Allahabad High Court
Nagar Ayukt Nagar Nigam vs Meraj Ahmad And Anohter on 22 April, 2019
Equivalent citations: AIRONLINE 2019 ALL 2442
HIGH COURT OF JUDICATURE AT ALLAHABAD Reserved A.F.R. Court No. - 47 Case :- WRIT - C No. - 61707 of 2013 Petitioner :- Nagar Ayukt Nagar Nigam Respondent :- Meraj Ahmad And Anohter Counsel for Petitioner :- Y.S. Sachan Counsel for Respondent :- C.S.C.,Fasiha Fatma Hon'ble J.J. Munir,J.
1. The Nagar Ayukt, Nagar Nigam, Kanpur Nagar has petitioned this Court under Article 226 of the Constitution seeking to quash an order dated 18.03.2013 passed by the Controlling Authority (hereinafter referred to as the 'Authority') under the Payment of Gratuity Act, 1972 (hereinafter referred to as the 'Act') in PG Case No. 67 of 2010. By the said order made in exercise of powers under Section 10(1) of the Act, the Authority has allowed an application brought by respondent no. 1, a retired class-IV employee of the petitoner-Nagar Nigam ordering the petitioner to pay an outstanding balance of gratuity in the sum of Rs. 96,961/- with 7% simple interest per annum to respondent no. 1 with effect from the date of application, within 30 days of the date of the order. In addition, the Authority has awarded costs in the sum of Rs. 500/- against the petitioner payable to respondent no. 1. The order dated 18.03.2013 as aforesaid, passed by the Authority shall hereinafter be referred to as the 'impugned order'.
2. A brief sketch of facts that have led to this petition is that respondent no. 1 was appointed by the petitioner-Nagar Nigam on 01.06.1970 as a class-IV employee. He retired upon attaining the age of superannuation on 31.07.2008, after rendering about 38 years of service. It is the petitioner's case that upon retirement respondent no. 1 was paid all his post retiral benefits, admissible under the Retiral Dues and General Provident Fund Regulation, 1962 framed by the petitioner-Nagar Nigam in exercise of their powers under Section 548 (1)(f) of the Municipal Corporation Act, 1959 which govern a retiring class-IV employee's rights, obligations and entitlement, inter alia, to gratuity besides other retiral benefits.
3. It appears that an issue arose between the petitioner and respondent no. 1 about the quantum of gratuity payable to him inasmuch as according to the respondent, a sum of Rs. 2,32,122/- was his entitlement, whereas the petitioner paid him gratuity in the sum of Rs. 1,40,431/-. Respondent no.1, therefore, demanded his outstanding balance towards gratuity in the sum of Rs. 96,961/- along with interest. Being denied, he moved the Authority under Section 10 (1) of the Act asking the Authority to order the petitioner to pay the unpaid balance of his gratuity. The application as aforesaid, made by respondent no. 1, came to be registered as PG Case No. 67 of 2010 on the file of the Authority. It was heard after notice to the petitioner, where the stand of the petitioner was that the provisions of the Act do not invest the Authority with jurisdiction over the petitioner, who are a local body with their own rules governing post retiral benefits, including gratuity.
4. The claim of respondent no. 1 on merits was contested by the petitioner on the foundation of a plea that he was entitled to receive towards gratuity, the equivalent amount of sixteen and a half months of his salary, worked out on the basis of salary last drawn. Both parties led evidence. The Authority has recorded a finding that in support of its case, the petitioner has not filed any documentary evidence. The Authority held on merits of the claim that respondent no. 1 was entitled to an amount of gratuity worked out in accordance with Section 4 (2) of the Act, that is to say, a sum calculated on the basis of fifteen days of his salary for every completed year of service, or part thereof in excess of six months, worked out on the basis of wages last drawn. This determination was made by the Authority not expressly on the basis of the provisions of Section 4(2) of the Act, but referring to a decision of this Court in Nagar Ayukt, Nagar Nigam, Kanpur vs. Mujib Ulla Khan and others1, where it was held that gratuity is payable to an employee of the petitioner-Nigam worked out on the basis of wages last drawn, in accordance with the Act. It was further held on merits that so far as the petitioner's case is concerned, they have not filed on record any documentary evidence to show in what manner they have calculated the gratuity payable to respondent no. 1, to arrive at the figure of Rs. 1,40,431/-. In the face of this evidence and the first respondent's entitlement under the Act, the petitioner was held liable to pay the balance, as claimed by respondent no. 1.
