The main legal point established in the judgment is that an educational institution can be considered an 'establishment' within the meaning of the Bombay Shops and Establishments Act, and therefore subject to the Payment of Gratuity Act.

1. The question involved in this petition is whether an educational institution, such as the petitioner, is covered by the Payment of Gratuity Act. The respondent who was employed with the petitioner had claimed gratuity under the Payment of Gratuity Act, 1972 (for short, "the Act"). The application was allowed by the Controlling Authority under the Act. An appeal was preferred by the petitioner which was rejected and the order of the Controlling Authority was confirmed.

2. The main contention raised on behalf of the petitioner is that the petitioner being a college of agriculture, the Payment of Gratuity Act, 1972 is not applicable. It is submitted that the Payment of Gratuity Act, 1972 has no application to an educational institution in view of the provisions of Section 1 sub-section (3) of the Payment of Gratuity Act. The counsel for the petitioner submits that the provisions of this section are applicable to only those establishments which are covered by the section and, therefore, the authorities have erred in granting the gratuity to the respondent.

3. It would be advantageous to set out the provisions of Section 1(3) of the Payment of Gratuity Act, 1972. Section 1(3) reads as under:-

"Section 1(3). It shall apply to -

(a) every factory, mine, oilfield, plantation, port and railway company;

(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf."

The provisions of Section 1(3)(b) are applicable to all establishments within the meaning of any law for the time being in force in which ten or more persons are employed on any day of the preceding twelve months. The learned counsel for the petitioner submits that to consider whether the institution is an "establishment", one would have to refer to the definition of an "establishment" as provided in Section 2(8) of the Bombay Shops and Establishments Act. It is submitted that the petitioner is neither a shop, nor a commercial establishment, residential hotel, restaurant, eating house, theatre, or other place of public amusement or entertainment and, therefore, does not fall within the ambit of Section 2(8) of the Bombay Shops and Establishment Act. Consequently the institution is not an "establishment" contemplated under Section 1(3)(b) of the Payment of Gratuity Act, submits the learned advocate.

4. This issue has already been decided by a learned Single Judge of this Court in the case of Principal, Bhartiya Mahavidyalaya, Amravati & anr. v/s Ramkrishna Wasudeo Lahudkar, reported in 1993 Mh.L.J. 1272. In that case, it has been held by the learned Single Judge that -

"10. The argument fails to impress. In fact, what is contemplated by section 1(3)(b) of the Gratuity Act is an establishment "within the meaning of any law for the time being in force in relation to shops and establishments in a State." Giving the ordinary meaning to these words would mean and include any establishment so defined to be an establishment in such law in relation to shops and establishments in a State. Now it is an admitted position that the Bombay Shops and Establishments would be such a law. Therefore, if an establishment is so defined to be an establishment in the Bombay Shops and Establishments Act, it would complete the test provided by section 1(3)(b) of the Gratuity Act. What is suggested by the words "within the meaning of any law" is only for the identification of such establishments. If those institutions can be called to be the establishments within the meaning of the State law, then section 1(3)(b) of the Gratuity Act must apply to them, even if such establishments