Full Judgment Text
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CASE NO.:
Appeal (civil) 252 of 2007
PETITIONER:
Guru Jambheshwar University through Registrar
RESPONDENT:
Dharam Pal
DATE OF JUDGMENT: 17/01/2007
BENCH:
G.P. Mathur & Dalveer Bhandari
JUDGMENT:
J U D G M E N T
(Arising out of Special Leave Petition (Civil) No.15566 of 2005)
G. P. MATHUR, J.
1. Leave granted.
2. This appeal, by special leave, has been preferred against the
judgment and order dated 21.3.2005 of a Division Bench of High
Court of Punjab and Haryana, whereby the writ petition filed by the
appellant challenging the award dated 9.11.2004 of the Industrial
Tribunal-cum-Labour Court, Hisar, was summarily dismissed.
3. The respondent Dharam Pal issued a notice dated 20.1.1998
under Section 2A of the Industrial Disputes Act, 1947 (hereinafter
referred to as ’the Act’) alleging that he was employed as an unskilled
workman by the appellant Guru Jambheshwar University, Hisar, on
2.10.1995, but his services were illegally terminated on 15.1.1998.
As the conciliation proceedings could not fructify, the Government of
Haryana referred the dispute under Section 10(1) of the Act for
adjudication by the Industrial Tribunal-cum-Labour Court, Hisar
(hereinafter referred to as ’the Labour Court") regarding the validity
of the termination of services of the respondent Dharam Pal and the
relief which he was entitled to get in case the termination order was
found to be illegal.
4. The respondent in his claim statement pleaded, inter alia, that
he was appointed as unskilled workman on the post of Mali (gardener)
in the University by a verbal order dated 2.10.1995; that he was
removed from service on 2.7.1997 but subsequently he was taken
back on duty on 15.10.1997; that he was illegally removed from the
service of the University on 15.1.1998; that the University was paying
wages of Rs.1638/- per month before his removal from service; that
the University had regular work and persons junior to him had been
retained in service and had been regularized; that the University was
forcing the workman to work on contract basis despite the fact that
there is work of regular nature; that the University was adopting
unfair labour practice and that his retrenchment was illegal as neither
any notice was given nor any compensation was paid to him at the
time of his retrenchment.
5. The Registrar of the University filed a reply on the grounds,
inter alia, that the respondent was engaged as Mali on daily wages on
2.12.1995 and not on 2.10.1995, as claimed by him; that he was
appointed for doing specific job of Mali in the Farming/Horticulture
Wing of the University; that the Government of Haryana on the basis
of the orders passed in CWP No.4522 of 1994 (Kulbhushan v. State of
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Haryana) by the High Court had issued instructions to the University
vide letter No.12/5-96/Ad.I(5) dated 17.1.1996 that no appointment on
daily wage basis should be made and all appointments should be made
on contract basis; that in accordance with the instructions all existing
employees in the University who were working on daily wage basis
were put on contract basis; that the respondent and some other
employees engaged on contract basis had been appointed without
following any procedure; that meanwhile the University advertised the
post of Mali for making regular appointments in order to comply with
the requirements of Articles 14 and 16 of the Constitution; that the
respondent also applied for the said post of Mali and appeared in
interview but he was not selected yet he was allowed to continue; that
consequent upon the closure of the farming operations in the
University and cessation of other seasonal work, the respondent was
given one month’s notice vide University letter no.485-500 dated
15.12.1997; that on completion of one month, the services of the
respondent were retrenched vide order dated 15.1.1998; that a cheque
bearing no.416869 dated 15.1.1998 was also given to the respondent
in compliance of Section 25F(b) of the Act as retrenchment
compensation; that as there was some work in the University all the
employees who were retrenched earlier were called but the respondent
did not turn up for duty though 14 other employees reported for duty
and were engaged and a letter in this regard was sent to the Labour
and Conciliation Officer, Hisar on 21.5.1998. It was specifically
pleaded that the services of the respondent were retrenched after duly
complying with the provisions of Section 25F of the Act and that in
the regular selection held for the post of Mali the respondent was not
selected by the selection committee.
