Delhi High Court
University Of Delhi vs Sh. Surinder Kumar on 4 August, 2015
Author: Gita Mittal
$~7 & 8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision : 4th August, 2015.
+ LPA 810/2013
UNIVERSITY OF DELHI ..... Appellant
Through : Mr. G.K. Pathak, Advocate.
versus
KANWAR KUMAR GAMBHIR & ORS. ..... Respondents
Through : Mr. Rajeev Saxena, Mr. Vardaan
Dhawan, Advocates for R1.
Mr. Anuj Aggarwal, Advocate for
R5& 6/UOI.
+ LPA 538/2014
UNIVERSITY OF DELHI ..... Appellant
Through : Mr. G.K. Pathak, Advocate.
versus
SH. SURINDER KUMAR ..... Respondent
Through : Mr. Sudesh Goyal, Advocates for R1.
Mr. Anuj Aggarwal, Advocate for
R5 & 6/UOI.
CORAM:
HON'BLE MS. JUSTICE GITA MITTAL
HON'BLE MR. JUSTICE I.S.MEHTA
GITA MITTAL, J (ORAL)
1. The appellant /University of Delhi assails the orders dated 13th
August, 2013 & 12th May, 2014 passed by the learned Single Judge
affirming the order dated 9th October, 2012 passed by the Controlling
Authority under the Payment of Gratuity Act, 1972.
2. Inasmuch as, identical questions of law arise on similar facts, we are
taking up these appeals together for the purposes of adjudication. We have
heard learned counsel for the parties at length and have carefully perused the
case. The facts giving rise to the petitions are in a narrow compass and to the
extent necessary are noted hereunder.
3. It is undisputed that both the respondents before us are the retired
employees of the appellant/University of Delhi. The appellant/University of
Delhi has disputed the applicability of the payment of Gratuity Act, 1972 to
the organisation for the reason that it has its own Gratuity Scheme under the
Delhi University Act and Statutes and ordinances notified thereunder. The
respondent/Kanwar Kumar Gambhir in LPA 810/2013 consequently was
compelled to move an application under Section 4 of the Payment of
Gratuity Act, 1972 to claim payment of gratuity on account of his
superannuation/retirement on 30th June, 2004 after completion of service of
about 37 years w.e.f. 25th November, 1967 to 30th June, 2004 as Senior
Technical Officer, Department of Zoology on attaining the age of 60 years
on superannuation. So far as the respondent/Surinder Kumar in LPA
538/2014 was concerned, he was also compelled to approach the Competent
Authority to claim the payment of gratuity under Section 4 of the Payment
of Gratuity Act, 1972 on account of his superannuation/retirement on 30th
September, 2007 after completion of service of about 40 years and 9 months
w.e.f. 03.12.1966 to 30.09.2007 as Section Officer, Department of Social
Work, University of Delhi on attaining the age of 60 years of
superannuation.
4. The appellant/University of Delhi rejected the applications on the
main plea of denial of applicability of statute and also that the claims of the
respondents were time barred. The appellant/University of Delhi took
another plea that it had sought exemption of applicability of the payment of
gratuity, therefore it is curtailed under Section (2) of Section 5 of the
Payment of Gratuity Act, 1972 from the Government of India. Before the
Controlling Authority, the matters had to proceed to evidence. Thereafter,
placing reliance on several judicial precedents of this court, as well as the
Supreme Court of India, the Controlling Authority passed orders arriving at
the conclusion that respondent/Kanwar Kumar Gambhir was entitled to total
amount of Rs.4,30,958/- towards gratuity with interest and that as the
amount of Rs.3,33,107 stood already paid to him, he was entitled to the
balance amount of Rs. 97851/- . It was accordingly directed that this amount
would be paid with simple interest @ 10% per annum in accordance with
the provisions of sub-section (3-A) of Section 7 of the Payment of Gratuity
Act, 1972 from the date on which gratuity became due and payable to the
respondent.
