N. Manoharan vs. The Adminsitrative Officer

2026 INSC 143
REPORTABLE


IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. OF 2026
@ SPECIAL LEAVE PETITION (CIVIL) NOS. 22628 – 22637 OF 2024

N. MANOHARAN, ETC. … APPELLANT(S)

VERSUS

THE ADMINISTRATIVE OFFICER AND ANOTHER … RESPONDENT(S)


WITH
CIVIL APPEAL NOS. OF 2026
SPECIAL LEAVE PETITION (CIVIL) NOS. 22638 – 22669 OF 2024
G. AROCKIASAMAY, ETC. … APPELLANT(S)
VERSUS

THE ADMINISTRATIVE OFFICER AND ANOTHER … RESPONDENT(S)

WITH
CIVIL APPEAL NOS. OF 2026
SPECIAL LEAVE PETITION (CIVIL) NO. 22670 OF 2024
S. ALANGAR LR OF (U. SUNDARA RAJ) … APPELLANT(S)
VERSUS

THE ADMINISTRATIVE OFFICER AND OTHERS … RESPONDENT(S)


J U D G M E N T
S.V.N. BHATTI, J.
Signature Not Verified
1. Leave granted.
Digitally signed by
geeta ahuja
Date: 2026.02.11
18:01:12 IST
Reason:
2. The point for consideration in the subject Civil Appeals is whether the
employees of Heavy Water Plant, Department of Atomic Energy, Government
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of India, Tuticorin (“HWP”) are covered by the provisions of the Payment of
Gratuity Act, 1972 (“PG Act”).
3. The Civil Appeals arise from a common Judgment dated 21.06.2023 in
Writ Appeal No. 1687 of 2021, Writ Petition No. 19117 and batch. The
impugned Judgment held and declared that the employees of HWP are not
covered by the definition of Section 2(e) of the PG Act. Hence, the Civil Appeals
are at the instance of the retired employees of HWP. The circumstances
leading to the dispute between the parties are admitted and fall within a
narrow compass.
4. The Atomic Energy Act, 1962 (“AE Act”), was enacted by the Parliament
and is effective from 15.09.1962. The objective of the AE Act is to provide for
the development, control and use of atomic energy for the welfare of the people
of India and for other peaceful purposes. Section 3 of the AE Act deals with
‘General Powers of the Central Government’ to produce, develop, use and
dispose of atomic energy, either by itself or through any Authority or
Corporation established by it, or a Government Company; and carry out
research into any materials connected therewith. Section 3 of the AE Act is
comprehensive and encompasses all primary and ancillary activities
undertaken by the Central Government relating to atomic energy. The
Department of Atomic Energy, Government of India (“DAE”), is the
Department through which the Central Government discharges the functions,
duties, and responsibilities assigned to it under the AE Act. The parties admit
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the following hierarchy of departments vis-à-vis atomic energy:
PRIME MINISTER
ATOMIC ENERGY
COMMISSION
DEPARTMENT OF
ATOMIC ENERGY
SERVICE
ORGANIZATIONS
R&D SECTOR
I&M SECTOR
PSUs
BHABHA ATOMIC
RESEARCH CENTRE,
NUCLEAR POWER
CORPORATION OF
MUMBAI
INDIA LTD.,
MUMBAI
DIRECTORATE OF
PURCHASE & STORIES,
HEAVY WATER
BOARD, MUMBAI
INDIRA GANDHI CENRE
FOR ATOMIC
MUMBAI
RESEARCH,
KALAPAKKAM
IREL (INDIA) LTD.,
MUMBAI
DIRECTORATE OF
RAJA RAMANNA CENTRE
CONSTRUCTION,
SERVICES & ESTATE
NUCLEAR FUEL
FOR ADVANCED
TECHNOLOGY, INDORE
COMPLEX,
HYDERABAD
MANAGEMENT,
MUMBAI
VARIABLE ENERGY
CYCLOTRON CENTRE,
URANIUM
CORPORATION OF
KOLKATA
INDIA LTD.,
HYDERABAD
BOARD OF
RADIATION &
GLOBAL CENTRE FOR
ISOTOPE
TECHNOLOGY,
GENERAL SERVICES
NUCLEAR ENERGY
ORGANIZATION,
PARTNERSHIP,
BAHADUEGARH
MUMBAI
KALPAKKAM
BHARATIYA
NABHIKIYA VIDYUT
NIGAM LTD.,
KALAPAKKAM
ATOMIC MINERALS
DIRECTORATE FOR
EXPLORATION &
RESEARCH,
HYDERABAD


