Automatic Application of State Government Gratuity Ceilings to Assam Financial Corporation Employees through Regulation 107

1. Introduction

This judgment of the Supreme Court of India clarifies a significant question in service and gratuity law for State public sector undertakings (PSUs): whether a PSU can deny to its employees the higher gratuity ceiling adopted by the State Government when its own staff regulations expressly link gratuity limits to amounts “as notified by the Government of Assam from time to time”.

The case concerns employees of the Assam Financial Corporation Limited (AFC), a State-level financial corporation, who retired between 2018–2019. They received gratuity capped at ₹7 lakhs under the Corporation’s internal regime, even though:

• the Assam Government had adopted a higher gratuity ceiling of ₹15 lakhs; and
• the AFC’s own Staff Regulations (Regulation 107 of the 2007 Staff Regulations) referred to the ceiling “as notified by the Govt. of Assam from time to time”.

The core issue was whether AFC could rely on its own Office Orders and the Board’s inaction to freeze the gratuity ceiling at ₹7 lakhs, or whether, by virtue of Regulation 107, the higher ceiling notified and implemented by the Government of Assam would automatically flow to AFC employees.

The Supreme Court ultimately upholds the High Court’s decision in favour of the employees, but on a distinct and focused ground: the employees’ right to higher gratuity flows directly from AFC’s own Staff Regulations, which dynamically import the State Government’s gratuity ceilings. The Court deliberately leaves open the broader question whether the Payment of Gratuity Act, 1972, per se applies to AFC.

2. Factual Background and Procedural History

2.1 Employment and Retirement

The respondents were employees of AFC who retired on superannuation between 2018 and 2019. Upon retirement, they were paid:

• retiral dues; and
• gratuity calculated under:
  • the Assam Financial Corporation (Payment of Gratuity to Employees) Regulation, 1964 (“1964 Regulations”), and
  • the Assam Financial Corporation (Amendment) Staff Regulations, 2007 (“2007 Staff Regulations”).

Under AFC’s internal regime, the gratuity ceiling had been:

• originally ₹3.5 lakhs; and
• enhanced to ₹7 lakhs via Office Order No. AFC/Estt/497/2012-13/1028 dated 25.07.2012 (“2012 Office Order”) “in line with Govt. of Assam employees”. [¶4]

2.2 Employees’ Claim before the High Court

Before the Gauhati High Court, the retired employees filed a writ petition contending primarily that:

• they were “employees” within the meaning of the Payment of Gratuity Act, 1972;
• under Section 4 of that Act, as amended, a higher ceiling on gratuity applied than AFC’s internal ceiling; and
• by virtue of Section 4(5) and Section 14 (the non obstante clause) of the Payment of Gratuity Act, AFC could not lawfully restrict them to a lower ceiling inconsistent with the Act. [¶3], [¶6], [¶20]

The learned Single Judge:

• examined the AFC Group Gratuity Assurance Scheme, the 1964 Regulations and the 2007 Staff Regulations;
• held that the respondents were covered as “employees” under the Payment of Gratuity Act; and
• on that basis, held that, in view of Section 14 of the Act, the higher statutory ceiling applied to them. [¶6], [¶20]

The Division Bench of the Gauhati High Court, in Writ Appeal No. 260 of 2022, affirmed the Single Judge’s decision and granted the employees the benefit of the enhanced gratuity in terms of the Payment of Gratuity Act, 1972. [¶5]

2.3 Appeal before the Supreme Court

AFC appealed to the Supreme Court, challenging the Division Bench judgment of 25.07.2023. [¶2] Its core defence was:

• that at the time the respondents retired (2018–2019), AFC’s internal ceiling was ₹7 lakhs;
• that any further enhancement of gratuity to match Government of Assam or Central Government ceilings required:
  • a conscious decision of AFC’s Board of Directors; and
  • approval of the concerned Administrative Department, in terms of notifications of the Governor dated 24.08.2012 and 17.01.2018;
• and that since the Board had deferred the proposal to enhance the ceiling to ₹15 lakhs in its meeting of 08.03.2022, the respondents could not claim parity with State Government employees. [¶7], [¶9], [¶11]

3. Issues Before the Supreme Court

On the facts and arguments, the main issues that arose were:

1. Interpretation of Regulation 107 of the 2007 Staff Regulations:
   Does Regulation 107, by using the expression “subject to maximum of Rs. 3.50 lacs or as notified by the Govt. of Assam from time to time”, automatically import and apply the higher gratuity ceilings adopted by the Government of Assam to AFC employees? [¶12]–[¶18]
2. Effect of Governor’s Notifications and Board Approval:
   Can the Governor’s instructions (that State PSUs may adopt revised pay/allowances only after Board consideration and with departmental approval) override, restrict, or condition the benevolent promise already contained in Regulation 107? [¶11], [¶16]
3. Role of the Payment of Gratuity Act, 1972:
   Is it necessary, and appropriate, to determine whether the Payment of Gratuity Act, 1972 directly applies to AFC employees, in light of:
   • the High Court’s finding that it does; and
   • the existence of AFC’s own regulations that already incorporate State Government ceilings? [¶6], [¶20]

4. Summary of the Judgment

4.1 Outcome

The Supreme Court:

• dismisses AFC’s appeal and upholds the ultimate result reached by the Gauhati High Court;
• however, it does so on its own, distinct reasoning, rooted in AFC’s Regulation 107 rather than in a direct application of the Payment of Gratuity Act; and
• directs that gratuity be recalculated and paid to the respondents within six months. [¶21]–[¶22]

4.2 Core Holdings

The Court’s principal holdings may be summarized as follows:

1. Dynamic import of State Government ceilings under Regulation 107:
   Regulation 107 of the 2007 Staff Regulations, by providing a ceiling of ₹3.5 lakhs “or as notified by the Govt. of Assam from time to time”, must be read to mean that whenever the Government of Assam enhances the gratuity ceiling, that higher limit automatically becomes applicable to AFC employees. [¶12]–[¶18]
2. AFC’s 2012 Office Order (₹7 lakhs) does not freeze the ceiling:
   The enhancement to ₹7 lakhs in 2012 did not exhaust or negate the continuing operation of the “as notified by the Govt. of Assam from time to time” clause. It was an incremental adjustment, not a cap preventing further automatic enhancements. [¶15]–[¶18]
3. Governor’s notifications and Board’s inaction cannot override Regulation 107:
   Instructions that Board approval is required before adopting revised pay and allowances cannot override a binding statutory-type regulation already made by AFC itself which incorporates State Government notifications on gratuity. [¶11], [¶16]
4. Beneficial and employee-friendly interpretation required:
   Being a benevolent provision, Regulation 107 must be interpreted in favour of the employees. Where there is a choice between:
   • a lower internal ceiling; and
   • a higher State Government ceiling,
   the higher ceiling must be applied. [¶16]–[¶18]
5. Equitable treatment and condemnation of institutional lethargy:
   AFC’s failure to timely align its internal ceiling with the State Government’s enhanced ceiling cannot be used to deny employees the benefit of that enhancement. To do so would be “absolutely inequitable treatment” and would make employees suffer due to the “lethargy” of AFC. [¶19]
6. No final ruling on the direct applicability of the Payment of Gratuity Act:
   Although the High Court rested its decision on the Payment of Gratuity Act and the employees pressed that argument before the Supreme Court, the Court expressly declines to rule on whether the Act applies to AFC. It finds that the employees’ rights are secure under the Regulations themselves, rendering that larger question unnecessary and reserving it for an appropriate future case. [¶20]

5. Detailed Analysis

5.1 Regulatory and Statutory Framework

5.1.1 Regulation 107 of the 2007 Staff Regulations

Regulation 107 is the pivot of the Supreme Court’s reasoning. It provides (relevant portions): [¶12]

“107. GRATUITY:

(i) An employee to be eligible for payment of Gratuity must complete service in the Corporation for minimum period of 5 years confirmed service.

(ii) Death-cum-Retirement Gratuity is to be paid at the rate of 16.5 times of the pay (Basic + DA) subject to maximum of Rs.3.50 lacs or as notified by the Govt. of Assam from time to time provided employees have rendered 33 years of service on the date of superannuation or in the event of death.

(iii) Employee with less tenure of service will receive gratuity equal to half a month's pay (Basic + DA) for each completed 6 (six) monthly period of service in the Corporation subject to maximum of 15 (fifteen) months pay (Basic + DA) or Rs.3.50 lacs whichever is less or as may be notified by the Govt. of Assam from time to time.”

Two features are critical:

• the formula-based entitlement (16.5 times pay for full service; proportional for shorter service); and
• the dual ceiling:
  • a fixed internal amount (initially ₹3.5 lakhs); or
  • an open-ended reference to whatever the Government of Assam may notify “from time to time”.

