Hima Kohli, J.
1. By this common order and judgment, this Court proposes to dispose of all the eight petitions. The present petitions are directed against the impugned order dated 21st March, 2005 passed by the Appellate Authority under the Payment of Gratuity Act, 1972 (hereinafter referred to as 'the Gratuity Act') dismissing the appeals of the petitioners and upholding the order dated 8th January, 2004 passed by the Controlling Authority rejecting the claim of the petitioners for payment of gratuity under the Gratuity Act on the ground that they were covered under the CCS (Pension) Rules 1972 (hereinafter referred to as 'the Rules'). The petitioners have sought a writ of mandamus to be issued to the respondent directing it to pay to the petitioners, the differential amount payable under the provisions of the Act, after deducting the amount of gratuity already paid under the Rules, along with interest.
2. The facts of the case of all the petitioners are common, except for the fact that the petitioners in WP(C) Nos. 17888, 17895 & 17914/2005 retired from service of the MCD in the year 1996, while the petitioners in WP(C) Nos. 17894, 17899, 20493, 20546 & 20562/2005 retired from service of the Delhi Jal Board in the years 2001-2002. For the sake of convenience, only the facts of W.P.(C) 17888/2005 are being stated in brief. In the year 1961, the petitioner was appointed in the service of the Municipal Corporation of Delhi/ Delhi Water Supply & Sewage Disposal undertaking, now Delhi Jal Board, the respondent herein (hereinafter referred to as 'DJB'). He retired from service on 31st July, 1996 after rendering service for about 35 years. On 28th August, 2003, the petitioner preferred an application under the Gratuity Act for payment of gratuity in accordance with law. As against the said application of the petitioner, the DJB filed a written statement before the Controlling Authority in which it was submitted that as the petitioner had received pension, gratuity and other retiral benefits as per the Rules, he was not entitled to payment of the difference of gratuity under the Gratuity Act. On 9th September, 2003, the DJB filed an affidavit stating inter alias that it had been granted exemption under Section 5(1) of the Act by the Competent Authority vide order dated 12th June, 2003.
3. The Controlling Authority, vide its order dated 8th January, 2004 dismissed the application of the petitioner by relying on the judgment of the Supreme Court in the case of DTC Retired Employees Association and Ors. v. DTC etc. reported as : (2001)IILLJ258SC . Against the aforementioned order of the Controlling Authority, the petitioner preferred an appeal before the Appellate Authority under Section 7(7) of the Gratuity Act, wherein it was submitted that the Controlling Authority had wrongly relied on the DTC's case (supra) as the facts of the said case were entirely different and, thereforee, the law as propounded therein was not applicable to the facts of the present case. The Appellate Authority passed the impugned order dated 21.3.2005 by which the order of the Controlling Authority was upheld on the ground that in the DTC case, the Supreme Court had decided that the employees cannot have the benefit of both, pension as well as gratuity, at the same time and that since in the present case, the petitioner had already received gratuity and other pensioner benefits under the Rules, he was not entitled to additional amounts of gratuity.
4. Learned Counsel for the petitioners stated that the impugned order is bad as it is based on a mis-appreciation of law and misapplication of a judgment of the Supreme Court. It was submitted that exemption from the application of the Gratuity Act which was available under the provision of Section 5(1) of the Gratuity Act, was granted to the DJB only on 12th June, 2003, thus raising a presumption that prior to the said date, the DJB was governed by the provisions of the Gratuity Act, and all the petitioners having got retired before 12th June, 2003, are entitled to the benefits under the said Act.
5. Learned Counsel for the petitioners argued that the Controlling Authority as well as the Appellate Authority erred in placing reliance on the DTC's case (supra), inasmuch as the ratio laid down in the said case is not applicable to the facts of the present case. It was stated that the difference between the said case and the present case is that in the said case, the DTC had introduced the Pension Scheme operated by the Life Insurance Corporation which provided an option to the employees to opt for a pension scheme, and the retired employees opting for the said scheme were requested to refund the amount of gratuity already received by them, with interest. Also, in the said case, at the time of exit from service, all the employees had received the amount of gratuity as per the provisions of the Gratuity Act, and pension never formed a part of their conditions of service. It was stated that it was in such a background of facts that the Supreme Court had held that there was no illegality or injustice in requiring the retired employees to refund the amount of gratuity before they could take the benefit under the pension scheme.
