[CASE NUMBER] IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 1573 of 2016 [ENTITY] & ANR. Petitioners Versus [ENTITY] AND ORS. Respondents Appearance: MS [ENTITY], GOVERNMENT PLEADER for the Petitioners State MR [ENTITY], ADVOCATE for the Respondent No. 1 Respondents No. 2 - 3 are served CORAM: HONOURABLE MR.JUSTICE [ENTITY] Date : 06/06/2016 CAV JUDGMENT
1. Challenge in this petition is made by the Employer - State to the order passed by the Controlling Authority under the [ACT] at Jamnagar in [CASE NUMBER] dated 30.12.2013. By the impugned order, the Controlling Authority has held that, the employee is entitled to gratuity, also for the period from 01.10.1984 to 31.03.1995 - the period which was excluded by the employer from the total period of service from 01.10.1984 to 30.11.2012. The appeal against the said order is not entertained by the Appellate Authority at Rajkot and the same is dismissed vide order dated 02.12.2014 in [CASE NUMBER].
2. The relevant facts as emerging from record are as under.
[CASE NUMBER] Page 1 of 22 Created On Tue Jun 07 00:59:17 IST 2016 2.1 The respondent employee had initially joined the service on 01.10.1984. He was taken as a daily wager labouror.
2.2 Subsequently, with effect from 01.04.1995, he was taken up in the regular pay-scale of Rs.750-940 (then prevailing).
2.3 He retired on attaining the age of superannuation on 30.11.2012.
2.4 He is paid his pension and gratuity under the [ACT]. The said payment is made considering his service from 01.04.1995 to 30.11.2012.
2.5 He is not paid anything towards the service for the period from 01.10.1984 to 31.03.1995.
2.6 It is the case of the employee that, he is entitled to receive gratuity for the entire service i.e. from 01.10.1984 to 30.11.2012. It is also his case that he is already paid gratuity for his service for the period from 01.04.1995 to 30.11.2012 under the provisions of The [ACT] and therefore he does not claim gratuity under the provisions of The [ACT] for the said period. However, it is his case that, for the period from 01.10.1984 to 31.03.1995 he should be paid gratuity under the provisions of The [ACT], since for the said period, he is not paid gratuity under the [ACT]. He had asked for it, which was denied and under these circumstance, he approached the Controlling Authority and the Controlling Authority has [CASE NUMBER] Page 2 of 22 Created On Tue Jun 07 00:59:17 IST 2016 accepted the claim vide order dated 30.12.2013.
2.7 By the impugned order dated 30.12.2013, the employer - State is directed to make payment of gratuity under the [ACT] for the period from 01.10.1984 to 31.03.1995 amounting to Rs.87,623/- plus statutory interest thereon.
2.8 It is noted that, the said order of the Controlling Authority dated 30.12.2013 was challenged by the employer in [CASE NUMBER]. The same was filed after the period of limitation. The Appellate Authority has not entertained the Appeal being barred by limitation. Whether the Appellate Authority should have condoned the delay or not is not the subject matter of this petition. Parties have concentrated on merits of the matter and this Court has also decided the issue on merits, as to whether the order of the Controlling Authority directing the payment of gratuity for the period from 01.10.1984 to 31.03.1995 is legal.
3. It is noted that, this petition was heard along with number of other matters involving identical, similar or nearer issue. Reference is made to:- (i) the order dated 22.04.2016 in [CASE NUMBER], (ii) order dated 10.03.2016 in [CASE NUMBER], (iii) order dated 12.01.2016 in [CASE NUMBER] and (iv) order dated 27.01.2016 in [CASE NUMBER]. For the reasons recorded in the said orders, the authorities of the Government of Gujarat in various departments including:- (i) the Finance Department, (ii) the Labour and Employment Department, (iii) the Urban Housing and Urban Development Department, (iv) the Energy and Petrochemicals Department,
(v) the Panchayat Rural Housing and Rural Development Department, (vi) the Women and Child Development Department and (vii) the Commissioner of [CASE NUMBER] Page 3 of 22 Created On Tue Jun 07 00:59:17 IST 2016 Labour were joined as party respondents. Learned Government Pleader herself has appeared on behalf of the said authorities and has assisted the Court, along with other learned advocates for the respective employer.
