CWP No. 6479 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. CWP No. 6479 of 2009 Date of decision 27 .10.2009 Vishwa Nath ... Petitioner Versus State of Haryana and another ... Respondents. CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JASWANT SINGH Present: Mr. Devender Punia ,Advocate for the petitioner Mr. Sanjeev Kaushik, Add AG Hy. For respondent no.1 Mr. Birender Singh Rana, Advocate for respondent no.2 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. This petition filed under Article 226 of the Constitution prays for quashing notification dated 28.11.2006 (P.5) exempting the employer of the petitioner namely Dakshin Haryana Bijli Vitran Nigam Ltd.- respondent no.2 from the operation of Payment of Gratuity Act, 1972 (for brevity 'the Act') with retrospective effect. The petitioner has claimed that he is entitled to payment of gratuity under the Act and since there was no notification excluding the application of the Act, he was entitled to payment of gratuity under that statute. The petitioner has joined erstwhile Haryana State Electricity Board on 7.4.1966 and he attained the age of superannuation on 30.4.1999 as Junior Engineer, after rendering 33 years of service. After his retirement the Board was divided in separate autonomous statutory bodies and the successor of the employer of the petitioner now is respondent no.2 which is CWP No. 6479 of 2009 2 based on the last posting held by him. The petitioner was a member of General Provident fund and admittedly his service conditions were governed by the Punjab Civil Service Rules (as applicable to Haryana) for the purposes of retirement. The petitioner has claimed that at the time of retirement he has been paid death-cum-retirement gratuity , computed as per the rules which amounted to Rs. 1,95,492/-. However, he has claimed that under Section 14 of the Act an over-riding effect has been given by non- obstante clause and as a consequence despite the provision made for gratuity in the Civil Service Rules, the Act would apply and the petitioner is entitled to receive gratuity in accordance with the provisions of the Act. Accordingly, he applied for payment of gratuity to respondent no.2 but the gratuity was paid to him in accordance with the Civil Service Rules. Eventually he filed an application under Section 7 of the Act before the Controlling Authority, Bhiwani claiming gratuity in accordance with the provisions of the Act. Vide order dated 2.1.2002, his application was allowed and he was held entitled to a sum of Rs. 2,21,151/- as gratuity (P.1). Respondent no.2 preferred an appeal under Section 7(7) of the Act before the Appellate Authority which was dismissed on 23.12.2002 (P.2). Thereafter respondent no. 2 filed CWP No. 6534 of 2003 challenging the order granting him gratuity under the Act. The writ petition was also dismissed on 26.4.2004 (P.3) primarily for the reason that there was already a binding judgement of Hon'ble the Supreme Court in the case of Punjab State Electricity Board v. Addl. Labour Commissioner 1998(1) Service Cases Today 595. The rationale of the judgement is that in the absence of any notification issued under Section 5(1),(2) and (3) of the Act exempting any organisation from the operation of the Act, the provisions of that Act CWP No. 6479 of 2009 3 would continue to apply. Thereafter respondent respondent no.2 filed SLP before Hon'ble the Supreme Court. During the pendency of the SLP, the State of Haryana issued a notification dated 28.11.2006 under Section 5 of the Act exempting the Haryana State Electricity Board and its successor entities and their employees from the operation of the Act with retrospective effect i.e. from the date of notification of the said Act. When the SLP came up for hearing before Hon'ble the Supreme Court, the aforesaid notification exempting respondent no.2 and its entities from the operation of the Act were brought to the notice of Hon'ble the Supreme Court. Accordingly Hon'ble the Supreme Court found that the validity of the notification was not challenged before the High Court . The Supreme Court did not examine the merits of the order passed by this Court which had upheld the orders of the Controlling/Appellate Authority. The SLP was disposed of by leaving open to the petitioners either to challenge the notification or approach the authorities. Accordingly, the instant petition has been flied to challenge the notification dated 28.11.2006 exempting respondent no.2 and its entities under Section 5 of the Act from the operation of the provisions of that Act. The only argument raised by the counsel for the petitioner is that according to Section 5(3) of the Act no notification under Section 5(1) and (2) of the Act for retrospective operation of a notification could be issued so as to prejudicially effect the interest of any person. According to the learned counsel, the amount of gratuity under the Civil Service Rules payable to him is Rs. 1,95,492/- whereas under the Act the amount comes to Rs. 2,21,151/-. Therefore, it has been claimed that the notification dated 28.11.2006 would not apply to the case of the petitioner. CWP No. 6479 of 2009 4 Mr. Sanjeev Kaushik and Mr. Birender Singh Rana, learned counsel for the respondents have however, vehemently argued that the notification dated 28.11.2006 (P.5) does not suffer from any legal infirmity nor it causes any prejudice to the rights of the petitioner because by no stretch of imagination it could be imagined that the petitioner would get lessor amount under the Punjab Civil Service Rules than the emoluments which may be payable under the Act. According to the learned counsel the petitioner has conveniently ignored the payment of other benefits and has confined his arguments only to the amount of gratuity paid under the Civil Service Rules. They have pointed out that the petitioner has been given lump sum amount under the CPF Scheme which includes handsome matching grant contributed by respondent no.2. Therefore by no stretch of imagination the petitioner would get better amount under the Act and the gratuity is only part thereof. Having heard the learned counsel for the parties and perusing the paper book with their able assistance we are of the view that the instant petition merits dismissal. It has come on record that on 28.11.2006 a notification has been issued under Section 5 of the Act exempting the Haryana State Electricity Board and