ALLAHABAD BANK & ANR.versusALL INDIA ALLAHABAD BANK RETIRED EMPS. ASSN.

                           [2010] 2 S.C.R. _162


A                     ALLAHABAD BANK & ANR.
                                      v.
     ALL INDIA ALLAHABAD BANK RETIRED EMPS. ASSN.
              (Civil Appeal No. 1478 of 2004 etc.)

            DECEMBER 15, 2009 & JANUARY 29, 201 O*
B
        [8. SUDERSHAN REDDY AND R.M. LODHA, JJ.]

         Payment of Gratuity Act, 1972 - ss. 4, 4(5), 5 and 14 -
    Denial of gratuity - To the employees opting for pension in
C   lieu of gratuity - Employer-Bank placing reliance on Awards
    and Bip.artite Settlements - Held: Gratuity being a statutory
    right cannot be taken away except in accordance with
    provisions of the Act - Pension and gratuity are separate
    retiral benefits - Provisions of the Act prevail over other
D   enactments, or instruments or contract so far as gratuity is
    concerned - Notwithstanding the Awards and Settlements,
    employees were entitled to gratuity - No exemption was
      granted to the employer·Bank from operation of the
    provisions of the Act - Waiver to the claim of gratuity on the
E   part of employees also not established - The Controlling
    Authority neither had jurisdiction to decide nor was correct in
    deciding the que.stion as regards comparative beneft{s
    between the pension scheme and the gratuity under the Act
    - Jurisdiction to decide such question is conferred on
F   appropriate Government - An employee.establishment
    cannot decide this question for itself - For protection uls. 4(5),
    the comparison is between gratuity under the Award/
    Settlement/contract and the gratuity under the Act -
    Comparison cannot be between the pension scheme and
G   gratuity under the Act - Service Law - Pension and Gratuity
    - Distinction between.

         Interpretation of Statute - Remedial I welfare I labour
    ---
    *Ed: The Judgment dated 15.12.2009 is modified/clarified by order dated
        29.1.2010.
H                                    162
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 163
           RETIRED EMPS. ASSN.
statutes - Interpretation of - Held: Such statutes should         A
receive liberal construction having due regard to the directive
principles of the State Policy, so as to secure the relief
contemplated by the statute - Constitution of India, 1950 -
Directive Principles.
                                                                  B
     The questions for consideration before this court
were whether the retired employees of the appellant-
Bank were entitled to payment of gratuity under the
provisions of Payment of Gratuity Act, 1972, having opted
for pensionary benefits in lieu of gratuity; and whether          C
the Controlling Authority had jurisdiction to decide or
rightly decided the question that the pension scheme
offered by the Bank was more beneficial than the benefit
of gratuity under Payment of Gratuity Act.

    Dismissing the appeal preferred by the Bank and               D
allowing the Writ Petitions preferred by the employees'
Association, the Court

     HELD: 1.1. Gratuity payable to an employee on the
termination of his employment after rendering continuous          E
service for not less than 5 years and on superannuation
or retirement or resignation etc. being a statutory right
cannot be taken away except in accordance with the
provisions of Payment of Gratuity Act, 1972, whereunder
an exemption from such payment may be granted only                F
by the appropriate Government under Section 5 of the Act
which itself is a conditional power. No exemption could
be granted by any Government unless it is established
that the employees are in receipt of gratuity or pension
benefits which are more favourable than the benefits
conferred under the Act. [Para 14] [174-G-H; 175-A-B]             G

     1.2. Pensionary benefits or the retirement benefits as
the case may be whether governed by a Scheme or Rules
may be a package consisting of payment of pension as
well as gratuity. Pensionary benefits may include-                H
    164    SUPREME COURT REPORTS              [2010] 2 S.C.R.


A payment of pension as well as gratuity. One does not
    exclude the other. Only in cases where the gratuity
    component in such pension schemes is in better terms·
    in comparison to that of what an employee may get under
    the Payment of Gratuity Act, the Government may grant
B · an exemption and relieve the employer from the statutory
    obligation of payment of gratuity. Pension and gratuity
    are separate retiral benefits and right to gratuity is a
    statutory right. (Paras 16 and 17] (175-D-H]

C      1.3. It is not correct to say that under pension and/or
  gratuity, in terms of Shastry/Desai Awards and/or
  Bipartite Settlement on one hand and the gratuity payable
  under the Act on the other, pensionary benefit was better
  in terms and more favourable than the benefits conferred
  under the Act. It is for the appropriate Government to form
D the requisite opinion that the employees were in receipt
  of gratuity or pensionary benefits which were more
  favourable than the benefits conferred under the Act and
  therefore, the establishment must be exempted from the
  operation of the provisions of the Act. The appellant-Bank
E having failed to obtain exemption from the operation of
  the provisions of the Act cannot be permitted to raise this
  plea. [Para 18] [178-F-H; 179-A-B]             ·

       1.4. No establishment can decide for itself that
F employees in such establishments were in receipt of
  gratuity or pensionary benefits not less favourable than
  the benefits conferred under the Act. Sub-section (5) of
  Section 4 protects the rights of an employee to receive
  better terms of gratuity from its employer under any
G Award or agreement or contract as the case may be.
  Admittedly the Scheme under which the employees of
  the Bank received the pension was in lieu of gratuity.
  There is no question of comparing the said Scheme and
  arrive at any conclusion that what they have received was
  much better in terms than the benefits conferred under
H
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 165
           RETIRED EMPS. ASSN.
the Act. Reliance upon sub-section (5) of Section 4 is         A
therefore unsustainable. [Para 18] [179-A-C]