4. Heard learned advocates.
5.1 Ms.[ENTITY], learned Government Pleader for the State Authorities (Employer) has submitted that, in view of the liberal policy of the Government, on completion of certain years of service as a daily wager, the concerned employee is taken on the regular pay-scale and in due course of time his service is regularsied for all purposes, including for the purpose of payment of pension and gratuity. It is submitted that, the concerned employee having been regularised as such, would be entitled to claim not only gratuity but also pension under the [ACT], subject to stipulations made thereunder. It is submitted that, what the employee gets under the State Rules is more beneficial to him, as compared to what he would have got under the [ACT], had his service not been regularised. It is submitted that, after having accepted the benefits under the State Rules for the part of the total service, the employee can not be permitted to claim gratuity under the [ACT]. It is submitted that, it does not matter whether the said claim is for the same period or for the different period. Learned Government Pleader has taken this Court through the provisions of the [ACT] and the [ACT]. Reliance is also placed on the decision of the Chattisgarh High Court in the case of [PRECEDENT] recorded on [CASE NUMBER] dated 04.07.2012.
[CASE NUMBER] Page 4 of 22 Created On Tue Jun 07 00:59:17 IST 2016 5.2 It is submitted that, the view taken by the Controlling Authority and the Appellate Authority in this case is contrary to the provisions of the Act and would be inconsistent with the [ACT]. It is submitted that, for this reason, the impugned orders passed by the authorities below be interfered with.
6.1 On the other hand, learned advocate for the employee has submitted that, even if the break-up of the total service of the employee into two parts, as 'qualifying' and 'non- qualifying' may be valid in view of the provisions of the [ACT], it can not result in complete negation of the [ACT] more particularly in view of [SECTION] thereof. It is submitted that, had the employee claimed gratuity under both the provisions i.e. 'the Act' and 'the Rules' for the same period, it can not be accepted, however, that is not the claim of the employee. What is claimed by the employee is only that, he be paid gratuity under the provisions of The [ACT], for the period for which he is not paid gratuity under the [ACT]. Reliance is placed on the decision of the Himachal Pradesh High Court in the case of [PRECEDENT] in [CASE NUMBER] dated 09.05.2007.
6.2 It is submitted that, the authorities below have not committed any error in accepting the claim of the employee and therefore this petition be dismissed.
7. Having heard learned advocates for the respective [CASE NUMBER] Page 5 of 22 Created On Tue Jun 07 00:59:17 IST 2016 parties and having gone through the material on record, this Court finds that the point for consideration before this Court in this case is, that when an employee is paid his gratuity by the Employer (State) under the provisions of the [ACT], for the part of the total length of his service, whether he can claim gratuity under the provisions of The [ACT], for the remaining period of his service i.e. for the period for which he is not paid gratuity under The [ACT].
8.1 For the above purpose, relevant provisions of the [ACT] and the [ACT] need to be kept in view. They are as under.
8.2 The relevant portion of the [SECTION] of the Act reads as under.
"4. Payment of gratuity. (1)Gratuityshall bepayabletoanemployeeontheterminationof hisemploymentafterhehasrenderedcontinuous servicefornotlessthanfiveyears,
(a) onhissuperannuation,or
(b) onhisretirementorresignation,or
(c) onhisdeathordisablementdueto accidentordisease:
Provided that the completion of continuous service of five years shall not be necessary wheretheterminationoftheemploymentofany [CASE NUMBER] Page 6 of 22 Created On Tue Jun 07 00:59:17 IST 2016 employeeisduetodeathordisablement:
(5) Nothing in this section shall affect the rightofanemployeetoreceivebettertermsof gratuity under any award or agreement or contractwiththeemployer.
(6) Notwithstanding anything contained in sub section(1),
(a) thegratuityofanemployee,whoseservices have been terminated for any act, willful omission or negligence causing any damage or lossto,ordestructionof,propertybelonging totheemployershallbeforfeitedtotheextent ofthedamageorlosssocaused;
(b) thegratuitypayabletoanemployee[maybe whollyorpartiallyforfeited]
(i) if the services of such employee have been terminatedforhisriotousordisorderlyconduct oranyotheractofviolenceonhispart,or
(ii) if the services of such employee have beenterminatedforanyactwhichconstitutesan offenceinvolvingmoralturpitude,providedthat suchoffenceiscommittedbyhiminthecourse ofhisemployment."
