Partly allowed

C.B. Nanjundappa v. the Chief Executive Officer

Karnataka HC16 Feb 2024WP/27075/2019

Case brief

AI extract

What is this about?

Retired work-charged government employee sought balance gratuity for pre-regularisation service under a Controlling Authority order. Court held Section 14 PG Act overrides KCSR; service prior to regularisation counts for gratuity. Petition for disbursal allowed, Zilla Panchayat's challenge dismissed with interest.

What did the court decide?

WP 27075/2019 allowed; WP 48720/2019 dismissed; respondents to release gratuity in four weeks per order dated 22.07.2015, failing which further interest at 6% till payment.

C.B. Nanjundappa Vs the Chief Executive… — Pension and Retirement Benefits | Karnataka HC (2024)

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1 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 16^TH DAY OF FEBRUARY, 2024

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BEFORE

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THE HON'BLE MRS JUSTICE K.S. HEMALEKHA

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WRIT PETITION NO.27075 OF 2019 (L-RES) C/W WRIT PETITION NO.48720 OF 2019 (L-PG)

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IN W.P. NO.27075/2019

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BETWEEN:

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C.B. NANJUNDAPPA S/O. LATE CHELUVAIAH, AGE: 65 YEARS, KAMBEDAHALLI VILLAGE & POST, BINDIGANAVILE HOBLI, NAGAMANGALA TALUK, MANDYA DISTRICT – 571401. ... PETITIONER

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(BY SRI GOVINDARAJ K., ADVOCATE)

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AND:

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THE CHIEF EXECUTIVE OFFICER, ZILLA PANCHAYAT, MANDYA, DISTRICT-MANDYA – 571401.

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Digitally signed by MAHALAKSHMI B M Location: HIGH COURT OF KARNATAKA

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DEPUTY COMMISSIONER, MANDYA DISTRICT, MANDYA – 571401.

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THE EXECUTIVE ENGINEER, PANCHAYATHRAJ ENGINEERING DIVISION, ZILLA PANCHAYATH, MANDYA – 571 401.

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THE ASSISTANT EXECUTIVE ENGINEER, PANCHAYATHRAJ ENGINEERING SUB-DIVISION, MANDYA DISTRICT

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MANDYA – 571 401. ... RESPONDENTS

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(BY SRI B.J. SOMAYAJI, ADVOCATE FOR R-1; R2 - R4 ARE SERVED)

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2 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO-DIRECT THE RESPONDENTS TO TAKE ACTION AND DISBURSE THE GRATUITY AMOUNT TO THE PETITIONER IN TERMS OF ORDER DATED 22.07.2015 PRODUCED AS ANNEXURE-B.

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IN W.P. NO.48720/2019

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BETWEEN:

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CHIEF EXECUTIVE OFFICER, ZILLA PANCHAYATH, MANDYA-571 401.

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ASSISTANT EXECUTIVE ENGINEER, PANCHAYAT RAJ ENGINEERING SUB-DIVISION, NAGAMANGALA, MANDYA DISTRICT-571 432. ... PETITIONERS

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(BY SRI B.J. SOMAYAJI, ADVOCATE)

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AND:

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SHRI NANJUNDAPPA C.B. S/O. CHALUVAIAH, AGED ABOUT 66 YEARS, KAMBADAHALLI, BINDIGANEVILE HOBLI, NAGAMANGALA TALUK, MANDYA DISTRICT – 571 432.

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ASSISTANT LABOUR COMMISSIONER AND GRATUITY CONTROLLING AUTHORITY, MYSORE DIVISION, MYSURU – 570 001. ... RESPONDENTS

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(BY SRI GOVINDARAJ K., ADVOCATE FOR R-1; R2 - SERVED)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUION OF INDIA PRAYING TO CALL FOR THE RECORDS PERTAINING TO THE ORDER PASSED BY THE ASSISTANT LABOUR COMMISSIONER AND GRATUITY CONTROLLING AUTHORITY, MYSORE ON 22.07.2015 IN CASE AND ON PERUSAL OF THE SAME.

