REGULAR SECOND APPEAL NO.69 OF 2005 :{ 1 }: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: JANUARY 28, 2010 The Managing Director, the Punjab State Cooperative Bank Ltd.,Chandigarh. .....Appellant VERSUS Manjit Singh Sodhi and others ....Respondents CORAM:- HON'BLE MR.JUSTICE RANJIT SINGH 1. Whether Reporters of local papers may be allowed to see the judgement? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? PRESENT: Mr. H. S. Sidhu, Advocate & Mr. Ajay Mahajan, Advocate, for the appellants. Mr. Vikas Suri, Advocate, for respondent No.1. **** RANJIT SINGH, J. This Regular Second Appeal No.69 of 2005 (The Managing Director, the Punjab State Cooperative Bank Ltd.,Chandigarh Vs. Manjit Singh Sodhi and others) is being disposed of alongwith 13 other Civil Writ Petition Nos.567 of 2005 (Abnash Chander Sidana and another Vs. State of Punjab and others), 8975 of 2005 (The Punjab State Cooperative Bank Ltd., Chandigarh Vs. Hari Chand Gupta and others), 16403 of 2005 (The Punjab State Cooperative Bank Ltd., Chandigarh Vs. Hukam Chand and others), 16405 of 2005 (The Punjab State Cooperative Bank Ltd., Chandigarh Vs. Sarabjit Singh Johal and others) 16413 of 2005 (The Punjab State Cooperative Bank Ltd., Chandigarh Vs. Hakim Singh and others) 16415 of 2005 REGULAR SECOND APPEAL NO.69 OF 2005 :{ 2 }: (The Punjab State Cooperative Bank Ltd., Chandigarh Vs. Ved Parkash Sharma and others), 16466 of 2005 (The Punjab State Cooperative Bank Ltd., Chandigarh Vs. Jagdev Singh and others), 19852 of 2005 (Amrik Singh Walia Vs. State of Punjab and another), 19882 of 2006 (Gurcharan Singh Vs. The Punjab State Cooperative Bank, Chandigarh and another), 1047 of 2008 (Kewal Krishan Kanwra and another Vs. State of Punjab and others), 20051 of 2008 (Harjinder Pal Singh Vs. State of Punjab and others), 21740 of 2008 (Balbir Singh Gill and others Vs. State of Punjab and others), and 21792 of 2008 (Karamjit Singh Randhawa and others Vs. State of Punjab and others). Common issue involved in all these cases relates to payment of gratuity. The appellant-Bank is in Regular Second Appeal to impugn the judgments passed by the Trial Court as well as First Appellate Court, through which the suit filed by one Manjit Singh Sodhi for payment of gratuity has been decreed. Manjit Singh had filed this suit with a grievance that he was entitled to the gratuity equivalent to 22 months of salary, which would work out to be Rs.2,56,014/- on the basis of the pay and emoluments he was drawing whereas he had been paid a sum of Rs.2,05,384/-. He accordingly prayed for release of Rs.50,130/-, which was the short fall in the gratuity that was payable to him alongwith 18% interest per annum. The case set-up by the respondent-plaintiff was that as per the last pay certificate (L.P.C) issued to him on 24.12.1996, his basic pay was Rs.5100, medical allowance Rs.125/-, dearness allowance Rs.5202, interim relief Rs.710/- and house rent allowance Rs.500/-, REGULAR SECOND APPEAL NO.69 OF 2005 :{ 3 }: totalling to Rs.11,637/-. Appellant Bank appeared and contested the suit and objected to the prayer made by the respondent-plaintiff, pleading that he was not entitled to recover any amount of gratuity with interest as prayed for. The claim of the respondent-plaintiff that he was entitled to the gratuity due to 32 years service he had rendered was contested by stating that he had 31 years 11 months and 25 days service and not 32 years as alleged. Appellant Bank (Defendant No.4) filed a separate written statement, contesting the claim. It was pleaded that respondent-plaintiff was entitled to gratuity equivalent to 21 months service and, thus, he was not entitled to the amount claimed in the suit. The suit proceeded on following issues:- “1. Whether the plaintiff is entitled for mandatory injunction for payment of gratuity amount of Rs.56,130/- OPP 2. Whether the plaintiff is entitled for interest? If so at what rate and what amount? OPP 3. Whether the suit is liable to be dismissed for misjoinder of parties?OPD 4. Whether the plaintiff (sic) plaint is not verified in accordance with law? OPD 4-A. Whether suit is not valued for the purpose of court fee and jurisdiction? OPD 5. Relief.” The parties led evidence in support of their respective stands. The respondent plaintiff claimed gratuity equivalent to 22 months of salary on the basis of his last drawn salary being REGULAR SECOND APPEAL NO.69 OF 2005 :{ 4 }: Rs.11,637/-. The appellant-Bank, however, maintained that respondent-plaintiff was entitled to gratuity equivalent to 21 months salary. In addition, it was pleaded that the gratuity would be payable by taking into consideration the basic salary plus D.A, Interim relief and that house rent and