# M.D./Chairman-Administrative-Committee/ Occupier Lko. & Anr v. Shri Krishna Bihari Yadav & Anr

- **Citation:** (2019) 3 ILRA 870
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-10-23
- **Bench:** Vivek Chaudhary
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-d-chairman-administrative-committee-occupier-lko-anr-v-shri-krishna-bihari-44849
- **Pages:** 16

## Headnote

A. - Service law -Payment of Gratuity
Act, 1972 - Section 14 - applicability of
Gratuity act upon the employees of
Pradeshik Co-operative Dairy Federation
Ltd. (PCDF) - the provision of section 14
gives an over-riding effect over any
other inconsistence provision and any
other documents or contract, be it the
V.R.S. signed by the parties. (Para 16 to
31)

Writ petition dismissed (E-6)

List of Cases Cited: -

## Text

_Characters 0–39,917 of 54,373. This is a partial read: ask again with offset=39917 for what follows._

870 INDIAN LAW REPORTS ALLAHABAD SERIES
(2019)11ILR A870

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 23.10.2019

BEFORE
THE HON'BLE VIVEK CHAUDHARY, J.

Misc. Single No. 20659 of 2019 connected with
other cases

M.D./Chairman-Administrative-Committee/
Occupier Lko. & Anr. ...Petitioners
Versus
Shri Krishna Bihari Yadav & Anr.
 ...Respondents

Counsel for the Petitioners:
Sri Manoj Kumar, Sri Arvind Kumar
Pandey, Sri Sridhar Awasthi

Counsel for the Respondents:
C.S.C., Sri A.N. Tripathi, Sri M.K. Sahu

A. - Service law -Payment of Gratuity
Act, 1972 - Section 14 - applicability of
Gratuity act upon the employees of
Pradeshik Co-operative Dairy Federation
Ltd. (PCDF) - the provision of section 14
gives an over-riding effect over any
other inconsistence provision and any
other documents or contract, be it the
V.R.S. signed by the parties. (Para 16 to
31)

Writ petition dismissed (E-6)

List of Cases Cited: -

1. Ghaziyabad Zila Sahkari Bank Limited Vs.
Additional Labour Commissioner and Ors
(2007) 11 SCC 756

2. Brahamvartha Commercial Co-operative
Bank Ltd. Vs. Presiding Officer, Industrial
Tribunal III, U.P. Kanpur (2012) 134 FLR 574

3. Sikta Mahoogarh Sadhan Sahkari Samiti
Ltd. Vs. Prescribed Authority(Payment of
Wages Act) and Ors (2015) 144 FLR 23
4. M/S Gangol Sahkari Dugdh Utpadak Sangh
Ltd. Through G.M. Vs. Presiding Officer,
Labour Court II Meerut and Anr.

5. Sugvir Singh Vs. State of U.P. & Ors.

6. Shobhai Ram and Ors. Vs. State of U.P. and
Ors. (2014) 142 FLR 457

7. P. Rajan Sandhi Vs. Union of India (2010)
10 SCC 338

8. Dr. Raj Kumar Singh Vs. Cadere Authority
U.P. Coop. Dairy Federation and Milk Union

9. Y. K. Singla Vs. Punjab National Bank and
Ors (2013) 136 FLR 1087

10. Municipal Corporation of Delhi Vs. Dharam
Prakash Sharma (1999) 81 FLR 867

11.
State
of
Punjab
Vs.
The
Labour
Court,Jullundur and Ors(1979) 39 FLR 353

12. Nagar Ayukt Nagar Nigam, Kanpur Vs.
Mujib Ullah Khan and Anr. (2019) 161 FLR 503
(S.C.)

(Delivered by Hon'ble Vivek Chaudhary, J.)

1. This bunch of writ petitions is
filed
by
petitioner,
Pradeshik
Cooperative
Dairy
Federation
Ltd.
(hereinafter referred to as 'PCDF'),
challenging the orders of different dates
and notices for payment of gratuity
passed and issued by the Controlling
Authority/Assistant
Labour
Commissioner,
Lucknow
(respondent
no.2) under the Payment of Gratuity Act,
1972.