     1.5. The appellant being an establishment is under
the statutory obligation to pay gratuity as provided for
under Section 4 of the Act which is required to be read        B
along with Section 14 of the Act which says that the
provisions of the Act shall have effect notwithstanding
anything inconsistent therein contained in any enactment
or in any instrument or contract having effect by virtue
of any enactment other than this Act. The provisions of        C
the Act prevail over all other enactment or instrument or
contract so far as the payment of gratuity is concerned.
The right to receive gratuity under the provisions of the
Act cannot be defeated by any instrument or contract.
[Para 21] (180-G-H; 181-A-B]
                                                               D
     1.6. Notwithstanding the Desai and Shastry Awards
and the subsequent settlements, the members of the
employees association are entitled to avail the benefit
conferred upon them for payment of gratuity under the
provisions of the Act. The employees cannot be deprived        E
of their valuable statutory right conferred upon them to
receive payment of gratuity. [Para 22] (181-C-D]

     1.7. There is no material placed before the Court that
the employees while opting for the pension scheme at the
time of their superannuation/retirement either expressly       F
or impliedly waived their statutory right to claim payment
of gratuity under the provisions of the Act. [Para 23] (181-
E-F]

    Som Prakash Rekhi vs. Union of India (1981) 1 SCC          G
449; Sudhir Chandra Sarkar vs. Tata Iron and Steel Co. Ltd.
(1984) 3 SCC 369; Union of India vs. All India Services
Pensioners' Association and Anr. (1988) 2 SCC 580;
Hindustan Lever and Anr. vs. State of Maharashtra and Anr.
(2004) 9. &CC 438; Purshottam H. Judye vs. V.B. Poddar         H
    166     SUPREME COURT REPORTS               [2010] 2 S.C.R.


A (1966) 2 SCR 353, relied on.

       OTC Retired Employees' Association and Ors. vs Delhi
  Transport Corporation and Ors. (2001) 6 SCC 61; Beed
  District Central Coop. Bank Ltd. vs. State of Maharashtra .and
B Ors. (2006) 8 SCC 514; Municipal Corporation Delhi vs.
  Dharam Prakash Sharma and Ors. (1998) 7 SCC 221;
  Workman of Metro Theatre, Bombay vs. Metro theatre Ltd.
  Bombay (1981) 3 SCC 596; Bank of India and Ors. vs. P.O.
  Swarnakar and Ors. (2003) 2 SCC 721 - distinguished.

C      2. Remedial statutes, in contra distinction to penal
  statutes, are known as welfare, beneficient or social
  justice oriented legislations. Such welfare statutes always
  receive a liberal construction. They are required to be so
  construed so as to secure the relief contemplated by the
D statute. Labour and welfare legislation have to be broadly
  and liberally construed having due regard to the Directive
  Principles of State Policy. The Payment of Gratuity Act is
  undoubtedly one such welfare oriented legislation meant
  to confer certain benefits upon the employees working
E in various establishments in the country. [Para 11] [173-
  E-G]

      3.1. The Act, nowhere confers any jurisdiction upon
  the Controlling Authority to deal with any issue under sub-
F section (5) of Section 4 as to whether the terms of gratuity
  payable under any Award or agreement or contract is
  more beneficial to employees than the one provided for
  payment of gratuity under the Act. This Court's order
  could not have conferred any such jurisdiction upon the
  Controlling Authority to decide any matter under sub-
G section (5) of Section 4, since the Parliament in its
  wisdom had chosen to confer such jurisdiction only
  upon the appropriate Government and that too for th.e
  purposes of considering to grant exemption from the
  operation of the provisions of the Act. [Para 27] [183-G-
H H; 184-A]
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 167
           RETIRED EMPS. ASSN.
     3.2. Even on merits, the conclusions drawn by the            A
Controlling Authority that the Pension Scheme (old)
offered by the Bank is more beneficial since the amount
of money, the pensioners got under the Pension Scheme
 is more than the amount that could have been received
in the form of gratuity under the provisions of the Act, is       B
unsustainable. The Controlling Authority failed to
appreciate that sub-section (5) of Section 4 of the Act,
protects the right of an employee to receive better terms
of gratuity under any award or agreement or contract
with the employer than the benefits conferred under the           c
Act. The comparison, if any, could be only between the
terms of gratuity under any award or agreement or
contract and payment of gratuity payable to an employee
under Section 4 of the Act. There can be no comparison
between a Pension Scheme which does not provide for
                                                                  0
payment of any gratuity and right of an employee to
receive payment of gratuity under the provisions of the
Act. Viewed from any angle the order of the Controlling
Authority is unsustainable. [Para 27] [184-B-E]

     4. It is applicable to all the members of the petitioner's   E
Association/Pensioners in the respondent-Bank govened
by the Pension Rgulations (old) 1890 of the Bank as well
as those pensioners who retired during the period
1.1.1986 to 31.10.1993. However, it is clarified that such
of those officers of the Bank working prior to 1.7.1979           F
and have retired after coming into force of the said Act
on 31st October, 1993, shall alone be entitled for the
benefits. [Para 28 (as modified/clarified by order dated
29.1.201 O)] [185-C-D]
                                                                  G
                     Case Law Reference:
    (1981) 1 sec 449          Relied on.            Para 12
    (1984) a sec 369          Relied on.            Para 13
                                                                  H
    168      SUPREME COURT REPORTS                 [2010] 2 S.C.R.


