Tripura High Court
Sri Samir Kumar Ghosh vs The State Of Tripura on 29 May, 2020
Equivalent citations: AIRONLINE 2020 TRI 161
Author: Akil Kureshi
Bench: Akil Kureshi
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HIGH COURT OF TRIPURA
AGARTALA
WP(C) No.1091/2017
Sri Samir Kumar Ghosh,
S/o Lt. Sachindra Ch. Ghosh,
resident of Durga Chowmuhani, Pragati Road,
opposite of Basanti Clinic, Agartala, P.O - Agartala,
P.S- West Agartala, District - West Tripura, Pin 799001.
............... Petitioner(s).
Vs.
1. The State of Tripura,
to be represented by the Secretary,
Department of Urban Development Department,
Government of Tripura, Secretariat Building,
New Capital Complex, Kunjaban, Agartala,
West Tripura, Pin - 799010.
2. Agartala Municipal Corporation,
to be represented by the Municipal Commissioner,
Agartala Municipal Corporation, Agartala,
West Tripura, Pin - 799001.
3. The Secretary, Department of Finance,
Government of Tripura, New Secretariat Building, New Capital
Complex, Kunjaban, Agartala,
West Tripura, Pin - 799010.
............... Respondent(s).
_B_E_ F_O_R_E_
HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI
For Petitioner(s) : Mr. P Roy Barman, Advocate,
Mr. Samarjit Bhattacharjee, Advocate,
Mr. Kawshik Nath, Advocate.
For Respondent(s) : Mr. T D Majumder, Advocate.
Date of hearing & judgment : 29th May, 2020.
Whether fit for reporting : No.
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J U D G M E N T (O R A L)
Petitioner is a retired employee of Agartala Municipal Corporation ('AMC' for short). He has filed this petition praying for a direction to the respondents to pay his gratuity on the basis of his last pay drawn inclusive of basic salary and dearness allowance and by applying revised ceiling of Rs.10,00,000/- for payment of gratuity. His request is that the deficient amount of gratuity be paid with interest from the date of retirement till actual payment.
[2] Brief facts are as under:
The petitioner was serving under AMC as the Lower Division Clerk. He retired on superannuation w.e.f 31st December, 2015 as a Head Clerk. On the date of retirement, he was drawing a basic salary of Rs.25,030/- and a dearness allowance of Rs.18,522/-. His case is that upon retirement he was entitled to receive gratuity under the Payment of Gratuity Act, 1972 ('the said Act' for short). The department sanctioned part payment of gratuity of Rs.3,00,000/- on 28th December 2015. The petitioner's grievance is that the computation of gratuity suffers from error since the employer has taken into account only his basic salary on the date of retirement, ignoring the component of Dearness Allowance. The petitioner would refer to Section 2(s) of the Act which defines the term wages as to mean, all emoluments which are earned by an employee while on duty in accordance with the terms and conditions of his employment which are paid or payable including dearness allowance. In continuation of Page - 3 of 1 1 this contention, the petitioner also argues that the previous ceiling of payment of gratuity of Rs.3,50,000/- under the said Act has been revised by the Government of India by a notification dated 24th May, 2010. The petitioner having retired on 31st December, 2015 was thus governed by this revised ceiling. It is in this background, that the petitioner's twin grievances about payment of gratuity have been raised in this petition.
[3] The case of the department, however, is that the petitioner is not governed by the said Act since the AMC has adopted CCS (Pension)Rules, 1972. The petitioner is receiving pension as per the said rules. A provisional gratuity of Rs.3,00,000/- was sanctioned and paid. Subsequently, a further sum of Rs.1,00,000/- was sanctioned towards remaining gratuity on 21st September, 2017. The respondents would point out that as per the Finance Department notification dated 5th May 2009, there was a ceiling of Rs.4,00,000/- for payment of gratuity. Such ceiling was revised to Rs.10,00,000/- by a notification dated 11th July, 2017. The petitioner having retired before the said date, pre-revised limit of payment of gratuity of Rs.4,00,000/- has been applied in his case.
