Disposed

Mukul Kr. Sengupta v. Union of India & Ors.

Calcutta HC3 Apr 2024WPA/15056/2019

Case brief

AI extract

What is this about?

Ex-employee of a CPSE sought revised gratuity and leave pay after pay-scale revision was made subject to 'affordability'. Since the employer had already disbursed revised pay, showing it met the affordability criterion, the court held the non-payment defence not bona fide and directed disbursement of enhanced gratuity and leave salary within six months.

What the court decided

AI extract

Mukul Kr. Sengupta Vs Union of India & Ors. — Pension and Retirement Benefits | Calcutta HC (2024)

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Form No.J(2)

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IN THE HIGH COURT AT CALCUTTA CONSTITUTIONAL WRIT JURISDICTION APPELLATE SIDE

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Present:

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The Hon’ble Justice Raja Basu Chowdhury

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WPA 15056 of 2019

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Mukul Kumar Sengupta Versus Union of India & Ors.

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For the petitioner	:	Mr. Susanta pal Mr. Ananda Dulal Sarkar
For the respondent no. 1	:	Mr. Nandalal Singhania
For the respondent no. 2	:	Mr. Shiv Shankar Banerjee Ms. Suvodeep Chakraborty
Heard on	:	03.04.2024
Judgment on	:	03.04.2024

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Raja Basu Chowdhury, J:

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At the very outset, Mr. Banerjee, learned advocate appearing for the respondent no. 2 submits that the affidavit-in-opposition had been affirmed on behalf of the respondent nos. 2 and 3 but due to inadvertence the same has been misplaced and has not been filed. In such circumstances, he prays that a copy of the aforesaid affidavit duly affirmed by the General Manager of the respondent no. 2 on 13^th April, 2021 be taken on record. Mr.

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Pal learned advocate representing the petitioner does not object to the same and having regard to the aforesaid, a copy of the aforesaid affidavit prepared on behalf of the respondent nos. 2 and 3 is retained with the record.

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The present writ petition has been filed, inter alia , praying for a direction upon the respondents to disburse revised gratuity and revised leave pay including, inter alia , proportionate revised salary for the month of January, 2017.

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The petitioner is an ex-employee of the respondent no. 2. According to the petitioner, after serving the respondent no. 2 for 37 continuous years, the petitioner was superannuated from the service with effect from 31^st January, 2017. According to the petitioner, at the time of his retirement the respondent no. 2 had duly disbursed all terminal benefits, inter alia , including gratuity. Subsequently, consequent upon enhancement of the ceiling limit of gratuity from Rs.10 lakhs to 20 lakhs with effect from 29^th March, 2018 as per the provisions of the Payment of Gratuity Act, 1972 (hereinafter referred to as the “said Act”), an office memorandum dated 10^th July, 2018 was issued by the Under Secretary to the Government of India, Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises, wherefrom it would appear that a clarification was issued to all administrative Ministries including the Departments of Government of India. By drawing attention of the

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Departmental heads to the DPE Office memorandum no. W- 02/0028/2017-DPE(WC)-GL-XIII/17 dated 3^rd August, 2017, it was, inter alia, clarified as follows:

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“ a) The payment of Gratuity under DPE guidelines dated 03.08.2017, is subject to affordability of the CPSEs concerned effective for the period from 01.01.2017 till 28.03.2018, in respect of Executives and Non-Unionised Supervisors of CPSEs on IDA pay pattern, where, pay has been revised w.e.f. 01.01.2017.

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b) Whereas, on and after 29.03.2018, the payment of gratuity of Rs. 20 lakhs is mandatory for all the CPSEs irrespective of their affordability as it is a statutory provision in light of the amendment in the Payment of Gratuity Act, 1972. This provision is applicable to all employees of all CPSEs.

