LexBEED DISTRICT CENTRAL CO-OPERATIVE BANK LTD. versus STATE OF MAHARASHTRA AND ORS.
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< BEED DISTRICT CENTRAL CO-OPERATIVE BANK LTD. A v. STATE OF MAHARASHTRA AND ORS. SEPTEMBER 29, 2006 [S.B. SINHA AND DAL VEER BHANDARI, JJ.] B Payment of Gratuity Act, 1972-Section 4-Payment of gratuity- Employer's gratuity Scheme envisaging rate of gratuity at the rate of 26 days' wages/or every completed year of service with a ceiling limit of Rs. 2,50,0001 C -Act of 1972 envisaging 15 days' wages with a ceiling limit of Rs. 3,50,000/ -Claim of benefit of the Scheme as also ceiling limit under the Act- Entitlement of-Held: Either the contract or the statute has to be given effect-Workman is not at liberty to opt for better terms of contract, while keeping option open regarding part of the statute-Thus, workman cannot opt for both. D Interpretation of Statutes-Beneficial legislation-Interpretation of- Held: When two views are possible and the Act seeks to achieve social welfare, it may be construed in favour of the workman-However, same is not when the workmen are not entitled to benefits thereof. only because it is a beneficent statute. E Doctrines-Doctrine of blue pencil-Applicability of-Employer's gratuity &heme envisaging rate of gratuity at the rate of 26 days' wages for every completed year of service with a ceiling limit of Rs. 2, 50, 0001-Act of 1972 envisaging 15 days' wages with a ceiling limit of Rs. 3,50,0001- F Severance of contract by blue pencil-Held: Doctrine of blue pencil not applicable-Payment of Gratuity Act, 1972. Appellant-Bank had its own gratuity scheme which was one of the terms of contract of employment between the parties. Under the scheme, employees were entitled to gratuity on minimum 5 years of service which was to be G calculated at the rate of 26 days' wages for every completed year of service with a ceiling limit of Rs. 2,50,000/-. However, under the Payment of Gratuity Act, 1972 (as amended), the rate of gratuity was to be calculated at the rate of 15 days' wages for every completed year of service with a ceiling limit of Rs. 3,50,000/-. Respondents claimed benefit of both the schemes as also the ceiling 895 II 896 SUPREME COURT REPORTS [2006] SUPP. 6 S.C.R. A limit fixed under the amended Act. Both the trial court and High Court upheld the claim. Hence the present appeal. Allowing the appeal, the Court HELD: 1.1. The Payment of Gratuity Act, 1972 is a beneficial statute. B When two views are possible, having regard to the purpose the Act seeks to achieve being a social welfare legislation, it may be construed in favour of the workman. However, it is also trite that only because a statute is beneficent in nature, it would not mean that it should be construed in favour of the workmen only although they are not entitled to benefits thereof. (901-C-E) C 1.2 Applying the 'Golden Rule of Interpretation of Statute', the question should be considered from the point of view of the nature of the scheme as also the fact that the parties agreed to the terms thereof. When better terms are offered, a workman takes it as a part of the package. He may volunteer therefor, he may not. Sub-Section (5) of Section 4 of the 1972 Act provides D for a right in favour of the workman. Such a right may be exercised by the workman concerned. He need not necessarily do it It is the right of individual workman and not all the workmen. When the expression "terms" have been used, ordinarily it may mean "all the terms of the contract". (901-E-G) 1.3 While interpreting a beneficent statute, Payment of Gratuity Act, E either contract has to be given effect to or the statute. The provisions of the Act envisage for one scheme. It could not be segregated. Sub-Section (5) of Section 4 of the 1972 Act does not contemplate that the workman would be at liberty to opt for better terms of the contract, while keeping the option open in respect of a part of the statute. While reserving his right to opt for the beneficent provisions of the statute or the agreement, he has to opt for either F of them and not the best of the terms of the statute as well as those of the contract. Also the doctrine of blue pencil is not applicable to the instant case. Therefore, the workman cannot opt for both the terms. Such a construction would defeat the purpose for which Sub-Section (5) of Section 4 has been enacted. (901-F-H; 902-F-Gl G 1.4 It is significant that in the event the amount of gratuity is calculated at the rate of26 days' salary for every completed year of ser
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