Allowed

Purvanchal Bank , Head Office Mohiddipur and Another v. Chief Labour Commissioner and 2 Others

Allahabad HC4 Jul 2018WRIC/20437/2018

Case brief

AI extract

What is this about?

This writ petition challenged an order by the Assistant Labour Commissioner regarding gratuity payment. The court held that Regional Rural Bank employees are 'employees' under the Gratuity Act and set aside the impugned order for not addressing the implications of a revived punishment order on gratuity deductions.

What did the court decide?

The order dated 20/23.4.2018 passed by the Assistant Labour Commissioner was set aside and the matter remanded for a fresh decision within two months.

Purvanchal Bank , Head Office Mohiddipur… — Pension and Retirement Benefits | Allahabad HC (2018)

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Court No. - 36

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Case :- WRIT - C No. - 20437 of 2018 Petitioner :- Purvanchal Bank , Head Office Mohiddipur And Another Respondent :- Chief Labour Commissioner And 2 Others Counsel for Petitioner :- Aditiya Kumar Singh,Shri Ashok Khare, Sr. Advocate Counsel for Respondent :- A.S.G.I.,Amrendra Pratap Singh

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Hon'ble Mrs. Sunita Agarwal,J.

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Memo of appearance filed by Sri Prem Shankar Prasad on behalf of the respondent nos. 1 and 2 is taken on record.

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Heard Sri Ashok Khare, learned Senior Advocate assisted by Sri Aditya Kumar Singh, learned counsel for the petitioners, Sri Amrendra Pratap Singh, learned counsel appearing for the respondent no. 3 and Sri Prem Shankar Prasad, learned counsel for respondent nos. 1 and 2.

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With the consent of the parties, the writ petition has been heard and is being decided finally at the admission stage itself without calling for the counter affidavit.

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The present writ petition is directed against the order dated 20/23.4.2018 passed by the Assistant Labour Commissioner (Central), Allahabad i.e. the Controlling Authority under the Payment of Gratuity Act, 1972 (hereinafter referred to as "the Act, 1972").

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The arguments of Sri Ashok Khare, learned Senior Advocate appearing for the petitioners are two folds. Firstly, he has submitted that the Controlling Authority under the Act, 1972 was not competent to entertain the dispute raised by the respondent no. 3 inasmuch as, the provisions pertaining to Payment of Gratuity Act are covered by the Regulation 72 of the Regulations namely Purvanchal Gramin Bank (Officers and Employees) Service Regulation, 2010 (hereinafter referred to as "the Regulations, 2010"), framed for the purpose of regulating the services of officers and employees of the bank.

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With reference to the sub-regulation (1) and (2) of Regulation 72, it is contended by the learned Senior Advocate that payment of gratuity to the employees and Officers of the bank is being made under sub-regulation (2) of Regulation 72 which contains much more flexible and better conditions than that provided under the provisions of the Act, 1972.

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As the regulations governing payment of gratuity is framed by the petitioner/bank, the Controlling Authority under the Payment of Gratuity Act was not empowered to entertain the dispute.

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It is further submitted that the respondent no. 3 being an employee of the

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petitioner/bank is not covered within the meaning of 'employee' under Section 2(e) of the Act, 1972 inasmuch as, the Central Government has all control over the post held by the petitioners.

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With reference to Section 17 of the Regional Rural Banks Act, 1976 (hereinafter referred to as "the Act, 1976"), it is contended by the learned Senior Advocate for the petitioners that the terms and conditions of appointment and services of staff of the Regional Rural Banks are determined by the Central Government and it has all control over the services of the officer and employees of the bank and, therefore, the respondent no. 3 would not be an 'employee' covered by the definition under the Act, 1972.

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Dealing with this submission of learned Senior Advocate for the petitioners, it would be relevant to note that under the Regulations, 2010 framed by the Bank for regulating the services of officers and employees of the bank, there is no provision to deal with the situation where a dispute is raised by an employee regarding determination of the amount of gratuity or withholding thereof.

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The relevant regulation 72 of Regulations, 2010 reads as under:-

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“72. Gratuity. - (1) An officer or employee shall be eligible for payment of gratuity either as per the provisions of the Payment of Gratuity Act, 1972 (39 of 1972) or as per sub-regulation (2), whichever is higher.

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(2) Every officer or employee shall be eligible for gratuity on -

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(a) retirement,

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(b) death,

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(c) disablement rendering him unfit for further service as

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certified by a medical officer approved by the Bank, or

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(d) resignation after completing 10 years of continuous service, or

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(e) termination of service in any other way except by way of punishment after completion of 10 years of service:

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Provided that in respect of an employee there shall be no forfeiture of gratuity for dismissal on account of misconduct except in cases where such misconduct causes financial loss to the bank and in that case to that extent only.

