Heard learned counsel for the petitioner and Sri B.D. Mandhyan, Senior Counsel, assisted by Sri Tarun Gaur, learned counsel appearing for respondent-Mandi Parishad.
The petitioner was working as Mandi Sahayak, a Class IV post since 1974 and the service condition of the petitioner is governed by U.P. Agriculture Produce Market Committees (Centralized) Service Regulations, 1984. The petitioner retired on 31.03.2013 on attaining the age of superannuation and after retirement the petitioner handed over charge. However, 'No Dues Certificate' was not issued to the petitioner, as such, the retirement dues was not paid. By letter dated 30.05.2013, the respondent no. 4, Secretary, Krishi Utpadan Mandi Samiti (Agricultural Produce Market Committee), Bareilly, mentioned that in departmental annual audit for the years 2010-2011 and 2011-2012 there was audit objection number 33 pertaining to the petitioner until and unless the audit objection is removed the 'No Dues Certificate' cannot be issued. Aggrieved, the petitioner has approached this Court seeking a direction to the respondent no. 3, Deputy Director (Admin./Marketing), Regional Office, State Agricultural Produce Marketing Board (U.P.) at Navin Mandi Sthal, Pilibhit Road, Bareilly, for payment of retiral benefits along with interest @ 18%.
Submission of learned counsel for the petitioner is that the audit objection enclosed along with letter dated 30.05.2013 does not raise any objection pertaining to the petitioner. On the contrary, objection has been raised in respect of one Sri R.K. Suman, Mandi Inspector and the audit report directs the Mandi Parishad to initiate proceedings to recover the loss of interest from R.K. Suman. There is no such objection against the petitioner, and hence, the petitioner is entitled to post retiral benefits.
In rebuttal, Sri B.D. Mandhyan, Senior Counsel, submits that the Mandi Parishad has no personal grievance against the petitioner, as and when the audit objection is removed and 'No Dues Certificate' produced, the Mandi Parishad shall release the post retiral benefits of the petitioner.
Rival submissions fall for consideration.
The factual matrix between the parties is not in dispute, the petitioner retired on 31.03.2013, no disciplinary proceedings was initiated against the petitioner and the sole reason for withholding the post retiral benefits is audit objection for the years 2010-11 and 2011-12. A bare perusal of the audit report clearly states that Sri R.K. Suman, Mandi Inspector, is responsible for the loss of interest and Parishad was directed to recover the interest from Sri Suman. No such direction/observation was made against the petitioner. Under the Payment of Gratuity Act, 1972, the gratuity cannot be withheld merely on audit objection, until and unless the conditions mentioned in sub-clause (6) of the Section 4 of the Payment of Gratuity Act, 1972 are not satisfied.
The Division Bench of this Court in the case of Smt. Marjaddi Vs. Central Administrative Tribunal, Allahabad Bench, Allahabad and others, [(2014) 2 UPLBEC 1549], has held that the recovery of damages for retention of official quarter against the gratuity is illegal.
In the case of Gorakhpur University vs. Dr. Shitla Prasad Nagendra and others, reported in 2001 92) SCSLJ 247, the post retiral dues of the Professor of the University had been withheld on the ground that the Professor has retained the University's accommodation after his retirement. The Apex Court has held that pension and gratuity are no longer matters of any bounty to be distributed by the Government but are valuable rights acquired and property in their hands and any delay in settlement and disbursement whereof should be viewed seriously and dealt with severely by imposing penalty in the form of payment of interest. The Apex Court has held as follows:
"We have carefully considered the submission on behalf of the respective parties before us. The earlier decision pertaining to this very university, reported in S.N. Mathur is that of a Division Bench, rendered after considering the principles laid down and also placing reliance upon the decisions of this Court reported in R. Kapur which in turn, relied upon earlier decisions in State of Kerala Vs. M. Padmanabhan Nair and Som Prakash. This Court has been repeatedly emphasizing the position that pension and gratuity are not longer matters of any bounty to be distributed by the Government bur are valuable rights acquired and property in their hands and any delay in settlement and disbursement whereof should be waived seriously and dealt with severely by imposing penalty in the form of payment of interest. Withholding to withhold disbursement of the terminal benefits. Such is the position with reference to amounts due towards provident fund, which is rendered immune from attachment and deduction or adjustment as against any other dues from the employee."
