Gujarat High Court
Bhuj Municipality vs Munja Veja Sadiya & 2 on 31 August, 2016
Author: C.L.Soni
Bench: C.L. Soni
C/SCA/13614/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 13614 of 2016
TO
SPECIAL CIVIL APPLICATION NO. 13622 of 2016
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BHUJ MUNICIPALITY....Petitioner(s)
Versus
MUNJA VEJA SADIYA & 2....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 petition filed under Article 226 of the Constitution of India, the petitioner Bhuj Municipality has challenged the common order dated 30/1/2015 passed by the Controlling Authority respondent no.2 in different applications preferred by the respondent no.1 of each petition under the Payment of Gratuity Act, 1972 ('the Act'), as also the common order dated 26/11/2015 passed by the Appellate Authorityrespondent no.3 in different appeals preferred by the petitioner under the Act. [2] By filing the individual applications, the Page 1 of 14 HC-NIC Page 1 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER respondent no.1 claimed gratuity with interest before the Controlling Authority under the Act. The applications were opposed mainly on the grounds that the Gujarat Civil Services Rules, ('the GCSR') are applicable to the respondent no.1 and since the petitioner has implemented 5th Pay Commission sanctioned by the Government, the respondent no.1 has been paid the gratuity within maximum limit of Rs. 3 lac as per the Rules and that since the maximum limit of Rs. 10 lac under the Act is not applicable to the petitionerMunicipality, the respondent no.1 is not entitled to difference of gratuity within the maximum limit of Rs. 10 lac.
[3] The Controlling Authority, however found that the petitioner is an establishment covered under the Act, and the respondent no.1 retired from service after the amendment of 2010 providing for maximum payment of gratuity of Rs. 10 lac was brought into force. The Controlling Authority also considered that by virtue of overriding effect of Section 14 of the Act and as per Section 4(5) of the Act providing for better terms of gratuity, the respondent no.1 was Page 2 of 14 HC-NIC Page 2 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER entitled to difference of gratuity within maximum limit of Rs. 10 lac and thus, passed order for payment of difference of gratuity amount with interest @ rate of 10 %.
[4] The petitioner preferred different appeals before the Appellate Authority under the Act, against the order of the Controlling Authority. The Appellate Authority held that when the respondent no. 1 is getting better terms of gratuity, they cannot insist for payment of interest. The Appellate Authority, therefore, partly allowed the appeals of the petitioner and confirmed the order of Controlling Authority for payment of difference of gratuity to the respondent no.1 within the maximum limit of Rs. 10 lac.
[5] Learned advocate Mr. Mankad appearing for the petitioner submitted that there was 2(p) settlement under the Industrial Disputes Act, 1947 ('the I.D. Act') between the Municipality and its employees based on the Bhuj Municipality Rules as sanctioned by the Government in the year 1956 for Page 3 of 14 HC-NIC Page 3 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER payment of gratuity and since the claim of respondent no.1 is under the settlement, the only remedy available to the respondent no.1 is to approach the appropriate forum by filing application under Section 33C(2) of the I.D. Act, and therefore, the respondent no.1 could not have filed the application under the Act before the Controlling Authority, and the Controlling Authority has no jurisdiction to entertain the application of the respondent no.1. Mr. Mankad submitted that the application is maintainable before the Controlling Authority only if there is a dispute under the Act but since the claim is based on the settlement, the Controlling Authority has no jurisdiction to pass the order for payment of gratuity to the respondent no.1. Mr. Mankad submitted that in any case GCSR, Rules of the Government apply to the employees of the Municipality and since the benefits of 5th Pay Commission as sanctioned by the State Government are given to the employees of the petitionerMunicipality, gratuity available to the employees is within the maximum limit of Rs. 3 lac as fixed in the said Rules. The respondent No. 1 thus could not be made entitled to the gratuity beyond the Page 4 of 14 HC-NIC Page 4 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER limit of Rs. 3 lac.
[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 Page 5 of 14 HC-NIC Page 5 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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, 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 Page 6 of 14 HC-NIC Page 6 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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 Page 7 of 14 HC-NIC Page 7 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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 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 Page 8 of 14 HC-NIC Page 8 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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 Page 9 of 14 HC-NIC Page 9 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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) 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 Page 10 of 14 HC-NIC Page 10 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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 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 Page 11 of 14 HC-NIC Page 11 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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 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. Page 12 of 14 HC-NIC Page 12 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER 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 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 petitionerMunicipality and its employees exempted the petitioner from the operation of the provisions of the Act.
[11] In above such view of the matter, there is no escape from the conclusion that the respondent no.1 were entitled to claim difference of gratuity under the Act and the authorities below have rightly Page 13 of 14 HC-NIC Page 13 of 14 Created On Mon Oct 02 05:46:10 IST 2017 C/SCA/13614/2016 ORDER entertained the applications of the respondent No. 1 and committed no error in giving benefit of the gratuity under the Act. The Court, therefore, finds that no interference is required in the impugned orders in exercise of powers under Article 226 of the Constitution of India. The petitions are therefore rejected.
(C.L.SONI, J.) MANOJ KUMAR Page 14 of 14 HC-NIC Page 14 of 14 Created On Mon Oct 02 05:46:10 IST 2017