# NAGAR AYUKT NAGAR NIGAM, KANPUR v. SRI MUJIB ULLAH KHAN AND ANOTHER

- **Citation:** [2019] 6 S.C.R. 1028
- **Court:** Supreme Court of India
- **Decided:** 2019-04-02
- **Case number:** Civil Appeal No. 2628 of 2017
- **Bench:** Mohan M. Shantanagoudar, Hemant Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nagar-ayukt-nagar-nigam-kanpur-v-sri-mujib-ullah-khan-and-another-33801
- **Pages:** 7

## Headnote

Payment of Gratuity Act, 1972 - ss.1(3)(c) and 14 - Retirement
and Benefits and General Provident Fund Regulations, 1962 - r.4(1)
- Uttar Pradesh Municipal Corporation Act, 1959 - s.548 -
Employees of Municipal Corporation claimed gratuity by invoking
the jurisdiction of the controlling authorities under the Act, 1972 -
Controlling authorities allowed the petition for gratuity in favour
of the employees - Appellant contended that gratuity is payable in
terms of r.4(1) of the 1967 Regulations published under the Act,
1959 - Therefore, the employees of the Municipalities were entitled
to gratuity only in terms of such Regulations and not under the Act,
1972 - High Court held that employees of Municipalities were
entitled to the gratuity in terms of the provisions of the Act, 1972 -
On appeal, held: Central Government had published a notification
dated 8.1.1982 in terms of s.1(3)(c) of the Act, 1972 which made it
clear that the Act is applicable to the local bodies i.e. the
Municipalities - s.14 of the Act, 1972 has given an overriding effect
over any other inconsistent provision in any other enactment - In
view of s.14, the provision in the State Act contemplating payment
of Gratuity will be inapplicable in respect of the employees of the
local bodies - Thus, there is no error in the orders passed by the
controlling authorities under the Act and as maintained by the High
Court - General Clauses Act, 1987 - s.3(31).
Dismissing the appeals, the Court
HELD: 1. In terms of the Section 1(3)(c) of the Payment of
Gratuity Act, 1972, the Central Government has published a
notification on 08.01.1982 and specified Local Bodies in which
ten or more persons are employed, or were employed, on any
[2019] 6 S.C.R. 1028
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day of the preceding twelve months as a class of establishment
to which this Act shall apply. The notification dated 08.01.1982
was not referred to before the High Court. Such notification
makes it abundantly clear that the Act, 1972 is applicable to the
local bodies i.e., the Municipalities. Section 14 of the Act, 1972
has given an overriding effect over any other inconsistent
provision in any other enactment. 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. [Paras 10, 11 and 12][1032-F; 1033-C; E]
2. The entire argument of the appellant is that the State
Act confers the restrictive benefit of gratuity than what is
conferred under the Central Act. Such argument is not tenable in
view of Section 14 of the Act and that liberal payment of gratuity
is in fact in the interest of the employees. Thus, the gratuity would
be payable under the Act, 1972. Such is the view taken by the
Controlling Authority. In view of the aforesaid, there is no error
in the orders passed by the Controlling Authorities under the
Act and as maintained by the High Court. [Paras 14, 15]
[1033-G-H; 1034-A]
Municipal Corporation of Delhi v. Dharam Prakash
Sharma and Another AIR 1999 SC 293: (1998) 7 SCC
221 - referred to.
 Case Law Reference
(1998) 7 SCC 221
 referred to
 Para 5

