Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2628 OF 2017
NAGAR AYUKT NAGAR NIGAM, ……APPELLANT
KANPUR
VERSUS
SRI MUJIB ULLAH KHAN AND ANOTHER …...RESPONDENTS
WITH
CIVIL APPEAL NO. 2629 OF 2017
NAGAR NIGAM, GORAKHPUR ……APPELLANT
VERSUS
RAM SHANKER YADAV AND ANOTHER …...RESPONDENTS
J U D G M E N T
Hemant Gupta J.
The challenge in Civil Appeal No. 2628 of 2017 is to an order
dated 19.04.2007 passed by the learned Single Bench of the High
Court of Judicature at Allahabad, whereby an order dated 08.12.2006
Signature Not Verified
passed by the Controlling Authority, Kanpur under the Payment of
Digitally signed by
POOJA ARORA
Date: 2019.04.02
18:05:02 IST
Reason:
1
Gratuity Act, 1972 was not interfered with.
1 Act
1
2. Civil Appeal No. 2629 of 2017 has also been taken up along
with present appeal wherein the challenge is to an order dated
02.05.2007 of the High Court of Judicature at Allahabad upholding an
order dated 29.04.2006 of Controlling Authority (Additional Labour
Commissioner, Gorakhpur, U.P.) passed under the Act allowing the
petition for gratuity in favour of the respondent herein.
3. The appellant, the Municipal Corporation, Kanpur is governed
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by the Uttar Pradesh Municipal Corporation Act, 1959 , whereas, the
respondent is an employee of the appellant. The employees in both
cases claimed gratuity by invoking the jurisdiction of the Controlling
Authorities under the Act. The argument of the appellant before the
learned Single Bench was that the gratuity is payable in accordance
with the Retirement Benefits and General Provident Fund Regulations,
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1962 framed under Section 548 of the 1959 Act as amended on
11/01/1988. Such Regulations contemplate payment of gratuity at
the rate of 15 days salary per month for 16.5 months. It was found by
the High Court that it is the Act which is applicable, whereby, gratuity
calculated at the rate of 15 days salary for every completed year
without any ceiling of months or part thereof.
4. The argument raised by the appellant before the High Court is,
that the gratuity is payable in terms of Rule 4(1) of the 1962
Regulations published under Section 548 (1) of the 1959 Act as
amended on 11.01.1988. Therefore, the employees of the
2 1959 Act
3 1962 Regulations
2
Municipalities are entitled to gratuity only in terms of such
Regulations and not under the Act.
5. The High Court relied upon a judgment reported as Municipal
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Corporation of Delhi vs Dharam Prakash Sharma and another
to hold that only employees of Central Government or the State
Government are exempt from the applicability of the Act, therefore,
the employees of the Appellants would be governed by the Act and
are entitled to gratuity in terms of the scale mentioned therein. It was
held that the Act is not applicable only to the Central Government or
State Governments in terms of definition of an ‘employee’ under
Section 2 (e) of the Act. Therefore, the employees of the
Municipalities are entitled to the gratuity in terms of the provisions of
the Act.
6. The appellant relies upon Section 3 of the U.P Dookan Aur
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Vanijya Adhishthan Adhiniyam, 1962 which is to the effect that such
Act will have no application to the office of Government or Local
Bodies. Therefore, on the strength of such statutory provision, it was
argued that the Act would not be applicable in respect of the
Municipalities. The appellant is not a factory, mine, oilfield,
plantation, port and railway company and that there is no notification
as stipulated under Clause (c) of Section 1(3) of the Act. Therefore,
the employees of the Municipalities are entitled to the gratuity in
4 AIR 1999 SC 293
5 1962 Act
3
terms of the Regulations framed in exercise of powers of Section 548
of the 1959 Act and not under the Act .
