SUPREME COURT OF INDIA
Union of India and Another
Vs
Manik Lal Banerjee
Appeal (Civil) 3166 of 2006 (Arising Out of S.L.P. (C) No. 21446 of 2005)
(S. B. Sinha and Dalveer Bhandari, JJ)
26.07.2006
S. B. SINHA, J.
Leave granted.
The Respondent was a Station Master working in Sodepur Railway Station, Eastern
Railway. He retired on 31.1.1995. He was paid 16 months emoluments comprising
basic salary and 20% dearness allowance towards Death-Cum-Retirement Gratuity.
One Pritam Singh who is said to be similarly situated, however, claimed and
obtained such benefits of gratuity in terms of the provisions contained in the Payment of Gratuity Act, 1972 (for short "the 1972
Act") in terms whereof the element of dearness allowance was calculated at
the rate of 125% of basic salary. A special leave petition filed there against
was dismissed by this Court by an order dated 13.2.2002 holding:
"This is not a fit case for our interference under Article 136 of the
Constitution. Hence the appeal is dismissed."
Principally, relying on the said decision, the Respondent filed an original
application before the Central Administrative Tribunal claiming payment of
gratuity on the same terms and for recovery of purported arrears of the
difference of gratuity. The Tribunal by an order dated 25.2.2004 directed the
Appellant to consider the Respondent's case whereupon a speaking order was
passed by the Appellant on 4.6.2004 inter alia holding that the case of the
Respondent was not governed by the provisions of the 1972 Act but by the
provisions of the Railway Services (Pension) Rules, 1993 (for short "the
1993 Rules").
Another original application was filed by the Respondent questioning the
validity of the said order before the Tribunal which was registered as OA No.
576 of 2004. The said application was allowed by an order dated 1.12.2004
holding inter alia:
"Mr. De, the learned counsel for the respondents to a query replied
that Pritam Singh case was complied with by the Railway Authorities. It is most
unfortunate to state here that the DRM treated the matter in a different manner
in order to avoid payment and has passed such illegal order by stating that
dismissal of SLP by the Hon'ble Supreme Court does not amount to a decision on
merits. He has lost sight of the fact that the CAT does not hold the
jurisdiction to sit in appeal against the order passed by the Controlling
Authority under the Gratuity Act. In Pritam Singh's case an independent
direction was passed by the CAT by invoking the provisions of Gratuity Act.
Similar benefit ought to have been given to the present applicant. From the
totality of the facts and circumstances of the case, I direct the respondent
No. 2 to pay the Gratuity as claimed by the applicant in terms of Section 4 of
the Indian Gratuity Act, 1972 together with the interest @12% per annum from
the date when it became due till the date of payment and file compliance report
within four months, failing which appropriate action, as deemed fit, will be
taken."
A writ petition filed by the Appellant questioning the legality of the said
Order was dismissed by a Division Bench of the High Court holding that the 1993
Rules do not make an employee of the Railways disentitled to the benefit of
gratuity under the 1972 Act. It was furthermore held that there was no reason
as to why the decision of the Tribunal in Pritam Singh would not be given
effect to.
Mr. K.P. Pathak, learned Additional Solicitor General appearing on behalf of
the Appellant urged that Section 2(e) of the 1972 Act will have no application
in view of the fact that the Respondent being a railway servant was an employee
of the Central Government and was being governed by the 1993 Rules.
Mr. Manik Lal Banerjee, Respondent appearing in person, on the other hand,
contended that Section 2(e) of the 1972 Act should be interpreted conjointly
with Section 2(f) defining 'employment' and Section 2(a)(i) defining
'establishment' and so construed, it must be held that the same is applicable
to the cases of railway employees also. Strong reliance in this behalf has been
placed on The Executive Engineer (Construction) Southern Railway, Quilon and
others v. M.P. Sankara Pillai 1981 (1) ILR(Ker) 164
It was urged that in view of Rule 15(4)(ii) of the 1993 Rules, as pension and
commuted value thereof are only governed by the Pensions
Act, 1871, the matter relating to payment of gratuity could not have
been brought within the purview of the 1993 Rules. As pension and gratuity are
not bounties, the same should be given a liberal construction. Mr. Banerjee
furthermore contended that the decision of the Joint Consultative Machinery
(JCM) to pay 20% dearness allowance in emoluments for the purpose of gratuity
being not a decision under a legislative Act, the same is subservient to the
provisions of the 1972 Act. In any event, the Fifth Pay Revision Commission
having made an interim report that 90% of dearness allowance should be paid to
the employees who have retired from 1.4.1995 to 31.12.1995, there is no reason
as to why the Respondent should be deprived from the benefit thereof.
