KATHEETA BAI THE 'SUPERINBENDING ENGINEER & ORS, . May'10, 1984 (0. CHINNAPPA REDDY, AP. SEN AND
-&, s. ‘VENKATARAMIAG, JJ.J
' Tamil Nadu ‘Eleetricty Board Contributory Provident Fund Regulations _ framed by Tamil Nadu Electricity Board under Electricity Supply Act, 1948—-—
Regulation 37—-Whether. Special Contribition to be made by Electricity Board.to the Contributory Provident Fund. of the employees is ‘same as Gratuity under Payment of Gratuity ‘Act, 1972—Whethet Payment. ‘of Gratuity under Payment of Gratuity Act debars payment of Special Contribution . ‘to be mate under Regula-
* tion 37. — pe
Public Interest Litigation—Letler to Judge treated writ petition.
Regujation 37 of the Tamil Nadu Electricity Board Contributory Provident Fund Regulations framed by the Tamil Natlu Electricity Board under the Electricity-Supply Act, 1948 provides that the Electricity Board shall credit to a member’ sprovident fund account a special contribution calculated in the specified
“manner, in addition to the contribution credited under ‘Regulation 13, if the Board is satisfied that the service of the member has been good efficient and. faithful and the member has not been dismissed from service or the member has not been removed from service, in which case the sanction of the Board had to be obtained. - - . .
The Payment of Gratuity Act, 1972 which” was: also applicable. to the Tamil’ Nadu Electricity Board provided for the payment of greatiuty to’ employees who would retire after rendering service fora specified number of years.
- The petitioner’s husband retired in 1976 after serving the Tami! Nadu Electricity Board for ‘about 34 years and died three. mouths thereafter. The petitioner was paid her husband’s ‘subscription to the Contributory Provident
- Fund and interest and the, Electricity Bourd’s contribution and interest and also . ;
the: gratuity under the payment of Gratuity Act, 1972.. The Electricity Board did not pay the Special Contribution to be made by it to the contributory Provident Fund under ‘Regulation 37.-on the ground that.the special contribution being nothing other than the payment of gratuity, they could not be asked to. © pay gratuity twice Over, once under Payment of Gratuity Act and again under:
; - Regulation .37. The petitioner having got no relief from anywhere wrote a a letter to a®Judge of the Supreme Court which was treated as a writ petition.
Allowing: the petition,
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‘She claméd were due to her husband. She knocked co
KATHEEJA BAI vy. SUPDT ENGINEER (Chinnappa Reddy, TD 799
HELD : The Electricity Board cannot avoid payment of the special
- Contribution to Proyident Fund under their own Provident Fund Regulations on the pretext that it is akin to or the same as Gratuity payable under the Payment of Gratuity Act. In the first place, the Board, in their Regulations, have themselves labelled the Special Contribution under Regulation 37.as a Special “contribution to Provident Fund and not as Gratuity. “It is not as if they were ‘unaware of the word ‘Gratuity’ and what it meant Since it -is found that there _is a reference in Régulation 5 to a: Gratuity Scheme of. the. Tamil Nadu Government ‘which had been adopted by the Board. ._The Special Contribution under Regulation 37 is part of a well thought out Provident Fund Scheme designed to benefit ‘good, efficient and faithful’ employees (borrowing the words from the Regulation itself) by making annual contributions in addition to the monthly contributions under Regulation 11.- This is what appears from Regulation 37 itself, There i is no justification for first dubbing it as a gratuity on the ground
_-, that it has some of the known characteristics of gratuity and then proceeding to
-deny the employees the benefit of it on the ground that the Beard are paying.
" gratuity under the Payment of Gratuity Act. If the Special Contribution has some common features With gratuity, it has also distinctive features which dis+ tin guish it from gratuity payable under the Pa iyment of Gratuity Act. [803B- FP]
in view of the finding that Special Contribution under Regulation 37 is not the same as gratuity: under Paymént of Gratuity Act, the argument that the provision for Special Contribution under Regulation 37 was inconsistent with the provisions of the Payment of Gratuity Act .and therefore the latter should
. prevail to the exclusion of the former must fail. [804H ; 805A] -
‘
ORIGINAL J onispitrioy Writ Petition No. 13009 of 1983.
(Under article 32 of the Constitution. of India)
Gopal Subra .aniam (A.C) for the Petitioner.
Dr. Y.S. Chitale, AY, Ranga and Mrs. Sarla Chandra for the Respondent. : .
