Meghalaya High Court
Mecofed vs Shri Tikender Singh And Ors on 4 August, 2017
Bench: Dinesh Maheshwari, S.R. Sen
1
Writ Appeal No.37/2012 &
Review Petition No.9/2016
IN THE HIGH COURT OF MEGHALAYA AT
SHILLONG
: JUDGMENT :
1. WRIT APPEAL No.37 of 2012 The Managing Director, MECOFED, Lumdiengjri, Shillong. ..... Appellant
-Versus-
Shri Tikender Singh and others ..... Respondents
2. REVIEW PETITION No.9 of 2016 The Managing Director, MECOFED, Lumdiengjri, Shillong. ..... Applicant
-Versus-
Shri Tikender Singh and others ..... Respondents
Date of Judgment: :: 4th August, 2017
PRESENT
HON'BLE SHRI JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE HON'BLE SHRI JUSTICE S.R. SEN Shri P Yobin, for the appellant/applicant (employer) Shri A Khan, for the respondents (employees) AFR BY THE COURT: (per Hon'ble the Chief Justice) Preliminary and brief outline:
These two matters, Writ Appeal No. 37 of 2012 and Review Petition No. 9 of 2016, involving the same set of parties and common set of basic facts, have been considered together; and are taken up for disposal by this common judgment.
The dispute herein had its genesis in a retirement package, termed as the Voluntary Retirement Scheme [„VRS‟]1, that was mooted by the Programme Implementation Department of the Government of Meghalaya to downsize several of the Public Sectors Undertakings/Enterprises [„PSUs‟/‟PSEs‟], which were registering 1 also referred to as „the Golden Handshake Scheme‟ or „the Scheme‟.2
Writ Appeal No.37/2012 & Review Petition No.9/2016 regular losses. The Meghalaya State Co-operative Marketing and Consumers‟ Federation Limited [„MECOFED‟] had also been one such sick Public Sector Undertaking that proceeded to apply such retirement package for its employees. However, several of the grey areas in the retirement package of MECOFED, particularly on the aspects related with the amount payable to the concerned employees (the respondents herein), gave rise to several litigations and have ultimately led to the intra-court appeal and the review petition before us. The employees‟ claim for Leave Encashment benefit forms the subject-matter of Writ Appeal No. 37 of 2012 [arising out of WP(C) No. 320 (SH) of 2012] whereas their claim for payment of Gratuity is the subject-matter of Review Petition No. 9 of 2016 [arising out of WA No. 34 of 2013].
Briefly put, the basic common facts concerning both these matters are as follows: MECOFED is a co-operative society registered under the Meghalaya Co-operative Societies Act, as adopted and modified by the Meghalaya Adaptation of Laws Order of 1973. The service conditions of the employees of MECOFED are governed by the Meghalaya State Co-operative Marketing and Consumers‟ Federation Limited Services Classification, Appointment, Control and Appeal Rules, 1980 [„the Rules of 1980‟]. It is not in dispute that the State Government, having approximately 95% investment in the share capital of MECOFED, is having deep and pervasive control over this organization.
In or about the year 2003, the Government of Meghalaya noticed that except four or five, all other PSUs/PSEs were incurring huge losses and were suffering varying degrees of sickness. It was also noticed that such PSUs/PSEs were regular defaulters in the matters of 3 Writ Appeal No.37/2012 & Review Petition No.9/2016 salary payments. In order to revive the financial health of those sick PSUs/PSEs, the Programme Implementation Department of the State Government mooted the idea of providing retirement packages for downsizing such sick PSUs/PSEs and hence, circulated a Cabinet Memorandum that formed the basis of retirement schemes in the said sick PSUs/PSEs. The relevant parts of the said Cabinet Memorandum, proposing the Golden Handshake Scheme for the employees of State PSUs/PSEs, had been as under:-
"Subject: VOLUNTARY RETIREMENT SCHEME/GOLDEN HANDSHAKE SCHEME FOR EMPLOYEES OF STATE PUBLIC SECTOR ENTERPRISES.
With the exception of the Mawmluh Cherra Cements Limited, the Meghalaya State Warehousing Corporation, the Meghalaya Co- operative Apex Bank Limited, the Meghalaya State Agricultural Marketing Board and the Meghalaya Industrial Development Corporation, all other Public Sector Enterprises and Departmental Undertakings/Boards in the State of Meghalaya are loss-making and can be considered as sick PSUs/PSEs. They are in varying degrees of sickness. At the time when they were created, all of them were expected to be engines of growth in the State and to generate enough resources, which would at least help them to be self-sustaining in the long run. However, it is quite unfortunate that many of them have acted as a drain on the meager and precious resources of the State. Frankly and plainly speaking, most of the State PSUs can be said to have become white elephants, which the State Government can ill afford to keep. A number of factors are responsible for this sorry state of affairs.
..... ..... .....
04. In our State, some of the State PSUs/PSEs have already been more or less regular defaulters in matters of salary payments and it is well known to the employees that these PSUs/PSEs are deeply in the red. It may be worthwhile for the State to examine the idea of voluntary retirement perhaps with the condition that all their dues would be paid in one lump sum amount within a few days of their relinquishing office, not piecemeal. If the State Government can ensure this, there is high probability that the response to the scheme would be good. As far as other statutory payments like Provident Fund, gratuity, leave encashment, etc. these also have to be paid within stipulated timeframe. Once the PSUs/PSEs have been downsized or right-sized, it is pretty certain that the average as well as the marginal productivity of the remaining employees will improve. The consequent reduction in the monthly salary bill will also improve to a certain extent the financial position of the PSUs/PSEs as already stated above.
05. In line with what some other State Governments in the country have started, it is proposed that those opting for voluntary retirement under the scheme would be given 2 (two) months salary, i.e. basic pay plus dearness allowance for each completed year of service or monthly salary, i.e. basic pay plus dearness allowance for the 4 Writ Appeal No.37/2012 & Review Petition No.9/2016 remaining months of service subject to a maximum of 48 (forty eight) months whichever is less. It should however, be stipulated that those who have opted for this scheme will be barred from seeking re- employment either under the State/Central Government or any State/Central PSU/PSE. The State Government can, however, think of creating favourable conditions that can facilitate the growth of self- employment avenues on which people can invest the huge amount of money they will be receiving after they leave service. Given the fact that, as on 31-03-1999 there were 6649 employees under the State PSUs and taking Rs.5500/- as an average pay per employee, it is roughly estimated that it would cost the State exchequer about Rs.2.20 lakh to Rs.2.64 lakhs per employee. If about one-third of the employees were to opt for the scheme, the total amount of fund that would be required will be to the tune of Rs.48.40 crores to Rs.58.08 crores. Each State PSU will, however, have to precisely work out its own financial involvement.
..... ..... ....."
(underlining supplied for emphasis) The aforesaid Cabinet Memorandum was forwarded to the different PSUs/PSEs including MECOFED with directions to work out the necessary details as regards the individual organization. In the model Golden Handshake Scheme, as forwarded to the PSUs with the letter dated 28.01.2003 by the Programme Implementation Department of the Government of Meghalaya, different components of monetary benefits were specified; and Sub-clauses (c) and (d) of Clause VI thereof provided that Encashment of Earned Leave and payment of DCRG2 would be as per the rules applicable/permissible to the employees/workers of the concerned PSU/PSE. Pursuant to these propositions, the applicant/appellant purportedly notified such Golden Handshake Scheme for the employees of MECOFED on 10.06.2004, in the following terms3:-
"NOTICE You are aware that this Federation has since the past several years been facing an acute financial crisis which has resulted to the employees of this federation not being receiving their regular salary for months together. The Huge debt liabilities has further aggravated this situation.
This chronic financial environment of the Federation has engaged the attention of the Management for quite some years now. As a measure to reduce this huge overhead burden, the Management 2 death-cum-retirement gratuity 3 Annexure-A-11 in WPC No. 320 (SH) of 2010 5 Writ Appeal No.37/2012 & Review Petition No.9/2016 has, as last resort, approached the Government for financial assistance for downsizing its employee.
The first batch of 70 employees who may have to avail the Golden Handshake scheme in phase I is available for inspection. The amount of severance package shall be as per norms of the Government.
Sd/-
(Shri S. Kharlyngdoh, MCS) Managing Director, MECOFED, Shillong"
In response to the notice aforesaid, the concerned employees like the present respondents expressed their doubts and grievances by way of a representation dated 18.06.2004 and asserted their rights, inter alia, to receive the payment towards Gratuity as also Leave Encashment apart from the due salary when leaving the service under the Golden Handshake Scheme. Thereafter, on 07.07.2004, the respondent No.1 made yet another communication on behalf of the concerned employees to the applicant/appellant, the Managing Director MECOFED, as under4:-
"The Managing Director, MECOFED, Shillong.
Subject: Golden Handshake (Reminder-I)
Reference: Your Order under Memo No.MSFE.1/99/253 dated
10.6.2004 and our letter dated 18.6.2004.
Sir,
With reference to the above subject, we would request you to kindly let us know the exact method adopted for calculation of the entitlements of the Golden Handshake Scheme referred to in your above order. This has also the reference to our petition dated 18.6.2004.
In the above context, the specific Notification of the Government the said Scheme applies to, may kindly be indicated for our information.
Further, as a goodwill gesture, the Management may kindly release the back duty salary which is more than eight months in arrears now.
In view of the above, a line in response would be highly appreciated.
Thanking you, Yours faithfully, for and on behalf of Golden Handshake Employees Phase I, MECOFED Sd/-
(T. Singh)"4
Annexure-A-12 in WPC No. 320 (SH) of 2010 6 Writ Appeal No.37/2012 & Review Petition No.9/2016 The aforesaid communication was responded by the applicant/appellant on 08.07.2004 in the following terms5:-
"To Shri T.Singh, Accounts Officer, MECOFED, Shillong, Subject Golden Handshake Scheme.