5. As regard the other issue raised that the Authority had no jurisdiction under the Act over the petitioner as they are a local body created by and under an Act of the State, with their own statutory rules governing their employees' entitlement to gratuity of the grade and class to which the first respondent belonged, the Authority held that the provisions of the Act had overriding effect in view of Section 14 thereof, and the Authority had jurisdiction to determine the matter. Accordingly, the impugned order was passed. Aggrieved, the Nigam has filed this petition.
6. Before this Court, learned counsel for the petitioner has confined his submission to the issue of jurisdiction, saying that the Authority, functioning under the Act has no jurisdiction over the petitioner-Nigam, who are a statutory corporation established under a State legislation. Looking to the statutory provisions of this Act, the question of jurisdiction and the rate at which gratuity would be payable to the petitioner are inseparable. In case, it is found that provisions of the Act vis-a-vis the provisions of U.P. Municipal Corporations Act, 1959 have overriding effect, gratuity would have to be worked out in accordance with Section 4(2) of Act; in case, however, the provisions of the U.P. Municipal Corporations Act, 1959 are to the exclusion of the Act, gratuity would be worked out and paid in accordance with the Retiral Dues and General Provident Fund Regulation, 1962, leading to a difference in the figure of entitlement, about which parties have joined issue.
7. Right away, it would be profitable to compare the difference in the amount of gratuity payable under the Retiral Dues and General Provident Fund Regulation, 1962 framed by the petitioner -Nigam and Section 4(2) of the Act. The differential entitlement under the Rules of the petitioner-Nigam and the Act is succinctly brought out in the decision of this Court in the case of Nagar Ayukt, Nagar Nigam, Kanpur (supra) where Hon'ble Sunil Ambwani, J. (as His Lordship then was) referring to some history of amendment to the Nagar Nigam Rules, and its differential effect on entitlement to gratuity, if calculated under the Act has said thus:
"2. The contesting respondents were employees of Nagar Nigam, Kanpur. They filed application under Rule 10(1) of the Payment of Gratuity Rules, 1975 for distribution and payment of balance amount of gratuity over and above the amount received by them from Nagar Nigam on their retirement in accordance with Retirement Benefits and General Provident Fund Regulation, 1962, Rule 4(1) of the Regulations made under Section 548(1) of the U.P. Municipal Corporation Act, 1959 amended on 11.1.1988 provide for death-cum-retirement gratuity on calculation by the number of years completed by the employees with the condition that the gratuity paid to the employees of the Corporation is not more than 16.5 months of the last wages drawn by him. Prior to the amendment of these rules the amount of the gratuity were calculated (R) 15 days salary per month over 15-1/2 months salary.-The Additional Labour Commissioner, U.P. Kanpur Region, Kanpur the Controlling Authority under the Payment of Gratuity Act, 1972, heard the parties and has found that the petitioners are entitled to the gratuity at the rates prescribed in the Payment of Gratuity Act, 1972, and accordingly calculated gratuity to be payable of 15 days salary of every completed year, without any ceiling of months or a part thereof, and the difference is directed to be paid by the Nagar Nigam, Kanpur."
8. The facts recorded as aforesaid in the decision of His Lordship in Nagar Ayukt, Nagar Nigam, Kanpur (supra) provide information that has decisive bearing on the facts of the present case, in particular, as the said decision was rendered in the context of the petitioner-Nigam, and its employees' entitlement to gratuity. It appears that the petitioner-Nigam by bringing about an amendment to the Retiral Dues and General Provident Fund Regulation, 1962(as amended in 1988) provided for payment of gratuity on a calculation of salary equivalent to an amount that would be the aggregate of sixteen and a half months of salary, worked out on the basis of salary last drawn prior to retirement. It could be a lesser entitlement going by the method of reckoning. It would be noticed that under the Regulations of the petitioner-Nigam, there is a ceiling of months, both under the pre-amended position and post amendment; whereas under the Act, there is no such ceiling. This difference leads to a higher entitlement under the Act, depending on the number of years of service put in at the point of time when gratuity is to be determined.
9. What is of cardinal importance is the legal position as to whether employees of the petitioner-Nigam would be governed in the matter of payment of gratuity by the Retiral Dues and General Provident Fund Regulation, 1962 (as amended), or by the provisions of Section 4(2) of the Act. In this context, Sri Y.S. Sachan, learned counsel for the petitioner has invited the attention of the Court to the provisions of Section 2(e) of the Act which read thus:
2. Definitions- .............................
(a) x x x
(b) x x x
(c) x x x
(d) x x x
(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 or gratuity.
