# U.P. Financial Corporation v. Appellate Authority Under Payment Of Gratuity Act and Others

- **Citation:** (2019) 1 ILRA 1203
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-07-11
- **Case number:** Writ - C No. 1302 of 2018
- **Bench:** J.J. Munir
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/u-p-financial-corporation-v-appellate-authority-under-payment-of-gratuity-act-44435
- **Pages:** 10

## Headnote

C.S.C., Sri Ranjeet Kumar Mishra

A. Whether interim relief being paid to an
employee
immediately
before
his
retirement would fall within the meaning
of 'wages' defined under Section 25 of the
Payment of Gratuity Act, 1972 for the
purpose of calculation of his gratuity,
under Section 4 (2)? (Para-1)

B.
Whether
a
statutory
right,
as
sacrosanct as that created under the Act
in favour of an employeeto receive
gratuity reckoned in accordance with the
Act, can be excluded on the basis of a
contract? (Para-12)
Once wages are defined to mean and
include dearness allowance, there is
absolutely no basis to exclude interim
relief from the definition of wages, that
is nothing but a temporary addition to
the principal component of wages, until
a revision of the dearness allowance or
the basic pay itself. (Para-17)

Interim relief claimed by the employee to be
part of his wages for the purpose of reckoning
his wages last drawn at the time of voluntary
retirement from service, would be indeed a
1204 INDIAN LAW REPORTS ALLAHABAD SERIES
part of it. The scheme would be no more
than a contract framed under a policy of the
petitioners,
and
would,
therefore,
be
subservient to the Act; and a fortiori to the
rights of an employee to receive gratuity on
the date he retires, calculated in accordance
with the provisions of the Act. Even if the
VRS were framed under an Act or had
statutory flavor, the provisions of the Section
14 of the Act would still give it overriding
effect, over anything said to the contrary in
the
scheme.
The
amount
of
gratuity
deposited with the Controlling Authority be
paid to the petitioner within 15 days of
receipt of a certified copy of this order by the
said Authority.

Writ Petition dismissed with costs.

CHRONOLOGICAL LIST OF CASES CITED:

1:- (2003) 5 SCC 163, A.K. Bindal & Another
vs. Union of India& others

2:- 2019 SCC Online SC 462, Nagar Ayukt,
Nagar Nigam, Kanpur vs. Mujib Ulla Khan and
another (E-7)

## Text

1 All. U.P Financial Corporation Vs. Appellate Authority Under Payment Of Gratuity Act and Others 1203
justice administration system. Despite
heavy quantum of cases in Courts, in our
view, it would neither be permissible nor
possible to state as a principle of law,
that while exercising power of judicial
review on administrative action and more
particularly judgment of courts in appeal
before the higher Court, providing of
reasons can never be dispensed with. The
doctrine of audi alteram partem has three
basic essentials. Firstly, a person against
whom an order is required to be passed
or whose rights are likely to be affected
adversely must be granted an opportunity
of being heard. Secondly, the concerned
authority should provide a fair and
transparent procedure and lastly, the
authority concerned must apply its mind
and dispose of the matter by a reasoned
or speaking order. This has been
uniformly applied by courts in India and
abroad."

26. In view of the same,we are of
the considered view that once respondent
no. 4 had already exhausted all remedial
forum then he had no right to approach
and make complaint in question against
the petitioner regarding eviction of the
petitioner from his land. Moreover in the
instant case the grievance which has been
raised as complained by respondent no. 4
before the commission is not at all
maintainable and the same is not within
the ambit and scope of the Commission to
proceed in the matter.

27. For all the aforesaid reasons, the
order dated 1.12.2015 passed by the Uttar
Pradesh Scheduled Caste and Scheduled
Tribes Commission, Lucknow-respondent
no. 3 and consequential notice dated
31.12.2015
issued
by
the
Deputy
Collector, Sadar, Varanasi, cannot be
sustained. They are is hereby set aside.

