CMA Laws and Ethics Payment of Gratuity 1972 Question and Answers

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Payment Of Gratuity 1972

Question 1. Objective and Scope of Gratuity Act, 1972
Answer:

  • An act to provide for payment of gratuity to employees engaged in certain establishments.
  • Applies to the whole of India including Jammu and Kashmir.
  • The objective of the act is to provide an old-age retirement social security ‘ benefit to an employee at the time of termination of services, a lump sum payment/amount.
  • Amended by Gratuity (Amendment Act), 2018.
  • The ceiling of gratuity has been enhanced from $ 10 lakhs to $ 20 lakhs.

Question 2. Applicability of the Act
Answer:

  • National Pension System
  • National Pension System Trust
  • Pension Fund.
  • Point of presence
  • Document
  • Individual pension Account
  • Intermediary

Question 3. Employee for the Act
Answer:

The person employed for wages.

Excludes: Apprentice Teachers are to be considered employees.

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Question 4. Payment of Gratuity.
Answer:

  • Gratuity is payable on termination of employment provided he/she has rendered continuous service for a minimum of 5 years
  • Gratuity is calculated based on continuous service( for every completed year or part above 6 months), at the rate of 15 days wages last drawn
  • Gratuity Payable = Wages x Completed years of service x 15/26

Question 5. Gratuity is payable on
Answer:

  • Retirement or resignation
  • Death or disability
  • Superannuation

Question 6. Forfeiture of Gratuity
Answer:

  • Gratuity forfeited on account of such act, omission, or negligence which causes loss, damage, or destruction is termed as partial forfeiture o gratuity since the same can be carried out only to the extent of loss damage, or destruction so caused.
  • As against this, in case the services of an employee get terminated due to violence or riotous act or committing an offense involving moral turpitude concerning his employment, the same can lead to forfeiture of the whole or part of the gratuity.
  • If the services of an employee are terminated due to willful omission c negligence which causes damage to the property of an employee gratuity can be forfeited to the extent of damage or loss caused. The whole amount cannot be forfeited for the wilful omission by the employee.

Question 7. Rights and Obligations of the Employer
Answer:

  • As soon as the Gratuity becomes payable the employer shall determine the amount of gratuity and shall give the notice to the person to whom the gratuity is payable and to the controlling authority.
  • The employer shall arrange to pay the amount of gratuity within 30 days of the date of its becoming payable to the person to whom it is payable
  • If such amount is not payable within due time, the employer shall pay from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at the rate of 10% per annum.

Payment of Gratuity 1972 Short Note Question And Answers

Question 1. Write a short note on the Protection of Gratuity;
Answer:

No gratuity payable under the Payment of Gratuity Act, 1972, and no gratuity payable to an employee employed in any establishment, factory, mine, oil field, plantation, port, Railway company, or shop exempted u/s 5 shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court. [Sec. 13, The Payment of Gratuity Act, 1972]

Question 2. Write a short note on the Forfeiture of Gratuity.
Answer:

Forfeiture of Gratuity :

Gratuity can be forfeited for any employee whose services have been terminated for any act of violence, wilful omission, or negligence causing damage or destruction to the property belonging to the employer.

  • It can also be forfeited for any act which constitutes an offense involving moral turpitude.
  • Where services have not been terminated on any of the above grounds, the employer cannot withhold gratuity due to the employee.
  • Where the land of the employer is not vacated by the employee, gratuity cannot be withheld.

Payment of Gratuity 1972 Descriptive Question And Answers

Question 1. State the nature of the dispute as to gratuity that may be decided by the Controlling Authority.
Answer:

The Controlling Authority may decide the following disputes:

  • Dispute as to the amount of gratuity payable to an employee under the Payment of Gratuity Act.
  • Dispute as to the admissibility of any claim of, or about an employer for payment of gratuity.
  • Dispute as to the person entitled to receive gratuity [Sec. 7(4)(a)].

