Gujarat High Court
Jethabhai Jivabhai Solanki vs Commissioner - Technical And Education ... on 21 January, 2015
Author: C.L.Soni
Bench: C.L. Soni
C/SCA/12878/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 12878 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE C.L. SONI
================================================================
1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
================================================================
JETHABHAI JIVABHAI SOLANKI....Petitioner(s)
Versus
COMMISSIONER - TECHNICAL AND EDUCATION & 1....Respondent(s)
================================================================
Appearance:
MR. VISHAL P THAKKER, ADVOCATE for the Petitioner(s) No. 1
MR YAGNIK ASSTT.GOVERNMENT PLEADER for the Respondent(s) No. 1 -
2
RULE SERVED for the Respondent(s) No. 2
================================================================
CORAM: HONOURABLE MR.JUSTICE C.L. SONI
Date : 21/01/2015
Page 1 of 18
C/SCA/12878/2013 JUDGMENT
ORAL JUDGMENT
1. The claim of the petitioner in this petition is to grant interest @ 18% on the delayed payment of gratuity amount.
2. As stated in the petition the petitioner retired on 31st July 2009 on reaching the age of superannuation. However, after the petitioner retired, on 5th April 2010 a departmental inquiry was initiated against the petitioner. In such departmental inquiry the petitioner was exonerated on 13th May 2011. It is stated by the petitioner that thereafter on 16th July 2011 the petitioner was paid gratuity along with other retiral benefits. It is the case of the petitioner that for no good reason and for no fault of the petitioner the payment of gratuity was delayed. The petition is opposed by the affidavitinreply filed on behalf of respondent no. 2 mainly stating that due to pending departmental inquiry the gratuity amount of the petitioner was not released. It is further stated that the petitioner had approached the competent authority under the Payment of Gratuity Act but thereafter since that authority had no jurisdiction the petitioner has filed Page 2 of 18 C/SCA/12878/2013 JUDGMENT the present petition. However, since the petitioner was paid gratuity on 16th July 2011 the petitioner cannot be made entitled to interest on such delayed payment of gratuity. It is also stated that even if the petitioner is entitled for interest on delayed payment of interest, the petitioner could be paid interest @ 6% as per the Government Resolution and not @18% as claimed by the petitioner.
3. I have heard learned advocates for the parties. Learned advocate Mr. Thakker submitted that in fact when the petitioner retired from service no departmental inquiry was pending against him. Mr. Thakker further submitted that after nearly a period of one year the departmental inquiry was initiated against him, wherein also the petitioner was exonerated. Mr. Thakker submitted that the delay in making payment was not on account of fault of the petitioner but the department on its own decided not to release the gratuity simply because the departmental inquiry was initiated against the petitioner. Mr.Thakker, therefore urged that the petitioner is entitled to interest @ 18% on delayed Page 3 of 18 C/SCA/12878/2013 JUDGMENT payment of gratuity.
4. As against the above arguments learned AGP Mr. Yagnik submitted that since the departmental inquiry was pending against the petitioner the gratuity amount was not released to the petitioner. Mr. Yagnik submitted that in any case even if the interest is to be paid on delayed payment of gratuity such interest is governed by the Government circular which provides for 6% interest on delayed payment of gratuity.
5. Having heard learned advocates for the parties, it appears that when the petitioner retired from service, neither any departmental inquiry nor any other legal hurdle was there for not releasing the gratuity amount to the petitioner. However, after about a period of nearly one year the departmental inquiry was initiated against the petitioner, and this was taken as a ground for not releasing the gratuity to the petitioner. In the departmental inquiry the petitioner has been exonerated.
