Citation Codes

Equivalent Citations

citation codes

Case Number

WA No. 436 of 2020, WA No. 445 of 2020, WA No. 10 of 2021, WA No. 446 of 2020, WA No. 447 of 2020, WA No. 448 of 2020, WA No. 449 of 2020, WA No. 451 of 2020, WA No. 455 of 2020, WA No. 457 of 2020, WA No. 459 of 2020, WA No. 460 of 2020, WA No. 461 of 2020, WA No. 465 of 2020, WA No. 469 of 2020, WA No. 471 of 2020 and WA No. 472 of 2020

Disposition

allowed

Attorney(S)

: Shri. Kishore Bhaduri and Shri. Sabyasachi Bhaduri, Advocates
No. 1 : Shri. N. K. Vyas and Shri. K.N. Nande, Advocates

Judges

Hon'ble Mr. Justice Parth Prateem Sahu
Hon'ble Former Chief Justice Mr. P. R. Ramachandra Menon

Acts

ARTICLE 226 CONSTITUTION OF INDIA
SECTION 4 A PAYMENT OF GRATUITY ACT 1972
PAYMENT OF GRATUITY ACT 1972
Section 2(e)
provisions of the Regional Rural Bank Act, 1976.
Section 2(e) and 2(s)

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The Respondents (described as 'Officers' of Chhattisgarh Rajya Gramin Bank) retired on superannuation and received gratuity payments calculated by the Employer-Bank. After accepting those amounts they claimed additional gratuity on the ground that the Bank's computation was incorrect under the Chhattisgarh Rajya Gramin Bank (Officers and Employees) Service Regulations, 2013 ("the Regulations") and that the computation should include certain allowances (notably Dearness Allowance) for Officers as it did for Employees under separate provisos to Regulation 72(3). Claim petitions were filed before the Controlling Authority; the Controlling Authority and the Appellate Authority found for the Claimants (Officers) treating Dearness Allowance as part of 'Pay' for Officers. The Bank's appeals against those decisions were unsuccessful, leading to writ petitions before the Single Judge, whose common judgment also favored the Claimants. The Bank then filed these writ appeals to challenge the Single Judge's interpretation of the definition of "Pay" in Regulation 2(m) and the mode of computation under Regulation 72(3). The parties agreed there was no factual dispute and that the question was purely legal.

Legal Issues Presented

Whether the Regulations envisage treating the class of “Officers” and the class of “Employees” differently for purposes of computing gratuity — i.e., whether the Regulations prescribe different modes of calculation for Officers and Employees under Regulation 72(3).
Whether the term “Pay” for an Officer (as defined in Regulation 2(m)) includes Dearness Allowance and other emoluments (or whether it is confined to basic pay and only such parts of emoluments as are specifically classified as pay under the Regulations).
Whether, when computing gratuity under the Regulations, it is permissible to import reckonable components from the Payment of Gratuity Act, 1972 (or to mix elements from the Act and the Regulations) or whether computation must be made strictly in accordance with the Regulations.

Arguments of the Parties

Appellant-Bank's Arguments

The Bank submitted that it was established under the Regional Rural Bank Act, 1976 and that the Regulations (framed with Central Government approval) are binding for service conditions including gratuity under Regulation 72.
Under Regulation 72(3) the mode of computation differs for Officers and Employees: for Officers gratuity is payable "based on the last pay drawn" (i.e., basic pay), while for Employees pay is the average of basic pay, dearness allowance and specified allowances for the preceding 12 months.
The Bank argued that the Controlling and Appellate Authorities erred by including Dearness Allowance as part of 'Pay' for Officers contrary to the plain language of the Regulations and contrary to the Annexure-A/2 Notification (note excluding certain allowances for retirement benefits). It contended the definition of 'Pay' is categorical and cannot be widened.
The Bank relied on the principle that a claimant may take gratuity either under the Act or the Regulations, whichever is higher, but cannot mix the modes (i.e., pick and choose favorable components from both).
The Bank cited Beed District Central Coop. Bank Ltd. v. State of Maharashtra ((2006) 8 SCC 514) for the proposition that the benefit must be taken "as a package" and one cannot pick best portions from both streams. It also relied on an authority (Khoday Distilleries Ltd.) for the proposition that dismissal of an SLP does not necessarily authenticate a legal proposition.