Reference No.Nil dated 7th July 2004.
On your petition mentioned above, you are hereby inform that, in pursuance of the instruction received from the state Government, a Golden Handshake Scheme package was prepared on the basis of the memorandum approved by the Cabinet, which gist as under.
The golden handshake scheme for the employees of the State public sector Enterprises was prepared and circulated by the Programme Implementation Department vide No. PID (PE) 25/2001/100 dated 28th January 2003 approved by Planning and Law Department.
Under the aforesaid scheme an employee/worker opting for the Voluntary retirement/Golden Handshake scheme would be entitled to compensation.
(i) Equivalent to 2 (two) months pay (basic plus DA) for each completed years of past service.
or
(ii) The monthly pay and allowances at the time of retirement multiplied by the balance months of service left before normal date or retirement subject to a maximum of 48 (forty-eight) months, whichever is less.
Other issues are being referred to Government for examination.
Managing Director."
(underlining supplied for emphasis) The aforesaid response dated 08.07.2004 only stated the clarification about the component of compensation but not about other dues and claims of the employees. It is further noticed that the employees like the respondents, faced with the position that the retirement scheme was likely to be enforced with effect from 31.08.2004, made yet another representation on 16.08.2004, raising 5 As re-produced in Annexure A-6 in WPC No. 320 (SH) of 2010 7 Writ Appeal No.37/2012 & Review Petition No.9/2016 the issue of want of clarity in the Scheme while stating their claims as under6:-
"To, The Managing Director, MECOFED, SHILLONG.
Subject: Application of Golden Handshake Scheme in respect of MECOFED employees.
Reference: Office Order No.MSFE.1/99/287 dated 11.8.2004.
Sir, With reference to the subject and Office Order cited above, we would like to state that the Golden Handshake Scheme appears likely to be settled on the 31st of August, 2004.
In this context, it is of the view that the order appears to be not clear and candid, devoid of commitment and sincerity on the part of the Management towards payment of entitlements in details, such as Golden Handshake amount, Gratuity, Leave Salary, more so, the duty salary (at present more than six months overdue) as well as the arrear pay on account of Pay Revision 1987 and 1996 (Meghalaya) which the MECOFED has adopted for its employees and for that matter, a specific time-bound commitment from the management for final settlement of all the dues.
In addition to the above, it is also imperative and pertinent that the employer's share of contribution towards the Employees Provident Fund is deposited upto-date. It is also a fact that the incremental accrual of the Employer's share of contribution due to the enhancement in the rate of contribution for the past several years and subsequent increase in the maximum limit of pensionable salary from the earlier amount of Rs.5000/- to Rs.6500/-, for each employee, has not been deposited as yet and that of the pending duty salary as well. These are basic factors for computation of pension for the employees affected. Moreover, it will stand in the way of final settlement of the Employee's share repayable at the time of retirement which involve lots of formalities that need to be completed.
Rather it would have been more convincing and acceptable to us had the Management taken due care and consideration to concede to our prayer for payment of duty salary as sought for in our letter dated 7th July, 2004.
Further, it is worth quoting the invaluable recommendations of the Programme Implementation Department, Govt. of Meghalaya vide the Official Notification No.PID (PE) 25/2001/100 dated 28.1.2003 which clearly defines the intention of the scheme that the dues such as Gratuity, Leave Salary, and any other dues are cleared alongwith the scheme money in a lump sum amount within a few days of their relinquishing office, not piecemeal which the Cabinet Committee has accordingly given its approval.
In the circumstances stated above, if any hasty decision is taken to issue termination/release order, it will be unjustified and against the principle of natural justice. Such action would be prejudicial, violative of service condition and in contravention of the 6 Annexure-A-4 in WPC No. 320 (SH) of 2010 8 Writ Appeal No.37/2012 & Review Petition No.9/2016 recommendations of the Programme Implementation Department and the esteemed decision of the Cabinet Committee.
We would also like to state in fact, that the scheme applied to herein for the MECOFED employees is the Golden Handshake Scheme and under which the Management may like to retrench an employee but should be fully prepared to pay the full dues of an employee before leaving the service and NOT the Voluntarily Retirement Scheme under which an employee seeks retirement at his own will.
In the meantime, the above package offered is acceptable to us provided, the fact, that the entitlements and other dues as envisaged in the Scheme are entirely settled and made available to us at the time of retirement, affording opportunity for verification of the amount settled.
We look forward for a favourable consideration of our above request and a line in response at least within a week's time would be highly appreciated."
(underlining supplied for emphasis) It is further noticed that although the aforesaid representations dated 18.06.2004 and 16.08.2004 remained unanswered, yet, the scheme of retirement was put in operation and was enforced by the applicant/appellant, whereby the respondents were retired from service on 31.08.2004. This action of the applicant/appellant led to a writ petition by a few of the aggrieved employees that was registered as WP (C) No.251 (SH) of 2004 with the Shillong Bench of Gauhati High Court that was, at the relevant time, exercising jurisdiction over the matter.
When the said writ petition came up for disposal on 25.08.2006, a learned Single Judge noticed the submissions that the employees‟ representations dated 18.06.2004 and 16.08.2004 had not been disposed of; and hence, directed the authority concerned to dispose of the said representations with a speaking order while giving liberty to the employees to file a fresh representation, if so advised, as also to approach the Court again, in case of any further grievance. The order dated 25.08.2006, as passed in WP (C) No.251 (SH) of 2004, reads as under:-
9
Writ Appeal No.37/2012 & Review Petition No.9/2016 "25.8.06 Heard Mr. MZ Ahmed, learned senior counsel assisted by Mr. K. Khan, learned counsel appearing on behalf of the petitioners. Also heard Ms. B. Dutta, learned counsel appearing on behalf of respondent No. 1 and Mr. ND Chullai, learned senior GA appearing on behalf of respondent Nos. 2, 3 and 4.
This matter was heard at length and during the course of hearing, Mr. Ahmed, learned counsel for the petitioners submitted that the petitioners have submitted two representations dated 16 th August, 2004 (Annexure-2 to the writ petition) and dated 18th June, 2004 (Annexure-5 to the writ petition) before the respondent. But till date the representations have not been disposed of by the authority. In the said representations, the petitioners have given details of their grievances.
In view of the submissions made, in my considered opinion this writ petition can be disposed of by directing the respondents to dispose of the representations so filed by the petitioners with a speaking order within a period of 8 weeks from the date of receipt of the certified copy of this order.
A copy of this order shall be furnished by the writ petitioners before the respondents within a period of seven days from today. The petitioners may also submit representation afresh, if so advised.
However, it is made clear that if the petitioners are aggrieved with the order passed by the respondents, they are at liberty to approach this court again.
With the above observation and direction this writ petition stands disposed of.
However, there will be no order as to cost."
Pursuant to the directions aforesaid, two separate orders were passed by the authorities concerned on the representations of the employees: one being the order dated 01.12.2006 by the applicant/appellant, the Managing Director MECOFED; and another being the order dated 02.12.2006 by the Commissioner and Secretary to the Government of Meghalaya in its Co-operation Department.
In his order dated 01.12.20067, the applicant/appellant summed up the issues raised in the said representations by the employees as follows:-
"Summing up the two representations, the petitioners have represented on the following:-7
Annexure-A-6 in WPC No. 320 (SH) of 2010 10 Writ Appeal No.37/2012 & Review Petition No.9/2016
1. The entitlement under the Golden handshake scheme.
2. Payment of arrears pays revision of 1987 and 1996.
3. Payment of gratuity to the employees of MECOFED.
4. Payment of Leave encashment in respect of earned leave.
5. Payment current duty salary, which has fallen in arrears of seven months.
6. Deposit Of employees' as well as employer's share of contribution towards Contributory Provident Fund and Employees Pension Fund with the CPF authorities.
7. Release of security deposits, which some employees might have deposited with the office.
8. Referring to letter No. PID (PE) 25/2001/100 dated 28.1.2003 from Programme Implementation Department, and
9. Payment of arrears of dearness allowance thereby raising the D.A. percentage from 62% to 65%."
Further, the applicant/appellant narrated the background of MECOFED, its business and status and the necessity of Golden Handshake Scheme; and also referred to his aforesaid response to the respondent No.1 on 08.07.2004 before dealing with the points raised in the representations. The relevant part of the matter is that in his order dated 01.12.2006, the applicant/appellant found untenable the claim of employees towards Gratuity and Leave Encashment while observing as under:-
"D. PAYMENT OF GRATUITY TO THE EMPLOYEES OF
MECOFED:-
The MECOFED CACA Rules 1980 is silent on the issue of payment of gratuity to its employee's be it a case of retirement on superannuation, resign, termination from service and whatever in relation to the employees severing from the service of MECOFED.
The board of director's in the meeting held on 24th march 1999 discussed the implementation of the 3rd Meghalaya Pay Revision. It was informed in that committee by the Registrar of Cooperative Societies that increase in the managerial subsidy by the State Government was next to impossible due to severe funds constrains.
The Board of Director of Mecofed in its meeting held on 17.4.98 discussed the case of Gratuity and agreed that the matter be referred to the Registrar of Cooperative Societies to examine and clarify if the Gratuity Acts & Rules can be applied to the employees of MECOFED. The Registrar of Cooperative Societies vide letter No. MC (M) 18/87/Vol-V/136 dated 3rd August 1998 conveyed to Mecofed that, as per extract of the Gratuity Act 1972, it does not appear that the Act is applicable to Mecofed, as it is an autonomous body registered under the Cooperative Societies Acts and Rules.
