Union of India & Anr Vs. Manik Lal Banerjee  Insc 451 (26 July 2006)
Sinha & Dalveer Bhandari
out of S.L.P. (C) No. 21446 of 2005] S.B. SINHA, J :
Respondent was a Station Master working in Sodepur Railway Station, Eastern
Railway. He retired on 31.1.1995. He was paid 16 = months emoluments comprising
basic salary and 20% dearness allowance towards Death-Cum-Retirement Gratuity.
Singh who is said to be similarly situated, however, claimed and obtained such
benefits of gratuity in terms of the provisions contained in the Payment of
Gratuity Act, 1972 (for short "the 1972 Act") in terms whereof the
element of dearness allowance was calculated at the rate of 125% of basic
salary. A special leave petition filed thereagainst was dismissed by this Court
by an order dated 13.2.2002 holding:
is not a fit case for our interference under Article 136 of the Constitution.
Hence the appeal is dismissed." Principally, relying on the said decision,
the Respondent filed an original application before the Central Administrative
Tribunal claiming payment of gratuity on the same terms and for recovery of
purported arrears of the difference of gratuity. The Tribunal by an order dated
25.2.2004 directed the Appellant to consider the Respondent's case whereupon a
speaking order was passed by the Appellant on 4.6.2004 inter alia holding that
the case of the Respondent was not governed by the provisions of the 1972 Act
but by the provisions of the Railway Services (Pension) Rules, 1993 (for short
"the 1993 Rules").
original application was filed by the Respondent questioning the validity of
the said order before the Tribunal which was registered as OA No. 576 of 2004.
The said application was allowed by an order dated 1.12.2004 holding inter alia:
De, the learned counsel for the respondents to a query replied that Pritam
Singh case was complied with by the Railway Authorities. It is most unfortunate
to state here that the DRM treated the matter in a different manner in order to
avoid payment and has passed such illegal order by stating that dismissal of
SLP by the Hon'ble Supreme Court does not amount to a decision on merits. He
has lost sight of the fact that the CAT does not hold the jurisdiction to sit
in appeal against the order passed by the Controlling Authority under the
Gratuity Act. In Pritam Singh's case an independent direction was passed by the
CAT by invoking the provisions of Gratuity Act. Similar benefit ought to have
been given to the present applicant. From the totality of the facts and
circumstances of the case, I direct the respondent No. 2 to pay the Gratuity as
claimed by the applicant in terms of Section 4 of the Indian Gratuity Act, 1972
together with the interest @12% per annum from the date when it became due till
the date of payment and file compliance report within four months, failing
which appropriate action, as deemed fit, will be taken." A writ petition
filed by the Appellant questioning the legality of the said Order was dismissed
by a Division Bench of the High Court holding that the 1993 Rules do not make
an employee of the Railways disentitled to the benefit of gratuity under the
1972 Act. It was furthermore held that there was no reason as to why the
decision of the Tribunal in Pritam Singh would not be given effect to.
K.P. Pathak, learned Additional Solicitor General appearing on behalf of the
Appellant urged that Section 2(e) of the 1972 Act will have no application in
view of the fact that the Respondent being a railway servant was an employee of
the Central Government and was being governed by the 1993 Rules.
Lal Banerjee, Respondent appearing in person, on the other hand, contended that
Section 2(e) of the 1972 Act should be interpreted conjointly with Section 2(f)
defining 'employment' and Section 2(a)(i) defining 'establishment' and so
construed, it must be held that the same is applicable to the cases of railway
employees also. Strong reliance in this behalf has been placed on The Executive
Engineer (Construction) Southern Railway, Quilon and others v. M.P. Sankara Pillai
[ILR 1981 (1) Ker 164] It was urged that in view of Rule 15(4)(ii) of the 1993
Rules, as pension and commuted value thereof are only governed by the Pensions
Act, 1871, the matter relating to payment of gratuity could not have been
brought within the purview of the 1993 Rules. As pension and gratuity are not
bounties, the same should be given a liberal construction. Mr. Banerjee
furthermore contended that the decision of the Joint Consultative Machinery
(JCM) to pay 20% dearness allowance in emoluments for the purpose of gratuity
being not a decision under a legislative Act, the same is subservient to the
provisions of the 1972 Act. In any event, the Fifth Pay Revision Commission
having made an interim report that 90% of dearness allowance should be paid to
the employees who have retired from 1.4.1995 to 31.12.1995, there is no reason
as to why the Respondent should be deprived from the benefit thereof.
