Allahabad High Court
Baroda Uttar Pradesh Gramin Bank Thru ... vs The Appellate Authority Under Payment ... on 15 October, 2019
Author: Sangeeta Chandra
Bench: Sangeeta Chandra
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 25 A.F.R. Case:- MISC. SINGLE No. - 7163 of 2012 Petitioner:- Baroda Uttar Pradesh Gramin Bank Thru The Chairman Respondent:- The Appellate Authority Under Payment Of Gratuity Act & Ors Counsel for Petitioner:- Anupras Singh Counsel for Respondent:- A.S.G.,Manish Mohan,Sharad K. Shukla,Vinay Pandey Hon'ble Mrs. Sangeeta Chandra,J.
1. Case called out.
2. Sri Anupras Singh, learned Counsel for the petitioner is present.
3. Sri Sharad Kumar Shukla, learned Counsel for the respondent no.3, has been given repeated opportunities to file the counter affidavit but no counter affidavit has been filed till date by respondent no.3. Today, when the matter is taken up, Sri Sharad Kumar Shukla, learned Counsel for the respondent no.3 is not present.
4. A short counter affidavit has been filed on 23.09.2019 on behalf of the Regional Labour Commissioner (Central), Lucknow by Sri Ajay Kumar Singh, learned Advocate.
5. Learned Counsel for the petitioner states that he does not wish to file any rejoinder affidavit to the short counter affidavit filed by the Regional Labour Commissioner (Central), Lucknow and the matter may be heard and decided on merits.
6. This writ petition has been filed by the petitioner challenging the order dated 28.09.2012, passed by the Appellate Authority under the Payment of Gratuity Act, 1972 (hereinafter to be referred as 'the Act, 1972') in PG Appeal No. 66 of 2011 and also praying for quashing of the order dated 31.05.2011 passed by the Controlling Authority under the Act, 1972 in PG Case No. Lko36(15)/2009.
7. It is the case of the petitioner that the services of its employees and officers are governed by the Baroda Uttar Pradesh Gramin Bank (Officers and Employees) Services Regulations, 2008. Under Regulation 2(o), 'Pay' means basic pay drawn per month by the officer or employee in a pay scale including stagnation increments and any part of the emoluments which may be specifically classified as pay under these Regulations and 'Salary' means the aggregate of pay and dearness allowance. The classification of officers as given under Regulation 3 classifies the Branch Manager as officer.
8. The respondent no.3 was initially engaged as an employee of the Bank on 01.11.1976 but at the time of his retirement on 31.01.2009, he had been promoted as Branch Manager i.e. as an officer of the Bank. For the purposes of gratuity, Regulation 69 of the said Regulations, 2008 prescribes that the amount of gratuity payable to an officer or employee shall be either as per the provisions of the Act, 1972 or as per the Sub-Regulation 3 of Regulation 69, whichever is higher. The sub-Regulation 3(ii) prescribes that amount of gratuity payable to an officer or employee shall be one month's pay for every completed year of service or part thereof in excess of six months subject to a maximum of 15 months' pay. The proviso to the said sub-Regulation provides that when an officer or employee has completed more than 30 years of service, he shall be eligible by way of gratuity, for an additional amount at the rate of one half of a month's pay for each completed year of service beyond 30 years. Provided further that in respect of an officer, the gratuity is payable based on the last pay drawn.
9. It has been submitted that under the Act of 1972, Section 2(s), defines 'Wages' to mean all emoluments which are earned by an employee while on duty or on leave, which are payable to him in cash and includes dearness allowance but would not include any bonus, commission and other allowances. The method of calculation is given under Section 4 of the Act of 1972, where under sub-Section 2 the explanation says that in case of monthly rated employee, fifteen days wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty six and multiplying the quotient by fifteen.
