IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 07.02.2011 CORAM: THE HON’BLE MR. JUSTICE K.CHANDRU W.P.No.3128 of 2006 & WPMP Nos.833 and 834 of 2006 M.Selvadurai .. Petitioner Vs. 1. The Director Personnel Block-I, Corporate Office Neyveli Lignite Corporation Limited Neyveli 1 Cuddalore District 2. The Deputy General Managr P & A Corporate Office Neyveli Lignite Corporation Limited Neyveli Cuddalore District 3. Additional Chief Manager P & IR Neyveli Lignite Corporation Limited Neyveli Cuddalore District 4. Regional Labour Commissioner and Appellate authority Under Payment of Gratuity Act Office of the Regional Labour Commissioner (Central) No.4, Haddows Road "Shasthri Bhavan" Chennai 6 5. Union of India rep.by its Secretary to Govt., Ministry of Labour and Employment Jaisalmer House, Mansigh Road New Delhi 110 001 (5th respondent impleaded as per order dated 16.11.2010 in WPMP No.706 of 2010) .. Respondents https://hcservices.ecourts.gov.in/hcservices/ Prayer : Petition under Article 226 of the Constitution of India praying for a Writ of Certiorarified Mandamus to call for the proceedings of the Regional Labour Commissioner, the 4th respondent herein dated 23.09.2005 in No.PGA.254/2003-B1 quash the same and consequently direct the 2nd respondent to pay the petitioner the gratuity benefits due to him along with appropriate interest. For Petitioner :: Mr.S.Meenakumari For Respondents :: Mr.N.Nithyanandam for R1 to R3 Mr.T.Chandrasekaran for R4 O R D E R Heard both sides. 2. This Writ Petition came to be posted on being specially ordered by the Hon'ble Chief Justice vide order dated 3.2.2011. 2. The petitioner was initially employed by the respondent Neyveli Lignite Corporation in their Education Department. He was originally appointed as an Office Assistant in NLC Schools with effect from 11.4.1987. His name was sponsored by the Employment Exchange and his scale of pay was fixed at Rs.550-11-715. Subsequently, he was promoted as a Record Clerk on 3.11.1998 with a revised scale of pay of Rs.580-12-700-13-830. But, however, in the order it was indicated that the said posting is subject to the approval by the State Government. It is needless to state that the Schools run by NLC were recognised under the Tamil Nadu Recognised Private Schools (Regulation) Act, 1973 and they were treated as 'private schools' for the purpose of the Act. 3. A proposal for approving the appointment of the petitioner was sent to the State Government. The State Government did not approve the said appointment and hence the petitioner's service came to an end on 4.7.1996. Thus the petitioner from 11.4.1987 to 4.7.1996 had put in nine years of service in their Schools. In view of the fact that the petitioner had put in long years of service and his post could not be continued in the NLC schools and on a representation, the respondent NLC had appointed him as an Attendant (Trainee) with effect from 5.7.1996. He was asked to sign an undertaking that he will not claim any service weightage or benefits for the period from 11.4.1987 to 4.7.1996. https://hcservices.ecourts.gov.in/hcservices/ 4. The petitioner after joining the post filed an application under Section 7(4) of the Payment of Gratuity Act before the Controlling Authority. His gratuity application was taken on file as G.A.No.83 of 2001 and Notice was ordered to the respondent NLC. Before the authority, the only stand taken by the respondent was that the petitioner was appointed as an Office Assistant and subsequently promoted as a Record Clerk and since the State Government did not approve his appointment, he was given an appointment as a fresh entrant in the NLC. Therefore, in view of his undertaking that he will not claim any benefit for the past service, this application was not maintainable. The authority correctly overruled the respondent NLC's objection by relying upon Section 14 of the Payment of Gratuity Act, wherein a non-obstante clause has been introduced. 5.Section 14 of the Payment of Gratuity Act reads as follows: "14. Act to override other enactments, etc.- The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act." 6. The Controlling Authority held that by taking an undertaking from the petitioner, the respondent cannot deny the statutory benefits accrued to the petitioner under the Payment of Gratuity Act. The fact that the State Government had not approved the appointment will not enure the service benefit available to him. Therefore, by order dated 11.4.2003, the Controlling Authority computed a sum of Rs.20,743/- together with interest at the rate of Rs.10% from 4.7.1996. 7. It was thereafter the respondent NLC filed an appeal under Section 7(7) of the Payment of Gratuity Act before the appellate authority, namely, the 4th respondent, who was the Regional Labour Commissioner (Central), Chennai. Before filing the appeal, it was claimed that the respondent NLC has deposited the amount, which was a pre-condition for entertaining the appeal. The said appeal was taken on file as PGA.254/2003 and the petitioner was issued with a show cause notice. For the first time, the respondent NLC took up a contention that the NLC Schools are not covered by the Payment of Gratuity Act. Since the notification covering "educational Institutions" was issued with effect from 3.4.1997 and that the petitioner's service in NLC School had come to an end before the said period, it cannot be said that the Act is covered to NLC Schools. Therefore, the order of the Controlling Authority was invalid. https://hcservices.ecourts.gov.in/hcservices/ 8. It must be noted that such contention was never raised before the Controlling Authority. Even otherwise, the 4th respondent appellate authority by order dated 23.9.2005 allowed the appeal only on the ground that the Government of India vide statutory order Ministry of Labour S.O.1080 dated 3.4.1997 had applied the Payment of Gratuity Act to the petitioner institution only from 3.4.1997 and therefore since the petitioner had worked before initiation and before the Coverage under the Act, he is not eligible for gratuity. Aggrieved by the order passed by the 4th respondent, the petitioner preferred the Writ Petition. 