Gujarat High Court
Bhuj Municipality vs Gitaben Kiranbhai Dholakiya & on 31 August, 2016
Author: C.L.Soni
Bench: C.L. Soni
C/SCA/13829/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 13829 of 2016
TO
SPECIAL CIVIL APPLICATION NO. 13850 of 2016
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BHUJ MUNICIPALITY....Petitioner(s)
Versus
GITABEN KIRANBHAI DHOLAKIYA & 1....Respondent(s)
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Appearance:
MR BY MANKAD, ADVOCATE for the Petitioner(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE C.L. SONI
Date : 31/08/2016
COMMON ORAL ORDER
[1] By the present petitions filed under Article 226 of the Constitution of India, the petitionerBhuj Municipality has straightway challenged the orders dated 18/06/2016 passed by the Controlling Authority on different applications preferred by the respondent no.1 of each petition under the Payment of Gratuity Act, 1972 ('the Act') without availing of statutory remedy of appeal available to the petitioner under Section 7(7) of the Act.
[2] It is settled law that when the statutory remedy of appeal is available, the petition under Article 226 is ordinarily not to be entertained, Page 1 of 10 HC-NIC Page 1 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER unless extraordinary circumstances are made out to invoke the jurisdiction of this Court under Article 226 of the Constitution of India.
[3] Learned advocate Mr. Mankad for the petitioner submitted that the petitioner has invoked the jurisdiction of this Court under Article 226 of the Constitution of India, straightway to challenge the order of the Controlling Authority as the claim for payment of gratuity made by the respondent no.1, is based on the settlement entered between the petitionerMunicipality and its employees under Section 2(p) of the Industrial Disputes Act, 1947 ('the I.D. Act'), and therefore, the respondent no.1 could not have filed the application for payment of gratuity before the Controlling Authority, and the Controlling Authority has no jurisdiction to entertain the applications of the respondent no.1.
[4] The Court, however finds that as recorded in the impugned order, the respondent no.1 have made applications under the Payment of Gratuity Act, claiming difference of gratuity within maximum limit Page 2 of 10 HC-NIC Page 2 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER of Rs. 10 lac as provided under the Act. It cannot be disputed that the respondent in each of the petition retired after the Amendment for increasing maximum limit for payment of gratuity upto Rs. 10 lac was brought into force in the year 2010. The Court therefore finds that the Controlling Authority has jurisdiction to entertain the applications of the respondent no.1 claiming difference of gratuity.
Learned advocate Mr. Mankad then submitted that group of petition being Special Civil Application No. 13614 of 2016 and allied matters are filed after availing the statutory remedy of the appeal before the Appellate Authority under the Act, and on the same contentions raised in the said group of petitions, the impugned orders of the Controlling Authority are being assailed in the present group of petitions and therefore the present petitions are directly filed under Article 226 of this Court against the order of the Controlling Authority.
[5] The Court has rejected the above referred group of the petition today since, the same contentions are canvassed in the present group of Page 3 of 10 HC-NIC Page 3 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER petitions, the Court finds that for the reasons given in the above said group of the matters, the present petitions are required to be rejected.
[6] In the said group of the petitions, this Court has held in paragraph Nos. 6 to 10 as under:
6. The Court, having heard learned advocate Mr. Mankad for the petitioner and having perused the impugned orders finds that as observed by the authorities below, the respondent no.1 preferred applications for payment of gratuity under the Act. As stated in the order of the Controlling Authority, the petitioner opposed the applications on the ground that the GCSR apply to the respondent no. 1 and since the 5th pay commission was sanctioned by the State Government for the petitioner, the gratuity could be paid to the respondent no.1 within maximum limit of Rs. 3 lac as provided in the Rules and not within the maximum limit of Rs. 10 lac under the Act. It is not in dispute that the respondent no.1 retired from service after the amendment of 2010 providing for maximum gratuity of Rs. 10 lac was brought into force. Therefore under the Act, the respondent no. 1 was entitled to claim of gratuity within maximum limit of Rs. 10 lac. However by Draft Amendment, the petitioner has contended that the respondent no.1 demanded the difference of gratuity amount, not as per the Act but under the settlement under Section 2(p) of the I.D. Act between the petitionerMunicipality and its employees which was arrived on the basis of Bhuj Municipality Gratuity Rules of 1956, and therefore the respondent no.1 could not have filed application before the Controlling Authority and the Controlling Authority has no jurisdiction to entertain the application of the respondent no.1 and resultantly the impugned orders are null and void.
