Madras High Court
Union Of India vs The Regional Labour Commissioner on 21 June, 2023
W.A. No. 1687 of 2021 etc. batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 21.06.2023
CORAM
THE HON'BLE MR.JUSTICE S. VAIDYANATHAN
AND
THE HON'BLE MR. JUSTICE K. RAJASEKAR
W.A. Nos.1687, 1693, 1720, 1733, 1738, 1752, 1815, 1823 to 1825 of
2021 and W.P. Nos.19117, 19122, 19144, 19156, 19160, 19168, 24351,
24463, 24614, 24935, 25033, 25037, 28498 & 28499 of 2021, 35157,
35158 & 35212 of 2022, 250, 252, 253, 256, 257, 459, 464, 534, 536,
688, 694, 697, 704, 887, 897, 899, 975, 980, 3441, 3442, 3446, 3448,
3450, 3875, 3881, 3884, 5113, 5117, 5121, 5125, 6950, 6964, 6966,
6968, 7108, 7115, 7119, 7343, 7612, 7620, 7629, 7631, 7633, 8539, 8544,
8548, 8556, 8561, 9116, 9121, 9576, 10144, 11609, 11615, 11618, 11622
& 13031 of 2023.
&
Connected miscellaneous petitions
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W.A. No. 1687 of 2021
Union of India,
rep. by Administrative Officer III
Heavy Water Plant,
Department of Atomic Energy
Government of India,
Tuticorin. ..Appellant
Vs.
1. The Regional Labour Commissioner
(Central) cum Appellate Authority
under the Payment of Gratuity Act,
1972,
O/o. Regional Labour Commissioner,
No.26, Haddows Road,
Shastri Bhavan,
Chennai 600 006.
2. The Assistant Labour Commissioner
(Central) cum Controlling Authority
under the Payment of Gratuity Act,
1972,
Ministry of Labour and Employment,
Government of India,
New No.5, Old No.1-A(II Floor),
Lady Doak College Road,
Chinna Chokkikulam,
Madurai 625 002.
3. K. Muthusamy ..Respondents
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Prayer: Writ Appeal as against the order dated 31.03.2016 passed in
W.P. No. 23128 of 2015.
For Appellant :: Mr.Venkatasamy Babu
For Respondents :: Mr. P.Ganesan
` Govt. Advocate for R1 & R2
Mr.S.T.Varadarajulu for R3
COMMON JUDGMENT
(Delivered by S. VAIDYANATHAN,J.)
The writ appeals, namely, W.A. Nos.1687, 1720, 1733, 1738, 1752,
1815, 1823 to 1825 of 2021 have been filed by the Union of India
represented by its Administrative Officer III, Heavy Water Plant,
Department of Atomic Energy, Government of India, Tuticorin, challenging
the order dated 31.03.2016 passed in W.P. Nos.23127 to 23129, 25088 to
25091, 25707 & 25732 of 2015 while W.A. No. 1693 of 2021 has been
filed challenging the order dated 29.01.2016 passed in W.P. No. 23578 of
2015 whereby the writ petitions filed by the Union of India questioning the
orders passed by the 1st respondent (Appellate Authority under the Payment
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of Gratuity Act, 1972) and the 2nd respondent (Controlling Authority under
the Payment of Gratuity Act, 1972) and seeking refund of the amounts
deposited by the appellant came to be dismissed following the earlier order
passed by this Court in connected matters.
2. As far as writ petitions are concerned, the same have been filed
by the Administrative Officer III, Heavy Water Plant, Department of Atomic
Energy, Government of India, Tuticorin, challenging the common order
dated 31.03.2021 passed by the Appellate Authority therein under the
Payment of Gratuity Act, 1972 dismissing the appeals filed by the
Management thereby confirming the order of the Controlling Authority
therein under the Payment of Gratuity Act, 1972 granting the difference of
gratuity payable to the employees concerned under the Payment of Gratuity
Act, 1972.
3. Since the core issue involved in the writ appeals and the writ
petitions is one and the same, both the writ appeals and the writ petitions
are taken up together for final disposal.
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4. The private respondents, who are ex-employees of the
appellant/writ petitioner Management, made applications for a direction to
the Management to pay the balance amount of Gratuity as per the Payment
of Gratuity Act, 1972. The claim made by the private respondents in the
writ appeals was allowed by the Controlling Authority and the same was
also confirmed by the Appellate Authority under the said Act. The writ
petitions filed by the Management questioning the orders passed by the
authorities allowing the claim of private respondents concerned therein came
to be dismissed resulting in filing of the present writ appeals. As far as the
writ petitions, which have been taken up along with the writ appeals are
concerned, the challenge made therein is to the dismissal of the appeals filed
by the Management as against the orders passed by the Controlling
Authority therein allowing the claim of private respondents concerned in
those writ petitions.
5. The primordial contention raised by the Management before the
authorities as well as before this Court is that it is a Central Government
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Department under Heavy Water Board, Department of Atomic Energy,
Government of India and the private respondents were holding the posts
under the Central Government and CCS Pension Rules, 1972 alone would
be applicable in respect of retiral benefits including Gratuity. Further, they
are excluded from the purview of definition of “employee” under Section
2(e) of Payment of Gratuity Act, 1972 and having received Gratuity under
the CCS (Pension) Rules, 1972, they are estopped from receiving the
benefits under the Payment of Gratuity Act, 1972 as two different statutes
cannot be made applicable for a single purpose.
6. The contention of the employees before the authorities and
before this Court is that they are governed by the first part of the definition
of Section 2(e) and excluding them in the light of second part of Section 2(e)
may not be correct as the provisions of Payment of Gratuity Act, 1972 are
applicable to the appellant/writ petitioner Management, which is an
establishment in terms of the Payment of Gratuity Act, 1972 and that unless
there is an exemption under Section 5 of the said Act, the appellant/writ
petitioner Management cannot deprive its employees of gratuity under the
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said Act. Taking note of these submissions on behalf of the employees and
in the light of the overriding provision contained under Section 14 of
Payment of Gratuity Act, 1972, under Section 14, the Controlling Authority
rightly held that the employees would be eligible to receive the difference of
amount of gratuity in accordance with the Payment of Gratuity Act, 1972,
passed orders in favour of the employees that they would be entitled to
gratuity, which was confirmed by the Appellate Authority and also upheld
by the learned Single Judge of this Court. When the employees have got
successive orders in their favour, the finding of fact rendered by the
authorities need not be interfered with.
7. Learned counsel for the employees would submit that merely
because they are getting pension, in terms of CCS (Pension) Rules, 1972
they cannot be deprived of the benefits under the Payment of Gratuity Act,
1972, which are more beneficial to them. The Hon'ble Apex Court, in the
judgment reported in 1998 (7) SCC 221 (Municipal Corporation of Delhi
V. Dharam Prakash Sharma & Another) has also categorically held that
Gratuity that is provided for under the CCS (Pension) Rules will not
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disentitle the employees from getting the payment of gratuity under the
Payment of Gratuity Act, 1972, more so, in the light of the overriding
provision contained under Section 14 of Payment of Gratuity Act, 1972. He
further contended that even though the employees of Municipal Corporation
of Delhi had been extended the benefit of CCS (Pension) Rules, 1972, the
contention of the Management counsel in that case that the employees will
have to be excluded in the light of Section 2(e) was not accepted. The Apex
Court in the aforecited case held that Section 5 of Payment of Gratuity Act,
1972 has conferred authority on the appropriate Government to exempt any
establishment from the operation of the provisions of the Act, if in its
opinion the employees of such establishment are in receipt of gratuity or
pensionary benefits not less favourable than the benefits conferred under
this Act. The relevant portion at paragraph No.2 of the said judgment is
extracted below:
“...The mere fact that the gratuity is provided for under the
Pension rules will not disentitle him to get the payment of
gratuity under the Payment of Gratuity Act. In view of the
overriding provisions contained in S.14 of Payment of
Gratuity Act, the provision for gratuity under the Pension
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Rule will have no effect. Possibly for this reason, S.5 of the
Payment of Gratuity Act has conferred authority on the
appropriate Government to exempt any establishment from
the operation of the provisions of the Act, if in its opinion
the employees of such establishment are in receipt of
gratuity or pensionary benefits not less favourable than the
benefits conferred under this Act. Admittedly MCD has not
taken any steps to invoke the power of the Central
Government under S.5 of the Payment of Gratuity Act. In
the aforesaid premises, we are of the considered opinion
that the employees of the MCD would be entitled to the
payment of gratuity under the Payment of Gratuity Act,
notwithstanding the fact that the provisions of the Pension
Rules have been made applicable to them for the purpose of
determining the pension. Needless to mention that the
employees cannot claim gratuity available under the
Pension Rules.”
