CWP No. 15423 of 2008 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P.No. 15423 of 2008 Date of decision 22 .9.2008 Municipal Council, Pathankot ...Petitioner Versus Appellate Authority under the Payment of Gratuity Act and others ... Respondents. CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JORA SINGH Present: Mr.G.S.Sandhawalia Advocate for the petitioner. Mr. Suvir Sehgal, Addl. AG Haryana. 1. Whether Reporters of local papers may be allowed to see the judgement ? 2. To be referred to the Reporter or not ? 3. Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. This order shall dispose of CWP No. 15422, 15423, 15424, 15441, 15854 and 5894 of 2008 as common question of law and facts have been raised in all these petitions. The issue which arises for determination in these petitions is whether the application of Payment of Gratuity Act, 1972 (for brevity 'the Act') would apply to the employees of the Local Bodies in the absence of exemption under Section 5(2) of the Act. Facts are being taken from the case titled as Municipal Council, Pathankot v. Appellate Authority and others (CWP No.15423 of 2008). In this case the employee- respondent no.3 in this case was inducted in service on 6.5.1968. The Punjab Municipal Employees, Pension and General Provident Fund Rules, 1994 were enacted and came into force w.e.f. 1.4.1990. The petitioner retired on 31.12.2002. He received his gratuity to the tune of Rs. 2,10,045/- under the Punjab Civil Service Rules. The CWP No. 15423 of 2008 2 employee- respondent no.3 filed an application under Section 4(1) of the Act claiming that he was entitled to the grant of gratuity under the Act and the balance amount of Rs. 47,003/- plus interest @ 12 percent p.a. from 31.12.2002 be paid to him. The petitioner contested the claim made by the employee- respondent no.3 by pleading that the provisions of the Act did not apply and the service rules were to prevail. The Controlling Authority Labour-cum- Conciliation Officer- respondent no.2 issued direction to the petitioners to pay a balance amount of Rs. 47,003/- plus interest @ 9 percent p.a. from the date of application to the employee- respondent no.3 failing which penal simple interest @ 12 percent was to be charged from 26.10.2007 ( Annexure P.4). On 31.8.2007 the application filed by the Director Local Government for issuance of notification under Section 5(2) of the Act was allowed and the 1994 rules were specifically made applicable to those who were appointed on or after 1.4.1998, the date when the rules have been applied. The petitioner filed an appeal before the Appellate Authority and the employee- respondent no.3 also preferred a cross appeal ( Annexure P.7) with a prayer for enhancement of interest element. On 11.7.2008 the appeal filed by the petitioner was dismissed by the appellate authority- respondent no.5 ( Annexure P.8). The operative part of the order reads thus: “ After hearing the preliminary objections of the parties, I have perused the record of the case. I have also gone through the judgement of the Hon'ble Punjab and Haryana High Court (supra) in which it is held that “the Notification has come into force in August, 2007, whereas respondent no.3 has retired from service way back on 3.4.2004. In this view of the matter, CWP No. 15423 of 2008 3 the notification of the Punjab Government could be inapplicable and would not operate retrospectively.” Since all the respondents in the present appeals had retired from service way back in 1999, 2000, 2002 and 2003 therefore, relying upon the above said judgement of Hon'ble Court, I am satisfied that the notification dated 31.8.2007 granting exemption under Section 5 of the Act to the Municipal employees cannot be made applicable to their cases. As regards the pleadings of the respondents counsel regarding non deposit of the amount of gratuity, I have perused the relevant provisions of the Act. Proviso II to sub section (7) of Section 7 of the Act clearly stipulates as under: “ Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the Controlling Authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub section (4) or deposits with the appellate Authority such amount.” As envisaged in the above provision of law, an appeal of any employer can only be admitted if he has produced a certificate in token of proof for depositing the ordered amount of gratuity. However, the appellant did not deposit the requisite amount at the time of filing these appeals. Thus, the appellant- employer failed to comply with the mandatory provisions of law. In these circumstances, I do not find any ground to admit CWP No. 15423 of 2008 4 these appeals for hearing on merit. Accordingly, the same are as not maintainable. However, no order as to costs. The files are consigned to the record. A copy of this order shall be placed on each of the case file.” After hearing learned counsel for the parties and perusing the record we are of the view that exemption notification dated 31.8.2007 ( Annexure P.5) has been confined to such employees who have been appointed on or