Writ Petition No. 8053 of 2012

22nd January, 2013

Petitioner Counsel: Mr. Suresh S. Pakale,Mrs. M.R. Bhoir,Shri R.A. Malandkar
Respondent Counsel: Mr. Prakash S. Devdas

Cases Cited:
Sanjay Singh & Anr. Vs. U.P. Public Service Commission, Allahabad & Anr, (2007) 3 SCC 720 [Para 8]

JUDGMENT

-Rule, with the consent of the learned counsel appearing for the parties made returnable forthwith and heard.

2. The writ jurisdiction of this Court under Articles 226 and 227 of the Constitution of India is invoked against the judgment and order passed by the Appellate Authority constituted under the Payment of Gratuity Act, 1972 (for short 'the said Act') by which the Appeal filed by the Petitioner herein came to be dismissed and resultantly the order passed by the Controlling Authority dated 28.03.2012 came to be confirmed.

3. The factual matrix which is involved in the above petition can be stated thus:

The Petitioner herein is the Municipal Corporation of Greater Mumbai established under the Mumbai Municipal Corporation Act, 1888. The Municipal Corporation employs a large retinue of employees in its various departments. For regulating the services of its employees, the Petitioner in exercise of the powers conferred by Section 81 of the said Act has framed what are known as the Pension Rules, 1953. The Respondent herein was working as an Administrative Officer and was due to retire on 31.05.2010. It is on the eve of his retirement, i.e. on 26.05.2010, that a charge-sheet was sought to be served upon him in respect of a misconduct arising out of an incident which had taken place in the year 2000. There is some controversy as regards whether the said charge-sheet was in fact received by the Respondent on 26.05.2010. However, it is not necessary to go into the said aspect in this Petition. The Petitioner conducted an enquiry pursuant to the said charge-sheet in which enquiry the Respondent participated. The said enquiry has been completed and the Respondent had been issued a show cause notice by the Competent Authority calling upon him to show cause as to why the punishment of reduction of his pension to the extent of 20% should not be imposed on him. The proceedings relating to the departmental enquiry against the Respondent are therefore at the said stage at present.

4. In view of the contemplated departmental enquiry against the Respondent, the Petitioner fixed the provisional pension payable to the Respondent in terms of the said Rules. In so far as the gratuity is concerned, the same was withheld by the Petitioner on the ground that a departmental enquiry was to be held against the Respondent and in terms of Rule 45A(1)(c) of the said Rules, the Petitioner could withhold the payment of gratuity. Since on his retirement the gratuity was withheld by the Petitioner, the Respondent filed an application before the Controlling Authority which was numbered as Application PGA/CA/RMP/64/21 of 2011 claiming that the gratuity should be payable to him. The Respondent in the said application relied upon the fact that he has retired from service on 31.05.2010 and in terms of Section 7 of the said Act, the Petitioner is liable to pay the said gratuity as the Respondent was entitled to the same.

5. The said application was opposed on behalf of the Petitioner and the defence that the gratuity has been withheld in view of the departmental enquiry which is being held against the Respondent was taken. The Petitioner also referred to the Pension Rules and especially Rule 45A(1)(c) thereof under which it was entitled to withhold the payment of the said gratuity and forfeit the gratuity in the eventuality of the charges being proved against the Respondent. The Controlling Authority considered the said application and by its order dated 28.03.2012 allowed the same. The gist of the reasoning of the Controlling Authority was that since the Respondent has been allowed to retire honourably, the gratuity could not be withheld. The Controlling Authority also referred to the judgments which had been relied upon on behalf of the Respondent wherein it has been held that the Gratuity Act would prevail over the Service Regulations which were not having any statutory force. The Controlling Authority, therefore, held the Respondent was entitled to the payment of gratuity and in view of the fact that it was not paid when due. The Controlling Authority directed the payment of the amount with 10% interest. The issue as regards the gratuity payable at the enhanced rate has also been considered by the Controlling Authority and decided against the Petitioner. The Controlling Authority held that the Applicant would be entitled to the payment of gratuity under the Payment of Gratuity Act amounting to Rs.9,38,295/- as the maximum ceiling is Rs.10,00,000/-

6. Aggrieved by the order dated 28.03.2012 passed by the Controlling Authority, the Petitioner filed an Appeal before the Appellate Authority. The Appellate Authority by the impugned order dismissed the Appeal and thereby confirmed the order passed by the Controlling Authority. The Appellate Authority whilst dismissing the Appeal reached a conclusion that the charge-sheet which has been issued in respect of an incident which had taken place in the year 2000 was grossly belated and was therefore beyond the scope of Rule 14-B(2)(b)(ii) of the said Rules. In so far as the other aspects are concerned, the Appellate Authority reaffirmed the findings of the Controlling Authority. As indicated above, it is the said order passed by the Appellate Authority dated 11.07.2012 which is impugned in the present Petition.