It has been confirmed from record that no Gratuity has ever been paid to the employees of MECOFED who (i) Retired from service either on superannuation or pre-mature retirement D (ii) Died while in service (iii) Resigned from service (iv) Were dismissed from service. 11
Writ Appeal No.37/2012 & Review Petition No.9/2016 A certificate from the Deputy Chief Account Officer is enclosed
- ANNEXURE-B E. PAYMENT OF LEAVE ENCASHMENT TO THE EMPLOYEES OF MECOFED The matter relating to earned leave and payment of leave encashment to the employees of MECOFED is governed by Rule 39 of the MECOFED CACA Rules 1980, which is reproduced below Rule 39:- earned leave
i) An employee shall earn one day's leave for every eleven days of duty.
ii) Earned Leave shall not be accumulated by an employee for more than 180 days.
iii) If services of an employee are terminated after giving him notice for the period prescribed in Rule 16 he shall be paid salary for the unenjoyed earned Leave due to him.
iv) If an employee resigns from his post after giving notice for the period prescribed in Rule 16, he shall: -
a) Be paid salary for the period of earned leave due to him.
b) In case, the notice falls short of the prescribed period, the amount of earned leave equivalent to the days the notice fall short, shall be adjusted towards the notice period and salary for the balance period of earned leave due shall be paid to him.
As per the aforesaid rules leave encashment is payable to the employees of MECOFED If services of an employee are terminated after giving him notice and if an employee resigns from his post after giving notice.
Leave encashment is not admissible to employees who retire from service on superannuation. As the disassociation of the employees under the Golden handshake scheme is taken as per the norms of entitlement under of the scheme, which says that such employees would be entitled to compensation.
(i) Equivalent to 2 (two) months pay (basic plus DA) for each completed years of past service.
or
(ii) The monthly pay and allowances at the time of retirement multiplied by the balance months of service left before normal date or retirement subject to a maximum of 48 (forty-eight) months, whichever is less.
The above norms quantify the term retirement in determining the package on Golden handshake scheme.
It has been confirmed from the records that no leave encashment has ever been paid to the employees of MECOFED who
(i) Retired from service on superannuation (ii) Died while in service (iii) Were dismissed from service. Leave encashment have however been paid in the case of those who had resigned from service before retirement.
A certificate from the Deputy Chief Accountant Officer is enclosed - ANNEXURE-C The view of the law Department on leave encashment and gratuity as communicated to the respondent is reproduced below. LAW DEPARTMENT VIEW ON LEAVE ENCASHMENT AND GRATUITY 12 Writ Appeal No.37/2012 & Review Petition No.9/2016 In view of the fact that no gratuity had ever been paid to any MECOFED employee, be it in the case of retirement/resignation/death (as Mecofed Service Rules is silent on this count) And in view of the other facts that no leave encashment has ever been paid to the MECOFED employees even for those who had naturally retired from service on superannuation (as the said Service Rules is also silent on this aspect), and as such, the MECOFED employees who are now proceeding on VRS/Golden handshake would not also be entitled for the above two benefits.
... ... ..."
On the other hand, the Government of Meghalaya in its Co- operation Department took a decision on the aforesaid representations in the order issued by the Commissioner and Secretary to the Government of Meghalaya on 02.12.20068. In this order, the issues relating to Gratuity and Leave Encashment were dealt with in the following manner:-
"3&4. Payment of gratuity and leave encashment to the employees of MECOFED:
It has been confirmed from record that (A) No Gratuity has ever been paid to the employees of MECOFED who (i) Retired from service either on superannuation or pre-mature retirement (ii) Died while in service (iii) Resigned from service (iv) Were dismissed from service (B) No leave encashment has ever been paid to the employees of MECOFED who (i) Retired from service on superannuation (ii) Died while in service (iii) Were dismissed from service. Leave encashment have however been paid in the case of those who had resigned from service before retirement.
Part VIII - General - of the model scheme launched by the Government lays that In case of any doubt regarding interpretation of this scheme, the decision of the Government shall be final.
With regard to the admissibility or otherwise of the claim for payment of gratuity and encashment to the employees of MECOFED, the State Government in cooperation department consulted the Law department and its view on these two issues is reproduced below:
In view of the fact that no gratuity had ever been paid to any MECOFED employee, be it in the case of retirement/resignation/death (as MECOFED Service Rules is silent on this count) And in view of the other facts that no leave encashment has ever been paid to the MECOFED employees even for those who had naturally retired from service on superannuation (as the said Service Rules is also silent on this aspect), and as such, the MECOFED employees who are now proceeding on VRS/Golden handshake would not also be entitled for the above two benefits."
The learned Commissioner and Secretary concluded on the representations in the following:-8
Annexure-A-5 in WPC No. 320 (SH) of 2010 13 Writ Appeal No.37/2012 & Review Petition No.9/2016 "Conclusion In view of the above, it is clarified that the State Government does not own any responsibility from the staff of MECOFED as not being its employees. MECOFED is governed by its byelaws and rules and service conditions are governed by the MECOFED CACA Rules 1980. Under Rule 17 (d) of the CACA rules 1980, MECOFED has authority to terminate by giving three months salary.
Government is of the view that despite having aforesaid provisions under Rule 17 (d) of the MECOFED CACA Rules 1980 governing the service conditions of the employees of MECOFED for three months notice to retire its employee in view of its precarious financial conditions, MECOFED adopted the scheme which is much more humane and reasonable and sought support from the Government in the matter. The trade off between the three months salary with leave encashment in case of termination and the offered golden handshake package in lieu of all dues excluding the current salary, the latter being reasonable and beneficial appear much more justified than provisions under Rule 17 (d) of the MECOFED CACA Rules 1980.
With the above stated facts, the petitions are disposed of in compliance with the Honourable High Court Order in relation with WP(C) no 251/6313 (SH) 2004 dated 25 th august 2006 and dated 6th November 2006."
Being aggrieved of the aforesaid orders dated 01.12.2006 and 02.12.2006, the employees preferred another writ petition in the then jurisdictional High Court, being WP (C) No.52 (SH) of 2007. It appears that the said writ petition was dismissed in default and before its restoration, the employees filed a representation before the Controlling Authority under the Payment of Gratuity Act, 1972 [„the Act of 1972‟] on 22.02.2010 in relation to their claim for Gratuity. While the said representation remained pending before the Controlling Authority, the said writ petition was restored and was taken up for consideration by a learned Single Judge of the then jurisdictional High Court on 02.06.2010. The learned Single Judge, after taking note of the said representation filed by the employees before the Controlling Authority, proceeded to dispose of the said writ petition with the directions to the Controlling Authority to take a decision on the representation dated 22.02.2010; and with liberty to the employees to approach the Court again, if aggrieved of the order passed by the Controlling Authority.14
Writ Appeal No.37/2012 & Review Petition No.9/2016 The order dated 02.06.2010 as passed in WP (C) No.52 (SH) of 2007 reads as under:-
"02.06.2010 Heard Mr. K Khan, the learned counsel for the petitioner. Also heard Mrs. B Dutta, learned counsel for the respondent No.1 and Mr. S Sen, the learned counsel for the State.
Seen the rejoinder affidavit filed by the petitioners. In paragraph 4 of the rejoinder affidavit, it is revealed that the petitioners have filed a representation before the Controlling Authority under the Payment of Gratuity Act, 1972, on 22.02.2010 to redress their grievance. This application was apparently filed when the writ petition was dismissed in default and was not yet restored. In view of this development, I do not find it necessary to adjudicate upon the points raised by the petitioner at this stage.
In this view of the matter, I have no alternative but to dispose of the writ petition with a direction that the State respondents/Controlling authority shall consider and dispose of the representation dated 22.2.2010 in accordance with law within a period of two months from today. It shall be open to the petitioners to approach the Court again if they are aggrieved by the order passed by the Controlling Authority.
A copy of this order be furnished to the learned counsel for the State."
Until the stage aforesaid, the facts run more or less common to these matters but it is once noticeable that the claims of the concerned employees for Gratuity as also for other payments formed the composite subject-matter of WP (C) No.52 (SH) of 2007 because therein, both the aforesaid orders dated 01.12.2006 and 02.12.2006 as passed in disposal of their representations had been challenged; and in the said orders, all the claims of the employees had been dealt with. In fact, apart from Gratuity and Leave Encashment, the employees had been making several other claims too, including those of the arrears of salary and of pay fixation on enhanced Dearness Allowance. However, the learned Single Judge of the then jurisdictional High Court proceeded to dispose of the said writ petition [WP (C) No.52 (SH) of 2007] merely with reference to the representation filed by the employees before the Controlling Authority under the Act of 1972; and 15 Writ Appeal No.37/2012 & Review Petition No.9/2016 in this process, the other claims of the employees including that relating to Leave Encashment were not even examined by the Court.
The aforesaid order dated 02.06.2010 as passed in WP (C) No.52 (SH) of 2007, therefore, led to two parallel sets of proceedings. As regards the claims that had not been adjudicated upon, the employees preferred yet another writ petition in the then jurisdictional High Court, being WP (C) No.320 (SH) of 2010. This writ petition was decided and partly allowed by a learned Single Judge of the then jurisdictional High Court on 01.11.2012; and this order dated 01.11.2012 is questioned by the applicant/appellant (the employer) in WA No. 37 of 2012. On the other hand, the employees‟ claim for Gratuity was dealt with by the Controlling Authority under the Act of 1972, whose final decision was questioned by the employees in WP (C) No.154 (SH) of 2012 that was allowed by a learned Single Judge of this Court on 10.07.2013; and the intra-court appeal filed by the employer, being WA No. 34 of 2013, was dismissed on 11.06.2015. The employer seeks review of the judgment dated 11.06.2015 in Review Petition No.9 of 2016.
