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2019 DIGILAW 1061 (GAU)

Assam Gramin Vikash Bank v. Union of India

2019-09-18

UJJAL BHUYAN

body2019
JUDGMENT : Ujjal Bhuyan, J. This order will dispose of WP(C) Nos.3086, 4802, 4806, 4813, 5384, 5387, 5389, 5392, 5816, 5901, 6068, 6071, 6085, 6086, 6087, 6089, 6090, 6097, 6170, 6846, 6851 and 1930/2018. 2. Heard Mr. A.D. Choudhury, learned counsel for the petitioners; Ms. A. Gayan and Mr. S.K. Medhi, learned Central Government Counsel for respondent Nos.1 to 4; and Ms. D. Borgohain and Ms. J. Purkayastha, learned counsel for the private respondents in all the cases. 3. In all the writ petitions, Assam Gramin Vikash Bank and its Chairman are the petitioners. 4. By filing this petition under Article 226 of the Constitution of India, they have challenged the impugned orders passed by the Controlling Authority under Section 3 of the Payment of Gratuity Act, 1972, who is also the Assistant Labour Commissioner (Central), Government of India, Ministry of Labour and Employment, Silchar whereby the employer i.e., Assam Gramin Vikash Bank was directed to pay additional payment with simple interest as part of the total gratuity in addition to Rs.10 lakhs already paid to the retired employees (private respondents in this bunch of writ petitions). 5. Though facts are not in dispute and are more or less identical in all the cases, for better appreciation, it would be apposite to take up the facts of WP(C) No.3086/2018 which may be taken up as the lead case. 6. Petitioner No.1 is a Regional Rural Bank set up in the State of Assam under the Regional Rural Banks Act, 1976 by amalgamation of four existing gramin banks in the State. Respondent No.5 Sri Jnanendra Purkayastha was an employee under the Assam Gramin Vikash Bank (Bank). On attaining the age of superannuation, he retired from service of the Bank on 31.12.2014. On his superannuation, he was paid an amount of Rs.10 lakhs as gratuity under the Payment of Gratuity Act, 1972. Contending that though he was paid Rs.10 lakhs as gratuity, he was entitled to payment of higher amount as gratuity under the Assam Gramin Vikash Bank (Officers and Employees) Service Regulations, 2010 (2010 Regulations), as amended. According to respondent No.5, he was entitled to a total amount of Rs.21,95,612.47 as gratuity and after deduction of the amount already paid to him, he was entitled to an additional amount of Rs.11,95,612.47. On receipt of such application, the same was registered as Application No.3/17 before the Controlling Authority. According to respondent No.5, he was entitled to a total amount of Rs.21,95,612.47 as gratuity and after deduction of the amount already paid to him, he was entitled to an additional amount of Rs.11,95,612.47. On receipt of such application, the same was registered as Application No.3/17 before the Controlling Authority. Claim of respondent No.5 was contested by the petitioners by submitting their response. On consideration, competent authority framed five issues for consideration; out of which this litigation is concerned with two. One of the issues framed was whether the Controlling Authority under the Payment of Gratuity Act, 1972 had the jurisdiction to entertain the application by invoking the provisions of Section 4(5) of the Payment of Gratuity Act, 1972. The other issue which is relevant was whether the applicant was justified in claiming basic pay plus dearness allowance (DA) plus FPP for the purpose of calculation of gratuity or whether the claim of the employer about "last wages drawn" would mean simple basic pay sans DA and FPP. By the order dated 19.01.2018, Controlling Authority answered both the above two issues in favour of respondent No.5 whereafter an amount of Rs.15,29,439.00 was quantified to be the total gratuity which was required to be paid by the petitioners to respondent No.5. After deducting Rs.10 lakhs already paid, the amount that was required to be paid by the petitioners to respondent No.5 was Rs.5,29,439.00 and it was directed that the said amount would carry simple interest at the rate of 10% per annum w.e.f. 07.03.2015 till the date of final payment. 7. Aggrieved by the aforesaid order, present writ petition has been filed. 8. Similar challenge has been made in all the other connected writ petitions. 9. This Court by order dated 18.05.2018 had issued notice and passed an interim order to the effect that since an amount of Rs.10 lakhs was already paid as gratuity to the retired officer i.e., respondent No.5, the direction for additional payment was kept in abeyance. 10. Respondent No.5 has filed an affidavit supporting the order passed by the Controlling Authority. In addition, it is contended that the writ petition is not maintainable inasmuch as under Section 7(7) of the Payment of Gratuity Act, 1972 (for short, Gratuity Act hereafter), there is a provision for appeal before the appropriate Government. 10. Respondent No.5 has filed an affidavit supporting the order passed by the Controlling Authority. In addition, it is contended that the writ petition is not maintainable inasmuch as under Section 7(7) of the Payment of Gratuity Act, 1972 (for short, Gratuity Act hereafter), there is a provision for appeal before the appropriate Government. Without availing the appellate provision which is an adequate and efficacious alternative remedy, the present writ petition has been filed. 