Gujarat High Court
Daminiben Hathising Rathod vs Ahmedabad Municipal Corporation on 8 April, 2019
Author: K.M.Thaker
Bench: K.M.Thaker
C/SCA/20310/2016 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 20310 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE K.M.THAKER Sd/-
================================================================
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 ?
================================================================
DAMINIBEN HATHISING RATHOD
Versus
AHMEDABAD MUNICIPAL CORPORATION & 3 other(s)
================================================================
Appearance:
MR YOGEN N PANDYA(5766) for the Petitioner(s) No. 1
MS RITU GURU, AGP (1) for the Respondent(s) No. 3
MR P.G. DESAI, SENIOR COUNSEL WITH MR HAMESH C NAIDU(5335) for
the Respondent(s) No. 1
NOTICE SERVED(4) for the Respondent(s) No. 2,4
================================================================
CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
Date : 08/04/2019
CAV JUDGMENT
1. Heard Mr.Pandya, learned advocate for the petitioner, Ms.Guru, learned AGP and Mr.P.G. Desai, learned senior counsel with Mr.H.C. Naidu, 1 C/SCA/20310/2016 CAV JUDGMENT learned advocate for the respondent corporation.
2. In present petition, the petitioner has prayed, inter alia, that:
"17(B) Your Lordships may be pleased to issue a writ of mandamus and/or an appropriate writ, order or direction in the nature of mandamus, quashing and setting aside the impugned orders passed by; (i) the learned Controlling Authority, Ahmedabad under the Payment of Gratuity Act, 1972, in Gratuity Case No.609 of 2013, dated 27.02.2015, (ii) the learned Appellate Authority, Ahmedabad, under the Payment of Gratuity Act, 1972, in Appeal Case No.115 of 2015, dated 21.01.2016 and
(iii) the Reviewing Authority in Review Application No.30 of 2016 in Gratuity Appeal No.115 of 2015, (Annexure'A' Colly.), as they being exfacie illegal, unjust, improper, without considering the facts and evidence on record and without application of mind, in the interest of justice."
3. The petitioner is aggrieved by the orders passed by the Adjudicating Authority (order dated 27.2.2015 in Case No.609 of 2013) and the Appellate Authority (order dated 21.1.2016 in Appeal No.115 of 2015) and Reviewing Authority (order dated 3.6.2016 in Application No.30 of 2016) under the Payment of Gratuity Act, 1972 ('the Gratuity Act' for short).
4. The grievance and claim of the petitioner is, essentially, for interest at statutory rate in respect of the delay caused in payment of total / maximum gratuity payable under and in accordance with the Gratuity Act.
2 C/SCA/20310/2016 CAV JUDGMENT
5. So far as the factual background is concerned, it has emerged from the record and from the submissions by learned advocates that:
5.1 The petitioner herein joined the service with the respondent corporation in January 1979.
She retired from the service, on superannuation, in October 2013 after rendering continuous service for about 34 years.
5.2 At the time when the petitioner retired from service, she was working with Vyayam Vidyalaya established, run and manged by the corporation and her last drawn salary was Rs.1916.80. 5.3 At this stage, it is relevant and necessary to mention that before the date on which the petitioner reached age for superannuation and retired from the service, the respondent corporation had issued a chargesheet which was served to the petitioner in June 2013. 5.4 In pursuance of the said chargesheet, 3 C/SCA/20310/2016 CAV JUDGMENT domestic enquiry was initiated.
5.5 Before the said domestic enquiry could be completed, the petitioner reached age of superannuation on 30.9.2013, since domestic enquiry could not be completed before the petitioner, retired on superannuation, the respondent, on said ground, did not pay gratuity. 5.6 On 5.9.2013, the respondent corporation informed the petitioner that gratuity and pension shall be withheld in view of pending domestic enquiry.
5.7 Subsequently the Enquiry officer concluded the enquiry somewhere in May / June 2014 and in his report / finding, the Enquiry Officer held that the charge and allegations against the delinquent employee (present petitioner) are proved.
5.8 Having regard to the finding and report of the Enquiry Officer, the Competent Authority passed order dated 25.6.2014 and imposed penalty 4 C/SCA/20310/2016 CAV JUDGMENT of cut / deduction @ Rs.100 from basic pension, for one year.
5.9 The said order of penalty has not been challenged by the petitioner and it has, undisputedly, attained finality.
5.10 During the said period, i.e. from 30.9.2013 / 1.10.2013 (the date when the petitioner retired from service on
superannuation) to 25.6.2015 (i.e. till the date of order of penalty), the respondent corporation withheld and did not pay to the petitioner any amount towards gratuity and pension. 5.11 It is not in dispute that the respondent corporation paid gratuity to the petitioner on 17.7.2014 i.e. about one month after the Disciplinary Authority passed order imposing penalty and almost 9 to 10 months after the petitioner retired from service on superannuation.
5.12 Since during the intervening period i.e. 5 C/SCA/20310/2016 CAV JUDGMENT from 30.9.2013 to June 2014, the respondent corporation did not pay gratuity, the petitioner approached the Controlling Authority and filed claim application (for interest on account of delay in payment of gratuity) before the Controlling Authority.
5.13 The said application came to be registered as Gratuity Case No.609 of 2013.
5.14 In the said application the petitioner claimed statutory interest from the date of retirement till the date of actual payment of gratuity.
5.15 The Controlling Authority considered the claim and the reply by the respondent corporation and rejected the said gratuity application vide its order dated 27.2.2015.
