KATHEEJA BAI

THE SUPERIN"iENDJNG ENGINEER & ORS.

MayJO, 1984

[0. CHINNAPPA l!-EDDY, A.P. SEN AND

• E.S. VENKATARAMIAH, JJ.]

Tamil Nadu.-Electrictjr Board Cotribulorj ProvidelJI Fund RegulatiOn1 frcimed by Tarilil Nadu Electricity Board .under Electricity Supply Act, 1948- Regulation 37-Whether_SP, t; Cial Contribiltion to be made by ElectriCity BQard. to the Contributory Provident Fund of the einpJOyees is _Same as Gr.atuity tinder Payment' of G; atufty Act, 1.912-W.hethi PaylTll!nt of Gratuity under Payment of _Gratuity A.ct debars paym.e"nt of SpeCial ConttibJ,(lion. to be made under Regula

ion 31.

Public Interest L'it1'gation-Letfer-to 1udgetreated wrii petition~

Regaiation 37 of the. Tamil Nadu Electricity Board Contributory Provident Fund Regulations framed by the Tamil Natlu Electricity Board under the Electricity-Supply Act, 1948 provides that the Electricity Board shall credit.to a member's.-provident fund acCount a special contribution calC\1lated in the specified ·rnanrier, in addition to. the contribution credited under Regut3.ti0n. ll, if the Board is satisfied that the service of the member has been good efficint and-_ faith .. ful and th¢_ member ha~ not beCn diSJ:n-issed from erviCe or the member hjs Jl(lt been removed ftom service. in which Case the sanction of the Board hiid to be obtained. ·

The Payment of Gratuity Act, 1!i12 which was also applicable .. to' the Tamil Nadti Electricity Board provided for the Payment of greatiuty to em .. ployees _who would fetife after rendering service for a specified number of . years .

. . The petitioner's huband retired in 1976 after serving the Tamil Nadu Electricity B0ard for about 34 _years and died three.mo.n1hs thereafter. The petitioner was paid_ her husband's stibscription to the Contributory Provident Fund and interest and the.Electdity Bo1lrd's contribution and intereSt and also thc-gratUity under the payment of Gratuity Act, 1972 .. The Electricity Board did not pay theSJ)ecial Contribrition to be ma.de by it to the contributory Provident Fund under. 'Regulation 37. on tqC grond that-the specia~· contributioll being nothing other than tbe payment of gratuity, they could n.ot be asked to. pay gratuity t\Vice Over, once under Payment of Gratuity Act and ain under _ Regii1ation 37. The petitiorier having got no relief from ailywhere wrote a letter tQ a!Judge of the Supreme Court which wa.• treated as a writ petitioll:

Allowins!the petition,

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KATilEEJA BAI v. SUPDT ENGINEER (Cb; nnappa Reddy, 'J.) 799.

HELD :. The Electrjcity BOard cannot avoid payn1ent of the special -Contribution to Provident Fuiid under their own Provident Fund RegulatiOlIS on the pretext that ii is a.kin to or_ the same as Gratuity payable_ under the Payment of Gratuity Act. In the first place, the Board, in thC:ir Regulations, h3ye themselves IabllC:d the Speci31 Contribution under Regulation 37 .as a Special -contribution to Provident Fund .andnOt as Gratuity. It is not as if they were

utiaware of the word '_Gratuity' -and what it meant Since it -is found that there is a reference in Regulation 5 to aGratuitt,.Scheme of.. th~.-Tilmil a~ Government which had been adopted by the.Bd!rd .. The Special Contr1but1on under Regulation 37 is part of a Well thought out _Provident Fund Scheine designed tO

benefit ·good-, efficient and faithfur employees (borrowing th:e wordsfrom the Regulation'itself) by _making annual contributions in_ additionto the monthly contributions .undr Re!iulation JI.· This is what apnears from Regulation 37 itself. There is no justification ror first dubbing it as a gratuity on the ground that it Ii.as some or the known ch_aractcristics of gratuity and then proceeding to deny the employees the benefit o.f it Qn the-gt"ound that the Beard are paying gratuity under the. Pa:yment of Gratuity Act. If the Special Contribution has so.me _cOII)mon features with gratuity, it has also distinctive features which ctis

tiguish it .from gratuity payable under the Ir.yment of Gratuity At. [803B-F]

