Madhya Pradesh High Court

Chief Engineer vs Smt. Shilpa Laghate on 26 November, 2015

Author:
Sanjay Yadav

Bench:
A.M. Khanwilkar
,
Sanjay Yadav

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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

HIGH COURT OF MADHYA PRADESH : JABALPUR

W.P. Nos.2315/2015 (S), 2544/2015, 13958/2015,

13959/2015, 13961/2015, 13963/2015, 13965/2015,

13969/2015, 13973/2015, 13976/2015, 13977/2015,

13978/2015, 13981/2015, 13982/2015, 13983/2015,

RP No. 554/2015, W.P. Nos.13995/2015, 13997/2015,

13998/2015, 14001/2015, 14003/2015, 14005/2015,

14006/2015, 14007/2015, 14009/2015, 14011/2015,

14012/2015, 14014/2015, 14019/2015, 14021/2015,

14024/2015, 14025/2015, 14028/2015, 14029/2015,

14032/2015, 14035/2015, 14036/2015, 14554/2015,

17404/2015, 17405/2015 and W.P. No.17407/2015
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CORAM :
Hon'ble Shri Justice A.M. Khanwilkar, Chief Justice
Hon'ble Shri Justice Sanjay Yadav, J.
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Shri Arvind Kumar Shrivastava, Advocate for the

petitioner in W.P. No.2315/2015(S).

Shri Akash Choudhury, Advocate for the petitioner in W.P.

No.2544/2015.

Shri Ravi Jain, Advocate for the petitioners in W.P.

No.13958/2015, 13951/2015, 13961/2015, 13963/2015,
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

13965/2015, 13969/2015, 13973/2015, 13976/2015,

13977/2015, 13978/2015, 13981/2015, 13982/2015,

13983/2015, RP No.554/2015, 13997/2015, 13998/2015,

14001/2015, 14003/2015, 14005/2015, 14006/2015,

14007/2015, 14009/2015, 14011/2015, 14012/2015,

14014/2015, 14019/2015, 14021/2015, 14024/2015,

14028/2015, 14029/2015, 14032/2015, 14035/2015 and

14036/2015.

Shri Prashant Sharma, Advocate for the petitioner in W.P.

No.14554/2015 and for respondent No.1 in W.P.

Nos.13965/2015, 13973/2015, 13976/2015, 14001/2015.

Shri A.A. Barnad, Government Advocate for the

respondent-State.

Shri Sanjay Agarwal, Advocate for the respondent No.4 in

W.P. No.2315/2015 and respondent No.8 in W.P. No.2544/2015.
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Reserved on : 28.10.2015
Date of decision : 26.11.2015

ORDER

Per Sanjay Yadav, J.

In these batch of writ petitions, we are mainly concerned

with two notifications issued by the State of Madhya Pradesh

through its Department of Labour, viz. Notification No.195-
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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2014-,-16 dated 27.5.2014 published in Madhya Pradesh

(Asadharan) Rajpatra dated 6.6.2014 and Notification No.1A-

06-14-B-16 dated 10.12.2014 published in Madhya Pradesh

Rajpatra dated 19.12.2014 in purported exercise of the powers

conferred by
Section 5
of the Payment of Gratuity Act, 1972

(hereinafter referred to as '1972 Act'), which empowers the

appropriate Government to exempt - any establishment,

factory, mine, oilfield, plantation, port, railway company or

shop; - any employee or class of employees employed in these

establishment(s) from the operation of provisions of 1972 Act,

if, in its opinion, these employees or class of employees

employed in these establishment(s) are in receipt of gratuity or

pensionary benefits not less favourable than the benefits

conferred under the 1972 Act.

2. The establishments, which we are concerned with, are

the corporate entities brought in vogue vide Notification

No.3679-,Q-vkj-,l-18-rsjg-2002 published in Madhya Pradesh

Rajpatri (Asadharan) dated 31.5.2005; whereby, in exercise of

the powers conferred under Madhya Pradesh Vidyut Sudhar

Adhiniyam, 2000; the
Electricity Act, 2003
and Madhya Pradesh

Electricity Reforms First Transfer Scheme Rules, 2003, the State
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

Government restructured existing Madhya Pradesh State

Electricity Board (earlier constituted under
Section 58(4)(a)
of

Madhya Pradesh Reorganisation Act, 2000 by dissolving the

then existing Madhya Pradesh Electricity Board which was

constituted under the
Indian Electricity (Supply) Act, 1948
) into

different corporate entities viz. Generating Company known as

Madhya Pradesh Power Generating Company Limited,

Transmission Company known as Madhya Pradesh Power

Transmission Company Limited and three distribution

companies viz. Madhya Pradesh Poorva Kshetra Vidyut Vitran

Company Limited, Madhya Pradesh Madhya Kshetra Vidyut

Vitran Company Limited and Madhya Pradesh Pashchim Kshetra

Vidyut Vitran Company Limited. And, as evident from the

Notification dated 31.5.2005, the restructuring of erstwhile

Madhya Pradesh State Electricity Board is with effect from

1.6.2005. No such notification has been commended at to

establish that any of these company owe an existence prior to

1.6.2005 (the relevancy of this observation will have the

bearing when we will be dealing with the issues which are

raised, at relevant stage).

3. That, prior to coming into existence of these five
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

corporate entities, the establishments viz. Madhya Pradesh

Electricity Board and Madhya Pradesh State Electricity Board

had adopted Madhya Pradesh Civil Services (Pension) Rules,

1976. This fact would be evident from the contentions in

paragraph 16 and 17 of the return filed by the respondents

no.2 to 7 in Writ Petition No.573/2015 and adopted in Writ

Petition No.2544/2015; wherein, it is stated that Madhya

Pradesh Electricity Board in exercise of power conferred by

clause (c) of
Section 79
of the Electricity (Supply) Act, 1948

vide notification dated 19.10.1963 made applicable New

Pension Rules, 1951 and vide notification dated 3.4.1978

applied the Madhya Pradesh Civil Services (Pension) Rules,

1976 w.e.f. 1.6.1976 to its employees. And, vide said

notification (i.e. 3.4.1978) also applied the Madhya Pradesh

Civil Pension (Commutation) Rules, 1976 w.e.f. 1.1.1976.

4. In the past, the employees of erstwhile Board claiming

that the gratuity payable under the 1976 Rules being less

favourable had availed the remedy under the
Payment of

Gratuity Act, 1972
, as by virtue of
Section 14
thereof, the

provisions therein were having overriding effect

'notwithstanding anything inconsistent therewith contained in
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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any enactment other than this Act or in any instrument or

contract having effect by virtue of any enactment other than

this Act'.