5.16 Feeling aggrieved by the said decision dated 27.2.2015 by the Controlling Authority, the petitioner filed appeal before the Appellate Authority which was registered as Gratuity Appeal 6 C/SCA/20310/2016 CAV JUDGMENT No.115 of 2015.
5.17 The Appellate Authority heard the contesting parties and vide its order dated 21.1.2016, the Appellate Authority rejected the appeal and confirmed the order passed by the Controlling Authority.
5.18 The petitioner filed Review Application No.30 of 2016 in Gratuity Appeal No.115 of 2015. The Authority, vide its order dated 21.7.2016, rejected the review application on the ground that there is no provision for review of the Appellate Authority's order.
6. In this background, the petitioner has taken out present petition and challenged the order dated 27.2.2015 passed by the Controlling Authority, the order passed by the Appellate Authority and the order dated 21.7.2016 passed in the review application.
6.1 The petitioner has challenged the said orders on the grounds mentioned in paragraph 7 C/SCA/20310/2016 CAV JUDGMENT Nos.11 to 13 of the petition, which read thus:
"11. The petitioner most respectfully submits that, the Authorities below ought to have considered the fact that the petitioner is retired on 10.10.2013 and the respondent No.1 Corporation has paid the amount of maximum gratuity on 17.07.2014, so, the respondent No.1 Corporation has paid the amount of gratuity to the petitioner after delay of about one year and for that, the respondent No.1 Corporation ought to have paid the interest at the rate of 10% pa. for the said delayed payment to the petitioner. For that, the petitioner need not to file any proceedings against the respondent No.1 Corporation as the petitioner has put in more than 36 years of service with the respondent No.1 Corporation, which is undisputed fact. Therefore, the impugned orders are bad in eyes of law and are not sustainable at all and the petitioner is required to be paid interest as prayed for by the petitioner.
12. The petitioner most respectfully submits that, one can believe that if the department inquiry is pending at the time of retirement, no one should pay the amount of gratuity in such circumstances. However, when the department inquiry is completed, then immediately the employee is entitled to get the amount of gratuity as it is his /her legitimate right. Therefore, soon after completion of departmental inquiry, the respondent No.1 should have to pay the amount of gratuity to the petitioner with effect from date of retirement i.e. from 01.10.2013 and not from the completion of the said socalled departmental inquiry i.e. from 17.07.2014. The respondent No.1 Corporation has paid the amount of maximum gratuity to the petitioner with effect from 17.07.2014 and not from 01.10.2013. The said action of the respondent No.1 Corporation is mala fide and perverse and therefore, the impugned orders are bad in eyes of law and therefore, the impugned orders are required to be quashed and set aside in the interest of justice.
13. In view of above facts and circumstances of the case, the learned Authorities below did not consider the matter of the petitioner and passed the impugned orders without considering the facts on record and without application of mind and therefore, the impugned orders are required to be be quashed and set aside in the interest of justice."
7. The respondent corporation has opposed the petition. The Labour Officer of the respondent corporation has filed an affidavit dated 18.8.2018 wherein, it is averred and stated that:
"3. It is submitted that even in the memo petition, at paragraph 12, it has been specifically admitted by the petitioner herself that the respondentcorporation is within its rights in not paying the amounts of gratuity in case of pendency of departmental inquiry, during the time of retirement. In the instant case, chargesheet was already given to the petitioner on 10th June, 2013 and subsequently, even the inquiry was underway when the petitioner superannuated on 30th September, 2013. It is submitted that vide letter dated 05th 8 C/SCA/20310/2016 CAV JUDGMENT September, 2013 it was specifically informed to the petitioner that due to pendency of the departmental inquiry, as per provisions of Sections 23, 24 and 144 to 146 of the Gujarat Civil Services (Pension) Rules, 2003, gratuity and pension shall be withheld. It is respectfully submitted that the It said letter is issued on 05th September 2013 and has never been challenged and has attained finality.
4. It is respectfully submitted that it is subsequently vide order dated 25th June, 2014, after holding the departmental inquiry, the alleged misconduct against the petitioner were proved and it was observed that the petitioner had committed misconduct and petitioner was not exonerated of the charges and as were proved, appropriate penalty was inflicted upon the petitioner vide order dated 25th June, 2014, copy of which is annexed the misconducts herewith and marked as ANNEXURER4.
5. It is respectfully further submitted that vide Resolution dated December, 2011, GCSR, 2002 has been adopted in totality by the respondent Corporation, copy of which is annexed herewith and marked as ANNEXURER5. It is submitted that the GCS (Pension) Rules specifically defines pension at Section 2 (55) and the said definition Section is exhaustive and include gratuity amount as well. It is submitted that as per Sections 23 and 24 of the said Pension Rules, pension which impliedly includes gratuity, can be withheld in case if the departmental proceedings are underway against employee. It has been specifically mentioned in Section 24 (2) that the proceedings shall be deemed to be continued even after the age of superannuation and shal1 continue till it is concluded by the authority as if is continued in service. It has been further submitted that even the said Section also provides that in here departmental proceedings are continuing, payment of gratuity/pension as per Rules 144 to 146 of the Pension) Rules, which specifically provides for withholdment of gratuity/ pension till two years is lapsed since the date of retirement and even after completion of two years if the departmental inquiry is not concluded then provisional payment of pension/ gratuity as specified in the Section can be disbursed. Thus the respondent corporation was within its rights in withholding the payment of gratuity as permissible under the Rules, which are applicable to the Corporation at large.