The Supreme Court emphasizes that the expression “or as notified by the Govt. of Assam from time to time” is not a mere recital; it is a substantive part of the ceiling clause that must be given full effect and interpreted in favour of employees. [¶16]–[¶18]

5.1.2 The 2012 Office Order (₹7 lakhs ceiling)

The 2012 Office Order, issued by AFC, enhanced the limit of Death-cum-Retirement Gratuity from ₹3.5 lakhs to ₹7 lakhs, stating that it was in line with Government of Assam employees and “as per the Gratuity Act”. [¶4]

The Supreme Court treats this as:

• a step taken by AFC to partially align itself with evolving statutory and State Government norms; but
• not as an exhaustive or final codification that would prevent further automatic enhancement via Regulation 107, once the State Government raised its ceiling beyond ₹7 lakhs. [¶15]–[¶18]

5.1.3 The 2022 Memorandum and the Board’s 395th Meeting

In 2022, AFC’s Managing Director submitted Memo No. 6335 dated 02.03.2022 (“2022 Memorandum”) to the Board of Directors, with the subject “Enforcement of Gratuity at par with Govt. of Assam ROP 2017 and in line with AFC Staff Regulation”. [¶8]

Key admissions in this Memorandum include:

• employees of AFC were still drawing gratuity with a ceiling of ₹7 lakhs “since last enhancement” in 2012;
• the gratuity amount is governed by the Payment of Gratuity Act, 1972, and that all government organizations and PSUs fall under its ambit;
• the Central Government gratuity ceiling had been raised to ₹20 lakhs with effect from 29.03.2018;
• the Government of Assam, as per its 2017 ROP, had adopted a ceiling of ₹15 lakhs;
• several Assam PSUs were already following ceilings of ₹15 or ₹20 lakhs; and
• crucially, that “as per staff regulation of AFC, the Corporation is to follow Govt. of Assam Rules to pay the gratuity amount to the employees … The gratuity ceiling for the Assam Govt. Employees at present is Rs.15.00 lakhs.” [¶8], [¶10]

The Memorandum proposed enhancing AFC’s gratuity ceiling from ₹7 lakhs to ₹15 lakhs, with actuarial estimates from LIC for the additional cost, and suggested paying the additional premium over two years. [¶8]

The Board, in its 395th meeting held on 08.03.2022, considered the Memorandum but deferred the proposal, stating that it should be placed after detailed study in the next financial year. [¶9]

5.1.4 Governor’s Notifications (2012 and 2018)

AFC relied heavily on notifications of the Governor of Assam dated 24.08.2012 and 17.01.2018, which broadly provided that State-level public enterprises (SLPEs) may adopt Government provisions regarding revision of pay and allowances:

• only after considering the financial implications; and
• subject to approval of the concerned Administrative Department and the Board’s willingness to bear such expenses. [¶11]

AFC argued that because its Board had, in March 2022, deferred the proposal to raise the ceiling, the respondents — who retired earlier when the ceiling was ₹7 lakhs — could not claim the benefit of a ₹15-lakh ceiling.

5.1.5 The Payment of Gratuity Act, 1972

The Payment of Gratuity Act, 1972:

• provides a statutory right to gratuity for employees meeting the eligibility criteria;
• in Section 4, prescribes the methodology and ceiling for determining gratuity;
• in Section 4(5), permits employees to receive better terms of gratuity under any award, agreement, or contract; and
• in Section 14, contains a non obstante clause providing that the provisions of the Act override any inconsistent laws, awards, or contracts. [¶3], [¶6], [¶20]

The High Court extensively relied on these provisions. The Supreme Court, however, makes a conscious choice not to pronounce on whether this Act directly applies to AFC, since it finds an independent route to uphold the employees’ rights under Regulation 107. [¶20]

5.2 Precedents and Prior Case Law

The reported text of the judgment as provided does not cite any earlier judicial decisions or case law by name. The Court’s reasoning is instead built upon:

• textual interpretation of Regulation 107; and
• general principles of beneficial, employee-friendly interpretation; and
• equitable considerations.

Accordingly, in this commentary, any reference to doctrinal principles (such as beneficial interpretation of labour legislation or dynamic incorporation of external norms) is drawn from the Court’s reasoning itself rather than from specific precedents formally cited in the text.