5. On 01.05.1969, the Government of India/DAE issued Office
Memorandum No. 12/7/69-(P) for the constitution of a Board to administer
the Heavy Water Production Projects of the DAE. The operative portion of the
Office Memorandum reads as follows:
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6. The HWP in Tuticorin is one of the Heavy Water Boards established by
the DAE. The circumstance precipitating a dispute between the retired
employees and HWP can be traced to one of the pension payment orders
issued by HWP. On 25.07.2014, the pension payment order in favour of
retired employee, N. Manoharan, was issued under the CCS (Pension) Rules,
1972. The CCS (Pension) Rules, 1972 deal with comprehensively the
retirement benefits to which a retired employee is entitled, including gratuity.
The sum payable as gratuity under the PG Act and CCS (Pension) Rules, 1972,
is less than the sum payable under the PG Act. This led to an employee of
HWP filing an application before the Controlling Authority under the PG Act.
The Controlling Authority held that the provisions of the PG Act are attracted
to the employees of HWP, and a direction was ordered to pay the difference
between the PG Act and CCS (Pensions) Rules, 1972. The Controlling
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Authority, on jurisdictional fact and the applicability of the PG Act, held that
HWP, constitutes an industry under the Industrial Disputes Act, 1947,
making the applicant-employee eligible for coverage under Section 1(3)(b) of
the PG Act. The Controlling Authority also relied on the Order dated
29.01.2016 of the High Court of Madras in WP Nos. 23577 to 23579 of 2015
and batch. HWP, Tuticorin, challenging the Order of the Controlling Authority,
filed an appeal before the Deputy Chief Labour Commissioner, and the appeal
filed was dismissed. The primacy of consideration of the appellate authority
as well proceeds on the fact that HWP is an industry under the Industrial
Disputes Act, 1947, and the employees are industrial employees covered by
the first limb of Section 2(e) of the PG Act.
7. HWP assailed the orders before the High Court in Writ Petition No.
23127 of 2015 and batch, which were dismissed on 31.03.2016, resulting in
the filing of Writ Appeal No. 1687 of 2021. The record discloses that HWP filed
Writ Petition No. 13346 of 2023 and batch challenging the subsequent orders
of the Controlling Authority directing payment of the difference of gratuity to
the retired employees of HWP. The Division Bench of the High Court of Madras
dealt with the Writ Appeals as lead cases and, by the Impugned Judgment,
and allowed the Writ Appeals as well as Writ Petitions filed by HWP. The
Impugned Judgment examined the issue under the following heads:
(i) On Interpretation of “Employee” (Section 2(e) of PG Act, 1972): The
Appellants were appointed by the Government of India, DAE. Their
appointment orders clearly stated they were governed by “Central Civil
Services Rules.” Since the Appellants held “civil posts under the Central
Government” and were governed by the CCS (Pension) Rules, 1972, which
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provide for gratuity, they fall squarely within the exclusion clause. Therefore,
they do not come within the meaning of “employees” under Section 2(e) of the
PG Act.
(ii) Inapplicability of Section 14 (Overriding Effect): Section 14 applies only
to persons who first qualify as “employees” under the PG Act . Since the retired
employees were excluded at the threshold definition stage (Section 2(e)), they
never entered the ambit of the PG Act. Consequently, Section 14 cannot be
invoked to override the CCS (Pension) Rules in their case. Hence, a specific
exclusion in the definition clause cannot be defeated by a general overriding
clause.
(iii) Status of the Heavy Water Board (“HWB”): It rejected the argument that
the HWB is an industrial establishment/autonomous body, distinct from the
Central Government. It treated HWB as a unit of the DAE of the Government
of India. It was held that, unlike a Public Sector Undertaking like NPCIL,
which is a separate corporate entity, HWB functions directly under the
Ministry. The employees are, therefore, Central Government servants, not
merely employees of an autonomous industrial unit.
(iv) The Principle of Estoppel: The Appellants had already received their
retirement benefits, including pension and gratuity, under the CCS (Pension)
Rules, 1972, without protest at the time of retirement. An employee cannot
claim benefits under two different statutes for the same purpose. Having
accepted the benefits under the specific rules applicable to government
servants, i.e. , CCS Rules, they are estopped from turning around and claiming
higher benefits under a general law, i.e., the PG Act, which expressly excludes
them.
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(v) Distinguishing Precedents (The MCD Case): Distinguishing this Court’s
1
judgment in Municipal Corporation of Delhi v. Dharam Prakash Sharma , it
was held that the employees were undeniably “employees” of the Corporation,
and the Corporation had merely adopted CCS Rules. Whereas in the present
case, the retired employees were originally Central Government servants
holding civil posts, which is a specific statutory exclusion not present in
the .
MCD (supra)