6. It is respectfully submitted that as soon as the order dated 25th June, 2014 was passed by the competent authority inflicting punishment, gratuity amount was paid on 17th July, 2014 i.e. within one month from the date gratuity becomes payable. It is submitted that even as per the provision of law, interest portion can be awarded if there is delay from the due date from which the gratuity becomes payable to an employee. In the instant case, in our respectful submission, the due date tor payment of gratuity shall be from 25th June, 2014 and within one month, payment of gratuity has been made. Hence, there arises no question of payment of interest as claimed.
7. It is respectfully further submitted that the petitioner herein was informed well in advance that withholdment of pension and gratuity by order dated 05th September, 2013 but the said order has never been challenged and has attained finality. When the order has attained finality, there arises no question of payment of interest as demanded by the petitioner."
7.1 Since, in the course of hearing of the 9 C/SCA/20310/2016 CAV JUDGMENT petition, certain issues arose, the respondent corporation, so as to offer explanation and with a view putting on record relevant material, filed further affidavit dated 28.8.2018. In the said further affidavit, the respondent corporation clarified that:
"2. I say and submit that the respondent - Corporation has adopted BCSR vide Resolution dated 03rd December, 2011 and the same has already been produced on record before this Hon'ble Court. I say and submit that according to the BCSR which has been adopted by the respondent - Corporation, increments, salary, leave, etc., are extended to its set of employees.
3. It is respectfully further submitted that the Pension Rules being Pension Rules, 2002 have been adopted by the respondent - Corporation as being part of BCSR. It is further submitted that promotion, recruitment, etc., is being undertaken as per Regulations, which have been framed by the respondent - Corporation under the BPMC Act. It is submitted that BCRS is made applicable wherein there are no other specific rules and regulations to govern the service conditions of the employees of the respondent - Corporation.
4. It is further respectfully submitted that in regard to gratuity for the employees of the respondent corporation computation is undertaken as per BCSR, Payment of Gratuity Act, 1972 and even as per the Municipal Corporation's Scheme, and after undertaking the computation under all the three schemes, highest amount payable is being paid to the employees of the respondent - Corporation. A resolution dated 02nd February, 1984 to this effect is passed which is also annexed herewith and marked as ANNEXURER6.
5. It is further submitted that even in the instant case computation qua the petitioner was undertaken as per all the three formulas and as the highest payable gratuity amounts was coming as per the Payment of Gratuity Act, 1972, gratuity was paid to the petitioner accordingly. The computation as being undertaken is annexed herewith and marked as ANNEXURER7."
7.2 From the reply by the corporation it has emerged that besides the provision for payment of gratuity under the Act the corporation has framed scheme for payment of gratuity to its employees 10 C/SCA/20310/2016 CAV JUDGMENT (which is different from 'deathcumretirement gratuity' payable under GCSR).
8. In this backdrop, learned advocate for the petitioner urged that undisputedly, the amount payable towards gratuity was not paid at the time when the petitioner retired from service on superannuation i.e. on 30.9.2013 / 1.10.2013. He further submitted that undisputedly, the respondent corporation paid gratuity on 17.7.2014. Thus, gratuity came to be paid after delay of almost 9 to 10 months and therefore, in view of the provisions under the Gratuity Act the claimant is entitled for interest for the said period of delay. Further, on unsustainable ground, the authorities under the Gratuity Act have denied the said claim of the petitioner. According to the petitioner, the authorities under the Gratuity Act failed to appreciate relevant provisions or misconstrued relevant provisions and on unsustainable grounds rejected the claim for interest. He submitted that the 11 C/SCA/20310/2016 CAV JUDGMENT scope of the relief prayed for by the petitioner is limited inasmuch as all that the petitioner claims is interest for the period of delay caused in payment of gratuity.
9. Learned senior counsel for the respondent corporation opposed the petition and the submissions of the petitioner. Learned senior counsel submitted that at the time when the petitioner attained age of superannuation, domestic enquiry was in progress and the petitioner was allowed to retire fro service during pendency of the domestic enquiry with clarification and on the condition that the domestic enquiry would continue. The petitioner was also informed that since the proceedings of disciplinary action are pending, amount payable towards gratuity and pension will be withheld until conclusion of the proceedings. Learned senior counsel for the respondent corporation further submitted that on conclusion of the enquiry, the Enquiry Officer held that the charge 12 C/SCA/20310/2016 CAV JUDGMENT and allegations are proved and though the Disciplinary Authority imposed penalty in view of the proved misconduct, the corporation released gratuity after conclusion of the enquiry and maximum amount payable towards gratuity (Rs.10 lakh) came to be paid to the petitioner in July 2014. It is claimed that in light of the provisions under the Gujarat Civil Services (Pension) Rules which are adopted by the corporation the corporation is entitled to withhold gratuity in the event disciplinary proceedings / criminal proceedings are pending against the employee at the time of superannuation and that, therefore, the petitioner's claim for interest is unjustified and it is rightly rejected by the authorities under the Gratuity Act. It is claimed that the orders passed by the authorities are just and proper and do not suffer from any error and therefore, the claim and the petition are not maintainable. Learned senior counsel for the petitioner and learned senior counsel for the 13 C/SCA/20310/2016 CAV JUDGMENT respondent corporation relied on the decision in the case of Union Bank of India [(2015) 144 FLR 371] and the decision dated 27.12.2002 in Special Civil Application No.11487 of 2000 as well as the decision dated 15.3.2017 in Special Civil Application No.1433 of 2003.