10. At the time of retirement of respondent no.3, Sri Ram Bilas Singh on 31.01.2009, the payment of gratuity had been done and the maximum limit of gratuity that could be paid to an employee under the Act, 1972 was fixed as 3,50,000/- under Section 4 sub-Section 3 of the Act. When the respondent no.3 retired, his gratuity was calculated as per the provisions of Regulation 69(2) and also as per the provisions of Regulation 69 (3) (ii). While calculating the amount of gratuity payable as per the Payment of Gratuity Act, the Bank took into consideration the statutory maximum ceiling limit as per Section 4(3) of the Act, 1972 i.e. Rs.3,50,000/-.
11. In paragraph-10 of the writ petition, the petitioner has stated the details of their calculations regarding the gratuity payable to the respondent no.3. The same are being quoted hereinbelow:-
"10. That the petitioner Bank calculated the amount of gratuity payable to respondent no. 3 under the Payment of Gratuity Act as well as the Regulation 69 (3) (ii) A- Gratuity calculation as per Service Regulation 69(2) (under Payment of Gratuity Act, 1972) Gratuity = ( Basic + DA+ Spl Allowance if any) x 15 x No. of years of service/ 26 = (22900 + 10429) x 15 x 32 / 26 = Rs. 6,15,305/-
Maximum Gratuity Ceiling as per Act is Rs.3,50,000/- Gratuity payable as per (A) = Rs. 3,50,000/-
B- Gratuity calculation as per Service Regulation 69 (3) (ii):
Gratuity - Last Basic Pay x No. of years of service rendered (32 yrs) = 22,900 x 16 = Rs. 3,66,400/-
Gratuity payable as per (B) = Rs. 3,66,400/-
Amount of Gratuity whichever is higher among A & B above, in terms of Regulation 69 of the service conditions of the Bank, shall be payable. Since Gratuity as per 'B' above is higher than the Gratuity as per 'A' hence the same has been paid."
It has been submitted that since the gratuity as per calculation 'B' above as given in paragraph-10 of the petition is higher than the gratuity as per 'A' , therefore, the gratuity of Rs. 3,66,400/- was paid as against the maximum statutory limit of Rs.3,50,000/-.
12. It has been submitted that with effect from 01.11.2007, the basic pay of the respondent no. 3 was revised and the gratuity was again calculated both under the Act of 1972 as well as Regulation 69 (3) (ii). The calculation is given in paragraph-12 of the writ petition, which is quoted hereinbelow:-
"(A) Calculation of gratuity as per Payment of Gratuity Act, 1972:-
[32400 + 5638] x 15 x 32 ÷ 26 = Rs.7,02,240/-
Maximum Ceiling Limit at that time was Rs.3,50,000/-
(B) Calculation of gratuity as per Regulation 69 (3) (ii) read with Regulation 2(o) of Baroda Uttar Pradesh Gramin Bank [Officers & Employee] Service Regulations 2008:-
[32400] x 16 month's pay = 5,18,400/-"
13. The Maximum Ceiling Limit being Rs. 3,50,000/-, again the calculation as per the Regulation 69(3)(ii) was preferred which came to about Rs.5,18,400/-. The dues of gratuity amount of Rs.1,52,000/- was also paid to respondent no.3. The respondent no. 3 not being satisfied with the gratuity paid by the Bank preferred the application under Rule 10(i) and under Section 7(4) of the Act, 1972 before the Controlling Authority i.e. Regional Labour Commissioner (Central), Lucknow. The said application was registered as P.G. Case No.Lko36(15)/2009.
14. The claim of the respondent no.3 was based on his Basic Pay + Dearness Allowance as given under the Act of 1972 and not as per the Regulations of the Bank. He also prayed that the Maximum Ceiling Limit of Rs.3,50,000/- be ignored and he may be paid Rs.6,15,305/- as gratuity and not Rs.5,18,400/- as paid by the Bank. The difference in amount of gratuity + interest @ 18% on the additional gratuity amount be also paid to him. The Controlling Authority erroneously calculated the gratuity amount on the basis of wages as defined under Section 2(s) of the Act, 1972 i.e. Basic Pay + Dearness Allowance and completely failed to take into consideration the Regulation 69 (3) (ii), which govern the service conditions of the respondent no.3 and provided that amount of gratuity be calculated on the basis of ''pay' as given under Regulation 2 (o) of the Regulations i.e. "Basic Pay drawn per month only by an officer".
