Y.K. SINGLAversusPUNJAB NATIONAL BANK & ORS.

                   [2012] 13 S.C.R. 1189


                        Y.K. SINGLA                             A
                             v.
            PUNJAB NATIONAL BANK & ORS.
              (Civil Appeal No. 9087 of 2012)
                   DECEMBER 14, 2012
                                                                B
      [DR. _a,s. CHAUHAN AND JAGDISH SINGH
                    KHEHAR, JJ.]

     Payment of Gratuity Act, 1972 - ss. 7 (3A), 4(5) and 14
- Withheld gratuity - Interest on - Entitlement - Criminal      c
proceedings pending against Bank employee - In the
meantime retirement of the employee on superannuation -
Gratuity withheld -, Subsequently acquittal of the employee -
Gratuity released - Interest thereon granted from the date of
the judgment of acquittal@ 5.5% - Employee's claim for the      0
interest from the date of his retirement - Held: Interest on
withheld gratuity is permissible uls. 7(3A) - The Pension
Regulations, 1995 which were adopted by the employer,
whereby interest on account of delayed payment was debarred
would be inconsequential - In view of ss. 4(5) and 14 benefit   E
u/s. 7(3A) cannot be denied to an employee whose gratuity
is regulated by some other instrument - Direction to pay the
interest on gratuity when it became due to the employee on
his retirement at the rate as provided u/s. 7(3A) - Punjab
National Bank (Employees) Pension Regulations, 1995.
                                                                F
    Criminal proceedings were initiated against the
appellant alleging that at the relevant time when he was
posted as a Manager with the respondent-Bank, he
entered into a conspiracy with the Regional manager of
the Bank and an officer of Indian Administrative Service,       G
which caused pecuniary loss to the Bank. In the
meantime, the accused retired on 31.10.1996 attaining the
age of superannuation. On account of pendency of the
criminal case, his gratuity, leave encashment and
commutation of permissible portion of pension were              H
                            1189
   1190     SUPREME COURT REPORTS             [2012] 13 S.C.R.

A withheld. The appellant was informed that eventual
  release of the retiral benefits would depend on the
  outcome of the pending criminal case. On 31.10.2009, the
  accused was acquitted in the criminal proceedings. On
  the basis of acquittal, the appellant sought for the retiral
B benefits with interest from the date they became due to
  him (i.e. from the date of his retirement) till the actual
  payment. The Bank released the retiral benefits with
  interest on the Leave Encashment and Gratuity amount
  from the date on which he was acquitted in the criminal
c proceedings i.e. on 31.10.2009 at the rate of 5.5. %.
      The appellant filed writ petition. The High Court
  allowing the petition, directed the Bank to pay the
  appellant interest at the rate of 8% from the date the retiral
  benefits become due to him till the actual payment
D thereof. Writ appeal was partly allowed by Division Bench
  of High Court holding that the appellant was not entitled
  to any interest on delayed payment of Gratuity in view of
  Regulation 46 of Punjab National Bank (Employees)
  Pension Regulations, 1995. Hence the present appeal.
E     Disposing of the appeal, the Court
       HELD: 1. Sub-Section (3A) of Section 7 of the Gratuity
  Act provides that in case gratuity is not released to an
  employee within 30 days from the date the same becomes
F payable under sub-Section (3) of Section 7, the employee
  in que~tion would be entitled to " ... simple interest at
  such rate, not exceeding the rate notified by the Central
  Government from time to time for repayment of long term
  loans, as the Government may, by notification specify ... "
  There is, however, one exception to the payment of
G interest envisaged under sub-Section (3A) of Section 7
  of the Gratuity Act, provided for in the proviso under sub-
  section (3A). The said proviso reveals, that no interest
  would be payable " ... if the delay in the payment is due
  to the fault of the employee, and the employer has
H obtained permission in writing from the controlling
  Y.K .. SINGLA   v: PUNJAB NATIONAL BANK & ORS. 1191
authority for the delayed payment on this ground ... ". The     A
second ingredient expressed in the proviso under sub-
section (3A) of Section 7 of the Gratuity Act was clearly
satisfied, when the competent authority approved the
action of withholding the appellant's gratuity. The
communication dated 13.5.2000, by which his gratuity            B
was withheld, had been issued at the instance of the
concerned controlling authority. Consequent upon the
acquittal of the appellant, it would be erroneous to
conclude, that the gratuity payable to the appellant on
attaining the age of superannuation was withheld on             c
account of some fault of the appellant himself.
Accordingly it emerges, that the "fault" ingredient of the
employee himself, for denial of gratuity when it became
due, remains unsubstantiated. Since one of the two
salient ingredients of the proviso under sub-Section (3A)       D
of Section 7 is clearly not satisfied, the appellant cannot
be denied interest under the proviso to section 7(3A).
Accordingly, the appellant has to be awarded interest
under section 7(3A). [Paras 17 and 18] [1207-A-E; 1208-
C-D-F-G; 1209-A-B]                 .
                                                                E
     2.    Even though the Punjab National Bank
(Employees) Pension Regulations, 1995 are silent on the
issue of payment of interest, the appellant would still be
entitled to the benefit of Section 7(3A) of the Gratuity Act.
Under Section 4(5) of the Gratuity Act, an employee has         F
the right to make a choice of being governed by some
alternative provision/lnstrument, other than the Gratuity
Act, for drawing the benefit of gratuity. If an employee
makes such a choice, he is provided with a statutory
protection, namely, that the concerned employee would           G
be entitled to receive better terms of gratuity under the
said provision/instrument, in comparison to his
entitlement under the Gratuity Act. - A perusal of Section
14 leaves no room for any doubt, that a superior status
has been vested in the provisions of the Gratuity Act, vis-     H
    1192    SUPREME COURT REPORTS             [2012] 13 S.C.R.


