The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.14522 of 2024 Ramesh Chandra Bishi …. Petitioner Mr. L. Samal, Advocate -Versus- Additional Chief Secretary to Govt. of Odisha, Water Resources Department, Bhubaneswar and others …. Opposite Parties Mr. H.K. Panigrahi, ASC CORAM: JUSTICE R.K. PATTANAIK DATE OF JUDGMENT:28.10.2024 1. Instant writ petition is at the behest of the petitioner challenging the correctness, legality and judicial propriety of the impugned order of rejection under Annexure-7 passed by opposite party No.1 and to direct opposite parties Nos.1 and 5 to release the gratuity amount for the entire period of 38 years and 3 months of service rendered by him under Work Charged Establishment along with 7% interest per annum payable w.e.f. 1st May, 2023 till the date of actual payment with the deduction of an amount of Rs.1,01,263/-, which has already been disbursed and received after his retrenchment on the grounds stated therein. 2. As per the pleading on record, the petitioner being a Diploma Holder in Mechanical Engineering entered into work charged services and joined the establishment of the then Chief Engineer, Rengali, Gohara and Samakoi Projects on 31st January, 1984 as a Junior Engineer and after serving for more than 19 years and 1 month was retrenched w.e.f. 31st March, W.P.(C) No.14522 of 2024 Page 1 of 13 2003 by order of opposite party No.3 as the service was held and declared surplus. It is further pleaded that the petitioner
Legal Reasoning
thereafter challenged the order of retrenchment before the Odisha Administrative Tribunal, Bhubaneswar in O.A. No.855 of 2009 and the same was disposed of on 28th October, 2013 vide Annexure-2 and directed him to be reinstated upon quashment of the retrenchment notice and order and to consider seniority with the period from the date of retrenchment being counted notionally and since, he belongs to the Work Charged Establishment, to allow increment on notional basis. It is further made to appear that after the order under Annexure-2, the petitioner was reinstated in service on 28th August, 2017 in the office of the Superintending Engineer, Left Canal Division No.III, Duburi by an order vide Annexure-3 and since then, continued as a Work Charged JE (Mechanical) till the date of retirement i.e. 30th April, 2022 and thereafter, on retirement, submitted a representation under Annexure-5 for disbursement of admissible gratuity in his favour, however, in the meantime, filed W.P.(C) No.18550 of 2022 which was disposed of by an order under Annexure-6 to consider such representation with a decision in accordance with law and within a stipulated period, later to which, opposite party No.1 by order dated 20th July, 2023 (Annexure-7) rejected the same on the premise that the alleged period between 28th August, 2017 and 30th April, 2022 is less than 5 years of continuous service and hence, he is not entitled to any such gratuity amount. The plea of the petitioner is that since the retrenchment notice and order was quashed vide Annexure-2, the petitioner is entitled to gratuity for the entire period of 38 years and 3 months and since it has not been paid within the W.P.(C) No.14522 of 2024 Page 2 of 13 time stipulated, interest @7% per annum is payable on the same w.e.f. 1st May, 2023 till the date of actual disbursement in view of Rule 49(5) of the OCS (Pension) Rules, 1992 and of course with the deduction of the amount already received by him.
Legal Reasoning
3. Heard Mr. Samal, learned counsel for the petitioner and Mr. Panigrahi, learned ASC for the State-opposite parties. 4. Opposite party Nos.1 and 4 filed a counter affidavit with the pleading that the petitioner is not entitled to gratuity for the period alleged and it has been rightly denied by opposite party No.1 vide Annexure-7. The further pleading is that the petitioner has been allowed notional benefit by order under Annexure-2, inasmuch as, the service conditions of work charged employees like him is governed by the Work-Charged Employees Instructions, 1974 (hereinafter referred to as ‘the Instructions’). The contention is that the petitioner, being an employee in a Work Charged Establishment, is not entitled to gratuity as per the provisions of Odisha Civil Service (Pension) Rules, 1992. It is also pleaded that as per Clause 11 of the Instructions as at Annexure-A/4, the petitioner is to draw EPF being covered under the Employees Provident Fund Pension Scheme as per EPF & MP Act, 1952 and in order to receive gratuity for the entire period, a work charged employee is required to make contributions towards the said fund and since the benefit in terms of the gratuity under the EPF & MP Act has been given to him for the duration between 1984 and 2003, for a period of 19 years and some odd with an amount of Rs.1,01,263/- besides the compensation amount of Rs.86,346/- with a one month notice as required under law and as there is W.P.(C) No.14522 of 2024 Page 3 of 13 break in service between 2003-2017 and the remainder period is less than five years, in view of the instructions and as per the provisions of the Payment of Gratuity Act, 1972 and in particular, Section 4 thereof, which entitles an employee to receive gratuity having rendered continuous service for not less than 5 years, opposite party No.1 did not commit any error or illegality in denying gratuity for the period in question. 