The Kerala High Court has ruled that a retired employee of a co-operative bank cannot raise a gratuity dispute before a Consumer Commission. The Court said that such disputes arise from an employer-employee relationship and not from a consumer-service relationship.
The Court set aside an order passed by the District Consumer Disputes Redressal Commission. It clarified that disputes related to statutory retirement benefits, such as gratuity, must be raised before the appropriate legal authority.
What is the Case?
The Tirur Service Co-Operative Bank Ltd. filed a writ petition before the Kerala High Court. The bank challenged an order passed by the District Consumer Disputes Redressal Commission, Malappuram.
The respondent was a former employee of the bank. He worked at the bank from November 1, 1978, to March 31, 2016. He retired after nearly 38 years of service.
According to the retired employee, he was entitled to ₹12,20,217 as gratuity under the Payment of Gratuity Act. However, the bank paid him ₹10 lakh at the time of his retirement.
He claimed that a balance amount of ₹2,20,217 was still payable. He later approached the Consumer Commission to recover the remaining gratuity amount.
Consumer Commission Ordered Bank to Pay Gratuity
The Consumer Commission accepted the retired employee’s complaint. It directed the bank to pay the balance gratuity amount.
The Commission also ordered the bank to pay ₹25,000 as compensation and ₹10,000 towards litigation costs.
The bank challenged this decision before the Kerala High Court.
What Did the Bank Argue?
The bank argued that the complaint was not maintainable before the Consumer Commission. It said that a retired employee does not fall under the definition of a “consumer” under the Consumer Protection Act, 2019.
The bank also argued that gratuity disputes are governed by the Payment of Gratuity Act. The Act provides a separate legal process for deciding such disputes.
The bank further said that disputes between a co-operative society and its employees are covered under the Kerala Co-operative Societies Act. Therefore, the Consumer Commission had no authority to decide the matter.
The bank also raised an objection that the gratuity claim was filed several years after the employee’s retirement.
High Court Says Writ Petition is Maintainable
Justice Ziyad Rahman A.A. rejected the objection that the writ petition should not be considered because an appeal was available under the Consumer Protection Act.
The Court said that the High Court can exercise its writ jurisdiction when a dispute raises a question about the jurisdiction of an authority.
“The question to be decided is a pure question of law, touching upon the jurisdiction of the District Commission,” the Court observed.
The High Court, therefore, held that the writ petition was maintainable.
Employee is Not a Consumer in Gratuity Dispute
The High Court examined the provisions of the Consumer Protection Act. It said that a consumer is a person who hires or uses services for consideration.
However, an employer-employee relationship is different. An employee provides services to an employer and receives a salary in return.
“The employer cannot be treated as a service provider and the employee cannot be treated as a person who availed the services from the employer,” the Court observed.
The Court said that an employee cannot be treated as a consumer of the employer in a dispute related to employment benefits.
Gratuity Disputes Cannot Normally Go Before Consumer Forums
The High Court referred to earlier Supreme Court decisions, including Jagmittar Sain Bhagat and Ministry of Water Resources v. Shreepat Rao Kamde.
The Court noted that disputes related to gratuity and other retirement benefits cannot normally be raised before Consumer Forums. Employees of government departments or institutions do not qualify as consumers in such service-related disputes.
The High Court also discussed earlier cases where employees were treated as consumers because they had contributed money to separate pension or welfare schemes managed by independent authorities.
However, the Court said that gratuity is different. Gratuity is a statutory benefit paid by the employer. Employees do not make any contribution towards gratuity.
Kerala High Court Quashes Consumer Commission Order
The Kerala High Court held that the District Consumer Disputes Redressal Commission had no jurisdiction to hear the gratuity complaint.
“The jurisdiction exercised by the District Commission in this case was without any jurisdiction,” the Court held.
The High Court quashed the Consumer Commission’s order. However, it clarified that the retired employee could pursue any other legal remedy available under the law.
Accordingly, the writ petition filed by the bank was allowed. The Consumer Commission’s order was set aside without affecting the retired employee’s right to approach the appropriate legal authority.
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