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(3) The amount of gratuity payable to an officer or employee shall be one months pay for every completed year of service or part

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thereof in excess of six months subject to a maximum of 15 month’s pay:

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Provided that where an officer or employee has completed more than 30 years of service, he shall be eligible by way of gratuity for an additional amount at the rate of one half of a month’s pay for each completed year of service beyond 30 years:

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Provided further that in respect of an officer the gratuity is payable based on the last pay drawn:

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Provided also that in respect of an employee pay for the purposes of calculation of the gratuity shall be the average of the basic pay (100%), dearness allowance and special allowance and officiating allowance payable during the 12 months preceding death, disability, retirement, resignation or termination of service, as the case may be.”

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A careful perusal thereof indicates that the said provision only determines as to the contingency in which officer and employee would be eligible for gratuity and or in which conditions, the gratuity can be withheld.

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In view of the admitted fact that there is no provision under the regulations governing the service conditions of officers and employees of the petitioner/bank, regarding adjudication in case of any dispute relating to payment or withholding of gratuity, it cannot be said that the Controlling Authority under the Payment of Gratuity Act would not be competent to entertain the dispute.

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Insofar as the submissions regarding definition of “employee” under Section 2(e) of the Act, 1972 and Section 17 of the Act, 1976 is concerned, it would be relevant to reproduce Section 2(e) of the Act, 1972 and Section 17 of the Act, 1976 as under:-

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“ 2(e) of the Act, 1972 - “employee” means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity;”

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“ Section 17 of the Act, 1976 :- Staff of Regional Rural Banks 1. A Regional Rural Bank may appoint such number of officers and other employees as it may consider necessary or desirable for the efficient performance of its functions and may determine the terms and conditions of their appointment and

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service:

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Provided that it shall be lawful for a Sponsor Bank, if requested so to do by a Regional Rural Bank sponsored by it, to send, during the first five years of the functioning of a Regional Rural Bank, such number of officers or other employees on deputation to the Regional Rural Bank as may be necessary or desirable for the efficient performance of its functions:

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Provided further that the remuneration of officers and other employees appointed by a Regional Rural Bank shall be such as may be determined by the Central Government, and, in determining such remuneration, the Central Government shall have due regard to the salary structure of the employees of the State Government and the local authorities of comparable level and status in the notified area.

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2. Notwithstanding anything contained in the Industrial Disputes Act, 1947, or any other law for the time being in force, no award, judgment, decree, decision or order of any industrial tribunal, court or other authority, made before the commencement of this Act, shall apply to the terms and conditions in relation to the persons appointed by a Regional Rural Bank.

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3. The officers and other employees of a Regional Rural Bank shall exercise such powers and perform such duties as may be entrusted or delegated to them by the Board.”

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A careful reading of both the provisions indicates that any such person who holds a post under the Central Government or State Government and whose services are governed by any Act or Rules providing for payment of gratuity would not be included within the meaning of “employee” under Section 2(e) of the Act, 1972.

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Insofar as the officers and employees of the petitioner/bank are concerned, they cannot be said to be Central Government employees inasmuch as, the Central Government has no control over their appointment or terms and conditions of service nor they are governed by the rules applicable to the Central Government.

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On a pointed query made by the Court, learned Senior Advocate for the petitioners has not been able to demonstrate that the creation of post of officers and employees of the Central Government or the matter relating to financial implications for payment of salary to such officers and employees is within the jurisdiction of the Central Government. Merely by the fact that the remuneration of officers and employees appointed by the Regional Rural Banks is determined by the Central Government, having regard to the salary structure of the employees of the State Government and Local authorities, it cannot be said that

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the Central Government has a direct control over the officers and employees of the bank or the post in question would be a post held under the Central Government.

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Rather it can safely be concluded from a careful reading of Section 17 of the Act, 1976 that the creation of post, appointment, determination of terms and conditions of services of officers and employees of the Bank is within the jurisdiction of Regional Rural Bank under the provisions of the Act, 1976.

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In view of the above, the arguments of the learned Senior Advocate that the respondent no. 3 would not be covered by the definition of “employee” under Section 2(e) of Act, 1972 is not acceptable.

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Now the Court is left with the second limb of the arguments of learned Senior Advocate for the petitioners which refers to the merits of the order passed by the Controlling Authority.

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Submission of learned Senior Advocate is that the dispute raised by respondent no. 3 with regard to withholding of gratuity or deductions made by the employer from the gratuity amount payable to respondent no. 3 was not addressed by the Controlling Authority at all. It is contended that the circumstances which were brought before the Controlling Authority in the objections filed by the employee were not considered.