8.3 "Employee" is defined in the Act as under.
"2(e) "employee"meansanyperson(otherthan an apprentice) who is employed for wages, whetherthetermsofsuchemploymentareexpress [CASE NUMBER] Page 7 of 22 Created On Tue Jun 07 00:59:17 IST 2016 or implied, in any kind of work, manual or otherwise,inorinconnectionwiththeworkof a factory, mine, oilfield, plantation, port, railwaycompany,shoporotherestablishmentto whichthisActapplies,butdoesnotincludeany suchpersonwhoholdsapostundertheCentral GovernmentoraStateGovernmentandisgoverned byanyotherActorbyanyrulesprovidingfor paymentofgratuity"
8.4 Other provisions of the Act, which may have bearing on the point at issue, are as under.
8.4.1 "2(q) " retirement " means termination of the service of an employee otherwise than on superannuation;"
8.4.2 "2(r) "superannuation", in relation to an employee, means the attainment by the employee of such age as is fixed in the contract or conditions of service as the age on the attainment of which the employer shall vacate the employment;"
8.4.3 "2(s) "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance."
8.5 The [ACT] is the Central Act and the [ACT] is the set of Rules framed by the State in exercise of its power under [CASE NUMBER] Page 8 of 22 Created On Tue Jun 07 00:59:17 IST 2016 proviso to [SECTION] of the [ACT]. The Act would prevail over the Rules. Even otherwise there is specific provision in the Act, which reads as under.
"14. Acttooverrideotherenactments,etc. The provisions of this Act or any rule made thereunder shall have effect notwithstanding anythinginconsistenttherewithcontainedinany enactment other than this Act or in any instrumentorcontracthavingeffectbyvirtue ofanyenactmentotherthanthisAct."
9. The relevant provisions of the [ACT], relating to payment of gratuity to the employee, are as under.
9.1 "Rule9(68)."QualifyingService"meansservice renderedwhileondutyorotherwisewhichmaybe takeninaccountforthepurposeofpensionand gratuityadmissibleunderGujaratCivilServices (Pension)Rules."
9.2 "Rule25. Qualifying Service : Subject to the provisionsoftheserules,qualifyingserviceof aGovernmentemployee,meansandincludes,
(i) all service including service on probation rendered on a regular establishment in any capacity whether, temporary or permanent, interrupted or continuous but it shall not [CASE NUMBER] Page 9 of 22 Created On Tue Jun 07 00:59:17 IST 2016 include
(a) serviceinnonpensionableestablishment,
(b) servicepaidfromcontingencies,
(c) servicerenderedindailyrated establishment,
(d) actualperiodsofbreakinserviceifany, betweenspellofservice,
(e) servicepriortoresignation,removalor dismissal,
(f) serviceasanapprentice,
(g) serviceonfixedpaybasis,and
(h) serviceoncontractbasis.
(ii) all service rendered in work charged establishment provided that the total service putin,assuchisfiveyearsormore,
(iii) foreignservice,
(iv) VacationtakenbyGovernmentemployeein vacationdepartment,
(v) allperiodsofleaveincludingextraordinary leaveuptoamaximumofthirtysixmonthsduring entireservice,
(vi) addition to qualifying service admissibleunderrule-37,
(vii) services rendered as Kotwal by a Governmentemployeeafterregularappointmentin theregulartimescale.
(viii) Services rendered as full time attendant by a Government employee before his [CASE NUMBER] Page 10 of 22 Created On Tue Jun 07 00:59:17 IST 2016 regularappointmentinclassIVservice,and
(ix) services rendered under the Central Government / Central Government Autonomous bodies having pension scheme, by a Government employeewhoisabsorbedinGovernment.
(x) Pensionableservicerenderedbyanemployee in a grantinaid institution the pension liability in respect of which is borne by the Government to the extent as may be ordered by theGovernmentfromtimetotime."