5. Mr. Samal, learned counsel for the petitioner submits that the petitioner is entitled to gratuity for the entire period of 38 years and 3 months in view of the order under Annexxure-2 when the learned Tribunal quashed the retrenchment notice and order with a conclusion that the solitary post held by the petitioner could not have been abolished and thereafter, retrenched, as according to the policy of the Government, a work charged employee on completion of the task in one project is required to be adjusted in any other major project where the work is going on or is likely to commence, inasmuch as, retrenchment due to austerity shall not be applicable to a single post and hence, the retrenchment is legally not tenable. Referring to Annexure-8, Mr. Samal, learned counsel for the petitioner would submit that the petitioner was disbursed with the gratuity for an amount of Rs.1,01,263/- only for a period between 1st February, 1984 and 1st April, 2003 and as he has been allowed the notional benefits, such as, increment, scale of pay etc., gratuity is also to be paid for the entire period till the date of retirement i.e. on 30th April, 2022 with interest on and from 1st May, 2023 till the date of actual payment. 6. Mr. Panigrahi, learned ASC for the State-opposite parties refers to Clause 11 of the Instructions besides the relevant W.P.(C) No.14522 of 2024 Page 4 of 13 provisions of the Payment of Gratuity Act, 1972 and justifies the impugned order under Annexure-7 to contend that since the petitioner has not contributed to the EPF and has rendered less than 5 years of continuous service after reinstatement, he is not entitled to such gratuity and while advancing such an argument, Section 4 of the said Act has been referred to. 7. In so far as, Clause 11 of the Instructions is concerned, the same relates to contribution by the employees to the provident fund and it stipulates that all the employees covered under the Employees Provident Fund Scheme shall contribute regularly to the EPF after completing one year of service and such employees, who are not covered by the Scheme are to pay to the Contributory Provident Fund on completion of the same period of service. As regards the provision of gratuity, Clause 15 of the Instructions indicates that the employees shall be allowed gratuity at the rate of ½ a months’ pay for every completed year of service subject to the maximum of 15 months pay on retirement, invalidation except where it is caused by intemperance and death, while in service subject to the condition that such concession shall be allowed only to the employees having rendered continuous service for minimum period of 10 years and the pay for the said purpose, shall be the pay last drawn. Considering the above provisions, it is made to suggest that gratuity is payable to all such employees in the Work Charged Establishment subject to Clause 15 of the Instructions independent of any such contributions to the provident fund covered under the Employees Provident Fund Scheme otherwise through Contributory Provident Fund. In the case at hand, opposite party No.1 declined gratuity payable to the petitioner for the period between 28th August, 2017 and W.P.(C) No.14522 of 2024 Page 5 of 13 30th April, 2022 since it fell short of 5 years as per Section 4 of the Payment of Gratuity Act, 1972. In fact, the petitioner represented the Government under Annexure-5 seeking gratuity for a period of 23 years and 8 months and not the entire period as it has been pleaded at present and the same was denied, since it was less than 5 years of service. As gratuity is payable to a work charged employee as per the instructions and also Section 4 of the Payment of Gratuity Act, 1972, the question is, whether, it is to be paid for the entire period or for a duration of 23 years and 8 months including the service rendered by him between 1984 and till the date of retrenchment? Whether, the petitioner is entitled to gratuity for a period of 4 years and 8 months independent of the duration of 19 years and 1 month between 1st February, 1984 and 31st March, 2003 as per the provisions of the Instructions and Payment of Gratuity Act, 1972? 8. Gratuity is payable to an employee on termination of employment after he has rendered continuous service for not less than 5 years on his superannuation or retirement or resignation or death or disablement due to accident or disease as per Section 4(1) of the Payment of Gratuity Act, 1972, however, completion of continuous service of 5 years shall not be necessary, if the termination of the employment is due to death or disablement. As per Sub-section (2) thereof, for every completed year of service or part thereof in excess of 6 months, the employer shall pay gratuity to an employee at the rate of 15 days wages based on the date on which last pay is drawn by the employee concerned. Sub-section (3) of Section 4 stipulates that the amount of gratuity payable to an employee shall not exceed such amount as notified by the Central W.P.