Uttarakhand High Court
Nalin Chandra Jain vs State Of Uttarakhand And Another on 22 March, 2018
Author: Lok Pal Singh
Bench: K.M. Joseph, Lok Pal Singh
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Writ Petition (S/B) No.350 of 2016
Nalin Chandra Jain .....Petitioner
Versus
State of Uttarkhand & Anr. ....Respondents
Mr. Rajendra Dobhal, Sr. Advocate assisted by Mr. Subhang Dobhal,
Advocate for the petitioner
Mr. Narain Dutt, Brief Holder for the State/respondent no.1
Mr. T.A. Khan, Senior Advocate assisted by Mr. Aditya Kumar Arya, Advocate
for respondent no.2
Date of Judgment : 22.03.2018
Coram : Hon'ble K.M. Joseph, C.J.
Hon'ble Lok Pal Singh, J.
K.M. Joseph, C.J. (Oral) Petitioner was appointed as Deputy Chief Accountant in The Kisan Cooperative Sugar Factory of U.P. which was being run by the U.P. Cooperative Sugar Factories Federation Ltd. He was transferred and worked at various sugar factories. Meanwhile, the State of Uttarakhand was created under U.P. Reorganization Act, 2000. U.P. Sugar Federation was also bifurcated and Uttarakhand Sahkari Chini Mills Sangh Ltd. was created. The employees working in the sugar factories of the U.P. Sugar Federation were directed to exercise their option. The petitioner exercised option for State of Uttarakhand and he joined his duties as Chief Accountant in the month of June 2001. In June 2005- 2006, he was given the charge of General Manager in Bazpur Sugar Factory. He was promoted in the year 2009. On 31.07.2015, he retired on the post of General Manager from Sugar Factory, after attaining 60 years, which is the age of superannuation. He was paid ` 20,42,880/- towards gratuity on 26.04.2016. This, according to him, was paid without any interest. He, 2 thus, approaches this Court, seeking the first relief as follows:
"(a) Issue a writ, order or direction in the nature of mandamus commanding the respondents to calculate the amount of gratuity in accordance with the provision of Payment of Gratuity Act and pay Rs.3,14,234/- along with interest on account of delayed payment of gratuity."
Secondly, he would also submit that he has not been paid amount of Provident Fund in a sum of `14,942/- and, hence, he has sought the payment of said amount also with interest.
2. Counter affidavit has been filed by the second respondent, wherein it is inter alia stated as follows:
4. That in fact, the petitioner was appointed as Deputy Chief Accountant vide order dated 20-07-1983 at Kisan Sahkari Chini Mill, Nadeli, District Udham Singh Nagar, which was under the control of U.P. Cooperative Sugar Factories Federation Ltd. at that relevant time. The service conditions of the petitioner were previously governed by the Provisions of U.P. Cooperative Sugar Mills Federation Service Rules and thereafter when Uttarakhand Cooperative Sugar Mills Federation (Uttarakhand Sugars) came into existence, the Rules were adopted by Uttarakhand Cooperative Sugar Mills Federation (Uttarakhand Sugars) remained applicable with regard to the service of the petitioner. The Uttarakhand Cooperative 3 Sugar Mills Federation has itself framed its own rules recently.
5. That there are the Rules known as U.P. Cooperative Sugar Factories Federation Ltd.
Employees Gratuity Service Rules 1987 and these rules were applicable upon the employees who were the employees in the Cooperative Sugar Factories in the State of U.P. After reorganization of the State, the same Rules were adopted by Uttarakhand Cooperative Sugar Mills Ltd., (Uttarakhand Sugars) also. As per clause 2, it has been provided that these rules will be applicable upon the employees who are either the employees of the Sugar Mill or those of Federation. But these Rules will not be applicable upon whom the provisions of Payment of Gratuity Act are applicable. Rule 3(8) provides the definition of the workman which includes the Managerial and Supervisory Staff also. Thus, the service of the petitioner was included within the definition of workman in the Rules of 1987 (Supra).
6. That per Rule 5 (2) of the aforesaid Rules, it has been specifically provided that the total sum of the gratuity will not exceed the amount equal to the salary of 20 months. The relevant clause reads as under:-
"5(2) fdlh deZpkjh dks ns; minku dh dqy /kujkf"k fdlh Hkh fLFkfr esa chl ekl ds osru ls vf/kd ugha gksxhA^^ The Rule 6(2) of the aforesaid Rules further provides as under:-
"6(2) dkj[kkuksa esa deZpkfj;ksa dh [email protected] ds ekeys esa lEc) dkj[kkuk QsMjs"ku dks izR;sd o'kZ tqykbZ eghus esa minku ds 4 va"knku dk Hkqxrku djsxk ftldh x.kuk lEc) o'kZ esa ml eghus esa deZpkfj;ksa dks ns; osru dh nj ds vk/kkj ij fujUrj lsok ds izR;sd lEiwfjr o'kZ ;k N% ekg ls vf/kd lsok ds Hkkx ds fy, iUnzg fnu ds osru dh nj ij dh tk;sxh A^^ Meaning thereby, the amount of gratuity shall be counted at the rate of the sum payable equal to 15 days salary every year. It means that when the amount of gratuity will be counted, it will be counted at the rate of 15 days salary last drawn by the workman. In the present case, the petitioner has worked for a period of 32 years, therefore he was entitled for the gratuity equal to the salary of 16 months. At the time of his retirement, the petitioner was getting the salary of Rs.
