Statutory gratuity cannot be reduced by non-statutory service rules for post-retirement dues or accommodation charges.

Gratuity payable under the Payment of Gratuity Act, 1972 is a statutory retiral benefit governed by a complete code, and a non-statutory service rule cannot override it. The employer could not deduct penal rent or other post-retirement dues from gratuity, because forfeiture is permitted only in the limited cases expressly set out in Section 4(6), and Section 14 gives the Act overriding effect over inconsistent rules or contracts. The Controlling Authority and Appellate Authority were therefore correct in directing payment of full gratuity without deduction, and the HC upheld that approach.

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Issues: (i) Whether the employer could deduct amounts towards penal rent and other dues from gratuity payable to the retired employee under its non-statutory gratuity rules. (ii) Whether the authorities under the Payment of Gratuity Act acted within jurisdiction in directing payment of the full gratuity without such deduction.

Issue (i): Whether the employer could deduct amounts towards penal rent and other dues from gratuity payable to the retired employee under its non-statutory gratuity rules.

Analysis: Gratuity under the Act is a statutory retiral benefit and the Act constitutes a complete code governing accrual, quantification, and recovery. Section 4(6) permits forfeiture only in the limited situations expressly stated, while Section 14 gives the Act overriding effect over inconsistent instruments or contracts. A non-statutory service rule cannot curtail the employee's right to receive gratuity in full, nor can post-retirement dues or retention of accommodation be used to justify deduction from gratuity. The distinction sought to be drawn between forfeiture and deduction was rejected as inconsistent with the scheme of the Act.

Conclusion: The employer was not justified in deducting the alleged dues from the gratuity payable to the retired employee.

Issue (ii): Whether the authorities under the Payment of Gratuity Act acted within jurisdiction in directing payment of the full gratuity without such deduction.

Analysis: Since the Act prohibits curtailment of gratuity except to the extent specifically authorised, the Controlling Authority and the Appellate Authority correctly rejected the employer's claim to withhold or reduce gratuity on the basis of its internal rules. Their orders were consistent with the statutory scheme and required no interference.

Conclusion: The authorities acted within jurisdiction in directing payment of the full gratuity.

Final Conclusion: The challenge to the appellate order failed, and the employee's entitlement to full gratuity was upheld without deduction on account of alleged dues or unauthorized occupation of accommodation.

Ratio Decidendi: Gratuity payable under the Payment of Gratuity Act, 1972 cannot be reduced or withheld on the basis of a non-statutory employer rule for post-retirement dues, and only the limited forfeiture expressly permitted by Section 4(6) can operate against the employee's statutory right.

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