Jagat Narayan, C.J.
1. This is a special appeal against the judgment of a learned Singh Judge of this Court by of his leave under Section 18(2) of the Rajasthan High Court Ordinance by Raghubir Sahai Mathur plaintiff.
2. The Rajasthan State Financial Corporation was formed on 1.5.1953 The appellant joined service on 5-3-55 in a temporary capacity on a salary of Rs. 400/- per mensem. He was confirmed on its April, 1956 on Rs. 425/- in the grade of Rs. 350-25-600. His date of birth was 24-8-1903. The Rajasthan Financial Corporation (Staff) Regulations, 1958 came into force with effect from October 16.1958. Under Regulation 17, an employee was to retire on attaining the age of 55 years, but the Board had power to sanction extension for a period not exceeding one year at a time, upto the age of 60 years. Four extensions were granted to the appellant and his services were terminated on 24-8-1962. He was not paid any gratuity. He claimed that he was entitled to gratuity under the Rajasthan Financial Corporation (Payment of Gratuity to employees) Regulations which came into force on July 13, 1961. He accordingly instituted the present suit. His case was that he was in permanent service with effect from 5-3-55, that his last pay was Rs. 575/-, that he had put in seven completed years of service and was entitled to gratuity amounting to Rs. 4025/-. The trial court decreed the suit for Rs. 2925/- The first appellate court held that he was not entitled to any gratuity. This finding was confirmed by the learned Single Judge on appeal.
3. The learned Single Judge assumed that the appellant accepted 1-4-1956 as the date of his confirmation This assumption is not correct as the appellant alleges that he was confirmed from 5-3-1955. We are satisfied from his order of confirmation Ex. A-2 that he was confirmed with effect from 1-4-56. He relies on his Provident Fund account. He was allowed to contribute towards Provident Fund with effect from 5-3-55. Normally only permanent employees are allowed to contribute towards Provident Fund, but under Regulation 9(11) an exception was made in case of employees who joined the service of the Corporation prior to the commencement of the Rajasthan Financial Corporation (Employees Provident Fund) Regulations, 1958 From the fact that he was allowed to contribute towards Provident Fund from 5-3-55, it cannot be inferred that he was in permanent service from that date.
4. As to whether or not he is entitled to gratuity depends on the interpretation of Regulation 5 of the Rajasthan Financial Corporation (Payment of Gratuity to employees) Regulations. It runs as follows:
5(1) No gratuity will be granted to, or in the case of, an employee-
(a) if he has not completed service in the Corporation for a minimum period of Ten Years, or
(b) if he is Or has been discharged from service in the Corporation for any misconduct.
(2) Notwithstanding anything contained in Clause (a) of Sub-regulation (1), gratuity will be granted to, or in the case, of an employee who has not completed service in the Corporation for a minimum period of Ten Years, if-
(i) he dies while in service of the Corporation; or
(ii) he has retired or has been required to retire, either on account of certified permanent incapacity due to bodily or mental infirmity or owing to the abolition of his appointment on account of reduction of establishment or
(iii) his service in the Corporation is terminated by the Corporation for reasons other than reduction of establishment or dismissal for misconduct.
5. The contention on behalf of the appellant is that his case falls under Regulation 5(2)(ii). The learned Single Judge however held that as he was retired because he had attained the stage of superannuation after four extensions and no further extension was granted to him. It cannot be said that his service was terminated by the Corporation within the meaning of Clause (iii) of Regulation 5(2) He formed this opinion on a consideration of the language used in Regulation 16 and 17 of the Rajasthan Financial Corporation (Staff) Regulations, 1958. Both these regulations occur in Section 3 which is headed 'Termination of Service'. Section 3 is reproduced below in extenso;
16. Termination of service by notice - (1) During his probationary period an employee shall not leave or discontinue his service in the Corporation without giving prior notice in writing to the Managing Director of his intention to leave or discontinue the service. The period of such notice shall not be less than-
(a) 7 days during the first month, and
(b) one month during the rest of the probationary period.