28. The writ petition is hereby
allowed.
----------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.07.2019

BEFORE
THE HON'BLE J.J. MUNIR, J.

Writ - C No. 1302 of 2018

U.P. Financial Corporation ...Petitioner
Versus
Appellate Authority Under Payment Of
Gratuity Act and Others ...Respondents

Counsel for the Petitioner:
Sri Ateeq Ahmad Khan

Counsel for the Respondents:
C.S.C., Sri Ranjeet Kumar Mishra

A. Whether interim relief being paid to an
employee
immediately
before
his
retirement would fall within the meaning
of 'wages' defined under Section 25 of the
Payment of Gratuity Act, 1972 for the
purpose of calculation of his gratuity,
under Section 4 (2)? (Para-1)

B.
Whether
a
statutory
right,
as
sacrosanct as that created under the Act
in favour of an employeeto receive
gratuity reckoned in accordance with the
Act, can be excluded on the basis of a
contract? (Para-12)
Once wages are defined to mean and
include dearness allowance, there is
absolutely no basis to exclude interim
relief from the definition of wages, that
is nothing but a temporary addition to
the principal component of wages, until
a revision of the dearness allowance or
the basic pay itself. (Para-17)

Interim relief claimed by the employee to be
part of his wages for the purpose of reckoning
his wages last drawn at the time of voluntary
retirement from service, would be indeed a
1204 INDIAN LAW REPORTS ALLAHABAD SERIES
part of it. The scheme would be no more
than a contract framed under a policy of the
petitioners,
and
would,
therefore,
be
subservient to the Act; and a fortiori to the
rights of an employee to receive gratuity on
the date he retires, calculated in accordance
with the provisions of the Act. Even if the
VRS were framed under an Act or had
statutory flavor, the provisions of the Section
14 of the Act would still give it overriding
effect, over anything said to the contrary in
the
scheme.
The
amount
of
gratuity
deposited with the Controlling Authority be
paid to the petitioner within 15 days of
receipt of a certified copy of this order by the
said Authority.

Writ Petition dismissed with costs.

CHRONOLOGICAL LIST OF CASES CITED:

1:- (2003) 5 SCC 163, A.K. Bindal & Another
vs. Union of India& others

2:- 2019 SCC Online SC 462, Nagar Ayukt,
Nagar Nigam, Kanpur vs. Mujib Ulla Khan and
another (E-7)

(Delivered by Hon'ble J.J. Munir, J.)

1. The question involved in this writ
petition is: whether interim relief being
paid to an employee immediately before
his retirement would fall within the
meaning of 'wages' defined under Section
25 of the Payment of Gratuity Act, 1972
for the purpose of calculation of his
gratuity, under Section 4 (2)?

2. The third respondent was
employed with the petitioner-corporation
in the month of December, 1972 and
retired voluntarily from service in the
month of July, 2005. He opted to retire
under the Voluntary Retirement Scheme
offered by the Corporation (for short the
'VRS'). At the time of his retirement in the
month of July, 2005 respondent no.3 held
the post of Assistant Manager (Finance)
with the petitioner corporation.

3. The case of the petitioner in short
is that at the time of his voluntary
retirement, he was paid gratuity that was
calculated taking into consideration his
basic pay + dearness allowance. However,
a sum of Rs. 800/- per month that he was
in receipt of at that time, by way of
interim relief, was not included in his
wages last drawn for the purpose of
calculation of his gratuity. Respondent
no.3, admittedly rendered 32 years of
service and taking the said respondent's
wages last drawn to be his basic pay at the
time, that is a sum of Rs. 3500/- per
month + dearness allowance, that at the
relevant time was at sum of Rs. 10,606/-,
his wages last drawn were determined at a
figure of Rs. 14,106/-. In whatever
manner gratuity was calculated, the
petitioner corporation reckoned the sum
payable to the third respondent in gratuity
at a figure of Rs. 2,22,222/-. This figure in
whatever manner calculated by the
petitioner according to their rules, and not
in accordance with the Payment of
Gratuity Act, 1972 (for short the 'Act'),
did not take into reckoning a sum of Rs.
800/- per month, that respondent no.3
received by way of interim relief.