9.3 "Rule80. Amount of Service Gratuity / Pension:
(1) In the case of a Government employee retiring on Superannuation, Retiring, Invalid, WoundandInjuryorCompensationPensionbefore completingqualifyingserviceoftenyears,the amountofservicegratuityshallbeonemonth's 'pay'foreachcompletedyearofservice.
(a) In the case of a Government employee retiringonSuperannuation,Retiring,Invalid or Compensation Pension in accordance with the provisions of these rules after completing qualifying service of not less than thirtythree years, the amount of pension shall be fifty per cent of the pensionablepaysubjecttominimumamountof [CASE NUMBER] Page 11 of 22 Created On Tue Jun 07 00:59:17 IST 2016 Rs.1275andmaximumamountofRs.13000.
(b) In the case of a Government employee retiringonSuperannuation,Retiring,Invalid or Compensation Pension in accordance with the provisions of these rules before completingqualifyingserviceofthirtythree yearsbutaftercompletingqualifyingservice ofthetenyears,theamountofpensionshall be proportionate to the amount of pension under clause (a) and in no case the amount shallbelessthanminimum.
(3) In calculating the length of qualifying service,fractionofayearequaltosixmonths and above shall be treated as a complete year andreckonedasqualifyingservice.
(4) The amount of pension finally determined underclause(a)orclause(b)ofsubrule(2), shallbeexpressedinwholerupeesandwherethe pensioncontainsafractionofarupeeitshall beroundedofftothenexthigherrupee."
Note: The pay for the purpose of service gratuityadmissibleundersubrule(1)shallbe the last drawn pay plus dearness allowance admissibleonthedateofactualretirement. 9.4 "Rule81.Death-cum-RetirementGratuity:
(1) (a) A Government employee, who has become [CASE NUMBER] Page 12 of 22 Created On Tue Jun 07 00:59:17 IST 2016 eligibleforservicegratuityorpensionunder [SECTION] shall, on his retirement, be granted deathcumretirementgratuityequaltoonehalf ofhispaylastdrawnforeachcompletedyearof qualifying service, subject to a maximum of 16.1/2timesthepay."
9.5 "[SECTION]. Conditions subject to which service qualifies : (1) The service of a Government employee shall not qualify unless his duties, pay and allowance are regulated by the Governmentorunderconditionsdeterminedbythe Government.
(2) For the purposes of subrule (1) the expression 'service' means service under Government and paid by Government from the ConsolidatedFundofState."
9.6 "[SECTION] after which service counts for pension : Service rendered by a Government employee after attaining the age of eighteen yearsshallonlybecountedforpension."
9.7 "Rule34.Interruptioninservice:(1)Unless there are specific entries regarding break in serviceintheservicerecordoftheGovernment employee,allservicefromthedateofentryto the date of retirement shall be treated as [CASE NUMBER] Page 13 of 22 Created On Tue Jun 07 00:59:17 IST 2016 continuous - subject to the condition that in case if there is interruption in service of a period of more than three months, the entire interruptionshallbedisregardedwhileworking out the qualifying service, interruption upto three months being treated as qualifying service.
(2) Allunauthorisedabsencesnotregularisedby grantofleaveandallleaveofanykindgranted for a continuous period exceeding five years shallconstituteabrakeinserviceandshallbe dealtwithaspersubrule(1)."
9.8 "39. Nonpensionable service : Notwithstanding anything contained in [SECTION], the following shallnotbepensionableservice:
(a) Government employees who are paid for services rendered for Government but who are not retained for whole time in the public service,
(b) Governmentemployeeswhoarenotinreceipt ofpaybutareremuneratedbyhonoraria,
(c) Government employees holding posts which havebeendeclaredtobenonpensionable,
(d) Holders of all tenure posts in the Medical Department,whetherprivatepracticeisallowed tothemornot,whentheydonothaveanactive [CASE NUMBER] Page 14 of 22 Created On Tue Jun 07 00:59:17 IST 2016 orsuspendedlienonanyotherpermanentposts underGovernment."
