Supreme Court of India
NAGAR AYUKT NAGAR NIGAM, KANPUR versus SRI MUJIB ULLAH KHAN AND ANOTHER on 2 April 2019
SUPREME COURT REPORTS
[2019] 6 S.C.R.
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NAGAR AYUKT NAGAR NIGAM, KANPUR
v.
SRI MUJIB ULLAH KHAN AND ANOTHER
(Civil Appeal No. 2628 of 2017)
BAPRIL 02, 2019
[MOHAN M. SHANTANAGOUDAR ANDHEMANT GUPTA, JJ.]
Payment of Gratuity Act, 1972 – ss.1(3)(c) and 14 – Retirementand Benefits and General Provident Fund Regulations, 1962 – r.4(1)C– Uttar Pradesh Municipal Corporation Act, 1959 – s.548 –Employees of Municipal Corporation claimed gratuity by invokingthe jurisdiction of the controlling authorities under the Act, 1972 –Controlling authorities allowed the petition for gratuity in favourof the employees – Appellant contended that gratuity is payable inDterms of r.4(1) of the 1967 Regulations published under the Act,1959 – Therefore, the employees of the Municipalities were entitledto gratuity only in terms of such Regulations and not under the Act,1972 – High Court held that employees of Municipalities wereentitled to the gratuity in terms of the provisions of the Act, 1972 –On appeal, held: Central Government had published a notificationEdated 8.1.1982 in terms of s.1(3)(c) of the Act, 1972 which made itclear that the Act is applicable to the local bodies i.e. theMunicipalities – s.14 of the Act, 1972 has given an overriding effectover any other inconsistent provision in any other enactment – Inview of s.14, the provision in the State Act contemplating paymentFof Gratuity will be inapplicable in respect of the employees of thelocal bodies – Thus, there is no error in the orders passed by thecontrolling authorities under the Act and as maintained by the HighCourt – General Clauses Act, 1987 – s.3(31).
Dismissing the appeals, the CourtG
HELD: 1. In terms of the Section 1(3)(c) of the Payment ofGratuity Act, 1972, the Central Government has published anotification on 08.01.1982 and specified Local Bodies in whichten or more persons are employed, or were employed, on any day of the preceding twelve months as a class of establishmentto which this Act shall apply. The notification dated 08.01.1982was not referred to before the High Court. Such notificationmakes it abundantly clear that the Act, 1972 is applicable to thelocal bodies i.e., the Municipalities. Section 14 of the Act, 1972has given an overriding effect over any other inconsistentprovision in any other enactment. In view of Section 14 of theAct, the provision in the State Act contemplating payment ofGratuity will be inapplicable in respect of the employees of thelocal bodies. [Paras 10, 11 and 12][1032-F; 1033-C; E]
2. The entire argument of the appellant is that the StateAct confers the restrictive benefit of gratuity than what isconferred under the Central Act. Such argument is not tenable inview of Section 14 of the Act and that liberal payment of gratuityis in fact in the interest of the employees. Thus, the gratuity wouldbe payable under the Act, 1972. Such is the view taken by theControlling Authority. In view of the aforesaid, there is no errorin the orders passed by the Controlling Authorities under theAct and as maintained by the High Court. [Paras 14, 15][1033-G-H; 1034-A]
Municipal Corporation of Delhi v. Dharam PrakashSharma and Another AIR 1999 SC 293: (1998) 7 SCC221 – referred to.
Case Law Reference
(1998) 7 SCC 221 referred to Para 5
CIVIL APPELLATE JURISDICTION: Civil Appeal No.2628 of
From the final Judgment and Order dated 19.04.2017 of the HighCourt of Judicature at Allahabad in Writ Petition No.19016 of 2007
With
Civil Appeal No.2629 of 2017.
Anurag Dubey, Satpal Wadhwa, Pramod Kumar, S.R. Setia, SunilKumar Verma, Advs. for the Appellant.
Vinay Garg, Sanjay Kumar Visen, Aniruddha P. Mayee, Advs.for the Respondents.
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1030SUPREME COURT REPORTS
AThe Judgment of the Court was delivered by HEMANT GUPTA J.
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1. The challenge in Civil Appeal No. 2628 of 2017 is to an orderdated 19.04.2007 passed by the learned Single Bench of the High Courtof Judicature at Allahabad, whereby an order dated 08.12.2006passedBby the Controlling Authority, Kanpurunder the Payment of Gratuity Act,1972[1] was not interfered with.
2. Civil Appeal No. 2629 of 2017 has also been taken up alongwith present appeal wherein the challenge is to an order dated 02.05.2007of the High Court of Judicature at Allahabad upholding an order datedC29.04.2006of Controlling Authority (Additional Labour Commissioner,Gorakhpur, U.P.) passed under the Actallowing the petition for gratuityin favour ofthe respondent herein.