A         (1988) 2 sec 580         Relied on.             Para 15
          (2001) 6 sec 61          Distinguished.         Para 17
          (2006) 8 sec 514         Distinguished.         Para 18
          (1998) 1 sec 221         Distinguished.         Para 19
B
          (1981) 3 sec 596         Distinguished.         Para 20
          (2003) 2 sec 121         Distinguished.         Para 21
          (2004) 9 sec 438         Relied on.             Para 22
c
          (1966) 2 SCR.353         Relied on.             Para 22

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    1478 of 2004.

D       From the Judgment & Order dated 13.11.2003 of the High
    Court of Allahabad, Lucknow Bench in Civil Misc. Writ Petition
    No. 1002 of 1989.

                                 WITH

E W.P. (C) N'-'os. 150 & 237 of 2007.

          P.P. Rao, Jitendra Sharma, Dhruv Mehta, Yashraj Singh
    Deora, Tanushree Mukherjee, Rama Arora, Sr. Manager (law)
    (for K.L. Mehta & Co.), Shail Kumar Dwivedi, Vandana Mishra,
F   Ashutosh Kr. Sharma, Manoj Kr. Dwi'{edi, B.K. Pal, P.N. Jha,
    D.S. Mahra for the appearing parties.

          The Judgment of the Court was delivered by

       B. SUDERSHAN REDDY, J. 1. All India Allahabad Bank
G Retired Employees Association (for short 'Association') filed
  a writ petition invoking the original jurisdiction of the Allahabad
  High Court under Article 226 of the Constitution of India with a
  prayer to issue a writ of mandamus directing the appellant bank
  herein to pay gratuity to the members of its Association under
H the Payment of Gratuity Act, 197? ( for short 'the said Act'). The
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 169
RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]
High Court on due consideration of the matter declared that the      A
retired employees of the appellant bank were entitled to the
benefit of gratuity under the said Act and accordingly directed
the payment of gratuity within the time specified in the judgment.
The said judgment of the Allahabad High Court is impugned in
this appeal.                                                         B

     2. A short question that arises for our consideration in this
appeal is as to whether the retired employees of appellant bank
are entitled to payment of gratuity under the provisions of the
said Act?
                                                                     c
     3. The retired employees of the appellant bank having
formed an association which includes officers and subordinate
staff sent a legal notice to the appellant bank on 27.11.1988
requiring it to release the amount of gratuity to its members in
accordance with the provisions of the said Act. The case set         D
up by the Association was that its members were being illegally
deprived of their statutory right to receive gratuity under the
provisions of the Act on the pretext that they had opted for
pensionary benefits in lieu of gratuity. It appears that on behalf
of the Association applications were sent to the competent           E
authority in the prescribed proforma for payment of gratuity in
response to which the appellant bank made its stand explicitly
clear that it was not possible to make payment of gratuity in
addition to pension. Since the whole cause of action is based
on the respo~se of the appellant bank dated 10.01.1989, it           F
would be appropriate to notice the same in its entirety.

                      "Ref. No. Admn./5/0280

                                         Date: January 10, 1989
    The General Secretary                                            G
    All India Allahabad Bank Retired
    Employees Association,
    Central Office, Ram Bhawan,
    C-12548, Sector-A,
                                                                     H
        170       SUPREME COURT REPORTS                 [2b10] ·2 S.C.R.


    A         Mahanagar, Lucknow.
              Dear Sir,·

              Payment of Gratuity

    B               This has reference to your letter Bank/14/8 dated
              14. 11.1988 and enclosures.                  ·
                                  ....
                   In this connection, we have to advise that Allahabad
              Bank has accepted contributory Provident Fund Scheme,.
             which is not available to Government employees. Besides
    c        this, the Bank has a Pension Scheme in which an
             employee/officer may exercise option letter for Pension or
             Gratuity; but the dual benefits are not available under the
             scheme Since the respective pensioners have exercised
•            their option voluntarily for availing of pension in lieu of
    D        Gratuity on their retirement from the bank's service, they .
             are not eligible for grat~ity at all. They are receiving
           . pension since their retirement and as such we are not in
             a position to accede to your request for payment of gratuity
             in addition to pension to the persons named in your letter
    E        under reference.
              Yours faithfully,
              Sd/-
              (R.K. Nath)
              Chief Manager (P.A.)"
    F
            4. The Association thereafter filed a writ petition asserting
      its right that its members were entitled to receive gratuity in
      accordance with the provisions of the Act. The contention was
      that the consent or option given by the members of the
      Association opting for pension scheme would not deprive them
    G of their statutory right to receive gratuity under the provisions
      of the Act. The appellant bank resisted the writ petition filed by
      the Association mainly relying upon the Awards known as
      Shastry Award and Deasai Award and subsequent settlements
      under' which employees were entitled either to the benefit of
    H
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 171
RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]
pension or benefit of gratuity at one's own option but not both.     A
The Bank took a specific stand that the members of the
Association had voluntarily opted for pension scheme, as a
result thereof, they were not entitled to receive gratuity as well
since they have already exercised their option claiming benefit
of pension. The submission was that at the time oftheir              B
retirement all the employees were paid contributory provident
fund and pension in terms of option exercised by them, under
the relevant Pension Scheme of the bank and therefore, they
were not entitled to payment of any gratuity. The bank further
asserted that the employees opted for the pensionary benefits        c
which, admittedly, are better in terms as found by various
Awards that pensionary scheme was really more advantageous
to the employees than that of the gratuity.

