Gujarat High Court
Bhavnagar Municipal Corporation vs Navalbhai Chandrashanker Maheta & 3 on 31 August, 2016
Author: C.L.Soni
Bench: C.L. Soni
C/SCA/13711/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 13711 of 2014
TO
SPECIAL CIVIL APPLICATION NO. 13717 of 2014
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BHAVNAGAR MUNICIPAL CORPORATION....Petitioner(s)
Versus
NAVALBHAI CHANDRASHANKER MAHETA & 3....Respondent(s)
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Appearance:
MR NIKUNT K RAVAL, ADVOCATE for the Petitioner(s) No. 1
GOVERNMENT PLEADER for the Respondent(s) No. 2 - 4
MR RAJESH MANKAD, ADVOCATE for Respondent No.1
NOTICE SERVED for the Respondent(s) No. 1 - 4
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CORAM: HONOURABLE MR.JUSTICE C.L. SONI
Date : 31/08/2016
COMMON ORAL ORDER
1. All these petitions are filed under Articles 226 and 227 of Constitution of India by Bhavnagar Municipal Corporation against the common order dated 4.6.2014 made by the Appellate Authority under Payment of Gratuity Act, 1972 ('the Act') in different appeals preferred by the petitioner Corporation against the orders made by the Controlling Authority for payment of gratuity to respondent No.1 of each petition.
2. It appears that respondent No.1 of each petition preferred individual applications before the Controlling Authority, stating that the gratuity paid to them was less than what was available under the Act and therefore, claimed difference of gratuity amount in the applications. The Controlling Authority, by separate orders dated 5.3.2007, ordered the petitioner to pay difference of gratuity amount Page 1 of 11 HC-NIC Page 1 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER and also to pay interest at the rate of 10% on the delayed payment of gratuity from 17.4.2006- the date of the application made by respondent No.1 before the Controlling Authority. Such orders were challenged by the petitioner before the Appellate Authority after expiry of the period of limitation provided under the Act. The Appellate Authority had therefore, rejected the appeals vide order dated 23.3.2011 on the ground that the appeals were time barred. It appears that such orders of the Appellate Authority were challenged before this Court by the petitioner and this Court remanded the matters to the Appellate Authority to decide the same on merits. It was thereafter, the Appellate Authority has decided all the appeals by impugned order.
3. Learned advocate Mr. Raval for the petitioner submitted that once respondent No.1 opted for pension scheme wherein provision of gratuity was made, they were not entitled to claim gratuity before the Controlling Authority under the Act. Mr. Raval submitted that the old pension scheme was replaced by new scheme and payment of gratuity under the new scheme was more beneficial to the respondent No.1 and therefore, the Controlling Authority was not justified in entertaining the applications under the Act. Mr. Raval submitted that the Government granted exemption to the petitioner Corporation from the operation of provisions of the Act with retrospective effect from 1992- the year wherein pension scheme was brought into force and in view of such retrospective exemption granted by the Government, respondent No.1 were not entitled to claim gratuity under the Act from the petitioner. Mr. Raval submitted that neither respondent No.1 nor any other employee had challenged the notification issued by the State Government granting exemption to the petitioner. Mr. Raval submitted that once the exemption granted by the State Government stands, no employee can claim gratuity under the Act and therefore, the impugned order is without Page 2 of 11 HC-NIC Page 2 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER jurisdiction. Mr. Raval submitted that in any case, gratuity available to respondent No.1 under the pension scheme was on better terms than available under the Act and therefore, the State Government had granted exemption and considering such exemption granted by the State Government, respondent No.1 was entitled to gratuity only as per the provisions made in the pension scheme.
