entitled for arrears of salary of Rs.2,28,260/- and gratuity, encashment of

earned leave not releasing retiral benefits to the petitioner till date without

any valid reasons prolonging the issue with a malafide intention as illegal,

arbitrary and void and consequently direct the respondents to release the

arrears of salary and terminal benefits with interest and to pass…..”

2. Heard Smt.Akella Padma, learned counsel for the petitioner, learned

Assistant Government Pleader for respondent Nos.1, 2 and 3. Ms.Umadevi,

learned Standing Counsel appeared for respondents 4 and 5. Perused the

material on record.

3. The petitioner was initially appointed as decadarised Secretary in the 3

rd

respondent Sambara Agricultural Cooperative Society, Vizianagaram, which is

under the control of the 4

th

respondent/ District Cooperative Central Bank Ltd.,

Vizianagaram (in short ‗DCCB‘) on 28.06.1977. The petitioner worked in

various cooperative societies at Vizianagaram District and while he was

working in 2

nd

respondent society as paid secretary, he was promoted as

Special Category Employee on 01.03.2009 in 4

th

respondent bank and

rendered his services without any blemish.

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4. The petitioner attained superannuation on 30.09.2011 while he was

working as a Cashier at Telam Branch of 4

th

respondent bank. Though the

petitioner discharged his duties without any remark and retired from service in

the year 2011, he was not paid the salaries for 14 months from May 2004 to

June 2005 and for 21 months from June 2007 to February 2009, totaling to

Rs.2,28,260/- apart from his terminal benefits, which have to be paid by the

respondents.

5. In this connection, the petitioner submitted a representation to the

respondents for payment of his arrears of salary and also retiral benefits, such

as, gratuity, earned leave encashment and provident fund etc. On such

representation, the 2

nd

respondent society passed a resolution on 12.05.2014

whereby requesting the 4

th

respondent bank to advance the amounts payable

to the petitioner. The said resolution further reveals that petitioner has not

involved in any financial irregularities during his services.

6. Even prior to this, the District Cooperative Officer, Vizianagaram,

addressed a letter dated 03.10.2009 to the 2

nd

respondent society, directing to

take necessary action for payment of arrears of salary pending against the

petitioner by following the existing bye-laws and rules in vogue. But, till the

date of filing of the writ petition, the petitioner was paid neither the arrears of

salary nor terminal benefits of gratuity, leave encashment of earned leave and

provident fund. Hence, having been left with no other efficacious remedy, the

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petitioner, who is a senior citizen being deprived of his terminal benefits i.e.,

gratuity and leave encashment, has approached this Court under Article 226 of

the Constitution of India, by filing the instant writ petition.

7. It is the further case of the petitioner that he being a senior citizen, non-

release of the terminal benefits i.e., gratuity and leave encashment, etc, would

cause multifarious problems and adversely affect him and his family members

physically, psychologically and fiscally and has put his right to life in peril.

8. On 02.11.2016, the 2

nd

respondent filed its counter while admitting its

liability submits that the 2

nd

respondent society does not have any funds of its

own and is merely works as an agent of 4

th

respondent bank. Further, the

petitioner retired as Special Category Employee on 01.03.2009 working in the

4

th

respondent bank, no record is available with the 2

nd

respondent office and

further states that since because of non-availability of funds only, they have

nothing to do in the case of the petitioner and it is only the 4

th

respondent bank

to pay the amounts due to the petitioner. It is further asserted in the counter

that indisputably petitioner extended his unblemished service to the

respondent authorities and retired from his service without any stigma and also

there are no disciplinary or criminal proceedings pending against him and

inspite of the same, he has not received his terminal benefits since then.

9. The 4

th

respondent – The District Co-operative Bank, Vizianagaram

(DCCB) filed its counter inter alia stating that the petitioner impleaded the bank

in a wrong manner as this bank has no responsibility in making payment of

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retirement benefits to the petitioner for the periods stated in the writ affidavit

during which period the petitioner worked with 2

nd

respondent PACS. It is

further stated that the 2

nd

respondent society is an independent entity as per

the special byelaws applicable to the said society issued by the Commissioner

and Registrar of Cooperative Societies, Government of Andhra Pradesh. The

arrears of salary for 14 months and 21 months totaling to Rs.2,28,260/- and

also the retirement benefits, such as gratuity and leave encashment of the

petitioner during the period the petitioner is working with the 2

nd

respondent

society, if any, shall have to be paid by the 2

nd

respondent alone and this bank

has no role to pay.