5. Pertinent it is, at this stage, to take note of sub-rules (8),

(9), (10), (11) and (12) of Rule 7 of Madhya Pradesh Electricity

Reforms First Transfer Scheme Rules, 2003. These sub-rules

mandate that the service benefits including terminal benefits

shall not in any way be inferior to those applicable immediately

before the transfer, stipulating therein that :

"8. Subject to the provisions of the Act and these
Scheme Rules, the transferee shall be entitled to
modify or frame new regulations governing the
conditions of service of personnel transferred to the
transferee under these Scheme Rules, but their
rank, scale of pay, salary, allowances and other
pecuniary benefits including terminal benefits etc.,
after the effective date of transfer shall not in any
way be inferior to those appliacable to them
immediately before the transfer.

9. In respect of all statutory and other schemes,
employment related matter including the provident
fund, gratuity fund, pension and any other
superannuation fund or any other special fund
created or existing for the benefit of the personnel,
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

the relevant transferee shall stand substituted for
the Board for all purposes and all the rights,
powers and obligations of the Board in relation to
any and all such matters shall become those of the
transferee concerned and the services of the
personnel shall be treated as having been
continuous for the purpose of the application of
these Scheme Rules.

10. The State Government shall notify
appropriate arrangements in regard to the funding
of the pension funds and other personnel related
funds by the transferees to the extent they are not
funded on the date of the transfer of the Personnel
from the Board including for the due payment of
the amounts to personnel who retire after the date
of the transfer, by the respective transferees to
which there personnel are transferred and till such
time such payments shall be duly made by the
Board.

11. The State Government shall notify
appropriate arrangements in regard to the funding
and due payment of the terminal benefits to the
existing pensioners of the Board as on the date of
the transfer and till such time such payments shall
be duly made by the Board.

For the purpose of this sub-clause, the term,-

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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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(i) "Existing Pensioner" means all the persons
eligible for the pension as on the date of the
transfer from the Board and shall include family
members of the personnel, and,

(ii)"Terminal Benefits" means the gratuity, pension,
dearness and other applicable relief, medical
benefit, and other applicable benefits including the
right to have the appropriate revisions in the above
benefits consistent with the practice that wre
prevalent in the Board.

(12) The provisions of sub-rules (9), (10), and
(11) above shall not apply to any personnel, other
than the existing personnel and existing pensioner
of the Board, as on the date of transfer. All
personnel recruited and appointed by the
transferee shall be governed by, Contributory
Provident Fund Scheme or any other appropriate
scheme, which the transferee concerned may
establish for the purpose and not by the pension
schemes of the existing personnel and existing
pensioners, under sub-rules (9), (10) and (11)
above."

6. Erstwhile employees i.e. "existing pensioners" having

succeeded in determination of gratuity as per 1972 Act, under

the said Act; wherein orders were passed by the Controlling

Authority for determination and payment of gratuity computed
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

as per
Section 4
of 1972 Act. These orders came to be affirmed

in Appeal and in Writ Petitions. In one such Writ Petition

No.5618/2007(s) : Chief Engineer, MPSEB Gwalior vs

Radheyshyam Goyal, a Division Bench of this Court by order-

dated 19.11.2008 while upholding the claim of the employees,

held -

"5. After having heard at length to the counsel
for the parties and going through the orders passed
by the Controlling Authority as well as by the
Appellate Authority, we are of the opinion that
there is no merit in the petition.
Section 14
of the
Payment of Gratuity Act, 1972 overrides the
provisions of other enactments. Under sub-section
(5) of
Section 4
of the Act, there is a right available
to the employee to opt for better terms of gratuity.

Employee has right to choose the gratuity under
the provision which is more beneficial. The
Payment of Gratuity is more beneficial under the

Gratuity Act
has been concurrently found on facts.
Thus, in our opinion, the orders passed by the
Controlling Authority and the Appellate Authority
are proper.

6. The petitioner counsel was unable to point
out any provision in pension rules that in case
gratuity is availed under the
Payment of Gratuity
Act
benefit of pension would be available. The
petitioner's counsel has relied on DTC Retired
Employees' Association (supra); it was a case with
regard to the applicability of the Pension Scheme
and applicability of Provident Fund Scheme. In that
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

pension scheme was required to be accepted using
the option within the specified time which is not the
case of the petitioner. Counsel for the petitioner
further relied on EID Parry (I) Ltd. (supra) in which
the provision of A.P. Shops and Establishment Act,
1996 was found to be more beneficial as compared
to the
Payment of Gratuity Act, 1972
. Here,
position is contrary."

7. These decisions led these five corporate entities move the

State Government vide their letter No.15801 dated 7.3.2014,

seeking exemption under
Section 5
from the provisions of 1972

Act. The relevant note-sheet contained in File No.195/2014/ l-

16 of Labour Department brought on record of Writ Petition

No.2315/2015 reveals that the Labour Commissioner, whose

opinion was sought, negatived the claim for exemption from

applicability of 1972 Act to these establishments. Pertinently,

the exemption was being sought only in respect of the

employees belonging to erstwhile Board. Later on, a decision

was taken on 23.5.2014 of issuing exemption notification

prospectively, in the following terms :

fo"k;%& fo|qr daifu;ksa dks miknku Hkqxrku vf/kfu;e] 1972
¼
The Payment of Gratuity Act
, 1972½ dh /kkjk&05 ds
varxZr NwV ds lac/a k esa ¼e/;izns'k e/;{ks= fo|qr forj.k
daiuh fyfeVsM] Hkksiky½
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

;g ewy uLrh e/;izns'k e/;{ks= fon~;qr forj.k
dEiuh fyfeVsM] Hkksiky dks miknku Hkqxrku vf/kfu;e 1972
dh /kkjk 05 ds vUrxZr NwV iznku djus ls lacaf/kr gSA bl
ewy uLrh ds lkFk&lkFk ikWp vU; fon~;qr forj.k dEifu;kW
1&e/;izns'k ikWoj Vªkalfe'ku dEiuh fyfeVsM] tcyiqj 2&
e/;izns'k ikWoj esustesUV dEiuh fyfeVsM] tcyiqj 3&
,e0ih0 ikWoj esustesaUV dEiuh fyfeVsM] tcyiqj 4& e0iz-
iwoZ {ks= fon~;qr forj.k dEiuh fyfeVsM] tcyiqj
5&e0iz0if'pe {ks= fon~;qr forj.k dEiuh fyfeVsM]
tcyiqj dh ufLr;kW Hkh v/kksfLFkr gSaS bu lHkh dEifu;ksa
ds }kjk miknku Hkqxrku vf/kfu;e] 1972 dh /kkjk 05 ds
vUrxZr NwV pkgh xbZ gSA bl ekeys esa fofHkUu deZpkjh
laxBuksa ,oa dEifu;ksa ds izfrfuf/k;ksa ds lkFk fnukad
4&4&14 dks cSBd j[kh xbZ o mHk;i{kksa dks i;kZIr volj
nsrs gq, lquk x;k A
2- izca/ku ds izfrfuf/k;ksa ds }kjk ,oa laxBu ds
izfrfuf/k;ksa ds }kjk tks rF; izLrqr fd;s x;s mudk lekos'k
izLrqr la{ksfidk esa fd;k x;kA la{ksfidk dh izfr v/kksfLFkr
gS A
3- miknku Hkqxrku vf/kfu;e 1972 dh /kkjk 05 ds
vUrxZr NwV u feyus ds dkj.k bu lHkh dEifu;ksa dks
gtkjksa U;k;ky;hu izdj.kksa esa my>uk iM+ jgk gS o
dEifu;ksa ij foRrh; Hkkj vk jgk gS tks turk ls olwy
gksxk vr% O;kid tufgr esa mDr lHkh dEifu;ksa dks
Hkfo";y{kh ¼vf/klwpuk fnukad ls miknku Hkqxrku vf/kfu;e
1972 dh /kkjk 05 ds vUrxZr NwV½ fn;k tkuk izLrkfor gS
D;ksafd lHkh ekeys ,d tSls gSaA bl izdj.k esa fy;s x;s
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

