Full Judgment Text
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PETITIONER:
JEEWANLAL (1929) LTD.ETC. ETC.
Vs.
RESPONDENT:
THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT &O
DATE OF JUDGMENT29/08/1984
BENCH:
SEN, A.P. (J)
BENCH:
SEN, A.P. (J)
REDDY, O. CHINNAPPA (J)
VENKATARAMIAH, E.S. (J)
CITATION:
1984 AIR 1842 1985 SCR (1) 664
1984 SCC (4) 356 1984 SCALE (2)303
CITATOR INFO :
RF 1986 SC 458 (3)
RF 1988 SC 587 (12)
ACT:
Payment of Gratuity Act 1972, Sections 4(2) and 4(3)
Monthly-rated employee-Computation of gratuity-Scope of
expression "fifteen days’ wages"- Explained.
Interpretation of statutes Social Welfare legislation-
Beneficient rule of construction-Adoption of.
Social security measures-Application of provisions-
Doubt or difficulty arising-Necessity for Government to
introduce legislation to cure the defect without waiting for
interpretation by highest Court-Suggestion for setting up of
National Labour Commission for Periodical review.
Words & Phrases: appropriate Government’-Meaning of
Section 2(a)(1) Payment of Gratuity Act 1972.
HEADNOTE:
The respondent-a monthly-rated employee of the
appellant-a public limited company, ceased to be an employee
on attaining the age of superannuation after completing 35
years of service. Since he was entitled to payment of
Gratuity under the Payment of Gratuity Act, 1972, the
appellant calculated the amount of gratuity payable under
sub-s.(2) of s.4 on the basis that ’fifteen days’ wages"
meant half of the monthly wages last drawn i.e., for 13
working days. there being 26 working days in a month, The
respondent being dissatisfied with this payment, made a
claim under sub-s(1) of s.7, before the Controlling
Authority, for payment of an additional sum of gratuity on
the ground that the daily wages should be ascertained on the
basis of what he actually got for 26 days and the amount of
"fifteen days’ wages" should be calculated accordingly, not
by just taking half of his wages for a month of 30 days or
fixing his daily wages by dividing his monthly wages by 30.
The Controlling Authority held; that for the purpose of
calculating "fifteen days’ wages" it was necessary to
ascertain one day’s wage and since a
665
month consists of 26 working days, the amount of gratuity
should be calculated by dividing the monthly wages last
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drawn by 26 and multiplying by ’fifteen’; and not by just
taking half of the monthly wages or by dividing such monthly
wages by 30.
On appeal, the Appellate Authority, held that there was
an error in the mode of computation of the amount of
gratuity that was payable, and held that the gratuity
payable would have to be calculated at half of the monthly
rate of wages, i.e. wages earned in a consecutive period of
15 days and the daily wages had to be multiplied by
"thirteen" and not by "fifteen" for every completed year of
service or part thereof not exceeding six months. The amount
of gratuity payable was accordingly reduced.
The High Court under Article 226, held following the
decision of this Court in Shri Digvijay Woollen Mills Ltd.
etc. v. Mahendra Prataprai Buch etc. 1981 1 SCR 64 that in
order to determine "fifteen days’ wages" of a monthly-rated
employee under sub-s.(2) of s.4 of the Act, it was necessary
to determine one day’s wages last drawn by him, and them
multiply the same "fifteen’ times. and the resultant sum has
to be multiplied by twenty to arrive at the maximum amount
of gratuity payable under sub-s.(3) of s.4 of the Act. The
orders of the Controlling Authority were restored.
In the Appeals and Special Leave Petitions it was
contended on behalf of the Management: that the words
"fifteen days’ wages" occurring in sub-s.(2) of s.4 of the
Act are clear and unambiguous and must mean half a month’s
wages and therefore there was no scope for an artificial
calculation being made by dividing the wages for a month by
the number of working days.
Dismissing the Appeals and Special Leave Petitions,
^
HELD: 1.(i) The Payment of Gratuity Act, 1972 was
enacted to introduce a scheme for payment of gratuity for
certain industrial and commercial establishments as a
measure of social security. The significance of this
legislation lies in the acceptance of the principle of
gratuity as a compulsory statutory retiral benefit. [672G;
673B]
(ii) In construing a social welfare legislation, the
Court should adopt a beneficent rule of construction and if
a section is capable of two constructions, that construction
should be preferred which fulfils the policy of the Act, and
is more beneficial to the persons in whose interest the Act
has been passed. When the language is plain and unambiguous.
the Court must give effect to it whatever may be the
consequence. The argument of inconvenience and hardship is
only admissible in construction where the meaning of the
statue is obscure and there are two methods of construction.