## Text

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SUPREME COURT REPORTS
[2019] 6 S.C.R.
NAGAR AYUKT NAGAR NIGAM, KANPUR
v.
SRI MUJIB ULLAH KHAN AND ANOTHER
(Civil Appeal No. 2628 of 2017)
APRIL 02, 2019
[MOHAN M. SHANTANAGOUDAR AND
HEMANT GUPTA, JJ.]
Payment of Gratuity Act, 1972 - ss.1(3)(c) and 14 - Retirement
and Benefits and General Provident Fund Regulations, 1962 - r.4(1)
- Uttar Pradesh Municipal Corporation Act, 1959 - s.548 -
Employees of Municipal Corporation claimed gratuity by invoking
the jurisdiction of the controlling authorities under the Act, 1972 -
Controlling authorities allowed the petition for gratuity in favour
of the employees - Appellant contended that gratuity is payable in
terms of r.4(1) of the 1967 Regulations published under the Act,
1959 - Therefore, the employees of the Municipalities were entitled
to gratuity only in terms of such Regulations and not under the Act,
1972 - High Court held that employees of Municipalities were
entitled to the gratuity in terms of the provisions of the Act, 1972 -
On appeal, held: Central Government had published a notification
dated 8.1.1982 in terms of s.1(3)(c) of the Act, 1972 which made it
clear that the Act is applicable to the local bodies i.e. the
Municipalities - s.14 of the Act, 1972 has given an overriding effect
over any other inconsistent provision in any other enactment - In
view of s.14, the provision in the State Act contemplating payment
of Gratuity will be inapplicable in respect of the employees of the
local bodies - Thus, there is no error in the orders passed by the
controlling authorities under the Act and as maintained by the High
Court - General Clauses Act, 1987 - s.3(31).
Dismissing the appeals, the Court
HELD: 1. In terms of the Section 1(3)(c) of the Payment of
Gratuity Act, 1972, the Central Government has published a
notification on 08.01.1982 and specified Local Bodies in which
ten or more persons are employed, or were employed, on any
[2019] 6 S.C.R. 1028
 1028
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day of the preceding twelve months as a class of establishment
to which this Act shall apply. The notification dated 08.01.1982
was not referred to before the High Court. Such notification
makes it abundantly clear that the Act, 1972 is applicable to the
local bodies i.e., the Municipalities. Section 14 of the Act, 1972
has given an overriding effect over any other inconsistent
provision in any other enactment. 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. [Paras 10, 11 and 12][1032-F; 1033-C; E]
2. The entire argument of the appellant is that the State
Act confers the restrictive benefit of gratuity than what is
conferred under the Central Act. Such argument is not tenable in
view of Section 14 of the Act and that liberal payment of gratuity
is in fact in the interest of the employees. Thus, the gratuity would
be payable under the Act, 1972. Such is the view taken by the
Controlling Authority. In view of the aforesaid, there is no error
in the orders passed by the Controlling Authorities under the
Act and as maintained by the High Court. [Paras 14, 15]
[1033-G-H; 1034-A]
Municipal Corporation of Delhi v. Dharam Prakash
Sharma and Another AIR 1999 SC 293: (1998) 7 SCC
221 - referred to.
 Case Law Reference
(1998) 7 SCC 221
 referred to
 Para 5
CIVIL APPELLATE JURISDICTION: Civil Appeal No.2628 of
2017
From the final Judgment and Order dated 19.04.2017 of the High
Court of Judicature at Allahabad in Writ Petition No.19016 of 2007
 With
Civil Appeal No.2629 of 2017.
Anurag Dubey, Satpal Wadhwa, Pramod Kumar, S.R. Setia, Sunil
Kumar Verma, Advs. for the Appellant.
Vinay Garg, Sanjay Kumar Visen, Aniruddha P. Mayee, Advs.
for the Respondents.
NAGAR AYUKT NAGAR NIGAM, KANPUR v.
SRI MUJIB ULLAH KHAN
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SUPREME COURT REPORTS
[2019] 6 S.C.R.
The Judgment of the Court was delivered by
HEMANT GUPTA J.
1. The challenge in Civil Appeal No. 2628 of 2017 is to an order
dated 19.04.2007 passed by the learned Single Bench of the High Court
of Judicature at Allahabad, whereby an order dated 08.12.2006passed
by the Controlling Authority, Kanpurunder the Payment of Gratuity Act,
19721 was not interfered with.
2. Civil Appeal No. 2629 of 2017 has also been taken up along
with present appeal wherein the challenge is to an order dated 02.05.2007
of the High Court of Judicature at Allahabad upholding an order dated
29.04.2006of Controlling Authority (Additional Labour Commissioner,
Gorakhpur, U.P.) passed under the Actallowing the petition for gratuity
in favour ofthe respondent herein.
3. The appellant,the Municipal Corporation, Kanpur is governed
by the Uttar Pradesh Municipal Corporation Act, 19592, whereas, the
respondent is an employee of the appellant. The employees in both cases
claimed gratuity by invoking the jurisdiction of the Controlling
Authorities under the Act. The argument of the appellant before the
learned Single Bench was that the gratuity is payable in accordance
with the Retirement Benefits and General Provident Fund Regulations,
19623framed under Section 548 of the 1959 Act as amended on
11/01/1988. Such Regulations contemplate payment of gratuity at the
rate of 15 days salary per month for 16.5 months. It was found by the
High Court that it is the Act which is applicable, whereby, gratuity
calculated at the rate of 15 days salary for every completed year without any ceiling of months or part thereof.
4. The argument raised by the appellant before the High Court is,
that the gratuity is payable in terms of Rule 4(1) of the 1962 Regulations
published under Section 548 (1) of the 1959 Act as amended on
11.01.1988. Therefore, the employees of the Municipalities are entitled
to gratuity only in terms of such Regulations and not under the Act.
5. The High Court relied upon a judgment reported as Municipal
Corporation of Delhi vs Dharam Prakash Sharma and another4 to
1Act
21959 Act
31962 Regulations
4AIR 1999 SC293
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hold that only employees of Central Government or the State
