K.R. GANESH RAO v. THE MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Judgment

2. THE MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, BANK OF BARODA, BARODA CORPORATE CENTRE, C-26, G BLOCK, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI – 400051. THE APPELLATE AUTHORITY AND DEPUTY CHIEF LABOUR COMMISSIONER (CENTRAL) AND CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972, GOVERNMENT OF INDIA, MINISTRY OF LABOUR AND EMPLOYMENT, SHRAM SADAN, 3RD CROSS, 3RD MAIN, TUMKUR ROAD, YESHWANTHPUR, BENGALURU – 560 022. - 2 -

3. THE ASSISTANT LABOUR COMMISSIONER (CENTRAL) AND CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972, GOVERNMENT OF INDIA, MINISTRY OF LABOUR AND EMPLOYMENT, SHRAM SADAN, 3RD CROSS, 3RD MAIN, TUMKUR ROAD, YESHWANTHPUR, BENGALURU – 560022. ... RESPONDENTS (BY SRI SYED KASIF ALI, ADVOCATE FOR SRI PRADEEP S. SAWKAR, ADVOCATE FOR R-1; DSGI FOR R-2 & R-3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDERS OF THE RESPONDENT NOS.2 AND 3, THE APPELLATE AUTHORITY UNDER PAYMENT OF GRATUITY ACT 1972 AND DY. CHIEF LABOUR COMMISSIONER (CENTRAL) BANGALORE AND THE CONTROLLING AUTHORITY UNDER PAYMENT OF GRATUITY ACT, 1972 AND ASSISTANT LABOUR COMMISSIONER (CENTRAL) BANGALORE ORDER IN APPEAL NO.36(506) 2019-B1 DATED

23.08.2021 AND COMMON ORDER IN APPLICATION DATED

26.09.2019 RESPECTIVELY AS PER ANNEXURE-G AND B RESPECTIVELY, ANNEXED TO THIS WRIT PETITION AND ETC. THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED ON 22/01/2024 FOR ORDERS AND COMING FOR PRONOUNCEMENT OF ORDER THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: - 3 -

O R D E R The petitioner is seeking to challenge the legality and correctness of the order dated 23.08.2021 passed by the Appellate Authority and order dated 26.09.2019 passed by the Controlling Authority, whereby, the application filed by the petitioner under Section 7(4) of the Payment of Gratuity Act, 1972 (hereinafter referred to as ‘the PG Act, 1972’ for short) read with Sub-Rule 1 of Rule 10 of the Payment of Gratuity (Central) Rules, 1972 was rejected.

2. Heard Sri Ganesh Rao, petitioner-party-in-person, Sri Syed Kashif Ali, learned counsel for Sri Pradeep S. Sawkar, learned counsel for respondent No.1 and learned DSGI for respondent No.2.

3. Petitioner joined the service of the respondent- Bank and retired from services of the respondent-Bank on attaining the age of superannuation on 29.02.2012, after completing 38 years 11 months and 24 days of continuous service. The grievance of the petitioner is that the petitioner - 4 - though was paid terminal benefits on superannuation, however, the gratuity payable to the petitioner was not properly reckoned as the respondent-Bank has not paid the gratuity under the Beneficial Scheme of Gratuity out of three schemes of Gratuity, namely, a) the Payment of Gratuity Act, 1972; b) Bank of Baroda Officers’ Service Regulations, 1979 (“the Service Regulations, 1979” for short); c) Bank of Baroda Gratuity Fund Rules and Regulations, 1975 (“the Fund Rules, 1975” for short) and the calculations arrived by the respondent-bank is under the PG Act, 1972 and Service Regulations, 1979 and has paid Rs.10,00,000/- under the Act, however, the petitioner’s gratuity under the Fund Rules, 1975 ought to have been determined by the respondent- bank, which is beneficial to the petitioner.

4. Accordingly, the petitioner raised a dispute for payment of differential amount of gratuity before the Controlling Authority in Form No.N, stating that: a) Better terms of gratuity was not considered; - 5 - b) Method of calculations is not correct i.e., 26 days a c) d) month not considered; Additional gratuity for service more than 30 years at 45 days for every completed year of service was not considered; Reckonable components of wages/pay/basic salary are not properly determined.

