[CASE NUMBER] 1/25 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH, NAGPUR. WRIT PETITION NO. 911 OF 2017 The Municipal Council, Achalpur. Through its Chief Officer, R/o. Achalpur, Tah. Achalpur, Distt. Amravati. PETITIONER VERSUS [ENTITY] s/o [ENTITY], Aged about 63 years, Occ. Retired, R/o. [ENTITY], Achalpur, Tah. Achalpur, Distt. Amravati. RESPONDENT Shri [ENTITY], Advocate for Petitioner. Shri [ENTITY], Advocate for Respondent. CORAM : [ENTITY], J. DATED : 27.09.2019 [ENTITY]:
1. Heard. [SECTION] made returnable forthwith. Heard finally by consent of parties.
2. The present Petition has been filed by the Municipal Council, Achalpur, challenging the judgment dated 06.01.2017 in [CASE NUMBER], passed by the Appellate Authority under the [ACT] and the judgment dated 26.06.2015 passed in [CASE NUMBER] by the Controlling Authority under the [ACT], [CASE NUMBER] Labour Court, Amravati. Both the above concurrent judgments have been impugned in the present Writ Petition.
3. Relevant facts required to be cited for the purpose of deciding the present controversy are as under:
a) The Respondent was initially appointed by the Petitioner-
Municipal Council as a daily wager in the department of Family Planning Survey and Low Cost Sanitation Survey with effect from 02.06.1984. There is no dispute that though the Respondent was a daily wager performing services of a Clerk. The services of the Respondent came to be terminated by the Petitioner Municipal Council on 01.07.1985 whereupon Respondent filed [CASE NUMBER] before the Labour Court, Amravati. The Labour Court, Amravati by its order dated 28.08.1994 directed the Petitioner- Municipal Council to reinstate the Respondent in service with continuity and full back wages on the ground of non-compliance of the provisions of [SECTION] of the [ACT]. There were 91 similar daily wagers, who were working with the Petitioner- Municipal Council during the then time. Thereafter, pursuant to the decision taken by the State Government, these, 91 daily wagers including the Respondent came to be absorbed by the Petitioner-
[CASE NUMBER] Municipal Council in terms of order dated 28.09.2002 issued by the Regional Director Municipal Administration and Commissioner, Amravati Division, Amravati. Thus, the Respondent was absorbed on the post of Clerk in Class-III cadre in the pay-scale of Rs. 950/- by the Petitioner-Municipal Council with a condition, that the said post will be abolished on the retirement of such employee or if it becomes vacant for any other reason. Thereafter, by order dated 13.10.2002, the Petitioner counsel absorbed the services of Respondent on the post of Clerk. Respondent thereafter, continued to work for a further period of eight years and one month with the Petitioner-Municipal Council and on attaining the age of superannuation retired from its services on 12.10.2010.
b) Since the Respondent was paid gratuity for the period of eight years and one month only, being aggrieved, the application being [CASE NUMBER], before the Controlling Authority, Labour Court, Amravati on 23.10.2012, under the provisions of [SECTION] of the [ACT], inter alia, seeking direction to the Petitioner to pay Gratuity for the entire length of his service beginning from 02.06.1984.
c) Thus, the Respondent computed and sought Payment of Gratuity of Rs.1,50,917/- as arrears of gratuity alongwith the [CASE NUMBER] interest @ 18% p.a. from the date of application until date of payment. Before the Controlling Authority, Labour Court, Amravati, the Petitioner submitted that on application of the policy decision of the Government of Maharashtra in terms of order dated 28.09.2002 passed by the Regional Director Municipal Administration, the submission of the Respondent that he had rendered more than 26 years of continuous services was in correct. According to the Petitioner the services of the Respondent were regularized by order dated 13.10.2002 on the specific condition that the Respondent would not be entitled to any financial and retirement related benefits in respect of the services rendered by him as daily wager earlier.
d) The Controlling Authority framed the following issues and gave its findings:
"In view of the rival pleadings of the parties the issues were framed at Ex- O-3 and I have recorded my findings against them for the reasons to follow:-
Issues Findings 1. Whether the applicant is entitled He is entitled to receive difference of gratuity amount for Rs. 1,50,970/-. from the non-applicant. 2. Whether the applicant is Yes, at the rate of entitled to receive interest on 10% per annum. the gratuity amount for claim as prayed? 3. What order? As per final order. [CASE NUMBER] e) One of the submissions advanced by the Petitioner before
the Controlling Authority was that since the Respondent had not challenged the condition in the absorption within a reasonable time, it was not open to the Respondent to now submit that his previous service was also required to be taken into account for the purpose of payment of computing gratuity both the respective parties referred to various case laws, inter alia, pertaining to entitlement to get gratuity pursuant to regularization of similarly placed employees.
