Gujarat High Court
Lalita Rafel Simon vs Employee State Insurance Scheme on 5 March, 2018
Author: K.M.Thaker
Bench: K.M.Thaker
C/SCA/10282/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 10282 of 2015
LALITA RAFEL SIMON
Versus
EMPLOYEE STATE INSURANCE SCHEME
Appearance:
JWALIT B SONEJI for the PETITIONER(s) No. 1
DS AFF.NOT FILED (N) for the RESPONDENT(s) No. 1,2,3,4
MR DM DEVNANI AGP for the RESPONDENT(s) No. 3,4
NOTICE SERVED BY DS for the RESPONDENT(s) No. 1,2,3,4
CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
Date : 05/03/2018
ORAL ORDER
Heard Mr. Soneji, learned advocate for the petitioner and Mr. Devnani, learned AGP for respondent State.
2. The petitioner is aggrieved by order dated 22.5.2014 passed by controlling authority in Gratuity Case No.74 of 2013 as well as by order dated 13.1.2015 passed in Gratuity Appeal No.137 of 2014 by appellate authority appointed under Payment of Gratuity Act, 1972.
2.1 Feeling aggrieved by said orders, the petitioner has prayed, inter alia, that:-
"10(a) Issue Writ of Certiorari or any other writ, order or direction in like nature quashing and setting aside the Award pass by Controlling Authority (Respondent no.2) dated 25/05/2014, Annexed at Annexure "A" and award passed by Appellant Authority (Respondent no.3) dated 16/01/2015, Annexed at Annexure-"B".
(b) To declare and pass an order stating that the Payment of Gratuity Act, 1972 is applicable to Respondent no.1 Page 1 C/SCA/10282/2015 ORDER Organization in view of judgment passed in SCA/1161/2010.
(c) To pass an order to pay remaining unpaid gratuity amount of Rs.1,01,952 with interest at 18% per annum from the date of retirement or any other rate which the Court feels appropriate.
(d) To pass an order to pay an interest at 18% per annum on delay of 302 days on amount of Rs.4,51,008/- as delay was caused due to fault or Respondent No.1.
(e) To pass an order to pay interest at 18% per annum on delay of 561 days on amount of Rs.15,984 as again the delay was caused due to fault of respondent No.1.
(f) To pass an order directing Respondent No.1 to pay compensation Rs.10,000/- or Lum-Sum compensation to the Petitioner that this Hon'ble Court feels appropriate.
(g) To pass order directing respondent No.1 to pay interest on all the delayed payment made by Respondent No.1 to Petitioner with reference to Annexure "J"."
3. The factual background which has emerged from record as well as from impugned award and from submissions by learned advocates for contesting parties are thus:
3.1 In September 1977, the petitioner came to be appointed as staff nurse by the respondent State.
3.2 The petitioner came to be appointed in a dispensary/hospital run by State as contemplated and provided for by Section 54 of the Employees' State Insurance Act, 1948.
3.3 The said dispensary/ hospital is established under Employees' State Insurance Scheme framed under the Employees' State Insurance Act, 1948 and is run and managed by State.
3.4 It is not disputed even by the respondent Page 2 C/SCA/10282/2015 ORDER State that the employees employed for the purpose of running and managing the said dispensary/hospital under the Employees' State Insurance Scheme framed under ESI Act, 1948, are employees of State.
3.5 In February 2010, the petitioner opted for voluntary retirement.
3.6 It is pertinent to note that the petitioner submitted application for voluntary retirement in accordance with the rules applicable for voluntary retirement prescribed under the Gujarat Civil Service Rules ["GCSR" for short].
3.7 After following the procedure prescribed under said Rules, the petitioner's request was accepted and she was permitted to voluntarily retire from service w.e.f. 28.2.2010.
3.8 Thereafter, the petitioner's case was examined for the purpose of payment of retiral benefits including provident fund, gratuity and pension.
3.9 On this count also, it is relevant to note that even the respondent authority considered the petitioner's case under provisions of GCS (Pension) Rules, 2002 and the benefits towards Page 3 C/SCA/10282/2015 ORDER gratuity and provident fund also came to be determined in accordance with GCSR.
3.10 After examining the case of the petitioner, the competent authority passed pension payment order dated 6/7.6.2013. Under said order, competent authority determined the rate and the amount of pension payable to the petitioner as well as amount payable towards gratuity.
According to pension payment order, the authority quantified Rs.10,810/- towards pension. Said amount was bifurcated in commuted pension and regular pension.
3.11 Undisputedly, the respondents have paid commuted pension to the petitioner.
3.12 Likewise, the petitioner is, undisputedly, receiving regular pension in accordance with and in terms of the pension payment order.