Respondents/Claimants' Arguments

The Claimants supported the Single Judge's decision that the Claimants are entitled to the higher benefit under the Regulations in view of Section 4(5) of the Payment of Gratuity Act, 1972 (i.e., entitlement to better terms if provided by a statute/regulation).
The Respondents conceded that benefits cannot be computed by mixing components from both the Act and the Regulations simultaneously, but argued that the Regulations' own definitions (Regulation 2(m) 'Pay', 2(o) 'Salary', 2(i) 'Emoluments') must be read together and give an inclusive/wider meaning to 'Pay' in the context of Regulation 72(3).
The Claimants relied on the literal interpretation of the last limb of Regulation 2(m) ("any part of the Emoluments which may specifically be classified as pay under these Regulations") and argued the Single Judge correctly interpreted those words so the limb would not be rendered meaningless.
The Respondents referenced several High Court decisions (including the Division Bench of the Madhya Pradesh High Court and others) that had taken a view favorable to the Claimants, and argued consistency with those holdings.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Beed District Central Coop. Bank Ltd. v. State Of Maharashtra, (2006) 8 SCC 514	Held that benefits must be taken "as a package" and one cannot pick and choose the best parts from two different schemes (here, the Act and the Regulations).	The court relied on this authority to emphasize that when a claimant opts for gratuity under the Regulations, the computation must follow the Regulations in entirety and cannot borrow components from the Act; this supported the Bank's submission but the Court used it to assert that computations must be done "strictly in terms of the Regulations".
Vidarbha Konkan Gramin Bank v. Appellate Authority, 2020 SCC OnLine Bom 17	As cited by the Appellant: treated a similar question and answered the legal position in favour of the Employer-Bank (per the opinion's description).	The appellant relied on this decision as supportive authority; the court noted that this decision took a view favourable to the Bank.
Khoday Distilleries Ltd. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd., (2019) 4 SCC 376	Holds that dismissal of an SLP does not necessarily amount to acceptance/merger of the legal proposition — i.e., dismissal of SLP does not automatically "put a seal" on the legal proposition.	The Appellant cited this authority to argue that a dismissed SLP against the Madhya Pradesh High Court verdict did not validate that verdict; the court recorded the appellant's reliance but ultimately applied its own interpretive analysis.
Sawarn Singh v. State of Punjab, (1976) 2 SCC 868	An error of law apparent on the face of the record can be corrected by a writ (court may rectify clear errors of law), but not errors of fact.	The court relied on this precedent to confirm that, in a writ under Article 226 raising a pure question of law (no factual dispute), the court's jurisdiction to correct an apparent error of law is appropriate and the writ petitions/appeals are maintainable.
Division Bench, Madhya Pradesh High Court — Writ Appeal No. 1318 of 2018 (referred to in the opinion)	Characterized in the opinion as having decided in favour of the Officers/Claimants that 'Pay' should be taken to include Dearness Allowance (as inferred from the court's reliance on that decision).	The Single Judge of this Court had placed reliance on that decision; the present Division Bench expressed disagreement with that view and declined to follow it.
B.N. Nageswara Rao v. Sapthagin Grameena Bank (Telangana High Court), decided 07.02.2020	Described in the opinion as having taken a similar view to the Single Judge (i.e., supportive of a broader interpretation of 'Pay').	The current court noted this decision but expressly disagreed with the view taken in that case.
Rajasthan Marudhara Gramin Bank v. The Appellate Authority (Writ Petition No. 7359/2019) (Rajasthan High Court, Jodhpur Bench)	Referred to in the opinion as another decision aligned with the broader interpretation (supporting Claimants).	The current court recorded disagreement with the view taken by that court.
Arup Kumar Basubal v. Bangiya Gramin Vikash Bank (W.P. 18488 (W) of 2019) (Calcutta High Court)	Referred to as another High Court decision that had taken a view supportive of the Claimants' broader reading.	The present court noted the decision but expressed disagreement with its reasoning.
Single Judge, Bombay High Court in Vidarbha Konkan Gramin Bank (as described in the opinion)	Described as having decided the question in favour of the Employer-Bank (narrower reading of 'Pay').	The court noted concurrence with the Bombay High Court Single Judge's approach and considered it persuasive in preferring a narrow reading of 'Pay' for Officers under the Regulations.

Court's Reasoning and Analysis

The court undertook a close textual and contextual analysis of the Regulations, the Act and the definitions contained within Regulation 2. The court's reasoning proceeded in identifiable steps, each grounded in the opinion's text:

Identification of the core legal question: the issue was purely legal (no factual dispute) — whether the Regulations treat Officers and Employees differently and how "Pay" must be interpreted for computation of gratuity.
Recognition of statutory context: Section 4(5) of the Payment of Gratuity Act, 1972 permits an employee to receive better terms if provided by a contract or regulation; thus claimants can take gratuity either under the Act or under the Regulations, whichever is higher, but not mix methods.
Close reading of Regulation 72(3): the court noted that Regulation 72(3) provides one month's "Pay" per year subject to caps, and that two provisos set out distinct modes of computation — for Officers the gratuity is "based on the last pay drawn" (second proviso), while for Employees the pay is an average including basic pay, dearness allowance and specified allowances for the preceding 12 months (third proviso). The court regarded this as a conscious distinction by the framers.
Examination of definitions as a hierarchical structure: the court described the definitions of "Pay" (Reg. 2(m)), "Salary" (Reg. 2(o)), and "Emoluments" (Reg. 2(i)) as forming a pyramid: Pay (top) — Salary (middle) — Emoluments (bottom). The definition of "Pay" reads as an exclusive definition ("means") limiting it to basic pay (including stagnation increments) except for any part of emoluments specifically classified as pay under these Regulations.
Literal and contextual interpretation: Because "Pay" is defined by "means", the court concluded it is an exclusive definition (basic pay) unless some part of emoluments is specifically classified as pay under the Regulations. The court observed there is no other provision in the Regulations that so classifies parts of emoluments for Officers, whereas the third proviso expressly specifies additional components for Employees.
Rejection of the wider interpretation: The court rejected the Single Judge's reading (and some High Court decisions) that gave a broader meaning to "Pay" for Officers that would include Dearness Allowance and other emoluments. The court found that such a reading would render the final limb of Reg. 2(m) ("any part of the emoluments which may specifically be classified as pay under these Regulations") otiose if the Appellant-Bank's position were incorrect, and conversely that the Bank's position must be honored because the Regulations draw a deliberate distinction between Officers and Employees.
Policy/legislative choice and limitation on judicial re-writing: The court emphasized that the differential treatment of Officers and Employees (including differing forfeiture rules and differing computation modes) was a policy choice for the framers of the Regulations and not for the Court to rewrite. The court reiterated that when computation is to be made under the Regulations, the computation must follow the Regulations strictly and not be widened by reading in elements from the Act or elsewhere.
Scope of judicial review: Citing Sawarn Singh, the court held that where an error of law is apparent on the face of the record the writ remedy under Article 226 is appropriate. Since the dispute was a pure question of law, the court considered the writ petitions and appeals maintainable and within its power to correct erroneous legal conclusions.
Conclusion of analysis: On the combined textual and contextual analysis, the court concluded that for Officers "Pay" means basic pay (last drawn basic pay) and does not include Dearness Allowance or other emoluments unless those elements are specifically classified as pay under the Regulations. Accordingly, the Controlling Authority's and Appellate Authority's findings to the contrary (and the Single Judge's affirmation) were incorrect.