10. I have considered impugned orders as well as rival contentions and the material available on record.
11. The petitioner claims that the gratuity should have been paid on the date of superannuation or immediately (within 30 days) thereafter and the corporation could not have withheld the payment and it should pay interest for the period of delay.
12. On the other hand, the claim is opposed by the corporation only on one premise viz. that in light of provision under GCS (Pension) Rules it can withhold gratuity in case where domestic enquiry is pending. The corporation claims that 14 C/SCA/20310/2016 CAV JUDGMENT since under GCSR, gratuity can be withheld, obligation to pay interest does not arise. 12.1 The authorities under the Gratuity accepted the corporation's reply and contentions and thereupon rejected the petitioner's claim.
13. So as to consider the claim and grievance of the petitioner, it is relevant and necessary to take into account below mentioned provisions under Gratuity Act:
"1(3) It shall apply to
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.
2(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity; 2(r) "superannuation", in relation to an employee, means the attainment by the employee of such age as is fixed in the contract or conditions of service as the age on the attainment of which the employee shall vacate the employment; 4(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease; 15 C/SCA/20310/2016 CAV JUDGMENT 4(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 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 14 [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. 15 [ 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.] 4(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. 4(6) Notwithstanding anything contained in subsection (1),
(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 c [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.
"5. Power to exempt. -
(1) The appropriate Government may, by notification, and subject to such conditions as may be specified in the notification, exempt any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the provisions of this Act 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 this Act.
(2) The appropriate Government may, by notification and subject to such conditions as may be specified in the notification, exempt any employee or class of employees employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the provisions of this Act, if, in the opinion of the appropriate Government, such employee or class of employees are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act.
(3) A notification issued under subsection (1) or sub section (2) may be issued retrospectively a date not earlier than the date of commencement of this Act, but no such notification shall be issued so as to prejudicially affect the interests of any person."16 C/SCA/20310/2016 CAV JUDGMENT
7(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in subsection (1) 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.
7(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. 7(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.
7(4)(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.
7(4)(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.
8. Recovery of gratuity. -
If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon a [at such rate as the Central Government may, by notification, specify] from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto :
Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate :
Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act."
13.1 Section 1(3) defines establishments to which the Act will apply. Section 2(e) explains the term employee who stand covered within 17 C/SCA/20310/2016 CAV JUDGMENT purview of the said term. Section 2(r) defines term superannuation. Section 4 prescribes the time and event when the gratuity become payable and the formula for computing the amount payable towards gratuity and the circumstances in which the employer can fortify gratuity. The said section also provides that any provision under the Act will not deprive the employee to receive better or higher benefit towards gratuity if available under any award or settlement or contract of employment. Section 7 of the Act imposes obligation on the employer to contribute gratuity payable in accordance with the Act and to inform the said details to the employee, even if any claim is not submitted by the employee.
The said Section 7 imposes further obligation on the employer to deposit the undisputed amount with the Controlling Authority in case any dispute arises between employer and employee.
14. Section 5 prescribes, inter alia, that by means of a notification Appropriate Government 18 C/SCA/20310/2016 CAV JUDGMENT may exempt any establishment from the operation of the provisions of the Act or the government may exempt any employee or class of employees employed in any establishment from the operation of the provisions of the Act, if in the opinion of the appropriate government, such establishment or employee or class of employees are in receipt of the gratuity or pensionary benefits which are not less favourable than the benefit conferred by the Act.
14.1 In present case, any notification exempting the respondent corporation or present petitioner or the class of employment in which the petitioner was employed, is not issued by appropriate government.
14.2 It is not the case even of the corporation that it is an exempted establishment and the Act is not applicable to the corporation by virtue of the exemption by notification by appropriate government. It is also not the case of the corporation that the petitioner is not an 19 C/SCA/20310/2016 CAV JUDGMENT 'employee' and/or that she is exempted / excluded employee. Thus, neither the corporation nor the employee are exempted from the purview of the Act.
14.3 In absence of such exemption / notification all provisions under the Act, including Section 8, apply, with the same force, to the corporation as they would apply in case of any other establishment / employer where the Act is applicable.
15. Before proceeding further, it is also appropriate to recall the provisions under Section 2(e) of Gratuity Act which defines the term 'employee'.
15.1 The said provision excludes (from the purview of said term) a person who 'holds a post' under the Central Government or the State Government and is governed by any other Act or Rules which provide for payment of gratuity. However, so far as the petitioner is concerned, 20 C/SCA/20310/2016 CAV JUDGMENT undisputedly, the petitioner is not a 'government employee'. The petitioner does not 'hold post' under Central or State Government. Further, the petitioner is not exempted or excluded from the purview of Section 2(e) and/or Section 5 of the Act. Such is not the case even of the corporation. Thus, the petitioner is, undisputedly, an 'employee' under Section 2(e).
16. When undisputed facts of present case are considered in light of conjoint reading of the said provisions, it emerges that -
(a) any notification exempting the respondent establishment from the applicability of the Act is not issued by the appropriate government. Thus, the respondent establishment is not exempted or excluded from the purview of the Act.
(b) Gratuity Act is, undisputedly, applicable to the respondent corporation (actually, the corporation has not raised any objection about applicability of the Gratuity Act to the corporation);
21 C/SCA/20310/2016 CAV JUDGMENT
(c) the petitioner did not hold a post under the State or the Central Government and she was not government employee;
(d) the petitioner is, undisputedly, an employee within the meaning of the term defined under Section 2(e) of Gratuity Act and the petitioner is not exempted / excluded from the purview of the Act;
(e) the service of the petitioner came to end by way of retirement on reaching superannuation [as defined under Section 2(r) of the Act];
(f) any notice for forfeiture of gratuity was never issued against the petitioner and/or any proceedings for forfeiture of gratuity were not initiated and conducted under Section 4(6) of the Act against the petitioner and any order to forfeit, wholly or partially, gratuity is not passed against the petitioner.
