Kumar Rajaratnam
1. Writ Appeal Nos. 3602 of 1997 and 4960 of 1999 have been filed by the Union of India aggrieved by the payment of gratuity to the employees who had resigned from service on the ground that as per Rule 26 of the Central Civil Services (Pension) Rules, 1972, resignation from service unless it is allowed to be withdrawn in the public interest by the Appointing Authority, entails forfeiture of past service. Since both the writ petitions raise common question of law, they have been taken up together and a common order is passed in these writ appeals.
2. The writ petitioner in Writ Appeal No. 3602 of 1997 was an Ex-Military Pensioner appointed in the Controllerate of Quality Assurance, Bangalore on 23-8-1982 and submitted his resignation on 12-12-1990 which was accepted by the Management on 31-5-1990. He had rendered seven years and nine months of service in the said post.
3. The petitioner in the Writ Appeal No. 4960 of 1999 was appointed as Office Assistant in Telecom Department, Bellary. He was appointed on 6-1-1981 and resigned on 22-6-1988 after putting in service of seven years five months and fifteen days.
4. Both the employees filed application before the authority constituted under the Payment of Gratuity Act, 1972 (hereinafter referred to as 'the Act'). In one case namely, Writ Petition No. 23365 of 1989 the employee was the beneficiary of an award under the provisions of the Act. This was confirmed by the learned Single Judge in Writ Petition No. 26202 of 1992. Aggrieved by the order of the learned Single Judge, the Central Government has preferred this Writ Appeal No. 4960 of 1999 and it is before us. In the other case namely, the petitioner in Writ Petition No. 26202 of 1992 moved the authorities under the provisions of the Act. Ultimately, the authority, in appeal, held that the employee is entitled to gratuity. The learned Single Judge dismissed both the writ petitions holding that the employee is entitled to gratuity under the provisions of the Act. Aggrieved by the orders passed by the learned Single Judge in both the writ petitions the Union of India is in appeal before us.
5. Heard Mr. Dinesh Kumar and Mr. Ashok Haranahalli, learned Senior Central Government Standing Counsel for the Union of India and Mr. Narayana Bhat and Smt. Manjula R. Kamadolli for the employees.
6. The learned Counsels for the appellants submitted that the learned Single Judge failed to note that Rule 26(1) of the Central Civil Services (Pension) Rules. It reads as follows:
'Forfeiture of service or resignation.--Resignation from a service or a post, unless it is allowed to the withdrawn in the public interest by the Appointing Authority, entails forfeiture of past service'.
It was strenuously submitted that if an employee of the Central Government resigns from service there shall be forfeiture of past service and therefore the employee would not be entitled to payment of gratuity. Support was sought to be invoked by Mr. Dinesh Kumar by making at reference to Section 2(e) of the Act. It was submitted by the Senior Counsel for the Central Government that a person is not an employee under the Act if he holds a post under the Central Government and is governed by any other Act or Rules providing for payment of gratuity Section 2(e) of the Act reads as follows:
' 'Employee' means any person (other than an apprentice) employed on wages in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semiskilled, or unskilled manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity'.
(emphasis supplied)
The further submission of Mr. Dinesh Kumar was that if a person has forfeited his service on resignation under Rule 26 of the Central Civil Services (Pension) Rules, he would not be entitled to gratuity.
7. What was forgotten was Rule 49 of the Central Civil Services (Pension) Rules. Rule 49 contemplates that even if a person retires before completing qualifying service of ten years, the amount of service gratuity shall be calculated at the rate of half month's emoluments for every completed six monthly period of qualifying service.
8. Hypertechnical objection was raised by the appellants stating that Rule 49 only contemplates retirement but not resignation. Rule 49(1) reads as follows:
'In the case of Government servant retiring in accordance with the provisions of these rules before completing qualifying service of ten years, the amount of service gratuity shall be calculated at the rate of half month's emoluments for every completed six monthly period of qualifying service'.
Undoubtedly, Rule 26 must be held to be subservient to Rule 49. This is the only harmonious way of looking at both the rules. Rule 26(1), in our view must be read down to give a harmonious meaning to Rule 49(1) of the Rules.
9. The Supreme Court had an occasion to deal with a similar situation. The question before the Supreme Court was whether the beneficial Legislation of the Payment of Gratuity Act will prevail over the Employees' Provident Fund and Miscellaneous Act with respect to payment of gratuity. The Supreme Court held that the Payment of Gratuity Act being a beneficial legislation shall prevail over any other legislation with respect to payment of gratuity.