(C) No.14522 of 2024 Page 6 of 13 Government from time to time. As to Sub-section (6) of Section 4, it deals with forfeiture of gratuity either entirely or in part. 9. It is trite law that retiral dues and gratuity are not bounty and are earned by an employee by rendering long service to the employer and held to be property in view of Article 300-A of the Constitution of India. It is equally a settled law that retiral dues cannot be withheld unless the law enables the employer to do so. As per the Instructions, an employee in a Work Charged Establishment is entitled to gratuity. Likewise, Section 4 of the Payment of Gratuity Act, 1972 deals with disbursement of gratuity in favour of an employee under the circumstances prescribed therein after he has rendered continuous service of not less than 5 years. The expression ‘continuous service’ has been defined in the Section 2(A) of the Payment of Gratuity Act, 1972. So, therefore, the gratuity is payable to each and every employee upon termination of employment on superannuation or resignation, death or disablement. The object vis-à-vis gratuity payable to an employee was discussed in detail by the Apex Court in Delhi Cloth and General Mills Company Limited Vrs. Workmen AIR 1970 SC 919 and it was held and observed therein that the intent and purport behind such a provision is to provide retiral benefit to an employee, who has rendered long and unblemished service to the establishment and thereby contributed to the prosperity of the employer and it may be visited with a forfeiture in case of a misconduct. In Management of Tournamulla Estate Vrs. Workmen (1973) 2 SCC 502, the Apex Court had again considered the very object of the gratuity scheme. In so far as the case of the petitioner is concerned, the question is, whether, he is entitled to gratuity W.P.(C) No.14522 of 2024 Page 7 of 13 either for the entire period or for the period of 23 years and 8 months or exclusively for the duration of 4 years and 8 months after he joined upon reinstatement later to the order under Annexure-2? The case of the petitioner is to be considered as per the provisions of the Instructions and Payment of Gratuity Act, 1972. The petitioner was retrenched in the year 2003 on completion of a project as further continuation and service was held to be surplus. It is not on account of misconduct that the petitioner was retrenched. So, therefore, the Court is to examine the plea of the petitioner, if he is entitled to any such gratuity for the entire period; or the period amalgamated to the earlier service, or exclusively for the period post- reinstatement. Admittedly, it is not a case of forfeiture of gratuity in terms of Section 4(6) of the Payment of Gratuity Act, 1972. 10. The petitioner was not in service from 2003 till 2017. It does mean, no service was rendered by the petitioner during the break period. For the period between 1st February, 1984 and 30th April, 2022, the petitioner has received gratuity for an amount of Rs.1,01,263/-. On a reading of the order under Annexure-2, the learned Tribunal directed reinstatement of the petitioner counting the entire of period of absence towards seniority notionally and since he belongs to the Work Charged Establishment, held to be entitled to increment etc. on notional basis till resumption of duty by him and actual financial benefits thereafter. Under notional fixation, with regard to pay, it shall be fixed in higher pay scale from the date of such fixation and increments in the higher pay scales are also allowed but no arrears are payable. The question is, whether, gratuity is a notional benefit? The reply is not in the affirmative. In fact, W.P.(C) No.14522 of 2024 Page 8 of 13 notional benefit does not apply to gratuity but only to the pensionary benefits. A gratuity is a form of compensation given to an employee expressing gratitude for the work done by him acknowledging the effort and contribution made towards the growth and development of the employer. A distinction lies between the provident fund and gratuity as in the former, the accounts receive contributions from the employee and employer, on the contrary, in the latter, the gratuity does not include any such contribution from the employer instead it is a token monetary amount offered to an employee as an appreciation; the provident fund is accounted for tax but gratuity is exempted; an employee may use provident fund for several reasons, in contrast, gratuity is offered only when the employee retires or suffers from physically injury or dies. To contend that payment of gratuity depends on the provident fund contributions, as per the contention of Mr. Panigrahi, learned ASC is misconceived. It is reiterated that an employee, who has contributed to the growth of an employer is allowed to receive gratuity on termination of employment and for the kind service rendered by him. At the cost of repetition, it is to be held that retiral benefits, gratuity etc., are not a token or bounty, to which an employee is otherwise eligible and entitled to receive, unless, it is intervened by any such situations leading to forfeiture in terms of Section 4(6) of the Payment of Gratuity Act, 1972. It is also reiterated that gratuity is not a notional benefit and to receive such benefit at the time of retirement etc. one has to render actual service. The order of learned Tribunal as at Annexure-2 has allowed notional benefit only without any direction as to if gratuity shall be payable to the petitioner upon such reinstatement including the break W.P.