Court rules Payment of Gratuity Act, 1972 not applicable to employees governed by Central Civil Services (Pension) Rules, 1972.
In a significant ruling, the Delhi High Court has dismissed the plea of Vimla Singh, a former Post Graduate Teacher of History at Kendriya Vidyalaya Sanghathan (KVS), seeking gratuity under the Payment of Gratuity Act, 1972. The Division Bench, comprising Justices Anil Kshetarpal and Amit Mahajan, delivered the judgment on February 25, 2026, affirming the orders of the Central Administrative Tribunal which had previously rejected Singh's claim for gratuity.
The court examined the applicability of the Payment of Gratuity Act, 1972, vis-à-vis Rule 26 of the Central Civil Services (Pension) Rules, 1972. It concluded that employees whose service conditions are governed by statutory rules providing for payment of gratuity are excluded from the ambit of the Payment of Gratuity Act.
Vimla Singh, who had served as a teacher at KVS from July 9, 1995, to August 18, 2008, resigned citing health issues. Her resignation was accepted with effect from the date she tendered it. Subsequently, she sought retiral benefits, including gratuity and pension, which were denied by KVS based on Bye-law No. 26, equivalent to Rule 26 of the Central Civil Services (Pension) Rules.
The High Court clarified that the exclusion clause in Section 2(e) of the Payment of Gratuity Act specifically bars employees governed by other statutory rules from its ambit. Since Singh's employment was governed by the Central Civil Services (Pension) Rules, her entitlement to gratuity was determined by those rules, not by the Payment of Gratuity Act.
The court further emphasized that Section 14 of the Payment of Gratuity Act, which provides the Act with an overriding effect, operates only where the Act applies. Since Singh was not covered under the Act, she could not invoke its provisions to override the statutory rules governing her employment.
The judgment also reinforced the interpretation of Rule 26 of the Central Civil Services (Pension) Rules, which mandates the forfeiture of past service upon resignation, thereby nullifying any qualifying service for pensionary benefits.
This decision underscores the judiciary's stance on the precedence of specific statutory rules over general legislation in employment matters, particularly concerning gratuity entitlements.
Bottom Line:
Payment of Gratuity Act, 1972 - Applicability of provisions to employees governed by Central Civil Services (Pension) Rules, 1972 - Employees governed by statutory rules providing for payment of gratuity are excluded from the ambit of the Payment of Gratuity Act, 1972.
Statutory provision(s):
Payment of Gratuity Act, 1972, Section 2(e), Section 14; Central Civil Services (Pension) Rules, 1972, Rule 26