10. The Supreme Court in the case of Balbir Kaur and Anr. v. Steel Authority of India Limited and Ors., : (2000)IILLJ1SC pronounced as follows:
''Para 15. It is upon consideration of the above noted provisions of Section 4, it was contended that question of compulsory depositing of the gratuity amount does not and cannot arise. We shall come back to the deposit of the Provident Fund but as regards the gratuity amount, be it noted that there is a mandate of the statute that gratuity is to be paid to the employee on his retirement or to his dependants in the event of his early death - the introduction of Family Pension Scheme by which the employee is compelled to deposit the gratuity amount, as a matter of fact runs counter to this beneficial piece of legislation (Act of 1972), The statutory mandate is unequivocal and unambiguous in nature and runs to the effect that the gratuity is payable to the heirs or the nominees of the concerned employees but by the introduction of the Family Pension Scheme, this mandate stands violated and as such the same cannot but be termed to be illegal in nature. We do find some substance in the contention as raised, a mandatory statutory obligation cannot be trifled with by adaptation of a method which runs counter to the statute. It does not take long to appreciate the purpose for which this particular Family Pension Scheme has been introduced by deposit of the provident fund and the gratuity amount and we are not expressing any opinion in regard thereto but the fact remains that statutory obligation cannot be left high and dry on the whims of the employer irrespective of the factum of the employer being an authority within the meaning of Article 12 or not'.
11. The Division Bench of the Bombay High Court in United India Insurance Company Limited v. H.K. Khatau and Ors., 1984 Lab. I.C. 33 (Bom.): 1984-I-LLJ-448 (Bom.) took the view that in the absence of provisions of Payment of Gratuity Act under the service conditions an employee can still claim gratuity under the Act. The reliance was also placed on a judgment of the Rajasthan High Court in Municipal Board, Gangapur v. Controlling Authority under Payment of Gratuity Act, Bhilwara, 1987 Lab. I.C. 575 (Raj.) : (1987)1 LLN 663 (Raj.). The Court held that Section 14 of the Act overrides all other enactments. Paras 7 and 8 reads as follows;
'7. Next question that arises is that when rules have been framed for payment of gratuity to Municipal employees then how this Gratuity Act will be applicable. Mr. Lodha, learned Counsel for the petitioner submits that in view of the specific rules for payment of gratuity, these Rules of 1969 as referred to above shall cover the case of petitioner and not the Gratuity Act. This can be answered by referring to Section 14 of the Act. Section 14 of the Act very clearly lays down that this Act will have overriding effect on all other laws, Section 14 reads as under.--
'Act to override other enactments etc.--The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act'. 8. Section 14 overrides the other rules or Act made on the subject by virtue of these provision. Rule of 1969 will have no role to play, so far as they are inconsistent with the Act. Thus, the Payment of Gratuity Act will cover the municipalities for the payment of gratuity and not the Rules of 1969. Moreover, this is social legislation and it should be given more extensive application. Thus, this submission of Mr. Lodha has no force and rejected. I hold that the Payment of Gratuity Act is applicable to the Municipalities and in this view of matter, the Appellate Authority has rightly upheld the order of the Controlling Authority of granting a sum of Rs. 3,007/- to the respondent as an arrear of the gratuity under this Act'.
12. Mr. Narayana Bhat, learned Counsel and Smt. Manjula R. Kamadolli appearing for the employee, respondent 1 have relied on a judgment of the Supreme Court in the case of State of Punjab v. The Labour Court, Jullundur and Ors., : (1981)ILLJ354SC which reads as follows:
'5. Having regard to the definition of 'superannuation' in Section 2(r) of the Act, it is clear that the case is not one under Clause (a). Nor, admittedly, is it a case which falls under Clause (c). As regards Clause (b), it is not a case of resignation. The only question is whether it can be regarded under Clause (b) as a case of retirement. The expression 'retirement' has been defined by Section 2(q) to mean 'termination of the service of an employee otherwise than on superannuation'. The definition is framed in the widest terms. Except for superannuation, any termination of service would amount to 'retirement' for the purposes of the Act. Retrenchment is a termination of service. It is immaterial that the termination is occasioned by the need to discharge surplus labour. That retrenchment implies the discharge of surplus labour was explained in Hariprasad Shivshankar Shukla and Anr. v. A.D. Divelkar and Ors., AIR 1957 SC 121 : 1957-I-LLJ-243 (SC). Nonetheless, it amounts to termination of service. We are of opinion that the retrenchment of the employee respondents falls within the scope of Section 4(1) of the Payment of Gratuity Act, and the employee respondents are therefore entitled to gratuity under that provision.
