Telangana High Court

The General Manager, vs The Assistant Labour Commissioner ... on 31 January, 2025

Author: Abhinand Kumar Shavili

Bench: Abhinand Kumar Shavili

                 HIGH COURT FOR THE STATE OF TELANGANA

                                     ********

                WRIT APPEAL NOs.1130, 1141 and 1181 of 2016;
               WRIT PETITION NOs.46004 OF 2016, 10983 OF 2018,
                 5564 OF 2020, 30041 OF 2023 & 30045 OF 2023

W.A.No.1130 of 2016:

Between :

The General Manager, South Central railway,
Railnilayam, Secunderabad and another.

                                                                           ...Appellants
             and

The Asst.Labour Commissioner (Central),
Hyderabad & Controlling Authority under the
Payment of Gratuity of 1972 and another.
                                                                        .... Respondents


DATE OF JUDGMENT PRONOUNCED            :        31.01.2025


            HONOURABLE SRI JUSTICE ABHINAND KUMAR SHAVILI
                                  AND
             HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY


1.     Whether Reporters of Local Newspapers             :       Yes
       may be allowed to see the Judgments ?

2.     Whether the copies of judgment may be             :       Yes
       marked to Law Reporters/Journals

3.     Whether Their Lordship wish to                        :    Yes
       see the fair copy of the Judgment ?



                                                  ___________________________________
                                                  ABHINAND KUMAR SHAVILI, J


                                                   ___________________________________
                                                    LAXMI NARAYANA ALISHETTY, J
                                                                        ASK,J & LNA,J
                                                         W.A.NOs.1130 of 2016 & batch.

                                            2



            * HONOURABLE SRI JUSTICE ABHINAND KUMAR SHAVILI
                                   AND
              HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY


                 + WRIT APPEAL NOs.1130, 1141 and 1181 of 2016;
                WRIT PETITION NOs.46004 OF 2016, 10983 OF 2018,
                   5564 OF 2020, 30041 OF 2023 & 30045 OF 2023


%   31.01.2025



Between:

# The General Manager, South Central railway,
Railnilayam, Secunderabad and another.

                                                                        ...Appellants
                and

$ The Asst.Labour Commissioner (Central),
Hyderabad & Controlling Authority under the
Payment of Gratuity of 1972 and another.
                                                                    .... Respondents

!Counsel for the appellants/Petitioners :

Ms.L.Pranathi Reddy, standing counsel for appellants in WA Nos.1130, 1141 and
1181 of 2016;

Ms.Ch.Lakshmi Kumari learned counsel for petitioner in WP No.46004/2016; Sri
S.Srinivasa Rao Siddanti for petitioners in WP Nos.10983,2018, 30041 of 2023,30045
of 2023 and 5564 of 2020;


Counsel for the Respondents      :

Learned Dy.Solicitor General of India appearing for respondent No.1 in all writ
appeals; Sri MPVNV Sastry, learned counsel for respondent no.2 in WA No.1130 of
2016; Smt. S.Siva Kumari for respondent no.2 in WA Nos.1141 and 1181 of 2016.

Learned Govt.Pleader for Labour appearing for respondent in WP No.46004 of 2016;
Dy.Solicitor General of India appearing for Central Government in WPNos.10983 of
2018, 30041 and 30045 of 2023; Sri Srinivasa Rao Madiraju, for respondent No.2 in
WPNos.10983 of 2018; 30041 and 30045 of 2023; Sri T.S.Venkataramana, learned
counsel for respondent No.2 in WP No.5564 of 2020;

<Gist :

>Head Note:

? Cases referred:
1998 (8) SCC 1; 2003 (2) SCC 107; (2010) 2 SCC 44; (1998) 7 SCC 221; (2006) 9 SCC
643; (2019) 15 SCC 292
                                                                  ASK,J & LNA,J
                                                   W.A.NOs.1130 of 2016 & batch.

