M.P. State Co-operative Union Ltd. and anr. Vs. J.L. Kashyap and ors. - Court Judgment

SooperKanoon Citationsooperkanoon.com/504233
SubjectService
CourtMadhya Pradesh High Court
Decided OnFeb-06-2007
JudgeS.R. Waghmare, J.
Reported in[2007(113)FLR407]; (2007)IILLJ1012MP
AppellantM.P. State Co-operative Union Ltd. and anr.
RespondentJ.L. Kashyap and ors.
DispositionPetition dismissed
Excerpt:
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service - gratuity - respondent no. 1, head assistant in petitioner's institution, superannuated - gratuity not paid in due time - respondent no. 1 approached controlling authority for claiming interest on gratuity amount - interest granted - hence, present petition - held, petitioner was fully established company having more than 10 employees - order of imposition of interest on petitioner did not create any financial hardship to it - not difficult for petitioner to pay interest amount - as petitioner already pay gratuity of respondent no. 1, denial of interest on same is barred by principle of estoppel - thus, petitioner liable to pay interest on gratuity - petition dismissed - indian penal code, 1890.sections 307 & 324: [lokeshwar singh panta & b.sudershan reddy,jj] assault proof -.....
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orders.r. waghmare, j.1. by this petition, the petitioners have challenged the order dated september 22, 2001 (annexure p/1), passed by respondent no. 2/controlling authority directing payment with interest @ 10% as well as the order of appellate authority dated december 29, 2002 dismissing the appeal vide annexure p/2.2. brief facts of the case are that respondent no. 1 j.l. kashyap was superannuated from the post of head assistant by order dated. november 17, 1994. respondent no. 1 j.l. kashyap was working with the petitioners' institution, m.p state co-operative union limited and carrying on the activity of printing literature as well as running training schools to educate the persorts in all cooperative-movements. the petitioner/ society alleged that on superannuation proper gratuity.....
Judgment:
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ORDER

S.R. Waghmare, J.

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1. By this petition, the petitioners have challenged the order dated September 22, 2001 (Annexure P/1), passed by respondent No. 2/Controlling Authority directing payment with interest @ 10% as well as the order of Appellate Authority dated December 29, 2002 dismissing the appeal vide Annexure P/2.

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2. Brief facts of the case are that respondent No. 1 J.L. Kashyap was superannuated from the post of Head Assistant by order dated. November 17, 1994. Respondent No. 1 J.L. Kashyap was working with the petitioners' Institution, M.P State Co-operative Union Limited and carrying on the activity of printing literature as well as running training schools to educate the persorts in all cooperative-movements. The petitioner/ society alleged that on superannuation proper gratuity was paid to him despite which he filed the case before the Controlling Authority claiming that since the gratuity was not paid in time, he was entitled to interest.

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3. Raising an objection that the Payment of Gratuity Act, 1972 was not applicable to the Cooperative Society, the petitioners resisted the claim by filing written statement and their claim was also barred on the basis of the principles of res judicata since an earlier case had already been filed and had been decided. Moreover, there was no notification requiring the provisions of Payment of Gratuity Act, 1972 to be made applicable to the petitioner/Institution whereas, their employees were governed by the rates framed by the Registrar of the Cooperative Society under Section 55(1) of the M.P Co-operative Societies Act, 1960.

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4. The Assistant Labour Commissioner, however, rejected the contentions of the petitioner/Institution and directed payment @ 10% per annum on the amount of gratuity paid (Annexure P/1). An appeal was preferred under Section 7 of the Payment of Gratuity Act, 1972 by the petitioners before the appellate Authority. However, the same was dismissed by order dated November 29, 2002. (Annexure P/2). Being aggrieved, the petitioners have filed the present petition.

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5. It is the contention of the counsel for petitioners that the petitioner is a Cooperative Society governed by the rules framed by the Registrar of the Cooperative Society and the impugned orders (Annexures P/1 and P/2) are without jurisdiction since the provisions of Payment of Gratuity Act, 1972 are not applicable to the petitioners. Besides this preliminary objection counsel for petitioners has submitted that there is no dispute regarding the petitioners being the registered Cooperative Society under the M.P Registration of Co-operative Societies Act, 1960 and hence in the rules framed by the Registrar of the Cooperative Society are applicable to it.

