In Brief
An employee of BCH Electric Limited sought gratuity exceeding the statutory ceiling of Rs. 10 lakh under the Payment of Gratuity Act, 1972, relying on the company's gratuity scheme which did not explicitly prescribe a ceiling. The Supreme Court held that where a company scheme incorporates statutory gratuity provisions but lacks an explicit ceiling, employees covered by the Act must follow all provisions of the Act, including the ceiling limit. Section 4(5) of the Act (better terms) applies only when a genuine alternative exists; here, the scheme itself required employees covered by the Act to calculate gratuity 'in accordance with the Act', leaving no alternative. The employee could not selectively adopt the scheme's rates while rejecting the statutory ceiling. The appeal was allowed and the claim dismissed."
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