CWP No.13655 of 2009.doc - 1 – HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** CWP No.13655 of 2009 (O&M) Date of Decision: 20.09.2010 **** Municipal Council, Budhlada . . . . Petitioner VS. The Appellate Authority under the Payment Of Gratuity Act, 1972-cum- Labour Commissioner, Punjab & Ors . . . . . Respondents **** CORAM : HON’BLE MR.JUSTICE SURYA KANT **** 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? **** Present: Mr. Prem Kumar, Advocate; Mr. G.S. Attariwala, Advocate; Mr. AK Sharma, Advocate; Mr. Danil Kumar; Advocate; Mr. G.S. Sandhawalia, Advocate; Mr. Harinder Kumar, Advocate; Mr. Amit Singh, Advocate; Mr. Ashish Yadav, Advocate; Ms. Jarnail Kaur, Advocate for the PETITIONER(S) Mr. H.S. Brar, Addl. AG Punjab Mr. R.S. Sharma, Advocate; Mr. Raj Kaushik, Advocate; Mr. Vishal Sharma, Advocate; Mr. Parminder Singh Sekhon, Advocate; Mr. Deepak Arora, Advocate; Mr. Baljit Puri, Advocate; CWP No.13655 of 2009.doc - 2 – for the RESPONDENT-WORKMEN ***** SURYA KANT J. (ORAL) (1). This order shall dispose of CWPs No.13655, 15015, 15067, 15068 & 15069 of 2009; 11135, 11159, 11166, 11180, 11449, 11461, 11462, 11472, 11481, 11699, 11790, 11792, 11794, 11795, 12077, 12086, 12097, 12105, 12134, 12136, 12173, 12180, 12190, 12191, 12202, 12203, 12204, 12205, 12206, 12282, 12301, 12369, 12777, 12778, 12780, 12781, 12782, 12784, 12793, 12794, 12798, 14231, 14237, 14238, 14440, 14446, 15821 & 16896 of 2010 as the issues involved in these cases are common in nature. The petitioners are various Municipalities in the State of Punjab and are commonly aggrieved by the orders passed by the Controlling and Appellate Authority under the Payment of Gratuity Act, 1972, passed in favour of the retired Municipal employees. For brevity, the facts are being extracted from CWP No.13655 of 2009. (2). The petitioner – Municipal Council, Budhlada impugns the order dated 21.07.2008 (Annexure P4) passed by the Controlling Authority under the CWP No.13655 of 2009.doc - 3 – Payment of Gratuity Act, 1972 (in short, ‘the Act’) which has been further upheld by the Appellate Authority under the Act, vide its order dated 13.03.2009 (Annexure P5). Vide these orders the Authorities under the Act have accepted the application moved by respondent No.3 – a retired Clerk of the petitioner-Municipal Council for payment of Gratuity to him as per the provisions of the Act. (3). The pleas raised on behalf of the petitioner- Municipal Council to the effect that (i) the Gratuity is payable to the retired Municipal employee(s) in accordance with the provisions contained in the Punjab Civil Services Rules as adopted by it; and (ii) that the Government notification dated 31.08.2007 (Annexure P3) vide which the Municipalities have been exempted from the provisions of the Act, did not find favour with the Authorities under the Act in the light of a Division Bench decision dated 22.09.2008 of this Court in CWP No.15423 of 2008 (Municipal Council and others vs. Appellate Authority and others). As a sequel thereto, the Controlling Authority accepted the application of respondent CWP No.13655 of 2009.doc - 4 – No.3 and directed the petitioner-Municipal Council to pay the balance Gratuity amount of Rs.36,960/- along with due interest @ 10% per annum. (4). The solitary contention reiterated/raised before this Court on behalf of the petitioner-Municipal Council also revolves around the Notification dated 31.08.2007 (Annexure P3) issued by the State Government granting exemption from the applicability of the provisions of the Act. It is urged that the Municipal employees having been taken out of the purview of the Act, the impugned order(s) cannot sustain in law. (5). I have heard learned counsel for the parties at some length and perused the records. (6). During the course of hearing, learned counsel for the parties are ad idem that the question raised hereinabove stands answered by this Court in favour of the retired employees through various decisions including dated 29.08.2001 passed in CWP No.13056 of 2001 (Municipal Council, Batala v. Smt. Satya and others), wherein the Division Bench considered similar contentions CWP No.13655 of 2009.doc - 5 – raised on behalf of the Municipal Council, Batala, namely, that its employees were entitled to Gratuity as envisaged under the Punjab Civil Service Rules only. While rejecting the said contention and relying upon the judgement of the Hon’ble Supreme Court in Municipal Corporation of Delhi vs. Dharam Parkash Sharma, 1998(7) SCC 221, the Bench ruled as follows:- xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx “In view of the aforesaid decision rendered by the Apex Court, it is evident that exemption by the appropriate Government under Section 5 of the 1972 Act is a pre-requisite before any employer other than the Central Government or the State Government wishes to introduce its own scheme of gratuity for its employees. A perusal of the order passed by the Controlling Authority reveals that the petitioner Municipal Council, Batala, has not sought exemption for payment of