8. However, Mr.AR.L. Sundaresan, learned Additional Solicitor
General appearing for the Management in some of the cases contended that
unless the employees satisfy the conditions governing the provisions of the
Payment of Gratuity Act, 1972, they cannot insist that the same would be
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applicable to them. It may be correct that the appellant/writ petitioner
Management is an establishment in terms of Section (1)(3)(b) of the Act,
but unless both the employer and the employee satisfy the conditions
specified, the employees cannot demand that eventhough there is an
exclusion clause, they should be deemed to be included in terms of first part
of the definition of Section 2(e) of the said Act. He would submit that the
Municipal Corporation of Delhi had adopted the provisions of CCS
(Pension) Rules, 1972. Since the employees of Municipal Corporation of
Delhi were already covered by the Payment of Gratuity Act, 1972 and by
virtue of adoption of the provisions of CCS (Pension) Rules, 1972, the
benefits of pension were extended to them. Only for the purpose of
extending the pensionary benefits, CCS (Pension) Rules were adopted and
not otherwise. Those employees were not excluded in terms of definition of
Section 2(e) of Payment of Gratuity Act, 1972 and therefore, the said
decision cannot be made applicable to the employees in the present case.
9. Heard both sides.
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10. The entire issue in this case revolves around the definition of
Section 2(e) of Payment of Gratuity Act, 1972. For useful reference, the
definition of “employee” under Section 2(e), as it existed originally as on
21.08.1972, prior to the amendment and the amended Section 2(e) with
effect from 03.04.1997 by Act 47 of 2009 are extracted hereunder:
Section 2 (e), as it stood, prior to amendment:
“employee” means any person (other than an apprentice)
employed on wages, in any establishment, factory, mine,
oilfield, planatation, port, railway company or shop to do
any skilled, semi-skilled, or unskilled, manual, supervisory,
technical or clerical work, whether the terms of such
employment are express or implied, and whether or not such
person is employed in a managerial or administrative
capacity, but does not include any such 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.”
Section 2(e), after amendment with effect from 03.04.1997:
“Employee” means any person (other than an
apprentice) who is employed for wages, whether the terms of
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such employment are express or implied, in any kind of
work, manual or otherwise, in or in connection with the work
of a factory, mine, oilfield, plantation, port, railway
company, shop or other establishment to which this Act
applies, but does not include any such 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.”
Section 5 of Payment of Gratuity Act, 1972, which deals with the
“power to exempt” and Section 14 of the said Act, which deals with the
“overriding provision” and which have been referred to, are also reproduced
hereunder:
Section 5: Power to exempt:
(1) The appropriate Government may, by
notification, and subject to such conditions as may be
specified in the notification, exempt any establishment,
factory, mine, oilfield, plantation, port, railway
company or shop to which this Act applies from the
operation of the provisions of this Act, if, in the
opinion of the appropriate Government, the employees
in such establishment factory, mine, oilfield,
plantation, port, railway company or shop are in
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receipt of gratuity or pensionary benefits not less
favourable than the benefits conferred under this Act.
Section 14: The provisions of this 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.
11. In the present case, the employees, who were holding the posts
under the Central Government, are governed by CCS (Pension) Rules, 1972,
in particular, Rule 50 of the said Rules for payment of Retirement/Death
Gratuity and Rule 49 of the said Rules for payment of pension.A reading of
the judgment of the Hon'ble Apex Court and a careful consideration of the
contentions of parties would make it very clear that the employees must
satisfy the requisite conditions to be governed by the provisions of Payment
of Gratuity Act, 1972. The Appellate Authority concerned in the writ
appeals and writ petitions had taken extensive steps to grant the relief to the
employees by confirming the order of the Controlling Authority concerned
in the writ appeals and writ petitions. Certainly that exercise has got to be
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appreciated, but only the first limb of the definition of “employee” under
Section 2(e) of the Act will be applicable to the employees herein and not
the exclusion clause. In the present case, as rightly pointed out by the
learned Additional Solicitor General, the Municipal Corporation of Delhi
had decided to adopt the CCS (Pension) Rules, 1972 to extend the benefit
of pension to its employees. The employees of Municipal Corporation of
Delhi were already covered by the Payment of Gratuity Act, 1972. When
the Act is not applicable to a person, who holds a post under the Central
Government or State Government and is governed by any other Act or any
other Rules providing for Gratuity, the employees concerned cannot demand
any benefit under the Payment of Gratuity Act, 1972. Though we are in
entire agreement with the contention of the learned counsel for the
employees that Section 14 of Payment of Gratuity Act, 1972 provides the
power to override other Acts, and that no benefits that flow under the
Payment of Gratuity Act, 1972 can be taken away by way of settlement or
agreement, Section 14 will be applicable provided the employees fall within
the inclusive definition of “employee” and not otherwise.