The Controlling Authority gave its findings thus:-
"12. I have given anxious consideration to the submissions made by both the parties. I have also minutely gone though the authorities cited by both the parties. In the ruling i.e. [PRECEDENT] [PRECEDENT]. Hon'ble Supreme Court specifically observed that;
[SECTION] protects right of employee to receive better terms of gratuity under award, agreement or contract with employer than benefits conferred under the Act.
After perusal of the unreported judgment cited by the Non-applicant in [CASE NUMBER] in the case of [PRECEDENT], wherein the direction to regularize the services of the employee was challenged before the Hon'ble High Court. The Industrial Court directed the petitioner to regularize the services after completion of 5 years service from the date of his initial appointment and to pay him a retirement benefits after counting the entire service. The Hon'ble Bombay High Court set aside the said judgment. The point involved in the cited case is in respect of regularization, therefore, it is difficult to accept the contention of the non-applicant that the cited case are on similar facts. Therefore, the authority reported in [CASE NUMBER] [PRECEDENT] and ors. supra relied by the counsel for the Non-applicant is not applicable to the facts of the present case.
[CASE NUMBER]
13. The last drawn wages of the applicant are not in dispute. From the record it appears that the applicant had filed [CASE NUMBER] and it was decided on merit by judgment dated 20.08.1994 directing the Non-applicant to reinstate the complainant with continuity of service and full backwages from 10.06.1993 onwards. The copy of the said judgment is at Exh. 9. The witness for the Non-applicant has admitted in her cross-examination that the applicant was working since 02.06.1984 with the Non-applicant. The applicant retired on 31.10.2010. In view of this, I hold that the applicant is entitled for gratuity for rendering 26 years service amounting to Rs. 1,88,130/- from the Non-applicant. However, the applicant has admitted that Non-applicant has granted Rs. 37,160/- to him as gratuity. Therefore, the said amount will have to be deducted - as per the annexure filed by him on record. Thus the applicant is entitled for Rs. 1,50,970/- towards difference of gratuity from the Non-applicant."
f) On the basis of the above findings, the Controlling Authority allowed the application filed by Respondent partly and directed that the Respondent was entitled to receive Rs.1,50,970/- towards gratuity in addition to the amount already paid to him along with interest @ 10% p.a.
g) In appeal proceedings filed before the Appellate Authority under the provisions of [SECTION] of the [ACT] the Appellate Authority framed the following points for determination and gave reasoned findings thereon which read as thus:-
"5. The following points arise for my determination and my findings thereon are as under:-
Points Findings 1. Whether the judgment and order No. dated 26.06.2015 passed in [CASE NUMBER] is perverse [CASE NUMBER] or not legal and proper? 2. What order? As per final order below. Appeal is dismissed". 6 7
8. After perusal of the judgment and order passed by the Controlling Authority in Application [CASE NUMBER] dated 26.06.2015, it is seen that the Controlling Authority while dealing with the application observed that the applicant also entitled for the gratuity for the period where the applicant has rendered the services on daily wages. The Point for consideration is very limited before the Court, because the period of service and date of regularisation of the applicant is not disputed. It was the grievance of the applicant before the Controlling Authority that he was regularised his services on 20.09.2002 and retired from service on 12.10.2010. However, the non-applicant had not considered all span of service for determination of gratuity and paid less gratuity amount to the applicant, therefore, the Point for consideration before the Controlling Authority was whether the applicant is entitled for the gratuity for the services rendered by him on daily wages. While dealing with this Point, the Controlling Authority considered the oral evidence of the applicant as well as oral evidence of the witness for the non-applicant and also considered various citations relied by the applicant and comes to the conclusion that the applicant is entitled for the gratuity for the services rendered by him on daily wages.
