Nagar Ayukt, Nagar Nigam vs Mujib Ulla Khan and Others

Sunil Ambwani, J.—Heard Sri Y.S. Sachan learned Counsel for the petitioner. Learned Standing Counsel appears for respondents 2 and 3.

The contesting respondents were employees of Nagar Nigam, Kanpur. They filed application under Rule 10(1) of the Payment of Gratuity Rules, 1975 for distribution and payment of balance amount of gratuity over and above the amount received by them from Nagar Nigam on their retirement in accordance with Retirement Benefits and General Provident Fund Regulation, 1962, Rule 4(1) of the Regulations made u/s 548(1) of the U.P. Municipal Corporation Act, 1959 amended on 11.1.1988 provide for death-cum-retirement gratuity on calculation by the number of years completed by the employees with the condition that the gratuity paid to the employees of the Corporation is not more than 16.5 months of the last wages drawn by him. Prior to the amendment of these rules the amount of the gratuity were calculated � 15 days salary per month over 15-1/2 months salary.-The Additional Labour Commissioner, U.P. Kanpur Region, Kanpur the Controlling Authority under the Payment of Gratuity Act, 1972, heard the parties and has found that the petitioners are entitled to the gratuity at the rates prescribed in the Payment of Gratuity Act, 1972, and accordingly calculated gratuity to be payable of 15 days salary of every completed year, without any ceiling of months or a part thereof, and the difference is directed to be paid by the Nagar Nigam, Kanpur.

Learned Counsel for the Nagar Nigam states that the gratuity is paid to the retired employees of the Corporation under the Retirement and Provident Fund Regulation, 1962 and that u/s 2(e) the employee who holds a post under Central Government or State Government and is governed by any other Act or of any rules provided for payment of gratuity will be regulated by such statutory provisions. According to Sri Sachan, the retired employees of Nagar Nigam, Kanpur were paid gratuity on prescribed rates from before enforcement of Payment of Gratuity Act, 1972 and that Nagar Nigam paid gratuity in accordance with the prescribed rules.

In Municipal Corporation of Delhi Vs. Dharam Prakash Sharma and Another, the Supreme Court considered the question as to whether the employees of the Municipal Corporation Delhi employed by the State Government for the purpose of excluding them to be covered by the Act and Rules made by the Stale Government u/s 2(e) of the Payment of Gratuity Act, 1972. the Supreme Court held as follows:

The only provision which was pointed out is the definition of ''employee'' in Section 2(e) which excludes the employees of the Central Government and State Governments receiving pension and gratuity under the Pension Rules but not an employees of the M.C.D. The M.C.D. employee, therefore, would be entitled to the payment of gratuity under the Payment of Gratuity Act, The mere fact that the gratuity is provided for under the Pension Rules will not disentitle him to get the payment of gratuity under the Payment of Gratuity Act. In view of the overriding provisions contained in Section 14 of the Payment of Gratuity Act, the provisions of gratuity under the Payment of Gratuity under Pension Rules will have no effect. Possibly for this reason Section 5 of the Payment of Gratuity Act has conferred authority on the appropriate Government to exempt any establishment from the operation of the provisions of the Act if in its opinion the employee of such establishment are in receipt of gratuity of pensioner benefits not less favourable than the benefits conferred under this Act. Admittedly M.C.D. has not taken any steps to invoke the power of the Central Government u/s 14 of the Payment of Gratuity Act;. In the aforesaid premises we are of the considered opinion that the employees(of the M.C.D. would be entitled to the payment of gratuity under the Payment of Gratuity Act notwithstanding the fact that the provisions of the Pension Rules have been made applicable to them for the purpose of determining the pension. Needless to mention that the employees can not claim gratuity available under Pension Rules.

In the present case, the contesting respondents are not Central Government or State Government employees and thus the regulation made by the Nagar Nigam, Kanpur will not exempt them from Section 14 of the Payment of Gratuity Act, 1972. The State Government has not exempted these employees from the applicability of Payment of Gratuity Act, 1972. Section 14 of the Payment of Gratuity Act, 1972 provides that the provisions of the Act shall have effect notwithstanding any thing 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. The regularizations made under the U.P. Municipal Corporations Act, as such, would, not apply for the purposes of calculation of payment of gratuity to the employees of Nagar Nigam, Kanpur.

There is no legal error in the order passed by the Controlling Authority under the Payment of Gratuity Act, 1972.

The writ petitions are dismissed. A copy of this order shall be placed on the record of writ petition Nos. 3384 of 2004, 17165 of 2005 and 75212 of 2005.