fu.kZ; vU; ikaWpksa izdj.kksa esa Hkh ykxw gksaxsA izLrko vuqeksnu
gsrq izLrqr gS A **

8. With the acceptance of proposal, the appropriate

Government i.e. State Government issued notification on

27.5.2014 in the following terms :

**Ø-195&2014&,&16&miknku Hkqxrku vf/kfu;e] 1972 ¼Ø-

1972 dk 39½ dh /kkjk 5 esa iznRr 'kfDr;ksa dks iz;ksx esa
ykrs gq, jkT; 'kklu] ,rn~}kjk e/;izns'k ikWoj esustesaV
dEiuh fy-] tcyiqj] e/;izns'k ikWoj tujsfVax dEiuh fy-]
tcyiqj e/;izns'k ikWoj Vªkaleh'ku dEiuh fy-] tcyiqj
e/;izns'k e/; {ks= fo|qr forj.k dEiuh fy-] Hkksiky
e/;izns'k iwoZ {ks= fo|qr forj.k dEiuh fy-] tcyiqj rFkk
e/;izns'k if'pe {ks= fo|qr forj.k dEiuh fy-] bUnkSj esa
fu;ksftr fu;fer dkfeZdksa dks ftUgsa e/;izns'k flfoy lsok
¼isa'ku½ fu;e] 1976 xzkg~; dj miknku] is'a ku] isa'ku
dE;wV's ku rFkk e`R;q lg&miknku ds leLr ykHk iznku
djus vkSj dkfeZdksa dks miknku ,oa csgrj isa'ku dk Hkqxrku
ldy :i ls fd;s tkus ds dkj.k mUgsa miknku Hkqxrku
vf/kfu;e] 1972 ds izHkkoh gksus ls vf/klwpuk tkjh djus dh
fnukad ls NwV iznku djrh gSA**

9. After issuance of exemption notification on 27.5.2014,

these companies sought further indulgence of the State

Government seeking exemption from a retrospective date on
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W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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the contentions that in the past, the employees were in the

receipt of gratuity and terminal benefits not less favourable

than the benefits conferred under 1972 Act. And, that if the

exemption is not granted from retrospective date, there will be

additional financial burden of Rs.90 crores. The claim paved the

way for following proposal -

**iwoZ esa Je foHkkx dh vf/klwpuk fnukad 27&5&2014 ls
e/;izns'k fon~;qr e.My dh fofHkUu dEifu;ksa dks miknku
Hkqxrku vf/kfu;e] 1972 ds izko/kkuksa esa NwV nh xbZ FkhA
pwaWfd buds }kjk Hkqxrku dh tk jgh lqfo/kk miknku
vf/kfu;e esa fn;s x;s izko/kkuksa ls vf/kd csgrj FkhA fon~;qr
e.My dh fofHkUu dEifu;ksa us Hkwry{kh izHkko ls NwV ekaxh
gSA vr% e/; izns'k ikoj tujsfVax dEiuh fyfeVsM]
tcyiqj] e/;izns'k e/; {ks= fon~;qr forj.k dEiuh fyfeVsM]
Hkksiky] e/;izns'k if'pe {ks= fon~;qr forj.k dEiuh
fyfeVsM] bUnkSj dks 31&05&2005 o ,e-ih- ikoj eSustesVa
dEiuh fyfeVsM] tcyiqj dks 31&05&2006 rFkk e-iz-ikoj
Vªkalfe'ku dEiuh fyfeVsM] tcyiqj dks 16&09&1972 ls
NwV fn;k tkuk izLrkfor gSA iwoZorhZ e/;izns'k fon~;qr
e.My dh fofHkUu ns;rk,Wa e/;izns'k ikoj Vªkalfe'ku dEiuh
tcyiqj dks nh xbZ gSaA vr% ,DV ykxw gksus ds le; ls bl
dEiuh dks NwV fn;k tkuk izLrkfor gSA
2- ;g mfYyf[kr gS fd ;fn iwoZ esa dEifu;kW
U;k;ky;hu vkns'kksa ;k fdlh vU; dkj.k ls ;fn dksbZ
xzsT;qVh dk Hkqxrku lsokfuo`Rr dfeZ;ksa dks fn;k x;k gS rks
:: 14 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

mldh olwyh ;g dEifu;kW ugha dj ldsaxhA ;g izko/kku o
la'kks/ku vf/klwpuk esa tkjh fd;k tkuk izLrkfor gS] ftlls
dh lsokfuo`Rr dfeZ;ksa ds fgrksa dh j{kk gks ldsA
mijksDrkuqlkj vuqeksnu gsrq A **

10. This proposal led to issuance of Notification on

10.12.2014, which is in the following terms -

Ø- ,Q1 ¼,&06&14&c&lksyg&miknku Hkqxrku vf/kfu;e]
1972 ¼Ø- 1972 dk 39½ dh /kkjk 5 esa iznRr 'kfDr;ksa dk
iz;ksx esa ykrs gq, jkT; 'kklu] ,rn~}kjk] bl foHkkx dh
vf/klwpuk Ø- ,Q 195&2014&,&lksyg] fnukad 27 ebZ
2014 tks e/;izns'k ¼vlk/kkj.k½ jkti= esa fnukad 06 twu]
2014 dks izdkf'kr gS] esa la'kks/ku djrs gq, fuEu dEifu;ksa
dks muds }kjk Hkwry{kh izHkko ls NwV nsus ds laca/k esa izLrqr
vH;kosnu ij iqufoZpkj djrs gq, dEifu;ksa ds le{k
mYysf[kr frfFk ls NwV iznku djrh gS%&