2. The relevant facts are that on
24.09.2015, petitioner PCDF introduced a
Voluntary Retirement Scheme (VRS).
Amongst other conditions, the VRS
scheme in clause-3(kha) provided that the
employees adopting the same will be paid
gratuity as per the gratuity scheme
3 All. M.D./Chairman Administrative Committee/Occupier Lko. & Anr. Vs. Shri Krishna Bihari Yadav & Ors.
871
applicable in PCDF. On 30.09.2015 a
clarification to the VRS scheme was issued,
Clause-1 whereof clarified that as per the
clause 28-Sa(3) of the gratuity scheme the
maximum limit of gratuity amount payable
shall
be
Rs.3.5
Lakhs.
All
the
respondents/employees applied under the
aforesaid VRS scheme and in and around
February, 2016 they all accepted their VRS
amounts, including Rs.3.5 Lakhs as their
gratuity.
In
and
around
May,
2017,
representations were made for payment of
gratuity under the Gratuity Act, 1972 which
was claimed to be Rs.6.5 Lakhs. Since no
action was taken on the representations made,
therefore, in December, 2017 applications
were filed before the respondent no.2,
Controlling Authority under the Gratuity Act,
1972. Objections were taken to the said
application by the petitioner-PCDF. All the
aforesaid applications stand allowed by the
impugned orders and, thereafter notices were
also issued for payment of the gratuity
amount as per the Gratuity Act, 1972. While
allowing the representations the Controlling
Authority has also condoned the delay in
filing the claim applications. The said orders
and notices are under consideration before this
Court in the present bunch of petitions

3. The chronology of relevant law is
that U.P. Co-operative Societies Act, 1965
(hereinafter referred to as 'Co-operative
Societies Act') was enforced in the State
of U.P. w.e.f. 26.01.1968 by way of
notification dated 30.12.1967 (except
Section 135 of the same). The Payment of
Gratuity Act, 1972 (hereinafter referred to
as 'Gratuity Act') was notified and came
into force from 16.09.1972. Section 121
of the Co-operative Societies Act reads:-

"121. Power of Registrar to
determine terms of employment of
society. - (1) The Registrar may, from time
to time, frame regulation to regulate the
emoluments and other conditions of
service including the disciplinary control
of employees in a co-operative society or
a class of co-operative societies and any
society
to
which
such
terms
are
applicable, shall comply with those
regulations and with any orders of the
Registrar,
issued
to
secure
such
compliance.

(2) The regulations framed
under sub-section (1) shall be published
in the Gazette and take effect from the
date of such publication."

4. In exercise of power under
Section 121 of the Co-operative Societies
Act, Registrar framed the U.P. Cooperative Societies Employees Service
Regulation, 1975 (hereinafter referred to
as 'Regulations of 1975'). The Regulations
of 1975 were notified by notification
dated 31.12.1975. Regulation 121(2)
states "they shall take effect from the date
of their publication in the U.P. gazette",
thus,
they
came
into
force
from
06.01.1976, the date of their publication.
Again in exercise of power under Section
121(1) of Co-operative Societies Act, U.P.
Co-operative
Dairy
Federation
Employees Service Regulations, 2010
were
notified
and
published
on
08.09.2010 (hereinafter referred to as
'Regulations of 2010'). Initially the said
Regulations of 2010 were shown as
issued by the Governor. An objection was
raised by the opposite parties that the
same
were
issued
by
the
State
Government which has power only under
Section 122 of the Co-operative Societies
Act, therefore, the same cannot be treated
to be issued by the Registrar under
Section 121 of the Co-operative Societies
Act. It was further argued by the opposite
parties that under Section 122 the State
872 INDIAN LAW REPORTS ALLAHABAD SERIES
Government only has power to constitute
an authority or authorities for recruitment,
training and disciplinary control of the
employees of co-operative society and not
to frame regulations to regulate their
emoluments and conditions of service.
During pendency of the petition a
corrigendum was also issued and notified
on 07.08.2019 whereby an amendment
was made to the Regulations of 2010
providing them to have been issued by the
Registrar.

5. Counsel for the petitioner Sri
Sudeep Seth, learned Senior Advocate,
assisted by Sri Samanvya Dhar Dwivedi,
Sri Manoj Kumar, Sri Pankaj Patel, Sri
Anupam Mishra and Sri A.R. Mishra,
Advocates, has made strong submissions
challenging the validity of the orders
passed by the controlling authority. Sri
Amarnath Tripathi, Sri Manoj Kumar
Sahu and Sri Ashutosh Srivastava, learned
counsel for respondents/employees have
also argued at great length supporting the
impugned orders.

6. During course of the arguments,
petitioner also filed four supplementary
affidavits bringing on record additional
documents, which were not filed by the
petitioner before the controlling authority.
With the consent of respondents all the
said documents were also permitted to be
relied upon by the petitioner, to finally
decide this long pending controversy with
regard to the law applicable for payment
of gratuity between the PCDF and its
employees.

7. Counsel for the petitioner has
disputed the applicability of the Gratuity
Act upon the employees of the PCDF. His
first submission is that it is the Cooperative
Societies
Act
and
the
Regulations framed thereunder, being
special Act, which will apply with regard
to all the service conditions, including
payment of gratuity, of the employees of
PCDF and, therefore, the Gratuity Act
cannot be applied.