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c) Further, the Government decision on the basis of the recommendations of the 7^th Central Pay Commission (CPC), regarding raising the Gratuity ceiling from Rs.10 Lakhs to Rs. 20 Lakhs w.e.f. 01.01.2016 is not applicable to the employees of CPSEs. ”

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According to the petitioner, once, the aforesaid office memorandum had been issued, the same became binding on the respondent no. 2 and the respondent no. 2 is obliged to act in terms thereof.

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Mr. Pal, learned advocate appearing for the petitioner, by drawing attention of this Court to the office memorandum dated 3^rd August, 2017 issued by the Joint Secretary to the Government of India, Ministry of Heavy Industries & Public Enterprises, Department of Public Enterprises, submits that the last revision of the scales of pay of Board level and below Board level Executives and Non-Unionized Supervisors or Central Public

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Sector Enterprises was made effective from 1^st January, 2007. As per the aforesaid office memorandum, the pay scale for Board level and below Board level Executives have been revised as per Annexure-I.

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The said office memorandum, inter alia , further provides that the revised pay scales would be implemented subject to the condition that the additional financial impact in the year of implementation of the revised pay package for Board level and below Board level Executives and Non-unionized Supervisors should not be more than 20 per cent of the average Profit Before Tax (PBT) of the last three financial years preceding the year of implementation.

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According to Mr. Pal, the said payment is thus, subject to affordability of the respondent no. 2 and the affordability has been explained in Clause 3 of the above memorandum. It is submitted that although, the petitioner had prayed for disbursal of revised pay scale on the basis of the aforesaid office memorandum dated 3^rd August, 2017, however, during the pendency of the instant writ petition, the revised pay scale has been disbursed in favour of the petitioner. He submits that the respondents have, however, in their affidavit-in-opposition attempted to make out a case that the respondent no. 2 has not yet achieved the affordability to pay the proportionate or balance gratuity at enhanced rate to the employees from 1^st January, 2017 to 28^th March, 2018.

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According to Mr. Pal, the aforesaid statement is not supported by any particulars and is self-contradictory. By drawing attention of this Court to the statement of profit and loss of the respondent no. 2 for the year 31^st March, 2018 and 31^st March, 2019 it is submitted that the respondent no. 2 is a profit making concern and the defence of affordability as set up by the said respondent to deny the petitioner his legal and legitimate entitlement, is a sham defence. In the facts and circumstances of the instant case, it is submitted that this Court may be pleased to direct the respondent no. 2 to disburse the enhanced amount of gratuity in terms of the office memorandum dated 10^th July, 2018 along with the leave salary.

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Per contra , Mr. Banerjee by placing before this Court the statements made in paragraph 4(x) and (xv) of the affidavit-inopposition, submits that the respondent no. 2 had initially taken a decision on the basis of cogent evidence and materials on record that it is not affordable for the respondent no. 2 to make provisions for payment of gratuity to employees who had retired during the period between 1^st January, 2017 and 28^th March, 2018. He submits that although, the respondent no. 2 had, inter alia , contended that the petitioner is not covered under the office memorandum dated 10^th July, 2018, the office memorandum from which the petitioner claims his entitlement specifically

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provides that the entitlement of the petitioner is subject to affordability by the respondent no. 2.

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By referring to paragraph 4(xv) of the said affidavit-in-opposition, it is submitted that the respondent no. 2 has not yet achieved the affordability to pay the proportionate or balance gratuity payable at the enhanced rate to the employees who had retired between the period from 1^st January, 2017 to 28^th March, 2018. According to Mr. Banerjee, the affordability is not linked with the profit of the respondent no.2 for a particular year. By placing reliance on the office memorandum dated 3^rd August, 2017 he submits that the term “affordability” has duly been clarified in the said office memorandum. To morefully appreciate the same, clause-3 of the office memorandum dated 3^rd August, 2017 is extracted hereinbelow:

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“ 3. Affordability: The revised pay scales would be implemented subject to the condition that the additional financial impact in the year of implementing the revised pay-package for Board level executives, Below Board level executives and Non-Unionised Supervisors should not be more than 20% of the average Profit Before Tax (PBT) of the last three financial years preceding the year of implementation. ”

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In the light of the aforesaid since, the respondent no. 2 has not

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reached the affordability to make payment of the differential amount of gratuity based on the revised pay, no direction at this stage should be issued upon the respondent no. 2, to make payment of the differential amount of gratuity to the petitioner.

