Karnataka High Court

B Nagaraju vs The Divisional Controller on 5 August, 2024

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                                                         NC: 2024:KHC:31219
                                                      WP No. 16808 of 2015




                      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                            DATED THIS THE 5TH DAY OF AUGUST, 2024

                                            BEFORE
                            THE HON'BLE MRS JUSTICE K.S. HEMALEKHA
                           WRIT PETITION NO. 16808 OF 2015 (L-KSRTC)
                      BETWEEN:
                      1. B. NAGARAJU,
                         S/O LATE BORAPPA ,
                         AGE 78 YEARS,
                         14TH MAIN ROAD,
                         RAGHAVENDRA NAGAR (G B PALYA)
                         MYSORE.

                                                          ...PETITIONER
                      (BY SRI. SOMASUNDAR, ADVOCATE FOR
                          SRI. LAKSHMAN RAO.,ADVOCATE)

                      AND:
Digitally signed by   1. THE DIVISIONAL CONTROLLER,
MAHALAKSHMI B M
Location: HIGH           KSRTC, BANGALORE CENTRAL,
COURT OF
KARNATAKA                DIVISION, SHANTHINAGAR,
                         K.H. ROAD,
                         BANGALORE - 560 027

                      2.   ASSISTANT LABOUR COMMISSIONER,
                           AND CONTROLLING AUTHORITY UNDER
                           THE P.G. ACT 1972 DIVISION-4,
                           KARMEEKA BHAVAN,
                           BANNERUGHATTA ROAD,
                           BANGALORE - 560 029.
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                                     NC: 2024:KHC:31219
                                WP No. 16808 of 2015




3.   DEPUTY LABOUR COMMISSIONER,
     AND APPELLATE AUTHORITY UNDER
     THE P.G. ACT 1972 REGION-1,
     KARMEEKA BHAVAN,
     BANNERUGHATTA ROAD,
     BANGALORE - 560 029.

                                ...RESPONDENTS
(BY SMT. H R RENUKA, ADVOCATE FOR R1,
     SRI.K. MANJUNATH, HCGP FOR R2 AND R3)

     THIS W.P. IS FILED PRAYING TO ;MODIFY THE
IMPUGNED ORDER PASSED BY THE R-3 DATED 22.5.2014
VIDE ANN-B AND RESTORE THE ORDER PASSED BY THE
R-2 CONTROLLING AUTHORITY DATED 29.9.2012 VIDE
ANN-ADIRECT THE R-1 CORPORATION TO RELEASE THE
DIFFERENCE OF GRATUITY AMOUNTING TO RS.1,32,023/-
INCLUSIVE OF INTEREST CALCULATED AT THE RATE OF
6% INSTEAD OF 10% AS PER THE ACT AND RULESPOST
THIS W.P. FOR PRELIMINARY HEARING BEFORE SINGLE
JUDGE.

     THIS PETITION, COMING ON FOR FINAL HEARING,

THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MRS JUSTICE K.S. HEMALEKHA
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                                                  NC: 2024:KHC:31219
                                                WP No. 16808 of 2015




                             ORAL ORDER

Petitioner-workman has called in question the order

passed by the Appellate Authority-respondent No.3 at

Annexure 'B', modifying the order dated 29.09.2012

passed by Controlling Authority-respondent No.2 at

Annexure 'A'.

2. Heard learned counsel for the petitioner and

learned counsel appearing for respondent No.1-

corporation.

3. Petitioner entered into service with respondent

No.1-Corporation on 24.04.1963 and retired from service

on 28.02.1996 having completed 32 years and 11 months

as total service. As on the date of retirement, the basic

pay of the petitioner was Rs.2,565/- and the Dearness

Allowance was Rs.3,762/-. Respondent No.1-corporation

calculated the gratuity and awarded Rs.1,01,233/- as on

the date of retirement. The petitioner not being satisfied

with the gratuity calculated by respondent No.1-

NC: 2024:KHC:31219

corporation, approached respondent No.2-Controlling

Authority, placing reliance on the judgment of the Apex

Court rendered in the case Management of KSRTC Th.