4. Aggrieved, the third respondent
moved an application to the Controlling
Authority, Payment of Gratuity Act (for
short the 'Controlling Authority'), dated
10.05.2012, in substance claiming that he
was entitled to receive gratuity in
accordance with Section 4(2) of the Act,
where the sum of interim relief that he
was receiving as part of his wages last
drawn, is required to be included while
determining the gratuity payable. It was
claimed that including the sum of interim
1 All. U.P Financial Corporation Vs. Appellate Authority Under Payment Of Gratuity Act and Others 1205
relief that the third respondent was in
receipt of when he retired, gratuity
payable to him would workout to a figure
of Rs. 2,83,787/-. Thus, deducting the
sum of Rs. 2,29,222/- paid to the third
respondent at the time of his voluntary
retirement in gratuity, a balance of Rs.
54,565/- is still outstanding, that he is
entitled to receive from the petitioners
under Section 4(2) of the Act.

5. The aforesaid application was
registered
before
the
Controlling
Authority as PG Case No. 57 of 2012. A
reply dated 05.12.2012, signed by the
Chief Manager, Law Department, of the
petitioner was filed in opposition to the
third respondent's claim. A further reply
dated 15.05.2013 was filed on behalf of
the petitioner. A rejoinder was filed on
behalf of the third respondent, reiterating
his claim about entitlement to difference
in the sum of gratuity payable to him, in
accordance with Section 4(2) of the Act.
The Controlling Authority allowed the
petitioner's application vide order dated
18.01.2016,
calculating
the
gratuity
payable, by including the sum of interim
relief for the purpose of reckoning wages
last drawn by the third respondent and
determining the same at a figure of Rs.
2,83,787/-,
in
accordance
with
the
provisions of Section 4(2) of the Act, read
with Rule 10(1) of the U.P. Payment of
Gratuity Rules, 1975 (for short the
'Rules').

6. The petitioners preferred an appeal
from the aforesaid order to the Appellate
Authority under the Act, invoking the
provisions of Section 7(7) and praying that
the order of the Controlling Authority, dated
18.01.2016 be set aside. The aforesaid appeal
was heard and dismissed by the Appellate
Authority, vide its order dated 11.10.2017.

7. Aggrieved, the present writ
petition has been filed.

8. Heard Sri Mohd. Saleem Khan,
learned counsel for the petitioner, Sri
Ranjeet Kumar Mishra, learned counsel
appearing for respondent no.3, and Sri
Sandeep
Kumar,
learned
counsel
appearing on behalf of respondent no.1.

9. A reading of the case as urged by
the petitioners before the authorities
below, shows that there is no issue about
the fact that the Act is applicable to the
petitioner's establishment. The thrust of
the petitioner's submission is two fold.
The first is that the petitioner having
accepted
the
Voluntary
Retirement
Scheme, and accepted terminal benefits
under the said scheme, he has no further
right to claim any sum of money on any
count whatsoever, including gratuity
payable under the Act. Learned counsel
for the petitioner submits that acceptance
of
retirement
under
a
Voluntarily
Retirement Scheme is a 'take it or a leave
it' offer, where whatever is offered by the
employer under the scheme, if accepted,
bars all claims to pay revision or higher
wages, which the employee may be
otherwise entitled under the Rules. In this
regard, learned counsel for the petitioner
has relied upon the decision of the
Supreme Court in A.K. Bindal &
Another vs. Union of India & others,
(2003) 5 SCC 163, where it has been held
thus:-

