HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU LPA No. 49/2025 Jammu & Kashmir & Ladakh Finance Corporation .....Applicant(s)/Petitioner(s) Through :- Ms. Monika Kohli, Sr. AAG v/s Jawahar Lal Koul & Ors. .....Respondent(s) Through :- Mr. R K S Thakur, Advocate CORAM: HON’BLE MR. JUSTICE SANJEEV KUMAR, JUDGE HON’BLE MR. JUSTICE PUNEET GUPTA, JUDGE ORDER 26.03.2025 1. This intra court appeal, filed by the appellant, is directed against an order dated 28.02.2025, passed by the learned Single Judge of this Court in CPSW No. 500/2017, whereby the learned Single Judge has, while rejecting the compliance report submitted by the appellant, also returned a finding that the respondents are entitled to gratuity. 2. Briefly stated, the facts leading to the filing of the instant appeal are that the respondents/ex-employees of J&K State Financial Corporation filed a writ petition being SWP No. 1755/2012 titled Jawahar Lal Koul & Ors. Vs. State of J & K & Ors. seeking inter alia a direction to the appellant-Corporation to grant the benefit of enhanced gratuity in terms of SRO-94 of 2009 in favour of the respondents. The writ petition was disposed of by the learned Single Judge vide its order and judgment dated 24.10.2016 directing the appellant herein to consider the respondents eligible for grant of revised pay-scale notionally w.e.f. Sr. No. 92 2 LPA No. 49/2025 01.01.2006. The respondents were also held entitled to all retiral benefits, including gratuity etc, strictly in accordance with the Rules. 3. The aforesaid judgment was assailed by the appellant-Corporation before the Division Bench of this Court in LPASW No. 25/2017. The Division Bench of this Court vide its order and judgment dated 20.02.2017 disposed of the appeal by holding as under: “Admittedly, the decision was taken to grant the notional benefit with effect from 01.01.2006. Therefore, the respondents, who were in employment, could not have been deprived of the aforesaid benefit, in absence of any rational and reasonable criteria. The learned Single Judge has rightly held the respondents to the benefit of revised pay scale notionally with effect from 01.01.2006. However, in view of the stand taken by the appellants that they have not adopted SRO 94 dated 15.04.2009, the directions insofar as it pertains to grant of gratuity is hereby modified and it is directed that in case SRO 94 dated 15.04.2009 has been adopted by the appellants and the benefit of the aforesaid SRO has already been given to the employees of the appellant-Corporation, the same benefit shall also be extended to the respondents. To the aforesaid extent, order passed by the learned Single Judge is modified.” 4. So far as the grant of benefit of enhanced gratuity in terms of SRO-94 dated 15.04.2009 is concerned, the Division Bench clearly observed that the aforesaid benefit would be available to the respondents subject to the following two conditions: i. That SRO-94 of 2009 has been adopted by the appellant- Corporation. ii. That the benefit of the aforesaid SRO has been given to the employees of the corporation. 5. When the judgment of the Division Bench dated 20.02.2017 was not fully implemented by the appellant, the respondents filed a Contempt Petition being CPSW No. 500/2017 seeking initiation of contempt 3 LPA No. 49/2025 proceedings against the officials at the helm of affairs of the appellant- Corporation. In response to the notice issued in the contempt petition, statement of facts/compliance report came to be filed by the then Managing Director, Jammu & Kashmir, State Financial Corporation in which a clear stand was taken in Paragraph 11 & 13 that the appellant- Corporation had not adopted SRO-94 of 2009 and also that the gratuity at the enhanced rate had not been allowed to the employees of the Corporation. The reason cited for non adoption of SRO-94 of 2009, as can be seen from the compliance report, is the scarcity of funds with the appellant-Corporation. This compliance report was not accepted by the learned Single Judge and the appellant-Corporation was directed to reconsider the matter and file fresh compliance. Accordingly, fresh compliance report was filed by the appellant-Corporation through one Shafat Sultan, Managing Director, JKLFC. 6. In the fresh compliance report, it was brought to the notice of the learned Single Judge that the judgment, in its entirety, stood complied with, however, with regard to SRO-94 of 2009, the Managing Director of the appellant-Corporation took the following stand, which is reproduced as under: “That so far as gratuity is concerned under SRO 94 dated 15.04.2009. The Corporation till date has not adopted the said SRO and no gratuity under the said SRO 94 dated 15.04.2009 has been released in favour of any existing employees of the Corporation. Further the respondents have only released the gratuity under a ceiling of 10.00 lakhs in favour of those ex- employees who filed the application before the Assistant Labour Commission Court under the payment of Gratuity Act, 1972 and obtained the order from the above courts in their favour.” 