In an anxiety to advance the beneficent purpose of the
legislation, the Court must not yield to the temptation of
seeking ambiguity when there is none. [675B-D]
2.(1) The intention of the Legislature in enacting sub-
s.(2) of s.4 of the Act was not only to achieve uniformity
and reasonable degree of certainty, but
666
also to create and bring into force a self-contained, all-
embracing, complete and comprehensive code relating to
gratuity as a compulsory, retiral benefit. The quantum of
gratuity payable under sub-s(2) of s.4 of the Act has to be
"fifteen days’ wages" based on rate of wages last drawn by
the employee concerned for every completed year of service
or more in excess of six months ’subject to the maximum of
20 months’ wages as provided by sub-s. (3). [676G-H; 677A]
Shri Digvijay Woollen Mills Ltd. etc. v. Mahendra
Prataprai Buch etc.,[1981] 1 SCR 64, referred to.
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Associated Cement Co. Ltd. Kistna Cement Works, Kistna
Guntur Distt. v. The Appellate Authority under Payment of
Gratuity Act (Regional Assistant Commissioner of Labour,
Guntur) & Ors. [1976] 1 LLJ 222 and Swamy & Ors. v.
Controlling Authority under Payment of Gratuity Act & Ors.,
[1978] 52 IFJ 138 over-ruled.
(ii) The word ’rate’ appears twice in sub-s.(2) of s.4
and it necessarily involves the concept of actual working
days. Although a month is understood to consist of 30 days,
gratuity payable under the Act treats the monthly wages as
wages for 26 working days. [675A]
(iii) Sub-ss.(2) and (3) of the Act are designed to
achieve two separate and distinct objects and they operate
at two different stages. While sub-s. (2) provides for the
mode of calculation of the amount of gratuity, sub-s:(3)
seeks to impose a ceiling on the amount of gratuity payable
at 20 months wages. It is meant to provide in incentive to
employees to serve for the period of 30 years or more. Sub-
s.(2) of s.4 of the Act which uses the words "fifteen days’
wages" and not half a months wages, cannot be called in aid
for construction of the words "20 month’ wages’, appearing
in sub-s.(3) of s.4 of the Act. [677F-G]
3. The definition of ’appropriate government’ in
s.2(a)(1) in relation to an establishment makes a
distinction between establishments and factories. In
relation to an establishment belonging to, or under the
control of, the Central Government and of a factory
belonging to, or under the control of, the Central
Government, the appropriate government is the Central
Government. But the Central Government is the appropriate
government only in relation to an establishment having
branches in more than one State. There is no like provision
made in relation to such an establishment having factories
in different States. [678F-G]
4. Whenever doubt or difficulty is expressed by the
High Courts in the application of provisions of social
security measures, namely, retiral benefits, gratuity,
provident fund etc., the Government must always introduce
legislation to cure the defect rather than wait judicial
interpretation by the highest Court.
[680H]
Lalappa Lingappa and Ors. v. Laxmi Vishnu Textile
Mills., Ltd. [1981] 2 SCR 797. referred to.
667
5. The Government may consider the desirability of
setting up a National Labour Commission which may be
entrusted not only with the task of making periodical review
of social welfare legislations from time to time but also to
suggest radical reform of the laws relating to industrial
relations which must be brought in tune with the changing
needs of the society. [681A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2332
1970, 2432,2784-2877 of 1981 and 7447 to 7497 of 1983
Appeals by Special leave from the Judgment and Order
dated the 19th June, 1981 of the Madras High Court in Writ
Petition Nos. 338, 4263 of 1977, 4028/80, 2662/78, 4056,
2171, 2170/80, 4136/78,4339/80, 2028/78,2085/80,
2178/78,1590/76,3164, 2426/80, 2122/80, 2452/78, 4414/80,
2073/78, 1598/76, 1596/76, 4257/80, 614/79, 4057, 4254,
4411, 1732/80, 1597/76, 4259/80, 2664/78, 4252,
2175/80,2058/78, 3972/80, 26/79,4410/80,1592/76,3571, 4259,
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4058, 3570, 2007/80,2169/78, 2135, 4331/80, 2665/78, 2006,
4255, 4022/80, 1595/76, 4054/80, 1594/76, 4026,2174/80,
2168/78, 3567/80,2172/78, 2133/80, 2469/78, 5470/78,
1593/76, 3569/80, 1551/76, 1591/76, 2008, 3156, 4029, 3165,
4055, 4409, 4408, 2427, 3412,
4024,4023,4412,3166/80,2663/78, 4225, 2134, 3157,4253/80,
2454/78,4027/80,2471/78, 1959/80,1635/76,
2453/78,2172,3163/80,2461/78,3158, 4053,4413/80,2073/78,
3568, 2005/80,1542, 1540, 1378, 1377/78,492, 339,340/77,
1541,1379/78, 3041/77,226/79, 3050,3056,3034
3038,3037/77,3767,4261,3058/77,168/79, 3766, 3039/77,3048,
3035, 3047, 4262, 4259, 3988, 3053, 4260, 4383/77,265/79,
4258, 2967,3055,3052, 3280, 3033, 3032, 3036,
3051,3049,3040,4381,4382, 3042/1977 & 264 of 1979.
WITH
Civil Appeal Nos. 2985-87, 3398-3410 of 1981, 369-410,
450-59, 3091-3092 of 1982, 60/83, 2560/83, 10778 of 1983,
Appeals by Special leave from the Order of the
Appellate Authority, Under the payment of Gratuity Act,
Madras dated 29th May, 31st January, 27th February, of 1981,
17th, & 30th April 16th December & 20th December, 1982 in
P.G.A. Nos. 24/81, 31/80,90/80,138,132, 131, 134, 139, 129,
137, 92, 133,91,136, 135, of 1980, 19-23, 25-28, 30,29,31-39
of 1981, 61, 69, 101, 98,66, 73, 50, 63, 60, 32, 33, 34, 35,
36, 57, 58, 59, 62, 64, 65; 67,68,74-79, 97,
668
99, 100 & 49 of 1980 2 & 6 of 1981, 458/81, 48/82 and 12 of
1981
AND
Civil Appeal No. 2559 of 1984.
Appeal by Special leave from the Judgment and Order
dated 22nd March, 1984, of the Appellate Authority and the
Regional Labour Commissioner (Central) Madras Under the
Payment of Gratuity Act, 1972 in Appeal No 17 of 1983.
AND
Special Leave Petition (Civil) Nos. 1819, 3324, 11382-
84, 14754 of 1982 and 4940 of 1984.
From the Orders dated the 19th July, 1981, 28th July &
12th August, 1982 and 16th February, 1984, of the Appellate
Authority and the Regional Labour Commissioner (Central)
Madras Under the Payment of Gratuity Act, 1972 in P.G.A.
Nos. 20/81, 1/77, 9/82, 10 & 11/82 and 16 of 1983
Soli J. Sorabjee, A.N. Haksar, S. Ramasubramaniam,
Sanjay Mohan & D.N. Gupta for the Appellants in CAS. 1970/81
& 2560/83.
Dr. Y.S. Chitale, S. Ramasubramaniam, Sanjay Mohan,
D.N. Gupta for the Appellants in CAS. 2432/81, 10778/83 &
2559/84.
S. Padmanabhan, S. Ramasubramaniam, Sanjay Mohan & D.N.
Gupta for the Appellants in CA. Nos. 2332/81 & 2985 of 1981
S. Ramasubramaniam, Sanjay Mohan & D.N. Gupta for
Appellants in rest of the Appeals and for Petitioners in
Special Leave Petitions.
S.H. Mehta & M.C. Tiwari for Respondent No. I in CA.
No. 3091/82.
H.S. Parihar for Respondent in CA. 60 of 1983.
Ambrish Kumar for the Respondent.
The Judgment of the Court was delivered by
669
SEN, J. These appeals by special leave and the
connected special leave petitions from the judgment and
order of the Madras High Court dated June 19, 1981 raise a
question of substantial importance. The question is whether
the words "fifteen days’ wages" occurring in sub-s. (2) of
s.4 of the payment of Gratuity Act, 1972 (hereinafter
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referred to as the ’Act’) in the case of monthly-rated
employes, can only mean half a month’s wages, i.e., wages
which they would have earned in a consecutive period of 15
days or in 13 working days and therefore, in calculating the
amount of gratuity payable to such employees, the rate of
wages earned by them has to be multiplied by ’thirteen"
there being 26 working days in a month and not by "fifteen".
A subsidiary question arises as to whether the words "twenty
months’ wages" occurring in sub-s. (3) thereof would only
mean wages for 520 working days taking the actual working
days in 20 months or must mean 600 days taking that a month
consists of 30 days.
It is not necessary to state the facts in any great
detail. In all these appeals, the respondent in each case
was a monthly-rated employee and the appellant, a public
limited company, was his employer. The facts in each of
these cases are more or less similar and it will suffice to
state the facts in one of them. In Civil Appeal No. 2332 of
1981-Messrs Jeeva lal (1929) Ltd. v. The Appellate Authority
under the Payment of Gratuity Act, Madras & Ors, the
respondent ceased to be an employee on attaining the age of
superannuation after completing 35 year of service. Since he
was entitled to payment of gratuity under the Act, the
appellant calculated the amount of gratuity payable to him
under sub-s. (2) of s. 4 on the basis that "fifteen days’
wages" meant half of the monthly wages last drawn by him,
i.e., for 13 working days, there being 26 working days in a
month. Being dissatisfied with such payment, the respondent
made a claim under sub-s. (1) of s. 7 of the Act before the
Controlling Authority, Madras for determination of the
amount of gratuity payable to him. He made a demand for
payment of an additional sum as gratuity on the ground that
his daily wages should be ascertained on the basis of what
he actually got for 26 working days and the amount of
"fifteen days’ wages" should be calculated accordingly, not
by just taking half of his wages for a month of 30 days or
fixing his daily wages by dividing his monthly wages by 30.
The appellant contested the claim contending that the words
"fifteen days’ wages" occurring
670
in sub-s. (2) of s. 4 of the Act only meant half a month’s
wages and since a month consisted of 26 working days, the
amount’ of gratuity was rightly arrived at by multiplying
the daily wages by ’thirteen’.
The Controlling Authority by its order dated September
23, 1978 held that for the purposes of calculating "fifteen
days’ wages" it was necessary to ascertain one day’s wage
and since a month consists of 26 working days, the amount of
gratuity should be calculated accordingly, i.e., by dividing
the monthly wages last drawn by 26 multiplied by ’fifteen’
and not by just taking half of his wages for a month of 30
days or by dividing such monthly wages by 30. It accordingly
directed the appellant to pay Rs. 6069.00 as gratuity under
sub-s. (1) of s. 4 of the Act. On appeal the Appellate
Authority, Madras by its order dated July 12, 1976 held that
there was an error in the mode of computation of the amount
of gratuity payable to the respondent. According to it, the
gratuity payable to the respondent would have to be
calculated at half of his monthly rate of wages, i.e., wages
he would have earned in a consecutive period of 15 days and
his daily wages had to be multiplied by "thirteen" and not
by "fifteen" for ever completed year of service or part
thereof not exceeding six months. It accordingly reduced the
amount of gratuity payable to Rs. 5259.80 p.
It, however, appears that the Appellate Authority in
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several other cases took a view to the contrary such as the
one in Civil Appeal No. 2432 of 1981 relating to the same
employer, Messrs Jeevanlal (1929) Ltd. as also in Civil
Appeal No. 1970 of 1981 relating to another employer, Messrs
Madura Coats Ltd. as also in Civil Appeal No. 2559 of 1984
relating to M/s Binny Ltd. and upheld the orders of the
Controlling Authority. As a result of these conflicting
orders passed by the Appellate Authority, the employers in
some of these cases and the employes in others had to file
petitions in the High Court under Article 226 of the
Constitution and they have been disposed of in the judgment
under appeal. The High Court following the decision of this
Court in Shri Digvijay Woollen Mills Ltd. etc. v. Mahendra
Prataprai Buch etc. and that of the Bombay High Court in
Lakshmi Vishnu Textile Mills v. P.S. Mavlankar held that in
order to determine "fifteen days’ wages" of a monthly rated
employee under sub-s. (2) of s. 4 of the Act, it was
necessary
671
to determine one day’s wage last drawn by him and then
multiply the same "fifteen" times, and the resultant sum had
to be multiplied by twenty to arrive at the maximum amount
of gratuity payable under sub-s. (3) of s. 4 of the Act. It
accordingly restored the orders of the Controlling
Authority.
In support of these appeals, learned counsel for the
appellants submitted that the decision of this Court in Shri
Digvijay Woollen Mills Ltd. case does not lay down any
principle but, on the contrary the Court expressly observed
that’ it was not necessary to go into the question as to the
correctness of the conflicting views taken by different High
Courts.’ Reliance was placed on the decision of the learned
Single Judge of the Andhra Pradesh High Court in Associated
Cement Co. Ltd. Kistna Cement Works, Kistna, Guntur Distt.
v. The Appellate Authority under Payment of Gratuity Act
(Regional Assistant Commissioner of Labour, Guntur) & Ors.
which was approved by a Division Bench of the same High
Court in Swamy & Ors v. Controlling Authority under Payment
of Gratuity Act & Ors. In all fairness to the learned
counsel, it must be said that they also brought to our
notice the decisions of the Calcutta High Court in
Hukamchand Jute Mills Ltd. v. State of West Bengal & Ors.
that of the Bombay High Court in Lakshmi Vishnu Textile
Mills’ case and that of the Gujarat High Court in Shri
Digvijay Woollen Mills’ case taking a view to the contrary.
It is urged that the words, ’fifteen days’ wages"
occurring in sub-s.(2) of s.4 of the Act are clear and
unambiguous and must mean half a month’s wages and therefore
there was no scope for an artificial calculation being made
by dividing the wages for a month by the number of working
days viz., 26 for determining the daily wages and
multiplying the same by "fifteen" to determine the amount
representing 15 days wages inasmuch as the wages of a
monthly-rated employee were for all the 30 days of a month
and not 26 working days alone and therefore "fifteen days’
wages" in his case, would amount only to half a month’s
wage. It is further urged that Parliament amended sub-s.(3)
of s.4 of the Act on recommendation of the Select Committee
and raised the ceiling of gratuity from 15 months’ wages to
20 months’ wages and the reason given by the Select
Committee was that there should be an incentive for
672
employees to serve beyond a period of 30 years. It is
submitted that by providing for a maximum gratuity of 20
months’ wages the Select Committee meant that it should be
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payable for a service of 40 years; and that, if the
contention of the employees were to prevail, the maximum
gratuity would become payable even after completion of 34
years and 8 months instead of 40 years. We are afraid, this
contention cannot prevail.
These submissions, broadly stated, give rise to two
question. The first is whether for the purpose of
computation of "fifteen days’ wages" of a monthly-rated
employee under sub-s.(2) of s.4 of the Act, the monthly
wages last drawn by him should be treated as wages for 26
working days and his daily rate of wages should be
ascertained on that basis and not by taking the wages for a
month af 30 days or fixing his daily wages by dividing his
monthly wages by 30. The second question is whether the
words "twenty months’ wages" occurring in sub-s.(3) of s.4
of the Act must be construed to mean wages for 520 days
taking the actual working in days in twenty months or must
mean wages for 600 days taking that a month consists of 30
days. As regards the first, the answer must be in the
affirmative in view of the decision of this Court in Shri
Digvijay Woollen Mills’s case, but learned counsel for the
appellant want us to take a second look at is as, according
to them, nothing was settled in that case. As regards the
second question, the learned counsel contend that sub-ss.(2)
and (3) of s.4 of the Act must receive a harmonious
construction as they provide for the mode of calculating the
total amount of gratuity payable to an employee upon
termination of his services under sub-s.(l) of s.4 of the
Act and it is said that a month cannot mean 26 working days
for the purpose of sub-s.(2) and 30 days for the purpose of
sub-s.(3).
The Payment of Gratuity Act, 1972 is enacted to
introduce a scheme for payment of gratuity for certain
industrial and commercial establishments, as a measure of
social security. 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 wage-earning
population, security of income, when the worker becomes old
or infirm, is of consequential importance. The provisions of
social security measures, retiral benefits like gratuity,
provident fund and pension (known as the triple benefits)
are of special importance. In
673
bringing the Act on the statute-book, the intention of the
legislature was not only to achieve uniformity and
reasonable degree of certainty, but also to create and bring
into force a self-contained, all embracing, complete and
comprehensive code relating to gratuity. The significance of
this legislation lies in the acceptance of the principle of
gratuity as a compulsory statutory retiral benefit.
As is true in every case involving construction of a
statute, our starting point must be the language employed by
the legislature. It is necessary to set out the relevant
statutory provisions of the Act. Sub-s.(1) of s.4 of the Act
reads:
"4(1): Gratuity shall be payable to an employee on the
termination of his employment after he has rendered
continuous service for not less than five years:
(a) on his superannuation, or
(b) on his retirement or resignation, or
(b) on his death or disablement due to accident or
disease.
Provided that the completion of five years shall
not be necessary where the termination of the
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employment of any employee is due to death or
disablement:
Provided further that in the case of death of the
employee, gratuity payable to him shall be paid to his
nominee or, if no nomination has been made, to his
heirs. Explanation-For the purposes of this section,
disablement means such disablement as incapacitates an
employee for the work which he was capable of
performing before the accident or disease resulting in
such disablement." Sub-ss.(2) and (3) of s.4 of the Act
provide as follows:
"4(2): For every completed year of service or part
thereof in excess of six months, the employer shall pay
gratuity to an employee at the rate of fifteen days’
wages based on the rate of wages last drawn by the
employee concerned:
Provided that in the case of a piece-rated
employee, daily wages shall be computed on the average
of the total wages received by him for a period of
three months immediately proceeding the termination of
his employment,
674
and, for this purpose, the wages paid for any overtime
work shall not be taken into account:
Provided further that in the case of an employee
employed in a seasonal establishment, the employer
shall pay the gratuity at the rate of seven days’ wages
for each season.’
