Transport Manager, Kolhapur Municipal vs Pravin Bhabhutlal Shah & others

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2004 Supreme(Bom) 904

IN THE HIGH COURT OF BOMBAY
Mhatre Nishita, J.
Transport Manager, Kolhapur Municipal
Transport Undertaking .... Petitioner.
Versus
Pravin Bhabhutlal Shah others.... Respondents.
Writ Petition No. 3747 of 2004, decided on 2-7-2004.
Advocates appeared :
D.S. Sawant with N.A. Kulkarni, for petitioner.
M.S. Topkar, for respondent No. 1.

Headnote:Payment of Gratuity Act, 1972 - Section 4(3) and (5) - Ceiling on gratuity payable. - Since earlier limit of payment of gratuity of Rs. one lac is increased to Rs. 3,50,000/- hence workman retired in 1999 entitled to gratuity as claimed by him. - The submissions on behalf of the petitioner that gratuity, if it is paid under the Payment of Gratuity Act, 1972, can be calculated only at the rate of 15 days wages is unsustainable. Section 4(5) of the Act clearly states that the right of employee to receive better terms of gratuity under any award or agreement or contract with the employer is not taken away by the provisions of the Act. Undisputedly, there is a settlement under which it was agreed that the workman would be paid gratuity at the rate of 21 days wages per year of service. The petitioner, therefore, cannot calculate the gratuity only on the basis of 15 days wages per year of service. Furthermore, the submission of Mr. Sawant that if gratuity is to be calculated as per the Payment of Gratuity Act, there is a ceiling on the gratuity payable and, therefore, the workman was not entitled to gratuity amount of Rs. 2,84,583/- cannot be accepted. The amendment to the Payment of Gratuity Act was made by Act 11 of 1998 whereby the limit of payment of gratuity was increased to Rs. 3,50,000/- from the earlier limit of Rs. 1,00,000/-. Admittedly, the respondent workman retired in 1999 and hence he would be entitled to gratuity as claimed by him. In any event, if the settlement does not impose any limit to the gratuity receivable by an employee, the Act cannot impose such a limit in view of Section 4(5) of the Act.
Payment of Gratuity Act, 1972 - Section 4(5) - Payment of gratuity. - In view of settlement for payment of gratuity at rate of 21 days wages per year of service as against 15 days wages as provided under Act, employees entitled for payment of gratuity as per settlement.
Payment of Wages Act, 1936 - Sections 4(2) and 2(s) - Computation of gratuity. - Gratuity payable to workman, required to be computed on wages payable to workman and not on wages last received by him. - A conjoint reading of Sections 4(2) and 2(s) of the Payment of Gratuity Act, 1972, shows that the workman is entitled to gratuity calculated at wages last drawn by him. Keeping in view definition of wages, the gratuity must be computed on the basis of the wages payable to him at the time of retirement. Gratuity payable to the workman was the basic wages plus the dearness allowance calculated at the rate of 228% of the basic wages. The computation made by the Controlling Authority was correct.

JUDGMENT - MHATRE NISHITA, J.:-Rule, returnable forthwith. Mr. Topkar waives service for respondent No. 1. Respondent Nos. 2 and 3 need not be served being formal parties. By consent, Rule called out and heard.

2. This petition has been filed against the order dated 30th March, 2002 passed by the Controlling Authority, Kolhapur in Application (PGA) No. 19 of 2000 allowing the application filed by respondent No. 1 and the order dated 9th October, 2003 of the Appellate Authority, Pune in Appeal (PGA) No. 2 of 2003 dismissing the appeal preferred by the petitioner.

3. The facts, in brief, are as follows :

On 19th October, 1966 respondent No. 1 (hereinafter referred to as "the workman") was employed with the petitioner undertaking and he was superannuated on 1st December, 1999. As his gratuity was not paid, respondent No. 1 filed an application before the Controlling Authority on 14th August 2000 claiming gratuity of Rs. 2,71,656/- for 33 years of service. The claim was made on the basis of the monthly wages which were payable to the workman. According to him, he was entitled to basic wages of Rs. 2,900/- plus Rs. 6612/- as dearness allowance calculated at the rate of 228% of the basic wage plus an amount of Rs. 690/- towards interim rise in wages. The total wage payable was Rs. 10,192/-. The recognised Union proposed that the dearness allowance paid to the workers should be frozen at 182% of basic wage in order that the petitioner undertaking be able to tide over the financial difficulties faced by it. It appears that no agreement was entered into under the provisions of the Industrial Disputes Act, 1947 for a ceiling on the dearness allowance. However, the Union and the workmen stood by the proposal and accepted payment of dearness allowance at 182% of the basic wage.

4. A settlement was entered into between the Union representing the workmen and the petitioner undertaking in 1977 agreeing that the gratuity would be payable under the Payment of Gratuity Act, 1972. It was further agreed that gratuity would be calculated at 21 days wages per year of service for those employees whose services cease on account of superannuation, death and physical disability. The Controlling Authority after assessing the evidence led before it held that the respondent workman was entitled to gratuity as claimed by him.

5. The Controlling authority was of the view that the dearness allowance should be calculated at the rate of 228% of basic wages and not 182% as that was the amount payable by way of dearness allowance. According to the Controlling Authority, the respondent workmen is entitled to an amount of Rs. 2,84,583.10 by way of gratuity together with simple interest calculated at 10% from the due date. The increase in the amount of gratuity was on account of the fact that the respondent workman had wrongly calculated the dearness allowance. The respondent by an application had submitted the correct calculations to the controlling authority showing the additional dearness allowance payable at the rate of 37% from 1st July 1999.

6. The Appellate Authority has confirmed the findings of the Controlling Authority and held that the calculations of the gratuity payable to the respondent workman should be made after taking into account 288% as dearness allowance.

7. Mr. Sawant, learned Advocate for the petitioner, submits that the gratuity payable has been claimed under the Act. Therefore, the claim ought to have been made within the period of limitation prescribed. It is further submitted that once gratuity is claimed under the Act, the claim must be calculated under the provisions of that Act and not under the provisions of any settlement. According to him, the workman is entitled to gratuity calculated at the rate of 15 days per year of service and not 21 days per year of service. It is next urged that the calculation of gratuity must be on the basis of last drawn wages. The last drawn wages of the workmen was Rs. 8858/- and, therefore, he was entitled

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