6. The parties adduced oral and documentary evidence in support
of their case before the Labour Court. The Labour Court held that the
instructions issued by the Government showed that the monthly wages
of unskilled Mali were Rs.1642/-. The respondent had been appointed
on 2.12.1995 and his services were terminated on 15.1.1998 and thus
he had completed two years and one month of service on the date
when he was retrenched from service. He was thus required to be
paid 15 days’ average pay for completion of the first year of service
and 15 days’ average pay for completion of second year of service as
retrenchment compensation. It was further held that in order to
calculate the retrenchment compensation, the legal requirement was to
divide average monthly wage by 26 and not by 30, as a worker
ordinarily gets four weekly holidays and has to work only on 26 days
in a month. For holding so, the Labour Court relied upon some
decisions of the High Courts and also a decision of this Court in
Jeevanlal (1929) Ltd. V. Appellate Authority under the Payment of
Gratuity Act and Ors. (1984) Lab IC 1458. After holding so, it was
held that one day’s average pay of the respondent would be Rs.63.15
(Rs.1642/26) and thus the compliance of Section 25F(b) required
payment of Rs.63.15x15x 2 = Rs.1,894.50. It was accordingly held
that the retrenchment compensation of Rs.1642/- paid by the
University to the respondent fell short of the amount which was
required to be paid under law and, therefore, there was non-
compliance of Section 25F(b) of the Act which rendered the
retrenchment of the respondent as illegal. It was further held that the
University had not produced any evidence to show that the respondent
had been gainfully employed after termination of his service, but
looking to the fact that he was engaged in a job which did not require
any qualification, it could not be held that he remained totally out of
job during the intervening period and, therefore, he was entitled to
50% back wages. The Labour Court, accordingly, gave an Award
directing that the respondent be reinstated with continuity in service
and all other consequent service benefits along with 50% back wages
from the date of issuance of demand notice dated 21.1.1998 till
publication of the Award and full wages thereafter till his
reinstatement.
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7. The question which requires consideration is whether the
Labour Court was correct in holding that one day’s average pay of the
respondent should be calculated by dividing his monthly salary of
Rs.1642/- by 26 and the quotient so arrived at should be multiplied by
30 (15 x 2) as he had worked for two years and one month.
8. Sections 2(aaa) and 25F of the Industrial Disputes Act, 1947
read as under :-
2(aaa) "average pay" means the average of the wages payable
to a workman--
(i) in the case of monthly paid workman, in the three
complete calendar months,
(ii) in the case of weekly paid workman, in the four
complete weeks,
(iii) in the case of daily paid workman, in the twelve
full working days,
preceding the date on which the average pay becomes
payable if the workman had worked for three complete
calendar months or four complete weeks or twelve full
working days, as the case may be, and where such
calculation cannot be made, the average pay shall be
calculated as the average of the wages payable to a
workman during the period he actually worked.
25F. Conditions precedent to retrenchment of
workmen.- No workman employed in any industry who
has been in continuous service for not less than one year
under an employer shall be retrenched by that
employer until--
(a) the workman has been given one month’s notice in
writing indicating the reasons for retrenchment and the
period of notice has expired, or the workman has been
paid in lieu of such notice, wages for the period of
the notice:
(b) the workman has been paid, at the time of
retrenchment, compensation which shall be equivalent to
fifteen days’ average pay for every completed year of
continuous service or any part thereof in excess of six
months; and
(c) notice in the prescribed manner is served on the
appropriate Government or such authority as may be
specified by the appropriate Government by notification
in the Official Gazette.
Sub-section (b) of Section 25F requires payment of
retrenchment compensation to a workman which shall be equivalent
to 15 days’ average pay for every completed year of continuous
service or any part thereof in excess of six months. Average pay has
been defined in Section 2(aaa) of the Act and, therefore, average pay
has to be determined strictly in accordance with the aforesaid
provision and not on the basis of some hypothetical calculation.
Section 2(aaa) contemplates four different kinds of wage period for
payment of wages. Clause (i) speaks of monthly paid workman and
here the average wage has to be calculated by arriving at the average
or mean of three complete calendar months. Clause (ii) refers to
weekly paid workman where the average pay would be the average or
mean of four complete weeks. Clause (iii) deals with daily wage
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workman and in this case the average pay would be the average or
mean of wages in twelve full working days. The fourth category
would be a case where it is not covered by any of the sub-clauses (i),
(ii) or (iii) and in this case the average pay shall be calculated as the
average of the wages payable to a workman during the period he had
actually worked.