The 1972 Act was enacted to provide for a scheme inter alia for payment of
gratuity to employees in relation to railway companies.
Section 2(e) of the 1972 Act defines 'employee' to mean "any person (other
than an apprentice) employed on wages, in any establishment, factory, mine,
oilfield, plantation, port, railway company or shop to do any skilled,
semi-skilled, or unskilled, manual, supervisory, technical or clerical work,
whether the terms of such employment are express or implied, and whether or not
such person is employed in a managerial or administrative capacity, but does
not include any such person who holds a post under the Central Government or a
State Government and is governed by any other Act or by any rules providing for
payment of gratuity." The definition, thus, excludes an employee holding
civil post under the Central Government and government by another Act or Rules
providing for gratuity.
Section 2(f) of the 1972 Act defines 'employer' inter alia to mean, in relation
to any railway company belonging to or under the control of the Central
Government or the State Government, a person or authority appointed by the
appropriate government for the supervision and control of the employees.
Section 4 provides for payment of gratuity to an employee on the termination of
his employment after he has rendered continuous service for not less than five
years inter alia on his superannuation. Sub- section (2) of Section 4 provides
that 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,
which amount in view of sub-section (3) of Section 4 shall not exceed three
lakhs and fifty thousand rupees.
The 1972 Act is applicable inter alia to the 'establishment' belonging to a
railway company. The amount of gratuity, however, is payable to an employee. The
interpretation clause contained in Section 2(e) takes out from the purview of
the said Act a person who holds inter alia post under the Central Government
and whose terms and conditions of service are governed by an Act or the Rules
providing for payment of gratuity. The 1993 Rules provides for payment of
gratuity in Rule 70 in the following terms:
"70. Retirement gratuity or death gratuity. (1)(a) In the case of a
railway servant, who has completed five years' qualifying service and has
become eligible for service gratuity or pension under rule 69, shall, on his
retirement, be granted retirement gratuity equal to one-fourth of his
emoluments for each completed six monthly period of qualifying service subject
to a maximum of sixteen and one-half times the emoluments and there shall be no
ceiling on reckonable emoluments for calculating the gratuity"
Rule 49 of the 1993 Rules provides for the manner in which emoluments of such
an employee should be calculated. 'Pay' in those rules means the pay in the
revised scales under the Fourth Pay Commission Report.
Following representations made on behalf of the employees; the Central
Government in a JCM conceded grant of a part of dearness allowance to be
reckoned as dearness pay (DP) for the purpose of computing the amount of
gratuity and the same was treated an additional advantage over and above those
allowed in the recommendations of the Fourth Pay Commission. The quantum of
such dearness pay was taken on the Consumer Index as on 1.7.1988 and 20% of
dearness allowance was declared to be payable as dearness pay. Such benefit was
extended also to the railway employees whose retirement had taken place on or
after 16.9.1993.
The Tribunal indisputably granted relief to the Respondent solely relying on or
on the basis of the decision in Pritam Singh. In Pritam Singh's case
indisputably the question as regards non-applicability of the 1972 Act and
consequent applicability of the 1993 Rules had not arisen for consideration.
The controlling authority in Pritam Singh's case proceeded on the basis that
the provisions of the 1972 Act were applicable. The Tribunal in Pritam Singh
opined:
"The Controlling Authority has considered the definition of term
'wages' and came to the conclusion that the applicant is eligible for getting
the gratuity. We do not see any infirmity or illegality on the order as averred
by the Petitioner in this Original Application. According to us, there is no
merit in the application which is only to be dismissed. Accordingly, we dismiss
Original Application with no order as to costs."
Our attention has also been drawn to the fact that the Central Administration
Tribunal, Principal Bench in OA No. 700 of 2004 in the matter of Federation of
Central Government Pensioners' Association Organisations, Calcutta v. Union of
India by a judgment and order dated 1st October, 2004 held that the decision of
the Tribunal in Pritam Singh was rendered per incuriam and, thus, did not
create any binding precedent. The Railway Administration in terms of its speaking
order dated 4.6.2004 also held so. The Tribunal, unfortunately, did not apply
its mind to that aspect of the matter and proceeded to grant relief to the
Respondent herein solely relying on or on the basis of the said decision.
Pritam Singh, in our opinion, did not create any binding precedent. Only
because this Court dismissed the special leave petition, the same would not
mean that any law within the meaning of Article 14 of the Constitution was laid
down thereby. Pritam Singh was evidently rendered per incuriam as the statutory
provisions relevant for determining the issue had not been taken into
consideration.
