Badri Nath Koul vs State Of J&K And Others on 29 October, 2022

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Jammu & Kashmir High Court - Srinagar Bench

Badri Nath Koul vs State Of J&K And Others on 29 October, 2022

01. The instant writ petition has been filed for quashing of order dated 20-03-2019 passed in a gratuity claim filed on 31-08-2017 by the private Respondent no. 3 (Original Applicant in the claim application), against the petitioner company, whereby, the Controlling authority under the Payment of Gratuity Act,1972 i.e. Assistant Labour Commissioner - Srinagar, has decided the issue as to "whether the instant application is hit by limitation?" in favour of the Respondent No. 3, (the Applicant therein) and against the Petitioner (Non -Applicant therein).

02. The impugned order had mainly dealt with the issue of limitation, among other issues, wherein the Respondent No. 3 had prayed for the payment of gratuity along with interest. The petitioner filed objections through their counsel resisting the claim on the grounds that;

a. No Application under Rule-7 of Gratuity Rules has been filed by the Respondent No. 3, before the petitioner 2 company, as such under law, Application was not maintainable.

b. Gratuity cannot be denied as per rules but the Respondent No. 3 was required to obtain NOC from the stores section which exercise has not been done by him, in view of the fact that Respondent No. 3, while in service had taken advance of Rs. 75000/- from the petitioner company. Out of which still Rs 55,000/-is outstanding against Respondent No. 3.

c. One laptop of the company with bio data & information pertaining to the business affairs of the company is with Respondent No. 3 has not been returned despite repeated requests, resulting in huge loss to the company.

d. Respondent No. 3 has not worked for the months of July, August and September 2016, as such is not entitled to the arrears as claimed.

Pursuant to the submissions made and analysis of statutory provisions, the statutory authority decided the issue of limitation in favour of the Respondent No.3 vide impugned order dated 20.03.2019.

FACTUAL MATRIX

03. The present writ petition has been preferred by the petitioner being partner of the firm M/S Gautam Engineering Company, Srinagar having employed Respondent No.3 in the year 2009. It is the specific stand of the petitioner that respondent no.3, while in employment, took an advance loan amounting to 50,000/- from the petitioner through cheque vide No.192325 dated 25.06.2016 and by cash amounting to Rs.20,000/- on 17.11.2016 plus an additional advance of Rs. 5,000/-on 31.12.2016. Thus total advance amount received by Respondent No. 3 3 was Rs.75,000/- ,out of which Respondent No.3 has paid four instalments of 5,000/- leaving behind the balance of Rs. 55,000/- which the Respondent No.3 owes to the petitioner company. Respondent no.3 was assigned the job to deal with the sale and purchase of the company and was also given a laptop to deal with the clients of the company, wherein data related to all business secrets, transactions and planning was stored.

04. It has been contended that from the month of July, 2016 till September, 2016, Respondent No.3 did not attend his duties. However, he joined back on October, 2016 and in April, 2017, left the job again without any intimation to the company that too without paying any balance amount which Respondent No.3 owes to the Company i.e amount of Rs.55,000/- and the laptop wherein all the business dealings and secrets were stored was stolen by him and has not returned the laptop to the company till date. It is the specific stand of the petitioner that Respondent No.3 was under legal obligation to return the laptop alongwith all the business information to the petitioner Company besides the amount which the Respondent No.3 owes to the petitioner company. Instead, Respondent No.3 filed a claim petition before Respondent No.2 i.e., Assistant Labour Commissioner, Under Payment of Wages Act, Srinagar, for release of leave salary.

05. The further stand of the petitioner is that the preliminary issue with regard to the maintainability of the claim petition, which was argued before Assistant Labour Commissioner, Srinagar by both sides, whereby, the Respondent No.2 held that the claim petition was maintainable and passed the order on 20.03.2019,which is impugned in the present petition.

06. It has been further contended that by virtue of order impugned dated 20.03.2019, Respondent No.2 i.e. Controlling authority under Payment of wages Act, has decided the issue of limitation under Rule 7 of Payment of Gratuity Act. Further, Respondent No.3 has filed gratuity claim on 31.08.2017 4 under Section 7 (4) of the payment of Gratuity Act, 1972,( hereafter for short "

the Act") against the petitioner Company for payment of Gratuity alongwith the interest. In the said claim Application, Respondent No.3 claimed that before resigning on 20.06.2017 from the services of the petitioner company, he was having continuous service of 07 years, 10 months and 10 days and was drawing monthly salary of Rs.24,800/, as such was entitled to Rs. 1,14,462/- as amount of gratuity with interest till payment was made.

