Calcutta High Court
Rabindra Nath Banerjee vs The Certificate Officer And Ors. on 22 December, 2004
Equivalent citations: IV(2005)BC6, (2005)1CALLT525(HC), [2006]131COMPCAS85(CAL), (2005)IIILLJ85CAL, [2005]63SCL529(CAL)
Author: P.K. Ray
Bench: Pratap Kumar Ray
JUDGMENT P.K. Ray, J.
1. In this writ application the petitioner a retired employee of Dunlop India Limited, a company duly incorporated under the provisions of the Companies Act, 1956, has prayed the following reliefs:
(a) Writ and/or writs in the nature of Mandamus directing the respondent No. 1 to act in accordance with law and to consider the representation of your petitioner and/or to initiate the certificate and/or recovery proceedings forthwith as against the said company and to realize the said sum of Rs. 3,50,000/- along with simple interest 10% per annum from 1st June, 1998 till the date of payment being the gratuity of your petitioner which has already been adjudicated by the Controlling Authority as stated hereinabove;
(b) Writ in the nature of Mandamus directing and/or commanding the respondent No. 1 to send the said sum of Rs. 3,50,000/- along with simple interest @ 10% per annum from 1st June, 1998 till the date of payment being the gratuity of your petitioner to the Controlling Authority after realizing the same from the said company so that the same can be paid to the petitioner forthwith;
(c) Writ in the nature of Mandamus be issued commanding the Controlling Authority to produce and/or furnish the original requisition and/or order and/or records and/or documents before the respondent No. 1 so that the respondent No. 1 can initiate the recovery proceedings against the company forthwith;
(d) Writ in the nature of prohibition commanding the respondent No. 1 from not delaying the matter in initiating the certificate and/or recovery proceedings as against the said company for realizing the said sum of Rs. 3,50,000/- along with interest @ 10% per annum from 1st June, 1998 till the date of payment being the gratuity of your petitioner as has already been adjudicated by the Controlling Authority as stated hereinbefore;
(e) Writ in the nature of certiorari commanding the respondent No. 1 and/or the Controlling Authority to produce and/or transmit all the relevant records, papers, documents pertinent to the instant case before this Hon'ble Court so that conscionable justice can be made by directing the respondent No. 1 to initiate recovery and/ or certificate proceedings as against the company for realizing the said sum of Rs. 3,50,000/- along with simple interest @ 10% per annum from 1st June, 1998 till the date of payment being the gratuity of your petitioner;
(f) An ad-interim order of injunction restraining the BIFR Authority not to take any further action pursuant to the publication made in the newspaper on 22nd December, 2003 being annexure "P11" to this petition;
(g) Rule Nisi in terms of the prayers above;
(h) Rule be made absolute if no cause or inadequate cause is shown;
(i) The respondent No. 1 be directed forthwith in initiate recovery and/or certificate proceedings as against the said company and to realize the said sum of Rs. 3,50,000/- along with simple interest @ 10% per annum from 1st June, 1998 till the date of payment being the gratuity of the petitioner and to send the same to the Controlling Authority;
(j) The Controlling Authority be directed to produce/furnish the original requisition and/or order and/or necessary records and papers before the respondent No. 1 forthwith;
(k) Ad-interim order in terms of prayers above;
(l) Costs of and incidental to this application be paid by the respondent No. 1;
(m) Such further or other orders be made and/or direction or directions be given as to this Hon'ble Court may deem fit and proper.
2. This application has been opposed by filing affidavit by the respondent No. 3, contending, inter alia, that since the respondent company being a sick industry awaiting rehabilitation programme by approval of the scheme under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 hereinafter referred to as SICA, 1985, under Section 22 of the said Act, no recovery proceeding could be initiated.