It is well-settled that a decision is an authority for what it decides and not
what can logically be deduced therefrom. The decision in Pritam Singh having
indisputably not taken into consideration, the exclusionary clause contained in
Section 2(e) of the 1972 Act cannot be held to be an authority for the
proposition that despite the provisions of the 1993 Rules, the 1972 Act would
apply in the case of the railway servants.
It is now well-settled that if a decision has been rendered without taking into
account the statutory provision, the same cannot be considered to be a binding
precedent. This Court, in Pritam Singh, while exercising its discretionary
jurisdiction, might have refused to interfere with the decision. The same,
therefore, did not constitute any binding precedent. The Tribunal and
consequently the High Court, therefore, committed a manifest error in holding
otherwise.
Submission of Mr. Banerjee that if the 1972 Act applies to an establishment
belonging to a railway company and the persons specified in Section 2(f) are
the employers, despite exclusion of railway servants governed by the provisions
of the 1993 Rules from the purview of the definition of 'employee' in terms of
Section 2(e) of the Act, the case shall be governed by the 1972 Act, cannot be
accepted.
The High Court noticed the definition of 'employee' contained in Section 2(e)
of the 1972 Act but while deciding the issue it fell into an error in coming to
the conclusion that there was nothing in the 1972 Act so as to exclude the
benefit thereof to a railway employee. It failed to properly construe the said
provision.
The Kerala High Court in M.P. Sankara Pillai (supra), whereupon strong reliance
has been placed by Mr. Banerjee, was considering a case of casual labour.
Indian Railway Administration although was held to be an establishment within
the meaning of the 1972 Act, it was clearly stated that where the person was employed
in Railway Administration as casual labourer on wages not exceeding Rs. 1000/-
per mensem and was holding Civil Post in the Central Government, but
subsequently absorbed in temporary regular service as temporary laskar in the
same establishment; it would be impossible to escape the conclusion that the
person was not an employee as defined in Section 2(e) and he would be entitled
to claim gratuity allowance in respect of the period of his service as casual
labourer in Railway Administration under Section 4, even in the Central
Government at the time of retirement.
The decision of the Kerala High Court, thus, does not advance the case of the
Respondent herein. Therein the question raised herein was not raised.
Reliance of Mr. Banerjee upon Rule 15(4)(ii) of the 1993 Rules is misplaced.
Rule 15 provides for recovery and adjustment of Government or railway dues from
pensionary benefits. Sub-rule (1) of Rule 15 enjoins a duty on the Head of
Office to ascertain and assess Government or railway dues payable by a railway
servant due for retirement, whereas sub-rule (2) thereof provides for recovery
of the dues against the retiring railway servant in terms of sub-rule (4).
Clause (ii) of sub-rule (4) of Rule 15 stipulates recovery of losses specified
in sub-clause (a) of clause (i) of sub-rule (4) and which has nothing to do
with the computation of the amount of payment of gratuity.
We have noticed hereinbefore that in terms of the 1993 Rules the emoluments
were to be paid in terms of the recommendations made by the Fourth Pay
Commission. The Fifth Pay Commission no doubt recommended that dearness pay be
linked to All India Consumer Price Index of 12.1.1966 as on 1.7.1993 but, the
entitlements of the employees in terms thereof was directed to be prospectively
affected with effect from 1.4.1995. The Central Government accepted the said
recommendations only with prospective effect from 1.4.1995 in terms whereof 97%
of the dearness allowance was to be paid to those who were drawing salary up to
Rs. 3500/- as basic pay. The Respondent retired on 31.1.1995. The
recommendations of the Fifth Pay Commission, thus, were not applicable in his
case.
It is now a well-settled principle of law that financial implication is a
relevant factor for accepting revision of pay. [See Hec Voluntary Retd. Emps.
Welfare Soc. & Anr. v. Heavy Engineering Corporation Ltd. & Ors.,
2006 (2) SCALE 660 and State of Andhra Pradesh and Anr. v. A.P.
Pensioners Association & Ors., 2005 (10) JT 115.
The matter might have been different if the revised scale of pay in terms of
the recommendations of the Fifth Pay Commission would have been made applicable
to the cases of the employees who had also retired prior to 1.4.1995 as was
noticed by this Court in U.P. Raghavendra Acharya and Ors. v. State of
Karnataka & Ors, 2006 (6) SCALE 23.
For the reasons aforementioned, the impugned judgment cannot be sustained which
is set aside accordingly. The appeal is allowed. No costs.