5. The respondent-bank appeared objections, inter alia, contending that the gratuity amount has been calculated based on the provisions of the PG Act, 1972 and Service Regulations, 1979 and higher amount of the two has been paid to the petitioner, and that the officer who had joined service prior to 01.07.1979 can only claim Additional Retirement Benefit (“ARB”) or the Extra Gratuity for service beyond 30 years.

6. The Controlling Authority, on the material placed, framed the following issues for consideration: “i. Whether the applicants are justified in their claim for inclusion of DA & SA fro calculation of gratuity under BoBOSR & Fund Rules? - 6 - ii. Whether the applicants are justified in their claim for gratuity at the rate of 45 days for every year beyond the service of 30 years? iii. Whether the applicants are eligible for ARB as well as extra gratuity for service beyond 30 years?”

7. The Controlling Authority, looking material placed before it and considering the three schemes and holding that the applicant is eligible for better terms of gratuity as per Section 4(5) of the PG Act, 1972, held at paragraph No.14 as under: “14. With regard to issue no.5(iii), there is no dispute that there exists an Additional Retirement Benefit (ARB), which provides for 6 months gross emoluments on completion of 25 years of service for the officers and 30 years of service for award staff. Under the BoBOSR & the Fund Rules, officers can choose between the ARB and the additional gratuity for the period of service beyond 30 years. Thus both the schemes have clearly left the choice to the officers/employees. I do not see the merit in the contention of the applicants that they should be eligible for both. The reason for my conclusion is that the applicants have not been asked to choose between the gratuity under the Gratuity Act and the ARB. That - 7 - would not have been acceptable. However the applicants who joined before 01.07.2019 have been asked to choose between the ARB and the gratuity for the service period beyond 30 years. The judgement in the case of Allahabad Bank vs A C Aggarwal by Hon’ble Supreme Court (CA no.9024/2012) does not come to the rescue for the same reason. In that case the employees of the Bank were to choose between the pension and the gratuity under the Gratuity Act. Whereas the applicant cannot be denied gratuity payable as per the calculation of the Gratuity Act, the employers may devise other schemes as they deem fit, with the only condition being that the amount paid as gratuity should be the higher of the amounts calculated as per the Gratuity Act or the Scheme/s. Hence the issue no.5(iii) is answered in the negative.” And by the impugned order held that the calculation of gratuity under the PG Act, 1972 is more beneficial to the applicant, several applications were considered together and rejected the applications seeking for payment of differential amount of gratuity.

8. Being aggrieved, the petitioner filed an appeal before the Appellate Authority under Section 7 (7) of the PG - 8 - Act, 1972, the Appellate Authority on consideration of the appeal, arrived at a conclusion that the amount arrived under the PG Act, 1972 being higher and more beneficial to the petitioner, the said amount of Rs.10,00,000/- was to be paid to the appellant and an amount of Rs.3,93,282/- as under ARB and the amount which the petitioner is entitled to under the Fund Rules, 1975 was much lesser than the amount arrived under ARB and accordingly, confirmed with the order of the Controlling Authority.

9. The sum and substance of the contention of the party-in-person is that, the respondent-bank has not calculated petitioner’s gratuity as per the Fund Rules, 1975, which is more beneficial to the petitioner and that the method of calculation at the rate of 26 days provided to monthly rated employee has not been followed by the respondent-bank while determining the gratuity payable to the petitioner and the components of wages as per the Act, pay as per Service Regulations, 1979, the basic salary has not been taken while determining and arriving at an amount - 9 - payable to the petitioner. The party-in-person would contend that the Controlling Authority and the Appellate Authority have only paid under ARB and no Extra gratuity for service period beyond 30 years is paid and thus, the said aspect needs to be considered by this Court.

10. Per contra, learned counsel for the respondent would justify the orders of the Controlling Authority and the Appellate Authority and would contend that there is no error committed by the respondent-bank while calculating the gratuity and there is no error in the orders of the authorities, while calculating the gratuity amount of the petitioner. Learned counsel reiterating the averments of the statement of objections filed on behalf of the Bank would mainly contend that the only question that would arise in the present petition is that, whether the petitioner is entitled for Additional Retirement Benefit under ARB Scheme and also the extra gratuity for service period beyond 30 years as the petitioner was appointed before 01.07.1979. Learned counsel would contend that the petitioner is not entitled for benefits - 10 - envisaged under ARB as well as Fund Rules, 1975 and the amount arrived at under ARB Scheme was more beneficial to the petitioner than under the Fund Rules, 1975 and accordingly, an amount of Rs.3,93,282/- has been paid to the petitioner over and above Rs.10,00,000/- i.e., the maximum amount payable under the PG Act, 1972 and would contend that the determination arrived at by the authorities is justified and the same does not warrant any interference by this Court.

