The main legal point established in the judgment is that the Payment of Gratuity Act, 1972 applies to the respondent-Corporation and its employees, and the Act's provisions have an overriding effect over conflicting rules or regulations.

JUDGMENT :

1. By this common judgment, two writ petitions, one bearing SWP No. 1539/2003 and the other bearing SWP No. 955/2004 are proposed to be decided together. Though issues involved in these two writ petitions are different but the parties to the same are identical.

2. Vide writ petition SWP No. 1539/2003 filed by J&K Projects Construction Corporation Workers Association, challenge has been thrown to Rule 5(II) of the J&K Projects Construction Corporation Limited (hereinafter to be referred as the JKPCC) Gratuity Rules on the ground that the same is contrary to Section 4(3) of the Payment of Gratuity Act, 1972. A further direction has been sought upon the respondents to implement the provisions of Section 4(3) of Payment of Gratuity Act, 1972 and extend the benefit of the said provision with retrospective effect.

3. Vide SWP No. 955/2004, the petitioner-Association has sought a direction upon the respondents to extend the benefit of Rules 37 and 38 of the J&K Civil Services (Leaves Rules), 1979 to the employees of JKPCC Limited and to make payment of cash equivalent to leave salary to the employees.

SWP No. 1539/2003

4. As already stated in this writ petition, the petitioner-Association has challenged the vires of Rule 5(II) of the J&K Projects Construction Corporation Limited Gratuity Rules on the ground that the same is contrary to the provisions contained in section 4(3) of the Payment of Gratuity Act. It has been contended by the petitioner-Association that as per the impugned Rule, the employees of the Corporation have been held entitled to gratuity to the extent of 20 months wages or Rs. 80,000/- whichever is less. This according to the petitioner-Association runs contrary to and inconsistent with the provisions of Section 4(3) of the Payment of Gratuity Act. Since the petitioner-Association has raised an issue which is purely legal in nature, as such, it is not necessary to go the facts narrated in the writ petition.

5. The respondent-Corporation has contested the writ petition by filing a counter affidavit. In the counter affidavit, the respondent-Corporation has taken a stand that the provisions of Payment of Gratuity Act do not apply to the said Corporation, therefore, there is no question of framing of rules by the Corporation in conflict with the said Act. It has been further submitted that the enhancement in the limit relating to the payment of gratuity of the employees of the Corporation is possible only after approval of the Board of Directors.

6. I have heard learned counsel for the parties and perused the record of the case.

7. Before determining the issue as to whether Rule 5(II) of the J&KPCC Gratuity Rules runs contrary to Section 4(3) of the Payment of Gratuity Act, it has to be decided that as to whether the provisions of Payment of Gratuity Act are applicable to the respondent-Corporation.

8. The Payment of Gratuity Act, 1972 provides for a scheme for payment of gratuity to the employees engaged in certain entities. It extends to whole of India including the erstwhile State of Jammu and Kashmir except to the extent of plantations and ports. Section 1(3) of the Payment of Gratuity Act provides for application of the Act to the following entities.

“(3) It shall apply to—

(a) every factory, mine, oilfield, plantation, port and railway company;

(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.”

9. From the above, it is clear that the provisions of the Act are applicable inter alia