8. The second ground of challenge
raised by the counsel for petitioner is that
the PCDF had, for the purposes of
payment of gratuity of its employees,
framed a scheme, constituted a trust and
also framed rules under the said scheme
and had also taken a Master Group
Gratuity and Insurance Policy from the
Life Insurance Corporation (LIC). Thus,
the gratuity could be paid to the
employees only under the aforesaid
policy and not under the Gratuity Act.

9. Since the second question
depends more upon facts, hence, I find it
appropriate to consider the same first.

10. The submission of counsel for
the petitioner is that in the meeting of the
Executive Council dated 01/02.12.1975,
under Item no.18, an agenda with regard
to payment of gratuity to employees was
proposed and a resolution was passed and
a scheme framed. Counsel for the
petitioner fairly admitted that at present
the trust deed, despite their best efforts, is
not available. He submits that however, a
trust was created as is reflected from the
minutes of meeting of the Board of
Directors dated 25/26.10.1978, wherein at
Item No.17 new trustees were appointed.
He also refers to the resolution dated
11.02.1991
of
the
Administrative
Committee of PCDF where at Item No.9
an approval was granted to the aforesaid
scheme, applicable in PCDF since 1976,
and it was also approved that the gratuity
amount shall be paid as per the directions
3 All. M.D./Chairman Administrative Committee/Occupier Lko. & Anr. Vs. Shri Krishna Bihari Yadav & Ors.
873
of the State government issued from time
to time. It also approved the rules framed
under the gratuity scheme. The said rules
are annexed with the aforesaid resolution
dated 11.02.1991 and are also referred to
by the counsel for the petitioner.
Reliance is also placed upon the
resolution
of
the
Administrative
Committee meeting dated 13.06.1997
wherein under Item No.18, limit on
payment of gratuity was extended from
Rs.1 lakh to Rs.2.5 Lakhs. The master
policy taken with the LIC was also
relied upon, filed along with the
supplementary affidavit. Large number
of documents were also referred to
show that newly appointed employees
were, from time to time, included in the
master insurance policy taken with the
LIC.

11. On the basis of the aforesaid
documents, counsel for the petitioner
submits that PCDF had framed its own
scheme for the payment of gratuity to its
employees and under the said scheme
they had also constituted a trust, framed
its rules and taken a master policy from
the LIC and the employees can be paid
their gratuity only as per the said scheme,
rules and the master policy and, therefore,
they are not liable and cannot be forced to
pay anything more than what is covered
by the master policy. Reliance is also
placed upon the letter/circular dated
13.09.2002
issued
by
the
Milk
Commissioner, lastly enhancing the limit
of gratuity payable to employees to
Rs.3.50 Lakhs.

12. The aforesaid gratuity scheme in
PCDF has come into force on the basis of
the resolution no.18 of the executive
council of the PCDF in its meeting dated
01/02.02.1975. The said agenda and
resolution reads:-

18- xzsPkqVh vf/kfu;e
ds vUrxZr deZpkfj;ksa
dks xszpqVh ;kstuk dh
lqfo/kk iznku djus gsrq
ftlesa VaLV dk fuekZ.k
gksuk gS rFkk xszpqVh dh
/kujkf'k tks deZpkfj;ksa
dks le; le; ij
ns;
gksxh
ds
mRRkjnkbRo
dks
n`f"Vxr j[krs gq,
ykbQ
bUlksjsUl
dkjiksjs'ku
n~okjk
izLrqr
;kstuk
dh
Lohd`fr ij fopkjA
'kZ i'pkr xzsPkqVh vf/kfu;e ds vUrxZr Lohd`r
thou chek fuxe n~okjk izLrqr ;kstuk dks
ykxw djus gsrq Lohd`fr iznku dh xbZA lfpo
xzspqVh vf/kfu;e ds vUrxZr izkfof/kr VaLV dk
xBu Hkfo"; fuf/k ;kstuk dh Hkkafr ifjiw.kZ djsa
rFkk ;kstuk ds dk;kZU;ou lEcU/kh vkSj vU;
vko';dh; dk;Zokgh djsaA

The resolution translates as
'after consideration, the scheme proposed
by the Life Insurance Corporation under
the Gratuity Act is approved to be
applied. The secretary will complete the
formalities for creation of the prescribed
trust under the Gratuity Act in a similar
manner as was done for the provident
fund scheme and will also take other
required actions for its implementation'.

13. The said agenda and resolution
specifically state that the scheme shall be
prepared for enforcing the provisions of
the Gratuity Act. The resolution further
provides that the trust shall also be
constituted as per the provisions of the
Gratuity Act. Thus, it is clear that the
executive council resolved to enforce the
provisions of the Gratuity Act and also
directed the scheme to be framed and the
trust to be created for giving effect to the
provisions of the Gratuity Act. Neither the
scheme nor the master policy, filed by the
petitioner, anywhere state that they are
created under the Co-operative Societies
Act or the Regulations of 1975 or the
Regulations of 2010.

