Employee With 4 Years 9 Months’ Service Wins Gratuity As Karnataka HC Applies 240-Day Rule To Fifth Year

Nandheesh was appointed as an Assistant Engineer on 6 July 2017 and was relieved on 18 April 2022 after resigning.

His service totalled four years, nine months and twelve days.

He claimed gratuity, asserting that he had worked more than 240 days during his fifth year of service.

The Controlling Authority directed payment of gratuity, and the Appellate Authority affirmed that order.

On the employer’s writ petition, the Single Judge quashed both orders because Nandheesh had not completed five calendar years.

Nandheesh appealed.

Section 4(1) of the Payment of Gratuity Act, 1972 generally makes gratuity payable on termination after at least five years of continuous service, subject to the stated exceptions.

Sections 2(c) and 2A define continuous service and provide that, in specified circumstances, an employee who has actually worked 240 days in the relevant preceding twelve-month period is deemed to have been in continuous service for one year.

The Court held that these provisions must be read together; eligibility cannot be determined solely by counting calendar years.

It relied on Mettur Beardsell Ltd. v. Regional Labour Commissioner (Central), Sreeja B.V. v. Regional Joint Labour Commissioner and TV Today Network Ltd. v. Ankita Sodhi on applying the 240-day deeming provision to the five-year requirement.

It also invoked the principles of statutory construction in Jeewanlal (1929) Ltd. v. Appellate Authority under the Payment of Gratuity Act, Surendra Kumar Verma v. Central Govt. Industrial Tribunal-cum-Labour Court and Mohan Lal v. Management of M/s. Bharat Electronics Ltd.

The Court considered that Nandheesh’s service fell short of five calendar years, but his claim was that he had worked more than 240 days during the fifth year.

It held that the statutory authorities were required to assess that claim under Section 2A read with Section 4(1), rather than reject it solely on the basis of the calendar-period shortfall.

The statutory authorities had allowed the claim after considering the evidence, and the employer had not cross-examined Nandheesh or led oral evidence to rebut it.

The Single Judge had not adequately addressed Section 2A and the authorities’ reasoning.

The High Court therefore concluded that the interference with the statutory orders was not justified.

It allowed the writ appeal, set aside the Single Judge’s order, and restored the Controlling Authority’s gratuity award of Rs.1,75,846 with interest at 10% from 18 May 2022, as affirmed by the Appellate Authority.

No order as to costs was made.