3.13 According to said order, the competent authority quantified amount towards gratuity at Rs.4,51,008/-.
3.14 Accordingly, the amount payable towards gratuity came to be paid to the petitioner on 28.12.2010.
Page 4 C/SCA/10282/2015 ORDER 3.15 Since there was some error in computation of amount towards gratuity, the petitioner was short paid gratuity by Rs.15,984/- which came to be paid to the petitioner on 6.8.2013.
3.16 It is not in dispute that the petitioner has received / accepted retiral benefits without protest.
3.17 After having accepted all retiral benefits including above mentioned benefits, the petitioner raised dispute with regard to benefit towards gratuity.
3.18 On the premise that Payment of Gratuity Act will be applicable to the establishment where she was employed, the petitioner demanded that she should be considered eligible for gratuity under the said Act and that she should be paid gratuity accordingly. On that ground, the petitioner demanded further sum of Rs.1,01,952/-.
3.19 For the said claim, the petitioner, almost 3 years after she voluntarily retired from service, filed gratuity claim application before the controlling authority.
3.20 The said case came to be registered as gratuity claim application No.74 of 2013.
Page 5 C/SCA/10282/2015 ORDER 3.21 The controlling authority examined the case of the claimant and after considering (a) relevant provisions under the Act; and also after having taken into account (b) the fact that the claimant was employee of State Government; and that (c) she was paid all benefits including pension, gratuity, provident fund, etc. in accordance with GCSR; and after taking into account (d) the definition of the term "employee" under the Act, the competent authority reached to the conclusion that the application filed by the claimant was not maintainable because she/the service rendered by her would not come within the purview of the term "employee" under the Act.
3.22 Having reached such conclusion, controlling authority rejected application vide order dated 22.5.2014.
3.23 Feeling aggrieved by said order, the petitioner filed appeal. The appeal was also came to be rejected vide order dated 13.1.2015 passed by appellate authority.
Feeling aggrieved by said two orders, the petitioner has taken out this petition.
4. Learned advocate for the petitioner would contend that provisions of the Payment of Page 6 C/SCA/10282/2015 ORDER Gratuity Act, 1972 ["the Act" for short] would be applicable to the establishment where she was employed and that therefore, gratuity payable to her should have been calculated in accordance with the provisions under the Gratuity Act. Learned counsel would submit that if amount payable towards gratuity is calculated accordingly, the petitioner would be entitled for Rs.5,52,960/- towards gratuity whereas the respondent paid rs.4,51,008/-. Learned advocate for the petitioner submitted that the order passed by controlling authority is incorrect, unjust, unfair and contrary to provisions under the Act. He submitted that even the appellate authority committed error in rejecting appeal and confirming order of controlling authority. He submitted that the petitioner is entitled to relief prayed for in the petition.
5. The petition as well as submissions on behalf of the petitioner are opposed by learned AGP who submitted that the petitioner was employee of State Government and that therefore, her service was governed by provisions under GCSR. Learned AGP further submitted that even the petitioner's application for voluntary retirement was considered, processed and decided in accordance with GCSR and the benefits payable to the petitioner including pension (commuted pension as Page 7 C/SCA/10282/2015 ORDER well as regular pension), gratuity, provident fund, leave encashment, etc. have been paid to the petitioner in accordance with GCSR and that therefore, claim for gratuity in accordance with the Act is unjustified and the controlling authority has not committed any error in rejecting petitioner's application and said decision is confirmed by the appellate authority. The petition against said two concurrent orders does not deserve to be entertained.
6. I have considered rival submissions by learned advocates for the contesting parties. I have also considered material available on record and orders passed by controlling authority as well as appellate authority.
7. The facts, more particularly relevant facts viz. date of joining, date on which the petitioner came to be relieved on voluntary retirement, last drawn salary, total length of service of the petitioner, etc. are not in dispute. The fact that the petitioner sought voluntary retirement and she came to be relieved from service on 28.2.2012 is also not in dispute.
7.1 In light of facts of the case, it is neither relevant nor necessary to enter into the dispute as to whether provisions under the Act would be Page 8 C/SCA/10282/2015 ORDER applicable to the establishment where the petitioner served as staff nurse because even if, only for the sake of considering petitioner's objection against the impugned orders, it is assumed that the provisions under the said Act would be applicable, then also, by virtue of his own submission, the petitioner's case would have to be examined in light of provision under Section 2(e) and Section 2(s) of the Payment of Gratuity Act.
7.2 As mentioned above, it is not in dispute that the petitioner was employed as staff nurse with the dispensary/hospital run and managed by the State for implementation of the scheme framed under ESI Act, 1948.