                                    3

  HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI
                        &
 HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY

        WRIT APPEAL NOs.1130, 1141 and 1181 of 2016;
       WRIT PETITION NOs.46004 OF 2016, 10983 OF 2018,
         5564 OF 2020, 30041 OF 2023 & 30045 OF 2023

COMMON JUDGMENT:

(per Hon'ble Sri Justice Laxmi Narayana Alishetty)

W.A.Nos.1130, 1141 and 1181 of 2016 are filed by the

appellants-Railways aggrieved by the common dated 26.07.2016

passed by single Judge of this Court in W.P.Nos.21535, 17925, and

17562 of 2016, respectively. Writ Petition Nos.46004 of 2016, 10983

of 2018, 5564 of 2020, 30041 and 30045 of 2023 are filed by the

employees aggrieved by the common order dated 20.01.2020 in

O.A.No.912 of 2018, 134 and 468 of 2019 passed by the Central

Administrative Tribunal, Hyderabad Bench, Hyderabad (for

short, 'Tribunal').

2. Since the issue involved in all these matters is one and the

same, all the Appeals and Writ Petitions were heard together and

disposed of by this common judgment.

3. Heard Ms. L.Pranathi Reddy, learned senior Standing

Counsel for appellants in W.A.Nos.1130, 1141 and 1181 of 2016;

ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

learned Dy.Solicitor General of India appearing for respondent

No.1 in all writ appeals; Sri MPVNV Sastry, learned counsel for

respondent No.2 in W.A.No.1130 of 2016; Smt S.Siva Kumari,

learned counsel for respondent No.2 in WA Nos.1141 and 1181 of

2016.

4. Heard Ms. Ch.Lakshmi Kumari, learned counsel for

petitioner in W.P.No.46004 of 2016, Sri S.Srinivasa Rao Siddanti,

learned counsel for petitioners in W.P.Nos.10983 of 2018, 30041 of

2023, 30045 of 2023 and 5564 of 2020; learned Govt.Pleader for

Labour appearing for respondent in WP No.46004 of 2016; Gadi

Praveen Kumar, learned Dy. Solicitor General of India appearing

for Central Government in WP Nos.10983 of2018, 30041 and

30045 of 2023; Sri Srinivasa Rao Madiraju, learned counsel for

respondent No.2 in W.P.Nos.10983 of 2018, 30041 and 30045 of

2023; Sri T.S.Venkataramana, learned counsel for respondent

No.2 in WP No.5564 of 2020.

W.A.Nos.1130, 1141 and 1181 of 2016:

5. For convenience, the facts in Writ Appeal No.1141 of 2016

are referred hereunder:

ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

5.1. The 2nd respondent was appointed on 13.10.1978 as Ticket

Collector and retired from service on 31.12.2013 as Chief Ticket

Inspector in appellant-Railways on attaining the age of

superannuation and has put up 35 years and two months service.

2nd respondent was granted gratuity of Rs.7,38,920/- immediately

after his superannuation. However, according to 2nd respondent,

the gratuity amount paid to him is less than the entitlement as per

the provisions of Payment of Gratuity (Central) Rules, 1972,

which comes to Rs.9,04,272/- and thus, still Rs.1,65,352/- was due

from the appellants. The 2nd respondent submitted representation

to the appellants and the same was rejected by the appellants

herein on the ground that gratuity amount was calculated as per

the Railway Services (Pension) Rules, which is applicable to the

2nd respondent, therefore, he is not entitled for any further

amount.

5.2. Respondent No.2 filed application before the Controlling

Authority under the Payment of Gratuity Act, 1972 (for short,

'Act, 1972') vide P.G. Application No.8 of 2015. The appellants

herein filed a detailed counter and the controlling authority, on ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

due consideration of the contentions put-forth on behalf of 2nd

respondent as well as appellants herein, allowed the application

vide order dated 10.09.2015 and held that 2nd respondent was

entitled to gratuity as per the Act, 1972 and directed the

appellants herein to pay balance amount of Rs.1,65,352/- along

with interest @ 10% per annum.

5.3. Aggrieved by the order dated 10.09.2015, appellants herein

preferred W.P.No.17925 of 2016 and the learned single Judge of

this Court vide order dated 26.07.2016 passed common order and

disposed of the writ petition along with other writ petitions

granting liberty to the appellants herein to avail alternative

remedy of appeal before the controlling authority. Aggrieved by

the order dated 26.07.2016, appellants herein filed the present

appeal.