4. Learned advocate Mr. Mankad appearing in Special Civil Application Nos.13712 of 2014 to 13717 of 2014 for respondent No.1 submitted that even though pension scheme provided for gratuity to the employees of the petitioner Corporation, same would not operate as bar to the employees of the Corporation to claim gratuity under the Act, if the employee is entitled to have more gratuity amount under the Act. Mr. Mankad submitted that undisputably, as observed by the Controlling Authority, the respondent No.1 got less amount of gratuity than what was available under the Act and therefore, the Controlling Authority was justified to entertain the applications made by respondent No.1 under the Act. Mr. Mankad submitted that when respondent No.1 retired from service, there was no exemption in force. He further submitted that even when the applications were made by respondent No.1 before the Controlling Authority and when the Controlling Authority passed order for payment of gratuity, there was no notification issued by the State Government granting exemption to the petitioner Corporation. He submitted that it was only after the Controlling Authority passed order for payment of gratuity, the petitioner Corporation approached the State Government claiming exemption from the provisions of the Act and thereafter, the State Government issued notification. Mr. Mankad submitted that in such facts situation, it cannot be said that exemption would apply to the case of the respondent No.1. Mr. Mankad submitted that even otherwise learned Single Judge of this Court has held in the petitions preferred by the petitioner Corporation Page 3 of 11 HC-NIC Page 3 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER that exemption granted by notification of the State Government could not operate retrospectively and the decision on such aspect of the matter had not been disturbed by Hon'ble Division Bench in Letters Patent Appeals preferred by the Corporation. Mr. Mankad submitted that the pension scheme providing for gratuity is not at all beneficial to the respondent No.1 and it is absolute right of the employee to decide whether the terms for gratuity provided in the pension scheme are better or whether gratuity available under the Act is better. Mr. Mankad submitted that in any case, the Controlling Authority has found that the gratuity paid to respondent No.1 was less than what was available to respondent No.1 under the Act and such order of the Controlling Authority has rightly been confirmed by the Appellate Authority, and therefore, this Court may not interfere with the impugned orders made by the Appellate Authority.
Nobody has appeared for respondent No.1 in the first matter.
5. Having heard learned advocates for both the sides, it appears that the orders of the Controlling Authority were challenged before the Appellate Authority mainly on the ground that the Government granted exemption to the petitioner Corporation vide its notification dated 12.5.2008 from the operation of provisions of the Act retrospectively with effect from 1.4.1992 and therefore, respondent No.1 were not entitled to claim gratuity under the Act. It appears that initially, when the Appellate Authority had rejected the appeals on the ground of delay, the petitioner Corporation had approached this Court by filing different petitions, being Special Civil Application No.8771 of 2011 and allied matters, wherein contention was raised that on account of exemption granted by the State Government, the respondent No.1 could not be made entitled to claim gratuity under the Act. Dealing with such contention, learned Single Judge has observed in para 10 of his order dated 21.7.2011 as under:-
Page 4 of 11HC-NIC Page 4 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER
10. Be that as it may. Notification dated 12.05.2008 cannot be allowed to operate retrospectively and respondents - Workmen cannot be deprived of the benefits flowing from non obtaining exemption certificate from the State Government.
This order of learned Single Judge was then challenged by filing Letters Patent Appeal No.2026 of 2011 and allied appeals by the petitioner Corporation. It appears from the order made by Hon'ble Division Bench that what was held by learned Single Judge in para 10 of his judgment is not disturbed, however the Appellate Authority was directed to hear the appeals on merits. Para 9 of the order dated 25.2.2014 made by Division Bench reads as under:-
"9. In the premises aforesaid, the delay caused in filing the appeal before the appellate court is hereby condoned. The appellate court shall hear the appeal on merits at the earliest and pass order accordingly preferably within a period of ninety days from the date of receipt of the writ of the order of this Court. The amount shall be invested by the appellants in a fixed deposit as directed hereinabove and interest thereon shall be paid to the respondents employees quarterly till the final adjudication of the matter between the parties. In case of appeal being filed against the order of the appellate authority before this Court, the aforesaid interim arrangement shall continue till the final adjudication of the matter before this Court. In case no appeal is filed by either side within the period of limitation, the party which succeeds shall be entitled to the amount in question after expiry of the period of limitation. We have not entered into the merits of the case and considered only the point of delay in these appeals and therefore the appellate authority may not be influenced by the remand order passed by this Court. Accordingly, these appeals are allowed."