9. From the Records and Proceedings of Application [CASE NUMBER], it is seen that the applicant has stated in his application that he was initially appionted as a Clerk since 02.06.1984 on daily wages, then his services is regularised since 20.09.2002, this fact is not disputed by the non-applicant, the date of retirement is also not disputed. It is also undisputed fact that the non-applicant calculated the period of regular service for the purpose of gratuity and not considered the period of service rendered by the applicant on daily wages. Now, it is the contention of the non-applicant that the provisions of [ACT] are applicable and as per [SECTION], [SECTION] and [SECTION], the applicant not entitled for any benefits as he has rendered only 8 years service as a regular employee. While dealing with this Point, the Controlling Authority relied upon the citations of the Hon'ble High Court and the Hon'ble Supreme Court. The Counsel for the applicant also relied on the judgment of the Hon'ble Supreme Court reported in [PRECEDENT], in the case of Allahabad Bank and another-vs- All India Allahabad Bank Retired Employees Association. In this cited case, the similar Point was before the Hon'ble Supreme Court, whether the retired employees having exercise of their services to avail the benefit under the Pension Scheme are stopped their claiming the benefit i.e. gratuity under the Provisions of the Act, answering this question in the negative. The Hon'ble Supreme Court held that, 'right to receive gratuity [CASE NUMBER] under provisions of the Act, cannot be defeated by any instrument or contract'. The Counsel for the applicant also relied upon the judgment of Madhya Pradesh High Court, reported in [PRECEDENT], in the case of [PRECEDENT]. Wherein it is held that 'the Municipal Council cannot escape the observance of provisions of Act, 1972'. The persons on the daily wages not excluded from purview of the Act, 1972. Considering this citations as relied by the Counsel for the applicant, it is made clear that the [ACT] is applicable to the employees of the Municipal Council.
10. So far as the calculation of gratuity is concerned, the non- applicant has considered only 8 years service period as a regular employee for the purpose of calculation of gratuity, but not considered the period of service rendered by the applicant on daily wages. The Controlling Authority not considering the period wages for the purpose of calculation of gratuity held that, the applicant also entitled for the gratuity for the services rendered by the applicant on daily wages and for this purpose relied on the judgment. Considering this reason and the citation relied by the Controlling Authority, I do not find any illegality because service of the applicant before regularisation is not counted for payment of gratuity and there is no authority to exclude the period of paying the amount of gratuity. Moreover, the witness for the non-applicant admitted in her cross examination that the [ACT] is applicable and the the applicant has rendered 26 years of service. She also admits that the applicant was working since 02.06.1984 on daily wages. Considering all these facts, I do not find any substance to the ground raised by the non-applicant.
11. It is one of the ground of the non-applicant that the applicant while accepting the order of regularisation has sware an affidavit and thereby he waved his rights including his annexure benefits for the period when he served as on daily wages. I have gone through the Records and Proceedings of [CASE NUMBER] and affidavit, there is no reference of gratuity, the Controlling Authority has properly considered this aspect while allowing with the application of the applicant for gratuity. After considering the various grounds and after careful perusal of the judgment and order of the Controlling Authority, I do not find any illegality or any error, hence, the Appeal filed by the Appellant/non- applicant needs to be dismissed. After considering the facts and circumstances, I proceed to pass the following order:
ORDER
1. The [CASE NUMBER] is dismissed.
2. No order as to costs.
3. R.& P. of [CASE NUMBER] be sent back to the Ld. Controlling Authority, Amravati.
4. As per request of Counsel for the Appellant 30 days time granted to approach before the Hon'ble High Court, till then, the respondent will not be permitted to withdraw the amount."
[CASE NUMBER]
4. Shri [ENTITY], learned counsel appearing on behalf of the Petitioner submitted that the Respondent was absorbed on 03.10.2002, by the Petitioner-Municipal Council and the said absorption order stipulated certain conditions. He submitted that condition no.3 and condition no.7 were relevant because it stated on absorption of the Respondent as Clerk in the services of the Petitioner, his past service will not be counted for the purpose of computation of retirement and financial benefit as also the services of the Respondent would be thereafter governed by the provisions of the [ACT] and the [ACT]. He submitted that since the Respondent had worked for eight years and one month as Clerk, after his absorption, continuity of his service was less than ten years and thus, the Respondent was entitled for Payment of Gratuity period for eight years and one month only in terms of [SECTION] of the [ACT], as amended by Government Resolution dated 30.10.2009 issued by the Finance Department. He vehemently submitted that the [ACT], would not apply to the Respondent's case for the purpose of computation and Payment of Gratuity as the employees of the Petitioner were governed by the provisions of [CASE NUMBER] [ACT] in respect of the same. He submitted that since the Respondent had worked for less than ten years, he was entitled for Payment Gratuity @ month's pay for every completed year of qualifying service. Therefore, according to him, the Respondent was paid an amount of Rs.37,160/- by the Petitioner on his superannuation on the above terms.