11. Petitioners have filed re-joinder affidavit contending that the writ petition is maintainable. In addition, statements made in the writ petition have been reiterated. 12. Mr. A.D. Choudhury, learned counsel for the petitioners contends that the Controlling Authority under the Gratuity Act has no jurisdiction to determine quantum of gratuity under the 2010 Regulations. He would have jurisdiction only under the Gratuity Act. In addition, Mr. Choudhury has pointed out what he calls a glaring error by the Controlling Authority while computing quantum of gratuity. Pointing out to the explanation in page 7 of the order, he contended that Controlling Authority had recorded as under: - 13. As per AGVP Regulation-1000 26x45x03 (33-3 = 03) = Rs.5192.00 14. According to Mr. Choudhury, the figure 45 was erroneously applied by the Controlling Authority as it should have been 15 in place of 45. He further submits that when a question of jurisdiction has been raised, a petition under Article 226 of the Constitution of India would be maintainable. Presence of alternative remedy cannot oust the writ jurisdiction. He submits that when there is a jurisdictional error, an aggrieved party can straight away invoke the writ jurisdiction without availing the alternative remedy. In support of his submissions, Mr. Choudhury, learned counsel for the petitioners has relied upon the following decisions: - 1. Arun Kumar Vs. Union of India, (2007) 1 SCC 732 , 2. Jagmittar Sain Bhagat Vs. Director, Health Services, (2013) 10 SCC 136 , 3. Civil Appeal No.5654/2019 (Maharashtra Chess Association Vs. Union of India), decided on 29.07.2019. 15. On the other hand, Ms. D. Borgohain, learned counsel for the petitioner submits that first and foremost there is provision for appeal under Section 7(7) of the Gratuity Act which mandates statutory deposit of an amount equal to the amount of gratuity. In order to avoid depositing the additional gratuity amount determined by the Controlling Authority, recourse has been taken to the writ jurisdiction. D. Borgohain, learned counsel for the petitioner submits that first and foremost there is provision for appeal under Section 7(7) of the Gratuity Act which mandates statutory deposit of an amount equal to the amount of gratuity. In order to avoid depositing the additional gratuity amount determined by the Controlling Authority, recourse has been taken to the writ jurisdiction. Additionally, she submits that arguments canvassed by learned counsel for the petitioners that Controlling Authority could not have adjudicated upon a claim to higher gratuity under the 2010 Regulations by invoking the provisions of the Gratuity Act was never raised before the Controlling Authority. Therefore, raising of such ground in the writ petition is not permissible. On merit, she supports the order passed by the Controlling Authority. 16. Responding to such submissions, Mr. Choudhury submits that on principle, petitioners are not against granting of higher gratuity to the retired employees. But it is the jurisdictional issue to which petitioners have lodged objection. If the Controlling Authority does not have jurisdiction to adjudicate higher gratuity under the 2010 Regulations, then the order passed by the Controlling Authority would be a nullity. 17. Submissions made by learned counsel for the parties have been considered. Also perused the materials on record. 18. Issues framed by the Controlling Authority, as would be evident from the order dated 19.01.2018, are extracted hereunder: - " (A) Whether the delay in submission of the application deserved to be condoned? (B) Whether the Controlling Authority under Payment of Gratuity Act, 1972 & Assistant Labour Commissioner (Central), Silchar has got the jurisdiction to entertain the application invoking the provisions of Section 4(5) of the Payment of Gratuity Act, 1972? (C) Whether the comment or stand of the Employer/Respondent in respect of attachment to sub-regulation 72 (2) in place of 72 (3) is justified or correct? (D) What should be actual components to be taken into account in the matter of computation of gratuity? (E) Whether the applicant is justified in claiming Basic Pay + Dearness Allowance + FPP for the purpose of calculation of gratuity OR the claim of the Employer/Respondent about 'Last wages drawn' means simple Basic pay sans DA & FPP?" 19. (D) What should be actual components to be taken into account in the matter of computation of gratuity? (E) Whether the applicant is justified in claiming Basic Pay + Dearness Allowance + FPP for the purpose of calculation of gratuity OR the claim of the Employer/Respondent about 'Last wages drawn' means simple Basic pay sans DA & FPP?" 19. On the issue as to whether the Controlling Authority had the jurisdiction or not as per issue No.