34.This
shows
that
a
considerable amount is to be paid to an
employee ex gratia besides the terminal
benefits in case he opts for voluntary
retirement under the Scheme and his
option is accepted. The amount is paid not
for doing any work or rendering any
1206 INDIAN LAW REPORTS ALLAHABAD SERIES
service. It is paid in lieu of the employee
himself leaving the services of the
company or the industrial establishment
and foregoing all his claims or rights in
the same. It is a package deal of give and
take. That is why in the business world it
is known as "golden handshake". The
main purpose of paying this amount is to
bring about a complete cessation of the
jural relationship between the employer
and the employee. After the amount is
paid and the employee ceases to be under
the employment of the company or the
undertaking, he leaves with all his rights
and there is no question of his again
agitating for any kind of his past rights
with his erstwhile employer including
making any claim with regard to
enhancement of pay scale for an earlier
period. If the employee is still permitted to
raise a grievance regarding enhancement
of pay scale from a retrospective date,
even after he has opted for Voluntary
Retirement Scheme and has accepted the
amount paid to him, the whole purpose of
introducing the Scheme would be totally
frustrated.

10. Learned counsel for the
petitioner submits that a reading of the
aforesaid principle makes it clear that
once an employee accepts to quit
employment under the VRS, all that he is
entitled to receive is whatever is part of
that scheme. The VRS is a complete
severance
of
all
relationship
and
obligations between the employer and
employee, and it comes subject to
whatever is offered in remuneration as
part of the VRS. He submits, therefore,
that the petitioner is not entitled to rely
upon the statutory fixation of gratuity
under the Act, to which he would be
entitled, in case he retired on attaining the
age of superannuation. According to Sri
Salim Ahmad Khan, learned counsel for
the petitioner, reckoning of gratuity under
the Act is an anathema to the concept of
VRS,
which
is
complete
in
all
quantification of rights and obligations
that are contracted by an employee,
opting to retire under the said scheme.

11. Sri Sandeep Kumar Mishra has
disputed the aforesaid proposition and
submits that the liability of the employer
to pay gratuity, governed by Section 4(2)
of the Act cannot be defeated on the basis
of attaching to the VRS an overshadowing
effect, upon the statutory rights of the
employee. He submits that the decision of
their Lordships in A.K. Bindal and
Another
(Supra)
is
clearly
distinguishable, as that did not relate to
payment of gratuity.

12. This Court has considered the
aforesaid submission with all the attention
that it deserves. The VRS that may be an
initiative in furtherance of a policy of the
petitioner, is after all a scheme under
which an employee is given an offer to
retire, subject to benefits extended to him
that are generally alluring enough for
him/her to forsake the remainder of his
tenure of service, in consideration of
whatever he is to receive under the
scheme. It is no doubt true that the
scheme comes in standard form, where
the condition of acceptance is "take it or
leave it". But, the question that arises in
that case is whether a statutory right, as
sacrosanct as that created under the Act in
favour of an employee to receive gratuity
reckoned in accordance with the Act, can
be excluded on the basis of a contract?
The nature of the right to receive gratuity
has been dealt with by their Lordships of
the Supreme Court in a recent decision in
Nagar Ayukt, Nagar Nigam, Kanpur
1 All. U.P Financial Corporation Vs. Appellate Authority Under Payment Of Gratuity Act and Others 1207
vs. Mujib Ulla Khan and another, 2019
SCC Online SC 462, where it has been
held in paragraph 11 and 12 of the report
as under:-

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:

"14. Act to override other
enactments, etc. - 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."

