DHANSAI SAHU versus STATE OF CHHATTISGARH & ORS.
[2020] 1 S.C.R. 120, Supreme Court of India, 2020
Outcome: Matter referred to larger bench
Segment: Issues
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SUPREME COURT REPORTS
[2020] 1 S.C.R.
DHANSAI SAHU
v.
STATE OF CHHATTISGARH & ORS.
(Civil Appeal No. 564 of 2020)
JANUARY 21, 2020
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Payment of Gratuity Act, 1972 – s.2(e) – Issue as to whether
the service rendered as daily-wager before being regularized and
given the status of a regular Government servant, can be reckoned,
so as to invoke the provisions of the 1972 Act after the age of
superannuation and retirement as State Govt. employee – High Court
held that the provisions of 1972 Act have no application to a person
who holds post under the State Govt. and is governed by any other
Act and in particular, the 1976 Rules – Appellant relied on the recent
decision of Supreme Court in Netram Sahu dealing with similar
argument by the appellant therein – Held: s.2(e) of the 1972 Act
provides that if a person holds a post under the Central Govt. or a
State Govt. and is governed by any other Act or by any rules
providing for payment of gratuity, the provisions of the 1972 Act
will have no application – Respondents are relying on the provisions
of the 1976 Rules applicable to the post held by the appellant after
being regularised on 01.09.08 – These Rules were not brought to
the notice of Supreme Court in the case of Netram Sahu which
decision is in conflict with the unreported decision dtd.16.01.09 of
the coordinate Bench of Supreme Court in Teja Singh (C.A.No.292/
09) – Ordinarily, the matter would have been
proceeded to be decided
on the construct of the relied upon Rules, but the exposition by the
coordinate Bench of two Judges of Supreme Court in Teja Singh will
also have to be taken note of, hence observing judicial propriety,
the issue is referred to be considered by a larger Bench of three
Judges – Registry to place the file before Hon’ble the Chief Justice
for constitution of a larger Bench – Service Law – Chhattisgarh
Civil Services (Pension) Rules, 1976 – rr. 3(i), 5, 13, 16, 43(1),
44(1) & (2) – Judicial Discipline.
   [2020] 1 S.C.R. 120
120
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Referring the issue to be considered by a larger Bench of
three Judges, the Court
HELD: 1.1 Notably, in Netram Sahu vs. State of Chhattisgarh
& Anr. the Supreme Court had dealt with the judgment of the
High Court in the case of Netram Sahu vs. State of Chhattisgarh
& Ors. which in turn had relied on the exposition of Supreme
Court in the case of Bharat Sanchar Nigam Ltd., Jammu vs. Teja
Singh (unreported decision) and also the principle underlying the
exposition in Secretary, State of Karnataka & Ors. vs. Umadevi
(3) & Ors. However, none of the above decisions was referred to
while answering the issue by this Court in Netram Sahu. In the
case of Teja Singh, the coordinate Bench of two Judges of
Supreme Court opined that a daily-rated Mazdoor who has been
regularized but did not have qualifying service in terms of the
service rules for extending retiral benefits to him, would not be
entitled for payment of gratuity under the 1972 Act.  The
subsequent decision in Netram Sahu is in conflict with the said
principle stated in the unreported decision of Supreme Court.
Section 2(e) of the Payment of Gratuity Act, 1972, in no uncertain
terms provides that if a person holds a post under the Central
Government or a State Government and is governed by any other
Act or by any rules providing for payment of gratuity, the provisions
of the 1972 Act will have no application. The respondents are
relying on the provisions of the 1976 Rules applicable to the post
held by
the appellant after being regularised on 1.9.2008. These
Rules were not brought to the notice of Supreme Court in the
case of Netram Sahu. Ordinarily, the Court would have proceeded
to decide the matter on the construct of the relied upon Rules,
but as noted above, the exposition by the coordinate Bench of
two Judges of this Court in the unreported decision of Teja Singh
will also have to be taken note of and to observe judicial propriety,
it is deemed appropriate to refer the issue under consideration
to be considered by a larger Bench of three Judges. [Paras 4-7]
[123-C-G; 124-A-D; F-G]
Netram Sahu v. State of Chhattisgarh & Anr. (2018) 5
SCC 430 : [2018] 3 SCR 682 ; Netram Sahu v. State of
Chhattisgarh & Ors. (2014) SCC OnLine Chh 159 ;
Bharat Sanchar Nigam Ltd., Jammu v. Teja Singh
DHANSAI SAHU v. STATE OF CHHATTISGARH & ORS.
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SUPREME COURT REPORTS
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Decision of Supreme Court dtd.16.1.2009 in Civil
Appeal No. 292/2009 ; Secretary, State of Karnataka
& Ors. v. Umadevi (3) & Ors. (2006) 4 SCC 1 : [2006]
3 SCR 953 ; Assistant Executive Engineer CNNL v. The
Deputy Labour Commissioner & Appellate Authority,
Bangalore & Ors. Decision dtd. 04.09.12 in the High
Court of Karnataka at Bangalore in W.P. No. 15856/
2012 – referred to.
Case Law Reference
[2018] 3 SCR 682
referred to
Para 4
[2006] 3 SCR 953
referred to
Para 4
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 564 of
2020.
From the Judgment and Order dated  19.09.2018 of the High
Court of Chhattisgarh at Bilaspur in Writ Appeal No. 283 of 2016.
J.P. Mishra, Shankar Divate, Advs. for the Appellant.
Sumeer Sodhi, Ms. Simran Agrawal, Ashish Tiwari,  Advs. for
the Respondents.