    5. We may at this stage notice that appellant bank did not
succeed in its attempt to get the bank exempted from the             D
operations of provisions of the Act.

       6. Before adverting to the question as to whether the
 retired employees of the bank are entitled to payment of any
 gratuity, it may be just and necessary to notice the objects and    E
 reasons and the scheme of the Act. It was realised that there
was no Central Act to regulate the payment of gratuity to
industrial workers, except the Working Journalists (Conditions
of Service) and Miscellaneous Provisions Act, 1955. The
G<2vernment of Kerala enacted legislation for payment of             F
gratuity to workers employed in factories, plantations, shops
and establishments. The West Bengal enacted an Ordinance
on 3.6.1971 prescribing a similar scheme of gratuity. Gratuity
was also being paid by some employers to their workers under
Awards and agreements. Since the enactment of the Kerala             G
and the West Bengal Acts, some other State Governments
have also voiced their intention of enacting similar measures
in their r~spective States. It is under those circumstances the
Union Government realised that it has become necessary, to
have a Central law on the subject so as to ensure a uniform
                                                                     H
    172      SUPREME COURT REPORTS                   [2010] 2 S.C.R.


A pattern of payment of gratuity to the employees through out the
  country. The Act was intended to avoid different treatment to
  the employees of establishments having branches in more than
  one State. The proposal for Central legislation on gratuity was
  discussed in various Labour Ministers' Conference, where
B Central legislation on payment of gratuity was felt a necessity.

          7. Section 4 (1) of the Act provides:

          "(1) Gratuity shall be payable to an employee on the
          termination of his employment after he has rendered
C         continuous service for not less than five years,-

          (a) on his superannuation, or

          (b) on his retirement or resignation, or

D         (c) on his death or disablement due to accident or
          disease:"

        8. The expression "employee" is defined in Section 2 (e)
  of the Act as any person (other than apprentice) employed on
E 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 .......... There is no dispute before us that the appellant
F bank is an establishment and an employer within the meaning
  of the provisions of the Act. Section 5 confers power upon the
  appropriate Government to exempt any establishment, factory,
  mine, oilfield, plantation etc. from-the operation of the provisions
  of the Act, if, in its opinion, the employees in such establishment,
  factory etc. are in receipt of gratuity or pensionary benefits not
G less favourable than the benefits conferred under the Act. The
  power to exempt conferred upon the appropriate Government
  is not an unconditional power. The appropriate Government is
  required to hear all the persons concerned who are likely to be
  affected by the decision to be taken and the exemption itself
H
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 173
RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]
is subject to the conditions mentioned in the provisions of the       A
Act namely that employee or class of employees in the opinion
of the government are in receipt of gratuity or pensionary
benefits not less favourable than the benefits conferred under
the Act.
                                                                      B
     9. A plain reading of the provisions referred to herein
 above makes it abundantly clear that there is no escape from
·payment of gratuity under the provisions of the Act unless the
 establishment is granted exemption from the operation of the
 provisions of the Act by the appropriate Government.
                                                                      c
     10. Notwithstanding the subsequent improvements and
embellishments the stand taken by the bank was and is before
us that the members of the Association had accepted the
Contributory Provident Fund Scheme and they opted for
pension in lieu of gratuity which was being paid and therefore        D
are not entitled to payment of gratuity under the provisions of
the Act.

       11. We shall proceed to examine the point urged by the
 learned counsel for the appellant. Remedial statutes, in contra      E
 distinction to penal statutes, are known as welfare, beneficient
or social justice oriented legislations. Such welfare statutes
always receive a liberal construction. They are required to be
so construed so as to secure the relief contemplated by the
statute. It is well settled and needs no restatement at our hands
                                                                      F
that labour and welfare legislations-have to be broadly and
liberally construed having due regard to the Directive Principles
of State Policy. The Act with which we are concerned for the
present is undoubtedly one such welfare oriented legislation
meant to confer certain benefits upon the employees working
in various establishments in the country.                             G

     12. Krishna Iyer, J in Som Prakash Rekhi vs. Union of
lndia 1 stated the principle in his inimitable style that benignant
provision mu~t receive a benignant construction and, even if
two interpretations are permissible, that which furthers the          H
    174      SUPREME COURT REPORTS                   [2010] 2 S.C.R.


A beneficial object should be preferred. It has been further
  observed: "We live in a welfare State, in a "socialist" republic,
  under a Constitution with profound concern for the weaker
  classes including workers (Part IV). Welfare benefits such as
  pensions, payment of provident fund and gratuity are in
B fulfilment of the Directive Principles. The payment of gratuity
  or provident fund should not occasion any deduction from the
  pension as a "set-off". Otherwise, the solemn statutory
  provisions ensuring provident fund and gratuity become illusory.
  Pensions are paid out of regard for past meritorious services.
c The root of gratuity and the foundation of provident fund are
  different. Each one is a salutary benefaction statutorily
  guaranteed independently of the other. Even assuming that by
  private treaty parties had otherwise agreed to deductions
  before the coming into force of these beneficial enactments
  they cannot now be deprivatory. It is precisely to guard against
0
  such mischief that the non obstante and overriding provisions
  are engrafted on these statutes."

         13. Interpreting the provisions of the said Act this Court in
  Sudhir Chandra Sarkar vs. Tata Iron and Steel Co. Ltd. 2
E observed that pension and gratuity coupled with contributory
  provident fund are well recognised retiral benefits governed by
  various statutes. These statutes are legislative responses to the
  developing notions of the fair and humane conditions of work,
  being the promise of Part IV of the Constitution. It was
F observed: "the fundamental principle underlying gratuity is that
  it is a retirement benefit for long service as a provision for old
  age. Demands of social security and social justice made it
  necessary to provide for payment of gratuity. On the enactment
  of Payment of Gratuity Act, 1972 a statutory liability was cast
G on the employer to pay gratuity."

         14. Gratuity payable to an employee on the termination of
    his employment after rendering continuous service for not less
    than 5 years and on .superannuation or retirement or resignation
    etc. being ..a statutory right cannot be taken away except in
H
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 175
RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]
accordance with the provisions of the Act whereunder an            A
exemption from such payment may be granted only by the
appropriate Government under Section 5 of the Act which itself
is a conditional power. No exemption could be granted by any
Government unless it is.established that the employees are in
receipt of gratuity or pension benefits which are more             B
favourable than the benefits conferred under the Act.

      15. In Union of India Vs All India Services Pensioners'
Association And Another, 3 this Court explained that there is
 always a distinction between the pension payable on retirement C
and the gratuity payable on retirement. "While pension is
payable periodically as long as the pensioner is alive, gratuity
 is ordinarily paid only once on retirement." No decision of this
Court which has taken a view contrary to the decisions referred:. ·
to herein above has been brought to our notice.
                                                                    D
      16. In our considered opinion pensionary benefits or the
retirement benefits as the case may be whether governed by
a Scheme or Rules may be a package consisting of payment
of pension and as well as gratuity. Pensionary benefits may
include payment of pension as well as gratuity. One does not E
exclude the other. Only in cases whet-e the gratuity component
in such pension schemes is in better terms in comparison to
that of what an employee may get under the Payment of Gratuity
Act the government may grant an exemption and relieve the
employer from the statutory obligation of payment of gratuity.      F

     17. In the result, we find merit in the submissions made
by the learned senior counsel, Shri P.P. Rao appearing for the
Association that pension and gratuity are separate retiral
benefits and right to gratuity is a statutory right. However, Shri .
Dhruv Mehta, learned counsel for the b~k placed strong . G
reliance on the decision rendered by this Court in OTC Retired
Employees' Association & Ors. Vs ·Delhi Transport-
Corporation & Ors., 4 in support of his contention that the·
employees of the bank are not entitled to the twin benefits of
                                                                   H
    176     SUPREME COURT REPORTS                  [2010) 2 S.C.R.


A  payment of pension and as well as gratuity. In that case, Delhi
   Transport Corporation introduced the Pension Scheme for the
   first time on 27.11.1992, for its retired employees, as per which
   all employees of OTC retiring on or after 3.8.1981, were to be
   covered for the purpose of pensionary benefits. The existing
B employees at the relevant time and those who retired on or after
   3.8.1981, were required to exercise their option for the Pension
   Scheme. The retired employees opting for the pension scheme
   were required to refund the employer's share of provident fund
   received by them with interest thereon. Those employees, who
c joined the service on 27.11.1992, and thereafter, had no option
   but to be compulsorily covered under the Pension Scheme. This
   Court found that the employees therein received gratuity at the
   time of their exit from the service and subsequently opted for
   pension which had never been a part of their service conditions.
   It is under those circumstances, this Court took the view that it
0
  was a condition precedent that in order to get the benefit of the
  Pension Scheme, they were required to refund the gratuity
  received by them at the time of retirement. It was clear that at
  the time of receipt of gratuity they were not entitled to get
  pension. The employees have opted for payment of pension
E only after the introduction of the Scheme for the first time. OTC
  (supra), in our considered opinion, is not an authority for the
  proposition that an employee who receives the pension is not
  entitled to the payment of any gratuity. This decision is of no
  assistance to the appellant.
F
         18. Learned counsel for the appellant has strenuously
  contended that under the Old Pension Scheme of the Bank, only
  two terminal benefits namely, Contributory Provident Fund and
  either gratuity or pension were required to be paid to the
G employees of the bank and not both. The bank in view of the
  Awards, circulars and statutory regulations is not under any
  legal obligation to pay gratuity as a third retiral benefit. The
  submission was that ever since the Payment of Gratuity Act
  came into force in 1972, no employee was paid both pension
H and gratuity till 1995, when the Pension Regulations came into
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 177
RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]