Page 4 of 18
C/SCA/12878/2013 JUDGMENT
6. It is required to be noted that if the petitioner was entitled for gratuity amount when he retired such gratuity could not have been withheld on account of subsequent lodging of departmental proceedings against the petitioner. It is not the case of the respondents that the gratuity was forfeited at any point of time. It is also not the case of respondents that gratuity amount was not released to the petitioner on account of fault on the part of the petitioner. Therefore, it clearly appears that the petitioner has been wrongfully denied the gratuity amount on his retirement. The petitioner is therefore justified in claiming interest on delayed payment of gratuity. In the case of Y.K Singla Vs. Punjab National Bank and Ors (2013) 3 SCC 472 the Hon'ble Supreme Court has held and observed in paras 18 to 24 as under:
"18. SubSection (3A) of Section 7 of the Gratuity Act is the most relevant provision for the determination of the present controversy. A perusal of the subSection (3A) leaves no room for any doubt, that in case gratuity is not released to an employee within 30 days from the date the same become Page 5 of 18 C/SCA/12878/2013 JUDGMENT payable under subSection (3) of Section 7, the employee in question would be entitled to "...simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long term loans, as the Government may, by notification specify..." There is, however, one exception to the payment of interest envisaged under sub Section (3) of Section 7 of the Gratuity Act. The aforesaid exception is provided for in the proviso under sub Section (3A) of Section 7. A perusal of the said proviso reveals, that no interest would 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..." The exception contemplated in the proviso under subSection (3A) of Section 7 of the Gratuity Act, incorporates two ingredients. Where the two ingredients contemplated in the proviso under subSection (3A) are fulfilled, the concerned employee can be denied interest despite delayed payment of gratuity. Having carefully examined the proviso under subSection (3A) of Section 7 of the Gratuity Act, we are of the view, that the first ingredient is, that payment of gratuity to the employee was delayed because of some fault of Page 6 of 18 C/SCA/12878/2013 JUDGMENT the employee himself. The second ingredient is, that the controlling authority should have approved, such withholding of gratuity (of the concerned employee) on the basis of the alleged fault of the employee himself. None of the other subsections of Section 7 of the Gratuity Act, would have the effect of negating the conclusion drawn hereinabove.
19. Insofar as the present controversy is concerned, the appellant was accused of having entered into a conspiracy with a bank employee superior to him, so as to extend unauthorized benefits to a member of the Indian Administrative Services belonging to the Haryana Cadre. Based on the aforesaid alleged fault of the appellant, the PNB, by an order dated 13.5.2000, informed the appellant, that the release of certain retiral benefits including gratuity was being withheld, because of pending of criminal proceedings against him. The appellant was also informed, through the aforesaid communication, that release of his retiral benefits including gratuity, would depend on the outcome of the pending criminal proceedings.It is, therefore apparent, that the second ingredient expressed in the proviso under subSection (3A) of Section 7 of the Gratuity Act was Page 7 of 18 C/SCA/12878/2013 JUDGMENT clearly satisfied, when the competent authority approved the action of withholding the appellant's gratuity. The instant conclusion is inevitable, because it is not the case of the appellant, that the communication dated 13.5.2000, by which his gratuity was withheld, had not been issued at the instance of the concerned controlling authority. The only question which, therefore,arises for consideration is, whether the first ingredient (culled out above) for the applicability, of the proviso under subSection (3A) of Section 7 of the Gratuity Act, can be stated to have been satisfied, in the facts and circumstances of the instant case. If it can be concluded, that the aforesaid ingredient is also satisfied, the appellant would have no right to claim interest, despite delayed release of gratuity.
20. Our determination of the first ingredient is, as follows. We are of the considered view, that consequent upon the acquittal of the appellant by the Special Judge, CBI Court, Chandigarh, it would be erroneous to conclude, that the gratuity payable to the appellant on attaining the age of superannuation i.e., on 31.10.1996, was withheld on account of some fault Page 8 of 18 C/SCA/12878/2013 JUDGMENT of the appellant himself. We may hasten to add, if the appellant had been convicted by the Special Judge, CBI Court, Chandigarh, then the first ingredient would also be deemed to have been satisfied. Conversely, because the appellant has been acquitted, he cannot be held to be at fault. Accordingly it emerges, that the "fault" ingredient of the employee himself, for denial of gratuity when it became due, remains unsubstantiated. Since one of the two salient ingredients of the proviso under subSection (3A) of Section 7 of the Gratuity Act is clearly not satisfied in the present case, we are of the view, that the appellant cannot be denied interest under the proviso to section 7(3A) of the Gratuity Act. Accordingly, the appellant has to be awarded interest under section 7(3A) of the Gratuity Act. Therefore, if the provisions of the Gratuity Act are applicable to the appellant, he would most definitely beentitled to interest under subSection (3A) of Section 7 of the Gratuity Act, on account of delayed payment of gratuity.