7. At this stage, it is required to be noted that though the amount was withheld on the basis that the amount of gratuity would be required to be forfeited on the basis of the final order passed in the enquiry proceedings. As indicated above, on the basis of the enquiry report a show cause notice has been issued to the Respondent calling upon him to show cause as to why 20% of his pension should not be reduced. Hence, the punishment which is sought to be imposed is as regards the reduction in pension and not by way of forfeiture of the gratuity or part of the gratuity. In view of the supervening event of said show cause notice, the Respondent would be entitled to the amount of gratuity which is payable to him on his retirement.

8. The learned counsel Mr. Pakale appearing for the Petitioner fairly acceded to the said position and further submitted that he is not urging the issue as regards whether the Respondent No.1 is entitled to gratuity as per the maximum limit that is now fixed by the amendment. However, he would urge the issue of payment of interest to the Respondent in terms of order of the Controlling Authority. The learned counsel Mr.Pakale would contend that since in the instant case, the adjudication in question is referable to sub-section 4(a) of Section 7, the Controlling Authority has erred in awarding interest on the amount of gratuity payable to the Respondent. The learned counsel would contend that it is only in terms of Section 3-A that simple interest would be payable to an employee if the amount of gratuity is not paid when due and payable. The learned counsel would contend that in awarding interest, the Controlling Authority has sought to add words in sub-section 4(a) in respect of payment of interest which is not permissible. The learned counsel would contend that since the adjudication was on account of the dispute in respect of the Respondent's entitlement to gratuity, the Respondent was not entitled to payment of interest and it was not permissible for the authorities to add words to the statute. For the said purpose the learned counsel relied upon on the judgment of the Apex Court reported in (2007) 3 SCC 720 in the matter of Sanjay Singh & Anr. V/s. U.P. Public Service Commission, Allahabad & Anr. Para 19 of the said report is material and is reproduced hereinunder :

"19. Rule 20(3) provides that the final list of selected candidates in order of their proficiency as disclosed by the aggregate of 'marks finally awarded to each candidate in the written examination and the interview". Note (i) to Appendix II of the Judicial Service Rules provides that the "marks obtained in the interview" will be added to "the marks obtained in the written papers" and that the candidate's place will depend on the aggregate of both. Though Judicial Service Rules refers to 'marks finally awarded', the said Rules do not contain a provision similar to the proviso to Rule 51 of PSC Procedure Rules, enabling the Commission to adopt any method, device or formula to eliminate variation in the marks. It is not possible to read the proviso to Rule 51 or words to that effect into Rule 20(3) or Note (i) of Appendix-II of Judicial Service Rules. It is well settled that courts will not add words to a statute or read into the statute words not in it. Even if the courts come to the conclusion that there is any omission in the words used, it cannot make up the deficiency, where the wording as it exists is clear and unambiguous. While the courts can adopt a construction which will carry out the obvious intention of the legislative or rule making authority, it cannot set at naught the legislative intent clearly expressed in a statute or the rules. Therefore, Rule 20(3) and Note (i) of Appendix-II has to be read as they are without the addition of the proviso to Rule 51 of PSC Procedure Rules. If so, what can be taken into account for preparing final list of selected candidates, are 'marks finally awarded to a candidate' in the written examination and the interview. The marks assigned by the examiner are not necessarily the marks finally awarded to a candidate. If there is any error in the marks awarded by the examiner it can always be corrected by the Commission and the corrected marks will be 'the final marks awarded to the candidate'. Where the Commission is of the view that there is 'examiner variability' in the marks (due to strict or liberal assessment of answer scripts) or improper assessment on account of erratic or careless marking by an examiner, they can be corrected appropriately by moderation. The moderation is either by adding (in the case of strict examiners) or deducting (in the case of liberal examiners) a particular number of marks which has been decided with reference to principles of moderation applied. If there is erratic or careless marking, then moderation is by fresh valuation by another examiner. Therefore, the marks assigned by the examiner as moderated will be the marks finally awarded to the candidates or marks obtained by the candidates. Moderation, it has to be held, is inherent in the evaluation of answer scripts in any large scale examination, where there are more than one examiner."

9. Per contra it is submitted by the learned counsel Mr.Devdas appearing on behalf of the Respondent that sub-section 3 mandates an employer to pay the amount of gratuity within 30 days from the date it becomes payable to the person to whom the gratuity is payable. The learned counsel Mr.Devdas would therefore contend that though the dispute is referable to sub-section 4(a), notwithstanding the same, the Petitioner was obliged to deposit the amount with the Controlling Authority within the period mentioned in sub-section 3. The learned counsel would contend that a purposive construction has to be given to the provisions of the Payment of Gratuity Act which is a beneficial piece of legislation. The learned counsel would contend that once the Controlling Authority as well as the Appellate Authority have come to the conclusion that the gratuity could not be withheld then necessarily the payment of interest had to follow, as otherwise, an employer would with impunity violate the mandate of payment of gratuity within 30 days of it becoming due and payable.