6. The sheet anchor of the arguments of the counsel for the petitioners is the judgment of the Supreme Court in the case of Municipal Corporation of Delhi v. Dharam Prakash Sharma and Anr. reported as (1998) 6 SCC 221. He argued that merely because the employees of the DJB were governed by the Rules, DJB would not be absolved of its duty to make payments to the petitioners under the Gratuity Act the same being more beneficial, the only caveat being that an employee cannot claim gratuity available under the Rules as well as under the Gratuity Act, so as to seek a double benefit. He also cited the said judgment to state that Section 14 of the Gratuity Act has an overriding effect and unless and until an exemption has been obtained by the concerned establishment under Section 5 of the Gratuity Act, which was not the case here, such an exemption having been obtained by DJB only after all the petitioners had retired, thereforee the petitioners are well entitled to the benefits under the Gratuity Act. It was emphasized that the petitioners are not seeking double payment, but are only pressing for the payment of the differential amount payable to them under the Gratuity Act, over and above what had already been received by them under the Rules. Heavy reliance was placed on the judgment in the case of M.C.D. (supra), for the reason that the DJB was initially a part of M.C.D. and it was canvassed that since M.C.D. is the parent department of the respondent thereforee the ratio of said case would hold good as against the DJB also.
7. While comparing the relevant provisions of the Gratuity Act and the Rules, it was pointed out that gratuity payable under the Gratuity Act was more favorable to the employees as compared to the gratuity payable under the Rules. As per the Gratuity Act, the cap on gratuity was much higher than the cap under the Rules and also, while gratuity under the Gratuity Act is calculated on the basis of 1/26 x monthly wages, gratuity under the Rules is calculated on the basis of 1/30 x monthly wages.
8. Refuting the arguments raised on behalf of the petitioners, counsel for the DJB stated at the very outset that the petitions filed by the petitioners are not maintainable and are liable to be dismissed, inasmuch as the provisions of the Gratuity Act are not applicable to the petitioners because of the exemption granted to the DJB from the operation of the provisions of the Gratuity Act under the provisions of Section 5(1). It was further submitted that no parity could be sought by the petitioners with the employees of the MCD and thus, the judgment rendered in the case of M.C.D. (supra) was of no assistance to the petitioners.
9. Counsel for the DJB urged that the provisions of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as 'the DMC Act') are not similar to those of the Delhi Water Board Act, 1998 (hereinafter referred to as 'the DWB Act') and that unlike the employees of MCD, the employees of the DJB are State Government employees and are governed by the CCS Rules. Emphasis was placed on the definition of the term 'Government' as provided under Section 2(o) of the DWB Act which has been defined as the Government of the National Capital Territory of Delhi. Reference was also made to the definition of the word 'Local Authority' under Section 2(s) of the aforesaid Act which included in its fold, the Municipal Corporation of Delhi, New Delhi Municipal Council, the Delhi Development Authority, the Delhi Cantonment Board, or any other succession body belonging to any of them and any other statutory authority performing municipal functions to state that the DJB was not included in the said definition and, thereforee, while the employees of the MCD are employees of the local authority, the employees of the DJB do not fall within the definition of 'Local Authority' and are thereforee Government servants. Reference was further made to the provisions of Section 51(3) and 52 of the DWB Act which deal with the appointment and discipline of the officers and employees of the DJB to state that by virtue of the said provisions of law, the DJB has the power to appoint its own employees and that the service rules as prescribed under the Rules and by the CCS (Classification, Control and Appeal) Rules, 1965 apply mutates mutants to all officers and employees of the DJB, and thereforee, the employees of the DJB are in no manner similarly placed as the employees of the Municipal Corporation of Delhi.
10. Counsel for the DJB further submitted that the word 'employee' as defined under Section 2(e) of the Gratuity Act, does not take in its fold any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by other Rules providing for the payment of gratuity, such as the petitioners herein. Reliance was also placed on the provision of Section 2(f) of the Gratuity Act which defines the term 'employer' to contend that the DJB is not covered under the said definition and as government employees are governed by the Rules, they are not entitled to receive gratuity under the Gratuity Act. In this background, it was argued that since the petitioners being employees of the DJB were Government employees, are governed by the Rules, thereforee the provisions of the Gratuity Act are not applicable to them.