1,27,677/- per month. Therefore his gratuity should be calculated on the basis of 15 days' salary for every year of his service as per rate of salary last drawn by him. His 15 days salary comes to Rs. 63,835.50/-. Since the petitioner had worked 32 years, therefore the amount of gratuity comes to Rs. 20,42,832/-. In the matter in hand the petitioner was paid an amount of Rs. 20,42,880/.- with regard to the gratuity, therefore nothing remains with the answering respondent.
7. That on the other hand, as per Section 4(3) of the Payment of Gratuity Act, the amount of gratuity payable to an employee should not exceed 10 lac rupees. Though the petitioner had himself sent his amount of gratuity to the Uttarakhand Cooperative Sugar Mills Federation (Uttarakhand Sugars) when the petitioner was posted as General Manager at Kisan Sahkari Chini Mill, Gadarpur, as per 5 the provisions of U.P. Cooperative Sugar Mills Federation Workman Gratuity Rules-1987. Now he is taking a new plea that the payment of gratuity should be made in accordance with the provisions of Payment of Gratuity Act. The amount of gratuity for himself as well as for other employees was deposited by the petitioner and the letter issued by him is being annexed as Annexure No. 1 to this counter affidavit.
10. That if the petitioner insists upon the method of calculation of the gratuity as provided under the Payment of Gratuity Act, he is also be governed by the provisions of Section 4(3) of the Payment of Gratuity Act and in those circumstances, he will have to return an amount of Rs. 10,42,880/- and the Hon'ble Court may be pleased to direct the petitioner to refund that amount to the answering respondent.
11. That so far as the question of Rs.
14,942/- with regard to the payment of provident fund is concerned, it is submitted that as per the record of Provident Fund Trust, maintained with the answering respondents, the entire payment has been paid to the petitioner and nothing is left with the answering respondent.
3. It is noteworthy that in the rejoinder affidavit in regard to paragraphs 4 and 5 of the counter affidavit, answer of the petitioner is as follows:
"5. That the contents of paragraph no. 4 & 5 of the counter affidavit need no comments."6
4. In regard to paragraph 6, however, the petitioner has stated as follows:
6. That the contents of paragraph no. 6 of the counter affidavit are admitted to the extent of provision mentioned in Rule 5 (2) of U.P. Cooperative Sugar Factories Federation Ltd., Employees Gratuity Rules, 1987 but it is clarified here that the Sugar Mills are required to contribute their share to Federation in the month of July every year. It is further stated that the Rule 1987 does not provide any method of calculation of the gratuity therefore the gratuity ought to have been calculated in accordance with method given in the Payment of Gratuity Act, 1972. It is further stated that the petitioner was getting the salary i.e. Rs.
1,27,677/- per month on the date of his retirement i.e. 31-07-2015. It is stated here that the petitioner served upto 32 years so in accordance to Rule 5 (1) of U.P. Cooperative Sugar Factories Federation Ltd., Karamchari Upadaan Viniyamawali, 1987, gratuity is payable to an employee @ 15 days per year on the salary last drawn by him. Since there is no specific formula for calculation of the gratuity in the aforesaid rules therefore the provision of Payment of Gratuity Act which is a Central Act will be applicable to the calculation of gratuity in which the formula of calculating gratuity is provided (i.e. what will be included in wages as basic pay, D.A. etc., and the formula what is to be paid). In which it is provided that 15 days wages shall be calculated by dividing the monthly rate of wages last drawn by an employee by twenty 7 six and multiplying the quotient by fifteen as such the amount of gratuity of the petitioner Rs. 23,57,114/- became due on 01-08-2015 as per calculation mentioned below:
1,27,677 x 32 x 15 26 = Rs. 23,57,114/-
It is stated that the petitioner has been paid as partial payment of gratuity amounting Rs. 20,42,880/- against the actual payment of Rs. 23,57,114/- as such a sum of Rs. 3,14,234/- + interest thereon remained balance of the petitioner with the respondents.
