Karnataka High Court
U. Ratnakar Rao vs Union Of India (Uoi) And Ors. on 12 November, 2002
Equivalent citations: [2003(97)FLR462], 2003(2)KARLJ192, (2003)IILLJ336KANT, 2003 LAB IC (NOC) 141 (KAR), 2003 AIR - KANT. H. C. R. 693, (2003) 1 CURLR 936, (2003) 97 FACLR 462, (2003) 2 LABLJ 336, (2003) 1 KCCR 616, (2003) 2 KANT LJ 192
Author: P. Vishwanatha Shetty
Bench: P. Vishwanatha Shetty
ORDER P. Vishwanatha Shetty, J.
1. In this petition the petitioner has sought for a direction to the respondents to calculate the amount of gratuity admissible under the Pension Rules in accordance with the provisions of the Central Civil Services (Pension) Rules, 1972 (hereinafter referred to as 'the Pension Rules'), by taiving into consideration that the maximum amount admissible under the Pension Rules would be Rs. 2,50,000/- and sanction him the gratuity amount of Rs. 2,14,731/- with interest, after giving deductions to the payment already made, along with interest at 18% per annum from 1st July, 1997 till the date of payment.
2. Few facts, which are not in serious dispute and are relevant for the disposal of this petition, may be stated as hereunder.-
The petitioner had retired as Superintending Engineer (Mechanical) in the services of the 2nd respondent-New Mangalore Port Trust (hereinafter referred to as 'the Port Trust') on 30th June, 1997. The 2nd respondent-Port Trust settled his retirement benefits including the gratuity immediately after his retirement on the basis he was entitled to receive the payment in terms of the provisions contained in the Payment of Gratuity Act (hereinafter referred to as 'the Gratuity, Act'). The petitioner not being satisfied with the settlement of the gratuity in terms of the provisions of the Gratuity Act, gave representations to the respondents to settle the gratuity payable to him in terms of the provisions contained under the Pension Rules. However, the claim made by the petitioner was negatived by means of communication dated 9th August, 2001, a copy of which has been produced as Annexure-R5 along with the statement of objections. Challenging the action of the respondents refusing to settle the gratuity payable to him in accordance with the provisions contained in the Pension Rules, the petitioner has filed this petition.
3. Sri C. Dinakar, learned Counsel appearing for the petitioner submits that since the petitioner is governed by the provisions of the Pension Rules, the gratuity payable to the petitioner is required to be settled in terms of the said rules and not in accordance with the provisions contained in the Gratuity Act. In support of his contention that the Pension Rules applies, he drew my attention to Regulation 4 of the New Mangalore Port Trust (Adaptation of Rules) Regulation, 1980 (hereinafter referred to as 'the regulations'). According to the learned Counsel, Regulation 4 of the Regulations makes it clear that till new regulations are framed with previous sanction of the Central Government, the Pension Rules would be applicable to all the employees of the 2nd respon-
dent-Port Trust; and till now since the new regulations have not yet been framed, the petitioner is entitled for settlement of his pension in terms of the Pension Rules.
4. However, Sri Ashok Harnahalli, learned Counsel appearing for the respondents 2 and 3 strongly repelling the contentions of the learned Counsel for the petitioner submits that the provisions of the Pension Rules have no application to the case of the petitioner and his service conditions, so far as payment of gratuity is concerned, were governed on the date of his retirement by the provisions of the Gratuity Act. In support of his submission, he relied upon Section 2(e) of the Gratuity Act. He further submitted that this petition is also liable to be rejected on the ground of delay and laches on the part of the petitioner in approaching this Court.
5. In the light of the rival contentions advanced by learned Counsels appearing for the parties, the two questions that would emerge for consideration in this petition are.-
1. Whether the petitioner is entitled for payment of gratuity in terms of the provisions contained in the Pension Rules or in terms of the provisions contained in the Gratuity Act?
2. Whether the petition is liable to be rejected solely on the ground of delay and laches on the part of petitioner in approaching this Court?
