High Court Kerala High Court

K.J. Julius vs Union Of India on 19 February, 2009

Kerala High Court
K.J. Julius vs Union Of India on 19 February, 2009
       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

WP(C).No. 9489 of 2006(D)


1. K.J. JULIUS, AGED 66 YEARS,
                      ...  Petitioner

                        Vs



1. UNION OF INDIA,
                       ...       Respondent

2. THE CHAIRMAN,

                For Petitioner  :SRI.T.C.GOVINDA SWAMY

                For Respondent  :SRI.K.R.SUNIL, CGC

The Hon'ble MR. Justice P.R.RAMACHANDRA MENON

 Dated :19/02/2009

 O R D E R
             P.R.RAMACHANDRA MENON, J.
             ======================
                    W.P.(C) No.9489 of 2006
             ======================
        Dated, this the 19th day of February, 2009
                       J U D G M E N T

“C.R.”

The challenge involved in this writ petition is as to

the proper method of calculating gratuity payable to the

petitioner, particularly as to the computation of the “per

day wage” as contemplated under the relevant scheme. The

question is whether it has to be arrived at by dividing the

monthly wages by the deviser of 30 (the total number of

days in the month) or by 26 (after excluding the four

Sundays/holidays). It is also in dispute whether the

petitioner is justified in taking a ‘U’ turn to contend that the

computation of the “per day wages” shall only be in

conformity with the stipulation under the statute i.e.,

Section 4(2) of the Payment of Gratuity Act (‘Act’ in short)

after praying for and obtaining the benefit under a Scheme.

W.P.(C) No. 9489/2006 -:2:-

2. The petitioner while working as Assistant

Executive Engineer (Electrical) under the second

respondent retired from the service on 30-6-1997 after

attaining at the age of superannuation. In fact, the second

respondent being an autonomous body and separate legal

entity, the C.C.S. (Pension) Rules are not applicable as

such. However, the Board of Trustees, on the basis of a

resolution passed has adopted the C.C.S.(Pension) Rules,

which govern the service conditions, particularly as to the

retirement benefits payable to the employees. However, in

the case of gratuity, it is contended by the second

respondent that the benefits payable to the

workers/employees were under the provisions of the Act,

calculation under the Act being more beneficial and as a

natural consequence, the amounts payable thereunder had

to be limited to the maximum amount of Rs.one lakh as

stipulated thereunder.

W.P.(C) No. 9489/2006 -:3:-

3. Pursuant to retirement of the petitioner, the

benefits were worked out under the Act, the calculation

according to the second respondent being more favourable

to the employees and the maximum amount of Rs.one lakh

was disbursed to him. After obtaining this amount, the

petitioner approached this Court stating that he was eligible

to get much higher benefits under Exhibit P1 scheme. It is

to be noted that the maximum amount of gratuity payable

under both the Payment of Gratuity Act, 1972 as well as

under the C.C.S. (Pension) Rules were originally Rs.one

lakh. The Pension Rules were amended and the maximum

ceiling was enhanced to Rs.2.5 lakhs with effect from 1-4-

1995, whereas, the Act was amended raising the ceiling

initially to Rs.2.5 lakhs and thereafter, to Rs.3.5 lakhs with

effect from 24-9-2007.

4. After delivering Exhibit P1 scheme, taking note of

the fact that the Act was amended only with effect from 24-

9-1997, the first respondent/Government brought about a

W.P.(C) No. 9489/2006 -:4:-

rider confining the benefit of Exhibit P1 scheme to those

employees who have retired on or after 24-9-1997 i.e., date

of the amendment of the Act. Aggrieved by the above

restrictive provision, the petitioner challenged Exhibit P2

before this Court by filing O.P.No.24282 of 2001.

5. During the pendency of the O.P.No.24282 of

2001, the first respondent, after considering the grievance

exposed from different corners, issued a further

clarification vide communication dated 20-2-2004 (Exhibit

P3) whereby, it was specified that the maximum ceiling of

gratuity payable under Exhibit P1/P2 would stand enhanced

from Rs.one lakh to Rs.2.5 lakhs with effect from 1-4-1995

to 31-12-1996 and from Rs.2.5 lakhs to Rs.3.5 lakhs with

effect from 1-1-1997. A copy of the said proceedings was

produced by the petitioner in O.P.No.24282 of 2001 as

‘Exhibit P6’ and after hearing, the said original petition was

disposed of vide Exhibit P4 judgment directing the second

W.P.(C) No. 9489/2006 -:5:-

respondent to pay the balance amount as might be payable

to the petitioner pursuant to Exhibit P6 therein (Exhibit P3

in the instant case). It was pursuant to the said verdict that

the second respondent computed the actual gratuity

payable to the petitioner as Rs.1,62,560/-, instead of Rs.one

lakh as originally paid vide Exhibit P5, correctness of which

is subjected to challenge in the present writ petition.