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."
(Emphasis by Court)

13. No doubt this decision was
rendered in the context of a local body,
but that is besides the point, as it is
nobody's case that the Act does not apply
to the petitioner. If it does, Section 14 of
the Act gives overriding effect to the Act,
not only over any other enactment, but
also over any other instrument or contract
having effect by virtue of any enactment
other than the Act. The language of
Section 14, clearly spells this out. The
VRS at best is a scheme that has been
framed by the petitioners in furtherance of
a policy, may be as their Lordships said in
A.K.Bindal and Another (Supra) to
reduce surplus staff and to bring about
financial efficiency. But, the scheme
would be no more than a contract framed
under a policy of the petitioners, and
would, therefore, be subservient to the
Act; and a fortiori to the rights of an
employee to receive gratuity on the date
he retires, calculated in accordance with
the provisions of the Act. Even if the VRS
were framed under an Act or had statutory
flavor, the provisions of the Section 14 of
the Act would still give it overriding
effect, over anything said to the contrary
in the scheme.

14. So far as the decision of their
Lordships in the case of A.K.Bindal and
Another(Supra)
is
concerned,
the
observations giving priority and finality to
all emoluments received under the VRS is
in relation to a claim for enhancement of
pay-scale, for an earlier period of time,
when the employee was in service. There
the entire framework of rights is different
because the right to receive emoluments
or a certain pay scale, arises from the
employer-employee relationship, and the
entitlement is governed by the prevalent
pay scale. In the nature of things that were
involved
in
A.K.
Bindal
and
another(Supra) what the employee was
enforcing was his right to a higher pay
scale, in relation to a period of time prior
to his retirement under the VRS. The right
to receive emoluments or pay at a
particular rate, being essentially a matter
of contract between an employer and
employee, may be governed or fixed by
rules, would all sink behind a contract of
voluntary retirement under the VRS,
where in complete liquidation of all the
employees' claims a lump sum is offered.
In that case, however, there was no issue
regarding
payment
of
a
statutory
1208 INDIAN LAW REPORTS ALLAHABAD SERIES
entitlement like gratuity, governed by an
Act that prescribes the rate thereof and
has overriding effect over any other
enactment, instrument or contract having
force of law, by virtue of Section 14.
Therefore, the right to receive other
emoluments at a higher scale, after
accepting retirement under the VRS,
cannot be compared to the statutory
entitlement to receive gratuity at the rate
prescribed under the Act. In fact, this
Court thinks that it would be in the best
interest of both the employer and
employee that calculation of gratuity,
which forms part of the VRS be always
done in accordance with the provisions of
the Act, considering the overriding effect
given to it, by Section 14. Thus, this
Court finds no force in the submission of
Sri Khan, learned counsel appearing for
the petitioner on this count.

15. The next submission of Sri
Khan, learned counsel for the petitioner is
that gratuity payable to the 3rd respondent
is to be worked out on basis that the rate
of wages last drawn by the employee, for
the purpose of Section 4(2) of the Act, is
to be calculated on the basis of his basic
pay + dearness allowance. He submits
that the third respondent's claim that
interim relief be added for the purpose of
calculating wages last drawn, is patently
fallacious. He submits that it is so, going
by the definition of wages, under Section
2(s) of the Act, which reads as follows:-

2.
Definitions:-In
this
Act,
unless the context otherwise requires,-

(a) x x

(b) x x

(c) x x

(d) x x

(e) x x

(f) x x

(g) x x

(h) x x

(i) x x

(j) x x

(k) x x

(l) x x

(m) x x

(n) x x

(o) x x

(p) x x

(q) x x

(r) x x

(s)
"wages"
means
all
emoluments which are earned by an
employee while on duty or on leave in
accordance with the terms and conditions
of his employment and which are paid or
are payable to him in cash and includes
dearness allowance but does not include
any bonus, commission, house rent
allowance, overtime wages and any other
allowance.

