N. NARAYANA MURTHY AND OTHERS Vs. RESERVE BANK OF INDIA, CENTRAL OFFICE, SHAHID BHAGATH SINGH MARG, FORT, MUMBAI- 400001 AND OTHERS

JUDGEMENT

(1.) HEARD the learned counsel for the petitioners and the learned Senior Advocate Shri Udaya Holla, appearing for the counsel for the respondents.

(2.) THE only issue that arises for consideration in the present petition is, whether the petitioners are entitled to claim ex -gratia payment on the revised salary subsequent to their retirement from service and after they have been paid ex -gratia on the basis of the pre -revised salary. This was a question that was addressed at length in WP 11090/2006 and connected cases in the case of K. Ajithirnar Gadiyar vs. Corporation Bank, dated 10.8.2011, wherein identical contentions were raised and it was disposed of inter alia holding as follows: - In addressing the question arising for consideration, the definition of ex gratia as found in the several Dictionaries, can be usefully noted: - According to Jowitt's Dictionary of English Law. Second Edition, 'ex gratia' is defined as follows: - Ex gratia (as of favor) in contra -distinction to "as of right". As to the liability to tax of an ex gratia payment. A Dictionary of Latin Words and Phrases, by James Morwood, defines 'ex gratia' as follows: ex gratia - done or given as a favor and not under any compulsion Words and Phrases, Permanent Edition, contains the following definition: Ex gratia payment Where there is concurrency of coverage between ceding company's policy and policy of reinsurance, the follow the settlements doctrine imposes upon reinsurer a contractual obligation to indemnify the ceding company for payments it makes pursuant to loss settlement under its own policy, provided that loss settlement is not fraudulent, collusive, or otherwise made in bad faith, and is not "ex gratia payment", which is one that is made by one who recognizes no legal obligation to pay but who makes payment to avoid later expenses as in case of settlement by insurance company to avoid costs of suit. According to Advanced Law Lexicon, Third Edition, by P. Ramanatha Aiyar: Ex gratia. By favor. Out of grace; as a mattes of grace, favor, or indulgence; gratuitous. A term applied to anything accorded as a favor; as distinguished from that which may be demanded ex debito as matter of right. The words "ex gratia" in a promise to pay do not carry a accessary or even probable implication that the agreement its to be without legal effect. As matter of grace or favor. Describing a payment made in thanks, such as a rip or golden handshake payment to a retiring employee. Most ex -gratia payments are tax free. Ex gratia payment. Payment made by one who recognizes no legal obligation to pay but who makes payment to avoid greater expense as in the case of a settlement by an insurance company to avoid costs of suit. A payment without legal consideration. In insurance, a payment made to settle an issue (such as an insurance claim) but without admitting liability, (Insurance) Ex gratia pension. A pension paid by an employer although there is no binding commitment to do so. (Investment) According to Webster's Third New International Dictionary, ex gratia - as a favor; not compelled by legal right (ex gratia pension payments) Concise -Oxford English Dictionary defines 'ex gratia' as follows - ex gratia - (with reference to payment) done from a sense of moral obligation rather than because of any legal requirement. According to Black's Law Dictionary, Sixth Edition., 'ex gratia' is, Ex gratia. Out of grace; as a matter of grace, favor of indulgence; gratuitous. A term applied to anything accorded as a favor; as distinguished from that which may be demanded ex debito, as a matter of right. Ex gratia payment. Payment made by one who recognises no legal obligation to pay but who rnakes payment to avoid greater expense as in the ease of a settlement by an insurance company to avoid costs of suit. A payment without legal consideration.

(3.) A Division Bench of Orissa High Court in the case of Manorama Rath vs. Orissa Mining Corporation Limited, 2002 LAB I.C. 3377, in an identical situation, as in the present case on hand, while referring to the relevant clause under the Voluntary Retirement Scheme that was involved in that case, providing for payment of ex gratia field that such a clause cannot give an extended meaning to the expression that last drawn monthly salary to mean the revised pay and could only refer to the pay existing at the time of acceptance of voluntary retirement and other amounts contemplated and held as follows: -