10. Sri Y.S. Sachan, learned counsel for the petitioner submits that the definition of an employee under the Act, read with Section 5 thereof, leads one to the inevitable conclusion that an employee of any establishment, like the petitioner-Nigam who under its rules is entitled to receive gratuity on terms not less favourable than the benefits conferred under the Act, would render such an establishment being exempt from the applicability of the Act. He urges that the Retiral Dues and General Provident Fund Regulation, 1962 framed by the petitioner-Nigam are more favourable to its employees, circumstanced as Respondent no.1, in the matter of entitlement to gratuity than the provisions of the Act, attracting the exemption clause under Section 5 of the Act. This Court is afraid that the submission cannot be accepted.
11. On a plain reading of Section 2(e) of the Act inapplicability of the Act is there only in relation to the such employees of the Central Government or the State Government, who hold a post that is governed by any Act or any Rules providing for payment of gratuity. This Court has no doubt that the question of inapplicability of the Act is very different from exemption from its operation. The Act on its own term is alone inapplicable in case of such persons who hold a post under the Central or a State Government that is governed by an Act or Rules providing for payment of gratuity; no other class of employees has been placed in a category to whom the Act is inapplicable. There is no manner of doubt that the petitioner-Nigam is neither the Central Government or a State Government. It is a Corporation established under a State enactment. Therefore, an employee of the Corporation can never fall in the class to whom the Act may be held inapplicable.
12. Exemption is quite another matter that is dealt with under Section 5 of the Act. Section 5 of the Act, reads thus:
"5. Power to exempt-
[1] The appropriate Government may, by notification, and subject to such conditions as may be specified in the notification, exempt and 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, 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 sub-section (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."
13. Exemption may be sought by any establishment, factory, mine, oilfield etc. and that exemption may be granted by the appropriate Government as defined under Section 2 (a) (ii). The appropriate Government would mean the State Government. Exemption under Section 5(1) of the Act may be granted by the appropriate Government by notification, and subject to such conditions as specified there. In case, employees of such establishment, factory, mine etc. are in receipt of gratuity or pensionary benefits conferred under the services Rules, in order to avail an exemption from the provisions of the Act, an establishment like the petitioner-Nigam have to establish that the State Government by notification have exempted them from the operation of the Act under Section 5(1) or under Section 5(2) of the Act, in case of a particular employee, or a class of employees. There is no such case much less pleading to show that the petitioner-Nigam has been granted an exemption by the Statement Government, under Section 5(1) of the Act. In the absence of an exemption granted by a notification duly made by the State Government, the mere fact that the terms of gratuity offered by the petitioner-Nigam are more beneficial to an employee like the first respondent here, would not automatically entitle the petitioner to an exemption from the provisions of the Act, by pleading or establishing before the Authority or the Court, the better terms of gratuity available under their service rules. The exemption can come from a notification under Section 5 of the Act issued by the appropriate Government alone, and in no other way. That being the case, the petitioner is not entitled to say that exemption from operation of the Act is there merely because they say or can establish before the Authority or this Court that under the Retiral Dues and General Provident Fund Regulation, 1962 (as amended up to date) the terms of gratuity offered to their employees, like the first petitioner, are more beneficial than those available under Section 4(2) of the Act.
