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2012 Supreme(Kar) 118
High Court of Karnataka
ARAVIND KUMAR
Manipal University
Versus
Vasantha Kotian
Writ Petition No.31840 of 2011 (L-PG)
Decided on : 29-02-2012
Subject
Gratuity - Payment of Gratuity Act, 1972
Act Referred
PAYMENT OF GRATUITY ACT : Art.4(1), Art.2(s)
Headnote
If the words ’any other allowance’ is excluded from the definition clause and is read and it would mean and include only those allowances as enumerated therein which would gets excluded and no other allowances. Likewise when the inclusive clause is applied and definition of wages is examined, it would be all emoluments including Dearness Allowance. If the intention of the legislature was to include any other component within definition clause, it would have found a place in the enactment or in other words, the legislature would have also used the word ’any other allowance’ in the inclusive definition. Thus, ’any other allowance’ not being found in the inclusive definition, the one and the only conclusion which can be drawn is that ’other allowances’ like bonus, commission, house rent allowance, overtime wages and any other allowances would get excluded from the purview of the definition of wages.
Therefore ’Variable Allowance’ in the instant case has been erroneously brought within the purview of the component ’wages’ by the authorities. Merely because the management employer has adopted a policy of extending Variable Allowance, even assuming uniformly that by itself would not be sufficient to arrive at a conclusion that it necessarily has to form part of component of wages. AIR 1998 SC 2928 and AIR 1972 SC 1061, Rel. on.
For the Appellant:S.N. Murthy, Senior Advocate.
For the Respondent:H. Mangalamba Rao, Advocate.
1. Petitioner management is calling in question the order dated 19.07.2010 in Gratuity Application No.48/534/2009-A/M at Annexure-D, passed by the Controlling Authority under the Payment of Gratuity Act, 1972 (hereinafter referred to as ‘Act’ for sake of brevity) and order dated 11.03.2011 passed in Appeal No.292/2010-B2 at Annexure-G passed by the Appellate Authority.
2. Heard Sri. S.N. Murthy, learned Senior Counsel appearing for petitioner and Smt. Mangalamba Rao, learned counsel appearing for respondent-workman. Perused the impugned order as also the documents filed by learned counsel for petitioner along with a memo.
3. Facts in brief leading to filing of this writ petition are as under:
(i) Respondent-workman was working in petitioner organization as driver. On attaining age of superannuation on 27.11.2008 and on his retirement petitioner-Management determined Gratuity amount payable to respondent at Rs.81,663/-by taking 19 years as continuous service and said amount was credited to respondent’s Savings Bank Account at Syndicate Bank. Respondent filed an Application before the Controlling Authority under the Payment of Gratuity Act, 1972 and the Assistant Labour Commissioner (Central), Mangalore (hereinafter referred to as ‘Controlling Authority’) claiming that ‘variable allowance’ and ‘conveyance allowance’ has not been included for the purposes of computation of the Gratuity by the management and he is entitled to payment of Gratuity under Section 4 of the Act and accordingly sought for payment of Gratuity amount.
4. Said Application being taken on record Controlling Authority issued notice to the management, who appeared and filed detailed statement of objections contending that workman was paid basic salary along with special pay, variable allowance, conveyance allowance, and special allowance and for the purposes of calculating Gratuity, variable allowance and conveyance allowance were not taken into account since these were not part of Gratuity within the meaning of Section 2(s) of the Payment of Gratuity Act, and respondent was entitled for the payment of gratuity only in respect of basic pay and special pay and special allowance. It was contended in the statement of objections filed that management had sanctioned variable allowance to the non-teaching staff with effect from 01.04.2007 as per the notification issued by the University and it is based purely on assessment of performance of the employees. It was contended that on the basis of said system every employee would be assessed, on his individual performance at the end of every year and variable allowance would be paid as per their assessment. It was contended that respondent herein was entitled for variable allowance of Rs.822/-per month and the said variable allowance and conveyance allowance of Rs.300/-paid to him was not part of Wages under the Payment of Gratuity Act, 1972.
5. The Controlling Authority after considering rival contentions raised by parties and on appreciation of arguments advanced arrived at a conclusion that management has changed the nomenclature of dearness allowance into variable allowance and has excluded the same from the term “wages” as defined under the Payment of Gratuity Act. It was also held by the Controlling Authority, on appreciation of facts that the contention of management that “Variable Allowance” which is paid to the respondent is not based on the assessment of the performance of employees on the following grounds:
I. Any payment related to performance can be considered as a general rule termed as ‘Pay’ and not as ‘Allowance’, since the word ‘Pay’ is used as distinct as ‘Allowance’.
Accordingly, the payment related to performance should have been termed as “Variable Pay” which would be included for the purposes of computation of Gratuity being ‘Wage’.
II. There is no component of ‘Dearness Allowance’ in the salary paid to the applicant which would only suggest that “Variable Allowance” is nothing but a camou