21. The most important question which arises for our consideration is, whether the provisions of the Gratuity Act can be extended to the Page 9 of 18 C/SCA/12878/2013 JUDGMENT appellant, so as to award him interest under subSection (3A) of Section 7 of the Gratuity Act. Insofar as the instant aspect of the matter is concerned, it was the vehement contention of the learned counsel appearing on behalf of the appellant, that the provisions of the Gratuity Act are extendable to the appellant, and as such, he would be entitled to disbursement of interest under Section 7(3A) thereof. The plea at the behest of the PNB, however, was to the contrary. The contention of the learned counsel representing the PNB was, that the PNB having adopted the 1995, Regulations, the claim of the appellant could only be determined under the provisions of the said Regulations. It was pointed out, that denial of payment of gratuity in the present case, was valid and justified under Regulation 46(2) of the 1995 Regulations. Furthermore, it waspointed out, that the 1995 Regulations, did not make any provision for the award of interest in case of delayed payment of gratuity. Therefore, since gratuity had legitimately been withheld, under the provisions of the 1995,Regulations, and the payment of gratuity to the appellant is not regulated under the Gratuity Act, there was no question of payment of interest to the appellant. It was submitted Page 10 of 18 C/SCA/12878/2013 JUDGMENT that the appellant's gratuity had been withheld during the pendency of criminal proceedings initiated against him, his entitlement to gratuity stood extended to such time as the said criminal proceedings were eventually disposed of. Thus viewed, the entitlement to gratuity stood extended to 31.10.2009 (i.e., the date of the disposal of the proceedings pending against him). In this behalf, it was also pointed out, that as soon as the criminal proceedings pending against the appellant, concluded in his favour, the PNB released all the appellant's retiral benefits, including gratuity. The documents available on the record of the case reveal, that gratuity was released to the appellant on 12.2.2010. As such, the delay in release of gratuity, if at all, was only from 31.10.2009 to 12.2.2010. For the aforesaid delayed payment of gratuity, the appellant was admittedly awarded interest quantified at Rs.3,336/ (calculated at the rate of 5.5%).
22. In order to determine which of the two provisions (the Gratuity Act, or the 1995, Regulations) would be applicable for determining the claim of the appellant, it is also essential to refer to Section 14 of the Gratuity Act, which is being extracted hereunder: Page 11 of 18 C/SCA/12878/2013 JUDGMENT "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."
(emphasis is ours) A perusal of Section 14 leaves no room for any doubt, that a superior status has been vested in the provisions of the Gratuity Act, visàvis,any other enactment (including any other instrument or contract) inconsistent therewith. Therefore, insofar as the entitlement of an employee to gratuity is concerned, it is apparent that in cases where gratuity of an employee is not regulated under the provisions of the Gratuity Act, the legislature having vested superiority to the provisions of the Gratuity Act over all other provisions/enactments (including any instrument or contract having the force of law), the provisions of the Gratuity Act cannot be ignored. The term "instrument" and the phrase "instrument or contract having the force of law" shall most definitely be deemed to include the 1995 Page 12 of 18 C/SCA/12878/2013 JUDGMENT Regulations, which regulate the payment of gratuity to the appellant.
23. Based on the conclusions drawn hereinabove, we shall endeavour to determine the present controversy. First and foremost, we have concluded on the basis of Section 4 of the Gratuity Act, that an employee has the right to make a choice of being governed by some alternative provision/instrument, other than the Gratuity Act, for drawing the benefit of gratuity. If an employee makes such a choice, he is provided with a statutory protect ion, namely, that the concerned employee would be entitled to receive better terms of gratuity under the said provision/instrument, in comparison to his entitlement under the Gratuity Act. This protection has been provided through Section 4 (5) of the Gratuity Act.