15. The Controlling Authority in his letter dated 31.05.2011 erroneously calculated the amount by applying the formula of the Act of 1972 and ordered the Bank to make payment of Rs. 79,754/-. The Controlling Authority while calculating the gratuity payable to respondent no.3 applied the same formula in making both the calculations i.e. calculation as per Regulation 69 (3)(ii) and calculation as per Section 4(2) of the Act of 1972. Whereas he should have applied the formula given under Regulation 69(3) of the Regulations of 2008, i.e. Basic Pay x 16, (after 32 years of service rendered in the Bank by respondent no.3). The Basic Pay of respondent no.3 was however correctly taken as Rs.32,400/-, although the respondent no. 3 has prayed that the same be taken as Rs.32,400 + Rs.5,6,38 i.e. by adding Dearness Allowance also.
As a result of the wrong calculation, the Controlling Authority came to the conclusion that Rs. 5,95,154/- was payable to the respondent no.3 and the Bank had only paid Rs.5,18,400/-. The difference in amount i.e. the additional gratuity was directed to be paid as Rs.79,754/-. The interest on delayed payment however was not given.
16. The respondent no.3 filed an appeal against the order of Controlling Authority but beyond the period of limitation as given under Section 7 and the said appeal was rejected by the Appellate Authority by an order dated 11.09.2010. A copy of the order dated 11.09.2010 as been annexed as annexure-7 to the writ petition.
17. The Bank also preferred an appeal. The said appeal was filed within time and it was considered on its merit and the order impugned filed as annexure-1 to the writ petition has been passed.
18. In the said impugned order, the Appellate Authority calculated the amount of gratuity payable to respondent no.3 on the basis of wages i.e. Basic Pay + Dearness Allowance as defined under the Act of 1972. It completely failed to take into consideration the Regulation 69 (3) (ii). The statutory Ceiling Limit of Rs.3,50,000/- as given under the Act of 1972, was also ignored by the Appellate Authority. The calculation as done by the Appellate Authority is evident from page-25 of the paperbook i.e. operative portion of the impugned order dated 28.09.2012. The relevant extract of the order dated 28.09.2012 is quoted hereinbelow:-
"Further, considering the facts and documents placed on record and the arguments of the parties to the case, I hereby modify the order of the Controlling Authority dated 31.05.2011 and allow submission of the respondent employee accordingly he has become entitled for payment of gratuity on the basis of calculation of Pay+DA i.e. Rs.38038 x 15 x 32 = 2 702240.00 say Rs.702240 - 518400 (already paid) = Rs.183840/- balance gratuity payable plus 10% interest on entire amount of gratuity payable to the employee from the date on which the gratuity become due till actual date of payment."
19. The interest @ 10% as given in the Act was directed to be paid on the additional amount so calculated from the date the gratuity become payable, till the date of actual payment, and in case of delay in payment by the Bank within 30 days to the employee, the employee was entitled for 18% compound interest therefor.
20. When the writ petition was filed and taken up at the admission stage on 19.12.21012, this Court had passed an order staying the order of the Appellate Authority to the extent of modification enhancing the amount granted by the Controlling Authority. However, this Court had made clear that the amount granted by the Controlling Authority shall be payable to the respondent no.3, which had already been deposited before the Controlling Authority and the same may be released to respondent no.3 on his application subject to the result of this writ petition.
21. Learned Counsel for the petitioner submitted that the Bank is not disputing any payment made on the basis of the impugned order of the Controlling Authority at this stage because it would lead to hardship to respondent no.3, but at the same time the Bank does not wish that the wrong calculation adopted by the Controlling Authority should become a binding precedent and should be utilized to cause loss to the Bank in the future by the other employees.