A a-vis, any other enactment (including any other
  instrument or contract) inconsistent therewith. Therefore,
  insofar as the entitlement of an employee to gratuity is
  concerned, it is apparent that in cases where gratuity of
  an employee is not regulated under the provisions of the
B Gratuity Act, the legislature having vested superiority to
  the provisions of the Gratuity Act over all other
  provisions/enactments (including any instrument or
  contract having the force of law), the provisions of the
  Gratuity Act cannot be ignored. The term "instrument"
c and the phrase "instrument or contract having the force
  of law" shall most definitely be deemed to include the
  1995 Regulations, which regulate the payment of gratuity
  to the appellant. Even if the provisions of the 1995
  Regulations, had debarred payment of interest on
  account of delayed payment of gratuity, the same would
0
  have been inconsequential. The benefit of interest
  enuring to an employee, as has been contemplated under
  section 7(3A) of the Gratuity Act, cannot be denied to an
  employee, whose gratuity is regulated by some
  provision/instrument other than the Gratuity Act. [Paras
E 20 and 21) [1210-G-H; 1211-A-F; 1212-A]
       3. The Bank is directed to pay to the appellant,
  interest at " ... the rate notified by the Central Government
  for repayment of long term deposits ... " as provided u/s.
F 7 (3A) of Payment of Gratuity Act. In case no such
  notification has been issued, the appellant would be
  entitled to interest, as was awarded to him by the Single
  Judge of the High Court i.e. interest at the rate of 8%.
  [Para 21) [1212-D-E]
G       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    9087 of 2012.
        From the Judgment & Order dated 29.11.2011 of the High
    Court of Punjab and Haryana at Chandigarh in Letters Patent
    Appeal No. 1950 of 2011.
H
   Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1193


     Sudhir Chandra Agarwala, Jitender Vohra, Rameshwar                 A
 Prasad Goyal for the Appellant.
     Yashraj Singh Deora, Rajesh Kumar, Anupama Dhurve,
 Prashant Narang, Sarv Mitter (for Mitter & Mitter Co.) for the
 Respondents.
                                                                        B
      The Order of the Court was delivered by
      JAGDISH SINGH KHEHAR, J. 1. Leave granted.
       2. The appellant was inducted into the service of the Punjab
  National Bank (hereinafter referred to as, the PNB) in the clerical   c
  cadre on 19.2.1958. He was successively promoted against
· the posts of Special Assistant and Accountant with effect from
  23.8.1972 and 26.12.1974. He also gained further promotions
  to the cadres of Manager-B Grade and thereafter, Manager-A
  Grade with effect from 24.11.1977 and 18.12.1982                      D
  respectively. He finally came to be promoted to the post of
  Chief Manager with effect from 1.10.1986. Whilst holding the
  post of Chief Manager, the appellant retired from service, on
  attaining the age of superannuation on 31.10.1996.
      3. During 1981-1982, when the appellant was posted as E
 Manager at the Sector 19, Chandigarh Branch of the PNB, he
 was accused of having entered into a conspiracy with R.L.
 Vaid, the then Regional Manager of the PNB, Chandigarh, and
 Dr. AK. Sinha, IAS, the then Secretary, Department of Town
 and Country Planning, Haryana and thereby, of fraudulently F
 having sanctioned a loan of Rs.2,70,000/- to Mrs. Rama Sinha
 (wife of Dr. AK. Sinha, aforementioned). The said loan was
 granted to Mrs.Rama Sinha, for construction of a building on a
 plot in Sector 6, Panchkula. The said building, after its
 construction, was leased to the PNB, at an allegedly exorbitant G
 rent of Rs.4,985/- per month. The loan amount, was to be
 adjusted out of the rent account. The PNB was allegedly, not
 in the need of the said building, because it was already housed
 in a building in Sector 17, Chandigarh, at a nominal rent of
 Rs.1,650/- per month. The building rented from Mrs. Rama H
    1194    SUPREME COURT REPORTS                [2012) 13 S.C.R.
                                                              '

A Sinha was said to have remained unoccupied from 1.5.1982
  to 21.1.1987. This factual position, it was alleged, was
  sufficient to infer, that the PNB was not in need of the building
  taken on rent from Mrs.Rama Sinha. Based on the aforesaid
  factual position, it was felt, that the action of the conspirators
B caused a pecuniary loss of Rs.2, 70,000/- to the PNB. It was
  also sought to be assumed, that the aforesaid loan and lease
  were favours extended to Dr. A.K. Sinha, IAS, through his wife
  Mrs. Rama Sinha. Based on the aforesaid allegations, the
  appellant Y.K. Singla, the aforesaid R.L. Vaid and Dr. A.K.
c Sinha, IAS, were charged under Section 120B of the Indian
  Penal Code and Section 5(2) read with Section 13(1 )(d) of the
  Prevention of Corruption Act, 1988.
       4. The trial in the above matter was conducted by the
  Special Judge, CBI Court, Chandigarh. On the conclusion of
D the trial, the Special Judge, CBI Court, Chandigarh arrived at
  the conclusion, that the prosecution had failed to produce any
  evidence on the issue of criminal conspiracy. The trial Court
  accordingly, acquitted all the three accused of the charges
  framed against them on 31.10.2009, by holding, that the
E prosecution had failed to establish the charges beyond a
  shadow of reasonable doubt.
       5. During the subsistence of the aforesaid criminal
  proceedings, the appellant Y.K. Singla retired from the
  employment of the PNB, on having attained the age of
F superannuation, on 31.10.1996. On his retirement, on account
  of the pendency of the criminal proceedings being conducted
  against him, gratuity, leave encashment and commutation of
  permissible portion of pension, were withheld. While
  withholding the aforesaid monetary benefits, the appellant was
G informed by the PNB through a communication dated
  13.5.2000, that the eventual release of the aforesaid retiral
  benefits, would depend on the outcome of the pending criminal
  proceedings.
        6. As already noticed above, the appellant was acquitted
H
   Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1195
            [JAGDISH SINGH KHEHAR, J.]