5. So far as respondent/ Surinder Kumar is concerned by an order of the
even date, i.e. by order dated 9th October, 2012, the Controlling Authority
concluded that respondent/ Surinder Kumar was entitled for a total sum of
Rs.5,48,390 towards gratuity. An amount of Rs.3,69,621 stood paid to him
leaving an amount of Rs.1,78,770 as balance amount of gratuity with simple
interest @ 10% per annum as per provisions of sub-section (3-A) of Section
7 of the Payment of Gratuity Act, 1972, from the date on which gratuity
became due and payable to the respondent.
6. We note that as far as, the payment of gratuity is concerned, the
Controlling Authority has relied upon the following directives of the
Supreme Court of India dated 5th February, 2003 in SLP (Civil) No.
4114/2002, tilted as S. Gangahanume Gowda v. Karnataka Agro
Industries Corporation Limited:
".......Payment of gratuity with or without
interest, as the case may be, does not lie in the
domain of discretion but it is a statutory compulsion.
Specific benefits expressly given in a social beneficial
legislation cannot be ordinarily denied. Employees on
retirement have valuable rights to get gratuity and
any culpable delay in payment of gratuity must be
visited with the penalty of payment of interest.
Earlier there was no provision for payment of interest
on the delayed payment of gratuity. In view of that
lacuna sub-section (3-A) was added to Section 7 by an
amendment, which came into force with effect from
1.10.1987. There is a clear mandate in the provisions
of Section 7 to the employer for payment of gratuity
within time and to pay interest on the delayed
payment of gratuity. There is also provision to
recover the amount of gratuity with compound
interest in case the amount of gratuity payable was
not paid by the employer in terms of Section 8 of the
Act.........
7. The University of Delhi's appeal (Appeal No. ND36 (10)2013-P.A)
under Section 7 (7) of the payment of Gratuity Act came to be rejected by
the Appellate Authority by its order dated 3 rd April, 2013 for the reason that
it was filed beyond the statutory period of 120 days from the date receipt of
order as required by law.
8. The challenge by the University of Delhi to pay the gratuity did not
end here and it filed two separate writ petitions. So far as
respondent/Sureinder Kumar is concerned, the University filed the writ
petition being W.P.(C) No. 2117/2014. W.P.(C) No. 5065/2013 was filed
against respondent/Kanwar Kumar Gambir.
9. W.P.(C) No. 2117/2014 against Sureinder Kumar was dismissed
vide an order dated 12th May, 2014. W.P.(C) No. 5065/2013 against Kanwar
Kumar Gambir was rejected vide an order dated 13th August, 2013 passed
by learned Single Judge of this Court. These writ petitions were rejected by
the learned Single Judge who concluded that the Controlling Authority had
no power to extend or condone the period of delay beyond the statutory
period of 120 days after the receipt of the impugned order vide two separate
orders. Learned Single Judge thus upheld the order of the appellate
authority.
10. It is well settled that an order can be assailed only on the factual
matrix and on the grounds which were placed before the authority which
passed the same.
11. The issue as to whether the employees are entitled to gratuity under
the enactment is concerned, it has been effectively adjudicated upon by this
court holding that the Payment of the Gratuity Act, 1972 applies to the
employees of appellant/Delhi University. For this reason, this issue is no
more res integra.
12. So far as the objections taken by the University of Delhi before the
Controlling Authority as well as in the appeals are concerned, the same have
been authoritatively rejected as noted above. We are informed that the
exemption claimed by the University of Delhi from applicability of
provisions of the payment of Gratuity Act, 1972 also stands rejected by an
order dated 19/21st January, 2015 by the Government of India which order
has attained finality. It is submitted by learned counsel appearing for the
respondents that in view of the above, the appellant/University of Delhi
would be bound by the provisions under the Payment of Gratuity Act, 1972
and it cannot refute its responsibility to pay the gratuity.