1972 Act was enacted to provide for a scheme inter alia for payment of gratuity
to employees in relation to railway companies.
2(e) of the 1972 Act defines 'employee' to mean "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 definition, thus, excludes an employee holding civil post
under the Central Government and government by another Act or Rules providing
2(f) of the 1972 Act defines 'employer' inter alia to mean, in relation to any
railway company belonging to or under the control of the Central Government or
the State Government, a person or authority appointed by the appropriate
government for the supervision and control of the employees. Section 4 provides
for payment of gratuity to an employee on the termination of his employment after
he has rendered continuous service for not less than five years inter alia on
his superannuation. Sub- section (2) of Section 4 provides that 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, which amount in view of
sub-section (3) of Section 4 shall not exceed three lakhs and fifty thousand
1972 Act is applicable inter alia to the 'establishment' belonging to a railway
company. The amount of gratuity, however, is payable to an employee. The
interpretation clause contained in Section 2(e) takes out from the purview of
the said Act a person who holds inter alia post under the Central Government
and whose terms and conditions of service are governed by an Act or the Rules
providing for payment of gratuity. The 1993 Rules provides for payment of
gratuity in Rule 70 in the following terms:
gratuity or death gratuity.
In the case of a
railway servant, who has completed five years' qualifying service and has become
eligible for service gratuity or pension under rule 69, shall, on his
retirement, be granted retirement gratuity 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" Rule 49 of the 1993 Rules
provides for the manner in which emoluments of such an employee should be
calculated. 'Pay' in those rules means the pay in the revised scales under the
Fourth Pay Commission Report.
representations made on behalf of the employees; the Central Government in a
JCM conceded grant of a part of dearness allowance to be reckoned as dearness
pay (DP) for the purpose of computing the amount of gratuity and the same was
treated an additional advantage over and above those allowed in the
recommendations of the Fourth Pay Commission. The quantum of such dearness pay
was taken on the Consumer Index as on 1.7.1988 and 20% of dearness allowance
was declared to be payable as dearness pay. Such benefit was extended also to
the railway employees whose retirement had taken place on or after 16.9.1993.
Tribunal indisputably granted relief to the Respondent solely relying on or on
the basis of the decision in Pritam Singh. In Pritam Singh's case indisputably
the question as regards non-applicability of the 1972 Act and consequent
applicability of the 1993 Rules had not arisen for consideration. The
controlling authority in Pritam Singh's case proceeded on the basis that the
provisions of the 1972 Act were applicable. The Tribunal in Pritam Singh
Controlling Authority has considered the definition of term 'wages' and came to
the conclusion that the applicant is eligible for getting the gratuity. We do
not see any infirmity or illegality on the order as averred by the Petitioner
in this Original Application. According to us, there is no merit in the
application which is only to be dismissed. Accordingly, we dismiss Original
Application with no order as to costs." Our attention has also been drawn
to the fact that the Central Administration Tribunal, Principal Bench in OA No.
700 of 2004 in the matter of Federation of Central Government Pensioners'
Association Organisations, Calcutta v. Union of India by a judgment and order
dated 1st October, 2004 held that the decision of the Tribunal in Pritam Singh
was rendered per incuriam and, thus, did not create any binding precedent. The
Railway Administration in terms of its speaking order dated 4.6.2004 also held
so. The Tribunal, unfortunately, did not apply its mind to that aspect of the
matter and proceeded to grant relief to the Respondent herein solely relying on
or on the basis of the said decision. Pritam Singh, in our opinion, did not
create any binding precedent. Only because this Court dismissed the special
leave petition, the same would not mean that any law within the meaning of
Article 14 of the Constitution was laid down thereby. Pritam Singh was
evidently rendered per incuriam as the statutory provisions relevant for
determining the issue had not been taken into consideration.