4 LPA No. 49/2025 7. It is significant to note here that on 18.03.2025, when a plea was raised by learned counsel for the respondents that some of the employees either under the awards passed by the Assistant Labour Commissioner under Payment of Gratuity Act, 1972 or otherwise have been given the benefit of SRO-94 of 2009, Ms. Kohli, learned Sr. AAG appearing for the appellant-Corporation, submitted that the enhanced gratuity was paid to the employees in implementation of the award passed by the Assistant Labour Commissioner’s Court under Payment of Gratuity Act and that some have received the enhanced gratuity under Voluntary Retirement Scheme (VRS). On this, we directed the learned Sr. AAG to place on record the copy of VRS. 8. Today, when the case was taken up for consideration, a copy of the VRS was provided to us, not by learned Sr. AAG but by Mr. Thakur, learned counsel appearing for the respondents, a perusal whereof clearly indicated that a separate set of benefits including the payment of gratuity under the Payment of Gratuity Act, 1972 were envisaged in favour of the employees who had opted for VRS and, therefore, were a class apart from the employees who retired on attaining normal superannuation. 9. Be that as it may, in the aforesaid backdrop, the learned Single Judge considered the fresh compliance report filed by the appellant- Corporation and came to the conclusion that in view of the fact that since some of the employees of the Corporation have already been given the benefit of enhanced gratuity, as such, similar benefit cannot be denied to the respondents. The compliance report submitted by the 5 LPA No. 49/2025 appellant-Corporation was thus, rejected. Paragraph 3 of the impugned order reads thus: “The respondent cannot take the plea that the petitioners are not entitled to the gratuity in view of its own showing that the respondent-Corporation has paid the gratuity to its ex-employees who had obtained order from the Assistant Labour Commissioner.” 10. Learned Sr. AAG would submit that the observation of the learned Single Judge made in Paragraph 3 is tantamount to modifying the directions passed by the Division Bench of this Court vide order dated 20.02.2017 in LPASW No. 25/2017 and therefore, the order impugned becomes appealable under Clause 12 of the Letters Patent. 11. Per contra, Mr. Thakur, learned counsel appearing for the respondents, would submit that the order impugned in this appeal is only an order passed in the course of proceedings in the contempt petition and therefore, not amenable to challenge under Clause 12 of the Letters Patent. He would further submit that, in terms of Section 19 of the Contempt of Courts Act, an appeal before the Division Bench would lie only if an order is passed by the learned Single Judge exercising jurisdiction to punish for contempt. 12. Having heard learned counsel for the parties and perused the material available on record, we are of the considered opinion that the order impugned does amount to modifying the directions issued by the Division Bench of this Court vide order dated 20.02.2017 in LPASW No. 25/2017. 6 LPA No. 49/2025 13. In Midnapore Peoples’ Co-op. Bank Ltd. & Ors. Vs. Chunilal Nanda & Ors. [(2006) 5 SCC 399], the Hon’ble Supreme Court has summarized the position of law in Para 11 which reads thus: “11….. The position emerging from these decisions, in regard to appeals against orders in contempt proceedings may be summarized thus: I. An appeal under section 19 is maintainable only against an order or decision of the High Court passed in exercise of its jurisdiction to punish for contempt, that is, an order imposing punishment for contempt. II. Neither an order declining to initiate proceedings for contempt, nor an order initiating proceedings for contempt nor an order dropping the proceedings for contempt nor an order acquitting or exonerating the contemnor, is appealable under Section 19 of the CC Act. In special circumstances, they may be open to challenge under Article 136 of the Constitution. III. In a proceeding for contempt, the High Court can decide whether any contempt of court has been committed, and if so, what should be the punishment and matters incidental thereto. In such a proceeding, it is not appropriate to adjudicate or decide any issue relating to the merits of the dispute between the parties. IV. Any direction issued or decision made by the High Court on the merits of a dispute between the parties, will not be in the exercise of 'jurisdiction to punish for contempt' and therefore, not appealable under section 19 of CC Act. The only exception is where such direction or decision is incidental to or inextricably connected with the order punishing for contempt, in which event the appeal under section 19 of the Act, can also encompass the incidental or inextricably connected directions. V. If the High Court, for whatsoever reason, decides an issue or makes any direction, relating to the merits of the dispute between the parties, in a contempt proceedings, the aggrieved person is not without remedy. Such an order is open to challenge in an intra- court appeal (if the order was of a learned Single Judge and there is a provision for an intra-court appeal), or by seeking special leave to appeal under Article 136 of the Constitution of India (in other cases). The first point is answered accordingly.” 