9. The language used in Section 2(aaa) is absolutely plain and
clear and there is not the slightest ambiguity in the same. It is well
settled principle that the words of a Statute are first understood in their
natural, ordinary or popular sense and phrases and sentences are
construed according to their grammatical meaning, unless that leads to
some absurdity or there is something in the context or in the object of
the statute to suggest to the contrary. The true way is to take the words
as the legislature have given them, and to take the meaning which the
words given naturally imply, unless where the construction of those
words is, either by the preamble or by the context of the words in
question, controlled or altered. As is often said the golden rule is that
the words of a statute must prima facie be given their ordinary
meaning and natural and ordinary meaning of the words should not be
departed from unless it can be shown that the legal context in which
the words are used requires a different meaning. (See Principles of
Statutory Interpretation by Justice G.P. Singh Ninth Edition2004
pg.78-79).
10. In the demand notice served by the respondent upon the
University under Section 2-A of the Act on 20.1.1998, it was stated
"that the University was paying him Rs.1638/- per month before
removal." Again in para 2 of the claim statement which was filed by
the respondent before the Labour Court, wherein he described himself
as petitioner, it was stated "that the University was paying the
petitioner Rs.1.638/- per month before the removal." In the reply, it
is also the specific case of the University that the respondent was
being paid on monthly basis at the rate of Rs.1642/- per month.
Therefore, there is no dispute that the respondent was being paid
wages on monthly basis though there is slight difference in the actual
amount which was being paid to him. The Labour Court has recorded
a finding that a cheque for Rs.1642/- was given by the University to
the respondent as retrenchment compensation. Since the respondent
was being paid wages on monthly basis, his average pay has to be
calculated in accordance with the formula given in clause (i) of
Section 2(aaa) of the Act which would mean the sum total of wages
paid to him in three complete calendar months immediately preceding
his retrenchment and dividing the said amount by three. The
respondent was being paid wages amounting to Rs.1642/- per month
in immediately three preceding months before his retrenchment.
Therefore, the "average pay" in accordance with Section 2(aaa)(i)
would come to Rs.1642/-. The respondent had worked for two years
and one month and, therefore, he was entitled to thirty (15 x 2) days of
average pay by way of retrenchment compensation in order to comply
with requirement of Section 25F(b) of the Act. The "average pay" of
the respondent being Rs.1642/- per month and he being entitled to 30
days’ average pay by way of retrenchment compensation, he was
required to be paid Rs.1642/- as retrenchment compensation. The
University gave him a cheque for Rs.1642/- at the time of his
retrenchment and, therefore, there was full compliance of Section
25F(b) of the Act.
11. The Labour Court has basically relied upon a decision of this
Court rendered in Jeevanlal (1929) Ltd. V. Appellate Authority under
the Payment of Gratuity Act and Ors. (1984) Lab IC 1458 for coming
to the conclusion that the respondent’s average pay has to be
calculated on per day basis by dividing the monthly salary drawn by
him by 26 and the quotient so arrived at should be multiplied by 30 in
order to determine the retrenchment compensation under Section
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25F(b) of the Act. It, therefore, becomes necessary to consider the
aforesaid decision in detail. The issue involved in the said case
related to payment of gratuity. Section 2(s) and sub-sections (1), (2)
and (3) of Section 4 of Payment of Gratuity Act at the relevant time
read as under :-
"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 allowances."
"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
(c) on his death or disablement due to accident of
disease.
Provided that the completion of five years shall not
be necessary where the termination of the 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 purpose 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.
(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 preceding the termination of his
employment, 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.
(3) The amount of gratuity payable to an employee shall
not exceed twenty months’ wages."