[4] Appearing for the petitioner, learned counsel Mr. P Roy Barman submitted that the petitioner was an employee of AMC and was governed by the said Act as held by the Supreme Court in case of Nagar Nigam, Gorakhpur Vs. Ram Shankar Yadav and Anr. reported in (2019) 6 SCC 103. Section 2(s) of the Act defines the term 'wages' which includes the basic pay and dearness allowance. The respondents committed an error in calculating the petitioner's gratuity ignoring the dearness allowance Page - 4 of 1 1 component. He further submitted that the maximum amount of gratuity payable under the said Act was revised by a notification dated 24th May, 2010 to Rs.10,00,000/-. The petitioner retired on superannuation on 31st December, 2015 and, therefore, such revised limit was applicable to him. In this context, counsel relied on a decision of a learned Single Judge of this Court in case of Bhupati Debnath Vs. State of Tripura and Ors. WP(C) No.1050/2019 reported in (2020) SCC OnLine Tri 84. [5] On the other hand, learned counsel for the AMC Mr. T D Majumder opposed the petition contending that the AMC has adopted CCS Pension Rules w.e.f. 1st January, 1992. The petitioner is, therefore, not governed by the said Act. The petitioner is, therefore, not an employee as defined under Section 2(e) of the Act. AMC is not an establishment governed by the said Act. He submitted that the limit for payment of gratuity to Rs.10,00,000/- was revised by the Government of India long after the petitioner had retired from service. In his case, therefore, a limit of Rs.4,00,000/- as applicable under the CCS Pension Rules at the relevant time was applied.
[6] The question of an employee of the Municipalities being governed by the said Act has been considered and decided by the Supreme Court in case of Nagar Nigam Gorakhpur(supra). In the said case, the respondent was an employee of Municipal Corporation, Kanpur. The employee had claimed gratuity before the controlling authority under the said Act. It was argued on behalf of the Municipal Corporation that the gratuity payable to the employee is in accordance with the Retirement Page - 5 of 1 1 Benefits and General Provident Fund Regulations, 1962 and not in terms of the said Act. It was argued that as per a provision of the UP Act, the said Act would not apply to Government or local bodies. The Supreme Court noted that the Central Government had published a notification dated 8th January, 1982 providing that in specified local bodies in which 10 or more persons are employed or were employed in any day preceding 12 months would be covered by the said Act. Referring to Section 14 of the said Act giving overriding effect to the provisions of the Act over other statutes, the Supreme Court held that employees of the municipalities would be governed by the said Act, notwithstanding any statutory provision contained to the contrary in the state Act. Relevant observations made by the Supreme Court read as under :
"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 the 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(1)(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.
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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.
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14. The entire argument of the appellant is that the State Act confers restrictive benefit of gratuity than what is conferred under the Central Act. Such argument is not tenable in view of Section 14 of the Act and that liberal payment of gratuity is in fact in the interest of the employees. Thus, the gratuity would be payable under the Act. Such is the view taken by the Controlling Authority."
[7] The question of the petitioner being governed by the said Act as an employee of the AMC is thus concluded by the said decision of the Supreme Court. The decision of the AMC to adopt CCS Pension Rules, would not change this position. The petitioner's entitlement of gratuity Page - 7 of 1 1 upon his retirement, therefore, shall have to be judged in accordance with the provisions made with the said Act.
[8] Section 2(s) of the said Act defines the term 'wages' as under:
"(s) "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance."
The definition of wages thus clearly includes dearness allowance. Gratuity is computed in terms of Section 4(2) of the said Act on the basis of last wages of the employee. His gratuity, therefore, shall have to be calculated on the basis of his basic pay as well as dearness allowance drawn by him on the date of retirement.
[9] The question of applying revised limit would also have to be judged in terms of the provisions of the said Act. As noted, the Central Government revised the ceiling for payment of gratuity under the said Act to Rs.10,00,000/- under a notification dated 24th May, 2010. The petitioner having retired w.e.f 31st December, 2015 such revised limits would apply to him. Such a question had come up for consideration before this Court in case of Bhupati Debnath (supra) in which following observations were made:
"7. Clause (a) of Section 2 of the Act defines the term "appropriate Government" as under:
"2. (a) "appropriate Government" means,--
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(i) in relation to an establishment--
(a) belonging to, or under the control of, the Central Government,
(b) having branches in more than one State,
(c) of a factory belonging to, or under the control of, the Central Government,
(d) of a major port, mine, oilfield or railway company, the Central Government,
(ii) in any other case, the State Government."
