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Court Judgments

  Bombay  High  Court

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       WRIT PETITION NO.  8053 OF 2012
1. The Municipal Corporation of Greater Mumbai ......................Petitioner(Org. Respondent)
Shri Vitthal Anna Kamble  ............................................Respondent(Org. Complainant)
Mr.Suresh S. Pakale with Mrs.M.R.Bhoir i/b Shri R.A.Malandkar for the Petitioner.
Mr.Prakash S. Devdas for the Respondent.
        CORAM : R.M. SAVANT, J.
DATE     : 22ND JANUARY 2013
1 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 theControlling 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 itsvarious 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 notbe  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 theRespondent 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  theControlling  Authority  which  was  numbered  a 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 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 AppendixII
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
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
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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 subsection  (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
[(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 subsection
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
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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 subsection
 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 instance 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.

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