(B), the discussions and findings of the Controlling Authority are as under: - "(B) Enforcing the provision of sub-section (5) of Section 4 of the Payment of Gratuity Act, 1972. The applicant submits that he is entitled to get the better terms of gratuity under Agreement (i.e., Assam Gramin Vikash Bank (Officers & Employees) Service Regulations, 2010 with amendment in 2013) as per sub-section (5) of Section 4 which the respondent did not accept. The matter has been discreetly examined and held that higher rate of gratuity in a settlement will be binding. The claim for higher amount will be tenable (Ref: Transport Manager Kolhapur Municipal Transport Undertaking, Kolhapur Vs. Pravin Babulal Shah, Bombay High Court, (2005) LLR 503. In the judgment of Honourable High Court of Kerala (Raveendranath Prabhu Vs. Rahappon, (1998) 1 LLJ 204, Court held that sub-section (5) of Section 4 of the PG Act, 1972 prescribed that nothing contained in this section shall affect the right of an employee to receive better terms of gratuity under any agreement or award or contract with the Employer. This is a beneficial provision which can be invoked only by the employee and not by the Employer. The Employer has no right to insist that the employees must accept the terms of gratuity under the agreement. It is for the employee to decide whether the term of gratuity under agreement is beneficial to him. If the agreement provides any better terms of gratuity in the opinion of the employee, he can opt to such agreement. Kerala High Court echoed the same judgment in WP(C) No.33378 of 2007 (W). In the instant case, the applicant both ways is eligible to get gratuity from the Employer/Respondent - either under the provision of PG Act, 1972 or under the Service Rule 72 of the Assam Gramin Vikash Bank (Officers & Employees) Service Regulations, 2010 & as amended in 2013. In the instant case, the applicant both ways is eligible to get gratuity from the Employer/Respondent - either under the provision of PG Act, 1972 or under the Service Rule 72 of the Assam Gramin Vikash Bank (Officers & Employees) Service Regulations, 2010 & as amended in 2013. Now the applicant calculated that the terms of gratuity under the Agreement/Service Regulations is much more beneficial & as such he craved and put his demand that the computation of gratuity be done under the canopy of the Service Regulations as citied above. It is his inherent right and privilege and there is no scope to derail and frustrate the inner meaning and intention of the statute. In view of the argument advanced by the applicant in the matter of his entitlement of gratuity calculation, I find substantial ground and logic to accept his prayer." 20. In so far the issue relating to the methodology adopted for quantification of gratuity i.e., issue No.(E), deliberation on the same may be deferred for the moment. 21. As already noticed above, petitioner No.1 is a Regional Rural Bank set up under the Regional Rural Banks Act, 1976 (1976 Act). The objective of the Act as laid down in the preamble is to provide for the incorporation, regulation and winding up of Regional Rural Banks with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs, and for matters connected therewith and incidental thereto. 22. From a careful analysis of the preamble to the aforesaid Act, it is evident that the basic purpose and object of the 1976 Act is to incorporate, regulate and wind up Regional Rural Banks with a view to develop the rural economy. In other words, development of rural economy is the focus of the 1976 Act. 23. Section 30 of the said 1976 Act empowers the Board of Directors of a Regional Rural Bank to make regulations in respect of all matters for giving effect to the provisions of the 1976 Act. Section 32 thereof, gives overriding effect to the provisions of the aforesaid Act. 23. Section 30 of the said 1976 Act empowers the Board of Directors of a Regional Rural Bank to make regulations in respect of all matters for giving effect to the provisions of the 1976 Act. Section 32 thereof, gives overriding effect to the provisions of the aforesaid Act. It says that provisions of the 1976 Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force or in any contract, express or implied, or in any instrument having effect by virtue of any law other than this Act, and notwithstanding any custom or usage to the contrary. 24. A careful analysis of Section 32 of the 1976 Act would reveal that provisions of the Act would have overriding effect over any other law or custom or usage in the field in which it operates. The use of the expression notwithstanding would imply that by virtue of the non-obstante clause, provisions of the 1976 Act would have overriding effect over other legal provisions in the field in which the 1976 Act operates. The scope and ambit of Section 32 thereof cannot be enlarged to give a meaning that the provisions of the 1976 Act would have overriding effect over all other laws in force. Such a construction would be inconsistent with the purpose for which Section 32 thereof has been put in the statute. 25. In exercise of powers conferred by Section 30 of the Regional Rural Banks Act, 1976 (already referred to as the 1976 Act), the 2010 Regulations have been framed. As per Regulation 2 (m), "pay" has been defined to mean basic pay drawn per month by the officer or employee in a pay-scale including stagnation increments and any part of the emoluments which may specifically be classified as pay under the 2010 Regulations. Regulation 2 (o) defines "salary" to main aggregate of pay and dearness allowance. 