Gujarat High Court
Asset Manager Ongc vs Ramiben S Thakore Wd/O Sanaji M Thakore on 19 July, 2019
Author: G.R.Udhwani
Bench: G.R.Udhwani
C/SCA/6490/2009 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6490 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE G.R.UDHWANI SD/-
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
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ASSET MANAGER ONGC
Versus
RAMIBEN S THAKORE WD/O SANAJI M THAKORE
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Appearance:
MR AJAY R MEHTA WITH MS NIYATI VAISHNAV (453) for the Petitioner(s) No. 1
MR KRISHNA G PILLAI(2767) for the Respondent(s) No. 1
MR RAJESH P MANKAD(2637) for the Respondent(s) No. 1
RULE SERVED(64) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE G.R.UDHWANI
Date : 19/07/2019
ORAL JUDGMENT
The petition arises under the Payment of Gratuity Act, 1972 (for short the Act) under peculiar facts and circumstances where the employee went missing on 15/03/1992 and was presumed dead under the decree of the Court drawn on 06/02/2003 and the workman came to be dismissed on 20/07/1992 for his unauthorized absence after the showcause notice dated 26/05/1992 and eventually this Court in SCA No.12627 of 2003 quashed the dismissal on 22/09/2004.
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2. The petition assails the order dated 18/01/2008 passed by the controlling authority under the Act as confirmed by its appellate authority on 20/10/2008. By the said orders, the gratuity was determined in the sum of Rs.4,25,045/ inclusive of interest. Against that, a sum of Rs.3,95,521/ was deposited with the controlling authority and the rest is deposited with this Court.
3. Broad facts in short lie in narrow compass:
3.1 The deceased employed with the petitioner went missing on 15/03/1992. Unaware of the said fact, the employee was put to showcause notice on 06/05/1992 for unauthorized absence and in absence of the reply thereto, the matter proceeded exparte and eventually the employee was struck of the muster roll on 20/07/1992.
3.2 In the meanwhile, by a decree in a suit by the wife of the employee, the employee was presumed dead under Section 108 of the Indian Evidence Act and then in a petition being SCA No.12627 of 2003 by his presumed widow, the employee was restored to the muster roll by judgment and order dated 22/09/2004 passed in SCA (supra). Endowed with the said order, the widow approached the controlling authority under the Act with the necessary application on 06/12/2006 and the authority after consideration of the matter, determined the gratuity with interest at the rate of 9% per annum for the period between 15/04/199 to 07/07/2005. It appears that 15/04/1999 was treated as the due date of gratuity or the date of the default under Section 7(3) of the Act Page 2 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT because the missing employee was required to be presumed dead from the said date as decreed, as also as ordered in SCA (supra).
3.3 It appears that for recovery of certain dues on account of House Building Advance (HBA), a suit came to be instituted by the petitioner being Civil Suit No.188 of 1994 in the Court of Civil Judge, (SD), Ahmedabad wherein, according to the learned Counsel for the petitioner, Pursis conceding to the adjustment of the outstanding HBA amount against gratuity dues came to be tendered and the said suit was withdrawn on that basis.
4. In the above contextual facts; rival submissions are required to be appreciated.
4.1 The impugned orders are assailed; principally with the following submissions by the employer:
4.1.1 After determination of the gratuity, the controlling authority / appellate authority (herein after referred to as the specified authorities) while exercising jurisdiction under Section 7 of the Act were under an obligation to reduce by; and pay to the petitioner a sum of Rs.1,60,459/ due in terms of undertaking of the employee and the pursis (supra), on account of HBA dues recoverable from the workman.
4.1.2 Both the authorities (supra) failed to appreciate that no incidence of gratuity arose on 15/03/1999 in absence of the relevant event under Section Page 3 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT 4 of the Act i.e. death of an employee herein entitling his estate to the gratuity and consequently 15/04/1999 could not have been presumed as the date of default within the meaning of Section 7(3A) of the Act, for the purpose of interest.