9. The Writ Petition was admitted on 6.2.2006. Though the petitioner sought for interim stay of the order of the appellate authority, this Court by an order dated 6.2.2006 dismissed the said application. The petitioner thereafter filed WPMP No.706 of 2010 to implead the Union of India as a party respondent and the same was ordered on 16.11.2010. The petitioner also filed WPMP Nos.833 and 834 of 2010 seeking to amend the prayer and also to raise additional grounds. However the view which this Court wants to have in this Writ Petition, it was unnecessary to entertain these Miscellaneous Petitions. Hence, both WPMP Nos.833 and 834 of 2010 are dismissed as unnecessary. 10. On notice, the respondent NLC had filed a counter affidavit dated 23.6.2010. In the counter affidavit, the respondent NLC had reiterated the same contentions which were raised by them in the appeal before the appellate authority. It is also stated that though they took steps to appoint the petitioner, the Education Department of the State Government did not grant approval for his appointment and that the petitioner had given an undertaking not to claim any benefits. Insofar as the undertaking is concerned, it was unnecessary to dwelve with it any further as the Controlling Authority had rightly found that in terms of Section 14 of the Payment of Gratuity Act, there cannot be any waiver or relinquishment of a right accrued to an employee covered by the provisions of the Payment of Gratuity Act. 11. Such a view was projected in a recent judgment in Allahabad bank and another vs. All India Allahabad Bank Retired Employees Association reported in (2010) 2 SCC 44. The Supreme court in paragraph 36 had observed as follows: "36. The appellant being an establishment is under the statutory obligation to pay gratuity as provided for under section 4 of the Act which is required to be read along with Section 14 of the Act which says that the provisions of the https://hcservices.ecourts.gov.in/hcservices/ 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 enactments or instruments or contracts so far a 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. The second contention whether it is only by virtue of the Notification, the Act will apply to the Educational Institutions, the question raised in this regard is no longer res integra. A Division Bench of this Court presided by M.Srinivasan, J (as he then was) vide judgment dated 17.10.1980 in the management of SIET Women's College, Madras vs. Mohamed Ibrahim and others reported in 1992 (1) LLJ 91 has held that the Payment of Gratuity Act will apply to educational institutions even in terms of Section 1(3)(b) of the Payment of Gratuity Act. In that case, it was found that the definition under Section 1(3)(b) makes an Act applicable to all establishments which are establishments within the meaning of any law for the time being in force. In support of this, a reference was made to the judgment of the Supreme Court in State of Punjab vs. Labour Court, Jullundur reported in 1980 (1) SCC 4 = 1981 (1) LLJ 354. 13. the Division Bench in paragraphs 5 and 8 has held as follows: "5. The Employees' Provident Funds and Miscellaneous Provisions Act, 1958 is applicable to the petitioner as all educational institutions have been notified as 'establishments' within the meaning of the said Act by the Central Government under Section 1(3)(b) of that Act, (vide Notification S.O.986 dated February 19, 1982. Hence, the petitioner is an 'establishment' within the meaning of a law for the time being in force in relation to establishments in the State. One of the contentions urged by learned counsel for the petitioner is that the law referred to in Section 1 (3)(b) of the Act should be a law already in force in the concerned State and not any law which comes into forces subsequently. We do not agree with this contentions. The question has to be decided only when it arises before the Court. If at the time when the question arises before the Court for consideration, there is a law in force in relation to shops or establishments in a State, then the Act will apply to all shops and establishments within the meaning of such law. There is no necessity for the relevant law to have been in force already when the Act was passed in 1972. However, that argument will not apply to the Employees' https://hcservices.ecourts.gov.in/hcservices/ Provident Funds and Miscellaneous Provisions Act, 1952, as that came into force long prior to the passing of the Payment of Gratuity Act. Even assuming that the contention of learned counsel is acceptable, it cannot escape the applicability of the Act as the petitioner is an establishment within the meaning of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. 8. The result of the above discussion leads to the conclusion that the petitioner is an 'establishment' falling within the purview of Section 1(3)(b) of the Act and the contention to the contrary urged by learned counsel for the petitioner should be rejected." 