Damodar Valley Corporation vs State Of Jharkhand And Ors

Heard counsel for the parties.

The present writ petition has been filed by the employer- corporation against the order dated 21.01.2013 passed by the

Learned Regional Labour Commissioner (Central) Dhanbad-cum-Appellate Authority (Respondent No.2) under the Payment of Gratuity Act, 1972, whereby the recovery of Rs. 50,385/- from the gratuity amount has been declared illegal and ordered for the payment to the employee-respondent on 20.07.2017.

The workman was a regular employee of the corporation on the post of Automobile Driver and stands retired on attaining the age of superannuation w.e.f. 31.05.2007. The gratuity amount has been calculated by the employer as Rs. 2,70,782 /- and the same has been paid after adjusting the alleged excess payment of Rs. 50,385/-.

Against the said adjustment employee has approached to the Controlling Authority by filing Application numbered as Application No. 36/(64)/2011.E.6 dated 11.6.2012/4.7.2012 which has been dismissed. Against the said order of dismissal an appeal has been preferred being Case No. P.G. APPEAL(48)/2012 before the Appellate Authority under the Payment of Gratuity Act, 1972.

Appellate Authority vide its order dated 21.01.2013 has directed the employer to return the adjusted amount of Rs. 50,385/- as the same is not permissible under The Payment of Gratuity Act, 1972. During the pendency of the present writ petition, certificate proceeding has been stayed by this Court vide order dated 20.06.2017 passed in I.A. No. 4320 of 2015 on the condition that employer will deposit the entire amount of Rs. 50,385/- to the Certificate Officer-cum-Additional Commissioner (supply), Dhanbad within a period of two weeks from the date of the order. It has been submitted in pursuance of the order, the amount has already been deposited before the Authority.

Counsel for the petitioner has relied upon the DVC Regulation 108-A which is quoted hereinbelow:-

"(1) Subject to the provisions of this Regulation every employee of the Corporation, who is substantively appointed in the service of the Corporation against a permanent post and who has retired or retires on or after the 15th August, 1959, shall be entitled to Pension-cum-Gratuity under the Government of India Pension Rules in force on the date of retirement of such employee.

"Provided that an employee of the Corporation employed on wages/salary not exceeding Rs. 1000/- per mensem who opted for pension-cum-gratuity scheme of the Damodar Valley Corporation shall be entitled to gratuity in accordance with the provisions of the Payment of Gratuity Act, 1972 (39 of 1972) subject to the conditions that he has not received gratuity under the Government of India Pension Rules nor shall be entitled to gratuity payable under the Government of India Pension Rules"."

Further counsel for the petitioner has relied upon the Rule 71 of CCS (Pension) Rules which is quoted hereinbelow:-

"Rule 71: Recovery and adjustment of Government dues

(1) It shall be the duty of the Head of Office to ascertain and assess Government dues payable by a Government servant due for retirement.

(2) The Government dues as ascertained and assessed by the Head of Office which remain outstanding till the date of retirement of the Government servant, shall be adjusted against the amount of the retirement gratuity becoming payable."

On the Strength of above provisions the argument has been advanced that the employer DVC has right to adjust the excess payment made to the employee under the Provision of The Payment and Gratuity Act, 1972.

On the other hand, counsel for the respondents referring Section-4(6) of the Payment of Gratuity Act, 1972, has submitted that same is not permissible as this will prevail over any other service condition if not specifically exempted by the appropriate government.

He has relied upon the judgement of the Apex Court in the case of Jaswant Singh Gill Vs. Bharat Coking Coal Ltd. reported in 2007 (1) SCC 663. The relevant paras 10 and 11 are quoted hereinbelow:-

"10. The provisions of the Act, therefore, must prevail over the Rules. Rule 27 of the Rules provides for recovery from gratuity only to extent of loss caused to the Company by negligence or breach of orders or trust. Penalties, however, must be imposed so long an employee remains in service. Even if a disciplinary proceeding was initiated prior to the attaining of the age of superannuation, in the event the employee retires from service, the question of imposing a major penalty by removal or dismissal from service would not arise. Rule 34.2 no doubt provides for continuation of a disciplinary proceeding despite retirement of employee if the same was initiated before his retirement but the same would not mean that although he was permitted to retire and his services had not been extended for the said purpose, a major penalty in terms of Rule 27 can be imposed.

Power to withhold penalty (sic gratuity) contained in Rule 34.2 of the Rules must be subject to the provisions of the Act. Gratuity becomes payable as soon as the employee retires. The only condition therefore is rendition of five years' continuous service."

Counsel for the petitioner by referring to Section 2(e) of the Payment of Gratuity Act, 1972 has contended that this Act is not applicable in the case of respondent-employee. Section 2(e) of The Payment of Gratuity Act, 1972 is quoted hereinbelow:-

"2(e): "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;]"

The Payment of Gratuity Act, 1972 applies to all employees and there is an exception phrase as "but does not include any such person but holds a post under the Central Government or State Government and is government by any other Act or any Rules providing for payment of gratuity thus, this execution clause is available against the government employee be central or State.

Further there is statutory rules governing the service condition regarding payment of gratuity".

In the present case, the petitioner-employer is neither Central Government nor State Government rather it is a corporation. Thus, its employee is not a government employee and merely because the Central Civil Services Rules of the Central Government has been adopted, the employee will not come under the exception clause rather they will be guided by the provision of the Payment of Gratuity Act, 1972.

It is trite that gratuity is no more bounty, rather it is hard earned money of the employee on the strength of long and meritorious service rendered by him to the employer. In "Garment Cleaning Works v. Workmen" (1962) 1 SCR 711, it has been held that pension is property within the meaning of Article 300 A of the Constitution of India and a workman can be deprived of benefit of pension only in accordance with law. Ordinarily, pension includes gratuity. In "Balbir Kaur and anr. vs. Steel Authority of India Ltd. and Ors." (2000) 6 SCC 493, it has been held that," the payment of gratuity is no longer in the realm of charity but it is the statutory right provided in favour of the employee".

Section 4(6) of the Payment of Gratuity Act, 1972 is quoted hereinbelow:

4.(6) Notwithstanding anything contained in subsection(1) -

(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer shall be forfeited to the extent of the damage or loss so caused;

(b) the gratuity payable to an employee [may be wholly or partially forfeited]

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

Section 4(1) provides that gratuity payable to an employee who has rendered continuous not less than 5 years of service shall be paid on his superannuation, retirement or resignation or on his death or disablement due to accident or disease. Section 4(1) of Payment of Gratuity Act, 1972 is mandatory. This mandate in law is fortified under Section 14 of the Act which declares that provisions of the Payment of Gratuity Act, 1972 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act. Section 13 provides that no gratuity payable under the Act shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court. Section 7(3) mandates that the employer shall arrange payment of gratuity to the employee within 30 days from the date it becomes payable and subsection 3A of Section 7 provides that if such payment has been delayed, simple interest at such rate not exceeding the rate notified by the Central Government shall accrue on the gratuity payable to the employee.

In the present case, the petitioner has retired w.e.f. 31.05.2007 on attaining the age of superannuation and as such he is entitled for gratuity under Section 4(1) of the Payment of Gratuity Act, 1972. There is no order of forfeiture of the gratuity or recovery from the gratuity in accordance with Section 4(6) of the Payment of Gratuity Act, 1972.

In view of above discussion and judicial pronouncement, this Court finds that the Appellate Authority has rightly passed the order for returning the recovered amount of Rs. 50,385/-. The said amount has already been deposited before the Certificate Officer.

With above observation and direction, the present writ petition stands disposed of.