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Judgment
C.S. Dharmadhikari, J.—In this writ petition the petitioner bank has challenged the order passed by the Second Labour Court at Nagpur in I. D. A. Case No. 1012 of 1969.
It appears from the record that respondent No. 1 Ramchandra filed an application u/s 33C (2) of the Industrial Disputes Act. According to him, he was employed by the opponent bank since the year 1949 as a Clerk and he served the Bank till 27th of September 1968. The last pay drawn by him was Rs. 237.50 per month as a basic pay. He then contended that as per Gratuity Rules of the Bank, which are duly sanctioned by the Registrar of Cooperative Societies, he is entitled to a gratuity equal to 15 months'' basic pay vide Gratuity Rule No. 1 (a) of the Rules. Therefore, he claimed an amount of Rs. 3,562.50 as gratuity.
It further appears that in August 1968 the Bank transferred the respondent-employee from Yeotmal to Mukutban. He submitted a representation against that order and gave his own reasons as to why he was unable to go to Mukutban. Therefore, he requested the authorities to cancel the order and in case it was not possible then to treat his representation as a notice for retirement.
He also prayed that in case he was to retire, he should be allowed leave which was standing to his credit as leave preparatory to retirement. It appears from the record that this order of transfer was not cancelled, but the Bank accepted the alternative request made by employee, treating it to be an offer of resignation, instead of retirement. Ultimately the Bank also granted him leave which was standing to his credit and he ceased to be in the service of the Bank from 27th of September 1968 after expiry of leave. Thereafter he made applications claiming gratuity amount but as the Bank rejected the said prayer, he filed an application before the Labour Court.
The Bank in its written statement admitted that the respondent-employee served the Bank from 1949 till 27-9-1968 and his basic pay was Rs. 237.50. The Bank also admitted that there are Gratuity Rules in existence. However, according to the Bank, the respondent-employee was not entitled to any such gratuity under the said rules. The Bank admitted that they had issued an order of transfer as well as the filing of representation by the respondent-employee against the said order. According to the Bank, the respondent-employee''s request for cancellation of the transfer order could not be granted and in the said representation itself he had submitted that if it was not possible to cancel the said order, the said representation itself should be treated as a resignation and a notice thereof. Therefore, according to the petitioner Bank, this request of the respondent-employee was granted by the accepting the resignation. The Bank further contended that there was no question of retirement as such. As he had claimed the leave standing to his credit, the same was granted to him, but from the letter issued by the Bank it cannot be construed that the Bank has accepted the request of the respondent employee to retire him from the service and for that reason the leave was granted as leave preparatory to retirement. In terms in the said letter an alternative offer was made by the respondent-employee that he wants to resign and the said offer was accepted by the Bank. Hence, according to the Bank, this is a case of voluntary resignation tendered by the employee and hence he is not entitled to gratuity under the rules. The Bank further contended that the retirement of an employee is contemplated only at his attaining the age of 58 years or in case he is found physically or mentally unfit to continue. This was not the case in respect of the respondent-employee and, therefore, his contention that he was allowed to retire from the service is wholly incorrect. The Bank also raised a contention before the Labour Court that u/s 33C (2) of the Industrial Disputes Act, such an adjudication would not be permissible and, therefore, the application filed by the employee is not maintainable. According to the Bank, the dispute involved in the application involves a complicated question as to whether it was a case of resignation or retirement or termination and such a question cannot be adjudicated upon in a summary enquiry contemplated by section 33C (2) of the Industrial Disputes Act. The Bank further contended that in a case where the question involved is about the interpretation of rules of gratuity, the question is beyond the purview of jurisdiction of the Labour Court. Such jurisdiction is vested in the Industrial Court u/s 7 (A) of the Industrial Disputes Act. According to the Bank, the Labour Courts appointed u/s 7 of the Industrial Disputes Act do not have that jurisdiction and hence the application filed by the respondent-employee is not maintainable. Even otherwise he is not entitled to any gratuity under the Gratuity Rules applicable to the Bank.