14. Counsel for the petitioner also
could not show from the record that the
874 INDIAN LAW REPORTS ALLAHABAD SERIES
resolution
dated
01/02.12.1975
of
Executive Council was ever modified or
withdrawn. He could not show anything
at all to prove that ever any decision was
taken, at any level whatsoever, to pay
gratuity as per the provisions of Cooperative Societies Act or the Regulations
of 1975 or the Regulations of 2010. Thus,
from the record of PCDF it is proved that
Executive Council of the PCDF took a
decision to enforce the provisions of the
Gratuity Act. The said decision was never
modified and, thus, today they cannot turn
back and say that the provision of the
Gratuity Act are not applicable. Further,
the circular dated 13.09.2002 issued by
the Milk Commissioner also states that,
since by amendment in the Gratuity Act
the maximum limit of the gratuity payable
is enhanced to Rs.3.50 Lakhs, therefore,
the same enhanced limit of Rs.3.50 Lakhs
is approved to be applied on the
officers/employees of PCDF. The said
circular also shows that even in 2002 the
modification in the Gratuity Act was
made applicable without any reference to
any other scheme.

15. There is yet another aspect of
the matter. The resolution of Executive
Council is dated 01/02.12.1975. The
Regulations of 1975 came into force from
06.01.1976
i.e.
from
the
date
of
publication of notification (even if taken
from the date of notification, the same
comes
to
31.12.1975).
Thus,
on
01/02.12.1975 there were no service
Regulations enforced, and thus, there is
no question of a decision being taken for
the payment of gratuity under the said
Regulations. There is no such decision
taken thereafter to pay gratuity under any
regulations. For the said reason also, it
cannot now be argued by the petitioner
that the scheme, rules and the master
policy for payment of gratuity is under
the Regulations of 1975 and is not for
enforcement of the Gratuity Act.

16. Coming back to the first
submission of counsel for petitioner, that
the Co-operative Societies Act is a special
act for the purposes of employees of the
co-operative societies and under the same,
in exercise of power under Section 121,
the
Registrar
has
framed
service
Regulations, which also provides for the
payment of gratuity and, therefore, it is
the Co-operative Societies Act and the
service Regulations which would be
applicable for payment of gratuity on its
employees and not the provisions of the
Gratuity Act. Strong reliance is placed by
the petitioner upon the judgment of the
Supreme Court in case Ghaziyabad Zila
Sahkari Bank Limited Vs. Additional
Labour
Commissioner
and
Others
(2007) 11 SCC 756 and upon the Single
Judge judgments of this Court in case of
Brahamvartha Commercial Co-operative
Bank
Ltd.
Vs.
Presiding
Officer,
Industrial Tribunal III, U.P. Kanpur
(2012) 134 FLR 574, Sikta Mahoogarh
Sadhan
Sahkari
Samiti
Ltd.
Vs.
Prescribed Authority (Payment of Wages
Act) and others (2015) 144 FLR 23,
unreported judgment of this Court dated
07.04.2017 passed in Writ-C No.184 of
1999 M/S Gangol Sahkari Dugdh
Utpadak Sangh Ltd. through G.M. Vs.
Presiding
Officer,
Labour
Court-Ii
Meerut
and
another,
unreported
judgment of this Court dated 03.08.2016
passed in Writ-A No.14364 of 2016;
Sugvir Singh Vs. State of U.P. & Others
and
other
connected
matters
and
judgment passed in Case of Shobhai Ram
and others Vs. State of U.P. and others
(2014) 142 FLR 457. Reliance is also
placed upon the judgment in case of P.
3 All. M.D./Chairman Administrative Committee/Occupier Lko. & Anr. Vs. Shri Krishna Bihari Yadav & Ors.
875
Rajan Sandhi Vs. Union of India; (2010)
10 SCC 338, where a comparison was
made between the provisions of Working
Journalists Act, 1955 and the provisions
of Payment of Gratuity Act.

17. Counsels for the opposite
parties, disputing the said submission of
petitioner, have placed reliance upon the
unreported judgment of Division Bench
of this Court, dated 09.04.2002 in Writ
Petition No.1427 of 2000 Dr. Raj Kumar
Singh Vs. Cadere Authority U.P. Coop.
Dairy Federation and Milk Union,
Centralised Services and others and
other connected matters and judgments of
Supreme Court in case of Y.K. Singla Vs.
Punjab National Bank and Others
(2013)
136
FLR
1087,
Municipal
Corporation of Delhi Vs. Dharam
Prakash Sharma (1999) 81 FLR 867,
State of Punjab Vs. the Labour Court,
Jullundur and Others (1979) 39 FLR
353.