Chief Law Officer Vs. R. Krishna Reddy1 (Krishna

Reddy), so as to calculate the gratuity by merging 90% of

the Dearness Allowances to the Basic Pay, respondent

No.2-Controlling Authority, by the impugned order by

adding 90% of the dearness allowance to the basic pay,

held that the petitioner is entitled to Rs.1,95,877/- and

after deducting the gratuity the already paid by the

corporation to the extent of Rs.1,01,233/- held that the

corporation is liable to pay gratuity amount of Rs.94,644/-

together with interest @ 6% p.a. The Corporation

preferred appeal before the Appellate Authority, the

Appellate Authority modified the order passed by the

Controlling Authority and held that the petitioner is

entitled for Rs.24,411/- with 6% interest applying

Krishna Reddy's case.

AIR ONLINE 2006 SC 610

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4. The Apex Court in the case of Krishna Reddy

stated supra has held at paragraph Nos.11 and 12 as

under:

11. We have noticed hereinbefore that the Government of Karnataka in terms of Government Order dated 28.11.1995 inter alia directed that 90% of Basic Pay to be added to pay for calculating gratuity. If the basic pay of an employee was upto Rs.3,500/- per month and was drawing a Dearness Allowance of Rs.2,000/-, what was to be added was the 90% of the Dearness Allowance which was being paid. If 90% of the Basic Pay as Dearness Allowance is to be added to the basic pay, the employee became entitled to higher wages on the basis thereof. It is in that sense the question of application of the merger of Dearness Allowance with the scale of pay arose for all intent and purport. As was rightly held by the learned Single Judge, different terminologies used didn't make any material difference. Section 4 of the Act itself contemplates implementation of a settlement.

Settlement, therefore, entered into by and between the parties was required to be interpreted having regard to the intention of the parties. What was contemplated by the parties was that the rates of Dearness Allowances would be at par with the rate sanctioned by the State Government to its

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employees from time to time and from the same date. It was never contemplated that a different amount of gratuity shall be payable to an employee who retires prior to the revision of scale of pay although the terms of the settlement are applicable to his case.

12. What was necessary to be taken into account was the merger of any portion of the Dearness Allowances with pay which was being paid to its employees. In such an event that partition of the Dearness Allowance was also to be reckoned at appropriate level by the appellant for determining the quantum of Gratuity payable to its employees. The said settlement was arrived at for calculating amount of gratuity payable to the employees of the appellant and not for any other purpose. It is, therefore, not a case where the appellant could legitimately raise a contention that any enhancement in the emoluments to its employees by the State would not automatically enhance the emoluments of the employees of the appellant. It has been contended before us that the effect of the merger and addition of Dearness Allowance would be different. It may be so. but, having regard to the fact of the present matter and the definition of 'wages' under the Act, we need not go into the said question.

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We have noticed hereinbefore that the contention may ordinarily be applicable to a case of merger of the basic pay vis-à-vis adding of Dearness Allowance to basic pay, but, herein the same would not make any substantive difference for the purpose of payment of gratuity keeping in view the definition of "wages" contained in Section 2(s) of the Act. It is not a case where the scheme of the Corporation and the provisions of the Act are inconsistent with each other.

5. The Controlling Authority calculated the gratuity

as under:

Rs.5,951/-X32.11 =Rs.1,95,877/-

And awarded gratuity at Rs.1,95,877/-. The

Appellate Authority recalculated by taking last drawn basic

pay adding 90% of the dearness allowance as per the

dictum of Krishna Reddy's case and arrived at a

conclusion that the petitioner is entitled for difference of

gratuity of Rs.24,411/- (Rs.1,56,472/ - Rs.1,32,061/-).

The Appellate Authority by calculating 90% of the

Dearness Allowances to the Basic Pay of Rs.2,565/- held

that the petitioner is entitled for Rs.2,308/-(Rs.2,565/-

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+90% = Rs.2,308/-) amounting to Rs.4,873/- X 12 X 32

years 11 months, awarded gratuity of Rs.24,411/- after

deducting the amount already paid by respondent No.1-

corporation with interest at the rate of 6% per annum.

There is no error committed by the Appellate Authority

and has rightly calculated the gratuity as per Krishna

Reddy's case which is squarely applicable to the present

facts and the order passed by the Appellate Authority does

not warrant any interference and accordingly, this Court

pass the following: