NAGAR AYUKT NAGAR NIGAM, KANPURversusSRI MUJIB ULLAH KHAN AND ANOTHER

1028                      [2019]REPORTS
                SUPREME COURT   6 S.C.R. 1028               [2019] 6 S.C.R.


 A               NAGAR AYUKT NAGAR NIGAM, KANPUR
                                         v.
                 SRI MUJIB ULLAH KHAN AND ANOTHER
                          (Civil Appeal No. 2628 of 2017)
 B                               APRIL 02, 2019
                  [MOHAN M. SHANTANAGOUDAR AND
                        HEMANT GUPTA, JJ.]
              Payment of Gratuity Act, 1972 – ss.1(3)(c) and 14 – Retirement
       and Benefits and General Provident Fund Regulations, 1962 – r.4(1)
 C
       – Uttar Pradesh Municipal Corporation Act, 1959 – s.548 –
       Employees of Municipal Corporation claimed gratuity by invoking
       the jurisdiction of the controlling authorities under the Act, 1972 –
       Controlling authorities allowed the petition for gratuity in favour
       of the employees – Appellant contended that gratuity is payable in
 D     terms of r.4(1) of the 1967 Regulations published under the Act,
       1959 – Therefore, the employees of the Municipalities were entitled
       to gratuity only in terms of such Regulations and not under the Act,
       1972 – High Court held that employees of Municipalities were
       entitled to the gratuity in terms of the provisions of the Act, 1972 –
       On appeal, held: Central Government had published a notification
 E
       dated 8.1.1982 in terms of s.1(3)(c) of the Act, 1972 which made it
       clear that the Act is applicable to the local bodies i.e. the
       Municipalities – s.14 of the Act, 1972 has given an overriding effect
       over any other inconsistent provision in any other enactment – In
       view of s.14, the provision in the State Act contemplating payment
 F     of Gratuity will be inapplicable in respect of the employees of the
       local bodies – Thus, there is no error in the orders passed by the
       controlling authorities under the Act and as maintained by the High
       Court – General Clauses Act, 1987 – s.3(31).
             Dismissing the appeals, the Court
 G           HELD: 1. In terms of the Section 1(3)(c) of the Payment of
       Gratuity Act, 1972, the Central Government has published a
       notification on 08.01.1982 and specified Local Bodies in which
       ten or more persons are employed, or were employed, on any

 H
                                     1028
         NAGAR AYUKT NAGAR NIGAM, KANPUR v.                             1029
                SRI MUJIB ULLAH KHAN

day of the preceding twelve months as a class of establishment          A
to which this Act shall apply. The notification dated 08.01.1982
was not referred to before the High Court. Such notification
makes it abundantly clear that the Act, 1972 is applicable to the
local bodies i.e., the Municipalities. Section 14 of the Act, 1972
has given an overriding effect over any other inconsistent
                                                                        B
provision in any other enactment. In view of Section 14 of the
Act, the provision in the State Act contemplating payment of
Gratuity will be inapplicable in respect of the employees of the
local bodies. [Paras 10, 11 and 12][1032-F; 1033-C; E]
       2. The entire argument of the appellant is that the State
Act confers the restrictive benefit of gratuity than what is            C
conferred under the Central Act. Such argument is not tenable in
view of Section 14 of the Act and that liberal payment of gratuity
is in fact in the interest of the employees. Thus, the gratuity would
be payable under the Act, 1972. Such is the view taken by the
Controlling Authority. In view of the aforesaid, there is no error      D
in the orders passed by the Controlling Authorities under the
Act and as maintained by the High Court. [Paras 14, 15]
[1033-G-H; 1034-A]
       Municipal Corporation of Delhi v. Dharam Prakash
       Sharma and Another AIR 1999 SC 293: (1998) 7 SCC                 E
       221 – referred to.
                          Case Law Reference
       (1998) 7 SCC 221           referred to          Para 5
       CIVIL APPELLATE JURISDICTION: Civil Appeal No.2628 of            F
2017
      From the final Judgment and Order dated 19.04.2017 of the High
Court of Judicature at Allahabad in Writ Petition No.19016 of 2007
                                 With
       Civil Appeal No.2629 of 2017.                                    G

    Anurag Dubey, Satpal Wadhwa, Pramod Kumar, S.R. Setia, Sunil
Kumar Verma, Advs. for the Appellant.
       Vinay Garg, Sanjay Kumar Visen, Aniruddha P. Mayee, Advs.
for the Respondents.                                                    H
1030              SUPREME COURT REPORTS                        [2019] 6 S.C.R.


