Koshy, J.

Whether the Kerala industrial Employees' Payment of Gratuity Act, 1970 (hereinafter referred to as Kerala Act') is applicable after the enactment of the Payment of Gratuity Act, 1972 (hereinafter referred to as the 'Central Act') is the question referred to the Division Bench for decision in this case. Before dealing with the question, we consider the facts of the case.

2. The petition establishment is a small scale industrial unit employing six persons. The second respondent herein was a Carpenter employed there. He was retrenched from service on 22.5.1992. The fact that his last drawn wages was Rs.974/- and that he had twelve years service at the time of retrenchment are not disputed. The second respondent filed an application before the Controlling Authority for payment of gratuity. The employer/Petitioner contended that he is not entitled to gratuity because under the Central Act only establishments employing ten or more employees are liable to pay gratuity. Section 1(3) of the Central Act reads as follows:

"1. Short title, extent, application and commencement:-

3. It shall apply to,--

(a) every factory, mine, oil-field, 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 proceeding 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.”

Under Section 2(g) it is stated that 'factory' has the meaning assigned to it in clause (m) of Section 2 of the Factories Act, 1948 and under Section 2(m) of the Factories Act also minimum strength of ten employees are required to come within the definition of factory even if power is used. Since the petitioner establishment has employed only six persons the Central Act is no applicable. There is no award or agreement compelling the petitioner to pay gratuity to the employees. Therefore, according to the petitioner, the second respondent is not entitled to gratuity. The Controlling Authority was of the opinion that even though for application of Central Act ten or more persons should be employed, under the Kerala Act there is no restriction of number of employees and, therefore, he is entitled to gratuity under the Kerala Act. The Controlling Authority calculated the gratuity of the second respondent for twelve years' of service taking Rs.974/- as his monthly salary. But, the Appellate Authority noticed that a person who earns more than Rs.750/- as monthly salary is not an employee under the Kerala Act. Therefore, the Appellate Authority has calculated gratuity under the Kerela Act taking Rs. 750/as the deemed salary of the employee. Those orders are under challenge in this petition.

4. The question regarding application of Kerala Act after enactment of the Central Act is to be answered first. The constitutional validity of the Kerala Act was challenged before this Court and a Full Bench of this Court in V.N. Sunder and Others v. State of Kerala and others (1975 K.L.T. 867 (F.B.)) held as follows:

"The provisions in the Act which were the same as those in Ordinance 7 of 1969 remained in force only between 10-12-69 and 16-9-72. The Central Act having superseded the Act on the latter date the liability arising under the Act to those employees whose services had been terminated for the reasons mentioned in S,4 (1) (a), (b) and (c) already extracted will be limited to termination that took place between 10-12-69 and 16-9-72. The Act has thus very limited application though it cannot be said to be a temporary piece of legislation.

The above observation would show that the Central Act superseded the State Act. Apart from the above, the payment of Gratuity Act was enacted by the Parliament