07. It has been contended by the petitioner that impugned order has been passed in a most mechanical manner without proper application of mind, more so, being non-speaking and without any reason in view of the fact that the Jammu &Kashmir Shops Establishment Act, 1966 alongwith its rules have not been applied to the area where the establishment of the petitioner/company is situated by any notification till date.

08. It has further been contended by the petitioner that the aforesaid Act has been made applicable, in so far as, District Srinagar is concerned for the places mentioned vide Labour and Employment Department Notification SRO 94 dated 31.03.2004 for the places, Dara, Harwan, Prang ( Kangan), Manigam, Wayil, and Nuner and not the place namely Dalgate, where the place of business of the petitioner/company is located.

"Act enforced to certain areas.

In exercise of the powers conferred by sub-section (3) of section 1 of the Jammu and Kashmir shops and Establishment Act, 1966 (XXXIX of 1996), the Government hereby appoint, 1st April, 2004 as the date on which the said act shall come into force in the areas shown against each in the sub-joined schedule.

This Act has been enforced in the cities of certain town of Jammu and Kashmir Provinces on 15.11.1996 by Notification No. SRO445-A dated 15.11.1966 in Jammu cantt. On 01.08.1967 by Notification No.SRO 290 dated 5 18.07.1967 in Badami Bagh Cantt. On 01.02.1970 by Notification No.SRO 37 dated 24.01.1970 vide Labour and Employment Department Notification SRO 94 dated 31.03.2004."

District Dooru Kokernag, Verinag, Achabal, Damhal Hanjipora, Anantnag Ashmuqam, Yaripora, Khudwani, Qaimoh., Arwani and Seer Hamdan.

District Drubgam, Rajpora, Keller, Newa, Gagrian Shopian Pinjeera, Pulwama Litter, Dadsera Tral.,Charsoo Jawbara ( Awantipora) Wayon Chakoora, Vehel ( Shopian) Noorpora Ladoo Meemender (Shopian) Ratnipora Pulwama District Wahthora, Gopal Pora, Nagam, Kremshore, Khansahib Budgam Nassarullahpora, Soibugh, Gondipora, Sepden, Narkara, Pakharpora and Aripanthan District Langate Chogal, Dragmullas, Kralpora, Batraganm, Chokibal, Kupwara Solgam, Arampora, Khumryal, Tangdar, Magam, Lalpora, Vilgam and Awora District Drass Kargil District Choglamsar Leh In light of the above quoted provision of law, the petitioners have contended that the issuance of the notification has no application viz-a-viz the claim petition of the Respondent No. 3 and the order issued in pursuance of the same to determine the issue of maintainability is bad in the eyes of law.

09. The petitioners have further raised the contention that even if the applicability of the Act is presumed, the respondent is still not entitled to any gratuity on the ground that he is accused of misconduct and theft of the property of the petitioner/company along with non- liquidation of the loan and also the theft of the laptop which was 6 loaded with business information, on account of which the company had suffered huge loss, both in terms of business and reputation.

10. The main plank of the argument on behalf of the petitioner was that the order has been passed in a mechanical manner without application of mind being non-speaking in view of the fact that the Jammu & Kashmir Shops and Establishment Act 1996 alongwith its rules have not been applied to the area where the establishment of the petitioner/company is situated, by any notification till date.

11. It is specific case of the petitioner that since the Respondent No.3 was in private employment, there has to be a specific condition viz-a-viz the entitlement of the employee for payment of gratuity which is not mentioned anywhere in the appointment order of the Respondent No.3; and as such he can‟t claim the gratuity. In addition to that, there was a break in his service record and on this count also, he is not entitled to the gratuity. Thus, entertaining the claim of the Respondent No.3 for payment of gratuity was not justified.

12 .Learned counsel for the petitioner has further argued that, even if the Act is applicable, still the question for consideration of Respondent No.2 was as to whether the gratuity, even if, the petitioner could be entitled to, can be released in favour of a person, who is accused of misconduct and theft of the property of the petitioner/company alongwith non-liquidation of the loan amount, theft of laptop with all business information which was used for his own benefit and to the serious detriment of the business concern of the petitioner/company who have suffered a huge loss in business. Accordingly, as per the counsel for the petitioner impugned order viz. entertaining the claim of the petitioner was misconceived and without application of mind and liable to be set aside.