4.1.3 In the appeal filed by the petitioner with the appellate authority under the Act, the interest could not have been enhanced and even otherwise, the awarding of further interest was untenable.
4.1.4 Reliance upon Sections 13 and 14 of the Act as if the concession in the pursis amounted to attachment was misconceived by the appellate authority.
4.1.5 Undertaking to repay the HBA, filed by the employee with the Department at the time of availing HBA Advance was binding on the employee and his heirs and therefore, the authorities below ought to have taken note of the said fact and deducted the outstanding amount of HBA which otherwise would be unnecessary burden on the public exchequer.
5. The above submissions made by the learned Counsel for the petitioner are sought to be countered by the learned Counsel for the respondent with the submission that the competent authority as well as appellate authority were statutorily bound to pass only such orders the authority as to which specifically bestowed upon them under the Act; orders dehors the Act would be without jurisdiction and therefore Page 4 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT notwithstanding the agreement by the employee under the pursis aforestated or the undertaking to repay the HBA executed at the time of availing the loan by the employee, the impugned orders are justifiable. It is argued that since employee was presumed dead as on 15/03/1999; the date was rightly selected as the date of liability of the employer to pay the gratuity to the employee. Reliance is placed on Lalitkumar D Thakkar vs. Controlling Authority and Asst. Labour Commissioner and Ors., [2006(1) GLH 287].
5.1 While inviting attention of this Court to paragraph 10 of the affidavit filed with the appellate authority, it is contended that no liability to repay the HBA Advance would fall on the employee in view of the fact that said sum was insured by ONGC at the cost of the employee who bore the premium and on consideration of that fact the appellate authority has rightly passed the order impugned.
6. Following questions arise for consideration of this Court:
(1) Whether the specified authorities under the Act have jurisdiction to consider the matters extraneous to the provisions of the Act and grant such relief to the employer as would amount to execution of the matter unconnected with gratuity?
(2) Can the interest under Section 7(3A) of the Act be reckoned 30 days next after the presumed Page 5 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT date of death of an employee under Section 108 of the Evidence Act?
(3) Whether appellate authority has a jurisdiction to modify the order of the controlling authority in favour of the employee while hearing the appeal by employer?
6.1 Before answering the above questions, it would be appropriate to look into certain provisions of the Act bearing on the subject matter. For convenience the relevant provisions are reproduced hereunder:
"2(d) "controlling Authority" means an authority appointed by the appropriate Government under Section 3;
3. Controlling Authority. The Appropriate Government, may, by notification, appoint any officer to be a controlling authority, who shall be responsible for the administration of this Act and different controlling authorities may be appointed for different areas.
4. Payment of Gratuity. (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,
(a) on his superannuation, or
(b) on his retirement or resignation,
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: 1[Provided further that in case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is minor, the share of such minor, shall be deposited with the Controlling Authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority].
Explanation. For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement. (2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned:
Provided that in the case of a piecerated employee, daily Page 6 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:
Provided further that in the case of 2[an employee who is employed in a seasonal establishment, and who is not so employed throughout the year], the employer shall pay the gratuity at the rate of seven days' wages for each season. 3[Explanation.In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twentysix and multiplying the quotient by fifteen.] (3) The amount of gratuity payable to an employee shall not exceed 4[ten lakh rupees].
(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced. (5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. (6) Notwithstanding anything contained in subsection (i),
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.
(b) the gratuity payable to an employee 1[may be wholly or partially forfeited].
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part; or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
7. Determination of the amount of Gratuity. (1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.
(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in subsection (i) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.
1[(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
Page 7 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021C/SCA/6490/2009 JUDGMENT (3A) If the amount of gratuity payable under subsection (3) is not paid by the employer within the period specified in subsection (3) the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits, as that Government may, by notification specify:
Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the Controlling Authority for the delayed payment on this ground].
