N.S. Krishna vs Bharat Heavy Electricals Limited
1995 Latest Caselaw 220 Del

JUDGMENT

S.D. Pandit, J.

(1) We have heard learned counsel for both the sides at length and we propose to dispose of this writ petition at this stage.

(2) The present petition is filed by Shri N.S. Krishna, who had joined as an Accountant on 10.7.1974 in the establishment of respondent No.1, Bharat Heavy Electricals Limited. He worked with Bharat Heavy Electricals Limited till 2.7.1976 and with the consent of his employer, viz. M/s. Bharat Heavy Electricals Limited he joined respondent No.2, State Trading Corporation of India Limited, after 2.7.1976. The provisions of the Gratuity Act, 1972 are made applicable to respondent No.1, M/s.Bharat Heavy Electricals Limited and a Scheme under the said Act was introduced in M/s.Bharat Heavy Electricals Limited when the petitioner was working there.

(3) The petitioner had sought voluntary retirement when he was serving with respondent No.2 on 2.7.1991. According to him the respondent No.1 had not transferred the amount payable by respondent No.1 under the Gratuity Act, 1972 for the period during which he worked with respondent No.1. According to him, as per the Memorandum dated 23.6.1988 issued by the Bureau of Public enterprises when an employee moves from one public enterprise to another with the consent of the management of the concerned enterprise, the former would extinguish its liability towards the payment of gratuity for the period of service rendered by the employee by making a lump sum payment equivalent to the gratuity earned by him to the latter as if the employee had retired from its service. It is further claimed that under the said memorandum the condition of minimum qualifying service of five years specified under the Act would not be invoked when such transfer takes place with the consent of both the employers. Therefore, after his retirement he made a claim with both respondent Nos.1 & 2 but as they did not make any payment to him on account of the claim of gratuity, he has filed the present petition.

(4) The claim of the petitioner is contested by respondent No.1, M/s.Bharat Heavy Electricals Limited, by filing its reply. It is contended that the claim of the petitioner is very belated and the petitioner's claim in the writ petition is hit by latches on his part. It is further contended that since the petitioner had put in less than two years service with respondent No.1 and as it is less than the minimum qualifying service of five years as per the provisions of Section 4 of the Gratuity Act, 1972, the petitioner is not entitled to claim and get any gratuity. It is further contended that the rules regarding the transfer of Gratuity account were introduced with effect from 30.1.1979 and these rules as well as the memorandum dated 23.6.1988 do not cover the case of the petitioner. The said Rules and Memorandum could not be given retrospective effect. Thus, it is contended that the petitioner's claim is not tenable in law and, therefore, the same should be rejected.

(5) The claim of the petitioner is a claim for gratuity. The gratuity claim is covered by the provisions of the Payment of Gratuity Act, 1972. If the provisions of Section 4(1) of the Payment of Gratuity Act are considered then it would be quite clear that gratuity shall be payable to an employee on termination of his employment with his employer after he has rendered continuous service for not less than five years. Admittedly, in this case the petitioner had served the respondent No.1 for a period of less than two years till 2.7.1976. It is also not in dispute that by the subsequent circular and memo dated 30.1.1979 and 23.6.1988 a provision has been made for transfer of the gratuity account of an employee to the concern where the employee has joined with the consent of his former employer. The real crux of the matter before us is as to whether the effect of the said circular is to be given retrospectively or whether it will be applicable from the date it came into force.

(6) Learned counsel for the petitioner has put reliance on the case of D.S. Nakara Vs. Union of India . It must be stated here that the claim in Nakara's case was a claim by pensioners under Article 14 of the Constitution of India. It was the contention of the petitioners in that petition that the provision made by the government circular to give pensionary benefits under the circular to the pensioners who had retired after the particular date mentioned in the circular is discriminatory. It has been held by the Supreme Court that there was a discrimination in treating the pensioners who had retired prior to the date of the said circular and who would be retiring and who had retired after the date of the circular. This conduct of the government in giving separate treatment to two sets of petitioners was held to be discriminatory and it has been observed in para No.49 in Nakara's case (Supra) as under: "BUT we make it abundantly clear that arrears are not required to be paid because to that extent the scheme is prospective. All pensioners whenever they retired would be covered by the liberalised pension scheme, because the scheme is a scheme for payment of pension to a pensioner governed by 1972 rules. The date of retirement is irrelevant. But the revised scheme would be operative from the date mentioned in the scheme and would bring under its umbrella all existing pensioners and those who retired subsequent to that date. In case of pensioners who retired prior to the specified date, their pension would be computed afresh and would be payable in future commencing from the specified date. No arrears would be payable. And that would take care of the grievance of retrospectivity. In our opinion, it would make a marginal difference in the case of past pensioners because the emoluments are not revised. The last revision of emoluments was as per the recommendation of the Third Pay Commission (Raghubar Dayal Commissioner). If the emoluments remain the same, the computation of average emoluments under amended R. 34 may raise the average emoluments, the period for averaging being reduced from last 36 months to last 10 months. The slab will provide slightly higher pension and if someone reaches the maximum the old lower ceiling will not deny him what is otherwise justly due on computation. The words "who were in service on 31st March, 1979 and retiring from service on or after that date" excluding the date for commencement of revision are words of limitation introducing the mischief and are vulnerable as denying equality and introducing an arbitrary fortuitous circumstance can be served without impairing the formula. Therefore, there is absolutely no difficulty in removing the arbitrary and discriminatory portion of the scheme and it can be easily severed."