16. Learned counsel for the
petitioner has placed much emphasis on
the fact that going by the definition of
wages, read according to its plain
meaning, it would include all emoluments
that are earned by an employee while on
duty or on permissible leave to which he
is entitled, and also include dearness
allowance.
However,
it
excludes,
according to learned counsel, bonus,
commission,
house
rent
allowance,
overtime wages and any other allowance.
He submits that interim relief paid to the
petitioner
would
qualify
under
the
category of "any other allowance", and,
therefore, cannot be included in the wages
last drawn by the employee, for the
purposes of Section 4(2) of the Act. He,
therefore, submits that the workman's
claim asking Rs. 800/- to be added in
determining his wages last drawn, on the
basis of which his entitlement to gratuity
1 All. U.P Financial Corporation Vs. Appellate Authority Under Payment Of Gratuity Act and Others 1209
is to be worked out, is contrary to the
provisions of Section 2(s) of the Act.

17. Sri Ranjeet Kumar Mishra,
learned
counsel
for
the
petitioner
disputes the above submission and says
that by application of no principle, can
interim relief be included in any of the
specifically named allowances, under
Section 2(s) of the Act, or other
allowances mentioned there, that are not
to form part of the wages. In the context
of emoluments paid to an employee,
interim relief is something like a prompt
relief that is provided to an employee in
the interregnum between time that
dearness
allowance
is
revised
appropriately, to bring it in tune with the
prevalent price index etc. It may be
likened to the temporary grant of a
particular
percentage
of
higher
emoluments, awaiting an impending
revision of pay scale, or emoluments
properly understood, like D.A. From
what interim relief means in the context
of emoluments payable to an employee,
it is certainly part of wages, if not the
basic
scale,
most
certainly
those
periodical revisions that are made by
way of accretions to the salary, called
dearness allowance, in order to keep the
real wages of the employee apace with
the price index and the escalating cost of
living. It is by no means an allowance
akin to house rent allowance, city
compensatory
allowance,
traveling
allowance or bonus or overtime wages,
that are generically different from the
substantive
wages
payable
to
an
employee. Once wages are defined to
mean and include dearness allowance,
there is absolutely no basis to exclude
interim relief from the definition of
wages, that is nothing but a temporary
addition to the principal component of
wages, until a revision of the dearness
allowance or the basic pay itself.

18. This Court is, therefore, of
opinion that interim relief claimed by the
employee to be part of his wages for the
purpose of reckoning his wages last
drawn at the time of voluntary retirement
from service, would be indeed a part of it.
Seen, thus, in the clear opinion of this
Court, the authorities below did not
commit any manifest error of law in
including interim relief to the figure of
wages last drawn by the third respondent,
while working out his entitlement to
gratuity, at the time of his voluntary
retirement.

19. There is another issue that the
learned counsel for the petitioner has
raised, and about it too, learned Counsel
for parties were heard at length. He has
raised this issue because it has figured in
the decision of the Controlling Authority,
regarding a decision taken by the
petitioner's Board in view of some
Judgment
in
the
case
of
one
Shyamnarayan Tripathi, where interim
relief was directed to be made part of
wages last drawn, in reckoning gratuity
payable to an employee retiring under the
VRS. A copy of the resolution of the
Board aforesaid, in that regard was filed
before this Court through the second
supplementary affidavit dated 13.02.2018.
The document is an extract of the minutes
of the 526th meeting of the petitioner's
Board, held on 8th June, 2010. The
resolution was passed under item No. 5 of
the agenda, and reads as follows:-

EXTRACTS
OF
THE
MINUTES OF THE 526TH BOARD
MEETING HLED ON TUESDAY 8TH
JUNE 2010 AT 11.30 AM IN THE
1210 INDIAN LAW REPORTS ALLAHABAD SERIES
BOARD METTING HALL, PICKUP
BHAWAN,
GOMTI
NAGAR,
LUCKNOW.

VOLUME-1

MATTER
PUT
BY
ADMINISTRATION DEPARTMENT

NOTE ON ITEM NO. 5 OF
THE AGENDA.