5.4. It is finally contended that the Controlling Authority under

the Act, 1972 has erroneously allowed the application filed by the

2nd respondent and came to erroneous conclusion that the Act,

1972 is applicable to the appellant-Railways, without appreciating

the fact that the railway has its own Pension Rules, 1993 in the ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

form of the Railway Service (Pension) Rules, 1993. Therefore, the

order dated 10.09.2015 passed by the Controlling Authority under

the Act, 1972 as well as the impugned order dated 26.07.2016

passed by the learned single Judge are liable to be set aside.

W.P.Nos.4004, 2016, 10983 of 2018, 5564 of 2020, 30041 and 30045 of 2023:

6. For convenience, the facts in Writ Petition No.5564 of 2020

are referred hereunder:

6.1. W.P.No.5564 of 2020 and batch are filed by the writ

petitioners-employees aggrieved by the common order dated

20.01.2020 in O.A.No.912 of 2018. The Tribunal passed common

order along with other O.As, which are filed by the retired

employees alleging that Railways paid less gratuity amount

contrary to the provisions of the Act, 1972. However, the Tribunal

rejected the same on the ground that the Act, 1972 is not

applicable. The other OAs were filed on the same ground which

were urged in the P.G. Application No.8 of 2015. However, the

said OAs were disposed of by the Tribunal vide order dated

20.01.2020 with liberty to employees to approach the Railways

herein and pursue for appropriate remedies, if so advised, in ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

accordance with law, consequent to the disposal of the writ

appeals i.e., W.A.Nos.1130 and 1141 of 2016.

6.2. The Tribunal without going into merits and taking into

consideration, interim order passed by the Division Bench of this

Court in W.A.Nos.1130 and 1141 of 2016 dated 25.10.2016,

wherein the Division Bench while granting interim order set

aside the order passed by the Controlling Authority under the

Act, 1972, with an observation that definition of the expression

émployee' under Section 2(e) of the Act, 1972, as amended by

Amendment Act 47 of 2009 w.e.f. 03.04.1997, makes it clear that

those who hold a post in Government and governed by any order

or by any rules providing for payment of gratuity, will not be

covered by the definition. The Tribunal considering the interim

order passed by the Division Bench in the above referred appeals,

did not adjudicate the application filed by the writ petitioner

herein on merits on the ground that the issue in question is under

adjudication of the Division Bench of this Court and therefore, it

would be proper and apt for the employees to approach the

respondents to pursue for appropriate remedies, if so advised, in ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

accordance with law, consequent to the disposal of the writ

appeals referred to above and with the same observation, the

OAs were disposed of.

7. Learned Senior Standing Counsel for appellants had

contended that Act, 1972 is not applicable to the appellants as it

has own Railway Service (Pension) Rules, 1993 (for short,

'Railway Rules, 1993') and therefore, learned single Judge has

committed serious error in disposing of the writ petition with

liberty to avail remedy of appeal before the appellate authority.

It is further contended that when the Act, 1972 is not applicable,

the question of filing and maintaining application before the

authority under the Act does not arise. Learned senior standing

counsel further contended that Section 2(e) of the Act, 1972 was

amended in the year 2009 w.e.f. 03.04.1997 and by virtue of

Amendment Act, the Act, 1972 is not applicable to Railways. It is

further contended that Railways obtained exemption in terms of

Section 5 of the Act, 1972, as per which, the operation of the Act,

1972 can be exempted to any establishment provided same was

permitted by the Government.

ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

8. Insofar as maintainability of the appeal, learned senior

standing counsel had contended that when an order is passed

without jurisdiction, applicability of the Act, 1972 is in dispute,

the remedy under Article 226 of the Constitution of India can be

invoked and relied upon by the judgment of the Hon'ble Apex

Court reported in Whirlpool Corporation v. Registrar of

Trademarks, Mumbai and others 1 and Harbanslal Sahnia v.