14. This view of the law accords with the guidance of the Hon'ble Supreme Court in Municipal Corporation of Delhi vs. Dharam Prakash Sharma2, where it was held by their Lordships thus:
"2.The short question that arises for consideration is whether an employee of the MCD would be entitled to payment of gratuity under the Payment of Gratuity Act when the MCD itself has adopted the provisions of the CCS (Pension) Rules, 1972 (hereinafter referred to as "the Pension Rules"), whereunder there is a provision both for payment of pension as well as of gratuity. The contention of the learned counsel appearing for the appellant in this Court is that the payment of pension and gratuity under the Pension Rules is a package by itself and once that package is made applicable to the employees of the MCD, the provisions of payment of gratuity under the Payment of Gratuity Act cannot be held applicable. We have examined carefully the provisions of the Pension Rules as well as the provisions of the Payment of Gratuity Act. The Payment of Gratuity Act being a special provision for payment of gratuity, unless there is any provision therein which excludes its applicability to an employee who is otherwise governed by the provisions of the Pension Rules, it is not possible for us to hold that the respondent is not entitled to the gratuity under the Payment of Gratuity Act. The only provision which was pointed out is the definition of "employee" in Section 2(e) which excludes the employees of the Central Government and State Governments receiving pension and gratuity under the Pension Rules but not an employee of the MCD. The MCD employee, therefore, would be entitled to the payment of gratuity under the Payment of Gratuity Act. The mere fact that the gratuity is provided for under the Pension Rules will not disentitle him to get the payment of gratuity under the Payment of Gratuity Act. In view of the overriding provisions contained in Section 14 of the Payment of Gratuity Act, the provision for gratuity under the Pension Rules will have no effect. Possibly for this reason, Section 5 of the Payment of Gratuity Act has conferred authority on the appropriate Government to exempt any establishment from the operation of the provisions of the Act, if in its opinion the employees of such establishment are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act. Admittedly MCD has not taken any steps to invoke the power of the Central Government under Section 5 of the Payment of Gratuity Act. In the aforesaid premises, we are of the considered opinion that the employees of the MCD would be entitled to the payment of gratuity under the Payment of Gratuity Act notwithstanding the fact that the provisions of the Pension Rules have been made applicable to them for the purpose of determining the pension. Needless to mention that the employees cannot claim gratuity available under the Pension Rules."
15. Sri Y.S. Sachan, learned counsel for the petitioner has invited the attention of this Court to a decision in Nagar Palika Parishad Muzaffarnagar vs. Controlling Authority under Payment of Gratuity Act, 1972 Saharanpur3, where dealing with inapplicability of the Act in the case of an employee of the Nagar Palika Parishad, and taking note of the decision of their Lordships of the Supreme Court in Municipal Corporation of Delhi (supra), a Division Bench of this Court held that the provisions of U.P. Municipalities Act, 1916 and U.P. Nagar Palika Non-Centralized Services Retirement Benefits Regulations, 1984 would exclude the applicability of the Act, in the matter of payment of gratuity. It was held thus:
"(15) The learned counsel for the petitioner could not place any exemption issued by the State of U.P. under Section 4 of the Act but in my view that is of little consequence. The Regulation may be treated as a combined notification both the exemption notification under Section 5 of the Act as also the intention of the State Government to make a special provision through the Regulation for its non centralized services of U.P. Nagar Mahapalika (sic 'Palika') so far as payment of gratuity is concerned. Somewhat a similar situation came for consideration before the Apex Court in a slightly different context in a sales tax matter in Commissioner of Sales Tax u.p. vs. Agra Belting Work, 1987 UPTC 850. In this case the commodity in question was exempt from payment of sales tax under Section 4 of the U.P. Sales Tax Act. Subsequently a notification was issued under section 3-A of the Act revying the tax. Repelling the argument of the dealer that unless a notification withdrawing the exemption under Section 4 is issued, the notification levying tax under Section 3-A of the Act would not be operative, it was held that, in fact, the notification under Section 3 A can easily be treated as a combined notification both for withdrawal of exemption as also for providing higher tax. The relevant portion is reproduced below:
"in fact, the second notification can easily be treated as a combined notification both for withdrawal of exemption and also for providing higher tax. When power for both the operations vests in the State and the intention to levy the tax is clear we wee no justification for not giving effect to the 2nd notification. We would like to point out that the exemption was in regard to a class of goods and while the exemption continues, a specific item has now been notified under Section 3-A of the Act."
(16) Municipal Corporation of Delhi vs. Dharam Prakash Sharma and another, AIR 1999 SC 293 was heavily relied upon by the learned counsel for the respondents. From the report it appears that the Pension Rules were already in existence at the time of commencement of the Act is issued, the provisions of the Act will be applicable. In the case on hand, the Regulation has come into force subsequent to the commencement of the Act, thus the ratio as laid down in the above case by the Apex Court is distinguishable.
(17) Apart from the above, the Apex Court proceeded to decide a controversy on the footing that the payment of Gratuity Act being a special provision for payment of gratuity unless there is any provision which excludes its applicability to an employee who is otherwise governed by the provisions of Pension Rules, it is not possible to hold that an employee of Municipal Corporation of Delhi is not entitled to the gratuity under the Act. In the present case, position is different inasmuch as the Regulations for payment of gratuity have been enacted by the State Legislature for a class of its employees. In this view of the matter also, on facts the ruling given in the case of Municipal Corporation of Delhi (supra) is distinguishable.
(18) Viewed as above, I find sufficient force in the argument of the learned counsel for the petitioner and it is held that the contesting respondent is entitled to get the gratuity as per the Regulations framed by the State Government in this regard and not under the Payment of Gratuity Act. The writ petition succeeds and is allowed and the impugned order is quashed."