8. This distinction between the State or the Central Government being an appropriate Government in relation to different classes of establishments, manifests itself in various sections contained in the said Act. For example, under Section 3 the appropriate Government may, by notification, appoint an officer to be a Controlling Authority who shall be responsible for the administration of the Act. Different Authorities may be appointed for different areas. Under Section 4A the appropriate Government may notify date with effect from which every employer other than an establishment belonging to or under the control of the Central or the State Government would have to obtain an insurance for liability for payment of gratuity. Under sub-section (1) of Section 5 the appropriate Government may by notification exempt any establishment, factory, mine or oilfield etc. from the operation of the provisions of the Act. Under sub-section (2) of Section 5 similarly the appropriate Government may notify exemption of any employee or class of employees from the operation of the provisions of the said Act.
9. However, when it comes to Section 4 of the said Act which pertains to payment of gratuity, this distinction of the appropriate Government being Central or the State Government, has no effect. Sub-section (1) of Section 4 provides that the gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than five years, on his superannuation or retirement or resignation or death or Page - 9 of 1 1 disablement due to accident or disease. Sub-section (2) of Section 4 provides that for every completed year of service or part thereof in excess of six months the employer shall pay gratuity to an employee at the rate of 15 (fifteen) days wages based on the rate of wages last drawn by the concerned employee. Sub-section (3) of Section 4 which is of importance reads as under:
"(3) The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government from time to time."
10. As per this provision thus the amount of gratuity payable to an employee would not exceed such amount as may be notified by the Central Government from time to time. The group of words "such amount as may be notified by the Central Government from time to time" was substituted by Act 12 of 2018 for the group of words "ten lakh rupees". This limit of ten lakhs of rupees was self in substitution of earlier limits of lesser amounts.
11. It can thus be seen that insofar as the payment of gratuity, its computation and the ceiling up to which such amount can be paid as referred to in Section 4 of the said Act, the term "appropriate Government" has no bearing. This distinction is also apparent from the statement of objects and reasons which provides that for the purpose of uniformity, the Central Act was envisaged. At the same time, appropriate Government is for the purpose of administering the Act. The ceiling limit for payment of gratuity is provided in sub-section (3) of Section 4. Previously, such ceilings were contained in the sub-section itself. Pursuant to amendment by virtue of Act 12 of 2018 the power to prescribe such ceiling has been vested in the Central Government to be exercised by issuing notification in this regard. It is in exercise of such delegated powers of legislation that the Central Government has issued a notification dated 29.03.2018 which reads as under:
"S.O. 1420 (E).--In exercise of the powers conferred by sub-section (3) of section 4 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Page - 10 of 11 Government hereby specifies that the amount of gratuity payable to an employee under the said Act shall not exceed twenty lakh rupees."
12. This revised ceiling thus would apply to all establishments irrespective of whether they are controlled or governed by the State or the Central Government as the appropriate Government. The stand of the respondents, therefore, that unless and until such revised ceiling of payment of gratuity is adopted by the State Government, the employees of the said corporation cannot claim benefit of such revised limit cannot be accepted. Revised ceiling limit of `20,00,000 (rupees twenty lakhs) would be applicable to the petitioner."
[10] In the result, it is directed that the respondent AMC shall calculate the gratuity in terms of Section 4(2) of the Act payable to petitioner by taking into account his basic salary and dearness allowance. The gratuity so calculated would be paid by applying revised ceiling of Rs.10,00,000/-. After deducting the gratuity already paid, remaining amount would be paid within a period of 4(four) months from today along with simple interest @ 6% per annum upon completion of 1(month) month from the date of superannuation till actual payment.
Petition is disposed of accordingly. Pending application, if any, also stands disposed of.
( AKIL KURESHI ), CJ Page - 1 1 of 11 Sukhendu