Legal provisions involved: Section 4 and Section 5 of the Payment of Gratuity Act, 1972; Rule 26 of the CCS Pension Rules, 1972.
Judgement by: Supreme Court
Bench/Judge: Justice Rajesh Bindal and Justice Manmohan
Facts
A DTC conductor who joined in 1985 resigned in 2014 due to personal reasons. His resignation was accepted, but when he later sought pension, gratuity, and leave encashment, DTC denied all benefits except the provident fund, stating that his service stood forfeited under Rule 26 of the CCS Pension Rules. After his death, his family continued the case before the Supreme Court.
Key legal provisions
- Section 4 and Section 5 of the Payment of Gratuity Act, 1972
- Rule 26 of the CCS Pension Rules, 1972.
Issues raised
Whether DTC could deny gratuity on the ground of resignation, and whether pension and leave encashment were payable?
Arguments of the case
The employee’s side argued that gratuity is a statutory right under the Gratuity Act. DTC contended that resignation leads to forfeiture of past service, barring pension and other benefits.
Judgement
The Supreme Court held that pension cannot be granted due to the clear bar under Rule 26. However, gratuity cannot be denied because DTC was not exempted from the Gratuity Act under Section 5. Since the employee had completed over five years of service, he was entitled to gratuity and leave encashment, which the Court directed to be released with 6% interest.
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