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6. Referring to Section 2(6)(iv) of the Cooperative Societies Act, 1960, counsel for petitioners stated that the Cooperative Union means registered Society, which has its principle object, the undertaking of Cooperative Education propaganda, training and Extension of Cooperative Services and the petitioner/society was carrying on the work of printing for its own use for the development of the cooperative movement and training schools and was thus covered under the Act. Counsel for petitioners further pointed out to Section 93 of the said Act stating that the certain acts were not applicable to Cooperative Society and Section 93 of the Act reads thus:

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Nothing contained in the Madhya Pradesh Shops and Establishments Act, 1958 (25/1958), the Madhya Pradesh Industrial Workmen (Standing Orders) Act, 1959 (19/1959) and the Madhya Pradesh Industrial Relations Act 1960 (27/1960) shall apply to a society registered under this Act.

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Then stating that the Cooperative Society was neither a shop nor an establishment nor an industry, the said acts were not applicable to the petitioner/society.

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7. There was no notification also to enable the respondents to claim under the Payment of Gratuity Act, 1972. Both Appellate Authority as well as the Controlling Authority had failed to consider these provisions. The Appellate Authority had even gone a step further and enhanced the interest to 10% per annum, which was not in accordance with law. Counsel for petitioner prayed for setting aside both the orders impugned.

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8. Counsel for respondent No. 1 on the other hand also referred to the notification, whereby regarding grant, of interest for belated payment, the Central Government had amended the interest from rate of 9% to 10% and has been duly awarded by the Appellate Authority and it cannot be said that the enhancement was not in accordance with law or unjustified.

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9. Counsel for respondent No. 1 moreover has by drawing the attention to the Court to the contradiction in the stand of the counsel for petitioner stating that according to the petition itself, gratuity was paid to respondent No. 1 J.L. Kashyap, then the petitioner was estopped from turning around and stating that the act was not applicable when it was the time to pay the interest on the delay in making the payment for which the petitioner/society was entirely responsible. Also contradicting the submissions, regarding the Act not being applicable was set at naught by the very fact that the petitioner/society was carrying on the work of printing and the procedure involved would be covered under Section 2(m) of the Factories Act.

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10. Also referring to Section 1(3-A) of the Payment of Gratuity Act, 1972, counsel for petitioners submitted that Section 1(3-A) of the Act states thus:

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A shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten.

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And thus the Cooperative Society being an establishment under Section 2(m) of the Factories Act is covered under Section 1(3-A) of the said Payment of Gratuity Act. Counsel for petitioner has further referred to Section 7(3)(a) of the Payment of Gratuity Act, which states thus:

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If the amount of gratuity payable under Sub-section 3 of the Act is not paid by the employer within the period specified in Sub-section (3), the employer shall, pay from the date on which the gratuity becomes payable to the date on which it is paid simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long term deposit as the Government may by notification specify and the proviso to the Section which states that the interest would not be payable if the delay was occasioned due to the fault of the employee.

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11. And finally referring to Section 14 of the Payment of Gratuity Act, 1972 and its overriding effect, counsel for respondent No. 1 stated that objection of the petitioner was not maintainable since in accordance with Section 14, which reads thus:

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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.

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Hence, there is no bar to the application of the Payment of Gratuity Act, 1972 to the petitioner/society and counsel for respondent No. 1 prayed that the petition being devoid of merit may be dismissed.

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12. Then, considering the sum totality of the submissions, I find that although the arguments of the counsel for petitioner/society had been quite persuasive and attractive initially considering the fact that there was a bar under Section 93 Application of Establishment Act and the respondent No. 1 Shri. Kashyaphad procured the benefit terming the petitioner/society as an establishment the same is rendered innocuous, or ineffective when confronted with Section 14 of the Payment of Gratuity Act, 1972. The petitioner/society is an establishment having more than 10 employees and carrying on the work of manufacturing as fully established by the counsel for respondent No. 1 and in accordance with law finally concluded the matter of petitioner bearing case No. 4/1998 before the competent authority and directed the payment of gratuity.

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13. Moreover, the petitioner's own conduct in payment of gratuity clearly establishes the fact that it had agreed and even made payment after calculation of gratuity payable, then on the principles estoppel, it cannot refuse to pay the interest that respondent No. 1 is legally entitled under Section 7(3)(a) of the Payment of Gratuity Act, 1972.

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14. In view of above, the petition is dismissed as sans merit. The petitioner/society shall pay the interest in accordance with the amended notification No. SO/0774/dated October 8, 1998 @ 10% per annum within a period of one month from the date of this order. No order as to costs.

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