Indian Oil Corporation Limited 2.

9. Learned counsel for petitioners/employees had contended

that Tribunal has committed grave error in not adjudicating the

OAs on merits and disposing the same on the ground that the

issue is under consideration of this Court. Learned counsel

further contended that the provisions of the Act, 1972 are

applicable to the writ petitioners and specifically referred to

Section 14 of the Act, 1972, as per which, the provisions of the

Act, override the other enactments. Therefore, the contentions of

the Railways that they are covered by the Railway Pension Rules,

1998 (8) SCC 1

2003 (2) SCC 107 ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

1993 and that provisions of the Act, 1972 are not applicable, is

untenable.

10. Learned counsel further contended that Section 2(e) of the

Act, 1972 was amended by the Amendment Act 47 of 2009 and as

per the said amendment, certain workmen were brought into

within the definition of employee and the amendment ipso facto

did not exempt employees for payment of gratuity as per the

provisions of the Act, 1972 and therefore, the contentions of the

Railways that by virtue of amendment to Section 2(e) of the Act,

1972 has no application to railways is untenable and contrary to

Section 2(e) as well as Section 14 of the Act, 1972.

11. Learned counsel further contended that the employees

have obtained information under the Right to Information Act,

whether the railways are exempted from the provisions of the

Act, 1972 and as per the information provided by the Ministry of

Labour and Employment, no exemption was extended to the

Railways. Therefore, the contention of the Railways that they

have obtained exemption under Section 5 of the Act is also

untenable and contrary to record. Learned counsel further ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

contended that as per Section 5(2), establishment applied for

exemption of provisions of the Act, 1972. However, in the present

case, no such exemption has been granted by the Central

Government. Therefore, the contentions of the railways are

factually incorrect.

12. Learned counsel relied upon the decision of the Hon'ble

Apex Court in Allahabad Bank v. All India Allahabad Bank

Retired Employees Association 3, wherein the Hon'ble Apex

Court at paragraph14 held that ''a plain reading of the provisions

referred to hereinabove makes it abundantly clear that there is no escape

from payment of gratuity under the provisions of the Act unless the

establishment is granted exemption from the operation of the provisions

of the Act by the appropriate Government''.

13. Learned counsel also relied upon the judgment of the

Hon'ble Apex Court in MCD v. Dharam Prakash Sharma 4,

wherein the Hon'ble Apex Court held that "the mere fact that

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

(2010) 2 SCC 44

(1998) 7 SCC 221 ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

view of the overriding provisions contained in Section 14 of the

Payment of Gratuity Act, the provision for gratuity under the Pension

Rules will have no effect...."

14. Before going into merits of the case, it is appropriate to

refer to amendment to Section 2(e), Sections 5 (1) & (2) and 14 of

the Act, 1972, which read as under:

"Section 2 (e) : 'Employee' means any person (other than an apprentice) who is employed for wages, whether the terms of 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. 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 receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act.

(2) The appropriate. Government may, by notification and subject to such conditions as may be specified in the notification, exempt any employee or class of employees employed in 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, such employee or class of employees are in receipt of gratuity or pensionary ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

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."

15. A bare reading of Section 5(1)&(2) of the Act, 1972

mandates that any establishment can apply for exemption from

the operation of the provisions of the Act, 1972 and on

permission and approval by the Central Government, the

institution can be exempted from the provisions of the Act. It is

not the case of Railways that it had obtained permission under

Section 5 (1) & (2) of the Act, 1972 nor any material placed on

record.

16. It is relevant to refer to Section 14 of the Act, as per which,

gratuity payable to an employee under any other rules or

enactment shall not be less than the gratuity payable under the

Act, 1972. In view of non-absente clause under Section 14 of the

Act, 1972, provisions of the Act, 1972 have override and effect of

any other enactment or rules. Therefore, unless pension rules or ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

enactment in any establishment are more beneficial than the Act,

1972, the same cannot be made applicable.