6. The third contention raised by the appellant is that the employee respondents were not entitled to apply under Section 33-C(2) of the Industrial Disputes Act, 1947 for payment of the gratuity, and should have, if at all, applied under the provisions of the Payment of Gratuity Act. It is urged that the Payment of Gratuity Act is a self-contained Code incorporating all the essential provisions relating to payment of gratuity which can be claimed under that Act, and its provisions impliedly exclude recourse to any other statute for that purpose. The contention has force and must be accepted. A careful perusal of the relevant provisions of the Payment of Gratuity Act shows that Parliament has enacted a closely knit scheme providing for payment of gratuity. A Controlling Authority is appointed by the appropriate Government under Section 3, and Parliament has made him responsible for the administration of the entire Act. In what event gratuity will become payable and how it will be quantified are detailed in Section 4. Section 7(1) entitles a person eligible for payment of gratuity to apply in that behalf to the employer. Under Section 7(2), the employer is obliged, as soon as gratuity becomes payable and whether an application has or has not been made for payment of gratuity, to determine the amount of gratuity and inform the person to whom the gratuity is payable specifying the amount of gratuity so determined. He is obliged, by virtue of the same provision, to inform the Controlling Authority also, thus ensuring that the Controlling Authority is seized at all times of information in regard to gratuity as it becomes payable. If a dispute is raised in regard to the amount of gratuity payable or as to the admissibility of any claim to gratuity, or as to the person entitled to receive the gratuity, Section 7(4)(a) requires the employer to deposit with the Controlling Authority such amount as he admits to be payable by him as gratuity. The Controlling Authority is empowered, under Section 7(4)(b), to enter upon an adjudication of the dispute, and after due inquiry, and after giving the parties to the dispute a reasonable opportunity of being heard, he is required to determine the amount of gratuity payable. In this regard, the Controlling Authority has all the powers as are vested in a Court while trying a suit under the Code of Civil Procedure, 1908 in respect of obtaining evidentiary material and the recording of evidence. The amount deposited by the employer with the Controlling Authority as the admitted amount of gratuity will be paid over by the Controlling Authority to the employee or his nominee or heir. Section 7(7) provides an appeal against the order of the Controlling Authority under Section 7(4) to the appropriate Government or such other authority as may be specified by the appropriate Government in that behalf. The appropriate Government or the Appellate Authority is empowered under Section 7(8), after giving the parties to the appeal a reasonable opportunity of being heard, to confirm, modify or reverse the decision of the Controlling Authority. Where the amount of gratuity payable is not paid by the employer within the prescribed time, the Controlling Authority is required by Section 8, on application made to it by the aggrieved person, to issue a certificate for that amount to the Collector. The Collector, thereupon, is empowered to recover the amount of gratuity, together with compound interest thereon at the rate of nine per cent per annum from the date of expiry of the prescribed time, as arrears of land revenue, and pay the same to the person entitled thereto.
7. It is apparent that the Payment of Gratuity Act enacts a complete Code containing detailed provisions covering ail the essential features of a scheme for payment of gratuity. It creates the right of payment of gratuity, indicates when the right will accrue, and lays down the principles for quantification of the gratuity. It provides further for recovery of the amount, and contains an especial provision that compound interest at nine per cent per annum will be payable on delayed payment. For the enforcement of its provisions, the Act provides for the appointment of a Controlling Authority, who is entrusted with the task of administering the Act. The fulfilment of the rights and obligations of the parties are made his responsibility, and he has been invested with an amplitude of power for the full discharge of that responsibility. Any error committed by him can be corrected in appeal by the appropriate Government or an Appellate Authority particularly constituted under the Act.
8. Upon all these considerations, the conclusion is inescapable that Parliament intended that proceedings for payment of gratuity due under the Payment of Gratuity Act must be taken under that Act and not under any other. That being so, it must be held that the applications filed by the employee respondents under Section 33-C(2) of the Industrial Disputes Act did not lie, and the Labour Court had no jurisdiction to entertain and dispose of them. On that ground, this appeal must succeed'.
(emphasis supplied)
13. The Supreme Court also held that a regulation of a company providing for deduction from pension of the amount of gratuity paid under the Act is invalid (See: Som Prakask Rekhi v. Union of India and Anr, AIR 1981 SC 212. Section 14 reads as follows.--
'Act to override other enactments, etc.--The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act'.
Section 14 clearly states that the Act has overriding effect and no other Act or Rules shall have any effect which is inconsistent with the Act,
14. There is hardly any scope for this Court in the light of the law laid down by the Supreme Court to interfere with the order of the learned Single Judge.
15. The writ appeals stand dismissed. No order as to costs.
16. In view of the delay in making the payments, the appellants are directed to pay the amount as stipulated by the authority with interest at 8% per annum from the date the payment is due till the date of payment. The payment shall be made within two months from the date of receipt of this judgment.
Sri P.S. Dinesh Kumar, Central Government Standing Counsel is permitted to file his memo of appearance within 2 weeks.