18. Counsels for the respondents
have
also
strongly
disputed
the
correctness of the judgments of this Court
relied upon by the petitioner, based upon
the judgment of Supreme Court in case of
Ghaziyabad Zila Sahkari Bank Limited
(Supra) on the ground that none of them
have considered the Division Bench
Judgment of this Court in case of Dr. Raj
Kumar
Singh
(Supra)
and
other
judgment of Supreme Court. Counsels for
the respondents state that the entire
compilation of documents with regard to
applicability of gratuity i.e. the scheme,
the master policy, the rules etc. were
never placed before any of the earlier
Courts. They, simply going by one line in
the judgment of Supreme Court in case of
Ghaziyabad Zila Sahkari Bank Limited
(Supra), which says that the Regulations
of 1975 would take effect over any other
labour laws, without even looking into the
issue as to which Act would be the special
Act,
have
passed
the
judgments.
Respondents counsels submit that even
the law settled in the Ghaziyabad Zila
Sahkari Bank Limited case (Supra) goes
against the petitioners and the other
Supreme Court judgments, relied upon by
them, settles the issue of the primacy of
the Payment of Gratuity Act.

19. So far as the judgments in cases
of
Brahamvartha
Commercial
Cooperative Bank Ltd. (supra), Sikta
Mahoogarh Sadhan Sahkari Samiti Ltd.
(supra), M/S Gangol Sahkari Dugdh
Utpadak Sangh Ltd. through G.M.
(supra),
Sugvir
Singh
(supra)
are
concerned, they all follow the judgment
of the Supreme Court passed in case of
Ghaziyabad Zila Sahkari Bank Limited
(Supra). In the aforesaid judgment,
proceedings
were
initiated
by
the
workman under Section 33-C of the U.P.
Industrial
Disputes Act,
1947. The
Supreme Court had occasion to compare
provisions of the Industrial Disputes Act,
1947 with the provisions of the Cooperative Societies Act for the purposes
of service conditions of the employees of
a co-operative society. The relevant
portion of paragraph-61, 63, 64 reads as
follows:-

"61. The general legal principle
in interpretation of statutes is that 'the
general Act should lead to the special
Act'. Upon this general principle of law,
the intention of the U.P legislature is
clear, that the special enactment UP Cooperative Societies Act, 1965,, 1965 alone
should apply in the matter of employment
of Co-operative Societies to the exclusion
of all other Labour Laws. It is a complete
876 INDIAN LAW REPORTS ALLAHABAD SERIES
code in itself as regards employment in
co-operative societies and its machinery
and provisions. The general Act the UPID
Act, 1947 as a whole has and can have no
applicability and stands excluded after
the enforcement of the UPCS Act. This is
also clear from necessary implication that
the legislature could not have intended
'head-on-conflict and collision' between
authorities under different Acts.............

63. Also if we refer to the
general
principles
of
Statutory
Interpretation as discussed by G.P.Singh,
in his treatise on 'Principles of Statutory
Interpretation', we can observe that, a
prior general Act may be affected by a
subsequent particular or special Act if the
subject-matter of the particular Act prior
to its enforcement was being governed by
the general provisions of the earlier Act.
In such a case the operation of the
particular Act may have the effect of
partially repealing the general Act, or
curtailing
its
operation,
or
adding
conditions to its operation for the
particular cases. The distinction may be
important at times for determining the
applicability of those provisions of the
General
Clauses
Act,
1897,
(Interpretation Act, 1889 of U.K. now
Interpretation Act, 1978) which apply
only in case of repeals.

