Appeal No 944 of 1966
Appeal by special leave from the judgment and order dated March 30 1 965 of the Bombay High Court in Special Civil Application No 5 of 1964
MC Chagla and 1
N Shrog for the appellant
Ganpat Rai and R Mahalingier for respondent No 1
The judgment of the Court was delivered by Dua J
Pundalikrao Laxmanrao Suryawanshi plaintiff respondent No 1 in this Court instituted arbitration proceedings in the Court of the Registrar s Nominee against the Jalgaon District Central Co operative Bank Ltd Jalgaon appellant in this Court for the recovery of a sum of Rs 7605 as the balance of gratuity with interest at 6 per cent due from 18 8 1962
The claim having been resisted the same was disallowed on May 16 1963
An appeal presented to the Maharashtra State Co operative Tribunal under section 97 of the Maharashtra Co operative Societies Act against the award of the Registrar s Nominee was dismissed and the said award was confirmed
The Bombay High Court was thereupon approached by respondent No 1 under Article 227 of the Constitution and the High Court allowing the application on July 17 1965 set aside the orders made by the Co operative Tribunal and by the Registrars Nominee and directed the appellant Bank to pay to respondent No 1 Rs 7605 together with interest at 4 per cent per annum from June 19 1963 up to date The present appeal by special leave is directed against the order of the Bombay High Court
Shri MC Chagla the learned counsel for the appellant concentrated his challenge to the impugned order on the ground that on July 19 1962 when respondent No 1 retired from service of the appellant Bank there were no valid rules in force entitling him to the amount of gratuity claimed by him
It was not disputed before us that respondent No 1 had retired on July  19 1962 after 32 years of service
On retirement he was paid a sum of Rs 5070 by way of gratuity but his claim in the present proceedings is for a further sum of Rs 7605 
194 Gratuity Fund Rules were sanctioned by the Board of Directors of the appellant Bank on August 17 1957
They were framed under the Bank s bye laws
These rules thereafter called old rules were forwarded to the Registrar of Co operative Societies for approval and they were approved with some modifications except Rules 6 10 and 15 which were kept under consideration
The principal argument pressed before us by Shri Chagla was that Rules 6 and to having not been approved by the Registrar all the old rules must be deemed to have remained inoperative because these two rules form the real substratum of the scheme embodied in those rules Without these two rules the remaining rules according to the argument cannot effectively operate
We are unable to accept this submission
It would be useful at this stage to reproduce old Rules 67 91015 and 16 which alone are suggested on behalf of the appellant to be relevant
These Rules shall be deemed to have come into force ie in respect of an employee retiring resigning andor having terminated his services from the 1st July 1953
Every employee who has completed at least five years service shall be granted gratuity at the rate specified herein
In case of retirement resignation or termination of services gratuity shall be granted a After five years but before completion of 10 years services  half month s salary for each completed year of service
b After 10 years but before completion of 16 years service  three fourth of a month s salary for each completed year of service
c After 15 years service three fourth of a month s salary for each completed year of service subject to the minimum of fifteen salaries
Payment of the claims on account of the Gratuity payable under these Rules shall be made within one month from the retirement resignation death or the termination of service
The Bank shall contribute on 30th June very year or as soon as possible thereafter but not later 195 than 30th September of the year an amount not less than the amount contributed by the Bank as contribution to the Provident Fund
11 to 14
The provisions under sec
41 of the Bombay Co operative Societies Act Bombay Act V11 of 1925 as amended upto date shall be applicable to the administration of the Gratuity Fund  created under these Rules
The Board of Directors shall have
powers subject to the approval of the Registrar Co operative Societies Bombay State Poona to alter add to or repeal these rules from time to time provided however that no such alteration addition or repeal shall have any retrospective effect against the interest of the employee in the employment of the Bank on that date
 According to the appellant s learned counsel the Registrar having withheld approval of Rule 6 the last sentence of which provides that every employee who has completed at least 5 years  service shall be granted gratuity at the rate specified in the rules there is no rule which imposes an obligation on the appellant Bank to pay gratuity
This argument in our opinion ignores the express language of Rule 7 which in unequivocal terms requires gratuity to be granted in case of retirement resignation or termination of service according to the rate specified therein