5.3 The Court’s Legal Reasoning

5.3.1 Centrality of Regulation 107 and Dynamic Incorporation

The Supreme Court starts by closely examining Regulation 107. It notes that from as early as 2007:

• gratuity is to be paid in accordance with a prescribed formula; and
• the amount is subject to a maximum of ₹3.5 lakhs or as notified by the Government of Assam from time to time. [¶13]–[¶14]

The Court draws a crucial inference:

“In such a case, the inescapable conclusion is that the maximum limit for payment of gratuity has to be Rs. 3.5 Lakhs (later enhanced to Rs. 7 Lakhs) or the limit prescribed by the State Government and in case where the limit prescribed by the State Government is higher than the limit set by the AFC, the import of Regulation 107 has to be interpreted in such a manner that the benefit of the higher limit set by the State Government has to be given to the employees of the AFC.” [¶18]

In other words:

• Regulation 107 does not merely mention State Government norms as an option; it imports them;
• whenever the State Government prescribes a higher gratuity ceiling than the Corporation’s own fixed figure, the higher State ceiling automatically applies; and
• this is an instance of what can be called “dynamic” or “ambulatory” incorporation—AFC has chosen to link its ceiling prospectively to whatever amounts the State Government notifies from time to time.

The Court also emphasises that Regulation 107 is a benevolent provision made “for the benefit of the employees” and must be interpreted accordingly. [¶16]

5.3.2 Rejection of AFC’s “Board-Approval-First” Argument

AFC contended that, by virtue of the Governor’s notifications, State-level public enterprises could adopt revised pay scales and allowances only after:

• the Board examined the financial implications; and
• the concerned Administrative Department granted approval, where the Board agreed to bear the additional expense. [¶11]

On that basis, AFC argued that the Board’s decision in March 2022 to defer consideration of the enhancement to ₹15 lakhs legally prevented any such enhancement from operating during the respondents’ service and retirement period.

The Court rejects this for two principal reasons:

1. Regulations cannot be overridden by such notifications:
   Once the 2007 Regulations themselves have incorporated the Government of Assam’s notified ceilings (“from time to time”), a subsequent executive notification requiring Board approval for adoption of pay/allowance revisions cannot override those Regulations. The Regulations, being akin to subordinate legislation within AFC’s statutory framework, prevail over such general instructions. [¶16]
2. The restriction on gratuity is unjustified under Regulation 107:
   Given that Regulation 107 expressly provides for a ceiling “as notified by the Govt. of Assam from time to time”, and the State Government had already enhanced its limit to ₹15 lakhs by 2017, any attempt to hold the AFC ceiling at ₹7 lakhs is contrary to the “import” and intent of the Regulation. [¶17]–[¶18]

Thus, the Court effectively holds that AFC’s internal rule-making (Regulation 107) represents a prior, binding decision to align with the State Government’s ever-evolving gratuity ceilings. The Board cannot later insist on a case-by-case approval as a condition for employees’ rights under that Regulation to crystallise.

5.3.3 Beneficial Interpretation and Equity

The Court stresses that, where text permits, employment and gratuity-related regulations must receive a construction that favours employees:

• Regulation 107 expressly uses language that can be read to confer the higher State Government limits on AFC employees;
• in such a situation, any interpretation narrowing the benefit to a lower ceiling (like ₹7 lakhs) is disfavoured; and
• the Court expressly states that “interpretation of the regulation must be made which is in favor of the employees.” [¶16]

Further, the Court introduces a strong equitable element into its reasoning:

“In this fact situation, it would be absolutely inequitable treatment for the Respondents to suffer at the behest of the AFC's lethargy.” [¶19]

The use of the term “lethargy” is telling. It conveys that:

• the AFC knew, or ought to have known, that its ceiling of ₹7 lakhs lagged behind the State Government’s ₹15-lakh ceiling (explicitly noted in the 2022 Memorandum);
• its failure to take timely steps to harmonise its practice with its own Regulations cannot be used as a shield against employees’ claims; and
• equity demands that employees not bear the consequences of institutional delay or inaction.

Thus, equity and beneficial interpretation coalesce to support a construction of Regulation 107 that automatically entitles AFC employees to the higher State Government ceiling once it exists.

