Statutory gratuity prevails over pension option schemes; retirement benefits under the Act cannot be waived by private arrangement.

Statutory gratuity under the Payment of Gratuity Act, 1972 cannot be defeated by an employee's option for a pension scheme, because gratuity and pension are distinct retiral benefits and the Act prevails over inconsistent private arrangements unless valid exemption is obtained. Retired bank employees who opted for pension therefore remained entitled to gratuity under the Act. The Controlling Authority also lacked jurisdiction to deny gratuity on the ground that the pension scheme was more beneficial, since exemption decisions rest with the appropriate Government and not with that authority. The statutory entitlement to gratuity was accordingly maintained.

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Issues: (i) Whether retired bank employees who opted for pension under the bank scheme were still entitled to gratuity under the Payment of Gratuity Act, 1972. (ii) Whether the Controlling Authority could decide that the old pension scheme was more beneficial than gratuity under the Act and thereby deny payment of gratuity.

Issue (i): Whether retired bank employees who opted for pension under the bank scheme were still entitled to gratuity under the Payment of Gratuity Act, 1972.

Analysis: Gratuity under the Act is a statutory retiral benefit payable on superannuation, retirement, resignation, death, or disablement after continuous service. The Act is a welfare statute and its provisions must receive a liberal construction. The employee's right to gratuity cannot be defeated by a private scheme, award, settlement, or contract unless the establishment has obtained exemption under the Act. Pension and gratuity are distinct benefits, and an option for pension does not by itself amount to waiver of the statutory right to gratuity. The overriding provision of the Act prevails over inconsistent instruments or contracts.

Conclusion: The employees remained entitled to gratuity under the Act despite having opted for pension.

Issue (ii): Whether the Controlling Authority could decide that the old pension scheme was more beneficial than gratuity under the Act and thereby deny payment of gratuity.

Analysis: The statutory scheme entrusts the power to consider exemption from the Act only to the appropriate Government under the exemption provision. The Controlling Authority's jurisdiction is confined to determination and payment of gratuity and does not extend to adjudicating whether an award, agreement, contract, or pension scheme is more beneficial so as to displace the Act. A comparison under the statutory saving provision can only be between better terms of gratuity under an award, agreement, or contract and the gratuity payable under the Act, not between a pension scheme and statutory gratuity. The order of the Controlling Authority, therefore, could not stand.

Conclusion: The Controlling Authority lacked jurisdiction to deny gratuity on the basis that the pension scheme was more beneficial, and its order was unsustainable.

Final Conclusion: The statutory entitlement to gratuity prevailed over the bank's pension option scheme, and the employees covered by the relevant retirement period were held entitled to gratuity under the Act.

Ratio Decidendi: A statutory right to gratuity under the Payment of Gratuity Act, 1972 cannot be defeated by an employer's pension scheme, award, settlement, or contract unless the establishment is validly exempted under the Act by the appropriate Government.

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