3. The appellant,the Municipal Corporation, Kanpur is governedby the Uttar Pradesh Municipal Corporation Act, 1959[2], whereas, theDrespondent is an employee of the appellant. The employees in both casesclaimed gratuity by invoking the jurisdiction of the ControllingAuthorities under the Act. The argument of the appellant before thelearned Single Bench was that the gratuity is payable in accordancewith the Retirement Benefits and General Provident Fund Regulations,1962[3]framed under Section 548 of the 1959 Act as amended onE11/01/1988. Such Regulations contemplate payment of gratuity at therate of 15 days salary per month for 16.5 months. It was found by theHigh Court that it is the Act which is applicable, whereby, gratuitycalculated at the rate of 15 days salary for every completed year with-out any ceiling of months or part thereof.F
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 Regulationspublished under Section 548 (1) of the 1959 Act as amended on11.01.1988. Therefore, the employees of the Municipalities are entitledto gratuity only in terms of such Regulations and not under the Act.G5. The High Court relied upon a judgment reported as MunicipalCorporation of Delhi vs Dharam Prakash Sharma and another[4 ]to 1Act 21959 Act 31962 Regulations 4AIR 1999 SC293H
hold that only employees of Central Government or the StateGovernment are exempt from the applicability of the Act, therefore, theemployees of the Appellants would be governed by the Act and areentitled to gratuity in terms of the scale mentioned therein. It was heldthat the Act is not applicable only to the Central Government or StateGovernments in terms of definition of an ‘employee’ under Section 2 (e)of the Act. Therefore, the employees of the Municipalities are entitled tothe gratuity in terms of the provisions of the Act.
6. The appellant relies upon Section 3 of the U.P Dookan AurVanijya Adhishthan Adhiniyam, 1962[5] which is to the effect that suchAct will have no application to the office of Government or LocalBodies. Therefore, on the strength of such statutory provision, it wasargued that the Act would not be applicable in respect of theMunicipalities. The appellant is not a factory, mine, oilfield, plantation,port and railway company and that there is no notification as stipulatedunder Clause (c) of Section 1(3) of the Act. Therefore, the employeesof the Municipalities are entitled to the gratuity in terms of theRegulations framed in exercise of powers of Section 548 of the 1959Act and not under the Act.
7. On the other hand, learned counsel forthe respondentpointedout that the Central Government has published a notificationin terms ofSection 1(3)(c) of the Act on 08.01.1982 to extend the applicability ofthe Act to the Municipalities. Thus,the Act is applicable to theMunicipalities. 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 shallnot extend to the State of Jammu and Kashmir.
(3) It shall apply to-
(a) every factory, mine, oilfield, plantation, port and railwaycompany; (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 A
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employed, or were employed, on any day of the precedingtwelve months;
(c) such other establishments or class of establishments, inwhich ten or more employeesare employed, or wereemployed, on any day of thepreceding twelve months, asBthe Central Government may, by notification, specify in thisbehalf.”
8. A perusal of the above provisions would show that the Act isapplicable to(1)every factory, mine, oilfield, plantation, port and railwaycompany;(2)every shop or establishment within the meaning of any lawCfor the time being in force in relation to shops and establishments in aState, in which ten or more persons are employed,the said provision hastwo conditions, viz. (i)a shop or establishments within the meaning of aState law and (ii) in which ten or more personsare employed; and (3)theestablishments or class of establishments which Central Governmentmay notify.D
9. The appellant is not covered by clauses (a) and (b) of Section1(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 1962Act as such Act is not applicable to the offices of the Government orlocal authorities. The Local Authorities means a municipal committee,Edistrict board etc or entrusted with the control or management of a mu-nicipal or local fund in terms of Section3(31) of the General ClausesAct, 1897.
10. In terms of the above said Section 1(3)(c) of the Act, theCentral Government has published a notification on 08.01.1982 and speci-Ffied Local Bodies in which ten or more persons are employed, or wereemployed, on any day of the preceding twelve months as a class ofestablishment to which this Act shall apply. The said notificationdated08.01.1982 reads as under:- “ New Delhi, the 8[th] January, 1982
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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 wereemployed, on any day preceding twelve months, as a class ofestablishments to which the said Act shall apply with effect fromthe 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 re-ferred to before the High Court. Such notification makes itabundantlyclear that the Act is applicable to the local bodies i.e., theMunicipalities. Section 14 of the Act has given an overriding effect overany other inconsistent provision in any other enactment. The saidprovision reads as under:
“14. Act to override other enactments, etc. – The provisions ofthis Act or any rule made thereunder shall have effect notwith-standing anything inconsistent therewith contained in any enact-ment other than this Act or in any instrument or contract havingeffect by virtue of any enactment other than this Act.”
12. In view of Section 14 of the Act, the provision in the State Actcontemplating payment of Gratuity will be inapplicable in respect of theemployees of the local bodies.
13. Section 2(e) of the Act alone was referred to in the judgmentreported as Municipal Corporation of Delhi (supra). The saidjudgment is in the context of CCS (Pension) Rules, 1972[6 ]whichspecifically provides for payment of Pension and Gratuity. The Act isapplicable to the Municipalities, therefore, it is wholly inconsequentialeven if there is noreference to the notification dated 08.01.1982.
14. The entire argument of the appellant is that the State Actconfers restrictive benefit of gratuity than what is conferred under theCentral Act.Such argument is not tenable in view of Section 14 of theAct and that liberal payment of gratuity is in fact in the interest of theemployees. Thus, the gratuity would be payable under the Act. Such isthe view taken by the Controlling Authority.61972 Rules A
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1034SUPREME COURT REPORTS[2019] 6 S.C.R.
A15. In view of the aforesaid, we find that there is no error in theorders passed by the Controlling Authorities under the Act and asmaintained by the High Court. Consequently, the appeals are dismissed.
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Ankit Gyan
Appeals dismissed.
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