Karnataka High Court

The Regional Director (Food) vs Shri. P. Lakshmanan on 18 February, 2025

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                                                           NC: 2025:KHC:7350
                                                       WP No. 25708 of 2018




                        IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                          DATED THIS THE 18TH DAY OF FEBRUARY, 2025

                                            BEFORE
                        THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
                             WRIT PETITION NO. 25708 OF 2018 (L-PG)
                      BETWEEN:

                      THE REGIONAL DIRECTOR (FOOD),
                      DEPARTMENT OF FOOD AND PUBLIC DISTRIBUTION,
                      FOOD CORPORATION OF INDIA ZONAL OFFICE,
                      NO.3, HADDOWS ROAD, CHENNAI-06.
                                                               ...PETITIONER
                      (BY SRI B PRAMOD, ADVOCATE)
                      AND:

                      SHRI. P. LAKSHMANAN,
                      ASST MANAGER (DEPOT),
                      AGED ABOUT 70 YEARS,
                      RETIRED FOOD TRANSFEREE,
                      RAJNI NIVAS, KUNJIMANGALAM,
                      KANNUR DISTRICT,
                      KERALA-670 309.
                                                              ...RESPONDENT
                      (BY SRI M NARAYANA BHAT, ADVOCATE)
Digitally signed by
PRAMILA G V
                           THIS WRIT PETITION IS FILED UNDER ARTICLES 226
Location: High
Court of Karnataka    AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH
                      THE ORDER DATED 2.2.2015 PASSED BY THE CONTROLLING
                      AUTHORITY UNDER PAYMENT OF GRATUITY ACT, 1972 &
                      ASSISTANT LABOUR COMMISSIONER (CENTRAL) MANGALORE
                      IN APPLICATION NO.48/20/2013-A/M (ANNEXURE-A);QUASH
                      TEH ORDER DATED 31.1.2017 PASSED BY THE APPELLATE
                      AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 &
                      DY. CHIEF LABOUR COMMISSIONER (CENTRAL), BENGALURU
                      IN APPEAL NO.36(18) 2016-B1 (ANNEXURE-A1).

                           THIS PETITION, COMING ON FOR FURTHER HEARING,
                      THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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                                           NC: 2025:KHC:7350
                                       WP No. 25708 of 2018




CORAM:    HON'BLE MR JUSTICE ANANT RAMANATH HEGDE


                       ORAL ORDER

This petition is filed challenging the order dated

02.02.2015 passed by the Controlling Authority under the

Payment of Gratuity Act, 1972 (for short 'Act of 1972') as

well as the order dated 31.01.2017 passed by the Appellate

Authority under the same Act.

2. The petitioner/employer's decision to withhold

the gratuity payable to the respondent/employee is called in

question before the Controlling Authority. The employer had

taken the decision to withhold the gratuity payable to the

respondent on the premise that respondent/employee is

convicted in a criminal offence and appeal against conviction

is pending consideration.

3. The Appellate Authority, dismissed the employer's

appeal. Hence, the present petition.

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4. It is the submission of learned counsel appearing

for the petitioner that under Rule 69(1)(c) of Central Civil

Service (Pension) Rules, 1972, (for short 'CCS Rules, 1972'),

the pendency of a disciplinary proceeding or any criminal

case, is a valid ground to withhold the pension till the

conclusion of the said proceedings. He further submits that

the Competent Authority as well as the Appellate Authority

have erred in holding that the respondent is entitled to

pension despite pendency of the appeal before the Appellate

Court.

5. Learned counsel submits that the Competent

Authority despite appraisal of the relevant Rule i.e., Rule 69

referred to above, has erroneously held that the relevant

provision of law is not brought to the notice of the Appellate

Authority and has wrongly held that Section 14 of the Act of

1972 overrides Rule 69 to dismiss the appeal.

6. Learned counsel would urge that respondent who

was initially a Central Government employee on

establishment of Food Corporation of India migrated to Food

Corporation of India and opted to be governed by the

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provisions of the Rules applicable to the Central Government

employees, in so far as terminal benefits. Thus, he would be

a Central Government employee, not an employee covered

under the Act of 1972, as such, the Act of 1972 has no

application.