5. According to Mr. [ENTITY], since the Respondent had rendered service only for eight years after his observation and thus, the Controlling Authority ought to have considered the same in terms of the [ACT], as the same is in pari materia with the [ACT]. He stressed that the [ACT], would not apply to the employees of the Petitioner-Municipal Council and therefore the judgment passed by the Controlling Authority and the Appellate Authority were not proper. He submitted that the Controlling Authority after consideration of the pleadings and evidence led before the Controlling Authority concluded that the points of consideration was limited before the Court inasmuch as there was no dispute about the period of service rendered by the Respondent as well as date of regularization. He submitted that the evidence led [CASE NUMBER] before the Controlling Authority was unconverted insofar as the length of service of the Respondent was concerned pursuant to his absorption as clerk by the Municipal Council. He submitted that on the applicability of the provisions of [ACT], the Respondent was not entitled to any benefit whatsoever as his services rendered to the Petitioner- Municipal Council was computed to be eight years only.
6. However, the Appellate Authority in its judgment and order referred to and relied upon the following two cases which reported the submission of the Petitioner-Municipal Council. In the case of [PRECEDENT] a similar question was framed for consideration by the Hon'ble Apex Court, as to whether retired employees in exercise of their services to avail benefits under the pension scheme are precluded from claiming benefit of gratuity under the provisions of the [ACT]. While answering this question in the negative the Hon'ble Apex Court categorically held that "right to receive gratuity under the provisions of the Act cannot be defeated by any instrument or contract".
Further, in the case of [PRECEDENT] . The [CASE NUMBER] Madhya Pradesh High Court in a similarly placed situation held that, "the Municipal Council cannot escape the observance of the provisions of [ACT]". On the basis of the above rulings, the Appellate Court came to the conclusion that persons employed on daily wages cannot be excluded from the purview of the [ACT], and thus, the [ACT] would be applicable to the employees of the Petitioner-Municipal Council.
7. On the aspect of the stipulation of condition in the letter of absorption and the subsequent affidavit given by the Respondent in the year 2002 which is annexed as Annexure-5 (at Page 60-C) of the Petition, the Appellate Authority held that in the record and proceedings of the case as well as the said affidavit there was no reference to gratuity and therefore the Controlling Authority had rightfully considered the above aspect while allowing the application for entitlement of payment of gratuity filed by the Respondent. The Appellate Authority, therefore, upheld the order passed by the Controlling Authority.
8. Both the above orders, passed by the Controlling Authority & the Appellate Authority have been assailed by the Petitioner-Municipal Council in the present Petition, on the principal ground that the provisions of [ACT], cannot be made applicable to the Respondent's case because he was an employee of the Petitioner- Municipal Council and his services were governed by the provisions of [CASE NUMBER] [ACT]. According to the Petitioner since the Respondent had worked as a daily wager and was paid daily wages by the Petitioner and his appointment was not on any sanctioned vacant post, therefore such services rendered by the Respondent as a daily wager should never have been taken into consideration by the Controlling Authority as well as the Appellate Authority as the same are non-pensionable services under [SECTION] of the [ACT]. He submitted that conditions stipulated in the absorption order dated 03.10.2002 where in the nature of a contract of appointment inasmuch as the Respondent did not challenge the said conditions till he retired. He submitted that the appointment of the Respondent was designated as a special case because it was stipulated in the absorption order dated 03.10.2002, that it was a one time post and the same would lapse on superannuation of the Respondent. Therefore, according to him, once the Respondent agreed to his absorption, he was not entitled to claim any benefit with respect to service rendered by the Respondent as a daily wager and thus, was not entitled for payment of gratuity for the period prior to absorption.
9. Shri [ENTITY], referred to and relied upon the judgment dated 07.10.2011, passed in [CASE NUMBER], in the case of [PRECEDENT] . In this case, the Petitioner employee had taken benefit of the absorption [CASE NUMBER] order whereby the services of the employee were regularized and a similar condition existed therein which stipulated that the earlier services rendered on daily wages shall not be looked into for any financial or other service related benefit. In the said case the employee had claimed grant of pension. The Payment of Gratuity was not the subject matter of the said case hence, the facts of the said case would not apply to the facts of the present case, as the same are distinctly different. He submitted that since the Respondent had acquiesced in action, he had no legal right to claim gratuity in the present case, in view of the conditions stipulated in the absorption order dated 03.10.2002, and the Respondent having not challenged any of the said conditions. The said judgment did not distinguish between the provisions of the [ACT], and the [ACT], and, therefore, I find that the same is not directly relevant in the present case.
