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2005 DIGILAW 760 (CAL)

FOOD CORPORATION OF INDIA v. APPELLATE AUTHORITY

2005-12-16

SOUMITRA SEN

body2005
SOUMITRA SEN, J. ( 1 ) THE above two writ petitions have been filed by the respective petitioner challenging an order passed by the Appellate Authority and Regional Labour Commissioner. The points of law involved in both the writ applications being identical, both the writ petitions are taken up together for hearing. ( 2 ) THE principal question involved is whether the respondent No. 3 who was an employee of the Government of West Bengal and was in deputation with the petitioner would be entitled for payment of gratuity taking into account his past service with the State of West Bengal before being absorbed in the regular service with the petitioner. ( 3 ) THE respondent No. 3 was sent on deputation by the Government of West bengal to the petitioner and worked with the petitioner from 12th December, 1966 to 30th June, 1984 and thereafter on and from 1st of July, 1984 has been permanently absorbed with the petitioner in terms of a policy circular being no. 21 of 1984. The respondent No. 3 in accordance with the said circular tendered his unconditional resignation in respect of his employment with the State of west Bengal. ( 4 ) ACCORDING to the petitioner the employees on deputation in order to be absorbed in the regular service of the petitioner, in accordance with the said circular No. 21 of 1984 had to fulfil the following conditions :"i) The State Government employees who opt for payment absorption in the service of the FCI, will be treated as direct recruit and will be subject to the terms and conditions as prescribed in the FCI Staff Regulations, 1971. ii) They will count their seniority in the post-graduate in which they are absorbed, from the date of absorption in the Corporation. iii) The post and scale of pay held by the State Government deputationists as also the corresponding post in the FCI and the scale of pay attached to the post has been indiacted in Annexure - II of the said Circular No. 21 of 1984. The employees who opt for absorption in the Corporation will be initially appointed to the corresponding post as indicated therein. iv) West Bengal State Government employees who have been on deputation in FCI for a period of at least five years as on 30. 4. 1984 will only be eligible for absorption in the service of the Corporation. The employees who opt for absorption in the Corporation will be initially appointed to the corresponding post as indicated therein. iv) West Bengal State Government employees who have been on deputation in FCI for a period of at least five years as on 30. 4. 1984 will only be eligible for absorption in the service of the Corporation. v) The deputationists who are interested for permanent absorption in the service of the FCI shall have to file option in the prescribed form before 30th april, 1984 and shall be to resign from their parent service under the State government, which were the pre-condition for absorption in FCI. vi) After absorption the FCI will not bear any liability in respect of the service rendered by them under the State Government prior to the date of permanent absorption in the service of the Corporation. " ( 5 ) IT is submitted on behalf of the petitioner that the order of absorption with the petitioner clearly mentions that the terminal benefits in respect of service rendered prior to the absorption with the petitioner will be settled by the individual concerned with the State Government. ( 6 ) IN view of the provisions contained in the said circular as mentioned above and the order of absorption it is contended on behalf of the petitioner that the respondent No. 3 was not entitled to the benefit of the past service rendered by him to the State Government for the purpose of payment of gratuity. It is further submitted that the said respondent is only entitled to for the terminal benefits for the services rendered in the petitioner-Corporation from the date of his absorption till the date of his superannuation. ( 7 ) IT is submitted on behalf of the petitioner that the Payment of Gratuity act does not have any enabling provision for reckoning the service rendered by the employee concerned with the past employer as qualifying service. ( 8 ) IT was further submitted that as per the relevant provisions of the Payment of Gratuity Act, as at the relevant time, the State Government deputationists absorbed with the petitioner, drawing wages not exceeding Rs. 1,600/- per month were not covered under the Payment of Gratuity Act. But, however, the petitioner introduced FCI Death-cum-Retirement Gratuity (DCRG) (Regulations) for the benefit of those employees who were drawing more than Rs. 1,600/- per month were not covered under the Payment of Gratuity Act. But, however, the petitioner introduced FCI Death-cum-Retirement Gratuity (DCRG) (Regulations) for the benefit of those employees who were drawing more than Rs. 1,600/- per month and those employees were not eligible for gratuity under the Payment of Gratuity act. The petitioner contends that the doputationists including the respondent no. 3 herein on the date of retirement was drawing a pay more than Rs. 1,600/-per month. Accordingly, the benefit of FCI (DCRG) Regulations was to be extended as per the provisions contained in the said regulations. ( 9 ) EXPLANATION 2 of clause 3 of DCRG Regulations of the petitioner provides as follows :"service rendered in the Government or any public or private undertaking by an employee before joining service of the Corporation may be 'declared' by the Managing Director to be deemed, in whole or in part, to be qualifying service in the Corporation provided that there was no break in service before joining in the Corporation. " ( 10 ) EXPLANATION 4 of clause 3 of the said DCRG Regulation of the petitioner which was brought effect from 10-8-1982 till 19-4-1990 was as follows :"qualifying service shall also include service rendered in the Government after completion of 18 years of age by an absorbed deputationist provided that the amount of Death-cum-Retirement Gratuity received by him, if any, from the Government in respect of the service rendered by him in the government is deposited with the Corporation