"4(3): The amount of gratuity payable to an
employee shall not exceed twenty months’ wages."
The term ’wages’ is defined in s.2(s) as follows:
"2(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 any other allowance."
In dealing with interpretation of sub-ss.(2) and (3) of
s.4 of the Act, we must keep in view the scheme of the Act.
Sub-s. (1) of s.4 of the Act incorporates the concept of
gratuity being a reward for long, continuous and meritorious
service. Sub-s. (2) of s.4 of the Act provides for payment
of gratuity at the rate of "fifteen days’ wages" based on
the rate of wages last drawn by the employee concerned for
every completed year of service. The legislative intent is
obvious. Had the legislature stopped with the words "fifteen
days’ wages" occurring in sub-s. (2) of s.4 of the Act there
was something to be said for the submission advanced by the
learned counsel for the appellants based upon the decision
of learned Single Judge of the Andhra Pradesh High Court in
Associated Cement’s case which was later approved by a
Division Bench of that Court in Swamy’s case. But the
legislature did not stop with the words "fifteen days’
wages" in sub-s. (2) of s.4 of the Act. The words "fifteen
days’ wages" are preceded by the words "at the rate of" and
qualified by the words "based on the rate of wages last
drawn" by the employee concerned. The emphasis is not on
what an employee would have earned in the course of fifteen
days during the month when his employment was last
terminated, but on the rate of fifteen days’ wages for every
completed year of service, based
675
on the rate of wages last drawn by the employee concerned.
The word ’rate appears twice in sub-s. (2) of s.4 and it
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necessarily involves the concept of actual working days. In
Shri Digvijay Wollen Mills’ case the Court rightly observed
that although a month is understood to consist of 30 days,
gratuity payable under the Act treating the monthly wages as
wages for 26 working days is not new or unknown.
In construing a social welfare legislation, the court
should adopt a beneficent rule of construction and if a
section is capable of two constructions, that construction
should be preferred which fulfils the policy of the Act, and
is more beneficial to the persons in whose interest the Act
has been passed. When, however, the a language is plain and
unambiguous, the Court must give effect to it whatever may
be the consequence, for, in that case, the words of the
statute speak the intention of the legislature. When the
language is explicit, its consequences are for the
legislature and not for the courts to consider. The argument
of inconvenience and hardship is a dangerous one and is only
admissible in construction where the meaning of the statute
is obscure and there are two methods of construction. In
their anxiety to advance beneficent purpose of legislation,
the courts must not yield to the temptation of seeking
ambiguity when there is none.
It is not correct to say that the decision in Shri
Digvijay Woolen Mills’ case does not lay down any principle.
Gupta, J. speaking for the Court set out the following
passage from the Judgment of the Gujarat High Court in Shri
Digvijay Woollen Mills’ case:
"The employer is to be paid gratuity for every
completed year of service and the only yardstick
provided is that the rate of wages last drawn by an
employee concerned shall be utilized and on that basis
at the rate of fifteen days wages for each year of
service, the gratuity would be computed. In any factory
it is well known that an employee never works and could
never be permitted to work for all the 30 days of the
month. He gets 52 Sundays in a year as paid holidays
and, therefore, the basic wages and dearness allowance
are always fixed by taking into consideration this
economic reality... A worker gets full month’s wages
not by remaining on duty for all the 30 days within a
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month but remaining on work and doing duty for only 26
days. The other extra holidays may make some marginal
variation into 26 working days, but all wage boards and
wage fixing authorities or Tribunals in the country
have always followed this pattern of fixation of wages
by this method of 26 working days."
And then observed:
"The view expressed in the extract quoted above
appears to be legitimate and reasonable."
The learned Judge then went on to say:
"Ordinarily of course a month is understood to
mean 30 days, but the manner of calculating gratuity
payable under the Act to the employees who work for 26
days a month followed by the Gujarat High Court cannot
be called perverse."
He further observed that it was not necessary to consider
whether another view was possible and declined to interfere
under Art. 136 in a matter where the High Court had taken a
view favourable to the employees and the view taken could
not be said to be in any way unreasonable and perverse, and
then added:
"Incidentally, to indicate that treating monthly
wages as wages for 26 working days is not anything
unique or unknown."
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We find that the same view has been taken by as many as
three High Courts viz. by the Calcutta, Bombay and Gujarat
High Courts in the cases referred to at the Bar. We find no
compelling reason to take a view different from the one
expressed by this Court in Shri Digvijay Woollen Mills’
case.
