Delhi Development Authority vs Shri Chander
2010 Latest Caselaw 1752 Del

                   *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                                             WP(C) No.4311/2003.
%                                                              Date of decision: 5th April, 2010

DELHI DEVELOPMENT AUTHORITY                                                          ..... Petitioner
                 Through: Mr. Arun Birbal, Advocate.

                                                      Versus
SHRI KUNDAN & ORS.                                                                ..... Respondents
                                             Through: None.

                                                      AND

                                             WP(C) No. 6886/2003.

DELHI DEVELOPMENT AUTHORITY                                                          ..... Petitioner
                 Through: Mr. Arun Birbal, Advocate.

                                                      Versus
SMT. LAXMI DEVI & ORS.                               ..... Respondents
                   Through: Mr. Anuj Aggarwal, Advocate.

                                                      AND

                                              WP(C) No. 5343/2004.

DELHI DEVELOPMENT AUTHORITY                        ..... Petitioner
                 Through: Mr. Bhupesh Narula & Mr. Sunny Arora,
                          Advocates.

                                                      Versus
SHRI CHANDER                                                                      ..... Respondents
                                            Through: None.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.         Whether reporters of Local papers may
           be allowed to see the judgment?                             YES

2.         To be referred to the reporter or not?                             YES

3.         Whether the judgment should be reported                            YES
           in the Digest?




WP(C) No.4311/2003, 6886/2003 & 5343/2004                                            Page 1 of 9
 RAJIV SAHAI ENDLAW, J.

1. All the three writ petitions raise the common question, of applicability of the

Payment of Gratuity Act, 1972 qua the employees of the petitioner DDA. The Authorities

under the said Act whose orders are challenged in these writ petitions have held the

petitioner DDA liable and directed payment of the additional amounts, due by way of

gratuity under the Act, over and above the gratuity otherwise paid by the petitioner DDA

under its rules and regulations to the respondents in each case.

2. Mr. Bhupesh Narula counsel for the petitioner DDA in W.P.(C) No.5343/2004

has argued that the DDA is neither a factory, mine, oilfield, plantation, port or railway

company within the meaning of Section 1(3)(a) of the Gratuity Act, nor a shop or

establishment within the meaning of any law for the time being in force in relation to

shops and establishments in Delhi, within the meaning of Section 1(3)(b) nor has it been

notified under Section 1(3)(c) of the Act and thus the provisions of the Act are not

applicable. However, I find that this Court as far back as in Municipal Corporation of

Delhi Vs. V.T. Naresh MANU/DE/0146/1985 held that merely because MCD is a local

body or a local authority created by the Delhi Municipal Act, 1957 would not mean that it

will not be an „establishment‟ so long as it is so in relation to any law relating to

„establishment‟. The MCD was thus held to be an establishment within the meaning of

Section 1 (3) (b) of the Gratuity Act. The judgment of the single judge in V.T. Naresh

was upheld by the Division Bench of this Court as recently as in MCD Vs. Rati Ram 153

(2008) DLT 284. What has been held qua MCD, applies equally to the petitioner DDA

also. There is thus no merit in the said plea.

3. Mr. Bhupesh Narula, Advocate next contended that the matter is fully covered by

the judgment in DTC Retired Employees' Association Vs. DTC AIR 2001 SC 1997. To

appreciate the said contention, the case of the petitioner DDA may be set out as under:

a. That under Section 2 (e) of the Gratuity Act, "employee" does not include

any person who holds a post under the Central Government or a State

Government and is governed by any other Act or by any rules providing

for payment of gratuity. The employees of the Central Government and

the State Government are governed by the CCS Rules framed under

Article 309 of the Constitution of India and which inter alia provide for

pension and which includes gratuity. Section 56 of the Delhi Development

Act, 1957 under which the petitioner DDA has been constituted allows the

Central Government to, after consultation with DDA, and by Notification

in Official Gazette make rules to carry out the purposes of the Act

including the rules as to the manner of constitution of the Pension and

Provident Fund for whole time paid members, officers and other

employees of DDA and the conditions subject to which such funds may be

constituted. In exercise of powers conferred by Section 56 (1) and 56(2)(q)

of the DDA Act the Central Government has framed the DDA (Pension)

Rules 1967; by virtue thereof the CCS (Pension) Rules 1972 governing the

Central Government employees were made applicable to the officers and

other employees of the DDA. It is argued that the employees of DDA are

thus governed by the same rules as the employees of the Central

Government and are therefore not entitled to gratuity by virtue of Section

2 (e) of the Gratuity Act. It is urged that for this reason alone, the

employees of the petitioner DDA would also not be entitled to gratuity

under the Act.

