EVEN IF PENSION PAID GRATUITY IS PAYABLE-JUSTICE K CHANDRU

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 08.02.2010

CORAM

THE HONOURABLE MR.JUSTICE K.CHANDRU

W.P.NO.21865 OF 2000
and W.M.P.NO.31690 OF 2000


The Coimbatore City Municipal Corporation
Coimbatore.
Rep. by its Commissioner .. Petitioner

Versus

1.The Joint Commissioner of Labour /
The Appellate Authority under the
Payment of Gratuity Act
Coimbatore 18.

2.The Assistant Commissioner of Labour /
The Controlling Authority under the
Payment of Gratuity Act
Coimbatore 18.

3.Tmt.Lakshmi .. Respondents


PRAYER : Writ petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari calling for the records of the first respondent pertaining to his proceedings in AGA Case No.37/98 and quash the order dated 12.07.1999.


For Petitioner : Mr.R.Sivakumar
For Respondents 1&2 : Mrs.C.K.Vishnu Priya
Additional Government Pleader
For Respondent 3 : Mr.P.K.Rajagopal


O R D E R

Heard both sides.

2.The petitioner is the Coimbatore City Municipal Corporation. They have filed the present writ petition seeking to challenge the order of the first respondent in AGA Case No.37/98 dated 12.07.1999.

3.The writ petition was admitted on 02.01.2001. Pending the writ petition, this Court did not grant any interim order and only notice was ordered on the stay application.

4.The brief facts leading to this case is as follows:-

a) The third respondent filed the Gratuity Application before the second respondent Controlling Authority. It was her case that her husband late.Palani, who was employed as a Sweeper in the petitioner Corporation from 19.12.1953, after put in 35 years of service, retired on 30.06.1988 on reaching the age of superannuation. He died on 02.01.1994. His last drawn salary was Rs.1,600/- per month.

b) The third respondent claimed full gratuity namely a sum of Rs.32,307/- as well as interest to the extent of Rs.29,076/-. The said application was taken on file as G.A.No.128/97.

c) The petitioner Corporation filed a counter statement dated 12.06.1998. It was contended that at the time of retirement, the third respondent's husband was paid Death-cum-Retirement Gratuity (DCRG) to the tune of Rs.11,148/- and no objection was raised by her. It was also stated that the Payment of Gratuity Act, 1972, will not apply to the petitioner's Corporation.

d) The Controlling Authority, by his order dated 10.08.1998 directed the petitioner Corporation to pay a sum of Rs.21,159/- to the third respondent. While ordering gratuity, he had withheld the amount of DCRG which has already been paid.
e) Therefore, the petitioner Corporation was directed to pay only Rs.21,159/- and not Rs.32,307/- as claimed by the third respondent.

f) Aggrieved by the non-payment of interest and the adjustment of DCRG, the third respondent filed an appeal. The said appeal was taken on file by the first respondent appellate authority as A.G.A.No.37/98.

g) On notice from the first respondent appellate authority, the petitioner Corporation filed a counter statement dated 30.03.1998.

h) The appellate authority, on a consideration of all the facts, held that the Payment of Gratuity Act will apply to the petitioner Corporation inasmuch as Section 14 of the Payment of Gratuity Act will override other enactments in view of the non-obstante clause found therein. Any amount withheld payable on account of the Act will be illegal and contrary to the provisions of the Act. It was also held that only because the petitioner Corporation did not pay gratuity, the third respondent had approached the authority and that if the gratuity amount was not paid on the accrued dated, then the worker is entitled to 10% interest on the amount of gratuity so withheld. Therefore, the petitioner Corporation was directed to pay 10% interest and also to pay the gratuity as per the provisions of the Act.

5.Mr.R.Sivakumar, learned counsel for the petitioner Corporation contended that inasmuch as the DCRG has already been paid, the third respondent cannot seek further gratuity and the petitioner Corporation is entitled to deduct the amount, which has already been paid.

