The main legal point established in the judgment is the interpretation of the definition of 'commercial establishment' under the Shops Act and its application to educational institutions, determining the applicability of the Payment of Gratuity Act, 1972 to such institutions.

Rajiv Sahai Endlaw, J.

The question which arises for consideration in this writ petition is whether the petitioner, a society registered under the Societies Registration Act, with the objective to serve as a post-graduate school for advanced teaching and research in Economics and allied subjects and to admit students for this purpose and to undertake co-operative research work on specific research problems and to arrange for permanent and continuous investigation into specific economic problems, and working on a no profit no loss basis and funded by various Ministries of Government of India and run on the basis of grants mainly received from Government of India, is covered by the provisions of the Payment of Gratuity Act, 1972 or not.

2. The Controlling Officer under the said Act, on complaint of respondent No. 2, an employee who has retired after rendering 38 years service in the petitioner institute has held the petitioner to be covered by the provisions of the Act relying on the judgment of this Court in Municipal Corporation of Delhi Vs. Smt. V.T. Naresh and another, (1985) 9 DRJ 173 holding MCD to be covered by the provisions of the said Act. I am unable to comprehend as to how and why the Controlling Officer, for the reason of the MCD being covered by the Act, held the same to apply to the petitioner also. The matter has thus been examined independently.

3. It is the case of the petitioner that the petitioner as per its rules and regulations follows generally the rules and regulations of the University of Delhi; that in terms of the said rules, the petitioner though not covered by the Act has its own scheme for gratuity and whereunder the respondent No. 2 became entitled to gratuity of Rs. 67,710/- which has already been paid to him. The claim of the respondent No. 2 is that under the provisions of the Act he was entitled to gratuity of Rs. 1 lac. The Controlling Officer holding the provisions of the Act applicable to the petitioner Institute, vide order dated February 26, 1999 impugned in this petition has directed the petitioner to pay the balance amount of Rs.32,290/- to the respondent No. 2 together with interest at 10% p.a. from May 31, 1994 but not exceeding the gratuity payable now i.e. Rs. 32,290/-. This Court vide ex parte order dated August 2, 1999 while issuing notice of the petition stayed the operation of the order of the Controlling Officer and the said order, on November 30, 2000 was made absolute till the pendency of this petition.

4. As per Section 1(3) of the Act, it applies 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, or, any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

5. It is the admitted position that at the time of retirement of the respondent No. 2 on May 31, 1994, the petitioner was not covered by Clause 'a' or 'c' (supra). The only question is whether the petitioner was an establishment within the meaning of the law in relation to shop and establishments in Delhi. The Gratuity Act does not define "establishment." However since it refers to the law in relation to shops and establishments, looking into the Delhi Shops & Establishments Act, 1954, one finds establishment defined in Section 2(9) as a shop, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment. Commercial establishment has been defined in Section 2(5) of the Shops Act as under:

"commercial establishment" means any premises wherein any trade, business or profession or any work in connection with, or i