While interpreting the aforesaid provisions, the Court held as
under in para 10 of the reports :
10. In dealing with interpretation of sub-sections (2) and (3)
of Section 4 of the Act, we must keep in view the scheme of the
Act. Sub-section (1) of Section 4 of the Act incorporates the
concept of gratuity being a reward for long, continuous and
meritorious service. Sub-section (2) of Section 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
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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-section (2) of Section 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 the learned single Judge of the Andhra Pradesh
High Court in Associated Cement’s case (1976) Lab IC 926)
which was later approved by a Division Bench of the Court in
Swamy’s case (1978 Lab IC 1285). But the legislature did not
stop with the words "fifteen days’ wages" in sub-section (2) of
Section 4 of this 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
on the rate of wages last drawn by the employee concerned.
The word ’rate’ appears twice in sub-section (2) of Section 4
and it necessarily involves the concept of actual working days.
In Digvijay Woollen Mills’ case (AIR 1980 SC 1944) 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."
(emphasis supplied)
Paragraph 12 of the reports is also relevant and the same is
being reproduced below :
12. It is not correct to say that the decision in Shri Digvijay
Woollen Mills’ case (AIR 1980 SC 1944) 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 (para 4) :
"The employee 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\005\005.. A
worker gets full month’s wages not by remaining on duty
for all the 30 days within a 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 Gujarat High Court cannot be called
perverse."
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He further observed that it was not necessary to consider
whether another view was possible and declined to interfere
under Article 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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12. It may be noted that Section 4(2) of the Payment of Gratuity
Act uses the expression "the employer shall pay gratuity to an
employee at the rate of fifteen days’ wages based on the rates of
wages last drawn by the employee." On account of the language used
in Section 4(2) it becomes necessary to find out the rate of wages
which necessarily involves the concept of actual working days. It was
on the basis of the aforesaid language of the provisions under the
Payment of Gratuity Act that this Court in the case of Jeevanlal
(supra) observed that "although a month is understood to consist of 30
days, gratuity payable under the Payment of Gratuity Act treating the
monthly wages as wages for 26 days is not new or unknown."
13. The principle laid down in the case of Jeevanlal (supra) and
Shri Digvijay Woollen Mills Ltd. v. M.P. Butch AIR 1980 SC 1944
can have no application for determining the retrenchment
compensation under Section 25F(b) of the Act as the word "average
pay" occurring herein has been defined in Section 2(aaa) of the Act.
The concept of 26 working days was evolved having regard to the
definition of the word "wages" as given in Section 2(s) of Payment of
Gratuity Act, which uses the expression "all emoluments which are
earned by an employee while on duty or on leave." Therefore, there is
no warrant or justification for importing the principle of 26 working
days for determining the compensation which is payable in terms of
Section 25F(b) of the Act.
14. There is another important feature which deserves notice.
Subsequent to the decision of this Court in Jeevanlal (supra) an
explanation has been added after second proviso to Section 4(2) of the
Payment of Gratuity Act, by Act No.22 of 1987, which reads as
under:-
"Explanation :- In the case of a monthly rated employee, the
fifteen days’ wages shall be calculated by dividing the monthly
rate of wages last drawn by him by twenty-six and multiplying
the quotient by fifteen."
By adding the explanation, the legislature has brought the
statute in line with the principle laid down in the case of Jeevanlal
(supra) and has given statutory recognition to the principle evolved,
viz. that in case of monthly rated employee the fifteen days’ wages
shall be calculated by dividing the monthly rate of wages by twenty
six and multiplying the quotient by fifteen. But, no such amendment
has been made in the Industrial Disputes Act. If the legislature
wanted that for the purposes of Section 25F(b) also the average pay
had to be determined by dividing the monthly wages by twenty-six, a
similar amendment could have been made. But the legislature has
chosen not to do so. This is an additional reason for holding that the
principle of "twenty-six working days" is not to be applied for
determining the retrenchment compensation under Section 25F(b) of
the Act.
15. We are, therefore, of the opinion that the view taken by the
Labour Court is clearly erroneous in law and has to be set aside. The
High Court did not go into the question at all and summarily
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dismissed the writ petition by a one line order observing that the
compensation offered to the workman was short of the amount
actually due.
16. For the reasons discussed above, the appeal is allowed. The
order dated 21.3.2005 passed by the High Court and the award of the
Labour Court dated 9.11.2004 are set aside. It is held that the
University had paid the retrenchment compensation to the respondent
Dharam Pal in accordance with law and there is no infirmity in the
order passed whereby his services were terminated. No costs.