LexN. MANOHARAN, ETC. versus THE ADMINISTRATIVE OFFICER AND ANOTHER
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[2026] 2 S.C.R. 596 : 2026 INSC 143 N. Manoharan, Etc. v. The Administrative Officer and Another (Civil Appeal No(s). 1513-1522 of 2026) 11 February 2026 [Pankaj Mithal and S.V.N. Bhatti,* JJ.] Issue for Consideration Whether the employees of Heavy Water Plant, Department of Atomic Energy, Government of India, Tuticorin (“HWP”) are covered by the provisions of the Payment of Gratuity Act, 1972. Headnotes† Atomic Energy Act, 1962 – CCS (Pension) Rules, 1972 – Payment of Gratuity Act, 1972 – s.2(e) – Retired employees of HWP employees governed by the CCS (Pension) Rules, 1972 claimed higher gratuity benefits under the PG Act – Controlling Authority held that the provisions of the PG Act are attracted to the employees of HWP, and directed to pay the difference of gratuity between the PG Act and CCS (Pensions) Rules, 1972 – HWP filed appeal before the Deputy Chief Labour Commissioner, dismissed – Writ Petitions filed by HWP, dismissed – In appeal, High Court held that since the Appellants held “civil posts under the Central Government” and were governed by the CCS (Pension) Rules, 1972, which provide for gratuity, they fall squarely within the exclusion clause and therefore, do not come within the meaning of “employees” u/s.2(e), PG Act – Interference, if warranted: Held: No, impugned order agreed with – The exclusionary limb of s.2(e) begins with the words “but does not include” any such person who holds a post under the Central Government; a State Government; is governed by any other Act or; by any Rules providing payment of gratuity – HWP is created to manage the projects of the Department of Atomic Energy (DAE) for the production of heavy water – HWP at Tuticorin is a project under the management of the Heavy Water Projects Board of the DAE, and cannot, by sieving, * Author [2026] 2 S.C.R. 597 N. Manoharan, Etc. v. The Administrative Officer and Another separate itself from being an ancillary or adjunct of the DAE – For the limited purpose of gratuity, the larger and comprehensive establishment of atomic energy facilities by the Central Government is not replaced with a very narrow construction of the functional freedom given to the Heavy Water Projects Board or individual Heavy Water Plants – HWP is an adjunct or ancillary operating through the Heavy Water Projects Board of the DAE – Constitution, establishment, and continuation examined, HWP is an adjunct of the Department of Atomic Energy – Therefore, the employees fall within the exclusionary clause of s.2(e) of the PG Act – Thus, ss.5 and 14 are not attracted in deciding on the applicability of the PG Act to the employees of HWP. [Paras 12-14] Atomic Energy Act, 1962 – s.3 – High Court inter alia held that Heavy Water Board (HWB) functions directly under the Ministry and the employees were Central Government servants, not merely employees of an autonomous industrial unit: Held: The Department of Atomic Energy, Government of India, is the Department through which the Central Government discharges the functions, duties, and responsibilities assigned to it under the AE Act – s.3 inter-alia empowers the Central Government to produce, develop, use and dispose of Atomic Energy, either by itself or through any Authority or Corporation established by it or a Government Company, and carry out research into any matters connected therewith – Similarly, to manufacture or to produce any prescribed radioactive substance or the ancillary works connected therewith, the difference in language between Clauses (a) and (b) of s.3 clearly demonstrate that a few of the functions/activities, the Central Government is empowered to do by itself or through any other authority or corporation established by it or a Government Company, and has power to manufacture or otherwise produce any prescribed or radioactive substance as per Clause (b) – There is a choice vested in the Central Government to undertake a particular act either directly or by establishing a company/PSU – Since its inception, a board has been constituted to manage the HWPs of the DAE – The retired employees admit that HWP is not incorporated under the Companies Act, is not recognised as a PSU, or functions as a Government Company – Thus, the other attributes of a separate legal entity, incorporated association, artificial person, limited liability, common seal, perpetual succession, and transferability of shares are not present. [Paras 4, 12.1] 598 [2026] 2 S.
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