Payment of gratuity under the provisions of the payment of gratuity act, 1972

PAYMENT OF GRATUITY UNDER THE PROVISIONS OF THE PAYMENT OF GRATUITY ACT, 1972 VIS-A-VIS THE RULES OF THE GOI/ VARIOUS MINISTRIES/DEPARTMENTS/STATES—A STUDY RETROGRADE FOR PROSPECTIVE AND RIGHTFUL CLAIM BY THE EMPLOYEE'S RETIREMENT ON SUPERANNUATION BEYOND 33 YEARS OF SERVICE.

In its broader meaning Gratuity means, a lump-sum amount of payment made to an employee by the employer as a mark of gratitude for the services rendered by the employee. Payment of Gratuity is now made obligatory and is being controlled under specific provisions of the Law in India. It is an important mode of social security benefit which is being paid at the end of the service/employment by way of retirement, death, and termination or resignation gratuity as per norms. The Hon’ble Supreme Court, (In Calcutta Insurance Co. Ltd. v. Their Workmen, on 6th February, 1967-- Equivalent citations: 1967 AIR 1286, 1967 SCR (2) 596), said that the 'Gratuity' is a reward for good, efficient and faithful service rendered for a considerable period and it is earned by an employee for a long and meritorious service. The term denotes a sum promised by an employer to pay the employee at the end of the service. A gratuity which is a gift and not in the nature of a debt which would be legally revocable by the ex-employee. Presently, the GOI made a provision that the amount of retirement gratuity or death gratuity, etc., payable shall in no case, exceed rupees ten lakh, and formulated a calculation table as retirement gratuity be granted equal to one-fourth of his emoluments for each completed six monthly period of qualifying service subject to a maximum of sixteen and one-half times the emoluments and there shall be no ceiling on reckonable emoluments for calculating the gratuity. That is, half of emoluments for every completed six monthly period of qualifying service subject to maximum of thirty-three times emoluments...

AS PER THE PAYMENT OF GRATUITY ACT, 1972: The provisions of the Act apply uniformly to every factory, mine, oilfield, plantation, port and railway company; 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, or were employed, on any day of the preceding twelve months; and such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf. There is no provision in the Act for exempting any factory, shop etc., from the purview of the Act covered by it except under Section 5 , which makes provision for exemption of those establishments, factories etc., where, the employees are in receipt of gratuity which are no less favourable than the benefit conferred under the Act.

Section 14 is clear that the provisions of the Act or any rule made there under shall have effect notwithstanding anything inconsistent therewith contained in any other enactment or in any instrument or contract having effect by virtue of any other enactment. The payment of gratuity under the Act is thus made obligatory being one of the minimum conditions of service. The non-compliance of the provisions of the Act is made as an offence punishable with the imprisonment or fine. It is settled law that the establishments which have no capacity to give to their workmen the minimum conditions of service prescribed by the Statute have no right to exist [Bijay Cotton Mills Ltd. v. The State of Ajmer; Mis. Crown Aluminium Works v.Their Workmen, [1958] SCR 65 and U.Unichoyi and Ors. v. State of Kerala,] With the implementation of VI CPC and pension benefits accruing on completion of 20 years qualifying service, and also that the extent of benefits of adding years of qualifying service for purposes of computing pension/related benefits like gratuity was to be withdrawn, the GOI/Ministry of Personnel, PG & Pensions, Dept. of P&PW Office vide Memorandum No. 7/7/2008-P&PW(F) dated 13-02-2009 ,Para 3-have issued Orders to this effect duly withdrawing the adding years of 2 qualifying service (33 years) for the purposes of commuting pension as well as other related benefits such as gratuity.