 force. It is the case of the bank that the optional scheme of           A
  pension prevalent at the relevant time was a better mode of
  payment and therefore was a better form of retiral benefit within
  the meaning of Section 4 (5) of the Act. In this regard, he relied
 on the decision of this Court in Beed District Central Coop.
 Bank Ltd. vs. State of Maharashtra & Ors. 5 In that case a policy       B
 decision was taken by the bank to extend the benefit of better
  rate of gratuity to a large number of its employees and a
 scheme was accordingly formulated to the effect that such of
 those employees who were on its roll on and from 1.12.1975,
 the rate of gratuity was to be calculated on one month's salary         c
 for every completed year of service with ceiling limit of 20
 months salary. It was operative from 1975 to 19.7.1996. The
 employees of the bank accepted the scheme and availed the
 benefit thereof. Thereafter the scheme was amended providing
 for payment of gratuity at the rate of 26 days' salary for every        0
 completed year of service with a ceiling limit of Rs. 1.7 lakhs
 which was operative from May, 1994 to September, 1997. Yet
 again, a scheme was floated raising the ceiling limit of Rs. 1. 7
 lakhs to Rs. 2.50 lakhs. The employees retired during the
 currency of the scheme formulated by the bank were offered              E
 gratuity in terms whereof the ceiling limit was fixed at Rs. 1. 7
 lakhs and Rs. 2.50 lakhs between the period 20.7.1996 and
 30.11.1999 and the period 1.12.1999 to 17.1.2005,
 respectively and the amount of gratuity so offered to them in
 terms of the scheme was accepted. However, they raised a
 claim that they were entitled to the benefit of both the schemes        F
as also the ceiling limit fixed under the Amendment Act, 1998,
 raising the ceiling limit to Rs. 3.50 lakhs. On the facts, this Court
framed a question for its consideration as to whether keeping
in view the provisions contained in sub-section (5) of Section
4 of 1972 Act, the employees although would be entitled to the           G
benefit of ceiling limit of Rs. 3.5 lakhs, the rate of gratuity should
be calculated at the rate of 26 days' instead and in place of
15 days' salary for every completed year of service in terms of
the 1972 Act. We fail to appreciate as to how the said judgment
is of any relevance to resolve the question that arises for our          H
    178      SUPREME COURT REPORTS                  [2010] 2 S.C.R.


A   consideration in the present case. It is not the case of the bank
    that at the time of superannuation of the employees there was
    a scheme for payment of gratuity under which the employees
    were entitled to payment of gratuity and the said scheme in
    comparison to that of the provisions of the Act was more
B   beneficial to the workmen. On the other hand, the scheme that
    was prevalent at the relevant time in clear and categorical terms
    provided that "the gratuity will not be payable in case where a
     pension is granted by the Bank. But if a pensioned officer
    should die before receiving any pension payments an
c   aggregate sum at least equal to the gratuity which he would
    otherwise have received then the Bank will pay the difference
    between such -aggregate sum and gratuity to the officer's
    widow; if any; otherwise to his legal representative." Be it noted
    that in the counter affidavit filed in the High Court the Bank
    placed reliance on Shastry and Desai Awards which have taken
0
    the view that Allahabad Bank which had pension scheme of its
    own was more advantageous than the provisions of the gratuity
    to its employees. It is asserted that under the said Awards and
    the subsequent settlements an employee entitled to receive
E   either the benefit of pension or gratuity at his own option but
    not both. The contention was that such of those Employees who
    had voluntarily opted for pension scheme were not entitled to
    receive the gratuity as well. The respective comparative figures
    under pension and/or gratuity, in terms of Shastry/Desai Awards
    and/or Bipartite Settlement on one hand and the gratuity
F   payable under the Act on the other were made available for the
    perusal of the Court to buttress the Bank's submission that what
    has been paid to the employees was better in terms and more
    favourable than the benefits conferred under the Act. The
    submission is totally devoid of any merit for more than one
G   reason namely; that it is for the appropriate Government to form
    the requisite opinion that the employees were in teceipt of
    gratuity or pensionary benefits which were more favourable than
    the benefits conferred under the Act and therefore, the
    establishment must be exempted from the operation of the
H
 ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 179
 RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]
  provisions of the Act. The Bank having failed to obtain              A
  exemption from the operation of the provisions of the Act cannot
  be permitted to raise this plea. No establishment can decide
  for itself that employees in such establishments were in receipt
· of gratuity or pensionary benefits not less favourable than the
  benefits conferred under the Act. Sub-section (5) of Section 4       B
  protects the rights of an employee to receive better terms of
  gratuity from its employer under any Award or agreement or
  contract as the case may be. Admittedly the Scheme under
  which the employees of the Bank received the pension was in
  lieu of gratuity. There is no question of comparing the said         c
  Scheme and arrive at any conclusion that what they have
  received was much better in terms than the benefits conferred
  under the Act. Reliance upon sub-section (5) of Section 4 is
  therefore unsustainable.