6.In this context he relied upon the judgment of the Supreme Court in MUNICIPAL CORPORATION OF DELHI VS. DHARAM PRAKASH SHARMA & ANOTHER reported in 1998 (II) LLJ 625 = 1998 (7) SCC 221. Reliance was placed upon the following passage found in para 2 of the judgment.

"2...... 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 Section 14 of the Payment of Gratuity Act, the provision for gratuity under Pension Rules will have no effect. Possibly for this reason, Section 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 Section 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 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 Pension Rules."
(Emphasis added)

7.He also placed reliance upon the judgment of Gujarat High Court in RAJKOT MUNICIPAL CORPORATION VS. ANIRUDH FULSHANKAR SHUKLA reported in 1999 (II) LLJ 830. In that case, the Gujarat High Court, after referring to the earlier judgment of the Supreme Court, and it was held in para 6 as follows:

"6......No employee, therefore, can have a right to benefit both, under the Act and also under the pension scheme. It is, therefore, clarified that the petitioner Corporation shall be at liberty to adjust the amount of gratuity and pension paid to the concerned respondents under the pension scheme against the amount of gratuity which is payable under the impugned order. The Corporation shall also be at liberty to discontinue the payment of monthly pension to the concerned respondents."
(Emphasis added)

8.The decision of the Supreme Court in MUNICIPAL CORPORATION OF DELHI has subsequently been considered in a recent decision of the Supreme Court in 2009 AIR SCW 7667 (ALLAHABAD BANK AND ANOTHER VS. ALL INDIA ALLAHABAD BANK RETIRED EMPLOYEES' ASSOCIATION). The relevant passages from the said judgment is dealt with elsewhere in this order. In the same case, the Supreme Court has also held that unless there are exemption under the Gratuity Act, there is no power vested with anyone including the Court (Except the Government) under Section 5 of the Gratuity Act. Hence, the decision of the Delhi High Court cited by the petitioner is no longer good law.
9.On the question of interest, the counsel for the petitioner Corporation contended that since the Corporation has discharged its liability in paying DCRG, the question of delayed payment may not arise.

10.The third respondent has filed a counter affidavit dated 26.01.2001. It is stated that the order of the appellate authority does not suffer from any infirmities and the third respondent was not guilt of any delay. In respect of delay, this Court in K.P.BACKIASAMY VS. APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 AND REGIONAL LABOUR COMMISSIONER (CENTRAL), CHENNAI AND OTHERS reported in 2008 (2) LLN 246, in paragraph 8, held as follows:

"8.In the present case, when the workman sent a notice in Form I under Rule 10(1), there is no reply from the employer and they have also not settled the gratuity within the due date. While for filing an appeal, S.7(7) itself prescribes a time-limit, for presenting an application before the controlling authority, under the Rule, no delegation has been given for the State to make the rule relating to limitation. In any event, the delay in filing the application is not unduly long. On the contrary, as held by the Patna High Court in its decision reported in Mineral Area Development Authority V. State of Bihar and others [1998 (3) L.L.N. 484], the scheme of the Act must be kept in mind and it is only then, the application will have to be decided. Similar view was also expressed by the Allahabad High Court in its decision reported in Rajendra Deva V. Additional Labour Commissioner (Accounts) Kanpur cum - Appellate Authority, and another [1999(3) L.L.N. 62]........"

11.In respect of the interest calculation, it was stated that under Section 8 of the Payment of Gratuity Act, the amount of gratuity can be recovered together with compound interest at the rate specified by the Central Government and the said amount can be collected as an arrear of Land Revenue. Therefore, there is no gain in saying that the third respondent is not entitled to get any interest.

12.On the question of double payment, the Supreme Court in KHATHEEJA BAI VS. THE SUPERINTENDING ENGINEER AND OTHERS reported in 1986 (I) LLJ 314, has held as follows in paras 7 and 8(2).

"7.Dr.Chitaley invited our attention to S.14 the Payment of Gratuity Act, 1972 which provides:
"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 an instrument or contact having effect by virtue of any enactment other than this Act.

