Karnataka High Court
Sri. Krishnadevaraya Educational ... vs The Union Of India on 4 January, 2024
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NC: 2024:KHC:483
WP No. 42168 of 2016
C/W WP No. 6706 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MRS JUSTICE K.S. HEMALEKHA
WRIT PETITION NO. 42168 OF 2016 (L-PG)
C/W
WRIT PETITION NO. 6706 OF 2021 (L-PG)
W.P.NO.42168/2016
BETWEEN:
SRI. KRISHNADEVARAYA EDUCATIONAL TRUST
ROYAL COTTAGE, ROYAL PALACE,
BENGALURU-560 052,
REPRESENTED BY ITS SECRETARY.
...PETITIONER
(BY SRI. KRISHNA MURTHY V., ADV.)
AND:
1. THE UNION OF INDIA
Digitally signed by REPRESENTED BY ITS SECRETARY,
MAHALAKSHMI B M DEPARTMENT OF MINISTRY OF LAW & JUSTICE,
Location: HIGH GOVERNMENT OF INDIA,
COURT OF 4TH FLOOR, "A" WING, SHASTRI BHAVAN,
KARNATAKA
NEW DELHI-110014.
2. THE UNION OF INDIA
REPRESENTED BY ITS SECRETARY,
DEPARTMENT OF LABOUR & EMPLOYMENT,
GOVERNMENT OF INDIA,
RAFI MARG, NEW DELHI-110014.
3. THE ASSISTANT LABOUR COMMISSIONER &
GRATUITY CONTROLLING AUTHORITY,
DIVISION-2, KARMIKA BHAVAN,
BANNERUGHATTA ROAD,
BENGALURU-560083.
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WP No. 42168 of 2016
C/W WP No. 6706 of 2021
4. SRI. DIVYA SRINATH
SON OF SRI. T. MUDDAPPA MEDHA,
AGED ABOUT 56 YEARS,
R/AT NO.23, 1ST MAIN ROAD,
BEST COUNTRY-1,
HESARAGHATTA ROAD,
VIDYARANYAPURAM,
BENGALURU-560 097.
...RESPONDENTS
(BY ASG FOR R1-2
SMT. SPOORTHI V., HCGP FOR R3
SRI. PRASHANTH B.K., ADV. FOR R4)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO DECLARE SECTION 2[1] OF
THE PAYMENT OF GRATUITY [AMENDMENT] ACT, 2009, AS
UNCONSTITUTIONAL IN SO FAR AS IT RELATES TO GIVING
RETROSPECTIVE EFFECT TO THE PAYMENT OF GRATUITY
[AMENDMENT] ACT, 2009 [ANNEX-D] ISSUED BY THE R-1 AND ETC.
W.P.NO.6706/2021
BETWEEN:
SRI. KRISHNADEVARAYA EDUCATIONAL TRUST
NO.16, BALLARI ROAD, SADASHIVANAGAR
BENGALURU-560 080,
REPRESENTED BY ITS SECRETARY
SRI. K. SHYAMA RAJU.
...PETITIONER
(BY SRI. KRISHNA MURTHY V., ADV.)
AND:
1. SRI K RAGHUPATHI
S/O SRI R KRISHNASWAMY IYENGAR
AGED ABOUT 61 YEARS
R/AT NO.916, I-A MAIN
4TH CROSS, BSK 3RD STAGE
3RD PHASE, 3RD BLOCK
BENGALURU-560 085.
2. THE LABOUR OFFICER &
GRATUITY CONTROLLING AUTHORITY
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WP No. 42168 of 2016
C/W WP No. 6706 of 2021
SUB-DIVISION-5
PRESENTLY AT KARNATAKA LABOUR RESEARCH
ORGANIZATION BUILDING
2ND FLOOR, ROOM NOS.21 & 22
NEAR GOVERNMENT HIGH SCHOOL
MANJUNATHNAGAR, BAGALAGUNTE
BENGALURU-560 073.
PREVIOUSLY AT DIVISION-II
KARMIKA BHAVANA
BANNERUGHATTA ROAD
BENGALURU-560 029.
3. THE APPELLATE AUTHORITY
UNDER GRATUITY ACT
DIVISION-IV CUM
ASSISTANT LABOUR COMMISSIONER
DIVISION-IV, PRESENTLY AT
KARNATAKA LABOUR RESEARCH
ORGANIZATION BUILDING
2ND FLOOR, ROOM NOS. 21 & 22
NEAR GOVERNMENT HIGH SCHOOL
MANJUNATHNAGAR, BAGALGUNTE
BENGALURU-560073.