(7) If the observations of the Supreme Court are taken into consideration it would be clear that even in that case it has been held by the Supreme Court that the persons who would be getting the pensions in equal terms from the date of the new circular irrespective of the fact whether they had retired prior to that date of the circular or whether they had retired after the said circular. They were not to be given the arrears in the terms of the new circular and it has been held that no retrospective effect could be given to the said circular.

(8) The claim in the instant case is not a claim of pension but it is a claim of gratuity and as per the position which was existing when the petitioner left the service of respondent No.1, the respondent No.1 was not under the law bound to make payment of gratuity to a person who had left their job before completing five years of service. Similarly, even in case if the employee had left the job of his first employer with the consent of the first employer and taken on a job with the new employer, the first employer was not under law bound to transfer the balance of the gratuity account to the new employer. In view of this position, had there been a condition of transferring his gratuity account, the employer may not have consented or allowed him to join the new concern with its consent.

(9) It must be further mentioned here that in a subsequent case of Union of India Vs. All India Services Pensioners Association and another it has been held as under:- "THE members of the All India Services who had retired prior to 1.1.1973 are not entitled to payment of gratuity as a part of retirement benefits at the rates specified in the Notification No.33/12/73-AIS(ii) dated 24.1.1975. The decision in D.S. Nakara's case is not applicable to the payment of gratuity. The Supreme 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. The decisions of the Supreme Court in the Andhra Pradesh State Government Pensioners Association's case and M.L. Abhyankar's case as regards the applicability of the rule in D.S. Nakara's case to the liability of the Government to pay gratuity on retirement is a binding precedent. Moreover, the Government notification in question does not either expressly or by necessary implication directs that those who had retired prior to 1.1.1973 would be entitled to any additional amount by way of gratuity."

(10) The same view was taken by the Supreme Court in the subsequent cases of Action Committee South Eastern Railway Pensioners & Others Vs. Union of India & Others (1991(1) S.L.R. 771) and Des Raj Bhatnagar & Another Vs. Union of India . In both these cases the pensioners had taken the benefits of computation of one-third of their pension and they wanted to take benefit of the new liberalised pension rules. Even in respect of that one-third pension commuted by them it has been held that they are not entitled to it and that the principle enunciated in Nakara's case (Supra) cannot be made applicable to them.

(11) Thus, in our view, when the present petitioner had left the job of respondent No.1 as per the position existing then, an employer even if he happened to give consent for his taking up a job in a new concern the employer was not bound to make payment of gratuity in case the employee had not completed five years of service. Similarly, the employer was also not to transfer the gratuity account to the new employer of his former employee. As per the subsequent circulars issued after January 1979 if the employer happened to give consent for his employee taking up a job in a new concern then his gratuity account will have to be transferred to the new concern and the circular further mentions that if he continues the job for more than five years then that gratuity amount will be payable to the employee and if he failed to continue the job for five years then the amount of gratuity would come back to the first employee. This change in the provision regarding the payment of gratuity could not be made applicable retrospectively.

(12) We have also to further observe that the petitioner's claim is also hit by the principle of latches. The circular in question has come into force in January 1979 and the second circular has come into force in June 1988 but the petitioner had not approached the Court till the year 1992. This clearly shows that there was unexplained inordinate delay in approaching the Court and on that account also the claim of the petitioner could not be entertained.

(13) In view of the above discussion we are of the opinion that the petitioner's claim for gratuity for the period of service of less than two years with respondent No.1 is not tenable. We, therefore, reject his claim by dismissing this writ petition. In the circumstances of the case we direct the parties to bear their own costs.