11. It was also argued on behalf of the DJB that the application for gratuity filed by the petitioners under the Gratuity Act was itself bad and liable to be rejected on the ground of delay and laches, since Rule 7 of the Payment of Gratuity (Central) Rules, 1972 very clearly provides that an application in this respect has to made within 30 days from the date gratuity becomes payable to the employer, while in the present case, the petitioners applied for gratuity only in the years 2002-2003, though they had retired much earlier, between the years 1996-2002.
12. Rebutting the argument of the counsel for the DJB that the employees of the DJB are government employees, and thereforee the Gratuity Act is inapplicable to them, counsel for the petitioners placed reliance on the judgment of the Supreme Court rendered in the case of State of Punjab v. The Labour Court, Jullundur and Ors. reported as : (1981)ILLJ354SC to state that Section 1(3)(b) of the Act should not be permitted to be given a narrow meaning and that the statutory provisions of the DWB Act do not confer any such status upon the employees of the DJB and that the provision of Section 51 of the DWB Act to the effect that the condition of employment should be as far as possible, in terms of the service conditions of the government employees, does not automatically confer the status of government employees on the employees of the DJB.
13. Having heard the learned Counsels for the parties as also having perused the relevant provisions of the statutes and examined the judgments relied on by both the sides, in the first instance, it will be necessary to deal with the plea raised on behalf of the DJB that the petitioners are State Government employees. For the said purpose, it is necessary to refer to the provision of Section 511 of the DMC Act which deals with the manner in which the employees of bodies and local authorities whose functions are taken over by the Corporation are to be dealt with. The said provision is analogous to Section 46 of the DWB Act as the said provision deals with transfer of assets, liabilities and services. Sub-section (1) of Section 511 of the DMC Act stipulates that every officer and other employee of each of the bodies and local authorities specified in the Second Schedule shall be transferred to and become an officer or other employee of the Corporation and shall hold office by the same tenure, at the same remuneration and on the same terms and conditions of service as he would have held if the Corporation had not been established and shall continue to do so unless and until such tenure, remuneration and terms and conditions are duly altered by the Corporation. The first proviso to the aforesaid Sub-section further stipulates that the tenure, remuneration and terms and conditions of service of any such officer or other employee shall not be altered to his disadvantage without previous sanction of the Central Government.
14. It is relevant to note that the Second Schedule referred to in Section 511(1) of the DMC Act also includes the erstwhile Delhi Joint Water and Sewage Board. The DWB Act was created by the Government of National Capital Territory of Delhi and notified in the Gazette as Delhi Act 4 of 1998 to provide for and discharge the functions of water supply, sewerage and sewage disposal and drainage within the National Capital Territory of Delhi, which was a function being carried out earlier by the Municipal Corporation of Delhi. After the said Act came into force, the aforesaid task was assigned to the Delhi Water Board. Section 46(1)(c) of the DWB Act stipulates as under:
46. Transfer of assets, liabilities and services. - (1) From such date the Government may appoint by notification in the Official Gazette-
(c) All officers and employees of the Delhi Water Supply and Sewerage Disposal Undertaking and all such employees of the Municipal Corporation of Delhi who are engaged mainly in connection with water supply or sewerage disposal shall become employees of the Board with such designation and discharging such functions as the Board may determine and they shall hold office for the same tenure, and at the same remuneration and on the same terms and conditions, as they would have held if the Board, had not been established and shall continue to do so until such tenure and remuneration and terms and conditions are duly altered by the Board:
Provided that the tenure, remuneration and terms and conditions of service of any such officer or employee shall not be altered to his disadvantage without the previous approval of the Government:
Provided further that any services rendered by any such office or employee before the establishment of the Board shall be deemed to be services rendered under the Board.
15. Section 51 of the DWB Act deals with appointment of officers and employees. Sub-section (3) of Section 51 is relevant and is reproduced hereinbelow:
51. Appointment of officers and employees-
(1) x x x
(2) x x x
(3) Unless expressly provided to the contrary under this Act or rules made there under and subject to the provisions of Section 46, the terms and conditions of service of an officer or employee of the Board shall be governed, as far as may be, by the terms and conditions of service and the rules and regulations applicable to the Government employees, and by the order and decisions issued by the Central Government from time to time.