7 LPA No. 49/2025 Indisputably, the learned Single Bench has, in terms of order impugned, issued direction touching upon the merits of the despute which direction is neither incidental nor inextricably connected with any order punishing for contempt. The impugned order, in a way, calls upon the appellant to do something which is not envisaged in the judgment of which mutation is alleged. The impugned order is, therefore, appealable under Clause 12 of the Letters Patent of this Court, the provisions of Section 19 of Contempt of Courts Act, 1972, notwithstanding. We have already reproduced the sum and substance of the directions passed by this Court with regard to the entitlement of the respondents to gratuity in terms of SRO 94 of 2009. The Division Bench of this Court has made the payment of benefit of enhanced gratuity in favour of the respondents depending upon two factors: i. The Corporation must have adopted SRO 94 of 2009. ii. The employees of the Corporation have been accorded the benefit under the aforesaid SRO. 14. In view of the clear stand taken by the respondents and in the absence of any contrary material available on record, it is beyond any pale of discussion or debate that the appellant-Corporation has not adopted SRO-94 of 2009 due to financial constraints and, therefore, all employees of the Corporation retiring on normal superannuation are entitled to gratuity at the rate as it existed prior to issuance of SRO-94 of 2009 by the Government of Jammu and Kashmir in respect of Government employees. 8 LPA No. 49/2025 15. True it is that in some cases the appellant-Corporation has granted the benefit of enhanced gratuity and that has been done by the Corporation under the pains of committing the contempt of orders passed by the Controlling Authority under the Payment of Gratuity Act, 1972. Some of the employees have also got the benefit of enhanced gratuity but that has been granted under the VRS, which apart from providing several benefits to the employees opting for VRS has also clearly envisaged the payment of gratuity, as per the Gratuity Act, 1972. The VRS employees, have therefore, been kept out of the payment of gratuity regulations of the Corporation for the purpose of conferring higher financial benefits upon them. The VRS makes the employees opting for the said scheme, a class apart from those employees who retire on normal superannuation. 16. The issue, which is vehemently agitated before us by Mr. Thakur, learned counsel appearing for the respondents, could have been very well agitated before the Division Bench which passed the judgment dated 20.02.2017 in LPASW No. 25/2017. Possibly, this was agitated but there is no finding returned by the Division Bench of this Court holding the respondents entitled to the benefit of enhanced gratuity under SRO-94 of 2009. 17. In the absence of any such finding having been returned by the Division Bench, we feel completely helpless in acceding to the submissions of learned counsel for the respondents, as accepting the submissions of learned counsel for the respondents, would be rewriting 9 LPA No. 49/2025 the judgment of the Division Bench which has already attained finality and is not subject matter challenge before us. 18. This Court, being a Contempt Court, is only obliged to ensure that the judgment passed by this Court, as it is, is complied with in its letter and spirit. In view of the stand, which the appellant-Corporation has taken, we have no manner of doubt that there is substantial compliance of the judgment passed by the Division Bench of this Court in LPASW No. 25/2017 and, therefore, there is no cause for proceeding with the contempt proceedings. 19. For all these reasons, we find merit in this appeal and the same is accordingly, allowed and the impugned order dated 28.02.2025 is set aside and the contempt proceedings pending before the learned Single Judge are quashed. We, however, leave it open to the respondents to challenge the rejection of their claim to the enhanced gratuity by availing appropriate remedy as available under law. Nothing said hereinabove shall be construed as an expression of opinion by this Bench on the merits of the claim of the respondents to enhanced gratuity. (Puneet Gupta) (Sanjeev Kumar) Judge Judge JAMMU 26.03.2025 Manan Whether the order is reportable : Yes Manan Mahajan 2025.04.02 23:13 I attest to the accuracy and integrity of this document