 of the charges framed against him, by the Special Judge, CBI          A
 Court, Chandigarh, on 31.10.2009. Based on his aforesaid
 acquittal, the appellant addressed a letter dated 26.11.2009 to
 the Executive Director of the PNB seeking release of his
 gratuity, encashment of privileged leave balance and
 commutation of permissible portion of pension. Additionally,          B
 he claimed interest, from the date the aforesaid retiral benefits
 became due to him, till the actual payment thereof. It will also
 be relevant to mention, that by this time, the appellant was over
 73 years old. In its reply dated 5.2.2010, the PNB informed
 the appellant, that it had released leave encashment of               c
 Rs.1,28, 716.24 on that day itself i.e., on 5.2.2010 itself. The
 appellant was also informed through the aforesaid
 communication, that a duly sanctioned gratuity proposal had
 been sent to the Provident Fund and Pension Deoartment of
 the PNB, for disbursement of gratuity. Thereupon, the appellant
                                                                       0
 actually received the gratuity payable to him, on 12.2.2010.
        7. Having received encashment of privileged leave
  balance, as also, gratuity in February, 2010, the appellant
  reiterated his claim for interest, on account of delayed payment
  of the aforesaid amounts,· through another letter dated              E
  17.2.2010. In the instant letter, the appellant pointed out, that
  he had retired on attaining the age of superannuation on
  31.10.1996, and as such, the PNB had withheld the aforesaid
  monetary benefits due to him for a period of more than 13 years
  up to February, 2010. The appellant's request for interest on        F
  the aforesaid delayed payments, was responded to by the PNB
  through a letter dated 12.3.2010. The appellant was informed,
  that he was entitled to interest on account of withholding of his
  retiral benefits, only with effect from the date of culmination of
  the proceedings pendirig against him. Having found the               G
  appellant entitled to interest with effect from 31.10.2009 i.e.,
  when the Special Judge, CBI Court, Chandigarh acquitted him,
  the PNB released a sum of Rs.1,881/- as interest towards
  delayed payment of leave enc~shment, and another sum of
. Rs.3,336/- as interest on account of having withheld his gratuity.   H
    1196    SUPREME COURT REPORTS                [2012] 13 S.C.R.


A The aforesaid interest, the appellant was informed, had been
  calculated at the rate of 5.5%.
        8. Dissatisfied with the action of the PNB, in not paying
  interest to him from the date the aforesaid retiral benefits
  became due (on his retirement on 31.10.1996), till their eventual
B release (in February, 2010), the appellant filed Civil Writ
  Petition no. 6469 of 201 O before the High Court of Punjab &
  Haryana at Chandigarh (hereinafter referred to as, the High
  Court). The aforesaid Writ Petition came to be allowed on
  4.5.2011. While allowing the Writ Petition filed by the appellant,
C the High Court directed the PNB to pay the appellant, interest
  at the rate of 8% from the date retiral benefits had became due
  to the appellant, till the actual payment thereof to him.
        9. Dissatisfied with the order dated 4.5.2011, passed by
D the learned Single Judge of the High Court, the PNB preferred
  Letters Patent Appeal no. 1950 of 2011. The Letters Patent
  Appeal filed by the PNB was partly allowed by a Division
  Bench of the High Court, on 29.11.2011. The Division Bench
  of the High Court arrived at the conclusion, that the appellant
  was not entitled to any interest on delayed payment of Gratuity.
E The award of interest to the appellant for withholding the other
  retiral benefits was, however, not interfered with. The decision
  (dated 29.11.2011) rendered by the Division Bench of the High
  Court, has been assailed by the appellant, through the instant
  appeal.
F
        10. The reasons which prompted the Division Bench of the
  High Court to deny interest on the withheld amount of gratuity
  to the appellant, are ascertainable from the paragraph 7 of the
  impugned order, which is being extracted hereunder:-
G       "?. On having considered the matter, we are in agreement
        with the submission made by the learned counsel
        appearing for the appellant-Bank insofar as withholding of
        gratuity is concerned. The language of the relevant Rule
        i.e. Rule 46 of the 1995 Rules is clear and unambiguous.
H       The mandate of the Rule is such that it operates as a bar
  Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1197
           [JAGDISH SINGH KHEHAR, J.]