Question 2. Under what circumstances the gratuity payable to an employee be forfeited?
Answer:

Forfeiture of Gratuity:

The legal provisions relating to the forfeiture of gratuity are contained In Section 4 (6) of the Payment of Gratuity Act, 1972, and may be summed up as under:

1. The gratuity payable to an employee shall be forfeited where the services of an employee have been terminated due to any act, willful omission or negligence on the part of the employee and the employee’s such act, etc. has caused:

  1. damage or loss to the property belonging to the employer, or
  2. destruction of the property belonging to the employer.

In this case, the gratuity payable to the employee shall be forfeited to the extent of the damage or loss caused to the employer’s property due to the employee’s act, omission, or negligence [Section 4(6)(a)]

2. The gratuity payable to an employee may be forfeited:

  1. If the services of such an employee have been terminated for his riotous or disorderly conduct or any other Act of violence on his part, or
  2. If the services of such employee have been terminated for any Act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.

In the above-stated cases, the gratuity payable to an employee may be forfeited wholly or partially. [Section 4(6)(b)]

The following judicial decisions are important to note in connection with the forfeiture of gratuity by the employer:

  • The right of the employer to forfeit the amount of gratuity of an employee whose services were terminated due to any Act, willful omission, or negligence causing any damage to the employer’s property is limited to the extent of damage and the proof of such damage. [Permali Wallance Ltd. Vs. State of Nl.P. (1996) ULLJ 515 (MP)].
  • The right of the employer to forfeit the gratuity is available only in the circumstances enumerated in Section 4(6), as stated in points (1) and (2)above, and is not available in any other circumstances as the employee’s right to gratuity is the statutory right. [K.C.Mathew Vs. Plantation Corpn. of Kerala Ltd. (2001) LLR 123 (ker.)].
  • The refusal by the employees to surrender land belonging to the employer is not a ground for forfeiture of gratuity. [Travancore Plywood Industries Ltd. Vs. Regional Joint Labour Commissioner, (1996) IILLJ 85 (ker.)].
  • in case of termination of services on account of. offence involving moral turpitude the gratuity may be wholly or partially forfeited. In this regard, the Karnataka High Court has held that when an offense of theft under the law involves moral turpitude, gratuity stands wholly forfeited given Section 4 (6) of the Act. [Bharat Gas Mines Ltd. Vs. Regional Labour Commissioner. (Central) (1987) 70 FJR 11 (Karnataka)].

Question 3. Explain how the gratuity payable to employees in a seasonal establishment is calculated under the Payment of Gratuity Act, 1972. The state also the maximum amount of gratuity payable under the Act.
Answer:

Seasonal Establishments:

In the case of seasonal establishment, the employees can be classified into 2 groups.

  1. Those who work throughout the year and
  2. Those who work only during the season.

The former is entitled to get the gratuity at the rate of 15 days’ wages for every completed year of service or part thereof more than 6 months. The latter are entitled to receive gratuity at the rate of 7 days for each season. Section 4(3) provides that the amount of gratuity payable to an employee shall not exceed? 20 lakhs.

Question 4. Discuss the procedure for determination of the amount of gratuity as per Section 7 of the Payment of Gratuity Act, 1972.
Answer:

Section 7 prescribes the procedure for the determination of the amount of gratuity. As soon as the gratuity becomes payable, the employer shall, whether the employee has made an application or not, determine the amount of gratuity. Then he is to give notice to the person to whom the gratuity is payable and also to the Controlling Authority, specifying the amount of gratuity so determined. The notice shall be in Form L.

  • The employer shall arrange to pay the amount of gratuity within 30 days from the date of its becoming payable to the person to whom it is payable. If it is not paid within the stipulated period the employer is liable to pay interest at the rate of 10% per annum. If the delay in payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment, on this ground, no interest is payable.
  • If the claim for gratuity is not found admissible, issue a notice in Form ‘M’ to the applicant employee, nominee, or legal heir, as the case may be, specifying the reasons why the claim for gratuity is not considered admissible. In either case, a copy of the notice shall be endorsed to the controlling authority.

Question 5. Mr. Gill, an employee of M/s Sonabheel Tea Ltd., continued to occupy the quarter of the company for eight months after superannuation, the company decided to forfeit the amount of gratuity Mr. Gill. Examine the decision taken by the company to forfeit the amount of gratuity in the light of the Payment of Gratuity Act, 1972.
Answer:

The gratuity of an employee, whose services have been terminated for any Act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer, can be forfeited to the extent of the damage or loss so caused.