14. Merely because the Central Government had issued a specific notification covering the educational institutions, that will not nonetheless make the provisions of the Act inapplicable before the date of the said Notification if the Act is otherwise applied by virtue of interpretation placed by the Supreme Court and the Division Bench. Certainly the contentions raised by NLC was not based on the above legal precedents. Therefore, the finding of the appellate authority in the impugned order by referring to the Notification and holding that the Act will apply only from the date of the Notification, namely from 3.4.1997 is clearly erroneous and not supported by law. It is rather unfortunate that though the impugned order was dated 23.9.2005, both parties have not brought it to the notice of the appellate authority about the binding precedents of the Supreme Court and the Division Bench as noted above and have allowed the authority to commit such a grave mistake. 15. This leaves out the last submission made by the respondent NLC, regarding the petitioner's appointment not being approved by the State Government and hence he was not eligible to get any benefit as he had worked in an unapproved post. But, in the present case, at the relevant time, the petitioner was appointed by the NLC. The fact that the State Government did not grant approval of his appointment is irrelevant for the purpose of deciding the employer and employee relationship between the petitioner and the respondent NLC. 16. This question came to be considered by the Supreme Court in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and others vs. V.R.Rudani and others reported in (1989) 2 SCC 691. In paragraph 10, the Supreme Court had observed as follows: https://hcservices.ecourts.gov.in/hcservices/ "10. Having heard the counsel for both parties, we are left with an impression that the appellants are really trying to side-track the issue and needlessly delaying the legitimate payments due to the respondents. The question whether the State is liable to recompense the appellants in respect of the amount payable to the respondent was not considered by the High Court and indeed could not have been examined since the State was not a party to the proceedings. However, by the persuasive powers of the counsel in this Court, the State has been impleaded as a party in these appeals. Perhaps, this Court wanted to find out the reaction of the State on the appellants' assertion for reimbursement. We heard counsel for the State. He disputes the appellants' claim. In fact, he challenges the claim on a number of grounds. He says that the State is under no obligation to pay the appellant as against the sum due to the respondents. We do not think that we need rule today on this controversy. It is indeed wholly outside the scope of these appeals. We are only concerned with the liability of the management of the college towards the employees. Under the relationship of master and servant, the management is primarily responsible to pay salary and other benefits to the employees. The management cannot say that unless and until the State compensates, it will not make full payment to the staff. We cannot accept such a contention." (Emphasis added) 17. As held by the Supreme Court, the relationship between the petitioner and the respondent NLC is that of a master and servant. The NLC being the employer is primarily responsible for paying the salary and other benefits. Gratuity is one such benefit and hence the respondent NLC is bound to pay gratuity, if the petitioner comes within the contingency found under Section 4(1) of the Payment of Gratuity Act. 18. In the light of the above factual matrix and the legal precedents referred to above, the impugned order passed by the 4th respondent in PGA.254/2003-B1 dated 23.9.2005 will stand set aside. The order of the Controlling Authority, namely the Assistant Labour Commissioner (Central), Chennai in G.A.No.82 of 2001 dated 11.4.2003 will stand restored. Since the amount is already in deposit with the said authority, (he was not made as a party in this Writ Petition), the petitioner is also entitled to withdraw the amounts and claim all other statutory dues to which he is entitled to. https://hcservices.ecourts.gov.in/hcservices/ 19. The Writ Petition is allowed with cost of Rs.5,000/-. The respondent NLC is directed to pay the above cost of Rs.5,000/- as counsel fee to the petitioner's counsel. Since the Writ Petition is allowed, the other Miscellaneous Petitions have become unnecessary and are dismissed. Sd/- Asst.Registrar /True Copy/ Sub.Asst.Registrar ajr To 1. The Director Personnel Block-I, Corporate Office Neyveli Lignite Corporation Limited Neyveli 1, Cuddalore District 2. The Deputy General Managr P & A Corporate Office Neyveli Lignite Corporation Limited Neyveli, Cuddalore District 3. Additional Chief Manager, P & IR Neyveli Lignite Corporation Limited Neyveli, Cuddalore District 4. Regional Labour Commissioner and Appellate authority Under Payment of Gratuity Act Office of the Regional Labour Commissioner (Central) No.4, Haddows Road "Shasthri Bhavan" Chennai 6 5. Secretary to Govt., Union of India Ministry of Labour and Employment Jaisalmer House, Mansigh Road New Delhi 110 001 + 1 cc to Mr.N.A.K. Sarma, Advocate SR.8995 + 1 cc to Mr.D. Balachandran, Advocate Sr.9052 W.P.No.3128 of 2006 PUR(CO) Eu 24.2.11 https://hcservices.ecourts.gov.in/hcservices/