PREVIOUSLY AT BENGALURU
KARMIKA BHAVANA
BANNERUGHATTA ROAD
BENGALURU-560 029.
...RESPONDENTS
(BY SRI. PRASHANTH B.K., ADV. FOR R1
SMT. SPOORTHI V., HCGP FOR R2-3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ENTIRE
ORDER PASSED BY THE R2 DATED 29.06.2015 VIDE ANNX-A UNDER
THE PAYMENT OF GRATUITY ACT, 1972, DIRECTING THE PETITIONER
TRUST TO PAY RS.6,06,576/- WITH EFFECT FROM 08.03.1990 TO
31.07.2013 WITH INTEREST AT THE RATE OF 10 PERCENT PER
ANNUM WITHIN 30 DAYS, BEING THE GRATUITY PAYABLE TO THE R1
AND ETC.
THESE PETITIONS ARE COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE
FOLLOWING:
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WP No. 42168 of 2016
C/W WP No. 6706 of 2021
ORDER
Since common questions are involved in these writ
petitions, both the writ petitions are taken up together for
disposal.
2. The petitioner in both these writ petitions is Sri.
Krishnadevaraya Educational Trust assailing the order of
the Controlling Authority, whereby, under the Payment of
Gratuity Act, 1972 (hereinafter referred to as "the PG Act,
1972" for short), petitioner-Trust was directed to pay
gratuity from the date of appointment till the date of
attaining superannuation.
3. The petitioner in W.P.No.42168/2016 is seeking
for the following prayers:
"I. Issue writ of mandamus, to declare Section
2(1) of the Payment of Gratuity [Amendment]
Act, 2009, as unconstitutional in so far as it
relates to giving retrospective effect to the
Payment of Gratuity [Amendment] Act, 2009
[Annexure-D] issued by the 1st respondent;
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II. To declare section 13-A inserted by section 3
of the Payment of Gratuity [Amendment] Act,
2009 in Payment of Gratuity Act, 1972 as
unconstitutional for arbitrary validating the
Notification dated 03.04.1997 with
retrospective effect i.e., 03.04.1997;
III. Quash the entire Order passed in
case No.ALCB-2/PGA/CR-69/2014 dated
31.05.2016 passed by the 3rd respondent in
favour of the 4th respondent under the
Payment of Gratuity Act, 1972, directing the
petitioner trust to pay Rs.3,77,055/- with
effect from 11.01.1991 to 06.08.2009 with
interest at the rate of 10% per annum within
30 days, being the gratuity payable to him
[Annexure-C].
IV. Pass any other appropriate Orders as this
Hon'ble Court deems fit in the facts and
circumstances of the case, including the costs
of this petition, in the interest of justice and
equity."
4. The petitioner in W.P.No.6706/2021 is seeking
the following prayers:
"I. Quash the entire Order passed by the 2nd
respondent in Case No.ALCB-2/PGA/CR-
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48/2014 dated 29.06.2015 [Annexure-A]
under the Payment of Gratuity Act, 1972,
directing the petitioner trust to pay
Rs.6,06,576/- with effect from 08.03.1990 to
31.07.2013 with interest at the rate of 10%
per annum within 30 days, being the gratuity
payable to the 1st respondent;
II. Quash the entire order passed by the 3rd
respondent dated 22.01.2020 in the Appeal
under No.ALCB-4/PGA/CR-03/2018-19
[Annexure-C] in dismissing the appeal filed by
the petitioner;
III. Consequently, allow the Appeal filed by the
Petitioner Trust in Appeal No.ALCB-4/PGA/CR-
03/2018-19 before the 3rd Respondent
thereby set aside the order passed by the 2nd
respondent in 29.06.2015; Case No.ALCB-
2/PGA/CR-48/2014 dated 29.06.2015;
IV. Pass any other appropriate orders as this
Hon'ble Court deems fit in the facts and
circumstances of the case, including the costs
of this petition, in the interest of justice and
equity."
5. W.P.No.42168/2016 is against one Divya
Srinath, wherein, the Assistant Labour Commissioner and
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the Gratuity Controlling Authority directed the petitioner-
Trust to pay a sum of Rs.3,77,033/- with interest at the
rate of 10% per annum.
