Reserved
Writ Petition No.310 (M/S) of 2010
U.P. Bhumi Sudhar Nigam T.C./19-B
Vibhuti Khand, Gomti Nagar, Lucknow ..........Petitioner
Versus
Appellate Authority and others ......Opposite parties
Hon'ble S.S. Chauhan, J.
This writ petition has been filed challenging the orders dated
31.1.2008 and 31.10.2009 passed by the Prescribed Authority and the
Appellate Authority respectively .
The facts in short giving rise to the present petition are that opposite
party no.3 was employed with the petitioner on the basis of the contract
entered into between the parties on a consolidated salary. The said contract
was entered for a period from 22.2.2002 to 21.2.2003 and thereafter from
22.2.2003 to 30.9.2005 and from 1.11.2006 to 30.9.2007. Services of
opposite party no.3 were dispensed with by giving one month’s salary on
15.5.2007 and on 13.6.2007 he was discharged from service. Opposite party
no.3 moved an application before the Prescribed Authority for payment of
gratuity as contemplated under Section 7 of the Payment of Gratuity Act,
1972 (for short “the Act”). Opposite party no.3 stated that he has worked for
more than five years continuously and therefore, he is entitled for payment of
gratuity. The Prescribed Authority allowed the claim of opposite party no.3
against which an appeal was filed by the petitioner. The said appeal also
came to be dismissed by means of the order dated 31.10.2009 by the
appellate authority. Hence this writ petition.
Submission of learned counsel for the petitioner is that the gratuity is
available to an employee, who is being paid wages. Opposite party no.3 was
not being paid wages and therefore, he is not entitled for gratuity. It is also
submitted that he did not work continuously but there was a break in service
for short intervals and therefore, he is not covered within the definition
‘continuous service’ as contemplated under Section 2-A of the Act.
Opposite party no.3 has appeared in person and he has submitted that
he was appointed on contractual basis and according to the terms of the
contract, he is entitled for payment of gratuity. He further submits that both
the authorities have taken into consideration the arguments raised by the
learned counsel for the petitioner and they have come to the conclusion that
he (opposite party no.3) has rendered more than five years’ continuous
service, as such, he is entitled for salary irrespective of the fact that his
employment was of a contractual nature. He also submits that Section 14 of
2
the Act has been given overriding effect and therefore, any other provision of
any other Act will not effect his right. Opposite party no.3 has relied upon
the judgments rendered in the cases of Ahmedabad Pvt. Primary
Teachers’ Assn. vs. Administrative Officer and others, (2004) 1 SCC
755 and Management of Goodyear India Limited vs. K.G. Devessar,
(1985) 4 SCC 45.
I have heard learned counsel for the parties and gone through the
record.
Clause (b) of Section 2 of the Act defines “completed year of service”
means continuous service for one year. In Clause (c) of Section 2 of the Act
“continuous service” has been defined means continuous service as defined
in Section 2-A. Section 2-A of the Act reads as under:-
“Section:2-A. Continuous service. – For the purposes of this
Act, –
(1) an employee shall be said to be in continuous service for a
period if he has, for that period, been in uninterrupted service,
including service which may be interrupted on account of
sickness, accident, leave, absence from duty without leave (not
being absence in respect of which an order [***] treating the
absence as break in service has been passed in accordance with
the standing orders, rules or regulations governing the
employees of the establishment), lay off, strike or a lock-out or
cessation of work not due to any fault of the employee,
whether such uninterrupted or interrupted service was rendered
before or after the commencement of this Act.
(2) where an employee (not being an employee employed in
a seasonal establishment) is not in continuous service within
the meaning of clause (1), for any period of one year or six
months, he shall be deemed to be in continuous service under
the employer –
(a) for the said period of one year, if the employee
during the period of twelve calendar months preceding the date
with reference to which calculation is to be made, has actually
worked under the employer for not less than –
(i) one hundred and ninety days, in the case of an
employee employed below the ground in a mine or in an
establishment which works for less than six days in a week;
and
(ii) two hundred and forty days, in any other
case;
(b) for the said period of six months, if the employee
during the period of six calendar months preceding the date
with reference to which the calculation is to be made, has
actually worked under the employer for not less than –
(i) ninety-five days, in the case of an employee
3employed below the ground in a mine or in an establishment
which works for less than six days in a week; and
(ii) one hundred and twenty days, in any other
case;
[Explanation: For the purposes of clause (2), the number of
days on which an employee has actually worked under an
employer shall include the days on which –
(i) he has been laid-off under an agreement or as
permitted by standing orders made under the Industrial
Employment (Standing Orders) Act, 1946 (20 of 1946), or
under the Industrial Disputes Act, 1947 (14 of 1947), or under
any other law applicable to the establishment;
(ii) he has been on leave with full wages, earned
in the previous years;
(iii) he has been absent due to temporary
disablement caused by accident arising out of and in the course
of his employment; and
(iv) in the case of a female, she has been on
maternity leave; so, however, that the total period of such
maternity leave does not exceed twelve weeks.](3) Where an employee, employed in a seasonal
establishment, is not in continuous service within the meaning
of clause (1), for any period of one year or six months, he shall
be deemed to be in continuous service under the employer for
such period if he has actually worked for not less than seventy-
five per cent, of the number of days on which the establishment
was in operation during such period.]”
The wages for the purposes of this Act have been defined under
Clause (s) of Section 2 of the Act. Section 2 (s) reads as under:-
“(s) “wages” means all emoluments which are
earned by an employee while on duty or on leave in
accordance with the terms and conditions of his
employment and which are paid or are payable to him in
cash and includes dearness allowance but does not
include any bonus, commission, house rent allowance,
overtime wages and other allowance.”
Opposite party no.3 has stated that Section 14 of the Act requires
appreciation of this Court on account of the fact that the Act has been given
overriding effect. Section 14 of the Act reads as under:-
“14. Act to override other enactments, etc. – The
provisions of this Act or any rule made there under shall
have effect notwithstanding anything inconsistent
therewith contained in any enactment other than this
Act or in any instrument or contract having effect by
virtue of any enactment other than this Act.”
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The petitioner, U.P. Bhumi Sudhar Nigam (for short “the
Corporation”), happens to be a Corporation. The said Corporation falls
within the definition of the establishment as defined in Section 2 (f) of the
Act wherein it has been provided that the “employer” means, in relation to
any establishment, factory, mine, oilfield, plantation, port, railway company
or shop–
(i) belonging to, or under the control of, the
Central Government or a State Government, a person or
authority appointed by the appropriate Government for
the supervision and control of employees, or where no
person or authority has been so appointed, the head of
the Ministry or the Department concerned.
From the definition of the establishment, there is no doubt in coming
to the conclusion that Nigam falls under the aforesaid provisions of the Act
and the provisions of the Act if read together, then the wages have been
defined to mean all emoluments which are earned by an employee while on
duty or on leave in accordance with the terms and conditions of his
employment.
Terms and conditions of the employment of opposite party no.3 are
evident by means of various agreements entered into between the parties
from time to time. The Act does not talk of salary but the Payment of
Gratuity Act has cautiously used the word “wages” and has linked the same
with the terms and conditions of the employment. The terms and conditions
of the employment are evident from the contract. Thus, the services of
opposite party no.3 would be deemed to be a fixed service as contemplated
under Section 2-A of the Act and the fixed amount paid to him would be
included within the ambit of the wages defined under Section 2 (s) of the
Act. The terms “completed year of service” and “continuous service” as
defined in Section 2 (b), 2 (c) and 2-A of the Act also lead to only one
interpretation that employment of opposite party no.3 has to be treated as a
continuous employment. Provisions of Section 14 of the Act go to indicate
that the Act has been given overriding effect, therefore, any other provisions
which are contrary and agreement will not prevail upon opposite party no.3
but looking to the language implied in Section 14 of the Act, the provisions
of the Act will prevail and govern the field.
The Apex Court in the case of Ahmedabad Pvt. Primary
Teachers’ Assn. (supra) has ruled as under:-
“6. The Act is a piece of social welfare legislation and
deals with the payment of gratuity which is a kind of reitral
benefit like pension, provident fund etc. As has been
5explained in the concurring opinion of one of the learned
Judges of the High Court “gratuity in its etymological sense
is a git, especially for services rendered, or return for favours
received”. It has now been universally recognized that all
persons in society need protection against loss of income due
to unemployment arising out of incapacity to work due to
invalidity, old age etc. For the wage-earning population,
security of income, when the worker becomes old or infirm,
if of consequential importance. The provisions contained in
the Act are in the nature of social-security measures like
employment insurance, provident fund and pension. The Act
accepts, in principle, compulsory payment of gratuity as a
social-security measure to wage-earning population in
industries, factories and establishments.
7. Thus, the main purpose and concept of gratuity is
to help the workman after retirement, whether retirement is a
result of rules of superannuation or physical disablement or
impairment of vital part of the body. The expression
“gratuity” itself suggests that it is a gratuitous payment given
to an employee on discharge, superannuation or death.
Gratuity is an amount paid unconnected with any
consideration and not resting upon it, and has to be
considered as something given freely, voluntarily or without
recompense. It is a sort of financial assistance to tide over
post-retiral hardships and inconveniences.”
In the case of Management of Goodyear India Limited
(supra), the Apex Court has ruled as under:-
“……………………Gratuity will have to be paid to all
those persons whose employment came to an end after the
coming into force of the Act for that period during which he
came within the definition of an employee within the
meaning of Section 2 (e) of the Payment of Gratuity Act. To
hold otherwise may render a whole class of persons who all
their lives got wages of less than Rs 1000 per month, but on
the eve of their retirement started getting wages of Rs 1000
per month. Surely that could not have been the intention of
Parliament. We think the only reasonable way of construing
Section 4 in the light of the definition of employee in Section
2 (e) is to hold that a person whose services are terminated for
any of the reasons mentioned in Section 4 (1), after the
coming into force of the Act is entitled to the payment of
gratuity, if he has rendered continuous service for not less
than five years, for that period during which he satisfied the
definition of employee under Section 2 (e) of the Act.”
Having considered the aforesaid dictum of the Apex Court as well as
the provisions of the Act, the inevitable conclusion is that opposite party
no.3 is entitled for gratuity as he has rendered more than five years of
continuous service. I find no illegality in the orders passed by the Prescribed
Authority as well as by the Appellate Authority. Learned counsel for the
petitioner could not raise any substantial legal point to indicate that the
6
orders suffer from any illegality in any manner.
The writ petition is devoid of merit. It is accordingly dismissed.
July 20, 2010
RBS/-