 A            The Judgment of the Court was delivered by
              HEMANT GUPTA J.
              1. The challenge in Civil Appeal No. 2628 of 2017 is to an order
       dated 19.04.2007 passed by the learned Single Bench of the High Court
       of Judicature at Allahabad, whereby an order dated 08.12.2006passed
 B     by the Controlling Authority, Kanpurunder the Payment of Gratuity Act,
       19721 was not interfered with.
              2. Civil Appeal No. 2629 of 2017 has also been taken up along
       with present appeal wherein the challenge is to an order dated 02.05.2007
       of the High Court of Judicature at Allahabad upholding an order dated
 C     29.04.2006of Controlling Authority (Additional Labour Commissioner,
       Gorakhpur, U.P.) passed under the Actallowing the petition for gratuity
       in favour ofthe respondent herein.
              3. The appellant,the Municipal Corporation, Kanpur is governed
       by the Uttar Pradesh Municipal Corporation Act, 19592, whereas, the
 D     respondent is an employee of the appellant. The employees in both cases
       claimed gratuity by invoking the jurisdiction of the Controlling
       Authorities under the Act. The argument of the appellant before the
       learned Single Bench was that the gratuity is payable in accordance
       with the Retirement Benefits and General Provident Fund Regulations,
 E     19623framed under Section 548 of the 1959 Act as amended on
       11/01/1988. Such Regulations contemplate payment of gratuity at the
       rate of 15 days salary per month for 16.5 months. It was found by the
       High Court that it is the Act which is applicable, whereby, gratuity
       calculated at the rate of 15 days salary for every completed year with-
       out any ceiling of months or part thereof.
 F
              4. The argument raised by the appellant before the High Court is,
       that the gratuity is payable in terms of Rule 4(1) of the 1962 Regulations
       published under Section 548 (1) of the 1959 Act as amended on
       11.01.1988. Therefore, the employees of the Municipalities are entitled
       to gratuity only in terms of such Regulations and not under the Act.
 G
            5. The High Court relied upon a judgment reported as Municipal
       Corporation of Delhi vs Dharam Prakash Sharma and another4 to
       1
         Act
       2
         1959 Act
       3
        1962 Regulations
       4
        AIR 1999 SC293
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                NAGAR AYUKT NAGAR NIGAM, KANPUR v.                                  1031
               SRI MUJIB ULLAH KHAN [HEMANT GUPTA, J.]

hold that only employees of Central Government or the State                         A
Government are exempt from the applicability of the Act, therefore, the
employees of the Appellants would be governed by the Act and are
entitled to gratuity in terms of the scale mentioned therein. It was held
that the Act is not applicable only to the Central Government or State
Governments in terms of definition of an ‘employee’ under Section 2 (e)
                                                                                    B
of the Act. Therefore, the employees of the Municipalities are entitled to
the gratuity in terms of the provisions of the Act.
       6. The appellant relies upon Section 3 of the U.P Dookan Aur
Vanijya Adhishthan Adhiniyam, 19625 which is to the effect that such
Act will have no application to the office of Government or Local
Bodies. Therefore, on the strength of such statutory provision, it was              C
argued that the Act would not be applicable in respect of the
Municipalities. The appellant is not a factory, mine, oilfield, plantation,
port and railway company and that there is no notification as stipulated
under Clause (c) of Section 1(3) of the Act. Therefore, the employees
of the Municipalities are entitled to the gratuity in terms of the                  D
Regulations framed in exercise of powers of Section 548 of the 1959
Act and not under the Act.
       7. On the other hand, learned counsel forthe respondentpointed
out that the Central Government has published a notificationin terms of
Section 1(3)(c) of the Act on 08.01.1982 to extend the applicability of             E
the Act to the Municipalities. Thus,the Act is applicable to the
Municipalities. The relevant provisions of the Act read as under:
          “1.Short title, extent, application and commencement.-
          (1) This Act may be called the Payment of Gratuity Act, 1972.
          (2) It extends to the whole of India:                                     F
          Provided that in so far as it relates to plantations or ports, it shall
          not extend to the State of Jammu and Kashmir.
          (3) It shall apply to-
            (a) every factory, mine, oilfield, plantation, port and railway
                company;                                                            G
            (b) 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

5
    1962 Act                                                                        H
1032             SUPREME COURT REPORTS                           [2019] 6 S.C.R.