(g) the petitioner has rendered continuous service for almost 34 years to the respondent corporation (meaning thereby the petitioner, before superannuation, had rendered / completed minimum period of service required for eligibility and that, therefore, the petitioner is eligible and entitled 22 C/SCA/20310/2016 CAV JUDGMENT for gratuity under the Act;
(h) consequently, the petitioner is eligible for gratuity under and in accordance with Section 4(1) read with Section 4(2) and 4(5) of Gratuity Act;
(i) Gratuity Act imposes obligation to pay gratuity within prescribed timeframe;
(j) Gratuity Act provides that in case there is any dispute between employer and employee as to amount payable to an employee or admissibility of claim, then in that event, the employer should deposit undisputed amount with the Controlling Authority;
(k) So far as the petitioner is concerned, her right to gratuity accrued under and flows from (i.e. it accrued and fructified under) Gratuity Act;
(l) Actually, the corporation has paid gratuity to the petitioner under the Act and in accordance with the formula under Gratuity Act;
(m) on conjoint reading of (i) Section 4(1) of the Act (which provides, inter
alia, that gratuity shall be payable to an employee on cessation of employment on account of retirement / superannuation of an employee) and 23 C/SCA/20310/2016 CAV JUDGMENT
(ii) Section 7(2) (which imposes obligation on the employer to determine the amount of gratuity and give notice to the employee (to whom gratuity is payable) and such procedure should be undertaken and completed by the employer as soon as gratuity becomes payable though application, for such purpose is not submitted by the employee, and
(iii) Section 7(3) of the Act (which imposes obligation on the employer to pay gratuity within 30 days from the date it becomes payable) and
(iv) Section 7(4)(a) of the Act (which provides, inter alia, that in case there is any dispute as to the amount of gratuity or as to the admissibility of any claim or as to the person entitled to receive gratuity, the employer must deposit undisputed amount with the Controlling Authority); it becomes clear that the Act does not brook delay in the matter of payment of gratuity. 16.1 Section 8 of Gratuity Act confers power to pay interest. Such direction can be passed when application is submitted to the authority and the Controlling Authority is requested to issue 24 C/SCA/20310/2016 CAV JUDGMENT appropriate direction.
16.2 Under the circumstances, if an employer does not pay gratuity within prescribed time and causes or commits delay in payment of gratuity to a person [who is an 'employee' within the purview of the Act and eligible for gratuity in terms of Section 4(1) read with Section 4(2) and 4(5)] then obligation to pay interest for the span of delay would arise and the employee would be entitled for interest.
16.3 If money is not paid when due and payable, then right to claim 'money' with interest accrues. The said claim becomes more intense and justified when timeframe to pay the amount is fixed by a statute.
16.4 The Act viz. Gratuity Act prescribes time frame to pay gratuity. On the other hand, Gratuity Act does not permit the employer to withhold payment of gratuity and said Act does not have any provision which confer authority to 25 C/SCA/20310/2016 CAV JUDGMENT the employer to withhold payment of gratuity beyond time limit mentioned under said Act.
17. In present case, the relevant facts viz. (i) average per day salary of the petitioner; (ii) the date when the petitioner joined the service with the corporation; (iii) the date on which the petitioner retired on superannuation from the service; (iv) the total period of service rendered by the petitioner, are not in dispute. According to the claimant there was no basis or justification to not pay gratuity to the petitioner.
17.1 So as to counter such claim the corporation has come out with the case that before the date of superannuation it had served a chargesheet to the petitioner and at the time of superannuation domestic enquiry was pending against the petitioner. The said fact is cited as the ground for withholding gratuity. However, the corporation has failed to show any provision under the Act which confer such power (to 26 C/SCA/20310/2016 CAV JUDGMENT withhold gratuity) to the corporation. The corporation is unable to back its action with strength and support of power flowing from the Act.
17.2 At this stage, it is pertinent that the petitioner's entitlement for maximum amount payable towards gratuity is not disputed by the corporation.
17.3 Actually, almost 9 months after petitioner's superannuation (and after the Disciplinary Authority passed order of penalty) the corporation, on 17.7.2014, paid maximum amount payable towards gratuity (in accordance with the formula under the Act) to the petitioner.
18. In this backdrop, the petitioner has claimed interest for the period of delay caused in payment of gratuity.
19. With reference to the claim of the petitioner it is necessary to note that there is 27 C/SCA/20310/2016 CAV JUDGMENT no provision in the Act and even in the Rules under Gratuity Act which permit the employer to withhold gratuity, more so when any action is not initiated / taken under subsection (6) of Section 4 of Gratuity Act.
20. It is pertinent that even under gratuity scheme framed by the corporation there is no provision which permits or authorises the employer to withhold payment of gratuity.
21. On the other hand the Act prescribes time frame within which employer should pay gratuity to the employee on cessation [covered under Section 4(1) of Gratuity Act] of his service.