(vi) Regarding Refund: The High Court ordered that employees who had
already withdrawn the differential gratuity amounts deposited by the
Management “need not return the money” and the Management cannot
demand a refund of these amounts. For those employees (like the retired
employees in the present Civil Appeals) who had not yet withdrawn the money,
the High Court ordered that the amounts lying in the deposit must
be returned to the Management.
8. Learned Senior Counsel, Ms. Haripriya Padmanabhan, argues that
HWP is an industrial establishment. The orders constituting HWP confer
complete autonomy to HWP to decide on the appointment of employees, and
service conditions by which the employees are governed. HWP, as an entity,
has adopted and applied the CCS (Pension) Rules, 1972. From the above
circumstances, it cannot be gainsaid that the employees of HWP fall within
the exclusive definition of “employee” under Section 2(e) of the PG Act. The
absence of an exemption notification under Section 5 is a crucial factor in
determining the applicability of the PG Act to HWP’s employees. The entities

1
(1998) 7 SCC 22.
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established as government companies/public sector undertakings have
exemption notifications in their favour, or the public sector undertaking, as a
corporate body, discharges the obligation under the PG Act. There is no
exemption notification in the case at hand. The impugned judgment fell into
a serious error by distinguishing the judgment in MCD (supra) . Assuming
without admitting that the retirement benefits are paid as per CCS Rules/CCS
Pension Rules, unless it is established on all fours that the employees of HWP
squarely fall within Section 2(e) of the PG Act, denial of gratuity under the PG
Act is illegal, and the impugned judgment is liable to be set aside.
9. Shree S.D. Sanjay, learned ASG appearing for HWP, argues that the
standing of employees of HWP vis-à-vis HWP is, in more than one sense, a
jurisdictional fact. The jurisdictional fact is appreciated and decided on all the
circumstances which bring into existence HWP, whether as a Department of
Atomic Energy or a separate corporate entity. The employees do not state that
HWP is a separate public sector undertaking/government company with a
certificate issued by the Registrar of Companies. HWP, as per the inception
document, was constituted by the Office Memorandum dated 01.05.1969. The
sequence is a Board of Management known as the Heavy Water Projects
Board, created for managing the projects of DAE for the production of heavy
water. HWP is a project of the DAE. To sieve out HWP from its constituent
department is illegal and may go contrary to the AE Act. In response to the
argument about the functional freedom granted to HWP, it is argued that this
freedom is granted to accelerate the objectives sought through HWP projects.
The appointment orders were issued in accordance with the CCS Rules. The
department’s service rules cannot be treated as indicia for deciding the
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jurisdictional fact. The appointment orders speak in unison that CCS Rules
govern the employees, and the resultant effect is that gratuity is payable
under the CCS (Pension) Rules, 1972. The circumstances leading to the
establishment of HWPs render the establishment subject to exclusion under
Section 2(e) of the PG Act. The need for an exemption notification under
Section 5 and the need to reply to overriding effect under Section 14 of the PG
Act depend on the Act’s applicability to the relationship between an employer
and an employee. The impugned judgment, in his argument, has briefly
summarised the position in fact and law, and no ground exists warranting
interference in the impugned judgment. It is lastly argued that, considering
the importance of the entities, the hierarchy of establishment, command and
control is decided by the Central Government. The employees cannot claim to
have the benefit of CCS Rules, status of a Central Government employee,
while for gratuity, the benefits under the PG Act.
10. The applicability or inapplicability of the PG Act, to begin with, depends
on whether the employee comes within the inclusive definition or the exclusive
definition. The same is dependent on jurisdictional facts. In Arun Kumar v.
2
Union of India , it has been held that a jurisdictional fact is a fact which must
exist before a court, tribunal, or authority assumes jurisdiction over a
particular matter. A jurisdictional fact is one on the existence or non-existence
of which depends the jurisdiction of a court, a tribunal or an authority. It is
the fact upon which an administrative agency’s power to act depends. If the
jurisdictional fact does not exist, the court, authority or officer cannot act. If
a court or authority wrongly assumes the existence of such a fact, the order

