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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. GUPTE, J.
Cummins (I) Limited - Petitioner
Vs.
Industrial Cleaning Services & Others – Respondents
WP NO. 7867 OF 2003 WITH CIVIL APPLICATION NO.2745 OF 2003, CIVIL APPLICATION NO.2767 OF 2008
Decided on : 05-01-2017
All questions as to the entitlement of the applicant to payment of gratuity as an employees as well as the liability of the person to pay such gratuity as the employer of the applicant and the quantum of gratuity payable, are matters to be determined by the Controlling Authority. The existence of a relationship of employer and employee is a matter to be determined by the authority itself under the Gratuity Act. There is no scope for determining liability of any other person to pay gratuity by virtue of any other law insofar as the authority under the Gratuity Act is concerned.
The infirmity in the impugned order however, is not about any finding of fact but a matter of law and jurisdiction where the Authority under the Gratuity Act has determined liability arising under another legislation (namely, the Contract Labour Act) and which is required to be enforced by recourse to the provisions of yet another legislation (namely, the Payment of Wages Act or the Industrial Disputes Act). The impugned order of the authority cannot be sustained. The respondent No. 1 being the immediate employer of the workmen, shall pay the amount of gratuity and interest determined by the Controlling Authority in the impugned order.
Payment of Gratuity Act - Sections 2(f), 4 and 7-Liability for payment of gratuity.-A person being an employer as defined in Section 2(f) of Act is liable to pay gratuity.
The employees were employed in the firm of respondent No. 1. It is this firm, which is the establishment for the purposes of gratuity so far as these employees are concerned. It is respondent No. 1 or its partners who had the ultimate control over the affairs of this establishment and it is respondent No. 1 who alone could be termed as an employer in relation to the establishment.
The mere fact that they were designated to work inside the factory premises of the petitioner does not make the factory premises an "establishment" as far as these employees are concerned. The authority was not right in holding that for deciding the liability of gratuity under the provisions of the Gratuity Act, it was immaterial as to who was the immediate employer of the applicants or that the employer in respect of any person, who works inside factory premises, is the occupier of the factory premises.
This petition filed under Article 226 of the Constitution of India challenges a common order and judgment dated 30 May 2003 passed on applications of individual workmen under Section 7 of the Payment of Gratuity Act, 1972 (“the Gratuity Act”). By the impugned order, the Controlling Authority under the Act directed the Petitioner herein (Opponent No.2 in the original applications) to pay the amount of gratuity in accordance with the determination of the Controlling Authority.
2 The facts of the Petitioner's case may be briefly stated as follows :
2.1 The Petitioner is an engineering company inter alia engaged in manufacture of diesel engines at its factory at Pune. Respondent No.1 is a partnership firm engaged in the business of providing ancillary services including cleaning and gardening, etc. to various companies in and around Pune.
2.2 The Petitioner had originally engaged one Dattatraya S. Vetal, who was running a proprietary firm in the name and style of “Industrial Cleaning Services” as a contractor for providing cleaning services at the former's factory at Pune.
2.3 This contract was terminated with effect from 31 December 1984. The cleaning services, however, were continued by another gentleman, one M.A. Pathak, in the name of “Industrial Cleaning Services” by taking over the business. Pathak agreed to continue the employment of all the then existing 74 employees employed by Vetal on the cleaning services at the Petitioner's factory. There was an agreement dated 1 January 1985 between Vetal and Pathak setting out the terms and conditions of takeover. The agreement inter alia provided that the liability to pay gratuity to the employees engaged for cleaning services in the Petitioner's factory would be that of Pathak, i.e. the firm of Respondent No.1. A trust created for the purpose in the name of “Industrial Cleaning Services Employees Group Gratuity cum Life Assurance Trust”, of which Vetal and his wife were originally trustees, was taken over by Pathak and his wife as new trustees in place and stead of the original trustees, in pursuance of the Agreement of 1 January 1985.
2.4 There were several agreements between the Petitioner and Respondent No.1 for providing cleaning services, the last of such agreements being of 2 February 1994. The workmen engaged by Respondent No.1 were all members of Kirloskar Cummins Employees' Union, Pune (“Union”). Their service conditions were governed by various settlements entered into between Respondent No.1 and the union from time to time, the last of such settlements being executed on 29 July 1993. Respondent No.1 had its own Provident Fund and ESI Numbers in respect of the workmen.
2.5 In December 1994, the Petitioner sought to terminate its contract with Respondent No.1. The union filed a complaint of unfair labour practices, being Complaint (ULP) No.316/1994, in the Industrial Court, Maharashtra, Pune, against the Petitioner as well as Respondent No.1. The complaint alleged illegal termination of services of the workmen of Respondent No.1 as also nonpayment of bonus and exgratia amounts to the workmen. A specific contention was raised in that complaint by the Petitioner that there was no employer-employee relationship between the Petitioner and the concerned workmen and that the complaint was not maintainable against the Petitioner.
2.6 By its order dated 9 November 1995, the Industrial Court was pleased to hold that there was no employer-employee relationship between the Petitioner and the workmen of Respondent No.1 and dismissed the complaint as against the Petitioner. The Court, however, found unfair labour practices on the part of Respondent No.1 and directed Respondent No.1 to pay bonus and exgratia amounts to the workmen. The Court also issued directions in the order to the effect that if the Petitioner intended to cancel the contract of Respondent No.1 and give contract to another contractor in respect of the cleaning work, the Petitioner should insist on continuation by
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