IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. LPA No. 797 of 2010 (O&M) Date of Decision: July 21, 2010 Municipal Council, Bhawanigarh and others …Appellants Versus Krishan Lal Aggarwal and others …Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE A.N. JINDAL Present: Mr. Samarth Sagar, Advocate, for the appellants. Mr. S.K. Sharma, Advocate, for the Caveator-respondents. 1. To be referred to the Reporters or not? Yes 2. Whether the judgment should be reported in the Digest? M.M. KUMAR, J. This appeal filed under Clause X of the Letters Patent is directed against the order dated 18.1.2010, passed by the learned Single Judge in CWP No. 6905 of 2006. 2. The short issue raised before the learned Single Judge and decided in favour of the petitioner-respondents is whether any Rule, which is less favourable to employees for payment of gratuity could be framed replacing the provisions of the Payment of Gratuity Act, 1972 (for brevity, ‘the Act’). According to the provisions of Section 5(2) of the Act, the Appropriate Government is clothed with the power to exempt any establishment etc. from LPA No. 797 of 2010 the operation of the provisions of the Act if in the opinion of the Government the employees of such establishment are in receipt of gratuity or pensionary benefits not less favourable than the benefit conferred under the Act. Under Section 5(3) of the Act a specific provision has been made that a notification could be issued retrospectively but it shall not be issued so as to prejudicially affect the interest of any person. Learned Single Judge has found that the matter was not res integra as in the case of Municipal Council, Pathankot v. Appellate Authority under the Payment of Gratuity Act and others (CWP No. 15423 of 2008, decided on 22.9.2008) a Division Bench of this Court (of which one of us, M.M. Kumar, J. was a member) held that the notification issued on 31.8.2007 exempting the employees of the Local Bodies from the operation of the Act on the ground that in respect of those employees of the Urban Local Bodies, Rules were enforced which were known as ‘the Municipal Employees Pension and General Provident Fund Rules, 1994’ and ‘the Punjab Improvement Trust Employees Pension and General Provident Fund Rules, 1994’. These rules are also applicable to the petitioner- respondents. Those rules have been applied to such employees who were appointed on or after 1.4.1990 and are governed by the aforesaid rules. Interpreting the aforesaid rules in the light of Section 5(2) of the Act, the Division Bench of this Court has observed as under:- “ 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 2 LPA No. 797 of 2010 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.” 3. Taking into account the aforesaid view, the learned Single Judge has held that the judgment of the Division Bench squarely governs the matter and the petitioner-respondents were also entitled to claim gratuity under the Act. 4. Having heard learned counsel for the appellants, we are of the considered view that no exception has been provided to interfere in the view taken by the learned Single Judge. The matter is squarely covered by the Division Bench judgment in the case of Municipal Council, Pathankot (supra) and the operation of the rules in regard to the petitioners has resulted in causing prejudice to their rights. There is no merit in the instant appeal. Accordingly, the appeal fails and the same is dismissed. (M.M. KUMAR) JUDGE 3 LPA No. 797 of 2010 (A.N. JINDAL) July 21, 2010 JUDGE Pkapoor 4