In a significant relief for a group of retired employees of the Assam Financial Corporation (AFC), the Supreme Court on Monday upheld their right to receive a higher gratuity amount, matching the limit already adopted by the State Government. The bench, hearing arguments that stretched across several sessions, refused to accept the corporation’s reasoning that the increase needed further internal approval before being applied.
Background
The dispute began when several AFC employees who retired between 2018 and 2019 were paid gratuity with a ceiling of ₹7 lakh. However, the Assam Government had, by then, already increased the gratuity limit to ₹15 lakh under revised regulations adopted in line with the Payment of Gratuity Act, 1972.
Feeling shortchanged, the retirees approached the Gauhati High Court, and both the Single Judge and Division Bench ruled in their favor. AFC, however, argued before the Supreme Court that unless its Board of Directors approved the enhanced ceiling, the higher limit could not be applied to its employees.
Court’s Observations
The bench of Justices J.K. Maheshwari and Vijay Bishnoi examined AFC’s internal regulations and noted that the gratuity rules already linked the maximum amount to limits set by the Assam Government.
“The regulation itself imports the ceiling notified by the State Government,” the bench remarked.
It also did not ignore what it described as administrative delay. The Court stated that AFC had multiple opportunities to adopt the higher ceiling but did not act. Meanwhile, employees who had completed decades of service retired with lower benefits.
The bench observed, “It would be absolutely inequitable treatment for the respondents to suffer at the behest of the Corporation’s lethargy.”
The Court further said the purpose of gratuity is welfare, not financial convenience for the employer. “Once a higher ceiling is notified by the State, there cannot be discrimination in disbursing the benefit,” the bench underlined.
Decision
Upholding the Gauhati High Court’s ruling, the Supreme Court dismissed AFC’s appeal. It directed that the retirees be paid the revised gratuity amount-calculated at the ₹15 lakh ceiling-within six months.
The article ends here, as required.
Case: Assam Financial Corporation vs. Retired Employees – Supreme Court on Higher Gratuity Ceiling
Appellant: Assam Financial Corporation (AFC)
Respondents: Group of retired AFC employees.
