D. Ramesh vs Govt. of India and Others

In this petition under Art. 226 of the Constitution the petitioner has sought for striking down Regulation 4(e)(1) of the Death-cum-Retirement Gratuity Regulations, 1975 (hereinafter referred to as ''the Gratuity Regulations'') framed by the second respondent as violative of Art. 14 of the Constitution and also being inconsistent with the provisions of Payment of Gratuity Act, 1972 (hereinafter referred to as ''the Act''). The petitioner has also sought for a writ in the nature of mandamus directing respondents 2 and 3 to pay the amount of gratuity which is legally due to him with compound interest, compensation and penalty.

The facts necessary for the purpose of deciding the reliefs sought for by the petitioner are not in dispute. The petitioner joined the service in the month of April 1970 as commodity Analyst/Economist under respondent No. 2 at Delhi on a salary of Rs. 780/- p.m. He served in that capacity at Delhi till July 1975. In the month of July 1975 on promotion as Marketing Manager he was posted at the Branch Office of the second respondent at Madras. He saved as such at Madras upto September 1976. Thereafter, he came to be transferred to Bangalore Branch in September 1976 as Branch Manager of the Bangalore Branch of the second respondent which is made as third respondent in the writ petition. From September 1976 to September 1979 he served at Bangalore Branch as Branch Manager. While serving at Bangalore he came to be transferred and posted to Frankfurt at West Germany by the Office Memorandum dated 25th April, 1979 produced as Annexure F. That Office Memorandum also contains conditions of Foreign Posting of the petitioner. Those conditions are as follows :

"The terms and conditions of his posting at Frankfurt will be as under :-

Pay Grade pay as admissible to him from time to time in India. Foreign Rs. 6515/- p.m. including Rs. 2032 p.m. allowance towards wages of part-time local domestic help. The drawal of servants wage is subject to certification of actual expenditure. Further, drawal of above rates of FA is also subject to 5% economy cut and thereafter a slab deduction of Rs. 100/- p.m. He is entitled to ad hoc addition every month to Foreign Allowance equal to 49.6% of the basic pay drawn by him for the month of February, 1978. In the event of his being promoted this ad hoc increase will be calculated with reference to the basic pay drawn immediately on promotion. The rate of exchange is Rs. 100/- DMO. 2462. Transfer Rs. 1540/- which is one month''s basic pay, Grant half of which has been paid in India in Rupees and the balance half will be paid abroad in local currency. Outfit/Special Rs. 2000/- as outfit Outfit - Allowance and Rs. 3000/- towards special Allowance outfit allowance, half of which has been paid in India in Rupees and the balance half will be paid abroad. Baggage By surface route : maximum up to 2000/- Kgs. By Air : As allowed free by Air India subject to a maximum of 350/- Kgs as unaccompanied baggage. Residential He will be provided residential A commotion accommodation within a ceiling which will be intimated to him in due course. Until residential accommodation is made available to him he will be allowed to stay in hotel for a maximum period of 30 days during which he will be entitled to draw split rates of DA in respect of hotel accommodation and cash allowance as prescribed by the Ministry of External Affairs for officers of his status in Consulate General''s office in Franfurt. No foreign allowance is payable during the period of stay in hotel and cash allowance will be restricted to twice the rate of foreign allowance. Hotel charges will not be admissible to his family.

As regards terms listed below, the same shall apply as provided in the Foreign Offices Manual and its amendments from time to time.

- Entertainment - Bonus - Medical - Allowance during expenses leave - Home Leave - income tax Passage liability - Emergency - Duration of Passage posting - Resignation/Furnishing of Undertaking of Surety Bond. - Learning of Local Languages.

In any other matter not specifically covered above, decision of the management will be final."

He served at Frankfurt, West Germany till 1983. His foreign posting came to be terminated in the year 1983. He returned to India and was posted at Delhi. On 25th April 1985 he submitted his resignation as per Annexure A. It was accepted by the Director of the second respondent by passing an order just below the application. Annexure A contains the application as well as the order passed thereon.

"Date : 25th April 1985

I herewith submit my resignation from my post in the State Trading Corporation of India Limited. I shall be grateful if I am relieved w.e.f. 15th May 1985.

I take this opportunity to express my gratitude for the abundance of affection and consideration I have received in the Corporation.

Sd/- (D. Ramesh) CMM FAI/DPI Divisions.

