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upon an area which is not within the jurisdiction of the Chairman
of the Corporation.
Revision of scales of pay as also other allowances is technical
in nature. When a benefit is extended to a group of employees the
effect of such benefit, if otherwise comes within the purview thereof
must be held to be applicable to other groups of employees also.
An employee is entitled to gratuity. It is not a bounty. It is
payable on successful tenure of service. Regulation 77 provides as
to how the amount of gratuity is to be calculated. Regulation 51
provides for a rule of measurement. Only because it employed the
word “permanent basic pay”, the same will not by itself lead to the
conclusion that once an employee has retired, he would not be
entitled to any revision of the amount of gratuity.
The Chairman of the Corporation has himself given retrospective
effect to revision in scales of pay. Such a retrospective effect has
also been given so as to benefit a class of employees. The employees,
irrespective of the fact whether they had superannuated or not,
were given the benefit of arrears of pay from 1st August, 1993. By
reason of grant of such benefit both to serving employees as well as
the superannuated employees, both the class of employees became
entitled by right.
If due to the above reason, an employee became entitled to the
benefit of the revised scale of pay as on the date of retirement, the
same for all intent and purpose must be taken to be the permanent
basic pay, apart from other allowances, if any, which are required
to be taken into consideration for the purpose of computation of
the amount of gratuity.
It cannot be said that the Chairman of the Corporation having
power to fix the cut-off dates for different purposes, also has
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jurisdiction to do so for payment of gratuity, which has a direct
nexus with the revised pay of scale.
Once the Chairman fixes a cut-off date for the purpose of giving
effect to the agreement vis-a-vis the payment of arrears in terms
thereof, he cannot exercise further jurisdiction in respect of a matter
which is not controlled by Chapter IV but is controlled by other
provisions of statutes and Parliamentary Acts governing the field.
It was held by the Hon’ble Supreme Court that an employee is
entitled to gratuity, and it is not a bounty. If an employee became
entitled to revised pay on date of retirement, his revised pay must
be taken to be permanent pay for purpose of computation of gratuity.
A delegate cannot act in violation of a statute - A sub-delegate
cannot exercise any power which is not meant to be conferred upon
him by reason of statutory provision - Gratuity is not covered under
Regulation 51 - Provident Fund and Gratuity are ordinarily governed
by the Acts enacted by Parliament subject to conditions contained
therein - Regulation 77 provides as to how amount of gratuity is to
be calculated – Regulation 51 provides for a rule of measurement -
Life Insurance Corporation of India (Staff) Regulations, 1960 -
Regulations 51 and 77 - Life Insurance Corporation of India Class I
Officers (Revision of Terms and Conditions of Service) Instructions,
1996. Words and Phrases: Expression “and other matters connected
therewith or incidental thereto” occurring in Regulation 51(2) of
Life Insurance Corporation of India (Staff) Regulations, 1960 -
Connotation of. The Chairman of the appellant-Life Insurance
Corporation, pursuant to revision of pay of the employees of the
Corporation, in exercise of powers under Regulation 51 of the LIC
of India (Staff) Regulations 1960, issued Life Insurance Corporation
of India Class I Officers (Revision of Terms and Conditions of Service)
Instructions, 1996, fixing cut-off dates for grant of different
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National Human Rights Commission
allowances as also the pay. The cut-off date for revision of pay was
fixed as 1.4.1993. However, for payment of gratuity, the cut-off date
was fixed as 1.8.1994, which was challenged in some of the High
Courts.
The Gujarat High Court and the Karnataka High Court upheld
the validity of the 1996 Instructions whereas the Kerala High Court
in the judgment under appeal took a different view. In the instant
appeal filed by the Life Insurance Corporation, it was contended for
the respondent, the employees, that the power of the Chairman of
the appellant-Corporation to issue instructions under Regulation
51 being limited to Chapter IV of the Regulations, the 1996
Instructions had no application to payment of gratuity, which is
covered by Regulation 77. The question for consideration before
the Court was: Whether the expression,
“The date from which the
revision shall apply, and other matters connected therewith or
incidental thereto”,
occurring in Regulation 51 of the Life Insurance
Corporation of India Regulations, 1960 would also include the matter
relating to payment of gratuity which is otherwise covered by
Regulation 77.
gratuity.