The following Order of the Court was passed
O R D E R
1. Leave granted.
2. The moot question involved in this appeal is: whether the service
rendered as daily-wager before being regularized and given the status
of a regular Government servant, can be reckoned, so as to invoke the
provisions of the Payment of Gratuity Act, 1972 (for short, “the 1972
Act”) after the age of superannuation and retirement as State
Government employee?
3. The High Court of Chhattisgarh, Bilaspur (for short, “the High
Court”) relying on the definition of “employee” in Section 2(e) of the
1972 Act, has taken the view that the provisions of the 1972 Act have no
application to a person who holds a post under the State Government
and is governed by any other Act and in particular, the Chhattisgarh Civil
Services (Pension) Rules, 1976 (for short, “the 1976 Rules”).
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4. The appellant would, however, rely on the recent decision of
this Court in Netram Sahu vs. State of Chhattisgarh & Anr.1, dealing
with the similar argument by the appellant therein, who was appointed
as a daily-wager and after working for 22 years, came to be regularized
on work charge establishment but was denied gratuity, because on the
day when he attained the age of superannuation, he was holding the post
under the State Government.  Indeed, the Court was called upon to
answer the issue in identical situation, but it is obvious from the
observations in paragraph 14 of the reported decision that no provision
of either the 1972 Act or the 1976 Rules was brought to the notice of the
Court, which would disentitle the appellant therein from claiming the
gratuity or for that matter, any provision prohibiting the appellant therein
from taking benefit of his long and continuous service period of 22 years
which he had rendered prior to being regularised.  Notably, this Court
had dealt with the judgment of the High Court in the case of Netram
Sahu vs. State of Chhattisgarh & Ors.2, which in turn had relied on the
exposition of this Court in the case of Bharat Sanchar Nigam Ltd.,
Jammu vs. Teja Singh3 (unreported decision) and also the principle
underlying the exposition in Secretary, State of Karnataka & Ors. vs.
Umadevi (3) & Ors.4.  However, none of the above decisions has been
referred to while answering the issue by this Court in Netram Sahu
(supra @
F.N. 1).
5. In the case of Teja Singh (supra), the coordinate Bench of
two Judges of this Court considered the claim of a person who was an
employee as a daily-rated Mazdoor with a Central Government owned
Corporation.  He was recruited in the year 1973 and regularized with
effect from 11.8.1986 and eventually superannuated on 30.8.1989.  This
Court was pleased to set aside the relief of gratuity given to that person
by the Central Administrative Tribunal and the High Court.  In other
words, the coordinate Bench of this Court opined that a daily-rated
Mazdoor who has been regularized but did not have qualifying service in
terms of the service rules for extending retiral benefits to him, would not
be entitled for payment of gratuity under the 1972 Act.  In other words,
the subsequent decision in Netram Sahu (supra @ F.N. 1) is in conflict
with the said principle stated in the unreported decision of this Court.
1 (2018) 5 SCC 430 (two-Judge Bench)
2 Decided on 1.8.2014 in Writ Appeal No. 240/2014 (2014 SCC OnLine Chh 159)
3 Decided on 16.1.2009 in Civil Appeal No. 292/2009 (two-Judge Bench)
4 (2006) 4 SCC 1
DHANSAI SAHU v. STATE OF CHHATTISGARH & ORS.
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6. Reverting back to Section 2(e) of the 1972 Act, the same in no
uncertain terms provides that if a person holds a post under the Central
Government or a State Government and is governed by any other Act or
by any rules providing for payment of gratuity, the provisions of the 1972
Act will have no application.  The respondents are relying on the provisions
of the 1976 Rules applicable to the post held by the appellant after being
regularised on 1.9.2008.  The said rules provide for grant of pension and
gratuity.  “Gratuity” has been defined in Rule 3(i) to include “Service
Gratuity” payable under sub-Rule (1) of Rule 43; “Death-cum-Retirement
Gratuity” payable under sub-Rule (1) of Rule 44 and; “Residuary
Gratuity” payable under sub-Rule (2) of Rule 44 of the stated Rules (the
1976 Rules).  Rule 5 deals with regulations of claims of pension/gratuity
or family pension, Rule 13 predicates that the service of a Government
servant shall not qualify unless his duties and pay are regulated by the
Government or under conditions determined by the Government and
Rule 16 envisages counting of service on contract for a specified period.
Obviously, these Rules were not brought to the notice of this Court in the
case of Netram Sahu (supra @ F.N. 1).  We may also notice the decision
of the High Court of Karnataka at Bangalore in the case of Assistant
Executive Engineer CNNL vs. The Deputy Labour Commissioner
& Appellate Authority,
Bangalore & Ors.5, which has taken the view
that where provision for payment of gratuity is made in the service Rules
applicable to the person holding a post, his claim for gratuity must be
decided on the basis of such Rules and not by invoking the provisions of
the 1972 Act.
7. Ordinarily, we would have proceeded to decide the matter on
the construct of the relied upon Rules, but as noted above, the exposition
by the coordinate Bench of two Judges of this Court in the unreported
decision of Teja Singh (supra) will also have to be taken note of and to
observe judicial propriety, we deem it appropriate to refer the issue under
consideration to be considered by a larger Bench of three Judges.
Accordingly, the Registry is directed to place the file of the present
matter before Hon’ble the Chief Justice for constitution of a larger Bench.
5 Decided on 4.9.2012 in W.P. No. 15856/2012 and connected matters
Divya Pandey
Matter referred to larger Bench.