Judgment

SEN, J. :- The controversy in these two appeals by special leave against a judgment of the Bombay High Court and an order of the President, Industrial Court, Bombay, turns on the construction of the expression continuous service as defined in Section 2 (c) of the Payment of Gratuity Act, 1972.

2. The facts giving rise to these appeals are these : Eighty-five permanent employees of the respondent who were on the regular muster roll, on termination of their employment, made a claim for payment of gratuity for the entire period of their service, i. e., in respect of every year during which they were in permanent employment, irrespective of the fact whether they had actually worked for 240 days in a year or not. Twentyfive badli employees of the respondent, who were on the badli register upon being made permanent, made a similar claim for payment of gratuity for the badli period, i.e., in respect of the period prior to their being made permanent, irrespective of the fact whether in those years they had been actually employed for 240 days or not. The respondent, however, calculated the number of years in which these employees were actually employed for at least 240 days in a year and paid gratuity accordingly. The Labour Court, which is the Controlling Authority, held in relation to the permanent employees that they were governed by the substantive part of the definition of continuous service in Section 2 (c) of the Act, upon the basis that there was no break in service, i.e., there was no question of their actual employment or actual working for 240 days or more, but as regards the badli employees, it held that they were not entitled to gratuity in respect of those years in which they were not actually employed for 240 days since they fell within Explanation I to Section 2 (c) of the Act. That view of the Controlling Authority was affirmed in appeal by the President of the Industrial Court, who is the Appellate Authority. The High Court while upholding the view of these authorities in respect of the badlis has, however, reversed their decision with regard to the permanent employees on the ground that unauthorised absence from work results in a break of service and, therefore, they were not in uninterrupted service and fell outside the substantive part of Section 2 (c) but came within Explanation I.

3. In support of these appeals, it was urged that the High Court was in error in equating the phrase actually employed with actually worked. It was submitted that though the word service has not been defined in the Act, the emphasis is on the subsistence of the contract of employment. It is urged that the word employed connotes a contract of employment and both the permanent employees and badli employees, therefore, fall within the substantive part of the definition of continuous service in Section 2 (c). In substance the contention is that Explanation I to Section 2 (c) covered only those cases where there was a break in continuity of service. by reason of discharge from service and re-employment. In regard to the permanent employees, it is urged that they would be deemed to be in continuous service for purposes of sub-section (1) of Sec. 4 of the Act so long as their names are borne on the permanent muster roll. In other words, the submission was that the jural relationship of employer and employee continues irrespective of whether they had actually worked for 240 days or not. With regard to the badli employees, it is urged that once a person is given a badli card it matters little whether he actually works for 240 days or not, since he has to report for work and his employment is at the volition of the employer. Thus, the absence of the badli employees on the days on which they were not provided with work, although they reported for duty and there was an endorsement made to that effect in the badli card, could not be treated as interruption of service. It was pointed out that the badli employees had been put at par with the per