MANAGEMENT OF KSRTC TH.CHIEF LAW OFFICER vs R. KRISHNA REDDY

The Supreme Court addressed the issue of gratuity payments under the Payment of Gratuity Act, 1972, specifically regarding the calculation of gratuity based on dearness allowance. The Court held that the merger of dearness allowance with basic pay, as per the Government Order No. FD 27 SRS 95, must be considered for calculating gratuity, thereby affirming the statutory obligation of the appellant corporation to adhere to the provisions of the Act. The Court ruled in favor of the employees, ensuring that the enhanced dearness allowance is included in the gratuity calculation, thus upholding the principles of fair compensation as mandated by law.