2020 INSC 0532
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. ........... OF 2020
(Arising out of SLP (Civil) No. 4790 of 2019)
Dhansai Sahu         …Appellant(s)
Versus
State of Chhattisgarh & Ors.                    …Respondent(s)
O R D E R
1. Leave granted.
2. The moot question involved in this appeal is: whether the service
rendered as daily­wager before being regularized and given the status
of a regular Government servant, can be reckoned, so as to invoke the
provisions of the Payment of Gratuity Act, 1972 (for short, “the 1972
Act”)   after   the   age   of   superannuation   and   retirement   as   State
Government employee?  
3. The   High   Court   of   Chhattisgarh,   Bilaspur   (for   short,   “the   High
Court”)   relying   on   the   definition   of   “employee”   in   Section   2(e)   of   the
1972 Act, has taken the view that the provisions of the 1972 Act have

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no   application   to   a   person   who   holds   a   post   under   the   State
Government   and  is   governed  by   any   other   Act   and   in  particular,  the
Chhattisgarh Civil Services (Pension) Rules, 1976 (for short, “the 1976
Rules”).  
4. The appellant would, however, rely on the recent decision of this
Court in   Netram Sahu vs. State of Chhattisgarh & Anr. 1
, dealing
with   the   similar   argument   by   the   appellant   therein,   who   was
appointed as a daily­wager and after working for 22 years, came to be
regularized   on   work   charge   establishment   but   was   denied   gratuity,
because  on  the   day  when   he  attained  the   age  of  superannuation,  he
was holding the post under the State Government.  Indeed, the Court
was   called   upon   to   answer   the   issue   in   identical   situation,   but   it   is
obvious   from   the   observations   in   paragraph   14   of   the   reported
decision   that   no   provision   of   either   the   1972   Act   or   the   1976   Rules
was   brought   to   the   notice   of   the   Court,   which   would   disentitle   the
appellant   therein   from   claiming   the   gratuity   or   for   that   matter,   any
provision   prohibiting   the   appellant   therein   from   taking   benefit   of   his
long and continuous service period of 22 years which he had rendered
prior   to   being   regularised.     Notably,   this   Court   had   dealt   with   the
judgment of the High Court in the case of  Netram Sahu vs. State of
1    (2018) 5 SCC 430 (two-Judge Bench)

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Chhattisgarh & Ors. 2
, which in turn had relied on the exposition of
this  Court in  the  case  of   Bharat   Sanchar   Nigam   Ltd.,   Jammu  vs.
Teja   Singh 3
  (unreported   decision)   and   also   the   principle   underlying
the   exposition   in   Secretary,   State   of   Karnataka   &   Ors.   vs.
Umadevi (3) & Ors. 4
.  However, none of the above decisions has been
referred to while answering  the issue by this Court in   Netram  Sahu
(supra @ F.N. 1).  
5. In   the  case   of   Teja   Singh   (supra),   the   coordinate   Bench   of   two
Judges   of   this   Court   considered   the   claim   of   a   person   who   was   an
employee as a daily­rated Mazdoor with a Central Government owned
Corporation.   He was recruited in the year 1973 and regularized with
effect   from   11.8.1986   and   eventually   superannuated   on   30.8.1989.
This Court was pleased to set aside the relief of gratuity given to that
person by the Central Administrative Tribunal and the High Court.  In
other   words,  the  coordinate  Bench   of  this  Court  opined  that   a  daily­
rated   Mazdoor   who   has   been   regularized  but  did   not   have   qualifying
service   in   terms   of   the   service   rules   for   extending   retiral   benefits   to
him,   would   not   be   entitled   for   payment   of   gratuity   under   the   1972
Act.  In other words, the subsequent decision in  Netram Sahu  (supra
2    Decided on 1.8.2014 in Writ Appeal No. 240/2014 (2014 SCC OnLine Chh 159)
3    Decided on 16.1.2009 in Civil Appeal No. 292/2009 (two-Judge Bench)
4    (2006) 4 SCC 1

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@ F.N. 1) is in conflict with the said principle stated in the unreported
decision of this Court.
6. Reverting   back   to   Section   2(e)   of   the   1972   Act,   the   same   in   no
uncertain   terms   provides   that   if   a   person   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
provisions of the 1972 Act will have no application.   The respondents
are relying on the provisions of the 1976 Rules applicable to the post
held   by   the   appellant   after   being   regularised   on   1.9.2008.     The   said
rules  provide   for   grant   of   pension   and   gratuity.   “Gratuity”   has  been
defined   in   Rule   3(i)   to   include   “Service   Gratuity”  payable   under  sub­
Rule   (1)   of   Rule   43;   “Death­cum­Retirement   Gratuity”   payable   under
sub­Rule (1) of Rule 44 and; “Residuary Gratuity” payable under sub­
Rule (2) of Rule 44 of the stated Rules (the 1976 Rules).  Rule 5 deals
with regulations of claims of pension/gratuity or family pension, Rule
13   predicates   that   the   service   of   a   Government   servant   shall   not
qualify unless his duties and pay are regulated by the Government or
under   conditions   determined   by   the   Government   and   Rule   16
envisages   counting   of   service   on   contract   for   a   specified   period.
Obviously, these Rules were not brought to the notice of this Court in
the   case  of   Netram   Sahu   (supra  @ F.N.  1).   We  may  also   notice  the

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decision   of   the   High   Court   of   Karnataka   at   Bangalore   in   the   case   of
Assistant   Executive   Engineer   CNNL   vs.   The   Deputy   Labour
Commissioner   &   Appellate   Authority,   Bangalore   &   Ors. 5
,   which
has   taken   the   view   that   where   provision   for   payment   of   gratuity   is
made in the service Rules applicable to the person holding a post, his
claim for gratuity must be decided on the basis of such Rules and not
by invoking the provisions of the 1972 Act.
7. Ordinarily, we would have proceeded to decide the matter on the
construct of the relied upon Rules, but as noted above, the exposition
by the coordinate Bench of two Judges of this Court in the unreported
decision of   Teja Singh   (supra) will also have to be taken note of and
to observe judicial propriety, we deem it appropriate to refer the issue
under   consideration   to   be   considered   by   a   larger   Bench   of   three
Judges.     Accordingly,   the   Registry   is   directed   to   place   the   file   of   the
present   matter   before   Hon’ble   the   Chief   Justice   for   constitution   of   a
larger Bench.
............................, J.
  (A.M. Khanwilkar)    
............................, J.
5    Decided on 4.9.2012 in W.P. No. 15856/2012 and connected matters

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(Dinesh Maheshwari)                    
New Delhi;
January 21, 2020.