7. Learned counsel for the petitioner would further

contend that the respondent/employee has opted for benefits

under the CCS Rules, 1972, by exercising option under

Section 12A of The Food Corporations, Act of 1964 (for short

'Act of 1964'). Having opted for the said option, he cannot

claim the benefit under Section 14 of the Act of 1972.

8. It is his further contention that throughout the

proceedings, the respondent has claimed that he is a Central

Government employee. When he makes a claim that he is a

Central Government employee, he is bound by the Central

Government Service Rules and Rule 69(1)(c) of CCS Rules,

1972 enables the employer to withhold the gratuity because

of pending criminal case.

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9. It is his further contention that valid contentions

raised under the law have not been considered by the

Controlling Authority as well as by the Appellate Authority.

The authorities were under obligation to consider the same.

Despite raising a specific defence under Rule 69(1)(c) of CCS

Rules, 1972, the Appellate Authority has proceeded to hold

that no provision of law is cited in support of the case of the

petitioner.

10. Learned counsel for the respondent on the other

hand would contend that the Act of 1964 has to be read

along with the provisions of Act of 1972, particularly

considering the sweep of Section 14 of the Act of 1972.

11. It is his contention that though the respondent-

employee was initially the Central Government employee, in

view of the establishment of the Corporation under the Act of

1964, he was transferred to the Corporation and then

became the employee of the Corporation for all practical

purposes. Though he opted to claim the retirement benefits

under the CCS Rules, 1972, because of the operation of

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Section 14 of the Act of 1972, the Act would override the

option which the respondent has exercised which is in the

nature of the contract between the employer and employee.

12. It is also urged that the Act of 1972 is not

applicable to the Central Government employees and State

Government employees. The respondent being the employee

of the Corporation is governed by the provision of the Act of

1972 and the Act of 1972 in terms of Section 14 overrides

the provisions of all other enactments to the extent of

inconsistency in other enactments vis-à-vis the provisions of

the Act of 1972.

13. The Act of 1972 provides for forfeiture of gratuity

only in the event of loss or damages being caused to the

employer by the employee. In the Departmental enquiry

initiated against the employee, the employee has been

exonerated and no loss or damages is quantified against the

employee. Thus, it urged that there is no power to withhold

the gratuity payable even under the provisions of the Act of

1972.

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14. Learned counsel would also place reliance on the

following judgments:

(1) Municipal Corporation of Delhi vs. Dharam Prakash Sharma and Anr.1

(2) Allahabad Bank and Anr. vs. All India Allahabad Bank Retired Employees Assn.2

(3) Nagar Ayukt Nagar Nigam, Kanpur vs. Mujib Ullah Khan and Anr.3

(4) Y K Singla vs. PNB and Ors.4

(5) University of Delhi vs. Sharwan Kumar Gupta and Ors.5

15. This Court has considered the contentions raised

at the bar and perused the records.

16. The following point would arise for consideration:

AIR 1999 SC 293

2010 (2) SCC 44

2019 (6) SCC 103

2013 (3) SCC 472

2014 SCC Online Del 4114

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Whether the respondent - employee can claim benefit of gratuity under the Act of 1972, after having exercised the option to claim the terminal benefit available to the Central Government employee under the Central Government Service Rules?

17. On a reading of the impugned order and the

grounds urged in the appeal memo before the Appellate

Authority, is noticed that the authorities have not considered

the contentions raised with reference to Rule 69(1)(c) of the

CCS Rules, 1972. That can be a ground to set aside the

order and to remand the case back to the Appellate Authority

or Competent Authority. The question raised under Rule (1)

matter to the Controlling Authority or the Appellate

Authority, same can be adjudicated by this Court. Hence,

same is considered by this Court.

18. There is no dispute that the respondent was once

employed by Central Government. Later after the

establishment of the Corporation, under the Act of 1964, the

respondent has migrated to the Corporation and since then

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he became the employee of the Corporation. The employee

was given an option to opt for pay scale and retirement

benefits under the Central Government or under the

Corporation. The respondent opted for pay scale under the

Corporation and retirement benefits under the CCS Rules,

1972.

19. On attaining the age of superannuation, the

terminal benefits payable to the employee were paid.

However, the gratuity was not paid. It was withheld. Hence,

the employee raised a dispute, apparently taking shelter

under Rule 69(1)(c) of the CCS Rules, 1972.