10. Shri [ENTITY], learned counsel appearing on behalf of the Respondent filed pursis dated 26.09.2019 and placed reliance the following judgments:
(i) 2010 I CLR 1 - Allahabad Bank & another Vs. All India Allahabad Bank Retired Employees' Association.
(ii) 1999-III-LLJ (Supp) - 296, [PRECEDENT] & another.
[CASE NUMBER]
(iii) 2002 (95) FLR 143 - Municipal Council, Panna Vs. The Controlling Authority & another.
(iv) 2007 LAB, I.C. 3760 - [PRECEDENT].
11. In the case of Allahabad Bank cited (supra) the following question for consideration was framed under the provisions of [SECTION] of the [ACT].
"Whether the (retired) employees, having exercised their option to avail the benefits under the pension scheme, are estopped from claiming the benefit (i.e. gratuity) under the provisions of the Act? -
Answering this question in the negative the Court held that (I) right to receive gratuity under provisions of the Act, cannot be defeated by any instrument or contract ; (ii) pension and gratuity are separate retiral benefits and right to gratuity is a statutory right: (iii) No comparison between a pension scheme, not providing for payment of gratuity and right of employee to receive gratuity under the provisions of the Act - No merit in this Appeal."
In that case, the question which had arisen for consideration in the appeal before the Hon'ble Apex Court was as to whether retired employees of the Appellate Bank were entitled to payment of gratuity under the provisions of the said Act and the controversy was that since some of the members of the association had opted for pensionary benefits in lieu of gratuity, such members were being illegally deprived of their statutory rights to receive gratuity under the [ACT]. Though, the question for consideration was slightly different from [CASE NUMBER] the facts and circumstances of the present case, some of the observations and findings of the Hon'ble Apex Court in paragraphs nos. 11 to 15, 19 to 21 of the said judgment are directly relevant to the present case and read thus:
"11. We shall proceed to examine the point urged by the learned counsel for the appellant. Remedial statutes, in contra distinction to penal statutes, are known as welfare, beneficient or social justice oriented legislations. Such welfare statutes always receive a liberal construction. They are required to be so construed so as to secure the relief contemplated by the statute. It is well settled and needs no restatement at our hands that labour and welfare legislation have to be broadly and liberally construed having due regard to the Directive Principles of State Policy. The Act with which we are concerned for the present is undoubtedly one such welfare oriented legislation meant to confer certain benefits upon the employees working in various establishments in the country.
12. [ENTITY], J in [PRECEDENT] stated the principle in his inimitable style that benignant provision must receive a benignant construction and, even if two interpretations are permissible, that which furthers the beneficial object should be preferred. It has been further observed: "We live in a welfare State, in a "socialist" republic, under a [ACT] with profound concern for the weaker classes including workers ([SECTION]). Welfare benefits such as pensions, payment of provident fund and gratuity are in fulfilment of the Directive Principles. The payment of gratuity or provident fund should not occasion any deduction from the pension as a "set-off". Otherwise, the solemn statutory provisions ensuring provident fund and gratuity become illusory. Pensions are paid out of regard for past meritorious services. The root of gratuity and the foundation of provident fund are different. Each one is a salutary benefaction statutorily guaranteed independently of the other. Even assuming that by private treaty parties had otherwise agreed to deductions before the coming into force of these beneficial enactments they cannot now be deprivatory. It is precisely to guard against such mischief that the non obstante and overriding provisions are engrafted on these statutes."
13. Interpreting the provisions of the said Act this Court in Sudhir Chandra Sarkar Vs. Tata Iron and Steel Co. Ltd. (1984) 3 SCC [SECTION]9 observed that pension and gratuity [CASE NUMBER] coupled with contributory provident fund are well recognised retiral benefits governed by various statutes. These statutes are legislative responses to the developing notions of the fair and humane conditions of work, being the promise of [SECTION] of the [ACT]. It was observed:
"the fundamental principle underlying gratuity is that it is a retirement benefit for long service as a provision for old age. Demands of social security and social justice made it necessary to provide for payment of gratuity. On the enactment of [ACT] a statutory liability was cast on the employer to pay gratuity."
14. 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] 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.