64. A general Act's operation
may be curtailed by a later Special Act
even if the general Act will be more
readily inferred when the later Special
Act also contains an overriding nonobstante provision. Section 446(1) of the
Companies Act 1956 (Act 1 of 1956)
provides that when the winding up order
is passed or the official liquidator is
appointed as a provisional liquidator, no
suit or other legal proceeding shall be
commenced, or if pending at the date of
winding up order shall be proceeded with
against the company except by leave of
the Court. Under Section 446(2), the
company Court, notwithstanding anything
contained in any other law for the time
being in force is given jurisdiction to
entertain any suit, proceeding or claim by
or against the company and decide any
question of priorities or any other
question whatsoever, whether of law or
fact, which may relate to or arise in the
course of the winding up. The Life
Insurance Corporation Act, 1956 (Act 31
of 1956) constituted a Tribunal and
Section 15 of the Act enabled the Life
Insurance Corporation to file a case
before the tribunal for recovery of various
amounts from the erstwhile Life Insurance
Companies in certain respects. Section 41
of the LIC Act conferred exclusive
jurisdiction on the tribunal in these
matters. On examination of these Acts, it
was held that the provisions conferring
exclusive jurisdiction on the tribunal
being provisions of the Special Act i.e. the
LIC Act prevailed over the aforesaid
provisions of the general Act, viz., the
Companies Act which is an Act relating to
Companies in general and, therefore, the
tribunal had jurisdiction to entertain and
proceed with a claim of the Life Insurance
Corporation against a former insurer
which had been ordered to be wound up
by the Company Court. This case was
followed in giving to the provisions of the
Recovery of Debts due to Banks and
Financial Institutions Act 1993 (RDB Act)
overriding effect over the provisions of
the Companies Act, 1956. The RDB Act
constitutes a tribunal and by sections 17
and 18 confers upon the tribunal
exclusive jurisdiction to entertain and
decide applications from the banks and
financial institutions for recovery of debts
(defined to mean any liability which is
claimed as due). The Act also lays down
3 All. M.D./Chairman Administrative Committee/Occupier Lko. & Anr. Vs. Shri Krishna Bihari Yadav & Ors.
877
the procedure for recovery of the debt as
per the certificate issued by the tribunal.
The provisions of the RDB Act, which is a
special Act, were held to prevail over
sections 442, 446, 537 and other sections
of the Companies Act which is a general
Act, more so because Section 34 of the
RDB Act gives over-riding effect to that
Act by providing that the provisions of
this Act shall have effect notwithstanding
anything inconsistent therewith contained
in any other law for the time being in
force."

20. The Division Bench of this
Court, in its judgment dated 09.04.2002
in Writ Petition No.1427 of 2000 Dr. Raj
Kumar Singh Vs. Cadere Authority U.P.
Coop. Dairy Federation and Milk Union,
Centralised Services and others and
other connected matters, has held:-

"The payment of gratuity is
governed by Payment of Gratuity Act,
1972 as amended from time to time. In
view of Section 1(3)(b) of the Act every
shop or establishment within the meaning
of any law for the time being in force in
relation to shops and establishment in a
State in which ten or more persons are
employed, or were employed on any day
of the preceding twelve months shall fall
under the provisions of the said Act. It is
not in dispute, rather it has not been
disputed by the learned counsel for the
respondents
that
PCDF
is
an
establishment. Learned counsel for the
petitioner has also placed reliance upon a
Division Bench judgment of this Court in
U.P. Cooperative Union and others Vs.
Prabhu Dayal Srivastava and Others,
1988 UPLBEC 391. in which it has been
held that the term 'establishment' as used
under Section 1(3)(b) or 1(3)(c) of the
Payment of Gratuity Act includes a
cooperative society also and thus the
employees of the cooperative society are
entitled for payment of gratuity. We have
no reason to take a different view in the
present case, as no such argument has
been advanced. Once it is established that
the petitioners were working in an
establishment, the Payment of Gratuity
Act becomes applicable to them. The Act
itself provides the manner of payment of
gratuity. The Payment of Gratuity Act
defines "employee" in section 2(e) which
means any person (other than an
apprentice) employed on wages in any
establishment, factory, mine, oilfield,
plantation, port, railway company or
shop, to do any 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. The payment of gratuity has
been provided in section 4 of the Act,
which reads as under:-

4.(1) Gratuity shall be payable
to an employee on the termination of his
employment
after
he
has
rendered
continuous service for not less than five
years,-

(a) on his superannuation, or

(b)
on
his
retirement
or
resignation, or

(c) on his death or disablement
due to accident or disease;

Provided that the completion of
continuous service of five years shall not
be necessary where the termination of the
employment of any employee is due to
death or disablement :
878 INDIAN LAW REPORTS ALLAHABAD SERIES

Provided further that in the case
of death of the employee, gratuity payable
to him shall be paid to his nominee or, if
no nomination has been made, to the
heirs.

EXPLANATION.-
For
the
purposes of this section, disablement
means such disablement as incapacitates
an employee for the work which he was
capable of performing before the accident
or disease resulting in such disablement.

(2) For every completed year of
service or part thereof in excess of six
months, the employer shall pay gratuity to
an employee at the rate of fifteen days'
wages based on the rate of wages last
drawn by the employee concerned :

Provided that in the case of
piece-rated employee, daily wages shall
be computed on the average of the total
wages received by him for a period of
three months immediately preceding the
termination of his employment, and, for
this purpose, the wages paid for any
overtime work shall not be taken into
account :

Provided further that in the case
of an employee employed in a seasonal
establishment, the employer shall pay the
gratuity at the rate of seven days' wages
for each season.

(3) The amount of gratuity
payable to an employee shall not exceed
twenty months' wages.

(4)
For
the
purpose
of
computing the gratuity payable to an
employee who is employed, after his
disablement, on reduced wages, his wages
for the period preceding his disablement
shall be taken to be the wages received by
him during that period, and his wages for
the period subsequent to his disablement
shall be taken to be the wages as so
reduced.