22. Despite such position under the Act and so also in the Rules framed under the Act (as well as under the scheme framed by the corporation) the respondent corporation withheld payment of gratuity to the petitioner for almost 9 months. 22.1 The corporation being conscious and aware about absence of such provision and so as to 28 C/SCA/20310/2016 CAV JUDGMENT justify its impugned action (i) of withholding payment towards gratuity and (ii) of not paying interest / opposing claim for interest, the corporation brought in picture under Gujarat Civil Services (Pension) Rules, 2002 and relied on Rule 145 of said Rules. It is claimed that the corporation has adopted said Rules. The relevant provisions under said Rules read thus:
"142. Provisional payment of pension and gratuity:
(1) The Pension Sanctioning Authority shall adhere to the procedure laid down in rules 128 to 138. In cases where, in spite of following the procedure laid down in rule 128 to 138, it may not be possible for the Pension Sanctioning Authority to forward the pension papers referred to in rule 138 to the Director of Pension and Provident Fund within the period prescribed or where the pension papers have been forwarded to the Director of Pension and Provident Fund within the prescribed period but the Director of Pension and Provident Fund may have returned the pension papers to the Pension Sanctioning Authority for elucidating further information before issue of pension payment order and order for the payment of gratuity where in case departmental or judicial proceedings are not pending against the retiring/retired Government employee and if the pension sanctioning authority is of the opinion that a Government employee is likely to retire before his pension and gratuity or both, can be finally assessed and settled in accordance with the provisions of these rules, he shall without any delay, take steps to determine the qualifying years of service and the pensionable pay after summary investigations.
Explanation : For this purpose, he shall
(i) rely upon such information as may be available in the official records, and in pension papers, (ii) if necessary, call for from the retiring Government employee a written statement stating the total length of qualifying service including details of pay drawn during the last ten months of service but excluding the breaks and other nonqualifying period of service.
(2) The written statements as referred to Explanation (ii) above shall be signed by the Government employee alongwith declaration as to the truth of the statement.
(3) The Pension Sanctioning Authority shall thereafter determine the qualifying years of service and the pensionable pay in accordance with the information available in the official records and the information obtained from the retiring Government employee under subrule (1). He shall, then, determine the amount of pension and the amount of deathcum 29 C/SCA/20310/2016 CAV JUDGMENT retirement gratuity.
145. Provisional payment of pension and gratuity where charge sheet is issued or judicial proceedings are instituted in respect of the Government employee against whom the departmental inquiry is pending : (1) In case of a Government employee against whom the Departmental Inquiry is initiated or prosecution is granted (i.e. charge sheet is issued or FIR is filed, as the case may be) prior to retirement, but the departmental inquiry or prosecution, is not concluded (i.e. the order of the competent authority on the report of the inquiry officer is not issued or the judgement of trial court is not delivered, as the case may be), the Pension Sanctioning Authority shall sanction provisional payment of full amount of pension as determined under subrule (3) of rule 142. No provisional payment of deathcumretirement gratuity shall be sanctioned.
(2) In case of a Government employee against whom the Departmental Inquiry is initiated or prosecution is granted (i.e. charge sheet is issued or FIR is filed, as the case may be) prior to retirement, but the departmental inquiry or prosecution, is not concluded (i.e. the order of the competent authority on the report of the inquiry officer's not issued or the judgement of trial court is not delivered, as the case may be), and two years have lapsed since the date of retirement, the Pension Sanctioning Authority shall sanction the provisional payment of pension and deathcumretirement gratuity as under :
(i) 100 per cent of pension as determined under subrule (3) of rule 142 if the same is not sanctioned under subrule (1).
(ii) 100 per cent of gratuity as determined under subrule (3) of rule 142 subject to withholding of after 10 per cent or fifteen thousand rupees which ever is less.
146. CONDITIONS FOR THE PAYMENT OF PROVISIONAL PENSION :
The conditions for the provisional payments of pension and gratuity shall be as under : (1) Sanction for the provisional payment of pension shall be given only in cases of Superannuation, Retiring (including pension sanctioned on voluntary retirement), and Invalid pension and deathcumretirement gratuity.
(2) Sanction for the provisional payment of Compensatory and Wound and Injury pension shall not be given.
(3) The Pension Sanctioning Authority shall mention the amount recoverable from the gratuity under rule 133 in the sanction order.
(4) The amount of provisional pension and deathcumretirement gratuity shall be paid from the treasury/subtreasury mentioned in the sanction order. The pensioner shall not be entitled to have the payment transferred to any other treasury/sub treasury.
(5) The amount of provisional pension and gratuity payable under sub rule (4) shall, if necessary, be revised after the completion of the detailed scrutiny of the records.
(6) The payment of provisional pension shall continue till final payment of pension is authorised by the Director of Pension and Provident Fund.
(7) If the amount of provisional pension and/or deathcum retirement gratuity disbursed to a Government employee under rules142 or 143 or 144 or 154 is, on its final assessment, 30 C/SCA/20310/2016 CAV JUDGMENT found to be in excess of the final assessment by the Director of Pension Provident Fund, it shall be open to the Pension Disbursing Authority to adjust the excess amount of pension out of gratuity withheld under rule143 or 144 or 154 or recover the excess amount of pension in installments by making short payments of the pension payable in future.
(8) Payment of provisional pension made under rule145 shall be adjusted against final retirement benefits sanctioned to such Government employee upon conclusion of such proceeding but no recovery shall be made where the pension finally sanctioned is less than the provisional pension or the pension is reduced or withheld either permanently or for a specified period."
22.2 Rule 145 under GCSR provides, inter alia, that gratuity can be withheld in case disciplinary action or prosecution is pending against government employee.
22.3 However, it is pertinent that the said Rules are framed by the State Government for 'government employee' and the said Rules prescribe service conditions for 'government employee'. The petitioner is, undisputedly, not 'government employee'.