Re: Question No. 1.--The 2nd respondent-Port Trust was earlier part of the Mangalore Harbour Project. However, by means of Notification dated 27th March, 1980, the 2nd respondent-New Mangalore Port Trust came to be established. Since then the petitioner and all other employees became the employees of the 2nd respondent-Port Trust. The 2nd respondent-Port Trust, in exercise of the power conferred on it under Sections 28 and 134 of the Major Port Trusts Act, 1963, framed the regulations known as the New Mangalore Port Trust (Adaptation of Rules) Regulations, 1980. The said regulation came into force with effect from 1st April, 1980. Regulation 4 of the Regulations, on which Sri Dinakar placed reliance reads as hereunder.-
"4. Existing rules to continue.--Existing rules and orders and subsequent amendments thereto made on or after the appointed day relating to the following matters shall, to the extent they are not inconsistent with the provisions of the Act or any regulations made thereunder and until they are altered, repealed or amended by the Board, continue in force, as if they were made by the Central Government under the Act, namely.-
(i) matters specified under Section 28 of the Act; and (ii) matters specified in Clause (b) and Clauses (e) to (n) of Section 123 of the Act:
Provided that any amendment aforesaid to the existing rules and orders, not advantageous to an employee, shall not be made applicable to such employee unless the Board obtains the previous sanction of the Central Government".
6. From the reading of Regulation 4 of the Regulations, it is clear that the existing rules and orders and subsequent amendments thereto made on or after the appointed day relating to the several matters mentioned therein to the extent that they were not inconsistent with the provisions or any regulations made thereunder and until they are altered, repealed or amended by the Board, continue to be in force as if they were made by the Central Government under the Act. It is not the case of the respondents in the statement of objections that the 2nd respondent-Port Trust had framed any regulations making either the provisions of the Gratuity Act applicable or providing for any other method by which the gratuity of an employee of the 2nd respondent-Port Trust is required to be settled. Section 2(e) of the Gratuity Act, on which reliance is placed by Sri Ashok Harnahalli, reads as follows.-
"(e) 'Employee' means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semiskilled or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied (and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity)".
7. From the reading of the said provision, it is clear that the provisions of the Act is not made applicable to a person who is governed by any Act or Rule providing for payment of gratuity. Section 28(b) of the Major Port Trusts Act confers power on the Board to frame regulations for several matters set out therein including for payment of gratuity. In the instant case, Regulation 4 of the Regulations framed by the 2nd respondent-Port Trust specifically provides that the existing rules are applicable to the employees of the 2nd respondent-Port Trust until they are altered. Till now new regulations have not been framed as provided under the said regulations. Therefore, in view of Regulation 4 of the Regulations which makes the Pension Rules applicable, the gratuity payable to the petitioner is required to be settled in terms of the Pension Rules.
8. Rule 50 of the Pension Rules provides for payment of gratuity. The maximum amount of gratuity payable under the Pension Rules is Rs. 2,50,000/-. It is not in dispute that the gratuity payable to the petitioner has been settled in terms of the provisions contained in the Gratuity Act. According to the petitioner, it was settled in a sum of Rs. 1,14,731/-; and if the gratuity has to be settled in terms of the Pension Rules, he is entitled for payment in a sum of Rs. 2,14,731/-. At this stage, I find it unnecessary for me to calculate actual gratuity amount payable to the petitioner. In the view I have taken above that the petitioner entitled for settlement of gratuity in terms of the Pension Rules, it would be sufficient if a direction is given to respondents 2 and 3 to calculate the gratuity payable to the petitioner in terms of the Pension Rules taking into account the number of years of service he has put in and all other relevant circumstances and settle the same.