 A                 employed, or were employed, on any day of the preceding
                   twelve months;
                  (c) such other establishments or class of establishments, in
                   which ten or more employeesare employed, or were
                   employed, on any day of thepreceding twelve months, as
 B                 the Central Government may, by notification, specify in this
                   behalf.”
              8. A perusal of the above provisions would show that the Act is
       applicable to(1)every factory, mine, oilfield, plantation, port and railway
       company;(2)every shop or establishment within the meaning of any law
 C     for the time being in force in relation to shops and establishments in a
       State, in which ten or more persons are employed,the said provision has
       two conditions, viz. (i)a shop or establishments within the meaning of a
       State law and (ii) in which ten or more personsare employed; and (3)the
       establishments or class of establishments which Central Government
       may notify.
 D
              9. The appellant is not covered by clauses (a) and (b) of Section
       1(3) of the Act. Clause (a) is not applicable on the face of the provisions,
       but even clause (b) is not applicable in view of Section 3 (c) of the 1962
       Act as such Act is not applicable to the offices of the Government or
       local authorities. The Local Authorities means a municipal committee,
 E     district board etc or entrusted with the control or management of a mu-
       nicipal or local fund in terms of Section3(31) of the General Clauses
       Act, 1897.
              10. In terms of the above said Section 1(3)(c) of the Act, the
       Central Government has published a notification on 08.01.1982 and speci-
 F     fied Local Bodies in which ten or more persons are employed, or were
       employed, on any day of the preceding twelve months as a class of
       establishment to which this Act shall apply. The said notificationdated
       08.01.1982 reads as under:-
                                            “ New Delhi, the 8th January, 1982
 G
                                          NOTIFICATION
             S.O. No. 239….-In exercise of the powers conferred by clause
             (c) of sub-section (3) of section 1 of the Payment of Gratuity Act,
             1972 (39 of 1972), the Central Government hereby specified

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        NAGAR AYUKT NAGAR NIGAM, KANPUR v.                                    1033
       SRI MUJIB ULLAH KHAN [HEMANT GUPTA, J.]

      ‘local bodies’ in which ten or more persons are employed, or were       A
      employed, on any day preceding twelve months, as a class of
      establishments to which the said Act shall apply with effect from
      the date of publication of this notification in the Official Gazette.
                                                                     Sd/.
                                                (R. K. A. Subrahmanya)        B

                                                    Additional Secretary
                                           (F. No. S-70020/16/77-FPG)”
      11. We find that the notification dated 08.01.1982 was not re-
ferred to before the High Court. Such notification makes it                   C
abundantlyclear that the Act is applicable to the local bodies i.e., the
Municipalities. Section 14 of the Act has given an overriding effect over
any other inconsistent provision in any other enactment. The said
provision reads as under:
      “14. Act to override other enactments, etc. – The provisions of         D
      this Act or any rule made thereunder shall have effect notwith-
      standing anything inconsistent therewith contained in any enact-
      ment other than this Act or in any instrument or contract having
      effect by virtue of any enactment other than this Act.”
      12. In view of Section 14 of the Act, the provision in the State Act    E
contemplating payment of Gratuity will be inapplicable in respect of the
employees of the local bodies.
       13. Section 2(e) of the Act alone was referred to in the judgment
reported as Municipal Corporation of Delhi (supra). The said
judgment is in the context of CCS (Pension) Rules, 19726 which                F
specifically provides for payment of Pension and Gratuity. The Act is
applicable to the Municipalities, therefore, it is wholly inconsequential
even if there is noreference to the notification dated 08.01.1982.
       14. The entire argument of the appellant is that the State Act
confers restrictive benefit of gratuity than what is conferred under the      G
Central Act.Such argument is not tenable in view of Section 14 of the
Act and that liberal payment of gratuity is in fact in the interest of the
employees. Thus, the gratuity would be payable under the Act. Such is
the view taken by the Controlling Authority.
6
1972 Rules
                                                                              H
1034                SUPREME COURT REPORTS                      [2019] 6 S.C.R.


 A           15. In view of the aforesaid, we find that there is no error in the
       orders passed by the Controlling Authorities under the Act and as
       maintained by the High Court. Consequently, the appeals are dismissed.


       Ankit Gyan                                               Appeals dismissed.
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