24. Furthermore, from the mandate of Section 14 of the Gratuity Act, it is imperative to further conclude, that the provisions of the Gratuity Act would have overriding effect, with reference to any inconsistency therewith in any other provision or instrument. Thus viewed, even if the provisions of the 1995, Regulations, had debarred payment of Page 13 of 18 C/SCA/12878/2013 JUDGMENT interest on account of delayed payment of gratuity, the same would have been inconsequential. The benefit of interest enuring to an employee, as has been contemplated under section 7(3A) of the Gratuity Act, cannot be denied to an employee, whose gratuity is regulated by some provision/instrument other than the Gratuity Act. This is so because, the terms of payment of gratuity under the alternative instrument has to ensure better terms, than the ones provided under the Gratuity Act. The effect would be the same, when the concerned provision is silent on the issue. This is so, because the instant situation is not worse than the one discussed above, where there is a provision expressly debarring payment of interest in the manner contemplated under Section 7(3A) of the Gratuity Act. Therefore, even though the 1995, Regulations, are silent on the issue of payment of interest, the appellant would still be entitled to the benefit of Section 7(3A) of the Gratuity Act. If such benefit is not extended to the appellant, the protection contemplated under section 4(5) of the Gratuity Act would stand defeated. Likewise, even the mandate contained in section 14 of the Gratuity Act, deliberated in detail hereinabove, would stand negated."
Page 14 of 18
C/SCA/12878/2013 JUDGMENT
7. In the case of D.D Tewari (dead) through Legal Representatives Vs. Uttar Haryana Bijli Vitran Nigam Ltd and Ors. (2014) 8 SCC 894 Hon'ble Supreme Court has held and observed in paras 6 to 8 as under :
"6. It is an undisputed fact that the appellant retired from service on attaining the age of superannuation on 31st October 2006 and the order of the learned single Judge after adverting to the relevant facts and the legal position has given a direction to thee respondent employer to pay the erroneously withheld pensionary benefits and the gratuity amount to the legal representatives of the deceased employee without awarding interest for which the appellant is legally entitled, therefore, this court has to exercise its appellate jurisdiction as there is a miscarriage of justice in denying the interest to be paid or payable by the employer from the date of the entitlement of the deceased employee till the date of payment as per the aforesaid legal principle laid down by this Court in the judgment referred to supra. We have to award interest at the rate of 9% per annum both on the amount of pension due and the gratuity amount which are to be paid by the respondent.Page 15 of 18
C/SCA/12878/2013 JUDGMENT
7. It is needless to mention that the respondents have erroneously withheld payment of gratuity amount for which the appellants herein are entitled in law for payment of penal amount on the delayed payment of gratuity under the provisions of the Payment of Gratuity Act, 1972. Having regard to the facts and circumstances of the case, we do not propose to do that in the case in hand.
8. For the reasons stated above, we award interest at the rate of 9% on the delayed payment of pension and gratuity amount from the date of entitlement till the date of the actual payment. If this amount is not paid within six weeks from the date of receipt of a copy of this order, the same shall carry interest at the rate of 18% per annum form the date the amounts falls due to the deceased employee. With the above directions, this appeal is allowed. "
8. In light of the above there is no escape from the conclusion that the petitioner is entitled to interest on delayed payment of gratuity. However, the question is whether the petitioner could be granted interest @ 18% as claimed by the petitioner. The Government circular dated 25th August 2004 provides for grant of 6% interest Page 16 of 18 C/SCA/12878/2013 JUDGMENT on delayed payment of gratuity. However, the provision made in the circular would not override the statutory provision made in section 7 of the Gratuity Act, 1972 for grant of interest. Sub section 3 (A) of Section 7 of the Gratuity Act provides for grant of interest on delayed payment of gratuity at a simple rate not exceeding the rate notified by the Central Government from time to time for payment of long term deposit. The Hon'ble Supreme Court has considered the above provision in the case of Y.K Singla (supra) therefore the contention raised on behalf of the Government by learned AGP Mr. Yagnik that the petitioner could be made entitled to 6% interest on the delayed payment of gratuity cannot be accepted. However, in the facts of the case this Court is of the view that grant of 9% interest on delayed payment of gratuity would subserve the interest of justice.
9. For the reasons stated above the petition is allowed in part. The respondents are directed to pay interest @ 9% per annum on the delayed payment of gratuity from the date of retirement of the petitioner till the actual payment of gratuity was made to the petitioner. The Page 17 of 18 C/SCA/12878/2013 JUDGMENT respondents shall pay amount of interest within a period of three months from the date of receipt of this order. Rule is made absolute the aforesaid extent.
Direct service is permitted.
(C.L.SONI, J.) mary Page 18 of 18