medical allowance can not be considered as part of salary for calculating gratuity. Pritpal Singh (DW2) was examined as a witness by the appellants in support of their case. He admitted while under cross- examination that total salary drawn by the respondent-plaintiff was Rs.11637/- and that payment of gratuity was to be made to the plaintiff as per Punjab State Cooperative Financing Instituting Service (Common Cadre) Rules, 1970-71 (for short, “Common Cadre Rules”). By referring to Rule 3a of the Common Cadre Rules, it was stated that the respondent-plaintiff was entitled to receive gratuity equal to the salary of 15 months for putting in 25 years service and thereafter for one month salary for each completed year of satisfactory service. It was on this basis pleaded that the service of the respondent-plaintiff, being 31 years, he was entitled to gratuity equivalent to 21 months of pay as 7th year of his service was not complete as it fell short by 6 days. The submissions made by counsel for respondent-plaintiff by referring to Rule 6.1 of Punjab Civil Service Rules, Volume II, that completed service of 3 months shall be treated as six months period for the purpose of pension was not accepted by the Trial Court on the ground that Rules for payment of gratuity for the employees of the Bank were Common Cadre Rules and so the Punjab Civil Service Rules would not be applicable. It was further observed that there was no provision for calculating fraction of REGULAR SECOND APPEAL NO.69 OF 2005 :{ 5 }: a year as a completed year under the Common Cadre Rules and as per Rule 3a, one month's pay as additional gratuity was payable for each completed year of satisfactory service beyond 25 years. Accordingly, it was held that respondent-plaintiff would be entitled to gratuity equivalent to 21 months salary. By placing reliance on Rule 2(C) of Common Cadre Rules, pay was held to mean average salary inclusive of other remuneration drawn in salary during the last 12 months and in view of the admitted fact that the total salary drawn by the respondent- plaintiff was Rs.11637/-, the gratuity payable to the respondent- plaintiff was calculated to be Rs.2,44,377/-. Submissions made on behalf of appellant-Bank that definition of “wages” as provided in the Payment of Gratuity Act (for short “Gratuity Act”) did not include bonus, commission, house rent allowance and over time wages and any other allowance, was not accepted on the ground that the gratuity was payable as per the Common Cadre Rules where the salary was defined to include all other remunerations drawn as salary. Accordingly, the justification advanced by the appellant-Bank to exclude the house rent and medical allowance for the purpose of calculating gratuity was rejected. Issues No.3 and 4 were decided against the appellant- Bank on the ground that these were not pressed. Similarly, additional issue framed as 4A was also not raised at the time of arguments and accordingly was decided in favour of the respondent-plaintiff. The appellant-Bank had filed appeal against this order primarily on the ground that the legal position was not properly appreciated and the term `pay' for the payment of gratuity was not REGULAR SECOND APPEAL NO.69 OF 2005 :{ 6 }: properly appreciated. The Appellate Court upheld the judgment passed by the Trial Court and rejected the contention raised by the appellant-Bank to the effect that pay would not include other remunerations like house rent, medical allowance. The first Appellate Court also relied upon Rule 2 (C) of the Common Cadre Rules for the purpose of definition of `pay'. The Ist Appellate Court also made reference to an order passed by this Court while deciding Civil Writ Petition No.1182 of 1997 to say that it was abundantly clear that the average salary including other remunerations drawn as salary during the last 12 months were to be taken into account while calculating gratuity. Rather, the Court further held that gratuity can not be calculated on the basis of basic salary alone. The Bank now, thus, is in appeal before this Court. From the issues that were framed while deciding the suit and the pleadings that were made, it would come out clearly that the Bank had never raised any question that the provisions of the Gratuity Act would prevail over the provisions of Common Cadre Rules for the purpose of calculating gratuity. Without any plea made in this regard, it was vaguely argued before the Trial Court that the wages as defined under the Gratuity Act be considered for the purpose of calculating the gratuity. In fact, the witness produced by the appellant-Bank clearly conceded the applicability of the Common Cadre Rules while under cross-examination. The last