13.Further, learned counsel for the petitioner contended that under Section 7 of the Payment of Gratuity Act, the claimant (Respondent No.3) even if , is entitled to 7 gratuity, has to submit a written application to the employer within a definite time frame as prescribed by the Act, which exercise is missing on the part of the claimant and has directly approached Respondent No.2 by way of a claim petition. Accordingly, the counsel for the petitioner argued that the claim petition was not maintainable as Respondent No.2 has no jurisdiction to entertain the claim petition unless, a written application is filed in terms of Rule 7 of the Payment of Gratuity Rules, 1972 within 30 days from the date employee is entitled to gratuity.

14. Thus in light of the aforesaid statutory provisions, it is the specific case of the petitioner that filing of the application by the employee to the employer is sine qua non for disbursement of the gratuity, if entitled to. Learned counsel for the petitioner has further argued that no objection certificate has also not been obtained from the Company and without obtaining no objection he has filed the claim petition before Respondent No. 2.

15. The petitioner has further contended that no formal application was filed/ submitted by Respondent No. 3, to the employer but instead had informed him orally two months before leaving the service on 26/6/2017.

16. Per contra, learned counsel for the Respondent No.3 has argued that petitioner company, while making reference to SRO 445 -A dated 15.11.1966, SRO 290 and SRO 37 in para 7 (1) of the writ petition, has wilfully concealed the relevant contents of SRO 445-A, which prescribes that Shops and Establishment Act 1966 is enforced in Srinagar City, w.e.f. 15.11.1966, and Dalgate is situated in heart of the city, where the company of the petitioner is located, therefore, the Act is applicable to the Respondent No.3 and Respondent No.3 is entitled to the payment of gratuity in terms of section 7 ( 2) and 7 ( 3)of the Act. The learned counsel for Respondent No. 3 has argued that in terms of Sub-Section (7) of Section 7, any person aggrieved by an order under sub-section(4) may, within sixty days from the date of receipt of 8 the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf.

17. The counsel for the respondent has vehemently argued that the ground taken by the petitioner will not survive on touch stone of law laid down under the provisions of Section 7(1), 7(2), 7(3) and 7(4)(b) of Payment of Gratuity Act,1972 and is liable to be rejected.

18. From the perusal of the scheme of the Act, it is prime duty of the employer to pay the gratuity or deposit the same with the Controlling authority as per mandate of section 7(4 ) (a) irrespective of the fact that whether the application under Section 7(1) of the Act read with Rule 7 of the Gratuity Rules,1972 has been made or not. Admittedly, in the present case petitioner company has neither paid the gratuity to respondent no.3 nor has deposited the same with the Controlling authority i.e., respondent no.2. Accordingly, Respondent No.3 was constrained to file the claim petition before the statutory authority i.e; Assistant Labour Commissioner, (respondent no.2) under Payment of Gratuity Act 1972 under section 7(4)(b) of the Act. For convenience, relevant clauses are reproduced hereunder:

[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. 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.]"

19. Thus it is the specific stand of the Respondent No.3, that Controlling authority has been empowered to adjudicate upon the dispute and the order impugned has been passed in exercise of its powers vested in it under law and cannot be questioned by invoking writ jurisdiction under Article 226 of the Constitution. The learned counsel for Respondent No.3 specifically argued that the impugned order is perfectly legal and does not suffer from any ambiguity and is thus liable to be upheld. 9

20. The counsel for the respondents has argued that, the Respondent No.3, filed a gratuity claim application on 31-08-2017, under sec 7(4) of the Payment of Gratuity Act,1972, against the petitioner company and another, before Respondent No. 2, for payment of gratuity along with interest. It was also stated in the application that before resigning on 20.06.2017, from the service of the petitioner company, he was having a continuous service of 07 years, 10 months and 10 days, at his back and used to draw a salary of Rs. 24,800/- as such, was entitled to Rs. 1,14,462/- as gratuity with interest till payment was made. The learned counsel has also laid emphasis on the point that the application filed by the Respondent No. 3 for payment of gratuity doesn‟t suffer from the vice of limitation.

Legal Analysis:-

21. The moot question which arises for consideration before this court is whether the writ petition under article 226 of the constitution against the order passed by the Assistant Labour Commissioner under the payment of Gratuity Act, 1972, is maintainable or not.