The intention of the legislature enacting sub-s. (2) of
s. 4 of the Act was not only to achieve uniformity and
reasonable degree of certainty, but also to create and bring
into force a self-contained, all-embracing, complete and
comprehensive code relating to gratuity as a compulsory,
retiral benefit. The quantum of gratuity payable under sub-
s. (2) of s.4 of the Act has to be fifteen days’ wages based
on the rate of wages last drawn by the employee concerned
for every completed year of service or more in excess of six
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months’ subject to the maximum of 20 months’ wages as
provided by sub-s. (3) thereof. The whole object is to
ensure that the employee concerned must be paid gratuity at
the rate of fifteen days’ wages for 365 days in a year of
service. The total amount of gratuity payable to such
employee at that rate has to be multiplied by the number of
years of his service subject to the ceiling imposed by sub-
s. (3) of s.4 of the Act viz., that such amount shall not
exceed 20 months’ wages. The construction of sub-s. (2) of
s.4 of the Act adopted by the learned Single Judge of the
Andhra Pradesh High Court in Associated Cement Company’s
case, and later approved by a Division Bench of that Court
in Swamy’s case would make it utterly unworkable. If the
determination of the amount of gratuity payable under sub-s.
(2) of s.4 depends on the number of calendar days in a month
in which the services of the employee concerned terminates,
the quantum of gratuity payable would necessarily vary
between an employee and an employee, belonging to the same
class, drawing the same scale of wages, with like service
for the same number of years. Obviously, this could not have
been the legislative intention.
The next question is: whether a month cannot mean 26
working days for purposes of sub-s. (2) of s.4 of the Act
and 30 days for purposes of sub-s. (3) thereof. It is said
that if a month under sub-s. (2) connotes 26 working days in
a month for purposes of calculating the amount of gratuity,
then the rule of harmonious construction requires that the
words "20 months’ wages" in sub-s. (3) thereof must mean
wages for 520 working days taking the actual working days in
20 months and not 600 days taking that a month consists of
30 days. The contention is wholly misconceived. Sub-ss. (2)
and (3) of s.4 of the Act are designed to achieve two
separate and distinct objects and they operate at two
different stages. While sub-s. (2) provides for the mode of
calculation of the amount of gratuity, sub-s. (3) seeks to
impose a ceiling on the amount of gratuity payable at 20
months wages. It is meant to provide an incentive to
employee to serve for the period of 30 years or more By no
rule of construction, sub-s. (2) of s.4 of the Act which
uses the words "fifteen days’ wages" and not half a months
wages, be called in aid for construction of the words "20
months’ wages" appearing in sub-s. (3) of s.4 of the Act.
We do not think it necessary to deal at length with the
last and
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third question raised in some of these appeals viz, the
objection to the jurisdiction of the Controlling Authority
under s. 3 of the Act to entertain the claim against some of
the appellants. It is said that Messers Jeevanlal (1929)
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Ltd. is an all-India concern having its branches in more
than one State and therefore the ’appropriate government’
within the meaning of s.2 (a) (1) (b) of the Act in relation
to them is the Central Government for purposes of s. 3. The
appropriate government is the Central Government in relation
to an establishment belonging to or under the control of the
Central Government or having branches in more than one State
or of a factory belonging to, or under the control of the
Central Government or in the case of a major port, mine, oil
field, or railway company. Section 2 (a) (1) of the Act
reads as follows:
"2: In this Act, unless the context otherwise requires
(a) "appropriate government" means-
(i) in relation to an establishment-
(a) belonging to, or under the control of, the Central
Government,
(b) having branches in more than one State,
(c) of a factory belonging to, or under the control
of, the Central Government,
(d) of a major port, mine, oil field or railway
company, the Central Government,
(ii) in any other case, the State Government:
It would appear that the definition of appropriate
government in s.2 (a) (1) in relation to an establishment
makes a distinction between establishments and factories. In
relation to an establishment belonging to, or under the
control of, the Central Government and of a factory
belonging to, or under the control of, the Central
Government, the appropriate government is the Central
Government. But the Central Government is the appropriate
government only in relation to an establishment having
branches in more than one State. There is no like provision
made in relation to such an establishment having factories
in different States. We feel that the point relating to the
jurisdiction of the Controlling Authority under s.3 of the
Act. does not really arise. It appears that Messrs
Jeewanlal(1929) Ltd
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have their registered and head office at Calcutta and branch
offices and factories at Calcutta, Bombay and Madras and
sales offices at Delhi, Hyderabad and Cochin. It has also
two factories in Madras viz., Shree Ganeshar Aluminium Works
and Messrs Mysore Premier Metal Factory. It employs about
300 members of clerical staff at the head office and its
branch offices throughout the country as well as in its two
factories and employs about 1300 workmen in its factories at
Calcutta, Bombay and Madras. We are inclined to the view
that the Controlling Authority had jurisdiction to entertain
the claim of an employee working in an office attached to a
factory as such an office would be an adjunct of the factory
but that is not the question before us. The Controlling
Authority has in fact, confined the adjudication of claims
in relation to workmen who were employed at the two
factories at Madras but declined to entertain the claims of
employees who were working either at the branch office at
Madras or at the office attached to the factories in
question. That being so, the contention relating to
jurisdiction of the Controlling Authority under s.3 of the
Act must fail.