The petitioner came to be selected and appointed by the State Government as employee of the State Government. The petitioner served, throughout her tenure, as employee of the State Government.
7.3 When the petitioner decided to voluntarily retire from service, she submitted her application under GCSR and sought voluntary retirement.
Her application was considered in accordance with the provision for voluntary retirement under GCSR and order accepting her request and Page 9 C/SCA/10282/2015 ORDER relieving her on voluntary retirement came to be passed under and in accordance with GCSR.
Upon being relieved from service on voluntary retirement, the retiral benefits payable in accordance with GCSR came to be paid to the petitioner which included the benefits towards pension, gratuity, provident fund, etc. The petitioner accepted said benefits without protest and objection.
8. Suddenly after lapse of almost 3 years since her retirement, the claimant filed application before controlling authority.
8.1 The petitioner claimed that the Act would be applicable to the establishment and therefore, she should be paid gratuity in accordance with formula prescribed under the Act.
8.2 Thus, even if it is assumed that the Act would be applicable to the establishment where the petitioner was employed and even if it is further assumed that the petitioner would be eligible for gratuity in accordance with the provisions under the Act, then also, neither the order passed by the controlling authority can be faulted nor it can be said that the claim of the petitioner can be accepted or granted.
Page 10 C/SCA/10282/2015 ORDER 8.3 In the first place, the said application was hit by gross delay inasmuch as it was filed almost 3 years after the expiry of prescribed limitation. The Act prescribes that the claim application should be filed within 30 days from the date when the cause of action arose.
In present case, it is not in dispute that the petitioner came to be relieved from service on superannuation on 28.2.2010. Thus, the cause of action for the petitioner arose on 28.2.2010. However, the respondent paid gratuity to the petitioner in accordance with GCSR on 28.12.2010. Therefore, in any case, the cause of action arose on 28.12.2010. If according to the petitioner, gratuity was short paid then she should have raised claim within 30 days from and after 28.12.2010. Whereas the claimant approached the controlling authority in 2013. The petitioner did not file application seeking condonation of delay. The application filed almost 3 years after cause of action arose and the application which came to be filed without the request/application to seek condonation of delay and which came to be filed even after maximum period of limitation which could have been condoned by the authority (if application seeking condonation of delay had been filed) in accordance with Section 7(7), the said application, even otherwise, could not have been entertained.
Page 11 C/SCA/10282/2015 ORDER When the application was undisputedly filed after expiry of prescribed period of limitation, application was not maintainable and the claim could not have been entertained.
Secondly, the petitioner/the service rendered by the petitioner was governed by GCSR which provide for gratuity and that therefore also, the petitioner / her service would, even otherwise, fall under the exception prescribed under Section 2(e). This is second reason in light of which the application could not have been entertained and the claim could not have been granted by said two authorities.
8.4 Further, to be eligible for gratuity under the Payment of Gratuity Act, 1972, the claimant / applicant should, in the first instance, establish that he/she was an employee of the opponent employer and he/she stands covered within purview of the definition of the term "employee" under Section 2(e) of the said Act.
Said Section 2(e) of the Act reads thus:-
"2(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity;" (emphasis supplied) 8.5 The said provision prescribes that (i) any person who is employed for wages in any kind of Page 12 C/SCA/10282/2015 ORDER work or in connection with work of factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which Act applies, then such person will be considered employee, however, the person who held (during tenure of service) post under Central Government or State Government would not fall within purview of the term "employee" and that (ii) if the said person/the service rendered by such person is governed by any Rules which provide for gratuity then such person would not be covered within the purview of Section 2(e) of the Act.
8.6 Differently put, the persons employed by or under Central Government or State Government and holding a post thereunder and eligible for gratuity under Rules are excluded from the purview of the term "employee".
8.7 In present case, it is not in dispute that the petitioner was not employed in any capacity or in connection with the work of factory, mine, oilfield, plantation, port, railway company, shop or other establishment.
8.8 The petitioner was employed on regular establishment of the State and she held the post of "staff nurse" and she/her service was governed by GCSR. She was employed as permanent employee Page 13 C/SCA/10282/2015 ORDER on regular establishment of the dispensary/ hospital run and managed by State Government for implementation of ESI scheme under the ESI Act.
8.9 The said dispensary/hospital would not fall within purview of expression factory, mine, oilfield, plantation, port, railway company, shop or other establishment.
8.10 It is pertinent to note that the term establishment is not defined under the Act though the Act employs expression "other establishment".
