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2011 DIGILAW 231 (GUJ)

Bank of Baroda v. Navnit Sukhlal Shah

2011-03-18

R.M.CHHAYA

body2011
JUDGMENT : R.M. Chhaya, J. By way of this petition under Articles 226 & 227 of the Constitution of India, the petitioner bank has inter alia challenged the order passed by the Controlling Authority under the Payment of Gratuity Act,1972 and Assistant Labour Commissioner (Central), Adipur, dated 19.2.2002 and also the order passed by the Appellate Authority in Appeal filed by the bank dated 26.9.2002. 2. Heard Mr. Darshan Parikh, learned Counsel for the petitioner and Mr. J.H. Kapadia, learned Counsel for the respondent. Mr. Darshan Parikh, at the outset, submitted that the amount, as calculated by the bank as per the Order-in -Original dated 19.2.2002, has been deposited before the Appellate Authority at the time of filing the appeal, to which, learned Advocate Mr. Kapadia has consented. 3. Learned Counsel for the petitioner has raised the following contentions : (i) That the very application filed by the respondent under the Provisions of Payment of Gratuity Act, 1972 (hereinafter referred to as 'the Act' for the sake of brevity), does not disclose the correct facts. Mr. Parikh has further pointed out that wrong statements have been made by the respondent as regards superannuation and even the date of termination is not correctly mentioned. (ii) That both the authorities have not considered the fact that as the date of removal of the respondent was 7.12.1990, the pre-amended section 2(e) would apply and, therefore, it was further submitted that the direction given by the First Authority in Order-in-Original is dehors the provisions of the Act and, therefore, it is submitted that it is an error apparent on the face of the record. (iii) That the authorities have not considered the aspect of gross delay of 11 years in filing the application and, therefore, the order of grant of interest to the respondent is erroneous. (iv) That the Appellate Authority has wrongly passed the order as regards eligibility of the respondent also under Regulation 46 of the Bank of Baroda. (v) That the authorities have not considered the fact that huge financial loss has occurred to the petitioner bank and, therefore, the authorities have passed an order dehors the provisions of the Act and, beyond the evidence on record and has thereby committed an error apparent on the face of it and, hence, submitted that both the orders deserve to be quashed and set aside and the petition deserves to be allowed. Mr. Mr. Parikh has further submitted that the Appellate Authority, under the Act, had no jurisdiction to decide the application taking into consideration the provisions of The Bank of Baroda Gratuity Funds Regulations and, therefore, the order passed by the Appellate Authority is bad in law. 4. Mr. Parikh has relied upon the judgment of the Apex Court in the case of Management of Goodyear India Limited v. K.G. Devessar, reported in (1985) 4 SCC 45 and the judgment of this Court reported in the case of Gujarat State Export Corporation Ltd. v. Madhusudan L. Khandwala & Another, reported in 2004(1) GLH 158 . Learned Counsel for the petitioner Mr. Parikh further submitted that both the authorities under the Act have misread the provisions of the Act and the Controlling Authority has no jurisdiction to adjudicate the claim of the respondent as the same was not flowing from the provisions of the Act. It was further contended by Mr. Parikh that taking into consideration the date of removal which is 7.12.1990, the respondent would only be entitled to payment of gratuity for the period during which he satisfied the definition of 'employee' under section 2(e) of the Act. 4.1 Mr. Parikh has further submitted that as the respondent was subjected to departmental inquiry as well as criminal proceedings, he is not entitled to payment of gratuity. Mr. Parikh further submitted that both the orders impugned in the petition are bad and illegal and the same deserve to be quashed. 5. Mr. Kapadia has supported the orders passed by the authorities. Mr. Kapadia submitted that the Payment of Gratuity Act is a Central Act and the same would prevail over Bank's regulations. Mr. Kapadia further submitted that as provided under section 7 of the Act, the respondent would be eligible for the Payment of Gratuity Act within 30 days from the date it has become payable to the respondent. He, therefore, submitted that the Controlling Authority as well as the Appellate Authority have committed no error in passing the orders impugned in this petition. Mr. He, therefore, submitted that the Controlling Authority as well as the Appellate Authority have committed no error in passing the orders impugned in this petition. Mr. Kapadia has relied upon the judgment of this Court in case of Gujarat Industrial Development Corporation v. Pranjivan H. Chavda, reported in 2010(1)GCD 198 and has further submitted that the respondent, being an employee of the petitioner bank, is entitled to amount of gratuity as ordered by the Controlling Authority and confirmed by the Appellate Authority and, therefore, he submitted that the petition is devoid of any merits and the same deserves to be rejected. 