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High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. A.P. SHAH & THE HONOURABLE MR. JUSTICE K. CHANDRU
P. Selvaraj
Versus
The Management of Shardlow India Limited Hosur Garden & Others
W.A.No.1478 of 2006
Decided On : 12-01-2007
Gratuity Act - Calculation of Gratuity - Section 4(2) - Summary of Acts and Sections: The court discussed the interpretation of the term 'last drawn wages' under Section 4(2) of the Gratuity Act, 1972. It highlighted the definition of 'wages' under Section 2(s) and its implications, as well as the amendments and judicial interpretations of the Act. The court also emphasized the significance of the settlement under Section 12(3) of the I.D. Act in fixing wages and other service conditions.
Fact of the Case:
The appellant, a retired employee, claimed the difference in gratuity amount payable to him under the Gratuity Act, based on the calculation of his last drawn wages. The employer had paid the gratuity based on the wages of the previous month, citing unavailability of cost of living index figures for the month of retirement. The appellant's claim was dismissed by the Controlling Authority and the Appellate Authority, which was upheld by the single Judge.
Finding of the Court:
The court found the order of the single Judge to be erroneous and contrary to the provisions of the Gratuity Act. It held that the term 'last drawn wage' should be interpreted in its full meaning, including what is payable to the workman. The court directed the employer to pay the appellant the difference in gratuity within four weeks, without ordering any interest on the delayed payment.
Issues: The issues involved the interpretation of the term 'last drawn wages' under Section 4(2) of the Gratuity Act, the significance of the settlement under Section 12(3) of the I.D. Act, and the delay in payment of gratuity based on the Variable Dearness Allowance.
Ratio Decidendi: The court emphasized a purposive interpretation of the term 'wages' under the Gratuity Act, consistent with the principles of equity and fair play. It held that the term should include not only what is paid but also what is payable to a workman. The court also highlighted the time limit of 30 days provided under Section 7(3) of the Act to settle the payment of gratuity.
Final Decision: The writ Appeal was allowed, and the order of the single Judge confirming the orders of the respondents 1 and 2 was set aside. The employer was directed to pay the appellant the difference in the gratuity payable to him within four weeks, without ordering any interest on the delayed payment.
K. Chandru, J.
This writ appeal is directed against the order of the learned single Judge dated 10. 2006 passed in W.P.No.79 of 2001 confirming the orders of the second respondent appellate authority and the third respondent Controlling Authority in not granting the difference of amount payable to the petitioner towards the gratuity in terms of the Payment of Gratuity Act, 1972 [for short, Gratuity Act].
2. The appellant joined the services of the first respondent on 111. 1996 and after putting in 32 years of service, he reached the age of superannuation on 07. 1998. On account of his superannuation, in terms of the Gratuity Act, the first respondent employer paid him a sum of Rs.70,802/- towards gratuity.
3. At the time of superannuation, viz., in July 1998, the appellants basic wage was Rs.131.04 and the Dearness Allowance was Rs.3951/-. The petitioner had worked for a period of nine days during July 1998 but, however, in computing the last drawn wages, the first respondent employer took into account the wage drawn by the appellant for the month of June 1998 and not July 1998. Under the terms of the settlement under the Industrial Disputes Act, 1947 [for short, I.D. Act] between the Union to which the appellant belongs and the first respondent, DA for the workman was to be arrived in terms of the settlement dated 20.02.1995 and it was signed under Section 12(3) of the I.D. Act before the Joint Commissioner of Labour (Conciliation) at Chennai and the DA fixed is found in paragraph 2 of the settlement, which reads as follows:
"02. DEARNESS ALLOWANCE: Effective 2. 95 all permanent workmen covered by this settlement will be paid dearness allowance, based on attendance, at 35. (Thirty Eight and half) Paise per point over and above 100 points of Madras Cost of Living Index (1936 base). Further, effective 2. 1996 the said rate of dearness allowance will be increased to 39 (Thirty Nine) paise per point over and above 100 points of Madras Cost of Living Index (1936 base)." [Emphasis added]
4. The said settlement came into force with effect from 01.02.1995 and was to apply to all permanent workmen, who are under the rolls of the company on the date of settlement and who were already paid DA at the rate of 38.5 per point over and above 100 points of Madras Cost of Living Index (1936 base). Though it is admitted that the said settlement applies to the case of the appellant, the first respondent did not calculate the gratuity by working out the DA as on 07. 1998 on the basis of 39 paise per point over and above 100 points of Madras Cost of Living Index with base of the year 1936. It was the stand of the first respondent that the Cost of Living Index figures were not available for the month of July 1998 and the petitioner admittedly worked only for a period of nine days and it took some time for the revision of DA to be made in terms of the settlement and in view of the fact that the gratuity will have to be settled on account of superannuation, the figures for the month of June 1998 was taken into account and since the gratuity as per the Act has been paid, there was no dispute between the appellant and the first respondent.
5. Aggrieved by the stand of the first respondent, the appellant filed a petition before the third respondent Controlling Authority under the Gratuity Act in P.G. Case No.15 of 1999 and claimed gratuity of a sum of Rs.75,360.73 and after giving credit to the amount already paid, viz., Rs.70,802/-the balance of Rs.4558.73 was claimed by him. He also claimed statutory interest at the rate of 15% per annum for the differential amount. The first respondent resisted the claim on the ground that the gratuity amount was paid to the appellant on 7. 1998 and that the appellant has given a valid receipt of full and final settlement of his account. Further, as per the settlement under Section 12(3) of the I.D. Act, the DA for the month of June 1998 was Rs.3720.21 and he was paid the said amount and since that w
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