    insofar as the Bank is concerned, as regards the release          A
    of gratuity to an employee against whom the departmental
    or judicial proceedings were pending on the date such
    employee attains the age of superannuation. The Rule
    stipulates that such withheld amount of gratuity would
    become payable only upon conclusion of the proceedings.           B
    Admittedly, judicial proceedings were pending against the
    respondent on the date of his superannuation i.e.
    31.10.1996 and concluded only upon his acquittal vide
    order dated 31.10.2009. The amount viz. gratuity has since
    been released on 13.2.2010 and interest thereupon has             c
    also been paid for the period 31.10.2009 till the date of
    payment. We, accordingly, hold that respondent no. 1 is
    not entitled to any interest for the period 31.10.1996 till the
    conclusion of the trial and his acquittal i.e. 31.10.2009 on
    the withheld amount of gratuity."
                                                                      D
     11. It is apparent from a perusal of the reasoning recorded
by the High Court, that the High Court relied upon Regulation
46 of the Punjab National Bank (Employees) Pension
Regulations, 1995 (hereinafter referred to as, the 1995.
Regulations). Regulation 46 is being extracted hereunder:-       E

    "46. Provisional Pension

     (1)   An employee who has retired on attaining the age
           of superannuation or otherwise and against whom
           any departmental or judicial proceedings are               F
           instituted or where departmental proceedings are
           continued, a provisional pension, equal to the
           maximum pension which would have been
           admissible to him, would be allowed subject to
           adjustment against final retirement benefits               G
           sanctioned to him, upon conclusion of the
           proceedings but no recovery shall be made where
           the pension finally sanctioned is less than the
           provisional pension or the pension is reduced or
           withheld etc. either permanently or for a specified        H·
    1198         SUPREME COURT REPORTS             [2012] 13 S.C.R.


A                  period.

           (2)    In such cases the gratuity shall not be paid to such
                  an employee until the conclusion of the
                  proceedings against him. The gratuity shall be paid
                  to him on conclusion of the proceedings subject to
B
                  the decision of the proceedings. Any recoveries to
                  be made from an employee shall be adjusted
                  against the amount of gratuity payable."

                                                  (emphasis is ours)
c
  Having perused Regulation 46(2), we are of the view, that the
  High Court was fully justified in concluding, that it was open to
  the PNB not to pay to the appellant gratuity, till the culmination
  of the proceedings pending against him. It is, therefore,
0 apparent, that non-release of gratuity to the appellant after
  31.10.1996 (when the appellant retired from his employment,
  with the PNB), till his acquittal by the Special Judge, CBI Court,
  Chandigarh, on 31.10.2009, cannot be faulted.

          12. The right to withhold gratuity, is an issue separate and
E   distinct, from the claim of interest, which has been raised by
    the appellant. The question that arises for consideration is,
    whether an employee whose gratuity has been withheld under
    Regulation 46(2) of the 1995 Regulations, would he be entitled
    to interest on the withheld payment of gratuity, if he is found not
F   to be at fault? According to the simple logic of the appellant,
    since his gratuity was withheld from 1996 (when he retired from
    service) till 2010 (when gratuity was eventually released to him),
    i.e., for a period of 14 years, for no fault of his, he is most
    definitely entitled to interest on the delayed payment. It is,
G   however, not the simple logic of the appellant, which will
    determine the controversy in hand. For, logic gave rise to
    diametrically opposite views, one of which was expressed by
    the Writ Court, and the other by the Letters Patent Bench. We
    shall therefore endeavour to search for a legal answer, to the
H   issue in hand.
   Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1199
            [JAGDISH SINGH KHEHAR, J.]

      13. The 1995, Regulations, are silent on the subject of an      A
  employee's rights whose gratuity has been withheld, even in
  circumstances where it has eventually been concluded, that he
  was not at fault. This is exactly the situation in the present
  controversy, inasmuch as, the appellant's retiral benefits
  including gratuity, were withheld on 31.10.1996 when he retired     B
  on attaining the age of superannuation. The aforesaid
  withholding, was on account of a pending criminal proceeding.
  The said withholding has appropriately been considered as
  valid, under Regulation 46(2) of the 1995, Regulation. But the
  appellant was acquitted from the criminal prosecution initiated     c
  against him on 31.10.2009. As such, it is inevitable to
· conclude, that his gratuity was withheld without the appellant
  being at fault. It is in the aforesaid background, that we shall
  venture to determine the claim of the appellant for interest,
  despite the PNB having validly withheld his gratuity under
                                                                      0
  Regulation 46(2) of the 1995, Regulations.

      14. Insofar as the issue in hand is concerned, reference
 needs to be made to certain provisions of the Payment of
 Gratuity Act, 1972 (hereinafter referred to as, the Gratuity Act).
 In our considered view, Sections 4, 7 and 14 of the Gratuity Act     E
 are relevant. Section 4 is being extracted hereunder:-

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

       (a)   on his superannuation, or
                                                                      G
       (b)   on his retirement or resignation, or

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

             Provided that the completion of continuous service       H
    1200         SUPREME COURT REPORTS              [2012] 13 S.C.R.


A                 of five years shall not be necessary where the
                  termination of the employment of any employee is
                  due to death or disablement:

                  Provided further that in the case of death of the
                  employee, gratuity payable to him shall be paid to
B
                  his nominee or, if no nomination has been made,
                  to his heirs, and where any such nominees or heirs
                  is a minor, the share of such minor, shall be
                  deposited with the controlling authority who shall
                  invest the same for the benefit of such minor in such
c                 bank or other financial institution, as may be
                  prescribed, until such minor attains majority.

                   Explanation - For the purposes of this section,
                   disablement means such disablement as
D                  incapacitates an employee for the work which he
                   was capable of performing before the accident or
                   disease resulting in such disablement.