6. To appreciate the controversy involved in the present petition, it would be appropriate to mention the provision of section 2(e) of the Act which defines the word 'employee' right from 1972. As per the original Act, section 2(e) stood as under : "(e) 'employee' means any person (other than an apprentice) employed on wages, not exceeding one thousand rupees per mensem, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, but does not include any such person who is employed in a managerial or administrative capacity, or who holds a civil post under the Central Government or a State Government, or who is subject to the Air Force Act, 1950, the Army Act, 1950 or the Navy Act, 1957". Explanation.- In the case of any employee, who, having been employed for a period of not less than five years on wages not exceeding/one thousand rupees per mensem, is employed at any time thereafter on wages exceeding one thousand rupees per mensem, gratuity, in respect of the period during which such employee was employed on wages not exceeding the one thousand rupees per mensem, shall be determined on the basis of the wages received by him during that period; Thereafter, section 2(e) came to be amended by Act No. 25 of 1984 and as per the said amendment, section 2(e) reads as under : "(e) 'employee' means any person (other than an apprentice) employed on wages, not exceeding one thousand and six hundred rupees per mensem, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include 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". Explanation.- In the case of an employee, who, having been employed for a period of not less than five years on wages not exceeding one thousand and six hundred rupees, is employed at any time thereafter on wages exceeding one thousand and six hundred rupees, gratuity in respect of the period during which such employee was employed on wages not exceeding one thousand and six hundred rupees, shall be determined on the basis of the wages received by him during that period. Again by Amendment Act (Act No.22 of 1987) section 2(e) was amended as under : "(e) 'employee' means any person (other than an apprentice) employed on wages, not exceeding two thousand and five hundred rupees per mensem, or such higher amount as the Central Government may, having regard to the general level of wages, by notification, specify any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include 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". Explanation.- In the case of an employee, who, having been employed for a period of not less than five years on wages not exceeding the amount for the time being specified by or under clause (e) is employed at any time thereafter on wages exceeding that amount, gratuity in respect of the period during which such employee was employed on wages not exceeding that amount, shall be determined on the basis of the wages received by him during that period. Again by Amendment Act (Act No. 34 of 1994) section 2(e) was amended with effect from 24.5.1994 whereby the explanation came to be omitted. Again by Act No. 47 of 2009 section 2(e) came to be substituted with effect from 3.4.1997 and the same reads as under : "(e) 'employee' means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, 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". 7. 7. From the above provision, it is clear that section 2(e) of the Act at the relevant time provided for an outer limit of its application and, therefore, in order to be eligible to the payment of gratuity, the employee has to satisfy to the said condition. The employee, would be entitled to gratuity for the period his wages were within that limit. The Hon'ble Supreme Court in the case of Management of Goodyear India Limited (supra) has observed as under : "..... The date of coming into force of the Act has relevance to the date on which gratuity becomes payable. Gratuity becomes payable on the termination of employment and therefore, in order to be eligible to payment of gratuity, the termination of employment whether it be due to superannuation or retirement or resignation or death or disablement, has to be after the date of coming into force of the Act. Once that condition is satisfied, the further question would be regarding the amount of gratuity payable. Gratuity will have to be paid to all those persons whose employment came to an end after the coming into force of the Act for that period during which he came within the definition of an employee within the meaning of section 2(e) of the Payment of Gratuity Act. To hold otherwise may render a whole class of persons who all their lives got wages of less than Rs.1000 per month, but on the eve of their retirement started getting wages of Rs.1000 per month. Surely that could not have been the intention of Parliament. We think the only reasonable way of construing section 4 in the light of the definition of employee in section 2(e) is to hold that a person whose services are terminated for any of the reasons mentioned in section 4(1), after the coming into force of the Act is entitled to the payment of gratuity, if he has rendered continuous service for not less than five years, for that period during which he satisfied the definition of employee under section 2(e) of the Act." 8. In the instant case, the respondent employee was terminated on 7.12.1990 and therefore, the respondent would be entitled to amount of gratuity as per section 2(e) of the Act for the period during which he satisfied the definition of an 'employee' and therefore, the subsequent amendment in 1994 whereby the provisions as regards amount of wages as aforesaid would not be applicable to the respondent since he was terminated on 7.12.1990. 