6. Learned advocate Mr. Raval however, submitted that once the order made by the Appellate Authority were quashed and the matters were remitted to the Appellate Authority for hearing the appeals on merits, the order made by learned Single Judge would stand quashed and no reliance could be placed on the order of learned Single Judge as regards exemption notification dated 12.5.2008. He submitted that the Appellate Authority in the impugned orders mainly relied on the order made by learned Single Judge holding that the notification dated 12.5.2008 granting exemption to the petitioner Corporation Page 5 of 11 HC-NIC Page 5 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER cannot operate retrospectively. He submitted that when the order of learned Single Judge on such aspect did not survive, the impugned orders made by Appellate Authority will be required to be quashed and set aside. The Court however finds that irrespective of the observations made by learned Single Judge in the order dated 21.7.2011 in Special Civil Application No.8771 of 2011, in the facts of the case, the respondent No.1 could not be deprived of the gratuity amount under the Act relying on the notification dated 12.5.2008 of the State Government. It is not in dispute that much before the notification was issued by the State Government granting exemption, respondent No.1 had retired from service. Respondent No.1 in Special Civil Application No.13711 of 2014 had retired on 28.2.2003, respondent No.1 in Special Civil Application No.13712 of 2014 had retired on 31.10.1994, respondent No.1 in Special Civil Application No.13713 of 2014 had retired on 30.11.1996, respondent No.1 in Special Civil Application No.13714 of 2014 had retired on 31.3.1996, respondent No.1 in Special Civil Application No.13715 of 2014 had retired on 3.6.1998, respondent No.1 in Special Civil Application No.13716 of 2014 had retired on 8.5.2000 and respondent No.1 in Special Civil Application No.13717 of 2014 had retired on 31.7.1993. Not only this but when respondent No.1 made applications in the year 2006, claiming gratuity under the Act, and even when Controlling Authority passed order in 2007, there was no exemption granted by the State Government to the petitioner from application of the Act. Undisputably, it was only after the Controlling Authority passed order, the petitioner Corporation made application claiming exemption. It appears that only after the order dated 12.5.2008 issued by the State Government, stated to be the Notification for exemption, the petitioner Corporation decided to prefer appeals, that too after a period of two years, which, as stated above, were initially rejected on the ground of delay and then decided on merits. From the order Page 6 of 11 HC-NIC Page 6 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER granting exemption, it appears that exemption is granted in respect of those employees who joined the pension scheme, which was made to be effective from 1.4.1992. The order granting exemption reads that those employees, for whom the pension scheme became implemented from 1.4.1992, shall not be required to be paid gratuity under the Act and they would be exempted under Section 5 of the Act with effect from 1.4.1992. Such order could not be made applicable to the respondent No.1 to dis-entitle them to claim gratuity under the Act as they had already retired from service long back before the order for exemption came to be passed. When respondent No.1 had retired from service, right to receive gratuity under the Act had already accrued to them and such accrued right could not be taken away by issuance of subsequent order purporting to be the exemption under Section 5 of the Act. Even when for such accrued right, the Controlling Authority passed order in favour of respondent No.1 for payment of gratuity, no exemption was in force. In such view of the matter, the Court finds that the Appellate Authority has not committed any error in holding that the exemption order passed by the Government cannot be applied to the case of respondent No.1. Learned advocate Mr. Raval however submitted that when new pension scheme providing for more benefits of gratuity was brought into force, the respondent No.1 was not entitled to claim gratuity under the Act. He submitted that respondent No.1 having accepted the gratuity under the pension scheme, could not be granted any more benefits under the Act. It is required to note that the petitioner has not placed the scheme on record. Apart from it, contention of Mr. Raval cannot be accepted in view of the provisions of Section 14 of the Act. Section 14 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 Page 7 of 11 HC-NIC Page 7 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER 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."
7. Section 14 of the Act gives overriding effect to the provisions of the Act over anything inconsistent contained in any enactment other than the Act, or any instrument or contract. Therefore, even if there is provision made in the pension scheme for payment of gratuity to the employees of the petitioner Corporation, if the employee finds that it is not beneficial compared to the provision made in the Act, the employee concerned shall be entitled to claim gratuity under the Act.
8. In the case of Y.K. Singla Vs. Punjab National Bank and others reported in (2013) 3 SCC 472, Hon'ble Supreme Court has held and observed in para 15, 16, 19, 22, 23 and 24 as under:-
15. Insofar as the issue in hand is concerned, reference needs to be made to certain provisions of the Payment of Gratuity Act, 1972 (hereinafter referred to as, the Gratuity Act). In our considered view, Sections 4, 7 and 14 of the Gratuity Act are relevant.