After recording evidence, the learned Labour Court came to the conclusion that the Labour Court has jurisdiction to decide the question as to the interpretation of the gratuity rules or the order issued by Bank. The Labour Court further held that the respondent-employee was entitled to the gratuity because the Bank permitted him to retire and this was a case of retirement. In this view of the matter the Labour Court allowed the claim of the respondent-employee and directed the Bank to pay an amount of Rs. 3,562.50 to the original applicant employee. It also granted a sum of Rs. 25 towards the costs of the proceedings. As already observed, it is this order which is challenged before us by the petitioner Bank.
Shri Khamborkar, the learned counsel for the petitioner Bank contended before us that in substance the claim made by the respondent-employee was disputed by the Bank on various counts. According to the employee, he was entitled to gratuity under the Gratuity Rules because his offer of retirement was accepted by the Bank. On the other hand, according to the Bank, the employee has voluntarily resigned and his resignation was accepted. Therefore, the question involved before the Labour Court was as to whether this was a case of retirement or resignation. Such a question cannot be adjudicated upon in a summary enquiry u/s 33C (2) of the Industrial Disputes Act. He further contended that by the finding recorded by the Labour Court, in substance, it had set aside the order passed by the Bank by holding that it was in substance an order of retirement, when in fact it was merely an order accepting the resignation tendered by the employee. Therefore, according to Shri Khamborkar, such a dispute cannot be entertained by the Labour Court in a summary enquiry u/s 33C (2) of the Industrial Disputes Act. In the alternative he contended that even otherwise the Labour Court committed an error in holding that this was a case of retirement. Under the relevant Standing Orders, which govern the terms and conditions of service between the petitioner and the respondent-employee, retirement is contemplated only at the age of 58 years. A premature retirement can be ordered only in case of physical or mental disability. In the present case the employee had not completed the age of 58 years nor it was found that he is physically or mentally unabled to continue in service. Under these circumstances, the Bank had no authority to order retirement at all. The Bank construed the offer made by the employee as an offer of voluntary resignation. The said offer was accepted and he was permitted to resign. In this view of the matter, the order passed by the Labour Court holding that in substance it was an order of retirement is wholly illegal and vitiated by an error apparent on the face of record.
On the other hand it is contended by Shri Bapat, the learned counsel for the respondent No. 1, that mere denial by the Bank of the claim made by the employee cannot oust the jurisdiction of the Labour Court while deciding the application u/s 33C (2) of the Industrial Disputes Act. According to Shri Bapat, the questions involved in the enquiry are merely incidental. When such a claim is made before the Labour Court u/s 33C (2) of the Industrial Disputes Act, it is open to the Labour Court to interpret the gratuity rules as well as the order passed by the employer. By this interpretation neither the order passed by the employer is set aside nor any complicated questions are decided. On the basis of sheer interpretation of the document, viz. the Gratuity Rules and the order passed by the Bank and the correspondent preceding and subsequent thereto, the claim made by the employee is adjudicated upon and decided. He further contended that, therefore, the order passed by the Labour Court is perfectly legal and valid. In support of his contention Shri Bapat has relied upon the decision of this Court is Ramkrishna Ramnath v. State of Maharashtra and others 1975 Mh. L J 212 and in Digamber v. Chemosyn Private Co. Ltd. and another 1975 Lah. Ind. Cas 1684.