The gratuity payable to an employee may be wholly or partially forfeited:

  1. if the services of such employee have been terminated for his riotous or disorderly conduct or any other Act of violence on his part or
  2. if the services of such employee have been terminated for any Act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.

It is not a valid ground forfeiture of the entire gratuity. In the above case, the company is entitled to charge the quarter rent as per rules and after adjustment of such charges, Mr. Gill is entitled to receive the balance gratuity.

Question 6. Discuss the procedure for determination of the amount of gratuity.
Answer:

Amount of Gratuity:

Section 7 of the Payment of Gratuity Act, 1972 provides the procedure for the determination of the amount of gratuity. As soon as the gratuity becomes payable the employer shall whether the employee has made an application or not, determine the amount of gratuity.

  • Then he is to give notice to the person to whom the gratuity is payable and also to the controlling authority) specifying the amount of gratuity so determined.
  • The employer shall arrange to pay the amount of gratuity within 30 days from the date of its becoming payable to the person to whom it is payable. If it is not paid within the stipulated period the employer is liable to pay interest at the rate of 10 % per annum.
  • If the delay in payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment, on this ground, no interest is payable.
  • If the claim for gratuity is not found admissible, issue a notice in Form ‘M’ to the applicant employee, nominee, or legal heir, as the case may be, specifying the reasons why the claim for gratuity is r.ot considered admissible. In either case, a copy of the notice shall be endorsed to the controlling authority.

Payment of Gratuity 1972 Practical Question And Answers

Question 1. Comment on the following based on legal provisions Mr. S.K. Paul employed in seasonal establishment and was not employed throughout the year claimed gratuity at the rate of 15 days wages for each year of service. But Employer refused to pay any Gratuity to employees of seasonal establishments.
Answer:

Employer shall pay gratuity at the rate of seven days wages for each season to employees who are employed in a seasonal establishment and who are not so employed throughout the year. Wages will include Basic and D.A. Hence Mr. Paul is entitled to Gratuity.

Question 2. ABC Pvt. Ltd. was incorporated on 2nd January 1980 carrying on business from the date of incorporation employing 50 persons. Due to loss, the number of employees reduced to five w.e.f. 02.06.2011. Mr. ‘A’ who retired on 31.05.2013 was refused gratuity on the ground that the total number of employees is below 10 (ten). The employer was justified?
Answer:

  • The Payment of Gratuity Act, of 1972 was enacted to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops, or other establishments who have rendered a minimum of five years of continuous service with the establishment employing ten or more persons.
  • Every employee, other than apprentice irrespective of his wages is entitled to receive gratuity after he has rendered continuous service for five years or more. Gratuity is payable at the time of termination of his service either
    1. on superannuation
    2. retirement or resignation or
    3. death or disablement due to accident or disease. Termination of services includes retrenchment.
  • However, the condition of five years of continuous service is not necessary if services are terminated due to death or disablement. In case of death of the employee, the gratuity payable to him is to be paid to his nominee, and if no nomination has been made, then to his heirs.
  • If the Act has become applicable to any establishment, it will continue to be applicable even if the number of persons employed falls below ten or any number as specified by the Central Government.
  • All the employees irrespective of salary or status are entitled to the payment of gratuity on completion of 5 years of service, in case of death or disablement there is no minimum eligibility period.

In light of the above the employer is not justified in refusing gratuity to A.

Question 3. Anurag was an employee of Coffee Estate Ltd. The whole undertaking of Coffee Estate Ltd. was taken over by a new company Asian Coffee Ltd. The Service of Anurag remained continuous in the new company. After serving for one year, Anurag met with an accident and became permanently disabled. Anurag applied to the new company for the payment of gratuity. The company Asian Estate Ltd. refused to pay gratuity because Anurag has served only for a year in the company. Examine the validity of the refusal of the company in the light of the provisions of the Payment of Gratuity Act, 1972.
Answer:

According to Section 4(1) of the Payment of Gratuity Act,1972, gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years or on his superannuation or, on his retirement or resignation or his death or disablement due to accident or disease.