(emphasis by Court)
16. The aforesaid law laid down by this Court in Nagar Palika Parishad, Muzaffarnagar (supra) fell for further consideration of a learned Single Judge of this Court in Nagar Ayukt, Nagar Nigam, Kanpur Nagar vs. Brij Kishore Bajpai and another4, where it was held that the Retiral Dues and General Provident Fund Regulation, 1962 (as amended in 1988) would be inapplicable to an employee of the petitioner-Nigam, which being not exempted by the State Government under Section 5, would be governed by the provisions of Act, in the matter of payment of gratuity. This Court held thus:
"In assailing the above order, the submission of Sri Sachan, learned counsel for the petitioner is that the payment of gratuity to the employees of the Nagar Nigam is governed by the provisions of Retiral Dues and General Provident fund and Regulations, 1962 as amended in 1988. The said Rules are more beneficial than the payment of gratuity under the Act. Therefore by necessary implication the Nagar Nigam gets exempted vide Section 5 of the Act from its applicability and its employees are entitled to gratuity only according to the Regulations.
In support he has placed reliance upon the decision of this Court dated 29.8.2008 in Nagar Palika Parishad Muzaffarnagar Vs. Controlling Authority under Payment of Gratuity Act 1972 Saharanpur 2008-Laws (All)-8-92:2008-ESC-5-3105.
In the aforesaid case before this Court, the question which had cropped up was whether the gratuity would be payable to the employees of the non centralized services of Nagar Palika as per the provisions of the Act or as per the Regulations framed by the State Government.
The learned Single Judge by a detailed judgment held that the employees of the non centralized services of Nagar Mahapalika (sic ''Palika') are entitled to gratuity as per the Regulations framed by the State Government and not under the payment of Gratuity Act, 1972.
The aforesaid decision was in connection with the employees of the non-centralized service of the Nagar Palika and not in respect to the employees of the Nagar Nigam and as such would not apply in the present case.
The payment of gratuity in general is governed by the provisions of the Act and it has the overriding effect over all previous enactments by virtue of Section 14 of the Act, unless the establishment is exempted by the State Government under Section 5 of the Act.
In other words, all establishments as provided vide Section 1 of the Act including Nagar Nigam are covered the provisions of the Act unless exempted.
Section 5 of the Act lays down the power of exemption. It provides if the appropriate government is satisfied that the employees of the establishment are receiving better benefits than those under the Act may by a notification exempt such an establishment from the operation of the Act. This means for exempting an establishment from the operation of the said Act there has to be a notification by the appropriate Government and that it should be satisfied that the employees were in receipt of benefits more beneficial than under the Act.
The petitioner has not pleaded or brought on record any notification issued by the appropriate government issued under Section 5 of the Act exempting Nagar Nigam from the operation of the Act and at the same time the exact benefit permissible under the Regulations vis-a-vis those under the Act to establish that benefits under the Regulations were much more than what the petitioner would receive under the Act."
17. This Court is in respectful agreement with the opinion expressed in Nagar Ayukt, Nagar Nigam Kanpur Nagar vs. Brij Kishore Bajpai and another (supra), where the decision in Nagar Palika Parishad, Muzaffarnagar (supra) has been distinguished in its application to the petitioner-Nigam. Apart from the reasons to distinguish the decision in Nagar Palika Parishad, Muzaffar Nagar (supra) that weighed with His Lordship in Nagar Ayukt, Nagar Nigam Kanpur Nagar vs. Brij Kishore Bajpai and another (supra), this Court cannot fail to notice that the decision in Nagar Palika Parishad, Muzaffar Nagar (supra) is not at all relevant in the statutory context of the present case. The reason is this. The decision in Nagar Palika Parishad, Muzaffar Nagar (supra) turns upon the effect of the U.P. Nagar Palika Non-Centralized Services Retirement Benefit Regulations, 1984 on the applicability of the Act to an employee, who is governed by the U.P. Nagar Palika Non-Centralized Services Retirement Benefit Regulations, 1984. In the present case, the petitioner has relied upon the provisions of Retiral Dues and General Provident Fund Regulation, 1962 (as amended in 1988) which have been framed under the U.P. Municipal Corporation Act, 1959.