13. A submission which was never placed before the Controlling
Authority to dispute the liability has been pressed before us. It is submitted
by Mr.G.K.Pathak, learned counsel for the appellant that the computation of
the quantum of gratuity by the Controlling Authority also cannot be
disputed. The University of Delhi, however, disputes the liability to pay any
amount beyond the limit prescribed under sub-section 3 of Section 4 of the
Act. It is urged that till the amendment of the statutory provision in 2010,
the maximum amount that could be paid to an employee towards gratuity
was subject to the limit of Rs.3,50,000/- under sub-section 3 of Section 4 of
the Payment of Gratuity Act, 1972. It is submitted that after the amendment
of the statutory provisions, this limit has been raised to Rs.10,00,000/-
(Rupees Ten lacs).
14. The relevant amendment to the Payment of Gratuity Act made in year
2010 (w.e.f. 24th May, 2010), reads thus:-
"2. In Section 4 of the Payment of Gratuity Act,
1972, in sub-section (3), for the words "three
lakhs and fifty thousand rupees", the words "ten
lakh rupees" shall be substituted"
15. It is further submitted that inasmuch as the respondent/Kanwar Kumar
Singh retired in the year 2004 and the respondent/Surinder Kumar retired in
the year 2007, irrespective of the computation of the gratuity, they could be
paid a maximum of only Rs.3,50,000/- towards gratuity in view of the
provisions of sub-section 3 of Section 4 of the Payment of Gratuity Act,
1972 as then existing. This objection is vehemently opposed by learned
counsel for the respondents who have urged that the Payment of Gratuity
Act is a part of social welfare legislation and that only an interpretation
which is beneficial to the employee has to be given. Reliance is placed by
learned counsel for the respondents on the pronouncement of the High Court
of Kerala dated 12.11.2014 in Writ Petition (Civil) No. 2241/2011 in C.
Renuka v. Kerala State Council for Science to urge that though the gratuity
would be calculated with regard to dates of retirement, the relevant date for
computing the limit of the payment would be the date on which the liability
to make payment of the gratuity crystallized in favour of the respondents. It
is submitted that only in such an eventuality can the objects of the Payment
of Gratuity Act be meaningfully achieved.
16. It is noteworthy that no such plea was raised before the Controlling
Authority and Appellate Authority under the Payment of Gratuity Act or
before the learned Single Judge. No such plea was pressed before the
learned Single Judge.
17. We have given our considered thought to the rival contentions raised
before us and find substance in the grievance of the respondents. Even
though, the respondents had retired in the years 2004 and 2007 respectively,
however, the University of Delhi/employer had taken a categorical stand that
these respondents are not entitled to the payment of gratuity under the
enactment. It was the University of Delhi's contention that this statute has
no application to its employees. By virtue of the computation of gratuity
under the rules of the University Grants Commission and the statutes under
the Delhi University Act, an amount of Rs.3,69,621/- (in case of Surender
Kumar) and an amount of Rs.3,33,107 /- (in case of Kanwar Kumar
Gambhir) was paid towards gratuity. It is an admitted position that these
computations and payments were not in accordance with the payment of
Gratuity Act.
18. After several unsuccessful representations to the appellant, these
respondents were compelled to invoke the jurisdiction of the Controlling
Authority in the year 2010. It is not disputed that the claim by the
respondents was made after the provision of Section 4(3) of the Payment of
Gratuity Act, 1972 stood amended w.e.f. 24 th May, 2010. It is also an
admitted position that by such amendment, the statutory limit of the amount
which could be paid to an employee stands raised to Rs.10 lakhs.
19. Mr. Rajeev Saxena, learned counsel appearing for the respondents has
drawn our attention also to the provisions of sub-section 5 of Section 4,
which read thus:-
"Section 4(5) of Payment of Gratuity Act, 1972
"4. Payment of Gratuity.--
(5) Nothing in this section shall
affect the right of an employee to
receive better terms of gratuity under
any award or agreement or contract
with the employer".