Director - Dr. T. Prakash :

I have counseled Shri D. Ramesh, CMM to reconsider his decision. In spite of it, due to personal reasons, he desires to be relieved w.e.f. 15th May 1985. We have no option but to accept his resignation. In view of his long service with dedication and devotion in the Corporation, we may waive his notice period and settle his accounts in full. Dir. (AS) has been informed by CMM (DR) and he has accepted his resignation.

Chairman may kindly accord approval. Chairman Approved Sd/-xx Sd/- 27-4 26-4"

The order passed by the Director was communicated to the petitioner by the communication dated 14th May 1985 as per Annexure-B to his Delhi address stating that his resignation has been accepted by the competent authority with effect from 15th May 1985 and he is deemed to have relinquished charge of the office of the Chief Marketing Manager from the said date.

Thereafter the petitioner sought for payment of gratuity. The same was refused by the communication dated 20th August 1987 by the Deputy Personnel Manager stating that under STC''s Death-Cum-Retirement Gratuity Regulations gratuity is not payable to the petitioner since he has resigned within three years of his posting back to India. Thereafter, the present petition is filed on 13th June 1988 seeking the aforesaid reliefs.

The respondent 2 and 3 have filed the statement of objections. The service particulars of the petitioner as stated by the petitioner and as just now stated in the preceding para 2 are not disputed by them. The contention of the respondents is that the Gratuity Regulations are framed by the second respondent to the benefit of those employees of the first respondent who do not come under the purview of the Payment of Gratuity Act. 1972 and it is a beneficial Regulation to extend benefits to such of those employees who are not entitled to Gratuity under the Payment of Gratuity Act. Therefore, the conditions of eligibility mentioned therein cannot at all be bifurcated and considered as being violative of the provisions of the Constitution. If an employee desires or intends to take benefit under the Payment of Gratuity Regulations he has to satisfy the conditions laid down therein. Therefore, the contention of the petitioner that Condition No. 4(e)(1) is violative of Art. 14 of the Constitution is untenable and it is not available to him; that the embargo of three years placed on the officials who had the benefit of Foreign Posting has a laudable object, according to the respondents 2 and 3, in as much as the experience gained by them from their Foreign posting should be available to the second respondent and that has been ensured by placing a condition that if they resign within a period of three years the gratuity will not be available to them; that the provisions contained in the revised manual of work of STC''s Officers abroad cannot be made a basis for the purpose of adjudication that Regulation 4(e)(1) is unreasonable in as much as it is contended that the object of "the Manual for the working of STC''s Officers Abroad" and the Gratuity Regulations are quite different and independent and therefore the yardstick of one year imposed on them by the Foreign Manual should not be taken as a basis for considering the reasonableness of the condition imposed by Regulation 4(e)(1) of the Regulations. As far as the applicability of the Payment of Gratuity Act is concerned, it is contended on behalf of respondents 2 and 3 that the point has not been specifically raised by the petitioner and the amount of emoluments is a determining factor as to the applicability of the Payment of Gratuity Act, that at the relevant point of time the salary of the petitioner along with allowances would be the relevant factor, that as no specific plea is raised the respondents 2 and 3 could not place the relevant material. As far as this contention is concerned after pursuing it at a certain length, learned counsel for the petitioner submitted that it may be kept open and the same need not be considered in this writ petition and the relief sought for in this writ petition may be considered on the basis that the petitioner is not entitled to the benefit of Payment of Gratuity Act.

Even otherwise, on the date the petitioner tendered his resignation and it was accepted, he was drawing a salary of Rs. 3630/- which he had continued to draw since a long time. In fact, he was drawing a salary of Rs. 2,000/- and above almost from 1978. Under these circumstances, the case is considered on the basis that the petitioner is not entitled to the benefit under the Payment of Gratuity Act and at the same time, the contention of the petitioner that during the period he was drawing a salary less than Rs. 1000/- and as such he was entitled to payment of gratuity for that period is kept open to enable him to agitate under the said Act before the appropriate authorities.

The other contention of the respondents is that as the 2nd respondent is situated at Delhi, the petitioner commenced his service at Delhi and he rendered his resignation at Delhi and his resignation was accepted at Delhi office and as such no part of the cause of action had arisen within the territorial jurisdiction of this Court. Hence the petitioner is not entitled to invoke the jurisdiction of this Court, under Art. 226 of the Constitution. On the contrary, the contention of the petitioner in this regard is that as the entire service rendered by the petitioner has to be taken into consideration for the purpose of determining the amount of gratuity payable to him and as the petitioner has served in the branch of the 2nd Respondent at Bangalore for a certain period, part of the cause of action had arisen within the jurisdiction of this Court. Hence the petitioner is entitled to invoke the jurisdiction of this Court under Art. 226 of the Constitution for the purpose of obtaining the relief.

