HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM WRIT APPEAL No. 1018 OF 2014 25-07-2014 BETWEEN Andhra Pradesh State Finance Corporation, rep., by its Managing Director, D.No. 5-9-191, Chiragali Lane, Hyderabad - 50001 …Appellant And Z. Prabhakara Rao …..Respondent HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM WRIT APPEAL No. 1018 OF 2014
JUDGMENT: (per the Hon'ble Sri Justice L. Narasimha Reddy)
The respondent retired from service of the appellant– Corporation as Deputy General Manager on 31-07-1996. The service regulations framed by the appellant provided for payment of gratuity at the rate of one month salary for each completed year of service, subject to a maximum of 20 years or Rs.1,00,000/- whichever is less. On this basis, he was paid the gratuity of Rs.1,00,000/-.
Stating that the appellant passed a resolution on 30-07-1996 raising the cap of Rs.1,00,000/- to Rs.2,50,000/- with effect from 01-04-1995, the respondent filed Writ Petition No. 20559 of 2001. The learned single Judge took note of relevant correspondence that ensued in this behalf and allowed the writ petition through order dated 13-02-2014. The same is challenged in this writ appeal.
Heard Sri A.K. Jayaprakash Rao, learned counsel for the appellant and S.R. Sanku, learned counsel for the respondent.
It is not in dispute that the respondent retired from service on 31-07-1996 and was paid a sum of Rs.1,00,000/- towards the gratuity. It is also not in dispute that, but for the cap of Rs.1,00,000/-, the amount of gratuity was much more.
The appellant framed regulations in exercise of power under Section 48 of the State Financial Corporation Act, 1951. The said provision is to the effect that the appellant is conferred with the power to frame regulations on various aspects, subject to approval by the State Government as well as the Industrial Development Bank of India (IDBI). The relevant regulation as it stood when the respondent retired, stipulated the cap of Rs.1,00,000/-.
On 30-07-1996, the Board of Management of the appellant met and took a decision to raise the ceiling from Rs.1,00,000/- to Rs.2,50,000/- with effect from 01-04-1995. It was clearly mentioned that such a decision is subject to approval from the State Government and the IDBI.
Soon after the decision was taken by the management, the same was sent to the State Government and the IDBI for approval. The IDBI accorded approval through its letter dated 17-
10-1996. When there was no response from the State Government, a reminder was issued on 13-06-2001. Acting on the same, the Government of Andhra Pradesh, Industries Department replied on 21-06-2001 as under:
“I am to invite your attention to the references cited and to inform, the proposal for extending the benefit of enhanced Gratuity to the employees of A.P. State Financial Corporations with effect from 1-4-1995 has been examined and found to be not feasible of acceptance”
Therefore, the amendment dated 30-07-1996 proposing to enhance the ceiling from Rs.1,00,000/- to Rs.2,50,000/- became inoperative. The respondent did not challenge the communication dated 21-06-2001 issued by the Government of Andhra Pradesh, Industries Department.
Learned counsel for the respondent placed reliance upon letter dated 21-07-2001 addressed by the Public Enterprises Department to the Managing Directors of all state level public enterprises. It is to the effect that Payment of Gratuity Act, 1972 was amended raising the ceiling and it shall be open to the managements of all the public sector undertakings to pay the gratuity on the enhanced rates.
Had it been a case where the respondent rested his claim under the Payment of Gratuity Act, 1972, things would have been different. He did not base his claim on it because the amendment to that Act came much after he retired from service. Even the amendment suggested to the regulations was subsequent to the date of his retirement, but with retrospective effect. The learned single Judge did not take note of these issues and has allowed the writ petition on the basis of the letter addressed by the Secretary of the Public Enterprise Department. When the service conditions of the respondent are governed by the regulations framed under the Act, a general letter addressed by the Public Enterprises Department cannot govern the situation.
Therefore, the writ petition is allowed and the order under appeal is set aside. However, it is left open to the respondent to challenge the communication dated 21-06-2001 issued by the Government of Andhra Pradesh, Industries Department refusing to accord approval for the amendment proposed by the appellant – Corporation. If the writ petition in that connection is filed within three months from today, it shall not be treated as barred by laches.
The miscellaneous petitions pending in this appeal shall also stand disposed of. There shall be no order as to costs.
L. NARASIMHA REDDY, J CHALLA KODANDA RAM, J 25-07-2014 ks Note:
LR copy to be marked.
B/O ks