7. The Court, finds that such contention was not raised before the authorities below. However, Page 4 of 10 HC-NIC Page 4 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER the contention when examined is found not acceptable. The claim of the respondent no.1 for difference of gratuity was under the Act. Section 4(5) of the Act preserves the right of an employee to receive better terms of gratuity under the settlement, award or the contract. However, such would not preclude an employee to claim gratuity under the Act, if he finds that it is more beneficial to him. The respondent no. 1 has claimed that what is paid to them by the petitionerMunicipality is within the maximum limit of Rs. 3,50,000/ under the settlement, which is less than available within the maximum limit of Rs. 10 lac under the Act, and therefore they asked for difference of the gratuity under the Act. In view of such claim of the respondent no.1 under the Act, it cannot be said that the respondent no.1 could not file application before the Controlling Authority, nor could it be said that the controlling authority has no jurisdiction to entertain their applications. As per Section 7(4)
(b) of the Act, if there is dispute with regard to any matter or matters specified in Clause (a) of Subsection (4), the employer or employee or any person raising the dispute may make an application to the Controlling Authority for deciding the dispute. Subsection 4(a) provides that if there is any dispute as to the amount of gratuity payable to an employee under the Act or as to the admissibility of any claim of, or in relation to, an employee for gratuity, the employer is required to deposit with the Controlling Authority the admitted amount payable as gratuity. Learned advocate Mr. Mankad however submitted that the Controlling Authority shall have no jurisdiction to entertain the application as there is a settlement based on which the respondent no. 1 accepted the gratuity, and therefore, the dispute for payment of gratuity is under the Settlement and not under the Act and since the settlement is under Section 2(p) of the I.D. Act, the only remedy available is under Section 33C(2) of the I.D. Act to claim recovery of amount of gratuity. For such purpose, he has relied on the decision of this Court in the Case of Gujarat State Road Transport Corporation Vs. Karsan Meghji Dabhi 1997(2) GLR 1396. In this decision, it is held that the application under Section 33C(2) of the I.D. Act is maintainable when the amount of gratuity claimed is under the settlement and not Page 5 of 10 HC-NIC Page 5 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER that whenever the claim is made under the settlement, the only remedy is available under Section 33C(2) of the I.D. Act. In any case, the judgment shall have no application to the facts of the present case, as the respondent no.1 has claimed gratuity under the Act. Learned advocate Mr. Mankad then argued that since the respondent no.1 and other employees have accepted the 5th pay commission's benefits as sanctioned by the State Government, and also accepted gratuity under the settlement within the maximum limit of Rs. 3,50,000/, the respondent no.1 could not claim the gratuity within the maximum limit of Rs. 10 lac. Such argument has no substance. It may be that the petitioner had given the benefits of 5th pay commission to its employees on getting sanction from the State Government but such would not be a ground to say that the respondent no.1 could be made entitled to gratuity within the maximum limit of Rs.3,50,000/. The petitioner is an establishment covered under the Act and the provisions made under the Act for gratuity have overriding effect by virtue of Section 14 of the Act to the provisions made in any settlement, award or contract or any Rules which are inconsistent with the provisions of the Act.
8. In the case of Y.K. Singla Vs. Punjab National Bank and others reported in (2013)3 SCC 472, the Hon'ble Supreme Court has held and observed in paragraph Nos. 22 to 25 as under:
22. In order to determine which of the two provisions (the Gratuity Act, or the 1995, Regulations) would be applicable for determining the claim of the appellant, it is also essential to refer to Section 14 of the Gratuity Act, which is being extracted hereunder: "14. Act to override other enactments, etc. - The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act."
(emphasis supplied) Page 6 of 10 HC-NIC Page 6 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER A perusal of Section 14 leaves no room for any doubt, that a superior status has been vested in the provisions of the Gratuity Act, visà vis, any other enactment (including any other instrument or contract) inconsistent therewith. Therefore, insofar as the entitlement of an employee to gratuity is concerned, it is apparent that in cases where gratuity of an employee is not regulated under the provisions of the Gratuity Act, the legislature having vested superiority to the provisions of the Gratuity Act over all other provisions/enactments (including any instrument or contract having the force of law), the provisions of the Gratuity Act cannot be ignored. The term "instrument" and the phrase "instrument or contract having the force of law" shall most definitely be deemed to include the 1995 Regulations, which regulate the payment of gratuity to the appellant.
23. Based on the conclusions drawn hereinabove, we shall endeavour to determine the present controversy. First and foremost, we have concluded on the basis of Section 4 of the Gratuity Act, that an employee has the right to make a choice of being governed by some alternative provision/instrument, other than the Gratuity Act, for drawing the benefit of gratuity. If an employee makes such a choice, he is provided with a statutory protection, namely, that the concerned employee would be entitled to receive better terms of gratuity under the said provision/instrument, in comparison to his entitlement under the Gratuity Act. This protection has been provided through Section 4 (5) of the Gratuity Act.
