Period of service prior to regularization is countable for calculating gratuity benefits under the Act.

The State of Madhya Pradesh (Petitioners) challenged the orders dated 06.06.2025 and 05.12.2025 passed by the Appellate Authority and Controlling Authority under the Payment of Gratuity Act, 1972, Shajapur

The authorities had granted gratuity to the respondent, Pramod Dhariwal, by calculating his service from the date of his initial appointment as a daily wager rather than from the date of his regularization

The State contended that based on a coordinate Bench decision in Radheyshyam Sharma v. State of M.P., retiral benefits should only be considered from the date of regularization

1. Whether the period of service rendered by an employee as a daily wager prior to regularization is liable to be counted for the purpose of calculating gratuity under the Payment of Gratuity Act, 1972

The Court primarily applied the provisions of the Payment of Gratuity Act, 1972, specifically regarding "continuous service" under Section 2A

The Supreme Court precedent Netram Sahu v. State of Chhattisgarh and Others (2018), which established that once an employee’s services are regularized, the State cannot deny the benefit of counting the preceding daily-wage service period for gratuity

The High Court’s coordinate Bench ruling in The State of Madhya Pradesh v. Govind Sharma (W.P. No. 23317/2019), which affirmed that previous daily-wage service is qualifying service for retiral benefits

The Court rejected the State's reliance on Radheyshyam Sharma, finding it superseded by the Supreme Court’s categorical ruling in Netram Sahu

The Court reasoned that if an employee renders long and continuous service (in this case, as a daily wager followed by regularization), they satisfy the "continuous service" requirement of five years under the Act

The Court emphasized that it would be a "travesty of justice" to allow the State to benefit from its own delay in regularizing an employee while denying them statutory gratuity for those years of service

Since the respondent's service was eventually regularized, the Controlling and Appellate authorities committed no jurisdictional error in counting the total period of service

The Court found no illegality or perversity in the impugned orders and declined to exercise its supervisory jurisdiction under Article 227 of the Constitution of India. The petition was dismissed as devoid of merit with no order as to costs