CONSIDERATION OF THE
ORDERS DATED 22.07.2009 AND
28.07.2009 IN THE CASES OF S/SRI
S.N. AWASTHY & K.K. SHUKLA EX
EMPLOYEES OF THE CORPORATION
RESPECTIVELY, PASSED BY THE
CONSTROLLING
AUTHORITY
UNDER
THE
PAYMENT
OF
GRATUITY
ACT
1972
AND
REPRESENTATONS OF SOME OF
THE OTHER RETIRED EMPLOYEES
OF
THE
COROPORATION
FOR
PAYMENT
OF
DIFFERENCE
IN
AMOUNT
OF
GRATUITY
W.E.F.
24.09.1997.

The Board considered the note
dated 24.05.2010 of the Managing
Director and decided that all those
employees who have retired between
24.09.1997 to March 2005 shall be
entitled for the payment of arrear of
Gratuity on account of enhanced limit of
Gratuity of Rs. 3.50 Lacs and also on
account of Interim Relief granted by the
Corporation.

The Board further decided that
the employees who have retired after
01.04.2005 and have been paid the
amount of Gratuity calculated on the
basis of Basic + D.A. + A.D.A. Shall also
be eligible for arrear on the amount of
Interim Relief by treating it as part and
parcel of wages.

20. It is argued by Sri Khan, learned
counsel for the petitioner that the benefit
of the aforesaid resolution will not go to
the 3rd respondent, as the decision of the
Board of Directors taken in their meeting
held on 08.06.2010, sanctioning inclusion
of interim relief for the purpose of
payment of gratuity, has been made with
regard to those employees who retire on
attaining the age of superannuation. The
benefit of this resolution would not go to
the 3rd respondent or any other employee
who retires under the VRS, that has its
own terms. Admittedly, the petitioner
retired availing VRS from the services of
the petitioner on 31.07.2005, which is a
date after 01.04.2005. According to the
petitioner's resolution dated 8th June,
2010 he would be entitled to arrears of
gratuity, calculated on the basis of basic
pay + D.A. + Additional D.A., including
interim relief, which shall be treated as
part and parcel of wages. Going by the
precise phraseology of the petitioner's
resolution there is absolutely no basis to
be found in the resolution or outside it for
drawing this classification, as learned
counsel for the petitioners submits,
between
employees
who
retire
on
attaining the age of superannuation and
those who have accepted retirement under
the V.R.S.

21. This distinction drawn appears
to have no basis in the decision of the
petitioner's board to include interim relief
as part and parcel of wages, for the
purpose of calculating gratuity payable to
a retiring employee. It is of little
significance whether the employee retires
on superannuation or voluntarily, once in
principle, the petitioners have accepted
that retired employees too are entitled to
receive arrears of gratuity, worked out on
basis that interim relief would form part
1 All. U.P Financial Corporation Vs. Appellate Authority Under Payment Of Gratuity Act and Others 1211
of wages to reckon the gratuity payable.
There
is
absolutely
no
reasonable
classification between a superannuating
employee and one retiring voluntarily, for
the purpose of calculation of gratuity that
is based on an intelligible differentia
bearing a reasonable nexus with the object
sought to be achieved by such a
classification, between employees retiring
from the petitioner's services. To make
this kind of a classification would lead to
promoting
invidious
and
hostile
discrimination, between two sets of
similarly circumstanced employees, at
least, as far as payment of gratuity is
concerned.

22. This is, particularly, so as the
right to receive gratuity, governed by the
Act as it is, makes little distinction
between retirement of an employee that
comes
about
on
superannuation
or
otherwise. Both kinds of retirements are
treated at par under the Act, as would be
evident from the provisions of Section
4(1) that are quoted below:-

4. Payment of gratuity.- (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 :

[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 his heirs, and where any such
nominees or heirs is a minor, the share of
such minor, shall be deposited with the
controlling authority who shall invest the
same for the benefit of such minor in such
bank or other financial institution, as may
be prescribed, until such minor attains
majority.]

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.