11. The undisputed facts are that, i. Petitioner joined the service of respondent No.1- ii. iii. bank on 07.03.1973 and retired on attaining the age of superannuation on 29.02.2012 after rendering 38 years 11 months and 24 days of service. On retirement, he was paid all the superannuation benefits including gratuity. The gratuity payable was to be calculated by the bank under the three schemes stated supra and thereafter, the better terms of gratuity was to be computed and to be paid to the petitioner. - 11 - iv. As per the three schemes provided by respondent No.1-bank, namely, the PG Act, 1972, Fund Rules, 1975 and Service Regulations, 1979 and the better terms of gratuity beneficial under the three schemes is payable as gratuity to the petitioner.

12. The provisions of each scheme needs to be considered in order to arrive at whether the calculations of the authorities and the bank in paying the gratuity to the petitioner is justified.

13. The PG Act, 1972 enables payment as envisaged under Section 4. Section 4 of the PG Act, 1972 reads as under: “4. Payment of gratuity.–(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,– (a) on his superannuation, or (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 of five years shall not be necessary where the - 12 - 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 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 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 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 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 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, - 13 - the wages paid for any overtime work shall 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 days’ wages for each season. 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 quotient by fifteen.” (Emphasis supplied)

14. The Fund Rules, 1975 - Eligibility and Payment of Gratuity is stated in Regulation 12, which reads as under: “12. Eligibility and Payment of Gratuity: 1) Each execution/office/employee whose service with bank ceases for any one the reasons set out below shall be entitled to gratuity at the rate mentioned against each case: A) In the case of executive/officers On the death of an executive/officer while in the service of the Bank or on his becoming physically or mentally continue disabled Irrespective service, length gratuity shall be payable at the rate of one month salary completed - 14 - further in the service of the Bank. On superannuation or on termination of his service by the Bank in any other way expect by way of punishment. service subject to the maximum of 15 months salary. After completion of 5 years service gratuity shall be payable at the rate of one month’s salary completed service, subject to the maximum of 15 months salary. 20 On voluntary retirement service/or resignation of an officer after 5 years of continuous service in the Bank. Gratuity shall be payable rate of one month’s salary for each completed service subject to the maximum 15 months salary. Provided that for continuous service over 30 years, additional gratuity at the rate of half month’s salary for each completed year of service over 30 years shall also be payable and to the extent the maximum provided here in above would increase. Provided further that in respect of officers they may be given an option either to adopt the above pattern regarding extra gratuity or to continue in the present system as applicable to officers in terms of the scheme published in Bank’s publication No.137 chapter XXXII on pages 155.” (Emphasis supplied) - 15 -

15. Service Regulations, 1979 defines Gratuity under Regulation 46, which reads as under: “Regulation 46 Gratuity

1. Every officer shall be eligible for gratuity on: a) Retirement b) Death c) disablement rendering him unfit for further service as certified by a medical officer approved by the bank. d) resignation after completing ten years continuous service; or e) termination of service in any other way except by way of punishment after completion of -10- years of service.

2. The amount of Gratuity payable to an officer shall be one month’s pay for every completed year of service, subject to maximum of 15 months pay. Provided that where an officer has completed more than 30 years of service, he shall be eligible by way of Gratuity for an additional amount at the rate of one-half of a month’s pay for each completed year of service beyond thirty years. NOTE: If the fraction of service beyond completed years of service is six months or more, gratuity will be paid pro rata for the period. Provided further that in respect of officers on the appointed date, they may be given an option either to adopt the above pattern regarding extra gratuity or to continue in the present system. Provided also that pay for the purpose of - 16 - Gratuity of an officer who ceased to be in service during the period 1.4.1998 to 31.10.1999 shall be with regard to scale of pay as specified in sub- regulation (2) of Regulation 4.”

16. The definition of the wages has been provided under 2(s) of the PG Act, 1972, which reads as under: “2. Definitions.–In this Act, unless context otherwise requires,– (s) “wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.”