16. Provisions of Section 52 of the DWB Act deal with discipline of officers and employees of the Board and stipulates that service rules as prescribed under the Central Civil Service (Conduct) Rules, 1964 and the Central Civil Services (Classification Control and Appeal) Rules, 1965 shall apply mutates mutants to every officer and employee of the Board.
17. Upon a perusal of the aforesaid provisions read in the light of the provisions of Section 2(e) & (f) of the Gratuity Act which define the words 'employee' and 'employer' respectively, the plea of the DJB that the employees of the DJB are State Government employees and, thereforee, the provisions of the Gratuity Act are not applicable to them is found to be unacceptable. Merely because Sub-section (3) of Section 51 of the DWB Act stipulates that as far as may be, terms and conditions of service of employee of the Board shall be governed by the terms and conditions of service and rules and regulations applicable to the Government employees, and by the orders and directions issued by the Central Government from time to time, does not mean that the employees of the DJB automatically become State Government employees. The said argument is inherently fallacious for the reasons that had the employees of the DJB been Government employees, there would have been no need for the legislature to have incorporated in Section 51 of the DWB Act, the condition that the employees of the DJB shall be governed by the rules and regulations applicable to Government employees. Instead, the legislature could have simply clarified that the officers and employees of the DJB were in fact Government employees. Nor would there have been any need for adoption of rules and regulations applicable to Government employees for the purposes of considering the terms and conditions of service of an officer and employee of the DJB. This is however not the position. Instead, a clear distinction has been drawn by the statute itself between the officers and employees of the DJB and the Government employees. Merely because the DJB does not fall within the definition of 'local authority' as contained in Section 2(s) of the DWB Act does not automatically confer the status of State Government employees on the employees of the DJB.
18. Further, Section 46(1)(c) of the DWB Act specifically states that the employees of the MCD engaged mainly in connection with the water supply or sewerage disposal shall become employees of the DJB and hold office for the same tenure, and at the same remuneration and on the same terms and conditions, as they would have held if the Board had not been established and they shall also continue to do so until such tenure and remuneration and terms and conditions are duly altered by the Board. The proviso to the said sub-section further stipulates that the tenure, remuneration and terms and conditions of any such officer or employee shall not be altered to his disadvantage without the previous approval of the Government.
19. The aforesaid provision is particularly relevant for the reason that while some of the petitioners who were working in the MCD, retired prior to the establishment of the DJB, there were others who were working with the MCD and became employees of the DJB after the DWB Act was notified. In the light of Section 46(1)(c) of the DWB Act, in so far as the petitioners in WP(C) No. 17888, 17895 & 17914/2005 are concerned, having retired from the MCD in the year 1996, prior to the DWB Act having been legislated, they are automatically governed by the judgment rendered by the Supreme Court in the case of Municipal Corporation of Delhi (supra). In the aforesaid judgment, while answering the question as to whether an employee of the MCD would be entitled to payment of gratuity under the Gratuity Act when the MCD itself adopted the provisions of the Rules which covered both, pension and gratuity payments, it was held as below:
Para 2 : ...We have examined carefully the provisions of the Pension Rules as well as the provisions of the Payment of Gratuity Act. The Payment of Gratuity Act being a special provision for payment of gratuity, unless there is any provision therein which excludes its applicability to an employee who is otherwise governed by the provisions of the Pension Rules, it is not possible for us to hold that the respondent is not entitled to the gratuity under the Payment of Gratuity Act. The only provision which was pointed out is the definition of 'employee' in Section 2(e) which excludes the employees of the Central Government and State Governments receiving pension and gratuity under the Pension Rules but not an employee of the MCD. The MCD employee, thereforee, would be entitled to the payment of gratuity under the Payment of Gratuity Act. The mere fact that the gratuity is provided for under the Pension Rules will not disentitle him to get the payment of gratuity under the Payment of Gratuity Act. In view of the overriding provisions contained in Section 14 of the Payment of Gratuity Act, the provision for gratuity under the Pension Rules will have no effect.... Admittedly MCD has not taken any steps to invoke the power of the Central Government under Section 5 of the Payment of Gratuity Act. In the aforesaid premises, we are of the considered opinion that the employees of the MCD would be entitled to the payment of gratuity under the Payment of Gratuity Act notwithstanding the fact that the provisions of the Pension Rules have been made applicable to them for the purpose of determining the pension. Needless to mention that the employees cannot claim gratuity available under the Pension Rules.