9. It is also worthwhile to note that the respondent filed the application under the provisions of the Act and no reference is made to the claim of the petitioner bank i.e. Bank of Baroda. The Controlling Authority while passing the impugned order dated 19.2.2002 has also considered the provisions of the Act. The Appellate Authority, therefore, had no power to adjudicate on the basis of the said private scheme of the Bank. The Appellate Authority could have directed the petitioner Bank to grant benefit as per provisions of the Act. This Hon'ble Court in the case of Gujarat State Export Corporation Ltd. v. Madhusudan L. Khandwala & Another (supra) has observed as under : "12. xxx xxx xxx In considered opinion of this Court, the benefits, to the extent the same are flowing from the provisions of the Gratuity Act, the Authority under the Act has power to adjudicate for the same. But if benefits sought for are arising from a settlement or private scheme, the same cannot be agitated before the Authority under the Act." From the above, therefore, it is clear that the Appellate Authority had no jurisdiction to consider the respondent eligibility for gratuity under Regulation 46 of the Bank of Baroda Gratuity Fund Regulations and only the benefits flowing from the provisions of the Gratuity Act could have been adjudicated. 10. Section 7(2) of the Act clearly provides that as soon as gratuity becomes payable, even in case where the employee does not apply for the gratuity determined the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the Controlling Authority specifying amount of gratuity so determined. It also provides that such amount of gratuity payable should be paid within thirty days from the date it becomes payable. It also provides that such amount of gratuity payable should be paid within thirty days from the date it becomes payable. It also provides that if the same is not paid within the time specified under sub-section (3) thereof the employee is entitled to simple interest as provided therein. In the instant case, we find that no exercise has been undertaken by the petitioner Bank as contemplated under section 7 of the Act nor any permission is obtained in writing from the Controlling Authority for the delayed payment from the petitioner Bank nor there exists any dispute as provided under subsection(4). 11. From the aforesaid discussions, it transpires that the respondent was terminated on 7.12.1990 and, therefore, the respondent would be entitled to the amount of gratuity till he satisfies the limit of Rs. 2500/- as per section 2(e) stood on the date of termination i.e. 7.12.1990. Therefore, the Controlling Authority has committed an error in coming to the conclusion that the respondent would be entitled to claim gratuity on the salary last drawn on 13.3.1987 and the Controlling Authority has, therefore, overlooked the provisions of section 2(e) as it stood on 7.12.1990. The Appellate Authority, while confirming the said order, has exercised the jurisdiction beyond the provisions of the Act and it had no authority to decide eligibility of the respondent for gratuity under Regulation 46 of Bank of Baroda Gratuity Fund Regulations and, therefore, the said finding is erroneous. There is no force in the contention raised by Mr. Parikh that because of departmental proceedings as well as criminal proceedings against the respondent employee, the respondent employee is not entitled to the benefit of gratuity. Section 4(6) of the Act provides for forfeiture of amount of gratuity payable to an employee. However, no such order of forfeiture is passed by the petitioner Bank and, therefore, the said contention raised by Mr. Parikh is without any substance. As far as the applicability of section 7 of the Act, both the authorities have correctly held that the employee is entitled to interest as contemplated under sub-section 3-A to section 7. However, no such order of forfeiture is passed by the petitioner Bank and, therefore, the said contention raised by Mr. Parikh is without any substance. As far as the applicability of section 7 of the Act, both the authorities have correctly held that the employee is entitled to interest as contemplated under sub-section 3-A to section 7. From the record, it transpires that the petitioner bank as employer did not undertake exercise as contemplated under section 7(2) of the Act within the time prescribed and the respondent employee has not been paid gratuity which he was entitled to under prevailing law, and therefore, the respondent employee would be entitled to interest @ 10% as contemplated under section 7(3)(a) of the Act. 12. In the result, the petition is partly allowed. The judgment and order of the Controlling Authority as confirmed by the Appellate Authority are hereby quashed and set aside. The petitioner Bank is directed to pay the amount of gratuity till the date the respondent satisfies the requirement of section 2(e) of the Act as it stood on 7.12.1990 with interest @ 10% and such exercise should be undertaken by the petitioner Bank as early as possible preferably within a period of three months from the date of the receipt of the copy of this order. 13. Rule made absolute to the aforesaid extent only with no order as to costs. Petition partly allowed.