  • The condition of the completion of five years of continuous service is not essential in case of the termination of the employment of any employee due to death or disablement for this section.
  • Disablement means such disablement as incapacities of an employee for the work that he was capable of performing before the accident or disease resulting in such disablement.
  • The given problem fulfills all the above requirements as stated.
  • Therefore, Anurag is entitled to recover gratuity after becoming permanently disabled, and continuous service of five years is not required in this case.
  • Hence, the company cannot refuse to pay gratuity on the ground that he has served only for a year.

Question 4. Mr. Mahavir joined the company on 25.05.1987 and retired on 30.11.2012 when his salary was INR 70,000 per month. He also received a conveyance allowance of INR 20,000 per month and an average overtime of INR 1,000 per month, calculated as the amount of gratuity.
Answer:

He superannuated on 30.11.2012

Joined on 25.05.1987

He is entitled to 25 years 6 months + 5 = 26 years

Amount of gratuity =

⇒ \(\frac{15 \times 26 \times 70,000}{26}\)

= INR 10,50,000

The maximum ceiling is INR 20,00,000

His gratuity is INR 10,50,000

Question 5. Ram is employed in Sweet Sugar factory, a seasonal establishment. The factory was in operation for four months only during the financial years 2011-12. Ram was not in continuous service during this period. However, he has worked only 60 days. Referring to the provisions of The Payment of Gratuity Act, 1972, decide whether Ram is entitled to gratuity payable under the Act. Would your answer be the same in case Ram works for 100 days?
Answer:

For entitlement of gratuity, one must work for at least 75% of the days on which the establishment was open and in operation. The factory was in operation for 120 days.

  • One must work for 75% of 120 therefore 90 days to claim gratuity. Ram is not entitled to gratuity, since he has worked for less than 75% of the number of days on which the establishment was in operation during such period.
  • If Ram had worked for 100 days, then he would have been entitled to gratuity since the number of days on which he would have worked, in that case, would have been 75% or more of the number of days on which the establishment was in operation.

6. Ajit an employee of Supertech Copper Ltd., continued to occupy the quarter of the company for eight months after superannuation, the company decided to forfeit the amount of gratuity of Ajit. Examine the decision taken by the company to forfeit the amount of gratuity in the light of the Payment of Gratuity Act, 1972.
Answer:

The gratuity of an employee, whose services have been terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer, can be forfeited to the extent of the damage or loss so caused.

The gratuity payable to an employee may be wholly or partially forfeited:

  • If the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part or
  • If the services of such an employee have been terminated for any act. which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.
  • It is not a valid ground for the forfeiture of the entire gratuity. In such a case, the company is entitled to charge the quarter rent as per rules and after adjustment of such charges, Ajit is entitled to receive the balance gratuity

Question 7. Deepak is employed in Assam Coffee Estate Ltd., a seasonal establishment. The factory was in operation for four months only during the financial year 2018-19. Deepak was not in continuous service during this period. However, he has worked only 60 days. Referring to the provisions of The Payment of Gratuity Act, 1972, decide whether Deepak is entitled to gratuity payable under the Act. Would your answer be the same in case Deepak works for 100 days? (5 marks)
Answer:

For entitlement of gratuity, one must work for at least 75% of the days on which the establishment was open and in operation. The factory was in operation for 120 days.

One must work for 75% of 120 – 90 days to claim gratuity. Deepak is not entitled to gratuity, since he has worked for less than 75% of the number of days on which the establishment was in operation during such period.

If Deepak had worked for 100 days, then he would have been entitled to gratuity since the number of days on which he would have worked, in that case, would have been 75% or more of the number of days on which the establishment was in operation.

Question 8. M/s TNT Pvt. Ltd. was incorporated on 2nd March 2009 carrying on business from the date of incorporation employing 70 persons. It’s one of the most renowned companies in the country.