10. Having heard the learned counsel for the parties, I have bestowed my anxious consideration to the rival contentions. As mentioned hereinabove, in the light of the show cause notice dated 3.01.2013 wherein the Respondent had been called upon to show cause only as regards reduction of 20% of the amount of pension payable to him, the issue of the forfeiture of the amount towards gratuity does not survive for consideration. The Respondent would therefore be entitled to the payment of gratuity. The question as mentioned hereinabove, is the payment of interest on the said amount which is directed to be paid by the Controlling Authority. In the said context, it is necessary to refer to the provisions of Section 7 of the said Act. The same is reproduced hereinunder :

7. Determination of the amount of gratuity

(1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.

[(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.

(3-A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify :

Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.]

(4) (a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity.

[Explanation -* * *]

[(b) Where there is a dispute with regard to any matter or matters specified in clause (a), the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute.]

[(c)] The controlling authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee, the controlling authority shall direct the employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer.]

[(d)] The controlling authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto.

[(e)] ....

(5) ....

(6) ......

(7) ......

(8) ........"

11. A reading of the said provisions therefore makes it clear that in terms of sub-section 3, the employer is mandated to pay the amount of gratuity within 30 days from the date it becomes payable to the person to whom the same is payable. Thereafter, Section 3-A postulates that if the gratuity is not paid under sub-section 3 by the employer within the period specified in sub-section 3, the employer shall pay from the date on which the gratuity becomes payable to the date on which it is paid simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits. In terms of sub-section 4(a), the employer is required to deposit with the Controlling Authority such amount as the he admits to be payable by him as gratuity if there is any dispute as to the amount of gratuity payable to an employee under the said Act or the admissibility of any claim of or in relation to an employee for payment of gratuity. Under clause (c) of sub-section 4(a), the manner in which the dispute is to be adjudicated, has been mentioned and under clause (d), the Controlling Authority shall pay the amount deposited including the excess amount, if any, deposited by the employer to the person entitled thereto.

12. In the instant case, as indicated above, the gratuity was withheld in view of the fact that an enquiry was contemplated against the Respondent herein. In fact, the enquiry was started just on the eve of his retirement and has been completed and as mentioned hereinabove, the Respondent has been issued a show cause notice on 3.01.2013 in the matter of imposition of punishment. There could be no dispute about the fact that the Petitioner has the power to continue the departmental enquiry against a person who has retired. The said power is referable to Rule 14 of the Pension Rules. It is under the said Rule that the departmental proceedings were initiated against the Respondent. The withholding of the gratuity pending the said proceedings therefore can be said to be a dispute involving the Respondent's entitlement to the gratuity as it was contingent upon the result of the departmental enquiry that the entitlement of the Respondent would be decided. Therefore, in so far as Section 7 is concerned, in the instant case, sub-section 4(a) would be attracted, as the gratuity was withheld on the ground that a departmental enquiry was being held against the Respondent. However, notwithstanding the fact that Section 4(a) was attracted in the instant case that would not have any impact on the time specified in sub-section 3, the said sub-section postulates the time within which the gratuity is payable. Hence, the time mentioned in sub-section 3 would permeate even sub-section 4(a). Hence, even if the dispute was referable to sub-section 4(a), the employer i.e. the Petitioner herein was required to deposit the amount of gratuity with the Controlling Authority may be with a caveat that the Respondent should not be allowed to withdraw the amount as the Petitioner is proceeding departmentally against him. However, this was not done and the Petitioner deposited the amount for the first time after the adjudication by the Controlling Authority and the matter was in Appeal and as a pre-condition for prosecuting the Appeal before the Appellate Authority. It is not possible to accept the contention of Mr.Pakale, the learned counsel appearing on behalf of the Corporation that the payment of interest cannot be read into sub-section 4(a) as the same only applies to sub-section 3. If it is so construed it is possible that an employer for the reasons best known to him would not pay the gratuity on the specious ground that there is some dispute about the same. It is well settled that a purposive construction is required to be given to a statute so that the same results in the object for which the statue has been framed is achieved. The Payment of Gratuity Act being a beneficial piece of legislation, on the employer not complying with the mandate of the said provision, he would be required to pay the amount with interest. In the instant case, the gratuity had become due and payable to the Respondent within one month of his retirement on 31.05.2010. However, the same was deposited as indicated above at the appellate stage as a pre-condition for filing the Appeal. In the light of the aforesaid facts, therefore, the direction by the Controlling Authority for payment of the said amount at 10% cannot be faulted with as the said rate of interest has been arrived at considering the rate at which repayment is made as notified by the Central Government from time to time for payment of long term deposits.

13. In that view of the matter, no case for interference in the writ jurisdiction is made out. The Writ Petition is accordingly dismissed.

Rule accordingly stands discharged with no order as to costs.

Petition dismissed.