26. Gratuity is provided in Regulation 72. As per Clause-(1) thereof, an officer or employee shall be eligible for payment of gratuity either as per provisions of the Gratuity Act or as per sub-regulation (2) of Regulation 72, which is higher. While sub-regulation (2) lays down the contingencies when an officer or employee becomes eligible for gratuity, sub-regulation (3) provides the methodology for computation of gratuity. 27. As per Clause-(1) thereof, an officer or employee shall be eligible for payment of gratuity either as per provisions of the Gratuity Act or as per sub-regulation (2) of Regulation 72, which is higher. While sub-regulation (2) lays down the contingencies when an officer or employee becomes eligible for gratuity, sub-regulation (3) provides the methodology for computation of gratuity. 27. Having noticed the above, reference may now be made to the provisions of the Payment of Gratuity Act, 1972 (already referred as the Gratuity Act). 28. Like the 1976 Act, it is also a central legislation providing for a scheme for payment of gratuity to employees engaged in factories, mines, oil fields, plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental thereto. From the above, what is evident is that the primary objective of the 1976 Act is payment of gratuity to employees. Section 3 thereof defines Controlling Authority. It says that appropriate Government, may, by notification, appoint any officer to be a controlling authority, who shall be responsible for the administration of the Gratuity Act and different controlling authorities may be appointed for different areas. 29. Government of India, Ministry of Labour and Employment issued notification dated 16.10.2014 appointing Controlling Authorities for different jurisdictional areas of the country. In so far State of Assam is concerned, Regional Labour Commissioner (Central), Dibrugarh and all Assistant Labour Commissioners (Central) within Guwahati region were appointed as Controlling Authority. 30. Section 4 deals with payment of gratuity. Since there is no dispute as to entitlement of the petitioner to gratuity, it may not be necessary to delve into the contingencies enabling payment of gratuity. Amount of gratuity payable to an employee is provided in sub-section (3). By an amendment brought in the year 2010, it was provided that the amount of gratuity payable to an employee shall not exceed Rs.10 lakhs. 31. However, Mr. Choudhury fairly submits that by an amendment brought in the year 2018, the figure of Rs.10 lakhs has been replaced by Rs.20 lakhs. Now maximum gratuity is Rs.20 lakhs. 32. Sub-Section (5) of Gratuity Act provides that nothing in Section 4 shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. 33. Section 7 of Gratuity Act deals with determination of the amount of gratuity. Now maximum gratuity is Rs.20 lakhs. 32. Sub-Section (5) of Gratuity Act provides that nothing in Section 4 shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. 33. Section 7 of Gratuity Act deals with determination of the amount of gratuity. Sub-section (4) thereof, provides that in case of any dispute as to the amount of gratuity payable to an employee, or as to the admissibility of any claim of, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity. If there is any dispute in this regard, the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute. 34. Under sub-section (7) of Section 7 of the Gratuity Act, any person aggrieved by an order under sub-section (4) may prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government within sixty days from the date of receipt of the order. 35. Section 14 of the Gratuity Act says that the Act would override other enactments. As per this provision, Gratuity Act or any rule made thereunder would have effect notwithstanding anything inconsistent therewith contained in any enactment other than the said Act or in any instrument or contract having effect by virtue of any enactment other than the Gratuity Act. 36. A careful reading of Section 14 of the Gratuity Act would go to show that this provision also starts with a non-obstante clause which in effect means that provisions of Gratuity Act would have overriding effect notwithstanding anything inconsistent contained in other enactment or in any instrument or in any contract. 37. As already discussed in the case of the non-obstante clause operating in Section 32 of the 1976 Act, in the context of the Gratuity Act, such a provision starting with a non-obstante clause can only mean overriding effect of the Gratuity Act over any other enactment or instrument or contract in the specific field in which this particular enactment operates i.e., in the field of payment of gratuity. There cannot be or there can be no confusion regarding the separate fields of operation of the two enactments. There cannot be or there can be no confusion regarding the separate fields of operation of the two enactments. The 1976 Act operates in the field of rural economy whereas the Gratuity Act operates in the field of payment of gratuity. The effect of having non-obstante clauses in the respective enactments would only highlight the importance of the enactments in their respective fields. There is no contradiction or conflict between the two enactments which operate in their respective fields assigned to them. 38. Having discussed the above, it may again be mentioned that Section 4(5) of the Gratuity Act itself makes it clear that nothing in Section 4 would come in the way of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. Likewise, Regulation 72 of the 2010 Regulations is also very clear which says that an officer or employee shall be eligible for payment of gratuity either as per the provisions of the Gratuity Act or as per sub-regulation (2), whichever is higher. 