22. Before resolving this question of maintainability, it would be apt to go through the statutory provisions of law applicable in the case, i.e Section 7 (1), 7( 2), 7(3) and 7 (4) (b) which have been reproduced as follows:

" Section 7. Determination of the amount of gratuity.--(1) A person who is eligible for payment of gratuity under this Act or any person authorized, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity 10 is payable and also to the controlling authority specifying the amount of gratuity so determined.

(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. (3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:

Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground. (4)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity.

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. 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 11 employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer 4 [(d)] The controlling authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto. 4[(e)] As soon as may be after a deposit is made under clause (a), the controlling authority shall pay the amount of the deposit--

(i) to the applicant where he is the employee‟

(ii) where the applicant is not the employee, to the [nominee or, as the case may be, the guardian of such nominee or] heir of the employee if the controlling authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity.

(5) For the purpose of conducting an inquiry under sub-section (4), the controlling authority shall have the same powers as are vested in a court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely: -- (a) enforcing the attendance of any person or examining him on oath;

(b) requiring the discovery and production of documents.

(c) receiving evidence on affidavits.

(d) issuing commissions for the examination of witnesses. (6) Any inquiry under this section shall be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).

(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate 12 Government in this behalf: Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days.

[Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub- section (4), or deposits with the appellate authority such amount.] (8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the controlling authorit". Rule 7 of the Payment of Gratuity Rules,1972 is also reproduced as under-

" Rule 7. Application for gratuity.-(1) An employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, ordinarily within thirty days from the date the gratuity became payable, in Form 'I' to the employer:

Provided that where the date of superannuation or retirement of an employee is known, the employee may apply to the employer before thirty days of the date of superannuation or retirement.

(2) A nominee of an employee who is eligible for payment of gratuity under the second proviso to sub-section (1) of section 4 shall apply, ordinarily within thirty days from the date of gratuity became payable to him, in Form „J‟ to the employer:

Provided that an application in plain paper with relevant particulars shall also be accepted. The employer may obtain such other particulars as may be deemed necessary by him.

(3) A legal heir of an employee who is eligible for payment of gratuity under the second proviso to sub-section (1) of section 4 shall apply, ordinarily within one year from the date of gratuity became payable to him, in Form 'K' to the employer.

(4) Where gratuity becomes payable under the Act before the commencement of these rules, the periods of limitation specified in sub-rules (1), (2) and (3) shall be deemed to be operative from the date of such commencement. (5) An application for payment of gratuity filed after the expiry of the periods specified in this rule shall also be entertained by the employer, if the applicant adduces sufficient cause for the delay in preferring his claim, and no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within the specified period. Any dispute in this regard shall be referred to the controlling authority for his decision (6) An application under this rule shall be presented to the employer either by personal service or by registered post acknowledgement due".

23. As per the provisions of aforesaid Act and rules, it is primarily the duty of employer to pay the gratuity to the employee or deposit the same with the Controlling Authority as per Section 7 (4) (A) of the Act irrespective of the fact as to whether an application under section 7(1) of the Act read with Rule 7 of the gratuity Rules 1972 has been made or not. Since the petitioner company has neither paid the gratuity nor deposited the same with the Controlling Authority after repeated requests, Respondent No.3 has filed a gratuity claim before the statutory 14 authority for payment of gratuity with other service benefits to which he is entitled to under the Act.

24. The Controlling Authority has been empowered under law to adjudicate upon the dispute. Thus, the order impugned which has been passed by the statutory authority in exercise of powers vested in it under law, is perfectly legal and justified and is within its jurisdiction and is not amenable to Writ jurisdiction before this court under Article 226 of the Constitution, in the light of the fact that the petitioner has an alternate and efficacious remedy available under Sub Section 7 of the Section 7 of the Act which prescribes for filing of appeal to the appropriate Government or such authority as may be specified by the appropriate Government in this behalf immediately within a period of 60 days from the date of the receipt of the order.

For facility of reference Sub Section 7 of Section 7 of the aforesaid Act is reproduced as under:-

(7) Any person aggrieved by an order under sub-section (4), may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf:

Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days.

2[Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an 15 amount equal to the amount of gratuity required to be deposited under subsection (4), or deposits with the appellate authority such amount.] (8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the controlling authority.