20. The remaining category of employees are those who were employees of the Delhi Municipal Corporation and became the employees of the Delhi Water Board after the DWB Act came to be legislated in the year 1998 and retired in the years 2001-2002, i.e., petitioners in WP(C) Nos. 17894, 17899, 20493, 20546 & 20562/2005. The provision of Section 46(1)(c) of the DWB Act has again to be taken note of to hold that such of the petitioners can also not be deprived of the benefit available under the Gratuity Act, as refusing to grant them the same benefit to which the employees of the MCD are entitled, would amount to altering the terms and conditions of their service to their disadvantage. Thus the overriding effect of Section 14 of the Gratuity Act would come into play and the Gratuity Act would be deemed to be applicable to the said employees of the DJB, as long as it did not seek exemption from the application of the said Act as provided for under Section 5 of the Gratuity Act. Admittedly, the DJB obtained the necessary exemption from the application of the Gratuity Act only on 12th June, 2003. Thus the benefit of the Gratuity Act is also available to the aforesaid petitioners who retired prior to the said date.
21. Having arrived at the conclusion that the petitioners were at par with the employees of the MCD and the judgment rendered in the case of Municipal Corporation of Delhi (supra) is squarely applicable to them, the observations made in the order dated 8th March, 2004 passed by the Controlling Authority as also order dated 21st March, 2005 passed by the Appellate Authority holding inter alias that the judgment rendered by the Supreme Court in the case of DTC Retired Employees Association (supra) is applicable to the case of the petitioners, both on facts and law, and that the said judgment had the effect of superseding the law decided in the case of Municipal Corporation of Delhi (supra) needs to be addressed.
22. The Supreme Court in the case of DTC Retired Employees Association (supra) examined the pension scheme floated by the DTC for its employees which was to operated by Life Insurance Corporation of India. As per the said scheme, all employees of the DTC who had retired on or after 3rd August, 1981 were to be covered for the purpose of pension benefit. While the existing employees and those who retired on or after 3rd August, 1981 were required to exercise their option for availing of the pension scheme, such of the retired employees who opted for pension, had to refund the share of employer's contribution to provident fund received by them under the EPF Act, with interest thereon. Certain disputes arose between the employees' association and the DTC including the contention raised by the employees' association to the effect that the excess amount of gratuity received by them was not liable to be returned and even if it was to be returned, the employees were not liable to pay interest on such gratuity. In this context, it is relevant to note that Clause 6 of the pension scheme floated by the DTC stipulated that the employees who had retired on or after 3rd August, 1981 and the existing employees who had drawn the employer's share under the EPF Act partly or wholly shall refund the same with interest in case they opt for the pension scheme. After scrutinizing the entire pension scheme of the DTC, the Supreme Court held as under:
Para 16 : The learned Counsel for the appellants further contended that the direction to refund the gratuity paid to the employees who had opted for Pension Scheme is illegal and even if they had opted for pension they are not liable to refund the gratuity already received by them. Reliance was placed on Section 4 of the Payment of Gratuity Act, 1972, relevant portion of which is to the following effect:
4. Payment of gratuity - (1) 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,-
(a) on his superannuation, or
(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
Para 17 : It was argued that in view of Sub-section (5) of Section 4, the employees can receive better terms of gratuity under any award or agreement or contract with the employer and as the provisions contained in the Payment of Gratuity Act itself contemplate better terms of gratuity or other payment than what is permissible under the Act, the present Pension Scheme could only be construed as an award or agreement for better terms. It was argued that in view of that circumstance, the appellants are not liable to refund the gratuity.
Para 18 : The argument advanced on behalf of the appellants is without any merit. Sub-section (5) of Section 4 is an exception to the main section under which gratuity is payable to the employee. In all welfare legislations, the amount payable to the employees or labourers is fixed at the minimum rate and there will not be any prohibition for the employer to give better perquisites or amounts than that is fixed under law. The employer, who is more concerned with industrial peace and better employer-employee relations, can always give benefit to the employees irrespective of any statutory minimum prescribed under law in respect of such reliefs. thereforee, the provision contained in Sub-section (5) of Section 4 is of no assistance to the appellants.