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It is contended that it is not a case where gratuity was withheld illegally or it has not been determined at all rather the employee was subjected to a departmental enquiry and the punishment order dated 27^th November, 1989 was passed against him on the charges of gross misconduct levelled and proved, wherein it was found that the bank had incurred financial loss to the tune of Rs. 13 lakhs and odd. The said punishment order was challenged by the respondent no. 3 in an appeal before the appellate authority of the bank which was dismissed on 22.2.1991.

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Both the orders were challenged in Writ Petition No. 25029 of 1991 (Virendra Kumar vs. Board of Director, Gorakhpur & others) which was kept pending till its dismissal on 31.5.2016 as infructuous.

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It is contended by learned Senior Advocate that dismissal of the writ petition as infructuous would not give leverage to the respondent no. 3 to get away with the punishment order rather the result would be that the punishment order dated 27.11.1989 confirmed by the appellate authority vide order dated 22.2.1991 would revive with the said dismissal. The deductions from the gratuity was made vide letter dated 23.11.2016 after dismissal of the writ petition

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challenging the punishment order. All these aspects were conveniently concealed by the respondent no. 3 and the Controlling Authority has totally ignored this aspect of the matter though it was duly brought on record in the objection filed by the employee.

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Sri Amrendra Pratap Singh, learned counsel for the respondent no. 3, on the other hand, vehemently opposes the maintainability of the writ petition with the assertion that the order passed by the Controlling Authority is appealable under Section 18 (2) of the Act, 1972. It is contended that the present petition cannot be maintained inasmuch as, all arguments raised before this Court can very well be addressed by the statutory appellate authority.

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Considering the submissions of learned counsel for the parties and having perused the record, it is evident that there is no dispute about the facts disclosed by the employee in the written statement filed before the controlling authority so much so, the punishment order passed by the departmental authority as affirmed by the appellate authority was challenged in the writ petition filed by respondent no. 3 wherein though initially an interim protection was granted, on the basis of which, the respondent no. 3 had continued in service but on the merits of the punishment order, no adjudication has been made rather after promotion and retirement from service, the respondent no. 3 got the writ petition dismissed as infructuous in the year 2016.

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There cannot be a doubt to the legal position that with the dismissal of the writ petition as infructuous, the punishment order would revive. The implications of punishment order, therefore, would come into play.

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The submission of the petitioner/employer that deductions/adjustment from the gratuity payment of the respondent no. 3 was made after dismissal of the writ petition by computation taking into consideration of the fact of revival of the punishment order has not been addressed by the controlling authority. The impugned order passed by the controlling officer under the Payment of Gratuity Act is completely silent over this aspect of the matter.

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Any order which is bereft of reasons or findings on the facts and circumstances brought before the statutory authority cannot withstand the test of scrutiny and cannot be allowed to survive merely on the ground that the said order is appealable before a higher authority.

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It is settled principle that the reasons are soul and heart of every order, be it an order passed by the statutory authority or the judicial authority. The statutory Authority discharging quasi-judicial function is bound to record reasons

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for coming to its conclusion.

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Reference may be made to the judgment of the Apex Court in Ravi Yashwant Bhoir vs. District Collector, Raigad and others reported in 2012 (4) Supreme Court Cases 407 .

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In view of the above discussion, having found that the Controlling Authority under the Payment of Gratuity Act has not addressed the merits of the contention of the employer and not adjudicated the lis recording the findings on the dispute raised before it, this Court is of the considered opinion that the order dated 20/23.4.2018 passed by the Assistant Labour Commissioner (Central), Allahabad/Controlling Officer (under the Payment of Gratuity Act, 1972), Allahabad cannot be sustained. The same is, therefore, set aside.

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The matter is remitted back to the Controlling Authority to decide afresh after giving due opportunity to the petitioner-bank and the respondent no. 3.

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All the arguments being raised by the respondent no. 3 regarding the effect of the order dated 31.5.2016 in Writ Petition No. 25029 of 1991 (Virendra Kumar vs. Board of Director, Gorakhpur & others) (challenging the punishment orders dated 27.11.1989 and 22.2.1991) shall be addressed by the Controlling Authority in a fresh order to be passed, preferably, within a period of two months from the date of submission of certified copy of this order.

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Subject to the above observations and directions, the writ petition is allowed .

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Order Date :- 4.7.2018 Brijesh

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(Sunita Agarwal, J.)

Purvanchal Bank , Head Office Mohiddipur and Another v. Chief Labour Commissioner and 2 Others

Case brief

What is this about?

What did the court decide?

Purvanchal Bank , Head Office Mohiddipur and Another v. Chief Labour Commissioner and 2 Others

Case brief

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