25. Thus from the bare perusal of Rule 7 of the Payment of Gratuity Rules 1972, it is manifestly clear that much emphasis has been laid on the word „ordinarily‟ which does not mean „mandatorily'.Thus as per the scheme of the Act with particular reference to Section 7(2) of the aforesaid Act, filing of application to the employer, is not mandatory as the gratuity becomes payable to the employee whether an application under Sub Section 1 has been made or not. The limitation period provided under Rule 7 upon the filing of an application cannot obviously defeat the claim of the employee. Rule 7 cannot override the substantive provision of Section 7 (2) of Act as Rules are subservient to the Act.

26. Thus as per the aforesaid statutory provisions, it is evident that in case of any dispute with regard the gratuity, the Controlling Authority has jurisdictionto entertain the dispute with regard to the gratuity in terms of Sub Section 4 (a) of Section 7 and any person aggrieved of the order under sub section (4) has to prefer an appeal before the appellate authority under Sub Section (7) of Section 7 of the Act. Assistant Labor Commissioner of Labor department has been appointed as Controlling Authority and the Deputy Labor Commissioner has been appointed as Appellate Authority. In the present case, petitioner being aggrieved of the order of Assistant Labor Commissioner ought to have filed an appeal before the Appellate authority which as per provisions of law, is the alternate and efficacious remedy available to him provided under Section 7 (7) of the Act. The petitioner instead of filing of an appeal before the appellate authority, has approached this Hon‟ble court 16 under Article 226 of the Constitution. Accordingly, the present writ petition is not maintainable under law and is liable to be dismissed as the alternate and efficacious remedy is available to petitioner.

27. I am fortified by the view taken by this court in case J&KState Road Transport Corporation Vs Ghulam Nabi Bhat and Another in order dated 13.09.2021 wherein it has been held that availability of statutory remedy of appeal provided under sub- section 7 of section 7 of the Payment of Gratuity Act,1972, which is equally efficacious, the writ petition against the impugned order of the Controlling Authority cannot be maintained.

28. It is a well settled principle of law in catena of judgments that generally a writ petition should not be entertained when an efficacious alternate remedy is available under law. Under Article 226 of the Constitution, the High Court having regard to the facts of the case has discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions, one of which is that, if an alternate efficacious remedy is available, the High Court would not normally exercise its jurisdiction as held in case titled "Whirlpool Corporation vs Registrar of Trademarks, Mumbai, (1998) 8 SCC 1". Also in CIT Vs. Chhabil Dass Agrawal (2014) SCC 603 Apex Court has held that:-

"..... while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titagarh Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the 17 Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field"

29.Thus in view of the aforesaid propositions of law, the present writ petition is not maintainable under Article 226 of the Constitution against the impugned order passed by Assistant Labour Commissioner in view of the Payment of Gratuity Act 1972, more particularly, when there is an alternate and efficacious remedy provided under statutory provisions of law.

30. It is pertinent to mention here that the petitioners have also placed reliance on certain judgements wherein the court had held that the gratuity of an employee can be withheld in case of misconduct. It has been contended that Hon‟ble Supreme Court is its judgment passed in 2005(5) SCC 245 para 20 has held that an employer has right to withhold gratuity in case of any misconduct by the employee which entails him a financial and business loss. However, the said judgement doesn‟t apply to the instant case as the misconduct has yet to be probed and on mere accusations leveled against the Respondent No. 3, he cannot be deprived of his legitimate claim of gratuity in terms of the aforesaid Act and Rules.

31. The second moot question which arises for consideration in the present case is whether the requirement of submitting written application to the employer under Rule 7 of Payment of Gratuity Act, 1972 is mandatory or not. Rule 7 of the Gratuity Rules 1972, prescribe for filing of an application "ordinarily" within a period of thirty days from the date of Gratuity became payable. Ordinarily does not mean mandatorily. Once making of an application to the employer is not mandatory under the provisions of Section 7 (2) of the substantive provisions of the Act, the limitation under the Rules upon filing of the application cannot obviously defeat the claim of the employee. Rule 7 cannot override the substantive provision of Section 7 18 (2) of the Act as Rules are subservient to the Act. Moreover, Rule-7 does not prescribe time period for filing the application before the Controlling Authority but prescribes the time period of thirty days for filing the application before the Employer, which even is not mandatory as per Section 7 (2) of the Act.