Having regard to these rival contentions, the points that arise for consideration are as follows :

(1) Whether any part of the cause of action relating to the relief sought for by the petitioner had arisen within the jurisdiction of this Court ?

(2) Whether Regulation 4(e)(1) of the Gratuity Regulations is valid ?

(3) Whether the petitioner is entitled to payment of gratuity under the Gratuity Regulations ?

POINT NO. 1

The contention of the respondents is that the 2nd respondent is situated at Delhi and the petitioner commenced his service at Delhi and tendered his resignation of Delhi and it was accepted at Delhi, therefore, no part of the cause of action had arisen within the territorial jurisdiction of this Court, hence the petition suffers from misconception of cause of action for the relief sought for by the petitioner. In this case the petitioner has sought for payment of gratuity which according to the Gratuity Regulations has to be determined on the basis of the entire period of service. If the petitioner had not rendered any part of his service in the State of Karnataka probably the contention would have been accepted. The petitioner admittedly served at Bangalore at the branch office of the 2nd respondent during the period from September 1976 to September 1979 as Branch Manager. Under the Gratuity Regulations, an officer above the rank of the Deputy Marketing Manager Grade II who has put in a service of not less than 5 years including the service rendered by him with the previous employer in a similar capacity is entitled to the payment of gratuity. The amount of gratuity is calculated as per Regulation No. 5 which provides that an eligible person shall, on his retirement be granted Death-cum-Retirement Gratuity equal to one-fourth of his emolument for each completed six monthly period of qualifying service or part thereof subject to a maximum of 16 1/2 times the emoluments. That being so, the period of service rendered by him at the Bangalore office becomes necessarily an integral part of the qualifying service for payment of gratuity that has got to be taken into account for the purpose of determining the gratuity. That being so, part of the cause of action had taken place within the territorial limits of this Court. Hence the contention of the respondents that no part of the cause of action had arisen within the jurisdiction of this Court cannot at all be accepted. The fact that the petitioner tendered his resignation at Delhi and it was accepted at Delhi and he joined the service at Delhi are not the only determining factors. Cause of action has to be construed with reference to the relief sought and the facts necessary for the purpose of granting the relief sought, for cause of action is nothing but a bundle of facts necessary for the purpose of granting the relief. These vital facts have to be considered as forming part of the cause of action. Therefore, when each completed period of six months qualifies for gratuity, the service rendered at a place for more that six months will become necessarily a part of the cause of action. Admittedly, the petitioner has rendered more than six months at Bangalore. Hence I am of the view that part of the cause of action had arisen within the jurisdiction of this Court. Hence point No. 1 is answered in the affirmative.

POINT NO. 2

The contention of the petitioner is that the Gratuity Regulation 4(e)(1) imposes an unreasonable restriction and it is also incompatible with the service conditions relating to foreign posting of an official of the 2nd respondent. Gratuity Regulation No. 4(e)(1) reads :

"An eligible person shall be granted gratuity under these Regulations in the following circumstances :

(a) to (d) xx xx

(e) Resignation subject to the following conditions :-

(1) Gratuity will not be admissible to a Manager posted in a foreign office who resigns during the period of his foreign posting or within 3 years of his posting back to India."

Thus the aforesaid Regulation disable an official who resigns during the period of his foreign posting; or within a period of 3 years after he as posted back to India on the termination of his foreign posting. It is not one of the conditions of foreign posting as prescribed by the second respondent. Para 43 of the Revised Manual for the working of STC''s Officers abroad reads thus :

"RESIGNATION"

No India-based employee who is posted abroad shall resign his/her service in the Corporation until he/she served the Corporation for a minimum period of three months (amended as one year) after his/her return to India on the termination of his/her posting abroad.

No resignation of an India-based employee posted abroad and tendered whether before or after the termination of his/her posting abroad, shall be effective so as to put an end to the contract of service unless the same is accepted in writing by the competent authority.

An India-based employee who is posted abroad shall along with his resignation from his/her service in the Corporation surrender, apart from all other documents, papers and things that he/she may be required to tender, surrender to the Corporation the passports issued to him/his/her family members and Indian servant, if any, by reason of his/her posting abroad in the service of the Corporation.

On the service of any India-based employee who has been posted abroad, coming to an end for any reason whatsoever, he/she shall not thereafter engage himself/herself in any manner whatsoever in any activity prejudicial or detrimental to the interest of the Corporation. Further, nor for a period of 2 years from the date of the contact service coming to an end due to any reasons whatsoever without the prior written permission of the Corporation engage/associate himself/herself either directly or indirectly in any business like that of the Corporation on his/her own account or as a partner or in service under another employer in any like business."

