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IN THE HIGH COURT OF GAUHATI, ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
Achintya Malla Bujor Barua, J.
Bhabendra Nath Sarma S/o Lt. Mahendra Nath Sarma And Ors. – Petitioners
Versus
The State of Assam Deptt. Of Public Enterprises Through The Commissioner And Secretary And Ors. – Respondents
WP(C)/3697 of 2020
Decided On : 18-04-2022
Payment of Gratuity Act 1972 - Section 2(e), 4(2), 5(1), 7(4), 14 - Assam Shops and Establishments Act, 1971 - Section 2(8) - Revision of Pay (RoP) Rules, 2017 - Payment of gratuity to an employee - All petitioners herein served as Staff Officers, Assistant Managers in respondent Assam Financial Corporation and had retired from service upon attaining age of superannuation on different dates during years 2018, 2019 and 2020 - By impugned communications, petitioners were informed by respondents in AFC that death-cum-retirement gratuity they would be entitled upon their superannuation from service would be limited to Rs. 7,00,000/- while allowing revision of pay scale as per Revision of Pay (RoP) Rules, 2017 - Petitioners contend that payment of death-cum-retirement gratuity benefit is governed by Payment of Gratuity Act 1972 (in short Act of 1972) as amended from time to time and therefore, their entitlement for gratuity benefit would be as provided under Act of 1972 - Whether payment of gratuity to retired petitioners would be governed as per provisions of Act of 1972 or it would be governed by aforesaid two Regulations namely Regulation of 1964 and Regulation of 2007 framed by AFC - Whether respondents in AFC would be an entity included under expression 'other establishments' as provided in long title to Act of 1972 – Para 25.
Finding of the Court :
Court remand matter back to authorities in respondent AFC to re-calculate payment of gratuity that petitioners would be entitled in facts and circumstances of their respective cases - Calculation be done within a period of fifteen days from date of receipt of a certified copy of this order and if calculation so arrived requires some further amount to be paid to petitioners, same be paid to petitioners within a period of three months thereafter - On other hand, if amount arrived at would be less than what have already been paid to petitioners, same may not be recovered -Provision would also be in conformity with provisions of Section 5(1) of Act of 1972, which provides for an exemption of any establishment from operation of provisions of Act, if in opinion of appropriate Government, employees of such establishments are in receipt of gratuity or pensionery benefits not less favourable than benefits conferred under Act - If petitioners are further aggrieved by amount that may be arrived at, petitioners may take recourse to provisions of section 7(4) of Act of 1972 - Any subsequent calculation that may be arrived at pursuant to this order would prevail over impugned communications in respect of petitioner No. 1 and other similar communications in respect of other petitioners - If upon making calculation strictly under provisions of Section 4(2) of Act of 1972 including Exception thereof, it is found that some further amounts are required to be paid, it will be open between respondent AFC and respondent LICI to settle it amongst themselves as to who will make payment.
Result : Writ petition is allowed
JUDGMENT :
Heard Mr. B Sarmah, learned counsel for the petitioners, Mr. JK Goswami, learned Additional Senior Government Advocate for the respondent No. 1 being the Department of Public Enterprises, Mr. P Naik, learned counsel for the respondent No. 2, Finance Department, Mr. G Choudhury, learned counsel for the respondents No. 3, 4 and 5 being the authorities in the Assam Financial Corporation and Mr. AN Mondal, learned counsel for the respondent No. 6 being the authorities in the Life Insurance Corporation of India.
2. All the petitioners herein served as Staff Officers, Assistant Managers in the respondent Assam Financial Corporation (in short AFC) and had retired from service upon attaining the age of superannuation on different dates during the years 2018, 2019 and 2020. By the impugned communications, the petitioners were informed by the respondents in the AFC that the death-cum-retirement gratuity they would be entitled upon their superannuation from service would be limited to Rs. 7,00,000/-while allowing the revision of pay scale as per the Revision of Pay (RoP) Rules, 2017. The petitioners contend that the payment of death-cum-retirement gratuity benefit is governed by the Payment of Gratuity Act 1972 (in short Act of 1972) as amended from time to time and therefore, their entitlement for the gratuity benefit would be as provided under the Act of 1972.
3. The respondents in the AFC on the other hand relies upon the Assam Financial Corporation (Payment of Gratuity of Employees) Regulation, 1964 (in short Regulation of 1964) as well as the Assam Financial Corporation (Amendment) Staffs Regulation 2007 (in short Regulation of 2007). As per the respondents in the AFC in paragraph 35 of their affidavit in opposition, the stand taken is that the last amendment to the Staff Regulation was made in the year 2007, wherein the maximum gratuity payable was fixed at Rs. 7,00,000/-. Accordingly, it is the stand that the entitlement of the petitioners would be a maximum of Rs. 7,00,000/- and not beyond that.
4. The respondents in the AFC also has an agreement with the respondent LICI for payment of gratuity to its employees upon their retirement. In view of such agreement, the LICI has also been arrayed as respondent No. 6 in this writ petition inasmuch as, under such arrangement, the amount of Rs. 7,00,000/-, which is determined to be the amount payable to the petitioners would be paid by the LICI.
5. In the aforesaid circumstance, the question for determination before this Court would be whether the payment of gratuity to the retired petitioners would be governed as per the provisions of the Act of 1972 or it would be governed by the aforesaid two Regulations namely Regulation of 1964 and Regulation of 2007 framed by the AFC.
6. In order to appreciate the contention of the respondents in the AFC, we have to understand that by referring to the aforesaid two Regulations, it is the stand of the AFC that for the purpose of payment of gratuity, they are not governed by the Act of 1972, but would be governed by their own Regulations.
7. In support of the contention of the respondents in the AFC, Mr. P Naik, learned counsel for the Finance Department refers to the provisions of Section 2(e) of the Act of 1972 to contend that the petitioners are not employees within the meaning of ‘employee’ as defined in Section 2(e) of the Act of 1972 and therefore, they would not be governed by the provisions of the Act of 1972 and on the other hand, as provided in Section 2(e) itself, they would be governed by the set of Regulations framed by the respondents in the AFC for the purpose of payment of gratuity.
8. We have heard the learned counsel for the respective parties. On the question as to whether the petitioners being retired employees of the respondents AFC would be governed by the provisions of the Act of 1972 or they would be governed by the provisions of the Regulations framed by the respondents in the AFC for the purpose of gratuity, we take note o
Point of Law : If in the opinion of the appropriate Government, the employees of such establishments are in receipt of gratuity or pensionery benefits not less favourable than the benefits conferred ....
The main legal point established in the judgment is that the entitlement to gratuity under a specific regulation and a general act was determined based on the fulfillment of conditions of eligibility....
The court emphasized the overriding effect of section 14 of the Act of 1972 and the assurance that employees should receive better terms of gratuity under sub-section 5 of section 4.
Employees of bank were found to be eligible for gratuity as per 1972 Act and, hence, they were found to be entitled to benefit of Regulation 72(1) of 2010 Regulation.
Railway employees are exempt from the Payment of Gratuity Act, 1972, as per amendments and judicial interpretations, affirming that Railway Service (Pension) Rules govern their gratuity rights.
Retirement gratuity is a statutory right under the Payment of Gratuity Act, and exemptions from the Act cannot apply retrospectively to negatively impact employees' entitlements.
The Payment of Gratuity Act, 1972 applies to local body employees, overriding inconsistent state provisions, and gratuity is a statutory right, not a charity.
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