6. It is submitted by the learned counsel for the

petitioner that neither Exhibit P1 nor Exhibit P3 does speak

about the manner of computation of “per day wages” and

in the said circumstances, it was very much essential for the

second respondent to have effected the computation only in

accordance with the Payment of Gratuity Act, particularly in

view of the “Explanation” given in Section 4(2) of the Act.

Exhibit P5 has been sought to be intercepted in so far as the

second respondent has computed the benefit under Rule 50

(1)(a) of the C.C.S. (Pension) Rules.

W.P.(C) No. 9489/2006 -:6:-

7. The learned counsel for the second respondent

highlighted the inconsistent stand being pursued by the

petitioner simultaneously seeking to have the benefits both

under the Act and under the Scheme so as to suit to his

requirements and convenience. The learned counsel

submits that the petitioner, after having succeeded in

getting Exhibit P1 Judgment from this Court getting rid of

the maximum ceiling of Rs.1 lakh prescribed under the Act,

stating that he was eligible to have the benefit under

different Scheme, it was no more open to him to approach

this Court to have the gratuity calculated/computed

following the norms under the Act. In other words, the

petitioner wants to have the best out of both the streams,

which is not permissible, submits the learned counsel. It is

further pointed out by the learned counsel for the second

respondent that the second respondent being an

autonomous body was not bound by Exhibit P1 scheme

since the Board of Trustees had not adopted the same and

W.P.(C) No. 9489/2006 -:7:-

never implemented or given effect to.

8. True, though such a contention has been raised by

the second respondent in paragraph 7 of the counter

affidavit, the petitioner has not rebutted the same by filing

any reply affidavit. But it is pertinent to note that there was

no case for the second respondent ever before, when the

earlier proceedings were finalised vide Exhibit P4 judgment

passed on 15-3-2004. On the other hand, Exhibit P3 in the

present case prescribing the extent of benefit payable under

Exhibit P1 scheme, was produced before this Court in

O.P.No.24282 of 2001 (as Exhibit P6), and it was

accordingly that Exhibit P4 judgment was passed by this

Court directing the second respondent to pay all benefits

flowing therefrom to the petitioner. Admittedly, the said

verdict has not been challenged by either side and it has

become final.

W.P.(C) No. 9489/2006 -:8:-

9. Payment of Gratuity Act, 1972 is a beneficial piece

of legislation. It is also true, by virtue of Section 4(5) of the

Act, the employee is entitled to choose the better option, if

there exists any other scheme/provision for payment of

Gratuity. But the crucial question whether an employee can

opt to have the best from both the streams simultaneously;

had come up for consideration before the Apex Court in

Beed District Central Co-operative Bank Limited v.

State of Maharashtra and Others [(2006) 8 SCC 514].

10. In the said case, the factual situation was that

besides the provision for payment of gratuity under the Act

there existed a scheme as well, wherein the ‘rate’ for

calculating the computation of gratuity was much higher,

though the maximum ceiling was lower than the ceiling

specified under the Act. Under the said scheme, gratuity

had to be computed reckoning the “per day wages” and

the amount payable was 26 days’ wages for every

W.P.(C) No. 9489/2006 -:9:-

completed year of service, subject to the maximum/ceiling

of Rs.1.7 lakhs from 20-7-1996 to 30-11-1999, which was

subsequently raised to Rs.2.5 lakhs from 1-12-1999 to 17-9-

2005. The contention of the employees was that the amount

should be worked out by adopting the “higher rate” (26

days’ wages for every completed year of service) as

prescribed under the Scheme and the maximum ceiling had

to be taken as provided under the Act – in view of Section 4

(5) of the Act providing for the better option.

11. The Apex Court observed that the Scheme of the

Bank in the above case was one of the terms of contract of

employment between the parties and under the Scheme, the

employees were entitled to Gratuity on the following terms:-

(i) eligibility to receive gratuity – Minimum 5
years of service.

(ii) rate of gratuity – 26 days’ wages for every
completed year of service.