Having taken note of the relevant background aspects, appropriate it shall now be to examine the orders hitherto passed in relation to the two claims involved in these matters. Issue relating to Leave Encashment:
As noticed, various claims of the retiring employees of MECOFED under the Golden Handshake Scheme, including that of Leave Encashment did not enter into the process of adjudication though forming the subject-matter of the earlier writ petition [WP(C) No.52 (SH) of 2007], which was filed by them while challenging the aforesaid two orders dated 01.12.2006 and 02.12.2006; and the said 16 Writ Appeal No.37/2012 & Review Petition No.9/2016 writ petition was disposed of only with reference to the representation before the Controlling Authority under the Payment of Gratuity Act. The employees had neither abandoned their other claims nor the Court had ruled against them. In the given circumstances, the employees preferred another writ petition in the then jurisdictional High Court, being WP (C) No.320 (SH) of 2010 seeking the following relief:-
"In the premises aforesaid, your humble Petitioners prays that this Hon'ble Court may be pleased to admit this Petition, call for records, issue Rules calling upon the Respondents to show cause as to why a Writ in the nature of certiorari, should not be issued setting aside the Order of termination of service, dated 31/08/2004, and/or a Writ in the nature of Mandamus should not be issued directing the Respondent authorities to carry out the decision arrived at as per the draft Cabinet Memorandum issued vide letter dated 20.1.2003 and order dated 25.8.2004 and pay all the amount due to the Petitioners, namely, balance arrear salary on the basis of the Pay Revision of 1987 and 1996 part of which has already been paid and leave encashment, and upon hearing the parties be pleased to make the Rule absolute, and/or pass such further Order/Orders as this Hon'ble Court may deem fit and proper."
While dealing with the said writ petition in the impugned order dated 01.11.2012, the learned Single Judge segregated the matter relating to the payment of Gratuity as the same was, at the relevant time, pending in other litigation; and took note of the issues arising in the writ petition as follows:
"27. On such a perusal, I have found that in this proceeding, the claim relating to payment of gratuity to the petitioners has not been agitated since such a claim has already been decided by the management of the MECOFED against which a review petition is said to have been pending. Being so, this Court contemplates to discuss other matters over which the parties at variance at the moment. They are:-
a) Whether MECOFED is a state within the meaning of Article 12 of the Constitution of India?
b) Whether the present writ proceeding is barred by the Principles of Waiver and Estoppels?
c) Whether the claim of petitioners in respect of arrear pay arising out of revision of pay affected in 1987 and 1996 is also barred by the Principles of res-judicata in view of decisions, rendered in Writ Appeal No. 13 (SH) 08, as well as WP (C) No.24 (SH) 08
d) Whether delay in seeking arrear pay comes in the way of the present writ petition?
e) Whether the petitioners are entitled to leave encashment benefit.17
Writ Appeal No.37/2012 & Review Petition No.9/2016
f) Whether, on the date of retirement from service, the petitioners are entitled to fixation of pay on the basis of their basic pay + DA at the rate of 65% of their basic pay."
In relation to point (a), the learned Single Judge held that MECOFED was an instrumentality of the State and as such, amenable to the writ jurisdiction. In point (b), the learned Single Judge rejected the contention that writ proceedings were barred by the principles of waiver and estoppel with the finding that grey areas and obscurities in the scheme of retirement were not addressed to despite representations and yet the employees were made to retire. The learned Single Judge, inter alia, observed as under:
"35. It is relevant that such clarifications were sought for in order to enable the petitioners to take appropriate decisions on some of the proposals incorporated in the scheme in question. In that connection, my attention has been drawn to the representation dated 18.06.2004, representation dated 16.08.2004 and representation dated 07.07.2004 at Annexure A-3, Annexure A-4 and Annexure A-12 to the writ petition respectively.
36. Annexure A-3, Annexure A-4 and Annexure A-12 clearly show that some clarifications on matters like payment of arrear salary, statutory dues as well as method of calculation of those entitlements under the Golden Handshake were sought for from respondent No.1 by some of the petitioners. Though respondent No.1 has filed a counter affidavit yet it cannot be deduced there-from that the aforesaid queries had appropriately been addressed to and answered.
37. Above being the position, the claim of the petitioners that they were not fully aware as to what statutory payment/payments, they were going to receive, in case, they were to retire from services and that they were not aware as to how those entitlements would be calculated cannot easily be brushed aside. These, in turn, lend enormous support to the claim of the petitioners that they were made to retire from service even before they formally expressed their consent to retire from service under the scheme aforesaid.
38. In the face of such revelations, the claim of the respondents that the petitioners had accepted the terms and the conditions incorporated the scheme on their own, that they chose to retire from service voluntarily and that too without raising any objection, whatsoever, cannot be accepted without a large grain of salt. As such, their claim that this proceeding is barred by principles of waiver and estoppels is also found without any basis."
(underlining supplied for emphasis) Thereafter, the learned Single Judge took up the claim of the employees towards leave encashment benefits and found them entitled to the same for having been so represented in contents of the Cabinet 18 Writ Appeal No.37/2012 & Review Petition No.9/2016 Memorandum. The consideration and findings of the learned Single Judge in the order impugned in this regard could also be noticed in extenso as under:
"39. This brings us to the question where I am to decide if petitioners are entitled to leave encashment benefit under the aforesaid scheme. It has also been contended that as per scheme, above, statutory payments are to be made in accordance with the Rules governing the PSUs/PSEs. According to the respondents, under the Rules which govern the MECOFED, the petitioners are not entitled to leave encashment.
40. In that connection, it has been stated that the Rules governing the MECOFED is silent vis-à-vis the granting of leave encashment to its employees. In fact, there is no past instance to show that any of its employees was ever granted such benefit. The petitioners are no exception to such a Rule and therefore, they too cannot claim leave encashment benefit, more so, when Rules in question does not permit such benefit.
41. On evaluating the above claims and counter claims in the light of materials on record, I have found that it is true that MECOFED Rules are silent regarding payment of leave encashment to its employees. It has also been found from the counter affidavit that there is no instance of any employee of MECOFED retiring in any circumstance whatsoever, being paid leave encashment benefit. But then, due to peculiarity of the problems before us, those revelations may not be sufficient to decide the matter under consideration.
42. We need to look at some other factors as well. This is because of the fact that one must not be oblivious to the various provisions, incorporated in draft Cabinet memorandum, more particularly Rule 4 of such memorandum which, amongst other things, contemplates the payment of provident fund, gratuity and leave encashment to the employees who chose to retire from services on accepting the terms and conditions incorporate in such a scheme.
43. One must not also be un-mindful to the fact that petitioners had some genuine doubts over some matters covered by the scheme, more particularly in matter of payment of statutory dues for which they approached the authority concerned to get their doubts cleared before they could express their mind to their authority. However, record reveals that the petitioners were made to retire from service even before some of their doubts, doubt relating to leave encashment in particular, being cleared.
44. When those revelations are considered together with the fact that the petitioners were required to retire from service even before their actual time of retirement comes, it would appear clear that the petitioners would not have accepted the voluntary retirement scheme if they had knowledge that some of the benefits, incorporated in Cabinet memorandum, leave encashment in particular, would not be granted to them even if they chose to retire from service under the scheme in question.
45. In the teeth of above disclosures, I am of the opinion that the respondent No.1 cannot take shelter under the plea that petitioners 19 Writ Appeal No.37/2012 & Review Petition No.9/2016 cannot be given leave encashment benefit for want of appropriate rule in the MECOFED or under the plea that no employee of the MECOFED, retiring under any circumstances, whatsoever, was ever given the leave encashment benefit.
46. I am, therefore, constrained to hold that by not granting leave encashment benefit to the petitioners, the respondents had resiled from its stand which it had taken in its draft Cabinet memorandum. This is not permissible, more so, when the petitioners were made to retire from services on the expectation that on their retirement from service under the VRS in question, they would be paid some statutory dues like leave encashment."
(underlining supplied for emphasis) The learned Single Judge, thereafter, dealt with the claim of employees towards arrears of salary and rejected the same with findings that the component of arrears of salary did not form the part of the Scheme and in fact, such a claim had already been declined in WP(C) No. 24 (SH) of 2008 and WA No. 13 (SH) of 2008. This part of the matter need not be dilated further for not forming the subject-matter of appeal. However, the other part of the issue considered and determined by the learned Single Judge had been as regards correct pay fixation and claim of D.A. at the rate of 65% of the basic pay, where the learned Single Judge found justified the claim of employees and while rejecting the stand of the respondents, held as under:
"85. Coming back to our case we have found that the petitioners were admittedly given additional DA at the rate of 3% w.e.f. 1 st July 2004 thereby raising the total DA of the basic pay of the employees working in the establishment under consideration to 65%. This clearly indicates that on the date, aforesaid, respondent No.1 was in a position to pay its employees DA @ 65% of the basic pay.
86. These speak loud and clear that on and from 01.07.2004, the petitioners were entitled to claim DA at the rate of 65% for all practical purposes including fixation of pay as on 31.08.2004. In that view of the matter, the petitioners claim for fixation of their pay on 31.08.04 on the basis of their basic pay prevailing then plus 65% of DA is found wholly justified.
87. Consequently, I am constrained to hold that the respondent No.1 in not releasing the leave encashment benefits as well as in not fixing the pay of the petitioners as on 31.08.2004 as stated above had acted arbitrarily, whimsically and in violation of principles of natural justice as well as various constitutional dicta. However their claims for arrear pay, as stated above, is found unsustainable."20
Writ Appeal No.37/2012 & Review Petition No.9/2016 In view of the above, the learned Single Judge partly allowed the petition in the following manner:
"88. In the result, this proceeding is partly allowed with following direction to the respondent No.1:-
1. To pay the petitioners the leave encashment benefits as per their Service Records/other relevant documents.
2. To fix the pay of the petitioners as 31.8.2004 on the basis of their basic pay plus DA @ 65 of their basic pay.
3. To compute the compensation etc. payable to the petitioners on the basis of their pay so fixed as on 31.08.2004 and
4. To pay all those dues as early as possible but in no case beyond 6 months from the date of receipt of copy of this Order. The parties are left to bear their own costs."
