Gratuity payable under a settlement arrived at during conciliation proceedings is not wages within the meaning of the term in section 2(vi) of the Payment of Wages Act, 1936.

TAMBE J. -This is an application under Article 227 of the Constitution of India, by 29 workmen who were in the employment of respondent No. ,8. the New Asiatic Company Limited. They seek to get quashed the order of the Second Additional Authority under the Payment of Wages Act, 1936, Bombay, of April 27, 1962.

2. The question that arises is whether the gratuity payable under the settlement arrived at during the course of the conciliation proceedings is "wages" within the meaning of that word in the Payment of Wages Act, 1936. These 29 workmen have been retrenched from service by respondent No.3, the first 27 on July 1, 1960, and Nos. 28 ~nd 29 on November 1, 1960. These 29 workmen, after they had been retrenched, filed applications under the Payment of Wages Act, for recovery of certain sums falling under three categories -wages for over -time work and for leave period, bonus and the amounts of gratuity claimed by them under the settlement reached during the course of conciliation proceedings. Now, the petitioners who had claimed payment of gratuity are only petitioners Nos. 2 to 8, 10, 16. 18, 28 and 29. The respondent company raised various objections, inter alia, contending that the gratuity was not wages within the meaning of that word in the Payment of Wages Act. The issue arising out of this contention was considered as a preliminary issue by the Authority appointed under the Payment of Wages Act, and has been decided against the workmen; hence this application.

3. In order to appreciate the rival contentions raised by counsel for parties, it would be convenient to reproduce the material part of the definition of "wages". The definition is contained in clause (vi) of section 2 of the Payment of Wages Act, and the material part reads:

"(vi) wages means all remuneration (whether by way of salary, a1lowances or otherwise) expressed in terms of money or capable of being so expressed which would. if the terms of employment, express or implied; were fulfilled; be payable to a. person, employed in respect of his employment or of work done in such employment, and includes -

(a) ..

(b) ..

(c) ..

(d) any sum which by reason of the termination of employment of the personemployed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made".

Therefore, for a sum to be "wages" under clause (d), the conditions that are required to be fulfilled are: (1) it must be a sum payable by way of termination of employment; and (2) it must be a sum payable under any law, contract on instrument which -provides for the payment of such sum, but does not provide for the time within which the payment is to be made. Both these conditions. must be cumulatively satisfied. It is not in dispute that the amount of gratuity claimed by the petitioners is payable to them by reason of the termination of their employment. Clause of Demand No.8 of the Settlement of date June 16, 1951, makes the position clear. The question next to be considered is whether it is a sum payable under any law, contract or instrument. It is clear that the claim being that it is payable under the settlement, it cannot be said to be a sum payable in law. The only question that has to be considered is whether it is a sum payable under a contract or instrument. In other words, the question that arises for consideration is whether the settlement arrived at in the course of the conciliation proceedings is a contract or instru. ment. It is the contention of Mr. Parikh, appearing for the petitioner, that having regard to the provisions of the Industrial Disputes Act (XIV of 1947), the settlement is a contract between the employer on the one hand and all the workmen on the other, irrespective of the fact whether they were in service on the date of settlement or not. In the alternative, it is his contention that, at any rate, the settlement