Holding and Implications

Holding:

Writ Appeals allowed; the orders of the Controlling Authority, the Appellate Authority and the Single Judge are set aside; the Claim Petitions are dismissed.

Implications (direct consequences stated in the opinion):

The Claimants (Officers) are not entitled to the additional gratuity amounts computed by treating Dearness Allowance and similar emoluments as part of "Pay" under Regulation 72(3) for Officers; gratuity for Officers must be computed on the basis of last drawn basic pay (subject to the Regulations' caps and other express provisions).
The court emphasized that when computation is to be made under the Regulations, it must be strictly in accordance with the Regulations; components from the Act cannot be imported to alter the mode of calculation set out by the Regulations.
No costs were awarded.
The opinion does not assert that it is creating a broader new principle beyond its interpretation of the Regulations; the decision addresses and resolves the dispute between the parties and expresses disagreement with several High Court decisions, while concurring with a Single Judge decision of the Bombay High Court. The opinion does not state that it establishes a novel principle beyond its application to these Regulations.

End of summary — prepared strictly on the basis of the provided opinion. No information has been added beyond the text of that opinion.

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Chhattisgarh Rajya Gramin Bank Through The Chairman v. Arun Phansalkar And Others

P.R. Ramachandra Menon, C.J.:— Whether the Chhattisgarh Rajya Gramin Bank (Officers and Employees) Service Regulations, 2013 (hereinafter referred to as ‘the Regulations’), envisage to treat the class of ‘Officers’ and the class of ‘Employees' of the Employer-Bank differently in claiming the quantum of ‘Gratuity’ payable under the Regulations with reference to their “Pay” and the mode of calculation?

2. This is the question re-framed by us, after considering the core issue raised by the Appellant/Writ Petitioner-Bank and the point considered by the learned Single Judge as to whether the pay for computation of Gratuity in the case of ‘Officers’ of the Bank would take in the Dearness Allowances as well or not; as being done in the case of ‘Employees' of the Bank, dealt with under the two separate provisos to Regulation 72(3) of the Regulations.

3. All these appeals arise out of a common judgment passed by the learned Single Judge dealing with the grievance projected in different writ petitions of similar nature.

4. Heard Mr. Kishore Bhaduri, the learned counsel appearing for the Appellants in all cases and Mr. N.K. Vyas, the learned counsel, who appeared for the party/private Respondents. There is no factual dispute and the point to be considered is purely a legal question, in connection with the interpretation of “Pay”, as defined under Regulation 2(m) of the Regulations; in the light of definition of the terms “Salary” under Regulation 2(o) and “Emoluments” under Regulation 2(i) of the Regulations.

5. The Respondents-‘Officers’ were serving the Appellant-Bank and on attaining the age of superannuation, they came out of the service; when the Gratuity payable was worked out and paid to them. After accepting the said amount, the above said ‘Officers’ putforth a claim that the calculation made by the Employer-Bank was quite wrong and that they were entitled to get more amounts in terms of the Regulations; by virtue of the statutory mandate under Section 4(5) of the Payment of Gratuity Act, 1972 (for short, ‘the Act’), stipulating that nothing in Section 4 shall affect the right of an employee (the term ‘employee’ defined under Section 2(e) of the Act also constitutes an ‘officer’ as well, having not been separately defined, unlike the Regulations, where separate definition exists) to receive better terms of Gratuity under any award or agreement or contract with the Employer and the extent of the Gratuity payable to an Employee (constituting both the ‘Officer’ and ‘Employee’ having not been separately defined under the Act), as specified under sub-Section (6) of Section 4 of the Act.

6. The prayer in the claim petition filed before the Controlling Authority was opposed from the part of the Employer-Bank, contending that the Pay to be reckoned for calculation of Gratuity to an ‘Officer’ was different from that of ‘Employee’, by virtue of the difference in the mode of calculation, as clearly provided under the ‘Regulations’ and hence that whatever payable to the ‘Officers’/Claimants, had already been calculated strictly in terms of the relevant provisions of law and satisfied. However, the contention of the Appellant/Employer-Bank was repelled and the Controlling Authority held that the Pay in the case of ‘Officers’/Claimants will take in the Dearness Allowance as well and accordingly a finding was rendered, giving appropriate directions to have the balance amount paid with interest as specified. Though, this was subjected to challenge before the Appellate Authority, at the instance of the Appellant/Employer-Bank, it did not turn to be fruitful, leading to the writ petitions filed before the learned Single Judge.