Aggrieved of the aforesaid order dated 01.11.2012 in WP(C) No. 320 (SH) of 2010, the applicant/appellant has preferred the intra-court appeal, being WA No. 37 of 2012. It may be pointed out at this stage itself that on 14.12.2012, though this appeal was admitted for consideration but on the prayer for stay in MC No. 472 (SH) of 2012, the Division Bench of the then jurisdictional High Court found that there was nothing wrong with direction No. 2 of the impugned order i.e., the direction relating to pay fixation of the writ petitioners as on 31.08.2004 on basic pay plus D.A. at the rate of 65%; and, therefore, even while staying the operation of the other part of the order impugned, the Division Bench directed that the aforesaid direction No. 2 shall be complied with by the appellant within six months. The time for implementation was further enhanced by a period of three months by an order dated 24.05.2013 in MC No. 158 (SH) of 2013. It is an admitted position of the parties that the aforesaid directions have since been complied with and this part of the matter has not been pressed for consideration in appeal. The same is, therefore, left at that only. 21
Writ Appeal No.37/2012 & Review Petition No.9/2016 The claim for Gratuity:
As regards the claim of the employees for payment of Gratuity, it is noticed that in compliance of the aforesaid order dated 02.06.2010 as passed in WP (C) No.52 (SH) of 2007, the Deputy Labour Commissioner-cum-Controlling Authority under the Payment of Gratuity Act, Shillong examined the representation made by the employees concerned; and, while holding that MECOFED came within the purview of Payment Gratuity Act, 1972 for being an Establishment within the meaning of Section 1 (3) (b) thereof, held that its employees were entitled to Gratuity. The order so passed by the Controlling Authority under the Payment of Gratuity Act, Shillong on 30.07.2010, accepting the representation of the concerned employees, reads as under:-
"GOVERNMENT OF MEGHALAYA OFFICE OF THE LABOUR COMMISSIONER MEGHALAYA :::: SHILLONG *************************************************************** ORDER No. MLG.16/73/__ Dated Shillong, the 30th July, 2010 In compliance and pursuance to the order dt. 2.06.2010 of the Hon'ble Guwahati High Court (Shillong Bench) No. WP(C)No. 52 (SH) the application submitted by Shri Tikendra Singh & others has been perused and examined in the light of Payment of Gratuity Act, 1972 vis-a-vis the Constitution and Bye-Laws of MECOFED. After consideration it is found as follows:-
The Meghalaya State Cooperative Marketing & Consumer Federation is a Society registered with the Registrar of Cooperative Society and as such it is an establishment. Establishment connotes organized body of men and women employed where relationship of employer and employees comes into existence. Hence the Meghalaya State Cooperative Marketing & Consumer Federation is an Establishment within the meaning of section 1 (3) (b) of payment Gratuity Act 1972. The function of MECOFED also comes within the said Act. Therefore its employees are entitled to gratuity.
Now, therefore, as the Controlling Officer under Payment of Gratuity Act, 1972, I pass the Order that the employees of MECOFED are also entitle to gratuity, MECOFED to take further necessary action in pursuance of this order.
Sd/-
(Smti. F.K. Marak) Deputy Labour Commissioner & Controlling Officer under the Payment of Gratuity Act."22
Writ Appeal No.37/2012 & Review Petition No.9/2016 It appears that after the aforesaid order dated 30.07.2010, the applicant/appellant filed a so called review petition, whereupon the Controlling Authority passed a different order on 30.05.2012, this time holding that the employees, who had retired under the Golden Handshake Scheme, were not entitled to claim Gratuity. The order dated 30.05.2012 reads as under:-
"GOVERNMENT OF MEGHALAYA OFFICE OF THE LABOUR COMMISSIONER MEGHALAYA::::SHILLONG ********** ORDER Shri Tikendra Singh & Others - Petitioner Vs. MECOFED - Respondent In pursuance of the Hon'ble High Court in its order dated 30 th March, 2012 passed in WP (C) No. [SH] of 2012, the application submitted by Shri Tikendra Singh & Others is heard in the arguments presented by both the parties on the 2nd and 14th March, 2012. The case has been examined thoroughly in the light of the Payment of Gratuity Act, 1972, the Classification, Appointment, Control and Appeal Rules, 1980, Bye-Laws of MECOFED and the Golden Handshake Scheme.
As evident from the Classification, Appointment, Control and Appeal Rules, 1980, Bye-Laws and the Golden Handshake Scheme and the points raised by the Learned Counsel of the Respondent, MECOFED, no fund provision was created by MECOFED to be reserved for the Payment of Gratuity since its inception. And the same was not incorporated in its Classification, Appointment, Control and Appeal Rules, 1980 and Bye-Laws. Payment of Gratuity was never paid to any of the employees who have retired on superannuation till the time of the introduction of the Golden Handshake Scheme. Again, as is evident, the employees had never raised the issue of the absence of the fund during all the time they were in service with the Corporation. Consequently, while framing the Golden Handshake Scheme, the Payment of Gratuity was never featured as a component of the Scheme.
In view of the above and the facts that the MECOFED is bound by the rules framed under the Classification, Appointment, Control and Appeal Rules, 1980, and the Bye-Laws, this Authority, hereby, declare that the employees who have retired under the Golden Handshake Scheme are not entitled to the claim of Gratuity.
Case disposed off and informed both parties.
Sd/-
(Smti. M.Thabah) Deputy Labour Commissioner & Controlling Authority under the Payment of Gratuity Act, 1972."23
Writ Appeal No.37/2012 & Review Petition No.9/2016 Aggrieved of the aforesaid order dated 30.05.2012, the employees preferred a writ petition, being WP (C) No.154 (SH) of 2012 that was allowed by a learned Single Judge of this Court on 10.07.2013 while disapproving the order dated 30.05.2012 and while holding that the Act of 1972 was applicable to MECOFED and Gratuity was payable to an employee on termination of his employment after he had rendered continuous service for not less than five years. The learned Single Judge, inter alia, held as under:-
"17. Therefore, relying on the provisions of the Payment of Gratuity Act, 1972, more particularly, section 1(3), section 2(e) and (f) and section 2(c) and 2(g) of "The Meghalaya Shop and Establishment Act 2004", this court is of the considered view that Payment of Gratuity Act 1972 applies to the MECOFED. Under section 4 of the Payment of Gratuity Act 1972, gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than 5(five) years. It is admitted by the parties that the MECOFED had more than 100 (one hundred) employees and the petitioner had rendered continuous service for more than 5(five) years before taking voluntary retirement. The State has the power to exempt any establishment from operation of the provisions of the Payment of Gratuity Act 1972 if in the opinion of the appropriate Government, the employees in such establishment, factory, mine, oilfield, plantation, port, railway company or shop are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under the Act. In the present case in hand, admittedly the respondent has not issued any order under section 5 of the Payment of Gratuity Act 1972 for exemption of the MECOFED from operation of the provisions of the Payment of Gratuity Act 1972."
The learned Single Judge also rejected the contentions of the applicant/appellant that the employees were not entitled to claim Gratuity for waiver and acquiescence, while observing that the statutory right of Gratuity cannot be denied to the employees even if they had given the option for voluntary retirement. The learned Single Judge observed and held as under:-
"18. It is the case of the State respondents that the petitioners are barred by the principles of estoppels, waiver and acquiescence from claiming the benefit under the Payment of Gratuity Act 1972 inasmuch as they had already enjoyed the benefit under the said Golden 24 Writ Appeal No.37/2012 & Review Petition No.9/2016 Handshake Scheme of Meghalaya with their eyes open. When they enjoyed the benefit under the said scheme by undergoing voluntary retirement, they did not claim for gratuity under the Payment of Gratuity Act 1972. But it is the case of the petitioners that there cannot be estoppel against the statutes. In other words, there cannot be waiver of statutory right under the Payment of Gratuity Act 1972 to claim the gratuity. The Apex Court in Allahabad Bank and Another vs. All India Allahabad Bank Retired Employees Association, (2010) 2 SCC page 44 held that there cannot be a waiver of statutory rights and also that the principles of estoppels cannot be raised to defeat the provisions of statute. The fact of the case in Allahabad Bank's case (Supra) is similar with that of the present case. In that case also, the employees had exercised their options voluntarily for availing of pension in lieu of gratuity for retirement from bank service.
Therefore, it was the case of the authority that since the employees had already exercised their option voluntarily for availing the pension in lieu of the gratuity, they cannot claim payment of gratuity under the Payment of Gratuity Act 1972. In that context, the Apex Court held that the statutory right of the employee under the Payment of Gratuity Act 1972 cannot be denied to the employees who had already given their options for voluntarily retirement for availing of pension in lieu of gratuity."
In intra-court appeal, the Division Bench of this Court again found that there was no exemption of MECOFED under Section 5 of the Act of 1972, while observing in its judgment dated 11.06.2015 as under:-
"7. On careful consideration of rival submissions, we do not find any merit in the contentions of learned counsel for the appellant organisation for various reasons, namely, that the Payment of Gratuity is a financial aspect of legislation which was enacted after consultation with the Labour Minister of States as well as the Central Government in different conferences. There is a specific provision, namely, Section 5 which provides for power to exempt payment in favour of the establishment. However, admittedly no such exemption was ever applied for or granted by the competent authority."