3. The short question involved in this case as to whether due to Section 22 of SICA, 1985 the recovery proceedings for realization of Gratuity amount under Public Demands Recovery Act would be kept pending. Before an answer to the question, the basic jurisprudential concept of the payments of gratuity and the constitutional mandates to that effect are required to be looked into. Gratuity is payable now under a statutory provision namely Payments of Gratuity Act, 1972 hereinafter referred to as Gratuity Act for brevity. Under Section 14 of the said Act due to incorporation of non-obstante clause, gratuity amount cannot be withheld under any circumstances. Section 14 reads thus:
"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."
4. The impact of Section 14 has been in depth dealt with in the case Som Prakash Rekhi v. Union of India and Anr., and in the case of R. Kapur v. Director of Inspection (Painting And Publication) Income Tax and Anr., . It is now a settled law now that the Payments of Gratuity Act being a piece of social welfare legislation following constitutional mandate for rendering social and economic justice to the older persons for protecting their interest in the winter days of life after retirement of service, will get its top priority so far as release of the retirement benefits are concerned.
5. The jurisprudential concept and the meaning of the word "Gratuity" has been dealt with by the Apex Court in the several judgments. Earlier concept has grown on the basis of the dictionary meaning of the word "Gratuity" holding that it is gratuitous payment, a gift or a boon and a matter solely within the discretion of the employer. But now its meaning has an effect of sea change with the new outlook of social welfare concept providing its meaning as a retirement benefits, which is property in the hands of retiree and that too a deferred payment. It is no longer a bounty or a charity to be distributed by the employer but it is a valuable right and property in the hands of the retired employee, which is payable on the next date of retirement. Further the Apex Court held by several judgments that for delays payment of gratuity high rate of interest to be imposed as an exemplary measures, which sometime even has been fixed to 18% per annum. Reliance may be placed to the judgments passed to the case Gorakhpur University and Ors. v. Dr. Shitla Prasad Nagendra and Ors., a Constitution Bench judgment and State of Kerala and Ors. v. M. Padmanabhan Nair, . Since the gratuity is not a bounty and/or charity and it is a property in the hands of the retired employee in terms of Article 300A of the Constitution of India, such social welfare provision whether can be curtailed by the subsequent SICA, 1985 as has been argued by the learned advocate for the respondents, Dunlop India Limited, now to be tested.
6. No doubt, under the SICA, 1985, under Section 22, a provision has been made by providing a "non-obstante clause" that no proceeding could be initiated for realization of any money but whether such provision would oust the social welfare legislation namely Payments of Gratuity Act and its mandatory provision for payments after retirement of the employee, is the central its of this writ application. It is an admitted fact in this application that a rehabilitation scheme is under process to give life to the sick industry. Learned advocate for the respondent company relied upon the Apex Court judgment namely The Gram Panchayat and Anr. v. Shree Vallabh Glass Works Ltd. and Ors., and Deputy Commercial Tax Officer and Ors. v. Corromandal Pharmaceuticals and Ors., to oppose this writ application.
7. Hence, it appears that the two "non-obstante clauses" in two central legislations, one under the Payments of Gratuity Act, 1972 another under SICA, 1985 being Section 14 and Section 22 respectively, are allegedly fouling the field of constitutional and statutory obligation to protect the rights of aged persons after retirement from service. Section 22 of the SICA, 1985 reads thus:
"22. Suspension of legal proceedings, contracts, etc. (1) Where in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956, or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof [and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company) shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority."
8. On a bare reading of Section 14 of the Gratuity Act, 1972 and Section 22 of SICA, 1985, it appears that there is a superficial conflict in between the two. It is true that in the event of any conflict in between the two central legislations, the latest legislation will be given effect to in terms of the judgment passed in the case Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd., . Still then, the point now to be considered in the angle whether by subsequent legislation being SICA, 1985, the gratuity under the Payments of Gratuity Act a special Act, has been saddled with any embargo in terms of Section 22 of SICA, 1985. As already observed by me relying upon the Apex Court judgments that the payments of gratuity is nothing but deferred payments as earned during the life time of service and it is a property in the hands of retired employee and it has been further observed by me relying upon the Apex Court judgments that retirement benefits are nothing but a protection under social security concept in terms of Article 41 of the Constitution of India, which reads thus:
"41. Right to work, to education and to public assistance in certain cases. - The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want."