           (2)     For every completed year of service or part thereof
                   in excess of six months, the employer shall pay
E
                   gratuity to an employee at the rate of fifteen days'
                   wages based on the rate of wages last drawn by
                   the employee concerned:

                   Provided that in the case of a piece-rated
F                  employee, daily wages shall be computed on the
                   average of the total wages received by him for a
                   period of three months immediately preceding the
                   termination of his employment, and, for this
                   purpose, the wages paid for any overtime work shall
G                  not be taken into account:

                   Provided further that in the case of an employee who
                   is employed in a seasonal establishment and who
                   is not so employed throughout the year, the
                   employer shall pay the gratuity at the rate of seven
H
Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1201
         [JAGDISH SINGH KHEHAR, J.]

         days' wages for each season.                            A

         Explanation.- In the case of a monthly rated
         employee, the fifteen days' wages shall be
         calculated by dividing the monthly rate of wages last
         drawn by him by twenty-six and multiplying the
                                                                 B
         quotient by fiftee_n.

   (3)   The amount of gratuity payable to an employee shall
         not exceed one lakh rupees.

   (4)   For the purpose of computing the gratuity payable       c
         to an employ!3e who is employed, after his
         disablement, on reduced wages, his wages for the
         period preceding his disablement shall be taken to
         be the wages received by him during that period,
         and his wages for the period subsequent to his          D
         disablement shall be taken to be the wages as so
         reduced.

  (5)    Nothing in this section shall affect the right of an
         employee receive better terms of gratuitv under any
         award or agreement or contract with the employer.       E

  (6)    Notwithstanding anything contained in sub- section
         (1 ), -

         (a)   the gratuity of an employee, whose services
                                                                 F
               have been terminated for any act, wilful
               omission or negligence causing any damage
               or loss to, or destruction of, property
               belonging to the employer, shall be forfeited
               to the extent of the damage or loss so
               caused;                                           G

         {b)   the gratuity payable to an employee may be
               wholly or partially forfeited -

         (i)   if the services of such employee have been        H
    1202     SUPREME COURT REPORTS                [2012] 13 S.C.R.


A                      terminated for his riotous or disorderly
                       conduct or any other act violence on his part,
                       or

                (ii)   if the services of such employee have been
                       terminated for any act which constitutes an
B
                       offence involving moral turpitude, provided
                       that such offence is committed by him in the
                       course of his employment."

                                                 (emphasis is ours)
c
    It is not a matter of dispute, that the appellant was entitled to
    gratuity when he retired on attaining the age of superannuation
    on 31.10.1996. The quantification of the appellant's gratuity by
    the PNB is not in dispute. As such, sub-sections (1) to (4) of
0   section 4 of the Gratuity Act are clearly not relevant to the
    present controversy. Only sub-section (5) of section 4 is
    relevant in so far as the present case is concerned. Likewise,
    since the appellant has not been found to be at any fault, sub-
    section (6) of section 4 is also not attracted in this case.
E       15. Sub-Section (5) of section 4 of the Gratuity Act permits
  an employee to be regulated for purpose of gratuity, under an
  alternative provision/arrangement (award or agreement or
  contract), other than the Gratuity Act In such an eventuality, sub-
  section (5) aforesaid, assures the concerned employee, "... to
F receive better terms of gratuity under any award or agreement
  or contract with the employer ... " Since the appellant's claim
  for gratuity is regulated, under the 1995, Regulations, it is
  evident, that his claim for gratuity is liable to be determined by
  ensuring his right to better terms than those contemplated under
G the Gratuity Act. In the instant process of consideration, the
  aforesaid conclusion, namely, that an employee who receives
  gratuity under a provision, other than the Gratuity Act, would be
  entitled to better terms of gratuity, will constitute one of the
  foundational basis, of determination. Having examined section
H 4 of the Gratuity Act, we may unhesitatingly record, that none
  Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1203
           [JAGDISH SINGH KHEHAR, J.]

of the other sub-sections of section 4 of the Gratuity Act, as well   A
as, the other provisions of the Gratuity Act, have the effect of
negating the conclusion drawn hereinabove.

     16. For the determination of the present controversy, it is
also relevant to take into consideration Section 7 of the Gratuity    B
Act, which is being extracted hereunder:-

     "7. Determination of the amount of gratuity.-

      (1)   A person who is eligible for payment of gratuity
            under this Act or any person authorized, in writing,      c
            to act on his behalf shall send a written application
            to the employer, within such time .~nd in such form,
            as may be prescribed, for payment of such gratuity.

      (2)   As soon as gratuity becomes payable, the
                                                                      D
            employer shall, whether an application referred to
            in sub-section (1) 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.                                   E

      (3)   The employee shall arrange to pay the amount of
            gratuity, within thirty days from the date it becomes
            payable to the person to whom the gratuity is
            payable.                                                  F
      (3A) If the amount of gratuitv gayable under sub-Section
           (3} is not gaid by the emgloyer within the geriod
           sgecified in sub-Section (3}, the emgloyer shall gay,
           from the date on which the gratuity becomes
           gayable to the date on which it is gaid, simgle            G
           interest at such rate, not exceeding the rate notified
           by the Central Government from time to time for
           regayment of long-term de12osits, as that
           Government may, by notification s12ecify:
                                                                      H
    1204         SUPREME COURT REPORTS               [2012] 13 S.C.R.