So far as the question regarding the jurisdiction of the Labour Court to interpret the Gratuity Rules or the order passed by the employer is concerned, in our opinion, by mere denial of the claim or setting up a different interpretation of the rules or order, the jurisdiction of the Labour Court cannot be ousted. It is open to the Labour Court to decide whether the case before it was a case of retirement or resignation or termination, by construing and interpreting the order itself by reference to contemporaneous documents on record. In the present case, having regard to the facts and circumstances disclosed on record, this does not involve any complicated questions of fact. It merely involved a question of interpretation, of the orders passed by the employer. It is also open to the Labour Court to interpret the gratuity rules while deciding the claim of an employee. The Labour Court is competent to decide whether the gratuity is payable to the employee under the gratuity rules. While deciding the claim of gratuity made by the employee, the Labour Court has necessarily to decide whether the conditions precedent for giant of such gratuity are satisfied or not. In this context apart from the decision of this Court in Ramkrishna Ramnath v. State of Maharashtra, on which reliance is placed by Shri Bapat, reference could also be made to two other decisions of the Supreme Court, namely, Sahu Minerals and Properties Ltd. Vs. Presiding Officer, Labour Court and Others, and Central Bank of India Ltd. Vs. Sisir Kumar Shaw, . As a matter of fact, as to whether a particular question could be decided in a summary enquiry u/s 33C (2) of the Industrial Disputes Act must depend on the facts and circumstances of each case. It is neither possible nor advisable to lay down any general rule in this behalf. If the questions are merely incidental one and involve the questions relating to interpretation of the rules, award or order, then it is open to the Labour Court to interpret such rules, award or orders. In the proceedings u/s 33C (2) of the Act, which are analogous to execution proceedings, when a Labour Court is called upon to compute the benefits of workmen, the Labour Court is competent to interpret the rules, where there is dispute as to the rights thereunder or as to its correct interpretation. Section 33C (2) will take within its purview cases of workmen who make a claim in terms of money to which they are entitled to even though the right to the benefit on which their claim is based is disputed by the employers. In such a case it is open to the Labour Court to interpret the award, settlement or rules etc., on which the workmen''s rights rest.
In the present case, it is not disputed by the Bank that the respondent-employee has served the Bank from 1949 till 27-9-1968 and since then he has ceased to be in the employment. It is also not disputed by the Bank that there are Gratuity Rules which are applicable to the employees and the employees are entitled to claim such a gratuity under the said rules. Therefore, the only question which is involved in this case relates to the interpretation of the order passed by the Bank as well as the Gratuity Rules. In our opinion, therefore, as this did not involve adjudication of any complicated questions of fact and law nor did it involve any adjudication of any industrial dispute as such it was quite competent for the Labour Court to deal with the claim made by the employee. Having regard to the facts and circumstances of the present case, in our opinion, therefore, the Labour Court was right in entertaining the application filed by the respondent-employee.
So far as the claim for gratuity made by the respondent-employee is concerned, the Labour Court has found that the order passed by the Bank was an order accepting the offer of retirement made by the employee. In our opinion, this is not the correct interpretation of the order passed by the petitioner Bank. From the record it is quite clear that after the order of transfer was issued, the respondent-employee submitted a representation giving his own reasons as to why he was unable to go to Mukutban. He also requested the authorities to cancel the order and in case it was not possible to cancel it, then to treat the representation as a notice for retirement. He also prayed that in case he was to retire, he may be granted leave which was standing to his credit, as leave preparatory to retirement. This representation made by the employee was in Marathi. A copy of this representation in vernacular is produced before us. The Bank has also filed before us its true translation. The Labour Court has also reproduced the relevant portion from this letter in vernacular. While translating this document in English, the Bank has correctly translated the word used in Marathi, namely as retirement. The Bank also used the word ''termination'' in brackets while translating this document. The case of the Bank was that this also could be interpreted as an offer of resignation. Accepting this alternative prayer, the Bank issued the order which is reproduced by the Labour Court at page 38 of this record. By this order the respondent-employee was informed that the leave which is found to his credit and claimed by him is granted. The Bank further stated that after expiry of the said leave, i.e., with effect from 28th September 1968 the resignation tendered by him is accepted.
From the record it appears that immediately after the receipt of this order the respondent-employee vide his letter dated 30th September 1968 informed the Bank that he had never tendered his resignation but had made a request that he should be permitted to retire. He further clarified the position that initially he had requested for the cancellation of the transfer order and in the alternative he had prayed for leave preparatory to retirement. Therefore, it is quite obvious from the correspondence placed on record, which is admitted, that the proposal made by the respondent employee was an alternate proposal and in the alternative he had prayed for retirement and had never tendered resignation. In spite of this, the Bank construed it as a resignation and accepted it as a resignation. The order passed by the Bank is obviously a camouflage order.