22. This Court has considered the submissions made by learned Counsel for the petitioner and has also gone through the Regulations of 2008. The Regulations of 2008 classify Branch Manager as officer of the Bank and the amount of gratuity payable to the officer has been given under Regulation 69 (3)(ii), which is to the effect that one month's pay for every completed year of service, subject to a maximum of 15 months' pay, was to be given to the officer but where the officer or employee has completed 30 years of service, he was eligible for gratuity of an additional amount at the rate of one half of a month's pay for each completed year of service beyond 30 years. Since the respondent no.3 rendered 32 years of service, 16 months' pay was to be given to respondent no.3 as gratuity, on the basis of last pay drawn by such officer. The last pay drawn by the officer at the time of his retirement was Rs.22,900/-, which was later on revised and became Rs.32,400/-. Such an amount came to Rs.5,18,000/- and the same was paid. On the other hand, the calculation was also done as per the Act of 1972 by the Bank to find out whether the respondent no.3 was entitled to a better deal.
The respondent no.3 was indeed entitled to the better deal as per the Act of 1972 on the method of calculation prescribed under sub-Section 2 of Section 4, but due to statutory ceiling limit of Rs.3,50,000/- on the gratuity payable to an employee under the Act of 1972, the best deal for such an employee would again be the calculation as per Regulations 69 (3)(ii) of the Bank's Regulation. Therefore, the best deal was given to the respondent no.3 by the Bank.
23. The Controlling Authority on the other hand while noticing the ceiling limit of Rs.3,50,000/- as given under the Act of 1972 before its amendment, made the calculations wrongly, on the basis of formula applied under the Act of 1972 i.e. ''the wages' were multiplied by fifteen into the years of service i.e. 32 years and then dividing the same by 26. As a result of this wrong calculation, the Controlling Authority found that Rs. 79,754/- had been paid less by the Bank and directed for such payment by its order dated 31.05.2011.
24. When the appeal was being considered by the Appellate Authority, the formula as per the Act of 1972 was again applied and also the ''wages' were taken into account and not the ''pay' as given under Regulations, 2008 i.e. inclusive of Basic Pay + Dearness Allowance.
25. The formula that should have been applied would be that of the Regulations of 2008 for calculation of gratuity as given under Regulation 63(3)(ii), and the ''pay' should have been taken as is defined under Regulation 2(o). Simultaneously, the calculation should have also been made on the basis of ''wages' as defined under Section 2(s) of the Act of 1972 on the basis of formula given under Section 4(2) of the Act. This would have resulted in a fair picture as to what the employee was entitled under the Regulations of 2008 and as to what the employee was entitled under the Act of 1972.
26. The Act of 1972 however had put statutory ceiling limit of Rs.3,50,000/-, therefore, the Bank's calculation as per Regulation of 2008 for the amount of gratuity payable to respondent no. 3 was indeed the best deal for the employee and the same was given in a bonafide manner by the petitioner - Bank.
27. This Court finds that the due to some confusion, the formula given under the Act of 1972 and the definition of ''wages' as given under the Act of 1972 was also applied in making calculation of gratuity for respondent no.3 by the Controlling Authority and by the Appellate Authority.
28. Also, in case the Controlling Authority and the Appellate Authority was applying the formula as given under the Act of 1972, they should have taken into consideration also the ceiling limit of Rs.3,50,000/- under the Act. The same was not taken into account. Such discretion was not provided under the Act to the Controlling Authority or the Appellate Authority, to ignore altogether the statutory ceiling limit.
29. In view of the above, the impugned orders are set aside. The writ petition is allowed.
30. However, because of the compliance of the order passed by the Controlling Authority certain amount had been deposited before the Appellate Authority by the Bank, which may have been released in favour of respondent no.3 during the pendency of the petition. This Court is not directing the recovery of the same from the employee concerned. However, the logic applied by the Controlling Authority and Appellate Authority having been found to be skewed, it is being disapproved, and it shall not be treated as binding precedent for calculating the amount of gratuity to be paid to Bank employees retiring from Baroda U.P. Gramin Bank.
31. Writ Petitions No. 7164 (M/S) of 2012 and No. 7165 (M/S) of 2012 are de-linked from the present petition, which shall be listed in the next week for orders to be passed thereon.
Order Date :- 15.10.2019 Rahul