Gratuity Advances Not Deductible: Sri Akilaa Spinning Mills Case Dismissed by Court

In this case, Sri Akilaa Spinning Mills Pvt. Ltd. (the petitioner) challenged the decision of the Appellate Authority under the Payment of Gratuity Act, 1972. The employee (the 3rd respondent) had claimed gratuity after his services were terminated. He claimed Rs. 3,67,500 in gratuity, but the company argued that the employee had already received gratuity advances totalling Rs. 1,67,400 over the years, and the last drawn salary was different from what the employee stated.

The Controlling Authority first decided that the employee was entitled to Rs. 2,30,192, and after deducting the advances already paid, he should receive Rs. 62,792. However, the Appellate Authority ruled in favour of the employee, stating that no deductions should be made from the gratuity amount, and the full Rs. 2,30,192 should be paid, as the advances were not legally recognized under the Payment of Gratuity Act.

The petitioner challenged this decision, arguing that the amounts paid as advances should be deducted. However, the court upheld the Appellate Authority’s decision, stating that gratuity can only be adjusted or forfeited in specific cases under Section 4(6) of the Payment of Gratuity Act. Since those conditions weren’t met, the petitioner’s claim was dismissed.

In summary, the employee is entitled to the full gratuity amount of Rs. 2,30,192, and the company must pay this amount without any deductions for previous advances. The writ petition was dismissed.