In this case the claim made by the employee is based on the gratuity rales which permitted payment of gratuity in case of retirement as well as termination. He has made a claim in his application on the basis that he is retired from the service and that claim has been accepted by the Labour Court.
However, in our opinion, there is much substance in the contention raised by Shri Khamborkar that under the Standing Orders or the relevant service rules the Bank had no authority to permit the respondent-employee to retire from service because he had not completed the age of 58 years, nor be was disabled either physically or mentally to continue in service. If the Bank had no authority or power to permit such retirement, then it is difficult to hold that this was a case of retirement as contended by the employee. We have gone through the relevant standing orders as well as the service regulations. The relevant provisions of Standing Order No. 22 read as under :
.... .... ....
(7) Every employee shall retire from service on completing the age of 58 years. An employee may, however, be called upon by the Bank, to retire earlier if he is considered medically unfit to continue in service.
(8) As employee before retirement shall be granted the privilege leave due to him on his applying for it or salary and allowances in lieu thereof.
From the bare reading of this, it is quite clear that an employee stands retired from service on completing the age of 58 years. However, he may be called upon by the Bank to retire earlier if he is considered medically unfit to continue in service. In the present case the respondent employee had not completed the age of 58 years nor he was considered medically unfit to continue in service. These Standing Orders are framed under the provisions of C. P. and Berar Industrial Disputes Settlement Act, 1947 and were duly certified by the competent authority. These Standing Orders are, therefore, in the nature of statutory contract of service. Even after repeal of the C. P. & Berar Industrial Disputes Settlement Act, by virtue of the provisions of the Bombay Industrial Relations Amendment Act, these Standing Orders were continued and admittedly were in force in the year 1968. If this is so, then in our opinion, if the Bank itself had no authority, power of jurisdiction to permit such a retirement, then on the basis of same interpretation power cannot be conferred upon the Bank, which it never had. Such an interpretation will run counter to the provisions of the Standing Orders and, therefore, in our opinion, the interpretation put forward by the Labour Court in this behalf is obviously erroneous, and therefore, it cannot be said that this is a case of retirement which is covered by clause 1 (a) of the Gratuity Rules.
However, in our opinion, this is not the end of the matter. The relevant gratuity rules read as under.
(1). The Gratuity shall be as under :
(A) On the death or retirement of an employee or an employee becoming physically or mentally incapable of further service while in the service of the Bank, the rate of one month''s basic pay for each completed year of service subject to a maximum of 15 month''s basic pay.
(B) On termination of service by the Bank after five years at the rate of half month''s basic pay for every completed year of service with a ceiling of 15 month''s basic pay.
From the bare reading of these rules it is quite clear that an employee is also entitled to a gratuity on termination of service by the Bank in case he satisfies the conditions laid down by sub-clause (B). It is an admitted position that the respondent-employee has put in more than five years of service. It appears to be an admitted position that practically he has put in more than 19 years service. The only question, therefore, which requires consideration is to find out as to whether the case of the respondent-employee is covered by clause B. From the representation made by the respondent-employee it is quite clear that initially he has prayed for cancellation of his order of transfer and in the alternative he had requested that he should be permitted to retire. It is quite obvious from the bare reading of the whole representation that he has never tendered his resignation. This is further clear from his subsequent letter also. If the employee had never tendered his resignation at all, then the question of accepting the resignation will not arise. If the whole representation is read in its context as a whole, it is further clear that even the alternative prayer made by the respondent employee for retirement was made under duress as a last resort. In no circumstances this can be construed to be an offer of voluntarily resignation. Therefore, by putting something in the mouth of the respondent-employee it was not open for the petitioner-Bank to construe the offer of the employee as an offer for voluntary resignation. In view of these peculiar facts and circumstances, it is quite obvious that the order passed by the Bank in that behalf is nothing but an order of termination by which the Bank wanted to terminate the contract of employment. It is no doubt true that it was not open for the Bank to pass such an order and prima facie such an order may be wrongful. It could also be termed to be a wrongful termination. But the respondent has not challenged the same. On the contrary, he has accepted the said termination by his own conduct, and on the basis of it alone he has filed the claim under the Gratuity Rules.