20. Learned counsel for the respondents submits that it is clear that the
Parliament has mandated that notwithstanding the provisions in Section 4(3)
imposing a ceiling of Rs. 10 lakhs, the right of an employee to receive better
terms of gratuity as envisaged in Section 4(5) shall remain unaffected. It is
apparent that the Parliament has given freedom to the employer to stipulate
better terms of gratuity than the provisions in the payment of Gratuity Act,
more particularly that in Section 4 thereof.
21. In Allahabad Bank v. All India Allahabad Bank Retired Employees'
Association, reported as (2010) 2 SCC 44, it has been held that for the
purpose of computation of quantum of grant of gratuity, if the terms of
agreement are better than the statute, then the employee is entitled to that
benefit. The Court has stipulated that the maximum limit as provided under
sub-section 3 of Section 4 cannot be reduced by a mutual settlement and
agreement.
22. In Allahabad Bank, while interpreting the wide scope of Section 4(5)
of the Act, the Apex Court has observed as under:-
"15...............It is true that Section 4(3) of the
Payment of Gratuity Act stipulates that the amount of
gratuity payable to an employee shall not exceed
Rs.10 lakhs. But it is clearly mandated in Section 4(5)
thereof that nothing in the Section, viz., Section 4
thereof, shall affect the right of an employee to
receive better terms of gratuity under any award or
agreement or contract with the employer".
23. We may also usefully advert to the observations made by the High
Court of Kerala as noted in C. Renuka. In para 15 of the judgment, the
Court has referred to the provisions of law laid down by the Supreme Court
in (1984) 3 SCC 369 in Sudhir Chandra Sarkar v. Tata Iron and Steel Co.
Ltd. which may usefully be extracted hereunder and reads thus:-
"15...............The fundamental principle
underlying gratuity is that it is retirement benefit for
long service as a provision for old age. Demands of
social security and social justice made it necessary to
provide for payment of gratuity. The combined effect
of the provisions in Section 4(3) vis-a-vis the
provisions in Section 4(5) of the Payment of Gratuity
Act has to be appreciated and interpreted in a
harmonious manner, keeping in view the basic
objective of legislature that the legislation has been
framed primarily as benevolent piece of legislation
for the welfare of the employees".
24. On the interpretation of sub-section (3) and (5) of Section 4, the High
Court of Kerala in C. Renuka has observed thus :-
"13. Coming to the next issue as to whether the
provisions in Ext.P3 rules will get the protection of
Section 4(5) of the Payment of Gratuity Act, the
following aspects are relevant:
""14. BEFORE adhering to the merits of the
rival contentions, it would be apposite to refer to the
inimitable words used by V.R.Krishna Iyer, J, in the
Apex Court decision rendered in Som Prakash Rekhi
v. Union of India, reported in 1981 (1) SCC 449,
wherein it was observed as under. (SCC p.p. 483-484,
para 66)
"66............ We live in a welfare State, in a
„socialist‟ republic under a Constitution with
profound concern for the weaker classes including
workers (Part IV). Welfare benefits such as pensions,
payment of provident fund and gratuity are in
fulfilment of the directive principles. The payment of
gratuity or provident fund should not occasion any
deduction from the pension as a „set-off‟. Otherwise,
the solemn statutory provisions ensuring provident
fund and gratuity become illusory. Pensions are paid
out of regard for past meritorious services. The root
of gratuity and the foundation of provident fund are
different. Each one is a salutary benefaction
statutorily guaranteed independently of the other.
Even assuming that by private treaty parties had
otherwise agreed to deductions before the coming into
force of these beneficial enactments they cannot now
be deprivatory. It is precisely to guard against such
mischief that the non obstante and overriding
provisions are engrafted on these statutes.
25. It is submitted that the socially beneficial legislation has to be
interpreted to the benefit of the class of persons who are entitled to the
benefit under the statutory enactment. So far as the present case is
concerned, there is no restriction or limit at all on the extent of gratuity
computation. The calculation of the gratuity is provided under sub-section
(2) of Section 4 the statute, which reads thus:-
"4.......................