7. It is seen from the judgment under challenge that the rival contentions were appreciated with reference to the relevant provisions in the Regulations and also in the Act. After placing reliance on the verdict passed by the Madhya Pradesh High Court, which stood in favour of the ‘Officers’/Claimants and observing that the SLP preferred there from has been dismissed by the Apex Court (in turn, holding that it “showed the acceptance of the legal proposition”), the learned Single Judge sought to give a wider interpretation to the term ‘Pay’; virtually reading the definition of the terms ‘Emoluments’/‘Salary’ into the definition of the term ‘Pay’ under Regulation 2(m) of the Regulations and dismissed the writ petitions. The learned Judge further observed that the power of the Court to have a scrutiny with regard to the nature of challenge raised under Article 226 of the Constitution was quite limited and further that the Controlling Authority and the Appellate Authority under the statute having given their findings on the question, the jurisdiction was rather of ‘supervisory’ in nature. Correctness of said verdict is put to challenge in these appeals.

8. The learned counsel appearing for the parties on both the sides conceded that there was no factual dispute and that the issue involved was purely a legal question. In the said circumstance, as agreed by the parties on both the sides, we heard the matter on merits. Writ Appeal No. 436 of 2020 is taken as the lead case and the parties and proceedings are referred to as given there, except where it is separately mentioned with reference to the context.

9. Mr. Kishore Bhaduri, the learned counsel for the Appellant submits that the Appellant-Bank is a Government owned Scheduled Bank sponsored by the State Bank of India and it was established under the relevant provisions of the Regional Rural Bank Act, 1976. It is also pointed out that, the Competent Authority, with the prior approval of Central Government, have framed the Regulations in accordance with the relevant provisions of law, which has been duly notified in the official gazette. The Regulations, dealing with the various service conditions, also provide for payment of Gratuity under Regulation 72. Under sub-Regulation 3 of Regulation 72, the Gratuity is to be computed, adopting different modes of calculation in the case of an ‘Officer’ and an ‘Employee’, who have been separately defined. In the case of an Officer, it has to be with reference to ‘Pay’ i.e. the last drawn pay i.e. basic pay, whereas in the case of an ‘Employee’ (dealt with under separate proviso), it is on the basis of average of the basic pay (100%), dearness allowance and special allowance and officiating allowance payable during the preceding 12 months, as specified.

10. According to the learned counsel, the Controlling Authority and the Appellate Authority have gone wrong in reckoning the dearness allowance also as part of ‘Pay’ for computing the Gratuity, which is clearly contrary to the provisions in the Regulations and against Annexure-A/2 Notification issued by the Central Government to the effect that special allowance and officiating allowance payable during the preceding 12 months shall not be reckoned for the purpose of computation of retirement benefits including the Gratuity as given in the ‘Note’. Since the provisions in the Regulations are quite categoric with regard to the ‘Pay’ to be reckoned and as to the mode of calculation, it was not correct or proper for the Controlling/Appellate Authorities to have added something more as part of the ‘Pay’, contrary to the scheme of the Regulations. The learned counsel submits that the said Authorities have virtually widened the term ‘Pay’ in the case of the ‘Officers’ by reading something more into it (w.r.t. the term ‘Emoluments’/‘Salary’); seeking to sustain the same in view of the definition of the term ‘Wages’ under Section 2(s) of the Act, which is quite wider. It is the case of the Appellant that the Claimants are entitled to get payment of Gratuity either in terms of the Act or in terms of the Regulations, whichever is higher, but the mode of calculation cannot be altered, picking out only the best from both the streams, which is not permissible, in view of the law laid down by the Apex Court in Beed District Central Coop. Bank Ltd. v. State Of Maharashtra reported in (2006) 8 SCC 514 (paragraphs 12, 13 and 14), holding that it has to be taken as a package. The above vital distinction was unfortunately not highlighted before the Division Bench of the Madhya Pradesh High Court in Writ Appeal No. 1318 of 2018; which came to be followed by the learned Single Judge of this Court, while dismissing the writ petitions filed by the Appellant-Bank and hence not correct. The learned counsel further submits that the verdict passed by the Division Bench of the Madhya Pradesh High Court was considered in the recent ruling rendered by a learned Judge of the Bombay High Court in Vidarbha Konkan Gramin Bank v. Appellate Authority reported in 2020 SCC OnLine Bom 17 (paragraph 11 onwards) and the legal position with reference to the similar term in the relevant Regulations has been answered in favour of the Employer-Bank. It is added by the learned counsel that dismissal of the SLP preferred against the verdict passed by the Division Bench of the Madhya Pradesh High Court does not put a seal of the Apex Court to the legal proposition, as there is no merger, as held by the Apex Court in Khoday Distilleries Ltd. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. reported in (2019) 4 SCC 376.

