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2022 Supreme(Cal) 992
IN THE HIGH COURT OF CALCUTTA
Suvra Ghosh, J.
State Bank Of India - Appellant
Versus
Ravi Shankar Malani And Others - Respondent
W.P.A. No. 16222 of 2021
Decided On : 02-03-2022
Susanta Pal, Advocate, S. Pal Chaudhari, Advocate, Soumya Majumder, Advocate
Contractual employees are entitled to gratuity under the Payment of Gratuity act, 1972, and the act's provisions have overriding effect over other regulations or contracts.
Headnote:
Gratuity - Contractual Employee - Payment of Gratuity act - Section 2(e), Section 4, Section 5, Section 14
Fact of the Case:
The respondent, a contractual Chartered accountant, claimed gratuity after rendering uninterrupted service for more than 8 years. The petitioner argued that the respondent's contractual nature of employment did not entitle him to gratuity under the Payment of Gratuity act, 1972.
Finding of the Court:
The court found that the respondent, despite being a contractual employee, was entitled to gratuity as per the provisions of the act. The court emphasized that the act does not exclude contractual employees from gratuity benefits and highlighted the overriding effect of the act's provisions over other enactments, instruments, or contracts.
Issues: The main issue was whether the respondent, as a contractual employee, was entitled to gratuity under the Payment of Gratuity act, 1972.
Ratio Decidendi: The court held that the respondent, having worked for more than five years, was entitled to receive gratuity as per Section 4 of the act. The court also emphasized that the act's provisions have overriding effect and cannot be circumvented by the employer's regulations.
Final Decision: The writ petition was allowed, setting aside the orders of the Controlling authority and the appellate authority. The petitioner was permitted to withdraw the deposited amount, and no costs were awarded.
JUDGMENT
Suvra Ghosh, J. - Under challenge in this writ petition are the order of the Controlling authority passed on 31st July, 2018 and the order of the appellate authority passed on 31st July, 2019. In the order impugned the Controlling authority has allowed the prayer of the private respondent and has held that the private respondent is entitled to payment of gratuity along with interest to be determined up to 31st July, 2018. In the appeal preferred against the said order the appellate authority has affirmed the order of the Controlling authority and has allowed the private respondent to receive gratuity with interest of 10% per annum from 1st July, 2017 till the actual date of disbursement of the gratuity amount. The observation of the appellate authority in the said order is set out:-
'1. It is a fact that the respondent was appointed in the appellant organization as a contractual Chartered accountant and he rendered uninterrupted service for more than 8 years.
2. Such appointment will be deemed to be an employee under the provision of the Payment of Gratuity act even if he is appointed on contractual basis.
3. The law does not distinguish that a contractual employee will be excluded from the provision of the act as enshrined under section 2(e) of the P.G. act.
4. The circular issued by the appellant on 18.02.2011 does not indicate that the contractual employee will be disentitled to receive gratuity. The circular is silent in this regard. It cannot be interpreted to the disadvantage of an employee. Gratuity being a beneficial legislation will always uphold liberal interpretation of law.
5. The appellant's statement that the respondent is not covered under bank's Gratuity Fund/scheme is irrelevant as it is contrary to law and inconsistent as per Section 14 of the P.G. act. Such non-inclusion will not take a statutory right of the respondent.
6. It seems apparently clear if such kind of contractual employee are not covered under any regulation of the appellant organisation, they cannot receive gratuity in any other form or mode.
7. By such negative means, the employer cannot outrightly deprive an employee from receiving gratuity in the guise of non-inclusion in their scheme/fund.
8. Further the appellant contention that respondent employee was in receipt of higher salary and he will not receive gratuity, sounds absurd. The definition of an employee does not stipulate any ceiling on salary/wage of an employee under the PG act as per Ministry of Labour & Employment SO No. 1080 dated 03.04.1997 read with The Payment of Gratuity (amendment) act of 2009.
9. The respondent having worked for more than five years, is entitled to receive the gratuity as per Section 4 of the P.G. act.'
2. Learned counsel for the petitioner submits that the appointment of the respondent was purely contractual in nature. The first contract was for a period of three years from 14th November, 2008 to 13th November, 2011 and subsequent appointments continued on the basis of fresh contracts entered into between the employer and the employee. The earlier contracts were not renewed and fresh contracts were executed on fresh terms and conditions. a consolidated package was allowed to the incumbent in each of the contracts. Referring to Clause 9 of the offer of appointment as Chartered accountant Junior Ca-S 1 on contract and CTC basis issued on 19th September, 2008, learned counsel submits that it was stipulated therein that service of Management Trainees/Executives would be on contract basis and they not being the permanent employees of the Bank will not be entitled to become members of SBI employees provident fund/pension fund/gratuity fund. Though the respondent worked with the petitioner company for more than five years, the said period cannot be termed as continuous service for the reason that fresh contracts were executed on new terms and conditions after expiry of the earlier contract, which does not amount to renewal of the earlier contract. It was indicated