immediately on receipt of such gratuity after his absorption in the Corporation. " ( 11 ) ON the basis of the above regulations, it was submitted on behalf of the petitioner that the said regulations make it clear that the petitioner-Corporation was to declare the past services qualifying service and the authority concerned was the Managing Director. Therefore, the essential conditions were not complied with by the employee concerned as no application was made to the managing Director for reckoning the past services after having deposited the gratuity amount immediately. Therefore, the essential conditions were not complied with by the employee concerned as no application was made to the managing Director for reckoning the past services after having deposited the gratuity amount immediately. ( 12 ) THE petitioner submits that until and unless the condition as mentioned above was fully satisfied, an employee who was initially on deputation from the State of West Bengal and thereafter absorbed permanently in the petitioner, could not claim to have his past service reckoned for the purpose of payment of gratuity and it is submitted that in the instant case, the said respondent No. 3 not having fulfilled the condition was not entitled to the benefit of his past service. ( 13 ) IT is submitted on behalf of the petitioner that having regard to the subsequent change of position by reason of the amendment of the Payment of gratuity Act and read with the regulations of the circular as mentioned above, if an employee sent on deputation is absorbed with the petitioner during the relevant period, and he immediately upon receipt of the gratuity amount from his past deposits the same to the petitioner-Corporation and thereafter applies to the Managing Director for grant of benefit for reckoning his past service he would be entitled to the benefit of his past service for the purpose of payment of gratuity. ( 14 ) THE amount of gratuity calculated by the petitioner was challenged by the respondent No. 3. Initially the Controlling Authority under the Payment of gratuity Act, 1972 and the Assistant Labour Commissioner (Central), Raniganj at Durgapur rejected the contention of the respondent on the ground that the gratuity amount was not deposited with the petitioner. It was observed that since the respondent No. 3 was governed by the Gratuity Rules of the State government and received gratuity for the period of service rendered with the state Government he was not to be included within the definition of an employee under the Payment of Gratuity Act for the period he had rendered service with the State Government. Against the said order of the Controlling Authority the petitioner preferred an appeal before the Appellate Authority. The said Appellate authority upheld the contention of the respondent and held that the respondent no. Against the said order of the Controlling Authority the petitioner preferred an appeal before the Appellate Authority. The said Appellate authority upheld the contention of the respondent and held that the respondent no. 3 was entitled to be treated as an employee and his past service is required to be taken into account for the purpose of payment of gratuity by the petitioner. The Appellate Authority have disagreed with the view expressed by the controlling Authority. In the present application the order of the Appellate authority is under challenge. ( 15 ) ON behalf of the respondent No. 3 it is contended that there was no break in service at the time of absorption with the petitioner. It is submitted that the absorption was made with retrospective effect after about a lapse of one year from his resignation from the service under the Government of West Bengal. It is submitted that during that period the petitioner had paid all the salary and all benefits like increment, earned leave, medical leave and sick leave standing in the credit of the respondent No. 3. It is submitted that the resignation from service of Government of West Bengal was formal in nature, only to determine the cut of date of the permanent absorption with the petitioner. ( 16 ) IT is submitted that the service of the respondent No. 3 herein was never affected in any manner by such resignation. It is submitted that the pay and other allowances which was drawn on 30th June, 1984, was given a continuous effect and in fact for all practical purposes the past service was considered to be a continuous service in the petitioner and therefore the said respondent cannot be treated as a fresh direct recruit with the petitioner but is merely a permanent absorbed employee on and from a certain date. ( 17 ) IT is further submitted that if all other benefits of the past service like earned leave, medical leave, which the said respondent No. 3 has earned, could be transferred and carried forward in the subsequent employment with the petitioner, there is no reason why the period of past service should not be taken into account for the purpose of payment of gratuity as, the facts of the case clearly indicate that there was continuity in service without any break whatsoever. ( 18 ) IT is submitted on behalf of the respondent No. 3 that the Circular No. 47 of 1996 dated 21st November, 1996, which has been annexed to the writ petition makes it clear that prior service would be treated as a qualifying service for payment of gratuity. It is further submitted that the past service was recorded in the Service Book of the said respondent No. 3 for the purpose of maintaining continuity of service and, therefore, the said period could be taken into account for payment of gratuity. ( 19 ) THE contention of the petitioner that the respondent No. 3 did not deposit the gratuity as required under the relevant regulations was categorically denied by the respondent. On the contrary, it was submitted with a great deal of emphasis that the petitioner in spite of being offered did not receive the amount of gratuity as the petitioner at that material point of time was not able to work out the procedure for receiving the amount of gratuity intended to be deposited by the deputationists-employees. ( 20 ) IT is further submitted that no formal order was passed for accepting the amount of gratuity from the deputationists-employees who were subsequently permanently