Heavy Water Plant Employees Not Covered by Gratuity Act | SC

Case Details: N. Manoharan, etc. vs. Administrative Officer - [2026] 183 taxmann.com 358 (SC)

Judiciary and Counsel Details

• Pankaj Mithal & S.V.N. Bhatti, JJ.
• Shrutanjay Bhardwaj, Siddhi Nagwekar, Aayushman Aggarwal, Advs., Raghunatha Sethupathy B., K. Paari Vendhan, Aors & Ms Haripriya Padmanabhan, Sr. Adv. for the Petitioner.
• S.D Sanjay, A.S.G., Ms Aurnima Diwedi, Rajeev Ranjan, Dharmendra Kumar Pandey, Raman Yadav, Saurabh Kumar Kaushik, Advs., Amrish Kumar, Raj Bahadur Yadav & Gurmeet Singh Makker, Aors for the Respondent.

Facts of the Case

In the instant case, the Government of India/DAE issued Office Memorandum No. 12/7/69-(P) for the constitution of a Board to administer the Heavy Water Production Projects of the DAE. The HWP in Tuticorin is one of the Heavy Water Boards established by the DAE. The circumstance precipitating a dispute between the retired employees and HWP can be traced to one of the pension payment orders issued by HWP. The pension payment order in favour of retired employee, was issued under the CCS (Pension) Rules, 1972. The CCS (Pension) Rules, 1972 deal with comprehensively the retirement benefits to which a retired employee is entitled, including gratuity.

The sum payable as gratuity under the PG Act and CCS (Pension) Rules, 1972, is less than the sum payable under the PG Act. This led to an employee of HWP filing an application before the Controlling Authority under the PG Act. The Controlling Authority held that the provisions of the PG Act are attracted to the employees of HWP, and a direction was ordered to pay the difference between the PG Act and CCS (Pensions) Rules, 1972. The Controlling Authority, on jurisdictional fact and the applicability of the PG Act, held that HWP, constitutes an industry under the Industrial Disputes Act, 1947, making the applicant-employee eligible for coverage under Section 1(3)(b) of the PG Act.

HWP, Tuticorin, challenging the Order of the Controlling Authority, filed an appeal before the Deputy Chief Labour Commissioner, and the appeal filed was dismissed. HWP assailed the orders before the High Court in Writ Petition and batch, which were dismissed, resulting in the filing of Writ Appeal. HWP filed Writ Petition and batch challenging the subsequent orders of the Controlling Authority directing payment of the difference of gratuity to the retired employees of HWP.

Supreme Court Held

The Division Bench of the High Court of Madras dealt with the Writ Appeals as lead cases and, by the Impugned Judgment, and allowed the Writ Appeals as well as Writ Petitions filed by HWP. The Impugned Judgment held and declared that the employees of HWP are not covered by the definition of section 2(e) of the PG Act. Then, an appeal was made before the Supreme Court.

List of Cases Reviewed

• Madras High Court order dated 21.06.2023 in Writ Appeal No. 1687 of 2021 (Para 14) affirmed

List of Cases Referred to

• Union of India v. Regional Labour Commissioner (Central) [W. P. Nos. 23577 to 23579 of 2015, dated 29-1-2016] (para 6)
• Municipal Corporation of Delhi v. Dharam Prakash Sharma (1998) 7 SCC 22 (para 7)
• Arun Kumar v. Union of India [2006] 155 Taxman 659 (SC) (para 10)
• Mahalakshmi Oil Mills v. State of A.P. 1990 taxmann.com 1344 (SC) (para 12)
• P. Kasilingam v. P.S.G. College of Technology (1995) supp 2 SCC 348 (para 12).