The Division Bench of this Court further held that the statutory requirements of making payment of Gratuity cannot be avoided by MECOFED and also expressed doubts if the Controlling Authority could have exercised the power of review against its administrative decision. Hence, the Division Bench proceeded to dismiss the appeal while observing as under:-
"8. The protection in respect of payment of gratuity has been discussed by the Delhi High Court in Taxmaco Ltd. vs. Roshan Singh, reported in 2001 LLR 890 (Delhi), wherein it was held that the payment of gratuity cannot be withheld even for failing to vacate staff quarters. In view of the clear provisions which provide for 25 Writ Appeal No.37/2012 & Review Petition No.9/2016 mandatory statutory requirement to make payment of gratuity in all eventualities, the appellant-organization cannot escape the liability to make payment of gratuity. That apart, it is also doubtful as to whether the controlling authority can exercise the power of review against its administrative decision. Thus, in the premises discussed hereinabove, we do not find any merit in the writ appeal and the same is hereby dismissed."
The applicant/appellant attempted to question the order so passed by the Division Bench of this Court by way of a Petition for Special Leave to Appeal [„SLP‟] before the Hon‟ble Supreme Court, being SLP (Civil) No.4329 of 2016. It appears that though at the initial stage, on 09.05.2016, the Hon‟ble Supreme Court expressed prima facie satisfaction on the entitlement of employees to the statutory benefit of Gratuity but at the request, the matter was adjourned so as to enable the learned counsel for the present applicant/appellant to go through the Scheme. Thereafter, when the matter was taken up on 22.07.2016, a prayer for withdrawal was made with liberty to approach this Court by way of a review petition. The Hon‟ble Supreme Court was pleased to accept the prayer and while granting liberty as prayed for, dismissed the SLP as withdrawn while also making it clear that the merits of the matter had not been examined.
In view of the liberty granted by the Hon‟ble Supreme Court, the applicant/appellant-Managing Director, MECOFED has filed the review petition [No.9 of 2016] essentially stating the grounds that the employees of MECOFED are governed by the Rules of 1980 and the said Rules are silent about the issue of payment of Gratuity. According to the applicant/appellant, the vital aspect of the matter that the Rules of 1980 governing the service conditions of the employees of MECOFED are absolutely silent about the payment of Gratuity has not been considered either by the learned Single Judge while deciding the writ petition [WP (C) No.154 (SH) of 2012] or by the Division Bench 26 Writ Appeal No.37/2012 & Review Petition No.9/2016 while deciding the appeal [WA No.34 of 2013]. It is also submitted that the principles of acquiescence and waiver do apply with full force against the respondents for themselves having opted for Golden Handshake Scheme and having received all the benefits under the said scheme without any demur.
Summation:
In summation of the narrative foregoing, the subject-matter of these cases could be put in a nut-shell as follows: The idea mooted by the State Government for VRS for the employees of sick PSUs/PSEs, was put in operation in MECOFED by the applicant/appellant, the Managing Director but the concerned employees, immediately after noticing this proposition, raised the doubts and queries as regards their entitlements and made representations, including those dated 18.06.2004 and 16.08.2004. These representations by the employees remained pending and without any decision thereupon, the retirement scheme was made effective from 31.08.2004 in MECOFED. The issues relating to payment of Gratuity and Leave Encashment had indeed been raised amongst other issues in the said representations.
By virtue of the order dated 25.08.2006 in WP(C) No. 251 (SH) of 2004, the concerned authorities took the decisions on these representations on 01.12.2006 and 02.12.2006 and declined the claim of the employees on the grounds that Gratuity had never been paid to any MECOFED employee; Leave Encashment had also not been paid to the MECOFED employees retiring on superannuation; and the MECOFED Service Rules i.e., the Rules of 1980 were silent on both these counts. The writ petition filed by the employees against the aforesaid orders dated 01.12.2006 and 02.12.2006 was, however, disposed of only because of the representations made by the 27 Writ Appeal No.37/2012 & Review Petition No.9/2016 employees to the Controlling Authority under the Act of 1972. The Controlling Authority ultimately declined the claim of the employees for Gratuity but the order so passed by the Controlling Authority was not approved by the learned Single Judge and then by the Division Bench of this Court while holding that MECOFED was covered under the Act of 1972 and there was no exemption granted to this organization. On the other hand, the other writ petition by the employees was allowed by the learned Single Judge and their claim for Leave Encashment was upheld with the observations that all the stipulations of VRS were not made clear by the employer before enforcing the Scheme; and the employer was not entitled to resile from the promise made in the Cabinet Memorandum that envisaged the payment towards Leave Encashment. The employer is aggrieved of the orders so passed by the Courts in granting the relief of payment of Gratuity and Leave Encashment to the employees.
Rival contentions and the points for determination:
Learned counsel for the applicant/appellant has strenuously argued that the claim for Gratuity or Leave Encashment by respondents was not maintainable at all for they having accepted the retirement scheme and having enjoyed the benefits thereunder.
Learned counsel has particularly relied on the decisions of the Hon‟ble Supreme Court in AK Bindal v. Union of India : (2003) 5 SCC 163, HEC Voluntary Retd. Employees Welfare Society & Anr v. Heavy Engineering Corpn. Ltd. & Ors: (2006) 3 SCC 708, and Officers and Supervisors of I.D.P.L. v. Chairman and M.D. I.D.P.L.: AIR 2003 SC 2870 and that of the Hon‟ble Delhi High Court in P.P. Vaidya & Ors v.
IFCI Ltd. & Ors: LPA No.786 of 2013 decided on 06.05.2014. The learned counsel has argued that when the rules do not provide for 28 Writ Appeal No.37/2012 & Review Petition No.9/2016 payment of Gratuity and no such Gratuity had ever been paid to any of the employees, the respondents, being the employees retiring under the Golden Handshake Scheme, did not acquire any entitlement thereto. According to the learned counsel, this aspect of the matter having not been examined in WA No. 34 of 2013, the judgment dated 11.06.2015 deserves to be reviewed by this Court. The learned counsel would further argue that under Rule 39 of the Rules of 1980, Leave Encashment is payable to the employee who resigns from service, and no such Leave Encashment amount was included as a component of the Golden Handshake Scheme; rather, the Scheme itself provided that the component like Leave Encashment would be applicable only as per the service rules of the respective PSUs/PSEs.
According to the learned counsel, when Leave Encashment had not been paid to any employee who retired on superannuation, the learned Single Judge was not justified in granting this benefit to the respondents.
Per contra, the learned counsel for the respondents has vehemently argued that the grey areas in the Scheme of retirement were never clarified by the applicant/appellant despite repeated representations of the employees and, therefore, unilateral operation of VRS with effect from 31.08.2004 cannot operate adverse to the entitlement of the employees. Learned counsel has contended that Gratuity being of a statutory right, once it is held that MECOFED is not exempted from the operation of the Act of 1972, the decision as rendered by the Division Bench of this Court in WA No. 34 of 2013 calls for no review or reconsideration. As regards the question of Leave Encashment, the learned counsel would argue that as per Rule 39 read with Rule 16 of the Rules of 1980, Leave Encashment is payable 29 Writ Appeal No.37/2012 & Review Petition No.9/2016 to employees of MECOFED not only in the case of resignation but also in the case of termination of service after notice. According to the learned counsel, the case of the respondents, for the purpose of Rule 39, does not fall in the category of retiring employees but in the category of the employees whose services are terminated under the Golden Handshake Scheme and hence, they are entitled to Leave Encashment at par with such an employee whose services are terminated by serving notice as per Rule 16 of the Rules of 1980. Hence, the learned counsel would submit, the impugned order dated 01.11.2012 also calls for no interference and the intra-court appeal preferred by the applicant/appellant deserves to be dismissed.
Having given anxious consideration to the rival contentions with reference to the records and the law applicable, we are clearly of the view that the intra-court appeal as also the review petition as filed by the employer deserve to be dismissed.
Legal implications of the VRS in question:
For dealing with the issues raised in these matters, the fundamental requirement is of taking into comprehension the basic principles governing the Scheme of Voluntary Retirement, by whatever name called. It remains trite that voluntary retirement of an employee and thereby cessation of the jural relationship between the employer and the employee, unless governed by any statutory provision, is essentially a matter of contract and is governed by the basic principles of the Contract Act, 1872. Ordinarily, for operating such a Scheme of voluntary retirement, the employer floats an invitation to offer and when an employee opts for such a Scheme, he makes an offer, which, upon acceptance by the employer, gives rise to a binding contract. Thus, all the basic norms applicable for making of a valid contract, as envisaged 30 Writ Appeal No.37/2012 & Review Petition No.9/2016 by the Contract Act, do apply to a Voluntary Retirement Scheme; and once it is found that a set of employees had accepted the invitation and made the offer of voluntary retirement with eyes open and have enjoyed the benefit under the Scheme, they are not entitled to turn around and claim at a later stage some alleged benefits which are not envisaged by the Scheme, which is of a binding contract, once accepted and acted upon.
In the case of AK Bindal (supra), the erstwhile employees of Fertilizers Corporation of India and Hindustan Fertilizer Corporation claimed the revision of pay scale after opting for the voluntary retirement. Such a claim was rejected by the Hon‟ble Supreme Court while finding that VRS resulted in complete cessation of jural relationship between the employer and employees; and the employees were not entitled to agitate later for any kind of past rights, including any claim with respect to the upward revision of pay scale. In the case of Officers and Supervisors of IDPL (supra) also, the Hon‟ble Supreme Court found the persons, who had opted for early retirement scheme, disentitled to claim any pay revision. Similarly, in the case of PP Vaidya (supra), the Delhi High Court rejected the claim for performance linked incentive by the employees after three years of taking voluntary retirement.