11. Mr. N. K. Vyas, the learned counsel representing the Respondents/Claimants seeks to support the verdict passed by the learned Single Judge and submits that the Claimants are entitled to get higher benefit flowing from the Regulations by virtue of the mandate under sub-Section (5) of Section 4 of the Act. The learned counsel submits that there is no dispute to the legal proposition (when the Claimants are entitled to get the benefit either under the Act or under the Regulations whichever is higher) that there cannot be any mixing up by taking the reckonable factors from both the streams (Act or the Regulations) simultaneously. According to the learned counsel, the Regulations are self-contained and the meaning of the relevant terms, as envisaged by the framers, has to be given effect to the definition of the term ‘Pay’ under Regulation 2(m) of the Regulations, particularly, in the light of the definition of the terms ‘Salary’ under Regulation 2(o) and ‘Emoluments’ under Regulation 2(i) of the Regulations. The learned counsel submits that the words “any part of the Emoluments which may specifically be classified as pay under these Regulations”, given under Regulation 2(m) defining the terms ‘Pay’, will be meaningless as held by the learned Single Judge of the Madhya Pradesh High Court and affirmed by the Division Bench, if the interpretation sought to be made by the Appellant-Bank is given effect to, to exclude the same from part of the ‘Pay’. This is more so, since no other provision is there referring to any part of the ‘Emoluments’ which may specifically be classified as ‘Pay’ under these Regulations, as correctly observed by the learned Single Judge of the Madhya Pradesh High Court in paragraph 20 and as affirmed by the Division Bench, which got finality by virtue of dismissal of the SLP by the Apex Court. Going by the definition of the terms ‘Emoluments’ and ‘Salary’ under Regulations 2(i) and (2(o) respectively of the Regulations, it is quite wider in terms and as such, when it comes to calculation under Regulation No. 72(3), the wider inclusive meaning has to be given to the term ‘Pay’, especially in view of the clarity discernible from the 2 proviso to the sub-Regulation (3) as to mode of calculation of Gratuity payable to the Employee, taking the average of the basic pay (100%), dearness allowance and special allowance and officiating allowance payable during the preceding 12 months. It is pointed out by the learned counsel that the verdict passed by the learned Single is not assailable under any circumstance and that a similar view has been taken by the learned Judges of the Telengana High Court in B.N. Nageswara Rao v. Sapthagin Grameena Bank decided on 07.02.2020, the Rajasthan High Court (Jodhpur Bench) in Writ Petition No. 7359/2019 (Rajasthan Marudhara Gramin Bank v. The Appellate Authority) and the Calcutta High Court in W.P. 18488 (W) of 2019 (Arup Kumar Basubal v. Bangiya Gramin Vikash Bank).

12. As mentioned already and as admitted by the learned counsel for the parties on both the sides, by virtue of the mandate under Section 4(5) of the Act, the Claimants are entitled to get Gratuity either under the Act or under the Regulations, whichever is higher. As declared by the Apex Court in Beed District Central Co-operative Bank Ltd. (supra) and as fairly conceded by the learned counsel for the Respondents, benefits cannot be computed by picking out the best from two different baskets (Act/Regulation) simultaneously. Since the dispute is in relation to the Gratuity payable under the Regulations, it has to be computed strictly in terms of the Regulations and not on the basis of the definition of any other term or as to the mode of calculation given elsewhere.

13. The first point to be noted is that the Regulations deal with the service conditions of both the ‘Employees', and the ‘Officers’, treating them as two separate class and as defined under Regulation Nos. 2(j) and 2(l) respectively; as extracted below:

“2(j) “Employee” means an employee of the Bank as classified under clauses (b) and (c) of sub-regulation (1) of regulation 3, and includes such employee whose services are lent to other organizations under regulation 75;

2(l) “Officer” means an officer of the Bank as classified under Clause (a) of sub-regulation (1) of regulation 3;”

14. The above definitions make a clear reference to the classification of Officers and Employees under Regulation No. 3, which is to the following effect:

“3. Classification of officers and employees. - (1) The officers and employees of the Bank shall be classified as follows, namely,

(a) Group ‘A’ - Officer Junior Management

(i) Scale I (Assistant Manager) Middle Management

(ii) Scale II (Manager)

(iii) Scale III (Senior Manager) Senior Management

(iv) Scale IV (Chief Manager)

(v) Scale V (Assistant General Manager)

Explanation. - For the purpose of these regulations, the Chairman may designate the officer, as Branch Manager, Regional Manager or General Manager, depending on the work or functions assigned and the scale of the officer.

(b) Group ‘B’- Office Assistants (Multipurpose).

15. It is in the said background that further analysis has to be made with regard to the scope of Regulation 72, dealing with payment of Gratuity to both the classes of Officers and Employees, as dealt with therein. For convenience of reference, we find it appropriate to extract Regulation 72 of the Regulations, as given below:

“72. Gratuity. - (1) An officer or employee shall be eligible for payment of gratuity either as per the provisions of the Payment of Gratuity Act, 1972 (39 of 1972) or as per sub-regulation (2), whichever is higher.

(2) Every officer or employee shall be eligible for gratuity on,-

(a) retirement,

(b) death,

(d) resignation after completing 10 years of continuous service, or

(e) termination of service in any other way except by way of punishment after completion of 10 years of service:

Provided that in respect of an employee there shall be no forfeiture of gratuity for dismissal on account of misconduct except in cases where such misconduct causes financial loss to the bank and in that case to that extent only.