b. That under Section 5(1) of the Gratuity Act the Government is empowered

to, by Notification, exempt any establishment to which the Act applies

from the operation of the provisions of the Act, if in the opinion of the

Government the employees in such establishment are in receipt of gratuity

or pensionary benefits not less favourable than the benefits conferred

under the Gratuity Act. It is argued that the Notification dated 17th May,

1978 of the Government of India in exercise of powers under Section 56

(1) and 56(2)(q) of the DDA Act, making the CCS (Pension) Rules 1972

applicable to the employees of DDA is a Notification within the meaning

of Section 51 (1) of the Gratuity Act. It is contended that the very fact that

the CCS Pension Rules, on the basis whereof the Gratuity Act is not

applicable to the Central Government employees, have been made

applicable to the employees of the DDA is indicative of DDA also being

exempted from the applicability of the Gratuity Act.

c. Reliance is also placed on Section 4(5) of the Gratuity Act. It is contended

that if this Court finds that the employees of DDA under the CCS Pension

Rules are getting better terms than they are entitled to under the Gratuity

Act, then also the petitioner DDA should be exempted from the

applicability of the Gratuity Act.

4. Attention of Mr. Bhupesh Narula, Advocate was invited to D.P. Kansal Vs. Delhi

Jal Board MANU/DE/8393/2007 where a single judge of this Court after considering the

DTC case (supra) nevertheless held the Gratuity Act applicable to the Delhi Jal Board. It

was enquired as to how the DDA is different from the Delhi Jal Board.

5. Mr. Arun Birbal counsel for the petitioner DDA in the other two cases has very

fairly and as is expected of an advocate, and more from an advocate of a Public

Undertaking or a Government, has taken me through the judgments on the basis whereof

he pleads his case and also through the judgments which take a contrary view in the

matter. Such assistance from the Bar definitely saves the precious time of the Court and I

cannot but express appreciation for the exemplary advocacy shown by Mr. Arun Birbal,

Advocate. From the list of judgments, Mr. Arun Birbal first draws attention to

Municipal Corporation of Delhi Vs. Dharam Prakash Sharma AIR 1999 SC 293

where the employees of MCD which has also adopted the provisions of the CCS

(Pension) Rules 1972 were held entitled to gratuity under the Gratuity Act. In that case

also the contention of the counsel for the MCD was that the payment of pension and

gratuity under the Pension Rules is a package by itself and once that package is made

applicable to the employees of the MCD, the provisions for payment of gratuity under the

Gratuity Act cannot be held applicable. The Supreme Court held that Gratuity Act being

a special law, unless there is any provision therein excluding its applicability to an

employee who is otherwise governed by the Pension Rules, it is not possible to hold the

employees of MCD to be not entitled to gratuity under the Gratuity Act. It was held that

the exclusion under Section 2(e) of the Gratuity Act being confined to employees of

Central Government and State Government could not extended to the employees of

MCD. The provision for gratuity under the Pension Rules was held to be of no effect. It

was held that the exemption from applicability of the Gratuity Act could be granted only

under Section 5(1) and MCD having not taken any steps to invoke the powers of the

Central Government under Section 5 (1), could not be heard to argue that the provisions

of the Act were not applicable to it. It was however observed that the employees cannot

claim gratuity available under the Pension Rules once they were provided the benefits

under the Gratuity Act. I may notice that Delhi Jal Board has since been exempted under

Section 5 (1) of the Gratuity Act vide Notification dated 12th June, 2003 and similarly

vide Notification dated 22nd July, 2005 MCD has also been exempted from the

applicability of the Gratuity Act. The petitioner DDA also, if of the view that the gratuity

and pensionary benefits given by it to its employees under the CCS Pension Rules are not

less favourable than the benefits under the Gratuity Act, ought to satisfy the Central

Government in this regard under Section 5(1) of the Act. I also find that the Division

Bench of this Court in Rati Ram (supra) has reiterated the applicability of the Gratuity

Act to the employees of MCD for the period prior to the exemption granted in the year

2005.

6. In DTC Retired Employee's Association (supra), the Supreme Court was

concerned with a Pension Scheme for its retired employees floated by the DTC in the

year 1992. The option to be included in the said scheme was given also to the employees

who had retired prior to coming into force of the said scheme but subject to their

returning inter alia the gratuity received by them at the time of their retirement, together

with interest thereon. The said requirement for refund of gratuity with interest was

challenged. It was contended that gratuity paid under the provisions of the Gratuity Act

could not be required to be refunded. It was in that context that the Supreme Court

observed that the employees cannot have the benefit of both pension and gratuity and

with reference to Section 4 (5) of the Gratuity Act held that the pension which under the

new scheme was being made payable, was a similar relief as intended to be given by

payment of gratuity.

7. I am unable to agree with the contention of Mr. Bhupesh Narula, Advocate that

the present lis is fully covered by the judgment in DTC Retired Employee's Association.

The observations therein have to be read in context in which they were made. The

employees of the DTC had been paid gratuity as was their right under the Gratuity Act.

At that time they were not entitled to pension. The employees who had already retired

would not have become entitled to pension under the scheme after their retirement.