10. The provisions of the [ACT] need to be read and applied keeping in view the observations of Honourable the Supreme Court of India in the case of [PRECEDENT]. Para: 6 and 7 of the said decision read as under.
"6. The Act is a piece of social welfare legislation and deals with the payment of gratuitywhichisakindofretiralbenefitlike pension, provident fund etc. As has been explained in the concurring opinion of one of thelearnedJudgesoftheHighCourt'gratuity initsetymologicalsenseisagift,especially for services rendered, or return for favours received.' It has now been universally recognized that all persons in society need protection against loss of income due to unemploymentarisingoutofincapacitytowork due to invalidity, old age etc. For the wage earningpopulation,securityofincome,whenthe worker becomes old or infirm, is of consequential importance. The provisions containedintheActareinthenatureofsocial security measures like employment insurance, providentfundandpension.TheActaccepts,in principle,compulsorypaymentofgratuityasa social security measure to wage earning [CASE NUMBER] Page 15 of 22 Created On Tue Jun 07 00:59:17 IST 2016 population in industries, factories and establishments.
7. Thus, the main purpose and concept of gratuity is to help the workman after retirement,whether,retirementisaresultof rulesofsuperannuation,orphysicaldisablement or impairment of vital part of the body. The expression'gratuity'itselfsuggestthatitis a gratuitous payment given to an employee on discharge,superannuationordeath.Gratuityis an amount paid unconnected with any considerationandnotrestinguponit,andhas to be considered as something given freely, voluntarilyorwithoutrecompense.Itissortof financial assistance to tide over postretiral hardshipsandinconveniences."
11. If the above quoted provisions of the [ACT] and the [ACT] are conjointly and harmoniously read and applied in the facts of the present case, while keeping in view the observations of Honourable the Supreme Court of India in the case of [PRECEDENT] (supra), the picture which has emerged before this Court is as under.
11.1 It is the case of the employee that, he is entitled to receive gratuity for the entire service i.e. from 01.10.1984 to 30.11.2012. It is also his case that he is already paid gratuity for his service for the period from 01.04.1995 to 30.11.2012 under the provisions of The [ACT] and therefore he does not claim gratuity under the [CASE NUMBER] Page 16 of 22 Created On Tue Jun 07 00:59:17 IST 2016 provisions of The [ACT] for the said period. However, it is his case that, for the period from 01.10.1984 to 31.03.1995 he should be paid gratuity under the provisions of The [ACT], since for the said period, he is not paid gratuity under the [ACT].
11.2 It is not in dispute that, had the service of the employee been not regularised, he would have been paid gratuity under the [ACT] for the entire service.
11.3 The break-up of the total service of the employee into two parts, as 'qualifying' and 'non-qualifying' as is done by the Employer in this case, may, at the first blush, appear to be valid in view of the provisions of the [ACT]. Specific reference can be made to [SECTION] [SECTION]. Applying the said pair of Rules, the stand of the State that only part of the service is accepted to be qualifying service for the purpose of payment of gratuity under 'the Rules', may not be discarded, that too when the legality of 'the Rules' is not the subject matter of the petition, further when the challenge in this petition is to the order passed by the Controlling Authority under the [ACT]. However, the said stand of the State can not be accepted to the extent that it will negate even the [ACT] along with [SECTION] thereof. Had the employee claimed gratuity under both the provisions i.e. 'the Act' and 'the Rules' for the same period, it can not be accepted. However, that is not the case. The claim of the employee is that, he be paid gratuity under the provisions of The [ACT], for the [CASE NUMBER] Page 17 of 22 Created On Tue Jun 07 00:59:17 IST 2016 period for which he is not paid gratuity under the [ACT]. No provision of the [ACT] can authorise the State to dis-entitle the employee from this claim. Only because, for some part of the service, the employer pays gratuity at better rate is no ground to wipe out the earlier service of the employee for the purpose of payment of gratuity under the Act.
12.1 It is noted that, identical issue had cropped up before the Himachal Pradesh High Court in the case of [PRECEDENT], dated 09.05.2007).