15. In [PRECEDENT], this Court explained that there is always a distinction between the pension payable on retirement and the gratuity payable on retirement. "While pension is payable periodically as long as the pensioner is alive, gratuity is ordinarily paid only once on retirement." No decision of this Court which has taken a view contrary to the decisions referred to herein above has been brought to our notice.
19. This Court in [PRECEDENT] SC observed:
"the mere fact that the gratuity is provided for under the [ACT] will not disentitle him to get the payment of gratuity under the [ACT]. In view of the overriding provisions contained in [SECTION] of the [ACT], the provision for gratuity under the [ACT] will have no effect. Possibly for this reason, [SECTION] of the [ACT] has conferred authority on the appropriate Government to exempt any establishment from the operation of the provisions of the Act, if in its opinion the employees of such establishment are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act. Admittedly MCD has not taken any steps to invoke the power of the Central Government under [SECTION] of the [ACT]. In the aforesaid premises, [CASE NUMBER] we are of the considered opinion that the employees of the MCD would be entitled to the payment of gratuity under the [ACT] notwithstanding the fact that the provisions of the [ACT] have been made applicable to them for the purpose of determining the pension. Needless to mention that the employees cannot claim gratuity available under the [ACT]" (emphasis supplied). In the present case it is not the case of the Bank that its employees had claimed and received gratuity under the pension scheme.
21. Learned counsel for the appellant relying upon the decision of this Court in [PRECEDENT] contended that once the employees have exercised their option to avail pension made available to them under the Old Pension Scheme, and having drawn the benefits thereunder cannot be permitted to resile from their stand. In that case a group of employees of the State Bank of India accepted the amount of ex-gratia under the scheme known as `the Employees Voluntary Retirement Scheme' and thereafter made an attempt to resile from the very Scheme itself. It is under those circumstances this Court observed that "those who accepted the ex-gratia payment or any other benefit under the Scheme, in our considered opinion, could not have resiled therefrom." In the present case the real question that arises for our consideration is whether the employees having exercised their option to avail the benefits under the pension scheme are estopped from claiming the benefit under the provisions of the Act? The appellant being an establishment is under the statutory obligation to pay gratuity as provided for under [SECTION] of the Act which is required to be read along with [SECTION] of the Act which says that the provisions of the Act shall have effect notwithstanding anything inconsistent therein contained in any enactment or in any instrument or contract having effect by virtue of any enactment other than this Act. The provisions of the Act prevail over all other enactment or instrument or contract so far as the payment of gratuity is concerned. The right to receive gratuity under the provisions of the Act cannot be defeated by any instrument or contract."
12. From the findings recorded by the Hon'ble Apex Court in paragraph nos.19 & 21, after referring to the case of [PRECEDENT] and the case of [PRECEDENT]. (2003) [CASE NUMBER] 2 SCC 721, it is clear that right to receive gratuity under the [ACT], cannot be defeated by any instrument or contract as also in view of the overriding provisions of [SECTION] of the said Act. Hence, the provision for Payment of Gratuity under the [ACT], will have no effect. The above ratio clearly defines the settled legal position and therefore both the concurrent orders passed by the Controlling Authority and the Appellate Court have been correctly passed.
13. In the case of [PRECEDENT]) a similar situation had arisen wherein the Petitioner therein had arisen for a total period of ten years with HIMCON- Respondent. The point of consideration therein was as to whether the Petitioner was entitled to get gratuity only for five years i.e. for the period for which his services were regularized or the entire period of ten years, which the Petitioner had admittedly worked under HIMCON. The Division Bench held that since the Petitioner therein was in the services of the Respondent from the date of his initial appointment and there is a link of entire service for ten years, he would be entitled to get gratuity for the entire period of service, in terms of [SECTION] of the [ACT], for each completed year of service or part thereof, at the prescribed rate.
