Under the Payment of Gratuity Act, 1972, an employee is entitled to gratuity only if he has been in continuous service for a period of five years and has actually worked for not less than 240 days in a year.

1. The second respondent Jayapal was in the service of the petitioner. Dalmia Magnesite Corporation, Salem for seven years from 1st September, 1969 to 15th October, 1976 on which date he resigned from service. The petitioner rejected the claim of the second respondent for gratuity on the ground that he had not put in "Continuous service" as required under the provisions of the Payment of Gratuity Act, 1972. The second respondent filed an application before the Controlling Authority under the Act. The petitioner contended that the second respondent had not actually worked for 240 days excluding the days of absence on account of sickness, accident, leave, lay-off, strike or lock-out and weekly holidays and, therefore, he was not in continuous service as defined under the Act. The controlling Authority negatived the contention of the petitioner and held that the second respondent was entitled to gratuity for the period of his service. The petitioner preferred an appeal under S. 7(7) of the Act. The Appellate Authority held that a reading of S. 2(c) of the Act would make it clear that interruption caused by leave of any kind whether with wages or without wages should be included in the term of continuous service and that the word "actually employed" occurring in Explanation I to S. 2(c) of the Act was not the same as actually worked. The Appellate Authority further held that to attract the application of Explanation I under S. 2(c) of the Act one need not actually work for not less than 240 days in a year. In these circumstances, the petitioner has filed this petition for the issue of a write of certiorari to quash the order passed by the Appellate Authority on 21st February, 1978.

2. It is seen from paragraph 2 of the counter-affidavit that the second respondent was unauthorisedly absent for 94 days, 92 days, 78 days, 15 days, 28 days, 29 days and 44 days every year on various dates from 16th October, 1969 to 15 October, 1976. In view of this unauthorised absence Mr. T. S. Gopalan contended that the second respondent had not put in continuous service for each year. Consequently he must have actually worked for at least 240 days to fall within the Explanation I to S. 2(c) of the Act and to qualify himself for gratuity. Mr. Gopalan argued that the view taken by the Appellate Authority that under the Explanation I an employee need not actually work for 240 days to be eligible for gratuity and that it would be sufficient if the relationship master and servant existed for days, is erroneous.

3. On the other hand, Mr. Chandru, the learned counsel for the second respondent strenuously contended that it was not necessary to fall within Explanation I to S. 2(c) of the Act that an employee should have actually worked for 240 days. So long as the master and servant relationship existed for 240 days, the employee would fall under Explanation I to S. 2(c) of the Act and he would be eligible for gratuity. In this case, the learned counsel further contended that if the number of holidays, leave with wages and off days are taken into account it would be clear that the second respondent had worked for 240 days.

4. To decide controversy between the parties it is necessary to refer to the relevant sections of the Act. Section 4 of the Act as follows

"4(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,

(a) On his superannuation; or

(b) On his retirement or resignation or

(c) On his death or disablement due to accident or disease :

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

Provided further that in the case of death of the employee gratuity payable to him shall be paid to his nominee, or if no nomination has been made, to his heirs

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(2) for every completed year of service or part thereof in excess of six months, the e