A                 Provided that no such interest shall be gayable if
                  the delay in the gayment is due to the fault of the
                  emgloyee and the emgloyer has obtained
                  germission in writing from the controlling authority
                  for the delayed gayment on this ground.
B          (4)    (a) If there is any dispute as to the amount of
                  gratuity payable to an employee under this Act or
                  as to the admissibility of any claim of, or in relation
                  to, an employee for payment of gratuity, or as to the
                  person entitled to receive the gratuity, the employer
c                 shall deposit with the controlling authority such
                  amount as he admits to be payable by him as
                  gratuity.
           (b)    Where there is a dispute with regard to any matter
D                 specified in clause (a), the employer or employee
                  or any other person raising the dispute may make
                  an application to the controlling authority for
                  deciding the dispute.
           (c)    The controlling authority shall, after due inquiry and
E                 after giving the parties to the dispute a reasonable
                  opportunity of being heard, determine the matter or
                  matters in dispute and if, as a result of such inquiry
                  any amount is found to be payable to the employee,
                  the controlling authority shall direct the employer to
F                 pay such amount or, as the case may be, such
                  amount as reduced by the amount already
                  deposited by the employer.
           (d)    The controlling authority shall pay the amount
                  deposited including the excess amount, if any,
G                 deposited by the employer, to the person entitled
                  thereto.
           (d)    as soon as may be after a deposit is made under
                  clause (a), the controlling authority shall pay the
H                 amount of the deposit-
Y:K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1205
          {JAGDISH SINGH KHEHAR, J.]

          {i)    to the applicant where he is the employee;      A
                 or

          (ii)   where the applicant is not the employee, to
                 the nominee or, as the case may be, the
                 guardian of such nominee or heir of the
                                                                 B
                 employee if the controlling authority is
                 satisfied that there is no dispute as to the
                 right of the applicant to receive the amount
                 of gratuity.

   (5)   For the purpose of conducting an inquiry under sub-     c
         section (4), the controlling authority shall have the
         same powers as are vested in a court, while trying
         a suit, under the Code of Civil Procedure, 1908, (5
         of 1908) in respect of the following matters,
         namely:-                                                D
         (a)     enforcing the attendance of any person or
                 examining him on oath;
         (b)     requiring the discovery and production of
                 documents;                                      E
         (c)     receiving evidence on affidavits;
         (d)     issuing commission for the examination of
                 witnesses.
                                                                 F
         (6)     Any inquiry under this section shall be a
                 judicial proceeding within the meaning of
                 sections 193 and 228, and for the puTpose
                 of section 196, of the Indian Penal Code (45
                 of 1860).
                                                                 G
  (7)    Any person aggrieved by an order under sub-
         section (4) may, within sixty days from the date of
         the receipt of the order, prefer an appeal to the
         appropriate Government or such other authority as
                                                                 H
    1206     SUPREME COURT REPORTS                 [2012] 13 S.C.R.


A                may be specified by the appropriate Government
                 in this behalf:

                 Provided that the appropriate Government or the
                 appellate authority, as the case may be, may, if it
B                is satisfied that the appellant was prevented by
                 sufficient cause from preferring the appeal within
                 the said period of sixty days, extend the said period
                 by a further period of sixty days:                   '

                 Provided further that no appeal by an employer shall
c                be admitted unless at the time of preferring the
                 appeal, the appellant either produces a certificate
                 of the controlling authority to the effect that the
                 appellant has deposited with him an amount equal
                 to the amount of gratuity required to be deposited
D                under sub-Section (4), or deposits with the
                 appellate authority such amount.

           (8)   The appropriate Government or the appellate
                 authority, as the case may be, may, after giving the
E                parties to the appeal a reasonable opportunity of
                 being heard, confirm, modify or reverse the
                 decision of the controlling authority."

                                                  (emphasis is ours)

F A perusal of sub-Section (2) of Section 7 reveals, that it is the
  onerous responsibility of the employer, to determine the
  amount of gratuity payable to a retiring employee. Sub-Section
  (3) of Section 7 enjoins a further responsibility on the employer,
  to disburse the amount of gratuity payable to an employee,
G within 30 days from the date it becomes payable. Since the
  appellant had attained the age of superannuation on
  31.10.1996, it is apparent, that gratuity had become payable
  to him on 31.10.1996. Accordingly, the same ought to have
  been calculated in terms of sub-Section (2) of Section 7 of the
H
  Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1207
           [JAGDISH SINGH KHEHAR, J.]

Gratuity Act, and should have been dispersed to the appellant    A
by 30.11.1996 in terms of sub-Section (3) of Section 7 of the
Gratuity Act.

      17. Sub-Section (3A) of Section 7 of the Gratuity Act is
the most relevant provision for the determination of the present B
controversy. A perusal of the sub-Section (3A) leaves no room
for any doubt, that in case gratuity is not released to an
employee within 30 days from the date the same become
payable under sub-Section (3) of Section 7, the employee in
question would be entitled to " ... simple interest at such rate, C
not exceeding the rate notified by the Central Government from
time to time for repayment of long term loans, as the
Government may, by notification specify ... " There is, however,
one exception to the payment of interest envisaged under sub-
section (3) of Section 7 of the Gratuity Act. The aforesaid
exception is provided for in the proviso under sub-Section (3A) D
of Section 7. A perusal of the said proviso reveals, that no
interest would be payable " ... if the delay in the payment is due
to the fault of the employee, and the employer has obtained
permission in writing from the controlling authority for the
delayed payment on this ground ... " The exception E
contemplated in the proviso under sub-Section (3A) of Section
7 of the Gratuity Act, incorporates two ingredients. Where the
two ingredients contemplated in the proviso under sub-Section
(3A) are fulfilled, the concerned employee can be denied
interest despite delayed payment of gratuity. Having carefully F
examined the proviso under sub-Section (3A) of Section 7 of
the Gratuity Act, we are of the view, that the first ingredient is,
that payment of gratuity to the employee was delayed because
of some fault of the employee himself. The second ingredient
is, that the controlling authority should have approved, such G
withholding of gratuity (of the concerned employee) on the basis
of the alleged fault of the employee himself. None of the other
sub-sections of Section 7 of the Gratuity Act, would have the
effect of negating the conclusion drawn hereinabove. '
                                                                 H
    1208     SUPREME COURT REPORTS                [2012] 13 S.C.R.