. . in view of the finding that . .Special. Contribtion un<; te~ Regulation 37 is not the same as grat_uityunder Payment of Gratuity Act; the argument that the provision for Special Contribution under Regulation 37 was inconsistent With • the provisions of the Payment of Gratuity Act .and therefore the Jatier should prevail to the eXclusion of the former must fail. [804H ; 805A] ·

ORIGINA~ JURisDier10N : Writ Petition .No. 13009 of 1983.

(Under article 32 of the Constitution of India)

.G; pal Subra aniam (A.C) for the Petitioner.

Dr. Y.S. Chitale, AY. Rangam and Mrs: Sar/a Chandra for the Respondeni. • The Judgm; niof the Court was delivered by

. CHINNAP.PA REDDY, J. Smt. .Kathoeja Bai, is the widow of Abdul Salam who retired .as a Line Inspector, Grade l, in the employment of the Tamil Nadu State Electricity Board on 31.7.76 and who unfortunately. died on 15.10.76. Smt. Katheeja Bai failed to get from her late husband's employers .certain amounts" which she clamd werl!o due to her husband. She. knocked contii)Uously, but m varn, at the doors of the Regional Provident Commissioner

Madras, Central Provident Commissioner, New Delhi ad th; Minister for Labour Government of India for several years for

Mo SUPREME CotJRT REPORTS [1984] 3 s.c.ll..

redress. In sheer :desperation she nltimately turned to this CQurt as a last resort. Unable to engage a lawyer, she addressed a letter to . a learned judge of the Court setting forth her grievance. After being processed in the. Registry; the letter was t)'eated asa Writ Petition under Art 32 of th~ Constitution. A Rule Nisi was issued and the Tamil Nadu .. State. Electricity 'Board have app.eared before • us through connsel. At our request Sri' Gopala Subramanyam argued the case for the widoJ' i!S amicus curiae. He presel)ted the case with understanding and .thoroughness and yie are grateful to bim, as also fo Dr. Chitaley who' presented the employer's case with his usual fairness.·

In exercise of the powers conferred by s. 79( c) of the Electricity Supply Act, .1948, the Tamil Nadn Electricity Bo.ard made the Tamil Nadu Electricity Board Contributory Provident , fund.Regulations.

Regulation 3 Provides for the estabfahment. of a fund kno.wn as the Tamil Nadu Electricity Board Employees' Contributory Provident Fund; with effect from 1.7.57. Regulation 3A to 3-K provide for the managemnt and administration of the fund by the Board of .

Truste&. Regulation 4 prescribes that the. Fund .shall be governed •

by regula!iou as may be in force for the . time being but provides that no addition, alteration or repeal, of any .regulation which may adversely effect a subscriller shall be. retrospective. Regulation 5 provides th.at all en; ployees who are eligible for the Contributory Prov.ident Fund (Tamil Nad1,1) Scheme and Gratuity Scheme oft.he Governfi1ent of Tamil Nadu except certain categories of employees with whom we are not. co.ncerned shall become subscribers to the fund o~ completion of three months continuous service. Regulation. 6 prescribes that. an account shall be opened in the name of eac.h member in which shall be credited, the member's subscriptions and interest thereon, the contributions maie by the Electricity Bo'ard to his account and interest thereon and the J)reexisting account before. the Electricity Department was taken.over by thil Electricity Board.

Regulation 9 provides ror subscription to the fund by member~ at the rate of 7-1/2 % of pay' iJlus dearness allowance. RJ)gnlation 11 provides for contribution byjhe Electricity Board to the account of. each member at the. rate of7t% of pay plus dearness allowance.