6. W.P.No.6706/2021 is against K.Raghupathi,
wherein, the Labour Commissioner and the Controlling
Authority directed the petitioner-Trust to pay a sum of
Rs.6,06,576/- with interest at the rate of 10% per annum,
which came to be affirmed by the Appellate Authority.
7. The grievance of the petitioner-Trust is in
twofold: that the Amended Act of 2009 has widened the
definition of 'Employee' to include the teachers of the
Educational Institution also, with retrospective effect from
03.04.1997, whereas, the Controlling Authority and the
Appellate Authority have arrived at a conclusion that
petitioner-Trust has to pay the gratuity amount with effect
from the date of appointment of the employee contrary to
the Amendment Act, 2009, which gives retrospective
effect for the payment of Gratuity with effect from
03.04.1997.
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8. Objections have been filed by the contesting
respondents stating that PG Act was brought into force in
the year 1972 and the Amended Act, 2009 was given
retrospective effect from 03.04.1997, making it applicable
to all the Educational Institutions, Employee, with 10 or
more persons.
9. Having heard learned counsel appearing for the
parties and on perusal of the material on record, the only
point that arises for consideration is,
"Whether impugned order of the
Controlling Authority in calculating the payment
of gratuity from the date of appointment is
justified and warranting any interference by this
Court?"
10. Learned counsel on both sides submit that
prayer Nos.1 and 2 in W.P.No.42168/2016 is squarely
covered by the decision of the Apex Court in the case of
INDEPENDENT SCHOOLS' FEDERATION OF INDIA
(REGD.) VS. UNION OF INDIA AND ANOTHER1
C.A.No.8168/2012, D.D. 29.08.2022
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(INDEPENDENT SCHOOLS' FEDERATION OF INDIA)
wherein, the Apex Court has upheld the constitutional
validity of the Amendment to Section 2(e) and insertion of
Section 13A of the PG Act, 1972, with retrospective effect
from 03.04.1997 vide Payment of Gratuity (Amendment)
Act, 2009. In the said circumstances, prayer Nos.1 and 2
in W.P.No.42168/2016 would not survive for
consideration.
11. The Apex Court in the case of INDEPENDENT
SCHOOLS' FEDERATION OF INDIA stated supra, has
held that the service period prior to 03.04.1997 is to be
counted for the purpose of computing entitlement
condition of 5 years of service. The Apex Court has laid
down that the PG Act, 1972 provisions will apply even
post-retrospective amendments, the condition being that it
will apply to those teachers who were in service as on
03.04.1997, and at the time of termination have rendered
service of not less than five years. The Apex Court held
that the ratio and decision in the case of MANAGEMENT
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OF GOODYEAR INDIA LIMITED VS. SHRI
K.G.DEVESSAR2 is correct and has held that the
retroactive effect of a statute has to be taken into
consideration unless contrary intention is expressed. The
Apex Court in the said judgment has held at paragraphs
15 and 19 as under:
"15. A secondary argument on behalf of the
private educational institutions that they would be
liable to pay gratuity for a period of service prior to
3rd April 1997, and, therefore, the amendments are
unconscionable and tyrannous, is equally fallacious
for several reasons. A somewhat similar
controversy had arisen in the case of Management
of Goodyear India Limited. v. Shri K.G. Devessar
((1985) 4 SCC 45), wherein the employee was in
service from 24th January 1961 to 31st December
1974. On 16th September 1972, the date when the
PAG Act came into effect, he was drawing a salary
of more than Rs. 1,000/- per month and hence, in
terms of the then definition of the word "employee"
under the PAG Act, which excluded those drawing
salary of more than Rs. 1,000/- per month, as per
the employer-management, the employee was not
entitled to gratuity. Rejecting the contention, this
(1985) 4 SCC 45
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Court held that the gratuity is payable to an
employee as per the mandate of Section 4 of the
PAG Act, after he has rendered continuous service
for not less than 5 years on his superannuation,
retirement or resignation or on his death or
disablement due to accident or disease, when such
event has occurred post the enforcement of the
PAG Act. The Court rejected the submission on
behalf of the employer-management that an
employee is entitled to gratuity only when, both on
the date when the PAG Act came into force, and on
the date when the employee retired, he/she was
drawing wages not exceeding Rs. 1,000/- per
month. The Court observed that to approve the
submission of the employer-management would
render a whole class of workers, who were during
the course of their employment drawing salary less
than Rs. 1,000/- per month but on the eve of their
retirement were getting wages of Rs. 1,000/- per
month, without the benefit of gratuity. This could
not have been the intention of the Parliament. The
reasonable way to construe Section 4 in the light of
Section 2(e) of the PAG Act would be to hold that
when the employees' services are terminated for
any reason mentioned in Section 4 after coming
into force of the PAG Act, the employee would be
entitled to the payment of gratuity if he has
rendered continuous service for not less than 5
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years and for that period during which he satisfied
the definition of "employee" under Section 2(e). It
does not matter whether that period comes before
the commencement of the PAG Act. Once that
condition is satisfied, the next and only question
would be regarding the amount of gratuity payable.