Ø- daiuh dk uke NwV iznku dh fof/k
¼1½ ¼2½ ¼3½
1- e/;izns'k ikWoj tujsfVax dEiuh fyfeVsM] tcyiqj 31&5&2005
2- e/;izns'k iwoZ {ks= fo|qr~ forj.k dEiuh fy-] tcyiqj 31&5&2005
3- e/;izns'k e/; {ks= fo|qr dEiuh fy-] Hkksiky 31&5&2005
4- e/;izns'k if'pe {ks= fo|qr dEiuh fy-] bankSj 31&5&2005
5- e/;izns'k ikWoj esustesaV dEiuh fy-] tcyiqj 31&5&2006
6- e/;izns'k ikWoj Vªkalfe'ku dEiuh fy-] tcyiqj 16&9&1972

ijUrq ;g fd iwoZ esa mDr dEifu;ka] U;k;ky;hu
vkns'kksa ;k fdlh vU; dkj.k ls ;fn dksbZ xzsP;qVh dk
Hkqxrku lsokfuo`Rr dfeZ;ksa dks fn;k x;k gS] rks mldh
olwyh ;s dEifu;ka ugha dj ldsaxhA**
:: 15 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

11. That, learned single Judge, Gwalior Bench of this Court in

seisin with batch of writ petitions preferred by these corporate

entities against the order passed by Authorities under 1972 Act

wherein these notifications i.e. notification dated 27.5.2014 and

10.12.2014 were pressed in service and though such challenge

being negatived by order dated 14.3.2014 in a batch of Writ

Petition Nos.8918/2013, 8929/2013, 8849/2013, 2871/2013,

3109/2013, 3718/2013, 3719/2013, 3723/2013, 4513/2013,

7770/2013, 7771/2013, 7772/2013, 8217/2013, 8374/2013,

215/2014, 214/2014, 213/2014, 250/2014, 1396/2014,

8375/2013, 8377/2013, 8552/2013, 8553/2013, 8772/2013,

8908/2013, 8910/2013 in Writ Petition No.14554/2015 yet,

taking note of the fact that constitutional validity of the

notification dated 10.12.2014 being under challenge in Writ

Petition No.573/2015 (re-registered as W.P. No.14554/2015 at

Jabalpur) :
M.P. Vidyut Karamchari Pensioners' Association vs

State of M.P
and forming an opinion that the matter involves

substantial question of law of general importance, has referred

the matter for decision by larger Bench by formulating the

question :

"whether the notification dated 10.12.2014
:: 16 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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will nullify or take away the effect and benefit of

the orders passed by the Controlling and Appellate

Authority under the
Gratuity Act
?".

12. The question referred though is confined only to the

aspect as to whether an order passed by quasi-judicial

authority of conferring certain service benefits under 1972 Act

could be retrospectively taken away. In other words, whether

such a quasi-judicial pronouncement tantamount to accrual of

right in favour of such employees or class of employees and the

right so accrued can be taken away by effecting an exemption

from 1972 Act from retrospective date. And, whether the choice

of date can be beyond the date from which the corporate entity

has come into existence.

13. The answer could have been short had the question

referred was the only issue, the reason being that, though all

these five corporate entities were reconstituted and

restructured with effect from 1.6.2005 yet, in TRANSCO, the

exemption has been made effective from 16.9.1972 i.e. from

the date when Act of 1972 came into existence. Whether this

could be done was the only issue. But, it is not to be so

because alongwith these batch of Writ Petitions is also a Writ
:: 17 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

Petition (W.P. No.14554/2015) wherein the vires of notification

dated 10.12.2014 is being questioned. Therefore, we intend to

deal with the issue of vires also by this order.

14. We straightaway go to the aspect of vires.

15. The contentions on behalf of petitioners to the validity of

notification is that it is beyond the powers of the appropriate

Government to review the notification earlier issued and make

it effective from retrospective date and grant exemption from a

retrospective effect thereby taking away the right of gratuity

accrued under 1972 Act and thereby, creating a class within a

class. And that subjecting the class to be exempted to the

provisions less favourable than the benefits conferred under

1972 Act. It is also the contention that the right accrued in

favour of the employees has been taken away from a

retrospective date without affording an opportunity of hearing.

In substantiation of these submissions, learned counsel for the

employees have led us through the benefit towards gratuity

computed as per
Section 4
of 1972 Act being more beneficial

than the gratuity payable under the Pension Rules 1976.

Formula provided under the Act of 1972 and one under 1976

Rules for computation of gratuity has been commended at to
:: 18 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

bring home the submissions that the gratuity under 1976 Rules

is less favourable than under 1972 Act. Decisions in
State of

Tamil Nadu v. State of Kerala
AIR 2014 SC 2407 and

B.S. Yadav v. State of Haryana AIR 1981 SC 561 have

been relied upon.

16. Jettisoning the contentions, respondents No. 2 to 7 while

relying on the powers conferred vide
section 5
of 1972 Act on

appropriate Government to exempt the establishment from a

date not earlier than the enactment, have to submit that it

being within the competence of the appropriate government to

exempt the respondent from the applicability of the provisions

of 1972 Act and having satisfied that the benefit under existing

1976 Rules being more beneficial than the benefits conferred

under 1972 Act, the impugned notification does not suffer from

the vice of arbitrariness or excessive exercise of delegated

powers. Emphasizing that the benefits under 1976 Rules are

better than those under the 1972 Act, respondents have placed

a comparative chart, which we intend to reproduce at relevant

stage while dwelling over the aspect as to whether the gratuity

payable under 1976 Rules are more beneficial than 1972 Act.

Respondents have placed reliance on Rules 43 and 44 of the
:: 19 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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Pension Rules, 1976. And, has relied on the decisions by Patna

High Court in
Janak Prasad Singh v. Bihar State

Electricity Board
2004 (3) LLN 491, Gujarat High Court in

Vadodara Mahanagar Palika, Naukar v. State of Gujarat

decided on 10.1.2008 and of Punjab & Haryana High Court in

Vishwanath v. State of Haryana
: C.W.P. No.6479/2009

decided on 27.10.2009.
Decision by the Supreme Court in

Shree Sidhbali Steels Limited v. State of Uttar Pradesh

2011 (3) SCC 193 is also relied upon to substantiate the

contention that it is within the power of the appropriate

government to issue exemption notification and also to review

the same.

17. The question which arises for consideration is whether it

is within the powers of the appropriate Government to issue

exemption notification under
Section 5
of 1972 Act. And if the

answer is 'Yes', whether the said power can successively be

exercised by issuing subsequent notification exempting the

establishment from a retrospective date. And, whether the date

for exemption could be beyond the date when the corporate

entity has come into existence. If the answer to these issues

are in affirmative, the next question which would arise for

consideration is as to whether there is an accrual of vested
:: 20 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

right in the employees whose services are transferred to new

corporate entities to claim gratuity under 1972 Act and whether

the gratuity or pensionary benefits under 1976 Rules are not

less favourable than the benefits conferred under 1972 Act.

18.
Section 5
of 1972 Act stipulates :

5. Power to exempt. - (1) The appropriate
Government may, 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.

:: 21 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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(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.

19. Thus, if sub-section (1) and (2) of
Section 5
empowers

the appropriate Government to exempt any establishment,

factory, mine, oilfield, plantation, port, railway company or

shop; any employee or class of employees employed in these

establishment(s) from the operation of provisions of Act of

1972; sub-section (3) of
Section 5
grafts in appropriate

Government to issue such notification even from a retrospective

date. Apparently, the powers conferred to the appropriate

Government is not only to issue notification for exemption but

also to issue the same from retrospective date. Thus, two

independent powers are conferred in the appropriate

Government. True it may be that the exercise of power under

Section (3) of
Section 5
may be exerciseable with the issuance

of notification under sub-section (1) or sub-section (2) of

Section 5
, but it delegates powers independent to these powers

by making exemption effective from retrospective date. Thus, in

a case as the present one, having notified an exemption under
:: 22 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

sub-section (1) of
Section 5
vide notification dated 27.5.2014, it

was still within the powers of the appropriate Government as

conferred under sub-section (3) of
Section 5
to issue a separate

notification specifying the date from which the exemption is

granted. In other words, the powers to make the notification

effective from a retrospective date does not get exhausted

merely because it does not find mention in a notification issued

under sub-section (1) or (2) of
Section 5
, as the case may be.

Thus, to exempt the establishment or the employee or class of

employees from retrospective date not earlier than the date of

commencement of Act of 1972 conferred upon the appropriate

Government is supplementary to and additional constituent of

power of exemption as conferred under sub-section (1) and (2)

of
Section 5
. Thus, there is no transgression of the powers

conferred in the appropriate Government who, at one point of

time, issue an exemption notification by making it effective

from the date of issuance of notification and at another point of

time, issue notification by making the exemption from the date

prior to issuance of exemption notification.

20. The issue can also be looked in the context of
General

Clauses Act, 1897
.
As the Act
of 1972 being a Central Act, the
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No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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provisions contained under 1897 Act can be taken aid of

Section 14
and 21 of 1897 Act, which stipulate -

14. Powers conferred to be exercisable
from time to time. - (1) Where, by any Central
Act or Regulation made after the commencement
of this Act, any power is conferred, then unless a
different intention appears that power may be
exercised from time to time as occasion requires.

(2) This section applies also to all Central Acts
and Regulations made on or after the fourteenth
day of January, 1887.

...

21. Power to issue, to include power to add
to, amend, vary or rescind notifications,
orders, rules or bye-laws. - Where, by any
Central Act or Regulations a power to issue
notifications, orders, rules or bye-laws is conferred,
then that power includes a power, exercisable in
the like manner and subject to the like sanction and
conditions (if any), to add to, amend, vary or
rescind any notification, orders, rules or bye-laws
so issued.

21. These two provisions have been interpreted to mean that

"...... when a power is conferred on an authority to do a

particular act, such power can be exercised from time to time
:: 24 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

and carry with it power to withdraw, modify, amend or cancel

the notifications earlier issued, to be exercised in the like

manner and subject to like conditions, if any, attached with the

exercise of the power." (See. Shree Sidhbali Steels Limited

v. State of U.P. (2011) 3 SCC 193, Paragraph 41).

22. Taking any view of the matter, it being within the

competence of the appropriate Government to notify exemption

and make the exemption effective from retrospective date, the

exercise of such power in issuing notifications dated 27.5.2014

and 10.12.2014 cannot be faulted with, as the appropriate

Government is empowered in that behalf vide
Section 5
of 1972

Act.

23. Next question which crops up for consideration is whether

an exemption from the applicability of the provisions of Act of

1972 can be from a date prior to coming into existence of the

establishment concerned, because sub-section (3) of
Section 5

of 1972 Act enables that a notification under sub-section (1)

and (2) can be issued "retrospectively a date not earlier than

the date of commencement of this Act".

24. That, being an enabling provision, the exercise of power

under
Section 5
of 1972 Act has to be within the limits implicit

therein. What are these limits ? Close reading of sub-sections

(1) and (2) of
Section 5
reveals that exemption of an
:: 25 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

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establishment to which 1972 Act applies, such establishment

must, therefore, be in existence. And, even when exempted

from a retrospective date, the establishment must be in vogue.

For example, in the case at hand, one of the establishments,

viz. Madhya Pradesh Power Transmission Company Limited

which though came in existence w.e.f. 31.5.2005 because of

the restructuring of erstwhile Madhya Pradesh State Electricity

Board which was dissolved yet, the Company is exempted from

the provisions of 1972 Act w.e.f. 16.9.1972. And though, similar

is the case of other corporate entities such as Madhya Pradesh

Power Generating Company, Madhya Pradesh Poorva Kshetra

Vidyut Vitran Co. Ltd., Madhya Pradesh Madhya Kshetra Vidyut

Vitran Co. Ltd., Madhya Pradesh Paschim Kshetra Vidyut Vitran

Co. Ltd. and Madhya Pradesh Power Management Co. Ltd.

which also came into existence w.e.f. 31.5.2005 and are

exempted from the date they came into existence. In other

words, the notification for exemption of establishment

/corporate entity being issued in exercise of powers conferred

vide sub-section (1) of
Section 5
of 1972 Act and though it

empowers the appropriate Government to exempt the

establishment even from the date when the Act of 1972 has

come into existence, but the same could be only in case the
:: 26 ::

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establishment in question is in existence. In other words, the

notification would be effective from and during the period when

such establishment exists unless provided to the contrary. It

can be argued that since the power vests with the appropriate

Government to even exempt the employee(s) from the

provisions of 1972 Act and since liability to pay pension to

existing pensioners has been conferred on Madhya Pradesh

Power Transmission Company Limited after the dissolution of

erstwhile Madhya Pradesh State Electricity Board, the

notification in respect of this Company be construed as being

issued in purported exercise of powers conferred under sub-

section (2) of
Section 5
of 1972 Act. Quite true it may be,

because of the settled principle that, in case if an order passed

in exercise of power, the sources of power is not quoted, it will

not invalidate the order if the power can be referred to a

jurisdiction which confers validity upon it (for an authority

please see
M.T. Khan v. State of A.P.
(2004) 2 SCC 267 at

page 273). However, even if it is to be construed to be a

composite notification, under
Section 5
of 1972 Act
,
in that

case
, it must meet two requirements, viz. (i) the gratuity or

pensionary benefit already available to the employees are not

less favourable than the benefit conferred by the Act of 1972
:: 27 ::

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and (ii) that the retrospective exemption should not

prejudicially affect interest of any person.

25. Coming to the case at hand, it is not being disputed that,

finding the provisions of Act of 1972 more beneficial than the

existing gratuity provisions contained in 1976 Rules, the

Controlling Authority has been allowing the claim and directing

for computation of gratuity in consonance with
Section 4
of

1972 Act. That being so, there is accrual of right in the

employees/existing pensioners who have been held entitled for

the gratuity under 1972 Act as could be taken away from the

retrospective date.

26. This issue can be analysed from another angle. The

impugned notification exempting the corporate entities from

retrospective effect has been issued on the bedrock that the

provisions of 1976 Rules were made applicable to erstwhile

Madhya Pradesh State Electricity Board and the gratuity and

pension component were more beneficial than the gratuity

under 1972 Act. However, as noticed above, the aspect as to

whether the gratuity under 1976 Rules are more beneficial than

under 1972 Act has been the subject matter of scrutiny before

the Controlling Authority and the Appellate Authority in

umpteen number of cases in past where on adjudication it has
:: 28 ::

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been found that the gratuity under 1976 Rules being less

favourable than what is payable under 1972 Act.

27. To overcome these findings justification as to that the

gratuity under 1976 Rules is more beneficial, it is being

presented as a package comprising of gratuity and pension. A

chart has been prepared and filed along with the return to

bring home the submissions that benefit under 1976 Rules from

its inception has been more than under the
Gratuity Act, 1972
.

To appreciate the contentions, the Chart is reproduced:

COMPARISON OF BENEFITS UNDER GRATUITY ACT 1972 VIS-A-VIS
UNDER MPCS PENSION RULES 1976 ADOPTED BY THE COMPANY

BENEFIT UNDER GRATUITY ACT, 1972

PAY DRAWN IN Total Pay DA @ 113% Total emol. Gratuity Calculation as per Act Max. Limit of
PAY BAND AND (One Time) Gratuity up to
GRADE (Pay X Length of service X 15)/26 10 lacs

8030(Pay)+1900 9930.00 11220.90 21150.90 439288.00 1000000
(Grade Pay) Class Interest @8.5% 3112.00
IV employee on gratuity

Thus employee could get benefit of one time Gratuity of Rs.4,39,288/-
for short terms and for long term Rs.3,112/- per month

BENEFIT UNDER MPCS PENSION RULES 1976 ADOPTED BY THE

COMPANY

Calculations made Total Pay DA@113% Total emol. Gratuity calculation as per
pension Rules, 1976
(One Time)
(Pay+DA) X 15 days X
length of service (Max. 33
years)/30

(i) Gratuity 9930 11220.9 21150.9 3,48,989.85

(ii) Pension per month (Last Pay/2 4,965.00

(iii) DA @ 113% on pension per month 5,610.45

(iv) Total pension per month 10,575.45

(v) Intt.@ 8.5 % on Gratuity 2,472.00

Thus employee could get benefit of one time gratuity of Rs.3,48,989 and
:: 29 ::

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pension of Rs.13,047 per month inclusive of interest of gratuity

BENEFIT UNDER GRATUITY ACT, 1972

PAY DRAWN IN Total Pay DA @ 113% Total emol. Gratuity Calculation as per Act Max. Limit of
PAY BAND AND (One Time) Gratuity up to
GRADE (Pay X Length of service X 15)/26 10 lacs
15050(Pay)+2300 18850 21300.5 40150.5 8,33,895 1000000
(Grade Pay) Interest @8.5% 5,907
Class III employee on gratuity

Thus employee could get benefit of one time Gratuity of Rs.8,33,895/-
for short terms and for long term Rs.5,907/- per month

BENEFIT UNDER MPCS PENSION RULES 1976 ADOPTED BY THE
COMPANY
Calculations made Total Pay DA@113% Total emol. Gratuity calculation as per
pension Rules, 1976
(One Time)
(Pay+DA) X 15 days X
length of service (Max. 33
years)/30

(i) Gratuity 18,850 21,300.5 40,150.5 6,62,483.25

(ii) Pension per month (Last Pay/2 9,425.00

(iii) DA @ 113% on pension per month 10,650.25

(iv) Total pension per month 20,075.25

(v) Intt.@ 8.5 % on Gratuity 4,693.00

Thus employee could get benefit of one time gratuity of Rs.6,62,483 and
pension of Rs.24,768/- per month inclusive of interest of gratuity

BENEFIT UNDER GRATUITY ACT, 1972

PAY DRAWN IN Total Pay DA @ 113% Total emol. Gratuity Calculation as per Act Max. Limit of
PAY BAND AND (One Time) Gratuity up to
GRADE (Pay X Length of service X 15)/26 10 lacs
25300(Pay)+5400 30,700 34,691 65,391 13,58,121 1000000
(Grade Pay) Class Max. Payable 10,00,000
II Interest @8.5% 3,112
on gratuity

Thus employee could get benefit of one time Gratuity Rs.10,00,000/-

for short term and for long term Rs.7,083/- per month

BENEFIT UNDER MPCS PENSION RULES 1976 ADOPTED BY THE
COMPANY
Calculations made Total Pay DA@113% Total emol. Gratuity calculation as per
pension Rules, 1976
(One Time)
(Pay+DA) X 15 days X
length of service (Max. 33
years)/30

(i) Gratuity 30,700 34,691 65,391 10,78,951.50
Max. Payable 10,00,000.00

(ii) Pension per month (Last Pay/2 15,350.00

(iii) DA @ 113% on pension per month 17,345.50
:: 30 ::

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(iv) Total pension per month 32,695.50

(v) Intt.@ 8.5 % on Gratuity 7,083.00

Thus, employee could get benefit of one time gratuity of
Rs.10,00,000/- and pension of Rs.39,779/- per month inclusive of
interest of gratuity

28. To justify the exemption from retrospective date, it is

contended on behalf of respondents that under the Act of 1972,

the employees are entitled only of gratuity whereas under the

Rules of 1976 they, besides gratuity, are entitled for the pension

which is paid lifelong. Taking an employee's service span of 35

years, it is urged that under the Act of 1972, a Class IV

employee gets one time gratuity of Rs.4,39,288/- and if divided

in terms of future benefits he gets Rs.3,122/- per month.

Similar breakup has been given in respect of Class III and Class

II employees. As evident, comparison has been drawn in case

of an employee governed by Rules, 1976.

29. However, evidently while computing benefits under 1976

Rules, three factors are taken into consideration; viz., gratuity

(as provided under Rule 43(1) of Rules, 1976), Pension (as

provided under Rule 43(2) and Commutation of pension (as

covered under Madhya Pradesh Civil Services (Commutation of

Pension) Rules, 1996 (which in turn replaced M.P. Civil Services
:: 31 ::

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(Commutation) Rules, 1976). Reliance is placed on the decision

by a Division Bench of Patna High Court in
Janak Prasad

Singh v. Bihar State Electricity Board
2004 (3) LLN 491,

the decision is followed by Punjab and Haryana High Court in

Vishwanath v. State of Haryana
2009 SCConline P&H

10012 and by Gujarat High Court in
Vadodara

Mahanagarpalika Naukar v. State of Gujarat
.