The member's subscription along with the Electricity B.oard's Contri- . bution is required to be credited to the individual. acount ofthe mem

. ber before the 15th of every month. Regulation 37 prescribes that the

Electricity Board shall credit to a memb<; r's Provide!lt Fund account a special contribution calculated in the specified maimer. in addi-

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~ATHESJA. BAI l'. SJPDT ENG!NEER (G:/iinnappa Raddy, J.j 80i

tion to the contributi'oncrediled under Regulation 11, ifthe Board .A is .satisfied that tlie service of the member has been .good, .efficient and faithful and the member has not bon dismissed from service or the membor h:ls not been removed from service in which case the sanction of the Board bas to be obtained. In the case of a Class I or Class Hcmpbyee who quits service on attainment of'the age of supernnuation, ne is to be credited, if his service exec.eds 18 years B with six months pay plus. half a month's pay for each completed year of service afte;- the J8t~1 but not so 1s to e<cced, in all, twelve . months' pay or rnpees tw:n!y:five thonsand, h1chever is less. If the employee's service does not exceed 1.8 years, he is to be credited with half a month's pay for each completed year of si:rvice".so as . • . .

G not to exceed six months' pay. In the case of a Class Ill or Class IV employees who bas attained tltc'age of superannuation after 15 years' . • service, th~ Electricity B.oard is requiccd to 9redit .his account with half a month's pey for each completed year of service., but no.t so as to exceed to 15 montl1s' pay. Jf the service is short of 15 years, he is to be credited .with half a month's pay !or e'ach completed yer .D of service so-as n0t 15 exc;!ed six mopths' pay. rt is provided in Regulation 37 that pay for the purpose. of reckoning special contri bution shall be the pay last drawn during the lastthree years .of service, whichever is more. The Board is also empowered to withhold or reduce the Special Contribution in any particular case. . . : . ~

At this stage, we may refer to s.12 of the Emloyees' Provident Funds, And Miscellaneous Provisions Act, 1952 which prohibits an employer from rcducinr; directly or indirectly the total quantum of benefits in the nature of uld age pension-, gratuity or Provident Fund or Life Insurance to whic:1 the employee is entitled under the terms of his employment, express or implied, by reason only of his liability for the payment of any contribution to th.e Fund (wh°ich. is defined by i.2 (h) as meaning a. Provident Fund . established under the Employed Provident Fund Scheme framed under s.5). . '

G In 1972, Parliament enacted the Payment of Gratuity Act, 1972 to provide for' a schem<": for the payment of gratuity to emplo:. yees in cert1iin establishments. There 'is no. dispute that the Act applies to the Tamil Nadu 'State Electricity }3oard. Section 4 of the .Act.,.equircs payment of gratuity to, an employee who .as rendered . continnous s; rvico for not less than-five years, on the termination H of his employment' on superannuation or on retirement or on. his . . '

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802 . SUPREME COURT RliPORrs . [l 984] 3 S.C.R. , c '

death or disable.ment due.to accideut or disease. The employer is required to pay the gratuity to.the employee at tbe rate of fifteen days' wages for each completed year of service or part thereof in excess of six months. The amount of gratuity. is not to exceed 20 'months' wages. The employer is not requfred to pay any gratuity to an employee if .the service of the employe.e has. been terminated for any act, wilful omission or negligence causing any damage or '. loss tci; or destruction of, property belonging to the employer, or if '< the services of the employee have been terminated for riotous or disorderly conduct or any other act of violence on his part or if his servicea have \)een terminated for any act involving moral turpitude provided ihat suc}). offence' is committed by him i.n the course.of his employment. Section 14 provides tl\at the contribution of the Act shall have effect notwithhstanding anything inconsistent therewith contained in any enactment other than tbis Act or in any instrumenJ; or contract }).aving effect by virtue of any enactmsnt other than the Payment of Gratuity Act.• •