(4)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the Controlling Authority such amount as he admits to be payable by him as gratuity.
2[***] 3[(b) Where there is a dispute with regard to any matter or matters specified in Clause (a), the employer or employee or any other person raising the dispute may make an application to the Controlling Authority for deciding the dispute.] 4[5[(c)] The Controlling Authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and, if, as a result of such inquiry any amount is found to be payable to the employee, the Controlling Authority shall direct the employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer.] 6[(d)] The Controlling Authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto.
7[(e)] As soon as may be after a deposit is made under Clause
(a), the Controlling Authority shall pay the amount of the deposit
(i) to the applicant where he is the employee; or(ii) where the applicant is the employee, to the 1[nominee or, as the case may be, the guardian of such nominee or] heir of the employee if the Controlling Authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity.
(5) For the purpose of conducting an inquiry under Sub Section (4), the controlling authority shall have the same powers as are vested in a Court, while trying a suit, under the Code of Civil Procedure,1908 (5 of 1908), in respect of the following matters namely:
(a) enforcing the attendance of any person or examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses. (6) Any inquiry under this Section shall be a judicial Page 8 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT proceeding within the meaning of Sections 193 and 228, and for the purpose of Section 196, of the Indian Penal Code, 1860 (45 of 1860).
(7) Any person aggrieved by an order under subsection (4), may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf:
Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days. 2[Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under subsection (4), or deposits with the appellate authority such amount.] (8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the controlling authority.
13. Protection of gratuity. No gratuity payable under this Act 2[and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under Section 5] shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.
14. Act to override other enactments, etc. The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act."
6.2 It would appear from the above provision that the controlling authority and the appellate authority exist and/or are created under the Act with a limited jurisdiction for determination of the gratuity, disbursement of the deposits in favour of the person/ persons indicated in Section 7(4)(e) of the Act and for resolution of the disputes as to (i) the amount of gratuity payable to an employee under the Act; (ii) the Page 9 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT admissibility of any claim of, or in relation to, an employee for payment of gratuity and; (iii) the person entitled to receive the gratuity; and after due inquiry and hearing the parties if the dispute is resolved in favour of the employee, order payment of gratuity due to the employee. No payment can be ordered for the employer; nor the applications like execution claims or counter claims or setof not concerning the gratuity can be adjudicated upon by the specified authorities in absence of the specific jurisdiction to do so, with them. The act is a beneficial legislation with a principal object to regulate the payment of gratuity to the specified class of workers. It has nothing to do with the disputes other than gratuity; nor does it contemplate a machinery for resolution of such disputes. The specified authorities are created under the Act with the above object and with specific purpose. It is settled law that creatures of the statute can exercise only that jurisdiction as is vested in them specifically under the statute by which they are created. Therefore, notwithstanding the contract or agreement or any other document binding the employee to setof in respect of the claims of the employer other than gratuity, the employer would not be entitled to any relief for such bindings, under the Act.
6.2.1 The first submission, if closely scrutinized, presupposes a jurisdiction with the specified authorities to adjudicate the disputes other than gratuity like the claims for execution, counter claims and setof, not concerning gratuity. In the opinion of Page 10 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT this Court, such a premise is misconceived for the foregoing reasons and the employer was not entitled to relief of the nature indicated (supra) from the specified authorities.
6.3 The question can be viewed from the alternative angle. As noticed above, the gratuity is immunized from being attached in any civil, revenue or criminal proceedings. Therefore, had the employer stretched the suit to its logical end and earned the decree, the gratuity or its part could not have been attached for the recovery of dues under the HBA advance. If the decree could not have been acted upon as such, there would be no question of authorities acting upon the undertaking or agreement or assurance recorded in the pursis (supra).
