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Dear Sujatha,
Having already put in service of 5 years and more, you are quite eligible for the gratuity to claim from the previous organization. So, you must claim that, or get confirmed in writing from your present employer that your service with the past employer (sister company), being under the same group of companies, would also be accounted for in the present employment while parting with the organization. If you don't get that confirmed now the matter may get disputed later on and you may have to knock the door of the court of law to claim your dues.
PS Dhingra

From India, Delhi

Can you support your contention with any relevant case law that its against the third party not against the employer, it does not matter whether protection provided is against third party or the employer himself.

Is it mention in Act any where?is it not your own interpretation. Please if you can

Agree with you that attachment is the subject matter of Courts but even deduction, recoveries or withhold also come under the preview of Section 13.

If it would have been not so then certainly as contended by you, the court would have allowed to deducted or withhold the payment of gratuity against any dues of employee, but not in a single case. if its in your knowedge then kindly point out.

There are a catina of judgments wherein the court has bared employer from withholding/deduction from employer( if you want I can mention), without any attachment from the court against the outstanding dues..

Withholding/adjustment/recoveries against outstanding dues to an employees is a sort of attachment as held in recent judgment Neyveli Lignite Corp Ltd V/s O Raju and others 2010 LLR 506(Mad) it was not open to the respondent that they were justified in the denying, payment of gratuity amount of account of the failure of employee to pay house rent, electricity charge.

So it if there is any adjustment or recovery of any dues then it's a sort of attachment. Such an action is not possible in view of section 13

Even a workmen give undertaking for making deductions, the gratuity of an employee can not be withheld Ram Ranjan Mukhjeri V/s Minining and Allied Machinery Corporation Ltd 2001 LLR 297(Cal HC).

As far as concerned about the interpretation these interpretation are done by the competent court of law not by any individual for their gain or profit, just to save the essence of Gratuity Act being social peace of legislation.

For the answer to the Author of this thread who has asked about the legality of settlement which allow adjustment from the Gratuity is illegal. Its an agreement.

Section 14 of the Act which clear give override effect to other enactments, any instruments and contract etc. as the same also held in by Ahalabad High Court 2010 LLR 1119 All.

I know that it depend on the fact & circumstance of the each case, but where the same question arise before the High Court or lower court, lower court take into consideration and have binding effect within that state & have a pervasive value for others, until and unless the same has been over ruled by the Court of a higher jurisdiction or by Double Bench or (B.D). or for your information if any judgment passed by Supreme Court of India, it's have a binding effect by virtue of Article 141 of constitution.

Further view of members are invited.



Dear Essykkr,

By trying to twist the argument can't make your point. You have been referring to case laws pertaining to deduction from the gratuity in respect of charges of residential accommodation allotted to the employees, or withholding of gratuity on some pretext, or attachment by court of law, etc. None of the case relate to payment of part amount of gratuity by adjustment of existing balance of loan. You are not coming forward with such type of case, WHEN YOU FULLY AGREE that "it depend on the fact & circumstance of the each case"

SO, if your interpretation is correct why not come forward with some SPECIFIC case law about loantaken by employee but the employer was barred by any court not to adjust the outstanding loan amount out of the gratuity by paying the balance amount? If there are several cases pertaining to attachments, withholding, non-payment of gratuity, there must be the cases pertaining to adjustment of the outstanding balances of loans taken by the employees from their employers.

If we go by your interpretation, employees would start taking home loans of several lakhs from their employers and then resign to join another company and claim their gratuity from the past employer. They would continue with the same practice with other employers also and would be able to garner even hundreds of lakhs from their several employers by switching over from one employer to another every five years.


May I suggest you, why not you experiment yourself by taking loan from your employer and then resign and claim your full gratuity, and if your employer adjusts the balance of loan amount take the shelter of Section 13 of the Payment of Gratuity Act and get the case settled in your favor. That way you would also be able to set an example to prove your own point. RATHER I POSE A CHALLENGE ON YOU, you won't be able to get that example set even through a court of law.

From India, Delhi

Dear Mr Dhingra,

please don't take it personally, what ever i have said and argued have supported with proper relevant case law & reasoning, not by writing in bold letters. writing in bold letter does not give force to one's agruments.

As far as concerned about specific case law in respect of loan adjustment the case has already been refered by me & numbers of other members i.e Yada Laxmi V/s A.P. State Co-operative bank 2006(1)ALD733 decided by Andhra Pradesh High Court is fit example & specific.

Again i would like to say this is not my interpretation, this is the correct position of law in this respect, if you are talking about legality.

The loan taken is not adjustable toward only Gratutiy. However there are other legal aspect & provisions those deal with the recoveries of loan etc. The employer have right to initiate legal action for recovery.