[CASE NUMBER]
14. In the case of [PRECEDENT] Authority (supra) decided by the learned Single Judge of the Madhya Pradesh High Court, it was categorically held that persons working on daily wages or monthly wages cannot be excluded from the purview of the [ACT]. It has been further held that it was not necessary that the person should be in permanent employment. The facts of the said case were similar and identical case to the present case inasmuch as the Petitioner therein employee of the time and appointed on 01.01.1975 and was removed from service 31.08.1996. He served for a period of 21 years and 8 months and claimed entitlement for gratuity amounting to Rs.15,840/-. The question raised therein was that the provisions of the [ACT], were not applicalbe to Municipal Council as it was a local authority and not an establishment within the meaning of [SECTION] of the said Act. This question was held to be no mere res integra in paragraph 7 of the judgment which reads thus:-
The question is no more res integra. In [PRECEDENT]., the Supreme Court held that :
"The [ACT] being a special provision for payment of gratuity unless there is any provision therein which excludes its applicability to an employee who is otherwise governed by the provisions of the [ACT] it is not possible for us to hold that the respondent is not entitled to the gratuity under the [ACT]. The only provision which was pointed out is the definition of "employee" in [SECTION] which excludes the employees of the Central Government and State Governments receiving pension and [CASE NUMBER] gratuity under the [ACT], but not an employee of the MCD. The MCD employee, therefore, would be entitled to the payment of gratuity under the [ACT]. The mere fact that the gratuity is provided for under the [ACT] will not disentitle him to get the payment of gratuity under the [ACT]. In view of the overriding provisions contained in [SECTION] of the [ACT], the provision for gratuity under [ACT] will have no effect. Possibly for this reason, [SECTION] of the [ACT] has conferred authority on the appropriate Government to exempt any establishment from the operation of the provisions of the Act if in its opinion the employee of such establishment are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act. Admittedly MCD has not taken any steps to invoke the power of the Central Government under [SECTION] of the [ACT]. In the aforesaid premises, we are of the considered opinion that the employee of the MCD would be entitled to the payment of gratuity under the [ACT] notwithstanding the fact that the provisions of the [ACT] have been made applicable to them for the purpose of determining the pension. Needless to mention that the employees cannot claim gratuity available under [ACT]."
15. In the case of [PRECEDENT] (supra) the Respondent-workman served the Himachal Pradesh Irrigation and Public Health Division as daily wage worker with effect from March, 1982 to 31.12.1993 and thereafter his services were regularised as water quard-helper from 01.01.1994 onwards. The employee retired from service after attaining the age of superannuation on 31.10.2001. The workman filed claim before the Labour Officer, even Controlling Authority (under the [ACT]) under [SECTION] of the [ACT], as the employer had [CASE NUMBER] not included the period of daily wages service from March, 1982 to 31 st December, 1993. The Labour Officer adjudication the claim and directed Payment of Gratuity for the entire period. The Petitioner state filed appeal before the Appellate Authority which rejected the appeal by order dated 24.10.2003 held that Public Health Department was covered under the [ACT] and that the workman was entitled for gratuity for daily wage period of service under the provisions of [ACT] with compound interest @ 10% p.a. The High Court after considering the facts of the case which are identical to the facts of the present case in paragraph nos. 7 to 12 held thus:-
"7 We have carefully examined, the various provisions of the [ACT], and we are unable to discern any reason for giving the limited meaning to [SECTION] urged before us on behalf of the appellant, [SECTION] applies to every establishment within the meaning of any law for the time, being in force in relation to establishments in a State. Such an establishment would include an industrial establishment within the meaning of [SECTION] of the [ACT]. Accordingly, we are of opinion that the [ACT] applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on. The Hydel Upper Bari Doab Construction Project is, such an establishment, and the [ACT] applies to it.
8. The H.P. Irrigation and Public Health Department is looking after the entire infrastructure for the supply of water in the State. The H.P. Irrigation and Pubic Health Department is constructing, maintaining and operating water pumps throughout the State of Himachal Pradesh and for that purpose had engaged a large number of workmen. Taking into consideration the entire functioning of the H.P. Irrigation and Public Health Department and the principles laid down by the Hon'ble Supreme Court in the above cited case, I hold the H.P. Irrigation and Public Health Department to be an establishment under [SECTION] of the [ACT].
[CASE NUMBER]
9. The next argument advanced on behalf of the State is that the workman is disentitled to claim gratuity under the [ACT] because he is a person excluded from the scope of the expression "employee" as defined in [SECTION] of the Act by reason of his having been the holder of a post under the State Government at the time of his superannuation from service. It is an admitted fact that the workman became the holder of post only when he was regularized on January 1,1994 under the State Government and was appointed as Water Guard-Helper. But the workman had admittedly worked as daily wage labourer during the period w.e.f. March, 1982 to December 31, 1993. There was notional termination of the employment of the Workmen as daily labourer when he was regularized as Water Guard-Helper from January 1, 1994.
10. Two questions which require deep consideration by this Court are:
(1) Whether the workman is entitled to get gratuity for the period he remains on daily wages basis under the [ACT] and thereafter is he entitled to get the gratuity under the [ACT] for the period commencing from regularization to the date of superannuation?