(5) Nothing in this section shall
affect the right of an employee to receive
better terms of gratuity under any award
or agreement or contract with the
employer.

(6) Notwithstanding anything
contained in sub-section (1),-

(a) the gratuity of an employee,
whose services have been terminated for
any act, willful 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 shall be wholly 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.

Power to exempt vests in the
appropriate Government under Section 5
of the Act, which provides as under:-

5.
(1)
The
appropriate
Government may, by notification, and
subject to such conditions as may be
specified in the notification, exempt any
establishment, factory, mine, oilfield,
plantation, port, railway company or
shop to which this Act applies from the
operation of the provisions of this Act, if,
in the opinion of the appropriate
Government, the employees in such
establishment, factory, mine, oilfield,
plantation, port, railway company or
shop are in receipt of gratuity or
pensionary benefits not less favorable
than the benefits conferred under this Act.
3 All. M.D./Chairman Administrative Committee/Occupier Lko. & Anr. Vs. Shri Krishna Bihari Yadav & Ors.
879

(2)
The
appropriate
Government may, by notification, and
subject to such conditions as may be
specified in the notification, exempt any
employee or class of employees employed
in any establishment, factory, mine,
oilfield,
plantation,
port,
railway
company or shop to which this Act applies
from the operation of the provisions of
this Act, if, in the opinion of the
appropriate Government, the employees
in such establishment, factory, mine,
oilfield,
plantation,
port,
railway
company or shop are in receipt of gratuity
or pensionary benefits not less favorable
than the benefits conferred under this
Act.(3)........................................................
...................................................................
.......

There is no provision under the
Act which vests power in any authority
to exempt payment of gratuity to the
employees of any establishment, who are
otherwise covered by the provisions of
this Act other than the appropriate
Government. The power to exempt may
include
the
power
to
exempt
an
establishment from payment of gratuity
in toto or may regulate the payment of
gratuity at different scales but this power
cannot be exercised either by the Society
or
by
the
Registrar,
Cooperative
Societies. The Registrar cannot be
substituted in place of the 'appropriate
Government'. The term 'appropriate
Government' has also been defined
under section 2(a) of the Act; which does
not include the Registrar.

The applicability of Regulation
95 Chapter VIII of the Regulations of
1975 can also not be of any assistance to
the respondents in view of the overriding effect given to the provisions of
Payment of Gratuity Act under Section
14. Section 14 of the Act reads as under:-

"14. The provisions of this Act
or any rule made thereunder 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."

Besides this, what should be the
amount of gratuity and how much amount
should be paid to an employee of an
establishment covered by Payment of
Gratuity Act has been provided under
section 4 and section 7 of the Act. It is
obligatory upon the employer of such
establishment
to
make
payment
of
gratuity in accordance with the provisions
of the aforesaid Act. It is not the case of
either of the parties that any exemption
has been granted to the PCDF under
Section 5 of the Act." (emphasis applied)

21. So far as the Single Judge
judgments of this Court are concerned,
the Division Bench judgment of this
Court in case of Dr. Raj Kumar Singh
(Supra) was never placed before them,
wherein this Court has held that it is the
provisions of the Gratuity Act which
would be applicable and the provisions of
the Co-operative Societies Act would not
be applicable for the purpose of payment
of gratuity to the employees of PCDF.
Counsel for the petitioner submits that the
judgment of the Division Bench is of the
year 2004 and loses its relevance in view
of the judgment of Supreme Court in case
of Ghaziyabad Zila Sahkari Bank
Limited (Supra), which is a later
judgment dated 17.01.2007. The said
judgment is considered in the later part of
this judgment, after first referring to
judgments of Supreme Court comparing
the Gratuity Act with other legislations.
880 INDIAN LAW REPORTS ALLAHABAD SERIES

22. The first such instance was in
case of State of Punjab Vs. The Labour
Court, Jullundur and Others (1979) 39
FLR 353 (S.C.). In the said case the
comparison was between the Gratuity Act
and the Industrial Disputes Act, 1947 and
the question was whether an employee
can have recourse to Section 33-C(2) of
the I.D. Act, 1947 for recovery of gratuity
amount. The Court found that:-