Abdul Salam, w!io held a non-pensionable post, retired on 31.7.76, after a service. of 34 years.and five months. He died on 15.10.76 within three months after his retirement. He was entitled or, in this case his widow was entitled to the paymorit of the entire amount standing to. his credit in his Provident Fund account and the gratuity pa.yable u.nder the Payment of Gratuity Act. The . Electricity Boai:d, however-, took the stand that she was entitled to

he paid the member's subscription and interest, the employer's contribution. and 'inte.rest and. gratuity but not the special contribution under Reg'!lation 37 of the Tamil Nudu State Electricity Board Contri.butory Provident Fund Regulitions .. The reason Jor the Board's .attitude was that the sp, ecial contribution required to be paid under Regulation 37 was nothing other than payment of gratuity and that !hey could not be asked to pay gratuity twice over, once under the Payment of Gratuity Ac( and again under Regulatio~ 37, Since they were ready to pay the gratuity payable under the Payment of Gratuity Act,. which. was more .favourable to the employee, they. were not obliged to make payent of tbe contribution under Regulation 37. We may mention here that tl)e Board B has paid to the widow, the member's subscription with interest and the employer'& contribu.tion with interest. but not the special ont.ri-. bution under Regulation 37. The Board has paid a sum ofRs.4275/- towards gratuity under the payment of Gratuity Act but a um of ·•

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KATHEEJA BAI v. SUP!)T, ENG!l:!EE'R (Chinnappa Raddy, J.) 803

Rs, 3167/- is admittedly yet due from the Board to_wards gratuity.

In the coun_ter affidavit filed on bhalf of the Electricity Board we A are not able to find any reason.for non-payment of the balance_ of gratuity .

We are unable to appreciate how the Electricity. Board can . avoid payment of the Special Contribution to Provident Funct'

_under their own Provident Fund Regulatio11s on the pretext that it is akin to or the same as Gratuity payable under the Payment of Gratuity Aci. In the first place, the Bqard, in their Regulations, have themselves labelled the Special Contribution under Reglilation 37 as a Special Contribution to Provident' Fund not as Gratuity. 'It is not.as if .they were uriaware of the word 'Gratuity' and what it meant since w.e find that there is a reference in Regulation 5 to a Gratui_ty Scheme -of the Tamil Nadil Government which had beeri adopted by the Board. The Special Contri- 'bution under Regulation 37 is part of a well thought out Provident Fund Scheme designed. to benefit 'good; efficient and faithful . "employees (we borrow the words from the . Regulation itself) by

making annual contributiOns ina\ldition the monthly contributions. under Regulation 11. This is wbat appears from Regulation or itself, we see no justification for first dubbing It as a gratuity on the ground that it has some of the known cbaracteristics of gratuity and then proceeding to. deny' the employees the benefit of it on the ground that the Board are paying gratuity under the Payment of Gratuity Act. If the Special Contribution has some common: features with gratuity, it has also. distinctive features which .distinguish It.from gratuity payable under the payment of Gratuity Act; For example, one important feature which discrimin_ates the Special Contribution under Regulation 37 from gratuity under the.Payment of Gratuity Act is that while tlie Payment of the latter is-obligatory and. can only be denied if the employee's services have been termi~ nated for his riotous or disorderly conduct or any other act of

'violence on-his part or.any act which 'Constitutes an offence involving - G moral turptitude and can also be denied to the_ extent. ofthe damage orlosscaused by the employee, where the employee's services have been terminated for any act, wilful omission or negligence causing any damage or to loss, or destruction of, property belonging to the . emp1oyer, the payment of the former is_ discretionar_y and may not -

be made if the service of the employee has not been good, efficient ani.l faith(ul. The employer has also the discretion to with, ho)d or reduce the Special 8ontribution in any. particular case. Of course,

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SUPREME CoURT REPORTS [l9g4j j S.C.R •.