5. We heard learned counsel for the petitioner and also learned Senior Counsel on behalf of second respondent besides the Brief Holder on behalf of first respondent.
6. Learned counsel for the petitioner would contend that the amount of gratuity paid to him was paid after a delay of 8 months. Therefore, under the provisions of The Payment of Gratuity Act, 1972 (hereinafter to be referred as the Act), he is entitled to get interest as provided under Section 7(3A) of the Act. Section 7(3A) of the Act reads as follows:
(3A) If the amount of gratuity payable under sub-
section (3) 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 deposits, as that Government may, by notification specify:
8Provided that no such interest shall be payable if the delay in the 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."
7. Next, he would also call in question the calculation of the amount of gratuity itself. This is on the basis of the Explanation contained in Section 4 of the Act. Section 4 of the Act reads as under:
"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
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:
[Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] Explanation.-- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.
(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of 9 fifteen days' wages based on the rate of wages last drawn by the employee concerned:
Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:
Provided further that in the case of [an employee who is employed in a seasonal establishment and who is not so employed throughout the year], the employer shall pay the gratuity at the rate of seven days' wages for each season.
[Explanation.-- In the case of a monthly rated employee, the 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.] (3) The amount of gratuity payable to an employee shall not exceed [ten lakh rupees]. (4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.
(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.
(6) Notwithstanding anything contained in sub- section (1),--
(a) 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 shall be forfeited to the extent of the damage or loss so caused;10
(b) the gratuity payable to an
employee [may be wholly or partially
forfeited]
(i) 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
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment."
8. It is, accordingly, as we have noted in the rejoinder affidavit that he has applied the formula as provided in the Explanation and arrived at the sum which is in excess of ` 23 Lacs and hence he reiterates that the claim made for an amount of ` 3,14,234/-, as contended in the writ petition, is fully justified. As far as the Rules which are relied on by the opposite side are concerned, his answer is that in the Rules there is no specific formula for calculating the gratuity and hence the formula which is provided in the Explanation will apply. Therefore, he would submit that he is entitled to the payment of extra amount by way of gratuity as well as entitled for interest, as there is delayed payment. As far as Provident Fund is concerned, he would reiterate that amount is due to the respondent.
9. Per contra, learned Senior Counsel Mr. T.A. Khan would submit that the petitioner was the General Manager at the time of retirement. He himself made the calculation on the basis of which the amount was arrived at as ` 20 Lacs and that was paid to him. He further more importantly points out that if the amount 11 is to be paid in terms of the Act, it cannot exceed ` 10 Lacs. Here the amount which has been paid is far in excess of the said amount and therefore the amount has been paid strictly in terms of the Rules. In other words, the amount which he had drawn in the last post, namely, the post of General Manager was divided by '2' and 15 days' wages was arrived at and that was multiplied by 32, which was the number of the years he has served. In fact, Mr. T.A. Khan, learned Senior Counsel would point out that in terms of the Rules, gratuity should have been calculated for each year throughout his career, in which case, the amount which is paid to him itself, was in excess. As far as amount of Provident Fund is concerned, learned Senior Counsel would point out that though a stand has been taken that amount has been paid but second respondent is open to re-examine the matter with reference to the records and if any amount is found due, the same shall be paid to the petitioner.
10. Admittedly, the petitioner has received a sum of ` 20,42,880/- towards gratuity on 26.04.2016. There is no doubt that there is a gap of about 8 months from the date of superannuation and the date of payment. Two questions arise in respect of payment of gratuity. First, whether the amount calculated by the respondent is in any way illegal and therefore warrants interference in writ jurisdiction under Article 226 of the Constitution of India. Second, whether any amount of interest is payable on the alleged delayed payment. As far as claim of the petitioner in regard to the amount of gratuity itself being deficient is concerned, we are of the view that there is no merit in the said contention. We have noticed the stand of the respondent that there were indeed Rules governing the petitioner, known as 12 U.P. Cooperative Sugar Factories Federation Ltd. Employees Gratuity Service Rules, 1987 (hereinafter to be referred as the Rules). Petitioner continued under employment in terms of the Rules and the Rules continued to be govern. In terms of the Rules, it is true that there is no formula as such provided for calculating the gratuity, as is provided in the Explanation in Section 4 of the Act, which we have already referred to and, therefore, the petitioner is seeking to apply the same in the case of the petitioner. In this regard, we must first examine whether petitioner will fall within the definition of word 'Employee' under Section 2(e) of the Act. Section 2 (e) of the Act reads as follows:
[(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, 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;]
11. Provisions clearly exclude persons who hold the posts under the Central Government or State Government and is governed by any other Act or by any Rules providing for payment of gratuity. One way of looking at the said Rules is that the word 'and' is intended to convey the meaning that it is only where the person is holding the post under the Central Government or State Government and is governed by 13 any Act or Rules, he will stand excluded. May be another way of looking at it would be to read the word 'and' as 'or' and if any person other than a government servant is governed by Act or Rules, even such person will be excluded. Quite clearly unless as far as both the conditions are fulfilled then perhaps the petitioner may continue to be included in the definition of employee. This is for the reason that a person who holds a post under the Central Government or State Government postulates the existence of a post as is contemplated in Article 311 of the Constitution of India. In this case, petitioner is actually an employee of a Cooperative Society. We need not dwell more deeply into this aspect as there is in fact no case for the respondent in this case as such that the petitioner is not an employee as defined under the Act. We may notice, in fact, that the definition of wages in this Act is contained in Section 2
(s), which reads as follows:
(s) "wages" means all emoluments which are earned by an employee while on duty or on l eave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission house rent allowance, over time wages and any other allowance.