its entities, like respondent no.2, from the operation of that statute. Accordingly no benefit under the Act would be available to the petitioner. However, the controversy raised is 'whether the retrospective operation of the impugned notification dated 28.11.2006 has caused any prejudice to the rights of the petitioner within the meaning of Section 5(3) of the Act. It would thus be necessary to read Section 5 of the Act which is relevant to the controversy and the same is as under: “5. POWER TO EXEMPT. - (1) The appropriate Government may, CWP No. 6479 of 2009 5 by notification, and subject to such conditions as may be specified in the notification, exempt any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the provisions of this Act if, in the opinion of the appropriate Government, the employees in such establishment, factory, mine, oilfield, plantation, port, railway company or shop are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act. (2) The appropriate Government may, by notification and subject to such conditions as may be specified in the notification, exempt any employee or class of employees employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the provisions of this Act, if, in the opinion of the appropriate Government, such employee or class of employees are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act. (3) A notification issued under sub-section (1) or sub-section (2) may be issued retrospectively a date not earlier than the date of commencement of this Act, but no such notification shall be issued so as to prejudicially affect the interests of any person. “ A perusal of sub section (1) shows that appropriate government may issue a notification exempting any establishment to which this Act applies from the operation of the provisions of the statute. However, it is dependent CWP No. 6479 of 2009 6 on the formation of an opinion by the appropriate Government that the employees of such establishment etc. who are in receipt of gratuity or pensionary benefits not less favourable then the benefits conferred under this Act. Likewise it may exempt any employee or class of employees employed in any establishment subject to the same conditions. Sub Section 3 of Section 5 of the Act even permits issuance of a notification with retrospective effect by incorporating the same conditions namely that such a retrospective operation of a notification exempting the establishment etc. or its employees do not prejudicially affect their interest. It is thus claimed that on the basis of the language of sub sections (1) and (2) while issuing notification the appropriate Government is required to make assessment of all benefits and form a valid opinion that the employees of such establishment are in receipt of gratuity or pensionary benefits which are not less favourable then the benefits conferred under this Act. Thus the mere element of gratuity in the series of various retiral benefits would not be the sole consideration for the Government. It would include other retiral benefits for the purposes of finding out whether any prejudice has been caused to the financial interest of an employee. In the aforesaid back drop, the facts of the present case are required to be examined. The petitioner was a member of the CPF scheme and obtained his due amount to which even respondent no.2 has contributed by giving matching grant. At the time of hearing it was not disputed that if all the retiral benefits are taken into account then the amount of gratuity which becomes payable under the Act would be far less than those benefits. It has come on record that the petitioner has been granted towards gratuity a sum of Rs. 1,95,492/- which is only part of other retiral CWP No. 6479 of 2009 7 benefits which has already been paid to him. However, under the Act the total amount of gratuity calculated in favour of the petitioner is Rs. 2,21,151/-. Thus the difference is only of Rs. 43,942/- whereas the petitioner has been paid much more under the Civil Service Rules than the amount of gratuity payable under the Act. The issue has also come up before Hon'ble the Supreme Court in the case of DTC (Retired) Employees Association v. Delhi Transport Corporation (2001) 6 SCC 61. In that case the employees were paid gratuity for their long service but they were not entitled to any pension at the time of receipt of the amount of gratuity. Thereafter they opted for pension which is the similar relief given to them for long service rendered by them. They claimed that they were not liable to refund the amount of gratuity received by them while switching over to pension scheme because it was contrary to Section 4(5) of the Act. The aforesaid claim made by them was rejected by holding that such employees 'cannot have benefit of both pension and gratuity'. It is, thus, evident that the amount of gratuity cannot be claimed in addition to pensionary benefits. If that be so then it would not hold good. Even in respect of Contributory Provident Fund Scheme in which matching grant is always contributed by the employer it follows that no gratuity under the Act independent of pension or Contributory Provident Fund Scheme, which include the element of gratuity itself, could be claimed. The prayer made by the petitioner is, thus, liable to be rejected. The views of Hon'ble the Supreme Court are explicit from paras 19, 20 and 22 of the judgment, which read thus: “19. The appellants contended that gratuity is an amount earned by the employee after long service. Therefore the direction to refund the same is illegal. CWP No. 6479 of 2009 8 20. Gratuity is essentially a retiring benefit payable to a workman which as per the Statute has been made payable on voluntary resignation as well. Gratuity is a reward for good, efficient and faithful service rendered for a considerable period....... 21. xxx xxx xxx 22. The appellants were paid gratuity for their long service, but at the time of receipt of this amount, they were not entitled to get pension. Now the appellants have opted for pension. That is a similar relief given to them for the longer service rendered by them. The appellants cannot have the benefit of both the pension and gratuity.......” Therefore, we find that there is no merit in the petition and the same does not deserve admission. Accordingly, the writ petition fails and the same is dismissed. (M.M.Kumar) Judge (Jaswant Singh) 27.10.2009 Judge okg