30. The judgment in Janak Prasad proceeded with the facts

as borne out from paragraphs 16, 17, and 18 that in Bihar

Electricity Board Workmen were earlier paid gratuity in terms of

Payment of Gratuity Act
and it was on account of persistent

demand raised through the representatives employees Union

that the Board ultimately agreed to pay monthly pension by

adopting Bihar Pension Rules which was a package for payment

of gratuity to the employees (under Rule 27 of the Pension

Rules pension includes gratuity). The Court thus found that the

pension package available under the Bihar Pension Rules

provides a better support system to the retired officer/

employees and their dependents unlike the benefits conferred

by the gratuity Act.
In the case of
Vishwanath
(supra), the
:: 32 ::

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Division Bench of Punjab and Haryana High Court while

dwelling on the challenge to an exemption notification took into

consideration the fact that the employee therein was a member

of CPF Scheme and obtained his due amount to which the

employer has also contributed by the giving matching grant and

that if all retiral benefits are taken into account then the

amount of gratuity which become payable under the Act of

1972 would be for less than those benefits. Though in this case

specific provisions of Service Rules are not spelt out, however, it

is gathered from the decision that this case also, as in the case

of Bihar Electricity Board, other retiral dues such as

contributory pension was clubbed with the gratuity to ascertain

the aspect as to whether the exemption notification from a

retrospective date would prejudicially affect the interest of any

person. Similar is the view of Gujarat High Court in
Vadodara

Mahanagarpalika Naukar
(supra).

31. In the case at hand, the Rules adopted by the

respondents are "The Madhya Pradesh Civil Services (Pension)

Rules, 1976".

32. Under Rule 2(i) the expression "Gratuity" includes: (1)
:: 33 ::

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'Service Gratuity" payable under sub-rule (1) of Rule 43; (2)

"Death-cum-Retirement Gratuity" payable under sub-rule (1) of

Rule 44 and (3) "Residuary gratuity" payable under sub-rule (2)

of Rule 44.

33. Under Rule 2(n) expression "Pension" includes: "Gratuity

except when it is used in contradistinction to gratuity".

34. Thus, the gratuity though payable under the Rules of

1976 but it is an entity different than pension. Because, while

pension is payable on completion of qualifying service of 10

years as provided under Rule 43 (2) of 1976 Rules, the gratuity

is payable before completion of qualifying service of ten years

as per computation under sub-rule (1) of Rule 43 of 1976

Rules. Whereas, death-cum-retirement gratuity is payable to

an employee who has completed five years' qualifying service

and has become eligible for service gratuity or pension under

Rule 43 on his retirement equal to 1/4th of his emoluments for

each completed six monthly period of qualifying service, subject

to maximum of 16½ times the emoluments.

35. In other words, an employee completing qualifying

service of ten years would be entitled for pension calculated as
:: 34 ::

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per sub-rule (2) of Rule 43 and Death-cum-Retirement Gratuity

calculated as per sub-rule (1) of Rule 44. Whereas, an

employee having less than 10 years of qualifying service is

entitled for gratuity as per sub-rule (1) of Rule 43 and Death-

cum-Retirement Gratuity as per sub-rule (1) of Rule 44 if has

completed 5 years of service. The Rules of 1976 does not,

therefore, aim at treating gratuity and pension as one.

36.
In
Union of India v. All India Services Pensioners'

Association
AIR 1988 SC 501, reiterating the law
laid down

in

State Government Pensioners' Association v. State of

Andhra Pradesh
(1986) 3 SCC 501, it has been held by the

Supreme Court: "From the foregoing it is clear that this Court

has made a distinction between the pension payable on

retirement and the gratuity payable on retirement. While

pension is payable periodically as long as the pensioner is alive,

gratuity is ordinarily paid only once on retirement."

37.
In
State of U.P. v. U.P. University Colleges

Pensioners' Association
(1994) 2 SCC 729, it has been

held:

13. Before we express our views on the aforesaid
matter, we would deal with the submission of Shri
:: 35 ::

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Jain that gratuity has to be taken as a part of
pension, to support which contention our attention
has been invited to this Court's judgment in
Jarnail
Singh
case'. Perusal of that judgment shows that
gratuity was taken to be a part of pension because of
the definition of "pension" as given in clause (o) of
sub-rule (i) of Rule 3 of Central Civil Services
(Pension) Rules, 1972.

It is because of this definition
that the case of
D.V. Kapoor v. Union of India
[(1990)
4 SCC 314] in which it had been held that gratuity
was not a part of pension, was not followed, as the
Bench which decided that case had not been referred
to the aforesaid definition of pension.
Similar
observation was made in Jarnail Singh case'
regarding F.R. Jesuratnam v. Union of India [1990
Supp SCC 640] wherein also gratuity was not
regarded as part of pension without noting the
abovenoted definition.

14. To buttress his aforesaid submission, Shri Jain
also refers to clause (17) of
Article 366
of the
Constitution which has defined pension to include
gratuity. Merely because what has been stated in
clause (17) it cannot be held that gratuity has to be
taken always and for all purposes as part of pension,
because this definition apparently has enlarged the
meaning of the word "pension" by stating that this
would include gratuity. It is well known that
legislature very often wants to give enlarged meaning
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to a particular word and this is done by stating that
the defined word would include some named related
subjects also.

15. We, therefore, state that either because of
what was stated in
Jarnail Singh
case or the way
"pension" has been defined in the Constitution, it
cannot be held that pension and gratuity are
conceptually same, as stated in paragraph 9 of
Jarnail
Singh
case' to which our attention is invited by Shri
Jain. According to us, this Court took the view in
question in Jarnail Singh because of the definition of
the word "pension" in the concerned rule; otherwise,
what was held in D. V. Kapoor and F.R. Jesuratnam
cases seem to be correct legal position."

38.
In
Municipal Corporation of Delhi v. Dharam

Prakash Sharma
(1998) 7 SCC 221) while dwelling on the

issue whether an employee of the Municipal Council Delhi

would be entitled to payment of gratuity under the
Payment of

Gratuity Act
when the MCD itself has adopted the provisions of

the CCS (Pension) Rules, 1972, whereunder there is a provision

both for payment of pension as well as of gratuity, it is held:

".........
The Payment of Gratuity Act
being a special
provision for payment of gratuity, unless there is
any provision therein which excludes its
applicability to an employee who is otherwise
governed by the provisions of the Pension Rules, it
:: 37 ::

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is not possible for us to hold that the respondent is
not entitled to the gratuity under the
Payment of
Gratuity Act
. The only provision which was pointed
out is the definition of "employee" in
Section 2 (e)

which excludes the employees of the Central
Government and State Governments receiving
pension and gratuity under the Pension Rules but
not an employee of the MCD. The MCD employee,
therefore, would be entitled to the payment of
gratuity under the
Payment of Gratuity Act
. The
mere fact that the gratuity is provided for under the
Pension Rules will not disentitle him to get the
payment of gratuity under the
Payment of Gratuity
Act
. In view of the overriding provisions contained
in
Section 14
of the Payment of Gratuity Act, the
provision for gratuity under the Pension Rules will
have no effect. Possibly for this reason,
Section 5
of
the Payment of Gratuity Act has conferred authority
on the appropriate Government to exempt any
establishment from the operation of the provisions
of the Act, if in its opinion the employees of such
establishment are in receipt of gratuity or
pensionary benefits not less favourable than the
benefits conferred under this Act. Admittedly MCD
has not taken any steps to invoke the power of the
Central Government under Sectopm 5 of the

Payment of Gratuity Act
. In the aforesaid premises,
we are of the considered opinion that the
employees of the MCD would be entitled to the
payment of gratuity under the
Payment of Gratuity
Act
notwithstanding the fact that the provisions of
the Pension Rules have been made applicable to
them for the purpose of determining the pension.