(3) The amount of gratuity payable to an officer or employee shall be one months pay for every completed year of service or part thereof in excess of six months subject to a maximum of 15 month's pay:

Provided that where an officer or employee has completed more than 30 years of service, he shall be eligible by way of gratuity for an additional amount at the rate of one half of a month's pay for each completed year of service beyond 30 years:

Provided further that in respect of an officer the gratuity is payable based on the last pay drawn:

Provided also that in respect of an employee pay for the purposes of calculation of the gratuity shall be the average of the basic pay (100%), dearness allowance and special allowance and officiating allowance payable during the 12 months preceding death, disability, retirement, resignation or termination of service, as the case may be.”

16. Sub-Regulation (1) makes a general declaration (which is similar to Section 4(5) of the Act) to the effect that an ‘Officer’ or ‘Employee’ shall be eligible for payment of Gratuity either as per the provisions of the Act or under the Regulations, whichever is higher. The circumstance under which an Officer or an Employee shall become eligible for Gratuity are mentioned under ‘Clauses (a) to (e)’ of sub-Regulation (2). This however is subject to the proviso mentioned therein, that, in respect of an ‘Employee’ there shall be no forfeiture of Gratuity for dismissal on account of the misconduct except in cases where such misconduct causes financial loss to the Bank and in that case, to that extent only. The proviso gives a clear idea as to the distinction sought to be drawn in respect of an ‘Employee’ (unlike an Officer) by the framers of the Regulations, while putting some restrictions as to forfeiture of Gratuity except to the extent as mentioned therein. This benefit, as such, is not given in the case of an ‘Officer’, who is rather governed by Clause (e) of the Regulation 72(2); which dis-entitles him in toto from getting Gratuity on termination from service by way of punishment, as specified. To put it more clear, in the case of an ‘Employee’, the rider under Clause (e) of Regulation 72(2), (dis-entitling an ‘Officer’ to claim Gratuity on termination of service by way of punishment) is not applicable as such, unless, it is for dismissal on account of misconduct causing financial loss to the Bank and in such cases, only to the said extent of loss resulted to the Bank. This is a clear indication to the fact that the framers of the Regulations did never envisage to treat an ‘Officer’ and an ‘Employee’ of the Bank, placing on the same/similar pedestal; whereas some wider benefit/concession was given in case of ‘Employees', treating them differently from the category of ‘Officers’. Computation of Gratuity under Regulation 72 (3) has to be analysed in the above context.

17. Sub-Regulation (3) of Regulation 72 makes the general declaration that the Gratuity payable to an ‘Officer’ or ‘Employee’ shall be one month's ‘Pay’ for every completed year of service or part thereof in excess of six months, subject to maximum of 15 month's Pay. The 1 proviso speaks about the eligibility of both the category of Officers and Employees to get a higher computation benefit, by reckoning one and a half month's of pay for each completed year of service beyond 30 years. The remaining two provisos under the said Regulations as to the computation of Gratuity deal with the above two classes (Officer/Employee) separately, providing different mode of calculation. In the 2nd proviso dealing with the case of ‘Officers’, it is mentioned that the Gratuity is payable based on the last pay drawn; whereas the 3rd proviso dealing with the ‘Employees' stipulates that Pay has to be calculated on the basis of the average of the basic pay (100%), dearness allowance, special allowance and officiating allowance payable during the preceding 12 months. Here again, the conscious attempt made by the framers of the Regulations is quite evident in the stipulation that one month's pay for every completed year of service of the Officer in excess of six months subject to a maximum of 15 month's pay as mentioned in sub-Regulation (3) has to be on the basis of the last pay drawn in the case of an ‘Officer’ as given in the 2 proviso, whereas the position is different when it comes to the case of an ‘Employee’ as dealt with under the 3 proviso, taking something more to be reckoned as ‘Pay’ for the purpose of calculation, which includes the average of the basic pay (100%), dearness allowance, special allowance and officiating allowance during the preceding 12 months. The rationality or the circumstances under which such distinctions were sought to be made by the framers of the Regulations, whether it be with regard to the extent of forfeiture of Gratuity in the case of an ‘Officer’ compared with the ‘Employees' or the quantum of Gratuity based on the mode of calculation with reference to the last pay drawn by the ‘Officers’ (2 proviso) and the Pay including such other allowances, applicable to the ‘Employees' (3 proviso), cannot be a subject matter of scrutiny before any Court, as it is exclusively within the wisdom of the framers of the Regulations, being a ‘policy matter’.

18. Now comes the question of actual computation. It will be worthwhile to note the definition of the terms ‘Pay’, ‘Salary’ and ‘Emoluments’ as given under Regulation 2(m), 2(o) and 2(i) of the Regulations.