5.3.4 Deliberate Avoidance of Ruling on the Payment of Gratuity Act

The High Court based its decision on:

• the applicability of the Payment of Gratuity Act, 1972 to AFC; and
• the overriding effect given by Section 14 to the Act over inconsistent arrangements. [¶6], [¶20]

The Supreme Court:

• acknowledges that the Single Judge and Division Bench had been “impressed” by the argument that respondents were “employees” under Section 4 of the Payment of Gratuity Act and thus entitled to the statutory ceiling; and
• notes that AFC had challenged these findings before it. [¶20]

Yet, the Court explicitly states:

“… we are, at present, not expressing any opinion regarding the same. We say so, because when the regulations themselves (particularly Regulation 107) import the higher ceiling for payment of gratuity as accepted by the State Government under the Payment of Gratuity Act, 1972, the right of the Respondents flows from the said regulation and the question as to whether the Payment of Gratuity Act itself applies to the AFC or not may be considered in an appropriate case.” [¶20]

This is a classic instance of judicial minimalism:

• the Court avoids deciding a broader, potentially far-reaching question (whether the Payment of Gratuity Act comprehensively applies to AFC);
• instead, it resolves the dispute on a narrower, but sufficient, ground (Regulation 107’s link to State Government ceilings); and
• it leaves the broader statutory question open for a future case where it may be decisively argued and where resolution may be unavoidable.

5.4 Impact and Implications

5.4.1 Immediate Impact on AFC and Its Employees

The immediate consequences of the judgment for AFC are:

• AFC must:
  • recalculate gratuity for the respondent employees by applying the higher ceiling which the Government of Assam had in force at the time of their retirement (₹15 lakhs as per ROP 2017, on the record); and
  • pay the recalculated amounts within six months from the date of the judgment. [¶21]
• Employees who retired during the period when AFC maintained a ₹7-lakh ceiling, but after the State Government had already adopted a higher ceiling, now have a clear judicial basis to claim recalculation, provided their claims are within limitation and procedural requirements.

Internally, AFC will also likely need to:

• align its accounting and actuarial provisioning with the higher ceiling; and
• regularly monitor changes in the Government of Assam’s gratuity rules, since Regulation 107 operates by dynamic reference (“from time to time”).

5.4.2 Precedent for Other Assam PSUs with Similar Clauses

The reasoning has broader resonance for other Assam PSUs that:

• have staff regulations or service rules that link gratuity (or other benefits) to State Government norms “as notified from time to time”; or
• have historically adopted government pay/benefit patterns but have not kept pace with later enhancements.

For such entities, the judgment signals that:

• where their regulations contain an open-ended reference to State Government norms, subsequent enhancements by the State Government may automatically extend to their employees;
• the Board’s inaction in formally revising internal ceilings does not neutralize such dynamic references; and
• executive instructions requiring prior Board approval cannot whittle down benefits already embedded in binding regulations.

5.4.3 Drafting Lessons: Static vs Dynamic Incorporation

A deeper, structural implication lies in the drafting of service regulations. Regulation 107 employs a classic “legislation by reference” formula:

• “subject to maximum of Rs.3.50 lacs or as notified by the Govt. of Assam from time to time”.

The Court interprets this as a dynamic incorporation of State Government ceilings rather than a one-time, static reference. This carries important lessons:

• For employers/PSUs: If they wish to maintain flexibility and financial control, they must draft regulations carefully. Phrases like “from time to time” and “as notified by the Government” may create automatic alignment with future government decisions, limiting the entity’s discretion to delay or decline adoption.
• For employees/unions: Where regulations include such dynamic references, employees can legitimately assert that higher government ceilings are automatically applicable, without waiting for separate resolutions or circulars by the PSU.

5.4.4 Unresolved Question: Direct Reach of the Payment of Gratuity Act

By declining to decide whether the Payment of Gratuity Act, 1972 directly applies to AFC, the Court:

• leaves intact the High Court’s reasoning only as between the parties but without endorsing it as a Supreme Court precedent; and
• preserves space for a future authoritative ruling on:
  • whether State financial corporations and similar PSUs are establishments fully governed by the Payment of Gratuity Act; and
  • how Section 14’s non obstante clause interacts with internal regulations and State pension rules.

Until such a ruling, PSUs and employees will often look to the framing of their own regulations (as in this case) to determine rights and obligations, even as the Payment of Gratuity Act remains the statutory backdrop.