12. Thus, wages would include all emoluments and also the dearness allowance but it would not include bonus, commission, HRA, overtime wages and any other allowance. Since this case is to be decided on the basis of another important feature, we need not be detained even by the definition of word 'wages'. Section 4 contemplates payment of gratuity in contingencies which is provided in sub-section (1), namely, superannuation, retirement, resignation, death or 14 disablement due to accident or disease. In fact, a distinction is brought between superannuation and retirement. This is contained in section 2(q) which reads as follows:-
(q) "retirement" means termination of the service of an employee otherwise than on superannuation
13. Thus, retirement is understood distinct from superannuation. Coming to section 4 again, we may refer to sub-section (3) of Section 4, which is extracted hereunder:
(3) The amount of gratuity payable to an employee shall not exceed 10 lakhs rupees.
14. Therefore, the amount of gratuity under the Act cannot exceed `10 lacs. On the one hand, petitioner seeks to apply the Explanation contained in sub-section (2) of Section 4 and, on the other hand, he requests the Court to close its eyes to the provisions contained in section 4(3). In other words, the acceptance of the petitioner's case would amount to asking the Court to become oblivious to sub-section (3) of Section 4 that the amount of gratuity cannot exceed `10 lacs. If the amount is calculated in terms of the Explanation, the amount would be more than `23 lacs, which is obviously more than `10 lacs. It is not open to the party to request calculation of the amount in terms of the Explanation which would involve violation of sub-section 4(3). He has approached this Court under Article 226 of the Constitution of India. He has not gone before the Authority under the Payment of Gratuity Act. Had the matter gone before it, if it posed the question, whether the Authority can grant the amount in excess of maximum, the answer can be only 15 in the negative. So, answer cannot be different while exercising jurisdiction under Article 226. The respondents have calculated the amount of gratuity in terms of the Rules. The Rules do not contain like provisions as contained in the Explanation. If there was no provision as contained in sub-section 4(3) of the Act, may be the petitioner would have succeeded, but in the presence of provisions contained in sub- section 4(3), that gratuity cannot exceed `10 lacs then it is not open to the petitioner to blow hot and cold to seek benefit of the part of the Act and discard the portion which is against him. If the gratuity is to be calculated in terms of the Act then it should be applied with all the limitations contained in the Act. Therefore, we are inclined to agree with the contention of the respondent that the petitioner must make up his mind as to whether he wants gratuity under the Act or Rules.
15. In such circumstances, we are of the view that petitioner is not justified in invoking the Explanation for calculating the amount of gratuity. Coming to the aspect regarding payment of interest, this is again contained in sub-section 3A of Section 7. Again an insuperable obstacle appears in the path of the petitioner that the petitioner in fact, in terms of the Act, has been paid more than `10 lacs. The amount has been calculated in terms of the Rules. In fact, the calculation was prepared by him. But no doubt there can be no estoppel against the statute. Mere fact that petitioner calculated it, cannot deprive him from contending that he is entitled for the other amount, if it is otherwise due.
1616. The petitioner is governed by the statutory rules. In this regard, we may notice that under the Rules, there is a case that amount is to be calculated each year and credited to the account and it is this amount which is to be paid. There is also a case for the second respondent that financial condition of the society is bad, it is loss making. In such circumstances, exercising the discretion of jurisdiction, even if the petitioner relies on Section 7(3A) of the Act, we are not inclined to grant interest. In such circumstances, relief no.(i) is rejected. As far as relief no.(ii) is concerned, we record the submission of Mr. T.A. Khan, learned Senior Counsel and direct that the second respondent will ascertain whether any amount is remaining to be paid by way of Provident Fund, within a period six weeks from today, and the amount, if any, found due would be paid within two months.
17. In view of the above, the writ petition stands disposed of finally.
(Lok Pal Singh, J.) (K.M. Joseph, C.J.) 22.03.2018 22.03.2018 Rajni/Parul