A       18. Insofar as the present controversy is concerned, the
  appellant was accused of having entered into a conspiracy with
  a bank employee superior to him, so as to extend unauthorized
  benefits to a member of the Indian Administrative Services
  belonging to the Haryana Cadre. Based on the aforesaid
B alleged fault of the appellant, the PNB, by an order dated
  13.5.2000, informed the appellant, that the release of certain
  retiral benefits including gratuity was being withheld, because
  of pending of criminal proceedings against him. The appellant
  was also informed, through the aforesaid communication, that
c release of his retiral benefits including gratuity, would depend
  on the outcome of the pending criminal proceedings. It is,
  therefore apparent, that the second ingredient expressed in the
  proviso under sub-Section (3A) of Section 7 of the Gratuity Act
  was clearly satisfied, when the competent authority approved
  the action of withholding the appellant's gratuity. The instant
0
  conclusion is inevitable, because it is not the case of the
  appellant, that the communication dated 13.5.2000, by which
  his gratuity was withheld, had not been issued at the instance
  of the concerned controlling authority. The only question which,
  therefore, arises for consideration is, whether the first
E ingredient (culled out above) for the applicability, of the proviso
  under sub-Section (3A) of Section 7 of the Gratuity Act, can be
  stated to have been satisfied, in the facts and circumstances
  of the instant case. If it can be concluded, that the aforesaid
  ingredient is also satisfied, the appellant would have no right
F to claim interest, despite delayed release of gratuity. Our
  determination of the first ingredient is, as follows. We are of
  the considered view, that consequent upon the acquittal of the
  appellant by the Special Judge, CBI Court, Chandigarh, it
  would be erroneous to conclude, that the gratuity payable to the
G appellant on attaining the age of superannuation i.e., on
  31.10.1996, was withheld on account of some fault of the
  appellant himself. We may hasten to add, if the appellant had
  been convicted by the Special Judge, CBI Court, Chandigarh,
  then the first ingredient would also be deemed to have been
H satisfied. Conversely, because the appellant has been
  Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1209
             [JAGDISH SINGH KHEHAR, J.]
·acquitted, he cannot be held to be at fault. Accordingly it          A
 emerges, that the "fault" ingredient of the employee himself, for
 denial of gratuity when it became due, remains unsubstantiated.
 Since one of the two salient ingredients of the proviso under
 sub-Section (3A) of Section 7 of the Gratuity Act is clearly not
 satisfied in the present case, we are of the view, that the          B
 appellant cannot be denied interest under the proviso to section
 7(3A) of the Gratuity Act. Accordingly, the appellant has to be
 awarded interest under section 7(3A) of the Gratuity Act.
 Therefore, if the provisions of the Gratuity Act are applicable
 to the appellant, he would most definitely be entitled to interest   c
 under sub-Section (3A) of Section 7 of the Gratuity Act, on
 account of delayed payment of gratuity.

      19. The most important question which arises for our
 consideration is, whether the provisions of the Gratuity Act can
 be extended to the appellant, so as to award him interest under D
 sub-Section (3A) of Section 7 of the Gratuity Act. Insofar as
the instant aspect of the matter is concerned, it was the
vehement contention of the learned counsel appearing on
behalf of the appellant, that the provisions of the Gratuity Act
are extendable to the appellant, and as such, he would be E
entitled to disbursement of interest under Section 7(3A) thereof.
The plea at the behest of the PNB, however, was to the contrary.
The contention of the learned counsel representing the PNB
was, that the PNB having adopted the 1995, Regulations, the
claim of the appellant could only be determined under the F
provisions of the said Regulations. It was pointed out, that
denial of payment of gratuity in the present case, was valid and
justified under Regulation 46(2) of the 1995 Regulations.
Furthermore, it was pointed out, th.at the 1995 Regulations, did
not make any provision for the award of interest in case of G
delayed payment of gratuity. Therefore, since gratuity had
legitimately been withheld, under the provisions of the 1995,
Regulations, and the payment of gratuity to the appellant is not
regulated under the Gratuity Act, there was no question of
payment of interest to the appellant. It was submitted that the H
    1210      SUPREME COURT REPORTS                 [2012] 13 S.C.R.