32. Respondent No.3, admittedly, has filed claim petition on 31.08.2017 i.e., just after 40 days from the date of resigning from the services on 20.06.2017, as much, there is no delay caused in filing the application as per Rule 10 (2) of the aforesaid Rules. Filing of an application within 90 days is provided in case the Employer issues notice under Rule 8 of the Gratuity Rules. Since no notice under Rule 8 has been given to Respondent No. 3, the claim petition filed before the Respondent No. 2 by Respondent No. 3 after 40 days from the date of resignation has a recurring and continuous cause of action till gratuity is actually paid.

33. Thus it is clear from the aforesaid statutory provisions of law that submitting a written application to the employer is not mandatory and it is the duty of the employer to determine the amount of gratuity irrespective of the fact that whether such application has been filed or not. A similar view was held by Madras High Court in Sri Muthukumaran Institute Of technology vs J.Rajalakshmi on 1 October, 2020, in paragraph 10, "The Rules framed under the Payment of Gratuity Act, 1972 provide for two separate periods of time in relation to the making of an application. The first under Rule 7 is an application to the employer within 30 days from the date on which gratuity becomes payable. Rule 7(5), however, provides that an application for payment of gratuity filed after the expiry of the period specified shall also be entertained by the employer if the applicant adduces sufficient cause for delay and no claim for gratuity shall be invalid merely because the claimant failed to present his application within the specified period. This must be in a juxtaposed with Section 7(2) which requires the 19 employer to make a determination of gratuity payable and to furnish a notice to the employee and to the Controlling Authority as soon as gratuity becomes payable whether or not an application under Section 7(1) has been made. Clearly therefore, the employer cannot set up limitation as a defence on the ground that the application to him was not presented within thirty days. The clear answer to such a defence, if it is set up is that the employer is obliged to determine and make arrangement to pay gratuity whether or not an application is made. The second time period that is prescribed is under Rule

10. Rule 10 inter alia provides a period of 90 days for making an application before the Controlling Authority upon the employer failing to issue a notice as required under Rule 8 upon the receipt of an application from the employee under Rule 7. The delay under Rule 10 can be condoned by the Controlling Authority on sufficient cause being shown."

Reliance is also placed on H. Jayarama Shetty v/s Sangli Bank Ltd (2005 II CLR

267), decided On, 11 March 2005, at, High Court of Judicature at Bombay, wherein it was held that, "The rules which were framed in 1972 must be read in a manner which is consistent with the statutory provisions of Section 7 particularly after the amendments that were introduced by Amending Act 25 of 1984 (with effect from 1st April 1984) and by Amending Act 22 of 1987 (with effect from 1st October 1987). The provisions of Section 7 emphasise that the obligation is that of the employer to determine and to make arrangements for the payment of gratuity and upon his failure to do so, to pay interest at the rate which is statutorily prescribed. Even if the period that is prescribed in the Rules is taken into consideration, the Rules themselves lay down that the delay on the part of the employer, if any, can be condoned if sufficient cause is shown. A 20 breach of the employer to comply with his obligation under section 7 provides a recurring and continuous cause of action.

The Act is a piece of social welfare legislation and the employer cannot be permitted by reason of his own default in complying with his obligation to defeat the just entitlement of the employee. Finally, it may be noted that the employer has to determine and pay gratuity whether or not an application is filed to him. The filing of an application before the employer is not a condition precedent. Rule 7 makes procedural provisions for such an application. On receipt of an application under Rule 7, the employer has to issue a notice under Rule 8 either admitting the claim or to specify the reasons why he holds the claim inadmissible. It is thereafter that time is prescribed in Rule 10 for an application to the Controlling Authority. The making of an application under Rule 7 therefore invokes a chain of events in Rules 8 and 10. Once the making of an application to the employer is not mandatory under the provisions of Section 7(2) of the substantive provisions of the act, the limitation under the Rules which is triggered upon the filing of the application under Rule 7 can obviously not defeat the claim of the employee."