pay certificate of the respondent-plaintiff was also admitted. However, entirely new twist is now given to the controversy while arguing the Regular Second Appeal before this Court by pleading that the provisions of Gratuity Act will have over-riding effect as per Section REGULAR SECOND APPEAL NO.69 OF 2005 :{ 7 }: 14 of the Gratuity Act. The contention noticed by this Court while issuing notice of motion is that definition of `wages' under the Gratuity Act, has been ignored. This was the precise submission advanced even at the time of admission of the present Regular Second Appeal. Plea was that medical allowance and house rent allowance could not be taken as a component of pay for the purpose of calculating the gratuity and taking of these into account for the purpose of calculation would be contrary to the provisions of the Gratuity Act. Now, while arguing this case before the Court, a new dimension has been given to the controversy. Not only this, the issue apparently is further compounded due to an action taken by the senior counsel who had appeared for the appellant Bank. His advice to Registrar led to withdrawing certain communication earlier issued by the Registrar. This has given rise to filing of number of writ petitions by the employees to challenge the said communication. Bank has also come forward to challenge the calculation of gratuity by filing number of petitions making this advice as a base. As would be noticeable, the Court had decreed the suit, primarily on the ground that the Common Cadre Rules would govern the payment of gratuity in this case. There was no specific pleading made that the Gratuity Act is to apply or that it would have an over- riding effect. Apparently, to tide over this tight situation, another novel method appears to have been invented and adopted to move the Registrar to withdraw the approval granted by him to the Common Cadre Rules. A communication was initiated on 19.10.2005 by the Registrar, Cooperative Societies, Punjab, to the Managing Director of REGULAR SECOND APPEAL NO.69 OF 2005 :{ 8 }: the appellant-Bank to the effect that the letter No.Credit/CA 4/Amendment/8535 dated 7.6.2001 and Credit/CA 4/7206 dated 7.5.2002 regarding gratuity were withdrawn on the legal advice given by Senior Advocate, who is named in the communication. The communication reads as under:- “Proposal sent by you vide letter under reference on the subject mentioned above was considered and on the recommendation of the Managing Director, Punjab State Co-operative Bank and keeping in view the legal advice given by Sh.H.S.Mattewal, Senior Advocate High Court, letters No.Credit/CA 4/Amendment/8535 dated 7.6.2001 and No. Credit/CA 4/7206 dated 7.5.2002 regarding gratuity are hereby withdrawn and letter No.Credit/CA 4/8230 dated 24.8.1998 will remain in force.” These letters have, thus, been withdrawn on the advice of a counsel, who had appeared for the Bank to argue the Regular Second Appeal. The background, which would have necessitated the need to withdraw these communication, may be noticed. On 24.8.1998, Registrar had issued a communication to substitute Rule 3.11 of Common Cadre Rules, which reads as under:- “The employee shall be paid Gratuity as per the provisions of the Payment of Gratuity Act, 1972.” Another communication dated 7.6.2001 was issued in response to a letter written by the Managing Director of the appellant- Bank. It is stated in this letter that the proposal was considered and it was decided to allow the payment of gratuity as per Annexure V to REGULAR SECOND APPEAL NO.69 OF 2005 :{ 9 }: those Common Cadre employees who were working as such before 24.8.1998 with the condition that no such employee who has been made final payment due to any reason whatsoever will be given any benefit in addition to whatever has been paid to him. It was also clarified that the gratuity was to be paid as per the provisions of the Gratuity Act, to those common cadre employees who were appointed after 24.8.1998, when the amendment in the Rule 3.11 was introduced. This position was again reiterated through letter dated 7.5.2002 where it was clarified that the gratuity is to be paid as per Annexure V of the Common Cadre Rules to the employees who were in the common cadre as on 24.7.1998 and the same was to be paid as per the Gratuity Act, to those employees who came into service or came into common cadre after 24.8.1998. These two clarificatory communications were withdrawn as noted above and the resultant effect is that it is now pleaded that the Gratuity Act would prevail over the Common Cadre Rules. Primarily, it appears to be aimed at circumventing the liability, which is payable upto 24.8.1998 and also to substantiate the