10. It is also stated by the 4

th

respondent bank that DCCB has paid its share

of gratuity of Rs.49,588/- and leave encashment of Rs.61,609/- to the

petitioner on 19.01.2015 itself for the period the petitioner worked with the

bank, i.e. from 01.03.2009 to 30.09.2011 and there is no single rupee due to

the petitioner from the 4

th

respondent bank and prayed to dismiss the writ

petition in respect of 4

th

respondent DCCB.

11. This Court has considered the submissions made by both the counsel

and perused the material available on record.

12. On 07.07.2015, while issuing notice before admission, this Court passed

the following interim order:

“Notice before admission.

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There shall be interim direction to the respondents to

release arrears of salary, terminal benefits & encashment

earned leave amounts, if any, became due to the petitioner,

within a period of eight weeks from the date of receipt of a copy

of this order.”

13. As the respondents have not complied with the interim direction issued

by this Court, the petitioner filed Contempt Case No.2450 of 2015 seeking to

punish the respondents under Sections 10 and 12 of the Contempt of Courts

Act, and the same is pending.

Analysis of the Court:

14. The central point emerged in the instant case is that the non-payment of

gratuity and leave encashment of the petitioner being retired employee,

without there being any legal impediment is valid or not?

15. Evidently, the petitioner initially joined in the 2

nd

respondent/PACS in the

year 1977. After serving in various societies as a Paid Secretary, the

petitioner got promoted as Special Category Employee on 01.03.2009 in 4

th

respondent DCCB. Finally, on attaining the age of superannuation, the

petitioner retired from his service from the 4

th

respondent DCCB on

30.09.2011 without any stigma.

16. It is incontrovertibly proved that the petitioner extended his service and

has attained the age of superannuation without any stigma or legal

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impediment. Therefore, the petitioner is certainly entitled for his terminal

benefits for his livelihood after retirement.

17. Indisputably, the respondents are liable to pay the statutory and

mandatory entitlement i.e., terminal benefits, leave encashment, gratuity, etc.,

of the employee in terms of the statutory frame work and also provisions of

Payment of Gratuity Act, 1972, (hereinafter referred to as ‗Act‘) which is a

legislation enacted with a laudable object of ensuring social security to the

working class. The relevant portion of Section 4 of the Act is extracted

hereunder:

―4. Payment of gratuity.-(1) Gratuity shall be payable to an

employee on the termination of his employment after he has rendered

continuous service for not less than five years,

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years

shall not be necessary where the termination of the employment of

any employee is due to death or disablement:

[Provided further that in the case of death of the employee,

gratuity payable to him shall be paid to his nominee or, if no

nomination has been made, to his heirs, and where any such

nominees or heirs is a minor, the share of such minor, shall be

deposited with the controlling authority who shall invest the same for

the benefit of such minor in such bank or other financial institution, as

may be prescribed, until such minor attains majority.]…………‖

(2)………………‖

(3)………………‖

(4)………………‖

(5)………………‖

(6) Notwithstanding anything contained in sub-section (1),

(a) the gratuity of an employee, whose services have been

terminated for any act, wilful omission or negligence causing any

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damage or loss to, or destruction of, property belonging to the

employer shall be forfeited to the extent of the damage or loss so

caused;

b) the gratuity payable to an employee [may be wholly or

partially forfeited]—

(i) if the services of such employee have been terminated for his

riotous or disorderly conduct or any other act of violence on his part,

or

(i) if the services of such employee have been terminated for

any act which constitutes an offence involving moral turpitude,

provided that such offence is committed by him in the course of his

employment……..‖

18. A plain reading of Section 4 (1) of the Act would ascertain that once an

employee has rendered continuous services for not less than five years on his

superannuation or retirement, he/she shall be entitled to get gratuity except in

the circumstances enunciated in Section 4 (1) (a) of the Act. Coming to the

case on hand, admittedly even as per the version of the respondents also, the

petitioner was superannuated without any legal impediments or stigma. In

other words, the action of the respondents' withholding of gratuity is not

permissible under any circumstances. In fact, the right to receive gratuity is a

statutory right; the respondent authorities cannot take it away except through

the procedure enunciated under the law.