However DTC decided to give opportunity of availing pension to such already retired

employees also, subject however to their refunding the gratuity already received. The

refund of gratuity therein was a condition imposed for availing pension to which retired

employees were otherwise not entitled. There was no compulsion on the already retired

employees who had received gratuity to join the pension scheme. They could retain their

gratuity and not avail of the pension. If they desired to avail of the pension, they had to

fulfill the condition therefor. The said judgment cannot be read as laying down that the

employees can never be entitled to both pension and gratuity. I may in this regard also

notice that Section 4(5) of the Gratuity Act only seeks to preserve the right of the

employee to receive better terms of gratuity than under the Act under any award or

agreement or contract with the employer and is a beneficial provision and cannot be read

as limiting or taking away the benefit of gratuity given under the Act. Further Section 4

(5) only refers to better terms of gratuity and does not refer to better terms of cessation of

employment or better terms of pension. Thus it appears that the employer of an

establishment otherwise covered by the Gratuity Act cannot escape the payment of

gratuity, relying on Section 4(5), by contending that since he is giving other terminal

benefits to the employee, he is not liable to pay gratuity under the Act.

8. Mr. Arun Birbal, Advocate next draws attention to Beed District Central Co-

operative Bank Ltd. Vs. State of Maharashtra (2006) 8 SCC 514 also holding that even

while interpreting a beneficient statute like the Gratuity Act, either a contract has to be

given effect to or the statute; the provisions of the Gratuity Act envisage for one scheme;

Section 4(5) of the Gratuity Act does not contemplate that the workman would be at

liberty to opt for better terms of the contract while keeping the option open in respect of

a part of the statute; he has to opt for either of them and not the best of the terms of the

statute as well as those of the contract, he cannot have both. Mr. Arun Birbal however

points out that though the said judgment is in his favour but has been dealt with in a

subsequent recent judgment dated 15th December, 2009 in Civil Appeal No.1478/2004 of

the Supreme Court of India title Allahabad Bank Vs. All India Allahabad Bank Retired

Employees' Association. The Supreme Court therein held that there is no escape from the

payment of gratuity under the provisions of the Gratuity Act unless the establishment is

granted exemption under Section 5 (1) of the Act. A distinction was drawn between

pension and gratuity. DTC Retired Employee's Association and Beed District Central

Co-operative Bank Ltd. (supra) were held to have been decided in their peculiar facts.

Mr. Arun Birbal however seeks to show an observation in the judgment in Allahabad

Bank where it was observed that in that case at the time of superannuation there was no

scheme for payment of gratuity. It is contended that in the present case the CCS (Pension)

Rules also providing for gratuity were available at the time of superannuation. The

Supreme Court in Allahabad Bank however also held that the court has no power under

Section 4(5) of the Act to grant exemption to the employer for the reason of any better

terms being offered to the employee. The judgment in Dharam Prakash Sharma (supra)

was reaffirmed.

9. That brings me to the judgment of the single judge of this Court in Delhi Jal

Board (supra). In that case the authorities under the Gratuity Act relying on the judgment

in DTC Retired Employee's Association had dismissed the claim of the petitioner for

gratuity. The Delhi Jal Board also raised a plea that its employees were government

employees and the provisions of the Gratuity Act are not applicable to them. The said

plea was not accepted notwithstanding Section 51(3) of the Delhi Water Board Act

stipulating that the terms and conditions of the services of employees of the Board shall

be governed by the terms & conditions of service and rules and regulations applicable to

government employees and by the orders and directions issued by the Central

Government from time to time. The judgment in DTC Retired Employees Association

was held to be not applicable to the employees of the Delhi Jal Board.

10. Mr. Arun Birbal points out that though the judgment of the single judge in Delhi

Jal Board has been upheld by the Division Bench vide judgment dated 13th January,

2009 in LPA No.780/2008 titled Delhi Jal Board Vs. Gulshan Kumar Oberoi, an SLP

there against being SLP Civil No.4451/2009 is pending before the Supreme Court and

contempt proceedings before this Court have been stayed. However as far as this Court is

concerned, the said judgment is final and squarely applies to the petitioner DDA.

11. In view of the judgments and the discussion thereon herein above, the question of

applicability of the Gratuity Act to employees of petitioner DDA is no longer res integra

and the same is held applicable to the petitioner DDA. The writ petitions thus have to fail.

12. Before parting with the case I may notice that Mr. Arun Birbal at the

commencement of hearing had also drawn attention to the fact that the respondents in

these petitions had approached the authorities under the Gratuity Act after a long delay of

2 to 8 years and that the appeals preferred by the DDA against the order of the

Controlling Authority had also been dismissed for the reason of having been filed beyond

the time prescribed in the proviso to Section 7(7) of the Act. However Mr. Anuj

Aggarwal, Advocate for the respondent in W.P.(C) No.6886/2003 has stated that in view

of the legal question involved, he is not pressing the said plea and would like the matter

to be decided on merits. The respondents in the other two petitions are ex parte.

All the writ petitions are in the circumstances dismissed.

However no order as to costs.

RAJIV SAHAI ENDLAW (JUDGE) 5th April, 2010 pp