23. Since the corporation heavily relied on GCSR to defend and justify its action, the Court inquired from the corporation as to whether the corporation has framed its own Service Rules / Rules for taking disciplinary action against its employees.
31 C/SCA/20310/2016 CAV JUDGMENT 23.1 In reply to the query by the Court, the corporation declared that it has framed its own / separate Service Rules (for disciplinary matters / actions) and under the said Rules there is no provision (i) to continue / conduct disciplinary proceedings (inquiry) after superannuation and/or (ii) for withholding gratuity during pendency of disciplinary inquiry. 23.2 From the corporation's reply it has also emerged that undisputedly, either under Gratuity Act and the Rules framed under Gratuity Act or under gratuity scheme (framed by the corporation) or under Service Rules there is no provision which permit or authorise the employer to conduct / continue domestic enquiry after superannuation and/or to withhold gratuity during pendency of domestic enquiry. On the other hand Gratuity Act prescribes timeframe and mandates that gratuity should be paid within said timeframe.
24. The question which arise in present petition is whether, in absence of provision (to withhold 32 C/SCA/20310/2016 CAV JUDGMENT gratuity) under the Act the corporation can withhold gratuity and whether the corporation can take shelter under GCS (Pension) Rules to support and justify its action i.e. (a) withholding payment of gratuity; and (b) denying claim for interest in respect of the period for which payment has been delayed.
24.1 Actually, plain and simple answer to said issue lies in the provision under the Act viz. Section 14 which is a nonobstante provision. The said Section 14 of Gratuity Act reads thus:
"14. Act of 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."
It emerges from said provision that the Act and the Rules framed under Gratuity Act shall override the enactments other than Gratuity Act. Thus, the provision under Gratuity Act prevail over other enactment.
24.2 On this count it is pertinent that the 33 C/SCA/20310/2016 CAV JUDGMENT petitioner's right to claim and receive gratuity accrued under and flows from Gratuity Act. She is eligible for gratuity under said Act and in accordance with the formula prescribed under said Act. Therefore, payment of gratuity to the petitioner attracts all provisions, including proviso of Section 8 of the Act, under the Act. 24.3 More important fact is that the corporation has paid gratuity to the petitioner under Gratuity Act and in accordance with the formula prescribed by Gratuity Act.
25. The scheme of Gratuity Act imposes obligation on the employer to pay gratuity within time frame prescribed by said Act. The Act also imposes obligation to deposit (with controlling authority) undisputed amount in case any dispute arises in light of employee's claim. 25.1 Any provision to confer right or authority and power to the employer (corporation in present case) to withhold payment of gratuity is not 34 C/SCA/20310/2016 CAV JUDGMENT prescribed under Gratuity Act. Under the Act, such right or power is not available to an employer. Even gratuity scheme and/or service framed by the corporation do not provide for or contain any provision which confer power to the employer (corporation in present case) to withhold payment of gratuity.
26. In this view of the matter i.e. in absence of provision under Gratuity Act and in absence of requisite power in the hands of employer viz. to withhold gratuity the corporation could not have withheld gratuity.
26.1 Impugned action is without authority in law. Thus incompetent and untenable.
27. The action of withholding gratuity resulted into delay. The said entire action is not only without authority but it is also contrary to the provision (under Gratuity Act) which mandates that gratuity should be paid within prescribed time.
35 C/SCA/20310/2016 CAV JUDGMENT
28. The Act is a social security and welfare legislation and confers right, in favour of employees, to receive gratuity on cessation of service on account of one of the events / circumstance mentioned under Section 4(1) of Gratuity Act i.e. within time frame prescribed under said Act.
28.1 Therefore, the provision which imposes such obligation (to pay gratuity within prescribed time limit) and to deposit the amount with the authority in case of dispute shall, in light of Section 14 of Gratuity Act, prevail over any other enactment / provision and it must be construed and enforced strictly and undue latitude cannot be granted to the employer and/or a right not available under / not granted by the Act (to the employer) cannot be read into the Act and employer cannot be permitted to exercise power (in the matter related to payment of gratuity) which is not conferred and granted by said Act.
36 C/SCA/20310/2016 CAV JUDGMENT
29. Actually, when (i) Gratuity Act is applicable to the corporation; and when (ii) the obligation to pay gratuity to its employees is cast by and has arisen under Gratuity Act; and when (iii) the right to receive gratuity has accrued in favour of employee and flows from the Act; and when (iv) even the corporation has paid gratuity to the petitioner under and in accordance with the formula under the Act; and when (v) neither the Act nor the Rules framed under Gratuity Act nor the scheme framed by the corporation contain any provision which permit and authorise the corporation (employer) to withhold payment of gratuity, then the corporation cannot wriggle out of said statutory obligation by invoking and by taking recourse under GCS (Pension) Rules, 2002 and the provision under BCS (Pension) Rules cannot be invoked to frustrate provision under a statute whereby employee has right to receive gratuity within prescribed timeframe and/or GCSR (Rule 145) 37 C/SCA/20310/2016 CAV JUDGMENT cannot be invoked to read a provision in the Act which is not provided for under Gratuity Act and/or to acquire or usurp and exercise such right or power and authority which the legislature, in its wisdom, did not grant to the employer. This cannot be done by invoking some provision from the Rules which are not framed under Gratuity Act and/or which are hit by Section 14 of the Act. The said Rules cannot prevail over provision under the Act and cannot plug or fill up any gap or absence of provision under Gratuity Act so as to confer such power to employer which the legislature has not conferred.