19. It is also apt to note the relevant portion of Section 7 of the Act, which

reads as under:-

7. Determination of the amount of gratuity.-(1) A person

who is eligible for payment of gratuity under this Act or any

person authorised, in writing to act on his behalf shall send a

written application to the employer, within such time and in such

form, as may be prescribed, for payment of such gratuity.

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(2) As soon as gratuity becomes payable, the employer shall,

whether an application referred to in sub-section (1) has been

made or not, determine the amount of gratuity and give notice in

writing to the person to whom the gratuity is payable and also to

the controlling authority specifying the amount of gratuityso

determined.

[(3) The employer shall arrange to pay the amount of gratuity

within thirty days from the date it becomes payable to the

person to whom the gratuity is payable.

(3A) If the amount of gratuity payable under sub-section (3) is

not paid by the employer within the period specified in sub-

section (3), the employer shall pay, from the date on which the

gratuity becomes payable to the date on which it is paid, simple

interest at such rate, not exceeding the rate notified by the

Central Government from time to time for repayment of long-

term deposits, as that Government may, by notification specify:

Provided that no such interest shall be payable if the delay in

the payment is due to the fault of the employee and the

employer has obtained permission in writing from the controlling

authority for the delayed payment on this ground.]

20. A perusal of the above statutory provision clearly reveals that if the

employer fails to pay the gratuity amount within thirty days from the date it

becomes payable to the person, then the interest from that date would also

become payable. However, such interest shall not exceed the rate notified by

the Central Government from time to time. In the light of above statutory

provisions, and taking into consideration the existing facts in the present case,

this Court, without any hesitation, unequivocally rules that the petitioner‘s right

to interest on delayed payment is statutory in nature and not subject to the

discretion of the respondent authorities.

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21. At this juncture, it is relevant to note the dictum of the Hon‘ble Supreme

Court in H. Gangahanume Gowda Vs. Karnataka Agro Industries Corpn.

Ltd.

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, while interpreting Section 7 of the Act in its vivid terms, held that there is

a clear mandate in the provisions of Section 7 to the employer for payment of

gratuity within time and is entitled to the interest on the delayed payment of

gratuity.

22. The Hon‘ble Supreme Court in the recent case between Gagan Bihari

Pristy Vs. Pradip Port Trust &Ors

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(decided on 03.03.2025), while accessing

the rate of interest on the delayed payment of gratuity, held that where an

employee retires and has to receive gratuity amount belatedly, without having

any excuse for delay, the interest would be payable as per the notification

issued by the Central Government and accordingly, the Hon‘ble Supreme

Court has awarded interest @ 10% per annum on the delayed payment of the

gratuity amount.

23. When the employees are entitled to the statutory entitlements, the same

cannot be deprived, unless there is any legal impediment, especially in the

event of lapse of time prescribed under the statutory framework.

24. In D.S Nakara &Ors. Vs. Union of India, the Hon‘ble Supreme Court,

while referring to the Deokinandan Prasad case in the course of interpreting

the pensionary rights and entitlements of the employees, had categorically

held as under:-

1

(2003) 3 SCC 40

2

S.L.P. (C) No.20740 of 2022

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―……20. The antiquated notion of pension being a

bounty, a gratuitous payment depending upon the sweet will

or grace of the employer not claimable as a right and,

therefore, no right to pension can be enforced through Court

has been swept under the carpet by the decision of the

Constitution Bench in Deokinandan Prasad v. State of

Bihar wherein this Court authoritatively ruled that pension is

a right and the payment of it does not depend upon the

discretion of the Government but is governed by the rules and

a government servant coming within those rules is entitled to

claim pension. It was further held that the grant of pension

does not depend upon anyone's discretion. It is only for the

purpose of quantifying the amount having regard to service

and other allied matters that it may be necessary for the

authority to pass an order to that effect but the right to receive

pension flows to the officer not because of any such order but

by virtue of the rules. This view was reaffirmed in State of

Punjab V. Iqbal Singh………

29. Summing up it can be said with confidence that

pension is not only compensation for loyal service rendered in

the past, but pension also has a broader significance, in that

it is a measure of socio-economic justice which inheres

economic security in the fall of life when physical and mental

prowess is ebbing corresponding to aging process and,

therefore, one is required to fall back on savings. One such

saving in kind is when you give your best in the hey-day of life

to your employer, in days of invalidity, economic security by

way of periodical payment is assured. The term has been

judicially defined as a stated allowance or stipend made in

consideration of past service or a surrender of rights or

emoluments to one retired from service. Thus the pension

payable to a government employee is earned by rendering

long and efficient service and therefore can be said to be a

deferred portion of the compensation for service rendered. In

one sentence one can say that the most practical raison

d'etre for pension is the inability to provide for oneself due to

old age. One may live and avoid unemployment but not

senility and penury if there is nothing to fall back upon……‖

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25. Very recently, the Apex Court in State of Uttar Pradesh Vs. Dinesh