There have been certain turn of events recently and the company has started to face challenges since mid of the year of 2020 due to the COVID-19 pandemic. Like most parts of the world this company was also badly hit by this pandemic, A larger number of companies in India were affected directly or indirectly by this pandemic and complete lockdown. Due to this pandemic and losses, the number of employees reduced to 7 w.e.f. 15-07-2020 by Ms. TNT Pvt. Ltd. Mr. Jain who retired on 30-12-2020 was refused gratuity on the ground that the total number of employees is below 10. Another senior employee of the company Mr. T. K. Singhania retired on 31-12-2020. Mr. Singhania continued to occupy the quarter of the company for eight months after superannuation and as a result, the company decided to forfeit the amount of gratuity of Mr. Singhania. Mr. Arun Bharat an employee of the company was frustrated with his work and willfully caused damage to a machine. M/s TNT Pvt Ltd. had to spend? 95000 to get the machine in working condition and due to this damage Ms. TNT Pvt. Ltd. withholds the gratuity of Mr. Arun Bharat. On the other hand, one employee Mr. Jain retired on 30-11-20 was refused gratuity on the ground that the total number of employees is below ten. Ms TNT Pvt. Ltd. has a separate factory which is a seasonal establishment. Mr. Barun Bharat brother of Mr. Arun Bharat is employed in this factory. The factory was in operation for four months only during the financial year: 2020-21 due to the COVID-19 pandemic. Mr. Barun Bharat was not in continuous service during this period and he has worked only 60 days.

Examine the validity of the decision taken by Ms. TNT Pvt. Ltd. to forfeit the amount of gratuity of Mr. Singhania in the light of the Payment of. Gratuity Act, 1972.
Answer:

  1. The gratuity of an employee, whose services have been terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer, can be forfeited to the extent of the damage or loss so caused.
  2. The gratuity payable to an employee may be wholly or partially forfeited:
    1. If the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part or.
    2. If the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.

Hence, it is not a valid ground for the forfeiture of the entire gratuity. In such case, the company is entitled to charge the quarter rent as per rules, and after adjustment of such charges, (Mr. Singhania is entitled to receive the balance amount of gratuity).

Question 9. M/s TNT Pvt. Ltd. was incorporated on 2nd March 2009 carrying on business from the date of incorporation employing 70 persons. It’s one of the most renowned companies in the country. There have been certain turn of events recently and the company has started to face challenges since mid of the year of 2020 due to the COVID-19 pandemic. Like most parts of the world, this company was also badly hit by this pandemic. A larger number of companies in India were affected directly or indirectly by this pandemic and complete lockdown. Due to this pandemic and losses, the number of employees reduced to 7 w.e.f. 15-07-2020 by Ms. TNT Pvt. Ltd. Mr. Jain who retired on 30-12-2020 was refused gratuity on the ground that the total number of employees is below 10. Another senior employee of the company Mr.T.K.Singhania retired on 31-12-2020. Mr. Singhania continued to occupy the quarter of the company for eight months after superannuation and as a result, the company decided to forfeit the amount of gratuity of Mr. Singhania. Mr. Arun Bharat an employee of the company was frustrated with his work and willfully caused damage to a machine. Ms TNT Pvt Ltd. had to spend? 95000 to get the machine in working condition and due to this damage Ms. TNT Pvt. Ltd. withheld the gratuity of Mr. Arun Bharat. On the other hand, one employee Mr. Jain retired on 30-11 -20 was refused gratuity on the ground that the total number of employees was below ten. Ms TNT Pvt. Ltd. has a separate factory which is a seasonal establishment. Mr. Barun Bharat brother of Mr. Arun Bharat is employed in this factory. The factory was in operation for four months only during the financial year: 2020-21 due to the COVID-19 pandemic. Mr, Barun Bharat has not been in continuous service during this period and he has worked only 60 days. Examine the validity of the decision taken by Ms. TNT Pvt. Ltd. to withhold the amount of gratuity of Mr. Arun Bharat in light of the Payment of Gratuity Act,1972.
Answer:

The Employer cannot withhold or forfeit the gratuity of Mr. Arun Bharat since his services were not terminated for the damages caused by the worker as per the Payment of Gratuity Act, 1972.

Question 10. M/s TNT Pvt. Ltd. was incorporated on 2nd March 2009 carrying on business from the date of incorporation employing 70 persons. It’s one of the most renowned companies in the country.