“2. Definitions. - (m) “Pay” means basic pay drawn per month by the officer or employee in a pay-scale including stagnation increments and any part of the emoluments which may specifically be classified as pay under these regulations;

(o) “Salary” means aggregate of pay and dearness allowance;

(i) “Emoluments” means the aggregate of salary and allowances, if any.:

19. If we look at the definitions as above, it is in the form of a ‘pyramid’ or a triangle with ‘Pay’ at the top, ‘Salary’ at the middle and ‘Emoluments’ at the bottom. Definition of the term ‘Pay’ under Regulation 2(m) says that, it means basic pay drawn per month by the Officer or Employee (covering both) in a pay-scale, including stagnation increments; of course, with liberty to add on any part of the ‘Emoluments’, which may specifically be classified as ‘Pay’ under these Regulations. So, three things are important, which are applicable to both the Officer segment as well as the Employee segment, when we consider the definition of the term ‘Pay’. First of all, it means the basic pay drawn per month in a pay-scale. When the terminology used is ‘means’, it is an ‘exclusive’ definition and is not an inclusive one. It cannot be anything other than basic pay, except to the extent as sought to be included or added on. Stagnation increment is one such instance, which is taken in and the next instance is as spoken in the last limb i.e. any part of the emoluments which may specifically be classified as pay under these Regulations.

20. Here, it may be noted that definition of the term ‘Salary’ under Regulation 2(o) speaks about the aggregate of ‘Pay’ and ‘Dearness Allowance’. When we come to definition of the term ‘Emoluments’ under Regulation 2(i), it is still wider, whereby it takes in ‘Salary’ (pay and dearness allowance) and other allowances, if any, as well. It is for this reason, that we mentioned that the term ‘Pay’, ‘Salary’ and ‘Emoluments’ are situated in the form of a ‘pyramid’; with ‘Pay’ at the top and ‘Emoluments’ at the bottom, placing ‘Salary’ in the middle. Going by the last limb of the definition of the term ‘Pay’ under Regulation 2(m), if at all any portion of the ‘Emoluments’ is to be added on, alongwith the basic pay, to reckon the ‘Pay’ defined under Regulation 2(m), it has to be : (i) specifically classified as ‘Pay’; (ii) under these Regulations. Hence only those portions of the ‘Emoluments’, if at all any extent is specifically classified to be reckoned as ‘Pay’ under the Regulations, it can be reckoned as ‘Pay’ to workout the Gratuity. Correctness of the observation of the learned Single Judge of the different High Courts (Madhya Pradesh High Court, this Court, Telengana High Court, Rajasthan High Court (Jodhpur Bench) and Calcutta High Court) that the last limb of the definition of the Regulation 2(m) defining the term ‘Pay’ i.e., “any part of the ‘Emoluments’ which may specifically be classified as ‘Pay’ under these Regulations” will be rendered otiose; if the interpretation sought to be made by the Employer-Bank is accepted, as there is “no other provision in the Regulations” to treat any part of the ‘Emoluments’ to be added on to the basic pay and constitute the ‘Pay’ as defined therein has to be considered in the said context.

21. On turning back to Regulation 72(3), when the core provision says that the amount of Gratuity payable to both the Officer or Employee shall be one month's Pay for every completed year of service or part in excess of six months, subject to maximum of 15 month's pay; the 2 proviso clearly stipulates that in the case of an ‘Officer’, the Gratuity is payable based on the last pay drawn, whereas the 3 proviso stipulates that in the case of an ‘Employee’, it is something more i.e., the pay for purpose of calculation of the Gratuity shall be the average of the basic pay (100%), dearness allowance, special allowance and officiating allowance payable during the preceding 12 months. This shows that there is a vital distinction as envisaged by the framers of the Regulations that in the case of ‘Officer’, the expression used is only ‘Pay’ which means the basic pay; whereas in the case of ‘Employee’, the ‘Pay’ is further qualified by stipulating to take the average of the basic pay (100%), dearness allowance, special allowance and officiating allowance payable during the preceding 12 months. This is a conscious decision taken by the framers to treat the ‘Officers’ and ‘Employees' as of different segments, placing them on two different pedestals and to have the calculation effected adopting the two different methods. Considering this in the light of definition of the term ‘Pay’ under Regulation 2(m), in the case of the ‘Officers’, since ‘Pay’ is the basic pay and nothing can be added on to the basic pay, the calculation has to be exclusively on the basis of the last pay drawn i.e. the last basic pay; whereas in the case of the ‘Employees', the last limb of Regulations 2(m) comes into operation, whereby something else by way of dearness allowance, special allowance and officiating allowance (average during the preceding 12 months), are provided to be added on to the basic pay, (average of preceding 12 months) to constitute the ‘Pay’/‘reckonable element’ as provided in the 3 proviso to Regulation 72(3). This being the position, the stipulation given as to the mode of calculation separately in the case of ‘Officers’ and ‘Employees' under the 2 and 3 provisos to Regulation 72(3) is in conformity with the provision to give effect to the definition of the term ‘Pay’, as defined under Regulation 2(m) of the Regulations.

22. In this context, it is worthy to note that there is a clear distinction when we come to the provisions of the Payment of Gratuity Act, 1972. The Preamble of the Act says that, it is to provide for a scheme for payment of Gratuity to ‘Employees', engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental thereto. The term ‘Employee’ is defined under Section 2(e) of the Act, which is to the following effect:

“2(e) “employee” means any person (other than an apprentice) employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, 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.”

23. There is no separate definition to the term ‘Officer’ under the Act. In other words, Section 2(e) takes in both the Employees as well as the Officers.

24. Section 2(s) of the Act defines the term ‘Wages’ in the following terms:

“2(s) “wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.”