In the case of State of Kerala Vs. M. Padmanabhan Nair and Som Prakash, reported in (1985) 1 SCC 429, the Apex Court has held as follows:
"Pension and gratuity are no longer any bounty to be distributed by the Government to its employees on their retirement but have become, under the decisions of this Court, valuable rights and property in their hands and any culpable delay in settlement and disbursement thereof must be visited with the penalty of payment of interest at the current market rate till actual payment."
The Division Bench of the Bombay High Court in the case of V.U. Warrier Vs. Secretary, Oil and Natural Gas Commission, Dehradun and another, reported in 2003 (3) Mh. L.J. 168 has held as follows:
"Legal position is no more res integra that pension and gratuity becomes valuable rights and property in the hands of employees on their retirement and payment of pension and gratuity cannot be withheld even if the employee has remained in unauthorized occupation of employer's accommodation and become liable to pay damages under the allotment Rules for overstay. To recover damages from such retired employees for unauthorized occupation, the employer has to pursue appropriate remedy in law but the said amounts cannot be set off against pension and gratuity amount payable to retired employee."
Hon'ble Apex Court in Balbir Kaur and Another v. Steel Authority of India Ltd. and Another [(2000) 6 SCC 493], has opined "...As regards the provisions of the Payment of Gratuity Act, 1972 (as amended from time to time) it is no longer in the realm of charity but a statutory right provided in favour of the employee...
Perusal of the Act shows that it is a neat scheme providing for payment of gratuity. It is a complete code containing detailed provisions covering the essential provisions of a scheme for gratuity. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the conditions on which he may be denied therefrom. As noticed hereinbefore, sub-section (6) of Section 4 of the Act contains a non- obstante clause vis-`-vis sub-section (1) thereof. As by reason thereof, an accrued or vested right is sought to be taken away, the conditions laid down thereunder must be fulfilled. The provisions contained therein must, therefore, be scrupulously observed. Clause (a) of Sub-section (6) of Section 4 of the Act speaks of termination of service of an employee for any act, willful omission or negligence causing any damage. However, the amount liable to be forfeited would be only to the extent of damage or loss caused. Conditions laid down therein are also not satisfied."
The Supreme Court in Y.K. Singla Versus Punjab National Bank and others, (2013) 3 SCC 472, held as follows:-
21. 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 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 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 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, that the 1995 Regulations, did not make any provision for the award of interest in case of 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 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 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 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%).
22. 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 hereunder:-
"Act to override other enactments, etc. The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith 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) 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-à-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 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" 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.
25. We, therefore, have no hesitation in concluding, 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 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.
26. We, accordingly, direct the PNB to pay to the appellant, interest at "......the rate notified by the Central Government for repayment of long term 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 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 also be disbursed to the appellant within the time indicated hereinabove."
The Supreme Court in the case of Jaswant Singh Gill vs. Bharat Coking Coal Limited [2006 LawSuit(SC) 994 while dealing with the case of a delinquent employee, who was issued charge-sheet for shortage of stock of coal and during the pendency of the departmental proceedings was allowed to retire and was denied payment of gratuity amount under the Payment of Gratuity Act, 1972 for the purpose of making recovery in the event recovery is directed in the disciplinary proceedings. The question before the Apex Court was as to whether the service rules shall prevail over the Act and rule 27 provided for making recovery from the pay or gratuity for pecuniary loss caused to the company.