Clause a of this rule contains a provision similar in effect to what the last sentence of Rule 6 directs
Rule 9 also imposes an imperative obligation for the payment of gratuity under these rules within one month from the retirement resignation death or termination of service of the employee concerned
Rule 10 which provides for contribution of the Bank towards the Gratuity Fund was no doubt also kept under consideration and not approved by the Joint Registrar but this too in our view does not render the remaining rules ineffective nor does this fact by itself absolve the Bank of the obligation imposed on it by Rules 7 8 and 9
The contention that without there being a Gratuity Fund the Bank cannot lawfully pay gratuity assumes that the Bank hag no other resources out of which its liabilities under the Rules in question can be discharged an assumption which is not easy to upheld
Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar then this obligation in our opinion cannot be rendered nugatory merely because there is no separate Gratuity Fund
Rule 15 which provides for the applicability of section 41 of the Bombay Co operative Societies Act VII of 1925 to the administration of 196 the Gratuity Fund created under the rules in question does not touch the question of the enforcement of these rules and indeed even on behalf of the appellant no attempt has been made to rely on Rule 15 for this purpose
The appellant s counsel next relied on the new rules which were approved by the Joint Registrar of Co operative Societies and were made retrospective in their operation so
as to be enforceable with effect from July 1 1953
It was however conceded by Shri Chagla and in our opinion rightly that the new rules could not detract from or prejudicially affect the vested rights created under the old rules
Indeed old Rule 16 it may be recalled prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees
The submission that the old rules have neither been repealed nor altered as contemplated by Rule 16 and that the Registrar has merely withdrawn his approval to the old rules and enforced the new ones does not advance the appellant s case
The effect of old rule 16 in our opinion cannot be negatived by describing the process as mere withdrawal of the approval of the old rules and enforcement of the new ones for in real substance the process seems to us to be covered by Rule 16
The appeal accordingly fails with no order as to costs
GC Appeal dismissed


Summary:
Respondent No 1 retired from the service of the appellant bank on July 19 19 62 after 32 years of service
Under the Bank s bye laws Gratuity Fund Rules were sanctioned by the Board of Directors on August 17 1957
These rules were forwarded to the Registrar of Cooperative Societies for approval and they were approved with some modification except Rules 6 10 and 15
On his retirement Respondent No 1 was paid a sum of Rs 5070 as gratuity
He instituted arbitration proceedings in the Court of the Registrar s Nominee for a further sum of Rs 7605as balance of gratuity payable to him with interest at 6 per cent
The claim was disallowed and an appeal before the Maharashtra State Cooperative Tribunal also failed
The High Court however in a petition under article 227 of the Constitution allowed the respondent s claim
The Bank appealed to this Court
It was urged on behalf of the appellant i that Rule 6 the last sentence of which provides for the grant of gratuity and RuIe 10 which provides for contributions by the Bank to the Gratuity Fund not having been approved by the Registrar there remained no basis for the claim of gratuity by respondent No 1 ii that the old rules had neither been repealed nor altered and the effect of retrospective operation of the new rules was that the Registrar had withdrawn his approval to the old rules and enforced the new ones
HELD i The argument that r 6 not having been approved there was no rule under Which the obligation to pay gratuity arose ignored the express language of r 7 which in unequivocal terms requires gratuity to be granted in case of retirement
resignation or termination of services according to the rate specified therein
Clause a of this rule contains a provision similar in effect to what the last sentence of r 6 directs
Rule 9 also imposes an imperative obligation for the payment of gratuity under these rules within one month from the retirement
resignation death or termination of service of the employee concerned
195 D F ii The non approval of r 10 by the Registrar also could not make the other rules ineffective and could not absolve the Bank of the obligation imposed on it by rr 7 8 and 9
Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar then this obligation cannot be rendered nugatory merely because there is no separate Gratuity Fund
195 193 It was conceded that the new rules could not detract from or prejudicially affect the vested rights created under the old  rules
Old Rule 16 expressly prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees
The effect of old r 16 cannot be negatived by describing the process as mere withdrawal of the approval of the old rules and enforcement of the new ones
196 B D