17. The expression “Salary” or “wages” or “pay” for the purpose of calculation has been defined under the Fund Rules, 1975, which states as under: “i) In the case of executive and officers: Last basic salary drawn preceding death disability, retirement, resignation or termination of service as the case may be.” - 17 -

18. The expression “pay” has been defined under the Service Regulations, 1979, which reads as under: “(k) “Pay” means basic pay including stagnation increment;”

19. Respondent No.1-bank has produced Annexure-R1 to contend that the methodology of calculations adopted by the bank is based on the provisions contained in the aforementioned three schemes. The calculations arrived by respondent No.1-bank, as could be seen from Annexure-R1 is by calculating basic pay, dearness allowance as per Fund Rules, 1975, basic pay, dearness allowance, professional qualification pay, fixed personal pay (basic), fixed personal pay (DA) has been calculated and arrived at a gratuity amount as per the PG Act, 1972, basic pay has been taken for calculation of the gratuity under the Service Regulations, 1979 and respondent No.1-bank on calculating petitioner’s gratuity under all the three schemes has paid the highest gratuity arrived and beneficial to the petitioner, which is as per the PG Act, 1972. Thus, the calculation - 18 - arrived by respondent No.1-bank and reasoned by the authorities was justified as the petitioner was given the better terms of gratuity beneficial to the petitioner being under the PG Act, 1972 and not the Fund Rules, 1975 as stated by the petitioner.

20. The other contention of the party-in-person is that, in addition to the Additional Retirement Benefit, the petitioner is also entitled for extra gratuity for the service period beyond 30 years. The Additional Retirement Benefit Scheme provides “that an officer on his retirement/voluntary retirement or death or on completion of 25 years of continuous service in the bank and the member of award staff on completion of 30 years continuous service in the bank becomes eligible for payment of 6 months gross emoluments as Additional Retirement Benefit. Gross emoluments as stated in the Additional Retirement Benefit Scheme means, basic pay, dearness allowance, special allowance and other allowances which are not of temporary in nature. - 19 -

21. Regulation 12 of the Fund Rules, 1975 as extracted envisages that, executive/ officer/employee on attaining superannuation or on termination of his service by the bank in any other way, except by way of punishment, after completion of five years of service, gratuity shall be payable at the rate of one month’s salary for each completed year of service, subject to the maximum period of fifteen months salary. First proviso to Regulation 12 states that, for continuous service over 30 years, additional gratuity at the rate of half month’s salary for each completed year of service over 30 years shall also be payable and to that extent the maximum provided hereinabove would increase. The second proviso further states that, in respect of the officers, they may be given an option either to adopt the above pattern regarding extra gratuity or to continue in the present system, as applicable to the officers in terms of the Scheme published in bank’s Publication No.137, Chapter 32 on page 155. - 20 -

22. A plain reading of the above two provisos envisage that an employee, in addition to the gratuity, as per Regulation 12 would be entitled for additional gratuity at the rate of half month’s salary over 30 years, however, further proviso envisages that the officer has an option to either adopt the additional gratuity or additional retirement benefit under ARB Scheme (Annexure – E2) and not both as contended by the petitioner. The ARB Scheme being more beneficial to the petitioner than that of the Gratuity Rules 1975, an amount of Rs.3,93,282/- has been paid to the petitioner over and above Rs.10,00,000/- as determined under the PG Act, 1972 and the respondent-Bank calculating the gratuity payable to the petitioner under the three Schemes has paid the gratuity beneficial to the petitioner under the Gratuity Act, 1972 and in addition, six months Additional Retirement Benefit (“ARB”) as per Annexure – R1 has been paid to the petitioner.

23. In the said circumstances, the reasoning assigned by the Controlling Authority and the Appellate Authority on - 21 - facts and the calculation arrived thereof, this Court is of the considered view that, at no point of time, there existed a situation that an officer is entitled to the benefits as envisaged under ARB as well as Gratuity Fund Rules, 1975 and accordingly, the order of the authority does not warrant any interference.

24. For the foregoing reasons, this Court pass the following: ORDER (i) The writ petition is dismissed. (ii) The orders at Annexures – “B” and “G” dated 23/08/2021 and 26/09/2019 respectively stand confirmed. MBM SD/- JUDGE