(2) for every completed year of service
or part thereof in excess of six months,
the employer shall pay gratuity to an
employee at the rate of fifteen days‟
wages based on the rate of wages last
drawn by the employee concerned.
Provided that in the case of piece rated
employee, daily wages shall be
computed on the average of the total
wages received by him for a period of
three months immediately preceding the
termination of his employment, and, for
this purpose, the wages paid for any
overtime work shall not be taken into
account.
Provided further that in the case of
seasonal establishment and who is not
so employed throughout the year, the
employer shall pay the gratuity at the
rate of seven days‟ wages for each
season".
26. Section 4(2) makes a reference to even completed year of service or
part thereof in excess of six months. Therefore, while computing the
entitlement of an employee, he would be entitled to the benefit of every year
of service or part thereof in excess of six months which have been rendered
by the employee. There is no upper limit statutorily fixed on this
computation. The Statute has cast its limit only on the extent of payment to
the employee.
27. The employer/University of Delhi was denying the very applicability
of the statute to its employees compelling them to approach the Competent
Authority under the Payment of Gratuity Act. The applications were made in
the year 2010. There is no dispute before us that the computation of the
gratuity by the Controlling Authority in both the cases is in accordance with
the provisions of statue. There is no dispute so far as the number of years of
service rendered by the respondents are concerned.
28. In both these cases, the University of Delhi was also disputing the
liability to make payment for the reason on which it had sought exemption
from the Government of India on the applicability of statutory provisions
which matter culminated only vide the letter dated 19/21st January, 2015, the
Government of India, when Ministry of Labour & Employment has rejected
the University of Delhi/appellant's proposal to grant exemption of its
employees from the provisions of the Payment of Gratuity Act, 1972. This
matter has attained finality only as a result.
29. In this background, the date on which the liability to make the
payment has crystallized upon the adjudication by the Controlling Authority
would be 9th October, 2012. The responsibility of the University to make
the payment has been finally determined on 19/21 st January, 2015, when its
exemption request was rejected. Given the beneficial interpretation which
has to be given to the legislation, the statutory limit prescribed under sub-
section (3) of Section 4, in these cases it has to be held that the respondents
would be entitled to the amount subject to the limit which has been
stipulated on the date when the liability crystallized, that is the limit which
was prescribed and applied on the date, when the Controlling Authority has
passed the order.
30. Learned counsel for the respondents has drawn our attention to the
provision made under Section 8 of the Payment of Gratuity Act, 1972 and
has submitted that under this social welfare legislation, the issue of non
payment of gratuity has been considered a serious matter and that if the
respondents had approached the Collector for recovery of the amounts
which have not been paid by the appellant/University of Delhi, they would
have received compound interest on the amounts awarded.
31. We may note that pursuant to the order dated 12th March, 2014 in
LPA 810/2013, the appellant/University of Delhi has deposited the full
amount as was directed by the Controlling Authority in the order dated 9th
October, 2012, in favour of Kanwar Kumar Gambhir.
So far as LPA 538/2014 is concerned, we have been told that an
amount of Rs.1,78,770/- is lying deposited in the Contempt Case (Civil) No.
16/2015 which was filed by Surinder Kumar, respondent in this LPA against
the University Management. The Registry shall ensure that the above
amounts are released to the respective respondent forthwith with all accruals
thereon, if the same have been kept in FDRs.
32. The appellant shall compute the interest liability on the awarded
amount and the interest component on the gratuity which became due and
payable after the date of deposit in terms of the orders dated 9 th October,
2012 within four weeks from today. The computation shall be
communicated to the respondents.
33. The appellant/University of Delhi shall be entitled to adjust the
amount of interest which may have accrued on the deposit in this court and
make payment of the balance amounts to the respondents within a further
period of six weeks thereafter.
34. We make it clear that this order shall not be treated as a precedent and
being passed on the peculiar facts and circumstances of the instant case.
35. We find no merit in these appeals which are hereby dismissed.
GITA MITTAL, J
I.S.MEHTA, J
AUGUST 04, 2015
j