gratuity envisaged under the 1972 Act. The aforesaid conclusion has not been disputed by the learned counsel for the petitioner. In the absence of exemption, CWP No.13655 of 2009.doc - 6 – it is evidently not permissible to the Municipal Council, Batala to introduce the scheme of gratuity to replace the scheme envisaged under the 1972 Act. In view of the aforesaid conclusion, we find no infirmity in the order passed by the Controlling Authority.” xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx (7). The Notification dated 31.08.2007 (Annexure P3) having been issued after the above-cited Division Bench decision, the contention based thereupon was raised by the Municipal Council, Pathankot before this Court in CWP No.15423 of 2008 (Municipal Council, Pathankot vs. Appellate Authority under the Payment of Gratuity Act, 1972 and others) but that too did not find favour with a Division Bench which held as follows:- xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx “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 CWP No.13655 of 2009.doc - 7 – 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.” xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx (8). Somewhat similar view has been taken by a Coordinate Bench in Krishan lal Aggarwal and others v. State of Punjab and others (CWP CWP No.13655 of 2009.doc - 8 – No.6905 of 2006) decided on 18.01.2010, the Letters Patent Appeal No.746 of 2010 preferred by the Municipal Council, Lehragaga against the above-stated decision of the Coordinate Bench also stands dismissed by a Division Bench vide its order dated July 2, 2010. (9). Learned counsel for the petitioner-Municipal Council, however, points out that the aggrieved Municipality has filed Special Leave Petition (Civil) No.11436 of 2009 before the Hon’ble Supreme Court against the first judgement of this Court rendered in CWP No.15423 of 2008 (Municipal Council, Pathankot vs. Appellate Authority under the Payment of Gratuity Act, 1972 and others) and vide an interlocutory order dated 13.05.2009 the Hon’ble Supreme Court has restrained the concerned Municipal employee(s) from taking any coercive steps effecting recovery of balance amount under the Act. It is also stated that the matter is still pending consideration before the Apex Court. (10). Having heard learned counsel for the parties and keeping the consistent view taken by this Court on the subject-issue, namely, that the Municipal CWP No.13655 of 2009.doc - 9 – employees are entitled to invoke the provisions of the Payment of Gratuity Act, 1972 as the amount of Gratuity payable under the Act is higher than what is being offered to them under the Punjab Civil Services Rules, there appears to be no other option but to dismiss these writ petition(s). (11). Ordered accordingly. (12). However, as agreed to by learned counsel for the parties and with a view to obviate further litigation, especially when the parties agree to accept and be bound by the final view to be taken by the highest Court, I deem it appropriate to dispose of these writ petition(s) with the following directions :- i. The parties shall abide by the decision of the Hon’ble Supreme Court in the pending SLP in Municipal Council, Pathankot’s case (supra) even if no separate SLPs are filed in their individual cases; ii. In cases the petitioner-Municipal Council has yet not paid the amount of Gratuity as ordered by the Controlling Authority/Appellate Authority under the CWP No.13655 of 2009.doc - 10 – Act, such Municipal Council(s) are directed to deposit the amount of Gratuity with the Controlling Authority within a period of three months and/or within a period of two months from the date of decision that may be rendered by the Hon’ble Supreme Court in the pending SLP, whichever is earlier; iii. During the interregnum, no coercive steps against the petitioner-Municipal Council(s) shall be taken by the respondents for the recovery of the balance dues; iv. The Controlling Authority shall be at liberty to disburse the amount of Gratuity to the Municipal employees on furnishing adequate security/indemnity bonds to its satisfaction with a clear undertaking that in the event of acceptance of the SLP by the Hon’ble Supreme Court, the Municipal employees shall be required to refund the said amount along with interest; v. The condition-(iv) above shall apply even in those cases where the amount of Gratuity has already been paid to the Municipal employees. CWP No.12301 of 2010 CWP No.13655 of 2009.doc - 11 – As a corollary to what has been directed above, the petitioner-Municipal Council in this case shall be at liberty to deduct the balance loan amount from the arrears of Gratuity payable to the respondent- employee in terms of the order of the Controlling Authority, however, it shall not preclude the respondent employee to question his liability to pay the balance loan amount before an appropriate forum, if so desired/advised. (13). With these observations/directions, the writ petition(s) stand disposed of. (14). Dasti . 20.09.2010 vishal shonkar (SURYA KANT) JUDGE