well-settled that a decision is an authority for what it decides and not what
can logically be deduced therefrom. The decision in Pritam Singh having
indisputably not taken into consideration, the exclusionary clause contained in
Section 2(e) of the 1972 Act cannot be held to be an authority for the
proposition that despite the provisions of the 1993 Rules, the 1972 Act would
apply in the case of the railway servants.
now well-settled that if a decision has been rendered without taking into
account the statutory provision, the same cannot be considered to be a binding
precedent. This Court, in Pritam Singh, while exercising its discretionary
jurisdiction, might have refused to interfere with the decision.
same, therefore, did not constitute any binding precedent. The Tribunal and
consequently the High Court, therefore, committed a manifest error in holding
of Mr. Banerjee that if the 1972 Act applies to an establishment belonging to a
railway company and the persons specified in Section 2(f) are the employers,
despite exclusion of railway servants governed by the provisions of the 1993
Rules from the purview of the definition of 'employee' in terms of Section 2(e)
of the Act, the case shall be governed by the 1972 Act, cannot be accepted.
High Court noticed the definition of 'employee' contained in Section 2(e) of
the 1972 Act but while deciding the issue it fell into an error in coming to
the conclusion that there was nothing in the 1972 Act so as to exclude the
benefit thereof to a railway employee. It failed to properly construe the said
High Court in M.P. Sankara Pillai (supra), whereupon strong reliance has been
placed by Mr. Banerjee, was considering a case of casual labour. Indian Railway
Administration although was held to be an establishment within the meaning of
the 1972 Act, it was clearly stated that where the person was employed in
Railway Administration as casual labourer on wages not exceeding Rs. 1000/- per
mensem and was holding Civil Post in the Central Government, but subsequently
absorbed in temporary regular service as temporary laskar in the same
establishment; it would be impossible to escape the conclusion that the person
was not an employee as defined in Section 2(e) and he would be entitled to
claim gratuity allowance in respect of the period of his service as casual labourer
in Railway Administration under Section 4, even in the Central Government at
the time of retirement.
decision of the Kerala High Court, thus, does not advance the case of the
Respondent herein. Therein the question raised herein was not raised.
of Mr. Banerjee upon Rule 15(4)(ii) of the 1993 Rules is misplaced. Rule 15
provides for recovery and adjustment of Government or railway dues from pensionary
benefits. Sub-rule (1) of Rule 15 enjoins a duty on the Head of Office to
ascertain and assess Government or railway dues payable by a railway servant
due for retirement, whereas sub-rule (2) thereof provides for recovery of the
dues against the retiring railway servant in terms of sub-rule (4). Clause (ii)
of sub-rule (4) of Rule 15 stipulates recovery of losses specified in
sub-clause (a) of clause (i) of sub-rule (4) and which has nothing to do with
the computation of the amount of payment of gratuity.
have noticed hereinbefore that in terms of the 1993 Rules the emoluments were
to be paid in terms of the recommendations made by the Fourth Pay Commission.
The Fifth Pay Commission no doubt recommended that dearness pay be linked to
All India Consumer Price Index of 12.1.1966 as on 1.7.1993 but, the
entitlements of the employees in terms thereof was directed to be prospectively
affected with effect from 1.4.1995.
Central Government accepted the said recommendations only with prospective
effect from 1.4.1995 in terms whereof 97% of the dearness allowance was to be
paid to those who were drawing salary up to Rs. 3500/- as basic pay. The
Respondent retired on 31.1.1995. The recommendations of the Fifth Pay
Commission, thus, were not applicable in his case.
now a well-settled principle of law that financial implication is a relevant
factor for accepting revision of pay. [See Hec Voluntary Retd. Emps. Welfare
Soc. & Anr. v. Heavy Engineering Corporation Ltd. & Ors., 2006 (2)
SCALE 660 and State of Andhra
Pradesh and Anr. v.
A.P. Pensioners Association & Ors., JT 2005 (10) SC 115].
matter might have been different if the revised scale of pay in terms of the
recommendations of the Fifth Pay Commission would have been made applicable to
the cases of the employees who had also retired prior to 1.4.1995 as was
noticed by this Court in U.P. Raghavendra Acharya and Ors. V .State of Karnataka & Ors, [2006 (6) SCALE 23].
the reasons aforementioned, the impugned judgment cannot be sustained which is
set aside accordingly. The appeal is allowed. No costs.