24. Furthermore, from the mandate of Section 14 of the Gratuity Act, it is imperative to further conclude, that the provisions of the Gratuity Act would have overriding effect, with reference to any inconsistency therewith in any other provision or instrument. Thus viewed, even if the provisions of the 1995, Regulations, had debarred payment of interest on account of delayed payment of gratuity, the same would have been inconsequential. The benefit of interest enuring to an employee, as has been contemplated under section 7(3A) of the Gratuity Act, cannot be denied to an employee, whose gratuity is regulated by some provision/instrument other than the Gratuity Act. This is so because, the terms of payment of gratuity under the alternative instrument has to Page 7 of 10 HC-NIC Page 7 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER ensure better terms, than the ones provided under the Gratuity Act. The effect would be the same, when the concerned provision is silent on the issue. This is so, because the instant situation is not worse than the one discussed above, where there is a provision expressly debarring payment of interest in the manner contemplated under Section 7(3A) of the Gratuity Act. Therefore, even though the 1995, Regulations, are silent on the issue of payment of interest, the appellant would still be entitled to the benefit of Section 7(3A) of the Gratuity Act. If such benefit is not extended to the appellant, the protection contemplated under section 4(5) of the Gratuity Act would stand defeated. Likewise, even the mandate contained in section 14 of the Gratuity Act, deliberated in detail hereinabove, would stand negated.
25. We, therefore, have no hesitation in concluding, that even though the provisions of the 1995, Regulations, are silent on the issue of payment of interest, the least that the appellant would be entitled to, are terms equal to the benefits envisaged under the Gratuity Act. Under the Gratuity Act, the appellant would be entitled to interest, on account of delayed payment of gratuity (as has already been concluded above). We therefore hold, that the appellant herein is entitled to interest on account of delayed payment, in consonance with subSection (3A) of Section 7 of the Gratuity Act.
9. In the case of Allahabad Bank and Another Vs. All India Allahabad Bank Retired Employees Association reported in (2010)2 SCC 44, the Hon'ble Supreme Court has held and observed in paragraph Nos. 14, 19, 30, 31 and 44 as under:
14. A plain reading of the provisions referred to herein above makes it abundantly clear that there is no escape from payment of gratuity under the provisions of the Act unless the establishment is granted exemption from the operation of the provisions of the Act by the appropriate Government.
19. Gratuity payable to an employee on the termination of his employment after rendering Page 8 of 10 HC-NIC Page 8 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER continuous service for not less than 5 years and on superannuation or retirement or resignation etc. being a statutory right cannot be taken away except in accordance with the provisions of the Act whereunder an exemption from such payment may be granted only by the appropriate Government under Section 5 of the Act which itself is a conditional power. No exemption could be granted by any Government unless it is established that the employees are in receipt of gratuity or pension benefits which are more favourable than the benefits conferred under the Act.
30. The submission is totally devoid of any merit for more than one reason, namely, that it is for the appropriate Government to form the requisite opinion that the employees were in receipt of gratuity or pensionary benefits which were more favourable than the benefits conferred under the Act and therefore, the establishment must be exempted from the operation of the provisions of the Act. The Bank having failed to obtain exemption from the operation of the provisions of the Act cannot be permitted to raise this plea.
31 No establishment can decide for itself that employees in such establishments were in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under the Act. Subsection (5) of Section 4 protects the rights of an employee to receive better terms of gratuity from its employer under any Award or agreement or contract as the case may be. Admittedly, the Scheme under which the employees of the Bank received the pension was in lieu of gratuity. There is no question of comparing the said Scheme and arrive at any conclusion that what they have received was much better in terms than the benefits conferred under the Act. Reliance upon subsection (5) of Section 4 is therefore unsustainable.
44. Subsection (7) of Section 7, provides for an appeal against the order of the Controlling Authority. The Act, nowhere confers any jurisdiction upon the Controlling Authority to deal with any issue under subsection (5) of Section 4 as to whether the terms of gratuity payable under any Award or agreement or contract Page 9 of 10 HC-NIC Page 9 of 10 Created On Mon Oct 02 05:46:17 IST 2017 C/SCA/13829/2016 ORDER is more beneficial to employees than the one provided for payment of gratuity under the Act. This Court's order could not have conferred any such jurisdiction upon the Controlling Authority to decide any matter under subsection (5) of Section 4, since the Parliament in its wisdom had chosen to confer such jurisdiction only upon the appropriate Government and that too for the purposes of considering to grant exemption from the operation of the provisions of the Act.
10. It is not the case of the petitioner that the Government in due consideration of the settlement arrived at between the petitioner Municipality and its employees exempted the petitioner from the operation of the provisions of the Act.
[7] For the above same reasoning, the petitions are rejected.
(C.L.SONI, J.) MANOJ KUMAR Page 10 of 10 HC-NIC Page 10 of 10 Created On Mon Oct 02 05:46:17 IST 2017