The Supreme Court held that the rules framed by the Coal India Limited are not statutory rules. The provisions of the Act, therefore, must prevail over the rules. Paragraphs 9 and 10 are as follows:-
"9. A statutory right accrued, thus, cannot be impaired by reason of a rule which does not have the force of a statute. It will bear repetition to state that the Rules framed by Respondent No. 1 or its holding company are not statutory in nature. The Rules in any event do not provide for withholding of retrial benefits or gratuity.
10.The Act provides for a closely neat scheme providing for payment of gratuity. It is a complete code containing detailed provisions covering the essential provisions of a scheme for a gratuity. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the conditions on which he may be denied therefrom. As noticed hereinbefore, sub-section (6) of Section 4 of the Act contains a non- obstante clause vis-`-vis sub-section (1) thereof. As by reason thereof, an accrued or vested right is sought to be taken away, the conditions laid down thereunder must be fulfilled. The provisions contained therein must, therefore, be scrupulously observed. Clause (a) of Sub-section (6) of Section 4 of the Act speaks of termination of service of an employee for any act, willful omission or negligence causing any damage. However, the amount liable to be forfeited would be only to the extent of damage or loss caused. The disciplinary authority has not quantified the loss or damage. It was not found that the damages or loss caused to Respondent No. 1 was more than the amount of gratuity payable to the appellant. Clause (b) of Sub-section (6) of Section 4 of the Act also provides for forfeiture of the whole amount of gratuity or part in the event his services had been terminated for his riotous or disorderly conduct or any other act of violence on his part or if he has been convicted for an offence involving moral turpitude. Conditions laid down therein are also not satisfied."
Supreme Court in State of Jharkhand and others vs. Jitendra Kumar Srivastava and another [2014 (1) AWC 159 (SC)] considered as to whether in absence of any provisions in the pension rules, State Government can withhold a part of pension or gratuity during the pendency of the departmental or disciplinary proceedings. Paragraph 11 is as follows:-
"11. Reading of Rule 43(b) makes it abundantly clear that even after the conclusion of the departmental inquiry, it is permissible for the Government to withhold pension etc. ONLY when a finding is recorded either in departmental inquiry or judicial proceedings that the employee had committed grave misconduct in the discharge of his duty while in his office. There is no provision in the rules for withholding of the pension/ gratuity when such departmental proceedings or judicial proceedings are still pending."
The Supreme Court further held that since pension and gratuity are property within the meaning of Article 300-A of the Constitution of India any circular or order not having a statutory character or force of law cannot withhold the gratuity. Paragraph 15 is as follows:-
"15. It hardly needs to be emphasized that the executive instructions are not having statutory character and, therefore, cannot be termed as within the meaning of aforesaid Article 300A. On the basis of such a circular, which is not having force of law, the appellant cannot withhold - even a part of pension or gratuity. As we noticed above, so far as statutory rules are concerned, there is no provision for withholding pension or gratuity in the given situation. Had there been any such provision in these rules, the position would have been different."
Division Bench of this Court in State of U.P. and others vs. Jai Prakash [(2014) 1 ADJ 207] relying upon Supreme Court judgment held that pension would include gratuity and the gratuity cannot be withheld merely due to pendency of criminal case unless there is a specific provision under the Rules to withhold pension and gratuity.
In the facts and circumstances of this case, it is admitted that there is no audit objection against the petitioner. Gratuity and provident fund cannot be withheld merely there is some audit objection. To withhold gratuity the conditions specified under sub-clause (6) of section 4 must be satisfied, otherwise, is rendered immune from attachment and deductions or adjustment as against any other dues from the employee. Reason for withholding the post retiral benefit of the petitioner is without lawful basis.
In such view of the matter, the respondents are directed to release the entire retiral benefits of the petitioner including gratuity and provident fund, for delayed payment of gratuity and provident fund the petitioner is awarded interest @ 8.5 % w.e.f. 01.04.2013. The post retiral dues along with interest be paid within two months from the date of filing of certified copy of this order before the respondents.
The writ petition is allowed.
Order Date :- 12.8.2014 kkm