From the aforesaid regulation it is clear that no Indian-based employee who is posted abroad shall resign his service in the Corporation until he has served the Corporation for a minimum period of one year after his/her return to India on the termination of his/her posting abroad. Therefore, the condition that is imposed is that until the period of one year expires after the termination of the foreign posting, an official cannot resign from post. The learned counsel for respondents 2 and 3 placed stress on the second para 2 of the Regulation that until the resignation is accepted, it will not come into effect. Therefore, it is contended that even if the resignation is tendered after the expiry of one year, the discretion is vested in the 2nd respondent to accept or reject such resignation. Therefore, the period of one year cannot be treated as decisive factor.

It is not possible to accept this contention. The second para of Regulation 43 makes it clear that the resignation does not come into effect until it is accepted by the competent authority. Of course in the matter of employment, even in the absence of such a provision, resignation does not come into effect automatically unless it is accepted. Therefore, the second para of Regulation 43 is only reiteration of the above position and it has no special significance. It is also relevant to notice that Regulation 43 imposes a further condition that in the event a Corporation employee resigns after his posting back to India on the expiry of one year, he shall not take up similar service under any other institution or Corporation for a period of two years. Therefore, Regulation 43 ensures that such an employee who is posted outside India on his reposting to India does not leave the Corporation for a period of one year and even if he resigns, he does not make himself available to others to render similar service for a period of two years thereafter. The object of this regulation is to ensure that the experience gained by the official by reason of his posting to a foreign office at the cost of the Corporation, must be available to the Corporation and it must not be available to other similar institutions so as to place the Corporation at a disadvantage. The position, thus emerging from Regulation 43, is the condition imposed by the Gratuity Regulations that it the official resigns within a period of three years from the date of his posting back to India, he shall not be entitled to gratuity is on the face of it unreasonable. There is no reason or logic to deprive the gratuity is the case of an employee who resigns after one year form the date of posting back to India. When the Regulation relating to foreign posting imposes a condition of one year, there is no reasons whatsoever for providing a period of three years in the case of gratuity regulations which are intended to benefit such employees when not entitled to payment of gratuity under the Payment of Gratuity Act. Gratuity is paid on the basis of every completed service of six months as contemplated in the Gratuity Regulations. Therefore, it is earned on the completion of each qualifying service of six months. Such being the position, the condition to deprive an official of such benefit which has accrued to him by reason of the service rendered by him on the ground that he has resigned within a period three years cannot be held to be reasonable, nor it has got any nexus with the object which is intended to be served. If the regulations relating to foreign posting imposes a condition that he should not resign within a period of one year the provisions of the Gratuity Regulations in putting a condition that he is not entitled to gratuity if he resigns within the period of three years is highly unreasonable and arbitrary. The object of both the regulations is to ensure that the services of the official should be available to the Corporation after his posting back to India. That being so, the yard-stick or the standard or criterion for ensuring those objects or achieving those objects should not differ. In the case of Foreign Posting Regulations, the yardstick is only one year, whereas in the case of payment of gratuity it is made three years. This makes the condition imposed by Gratuity Regulation 4(e)(1) highly unreasonable.

It is next contended on behalf of the respondents that Gratuity Regulations and also the Foreign Posting Regulations have no statutory force and as such they are not enforceable. It is not possible to accept such a contention. Such a contention does not lie in the mouth of respondents 2 and 3. Both relate to the service conditions of its employees. On the basis of these regulations, the staff is recruited and the services are rendered by the officials of the Corporation. As far as the Corporation and its employees are concerned, both the Regulations have got the force of law governing or regulating service conditions. The Corporation being "the State" for the purpose of Part III of the Constitution, as per Art. 12 of the Constitution it is entitled to frame the rules and regulations governing the service conditions of its employees. It has accordingly framed them and named them as "Regulations". Therefore it is not possible to agree with the contention of the respondents that the said Regulations do not have the statutory force and hence cannot be enforced in a Court of law.

