Case Note & Summary
The Supreme Court in this appeal considered whether a daily-wager, who was later regularized as a government employee and superannuated, is entitled to gratuity under the Payment of Gratuity Act, 1972. The appellant, Dhansai Sahu, worked as a daily-wager before being regularized on 1.9.2008 and superannuated thereafter. He claimed gratuity under the 1972 Act, but the High Court of Chhattisgarh rejected his claim, relying on Section 2(e) of the Act, which excludes persons holding posts under the State Government if governed by other Acts or rules providing for gratuity, such as the Chhattisgarh Civil Services (Pension) Rules, 1976. The appellant relied on Netram Sahu v. State of Chhattisgarh (2018) 5 SCC 430, where a similar claim was allowed. However, the Supreme Court noted that Netram Sahu did not consider the 1976 Rules or an earlier unreported decision in Bharat Sanchar Nigam Ltd. v. Teja Singh (2009), which held that a daily-rated mazdoor who was regularized but lacked qualifying service under service rules was not entitled to gratuity under the 1972 Act. The Court observed a conflict between these two decisions and, to maintain judicial propriety, referred the matter to a larger Bench of three Judges. The Court did not decide the merits but directed the registry to place the file before the Chief Justice for constitution of a larger Bench.
Headnote
A) Gratuity - Daily-wager - Regularization - Section 2(e) Payment of Gratuity Act, 1972 - Chhattisgarh Civil Services (Pension) Rules, 1976 - The court considered whether a daily-wager who was later regularized and superannuated as a government employee is entitled to gratuity under the 1972 Act. The High Court held that Section 2(e) excludes persons holding posts under State Government governed by other Acts/Rules. The Supreme Court noted a conflict between Netram Sahu v. State of Chhattisgarh (2018) 5 SCC 430 and Bharat Sanchar Nigam Ltd. v. Teja Singh (unreported, 2009) and referred the matter to a larger Bench. (Paras 2-7)
B) Gratuity - Exclusion under Section 2(e) - Government employees - The definition of 'employee' under Section 2(e) of the Payment of Gratuity Act, 1972 excludes persons holding posts under Central/State Government if governed by other Acts/Rules providing for gratuity. The Chhattisgarh Civil Services (Pension) Rules, 1976 provide for gratuity, thus the 1972 Act may not apply. (Paras 2, 6)
C) Conflict of Precedents - Larger Bench reference - The Supreme Court found that Netram Sahu (2018) 5 SCC 430, which allowed gratuity to a daily-wager, did not consider the 1976 Rules or the earlier decision in Teja Singh (2009). To maintain judicial propriety, the matter was referred to a three-Judge Bench. (Paras 4-7)
Issue of Consideration
Whether service rendered as a daily-wager before regularization can be counted for gratuity under the Payment of Gratuity Act, 1972 after superannuation as a regular government employee, given the exclusion under Section 2(e) of the Act.
Final Decision
The Supreme Court did not decide the merits but referred the matter to a larger Bench of three Judges due to conflict between Netram Sahu (2018) and Teja Singh (2009). The registry was directed to place the file before the Chief Justice for constitution of a larger Bench.
Law Points
- Payment of Gratuity Act
- 1972
- Section 2(e)
- Chhattisgarh Civil Services (Pension) Rules
- 1976
- Rules 3(i)
- 5
- 13
- 16
- daily-wager
- regularization
- gratuity
- superannuation
- conflict of decisions
Case Details
Civil Appeal arising out of SLP (Civil) No. 4790 of 2019
A.M. Khanwilkar, Dinesh Maheshwari
State of Chhattisgarh & Ors.
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Nature of Litigation
Civil appeal against High Court judgment denying gratuity under Payment of Gratuity Act, 1972 to a daily-wager who was later regularized as a government employee.
Remedy Sought
Appellant sought gratuity under the Payment of Gratuity Act, 1972 for his service as a daily-wager before regularization.
Filing Reason
Appellant was denied gratuity by the High Court on the ground that Section 2(e) of the 1972 Act excludes government employees governed by other rules providing for gratuity.
Previous Decisions
High Court of Chhattisgarh dismissed the claim; Supreme Court noted conflict between Netram Sahu (2018) and Teja Singh (2009) and referred to larger Bench.
Issues
Whether service as daily-wager before regularization can be counted for gratuity under the Payment of Gratuity Act, 1972 after superannuation as a regular government employee.
Whether Section 2(e) of the Payment of Gratuity Act, 1972 excludes government employees governed by other gratuity rules.
Whether the decision in Netram Sahu (2018) is in conflict with Teja Singh (2009).
Submissions/Arguments
Appellant relied on Netram Sahu v. State of Chhattisgarh (2018) 5 SCC 430, which allowed gratuity to a daily-wager in similar circumstances.
Respondents relied on Section 2(e) of the Payment of Gratuity Act, 1972 and the Chhattisgarh Civil Services (Pension) Rules, 1976, arguing that the 1972 Act does not apply to government employees covered by those Rules.
Ratio Decidendi
The court did not decide the ratio due to reference to larger Bench; however, it noted that Section 2(e) of the Payment of Gratuity Act, 1972 excludes government employees governed by other gratuity rules, and there is a conflict of precedents on whether daily-wager service before regularization counts for gratuity.
Judgment Excerpts
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 after the age of superannuation and retirement as State Government employee?
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.
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.
Procedural History
The appellant filed a civil appeal before the Supreme Court against the judgment of the High Court of Chhattisgarh, which had dismissed his claim for gratuity under the Payment of Gratuity Act, 1972. The Supreme Court granted leave and, after hearing, referred the matter to a larger Bench due to conflict between two coordinate Bench decisions.
Acts & Sections
- Payment of Gratuity Act, 1972: Section 2(e)
- Chhattisgarh Civil Services (Pension) Rules, 1976: Rules 3(i), 5, 13, 16, 43, 44