12.2 Para:10 of the said judgment reads as under.
"10. Two questions which require deep considerationbythisCourtare:
(1) Whethertheworkmanisentitledtoget gratuityfortheperiodheremainsondaily wages basis under the [ACT] and thereafter is he entitled to get the gratuity under the CCS (Pension) Rules, 1972 for the period commencing from regularisationtothedateofsupperannuation ?
(2) Whether the workman's entire period w.e.f. his initial date of engagement on daily wages basis, including the period of regularisation up to superannuation, will [CASE NUMBER] Page 18 of 22 Created On Tue Jun 07 00:59:17 IST 2016 entitlehimtogetthegratuityeitherunder the [ACT] or under theCCS(Pension)Rules,1972?"
12.3 After considering the various decisions of Honourable the Supreme Court of India, the Court held as under.
"23. In view of the above discussion, the ControllingAuthoritywasrequiredtocalculate thegratuityfortheperiodw.e.f.March,1982 to December 31, 1993 under the [ACT] to January 31, 2001 (regular period only), the State was bound to paythegratuityundertheCCS(Pension)Rules, 1972.Accordingly,thewritpetitionisdisposed ofwiththefollowingdirections:
(i) The workman is entitled to get the gratuityfortheperiodw.e.f.March,1982to December 31, 1993 under the Payment of GratuityAct,1972withinterestasper law laiddownbytheHon'bleSupremeCourtin H. GangahanumeGowdav.KarnatakaAgroIndustries Corpn.Ltd.(supra);[AIR2003SC1526]
(ii) Theworkmanisheldentitledandisto bepaidthegratuityw.e.f.January1,1994to January31,2001(sic)(regularperiod)under theCCS(Pension)Rules,1972withinterest@ 9%perannum.Thecopyofthejudgmentbesent totheSecretaryLabour&Employmentforits [CASE NUMBER] Page 19 of 22 Created On Tue Jun 07 00:59:17 IST 2016 distribution to the Controlling as well as Appellate Authority constituted under the [ACT]"
12.4 The view taken by this Court in the present case is further fortified by the above decision.
13.1 Reference can also be made to the decision of the Division Bench of this Court in the case of [PRECEDENT] recorded on [CASE NUMBER] dated 03.02.2001.
13.2 Reference also needs to be made to the decisions of this Court in the case of (i) [PRECEDENT] recorded on [CASE NUMBER] dated 26.04.2013 and (ii) [PRECEDENT] recorded on [CASE NUMBER] dated 03.07.2013 and 25.07.2013.
14. The decision of the Chattishgarh High Court in the case of [PRECEDENT] (supra) as relied by the learned advocates for the employer would not take the case of the employer any further for the reason that, the claim of the employee in the said case was for pension and gratuity under the State Rules like the [ACT], under which the service as a daily wager was not accepted as pensionable service. Whether the said employee was entitled to gratuity under the provisions of the [ACT] or not was not the issue before the High Court. It needs to be noted that in the present case, the claim of the employee, as noted above is to the effect that, he be paid [CASE NUMBER] Page 20 of 22 Created On Tue Jun 07 00:59:17 IST 2016 gratuity under the provisions of The [ACT], for the period for which he is not paid gratuity under the [ACT].
15. In view of above, in the facts of the present case, it is held that when the employee is paid his gratuity by the Employer (State) under the provisions of the [ACT] for the part of the total length of his service, he is not dis-entitled to claim gratuity under the provisions of The [ACT] for the remaining period of his service i.e. for the period for which he is not paid gratuity under The [ACT], if otherwise there is no disqualification under the provisions of the Act. In the present case therefore it is held and it needs to be directed that, the employee is entitled to claim gratuity under the [ACT] for the period for which he is not paid gratuity under the [ACT].
16. For the reasons recorded above, the following order is passed.
16.1 This petition is dismissed.
16.2 The impugned order passed by the Controlling Authority under the [ACT] at Jamnagar in [CASE NUMBER] dated 30.12.2013 is confirmed.
16.3 Rule is discharged. No order as to costs.
[CASE NUMBER] Page 21 of 22 Created On Tue Jun 07 00:59:17 IST 2016 ([ENTITY], J.) Amit/14 [CASE NUMBER] Page 22 of 22 Created On Tue Jun 07 00:59:17 IST 2016