(C) No.14522 of 2024 Page 9 of 13 period. So to say, the order under Annexure-2 has granted the petitioner, the notional benefits simpliciter. In fact, a decision of the High Court of Hyderabad (V.S. Ravi Kumar Vrs. Andhra Pradesh State Road Transport Corporation) 2018 SCC Online HYD 2035 is cited at the Bar, wherein, it has been held that the period of suspension in absence of a specific order as to how it shall be treated, when held as not on duty, whether, for all purposes or for the purpose of gratuity, such period cannot be ignored to determine the qualifying service to grant gratuity, however, it was in a matter involving Transport Department, which had issued circulars to deal with as to how gratuity of an employee is to be calculated with a stipulation that period of suspension treated as not on duty for all purposes or for specific purpose of gratuity shall be deducted from the length of service, which means the order of the authority shall have to be clear, whether, the period of suspension shall be discounted for all purposes or only for gratuity. As regards the petitioner, claim of gratuity or otherwise, as earlier stated, is governed by the Instructions and provisions of the Payment of Gratuity Act, 1972. Since the order of learned Tribunal under Annexure-2 in categorical terms relates to allowing notional benefits in favour of the petitioner, the Court, hence, has to reach at a conclusion that the period between 2003 and 2017 cannot be counted for the purpose of gratuity all the more when no actual service has been rendered by him during that time. 11. Next consideration would be, whether, the past service rendered prior to retrenchment is to be counted together with the later to allow the petitioner, the gratuity payable for the entire period. As per the Instructions, gratuity is payable, provided the employee concerned renders or has rendered W.P.(C) No.14522 of 2024 Page 10 of 13 continuous service till the termination of employment. As per Section 4 of the Payment of Gratuity Act, 1972 read with Section 2A thereof, gratuity shall be payable to an employee only after he has served continuously for not less than 5 years with exception, however, on account of death or disablement. Since there is a break in service of the petitioner, notwithstanding the order of reinstatement under Annexure-2, the service rendered by the petitioner is not continuous. Of course, it has been held by learned Tribunal that the order of retrenchment is illegal vis-à-vis a solitary post and the petitioner would have been accommodated in any other project in progress or under contemplation but having regard to the fact that upon reinstatement, he has been allowed the notional benefits only, in view of the Clause 15 of the Instructions and Section 4 of the Payment of Gratuity Act, 1972, the service rendered by him being not continuous or uninterrupted, the break period cannot be taken to amalgamate the past years of service with the later period of 4 years and 8 months subsequent to his reinstatement till the date of retirement. Having concluded so, the Court is then to consider, whether, the petitioner can be allowed gratuity for having served the Work Charged Establishment for a period of 4 years and 8 months. From Annexure-7 and as earlier discussed, since the period fell short and was less than 5 years in view of Section 4 of the Payment of Gratuity Act, 1972, gratuity was not allowed for the said period. As earlier discussed, gratuity is a financial acknowledgement bestowed by the employer when the employees depart and has, in fact, emerged as a crucial aspect of the employment landscape, however, misconceptions surrounding the eligibility criteria often lead to confusion. W.P.(C) No.14522 of 2024 Page 11 of 13 Typically, gratuity is extended to employees, who have rendered at least 5 years of service with the employer. According to the Payment of Gratuity Act, 1972, gratuity payment hinges on the following conditions, such as, an employee should complete a minimum of 5 years of continuous service as defined in Section 2A thereof. So, to speak, Section 4 of the Payment of Gratuity Act, 1972 is to be accordingly understood, while considering a 5-year threshold. In the present case, a 6 day work week schedule is applicable since as per Clause 7 of the Instructions with a head note ‘weekly off’, an employee shall be eligible for one off-day full pay in a week either on a Sunday or any other day in the week to commence from Monday besides being eligible to avail the Gazetted holidays, however, not exceeding 15 days in a calendar year with the dates mentioned therein with a rider that the authority sanctioning leave may refuse an employee, the permission to avail any such holiday in the exigency of public service. Considering the above provision, since, the petitioner was an employee in the Work Charged Establishment having a 6-day work week schedule, he having worked for more than 240 days, regard being had to the definition of continuous service in Section 2A(2)(a)(ii) of the Payment of Gratuity Act, 1972, is eligible to receive gratuity for the service rendered by him after reinstatement till superannuation. In the other words, the 5-year continuous service as per Section 4 of the Payment of Gratuity Act, 1972 is to be interpreted and understood accordingly for considering the payment of gratuity in favour of the petitioner only for period between 2017 and 2022. 12. Hence, it is ordered. W.P.(C) No.14522 of 2024 Page 12 of 13 13. In the result, the writ petition stands partly allowed. As a logical sequitur, the impugned order under Annexure-7 passed by opposite party No.1 is hereby set aside with a direction to opposite parties Nos.1 and 5 to release the gratuity in favour of the petitioner for the period of actual and continuous service rendered by him from the date of reinstatement up to retirement for the period corresponding to 2017 and 2022 at the earliest preferably within a period of four weeks from the date of receipt of a certified of the judgment, failing which, the amount shall carry an interest @7% per annum till the date of disbursement. 14. In the circumstances, however, there is no as to costs. (R.K. Pattanaik) Judge Rojina Signature Not Verified Digitally Signed Signed by: ROJINA SAHOO Designation: Junior Stenographer Reason: Authentication Location: OHC, CTC Date: 30-Oct-2024 18:03:29 W.P.(C) No.14522 of 2024 Page 13 of 13