18. There is an essential difference between the statutory origin of power and the authority by which the U.P. Nagar Palika non-centralized Services Retirement Benefit Regulation, 1984 have been framed and enforced, on the one hand, and the Retiral Dues and General Provident Fund Regulation, 1962 (as amended in 1988), on the other. The U.P. Nagar Palika non-centralized Services Retirement Benefit Regulation, 1984 have been framed by the State Government in exercise of its powers under Section 297(1)(k), read with sub-section (2) of Section 297 of the U.P. Municipalities Act, 1916. A conjoint perusal of Section 297(1)(k) with sub-section (2) leaves no manner of doubt that regulation as to the conditions of service, including the period of service of all servants of a Municipality and the conditions under which such servants or any of them, would receive gratuity or compassionate allowances on retirement etc., are to be framed by the State Government.
19. A perusal of U.P. Nagar Palika non-centralized Services Retirement Benefit Regulation, 1984 would show that these regulations have been framed by the State Government under Section 297(2) of the U.P. Municipalities Act, as would be evident from the Regulations, which read thus:
No. 3898/11-6-1984-217-v-79 October 1, 1984 In exercise of the powers under sub-section (2) of section 297 of the U.P. Municipalities Act, 1916 (U.P. Act II of 1916), the Governor is pleased to make the following regulations after their previous publication with Government notificatin no. 2837/XI-3-79-217-Miscellaneous-79, dated July 19, 1979, as required under sub-section (1) of section 300 of the U.P. Municipalities Act, 1916 REGULATIONS THE UTTAR PRADESH NAGARPALIKA NON-CENTRALIZED SERVICES RETIREMENT BENEFITS REGULATIONS, 1984.
PART I-Preliminary
1. (1) Short title and Commencement- These regulations shall be called the Uttar Pradesh Nagarpalika Non-Centralized Services Retirement Benefits, Regulations, 1984
2. They shall come into force with effect from the date of their publication in the Gazette.
20. The statutory power thus flows from Section 297(1)(k) read with Section 297(2) of the U.P. Municipalities Act, 1916. The Uttar Pradesh Nagarpalika Non-Centralized Services Retirement Benefits, Regulation, 1984 governing the right of employees of a municipality governed by the U.P. Municipalities Act 1916 are, therefore, statutory regulations framed by the State Government and not statutory regulations framed by the Municipality under the Act of 1916. It is in this context that the Division Bench in Nagar Palika Parishad, Muzaffarnagar (supra) held in paragraph nos. 8, 9, 11 and 12 of report:
8. The Regulations have been framed in exercise of power under sub-section (2) of Section 297 of the Municipalities Act, 1916 by the Governor. Section 297 of the U.P. Municipalities Act empowers a Board to make Regulations consistent with the Municipalities Act in respect of matter enumerated therein including the conditions of service, including period of service of all servants of Board as also the conditions under which gratuities or compassionate allowances may be paid to the surviving relatives of any such servant whose death has been caused thrugh the execution of his duty vide clause (k) of Section 297. Under sub-section (2) of Section 297, the State Government has been empowered to make Regulations consistent with the provisions of the Municipalities Act in respect of the matters specified in clauses (d, h to n) of Section 1. A conjoint reading of Section 1 and sub-section (2) of Section 297 amply makes it clear that the State Government has been empowered to provide Regulations consistent with the Municipalities Act with respect to the payment of gratuities. Thus, the power of the State Government to frame the Regulations for payment of gratuity cannot be doubted. The validity of the Regulations has not be questioned by the respondent in the present writ petition.
9. The only question which survives is whether the gratuity would be payable to non-centralized services of Nagar Palika as per provision of the Gratuity Act or as per Regulations framed by the State Government.
11. A scheme which has been framed subsequent to the commencement of the Act by an appropriate government, does not come within the ambit of Section 5 of the Act.
12. The Regulations has come into force subsequent to the enactment of the Act, w.e.f. 1st October, 1984. The date on which the Regulations were framed, it is presumed that the State Government was aware about the existence of the Act on the Statute book. The argument that there being no exemption notification, therefore, the provisions of Regulation will not be attracted, is liable to be rejected for the reasons more than one. Firstly, Section 5 of the Act which talks about the power to exempt is not applicable to such enactments which have come into operation subsequent to the commencement of the Act. Secondly, the Regulations have been validly made by the appropriate government in exercise of power conferred on it by Section 297 (2) of the Municipalities Act. It cannot be presumed that the Act has denuded the power of the State Government which is otherwise possessed by it under Section 297 of the Municipalities Act.