stand of the Bank to challenge the judgment that was under appeal before this Court. This action of Registrar to favour the Bank, which is a party before this Court, that too on the advice of the counsel representing the Bank would certainly be a cause of concern. It is for the counsel to consider if it was ethical to tender legal advice in a case where he was representing a party. It would be a cause of grievance to those employees who were affected because of the withdrawal of these communications. Accordingly, number of writ petitions came to be filed before this Court to seek quashing this REGULAR SECOND APPEAL NO.69 OF 2005 :{ 10 }: communication dated 19.10.2005, (Annexure P-5), and so also the directions dated 24.8.1998. Prayer in the alternative is made to say that the said letters be made applicable to those employees who came into common cadre after issuance of the said letters. Civil Writ Petition Nos.567, 1047, 20051, 21740, 21792 of 2008 were accordingly filed by the employees to challenge the communications that were initiated by the Registrar. Civil Writ Petition No.19852 of 2005 was filed by one Amrik Singh Walia, seeking direction for payment for release of his gratuity with an additional prayer to count his military service for this purpose. Gurcharan Singh, another petitioner filed Civil Writ Petition No.19882 of 2006, also approached this Court for release of his gratuity under the Common Cadre Rules. These two writ petitions were admitted to be heard alongwith the Regular Second Appeal on the ground that the common question of law was involved. During the pendency of the Regular Second Appeal, the Bank also filed some Civil Writ Petitions to impugn the calculation done by the Accountant General for payment of gratuity by taking into consideration the emoluments/allowances to be inclusive in the pay, on the lines of the view taken by the Court which is under challenge in the instant Regular Second Appeal and perhaps in some of the writ petitions. The Bank accordingly challenged the calculation so done through a writ petition to say that the gratuity being calculated by including house rent allowance, medical allowance, city compensatory allowance and the interim relief, can not be done but was being done and would be contrary to the Gratuity Act and in terms of the definition of pay given in clause 2 (c) of the Common REGULAR SECOND APPEAL NO.69 OF 2005 :{ 11 }: Cadre Rules. First Civil Writ Petition filed in this regard is 8975 of 2005, which was admitted to be heard alongwith this Regular Second Appeal. Civil Writ Petition Nos.16403, 16405, 16413, 16415, 16466 of 2005 containing identical challenge were ordered to be admitted for hearing alongwith Civil Writ Petition No.8975 of 2005. Some of the writ petitions filed by the employees were also admitted to be heard alongwith these writ petitions as the identical issues were being raised in all such writ petitions. It is being canvassed by the employees that gratuity shall be payable to them in terms of the Common Cadre Rules where the salary is so defined and, thus, for the purpose of calculating the gratuity, the house rent and medical allowance, which are emoluments payable to them as a salary are required to be included for the purpose of calculating gratuity. This is what has been held in the civil suit decided by the Courts, which is impugned by the Bank through present Regular Second Appeal. On the other hand, the Bank would say that pay is to be construed in terms of the definition contained in the Gratuity Act and accordingly the allowances like house rent allowance or medical allowance etc. would not form part of pay and hence, can not be included as part of pay for the purpose of calculating gratuity. The shift in the stand of the Bank to come out of the judgment passed against it and to substantiate its stand in the Regular Second Appeal can be clearly discerned. No submission on the lines as are advanced before this Court were ever made in the pleadings while defending the civil suit. A vague plea was raised that the salary is to be construed as per the definition given in the REGULAR SECOND APPEAL NO.69 OF 2005 :{ 12 }: Gratuity Act. No plea was ever raised in this regard in the pleadings. It was also not urged, as is now being stated, that the provisions of the Gratuity Act would have an over-riding effect on the other statutory provisions in view of Section 14 thereof. No plea was raised as is being now urged that exception to this could be only in those situation where there are better terms under Section 5 of the Gratuity Act that too when exemption is granted. Of course, his plea that the wages will include only dearness allowance and not other