‘The Judgment of the Court was delivered by - CHINNAPPA REDDY, J. Smt. Kathe eeja Bai, is the widow of
Abdul Salam who retired ds a Line Inspector, Grade I, in the employment of the Tamil Nadu State Electricity Board -on 31.7.76
‘and who unfortunately died on 15.10.76. Smt. Katheeja Bai failed .
toget from her fate husband’s employers certain amounts’ which ntinuously; but in vain, at the doors of the Regional Provident Commissioner, Madras, Central ‘Provident Commissioner, New- Delhi and the
‘Minister for Labour: Government of India for several _ years for
“N
G.
. 800 so SUPREME COURT REPORTS a. [1984] 3 s.c.k.
redress. “In sheer ‘desperation she ultimately turned to this Court as
- -alast resort, Unable to engage a lawyer, she addressed a letter to
: a learned judge of the Court setting forth her grievance. After be- ing processed in the, Registry; the letter was treated as-a Writ.
. ‘Petition under Art 32 of the Constitution. A Rule Nisi was issued | and ‘the Tamil Nadu_ State. Electricity Board - have appeared before us through connsel. At our request Sri Gopala Subramanyam a argued the case for. the widow as amicus curiae. He presented the case with understanding and thoroughness ahd we are grateful to _ . him, as also to Dr. Chitaley who’ Presented the employer's case |
* with his usual fairness.
In exercise of the powers conferred by 8. 79(c) of the Electricity
Supply Act, 1948, the. Tamil Nadu Electricity Board made the Tamil:
~ Nadu Electricity Board Contributory Provident , Fund-Regulations.
~ Regulation 3 Provides for the establishment of a fund known as the _
- Tamil Nadu Electricity Board Employees’ Contributory Provident : Fund, ‘with effect from 1.7.57. Regulation 3-A to 3-K. provide ‘for the management ‘and administration of the fund by the Board of.
Trusteés. ‘Regulation 4 prescribes that the, Fund shall be governed by regulation as may be in force for the time being but provides that no addition, alteration or repeal, of any regulation which may _
- adversely effect a subscriber shall be. retrospective. Regulation 5 provides that all employees who are eligible for the Contributory:
"” Provident Fund (Tamil Nadu) Scheme and Gratuity Scheme of the Government of Tamil Nadu except certain categories of employees with whom we are not. concerned ‘shail become subscribers to the fund on completion of three months continuous service. Regulation.
6 prescribes that an account ' shall be ‘opened i in the name of each
* .
member in which shall be credited, the member’s subscriptions and 7 interest thereon, the contributions mage ‘by the Electricity’ Board to
- his account and interest thereon and the pre-existing account before.
the Electricity Department was taken over by the Electricity Board. Regulation 9 provides - for subscription to the fund by members at the rate of 7-1/2% of pay plus dearness allowance. Regulation 11
' provides for contribution by the Electricity Board to the account of .
each member at the rate of 74% of pay plus dearness allowance.
“The member’s subscription along with the Electricity Board’s Contri-.
: “pution is required to be credited to the individual, agcount of the mem per before the 15th of every month. Regulation 37 prescribes that the
. Plectricity Board shall credit to a member’s Provident Fund account
. a special contribution calculated: in the specified manner. in addi-
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KATHESIA BAT ¥ SUPDT ENGINEER (Chinnappa Raddy, 4) “ 801 tion to the contribution credited under Regulation Ly ‘if the Board js satisfied that tlie service of the member has been-good, efficient and faithful and the member has not been dismissed from service or the member has not beca removed from service in which case the sanction of the Board tias to-be obtained. In the case of a Class I or Class if cmployce who quits service on attainment of the age of _ supernnuation, he is to be ‘credited, if his service exceeds [8 years with six months pay plus, half a month’s pay for cach completed year of service after the 18th but not so as to exceed, in all, twelve:. months’ pay or supees twenty-five thousand, whichever is less. If.
the employee’s service docs not exceed 18. years, he is to be credited with half a month's pay for each completed year of service so as not 10 exceed’ six montis’ pay. In the case of a Class HI or Class IV employecs who bas attained tic'age of superannuation after 15 years’
.* service, the Electricity Board is required to credit his account with half a month’s pay for cach completed year of service, ‘but not so as to exceed to 15 months’ pay. If the service is short of 15 years, he is to be credited with half a month’s pay for each completed year
_ of service so-as not 15 exceed six months’ pay. It is provided in
Regulation 37 that pay for the purpose of reckoning special contri- _ bution shall be the pay last drawn during the last: three. years -of
' service, whichever is more. The Board is also empowered to withhold ;
or reducc the Special Contribution in any particular case.