There have been certain turn of events recently and the company has started to face challenges since mid of the year of 2020 due to the COVID-19 pandemic. Like most parts of the world, this. the company was also badly hit by this pandemic. A larger number of companies in India were affected directly or indirectly by this pandemic and complete lockdown. Due to this pandemic and losses, the number of employees reduced to 7 w.e.f. 15-07-2020 by Ms. TNT Pvt. Ltd. Mr. Jain who retired on 30-12-2020 was refused gratuity on the ground that the total number of employees is below 10. Another senior employee of the company Mr. T. K. Singhania retired on 31-12-2020. Mr. Singhania continued to occupy the quarter of the company for eight months after superannuation and as a result, the company decided to forfeit the amount of gratuity of Mr. Singhania. Mr. Arun Bharat an employee of the company was frustrated with his work and willfully caused damage to a machine. Ms TNT Pvt Ltd. had to spend? 95000 to get the machine in working condition and due to this damages M/s TNT Pvt. Ltd. Withheld the gratuity of Mr. Arun Bharat. On the other hand, one employee Mr. Jain retired on 30-11-20 was refused gratuity on the ground that the total number of employees is below ten. Ms TNT Pvt. Ltd. has a separate factory which is a seasonal establishment. Mr. Barun Bharat brother of Mr. Arun Bharat is employed in this factory. The factory was in operation for four months only during the financial year: 2020-21 due to the COVID-19 pandemic. Mr. Barun Bharat was not in continuous service during this period and he has worked only 60 days. From the above decide whether Mr. Barun Bharat is entitled to claim gratuity under the provisions of the Payment of Gratuity Act,1972
Answer:

  • In the above case: For entitlement of gratuity one must work for at least 75% of the days on which the establishment was open and in operation. The factory was in operation for 120 days.
  • One must work for 75% of 120 – 90 days to claim gratuity.
  • Mr. Barun Bharat is not entitled to gratuity, since he has worked for less than 75% of the number of days on which the establishment was in operation during such period.

Question 11. M/s TNT Pvt. Ltd. was incorporated on 2nd March, 2009 carrying on business from the date of incorporation employing 70 persons. It’s one of the most renowned companies in the country.

There have been certain turn of events recently and the company has started to face challenges since mid of the year of 2020 due to the COVID-19 pandemic. Like most parts of the world, this company was also badly hit by this pandemic. A larger number of companies in India were affected directly or indirectly by this pandemic and complete lockdown. Due to this pandemic and losses, the number of employees reduced to 7 w.e.f. 15-07-2020 by Ms. TNT Pvt. Ltd. Mr. Jain who retired on 30-12-2020 was refused gratuity on the ground that the total number of employees is below 10. Another senior employee of the company Mr. T. K. Singhania retired on 31-12-2020. Mr. Singhania, continued to occupy the quarter of the company for eight months after superannuation and as a result, the company decided to forfeit the amount of gratuity of Mr. Singhania. Mr. Arun Bharat an employee of the company was frustrated with his work and willfully caused damage to a machine. Ms TNT Pvt Ltd. had to spend? 95000 to get the machine in working condition and due to this damage Ms. TNT Pvt. Ltd. withheld the gratuity of Mr. Arun Bharat. On the other hand, one employee Mr. Jain retired on 30-11-20 was refused gratuity on the ground that the total number of employees is below ten. Ms TNT Pvt. Ltd. has a separate factory which is a seasonal establishment. Mr. Barun Bharat brother of Mr. Arun Bharat is employed in this factory. The factory was in operation for four months only during the financial year: 2020-21 due to the COVID-19 pandemic. Mr. Barun Bharat was not in continuous service during this period and he has worked only 60 days. Examine the validity of the decision taken by Ms. TNT Pvt. Ltd. for Mr. Jain to refuse to pay the gratuity since the number of employees was reduced to seven w.e.f. 15-07-20 under the provisions of the Payment of Gratuity Act, 1972.
Answer:

Payment of Gratuity Act states that a shop or establishment to which this Act has become applicable shall continue to be governed by this Act despite persons employed therein at any time it has become so applicable falls below ten. Therefore TNT Pvt. Ltd. cannot refuse payment of gratuity to Mr. Jain.

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