In the case of HEC Voluntary Retired Employees Welfare Society (supra), the Hon‟ble Supreme Court expounded on the binding effect of the terms of Voluntary Retirement Scheme and disentitlement of the concerned employees to the benefit of revision in pay scale which was granted by the employer after their voluntary retirement. In this case, the Hon‟ble Supreme Court explained the principles, inter alia, in the following:31
Writ Appeal No.37/2012 & Review Petition No.9/2016 "11. An offer for voluntary retirement in terms of a scheme, when accepted, leads to a concluded contract between the employer and the employee. In terms of such a scheme, an employee has an option either to accept or not to opt therefor. The scheme is purely voluntary, in terms whereof the tenure of service is curtailed, which is permissible in law. Such a scheme is ordinarily floated with a purpose of downsizing the employees. It is beneficial both to the employees as well as to the employer. Such a scheme is issued for effective functioning of the industrial undertakings. Although the Company is "State" within the meaning of Article 12 of the Constitution, the terms and conditions of service would be governed by the contract of employment. Thus, unless the terms and conditions of such a contract are governed by a statute or statutory rules, the provisions of the Contract Act would be applicable both at the formulation of the contract as also the determination thereof. By reason of such a scheme only an invitation of offer floated. When pursuant to or in furtherance of such a voluntary retirement scheme an employee opts therefor, he makes an offer which upon acceptance by the employer gives rise to a contract. Thus, as the matter relating to voluntary retirement is not governed by any statute, the provisions of the Contract Act, 1872, therefore, would be applicable too. (See Bank of India v. O.P. Swarnakar)
12. It is also common knowledge that a scheme of voluntary retirement is preceded by financial planning. Finances for such purpose, either in full or in part, might have been provided for by the Central Government. Thus financial implications arising out of implementation of a scheme must have been borne in mind by the Company, particularly when it is a sick industrial undertaking. Offers of such number of employees for voluntary retirement, in that view of the matter, were to be accepted by the Company only to the extent of finances available therefor.
13. We have noticed hereinbefore the benefits admissible under the scheme. The employee offering to opt for such voluntary retirement not only gets his salary for the period mentioned therein but also gets compensation calculated in the manner specified therein, apart from other benefits enumerated thereunder."
The question herein is as to whether the principles aforesaid operate against the claim made by the respondents. In our view, in the given set of facts and circumstances, the answer is in the negative.
As noticed, when the State Government mooted the idea of Voluntary Retirement Scheme/Golden Handshake Scheme for the employees of the sick PSUs/PSEs, the Cabinet Memorandum proposing the Scheme stated in generalised terms that downsizing of PSUs/PSEs may be brought about with voluntary retirement of the employees, perhaps with the condition that all their dues would be paid in lumpsum; and the other statutory payments like Provident Fund, 32 Writ Appeal No.37/2012 & Review Petition No.9/2016 Gratuity, Leave Encashment etc. would also be paid within a stipulated time frame. The model Scheme was forwarded to MECOFED with the letter dated 28.01.2003 by the Programme Implementation Department of the Government of Meghalaya. This model Scheme stated, inter alia, in its clause VI that encashment of Earned Leave and payment of DCRG would be as per the Rules applicable to the employees. While acting on such a proposition, the applicant/appellant issued General Notice dated 10.06.2004 stating the financial crisis being faced by MECOFED and the management having approached the Government seeking financial assistance for downsizing the organisation. However, thereafter, even while listing the first batch of 70 (seventy) employees for VRS, the applicant/appellant, instead of specifying every relevant aspect, stated in rather cryptic terms that „the amount of severance package shall be as per norms of the Government‟. It had not been the case that the respondents immediately jumped on such a proposition; rather they stated their reservations, doubts, and queries by way of the representation dated 18.06.2004 and followed it up with reminder dated 07.07.2004. The applicant/appellant did not attend on the representation dated 18.06.2004 and as regards the reminder dated 07.07.2004, sent an incomplete and vague response, where the method of quantification of the component of compensation was spelt out to say that the compensation would be equivalent to two months‟ pay for each completed year of service or monthly pay and allowances as available to the employee at the time of retirement multiplied by the balance months of service left before the normal date of retirement subject to the cap of maximum 48 months. However, here again, the appellant stated that other issues were being "referred to Government for examination". The employees like the respondents did not get 33 Writ Appeal No.37/2012 & Review Petition No.9/2016 specific and categorical answer to their queries and made yet another representation dated 16.08.2004 raising the issue of want of clarity in the Scheme and also stated their claims. The employees, inter alia, indicated their understanding that the intention of the Scheme had been to make payment of dues such as Gratuity, Leave Encashment etc.; and also stated that any hasty decision to issue termination order would be unjustified and would be against the principles of natural justice apart from being in contravention of the recommendations of the Programme Implementation Department. The employees also stated that the package offered was acceptable to them provided their entitlements and other dues, as envisaged in the Scheme, were entirely settled and made available to them at the time of retirement.
The significant aspect of the matter remains that the aforesaid earlier representation dated 18.06.2004 and the later representation dated 16.08.2004 remained pending and no decision was taken thereupon and yet the applicant/appellant chose to put in operation the Scheme of retirement and thereby, the respondents were retired from service on 31.08.2004.
We are clearly of the view that in the given factual scenario, the applicant/appellant is not entitled to contend that it had been a matter of clear and unequivocal voluntary offer by the employees concerned to retire on VRS while understanding all its stipulations. Therefore, the contention that the employees are not entitled to turn around and claim any other payment after having derived the benefit under VRS remains misplaced in the present case and is required to be rejected. In this regard, it is also noteworthy that faced with the orders issued by the applicant/appellant, purportedly retiring them from service, the present respondents immediately approached the Court by way of a writ 34 Writ Appeal No.37/2012 & Review Petition No.9/2016 petition, being WP (C) No.251 (SH) of 2004. Even though the said writ petition remained pending for long, but when the same was ultimately taken up for disposal on 25.08.2006, the learned Single Judge of the jurisdictional High Court specifically noticed the fact that the said representations dated 18.06.2004 and 16.08.2004 had not been disposed of and issued directions for their disposal with a speaking order, while extending liberty to the employees to make a fresh representation and to approach the Court again, in case of any further grievance. It was only after such directions of the High Court that the applicant/appellant as also the Government took up the representations for consideration and passed the speaking orders thereupon on 01.12.2006 and 02.12.2006 declining the claim of the employees. We shall examine the merits of the propositions of the applicant/appellant as also of the Government in the aforesaid orders dated 01.12.2006 and 02.12.2006 a little later but relevant it is to observe at this juncture that it was required of MECOFED as also of the Government of Meghalaya that the said representations were decided before enforcing the Scheme of voluntary retirement while making it clear to the employees that they were not willing to accede to the claims for Gratuity and Leave Encashment. Had the applicant/appellant as also the Government been forthright and unequivocal in their propositions and yet the employees opted for VRS, all the principles in the referred decisions would have applied fair and square, at least as regards those claims on which the Rules of 1980 are not clear and there is no other statutory mandate operating. Unfortunately, MECOFED as also the Government of Meghalaya kept the things in obscurity and avoided the decision on representations before enforcing the Scheme of retirement. In the given set of facts, 35 Writ Appeal No.37/2012 & Review Petition No.9/2016 we are constrained to deduce that the applicant/appellant avoided forthrightness and clarity on the doubtful matters and now seeks to suggest that after acceptance of VRS, the employees cannot claim anything further than what has been granted to them. In the fact situation of the present case, we find no reason to endorse the stand of the applicant/appellant, who is not entitled to derive any benefit out of the confusion and obscurities, which were not cleared by him despite repeated requests of the employees.
For what has been discussed hereinabove, we are clearly of the view that in the present matters, the applicant/appellant is not entitled to contend that the employees had voluntarily offered their exit from the organization by way of VRS; and when several grey areas and obscurities were not clarified despite representations and yet the applicant/appellant chose to enforce the so called Golden Handshake Scheme, it had not been a matter of clear and binding contract between the parties; and in any case, the exit of the respondent- employees from the organization was a matter forced upon them and hence, such an exit had been the result of termination of their services, and not of retirement. In this view of the matter, the claims as made by the employees cannot be declined on the suggested ground that they had opted for VRS. With the observations foregoing we may examine the merits of the intra-court appeal and the review petition before us. Writ Appeal No.37 of 2012- the claim for Leave Encashment The issue concerning the employees‟ claim of Leave Encashment, at the first blush, appears to be a vexed one but on a comprehension of the Rules of 1980 and the overall circumstances of the case, in our view, this claim of the employees, as granted by the learned Single Judge, deserves to be upheld.
36
Writ Appeal No.37/2012 & Review Petition No.9/2016 As noticed, the Cabinet Memorandum proposing the Voluntary Retirement Scheme for the PSUs/PSEs in the State of Meghalaya clearly proposed that while downsizing the organisations, the employees who opt for VRS be paid compensation apart from statutory payment like Provident Fund, Gratuity, Leave Encashment etc. The matter relating to Gratuity and Leave Encashment etc. being not clear, the employees did submit their representations before enforcement of the Scheme of Voluntary Retirement. The core issues raised in those representations were not addressed to by the applicant/appellant and yet this Voluntary Retirement Scheme was enforced. We have already held hereinbefore that in the given scenario, the applicant/appellant is not entitled to assert that it had been a matter of clear and unequivocal voluntary offer by the employees to retire while understanding all the stipulations of VRS. We find nothing of error or unreasonableness in the observations of the learned Single Judge in the impugned order dated 01.11.2012 that the employees were „made to retire‟ before the ordinary date of their retirement under such Voluntary Retirement Scheme; and they might not have accepted the Scheme if having the knowledge that some of the benefits incorporated in the Cabinet Memorandum, Leave Encashment in particular, would not be granted to them. We have already observed that if the things were made clear by the applicant and yet the employees accepted VRS, the position would have been slightly different but it were not so; and the applicant/appellant cannot be allowed to seek any benefit out of the confusions and obscurities, which were not cleared by MECOFED and the State Government despite requests and representations of the employees.