2
(2007) 1 SCC 732.
9


can be questioned by a writ of certiorari. The underlying principle is that by
erroneously assuming the existence of such a jurisdictional fact, no authority
can confer upon itself jurisdiction which it otherwise does not possess.
11. It is axiomatic that a decision is an authority for what it decides and
not what can be logically deduced therefrom. In our view, the decision in MCD
(supra) cannot be an authority for deciding the applicability of the PG Act to
the employees of HWP. We cannot logically also deduce the similarity of
circumstances in the corporate entity of Municipal Corporation of Delhi and
an annexe of the DAE. Therefore, the applicability is determined by the facts
of the case considered by the tribunal/court.
12. It is relevant to notice that the amended definition deals with the first
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limb of Section 2(e), and the second exclusionary limb is the same in the pre-
and post-amendment provisions. Construing Section 2(e), the second limb
begins with the words “but does not include” any such person (i) who holds a
post under the Central Government, (ii) a State Government, (iii) is governed
by any other Act or (iv) by any Rules providing payment of gratuity. The
exclusionary clause, if read by applying the golden rule without a further test,

3

10


excludes employees of the Central and State Governments from the meaning
of “employee” under the PG Act. Secondly, it also excludes a person who is
governed by any other act. Thirdly, even if it is used as “or” but not as “and”,
it excludes any such person who is governed by any other Act or by any rules
providing for payment of gratuity. The provision contains the words both
“means” and “does not include”. Under interpretation of statutes, this Court
has repeatedly held that coupling the word “means” with “includes” denotes
4
an exhaustive definition. Conversely, the word “means” and “does not
include” should be read as exclusionary language that strictly excludes the
scope of the provision from certain classes. Consequently, a person who is
governed by any other Act, or governed by any Rules providing for payment of
gratuity, does not come within the ambit of the definition of “employee” under
the PG Act.
12.1 The construction of Section 2(e), as above, leads us to the factual matrix
of the case. The AE Act is not considered exhaustively for the present purpose.
Still, it is sufficient to refer to Section 3 of the AE Act which inter-alia
empowers the Central Government to produce, develop, use and dispose of
Atomic Energy, either by itself or through any Authority or Corporation
established by it or a Government Company, and carry out research into any
matters connected therewith. Similarly, to manufacture or to produce any
prescribed radioactive substance or the ancillary works connected therewith,
the difference in language between Clauses (a) and (b) of Section 3 clearly
demonstrate that a few of the functions/activities, the Central Government is

4
Mahalakshmi Oil Mills v. State of A.P. (1989) 1 SCC 164; P. Kasilingam And Others v. P.S.G
College Of Technology And Others (1995) supp SCC 2 348
11


empowered to do by itself or through any other authority or corporation
established by it or a Government Company, and has power to manufacture
or otherwise produce any prescribed or radioactive substance as per Clause
(b). The chart in the above paragraph demonstrates the choice vested in the
Central Government to undertake a particular act either directly or by
establishing a company/PSU.
13. Since its inception, a board has been constituted to manage the HWPs
of the DAE. The retired employees admit that HWP is not incorporated under
the Companies Act, is not recognised as a PSU, or functions as a Government
Company. In other words, the other attributes of a separate legal entity,
incorporated association, artificial person, limited liability, common seal,
perpetual succession, and transferability of shares are not present. In
substance, without any ambiguity, the HWP is created to manage the projects
of the DAE for the production of heavy water. HWP at Tuticorin is a project
under the management of the Heavy Water Projects Board of the DAE, and
cannot, by sieving, separate itself from being an ancillary or adjunct of the
DAE. For the limited purpose of gratuity, the larger and comprehensive
establishment of atomic energy facilities by the Central Government is not
replaced with a very narrow construction of the functional freedom given to
the Heavy Water Projects Board or individual Heavy Water Plants. The
jurisdictional fact, on appreciation, leads us to the conclusion that HWP is an
adjunct or ancillary operating through the Heavy Water Projects Board of the
DAE. On examination of constitution, establishment, and continuation, we
notice the character of HWP as an adjunct of the Department of Atomic
Energy, and by choice, we are not adverting to the appointment orders or any
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other circulars for deciding the jurisdictional fact of “employees”. Therefore,
the employees fall within the exclusionary clause of Section 2(e) of the PG Act.
The result of such exclusion is that Sections 5 and 14 are not attracted in
deciding on the applicability of the PG Act to the employees of HWP.
14. For the above reasons, we are in agreement with the order impugned,
and the Civil Appeals fail and are dismissed. Pending applications, if any,
stand disposed of.


………..……….…………………J.
[PANKAJ MITHAL]






………..…………………………J.
[S.V.N. BHATTI]


New Delhi;
February 11, 2026.
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