8.11 In light of the facts of present case, more particularly to examine the issue related to applicability of Gratuity Act to the said hospital / dispensary, it is necessary to take into account Sub-section (3) of Section 1 of The Payment of Gratuity Act, 1972 which reads thus:-
(3) It shall apply to--
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf."
According to the said provision the Act applies to every factory, mines, oilfields, plantation, port and railway company. However, the said hospital / dispensary run and maintained Page 14 C/SCA/10282/2015 ORDER by the respondent State Government for implementation of ESI Scheme under ESI Act cannot be termed as and it would not fall within the purview of factory and / or mines and / or oilfields and / or plantation and / or port and / or railway company.
The said hospital / dispensary cannot be termed and would also not fall within the purview of expression 'shop'.
Though the Act employs words "other establishment" the term establishment is not defined under the Act.
Since clause (b) of sub-section (3) of Section 1 prescribes "establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State"
it is necessary to turn to the provision under Bombay Shops and Establishment Act because said Act is law in force in relation to shops and establishments in the State. In this view of the matter it is necessary to take into account the definition of the term 'establishment' under Section 2(8) of the Bombay Shops and Establishment Act, 1948. The said Section 2(8) of the said Act reads thus:-
"2(8) "Establishment" means a shop, commercial establishment, residential hotel, restaurant, eating house, theatre or other place of public amusement, or entertainment to which this Act applies and includes such other establishment as the [State] Government may, by notification in the Official Gazette, declare to be an establishment for the purposes of this Act."
On plain reading of said Section 2(8) it Page 15 C/SCA/10282/2015 ORDER comes out that the shop, commercial establishment, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment are included within the purview of the term "establishment".
The said hospital / dispensary cannot be termed or is not within the purview of expression shop, residential hotel, restaurant, eating house, theatre or place of public amusement or entertainment.
The said Section 2(8) of the Act also provides that the State Government may include such other establishment which it considers necessary and appropriate within the purview of Section 2(8).
However, there is nothing on record to establish that "hospital / dispensary"
established, run and managed by State Government for implementing ESI Scheme under ESI Act have been notified by the State Government. Thus, there is nothing on record to demonstrate that the concerned dispensary / hospital would stand included within the purview of Section 2(8) of said the Act.
This leaves behind the term "commercial establishment". The said expression is defined under Section 2(4) of the said Act which reads thus:-
"2(4) "Commercial Establishment" means an establishment which carries on any business, trade or profession or any work in connection with, or incidental or ancillary to, any business, trade or profession and Page 16 C/SCA/10282/2015 ORDER includes a society registered under the Societies Registration Act, 1860 (XXI or 1860) and a charitable or other trust, whether registered or not, which caries on, [whether for purposes of gain or not] any business, trade or profession or work in connection with or incidental or ancillary thereto but does not include a factory, shop, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment."
On plain reading of the said Section 2(4) it also becomes clear that the said dispensary / hospital would not fall within the purview of the term "commercial establishment" and consequently the said dispensary would not fall within the purview of Section 2(4) of the Act and that therefore it would not fall within the purview of clause (b) of Section 1(3) of Gratuity Act.
According to clause (c) of sub-section (3) of Section 1 the act also applies to "such other establishments or class of establishment in which ten or more employees are employed...... as the Central Government may, by notification, specify in this behalf"
As mentioned above, there is nothing on record to establish that the State Government has specified the hospital / dispensary established, run and maintained for implementation of ESI Scheme under ESI Act, as "other establishment"
for purpose of Gratuity Act [i.e. under Section 1 (3)(c) of Gratuity Act].
In this view of the matter, the said dispensary / hospital cannot be considered an "establishment" under Section 1(3) of Gratuity Act and that therefore the Gratuity Act would not be applicable.
Page 17 C/SCA/10282/2015 ORDER Despite such fact and in above mentioned factual background even if it is assumed that the said hospital / dispensary would fall within the purview of expression "other establishment" and consequently, the petitioner can be termed employee under and for the purpose of Gratuity Act and even if it is assumed that the Gratuity Act would be applicable to the said hospital / dispensary that the dispensary/hospital would fall within purview of expression "other establishment" and therefore, the Act would be applicable even to the dispensary/hospital established for implementation of ESI Scheme, then also, it was necessary for the petitioner to establish that she does not stand excluded from the definition of the term "employee" in light of the exclusion which excludes persons employed by or under the State Government or Central Government and who hold post under Central Government or State Government and are governed by Rules which provide for gratuity.