20. Relevant portion of Rule 69(1)(c) of the CCS

Rules, 1972 reads as under:

"69. Provisional pension where departmental or judicial proceedings may be pending.-

(1)(c) No gratuity shall be paid to the Government servant until the conclusion of the departmental or judicial proceedings and issue of final orders thereon :

xxxx

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21. The aforementioned provision undoubtedly

provides for withholding the gratuity until conclusion of

departmental or judicial proceeding and issue of final order

thereon. It is the contention of the learned counsel for the

petitioner that though the respondent is exonerated in the

departmental enquiry conducted by the employer, in the

criminal case initiated against the respondent and the

respondent has suffered conviction and appeal against the

said conviction is pending consideration for the Appellate

Court. Thus, there is justification to withhold the gratuity as

provided under Rule 69(1)(c) of the CCS Rules, 1972.

22. The petitioner contends that since respondent

has exercised the option in the year 1977 seeking retirement

benefits under the CCS Rules, 1972, he cannot claim a

benefit under the Act of 1972.

23. The Food Corporation Act came into force in

1964. The respondent has given the option in the year 1977

opting for CCS Rules, 1972, insofar as retirement benefits

are concerned. Thus it is a contract between himself and the

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employer. However, the Act of 1972 had come into operation

by then.

24. The Act of 1972 is not applicable to Central

Government employees. There is no difficulty in accepting

the contention that the respondent ceased to become the

Central Government employee after the establishment of

Corporation. Thereafter, he became the employee of the

Corporation and his salary was paid on par with the

employee Corporation.

25. Though the respondent was initially a Central

Government employee after the migration to the Food

Corporation of India which is a statutorily created

Corporation, the respondent became the employee of the

Corporation and thus fit into the definition of 'employee'

under the Act of 1972. Once he fits into the definition of

employee under the Act of 1972 and once he fulfills the

requirement under Section 4 of the Act of 1972 i.e.,

minimum 5 years of service and once he attains the age of

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superannuation, he is entitled to the benefit under the Act of

1972.

26. The respondent no doubt has opted to the benefit

of CCS Rules, 1972, in so far as retirement benefit is

concerned. However, on account of operation of Section 14

of Act of 1972 the said option which is in the nature of the

contract between the employer and the employee pales into

insignificance in so far as payment of gratuity.

27. Section 14 of the Act of 1972 reads as under:

"Act to override other enactments, etc.- The provisions of the Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act."

28. On reading of Section 14 of the Act of 1972, it is

crystal clear that it overrides all other Enactments, Rules and

Regulations, instruments and contracts contrary to the

provisions of the Act of 1972.

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29. Thus, the respondent who is coming under

definition of 'employee' under the Act of 1972 is also entitled

to benefit of the Act of 1972 as he fulfills all the

requirements under Section 4 of the Act of 1972.

30. Learned counsel for the respondent has also

relied upon judgment of the Hon'ble Apex Court in the case

of Municipal Corporation Delhi vs. Dharam Prakash

Sharma6.

31. In the aforementioned judgment, the Hon'ble

Apex Court was considering in an almost similar situation

where the employee who was governed by CCS Rules, 1972.

However, by interpreting the provisions of the Act of 1972,

the Apex Court has held that as far as payment of gratuity is

concerned because of Section 14 of the Act of 1972, the

restrictions contained in the CCS Rules, 1972 are not

applicable.

AIR 1999 SC 293

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32. This Court is of the view that the ratio laid down

in the aforementioned judgment squarely applies to the

present case on hand.

33. It is also relevant a note that as pointed out by

the respondent in the very order dated 30.08.2008, the

petitioner has stated as under:

"The outstanding amounts if any, due to the Corporation shall be recovered/adjusted out of the amounts payable to Sri.P.Lakshmanan, Manager (Depot) other than terminal benefits."

(Emphasis supplied)

34. This order is issued pursuant to the respondent

attaining age of superannuation. Thus, the petitioner himself

has made it clear that any dues payable to the petitioner, by

the respondent shall be adjusted or recovered from the

respondent other than the terminal benefits.

35. There is no dispute over the fact that the gratuity

amount payable falls under the category of terminal benefits.

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Hence, the said order passed by the employer also comes in

the way in accepting the contention of the petitioner.