The appellant’s argument was that the payment of pension and
gratuity under the Pension Rules being a package by itself, and
that package having been made applicable to the employees of the
MCD, the provisions of payment of gratuity under the Payment of
Gratuity Act could not be held applicable.
The Supreme Court examined the provisions of the Pension
Rules as well as the provisions of the Payment of Gratuity Act. The
Payment of Gratuity Act being a special provision for payment of
gratuity, except if there is any provision, which excludes its
applicability to an employee otherwise governed by the provisions
of the Pension Rules, it is not possible to hold that the respondent
is not entitled to the gratuity under the Payment of Gratuity Act.
The only provision, which was pointed out, was the definition
of “employee” in Section 2(e), which excludes the employees of the
Central Government and State Governments receiving pension and
gratuity under the Pension Rules but not an employee of the MCD.
The MCD employee, therefore, was held entitled to the payment of
gratuity under the Payment of Gratuity Act. The fact that the gratuity
was provided for under the Pension Rules did not render him
ineligible to get the payment of gratuity under the Payment of
Gratuity Act.
The Hon’ble Supreme Court opined that the employees of the
MCD would be entitled to the payment of gratuity under the Payment
of Gratuity Act, despite the provisions of the Pension Rules having
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been made applicable to them for the purpose of determining the
pension. In the above circumstance, the employees cannot claim
gratuity available under the Pension Rules.
6. D.S. Nakara & Others Vs. Union of India
11
This case was related to pensioners being denied increased
pensionary benefits due to their date of retirement.
By a Memorandum dated May 25
th
, 1979 the Government of
India liberalized the formula for computation of pension in respect
of employees governed by the Central Civil Services (Pension) Rules,
1972 and made it applicable to employees retiring on or after March
31, 1979. By another Memorandum issued on September 23
rd
, 1979
it extended the same, subject to certain limitations, to the Armed
Forces’ personnel retiring on or after April 1, 1979.
Petitioners D.S.Nakara and another, who had retired in the year
1972 from the Central Civil Service and the Armed Forces’ service
respectively, and Petitioner No. 3, a registered society espousing
the cause of pensioners all over the country, challenged the validity
of the above two memoranda in so far as the liberalization in
computation of pension had been made applicable only to those
retiring on or after the date specified and the benefit of liberalization
had been denied to all those who had retired earlier.
Counsel for petitioners contended that all pensioners entitled
to receive pension under the relevant rules form a class, irrespective
of the dates of their retirement and there cannot be a mini-
classification within this class. Further, that the differential
treatment accorded to those who had retired prior to the specified
date is a violation of Art. 14 of the Constitution of India as the
choice of specified date is wholly arbitrary, the classification based
on the fortuitous circumstance of retirement before or subsequent
K ****************
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Initiatives
to the specified date is invalid and that the scheme of liberalization
in computation of pension must be uniformly enforced with regard
to all pensioners.
Counsel for respondents contended that a classification based
on the date of retirement is valid for the purpose of granting
pensionary benefits, that the specified date is an integral part of
the scheme of liberalization and that the Government would never
have enforced the scheme devoid of the date. Further, that the
doctrine of severability cannot be invoked to sever the specified
date from the scheme as it would have the effect of enlarging the
class of pensioners covered by the scheme when the legislature has
expressly defined the class to which the legislation applies. It would
be outside the judicial function to enlarge the class. There is not a
single case, where the court has included some category that “If
more persons divided the available cake the residue falling to the
share of each, especially to the share of those who are not before
the court would become far less and therefore no relief could be
given to the petitioners that pension is always correlated to the
date of retirement and the court cannot change the date of retirement
and impose fresh commutation benefit which may burden the
exchequer to the tune of Rs. 233 crores; and that the third petitioner
has no locus standi in the case.”
The Hon’ble Supreme Court held that Article 14 strikes at
arbitrariness in State action and ensures fairness and equality of
treatment. It is attracted where equals are treated differently without
any reasonable basis. The principle underlying the guarantee is
that all persons similarly circumstanced shall be treated alike both
in privileges conferred and liabilities imposed. Equal laws would
have to be applied to all in the same situation and there should be
no discrimination between one person and another if as regards
the subject-matter of the legislation their position is substantially