      19. This Court in Municipal Corporation Delhi vs. Dharam         D
 Prakash Sharma & Ors., 6 observed: "the mere fact that the
gratuity is provided for under the Pension Rules will not disentitle
 him to get the payment of gratuity under the Payment of Gratuity
Act. In view of the overriding provisions contained in Section
 14 of the Payment of Gratuity Act, the provision for gratuity         E
under the Pension Rules will have no effect. Possibly for this
reason, Section 5 of the Payment of Gratuity Act has conferred
authority on the appropriate Government to exempt any
establishment from the operation of the provisions of the Act,
if in its opinion the employees of such establishment are in           F
receipt of gratuity or pensionary benefits not less favourable
than the benefits conferred under this Act. Admittedly MCD has
not taken any steps to invoke the power of the Central
Government under Section 5 of the Payment of Gratuity Act. In
the aforesaid premises, we are of the considered opinion that          G
the employees of the MCD would be entitled to the payment
of gratuity under the Payment of Gratuity Act notwithstanding
the fact that the provisions of the Pension Rules have been
made applicable to them for the purpose of determining the
pension. Needless to mention that the employees cannot                 H
     180     SUPREME COURT REPORTS                  [201 O] 2 S.C.R.


A   claim gratuity available under the Pension Rules" (emphasis
    supplied).

      In the present case it is not the case of the Bank that its
  employees had claimed and received gratuity under the pension
B scheme.

       20. The decision in the case of Workman of Metro
  Theatre, Bombay vs. Metro theatre Ltd., Bombay7 in which this
  Court took the view that on true construction the expression
  'Award' occurring in sub-section (5) of Section 4 does not
C mean and cannot be confined to 'existing Award' but includes
  any Award that would be made by an adjudicator wherein better
  terms of gratuity could be granted to the employees if the facts
  and circumstances warrant such grant. This decision cited by
  the learned counsel for the appellant is of no relevance and in
D no manner supports the appellant's case.

         21. Learned counsel for the appellant relying upon the .
     decision of this Court in Bank of India & Ors. vs. P. 0.
     Swamakar & Ors. 8 contended that once the employees have ·
E   exercised their option to avail pension made available to them
    under the Old Pension Scheme, and having drawn the benefits
    thereunder cannot be permitted to resile from their stand. In that
    case a group of employees of the State Bank of India accepted
    the amount of ex-gratia under the scheme known as 'the
    Employees Voluntary Retirement Scheme' and thereafter made
F   an attempt to resile from the very Scheme itself. It is under those
    circumstances this Court observed that "those who accepted
    the ex-gratia payment or any other benefit under the Scheme,
    in our considered opinion, could not have resiled therefrom."
    In the present case the real question that arises for our
G   consideration is whether the employees having exercised their
    option to avail the benefits under the pension scheme are
    estopped from claiming the benefit under the provisions of the
    Act? The appellant being an establishment is under the statutory
    obligation to pay gratuity as provided for under Section 4 of the
H   Act which is required tb be read along with Section 14 of the
 ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 181
 RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]
Act which says that the provisions of the Act shall have effect      A
notwithstanding anything inconsistent therein contained in any
enactment or in any instrument or contract having effect by virtue
of any enactment other than this Act. The provisions of the Act
prevail over all other enactment or instrument or contract so far
as the payment of gratuity is concerned. The right to receive        B
gratuity under the provisions of the Act cannot be defeated by
any instrument or contract.

     22. This Court in Hindustan Lever and Anr. vs. State of
Maharashtra & Anr. 9 relying upon the decision of this Court in C
Purshottam H. Judye vs. V.B. Poddar10 held that the word
'instrument' would include award made by the Industrial
Tribunal. It is thus clear that notwithstanding the Desai and
Shastry Awards and the subsequent settlements the members
of the employees association are entitled to avail the benefit
conferred upon them for payment of gratuity under the provisions D
of the Act. The employees cannot be deprived of their valuable
statutory right conferred upon them to receive payment of
gratuity.

      23. There is no material placed before us that the             E
employees while opting for the pension scheme at the time of
their superannuation/retirement either expressly or impliedly
waived their statutory right to claim payment of gratuity under
the provisions of the Act. In the circumstances we find no merit
in the submission made by the learned counsel for the appellant      F
in this regard. For the aforesaid reasons we find no merit in
the appeal.

     24. During the pendency of the appeal this Court by its
 order dated 22.3.2006 directed the parties to appear before
the Controlling Authority and the Controlling Authority was          G
required to decide as to whether the benefits under the
Allahabad Bank Employees Pension Scheme (Old) are more
beneficial in comparison to that of the payment of Gratuity under
the provisions of the Act. Following is the order passed by this
Court:                                                               H
    182       SUPREME COURT REPORTS                   [2010] 2 S.C.R.


A         "Though the order of the High Court speaks about the
          benefit of gratuity under the Payment of Gratuity Act, 1972
          and a better Scheme, it does not indicate as to who is the
          Authority to decide which one of the schemes is better.
          According to the Bank, the employees concerned had
B         accepted the particular Scheme which had the option of
          either the pension or the gratuity. It is pointed out that the/
          there was no challenge to the legality of the arrangement
          made or the Scheme itself. On the other hand, Mr. Trivedi,
          learned counsel for respondent no. 1 submits that whether
c         the Scheme is better is relatable to the benefits available
          under the Act and nothing beyond it. The High Court has
          come to an abrupt conclusion that a Statute overrides an
          agreement. There was no plea in this regard in the writ
          petition. Be that as it may, we permit the parties to appear
          before the controlling authority who shall take a decision
D
          within three months. The parties are given liberty to
          produce copy of the order before the controlling authority
          so that it can fix a date for hearing.