37
Writ Appeal No.37/2012 & Review Petition No.9/2016 The learned Single Judge has held the employees entitled to Leave Encashment for the reason that this component had been stated in the draft Cabinet Memorandum. The applicant/appellant contends that this payment is not available for there being no such provision in the Rules and this being not of any statutory entitlement of the employees. We are unable to accept the submissions of the applicant/appellant. The matters relating to „Earned Leave‟ have been dealt with in Rule 39 of the Rules of 1980. Though, this Rule 39 has already been noticed in the quotation from the order dated 01.12.2006 hereinbefore but for the present discussion, it may again be noticed, even at the cost of repetition, as under:-
"39. Earned Leave:
(i) An employee shall earn one day's leave for every eleven days of duty.
(ii) Earned Leave shall not be accumulated by an employee for more than 180 days.
(iii) If services of an employee are terminated after giving him notice for the period prescribed in Rule 16 he shall be paid salary for the unenjoyed earned leave due to him.
(iv) If an employee resigns from his post after giving notice for the period prescribed in Rule 16, he shall:-
(a) be paid salary for the period of earned leave due to him.
(b) In case, the notice falls short of the prescribed period, the amount of earned leave equivalent to the days the notice falls short, shall be adjusted towards the notice period and salary for the balance period of earned leave due shall be paid to him.
(v) Salary during the period of earned leave shall be governed by Rule 3 (12)."
Thus, a bare look at the Rule aforesaid makes it clear that Leave Encashment is envisaged not only when an employee resigns from the post but also in a case where services of the employees are terminated after giving him notice for the period prescribed in Rule 16. Rule 16 of the Rules of 1980 essentially deals with the matters relating to 38 Writ Appeal No.37/2012 & Review Petition No.9/2016 termination of service and the relevant clauses thereof9, may be noticed as under:
"16. Termination of Service:
(i) Notwithstanding anything contained in these rules, the services of a direct employee on probation may be terminated by the appointing authority without assigning any reason by 30 days notice, if the service rendered by the employee is more than 3 months.
.... ... ...
(iv) The service of an employee who has been in continuous employment exceeding 3 months but less than a year could be terminated by giving at least 14 days notice in writing or 14 days salary in lieu of such notice.
(v) The services of an employee who has been in continuous service for a period of one year or more could be terminated by giving him at least 30 days notice in writing or 30 days salary in lieu of such notice.
(vi) The service of an employee who has been confirmed in any post could be terminated by giving him at least 3 months notice in writing or three months salary in lieu thereof by the Appointing Authority."
Of course, Rule 17 of the Rules of 1980 relates to retirement and the same may also be taken note for ready reference as under:
"17. Retirement:
1) An employee shall retire from the services of the Federation:-
(a) On his attaining the age of 60 years provided that when it is in the Federation's interest to retain an employee holding a Class I post after the age of 60, he may be re-employed for a period of one year at a time till he attains the age of 65, provided further that he is in good health.
(b) On his being declared medically unfit for service by a competent authority not below the rank of a Civil Surgeon of Government Hospital.
(c) On attaining the age of 50 years an employee will be eligible to seek voluntary retirement from the service of the Federation and on the imposition of a major penalty of compulsory retirement.
(d) Notwithstanding anything contained in these Rules, the Appointing Authority, shall, if it is of the opinion that is in the Federation's interest so to do, have the absolute right to retire any employee of the Federation by giving him a notice of not less than three months in writing or three months pay and allowances in lieu of such notice, if he has completed 20 years of service or attained the age of 50 years, whichever happens earlier."
On a conjoint reading of Rules 16, 17 and 39, though it could be accepted that in relation to a person retiring: on attaining a particular age; or on being declared medically unfit; or compulsorily, his 9 While omitting clause (ii) relating to the case of a temporary employee and clause (iii) relating to the case of misconduct or of the service less than three months, being not relevant. 39
Writ Appeal No.37/2012 & Review Petition No.9/2016 corresponding right of Leave Salary is not seen in Rule 39. Similarly, if an employee, after attaining the age of 50 years seeks voluntary retirement from service, Rule 39 may not be applicable to him either. However, the peculiar aspect of the present case is that it is difficult to categorise the respondents as the employees who had of their own volition and unequivocally sought the retirement after attaining the age of 50 years. The facts of the case leave nothing to doubt that neither the respondent/employees had volunteered to retire nor it were a case of compulsory retirement but the so-called retirement was, in fact, thrusted upon them without clarifying all the stipulations and propositions. In the given set of facts, we are inclined to agree with the contentions of the learned counsel for the respondent/employees that it had been a case of termination of their services by the employer, i.e. applicant/appellant; and on the analogy of the provisions of Rule 16, for this being a matter of termination of their services, the employees are entitled to be paid the salary for the un-enjoyed earned leave due to them.
The suggestion on the part of the applicant/appellant as also on the part of the Government that the employees concerned rather stood in advantageous position for having been allowed substantial payment by way of compensation does not, in any manner, operate over the rights of the employees towards Leave Encashment. Noticeable it is from the Cabinet Memorandum itself that even while suggesting the method and formula for quantification of compensation payable to the employees concerned, it was never suggested that any other payment legally due to the employees would not be paid or would stand subsumed by such compensation alone. Obviously, the component of compensation stood different and apart from all other dues of the 40 Writ Appeal No.37/2012 & Review Petition No.9/2016 employees; and it cannot be accepted that merely for payment of compensation, any other entitlement like Leave Encashment could be denied to the employees.
For what has been discussed hereinabove, we are clearly of the view that an employee, whose services stood terminated by virtue of the Voluntary Retirement Scheme in question, was entitled to the salary for the un-enjoyed earned leave due to him. In this view of the matter, we find no reason to interfere with the final relief granted to the employees in the impugned order dated 01.11.2012, for payment of Leave Encashment benefits.
Accordingly, WA No.37 of 2012 deserves to be dismissed. Review Petition No.9 of 2016- the claim for Gratuity Taking up now the question relating to Gratuity, in our view, the matter does not require much of dilatation. In the first place, we are unable to find anything of any error apparent on the face of record so as to review the judgment dated 11.06.2015 in WA No.31 of 2013. The suggestions that the Rules of 1980 do not provide for Gratuity and this aspect has not been considered by the Court do not carry any substance. It is noticed that the Division Bench, while dealing with the intra-court appeal, indeed took note of the contention on the part of the applicant that MECOFED, while preparing the components of VRS, excluded Gratuity and Leave Encashment as per the Service Rules. However, the Division Bench dealt with the matter on the very fundamentals that payment of Gratuity was that of mandatory statutory requirement; and that MECOFED was directly covered under the Act of 1972; and further, that there had not been any exemption granted to this organization under Section 5 thereof. In the impugned order of the learned Single Judge too, the matter was dealt with in sufficient details 41 Writ Appeal No.37/2012 & Review Petition No.9/2016 that the statutory right of Gratuity cannot be waived with reference to the decision in the case of Allahabad Bank and Anr v. All India Allahabad Bank Retirement Employees Association: (2010) 2 SCC 44 wherein, the Hon‟ble Supreme Court has laid down the principles governing the overriding rights of the employees to receive Gratuity, unless the organization is exempted from the operation of the Act of 1972, inter alia, in the following:-
"14. A plain reading of the provisions referred to hereinabove makes it abundantly clear that there is no escape from payment of gratuity under the provisions of the Act unless the establishment is granted exemption from the operation of the provisions of the Act by the appropriate Government.
...... ....... .......
19. Gratuity payable to an employee on the termination of his employment after rendering continuous service for not less than 5 years and on superannuation or retirement or resignation, etc. being a statutory right cannot be taken away except in accordance with the provisions of the Act whereunder an exemption from such payment may be granted only by the appropriate Government under Section 5 of the Act which itself is a conditional power. No exemption could be granted by any Government unless it is established that the employees are in receipt of gratuity or pension benefits which are more favourable than the benefits conferred under the Act.
...... ....... .......
36. The appellant being an establishment is under the statutory obligation to pay gratuity as provided for under Section 4 of the Act which is required to be read along with Section 14 of the Act which says that the provisions of the Act shall have effect notwithstanding anything inconsistent therein contained in any enactment or in any instrument or contract having effect by virtue of any enactment other than this Act. The provisions of the Act prevail over all other enactments or instruments or contracts so far as the payment of gratuity is concerned. The right to receive gratuity under the provisions of the Act cannot be defeated by any instrument or contract."
In view of the above, the suggestion, that Gratuity had not been paid in the past to any MECOFED employee, does not carry any substance because an overriding inalienable statutory right cannot be overtaken by any past practice or wrongful denial. In the ultimate analysis, in view of the overriding provisions of the Act of 1972 and the principles enunciated by the Hon‟ble Supreme Court in Allahabad Bank (supra), we have no hesitation in reiterating the views taken by the 42 Writ Appeal No.37/2012 & Review Petition No.9/2016 learned Single Judge and then by the Division Bench of this Court that the respondent/employees are entitled to Gratuity for the reason that the organisation in question, i.e. MECOFED is covered under the Act of 1972 and had not been exempted under Section 5 thereof. We are further clearly of the view that such statutory right of Gratuity is available to the employees by virtue of the overriding provisions of the Act of 1972 irrespective whether the same is stated in the Service Rules of the organisation or not. Therefore, the relief granted to the respondents, for payment of Gratuity, calls for no interference; and the review petition also deserves to be dismissed.
CONCLUSION For what has been discussed hereinabove, we find no reason to consider interference in the intra-court appeal and the review petition preferred by the employer.
Consequently, Writ Appeal No.37 of 2012 and Review Petition No.9 of 2016 stand dismissed. In the circumstances of the case, the parties are left to bear their own costs.
JUDGE CHIEF JUSTICE Marlene/ /Lam/Sylvana