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SUPREME COURT OF INDIA
M.M.Punchhi : Sujata V.Manohar
Aspinwall And Company, Kulshekar, Mangalore
Versus
Lalitha Padugady
Case No. : .
Date of Decision : 7/26/95
Advocates Appeared: Choudhary Prabir : Ganguli A.K. : Mathur Meera : Mathur O.C. : Pai G.B.
Payment of Gratuity Act, 1972 - Section 25 - Industrial Disputes Act, 1947 – Claim of compensation – Jurisdiction - At outset we need to record prominently that we are concerned with the state of law as existing prior to the year 1984, as substantial amendments found way into the Act thereafter - It has to be seen whether in the law then applicable, was the concept of the calendar year well ingrained bearing any relevance, for it is on that concept that High court as also the departmental authorities have based their decision. It would be worthwhile at this stage to take stock of the provision insofar as is relevant – Held, Explanation II to Section 2(c) plainly provides that an employee of a seasonal establishment shall be deemed to be in continuous service, if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during the year - Now what is that year. It obviously is the completed year of service of an employee, meaning thereby continuous service for one year - Provisions of Section 4 clearly reveal that before an employee can claim gratuity, he must have rendered continuous service for not less than five years. Further, for every completed year of service or part thereof in excess of six months, the employer is required to pay him gratuity at the rate of fifteen days wages based on the rate of last drawn wages by the employee concerned. The first proviso relates to the right conferred under Ss. (2 to employees other than those employed in a seasonal establishment. The second proviso being so related prominently says that in case of an employee employed in a seasonal establishment, the employer shall pay gratuity at the rate of seven days wages for each season. Now the word season herein presupposes that the employee has not been employed in annual or regularly durated work during the days in which the establishment was in operation during the year. Were it to be so, then the employment would not be seasonal. Here the unit of reckoning is by means of the afore-understood continuous service of one year containing a season or seasons. And being seasonal, the span of the period of such season can by the very nature of things be short or large for various reasons but referable yet to continuous service within the meaning of Section 2(c). Tying all these ends together, the conclusion is thus inescapable that when gratuity at the rate of seven days wages for each season requires to be worked out, then one has to see the number of seasons in each completed year of service of the workman i.e. his continuous year of service not regulated by the calendar year. The second proviso would have to be read in a purposive way i.e. in the nature of an explanation tied and woven in Section 4. In working for each season thus the employee becomes entitled to gratuity at the rate of seven days wages per season. Instantly no dispute had individually been raised in such manner with regard to identification of seasons on the basis of the count of the number of working days in each completed year of service pertaining to each workman – Appeal allowed
(1) THESE five Civils bearing Nos. 4086 to 4090 of 1986 would be disposed of by a common order since the question of law raised in these is common.
(2) IN each case, there is a workman arrayed as respondent, Undisputably that workman was employed in a seasonal establishment of the employer- appellant. The activity of the establishment is curing coffee. The industry involved has been declared seasonal under Section 25-A(2 of the Industrial Disputes Act, 1947. In each calendar year the factory remains closed from the month of June to the month of September. The establishment as a consequence is in operation from September onwards till June in the year following. The claim of each workman before the controlling authority under the Payment of Gratuity Act, 1972 was that he had a right to have his gratuity computed at the rate of 7 days wages for two seasons in each calendar year on the basis that the calendar year is a unit and the period of work stood split into two seasons. Support for the claim was sought from the fact that the establishment maintained its accounting year from January 1st to December 31 st and so, it was claimed, computation of gratuity has to fall in line with the accounting year.
(3) THE claims of the workmen were disputed by the establishment on the ground that there was only one continuous season starting from September till June of the following calendar year; the nature of the work demanding closure of the establishment during the monsoon season. It was contended that the workmen were entitled to 7 days wages as gratuity for such season, the period necessarily not terminating by the end of the calendar year and starting anew in the next calendar year. The controlling authority by a reasoned order dated 8/7/1983 accepting the claim of the workmen, granted them gratuity for two seasons at the rate of 7 days wages per season in each calendar year. Challenge thereto made by the appellant-establishment before a learned Single Judge of the High court of Karnataka failed. Writ appeals of the appellant-establishment were dismissed by a division bench of that High court giving rise to these appeals.
(4) AT the outset we need to record prominently that we are concerned with the state of law as existing prior to the year 1984, as substantial amendments found way into the Act thereafter. It has to be seen whether in the law then applicable, was the concept of the calendar year well ingrained bearing any relevance, for it is on that concept that the High court as also the departmental authorities have based their decision. It would be worthwhile at this stage to take stock of the provision insofar as is relevant:
(5) SECTION 4 provides for payment of gratuity. The relevant provisions are:
"4. Payment of Gratuity.- (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 or disease: Provided that the completion of continuous service 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.- * * * (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 * * * 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."
(6) TWO expressions defined in Section 2 would have to be taken note of as they are relevant:
"2. Definitions.- In t
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