after 1.4.1990 and are governed by these rules from that date. It is patent from the perusal of the facts of the present case that the employees in the present petitions have joined service way back from 6.5.1968. The date of their appointment is explicit from the following table. S.No. Name of the applicant Particulars of the case Date of joining 1 Roop Lal CWP No. 15423 of 2008 06/05/68 2 Ramesh Chander CWP No. 15422 of 2008 18.11.1963 3 Surinder Singh CWP No. 15843 of 2008 15.1.1968 4 Bansi Ram CWP No. 15434 of 2008 05/04/61 5 Nathu Ram CWP No. 15441 of 2008 07/02/63 6 SukhdevRaj Sharma CWP No. 5894 of 2008 11/10/66 Moreover, the appeal of the petitioner has been dismissed on the ground that mandatory provision of Section 7(7)(ii) of the Act has been violated in as much as it has remained unable to deposit the amount as per the directions issued by the Controlling Authority. A bunch of petitions was decided by a Division Bench of this Court in the case of Municipal Committee Batala v. Satya (CWP No.13056 of 2001 decided on 29.8.2001). A copy of the judgement has been placed on record as Annexure R/4/3 in CWP No.5894 of 2008. The Division Bench after detailed examination of various provisions upheld the order passed by the Appellate Authority and dismissed the appeal for want of compliance of proviso (ii) of Section 7(7) CWP No. 15423 of 2008 5 of the Act. Another Division Bench of this Court has also upheld the claim made by the employees by dismissing the writ petitions filed by the Municipal Committee, Mour. The judgement has been delivered in the case of Municipal Committee Mour v. Appellate Authority (CWP No. 289 of 2008 decided on 14.2.2008) ( Annexure R/4/2 with CWP No. 5894 of 2008). It is now well settled that the provisions of the Act would continue to apply for payment of gratuity in respect of any provision made for gratuity under the pension rules because of the over-riding effect given to the provisions of the Act by virtue of Section 14 thereof. In that regard reliance may be placed on the judgement of Hon'ble the Supreme Court in the case of Municipal Corporation of Delhi v. Dharam Parkash Sharma (1998) 7 SCC 221. It is true that in the present case a notification under Section 5(2) of the Act exempting the employees of the local bodies has been issued by the State Government on 31.8.2007 which specifically provides in para 1 that the Director Local Government Punjab had applied for exemption from the provisions of Payment of Gratuity Act in respect of the employees of the Urban Local Bodies who have opted for Punjab Municipal Employees Pension and General Provident Fund Rules, 1994, the Punjab Municipal Corporation Employees Pension and General Provident Fund Rules, 1994 and the Punjab Improvement Trust Employees Pension and General Provident Fund Rules, 1994 who were appointed on or after 1.4.1990 and are governed by these rules w.e.f. 1.4.1990 when these rules were enforced. The afore-mentioned application was accepted by the Government and the concluding para of the notification reads thus: “ Now, in exercise of the powers conferred by sub section (2) CWP No. 15423 of 2008 6 of Section 5 of the Payment of Gratuity Act,1972, the Governor of Punjab is pleased to exempt such employees who have opted for Punjab Municipal Employees Pension and General Provident Fund Rules, 1994, the Punjab Municipal Corporation Employees Pension and General Provident Fund Rules, 1994 and the Punjab Improvement Trust Employees Pension and General Provident Fund Rules, 1994 from the provisions of the Payment of Gratuity Act,1972 w.e.f. 1.4.1990 subject to the condition that this notification will not prejudicially affect the interests of any person as provided under sub section (3) of Section(5) of the Payment of Gratuity Act,1972” A close examination of the afore extracted para of the notification would show that the exemption granted to Urban Local Body employees was to operate subject to one vital condition that the notification was not to substantially affect the interests of any person as provided by sub section 3 of Section 5 of the Act. It has come on record that interest of the employee- respondent no.3 is adversely affected as exemption notification issued under Section 5(2) of the Act would result into payment of far less amount admissible to him under the Act if the same is to be payable under the Rules. A balance amount of Rs.47,003/- is liable to be paid if the calculation is made under the Act. Moreover, the request made by the Director Local Government was only in respect of those employees who were appointed on or after 1.4.1990 and were governed by the Rules w.e.f. the afore-mentioned date. The petitioners were appointed in the year 1968, 1963, 1968, 1961, 1963 and 1966. On that basis also the notification cannot be relied upon by the petitioner. CWP No. 15423 of 2008 7 For the reasons afore-mentioned these petitions are without merit and are consequently dismissed. A copy of this order be placed on the file of connected petitions. (M.M.Kumar) Judge (Jora Singh) 22.9.2008 Judge okg