After a lapse of over four decades, here comes very interesting line of thought and for LAW FIRMS/ forum's discussion- wherein in two separate Applications filed by two retired railway servants who claimed for payment of gratuity for the entire period of service THEY rendered, say about 38 years, and the Respondents/Railways could not bring forward the documents/arguments before the Ministry of Labour and Employment, that is, the Asst. Labour Commissioner (Central), Hyderabad resulting in the issue of two separate Directions/Orders to the General Manager, South Central Railway in P.G. Application No. 7 and 8 of 2015 dated the 10 th September, 2015; (No. 48/7 and 8/2015-E-2 dated 10-09-2015),which indicate that the Railway’s Rules framed pertaining to Payment Gratuity are not in accordance with provisions of the Law/P.G.Act, that the calculation of Gratuity paid to them by limiting the service to that of 33 years of service are inconsistent with the Payment of Gratuity Act,1972, and that the Respondents/Railways could not place documents to sustain their claim of exemption under section 5 of the Act, etc.; Ordered the Railways that these employees retiring from service has to be paid gratuity as per total number of years of service rendered as no Rule can override the Act . Under Section 5 of the Payment of Gratuity Act, the Ministry of Railways, Railway Board found to have claimed exemption of application of the Act to the Railway Servants, and made out and formulated their own set of Rules for payment of Gratuity under Railway Pension Rules.

It is pertinent to note some of very important Judgements of Honourable Apex Court, like: • Actionable Wrong- Application of parenspatriae- Where the Petitioner's Fundamental Rights are impaired by Legislation or Rules or Government Orders, the Courts can interfere even if it is a matter concerning to service (Article-32,14,16,309); FCI Workers Vs FCI- AIR (1990)-SC 2178; (1990) Supp.SCC 296; (1990) 4 SCR 745;S.M.Mukharjee Vs UOI- AIR (1990) SC1984; (1990) 4 SCC 594;Sesha Rao Vs Govind Rao- AIR (1991) SC 76;

[Honourable Supreme Court Judg. Order in D.S. Nakara and others Vs Union of India [AIR 1983 SC 130]

(vi) The absence of precedent does not deter the court. Every new norm of socio-economic justice, every new measure of social justice commenced for the first time at some point of time in history. If at that time it was rejected as being without a precedent, law as an instrument of social engineering would have long since been dead. [193 G, 193 C-D

4. Any member of the public having sufficient interest can maintain an action for judicial redress for public injury arising from breach of public duty or from violation of some provision of the Constitution or the law and seek enforcement of such public duty and observance of such constitutional or legal provision

The Honourable Supreme Court of India in [ Prem Devi Vs Delhi Administration SCC-SCPl-1989AJLT330 17-04-1989]; [YanamandraGuananda Sharma Vs UOI and Ors- 1991 (2) ATLJ 123 ( Calcutta)- 30-05-1991] issued Judg.Orders directing the UOI/GOI - to apply its Judg.Orders  to other employees identically placed would have been given the same benefits which would have avoided not only un-necessary litigation but also of the waste of time and the movement of files and papers which only waste public time

All decisions of this type should be treated as judgements in rem and be applied to the persons similarly circumstanced

Rules framed shall have the effect of Law- Constitute Law- RULES framed in accordance with the provisions of the Act/Law: ( Article- 14,15,235,309); So long as a Rule framed under Article 309 is not duly amended, it is binding on the Government and its action in matter covered by the Rules must be regulated by the Rules; Bhatnagar Vs UOI- (1990)1 SCC 544;(1991)16 ATC 501; Bansal Vs UOI-AIR (1993) SC 978; (1992) 3 SLR 445-Para-21;

To have more information on the matter, the writer asked for copies of documents pertaining to exemption of application of the provisions of the Act, to frame Railway Services Pension Rules, 1993 for payment of Gratuity. etc., the Ministry of Railways, Railway Board, vide letter No. RB / RTI/2015/ 010057417/ 57405 dated 04-03-2016 have directed to contact the Govt. of India, Ministry of Labour and Employment who is the Nodal & Controlling Authority under the Payment of Gratuity Act, the matter has been moved and a reply is awaited. In the circumstances of the matter on record, the Law vis-à-vis the Rules, it is firmly opined that the employee should be paid the rightful gratuity for the entire years of service rendered, and the Employer shall not restrict the gratuity payment to the convenience of the employer by sideling the Law of the Land, as is being now adopted to 33 years.

The Rules, with making the countable service 3 to maximum of 33 years for payment of gratuity to an employee retiring from service on superannuation be dispensed forthwith by an Order by the GOI and go in line with the Law so as to bring satisfaction and gratitude of the employee towards everyone.

V.SESHADRI,

Retired Asst. Security Commissioner,

RPF, & President, RPF Pensioner's

Welfare Assn., SCRly, SC,

House Number- 24-147/4/2, East Anandbagh,

MALKAJGIRI, SECUNDERABAD-500047,

TELANGANA STATE *****