7. On the other hand, learned counsel for the respondent pointed
out that the Central Government has published a notification in terms
of Section 1(3)(c) of the Act on 08.01.1982 to extend the applicability
of the Act to the Municipalities. Thus, the Act is applicable to the
Municipalities. The relevant provisions of the Act read as under:
“1. Short title, extent, application and commencement.-
(1) This Act may be called the Payment of Gratuity Act,
1972.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or
ports, it shall not extend to the State of Jammu and
Kashmir.
(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.”
8. A perusal of the above provisions would show that the Act is
applicable to (1) every factory, mine, oilfield, plantation, port and
railway company; (2) every shop or establishment within the
meaning of any law for the time being in force in relation to shops
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and establishments in a State, in which ten or more persons are
employed, the said provision has two conditions, viz. (i) a shop or
establishments within the meaning of a State law and (ii) in which
ten or more persons are employed; and (3) the establishments or
class of establishments which Central Government may notify.
9. The appellant is not covered by clauses (a) and (b) of Section
1(3) of the Act. Clause (a) is not applicable on the face of the
provisions, but even clause (b) is not applicable in view of Section 3
(c) of the 1962 Act as such Act is not applicable to the offices of the
Government or local authorities. The Local Authorities means a
municipal committee, district board etc or entrusted with the control
or management of a municipal or local fund in terms of Section 3(31)
of the General Clauses Act, 1897.
10. In terms of the above said Section 1(3)(c) of the Act, the
Central Government has published a notification on 08.01.1982 and
specified Local Bodies in which ten or more persons are employed, or
were employed, on any day of the preceding twelve months as a
class of establishment to which this Act shall apply. The said
notification dated 08.01.1982 reads as under:-
th
“ New Delhi, the 8 January, 1982
NOTIFICATION
S.O. No. 239….-In exercise of the powers conferred by
clause (c) of sub-section (3) of section 1 of the Payment
of Gratuity Act, 1972 (39 of 1972), the Central
Government hereby specified ‘local bodies’ in which ten
or more persons are employed, or were employed, on
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any day preceding twelve months, as a class of
establishments to which the said Act shall apply with
effect from the date of publication of this notification in
the Official Gazette.
Sd/.
(R. K. A. Subrahmanya)
Additional Secretary
(F. No. S-70020/16/77-FPG)”
11. We find that the notification dated 08.01.1982 was not
referred to before the High Court. Such notification makes it
abundantly clear that the Act is applicable to the local bodies i.e., the
Municipalities. Section 14 of the Act has given an overriding effect
over any other inconsistent provision in any other enactment. The
said provision reads as under:
“14. Act to override other enactments, etc. –
The provisions of this Act or any rule made
thereunder shall have effect notwithstanding
anything inconsistent therewith contained in any
enactment other than this Act or in any instrument or
contract having effect by virtue of any enactment
other than this Act.”
12. In view of Section 14 of the Act, the provision in the State Act
contemplating payment of Gratuity will be inapplicable in respect of
the employees of the local bodies.
13. Section 2(e) of the Act alone was referred to in the judgment
reported as Municipal Corporation of Delhi (supra). The said
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judgment is in the context of CCS (Pension) Rules, 1972 which
specifically provides for payment of Pension and Gratuity. The Act is
6 1972 Rules
6
applicable to the Municipalities, therefore, it is wholly inconsequential
even if there is no reference to the notification dated 08.01.1982.
14. The entire argument of the appellant is that the State Act
confers restrictive benefit of gratuity than what is conferred under the
Central Act. Such argument is not tenable in view of Section 14 of the
Act and that liberal payment of gratuity is in fact in the interest of the
employees. Thus, the gratuity would be payable under the Act. Such
is the view taken by the Controlling Authority.
15. In view of the aforesaid, we find that there is no error in the
orders passed by the Controlling Authorities under the Act and as
maintained by the High Court. Consequently, the appeals are
dismissed.
…….………..…………………………J.
(Mohan M. Shantanagoudar)
……………………………………………J.
(Hemant Gupta)
New Delhi
April 2, 2019
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