Para 22 : The appellants were paid gratuity for their long service, but at the time of receipt of this amount, they were not entitled to get pension. Now the appellants have opted for pension. That is a similar relief given to them for the longer service rendered by them. The appellants cannot have the benefit of both pension and gratuity. The appellants relied on a decision reported in State Govt. Pensioners' Assn. v. State of A.P. : [1986]3SCR383 and contended for the position that the gratuity is a one-time payment and once it has been paid the transaction is completed and closed and the same cannot be reopened at a later date. It was argued that in view of that decision, the appellants cannot be asked to refund the same. That is a case where the appellants therein were government employees who retired before 1-4-1978. They contended that gratuity is a part and parcel of the pension and the same cannot be looked separately from other pensionary reliefs and thereforee they are entitled to the benefit of gratuity 'retrospectively' at the enhanced rate, as they had been paid gratuity at the time of retirement at the then prevailing rate. This plea was not accepted and it was held that upward revision of gratuity takes effect from the specified date with 'prospective' effect only. This decision also is of no assistance to the appellants.
23. After making the aforementioned observations, the Supreme Court went on to hold that as the employees of the DTC had received gratuity at the time of their exit from the service, subsequently having opted for pension which had never been a part of their service conditions, it was thereforee neither illegal, nor unjust on the part of the DTC to impose a condition precedent in the pension scheme that in order to avail of the benefit of the pension scheme, the employees had to refund the gratuity received by them.
24. Thus the Controlling Authority as also the Appellate Authority erred in applying the aforementioned judgment to the facts of the present case. There can be no comparison of the facts of the aforesaid case with those of the case in hand. In fact, the operative part of the said judgment cannot be treated as a precedent as it was rendered in the peculiar facts and circumstances of the said case itself; nor can the said judgment be held to supersede the law decided by another Bench of co-equal strength. In fact, while dealing with the law of precedence, the Supreme Court as also this Court has time and again held that a judgment is rendered merely having regard to the fact situation obtaining therein and cannot be treated as a binding precedent or a declaration of law within the meaning of Article 141 of the Constitution. While applying the ratio, the court may not pick out a word or a sentence from the judgment divorced from the context in which the said question was considered. Reliance in this respect can be placed on the following judgments:
(i) Haryana Financial Corporation and Anr. v. Jagdamba Oil Mills and Anr. : [2002]1SCR621 .
(ii) Punjab National Bank v. R.L. Vaid : 2004CriLJ4246 .
(iii) State of Gujarat and Ors. v. Akhil Gujarat Pravasi V.S. Mahamandal and Ors. : AIR2004SC3894 .
(iv) U.P. State Brassware Corporation Ltd. and Anr. v. Uday Naraian Pandey : (2006)ILLJ496SC .
25. The next plea advanced on behalf of the DJB that the provisions of Gratuity Act are not applicable to the petitioners as they are not 'employees' within the meaning of Section 2(e) of the Gratuity Act, is also noted only to be rejected. There is force in the submission of the counsel for the petitioners that the reach of the Act cannot be permitted to be stultified so as to exclude the employees of the DJB from the definition of Section 2(e) of the Gratuity Act, particularly when it has already been held above that the employees of the DJB cannot be treated as Government employees. The said plea is also self-defeating for the reason that the DJB itself submitted to the Gratuity Act, by applying to the appropriate Government under the provision of Section 5 of the Act for seeking exemption from the operation of the said Act. Having made such an application for exemption, the DJB cannot be heard to say that the Gratuity Act is not applicable to it, as inherent in the making of the said application, is the premise that the DJB submitted in the first place to the applicability of the provision of the Gratuity Act to its employees.
26. A reference made by the counsel for the petitioners to the judgment of the Supreme Court in the case of State of Punjab (supra) is also relevant. In the said case, while dealing with the provisions of the Gratuity Act, particularly Section 1(3), which defines the various establishments to which the Act is applicable, the Supreme Court held as below:
Para 7 : It is apparent that the Payment of Gratuity Act enacts a complete Code containing detailed provisions covering all the essential features of a scheme for payment of gratuity. It creates the right to 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 percent 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 fulfillment of the rights and obligations of the parties are made his responsibility, and he has been invested with an amplitude of power of 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.