the einpfoyer canhot arbitrarily clai'm that th~ employee's service. . was not good., efficient and faithful, . or with-hold or reduce the

Special Contribution in an arbitrary fashion. Even so,. the distinction between the mandate of the Payment of Gratuity Act and the . discretion involved in makin,!J the Special Contribution under Regula1ion 37 is iriielligibly clear, Another feature which di1tinguishes the.two is that the benefit of the Payment of Gratuity Act is confin- .ed to persons drawing wages not exceeding Rs. 1000 and does :not extend to persons employed in a managerial or administrative capacity .wliereas the SpeCial Contr, ibution under Regulaiion 37 is not so confined and extends to every employee of the Board° except casual employees, State or Cenfral Government employees employed with the Board on foreign service terms etc. etc. For the ·

purpose of contibution of, Provident Fund under Regulation 11 or Regulation 37 it makes no difference that a person is employed in a managerial or administtarive capacity on that he draws wages more than Rs. 1000 pet month. A thin;\, feature which marks the two apart is that the contribution to the. Provident Fund whether under Regulation 11 or Regulation 37 becomes .part of the Fund established py Regulation 3 andis to be managed and administered by trustees u.nder Regulation 3-A to 3-K, whereas the payment of Gratuity Act does .not provide for the Constitution of a fund to be managed and administered by trustees.. In addition -to th.ese broad feature;, we have the outstanding circumstance that the Board themselves have describ.ed the contribution under Reguiation 37 as a contribution to Provident Fund and have chosen to include it in their Provident Fund Scheme. That should conclude the matter.

 Dr. Chitaley invi.ted our attention to s.14 of the Payment of• Gratuity Act; i972 which provides, ·

"The provisions of this Act or any rule mae there .under shall have effect notwithstanding anything inconsistent therewith contained in an enactment other than th.is Act or in any instrument or contract having effect by virtue of any enactmel/.t other thau this Act," ..

He argued that the provision for Special Contribution under Regulation 37 was inconsistent with.the provisions of the Payment of Gratuity Act and therefore the latter should prevail to the H exculusion of the former .. This ,'argument is. dependent on the assumption that the SpeCial Contribution nuder Regulation 37 is the samething as the gratuity contemplated by the Payment of .

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KATl!imJA BAI v. SUPDT. ENGINEER (Chinnappa Raddy, J.) 805 '

' Gratuity Act. We have held that it. is not and the argument, "therefore, fails.

There was then the usual lament that a large number of employees were involved and, therefore, the cost will be.heavy. We do not understand this argument at all .. Does it inean that beneficent. legislations . and beneficent schemes must be confined to small establishments emploY, ing a Jew workers only ? On the other hand, it is misreading to say that the cost is heavy. The cost is made to appear heavy divorced from the size of the establishment. If the. establishment is huge and if a large number of workmen are employ- . ed the total wagejbill may appear to bepeayy, but is it really so? ls it disproportionate to the size of the estblishmeut,' its resourees, . -its revenues and its other expenditure ? Is the individual wage-bill. also very high ? To talk of heavy cost without refere.nce to .other circumstances is to present an entireiy unfaithful pictl!re. We need . . <-rnake no further .comment. ·

In the resuJt we direct the respondent Board to pay to the . petitioner the whole of the. Special Contribution under Regulation

37" which was payable. to her husband and the balan.ce of the gratuity payable under the Payment of Gratuity Act, part of which we are told has beenpaid leaving the sum of Rs. 3167 unpaid. Tbese amounts should be paid to the. petitiouer with interest at 15% per annum froin the date on w.hich the amO.unts fell due. The respondent Board -shol!ld also pay a sum of Rs. 2500 to the "petitioner towards compensatory costs. We must add that the case haa left us with the.feeling of: uneasiness and distress at the plight.of helpless persons like the petitioner whose repeated representations to those in authority were left uncared for. so the tediously long despite frequent protestations pf social j)lstice .

H.S.K.

Petirion allowed.