(emphasis by Court)
21. By contrast, the Retiral Dues and General Provident Fund Regulations, 1962 (as amended in 1988) have been framed by the Executive Committee of the Nigam, after confirmation by the Corporation. The regulation relating to gratuity under Section 548 (1)(f) read with sub-section (3) clearly shows that such regulations are framed by a Nigam or the Corporation, as called under the Act. But, these regulations are neither framed by or with the approval of the State Government. It is only in relation to the subject matter of Section 548 (1)(h) that the regulations framed by the Corporation do not take effect unless confirmed by the State Government. It has not been suggested by as much as a hint that the Retiral Dues and provident Fund Regulations, 1962 (as amended in 1988) have been framed by the Corporation, in exercise of powers under Section 548 (1)(h), so as to involve confirmation by the State Government. The power has been clearly exercised under Section 548 (1)(f) of the Act.
22. Again, one of the cardinal reasons on the basis of which their Lordships of the Division Bench in Nagar Palika Parishad Muzaffarnagar (supra) held that the State Government, while framing the U.P. Nagar Palika Non-Centralized Services Retirement Benefits Regulations, 1984, relating to gratuity of an employee of a Municipality, under Section 297 (1)(k) read with sub-section (2) cannot be presumed to have been denuded of its power to frame such regulations that it possess under Section 297(2) of the Municipalities Act by virtue of Section 5 of the Act, appears to be that exemption from Section 5 of the Act being required to be given by the State Government, which would be the appropriate Government within the meaning of this Section, framing of regulations, subsequent in point of time, providing for gratuity under Section 297 (2) of the U.P. Municipalities Act, 1916, would virtually operate as unqualified exemption to the Municipality from the operation of the Act. This reasoning has been made explicit by the Division Bench in Nagar Palika Parishad, Muzaffarnar (supra) in paragraph 15 of the Report in that case. But, that is not at all so in the case of a Corporation under the Act, 1959, where the Retiral Dues and General Provident Fund Regulation, 1962 (as amended in 1988) have been framed by the Corporation in exercise of its statutory powers and not by the State Government, or by their previous or post approval. The Retiral Dues and General Provident Fund Regulation, 1962 (as amended in 1988) cannot be said to be, therefore, a virtual exemption from the operation of Section 5 of the Act.
23. Thus, in this regard, the law relating to gratuity of an employee of a Nagar Nigam governed by any Regulation about the entitlement to or payment of gratuity, would be different from an employee governed by the U.P. Nagar Palika Non-Centralized Services Retirement Benefits Regulations, 1984. In the instant case, the petitioner-Nigam are governed by the Retiral Dues and General Provident Fund Regulations, 1962 (as amended in 1988). There is absolutely no authority of the State Government in the framing of these regulations so as to detract from the requirement of seeking an exemption by the petitioner-Nigam, under Section 5 of the Act. This difference in the nature of the U.P. Nagar Palika Non-Centralized Services Retirement Benefits Regulations, 1984 relating to a Nagar Palika and the Retiral Dues and General Provident Fund Regulation, 1962, relating to the petitioner-Nigam is also evident from the fact that whereas the U.P. Nagar Palika Non-Centralized Services Retirement Benefits Regulations, 1984 are universally applicable to all Nagar Palika across the State, vis-a-vis retirement benefits of their employees belonging to Non-Centralized Services, the Retiral Dues and General Provident Fund Regulation, 1962 (as amended in 1988) relating to the petitioner-Nigam are confined in their application to the petitioner-Nigam alone. There would be similar regulations framed by different Corporations under the U.P. Municipal Corporation Act, 1959, which the Nagar Palika are not required to do in view of U.P. Nagar Palika Non-Centralized Services Retirement Benefits Regulations, 1984 framed by the State Government.