Or please think before writing, i have no where mentioned in my any of the post recourse to increase the fraudulent activities, have only given the legal position if dispute arise.

personally i am also not against this, if any employer who is extending helping hand to the employee in times of need then, employee should return such loan within time.There is no use of prolong & entagled litigation except wastage of time & money.


anil kaushik

Dear Friends,
With respect to all learned members, I am of the view that discussion on the point has gone out of good taste.
Everyone has its own view and right to put forward. No one should let down others by attempting to prove that they are fools.
This forum views should not be taken as final verdict on any point. Member asking query should also not take it in that way and must go by his co. legal expert opinion because in such matters company is the only stakeholder and no one else.Facts of each case differs and so the views.
If all of us indulge into words bullet firing on each other, platform will loose its prime objective.
However, With all humility,I stand by my version .I am also fully aware of my responsibility while putting my views on any point being editor of a professional journal which is read and respected by thousands of readers every month.
anil kaushik

From India, Delhi

Dear Essykkr,

I have not taken it personally, nor I at any time intend to take any thing personally, but I am not in favor of misleading the community.

About Yada Laxmi V/s A.P. State Co-operative bank 2006(1)ALD733, case, I have already pointed out that the case pertained to a deceased employee where the gratuity was due to be paid to his heirs, and for your information gratuity to be paid to the heirs of the deceased is not liable to be slashed or withheld on account of any amount of loan outstanding against the deceased employee. It is not he correct position of law in respect of the living employees having retired or resigned. However, if you have any instance of case law pertaining to any living employee retiring or resigning and would have claimed full gratuity through court of law where any loan would have been outstanding against him, you are welcome to quote that, as that would enhance my knowledge also.

For your kind information, loans and other dues outstanding against the deceased employee have to be waived of. On the other hand in the case of any living employee, but parting ways with the organization by resignation or retirement, management has full right to recover the organization's dues from him.

Needless to emphasize, while discharging our duties sincerely, we need to apply our own common sense also and should not always look forward for every matter towards courts of law. Court cases arise only when the management tries to impose their authority unduly and irrationally over the employees or their heirs. Laws are made only to desist the employer to apply highhandedness, otherwise there would not have been any need for framing such laws, if employers always would have worked rationally and ethically.

PS Dhingra

From India, Delhi
Vasant Nair

Yes Sujatha you are very much entitled to receive payment of Gratuity since you have already fulfilled the qualifying criterion of 5 years of continuous service in the Company.

However, payment of Gratuity shall become due only upon your cessation of employment with your present employer.

That you have been transferred from one group company to another does not interfere with your period of continuous employment.

The rules with regard to entitlement to Gratuity are:

1. To become eligible you have to complete five years of continous employment with a Company.

This clause does not apply in case of death while in employment.

2. Gratuity is payable only when you leave the organization by way of resignation or superannuation.

3. Gratuity is calculated @ 15 days' wages for every completed year of service.

The formula is Wages/26x15xNo.0f years of service.

Best Wishes,

Vasant Nair

From India, Mumbai
Dear Friends,
One of my relatives retired from Maharashtra Zilla Parishad Services in May 2012.
The Zilla Parishad had sanctioned him the Senior Pay Scale with effect from 1990.(In 2004)
Now at the time of Retirement the Auditors are saying that the Senior Pay Scale was sanctioned in the wrong manner by the Committee Authorised to Sanction Senior Pay Scale By Chief Executive Officer of Zilla Parishad.
So they have initiated a recovery of over 2 Lakh rupees from Gratuity Amount which is more than 50% of the whole Gratuity Amount.
No Pension has been sanctioned after 7 Months after retirement.
So my Questions are:
1) Can they recover this amount from Gratuity?
2) Can Auditors Change Decisions which are not clerical or Mathematical in Nature? The Decision to Sanction the Senior Pay Scale was taken by the Special Committee Formed for only Deciding on Senior Pay Scale of Employees. (Please Cite Case Laws)
3) Can they Delay Payment of Pension due to this Recovery Process?

From India, Pune
Respected All,
We are suffering from a long term case in which judgment was given in our favor in year 2012,
Situation is,
There was an employee from Central Pollution Control Board, New Delhi, had taken some amount from ours family but he was not giving the same on time. Later we filed a case with the same reasons and judgment was given in our favor, from the day onwards the person was not at home address also left his job without any notice in his office.
Can you please tell me the recovery will be done from his gratuity amount or not and if possible kindly will give the proper Act and any judgment related to this later given in these kinds of cases
Your kind cooperate will be highly appreciated as we are suffering from so many years.
Manoj Kumar
+91 9711110388

From India, New Delhi
Dear PSDHINGRA , I worked with a Bank. If the Gratuity is credited into my account then does the bank has the power to recover the amount from my account without my consent.
From India, New Delhi
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