(2) Whether the workman's entire period w.e.f. his initial date of engagement on daily wages basis, including the period of regularization up to superannuation, will entitle him to get the gratuity either under the [ACT] or under the [ACT]?
11. Admittedly, the workman has worked 'on daily wages basis w.e.f. March, 1982 to December 31, 1993 and thereafter after his regularization as Water Guard-helper from January 1, 1994 to October 31, 2001.
12. I am of the view that the workman in these circumstances where he has worked in two different spells in different capacities, he is entitled to get the benefit of both the Acts, i.e. [ACT] and [ACT]. The workman is entitled to get the gratuity for the period he remained on daily wage basis under the [ACT] and for rest of the period after his regularization to superannuation under the [ACT]. This question is no more res integra in view of [PRECEDENT], in the [PRECEDENT], which is as under:
[CASE NUMBER] That brings us to the contention raised by the appellant for the first time in this appeal that the writ petitioner is disentitled to claim gratuity under the Act because he is a person excluded from the scope of expression 'employee' as defined in [SECTION] of the Act by reason of his having been the holder of a civil post under the Central Government at the time of his retirement from service. It is true that the writ petitioner became the holder of a civil post under the Central Government when he was appointed as temporary Lascar under the order Exhibit R-1, dated June 17, 1975. If he had served the Railway Administration only in the said capacity, the appellants would have been well founded in the contention of the Act. But the writ petitioner had admittedly worked as a casual labourer during the period from April 29, 1954 till June 16, 1975, There was a notional termination of the employment of the writ petitioner as casual labourer when he was absorbed as temporary Lascar in the regular service of the Railway on June 17, 1975. Such termination having taken place only subsequent to the coming into force of the Act, the provisions of [SECTION] get attracted and a right accrued to the petitioner to have gratuity paid to him in respect of the service rendered by him as casual labourer for the period from April 29, 1954 till June 16, 1975. It is contended on behalf of the appellants that because the writ petitioner was absorbed as a temporary Lascar while functioning as a casual labourer, there was no break at all in his service and no termination of service could be said to be implied in his absorption as regular employee. We are unable to accept this contention. A casual labourer is not in the service of the Railway at all in any strict or real sense. The petitioner became a Railway servant only when he was appointed as temporary Lascar under the order Exhibit R-1. In accepting that appointment he had necessarily to forsake or abandon his status as a casual labourer and that involved a severance of the nexus that existed between himself and the Railway Administration arising out of his continuous causal employment. It is true that there was no order passed or even any overt action taken by the Railway Department terminating the status of the petitioner as casual employee. But as pointed out by the Supreme Court in State Bank of India v. Shri N. Sundara Money" (1976) Lab IC 7[SECTION]) "termination embraces not merely the act of termination by the employer but the fact of termination howsoever produced". A termination of the relationship arising out of casual employment took place when the petitioner was offered appointment as temporary Lascar under the order Exhibit R-1 and the said offer was accepted by him on June 17, 1975. The expression 'retirement' as defined in [SECTION] in the Act means termination of the service of an employee otherwise than on superannuation. Going by the said definition the writ [CASE NUMBER] petitioner must be taken to have 'retired' from employment as casual labourer on the date of Exhibit R-1 and he became entitled to claim gratuity under [SECTION] of the Act. The right, which became vested in him, is not in any way affected by the reason that he has served the railway administration in the capacity of temporary Lascar for the short period of 1 year 6 months and 15 days subsequent to the date of Exhibit R-1, which service cannot be counted for the purpose of payment of gratuity under the Act."
For the reasons stated above, the Writ Petition is dismissed with the following directions.
a) Judgment dated 26.06.2015, passed by the Controlling Authority, Amravati, in application [CASE NUMBER] and the judgment dated 06.01.2017 in [CASE NUMBER] passed by the Appellate Authority, Amravati, are upheld and confirmed.
b) The Respondent shall be entitled to get gratuity for the entire period of service i.e.from 02.07.1984 until his date of retirement on superannuation i.e.12.10.2010 along with interest as awarded by the Controlling Authority.
With the above directions and observations Writ Petition is disposed of. Parties to bear their own costs.
The copy of judgment be sent to the Controlling Authority as well as the Appellate Authority constituted under the [ACT].
16. Writ Petition is disposed of in the aforesaid terms. There shall be no order as to costs.
JUDGE [ENTITY]