Xxx xxx xxx
19. The provisions of the PAG Act, even
post the retrospective amendments, will apply only
to those teachers who were in service as on
3rd April 1997, and at the time of termination have
rendered service of not less than 5 years. The
period of 5 years may be partly before 3rd April
1997, as the date on which the person was
employed does not determine the applicability of
the PAG Act. The date of termination of service, in
the form of superannuation, retirement, or
resignation, or death or disablement due to
accident or disease, should be post the enforcement
date, which in the present case is 3rd April 1997.
The entire length of service, including the service
period prior to 3rd April 1997, is to be counted for
the purpose of computing the entitlement condition
of 5 years of service. This is the correct effect of
the ratio and decision in Management of Goodyear
India Limited. (supra) and the decisions explaining
retroactive effect of a statute. This legal position
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would be equally true and correct when the PAG Act
was first enforced with effect from 16th September
1972, and when Notification No. S-42013/1/95-
SS.(II) under Section 1(3)(c) of the PAG Act was
issued and enforced with effect from 3rd April,
1997. It would be the position in case of all
notifications issued under Section 1(3)(c) of the
PAG Act, unless a contrary intention is expressed,
which is not the situation in the present case and
thus need not be examined."
12. Notification dated 31.12.2009 has included the
teaching staff of the educational institution to the word
"Employee" with retrospective effect with Amended Act,
2009 from 03.04.1997 and the Apex Court declared the
post retrospective amendment, will apply to those
teachers in service as on 03.04.1997 and at the time of
termination, they have service of not less than five years.
Admittedly, in the instant case, respondent No.4 in W.P.
No.42168/2016 was appointed on 11.01.1991 as Assistant
Professor in Civil Engineering Department and respondent
No.1 in W.P. No.6706/2021 was appointed on 08.03.1990
as Lecturer in the Civil Engineering Department. Thus, the
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decision of the Apex Court in the case of Independent
Schools' Federation of India squarely applies to the
present case. The Controlling Authority considering the
date of appointment has calculated the gratuity payable by
the petitioner-Trust and accordingly the applicant before
the Authority has held to be eligible for gratuity amount.
The material on record evidences that applicant has served
the institution and in light of inclusion of the "teaching
staff" of educational institution in the definition of
"Employee" by Amended Act, 2009, the clause stating
effect is that, the applicants are entitled for gratuity
amount from the date of appointment and not from
03.04.1997 as contended by the petitioner's learned
counsel for the petitioner-Trust and the Controlling
Authority has rightly calculated the amount payable to the
applicant and in the result, point for consideration is
answered in favour of the applicant holding that applicant
is eligible for gratuity amount from the date of
appointment and accordingly, this Court pass the
following:
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ORDER
1) Both the writ petitions are hereby
dismissed.
2) Impugned order passed in
W.P.No.42168/2016 in case No.ALCB-
2/PGA/CR-69/2014 dated 31.05.2016 passed
by the 3rd respondent in favour of the 4th
respondent under the Payment of Gratuity
Act, 1972 (Annexure-C) is hereby
confirmed.
3) Impugned orders passed in
W.P.No.6706/2021 by the 2nd respondent in
Case No.ALCB-2/PGA/CR-48/2014 dated
29.06.2015 [Annexure-A] under the Payment
of Gratuity Act, 1972 and the order passed by
the 3rd respondent dated 22.01.2020 in the
Appeal under No.ALCB-4/PGA/CR-03/2018-
19 [Annexure-C] are hereby confirmed.
No order as to costs.
Sd/-
JUDGE
NC
CT:bms