30. A beneficial provision under social welfare legislation and special statute cannot be frustrated or cannot be rendered redundant with aid of a Rule which is not framed under Gratuity Act and/or which runs contrary to substantive provision under Gratuity Act and militates against the obligation created and imposed by the Act.
38 C/SCA/20310/2016 CAV JUDGMENT
31. The corporation, even in exercise of Rule making power under different Act viz. BPMC Act cannot frame or adopt a rule to deny benefit created and granted in favour of the petitioner by virtue of provision under Special Act and/or to confer power or authority, which is not conferred by the legislature.
31.1 Further, in exercise of Rulemaking power available under different Act the corporation cannot frame or adopt Rule which is not in conformity with but which militates against substantive provision under Special and Welfare Act viz. Sections 4 to 7 of Gratuity Act. Besides this, the authority could not have passed order ignoring Section 4 to Section 7 and Section 8 of the Act.
32. The provision under the statute will prevail over such Rule. A Rule under GCSR cannot nullify substantive and beneficial provision under special statute and the corporation also cannot 39 C/SCA/20310/2016 CAV JUDGMENT exploit the said Rules to wriggle out of the consequence (prescribed by the Act) for withholding payment of gratuity.
33. Besides this, the nonobstante provision under Gratuity Act (viz. Section 14 of Gratuity Act) even otherwise will prevail over and override Rule under GCSR. In light of Section 14 of the Act, the provisions under Gratuity Act would prevail over the said Rules to the extent they militate against provision under Gratuity Act or run contrary to the obligation prescribed by Section 4 to Section 7 of Gratuity Act. A cursory glance at the said nonobstante provision clearly brings out that anything inconsistent with Gratuity Act cannot operate or prevail and cannot be given effect to.
34. Any Rule which militates against statutory provision cannot be invoked and operated to render otiose the provision under Gratuity Act. Such Rule cannot be given effect. It would be hit by Section 14 of Gratuity Act. The supremacy of 40 C/SCA/20310/2016 CAV JUDGMENT statutory provision must prevail and a provision under GCSR cannot obliterate statutory provision and/or the obligation cast by statutory provision.
35. In present case, there is additional dimension inasmuch as the corporation did not initiate any proceeding under Section 4(6) of the Act and/or has not taken any action against the employee under Section 4(6) of the Act. Under the circumstances, even otherwise there is no justification for not paying gratuity in accordance with Section 4(1) of the Act and there is no justification in the corporation's refusal to pay interest.
36. Despite this position the corporation withheld gratuity. The corporation subsequently (after 9 months) paid gratuity to the petitioner. For said period of delay the petitioner claimed interest. However, the corporation refused said claim. The petitioner, therefore, filed claim application. The authorities under the Act failed 41 C/SCA/20310/2016 CAV JUDGMENT to appreciate the aspects discussed above. When power conferred by Section 8 was available inasmuch as claim application was filed to claim interest on ground of delay in paying gratuity and employer's denial to pay interest, the authority ought not have rejected the applications. The authority failed to exercise power available to it under law.
37. In light of relevant provision in view of foregoing discussion and for reasons mentioned above, the Court is of the view that the authorities under the Gratuity Act have committed error in refusing the demand and claim for interest in respect of delay in payment of gratuity and the impugned orders passed by the authorities are not sustainable and they deserve to be set aside and the petitioner is entitled to receive interest for the period in question.
38. From foregoing discussion it emerges that impugned orders deserve to be set aside. The action of the corporation viz. to withhold 42 C/SCA/20310/2016 CAV JUDGMENT gratuity and refusing to pay interest in respect of the delay is unjust, incompetent, contrary to the provision under Gratuity Act and it cannot be sustained. The Controlling Authority and/or Appellate Authority should have granted the relief prayed for by the petitioner. The decision by the authorities viz. to deny the applicant's request - claim is unjustified and untenable.
39. Learned senior counsel for the corporation relied on the decision of Hon'ble High Court of Kerala in the case of Union of India vs. Ram Mohan [2014 (4) KerLT 351]. The said decision is rendered in light of Rules of different amplitude and effect and it appears that Section 14 of Gratuity Act was not pressed in service or did not fall for consideration in said case. In view of facts of present case, the said decision does not render assistance to the petitioner.
40. From the facts of present case and in light of relevant provision and foregoing discussion it has emerged that the petitioner is eligible and 43 C/SCA/20310/2016 CAV JUDGMENT entitled for interest for the period the corporation did not pay gratuity i.e. from the date when gratuity became payable in accordance with Section 4 of Gratuity Act till the date of actual payment. The petitioner should be paid interest for the said period of delay at the same rate which is notified for the purpose of Section 8 of Gratuity Act.
41. Consequently, the orders passed by the Adjudicating Authority (order dated 27.2.2015 in Case No.609 of 2013) and the Appellate Authority (order dated 21.1.2016 in Appeal No.115 of 2015) and Reviewing Authority (order dated 3.6.2016 in Application No.30 of 2016) are quashed and set aside.
42. Accordingly, the petition is partly allowed. Rule is made absolute to the aforesaid extent. The case is remanded to the authority to calculate and quantify amount payable towards interest in respect of the span and length of 44 C/SCA/20310/2016 CAV JUDGMENT delay.
For said purpose the authority shall take into account rate notified for Section 8 of Gratuity Act. Such process shall be completed by the authority within two weeks from receipt of present order and the amount so quantified shall be paid to the petitioner within four weeks from the date of the authority's order.
Orders accordingly.
Sd/ (K.M.THAKER, J) Bharat 45