Back
1974 Supreme(Ker) 191
Judges : P.GOVINDA NAIR,V.P.GOPALAN NAMBIYAR,G.VISWANATHA IYER
V.N.SUNDER AND OTHERS - Appellant
Versus
STATE OF KERALA AND OTHERS - Respondent
Case No : 0. P. No. 2831, 3111, 3141, 3150, 3154, 3155 etc. of 1972
Decided On : 12/12/1974
Advocates Appeared :
S. Eswara Iyer; M. Ramachandran; B. S. Krishnan; C. M. Devan; K. A. Nayar; A. D. Krishnan Asan; A. Ines; O. V. Radhakrishnan; P. Balagangadhara Menon; K. N. Narayanan Nair; K. J. Chacko; V. Sivaraman Nair; T. C. Mohandas; S. A. Nagendran; A. C. Jose; For Petitioners Advocate General M. M. Abdul Khader; For 1st Respondent M. P. Menon; M. M. Cherian; P. J. Varghese; M. Rajasekharan Nair; V. C. James; M. C. Sen; For Other Respondents
The main legal point established in the judgment is that the provision making gratuity payable even in cases of dismissal for gross misconduct was interpreted to make gratuity payable only in cases of dismissal not due to the employee's fault, aligning with the concept of unblemished service emphasized in judicial decisions.
Headnote:
Gratuity Act - Validity of Kerala Industrial Employes' Payment of Gratuity Act, 1970 - S.14 of the Central Act - S.4 of the Act - S.2(b) - S.20 - Provisions of the Central Act - Interpretation of 'wages' - Differences between the Act and the Central Act - Obligation of the employer in a seasonal establishment - Restrictions in the right of an employee dismissed for misconduct to payment of gratuity - Application of the Act - Arguments and contentions raised by the petitioners and the Advocate General - Court's analysis and conclusion
Fact of the Case:
The petitions challenged the validity of the Kerala Industrial Employes' Payment of Gratuity Act, 1970, which was replaced by the Payment of Gratuity Act, 1972. The Act provided for gratuity to be payable to an employee on various grounds, including superannuation, retirement, resignation, retrenchment, discharge, or dismissal after a minimum period of five years of continuous service. The Act also defined 'continuous service' and 'wages'. The Central Act contained similar provisions but with some differences, including the definition of 'wages' and additional provisions for seasonal establishments and employee dismissals for misconduct. The arguments raised by the petitioners included claims of discrimination, violation of constitutional rights, and unreasonableness of the Act's provisions. The Advocate General contended that the Act was introduced for the purpose of social control and to achieve social justice.
Finding of the Court:
The court found that the Act's provisions regarding gratuity linked to total wages and a five-year qualifying period were not sufficient grounds to declare the statute unconstitutional. The court did not consider the discrimination argument due to lack of proper pleading and proof. However, the court was troubled by the provision making gratuity payable even in cases of dismissal for gross misconduct. The court interpreted the provision to make gratuity payable only in cases of dismissal not due to the employee's fault, aligning with the concept of unblemished service emphasized in judicial decisions. As a result, the court upheld the Act and dismissed the writ petitions.
Ratio Decidendi: The Act's provisions regarding gratuity linked to total wages and a five-year qualifying period were not sufficient grounds to declare the statute unconstitutional. The discrimination argument was not considered due to lack of proper pleading and proof. The provision making gratuity payable even in cases of dismissal for gross misconduct was interpreted to make gratuity payable only in cases of dismissal not due to the employee's fault, aligning with the concept of unblemished service emphasized in judicial decisions. As a result, the court upheld the Act and dismissed the writ petitions.
Final Decision: The court dismissed the petitions challenging the validity of the Kerala Industrial Employes' Payment of Gratuity Act, 1970, and upheld the Act's provisions, including the provision making gratuity payable only in cases of dismissal not due to the employee's fault.
1. All these petitions challenge the validity of the Kerala Industrial Employes' Payment of Gratuity Act, 1970, for short the Act which came into force on 18-2-1970. This Act replaced Ordinance 7 of 1969 which had come into operation on 10-1-69. The Act was superseded by the coming into force of the Payment of Gratuity Act, 1972 (hereinafter referred to as the Central Act) passed by Parliament and which came into force on 16-9-1972. S.14 of the Central Act specifically provides that the Central Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than the Central Act or in any instrument or contract having effect by virtue of any enactment other than that Act.
2. Before we proceed to deal with the contentions raised by counsel it is necessary to state the scheme provided by the Act. S.4 enjoins that "gratuity shall be payable to an employee -
(a) on his superannuation;
(b) on his retirement, resignation, retrenchment, discharge or dismissal from service after completion of a minimum period of five years of continuous service;
(c) on his death or total disablement due to accident or disease." The gratuity payable is at the rate of 15 days' wages on the last drawn wages for every completed year of service or part thereof in excess of six months subject to a maximum amount of 15 months wages. The Act saves the right of any better terms of gratuity or retirement benefits under any award or agreement or contract with the employer. The last two provisos to S.4 of the Act are in these terms: -
"Provided also that in the case of voluntary retirement or resignation from service in any particular year, not more than five percent of the total number of employees in the factory, plantation, establishment or undertaking shall be entitled to payment of gratuity and if the number of employees who voluntarily retire or resign from service exceeds five per cent of the total number of employees, the eligibility of an employee for payment of gratuity shall be determined on the basis of the length of the service of the employee in the factory, plantation, establishment on undertaking:
Provided further that an employee who voluntarily retires or resigns from service shall be eligible to claim gratuity only if one months notice in writing of his intention so to retire or resign had been given to the employer".
3. The gratuity is payable after completion of a minimum period of five years of continuous service. "Continuous service" is defined in S.2 (b) thus: "2. In this Act, unless the context otherwise requires -
(a) ….
(b) "continuous service" means uninterrupted service and includes service which may be interrupted by sickness, accident, leave, strike, lock out or cessation of work not due to employee's fault;"
4. And "wages" is defined in S.20) in these terms:
"20) "wages" means all remuneration capable of being expressed in terms of money, which would, if the terms of employment expressed or implied, were fulfilled, be payable to an employee in respect of his employment, or of work done in such employment and includes
(i) such allowances (including dearness allowance) as the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession; but does not include bonus, commission, overtime wages and night allowance."
5. The Central Act contains similar provisions The rate under that Act is also 15 days' wages. The maximum however is a total of twenty months' wages. The expression "continuous service" is defined in almost similar terms as in the Act. The definition of the term "wages" in the Central Act however is not the same definition contained in the Act. S.2(s) of the Central Act defining wages is in these terms:
"2(s) "wages" means all emoluments which are earned by an