absorbed by the petitioner but the amount of gratuity was entered into the Service Book of the respect employees and was to be deducted at the time of final settlement of gratuity. The relevant correspondence in this regard has been annexed to the affidavit-in-opposition filed on behalf of the respondent No. 3. ( 21 ) IT was, therefore, submitted on behalf of the said respondent No. 3 that the conduct of the petitioner clearly indicates that it was required the calculate the total amount of gratuity by taking into account the past service of the said respondent No. 3 and the service rendered with the petitioner for the purpose of calculating the total of gratuity and thereafter the petitioner was to deduct the amount paid by the Government of West Bengal and thereafter pay balance amount at the time of superannuation. ( 22 ) IT is submitted on behalf of the respondent that since there did not arise any question of deposit of the amount of gratuity, there was no corresponding obligation on the part of the said respondent to apply to the Managing Director for reckoning the past service. ( 22 ) IT is submitted on behalf of the respondent that since there did not arise any question of deposit of the amount of gratuity, there was no corresponding obligation on the part of the said respondent to apply to the Managing Director for reckoning the past service. The two conditions being read together, one having been waived and the other automatically stands waived. ( 23 ) IT appears to me that the petitioner, on the one hand, is relying upon circular No. 21 of 1984 and the respondent No. 3, on the other hand, relies upon circular No. 47 of 1996. It, therefore, appears that the Payment of Gratuity act, 1972 as well as the FCI DCRG (Regulations), 1967 were both in the operation prior to the amendment of the Gratuity Act on 24th of May, 1994. As the respondent No. 3 was drawing the wages exceeding the prescribed limit under the Payment of Gratuity Act the FCI DCRG (Regulations), 1967 were applicable as far as the respondent No. 3 was concerned prior to the amendment of the Act. After the Act was amended the said regulations became redundant and the benefit under the Payment of Gratuity Act was extended to all employees irrespective of the salary drawn by them with effect from 24th of may, 1994. ( 24 ) IT, therefore, appears to me that from the various provisions of the payment of Gratuity Act and the regulations an employee was entitled to the favourable benefits that were existing at the material point of time. Under the regulations the period of past service was to be taken into account for the purpose of payment of gratuity. In that view of the matter the Circular No. 21 of 1984 does not override and take away the favourable benefits, which an employee could have otherwise received. Under the regulations the period of past service was to be taken into account for the purpose of payment of gratuity. In that view of the matter the Circular No. 21 of 1984 does not override and take away the favourable benefits, which an employee could have otherwise received. From the impugned order it appears to me that on facts the Appellate Authority have accepted the respondent's contentions that there was no break in service and that the amount of gratuity could not be deposited with the petitioner as the management of the petitioner could not work out the procedure of receiving gratuity money from the permanently absorbed deputation and that finally the petitioner entered the said amount of gratuity in the service book mentioning therein that the amount should be deducted from admissible amount of gratuity to be paid to the said respondent no. 3 upon his superannuation. ( 25 ) THE Controlling Authority before whom the respondent No. 3 initially challenged the action of the petitioner came to a finding that the respondent no. 3 was not entitled to include the period of past service for the purpose of calculating the amount of gratuity. The main reason to come to the conclusion was that the amount of gratuity was not deposited in terms of the relevant circular. Though otherwise the Controlling Authority came to the conclusion that the favourable benefits to an employee cannot be denied. The Appellate authority before whom the respondent No. 3 preferred an appeal against the order of the Controlling Authority had clearly held that the respondent No. 3 could not deposit the amount of gratuity by reason of the management not being able to work out the appropriate procedure. After going through the impugned order and the order of the Controlling Authority it appears to me that some of the provisions of Circular No. 21 of 1984 were inconsistent and conflicting with the subsequent Circular No. 47 of 1996. Therefore, as a matter of general principle the favourable benefits which an employee received under the Payment of Gratuity Act could not be denied. Accordingly, I am of the opinion that the impugned order passed by the Appellate Authority requires no interference by this Court and the writ petition stands dismissed and all interim order stands vacated. Therefore, as a matter of general principle the favourable benefits which an employee received under the Payment of Gratuity Act could not be denied. Accordingly, I am of the opinion that the impugned order passed by the Appellate Authority requires no interference by this Court and the writ petition stands dismissed and all interim order stands vacated. The petitioner is directed to pay the gratuity ir accordance with the directions contained in the impugned order within a period of 6 weeks from the date of communication of this order. ( 26 ) IN view of the judgment and order passed in W. P. No. 2710 (W) of 2004 the petition being W. P. No. 1583 (W) of 2004 also stands dismissed. The petitioner is directed to pay the respondent No. 3 in terms of the direction of the appellate Authority contained in the impugned order within a period of 6 weeks from the date of communication of this order upon concerned authority. Later: ( 27 ) IT is submitted that the amount of gratuity is lying deposited with the registrar General, Appellate Side. Accordingly, the said amount be released in favour of the concerned respondent No. 3 within a period of four weeks from date. Writ petitions dismissed.