Kumar Sharma

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, in its unequivocal words, stated that pension is not a charity

or a bounty and an employee is entitled to receive his pension. Hence, in view

of catena of judgments, the law is well settled without any iota of doubt.

26. In respect of financial incapacity/poor financial conditions as stated by

the 2

nd

respondent PACS for non-releasing of their share towards terminal

benefits after utilising the services of the petitioner is not valid. A mere

financial incapacity or paucity of funds cannot be a valid defence for non-

fulfilment of such statutory obligations, more particularly, when the employee

rendered his services, as such, he is rightly entitled to terminal benefits under

law.

27. It is relevant to note the case of Kapila Hingorani Vs. State of Bihar,

wherein, the Hon‘ble Supreme Court at para 34 held as follows:

“…….The State may not be liable in relation to the day

to day functioning of the Companies, but its liability would

arise on its failure to perform the constitutional duties and

functions by the public sector undertakings, as in relation

thereto the State's constitutional obligations The State acts in

a fiduciary capacity. The failure on the part of the State in a

case of this nature must also be viewed from the angle that

the statutory authorities have failed and/or neglected to

enforce the social welfare legislations enacted in this behalf

e.g. Payment of Wages Act. Minimum Wages Act etc Such

welfare activities as adumbrated in Part IV of the Constitution

of India indisputably would cast a duty upon the State being a

welfare State and its statutory authorities to do all things

which they are statutorily obligated to perform…….”

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(2025) SCC OnLine SC 596

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28. In view of the above well settled legal position, the respondents 2 and 3

are bound to release the terminal benefits to the petitioner.

29. It has been consistently held by the authoritative Constitutional Benches

of the Apex Court right from Deoki Nandan Prasad and D.S Nakara cases as

also in catena of judgments delivered by this Court and other Hon‘ble High

Courts that the pension and terminal benefits payable to the employee upon

superannuation age is a property under Article 300-A of the Constitution of

India and it form an integral part of right to livelihood guaranteed under Article

21 of the Constitution of India. Any deprivation, even of a portion of such

amount, cannot be countenanced, except in accordance with law.

Conclusion:

30. In view of aforesaid facts and circumstances involved in the lis, taking

note of the fact that in the counter, the 4

th

respondent bank stated that the

bank‘s share of gratuity of Rs.49,588/- and leave encashment of Rs.61,609/-

(in total Rs.1,11,197/-) were paid to the petitioner on 19.01.2015 for the period

the petitioner worked in their bank i.e. from 01.03.2009 to 30.09.2011, the writ

petition is allowed with the directions given below:

(i) The respondent Nos.2 and 3 are hereby directed to

release the terminal benefits such as gratuity amount and

leave encashment etc., due to the petitioner, i.e.

Rs.1,17,063 (Rs.2,28,260/- minus the amount paid by 4

th

respondent bank towards its share, i.e. Rs.1,11,197/-)

with interest @ 10% p.a. from the date on which said

amount became payable till the date of actual payment,

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within a period of ten (10) weeks, from the date of receipt

of copy of this Order.

31. As the Contempt Case is preferred against the respondents 2 and 3

alone, in view of the orders passed in the present writ petition, the Contempt

Case is closed giving liberty to the petitioner to seek recourse to law, if the

respondents 2 and 3 failed to comply with the orders passed in this writ

petition.

No order as to costs. As a sequel, all pending applications shall stand

closed.

___________ ____________________

JUSTICE MAHESWARA RAO KUNCHEAM

Date:02.01.2026

Rns

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THE HON’BLE SRI JUSTICE MAHESWARA RAO KUNCHEAM

WRIT PETITION No. 20248 of 2015 and C.C.No.2450 of 2015

Date:02.01.2026

Rns