27. In the aforesaid judgment, while dealing with the question as to whether the Hydel Department of the Government of Punjab would fall within the definition of Section 1(3)(b) of the Gratuity Act, it was held as below:
Para 3 : In this appeal, the learned Additional Solicitor-General contends on behalf of the appellant that the Payment of Gratuity Act, 1972 cannot be invoked by the respondents because the Project does not fall within the scope of Section 1(3) of that Act. Section 1(3) provides that the Act will apply to:
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.
According to the parties, it is Clause (b) alone which needs to be considered for deciding whether the Act applies to the Project. The Labour Court has held that the Project is an establishment within the meaning of the Payment of Wages Act, Section 2(ii)(g) of which defines an 'industrial establishment' to mean any 'establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on.' It is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by Section 1(3)(b), of the Payment of Gratuity Act. The Payment of Wages Act, it is pointed out, is a Central enactment and Section 1(3)(b), it is said, refers to a law enacted by the State Legislature. We are unable to accept the contention. Section 1(3)(b) speaks of 'any law for the time being in force in relation to shops and establishments in a State.' There can be no dispute that the Payment of Wages Act is in force in the State of Punjab.... Had Section 1(3)(b) intended to refer to a single enactment, surely the appellant would have been able to point to such a statute, that is to say, a statute relating to shops and establishments, both commercial and non-commercial. The Punjab Shops and Commercial Establishments Act does not relate to all kinds of establishments. Besides shops, it relates to commercial establishments alone. Had the intention of Parliament been, when enacting Section 1(3)(b), to refer to a law relating to commercial establishments, it would not have left the expression 'establishments' unqualified'. We have carefully, examined the various provisions of the Payment of Gratuity Act, and we are unable to discern any reason for giving the limited meaning to Section 1(3)(b) urged before us on behalf of the appellant. Section 1(3)(b) applies to every establishment within the meaning of any law for the time being in force in relation to establishments in a State. Such an establishment would include an industrial establishment within the meaning of Section 2(ii)(g) of the Payment of Wages Act. Accordingly, we are of opinion that the Payment of Gratuity Act applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on. The Hydel Upper Bari Doab Construction Project is such an establishment, and the Payment of Gratuity Act applies to it.
28. Thus the DJB while carrying out the functions relating to supply of water, amongst others, cannot seek exclusion from the applicability of the Gratuity Act and the plea of the respondent to claim exclusion, is rejected.
29. A plea has also been taken with regard to delay and laches on the part of the petitioners in filing an application under Rule 7 of the Payment of Gratuity (Central) Rules, 1972. Sub-rule (5) of Rule 7 stipulates that if an applicant adduces sufficient cause for the delay in preferring his claim, no claim for gratuity under the Gratuity Act shall be invalid merely because the claimant failed to present his application within the specified time. Thus, though ordinarily the rule stipulates that an application shall be made for payment of gratuity under the Gratuity Act within a period of 30 days from the date gratuity became payable, but at the same time, the Rule also provides for condensation of delay on adducing sufficient cause for the same. In the present case, though the petitioners filed applications for condensation of delay before the Controlling Authority, a perusal of the record shows that no orders were passed by the competent authority on the said application. That being the position, it is now for this Court to examine as to what would be the effect of such delay in preferring their claim for gratuity by the petitioners under the Gratuity Act. It is no longer rest integra that pension and gratuity are rights which accrue in favor of employees on their retirement. Pensionary benefits such as gratuity cannot be said to be a `bounty'. It is well settled that gratuity is earned by an employee for long and meritorious service rendered by him and it is not paid to the employee gratuitously or merely as a matter of boon. It is thereforee considered appropriate to condone the delay in filing the applications, while at the same time, moulding the relief keeping in view the delay in preferring the applications.