9. Same is being protected further under the international charters of human rights being universal documents of Human Rights, 1948 under Article 25 Clause (1), which provides "Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond its control", whereby and whereunder social security in the old age has been protected by declaring a right of standard leaving adequate for the health and well-being of himself and his family including food, clothing, housing and medical care. Hence, I am of the view that subsequent legislation under Section 22 of SICA, 1985 has not placed any embargo so far as the release of gratuity money is concerned as the payments of gratuity though payable under a statutory provision being Payments of Gratuity Act, 1972, but its genesis is constitutional provision being Article 21 of the Constitution of India. The constitutional mandates and the human rights concept cannot be made nugatory by any legislation. Hence, the question of effect of subsequent legislation applying "conflicting legislations principle" has no relevancy in the instant case to argue that Section 22 of SICA, 1985, has overriding effect over Payments of Gratuity Act, 1972.
10. Gratuity and retirement benefits are the rights being an emanated fundamental right from Article 21 of the Constitution of India in view of the wide amplitude of the meaning of the word "Life" as envisaged under Article 21 of the Constitution of India. Hence, the constitutional provision and emanated fundamental right whether can be contoured into and/or encroached upon by any legislation is the main guiding question to decide the issue as raised in this writ application. In my view the constitutional provisions and the emanated fundamental rights namely the right to enjoy the retirement benefits at the old age under the social security scheme and social welfare legislation in a democratic state cannot be whittled down and/or negatived by any legislations under the garb of rehabilitation of sick industry. Furthermore, the present issue as raised in the writ application namely measures for rehabilitation of sick industry under SICA, 1985 by applying the Section 22 of the said Act to debar payments of gratuity qua the right of retired employee at their old age to enjoy their retirement benefits, could be looked into in the angle of proportionately doctrine. In one side a question of rehabilitation of sick industry, in another side question of survival of human life after retirement from service, are the two factors, which require to be balanced in the angle of proportionately doctrine. It will be a disproportionate view if it is accepted that the sick industries rehabilitation would suppress or override the survival of human being who has reached the old age after retirement denying his retirement benefits. Human rights concept has already been imbedded in our constitutional provision providing the social duty and obligation of the state to protect the old, aged infirm and sick persons. Human values and human life cannot be under subjugation of rehabilitation programme of a sick industry. The legislation which intended to curtail the human rights concept in terms of the human rights charters as well as the constitutional rights here in the case emanated fundamental rights in terms of Article 21 of the Constitution of India as non-payments of gratuity touches the very survival in life in terms of Article 21 of the Constitution of India, must pass the acid test of proportionality.
11. The Court is now ahs to consider the applicability of the said proportionality doctrine for interpreting Section 22 of the SICA, 1985. Such scope is there to apply this doctrine. Human Right Courts have already applied such provision. Our Apex Court also has considered this issue in the case Union of India and Anr. v. G. Ganayutham, for the purpose of applicability of the said doctrine in respect of any legislation, which affects the fundamental rights. The statute can be struck down if the restriction is imposed by it are disproportionate or excessive having regard to the purpose of the statute and the Court can go into the question whether there is a proper balancing of fundamental right and the restriction imposed. Reliance may be placed to the judgment passed in the case Chintamanrao and Anr. v. The State of Madhya Pradesh, , The State of Madras v. V.G. Row, and Indian Express Newspapers (Bombay) Private Ltd. and Ors. v. Union of India and Ors., . Validity of a statutory provision applying the doctrine of proportionality also has been considered by Courts of Australia and Canada as it appears from paragraph 22 of the report of the case G. Ganayutham (supra), which reads thus:
"McDowell however makes it clear that so far as the validity of a statute is concerned, the same can be judged by applying the principle of proportionality for finding out whether the restrictions imposed by the statute are permissible and within the bounds prescribed by our Constitution. McDowell referred to this exception as follows: (SCC pp. 738-39, para 43] "43. It is one thing to say that a restriction imposed upon a fundamental right can be struck down if it is disproportionate, excessive or unreasonable and quite another thing to say that the Court can strike down enactment if it thinks it unreasonable, unnecessary or unwarranted."