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THESE WRIT PETITIONS COMING ON FOR DICTATION, THIS DAY, THE COURT MADE THE FOLLOWING:

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3 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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ORDER

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The petitioner in W.P. No.27075/2019 is seeking a writ of mandamus directing the respondent No.2 to take action against respondent Nos.1, 3 and 4 and recover the gratuity amount to the petitioner in terms of the order dated 22.07.2015.

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W.P.No.48720/2019 by the Chief Executive Officer, Zilla Panchayath and Assistant Executive Engineer, Panchayath Raj assailing the order passed by the Assistant Labour Commissioner and Gratuity Controlling Authority on 22.07.2015, whereby, the application filed before the Controlling Authority under the Payment of Gratuity Act by the workman was allowed ordering payment of gratuity.

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Parties herein are referred to as per the ranking in W.P.No.27075/2019.

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Heard Sri Somayaji, learned counsel for Zilla Panchayath, Panchayath Raj and Sri K. Govindraj, learned

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NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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counsel for the workman and perused the material on record.

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Petitioner is a retired government servant, who was working as a Junior Inspector in the office of respondent No.4, respondent extended the benefit of gratuity for the regular service rendered by him from 01.01.1990 to 31.03.2013. The petitioner approached the Controlling Authority under the Payment of Gratuity Act, 1972 (‘the PG Act,’ for short) seeking for difference of gratuity. The Authority vide order dated 22.07.2015 directed the respondent to pay the balance gratuity of Rs.1,62,000/- to the petitioner with simple interest.

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Pursuant to the order passed by the Controlling Authority, the petitioner repeatedly approached the respondent by way of application, representation praying for disbursing the amount as per the order of the Controlling Authority. The application submitted by the petitioner was forwarded by the Labour Officer to respondent No.2 along with the recovery certificate in

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5 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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prescribed format for the purpose of revenue recovery. The order of the Controlling Authority having become final and in spite of the several efforts by the petitioner, the detrimental amount has not been disbursed to the petitioner is the contention of the learned counsel appearing for the petitioner.

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Respondent Nos.1 and 4 filed W.P.

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No.48720/2019 now "assailing the order passed by the Controlling Authority in the year 2015" without exhausting the alternative efficacious remedy available under Section 7 (7) of the PG Act. The contention of respondent Nos.1 and 4 is that the post held by the petitioner is under the State Government and as per Section 2(e) of the PG Act, the petitioner being a government servant is excluded from the definition of ‘employee’ of the PG Act. It is also the submission of respondent Nos.1 and 4 that the petitioner being an employee of a State Government is not entitled for gratuity under the PG Act, 1972 and on the other hand, the Karnataka Civil Services Rules (KCSR for

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6 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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short) as per Rule 248-A is to be made applicable to the petitioner and it is the contention of respondent Nos.1 and 4 that the judgment of the Apex Court in the case of Netram Sahu Vs. State of Chhattisgarh and another¹ (Netram Sahu) placed reliance by the learned counsel for the petitioner has been referred to the Larger Bench and the same cannot be placed reliance to hold that the petitioner is entitled for the benefit which he had rendered prior to his regularization for calculating his continuous service of 5 years and would contend that the writ petition before this Court by respondent Nos.1 and 4 is maintainable without exhausting the alternative efficacious remedy, as very jurisdiction of the Controlling Authority is assailed before this Court. The term employee as mentioned under Section 2(e) of the PG Act reads as under:

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“2(e) “employee” means any person (other than an apprentice) who is employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop to do any

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1 (2018) 5 SCC 430

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7 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, 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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Learned counsel for respondent Nos.1 and 4,

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placing reliance on Section 2(e) of the PG Act which excludes the person who hold post with Central or State Government and are governed by any other Act or rules provided for payment of gratuity, would contend that petitioner could not have invoked Section 7 of the Act, as such Controlling Authority had no jurisdiction, the Rule 248-A of KCSR states that the persons borne on the workcharged establishments of Government either on daily or monthly wages system, when appointed to regular pensionable service under Government shall count for pension or gratuity 1/4^th of their service rendered on the

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8 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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work-charged establishments, subject to a maximum of 3

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years.

