UNION OF INDIA AND ANR. versus MANIK LAL BANERJEE

Citation: [2006] SUPP. 4 S.C.R. 66 · Decided: 26-07-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
c 
UNION OF INDIA AND ANR. 
v. 
MANIK LAL BANERJEE 
Jll LY 26. 2006 
[S.B. SINHA AND DAL VEER BHANDARI, JJ. J 
Service Law: 
Payment of Gratuity Act. 1972, Ss. 2!eJ & 2(j)!Rai/way Service (Pension) 
Rules, 1993; Rule 15(/)(ii): 
Paymenl of Death-cum-Ri!lirement Gratuity-1972 Act or Railway 
Services (Pension) Rules- Applicability of-Held: Section 2(c} of 1972 Acl 
excluding .fiwn its purview an employee holding a post under Central 
D Government and whose terms & conditions of service governed by any other 
AcliRu/,:s providing for payme/1/ of gralllit;~-Since, non-applicability of 1972 
Act and consequent applicabilitv of the Railway Services Pension Rules to 
Railway employees was not in issue in the decided case of Prilam Singh, 
Tribunal erred in placing reliance on the principle evolved in that case while 
deciding 1he issue in favour of the employee- -Both the ( 'ourts below failed to 
E 
pruper~v cons/rue Lhe provisions of 1972 Ael--Hence, the employee in queslion 
not en1i1/ed to paymenl of gratuity in terms of 1972 Ac/. 
Fifih Pay Commission's Recommendation-Increase in dearness pay-· 
Effective date·-Entitlement lo--He/d: Since Central Government accepled the 
recommendations wilh prospeclive e.ffec/ from 1 . ./.1995 and the employee in 
F question retired on 31.1.1995, bene.fil of the recommenda1ions not applirnhle 
IV him. 
G 
H 
IYords and Phruses: 
'Employee' and 'Employer' -Meaning of in the context of Payment of 
<Jratu11y Act, 1972. 
The question which arose for determination in this appeal was as to 
whether a Railway employee who retired from service on 31.1.1995 was 
entitled to get gratuity in terms of provisions of the Payment of Gratuity 
66 
.. 
) 
U.0.1. v. MANIK LAL BANERJEE 
67 
Act, 1972 in preference to the Railway Services Pension Rules, 1993. 
A 
Appellant contended that Section 2(e) of the 1972 Act will have no 
application in view of the fact that the Respondent being a railway servant 
was an employee of the Central Government and was governed by the 1993 
Rules. 
Respondent-employee submitted that Section 2(e) of the 1972 Act 
should be interpreted conjointly with Section 2(1) of the Act while defining 
'employment' and Section 2(a)(i) of the Act in defining 'establishment' and 
construing so, it must be held that the 1972 Act is applicable to the cases 
B 
of railway employees also; that in view of Rule 15(4)(ii) of the 1993 Rules, C 
the pension and commuted value thereof are only governed by the Pensions 
Act, 1871, therefore, the matter relating to payment·of gratuity could not 
have been brought within the purview of the 1993 Rules; that since pension 
and gratuity are not bounties, the same should be given a liberal 
construction; that the decision of the Authorities to pay 20% dearness 
allowance in emoluments to him for the purpose of gratuity being not a D 
decision under a legislative act, the same is subservient to the provisions 
of the 1972 Act; and that the .Fifth Pay Revision Commis~ion having made 
an interim report that 90% of dearness allowance should be paid to the 
employees who have retired during the period from l.4.1995 to 31.12.1995, 
the Respondent should not be deprived of such benefit. 
Allowing the appeal, the Court 
E 
HELD:l.1. The interpretation clause contained in Section 2(e) of the 
Payment of Gratuity Act takes out from its purview a person who holds 
inter alia a post under the Central Government and whose terms and 
conditions of service are governed by an Act or the Rules providing for F 
payment of gratuity. 172-D] 
1.2. Since railway servants are governed.by the provisions of the 1993 
Rules, they shall not be governed by the 1972 Act. The High Court noticed 
the definition of 'employee' contained in Section 2(e) of the 1972 Act, G 
however, while deciding the issue it fell into an error in coming to the 
conclusion that there was nothing in the 1972 Act so as to exclude the 
benefit thereof to a railway employee. It failed to properly construe the 
said provision. [74-C-D-El 
2.1. The Tribunal granted relief to the Respondent-employee solely H 
68 
SUPREME COURT REPORfS (20061SUPP.4 S.C.R. 
A relying on or on the basis of a decision of the Central Administrative 
Tribunal in the case of Pritam Singh. However, in that case, indisputably, 
the question as regards non-applicability of the 1972 Act and consequent 
applicability of the Railway Services Pension Rules, 1993 had not arisen 
for consideration. (73-B] 
B 
Union of India v. Pritam

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