Employees can approach Consumer Forum for disputes relating to payment of Gratuity

Mr. A was an employee of a private company. He retired after serving 37 years and was eligible for Gratuity in the sum of Rs.1,82,457/-. The amount should have been paid within a month of retirement. But the employer did not pay the gratuity amount within the time. Instead of paying the whole amount within a month of retirement, the employer chose to pay it in many instalments over a period of 6 years. The Complainant approached District Consumer Forum and prayed prayed for release of balance gratuity amount of Rs.48,625/- and also interest over the same since retirement date including compensation for harassment and agony etc.

The opposite party argued that the complainant is not a consumer as per provision of C.P. Act 1986 and further submitted that opposite party never rendered any service as it is a service contract and an employee cannot be a consumer under any provision of law. They further contended that complaint is not maintainable in view of the provision of payment of Gratuity Act 1972 and as per payment of Gratuity Act 1972, all the disputes between the employer and employee, in respect of gratuity shall be decided by Labour Commissioner or the Authority appointed by the Government in respect of particular establishment and the present claim of the complainant in respect of the part non-payment of gratuity, so it shall be decided by the Labour Commissioner or the Authority as specified in the payment of Gratuity Act 1972.

Ultimately, the claim succeeded on grounds that in so many judgements National Commission and State Commission have decided that (Provident Fund and Gratuity amount) in respect of non-payment of any provident fund and gratuity amount of the retired employees by the employer are entertain able by the Consumer Forum on the ground of deficient of service and accordingly the reported decision I (2008) CPJ 219 NC already decided that any dispute related to provident fund and gratuity amount or non-payment or part payment, shall be decided by the Forum as they are consumer and for deficiency of service same is tenable before the Consumer Forum.

Moreover considering the judgement of State Commission of West Bengal passed in FA 266/2009 and FA 08/400, it is found that complaint of such a nature is maintainable under Consumer Protection Act 1986 for a claim of gratuity and further the State Commission by another judgement in FA Case No.118/2010 dated 18.06.2010 decided that any dispute related non-payment of provident fund regarding gratuity is maintainable in the eye of law before Forum.

The opposite party was ordered to pay the balance gratuity amount with composite interest and punitive damages of Rs.50,000/-.

It is imperative to note that In Regional Provident Fund Commissioner v. Bhavani AIR 2008 SC 2957, hon’ble Supreme Court dealt with the issue as to whether submissions regarding the non-applicability of the Act to the case of Regional Provident Fund Commissioner – the person responsible for the working of a Pension Scheme, could be held to be a ‘service giver’ within the meaning of Section 2(1)(o) of the Act, as it was neither a case of rendering of free service nor rendering of service under a contract of personal service so as to bring the relationship between the parties within the concept of ‘master and servant’.  The court held:

“In our view, the respondent comes squarely within the definition of ‘consumer’ within the meaning of Section 2(1)(d)(ii), inasmuch as, by becoming a member of the Employees’ Family Pension Scheme, 1971, and contributing to the same, she was availing of the services rendered by the appellant for implementation of the Scheme.  The same is the case in the other appeals as well.”

Some case references:

S.C. CASE NO. FA/266/2009 – West Bengal State Commision
Venkatesh-Vs-Vishwanath reported in 2006(1) CPR 473
R.P.No.3382 of 2013 – NCDRC
R.P.No.3383 of 2013 – NCDRC
Regional Provident Fund Commissioner v. Bhavani AIR 2008 SC 2957
Assistant Provident Fund Commissioner, Raichur vs. Vasant Madhav Kerur (RP No. 765 of 2013)




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    • Rameshwar Dayal on 10/09/2016 at 11:26 pm

    Hello sir,
    I have worked in a pvt ltd company for a period of nine years but after resigning of even two years company is still didnot paid my graduity and leave encashment benefit.
    Everytime I use to go to them but they still not paid it to me.
    Request your suggestions and advises.

    • Lakshmy on 13/09/2017 at 3:35 pm

    I worked with an organization for about 16 years from 1977 to 1993.
    As per Family pension 1971 scheme , member is alive, no pension and (2)withdrawal can be done only after 60 years is mentioned.(Retirement or superannuation)

    Withdrawl at the time of resignation in 1993 is possible.
    I was working with an exempted employer and proident fund dues are settled by the Trust and Family pension fund is administered by Bandra PF office.
    Can they settle to an employee in 1994 the family pension fund?
    Withdrawl permitted to an employee who completed more ten years of service in same organization ? pls let me know answer to my email id. Thanks

    • Scott on 12/10/2017 at 7:59 pm

    Dear Sir,
    Sub: Gratuity concern

    I was working in a pvt company for a period of 4 years and 10 months and the company has relieved most of the employees due to severe work shortage and we were forced to resign. After this when I asked for gratuity they are telling that I am not eligible because I have not completed 5 years of service. Many sources are telling me that I am eligible because a period of 4 yrs and 7 months or more would be taken as 5 years.of service. Kindly reply on this matter.
    Kind regards,

    • Kamalakar on 19/10/2017 at 12:16 pm

    I have worked for an Educational institution on the promise that I will be transfered to other branch after six months.three months before I resigned as per norms of Institution that in case of not transferring my resignation should be accepted.They requested me to stay back and made me to withdraw resignation by promising to transfer.After 6th month they terminated me without transfer.Whether I can file case in consumer court.

    • Pradeep kumar on 30/11/2017 at 4:40 pm

    Dear sir,

    Sub – gratuity not paid

    I hve joined a phrma company as on 12July, 2012. Now company has been terminated me as on 29June 2017 with 1 month notice period salary because i complained my manager in legal department of the company for depositing Rs 15000 in his given bank account.

    But my company has been terminated me and protest to the senior manager.

    Now i have workes 4yrs 11month 20days with the company. And company also paid me 1 month notice period salary.

    Kindly confirm me i am eligible for gratuity or not. Because company make my full & final settlement without gratuity amount.

    Pradeep kumar

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