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12. As discussed supra, we are of the view that in the present case,
the employees do not come under the provisions of Payment of Gratuity Act,
1972 as they are Central Government Employees originally covered by the
CCS (Pension) Rules, 1972 unlike employees of Municipal Corporation of
Delhi wherein CCS (Pension) Rules, 1972 have been adopted for the
purpose of providing pension. Even assuming for the sake of argument that
the entire CCS (Pension) Rules, 1972 have been adopted by the Municipal
Corporation of Delhi, the employees therein are governed not only by the
provisions of Payment of Gratuity Act, 1972 but also under the CCS
(Pension) Rules, 1972. In any event, better benefits will have to be
extended to them and the Hon'ble Supreme Court, in that context, had
granted the relief of payment of difference in gratuity to those employees,
who had better benefits under the Payment of Gratuity Act,1972 than the
one under the Pension Rules. Hence, we are of the view that the employees
concerned herein do not fall under the exclusive definition of “employee”
and to be more precise, they are excluded from the definition of Section 2(e)
of Payment of Gratuity Act, 1972. Once they are excluded, no provision
under the Payment of Gratuity Act, 1972 could be made applicable and no
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relief can be granted.
13. Section 2(f) of Payment of Gratuity Act, 1972, defines
“employer” as hereunder:
“(f) “employer” means, in relation to any establishment,
factory, mine, oil-field, plantation, port, railway company or
shop -
(i) belonging to, or under the control of, the
Central Government or a State Government, a
person or authority appointed by the
appropriate Government for the supervision and
control of employoees, or where no person
orauthority has been so appointed, the head of
the Ministry or the Department concerned.
(ii) belonging to, or under the control of, any
local authority, the person appointed by such
authority for the supervision and control of
employees or where no person has been so
appointed, the chief executive officer of the local
authority.
(iii) in any other case, the person, who, or the
authority which, has the ultimate control over
the affairs of the establishment, factory, mine,
oil-field, plantatio, port, railway company or
shop, and where the said affairs are entrusted to
any other person whether called a manager,
managing director or by any other name, such
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person;”
The Management may be an employer as per the definition under Section
2(f) of Payment of Gratuity Act, 1972. But, both the employee and
employer shall be covered by Payment of Gratuity Act, 1972 unless there is
an exception like Municipal Corporation of Delhi referred to supra.
14. Therefore, we are of the view that the order of the learned
Single Judge confirming the order of the Appellate Authority, who has
confirmed the order of the Controlling Authority is set aside and the writ
appeals are allowed.
15. Insofar as writ petitions are concerned, the common order of
the Appellate Authority dated 31.03.2021 confirming the order of the
Controlling Authority is set aside and the writ petitions are allowed. No
costs.
16. It is brought to the notice of this Court that pursuant to the
orders of the Controlling Authority concerned in the writ appeals and writ
petitions, the difference of gratuity amounts have been deposited before the
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respective authorities as it is a condition precedent before preferring appeals
before the Appellate Authority concerned in the writ appeals and writ
petitions. Some of the employees concerned in the writ appeals have already
withdrawn their respective amounts and the employees concerned in the
writ petitions are yet to withdraw. We make it very clear that the employees
who had already withdrawn the amounts need not return the money and
that the appellant/writ petitioner Management cannot demand for refund of
the said amounts. The amounts, which are lying in deposit together with
accrued interest shall be returned to the appellant/writ petitioner
Management within a period of four months from the date of receipt of a
copy of this order. Connected miscellaneous petitions are closed.
(S.V.N.J.) (K.R.S.J.)
nv 21.06.2023
To
The Regional Labour Commissioner
(Central) cum Appellate Authority
under the Payment of Gratuity Act,
1972,
O/o. Regional Labour Commissioner,
No.26, Haddows Road,
Shastri Bhavan, Chennai 600 006.
2. The Assistant Labour Commissioner
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(Central) cum Controlling Authority
under the Payment of Gratuity Act,
1972,
Ministry of Labour and Employment,
Government of India,
New No.5, Old No.1-A(II Floor),
Lady Doak College Road,
Chinna Chokkikulam,
Madurai 625 002.
3. The Regional Labour Commissioner
(Central) Madurai,
Kanga Apartments,
Suit No.III, 1st Floor, 13-A,
Lady Doak CollegeRoad,
Chinna Chokkikulam,
Madurai – 625 002.
4. Dy. Chief Labour Commissioner
(Central), 5th Floor,
Shastri Bhavan,
Chennai – 600 006.
S. VAIDYANATHAN,J.
AND
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K. RAJASEKAR,J.
nv
W.A. No. 1687 of 2021 etc. batch
21.06.2023
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