6. Complex Concepts Simplified

6.1 What is Gratuity?

Gratuity is a lump-sum financial benefit paid by an employer to an employee as a token of appreciation for long and continuous service. Under the Payment of Gratuity Act, 1972:

• an employee becomes eligible on completing a specified period of continuous service (usually five years), or earlier in the event of death or disablement;
• the amount is generally calculated with reference to last drawn wages and years of service; and
• the law prescribes both a method of calculation and a maximum ceiling (which has been enhanced over time).

Organizations like AFC may:

• follow the statutory framework directly; and/or
• frame their own gratuity regulations, which can provide equal or better (but usually not worse) benefits than the statutory minimum.

6.2 “Non Obstante Clause” in Section 14 of the Payment of Gratuity Act

Section 14 of the Payment of Gratuity Act says that the provisions of the Act will have effect “notwithstanding anything inconsistent therewith contained in any other enactment or in any instrument or contract”. This kind of clause is called a “non obstante” clause.

In simple terms, it means:

• if there is a conflict between the Act and any other law, service rule, contract, or agreement, the Act prevails;
• employers cannot use contracts or internal rules to reduce or avoid statutory gratuity entitlements; and
• however, better terms for employees (e.g. higher ceilings or more favourable formulas) are permitted and protected by Section 4(5).

In this judgment, the Supreme Court notes the High Court’s reliance on Section 14, but consciously refrains from pronouncing on its application to AFC, as it finds a complete answer in Regulation 107 itself. [¶20]

6.3 “As Notified by the Government from Time to Time”: Dynamic Reference

When a regulation says that a benefit (like gratuity) is subject to a ceiling “as notified by the Government from time to time”, it usually means:

• the regulation is not fixing a once-and-for-all ceiling; instead, it is “hooked” to whatever figure the Government prescribes in the future;
• when the Government later increases the ceiling (e.g. from ₹7 lakhs to ₹15 lakhs), that increase is automatically imported into the regulation; and
• the employer does not need to issue fresh internal regulations each time, unless it wishes to provide more than what the Government provides.

The Supreme Court reads Regulation 107 in exactly this dynamic way, which is why AFC’s employees gain the benefit of the ₹15-lakh ceiling once the Government of Assam adopts it. [¶18]

6.4 Beneficial Interpretation of Labour and Service Laws

“Beneficial interpretation” means that where a provision is capable of more than one interpretation:

• and the provision concerns labour, service, or welfare benefits; and
• one interpretation favours employees while the other restricts them,

courts tend to adopt the interpretation that enhances or preserves employee benefits, so long as the language reasonably permits it.

In this case:

• Regulation 107 could be read narrowly (as limiting gratuity to ₹3.5 lakhs/₹7 lakhs unless AFC explicitly adopted State Government ceilings), or broadly (as automatically applying higher State ceilings);
• the Supreme Court opts for the broader, employee-friendly reading; and
• this approach is reinforced by considerations of equity and avoidance of hardship caused by institutional “lethargy”. [¶16], [¶19]

7. Conclusion: Significance and Key Takeaways

This judgment establishes an important and clear principle in the context of State PSUs and their staff regulations:

• Where a PSU’s own regulations explicitly link gratuity ceilings to those “as notified by the Government … from time to time”, higher ceilings adopted by the Government automatically apply to PSU employees.
• Executive instructions requiring Board approval for adopting revised pay or allowances cannot override such regulations. Institutional delay or reluctance cannot legitimately deprive employees of benefits that the regulations promise them.
• Beneficial and equitable interpretation is central: where regulatory text allows, courts will choose the path that protects and enhances employee entitlements rather than unduly restricting them.
• The Supreme Court consciously leaves open the broader question whether the Payment of Gratuity Act, 1972 directly applies to entities like AFC, instead anchoring its decision in the internal Regulation 107. Future litigation may test and resolve that larger statutory issue.

For drafting of service regulations, the decision is a cautionary and instructive precedent: phrases like “as notified by the Government from time to time” are not ornamental—they carry real, enforceable consequences and can dynamically bind an organisation to evolving governmental norms. PSUs must therefore:

• either accept those consequences and budget for them; or
• craft their regulations more cautiously if they intend to preserve an independent, discretionary approach—bearing in mind that any such approach remains subject to the floor created by statutory protections such as the Payment of Gratuity Act.

In sum, THE ASSAM FINANCIAL CORPORATION LIMITED v. BHABENDRA NATH SARMA stands as an authoritative statement on the automatic application of State Government gratuity ceilings to PSU employees where internal regulations incorporate those ceilings by reference, anchored in a strong commitment to employee welfare and equitable treatment.