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The Apex Court in the case of Municipal

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Corporation of Delhi Vs. Dharam Prakash Sharma and another² (Dharam Prakash Sharma) has held that the Payment of Gratuity Act being a special provision for payment of gratuity, and notwithstanding separate pension rules, Municipal Corporation of Delhi employees were entitled to the benefits under the provisions of the PG Act, 1972 in view of the overriding effect of the PG Act as per Section 14 of the PG Act.

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The Apex Court in the case of Netram Sahu stated supra has held at paragraph No.14 as under:

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"14. We do not agree with this submission of the learned counsel for the respondent State for more than one reason:

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14.1. First, the appellant has actually rendered the service for a period of 25 years.

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2 AIR 1999 SC 293

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9 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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14.2. Second, the State actually regularized his services by passing the order dated 06.05.2008.

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14.3. Third, having regularized the services, the appellant became entitled to claim its benefit for counting the period of 22 years regardless of the post and the capacity on which he worked for 22 years.

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14.4. Fourth, no provision under the Act was brought to our notice which disentitled the appellant from claiming the gratuity and nor any provision was brought to our notice which prohibits the appellant from taking benefit of his long and continuous period of 22 years of service, which he rendered prior to his regularization for calculating his continuous service of five years."

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The Apex Court held that if the services are regularized the workman is entitled to claim benefit by counting his service rendered prior to his regularization for calculating his continuous service of five years.

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Though the petitioner would be governed by the KCSR, and the gratuity amount has been paid to the petitioner under the KCSR, however, the gratuity paid was covering the period from the regularization till his

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10 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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retirement on superannuation, and the respondents did not take into consideration the service rendered by the petitioner prior to regularization.

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The Apex Court in Nagar Ayukt Nagar Nigam, Kanpur v. Mujib Ullah Khan and another³

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(Nagar Ayukt) has held as under:

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"7. On the other hand, the 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.

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"1. short title, extent, application and

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commencement -(1) This Act may be called the payment of Gratuity Act, 1972.

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(2) It extends to the whole of India:

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Provided that insofar as it relates to plantations or ports, it shall not extend to the State of Jammu and Kashmir.

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(3) It shall apply to-

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(a) every factory, mine, oilfield, plantation, port and railway company;

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3 (2019) 6 SCC 103

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11 -

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NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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(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;

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(c) such other establishments or class of 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."

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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 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 the Central Government may notify.

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12 -

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NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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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(1)(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.

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10. In terms of the abovesaid Section 1(3)(c) of the Act, the Central Government has published a notification on 8-1-1982 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 8-1-1982 reads as under:

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"New Delhi, 8-1-1982 NOTIFICATION.

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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 any day preceding twelve months, as a class of establishments to which the said Act shall

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13 -

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NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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apply with effect from the date of publication of this notification in the official Gazette.

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sd/(R.K.A. Subrahmanya) Additional Secretary (F. No. S-70020/16/77-FPG)”

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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:

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”14. Act to override other enactments, etc.- The provisions of this Act or any rule made there under 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."

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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.

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13. Section 2(e) of the Act alone was referred to in the judgment reported as MCD [MCD v. Dharam Prakash Sharma, (1998) 7 SCC 221:

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14 -

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NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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1998 SCC (L&S) 1800: AIR 1999 SC 293]. The said judgment is in the context of the CCS (Pension) Rules,. 1972 [1972 Rules] which specifically provides for payment of pension and gratuity. The Act is applicable to the Municipalities, therefore, it is wholly inconsequential even if there is no reference to the Notification dated: 08.01.1982.

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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."

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The Apex Court held that though Municipal Corporation employees are governed by separate enactments, however, in light of Section 14 of the Act which has overriding effect, and gratuity would be payable to the employees under the Gratuity Act.

