Employees opting for retirement at 60 remain entitled to gratuity absent a valid Section 5 exemption.

The petitioner association represented retired teachers, family pensioners and legal heirs of deceased employees of G.B. Pant University who had retired before 18 June 2005 after opting for retirement at the age of 60 years.

Under the Government Orders dated 10 December 1984 and 19 December 1984, employees opting for retirement at 60 years were allegedly denied retirement gratuity, while those retiring at 58 years were entitled to pension, death-cum-retirement gratuity, family pension and provident fund.

The State Government’s Government Order dated 18 June 2005 subsequently provided similar retiral benefits to teaching and non-teaching employees retiring at either 58 or 60 years.

In earlier litigation initiated by similarly situated non-teaching employees, the Controlling Authority ordered payment of gratuity, the appellate authority affirmed that decision, and the High Court upheld the entitlement while reducing interest to 6% per annum. The Supreme Court dismissed the University’s Special Leave Petitions on 18 November 2021.

The State Government’s order dated 27 September 2022 directed that only the claims covered by the Supreme Court’s judgment be processed in compliance with that judgment and that other representations be disposed of under the rules prevailing at the time of retirement.

Pursuant thereto, the University rejected the members’ claims by office order dated 31 October 2022.

The Court applied the Payment of Gratuity Act, 1972, particularly Section 5, under which exemption from the Act must be granted by the appropriate Government in the prescribed manner, and Section 14, which gives the Act overriding effect over inconsistent laws or instruments.

It relied on the earlier High Court judgment dated 1 November 2017 and the Supreme Court’s order dated 18 November 2021, holding that mere exercise of an option to retire at 60 years could not defeat an employee’s entitlement to gratuity unless the University had obtained a valid exemption under Section 5.

The Court also applied the principle in State of U.P. v. Arvind Kumar Srivastava, (2015) 1 SCC 347, that the benefit of a judgment should ordinarily be extended to similarly situated persons where the judgment is in rem and intended to apply generally.

The objections based on the association’s standing, statutory remedy, and dual statutory benefits were considered in light of B. Srinivasa Reddy, Chairman/Managing Director, U.P. Power Corporation Ltd. v. Ram Gopal, and N. Manoharan, but those decisions were held distinguishable on the facts.

The Court found that the petitioner’s members were materially identical to the 28 non-teaching employees who had succeeded in the earlier proceedings: they had also retired at 60 years and had been denied gratuity under the same 1984 Government Orders.

The earlier High Court judgment did not turn on the individual circumstances of the successful employees but on the general legal conclusion that the University had not obtained exemption under Section 5 of the Payment of Gratuity Act.

The Supreme Court expressly affirmed that an employee’s option to retire at 60 years could not, by itself, operate as a waiver or forfeiture of gratuity.

Consequently, the earlier decisions were treated as judgments in rem, requiring the authorities to extend the legal benefit to all similarly situated employees, irrespective of whether they had individually approached the Court.

The State Government could not restrict the benefit of the Supreme Court’s decision only to the employees who were parties to the earlier litigation.

The Court rejected the University’s contention that the employees were governed exclusively by the State pension rules, holding that the prior binding decisions had already determined the effect of the absence of a valid Section 5 exemption.

The ancillary objections also failed: the association had disclosed its members and paid court fee on their behalf, the challenge concerned the State’s own Government Order, and there was no demonstrated basis for treating Uttar Pradesh as a necessary party.

It consequently quashed the State Government’s Government Order dated 27 September 2022 and the University’s consequential office order dated 31 October 2022.

A writ of mandamus was issued directing the State to pay gratuity individually to each eligible member of the petitioner association, together with interest at 6% per annum, in accordance with the earlier High Court judgment as affirmed by the Supreme Court.

The writ petition was accordingly allowed.