30. The last argument raised on behalf of the DJB that the payment if directed to be made to the petitioners under the Gratuity Act would amount to grant of a claim of double benefit for the reason that they have already received the pension under the Rules and that in case the gratuity is calculated under the Gratuity Act, some of the petitioners will be required to refund the pension amount under the Rules, has to be examined in the light of the observations made by the Supreme Court in the case of Municipal Corporation of Delhi (supra). It was held therein that the Gratuity Act is a special provision meant for payment of gratuity and merely because the provisions as contained in the CCS (Pension) Rules had been made applicable to the petitioners therein for the purpose of determining pension, will not mean that they would be excluded from the payment to which they were entitled under the Gratuity Act. At the same time, it was clarified that the said employees could not claim gratuity available under the Pension Rules. This being the position, it has to be examined as to whether the petitioners having already received the payment of gratuity from the DJB under the CCS (Pension) Rules, 1972, shall be entitled to receive the differential amount, if any, payable under the Gratuity Act.
31. As already noted above, the petitioners in WP(C) No. 17888, 17895 & 17914/2005 had retired in the year 1996. A perusal of the computation sheet furnished by the counsels for the parties giving the details with regard to the date of appointment, date of retirement, period of service, gratuity paid under the CCS (Pension) Rules etc. of the aforesaid petitioners, shows that they had received the following amounts towards gratuity paid under the CCS (Pension) Rules:
NAME DATE OF RETIREMENT GRATUITY PAID UNDER CCS (P) RULESD.P. Kansal 31.07.1996 1,03,818/-Jai Kishan Bansal 30.11.1996 1,58,730/-R.M. Limaya 30.06.1996 1,33,650/-
32. At the relevant time, i.e. in the year 1996, Section 4(3) of the Gratuity Act read as under:
4. Payment of Gratuity
(3) The amount of gratuity payable to an employee shall not exceed One lac rupees.
33. The amount mentioned in the aforesaid provision was substituted by Act 11 of 1998, by incorporating the figure of Rupees Three Lakhs Fifty Thousand in place of Rupees One lakh, with effect from 24th September, 1997. Thus at the time of retirement of the aforesaid petitioners, they were not entitled to claim more than Rs. One lac under the Gratuity Act. However, as per the computation sheet, each of the aforesaid three petitioners received more than Rupees One lac towards Gratuity at the time of their retirement. Thus, the respondent is justified in stating that the applications filed by the said petitioners before the Controlling Authority claiming payment of differential amount under the provisions of the Gratuity Act, were misconceived and not maintainable. Though this Court does not agree with the reasons given in the impugned order for rejecting the claims of the said petitioners, however, for the reasons given hereinabove, there is no justification to interfere with the conclusion arrived at in the impugned order rejecting the claim of the said petitioners for payment of any differential amount, the petitioners having already received the maximum permissible amount of gratuity under the Gratuity Act.
34. Coming next to the claim of the petitioners in WP(C) Nos. 17894, 17899, 20493, 20546 & 20562/2005, who retired in the years 2001-2002, after the amendment of Section 4(3) of the Gratuity Act, they shall be entitled to receive the differential amount within the prescribed limit of Rupees Three Lakhs Fifty Thousand under the Gratuity Act, after deducting the amount of gratuity already received by them under the CCS (Pension) Rules.
35. For the reasons stated above, only the petitioners in WP(C) Nos. 17894, 17899, 20493, 20546 & 20562/2005 succeed. The impugned orders 21st March, 2005 and 8th January, 2004, passed by the Appellate Authority as also the Controlling Authority qua the said petitioners are set aside. The respondent is directed to calculate the gratuity payable to the aforesaid petitioners under the Payment of Gratuity Act, and release to them the differential amount with interest, after deducting the amount already paid to them under the CCS (Pension) Rules within a period of four weeks. In so far as payment of interest is concerned, taking into consideration the fact that the petitioners approached the +Controlling Authority by preferring applications for payment of gratuity under the Gratuity Act during the period between July 2002 to April 2003, they shall be entitled to receive interest payable @ 9% p.a. on the differential amount only with effect from the date of preferring their respective claims before the Controlling Authority. While releasing the payment, the respondent shall also forward a detailed statement of computation to each of the aforesaid five petitioners.
36. In view of the aforesaid facts and circumstances, while WP(C) Nos. 17888, 17895 & 17914/2005 are dismissed, WP(C) Nos. 17894, 17899, 20493, 20546 & 20562/2005 are allowed to the aforesaid extent. No orders as to costs.