Needless to mention that the employees cannot
claim gratuity available under the Pension Rules. ."

39. In the case at hand, though an untiring effort has been
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made on behalf of respondents to establish that the provisions

under the Rules of 1976 are more beneficial than that of 1972

Act but by clubbing the gratuity and pension; however, since

the two are different entities, respondents have utterly failed to

establish that the gratuity payable under Pension Rules, 1976

are more beneficial than payable under 1972 Act. And since by

virtue of
Section 14
of 1972 Act the provisions therein have an

overriding effect, the accrual of right to receive gratuity under

1972 Act cannot be taken away from the existing pensioners

even if it is within the powers of the appropriate government to

cause exemption from a retrospective date.

40. The next issue for consideration is that whether the

impugned notification takes away the vested right said to have

accrued in favour of existing pensioners. In order words,

whether the retrospective operation would have an adverse

effect over the right of existing pensioners for a gratuity under

the Act of 1972.

41. As has been observed in
Chairman, Railway Board v.

C.R. Rangadhamaiah
(1997) 6 SCC 623 that "20. .. but a

rule which seeks to reverse from an anterior date a benefit

which has been granted or availed of, e.g., promotion or pay
:: 39 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

scale, can be assailed as being violative of
Articles 14
and
of

the Constitution to the extent it operates retrospectively".

42.
In
State of Gujarat v. Raman Lal Keshav
(1983) 2

SCC 33, while striking down 1978
Amendment in Gujarat

Panchayat Act, 1961
which extinguished the status of ex-

ministerial employees allocated to Panchayat Service as

Secretaries, Officers and Servants of Gram and Nagar

Panchayats as government servants, it was held by the

Supreme Court -

"52. The legislature is undoubtedly competent to
legislate with retrospective effect to take away or
impair any vested right acquired under existing
laws but since the laws are made under a written
Constitution, and have to conform to the dos and
don'ts of the Constitution; neither prospective nor
retrospective laws can be made so as to contravene
Fundamental Rights. The law must satisfy the
requirements of the Constitution today taking into
account the accused or acquired rights of the
parties today. The law cannot say twenty years ago
the parties had no rights, therefore, the
requirements of the Constitution will be satisfied if
the law is dated back by twenty years. We are
concerned with today's rights and not yesterday's.

A Legislature cannot legislate today with reference
to a situation that obtained twenty years ago and
ignore the march of events and the constitutional
rights accrued in the course of the twenty years.

That would be most arbitrary, unreasonable and a
negation of history."

:: 40 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

43.
In
Salabuddin Mohamed Yunus v. State of A.P.

1984 (Supp) SCC 399, while striking down the amendment
in the relevant Rules applicable to employee in the service of
former Indian State of Hyderabad prior to coming into force of
the Constitution of India, which was effective from a
retrospective date by substituting "Rs.857.15 a month" in place
of "Rs.1000 a month" in clause (b) of sub-rule (1) of Rule 299
being violative of
Article 31(1)
and
19(1)(f)
of the Constitution,
it was held that -

"6. .. The fundamental right to receive pension
according to the rules in force on the date of his
retirement accrued to the appellant when he retired
from service, By making a retrospective
amendment to the said Rule 299(1)(b) more than
fifteen years after that right had accrued to him,
what was done was to take away the appellant's
right to receive pension according to the rules in
force at the date of his retirement or in any event
to curtail and abridge that right, To that extent,
that said amendment was void"

44.
In
C.R. Rangadhamaiah
(supra), it has been observed

-

"24. In many of these decisions the expressions
"vested rights" or "accrued rights" have been used
while striking down the impugned provisions which
had been given retrospective operation so as to
have an adverse effect in the matter of promotion,
seniority, substantive appointment, etc. of the
employees. The said expressions have been used in
the context of a right flowing under the relevant
rule which was sought to be altered with effect
:: 41 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

from an anterior date and thereby taking away the
benefits available under the rule in force at that
time. It has been held that such an amendment
having retrospective operation which has the effect
of taking away a benefit already available to the
employee under the existing rule is arbitrary,
discriminatory and violative of the rights
guaranteed under
Articles 14
and
of the
Constitution. We are unable to hold that these
decisions are not in consonance with the decisions
in Roshan Lal Tandon AIR 1967 SC 1189, B.S.
Yadav AIR 1969 SC 118 and Raman Lal Keshav Lal
Soni (1983) 2 SCC 33.

45. There is another reason why the impugned notification

will exclude the persons in whose favour there exist decision by

the Authorities under 1972 Act of receiving gratuity thereunder

and such decision having attained finality.
In
State of Tamil

Nadu v. State of Kerala
AIR 2014 SC 2407, it is held :-

"146. ... Once a judicial decision on ascertainment
of a particular fact achieves finality, we are afraid
the legislature cannot reopen such final judgment
directly or indirectly. In such cases, the courts, if
brought before them, may reopen such cases in
exercise of their own discretion."

46. To sum up, though we uphold the competence of the

appropriate Government to issue a notification of exemption as

also notifying exemption from a retrospective date. However,

the notification dated 10.12.2014 since does not meet out the
:: 42 ::

W.P. Nos.2315/15(S), 2544/15, 13958/15, 13959/15, 13961/15, 13963/15, 13965/15, 13969/15, 13973/15, 13976/15, 13977/15, 13978/15, 13981/15, 13982/15, 13983/15, RP

No.554/15, W.P. Nos.13995/15, 13997/15, 13998/2015, 14001/15, 14003/15, 14005/15, 14006/15, 14007/15, 14009/15, 14011/15, 14012/15, 14014/15, 14019/15, 14021/15,

14024/15, 14025/15, 14028/15, 14029/15, 14032/15, 14035/2015, 14036/15, 14554/15, 17404/15, 17405/15 and W.P. No.17407/15

twin safeguards, viz. that the gratuity or pensionary benefit

already available to the employees is not less favourable than

the benefit conferred by the Act of 1972 and that the

retrospective exemption should not prejudicially affect interest

of any person. We hold that the notification will not nullify nor

take away the effect and benefit of the orders passed by the

Authorities under 1972 Act. Nor will it take away the right of

the employees, including the existing pensioners, of gratuity

under 1972 Act.

47. The petitions are finally disposed of. However, no costs.

(A.M. KHANWILKAR) (SANJAY YADAV)
CHIEF JUSTICE JUDGE
vivek tripathi/
vinod