24. The issue relating to the applicability of the Act to the petitioner-Nagar Nigam has been very recently examined by the Supreme Court in Nagar Ayukt Nagar Nigam, Kanpur vs. Mujib Ullah Khan and another, 2019 SCC OnLine SC 462, which incidentally is a decision on an Appeal by Special Leave carried by the petitioner-Nigam from the decision of this Court in Nagar Ayukt, Nagar Nigam, Kanpur vs. Mujib Ullah Khan (supra) referred to in the earlier part of this judgment. Their Lordships have clearly held the petitioner-Nigam and its employees to be amenable to the Act by virtue of a notification dated 8th January, 1982 issued by the Central Government in exercise of powers under Section 1(3)(c) of the Act. The decision aforesaid of their Lordships in Nagar Ayukt, Nagar Nigam, Kanpur vs. Mujib Ullah Khan and another (supra) (the Hon'ble Supreme Court's decision) lays down the law in this regard, to which a wholesome and contextual reference finds detail in paragraphs 6, 7, 8, 9, 10, 11 and 12 of the Report, where it is held:
"6. The appellant relies upon Section 3 of the U.P Dookan Aur Vanijya Adhishthan Adhiniyam, 1962 (1962 Act) which is to the effect that such Act will have no application to the office of Government or Local Bodies. Therefore, on the strength of such statutory provision, it was argued that the Act would not be applicable in respect of the Municipalities. The appellant is not a factory, mine, oilfield, plantation, port and railway company and that there is no notification as stipulated under Clause (c) of Section 1(3) of the Act. Therefore, the employees of the Municipalities are entitled to the gratuity in terms of the Regulations framed in exercise of powers of Section 548 of the 1959 Act and not under the Act.
7. On the other hand, learned counsel for the respondent pointed out that the Central Government has published a notification in terms of Section 1(3)(c) of the Act on 08.01.1982 to extend the applicability of the Act to the Municipalities. Thus, the Act is applicable to the Municipalities. The relevant provisions of the Act read as under:
"1. Short title, extent, application and commencement.-(1) This Act may be called the Payment of Gratuity Act, 1972.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu and Kashmir.
(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."
8. A perusal of the above provisions would show that the Act is applicable to (1) every factory, mine, oilfield, plantation, port and railway company; (2) 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, the said provision has two conditions, viz. (i) a shop or establishments within the meaning of a State law and (ii) in which ten or more persons are employed; and (3) the establishments or class of establishments which Central Government may notify.
9. The appellant is not covered by clauses (a) and (b) of Section 1(3) of the Act. Clause (a) is not applicable on the face of the provisions, but even clause (b) is not applicable in view of Section 3(c) of the 1962 Act as such Act is not applicable to the offices of the Government or local authorities. The Local Authorities means a municipal committee, district board etc or entrusted with the control or management of a municipal or local fund in terms of Section 3(31) of the General Clauses Act, 1897.
10. In terms of the above said Section 1(3)(c) of the Act, the Central Government has published a notification on 08.01.1982 and specified Local Bodies in which ten or more persons are employed, or were employed, on any day of the preceding twelve months as a class of establishment to which this Act shall apply. The said notification dated 08.01.1982 reads as under:--
"New Delhi, the 8th January, 1982 NOTIFICATION S.O. No. 239....-In exercise of the powers conferred by clause (c) of sub-section (3) of section 1 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specified ''local bodies' in which ten or more persons are employed, or were employed, on any day preceding twelve months, as a class of establishments to which the said Act shall apply with effect from the date of publication of this notification in the Official Gazette.
Sd/.
(R.K.A. Subrahmanya) Additional Secretary (F. No. S-70020/16/77-FPG)"
11. We find that the notification dated 08.01.1982 was not referred to before the High Court. Such notification makes it abundantly clear that the Act is applicable to the local bodies i.e., the Municipalities. Section 14 of the Act has given an overriding effect over any other inconsistent provision in any other enactment. The said provision reads as under:
"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."
12. In view of Section 14 of the Act, the provision in the State Act contemplating payment of Gratuity will be inapplicable in respect of the employees of the local bodies."
25. Looking to the said decision of the Hon'ble Supreme Court, their remains not an iota of doubt that employees of the petitioner-Nigam would be governed by the provisions of the Act. It is not for this Court to examine whether the decision of the Division Bench in Nagar Palika Parishad Muzaffarnagar (supra), upon which the learned counsel for the petitioner-Nigam has relied much lays down the correct law in view of their Lordships' decision in Nagar Ayukt, Nagar Nigam, Kanpur vs. Mujib Ullah Khan and another (supra) (the Hon'ble Supreme Court's decision). It is so because the decision of the Division Bench in Nagar Palika Parishad Muzaffarnagar (supra) is in the context of a Municipality governed by the U.P. Municipalities Act, and to whose employees, the U.P. Nagar Palika Non-Centralized Services Retirement Benefits Regulations, 1984 apply; and all that is not relevant to the statutory context here.
26. In the result, this Court does not find any valid ground to interfere with the impugned order. Accordingly, the petition fails and is dismissed with costs which are quantified at Rs. 10,000/- payable to respondent no. 1.
27. The interim order dated 18.11.2013 stands vacated.
Order dated: 22.04.2019 Deepak