                 The parties are permitted to take all stands which are
E         being raised in the present appeal. The matter shall be
          listed after four months."

         25. The Controlling Authority held that the amount received
    by the employees under the said Scheme is much more than
F   what they could have received under the Act. The benefits
    according to the Controlling Authority available under the
    Scheme are more beneficial than the gratuity payable under the
    Act.

       26. Being aggrieved by the order of the Controlling
G Authority two writ petitions were filed, one by All India Allahabad
  Bank Retired Employees Association and the other by the
  Allahabad Bank Retirees' Association challenging the validity
  of the order of the Controlling Authority dated 25.9.2006.

H
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 183
RETIRED EMPS. ASSN. [B. SUDERSHAN REDDY, J.]
        27. Section 2 (d) of the Act defines Controlling Authority   A
  as an authority appointed by the appropriate Government under
  Section 3 of the Act. Under Section 3 the Controlling Authority
  is made responsible for the administration of the Act and it
  further provides for appointment of different authorities for
  different areas. Section 7 deals with for determination of the     s
  amount of gratuity. Every person who is eligible for payment of
  gratuity under the Act is required to send a written application
  to· the employer in the prescribed form for payment of such
 gratuity. Sub-section (2) of Section 7 provides once the gratuity
  becomes payable, the employer shall, whether an application        c
  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 so determined and arrange to pay the
 amount of gratuity to the person to whom the gratuity is payable.   D
 The Scheme envisaged under Section 7 of the Act, is that in
 case of any dispute to the amount of gratuity payable to an
 employee under the Act or as to the admissibility of any claim
 of, or in relation to, an employee payable to gratuity etc. the
 employer is required to deposit with the Controlling Authority      E
 the admitted amount payable as gratuity. In case of any dispute
 parties may make an application to the Controlling Authority for
 deciding the dispute who 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 result of
 such inquiry any amount is found to be payable to the employee,     F
the Controlling Authority shall direct the employer to pay such
amount to the employee. Sub-section (7) of Section 7, provides
for an appeal against the order of the Controlling Authority. The
Act, nowhere confers any jurisdiction upon the Controlling
Authority to deal with any issue under sub-section (5) of Section    G
4 as to whether the terms of gratuity payable under any Award
or agreement or contract is more beneficial to employees than
the one provided for payment of gratuity under the Act. This
Court's order could not have conferred any such jurisdiction
                                                                     H
    184      SUPREME COURT REPORTS                [2010] 2 S.C.R.


A  upon the Controlling Authority to decide any matter under sub-
   section (5) of Section 4, since the Parliament in its wisdom had
   chosen to confer such jurisdiction only upon the appropriate
   Government and that too for the purposes of considering to
   grant exemption from the operation of the provisions of the Act.
B Even on merits the conclusions drawn by the Controlling
   Authority that the Pension Scheme (old) offered by the Bank is
   more beneficial since the amount of money the pensioners get
   under the Pension Scheme is more than the amount that could
   have been received in the form of gratuity under the provisions
c  of the Act is unsustainable. The Controlling Authority failed to
   appreciate that sub-section (5) of Section 4 of the Act, protects
  the right of an employee to receive better terms of gratuity under
  any award or agreement or contract with the employer than the
   benefits conferred under the Act. The comparison, if any, could
  be only between the terms of gratuity under any award or
0
  agreement or contract and payment of gratuity payable to an
  employee under Section 4 of the Act. There can be no
  comparison between a Pension Scheme which does not
  provide for payment of any gratuity and right of an employee
  to receive payment of gratuity under the provisions of the Act.
E Viewed from any angle the order of the Controlling Authority is
  unsustainable. The order is liable to be set aside and the same
  is accordingly set aside.

        28. However, the judgment of ours is applicable to only
F   such of those employees/workmen who retired from the service
    between 1.1.1986 and 31.10.1992.

        29. In the result, the appeal preferred by the bank is
  dismissed with costs quantified at Rs. 25,000/- and the writ
G petitions are allowed without any order as to costs.

    K.K.T.          Appeal dismissed and writ petitions allowed.
ALLAHABAD BANK v. ALL INDIA ALLAHABAD BANK 185
           RETIRED EMPS. ASSN.
                               ORDER                                 A
                        (Dated 29.1 .1.2010)
                                  In
                             I.A. No. 6
                                  In
                  Civil Appeal No. 1478 of 2004.                     B

     We have heard learned counsel for the petitioner as well
as learned cour~el appearing for the Bank.

     Paragraph 28 of the Judgment shall now read as under:
                                                                     c
     "Judgment is, however, applicable to all the members of
the Petitioner's Association/Pensioners in the respondent-Bank
governed by the _Pension Regulations (old) 1890 of the Bank
as well as those pensioners who retired during the period
1.1.1986 to 31.10.1993.                                              D

      It is made clear that such of the those officers of the Bank
working prior to 1. 7.1979 and have retired after coming into
force of the said Act on 31st October, 1993, shall alone be
entitled for the benefits.

     I.A. Is disposed of accordingly.

K.K.T.                                          I.A. disposed of.