That a statute can be struck down if the restrictions imposed by it are disproportionate or excessive having regard to the purpose of the statute and that the Court can go into the question whether there is a proper balancing of the fundamental right and the restriction imposed, is well settled. [See Chintaman Rao v. State of M.P.; State of Madras v. V.G. Row, Indian Express Newspapers Bombay (P) Ltd. v. Union of India.](The principle of "proportionality" is applied in Australia and Canada also to test the validity of statutes.)"
12. Having regard to such legal position, it appears before this Court that Section 22 of SICA, 1985 it is considered as an embargo to realize the gratuity amount under Payments of Gratuity Act, 1972 upon giving an overriding effect of the said section, then such provision to that extent whereby and whereunder a view would be reflected that it affects the emanated fundamental right under Article 21 of the Constitution of India to receive the retirement benefits after retirement to sustain the retired life, is highly disproportionate to the object sought for and in that angle also the argument of the respondent No. 3 that Section 22 of SICA, 1985 is an embargo for realisation of arrear gratuity amount with interest by recovery proceeding is not legally sustainable.
13. Before parting with the matter, it appears before this Court that the different High Courts has also considered the issue namely whether the Section 22 of SICA, 1985 is an embargo so far as realisation of gratuity amount in the case Swadeshi Cotton Mills v. Asst. Labour Commissioner (Central) & Controlling Authority under Payment of Gratuity Act, Allahabad Ors., reported in 2001 (1) LLJ (Allahabad) 1221 being a judgment passed by learned single Judge of Allahabad High Court, in the case Modistone Ltd. and Ors. v. Deputy Commissioner of Labour, Mumbai and Ors., reported in 1999 (2) LLJ 1043 a judgment passed by learned single Judge of Bombay High Court. Learned single Judge of Allahabad High Court so far as the issue as to whether payments of wages could be resisted applying the embargo of Section 22 of SICA, 1985 considered by holding that payments of wages cannot be resisted in the case of Poysha Industries Co. Ltd. v. Collector, Ghaziabad and Ors., reported in 1998 (79) LR 166. Similar is the view of Bombay High Court passed in the case of N.T.C. (South Maharashtra) Ltd. v. B.N. Jalgaonkar and Ors., reported in 1999 (81) FLR 234. This Court accordingly fortified by those judgments.
14. Having regard to such the question as raised by respondents in the writ application that the recovery proceedings under Bengal Public Demands Recovery Act as initiated for realization of gratuity amount could be resisted by application of Section 22 of SICA, 1985, is answered negatively by holding that Section 22 of SICA, 1985 cannot resist any proceeding for realisation of gratuity amount payability of which is in the domain of emanated fundamental right of retired employee. Writ application accordingly is allowed in terms of prayer (a), (b), (c) and (d). Respondent No. 1 is directed to realise the amount as mentioned in the said prayers along with the interest with effect from the date as allowed by initiating the recovery proceeding and/ or certificate proceeding under the concerned Public Demands Recovery Act within two months from this date and thereby to disburse the amounts in accordance with law in favour of the petitioner. Controlling Authority is directed to take all steps by production of the records etc. to implement the judgment.
21.12.2003 Stay as prayed for on behalf of the respondent No. 3 is refused.
Urgent xerox certified copy of the order, if applied for, be supplied expeditiously.