Q: I retired in May this year after 25 years of service in a public limited company. I have not been paid any gratuity. I want to know whether I have a legal right to claim gratuity and, if so, how much? If there is a dispute regarding entitlement to gratuity or the amount of gratuity payable, how can it be resolved?

Atin Saha, Calcutta

A: It appears that you were an “employee” within the meaning of Section 2(e) of the Payment of Gratuity Act, 1972, and, as such, you have a legal right to receive gratuity upon your retirement. Section 4 of the said Act provides that for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of 15 days’ wages based on the rate of wages last drawn by that employee, subject to a maximum of Rs 3,50,000. However, the right of an employee to receive better terms of gratuity under any award / agreement / contract is not affected. Section 7 of the Act provides that if there is a dispute regarding the amount of gratuity payable to an employee under the Act or as to the admissibility of any claim for gratuity, the same would be decided by the controlling authority (defined in section 2(d) of the Act) on an application made by the employer or an employee.

Q: I have a sole proprietorship business, selling products of various companies. I was appointed by a reputed company as its sales agent under a written contract. Disputes have arisen between the company and me regarding the payment of agency commission. I sent a notice of demand to the company claiming my legitimate dues. The company has filed a civil suit asking for cancellation of the notice. The written contract between the company and me contains an arbitration clause. Can I now refer the dispute to arbitration? What is the procedure I should follow?

A: The company should have referred the dispute to arbitration instead of filing a civil suit assuming that the arbitration clause in the contract between you and the company is wide enough to cover resolution of such dispute. You should file an application under Section 8 of the Arbitration and Conciliation Act, 1996, in the court where the company has filed the civil suit, praying for reference of the dispute to arbitration. This should be done before filing your defence on the merits in the civil suit. In the event the court holds that the dispute is covered by the arbitration clause, the dispute shall be referred to arbitration. However, your application will not be entertained unless it is accompanied by the original agreement containing the arbitration clause or a duly certified copy thereof. Once you make such an application, the civil court is unlikely to proceed with the suit against you till it disposes of the application.

Even during the pendency of the application, you may initiate arbitration proceedings by giving appropriate notice to the company. If the arbitration clause does not specify any named arbitrator, you may take recourse to Section 11 of the said Act. You should also take note of Section 89 of the Code of Civil Procedure, 1908, which empowers the civil court to refer the dispute to arbitration / conciliation / judicial settlement, including settlement through Lok Adalat / mediation if it appears to the court that there exist elements of a settlement which may be acceptable to the parties.