(2) After confirmation an employee shall not leave or discontinue his service in the Corporation without giving prior notice in writing to the Managing Director of his intention to leave or discontinue the service. The period of such notice shall not be less than-
(a) three months in the case of an employee in class A, and
(b) one month in the case of an employee in any other class.
(3) An employee who contravenes the provisions of the foregoing sub-regulations of this Regulation as compensation a sum equal to his substantive pay for the period of notice required of him, provided chat the Board may at its discretion waive such payment of compensation in case of employee in Class A and the Managing Director may at his discretion waive such payment of compensation in any other case.
(4) The Corporation may determine the service of an employee after expiry of the period of his probation on giving him-
(a) three month's notice, or substantive pay in lieu thereof, if he is an employee in Glass A, and
(b) one month's notice, or substantive pay in lieu thereof, if he is an employee in any other class.
The power to determine the service of an employee shall be exercised by the Managing Director, subject in the case of Officers to the prior approval of the Board.
(5) Nothing in this regulation shall affect the right of the Corporation:
(a) to retire or dismiss an employee without notice or pay in lieu thereof in accordance with the provisions of Regulation 17 and 37; and
(b) to determine the service of an employee without notice or pay in iieu thereof on his being certified by the Corporation's Medical Officer to be permanently incapacitated for further continuous service in the Corporation.
Explanation I. - The expression 'month' used in this regulation shall be reckoned according to the English Calendar and shall commence from the day following that on which notice is given by the employee or the Corporation as the case may be.
Explanation II-A notice given by an employee under Sub-regulation (1) & (2) shall be deemed to be proper only if he remains on duty during the period of notice, and an employee shall not be entitled to set off any leave earned and not availed of by him against the period of such notice.
Explanation III-A an employee to whom notice is given by the Corporation in pursuance of this regulation absents himself from duty without permission during the period of notice he shall not be entitled to receive any pay or allowance during the period of absence and shall further be liable to such further penalties as the Managing Director may deem fit to impose.
17. Superannuation and Retirement. - An employee shall retire at fifty-five years of age provided that the Board may at its discretion, sanction from time to time the extension of his employment for a period not exceeding one year at a time, but no extension of his employment shall be granted beyond the age of 60 years.
Explanation. - Notwithstanding anything contained in this regulation, where an employee has at the credit of his leave act count ordinary leave earned and has in sufficient time before the date of retirement either-
(1) formally applied for leave and been refused it, or
(2) ascertained in writing from the Managing Director that leave
6. Regulation 37 which is referred to in Regulation 16(5)(a) runs as follows:
37 Penalties - (1) Without prejudice to the provisions of other Regulations, an employee who commits a breach of the Regulations of the Corporation or who displays negligence inefficiency or indolence, or who knowingly does anything detrimental to the interests or prestige of the Corporation or in conflict with its instructions, or who commits a breach of discipline or is guilty of any other act of misconduct or misbehaviour, shall be liable to the following penalties:
(b) With-holding or postponement of increments or promotion;
(c) Permanent stoppage of increment;
(d) Recovery from pay of the whole or part of any pecuniary loss caused to the Corporation by negligence or breach of orders;
(e) Reduction to a lower post or grades on a fixed pay or a time-scale or to lower stage in a time scale;
(2) No employee shall be subjected to the penalties in Clauses (b), (c), (d), (e), (f), (g), or (h) of Sub-regulation (1) of this regulation except by an order in writing signed by the Managing Director, and no such order that be passed without the charge or charges being formulated in writing and given to the said employee so that he shall have reasonable opportunity to answer them in writing or in person, as he prefers, and in the latter case his defence shall be taken down in writing and read to him; provided that the requirements of the Regulation may be waived if the facts on the basis of which action is to be taken have been established in a Court of Law or where the employee has absconded or where it is for any other reason impracticable to communicate with him or where there is difficulty in observing them and the requirements can be waived without injustice to the employee. In every case where all or any of the requirements of this regulation are waived, the reason for so doing shall be recorded in writing.