16. Sub-Section (5) of section 4 of the Gratuity Act permits an employee to be regulated for purpose of gratuity, under an alternative provision/arrangement (award or agreement or contract), other than the Gratuity Act. In such an eventuality, sub-section (5) aforesaid, assures the concerned employee, "...
to receive better terms of gratuity under any award or agreement or contract with the employer..." Since the appellant's claim for gratuity is regulated, under the 1995, Regulations, it is evident, that his claim for gratuity is liable to be determined by ensuring his right to better terms than those contemplated under the Gratuity Act. In the instant process of consideration, the aforesaid conclusion, namely, that an employee who receives gratuity under a provision, other than the Gratuity Act, would be entitled to better terms of gratuity, will constitute one of the foundational basis, of determination. Having examined section 4 of the Gratuity Act, we may unhesitatingly record, that none of the other subsections of section 4 of the Gratuity Act, as well as, the other provisions of the Gratuity Act, have the effect of negating the conclusion drawn hereinabove.
19. Insofar as the present controversy is concerned, the appellant was accused of having entered into a conspiracy with a bank employee superior to him, so as to extend unauthorized benefits to a member of the Indian Administrative Services belonging to the Haryana Cadre. Based on the aforesaid alleged fault of the Page 8 of 11 HC-NIC Page 8 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER appellant, the PNB, by an order dated 13.5.2000, informed the appellant, that the release of certain retiral benefits including gratuity was being withheld, because of pending of criminal proceedings against him. The appellant was also informed, through the aforesaid communication, that release of his retiral benefits including gratuity, would depend on the outcome of the pending criminal proceedings. It is, therefore apparent, that the second ingredient expressed in the proviso under sub-Section (3A) of Section 7 of the Gratuity Act was clearly satisfied, when the competent authority approved the action of withholding the appellant's gratuity. The instant conclusion is inevitable, because it is not the case of the appellant, that the communication dated 13.5.2000, by which his gratuity was withheld, had not been issued at the instance of the concerned controlling authority. The only question which, therefore, arises for consideration is, whether the first ingredient (culled out above) for the applicability, of the proviso under sub-Section (3A) of Section 7 of the Gratuity Act, can be stated to have been satisfied, in the facts and circumstances of the instant case. If it can be concluded, that the aforesaid ingredient is also satisfied, the appellant would have no right to claim interest, despite delayed release of gratuity.
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) 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, vis-a-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 Page 9 of 11 HC-NIC Page 9 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER 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 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.
9. Learned advocate Mr. Raval has relied on the decisions of this Court in the case of Vadodara Mahanagarpalika Naukar Mandal Vs. State of Gujarat, reported in 2008(2) GLR 1163 and in the case of Vadodara Mahanagarpalika Naukar Mandal Vs. State of Gujarat, reported in 2015 JX (Guj) 65. The Court having considered the judgments finds that they cannot have any application to the facts of the case.
10. In light of the above and for the reasons stated above, the Page 10 of 11 HC-NIC Page 10 of 11 Created On Sat Sep 03 01:58:41 IST 2016 C/SCA/13711/2014 ORDER Court finds that no interference is required in the impugned orders made by the Appellate Authority and the prayer to hold that the notification dated 12.5.2008 issued by the Government exempting the petitioner from the provision of payment of gratuity to respondent No.1 under the Act with effect from 1.4.1992 cannot be granted. The petitions are therefore, rejected. Notice is discharged in each petition.
11. It is pointed out that the petitioner Corporation had deposited the amount of gratuity payable to respondent No.1 with lower authorities. Now, since the matters are disposed of, the concerned lower authorities shall disburse the amount of gratuity to respondent No.1 of each of the petitions as ordered by the Controlling Authority.
12. At this stage, learned advocate for the petitioner requests to stay and suspend the present order. In the facts of the case, the request is rejected.
Sd/-
(C.L.SONI, J.) Omkar Page 11 of 11 HC-NIC Page 11 of 11 Created On Sat Sep 03 01:58:41 IST 2016