It is well settled that the relationship of master and servant is created by a bilateral act. Contract of service is continuing in nature and the obligation under the said contract is terminable by following certain defined modes. Resignation or retirement are well recognised modes of terminating this contract of employment. But for this the employee should voluntarily tender his resignation. If this is not the position, then in a given case depending upon the facts and circumstances of a case, a forced resignation may amount to removal or dismissal from service. Mere use of polite language instead of peremptory language will not alter the fact. See Abraham Reuben v. The Karachi Municipality AIR 1929 Sind 69. In other cases including case of compulsory retirement, termination of service is normally against the will of an employee.
As to what is the meaning of the word ''termination'' came for consideration of the Supreme Court in M/s Hindustan Steel Ltd. v. The Presiding Officer, Labour Court, Orissa and others, AIR 1977 SC 31 though in somewhat different context. After making a reference to the definition of the term ''retrenchment'' as defined in section 2 (oo) of the Industrial Disputes Act, the Supreme Court quoted with approval the following observations in its earlier decision in The State Bank of India Vs. Shri N. Sundara Money, ; which read as under:
Termination for any reason whatsoever'' are the key words. Whatever the reason, every termination spells retrenchment. So the sole question is has the employees''s service been terminated?
A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term Termination embraces not merely the act of termination by the employer, but the fact of termination howsoever produced, an employer terminates employment not merely by passing an order as the service runs. He can do so by writing a composition order, one giving employment and the other ending or limiting it. A separate, subsequent determination is not the sole magnetic pull of the provision. A pre-emptive provision to terminate is struck by the same vice as the post-appointment termination.
From the bare reading of these observations it is quite clear that the term ''termination'' embraces not merely the act of termination by the employer, but the fact of termination howsoever produced. The words ''terminated'' or ''termination'' indicate only determination of contract of service. It postulates some act by somebody, which is taken to bring the employment to an end. Under the gratuity rules, an employee is entitled to a gratuity on termination of service by the Bank. It is equally well-settled that the form of the order is not decisive of the whole matter. The employer''s word in this behalf is not the last word. He cannot give go-bye to his responsibility by mere using different words nor the Tribunal will be debarred from going into the question as to whether, notwithstanding the form of the order, in substance, it is an action of termination of services by the employer or not. In this behalf we cannot be oblivious to the plight of respondent employee in this unequal fight with the petitioner Co-operative Bank, which is a big establishment.
It is well settled that gratuity is earned by an employee for his long and meritorious service. If this is so, then it is difficult to understand as to why the benefit thus earned by a long and meritorious service should not be available to the employee like the respondent. Even though the order is differently worded, if the gratuity is payable for the service rendered by an employee to the employer, then in our opinion, it is difficult to understand why respondent No. 1 should necessarily be denied this benefit of gratuity only because camouflage order is passed by the Bank. It appears from the reading of the gratuity Rules referred to hereinbefore, that the employee is also entitled to gratuity on the termination of employment. Therefore, considering the totality of the circumstances which emerge from the material placed before us, it is quite clear to us that this is also a case of termination of employment by the Bank.
In these circumstances, it can very well be said that this is a case of termination of service by the Bank and hence the respondent-employee is entitled to gratuity under clause (B) of Rule 1 of the Gratuity Rules.
It appears from the record that respondent No. 1 has put in 19 years of continuous service. Therefore, under clause (B) of Rule 1, he will be entitled to a gratuity at the rate of half month''s basic pay for every completed year, which comes to his basic pay for 9 1/2 months. No other question or contention was either raised or argued before us.
In the Jesuit, therefore, the order passed by the Labour Court is modified to the extent indicated above and the petitioner Bank is directed to pay to the respondent-employee an amount of Rs. 2,256,25 p. by way of gratuity and further a sum of Rs. 25 towards the costs of Labour Court. So far as this Court is concerned, there will be no order as to costs.