"It is urged that the Payment of
Gratuity Act is a self-contained code
incorporating all the essential provisions
relating to payment of gratuity which can
be claimed under that Act, and its
provisions impliedly exclude recourse to
any other statute for that purpose. The
contention has force and must be
accepted. A careful perusal of the relevant
provisions of the Payment of Gratuity Act
shows that Parliament has enacted a
closely knit scheme providing for payment
of gratuity. A controlling authority is
appointed by the appropriate Government
under section 3. and Parliament has
made
him
responsible
for
the
administration of the entire Act. In what
event gratuity will become payable and
how it will be quantified are detailed in
section 4. Section 7(1) entitled a person
eligible for payment of gratuity to apply
in that behalf to the employer. Under
section 7(2), the employer is obliged, as
soon as gratuity becomes payable and
whether an application has or has not
been made for payment of gratuity, to
determine the amount of gratuity and
inform the person to whom the gratuity is
payable specifying the amount of gratuity
so determined. He is obliged, by virtue of
the same provision, to inform the
controlling authority also, thus ensuring
that the controlling authority is seized at
all times of information in regard to
gratuity as it becomes payable. If a
dispute is raised in regard to the amount
of gratuity payable or as to the
admissibility of any claim to gratuity, or
as to the person entitled to receive the
gratuity, section 7(4)(a) requires the
employer to deposit with the controlling
authority such amount as he admits to be
payable
by
him
as
gratuity.
The
controlling authority is empowered. under
section
7(4)(b),
to
enter
upon an
adjudication of the dispute, and after due
inquiry, and after giving the parties to the
dispute a reasonable opportunity of being
heard, he is required to determine the
amount of gratuity payable. In this
regard, the controlling authority has all
the powers as are vested in a court while
trying a suit under the Code of Civil
Procedure, 1908 in respect of obtaining
evidentiary material and the recording of
evidence. The amount deposited by the
employer with the controlling authority as
the admitted amount of gratuity will be
paid over by the controlling authority to
the employee or his nominee or heir.
Section 7(7) provides an appeal against
the order of the controlling authority
under section 7(4)to the appropriate
Government or such other authority as
may be specified by the appropriate
Government
in
that
behalf.
The
appropriate Government or the appellate
authority is empowered under section
7(8), after giving the parties to the appeal
a reasonable opportunity of being heard,
to confirm, modify or reverse the decision
of the controlling authority. Where the
amount of gratuity payable is not paid by
the employer with in the prescribed time,
the controlling authority is required by
Section 8, on application made to it by the
aggrieved person, to issue a certificate
for that amount to the Collector. The
Collector, thereupon, is empowered to
3 All. M.D./Chairman Administrative Committee/Occupier Lko. & Anr. Vs. Shri Krishna Bihari Yadav & Ors.
881
recover the amount of gratuity, together
with compound interest thereon at the
rate of nine per cent per annum from the
date of expiry of the prescribed time, as
arrears of land revenue, and pay the same
to the person entitled thereto.

It is apparent that the Payment
of Gratuity Act enacts a complete code
containing detailed provisions covering
all the essential features of a scheme for
payment of gratuity. It creates the right to
payment of gratuity, indicates when the
right will accrue, and lays down the
principles
for
quantification
of
the
gratuity. It provides further for recovery
of the amount, and contains an especial
provision that compound interest at nine
per cent per annum will be payable on
delayed payment. For the enforcement of
its provisions, the Act provides for the
appointment of a controlling authority,
who is entrusted with the task of
administering the Act. The fulfilment of
the rights and obligations of the parties
are made his responsibility, and he has
been invested with an amplitude of power
for
the
full
discharge
of
that
responsibility. Any error committed by
him can be corrected in appeal by the
appropriate Government or an appellate
authority particularly constituted under
the Act.

Upon all these considerations,
the
conclusion
is
inescapable
that
Parliament intended that proceedings for
payment of gratuity due under the
Payment of Gratuity Act must be taken
under that Act and not under any other.
That being so, it must be held that the
applications
filed
by
the
employee
respondents under section 33-C(2)of the
Industrial Disputes Act did not lie, and
the Labour Court had no jurisdiction to
entertain and dispose of them. On that
ground, this appeal must succeed."

23.

Thus,
after
taking
into
consideration the provisions of the
Gratuity Act, the Supreme Court found it
to be a self contained court having effect
over all other laws for the purposes of
payment of gratuity to the employees. The
next judgment is Municipal Corporation
of Delhi Vs. Dharam Prakash Sharma
(1999) 81 FLR 867 (S.C.). The same is a
short judgment and paragraph-2 thereof
reads:-

"2. The short question that
arises for consideration is whether an
employee of the MCD would be entitled to
payment of gratuity under the Payment of
Gratuity Act when the MCD itself has
adopted the provisions of the CCS
(Pension)
Rules,
1972
(hereinafter
referred to as "the Pension Rules"),
whereunder there is a provision both for
payment of pension as well as of gratuity.
The contention of the learned counsel
appearing for the appellant in this Court
is that the payment of pension and
gratuity under the Pension Rules is a
package by itself and once that package is
made applicable to the employees of the
MCD, the provisions of payment of
gratuity under the Payment of Gratuity
Act cannot be held applicable.