7. This takes this Court to the question No.2.
7.1 The incidence of gratuity would arise on occurrence of one of the events amongst (01) superannuation (02) retirement (03) resignation (04) death (05) disablement of an employee due to accident or disease; subject to other relevant conditions under the Act. Necessary corollary would be that in absence of one of the aforementioned occurrences, the incident of gratuity would not arise. As soon as the gratuity is payable, the employer would be under the mandate to determine the amount of gratuity and give the notice of such determination in writing to a person concerned, as also to the controlling authority under subsection (2) of Section 7 and arrange for its payment within 30 days Page 11 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT from the date it becomes payable, irrespective of the application of the employee or authorized person claiming the gratuity under subsection (1) of Section 7. Evidently, the question of determination of the amount of gratuity would arise on its payability and the payability or the incidence of gratuity would arise on compliance of the necessary conditions / statutory provisions including Section 4 of the Act for an employer to act in terms of subsection (2) of Section 7. Failure in complying with subsection (2) of Section 7 would expose the employer to the liability of interest contemplated under subsection (3A) of Section 7 in absence of the applicability of the proviso to the last mentioned subsection, with which this Court is not concerned.
7.2 Coming to the facts of the case, the question is when was the gratuity payable to the employee. No event like (01) superannuation (02) retirement (03) resignation (04) death (05) disablement of an employee due to accident or disease concededly occurred on 15/03/1999. Therefore, the gratuity was not payable on that date. The death was presumed on the later date by the decree of the Court under Section 108 of the Evidence Act. There is mark difference between presumed death and actual death, for in the later case statutory liability if dependent upon the death of a person, would commence from the actual date of death; such liability in case of presumed death would be incurred only when the death is presumed by legal declaration; though the liability shall have to be discharged reckoning the presumed date of death. Furthermore, in a case where the employee is not Page 12 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT eligible for the gratuity on the date of cessation of his employment, but is rendered eligible on account of his restoration of his employment at a later date by a lawful order, the liability or incidence of gratuity would arise only by virtue of such order; though the effective date may be the date of the presumed death. On the date of the decree also the employee was obviously not in service. In absence of the employee, being in service, none of the events as above could have occurred on 15/03/1999. However, the liability of the employer on the basis of presumed death of the employee came to be fixed by order in SCA (supra) while setting aside the order of discharge of the employee. Thus, it is only by virtue of the said order that incidence and obligation to pay gratuity arose respectively under Section 4 read with Section 7(2) and (3) of the Act and the default exposing the employer to the interest under subsection (3A) of Section 7 can be reckoned 30 days next after the order in SCA (supra). However, since the death was presumed as on 15/03/1999, the gratuity was required to be computed as on that date which was rightly done. Under the circumstances, however, the specified authorities were under the jurisdictional error in reckoning the inaccurate date of default consequenting into inaccurate application of the default interest.
8. The next question is as regards exercise of jurisdiction by the appellate authority to modify the order of the controlling authority in favour of the employee, in an appeal by the employer. The modification was necessitated so as to bring the rate of interest i.e. Page 13 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021 C/SCA/6490/2009 JUDGMENT 9% p.a. in alignment with the rate i.e. 10% as provided in the Central Government Notification issued in the year 1987.
8.1 A bare perusal of Section 7(7) makes it clear that the orders in appeal can be modified without any fetters on the jurisdiction of the appellate authority. It has power to modify the orders and in absence of any circumspection on such powers, the argument that the power could not have been exercised in an appeal by the employer, must be noted for rejection.
9. It appears that a sum of Rs.29,524/ has been deposited by the employer with this Court. Entitlement to the said amount can be determined only after the computation of final figure of gratuity with interest as indicated in this judgment. Such computation shall be made by the employer within a period of eight weeks from today and it will be open for the parties thereafter to move this Court for determination of the recipient of Rs.29,524/.
10. For the foregoing reasons, this petition succeeds to an extent indicated in paragraph No.7.2. Rule is made absolute to that extent.
(G.R.UDHWANI, J) sompura Page 14 of 14 Downloaded on : Thu Sep 30 01:48:07 IST 2021