34. I am also fortified by judgment of Delhi High Court in case M.C.D. Vs Nand Kishore 2003 ( 97) FLR 158, wherein it is held that:-

"The respondent was employed as driver in the Health Department on 10th December, 1957. He retired from service on 30th June, 1998. The appellant paid a sum of Rs. 1,09,098/- to the respondent as gratuity. The respondent not being satisfied with the amount of gratuity paid to him filed an application before the Controlling Authority under the Payment of Gratuity Act, 1972. The Controlling Authority held the respondent entitled for an additional sum of Rs. 47,301/- which was short paid to him by the appellant. The main grievance of the appellant is that the Controlling Authority did not take into 21 consideration delay of the respondent in filing the application under the Payment of Gratuity Act, 1972 and the rules framed there under. The grievance of the appellant is misconceived as the non-payment of gratuity due to the respondent was a continuing wrong and there was no question of any delay in approaching the Controlling Authority. Accordingly, we do not see any reason to interfere with the order passed by the Controlling Authority or the impugned order passed by the learned Single Judge. In the circumstances, the appeal fails and is therefore dismissed."

35. The Hon‟ble Apex Court in the case of State of Kerala and Ors. V. M. Panmanabhan Nair (1985) 1 SCC 429 has held under :-

"Pension and gratuity are no longer any bounty to be distributed by the Government to its employees on their retirement but have become, under the decisions of this Court, valuable rights and property in their hands and any culpable delay in settlement and disbursement thereof must be visited with the penalty of payment of interest at the current market rate till actual payment." As such, we hold the appellants entitled for the interest at the rate of current market rate i.e., at the rate of Rs. 15% per annum on the amount of gratuity which the respondents had admitted to be payable to the respective claimants in the replies filed by them before the Controlling Authority. It also appears to us that appellants were unnecessarily dragged in litigation and were compelled to fight for their legitimate claim for years together. We, therefore, deem it appropriate to award each of the appellants a sum of Rs. 5000/- by way of cost of the litigation from the respondents.

Similar view has been taken by the Bombay High Court in a case reported as Shri Dnyanoba Vishnu Sawantv. M/S. Sitaram Mills Unit of National decided on 24.01.2017 (2017) 2 CLR 414.

36. Thus I hold that filing of an application is not mandatory and the expression used in Rule 7 of the Gratuity Rules lays much emphasis on "ordinarily" which by 22 no stretch of imagination can be construed as "mandatorily". In view of the above, the impugned order dated 20.03.2019 passed by Assistant Labour Commissioner (Controlling Authority under the Payment and Gratuity Act) i.e., Respondent No.2 cannot be faulted and the same is upheld.

Conclusion.

37. Thus in the light of what has been discussed hereinabove coupled with the settled legal position, the writ petition is dismissed with the following observations:-

(i) The writ petition is not maintainable under Article 226 of the constitution against the order passed by Respondent No.2 under Payment and Gratuity Act 1972 in light of the alternate and efficacious remedy being available under law by way of filing appeal within 60 days in terms of Sub Section 7 of Section 7 of the Payment and Gratuity Act 1972, which has not been availed by the petitioner;

(ii) The requirement of filing written application for gratuity in terms of Rule 7 of the Payment of Gratuity Rules 1972 to the employer by the employee is not mandatory and it is primary duty of the Employer to pay the gratuity to the employee as per Section 7(2) and 7(3) of the aforesaid Act or deposit the same with the Controlling Authority irrespective of the fact as to whether an application under Section 7(1) of the Act read with Rule 7 of the Gratuity Rules has been made or not.

(iii) Since the order impugned has been passed by the Respondent No. 2 in exercise of its jurisdiction vested under law which cannot be questioned by invoking the power of writ jurisdiction 23 under Article 226, when, alternate and efficacious remedy is available under the statutory provisions and accordingly, the order passed by the Respondent No. 2 dated 20.03.2019 is upheld.

(iii) Under the Shops and Establishment Act, 1966 it is established that the company of the petitioner is located in Durganag Dalgate, Srinagar, and registered with Labour department under the aforesaid Act, which is in heart of the city and falls within the ambit of the Shops and Establishment Act, 1966, the Payment of Gratuity to the Respondent No.3 under the aforesaid Act cannot be denied as the petitioner company comes within the purview of the aforesaid Act, and Payment of Gratuity Act is applicable in the present case.

(iv.)Since the final claim has not yet been adjudicated by the Controlling Authority under Payment of Gratuity Act, the parties are directed to appear before the Controlling authority on 15.12.2022 and it is expected that the Controlling Authority shall decide the claim petition finally within a period of two months thereafter.



                                          (WASIM SADIQ NARGAL)
                                                       JUDGE

Srinagar
29.10 .2022

                    Whether the order is reportable?     Yes

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Jammu & Kashmir High Court - Srinagar Bench