Re: Question No. 2.--No doubt, the petitioner has retired from service on 30th June, 1997 and he has presented this petition on 7th November, 2001. Though the petitioner has not set out in the petition explaining the reasons for delay in filing the petition, the petitioner has filed an application seeking condonation of delay in filing the petition. In the application filed seeking condonation of delay, the petitioner has stated that he had submitted representations repeatedly to respondents 2 and 3 requesting them for sanction of gratuity in accordance with the Pension Rules applicable to him and his last representation is dated 3rd May, 2001. The Annexure-R5 produced along with the statement of objections shows that the claim made by the petitioner came to be rejected only on 9th August, 2001. Immediately thereafter, the petitioner has submitted this petition. Even otherwise, I am of the view that if the petitioner is held to be entitled for the benefit of payment of gratuity in terms of Pension Rules, the said benefit cannot be denied to him only on the ground that the petitioner has not approached this Court immediately after his retirement. It is necessary to point out that the retirement benefits including the gratuity are earned by an employee. It is the duty of the employer to settle the retirement benefit of an employee in accordance with the service conditions by which an employee is governed. It is not reasonable and fair to expect every retired employee to rush to this Court immediately after his retirement seeking settlement of retirement benefit. It is but natural for a retired employee to persuade his employer to settle his retirement benefit in accordance with the rules and approaching the Court would be last option for a retired employee. Under these circumstances, in my view, if the petitioner had given representations and his claim came to be rejected by means of Annexure-R5, dated 9th August, 2001, it would be unjust to deny the relief to the petitioner only on the ground that there is delay on the part of the petitioner in approaching this Court and as such the conduct of the petitioner disentitles him for any relief by this Court in exercise of its power under Articles 226 and 227 of the Constitution of India. I am satisfied with explanation offered by the petitioner for the delay in approaching this Court and therefore, the petitioner cannot be denied the benefit of settlement of his gratuity under the rules.
9. Now, the only other question remains to be considered is as to whether the petitioner is entitled for interest and if so, what is the reasonable rate of interest that is required to be awarded?
10. No doubt, the learned Counsel appearing for the petitioner submitted that the Hon'ble Supreme Court in the case of R. Kapur v. Director of Inspection (Painting and Publication), Income-tax and Anr., has awarded 18% interest per annum and therefore, since the respon-
dents have unjustly refused to pay the retirement benefit due to the petitioner, the respondents must be directed to pay interest at 18% per annum. However, the contention of Sri Ashok Harnahalli, is that since the respondents bona fide took the view that the provisions of the Gratuity Act is applicable to the case of the petitioner and not the Pension Rules, the respondents should not be directed to pay interest on the balance of gratuity amount payable to the petitioner. He further pointed out that delay and laches on the part of the petitioner in approaching this Court should at least be a ground to deny the interest on the balance amount payable to the petitioners.
11. I am of the view that the petitioner is entitled for award of interest on the balance gratuity amount payable to him. Since I have negatived the contention of Sri Ashok Harnahalli that the petitioner should be denied relief on the ground of delay and laches on his part in approaching this Court, I am unable to accept his submission that the claim of the petitioner for award of interest should be denied at least on the ground of delay and laches in approaching this Court. I have already taken the view that it is the duty of the employer to settle the retirement benefit of an employee in accordance with the service conditions by which he is governed. The wrong interpretation of service conditions of the petitioner though done bona fide should not enure to the benefit of the employer to deny either the retirement benefit payable to an employee or the interest payable for the delayed payment of the retirement benefit. As noticed by me earlier, the retirement benefits are earned by an employee for being in long service and as a security and support during retired life. Therefore, it would be totally unjust to deny interest on the amount payable to the petitioner. However, having regard to the facts and circumstances of the case, I am of the view that award of 12 per cent interest per annum as against 18 per cent per annum claimed by the petitioner is fair and reasonable. While fixing the rate of interest, I have taken into consideration the provisions contained in State Rules which provides for award of 12 per cent interest per annum for the delayed payment of retirement benefits.
12. In the light of the discussion made above, I make the following:
ORDER The respondents are directed to settle the gratuity payable to the petitioner in accordance with the Central Civil Services (Pension) Rules, 1972, with interest at 12% per annum, one month after the date of retirement of the petitioner till the date of payment.
2. The respondents 2 and 3 are given eight weeks' time, from the date of receipt of a copy of this order, to comply with the direction given above.
13. In terms stated above, this petition is allowed and disposed of However, no order is made as to costs.