emoluments, as already noticed, was vaguely raised. Plea further is that the emoluments, unless categorized as pay can not become part of the pay as per the definition of term contained in various statutes. The counsel representing the employees would join serious issues regarding the submission made by the counsel for the appellant, who has appeared for the Bank in some of the writ petitions as well. They would plead that the provisions of the Common Cadre Rules are to be taken into consideration for payment of gratuity as has even been viewed by the Department as such, till the time the Rule was substituted on 24.8.1998. They would also plead that the Registrar would not have jurisdiction to withdraw the communications as was done by issuing Annexure P-5, which is under challenge in the writ petitions. By making reference to the provisions of Punjab State Cooperative Societies Act, it is urged that the approval once granted by the Registrar to the common cadre can not be withdrawn as it would amount to review of the order for which Registrar has no power or authority. Alternatively, it is pleaded that in any case once the benefit was granted and is available to the employees as a right, the same can not be taken away REGULAR SECOND APPEAL NO.69 OF 2005 :{ 13 }: retrospectively as it would then amount to taking away the accrued rights of the employees, which in any case would be totally illegal being unconstitutional. Mr.H.S.Sidhu has advanced his arguments in the Regular Second Appeal. The first difficulty that starred at him in this background was the pleadings made on behalf of the appellant Bank before the Trial Court. There was total lack of pleadings on the aspects which he argued before this Court. Rather, the Regular Second Appeal was got admitted on this basis only, which had not been pleaded or urged before the Trial Court in the pleadings. To tide over this situation, he drew my attention to Tarini Kamal Pandit and others Vs. Prafulla Kumar Chatterjee (dead) by Legal Representatives, 1979 (3) Supreme Court Cases 280 to urge that a pure question of law not involving any question of fact was permitted to be raised for the first time even before the Supreme Court as per the law laid down in this case. The relevant observations of the Hon'ble Supreme Court in this regard are as under:- “This point was not taken in any of the courts below but learned counsel submitted that because it is a pure question of law not involving any investigation of facts and as it goes to the root of the matter the court may permit the point to be taken. In support of his contention that a pure question of law in the circumstances can be taken for the first time in this Court he relied on the decisions of this Court in (1) Yaswant Deorao Deshmukh V. Walchand Ramchand Kothari, (2) Raja Sri Sailendra Narayan Bhanja Deo Vs. State of Orissa, (3) Seth Badri Prasad Vs. Seth Nagarmal, (4) State of Uttar Pradesh Vs. Anand Swarup and (5) T.G.Appanda Mudaliar V. State of Madras. As the point raised is a pure question of law not involving any investigation of the facts, we permitted the learned counsel to raise the question.” 1 AIR 1951 SC 16 3 AIR 1959 SC 559 5 AIR 1976 SC 2450 2 AIR 1956 SC 346 4 (1974) 1 SCC 42 REGULAR SECOND APPEAL NO.69 OF 2005 :{ 14 }: Reference in this regard is also made to T.G.Appanda Mudaliar (dead) by L.Rs Vs. State of Madras, 1976 (4) Supreme Court Cases 821, where new plea raising pure questions of law relating to interpretation of statute was allowed by the Supreme Court. In Grasim Industries Ltd. Vs. Collector of Customs, Bombay, 2002 (4) Supreme Court Cases 297, a new plea not raised before any Forum below but involving questions of law was allowed to be raised by the Supreme Court. Similar view was taken by the Hon'ble Supreme Court in Rajeswari Amma and another Vs. Joseph and another, 1995 (2) Supreme Court Cases 159. Accordingly, these pleas even if are being raised for the first time before this Court may require consideration, especially so when the similar issues are arising in the writ petitions, which are being heard alongwith this Regular Second Appeal. The first submission that would require consideration would be regarding the over-riding effect of the provisions of the Gratuity Act in terms of Section 14. The counsel for the appellant has canvassed that the provisions of the Gratuity Act would have an over- riding effect notwithstanding anything contained inconsistent therewith in any enactment, any other act or any instrument. He would, however, concede that Section 4 of the Gratuity Act would carve out an exception in this regard by providing in sub-section (5) thereof that “nothing in this Section shall effect the right of an