. At this stage’ we may refer to to t2 of the Employes Provident Funds, And Miscellaneous Provisions Act, 1952 which prohibits an employer from reducing directly 6r indirectly the total quantum of ' benefits ia the nature of old age peasion, gratuity or Provideat Fund ‘or Life Insurance to whicn the employee is entitled under the terms of his employment, express or implied, by reason only of his liability for the payment of any contribution to the Fund (which is defined -
_by §.2 (h} as meaning a, Provident Fund established under the Employees’ Provident Fund Scheme framed under s.5), .
~ In 1972, Parliament enactéd ‘the ‘Payment of Gratuity Act,
1972 to provide fora scheme for the payment of gratuity to emplo-.
yees in certdin establishments. There ‘is no. dispute that the Act applies to the Tamil Nadu State Electricity Board. Section 4 of the
Act requires payment of gratuity to.an employee who has rendered ~ continuous s ervicd for not less than“five years, on ‘the termination of his employment on superainuatiog or on retirement or on his
~ a
Payment of Gratuity Act.
802 . ~ SUPREME COURT REPORTS - [1984] 3 s.c.r.
death or disablement due-to accident or disease.’ The employer is ° required to pay the gratuity to'the employee atthe rate of fifteen .
days’ wages for each completed year of service or part thereof .in excess of six months. The amount of gratuity. is not to exceed 20
‘months’ wages.. The employer is not required to pay any gratuity, to an employee if the service of the employee has. been terminated for any act, wilful oinission or negligence causing any damage or - Joss to, or destruction of, property belonging to the employer, or if the services of the employee have been terminated for riotous or disorderly conduct or any other act of violence on his part or if his . ". services liave been terminated for any act’ involving moral turpitude provided that such offence'is committed by him in the course of his
‘émployment. Section 14 provides that the contribution of the Act shall have effect. notwithhstanding 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 the x
Abdul Salam, who held a non-pensionable post, retired: on
' 31.7.76, after a service. of 34 years and five months. He died on
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15.10.76 within three: months after his retiremént. He was entitled. or, in this case his widow was entitled to the payment of the entire amount standing to. his credit in-his Provident’ Fond account and the gratuity ‘payable. under ‘the Payment of Gratuity Act. The
-Hlectricity Board, however, took the stand that she was entitled to be paid the. imember’s subscription ‘and interest, the employer’s
- contribution . and ‘interest and - gratuity but not the special contri- ~ bution under Regulation 37 of the ‘Tamil Nudu State Electricity -
Board Contributory Provident Fuad Regulations. The reason for the Board’s attitude was that the special - conttibution required to be paid ‘under Regulation 37 was nothing other than payment of | ~ gratuity and that they could not be asked to pay gratuity twice over, = once under the Payment of Gratuity Act and again under Regulation
37, - Since they were ready to pay the gratuity payable under the
Payment of Gratuity Act,.which was more favourable to tlie employee, they. were not obliged to make payment of the contri- bution under Regulation 37. We may mention here that the Board ° has paid to the widow, the member’s: subscription with interest and. - the. employer’s contribution with interest. but not the special gontri-
“bution under Regulation 37. The Board has paid a sum of Rs.4275/ds gratuity under the payment of Gratuity Act but a sum of -@ ye
KATHEEIA BAL v. SUPDT, ENGINEER (Chinnappa Raddy, J.) 803
Rs, 3167/- is admittedly yet due from the Board towards gratuity. a In the counter affidavit filed on behalf of the Electricity Board we
~ are not able to find any reason for non-payment of the balance, of .
* gratuity.
We are unable to dppreciate how the Electricity. Board « can - -avoid payment of the Special Contribution to Provident Fund "under their own Provident Fund Regulations on the pretext that it is akin toor the same as Gratuity payable under the Payment of Gratuity Act. In the first place, the Board, in their Regulations, have themselves labelled the Special Contribution under Regulation 37 as a Special Contribution to Provident Fund not as. Gratuity. . It is not as if they were unaware of the word ‘Gratuity’ ‘and what it meant since we find that there is a reference in Regu- lation 5 to a Gratuity Scheme of the Tamil Nadu Govern- ment which had been adopted by the Board. The Special Contri- ‘bution under Regulation 37 is part of a well thought out Provident ‘Fund Scheme designed’ to benefit ‘good? efficient and faithful employees (we borrow the words from the Régulation itself) by a making annual contributions ix addition the monthly contributions.
under Regulation 11. This is what appears from Regulation or itself, we see no justification for first dubbing it as a gratuity on the ground that it has some of the knowa characteristics of gratuity and ‘then proceeding to’ deny’ the employees the’ benefit ‘of it on the.