      (iii) the maximum amount
                       of gratuity     - Rs.2,50,000/-

W.P.(C) No. 9489/2006        -:10:-


The contention raised by the employees was that the third

stipulation prescribing the maximum ceiling at Rs.2.5 lakhs

was repugnant to Section 4(3) of the Act, and void under

Section 23 of the Contract Act, which hence should have

been severed from the rest of the contract applying the

“Blue pencil doctrine”, to be replaced by Section 4(3) of

the Act.

12. After considering the rival contentions, it was

specifically held by the Apex Court that the said “Blue

pencil doctrine” cannot be said to have any application to

the said case and instead, applying “golden rule of

interpretation of statute” (as discussed in paragraph 14), it

was held that the Act did not contemplate that the workman

would be at liberty to opt for better terms of the contract,

while keeping the option open in respect of a part of the

statute. Accordingly, the law was declared and the

impugned verdicts were set aside holding that the workman

W.P.(C) No. 9489/2006 -:11:-

had to confine to the benefits provided either under the Act

or under the Scheme (emphasis supplied).

13. Coming to the instant case, the issue stands

entirely on a different footing. By virtue of the declaration

of law by the Apex Court, it is true that it is no more open to

the petitioner to contend that he should be given the best of

both under the Act and under Exhibits P1/ P3 Scheme. But

the question is whether the second respondent was right in

not calculating the “per day wages” so as to compute the

gratuity payable at the rate of 15 days wages for every

completed year of service as contemplated under the

Scheme, which benefit has been ordered to be given by

Exhibit P4 judgment. Obviously, calculation of “per day

wages” was never a subject matter involved in the decision

of the Apex Court reported in Beed District Central Co-

operative Bank Limited v. State of Maharashtra and

Others[(2006) 8 SCC 514]. The learned counsel for the

W.P.(C) No. 9489/2006 -:12:-

second respondent contends that the extent of benefits

payable to the petitioner having been finalized on the basis

of Exhibit P4 judgment, it is not correct or proper to go

back to the stipulation given under the head “explanation”

to Section 4(2) of the Act enabling the calculation of “per

day wages” by dividing the monthly wages by “26” (after

excluding the holidays).

14. The payment of Gratuity Act, 1972 was amended

incorporating the above head “explanation” under Section

4(2) only with effect from 19-10-1997. But even much prior

to that, the position of law had been crystallized by virtue of

the decision rendered by the Hon’ble Supreme Court in

Digvijay Woolen Mills Limited v. Mahendra Prataprai

Buch reported in AIR 1980 SC 194, wherein it was held

that the “per day wages” were to be calculated by dividing

the monthly wages by the deviser of “26” (after excluding

the Sundays) and not by 30. The above decision was

W.P.(C) No. 9489/2006 -:13:-

considered and re-affirmed in the subsequent decision

reported in AIR 1984 SC 1842 as well. This being the

position, it can easily be said that even if no reference is

made to the “explanation” provided under Section 4(2) of

the Payment of Gratuity Act, 1972, the law laid down by the

Apex Court is quite unambiguous and the “per day wages”

had to be computed by dividing the monthly wages by the

deviser of ’26’. The law declared by the Apex Court being

the law of the land by virtue of Article 141 of Constitution of

India, this Court and every other Court/Authority in India

are very much bound to follow the same. In such

circumstances, it is clear that the calculation made by the

second respondent vide Exhibit P5 under Rule 50(1)(a) of

the C.C.S. (Pension) Rules is not correct or sustainable.

15. In the above facts and circumstances, Exhibit P5

order passed by the second respondent is set aside. The

second respondent is directed to re-consider the quantum of

W.P.(C) No. 9489/2006 -:14:-

gratuity payable to the petitioner reckoning the “per day

wages” by dividing the monthly wages by ’26’, and by

granting the benefit flowing from Exhibit P3 as ordered to

be paid vide Exhibit P4 Judgment (where it is marked as

Exhibit P6). Final orders in this regard shall be passed and

the balance amount flowing therefrom shall be disbursed to

the petitioner as expeditiously as possible and at any rate,

within a period of three months from the date of receipt of a

copy of this judgment. Petitioner shall produce a copy of

this judgment before the second respondent for pursuing

further steps. It is made clear that the petitioner will not be

entitled to get interest on the due amount, the said prayer

having already been rejected by this Court vide Exhibit P4.

The writ petition is allowed to the above extent.

P.R.RAMACHANDRA MENON,
JUDGE.

skr