Considering said aspect, the controlling authority took into account the fact that (i) the petitioner was appointed by the State Government and (ii) she was employed as staff nurse by and under the State Government and that (iii) she was employed as permanent employee on regular establishment of the hospital/dispensary; and that (iv) she held post "staff nurse" as Page 18 C/SCA/10282/2015 ORDER permanent employee on regular establishment under the State Government, consequently, she stood excluded from the term "employee", under the Act being an employee of the State Government.
8.12 It is not the case of the petitioner that she was not an employee of the State Government and she was not employed by the State Government.
8.13 This is fourth reason in light of which the order passed by controlling authority does not warrant interference.
9. There is one more reason in light of which the petitioner's claim is even otherwise misconceived.
It is necessary to take into account the fact that to support her allegation that the respondent short paid gratuity, the petitioner based her claim by taking into account Rs.29,946/- as her salary (last drawn wages). While taking into account the said amount of Rs.29,946/- the petitioner included below mentioned heads:-
Calculation of Gratuity as per the applicable provision and settled law.
Pay Band / Basic 17160.00
Grade Pay 04400.00
DA 07546.00
Vehicle or transport allowance 00200.00
E.S.I. Allowance 00015.00
Washing Allowance 00075.00
Nursing Allowance 00150.00
Uniform Allowance 00250.00
Special Pay 00150.00
Total 29946.00
Page 19
C/SCA/10282/2015 ORDER
9.1 In this context, it is relevant to take into account provision under Section 2(s) of the Act which reads thus:-
"2(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 employments 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."
9.2 According to said definition, any amount paid to the employee towards bonus, commission, house rent allowance, overtime wages and "any other allowance" has to be excluded.
Despite this fact the petitioner included vehicle/transport allowance Rs.200/-, E.S.I. Allowance Rs.15/- Washing Allowance Rs.75/-, Nursing Allowance Rs.150/- and Uniform Allowance Rs.250/-.
Thus, almost Rs.690/- would stand excluded from the salary which the petitioner mentioned as her last drawn salary.
9.3 According to the respondent the petitioner's last drawn salary is as mentioned below:-
16680 + 4200 (pay band) + 7308 (DA) = 28188 X 16 years = 4,51,008/-
9.4 As against the said amount, the petitioner is paid Rs.4,66,992/- as gratuity.
9.5 The said factual background also brings out that the petitioner's allegation that amount payable towards gratuity in accordance with the Page 20 C/SCA/10282/2015 ORDER Act is not paid to her is misconceived. The petitioner's claim for gratuity under the Act is also not maintainable in view of the fact that the petitioner accepted all benefits paid to her in accordance with the provision under GCSR, without protest and for almost 3 years the petitioner never raised any protest or objection against the payment of any benefit including gratuity. Thus, in view of the fact that the petitioner accepted all benefits without protest and also for the reason that she raised claim after delay of 3 years neither claim of the petitioner can be entertained nor order of controlling authority can be faulted.
10. However, petitioner's claim for interest on account of delay in payment of gratuity cannot be brushed aside.
It is not in dispute that the petitioner came to be relieved on voluntary retirement in February 2010.
Whereas the respondent paid Rs.4,51,008/- towards gratuity on 28.12.2010.
Thus, petitioner will be entitled to interest at the rate prescribed under the Act for the period from 28.2.2010 to 28.12.2010 in respect of Rs.4,51,008/-.
The balance amount of Rs.15,984/- came to be paid in August 2013.
Page 21 C/SCA/10282/2015 ORDER Therefore, the petitioner will be entitled to interest at the rate prescribed under the Act, for the period from 28.2.2010 to August 2013 in respect of said amount of Rs.15,984/-.
To that extent petitioner's demand and claim are justified and deserves to be granted. Consequently following order is passed:-
[a] The petition challenging decision of controlling authority and the order passed by the appellate authority confirming the order of controlling authority is not accepted. The petition, to that extent, is rejected.
[b] As mentioned above, even if it is assumed that the Payment of Gratuity Act 1972 would be applicable to the establishment where the petitioner was employed, then also, for the reasons mentioned above, the petitioner would not be eligible to maintain the application which she filed in 2013 i.e. the application No.74 of 2013.
[c] However, so far as petitioner's claim for interest is concerned, the said claim is justified and deserves to be granted. Consequently, while rejecting the petition, part of claim towards interest is accepted and the respondent is directed to compute interest as mentioned above and to pay amount payable towards Page 22 C/SCA/10282/2015 ORDER interest to the petitioner as expeditiously as possible and preferably within 4 weeks.
For any delay in payment beyond the period of 4 weeks, the petitioner will be entitled for further interest at the same rate until the date of actual payment.
With the aforesaid clarifications the petition is disposed of.
((K.M.Thaker, J.) KDC/Suresh* Page 23