_ ground that the Board are paying gratuity under the Paymént of Gratuity Act. If the Special Contribution has some common. features with gratuity, it has also, distinctive features which distin-
- guish it. from gratuity payable under the payment of Gratuity Act,
For example, one important feature which discriminates the Special Contribution under Regulation 37 from gratuity under the. Payment of Gratuity Act is that while the Payment of the latter is-obligatory and can only be denied if the employce’s services have been termi-: nated for his riotous or disorderly conduct’ or any other -act of “violence on-his part or. any act which constitutes an offence involving ©
-- moral turptitude and can also be denied to the extent of-the damage — - or loss‘caused by the employee, where the employee’s services have been terminated for any act, wilfal omission or négligence causing any damage or to loss, or destruction of, property belonging to the _employer, the payment of the former is discretionary and may notbe made if the service of the employee has not been good, efficient and faithful. The employer has. also the discretion to with-hold or reduce the Special Contribution in any particular case. Of course,
. $04 SUPREME CouRT REPoRTS = [1984] 3 s.c.R. | the employer canhot arbitrarily claim that the employee’s service. - was not good, efficient and faithful,.or with-hold or reduce the Special Contribution in an arbitrary fashion. Even-so,. the distinc- tion between the mandate of the Payment of Gratuity Act and the .
discretion involved in making the Special Contribution under Regulation 37 is intelligibly clear, Another feature which . distinguishes the two is that the benefit of the Payment of Gratuity Act is confin- ed to persons “drawing wages not - exceeding Rs. 1000 and _ does not extend to persons employed: in a managerial or: administrative capacity whereas the Special Contribution under Regulation 37 isnot so confined and extends to every employee of the Board except casual employees, State or Central Government employees employed with the Board on forcigd service terms etc. etc. For the purpose of contribution of Provident Fund under Regulation 11 or Regulation 37 it makes no difference that-a. person is employed in a managerial or administtarive capacity. on that he draws wages more than Rs. 1000 per month. A third feature which marks the
- two apart is that the ‘contribution to the. Provident Fund whether . under Regulation 11. or. Regulation 37 becomes part of the Pund | established by Regulation 3 and'is to be managed ‘and administered by trustees under Regulation 3-A to 3-K, whereas the paynient of
Gratuity Act does not provide for the Constitution of a fund to be
" managed and: administered by trusteés., In addition -to these broad - features, we have the outstanding circumstance that the. Board themselves have described the contribution under Regulation 37 as a contribution to Provident Fund and have chosén to include it in * their Provident F und Scheme. That should: conclude the matter. .
Dr. Chitaley ‘ ‘invited our attention to s. a of the Payment of *
Gratuity. ‘Act; i972 which provides,
“The provisions of this Act or any: rule made there under shall have effect notwithstanding anything inconsistent therewith contained in an enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act,’ ot
He argued that the provision for Special Contribution under Regulation 37 was inconsistent with the provisions of the Payment of Gratuity: Act and - therefore the latter should prevail to. the
-exculusion of the former. ' This ‘argument is dependent on the _ assumption that the Special. Contribution under ‘Regulation 37 is _ ; -the samething as the gratuity contemplated by the Payment of .
KATHEEJA BAI V. SUPDT. ENGINEER (Chinnappa Raddy, J.) 803
Gratuity ‘Act. We have held that it, is not and the argument,
‘therefore, fails.
Thete was then the usual lament that a large number of employees were involved and, therefore, the cost will be. heavy: We do not understand this argument at all, Does it mean that beneficent - legislations and beneficent schemes. must be confined to small establishments employing a few workers only ? On the other hand, it js misfeading to say that the cost is heavy. The cost is made to
" appear heavy divorced from the size of the- establishment. - Tf the, establishment is huge and if a large number of workmen are employ- . ‘ed the total. wageybill may appear to be heavy, but is it really so ?- Is it disproportionate to the sizé of the estblishment, its Tesoure¢s, - ~“its revenues ‘and its other expenditure ? 2 Is the individual wage- -bill.
also very high ? To talk of heavy cost without reference to other circumstances is to present an entirely unfaithful: picture. We need * ~make no further comment.
“In the result we direct the respondent Board to pay to the
: petitioner the whole of the. Special Contribution unde? Regulation 37 which was payable to her husband and the balance of the gratuity payable under the Payment of Gratuity-Act, part of which we are told has been paid leaving the sum of Rs. 3167 unpaid. These amounts should be paid to the petitioner with interest at 15% per
- annum from the date on which the amounts fell due. The. respondent Board should also pay asum of Rs. 2500 to the petitioner - towards compensatory costs. We must add that the case had left us with the feeling of, uneasiness and distress at the plight. of helpless persons like the petitioner whose repeated - representations to those
~ in authority were left uncared for_so the tediously long despite
- Rrequent protestations of social justice.
HSK. - ae Ot ._ Petition allowed.