(3) An employee may be placed under suspension by the Managing Director provided that in the case of an employee in class 'A' the Managing Director shall report all the facts of the case known to him to the Board at its first meeting after he issues the orders of suspension and there upon the Board shall appoint one of its members other than the Managing Director to hold an inquiry into the charges against such employee and to make a report to the Board. During such suspension, the employee shall receive subsistence allowance equal to one half of his average pay provided that if the suspension is held by Board to be wholly unjustified or the employee is fully exonerated, the period of suspension shall be treated as on duty and the employee shall be entitled to the difference between his subsistence allowance and the emoluments which he would have received but for such suspension for the period he was under suspension. In any other case, the employee shall be entitled to only such proportion of pay and allowance as the Board may decide on the recommendations of the enquiry officer after deducting the amount of subsistence allowance and defames allowance drawn during the period of suspension provided that the Board shall not pass any order which shall have the effect of compelling the employee to refund the amount drawn by him by way of subsistence and dearness allowances during the period of suspension.
7. The learned Single Judge was of opinion that termination of service on superannuation was referred to as retirement, in Regulation 17 and as in Clause (iii) of Regulation 5(2) the expression 'retirement' is not mentioned, that clause is not applicable to the case of the appellant. This argument was supported before us by the learned Counsel for the Rajasthan Financial Corporation.
8. We are of opinion that retirement on superannuation is also a termination of service both having regard to the ordinary grammatical meaning of the term and having regard to the fact that the Rajasthan Financial Corporation (Staff) Regulation, 1958 treated retirement on superannuation also as termination of service, because Regulation 17 which deals with it is included in Section 3 which is headed Termination of Service. All the possible termination of service have been dealt with in Regulation 16 including retirement on superannuation under Regulation 17. In Regulation 16 there is a specific mention of dismissal under Regulation 37, of retirement after attaining the age of superannuation under Regulation 17, determination of the service of an employee on his permanent incapacity due to bodily or mental infirmity (this has been termed as retirement under Regulation 5(2)(ii) of the Gratuity Regulation) and determination of the service of an employee on service of notice for the prescribed period under Regulation 16(4) In Clause (iii) of Regulation 5(2) termination by the Corporation for reasons other than reduction of establishment or dismissal for misconduct can only apply to retirement on attaining the age of superannuation.
9. We are accordingly of the opinion that the appellant is entitled to gratuity under the Rajasthan Financial Corporation (Payment of Gratuity to Employees) Regulation. Under Regulation 3(c) of these regulations, service in the Corporation means the period of employee's service from the date of his confirmation. Under Regulation 3(d) the expression 'Pay' for the purpose of Regulation 6 means substantive pay at the date of his retirement. The appellant attained the age of 65 years on 23-8-1958, but he was granted four extensions of one year each with the result that he actually retired on 24-8-1962. He was drawing a Substantive pay of Rs. 575/- on that date and had put in six year completed service. Under Regulation 6 he is entitled to a gratuity amounting to Rs. 3450/-.
10. The appellant served a notice on the Rajasthan Financial Corporation on 19th December 1962 claiming Rs. 4025/- as gratuity at the rate of Rs. 575/- for seven years and interest at 6% per annum on this amount. He gave one month's time for payment Assuming that the notice was served in three days, the appellant is entitled to interest 6% per annum simple from 22-1-1963 to 11-4-1963 on Rs. 3450/-. This amounts to Rs. 50/-.
11. We accordingly allow the appeal in part, and decree the suit for the recovery of Rs. 3500/- with pendente lite and further interest on the sum of Rs. 3450/- at 6% per annum simple till the date of realisation. The appellant is also entitled to recover proportionate costs throughout from the respondent.