Bangalore Metropolitan Transport Corporation vs The Deputy Labour Commissioner and the Appellate Authority Under the Payment of Gratuity Act & Others

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(Kar) 71

2009 ILR(Kar) 1166
High Court of Karnataka
THE HONOURABLE MR. JUSTICE SUBHASH B. ADI
Bangalore Metropolitan Transport Corporation
Versus
The Deputy Labour Commissioner and the Appellate Authority Under the Payment of Gratuity Act & Others
Writ Petition No. 6382 of 2008 (LK)
Date of Judgment : 29-01-2009

Advocates Appeared:
For the Petitioner:H.R. Renuka, Advocate. For the Respondents: R1, R2,
Jagadeesh Mundargi, GA, R3, M.C. Basavaraju, Advocate.

Headnote:PAYMENT OF GRATUITY ACT, 1972 - Section 2A: [Subhash B. Adi, J] Denial of Gratuity for the "Break in service" period - Held, The Act being a social legislation and social security for an employee after retirement, resignation, whenever he becomes eligible and being a beneficial legislation, compliance with requirement under Section 2-A is mandatory. Sub-section 91) of Section 2-A provides for treating the absence as break in service. However, such break in service must be evidenced by an order in accordance with the standing order, rules or regulations governing the employees of the establishment. No doubt Sub-section (2) of Section 2-A requires that, employee to work not less than 240 days in a year to avail the benefit of gratuity for the said year. However, if the management wants to treat any period of service as break in service so as to deny the gratuity for that period, then it cannot by showing him as absent or on leave, etc., treat the same as break in service, it has to pass an order to the knowledge of the workman and in compliance with the principles of natural justice. Further, continuous service means, continuous service rendered by the workman minus break in service for which the management has passed appropriate orders. If there is no express order passed in terms of Section 2-A of the Act, such deduction is not permissible.
PAYMENT OF GRATUITY ACT, 1972 - Section 2-A: [Subhash B. Adi, J] Workman complaining that he was paid less gratuity than what is required to be paid - Employer contending that there was break in service and hence workman has not worked for 240 days continuously, hence not entitled to full gratuity as claimed - Controlling Authority held that employer-Corporation has not proved that workman has not worked for 240 days continuously - Hence ordered that workman entitled to balance of gratuity-Appealed by employer - Appellate Authority held that order does not call for interference -Writ petition challenging order- Held, Authorities have not passed order under Section 2-A of the Act. Documents does not show that workman has not at all worked for 240 days in a year. Hence only inference that can be drawn is that workman had worked for 240 days continuously in a year and is entitled to balance of amount of gratuity. Orders of Authorities upheld.

Judgment :-

Subhash B. Adi, J.

This Writ Petition is by the Corporation questioning the order of the second respondent dated 4.9.2007 produced at Annexure-C confirmed by the order of first respondent dated 31.3.2008 produced at Annexure-E.

2. Respondent No.3 filed a claim petition before the Controlling Authority under the provisions of Payment of Gratuity Act 1972 (in short referred to as `the Act') interalia stating that, he joined the Corporation service on 19.12.1966 and retired on 31.1.2004 and has completed 37 years of continuous service and he was drawing Rs.7,315/- basic pay and was also getting Rs.4,023/-dearness allowance. However, Corporation has paid Rs.2,38,621/- towards the gratuity as against Rs.2,70,655/- and claimed that he is entitled for Rs.32,034/- with interest.

3. Thesaid claim petition was opposed by the Corporation interalia stating that there was a break in service for 3 years 11 months 7 days. In this regard, corporation had produced attendance register showing that the respondent had remained absent and has not completed 240 days during 1972, 1973, 1977 and 1981 and even evidence was also led by the Corporation.

4. The Controlling Authority considering the evidence held that there is no break in service under the provisions of the Act and held that the respondent is entitled for balance of gratuity amount of Rs.33,987/- with 10% interest.

5. Said order of the Controlling Authority was called in question before the Appellate Authority. Appellate Authority considering the grounds of appeal and the contentions held that, there is no legal evidence to prove the break in service of 3 years 11 months 7 days and concurred with the findings of the Controlling Authority. These two orders are called in question by the Corporation.

6. Smt. H.R. Renuka, learned Counsel appearing for the petitioner submitted that, the Corporation led the evidence before the Controlling Authority and in the evidence, it is stated that, during the years 1972, 1973, 1977 and 1981, the respondent has not completed 240 days continuous service and to this effect, the attendance register and leave account extract were produced to show that, for certain period, the respondent had remained absent. In this regard, she strongly relied on the Gratuity Regulations of the Karnataka State Road Transport Corporation and submitted that, these regulations are framed in terms of the settlement arrived between the union and the Corporation and the Regulations provided for better gratuity than what is provided under the provisions of the Act and in terms of the Regulations, the gratuity is required to be paid. She relied on clause-4 of the Regulations, which reads as under:

"4 Conditions of Eligibility:

(1) Minimum qualifying service, for becoming eligible to gratuity shall, subject to the provisions of subregulation (2), be 15 years continuous service in the Department. EXPLANATION I. Service rendered by a transferred employee under the B.TC., B.S.R.TC., or the Hyderabad Road Transport Department shall be counted, for put poses sub-regulation (1).

EXPLANATION 2. In computing the said period, the period of extraordinary leave and suspension which is not treated as on duty shall be excluded.

(2)In the case of an employee who dies while in service or who is prematurely retired due to permanent physical or mental disability the minimum qualifying service shall be five years.

(3)The amount of gratuity may be disallowed or reduced if the service of the employee has not been thoroughly satisfactory. "

Relying on the said clause, learned Counsel further submitted that, in terms of Explanation 2, in computing the continuous period, the extra-ordinary leave and suspension cannot he treated as on duty and shall be excluded. She further relied on the calculation sheet attached to the regulations and pointed out that, the calculation sheet shows as to how calculation of gratuity is determined, that is by deducting non-qualifying services like, leave without allow

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