17. In the present case, specific case of the employees is that

under the Rules, 1993, less gratuity is being paid than the gratuity

payable under the Act, 1972. This issue was considered by the

Hon'ble Apex in Allahabad Bank (3 supra), wherein the Hon'ble

Apex Court held that unless the establishment is granted

exemption from the operation of the provisions of the Act, 1972,

the institution cannot escape from payment of gratuity under the

Act, 1972. It is also relevant to refer to the judgment of the

Hon'ble Apex Court Dharam Prakash Sharma (4 supra), wherein

similar view was taken by the Hon'ble Apex Court.

18. Learned senior Standing Counsel for Railways specifically

contended that in view of amendment to Section 2(e) of the Act,

1972 by way of Amendment Act 47/2009, the Act, 1972 is not

applicable to the Railways. It is also the contention of learned

Standing Counsel for Railways that all the employees of

Railways are governed by the Rules, 1993 and the employees are

being paid retiral benefits including gratuity, pension and all ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

other benefits under the said Rules. A perusal of the Amendment

Act 47/2009 would indicate that any 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 are not covered under the definition of employee

under Section 2(e) of the Act, 1972. Therefore, the respondents who

are employees of Railways which is Ministry of Railways, are not

covered under Section 2(e) of the Act, 1972. Therefore, there is

considerable force in the contention of the Standing Counsel for

Railways that Railways are exempted from the provisions of the

Act, 1972 and are governed by the Rules, 1993.

19. It is relevant to refer to the judgment of the Hon'ble Apex

Court in Union of India v. Manicklal Banerjee 5, wherein the

Hon'ble Apex Court held that the interpretation clause contained

in Section 2(e) of the Payment of Gratuity Act, 1972, takes out

from the purview of the said Act, a person who holds inter alia

post under the Central Government and whose terms and

conditions of service are governed by an Act or the Rules

(2006) 9 SCC 643 ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

providing for payment of gratuity. The applicant is holding a

post under Central Government and governed by Railway

Service (Pension) Rules, 1993 for payment of Death Cum

Retirement Gratuity is therefore not covered under the Payment

of Gratuity Act, 1972.

20. It is also relevant to refer to the judgment of the Hon'ble

Apex Court in Senior Superintendent of Post Offices v.

Gursewak Singh and others 6, wherein the Hon'ble Apex Court

held as under:

"9.3. Section 4 of the 1972 Act states that "Gratuity shall be payable to an employee". The term "employee" is defined by Section 2(e) of the 1972 Act, as under:

"2. Definitions.--In this Act unless the context otherwise requires,-- ....

(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of 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;"

(emphasis supplied)

Section 2(e) of the 1972 Act, however specifically excludes persons who are governed by any Act, or Rules providing for payment of gratuity.

(2019) 15 SCC 292 ASK,J & LNA,J W.A.NOs.1130 of 2016 & batch.

9.4. Section 2(e) of the 1972 Act excludes persons who hold a post with the Central or State Government and are governed by any other Act or rules providing for payment of gratuity. Gramin Dak Sewaks are engaged as extra-departmental agents, a post governed by the 2011 Rules. [Supt. of Post Offices v. P.K. Rajamma, (1977) 3 SCC 94 : 1977 SCC (L&S) 374. See also Union of India v. Kameshwar Prasad, (1997) 11 SCC 650 : 1998 SCC (L&S) 447] These Rules have a separate provision for payment of gratuity to the extra-departmental agents. A Gramin Dak Sewak is not an "employee" under the 1972 Act. The first issue is answered accordingly."

21. In view of the ratio laid down by the Hon'ble Apex Court,

employees of Railways are not covered under the definition of

employee under Section 2(e) of the Act, 1972 after amendment

and thus, they are exempted from the provisions of the Act, 1972.

Therefore, in view of amendment to Section 2(e) of the Act, 1972,

the respondents are not covered under the Act, 1972, but are

covered by the Railway Service (Pension) Rules, 1993.

22. Since the employees of Railways are exempted from the

provisions of the Act, 1972 in view of amendment w.e.f.

03.04.1977 (Amendment Act 47/2009), the Controlling Authority

under the Act, 1972 has no jurisdiction to entertain the

application filed by the employees. In the present case, the