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Further, the Division Bench of this Court in Smt. Mahadevamma Vs. Assistant Executive Engineer and

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15 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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others⁴ (Mahadevamma) held that Payment of Gratuity Act being a special provision are entitled to gratuity under the payment of Gratuity Act 1972, referring Netram Sahu’s case referring to Section 248-A of the KCSR, held as under:

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“11. It is pertinent to note that the interpretation put forth by the learned Single Judge that in view of Rule 248A of the Rules, the provisions of the Act would not apply cannot be sustained as the Supreme Court in Municipal Corporation Delhi supra has held that payment of Gratuity Act being a special provision for payment of gratuity, unless there is any provision therein which excludes its applicability to an employee who is otherwise governed by provision of Pension Rules, it is not possible to hold that an employee is not entitled to gratuity under Payment of Gratuity Act, 1972. In view of aforesaid enunciation of law by Hon'ble Supreme Court in Netram Sahu supra, the order passed by the learned Single Judge cannot be sustained in the eye of law as the aforesaid decision binds this court.

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The decision placed reliance by the learned

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counsel appearing for respondent Nos.1 and 4 in the case

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4 W.A. No.100/2013 (L-PG)

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of Senior Superintendent of Post Offices vs. Gursewak Singh and others⁵ (Gursewak Singh) was under the circumstances where Gramin Dak Sewak are engaged as an extra departmental agents post, government by 2011 rules and Apex Court held that this rules have separate provisions for payment of gratuity to the extra departmental agents and in that circumstances, the Apex Court held that the Gramin Dak Sevak is not an employee under Section 1972 Act in Gramin Dak Sevak, the employees were not regularized. In the instant case, the rules provided under the KCSR is for a period of 3 years. While the payment of gratuity being a better entitlement to the petitioner and in light of Section 14, there being an overriding effect, in the said circumstances, the decision placed reliance by the learned counsel for respondent Nos.1 and 4 has no application to the present facts and circumstances of this case.

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5 AIR (2019) SC 1493

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17 - NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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The Co-Ordinate bench of this Court in Chief Executive Officer, Zilla Panchayat, Mysuru and another Vs. Shri K.V. Puttaraju and others⁶ (Puttaraju) and in Sri Basavegowda Vs. The State of Karnataka and others⁷ (Basavegowda) placing reliance on the decision in Dharam Prakash Sharma , Netram

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Sahu’s case held that employee is entitled to gratuity for his entire service, not restricting period of regular service as the Act does not differentiate between a regular employee and a daily wage employee and observed that State cannot deny payment of gratuity, if the employee is entitled under the Act.

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In the light of the decisions stated supra in Netram Sahu case by Apex Court, in Mahadevamma Case by the Division Bench, the Co-Ordinate Bench of this Court in Puttaraju and Basavegowda , respondent Nos.1 and 4 that the petitioner being a State Government employee cannot seek gratuity under the PG Act needs to

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6 W.P. No.46017/2017 & connected matters D.D. 12.05.2022

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7 W.P. No.10872/2023 D.D. 20.12.2023

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18 -

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NC: 2024:KHC:6683 WP No. 27075 of 2019 C/W WP No. 48720 of 2019

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be rejected. The petitioner has been deprived of his legitimate right, since eight long years and therefore, entitled for interest and accordingly, this Court pass the following:

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ORDER

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i. W.P. No.27075/2019 is hereby allowed .

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ii. W.P. No.48720/2019 is dismissed . iii. The petitioner in WP.No.48720/2019 to release the amount of Gratuity within a period of four weeks, in terms of the order dated 27.07.2015 from the date of release of this order, if the order or direction is not complied by the respondent Nos.1 and 4 (petitioner in W.P.No.48720/2019) within four weeks, the petitioner is entitle for further interest at 6%, till the gratuity amount is paid.

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Sd/JUDGE

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List No.: 1 Sl No.: 14

C.B. Nanjundappa v. the Chief Executive Officer

Case brief

What is this about?

What did the court decide?

C.B. Nanjundappa v. the Chief Executive Officer

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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