It has been our unfortunate experience that a
beneficient measure like Payment of Gratuity Act 1972
providing for a scheme of retiral benefit, has been be set
with many difficulties in its application. It need not be
over emphasised that a legislation of this kind must not
suffer from any ambiguity. In the recent past, the Court in
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Lalappa Lingappa and Ors. v. Laxmi Vishnu Textile Mills Ltd.
faced with the problem as to whether the expression
"actually employed" in Explanation I to s.2 (c) of the Act
must, in the context in which it appeared, meant "actually
worked". The inclusive part of the definition of ’continuous
service’ in s.2 (c) is to amplify the meaning of the
expression by including interrupted service under certain
contingencies which, but for such inclusion, would not fall
within the ambit of the expression ’continuous service’. But
the use of the words ’actually employed’ in Explanation 1 to
s.2 (c) of the Act created a difficulty. The Court observed
that it was not permissible to attribute redundancy to the
words ’actually employed’ and, accordingly, held that the
expression ’actually employed’ in Explanation I to s.2 (c)
of the Act meant ’actually worked’. The law declared by this
Court in Lalappa Lingappa’s case, supra, resulted in denial
of gratuity to a large number of permanent
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employees, whose short-term absence had remained
unregularised, due to lack of appreciation of the
significance for the purpose of working out their
entitlement to gratuity. It is to be regretted that the
Government waited for a period of three years before
introducing the Payment of Gratuity (Amendment) Bill, 1984
to remove the lacuna in the definition of continuous service
in s.2 (c) of the Act by specifically providing that a
period of absence in respect of which no punishment or
penalty has been imposed would not operate to interrupt the
continuity of service for the purpose of payment of
gratuity. It also amplified the definition of continuous
service under s.2 (c) of the Act. Such a belated legislation
must have worked great injustice to a large number of
permanent employees.
In these cases now before us, the Court is faced with
the problem of determining the mode of calculating the
amount of gratuity payable to the employees concerned under
sub-s. (1) of s.4 of the Act upon the termination of their
services. It turns on the much vexed question as to the true
meaning of the words "fifteen days’ wages" occurring in sub-
s. (2) of s.4 of the Act. The section does not specify how
the rate of wages last drawn by such employees are to be
determined for the purpose of determining the rate of
"fifteen days’ wages" under sub-s. (2) of s.4 of the Act.
This gave rise to some doubt and difficulty amongst
different High Courts in computation of the retiral benefit.
It is always an unequal struggle between the capital and
labour, and these cases furnish an instance where workmen
after putting in long and meritorious service for over 30
years or more have been driven from one court to another for
the last 12 years due to the reason that the words "fifteen
days’ wages" occurring in sub-s. (2) of s.4 of the Act were
susceptible of two possible conflicting constructions. In a
situation like this, the Government should have intervened
at once to introduce a Bill for inserting an appropriate
provision in the Act specifying the mode of calculating the
rate of wages last drawn by such employees for the purpose
of determining the rate of "fifteen days’ wages" under sub-
s. (2) of s.4 of the Act.
In retrospect, we wish to impress upon the Government
that whenever such doubt or difficulty is expressed by the
High Courts in the application of provisions of social
security measures viz., retiral benefits, gratuity,
provident fund and pension and the like,
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they must always introduce legislation to cure the defect
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rather than wait for judicial interpretation by the highest
Court. We may also add that the Government may consider the
desirability of setting up a National Labour Commission
which may be entrusted not only with the task of making
periodical review of such social welfare legislations from
time to time but also to suggest radical reform of the laws
relating to industrial relations which must be brought in
tune with the changing needs of the society.
In the result the appeals as well as the special leave
petitions must fail and are dismissed with costs throughout.
The costs are quantified at the sum of Rs. 10,000 two-thirds
of which shall be deposited with the Supreme Court Legal Aid
Committee of which Shri Subba Rao is the Hony. Secretary and
the remaining one-third shall be paid to the respondent.
N.V.K. Appeals and petitions dismissed.
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