39. Ontrolling authority is defined under Section 3 of the Gratuity Act which has also been noted above. There is no corresponding definition of Controlling Authority under the 2010 Regulations. Therefore, when an employee makes a claim to gratuity, it can be either under the Gratuity Act or under the 2010 Regulations which cannot however be detrimental to the interest of the employee. Under whichever provision gratuity is higher that may be availed by the employee. Though methodology has been provided for quantifying gratuity under the 2010 Regulations, the machinery has not been provided. Since it is a question of payment of gratuity, even in case of a claim under Regulation 72, the machinery provided under the Gratuity Act would come into play along with Section 3 thereof. Therefore, it is the Controlling Authority as defined under Section 3 of the Gratuity Act who would be the competent authority to quantify the amount of gratuity to be paid by the employer to an employee. It is open to an employee as well as to the Controlling Authority to find out which of the two provisions provide better terms and conditions of gratuity and whichever is found to be more beneficial to the employee, the same is to be accepted. 40. In Bakshish Singh Vs. It is open to an employee as well as to the Controlling Authority to find out which of the two provisions provide better terms and conditions of gratuity and whichever is found to be more beneficial to the employee, the same is to be accepted. 40. In Bakshish Singh Vs. M/s. Darshan Engineering Works, (1994) AIR SC 251, Supreme Court surveyed the relevant authorities relating to payment of gratuity and thereafter observed that in labour jurisprudence the concept of gratuity has undergone a metamorphosis over the years. The dictionary meaning may suggest that gratuity is a gratuitous payment, a gift or a boon made by the employer to the employee as per his sweet-will. It necessarily means that it is in the discretion of the employer whether to make the payment or not and also to choose the payee as well as the quantum of payment. However, in the industrial adjudication, it was considered as reward for a long and meritorious service and its payment, therefore, depended upon the duration and the quality of the service rendered by the employee. At a later stage, it came to be recognized as a retiral benefit in consideration of the service rendered and the employees could raise an industrial dispute for introducing it as a condition of service. The recognition of gratuity as a retiral benefit brought in its wake further modifications of the concept. Ultimately, Supreme Court held that Payment of Gratuity Act is a welfare measure introduced in the interest of the general public to secure social and economic justice to workmen, to assist them in their old age and to ensure them a decent standard of life on their retirement which is a constitutional objective. 41. Viewed in the above context, contention raised by the petitioners that the Controlling Authority appointed under Section 3 of the Gratuity Act would have no jurisdiction to determine higher gratuity under the 2010 Regulations cannot be accepted. Such a contention is wholly unsustainable and deserves rejection. It is accordingly rejected. 42. In so far availability of alternative remedy is concerned, there is no dispute to the proposal that under Article 226 of the Constitution of India, there cannot be any limitation to the exercise of power of judicial review. The limitation, if any, is self imposed to maintain judicial discipline. It is accordingly rejected. 42. In so far availability of alternative remedy is concerned, there is no dispute to the proposal that under Article 226 of the Constitution of India, there cannot be any limitation to the exercise of power of judicial review. The limitation, if any, is self imposed to maintain judicial discipline. Ordinarily, when there is a provision for adequate and efficacious alternative remedy, a writ court would not exercise its jurisdiction under Article 226 of the Constitution of India. However, in a situation where there is violation of the principles of natural justice, or when there is a question of jurisdiction or in a case of patent illegality, it is open to a person aggrieved to seek remedy under Article 226 of the Constitution of India. 43. Having said the above, Court is reluctant to enter into any factual adjudication regarding the quantum of gratuity. Since it has already been held that the Controlling Authority had the jurisdiction to pass the impugned order and to that extent, the challenge made thereto has been rejected, it would be open to the petitioners to avail their appellate remedy under the Payment of Gratuity Act, 1972, if there is any dispute as to the quantum of gratuity and if they are so advised. 44. Subject to the observations made above, all the writ petitions are dismissed. Interim orders passed are vacated.