He argued that the provision for Special Contribution under Regulation 37 was inconsistent with the provisions of the Payment of Gratuity Act and therefore, the latter should prevail to the exclusion for the former. This argument is dependant on the assumption that the Special Contribution under Regulation 37 is something as the gratuity contemplated by the Payment of Gratuity Act. We have held that it is not and the argument, therefore, fails.
8.....
In the result we direct the respondent Board to pay to the petitioner the whole of the Special Contribution under Regulation 37 which was payable to her husband and the balance of the gratuity payable under the Payment of Gratuity Act, part of which we are told has been paid leaving the sum of Rs.3167/- unpaid. These amounts should be paid to the petitioner with interest at 15% annum from the date on which the amount fell due. The respondent Board should also pay a sum of Rs.2500/- to the petitioner towards compensatory costs. We must add that the case had left us with the feeling of uneasiness and distress at the plight of helpless persons like the petitioner whose repeated representations to those in authority were left uncared for so long despite frequent pretentions of social justice."

Very recently, the Supreme Court vide its decision in ALLAHABAD BANK AND ANOTHER VS. ALL INDIA ALLAHABAD BANK RETIRED EMPLOYEES' ASSOCIATION reported in 2009 AIR SCW 7667 dealt with more or less a similar issue. The following passages found in paragraphs 14, 16, 21 and 23 may be usefully extracted below:
"14.Gratuity payable to an employee on the termination of his employment after rendering continuous service for not less than 5 years and on superannuation or retirement or resignation etc. being a statutory right cannot be taken away except in accordance with the provisions of the Act whereunder an exemption from such payment may be granted only by the appropriate Government under Section 5 of the Act which itself is a conditional power. No exemption could be granted by any Government unless it is established that the employees are in receipt of gratuity or pension benefits which are more favourable than the benefits conferred under the Act.

16.In our considered opinion pensionary benefits or the retirement benefits as the case may be whether governed by a Scheme or Rules may be a package consisting of payment of pension and as well as gratuity. Pensionary benefits may include payment of pension as well as gratuity. One does not exclude the other. Only in cases where the gratuity component in such pension schemes is in better terms in comparison to that of what an employee may get under the Payment of Gratuity Act the Government may grant an exemption and relieve the employer from the statutory obligation of payment of gratuity.

21.................The appellant being an establishment is under the statutory obligation to pay gratuity as provided for under Section 4 of the Act which is required to be read along with Section 14 of the Act which says that the provisions of the Act shall have effect notwithstanding anything inconsistent therein contained in any enactment or in any instrument or contract having effect by virtue of any enactment than this Act. The provisions of the Act prevail over all other enactment or instrument or contract so far as the payment of gratuity is concerned. The right to receive gratuity under the provisions of the Act cannot be defeated by any instrument or contract.

23.There is no material placed before us that the employees while opting for the pension scheme at the time of their superannuation/retirement either expressly or impliedly waived their statutory right to claim payment of gratuity under the provisions of the Act.............."

13.So long as the petitioner Corporation had not got any exemption under the provisions under Section 5(3), they cannot claim that the DCRG is a substitute for gratuity under the Payment of Gratuity Act or after getting the DCRG he is disentitled to receive gratuity under the Act. Further, as held by the Supreme Court, Section 14 has an overriding effect and therefore, the order of the appellate authority does not suffer from any infirmity.

14.In the light of the above, the writ petition stands dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petition is closed.

08.02.2010
Index : Yes
Internet : Yes
TK


To

1.The Joint Commissioner of Labour /
The Appellate Authority under the
Payment of Gratuity Act
Coimbatore 18.

2.The Assistant Commissioner of Labour /
The Controlling Authority under the
Payment of Gratuity Act
Coimbatore 18.



K.CHANDRU, J.

TK
















PRE-DELIVERY ORDER MADE IN
W.P.NO.21865 of 2000