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Andhra Pradesh High Court
Judges : K.RAMACHANDRA RAO
Duncan Agro Industries Limited - Appellant
Versus
Subbanna, B. - Respondent
Decided On : 03-04-83
PAYMENT OF GRATUITY ACT - SECTION 2(A)(I)(B), 2(C), 2(Q), 4 - JURISDICTION OF CONTROLLING AUTHORITY - COMPUTATION OF SERVICE - RETIREMENT - INTERPRETATION OF STATUTE - RETROSPECTIVITY - SUMMARY
Fact of the Case:
The petitioner, a company with branches in multiple states, challenged the jurisdiction of the State Government-appointed Controlling Authority to determine gratuity claims of its employees in Andhra Pradesh. The company argued that the appropriate Government under the Payment of Gratuity Act should be the Central Government since it had branches in more than one state. Additionally, the company contended that gratuity was not payable in cases of unit closure and that the qualifying period of service for gratuity should be reckoned from the date the Act came into force, not including prior service.
Finding of the Court:
The court held that the State Government had jurisdiction to constitute the Controlling Authority since the company did not provide sufficient evidence to establish that it had branches in more than one state. The court also held that gratuity was payable in cases of unit closure, as the definition of "retirement" in the Act included termination of service due to any reason except superannuation. Furthermore, the court ruled that the qualifying period of service for gratuity should include service rendered both before and after the Act came into force, as the Act applied to employees who had completed five years of service as of the date it came into effect.
Issues: 1. Whether the State Government had jurisdiction to constitute the Controlling Authority under the Payment of Gratuity Act. 2. Whether gratuity was payable in cases of unit closure. 3. Whether the qualifying period of service for gratuity should be reckoned from the date the Act came into force, excluding prior service.
Ratio Decidendi: 1. The court interpreted Section 2(a)(i)(b) of the Payment of Gratuity Act, which defines the appropriate Government for the purposes of the Act. The court held that the State Government was the appropriate Government in this case since the company did not provide sufficient evidence to establish that it had branches in more than one state. 2. The court interpreted Section 2(q) of the Act, which defines "retirement" as termination of service otherwise than on superannuation. The court held that this definition included termination of service due to unit closure, as it was a termination of service for reasons other than superannuation. 3. The court interpreted Section 2(c) of the Act, which defines "continuous service" as service rendered either before or after the commencement of the Act. The court held that this definition meant that the qualifying period of service for gratuity should include service rendered both before and after the Act came into force.
Final Decision: The court dismissed the writ petitions filed by the company, upholding the jurisdiction of the State Government-appointed Controlling Authority, the payment of gratuity in cases of unit closure, and the inclusion of prior service in the computation of the qualifying period for gratuity.
( 1 ) IDENTICAL issues are involved in all these three writ petitions. W. P. No. 3785 of 1981 is a petition for issue of writ of certiorari for quashing the order of the Controlling Authority under the Payment of Gratuity Act, Rajahmundry made in Case No. 19 of 1981, dated 21/05/1981. W. P. Nos. 1676 and 1677 of 1981 are for issue of writ calling for records in P. G. Appeal Nos. 11 and 15 of 1980 on the file of the Controlling Authority under the Payment of Gratuity Act, Eluru and quash dated 23/09/1980 and 28/09/1980 therein.
( 2 ) THE facts stated in support of the Writ Petition No. 3785 of 1981 may be considered and the facts and allegations in the other writ petitions are similar. The petitioner is a company established at Agarpura, 24 Parganas in the State of West Bengal and has branches at Guntur and Bikkavole in Andhra Pradesh. The 1st respondent and others, who were daily-rated seasonal workmen in Biccavole factory, which was closed down in 1974, presented an application under the Payment of Gratuity Act claiming gratuity. Section 4 of the Payment of Gratuity Act, 1972 confers right on the employee to claim gratuity in the event on rendering continuous service for not less than five years on the conditions enumerated in S. 4. Section 4 does not enable the employee to claim gratuity in the event of closing down the unit. When the Controlling Authority under the Payment of Gratuity Act formerly accorded the gratuity to the 1st respondent, the petitioner was obliged to file appeal and in appeal, the orders were passed remanding the matter to the preliminary authority for fresh disposal. The petitioner establishments has branches in more than one State i. e. , in West Bengal and Andhra Pradesh and therefore, the appropriate Government in respect of the petitioner is the Central Government and the authority for considering the issue is Central Authority, under the Payment of Gratuity Act appointed by the Central Government, but not the authority constituted by the State Government.
( 3 ) THE Controlling Authority, 2nd respondent herein, stated in the counter-affidavit that the contention that the employee is not eligible for payment of gratuity in the event of closure of the unit is untenable as the requirement defined in S. 2 (q) takes in the situation of closure of the unit. With regard to the want of jurisdiction of the State Government, the petitioner did not plead or place the basic jurisdictional factors before the primary authority and as such, this primary objection was rejected. In the absence of any facts in support of the contention regarding jurisdiction, it is not possible to decide the issue.
( 4 ) THE learned counsel for the petitioners contended that the petitioner-company has branches outside the State and as such the appropriate Government is the Central Government as provided under S. 2 (1) (a) of the Payment of Gratuity Act and as such, the Controlling Authority constituted by the State Government has no jurisdiction to determine the issue. It is further contended that the Payment of Gratuity is not contemplated in the event of closure of the unit and that the Payment of Gratuity Act, 1972 came into force on 16/09/1972 and therefore the qualifying period of service for 5 years should be reckoned from 16/09/1972 only and not anterior thereto. The learned Government Pleaded contended that the details with regard to the branches are not furnished and in the absence of jurisdictional facts, the issue with regard to jurisdiction cannot be raised and the payment of gratuity is contemplated in the event of termination of the services of employees, including the closure of the unit and the provisions of Payment of Gratuity Act came into force on 1 6/09/1972 and the Act applies to all service personnel who put continuous service of 5 years.
( 5 ) SECTION 3 of the Payment Act empowers the appropriate Government to appoint any officer to be the Controlling Authority who is the primary authorit
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