Government are exempt from the applicability of the Act, therefore, the
employees of the Appellants would be governed by the Act and are
entitled to gratuity in terms of the scale mentioned therein. It was held
that the Act is not applicable only to the Central Government or State
Governments in terms of definition of an 'employee' under Section 2 (e)
of the Act. Therefore, the employees of the Municipalities are entitled to
the gratuity in terms of the provisions of the Act.
6. The appellant relies upon Section 3 of the U.P Dookan Aur
Vanijya Adhishthan Adhiniyam, 19625 which is to the effect that such
Act will have no application to the office of Government or Local
Bodies. Therefore, on the strength of such statutory provision, it was
argued that the Act would not be applicable in respect of the
Municipalities. The appellant is not a factory, mine, oilfield, plantation,
port and railway company and that there is no notification as stipulated
under Clause (c) of Section 1(3) of the Act. Therefore, the employees
of the Municipalities are entitled to the gratuity in terms of the
Regulations framed in exercise of powers of Section 548 of the 1959
Act and not under the Act.
7. On the other hand, learned counsel forthe respondentpointed
out that the Central Government has published a notificationin terms of
Section 1(3)(c) of the Act on 08.01.1982 to extend the applicability of
the Act to the Municipalities. Thus,the Act is applicable to the
Municipalities. The relevant provisions of the Act read as under:
"1.Short title, extent, application and commencement.-
(1) This Act may be called the Payment of Gratuity Act, 1972.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or ports, it shall
not extend to the State of Jammu and Kashmir.
(3) It shall apply to-
(a) every factory, mine, oilfield, plantation, port and railway
company;
(b) every shop or establishment within the meaning of any
law for the time being in force in relation to shops and
establishments in a State, in which ten or more persons are
NAGAR AYUKT NAGAR NIGAM, KANPUR v.
SRI MUJIB ULLAH KHAN [HEMANT GUPTA, J.]
51962 Act
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SUPREME COURT REPORTS
[2019] 6 S.C.R.
employed, or were employed, on any day of the preceding
twelve months;
 (c) such other establishments or class of establishments, in
which ten or more employeesare employed, or were
employed, on any day of thepreceding twelve months, as
the Central Government may, by notification, specify in this
behalf."
8. A perusal of the above provisions would show that the Act is
applicable to(1)every factory, mine, oilfield, plantation, port and railway
company;(2)every shop or establishment within the meaning of any law
for the time being in force in relation to shops and establishments in a
State, in which ten or more persons are employed,the said provision has
two conditions, viz. (i)a shop or establishments within the meaning of a
State law and (ii) in which ten or more personsare employed; and (3)the
establishments or class of establishments which Central Government
may notify.
9. The appellant is not covered by clauses (a) and (b) of Section
1(3) of the Act. Clause (a) is not applicable on the face of the provisions,
but even clause (b) is not applicable in view of Section 3 (c) of the 1962
Act as such Act is not applicable to the offices of the Government or
local authorities. The Local Authorities means a municipal committee,
district board etc or entrusted with the control or management of a municipal or local fund in terms of Section3(31) of the General Clauses
Act, 1897.
10. In terms of the above said Section 1(3)(c) of the Act, the
Central Government has published a notification on 08.01.1982 and specified Local Bodies in which ten or more persons are employed, or were
employed, on any day of the preceding twelve months as a class of
establishment to which this Act shall apply. The said notificationdated
08.01.1982 reads as under:-
 " New Delhi, the 8th January, 1982
NOTIFICATION
S.O. No. 239....-In exercise of the powers conferred by clause
(c) of sub-section (3) of section 1 of the Payment of Gratuity Act,
1972 (39 of 1972), the Central Government hereby specified
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'local bodies' in which ten or more persons are employed, or were
employed, on any day preceding twelve months, as a class of
establishments to which the said Act shall apply with effect from
the date of publication of this notification in the Official Gazette.
Sd/.
 (R. K. A. Subrahmanya)
 Additional Secretary
 (F. No. S-70020/16/77-FPG)"
11. We find that the notification dated 08.01.1982 was not referred to before the High Court. Such notification makes it
abundantlyclear 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.
13. Section 2(e) of the Act alone was referred to in the judgment
reported as Municipal Corporation of Delhi (supra). The said
judgment is in the context of CCS (Pension) Rules, 19726 which
specifically provides for payment of Pension and Gratuity. The Act is
applicable to the Municipalities, therefore, it is wholly inconsequential
even if there is noreference to the notification dated 08.01.1982.
14. The entire argument of the appellant is that the State Act
confers restrictive benefit of gratuity than what is conferred under the
Central Act.Such argument is not tenable in view of Section 14 of the
Act and that liberal payment of gratuity is in fact in the interest of the
employees. Thus, the gratuity would be payable under the Act. Such is
the view taken by the Controlling Authority.
61972 Rules
NAGAR AYUKT NAGAR NIGAM, KANPUR v.
SRI MUJIB ULLAH KHAN [HEMANT GUPTA, J.]
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SUPREME COURT REPORTS
[2019] 6 S.C.R.
15. In view of the aforesaid, we find that there is no error in the
orders passed by the Controlling Authorities under the Act and as
maintained by the High Court. Consequently, the appeals are dismissed.
Ankit Gyan
 Appeals dismissed.