(Emphasis by Court)

23. A perusal of Clause (a) of subsection (1) of Section 4 of the Act, and
clause (b) of sub-section (1) aforesaid
would show that for the purpose of
entitlement of an employee to gratuity,
the
mode
of
termination
of
his
employment after rendering five years or
more of continuous service, that have
been placed at par, are superannuation
under Clause (a), and retirement or
resignation under Clause (b). Retirement
other than superannuation under clause
(b), in the opinion of this Court, would
clearly take within its fold, voluntary
retirement.

24. Of course, the Act adds to it by
Clause (b) of sub-section (1), resignation
also as an contingency which after five
years or more of continuous service,
would entitle an employee to payment of
gratuity under the Act. Considering that
the Act has overriding effect over any
other law, or any contract or instrument
having force of law to the contrary by
virtue of Section 14, the distinction
between retirement on reaching the age of
superannuation and retirement that is
1212 INDIAN LAW REPORTS ALLAHABAD SERIES
voluntary under an option exercised
availing the V.R.S., seems to be contrary
to what the Act says. The resolution dated
08.06.2010 passed by the petitioner's
Board, therefore, would equally apply to
the third respondent's case, as it does in
the case of a workman who retires on
attaining the age of superannuation.

25. This Court, therefore, finds that
the
conclusions
of
the
Controlling
Authority and the Appellate Authority on
this score, may be for different or added
reasons, are right and unassailable.

26. In the result the writ petition fails
and is dismissed with costs.

27. The amount of gratuity deposited with
the Controlling Authority be paid to the
petitioner within 15 days of receipt of a certified
copy of this order by the said Authority.
----------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.07.2019

BEFORE
THE HON'BLE J.J. MUNIR, J.

Writ - C No. 11140 of 2019

Mahak Singh ...Petitioner
Versus
Appellate
Authority/Deputy
Labour
Commissioner Payment of Gratuity
 ...Respondent

Counsel for the Petitioner:
Sri Dinesh Rai.

Counsel for the Respondent:
C.S.C., Sri Chandan Sharma

A.
Whether
the
Additional
Labour
Commissioner/Prescribed
Authority
under the Timely Payment of Wages Act,
1978 had exceeded in its jurisdiction in
issuing the recovery certificates while
exercising power under Section 3 of the
said Act.

B. Whether there was an illegal strike or
valid closure of the factory and the
denial on the part of the employer to pay
wages to the workmen since 7.8.2001
was "default" on its part of the employer
within the meaning of the Act, 1978 or
there was a valid dispute with regard to
entitlement of the workmen to wages
which
required
adjudication
by
an
industrial adjudicator.

Whether the settlement dated 14.1.2002
was binding on all the workmen or the
union. (Para-44)

The
enquiry
conducted
by
the
Labour
Commissioner to record reasons while arriving
at the conclusion of default on the part of the
employer was well within the limited exercise
of jurisdiction conferred on him under Section
3 of the Act, 1978. It cannot be said that the
Labour Commissioner had acted beyond its
jurisdiction in making enquiry to reach at the
conclusion of genuineness of denial on the
part of the workmen. In absence of legal
lockout or illegal strike, the orders of recovery
cannot be said to be wrongful exercise of
power on the part of the Labour Commissioner
(Para80). The petitioner had not been able to
establish before the Labour Commissioner that
there was a genuine dispute pertaining to
strike or validity of settlement, which required
adjudication by an industrial adjudicator, there
was no question of relegating the workmen to
approach the industrial adjudicator. (Para-94).

Such a settlement would not be binding on
those who are not signatories to the same.
 (Para-96)

Writ Petitions dismissed

CHRONOLOGICAL LIST OF CASES CITED:
1:- 1994 SCC (1) 159, Modi Industries Ltd. vs.
State Of U.P

2:- 2006 (5) SCC 442, Hotel and Restaurant
Karamchari Sangh vs. Gulmarg Hotel and others