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Mr. Singhania, learned advocate appearing for the respondent no. 1, submits that the respondent nos. 2 and 3 should strictly follow and comply with the terms of the office memorandum dated 10^th July, 2018 and 3^rd August, 2017.

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Heard the learned advocates appearing for the respective parties and considered the materials on record.

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Admittedly, in this case it is noticed that the right of the petitioner to the enhanced amount of gratuity and the revision of pay flows not from the said Act but from the office memoranda dated 3^rd August, 2017 and 10^th July, 2018. As would appear from the aforesaid office memorandum dated 10^th July, 2018 though, payment of enhanced gratuity has been made mandatory with effect from 29^th March, 2018, payment of enhanced amount of gratuity in terms of the aforesaid memorandum with effect from 1st January, 2017 till 28^th March, 2018, has been made subject to “affordability” . To that extent, I find substance in the submission of Mr. Banerjee.

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It would also appear that by office memorandum dated 3^rd August, 2017, recommendation has been made for revision of pay of Board level and below Board level Executives, however, the effect thereof has been made subject to “affordability” . In the said office memorandum, the term “affordability” has been specifically defined. Admittedly, in this case it is noticed that during pendency of the instant writ petition, the petitioner has been

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disbursed the revised pay in terms of he office memorandum dated 3^rd August, 2017. As such, it is clear that the respondent no. 2 had the “affordability” to make payment of the revised pay scale.

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Although, a stand has been taken by the respondent nos. 2 and 3 in the affidavit-in-opposition that initially a decision had been taken on the basis of cogent evidence and materials on record that it is not affordable for the respondents to make provision for payment of gratuity to the employees who had retired between the period 1^st January, 2017 and 28^th March, 2018, no document in support thereof has been disclosed. On the contrary, it is noticed that in paragraph 4(xv) of the affidavit-in-opposition, it has been stated by the self-same respondents that the respondent no. 2 is yet to achieve affordability to pay proportionate or balance gratuity payable at the enhanced rate to the employees for the period from 1^st January, 2017 to 28^th March, 2018.

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Since, the respondents have already disbursed the revised pay in terms of the office memorandum dated 3^rd August, 2017, it is apparent and clear that the respondents had the affordability to pay the same. Thus, on the own showing of the respondent no.2 since, the affordability to make payment of gratuity is linked with the office memorandum dated 3^rd August, 2017, I am of the view that the defence set up by the respondent no. 2 to deny the

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petitioner of his entitlement to receive gratuity in terms of the office memorandum dated 10^th July, 2018, does not appear to be bona fide.

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Having regard to the aforesaid, I direct the respondent no.2 to forthwith take steps to disburse the enhanced amount of gratuity in terms of the office memorandum dated 10^th July, 2018. The respondent no. 2 is also directed to ensure that other entitlements of the petitioner including, inter alia , leave salary is disbursed in favour of the petitioner in terms of the office memorandum dated 3^rd August, 2017, since admittedly the respondents on their own showing has the affordability to make payment.

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It is expected that the aforesaid payments should be disbursed in favour of the petitioner within a period of six months from the date of communication of this order.

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With the above observations/directions, the writ petition stands disposed of. There shall be no order as to costs.

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Urgent Photostat certified copy of this order, if applied for, be made available to the parties upon compliance of all necessary formalities.

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(Raja Basu Chowdhury, J.)

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Saswata

Mukul Kr. Sengupta v. Union of India & Ors.

Case brief

What is this about?

What the court decided

Mukul Kr. Sengupta v. Union of India & Ors.

Case brief

What is this about?

What the court decided

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Statutes considered

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