25. From Section 2(e) and 2(s) and the scheme of the statute, particularly, with reference to the ‘preamble’ it is quite clearly discernible that the provisions in the Act are applicable on equal measures to both the Officers and Employees who are not intended to be distinguished or treated separately. In other words, the ‘wages’ (defined under 2(s) of the Act) earned by the Employee under the different heads are treated as the amount reckonable for the purpose of computation of Gratuity under Section 4 of the Act, on an equal footing, whether the beneficiary be an Officer or a General worker or such other Staff. Unlike this, insofar as the ‘Regulations’ separately define the terms ‘Employee’ and ‘Officer’ under Regulation 2(j) and 2(l) respectively and draws a distinction with regard to the extent of ‘Forfeiture of Gratuity’ as given under Regulation 72(2)(e), read with the proviso thereunder and the different ‘Modes of calculation’ with reference to the ‘Pay’ reckonable in the case of ‘Officers’ and ‘Employees' (dealt with separately under the 2 and 3 provisos to Regulation 72(3), the definition of the term ‘Pay’ under Regulation 2(m) cannot be widened beyond the explicit terms as given therein, by reading something more into it. This exercise done by the Controlling Authority, the Appellate Authority and the learned Single Judge of this Court as discussed above, in our view, is not correct. We respectfully disagree with the view taken by the Division Bench of the Madhya Pradesh High Court and the learned Judges of Telengana, Rajasthan (Jodhpur Bench) and Calcutta High Courts; while concurring with the view expressed by the learned Single Judge of the Bombay High Court in this regard.

26. It is settled law of interpretation that when the statute/provision of law is clear and there is no ambiguity, it has to be taken as it is. It is not within the realm of this Court to question the wisdom of the law makers, for the distinction they have sought to make with reference to the classification of the workforce, placing the ‘Officers’ and Employees' on different platforms and providing different modes of calculation. Option is always given to the Claimants to claim Gratuity either under the Act or under the Regulations, but never under both. When the calculation has to be made under the Regulations, each and every provision therein has to be given effect to, which cannot be widened by adding something more, taking it from elsewhere, whether it be with reference to the inclusive definition of the term ‘wages’ under Section 2(s) of the Act or definition of the terms ‘Salary’ under Regulation 2(o) or ‘Emoluments’ defined under Regulation 2(i) of the Regulations. This is absolute, irrespective of the fact whether the provision/law is a welfare legislation or not.

27. In the above circumstances, the observations of the learned Single Judge in ‘paragraph 20’ of the judgment under challenge that “as in the case of an ‘Employee’, the framers of the Regulations could have also specifically said that the calculation of Gratuity for an Officer would be one month's of basic pay and other specific allowance” and so also, “the fact that they have not specifically held that it would be one month of ‘basic pay’ rather it is one month of ‘pay’ means there is a deliberate and conscious exclusion of term ‘basic pay’ from sub Clause 3 of Regulation 72 of the Regulations, so far as Officers are concerned”, are not correct or sustainable. We also record our disapproval with the observation made by the learned Single Judge in ‘paragraph 22’ that “the emoluments that an officer was drawing would also have to be treated as part of the pay”; for the reason that the qualifying words under the 3 limb of the definition ‘Pay’ under Regulation No. : 2(m):“which may be specifically classified as ‘pay’ under these Regulations” have been left out (which, in fact, is contained in case of ‘Employees' under the 3 proviso of the Regulation 72(3)); but conspicuously absent in the case of ‘Officers’ under the 2 proviso to the same Regulation. For the very same reason, the observation made by the learned Single Judge in ‘paragraph 26’ that “the framers of the Regulations had taken the term ‘Pay’ in broader perspective rather than giving it restrictive or narrow meaning confined to the term basic pay” does not reflect the correct position. Same is the case with regard to the observations as to the intention of the framers of the Regulations as given in ‘paragraph 34’ of the judgment.

28. With regard to the scope of judicial review, the writ petitions were filed under Article 226 of the Constitution of India raising a serious question of law as to the computation of Gratuity payable under the Regulations. There is no dispute on facts and the challenge is only w.r.t. the question of law and its correct interpretation. The scope and extent of power of this Court under Article 226 of the Constitution of India is wide enough to decide the ‘lis’. The very same ruling of the Apex Court in Sawarn Singh v. State of Punjab reported in (1976) 2 SCC 868 relied on and extracted in ‘paragraph 39’ of the judgment passed by the learned Single Judge holds in unequivocal terms (last sentence in paragraph 12) that an error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however grave it may appear to be. The way how the issue has to be approached, analysed and appreciated, even in a case where the writ petition has been filed wrongly marking it as under Article 227, or by showing both Articles 226 and 227, has been discussed in detail by this Court in the recent judgment dated 14.09.2020 passed in Writ Appeal No. 316 of 2020. We hold that the writ petitions filed by the Appellant-Bank as well as these appeals are quite maintainable in all respects.

29. In the light of the above discussion, we find that the orders passed by the Controlling Authority and the Appellate Authority impugned in the writ petitions and the common verdict passed by the learned Single Judge are not liable to be sustained. They are set aside accordingly and the Claim Petitions stand dismissed. The Writ Appeals are allowed. No costs.

Chhattisgarh Rajya Gramin Bank Through The Chairman v. Arun Phansalkar And Others

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Chhattisgarh Rajya Gramin Bank Through The Chairman v. Arun Phansalkar And Others

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