A appellant's gratuity had been withheld during the pendency of
  criminal proceedings initiated against him, his entitlement to
  gratuity stood extended to such time as the said criminal
  proceedings were eventually disposed of. Thus viewed, the
  entitlement to gratuity stood extended to 31.10.2009 (i.e., the
B date of the disposal of the proceedings pending against him).
  In this behalf, it was also pointed out, that as soon as the
  criminal proceedings pending against the appellant, concluded
  in his favour, the PNB released all the appellant's retiral
  benefits, including gratuity. The documents available on the
c record of the case reveal, that gratuity was released .to the
  appellant on 12.2.2010. As such, the delay in release of
  gratuity, if at all, was only from 31.10.2009 to 12.2.2010. For
  the aforesaid delayed payment of gratuity, the appellant was
  admittedly awarded interest quantified at Rs.3,336/- (calculated
  at the rate of 5.5%).
0
         20. In order to determine which of the two provisions (the
    Gratuity Act, or the 1995, Regulations) would be applicable for
    determining the claim of the appellant, it is also essential to refer
    to Section 14 of the Gratuity Act, which is being extracted
E   hereunder:-

           "14. Act to override other enactments, etc. - The
           provisions of this ·Act or any rule made thereunder shall
           have effect notwithstanding anything inconsistent therewith
F          contained in any enactment other than this Act or in any
           instrument or contract having effect by virtue of any
           enactment other than this Act."

                                                    (emphasis is ours)

G A perusal of Section 14 leaves no room for any doubt, that a
  superior status has been vested in the provisions of the Gratuity
  Act, vis-a-vis, any other enactment (including any other
  instrument or contract) inconsistent therewith. Therefore, insofar
  as the entitlement of an employee to gratuity is concerned, it
H is apparent that in cases where gratuity of an employee is not
   Y.K. SINGLA v. PUNJAB NATIONAL BANK & ORS. 1211
            [JAGDISH SINGH KHEHAR, J.]

 regulated under the provisions of the Gratuity Act, the legislature    A
 having vested superiority to the provisions of the Gratuity Act
 over all other provisions/enactments (including any instrument
 or contract having the force of law), the provisions of the Gratuity
 Act cannot be ignored. The term "instrument" and the phrase
 "instrument or contract having the force of law" shall most            s
 definitely be deemed to include the 1995 Regulations, which
 regulate the payment of gratuity to the appellant.

        21. Based on the conclusions drawn hereinabove, we shall
   endeavour to determine the present controversy. First and
   foremost, we have concluded on the basis of Section 4 of the         C
   Gratuity Act, that an employee has the right to make a choice
   of being governed by some alternative provision/instrument,
   other than the Gratuity Act, for drawing the benefit of gratuity.
   If an employee makes such a choice, he is provided with a
   statutory protection, namely, that the concerned employee 'would     D
· be entitled to receive better terms of gratuity under the said
   provision/instrument, in comparison to his entitlement under the
  Gratuity Act. This protection has been provided through Section
  4 (5) of the Gratuity Act. Furthermore, from the mandate of
   Section 14 of the Gratuity Act, it is imperative to further          E
  conclude, that the provisions of the Gratuity Act would have
  overriding effect, with reference to any inconsistency therewith
  in any other provision or instrument. Thus viewed, even if the
  provisions of the 1995, Regulations, had debarred payment of
  interest on account of delayed payment of gratuity, the same          F
  would have been inconsequential. The benefit of interest
  enuring to an employee, as has been contemplated under
  section 7(3A) of the Gratuity Act, cannot be denied to an
  employee, whose gratuity is regulated by some provision/
  instrument other than the Gratuity Act. This is so because, the       G
  terms of payment of gratuity under the alternative instrument has
 to ensure better terms, than the ones provided under the
  Gratuity Act. The effect would be the same, when the concerned
 provision is silent on the issue. This is so, because the instant
 situation is not worse than the one discussed above, where             H
    1212      SUPREME COURT REPORTS                [2012] 13 S.C.R.


A there is a provision expressly debarring payment of interest in         •
  the manner contemplated under Section 7(3A) of the Gratuity
  Act. Therefore, even though the 1995, Regulations, are silent
  on the issue of payment of interest, the appellant would still be
  entitled to the benefit of Section 7(3A) of the Gratuity Act. If
B such benefit is not extended to the appellant, the protection
  contemplated under section 4(5) of the Gratuity Act would stand
  defeated. Likewise, even the mandate contained in section 14
  of the Gratuity Act, deliberated in detail hereinabove, would
  stand negated. We, therefore, have no hesitation in concluding,
c that even though the provisions of the 1995, Regulations, are
   silent on the issue of payment of interest, the least that the
   appellant would be entitled to, are terms equal to the benefits
   envisaged under the Gratuity Act. Under the Gratuity Act, the
   appellant would be entitled to interest, on account of delayed
D payment of gratuity (as has already been concluded above).
   We therefore hold, that the appellant herein is entitled to interest
   on account of delayed payment, in consonance with sub-
   section (3A) of Section 7 of the Gratuity Act. We, accordingly,
   direct the PNB to pay to the appellant, interest at "... the rate
   notified by the Central Government for repayment of long term
E deposits ... ". In case no such notification has been issued, we
   are of the view, that the appellant would be entitled to interest,
   as was awarded to him by the learned Single Judge of the High
   Court vide order dated 4.5.2011, i.e., interest at the rate of 8%.
   The PNB is directed, to pay the aforesaid interest to the
F appellant, within one month of the appellant's furnishing to the
   PNB a certified copy of the instant order. The appellant shall
   also be entitled to costs quantified at Rs.50,000/-, for having
   had to incur expenses before the Writ Court, before the Division
   Bench, and finally before this Court. The aforesaid costs shall
G also be disbursed to the appellant within the time indicated
   herein above.
           22. Disposed of in the aforesaid terms.

H K.K.T.                                        Appeal disposed of.