Similar question arose in S.V. Shastri Vs. Karnataka State Road Transport Corporation, , in respect of an order passed by the Karnataka State Road Transport Corporation relating to auctioning of the stalls. This court held that the General Standing Order passed by the K.S.R.T.C. has the force of law and it can be enforced through a Court of law. This Court held thus :

"The decision of the Board of Directors as incorporated in the General Standing Order No. 342 has the force of law inasmuch as law can also be an obligatory Rule of conduct imposed and enforced by the State or a Public Authority created under a statue having corporate or legal personality which has the power to manage, control and conduct its own affairs. Law can also be a body of principles recognised and stated by such public Authority or the State in the administration of its affairs. It is the very essence of Rule of law that a public Authority or the State, as the case may be, when it expresses itself that its affairs will be conducted in a particular manner or it will be governed by a particular decision. Principle, rule or set of rules, it is required to comply with such decisions, rules or principles and it is bound by them. It is more so when such Rules, decisions or principles concern to matters wherein the rights and duties or liabilities of third parties come to be affected as has happened in the instant case".

The said decision has been affirmed by a Division Bench of this Court in W.A. No. 686 of 1988 decided on 24th May, 1988. Therefore, applying the aforesaid reasoning, there is no difficulty in holding that the Gratuity Regulations and the Foreign Posting Regulations framed by the 2nd respondent have the force of law.

I have already pointed out that Gratuity Regulation 4(e)(1) is oppressive in nature and it is unreasonable and is also incompatible with the Foreign Posting Regulations as incorporated by Regulation 43. If the Gratuity Regulation 4(e)(1) had prescribed a condition similar to the one provided in Regulation 43 relating to Foreign Posting, it would not have been objectionable and there would not have been any difficulty whatsoever for this Court in upholding such a condition. But as the matter stands, the impugned regulation places a condition of three years which, judged from the standard laid down by the Corporation itself in respect of foreign posting under Regulation 43, is unreasonable. Accordingly, Gratuity Regulation 4(e)(1) is declared as violative of Art. 14 of the Constitution and is null and void. Point No. 2 is answered accordingly.

POINT No. 3

As far as payment of gratuity payable to the petitioner is concerned, it has not been determined by the 2nd respondent on the ground that the petitioner is not entitled to it having regard to the provisions contained in Gratuity Regulation 4(e)(1). Now that Gratuity Regulation 4(e)(1) as starch down, necessarily the order refusing payment of gratuity is liable to be quashed and the 2nd respondent has to be directed to determine the gratuity payable to the petitioner in accordance with the Gratuity Regulations. Point No. 3 is answered accordingly.

Before passing the operative portion of the order, it is necessary to refer to another contention urged on behalf of respondents 2 and 3. It is contended that the petitioner is guilty of laches; therefore, he is not entitled to any relief.

The petitioner tendered his resignation on 24th April, 1985 and it was accepted on 14th May, 1985. Thereafter, he represented to the 2nd respondent on 12th July, 1985 for payment of gratuity and the 2nd respondent sent a reply on 23rd July, 1985 stating that he was not entitled a payment of gratuity as he had resigned within a period of three years from posting back of India. The letter also further directed him to furnish as to whether he had joined any other firm. Thereafter he sent another telex letter on 4th August, 1987. In response to the petitioner was again informed that he was not entitled to gratuity as he had resigned within a period of three years from the date of his posting back to India. Thereafter the writ petition is filed on 13th June, 1988.

There is no doubt that from August 1985 to August 1987 the petitioner has not moved in the matter and it was open to him to invoke the jurisdiction of this Court immediately after August 1985. Therefore, the question for consideration is whether the delay of two years in a matter like this wherein the gratuity payable to the petitioner ought to have been determined to paid to him should be taken as a ground for denying relief. In all cases, laches cannot be considered in the same manner. It all depends upon the liability of the respondents. In a case where there is a duty cast on the respondents to settle the claim of the petitioner and which the respondents on a wrong understanding of law, does not or refuses to settle, the delay of a year of two should not be taken as a ground to deny the relief. Therefore, I am of the view that the fact that there is a delay of two years in approaching this Court should not by itself be made a ground to deny relief to this petitioner in the light of the fact that it is the legal duty of the 2nd respondent in terms of the Gratuity Regulations framed by it to pay the gratuity to the petitioner. Accordingly, the contention of the respondents based on delay and laches is rejected.

For the reasons stated above, this writ petition is allowed in the following terms :

i) Death-cum-Gratuity Regulation 4(e)(1) is struck down as being violative of Art. 14 of the Constitution;

ii) The 2nd respondent is directed to settle the claim for payment of gratuity of the petitioner without taking into consideration Regulation 4(e)(1) of Death-cum-Retirement Gratuity Regulations 1975 framed by it and in accordance with the other provisions of the said Regulations within a period of 4 months from today.

iii) The question as to payment of interest on the amount found payable is left open to be considered by the 2nd respondent.

iv) In the facts and circumstances of the case, there will be no order as to costs.