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2011 Supreme(Mad) 992
High Court of Judicature at Madras
K. CHANDRU, J.
Addison Paints and Chemicals Ltd., Chennai
Versus
Joint Commissioner of Labour & Others
W.P.No.21409 of 2004, WP MP.No.25867 of 2004 & WVMP.No.305 of 2005
Decided on : 28-02-2011
For the Petitioner:H. Balaji, Advocate.
For the Respondents:R1 & R2 - R. Murali, G.A., R3 - Ms.C. Monika, S. Vaidyanathan, Advocates.
The main legal point established in the judgment is that the employer cannot exclude the period of non-employment from the computation of gratuity under the Payment of Gratuity Act.
Headnote:
Gratuity - Employer-Employee Relationship - Payment of Gratuity Act - Section 2A, Section 4(2), Act 26 of 1984 - The court discussed the employer-employee relationship, continuous service, and the computation of gratuity under the Payment of Gratuity Act. The court emphasized that the employer cannot take advantage of non-employment to exclude the service for the computation of gratuity.
Fact of the Case:
The petitioner, an employer, challenged an order rejecting the appeal for gratuity filed by the petitioner against the order passed by the Controlling Authority. The dispute arose from the third respondent's refusal to accept a transfer order, leading to a legal battle and subsequent computation of gratuity.
Finding of the Court:
The court found that the employer-employee relationship had continued despite the period of non-employment, and the employer could not exclude the service for the computation of gratuity.
Issues: The main issue was whether the period of non-employment due to the third respondent's refusal to accept the transfer order should be treated as non-service for the computation of gratuity.
Ratio Decidendi: The court held that under Section 2A of the Payment of Gratuity Act, the employer cannot take advantage of non-employment to exclude the service for the computation of gratuity.
Final Decision: The writ petition was dismissed, and the third respondent was entitled to withdraw the amount lying in deposit with the second respondent.
1. The petitioner is an employer. They have come forward to challenge an order passed by the first respondent Appellate Authority under the Payment of Gratuity Act made in P.G.A.No.8 of 2004 dated 08.06.2004. By the impugned order, the first respondent rejected the appeal filed by the petitioner against the order passed by the second respondent Controlling Authority made in P.G.Case No.29 of 2003 dated 14.08.2003.
2. The writ petition was admitted on 26.07.2004. Pending the writ petition, this Court granted an interim stay. The third respondent employee filed a vacate stay application in WVMP.No.305 of 2005 together with supporting counter affidavit dated 17.11.2004, but the matter was not taken up.
3. Heard the arguments of Mr.H.Balaji, learned counsel for the petitioner, Mr.R.Murali, learned Government Advocate appearing for respondents 1 and 2 and Ms.C.Monica, representing Mr.S.Vaidyanathan, learned counsel for the third respondent.
4. The facts leading to the filing of the writ petition are as follows:-
The third respondent was appointed as a Chemist with effect from 25.05.1962. After 40 years of service, he got superannuated on 11.06.2002. After his retirement on 11.06.2002, by a letter dated 09.07.2002, the petitioner Management informed him that he was not entitled to get gratuity for the period from 25.07.1988 to 06.03.1996, which was rounded off to eight years and his gratuity was computed at Rs.89,220/-. When the said amount was paid to the third respondent, he received the same without prejudice to his benefits enured under Award made in I.D.No.83/84. While the third respondent was working in the petitioner Management, on 25.07.1988, he was transferred from the post of Chemist which is a workman category to that of a Sales Representative, which is a non-workman category. The third respondent did not accept the transfer. The Trade Union, to which the third respondent belonged viz., Addison Paints and Chemicals Ltd., Assistants' Association raised an Industrial Dispute regarding the illegal transfer. The State Government referred the dispute by G.O.Ms.No.2242 Labour and Employment Department, dated 22.12.1989.
5. The Labour Court was directed to find out whether the transfer of the third respondent from the post of Chemist to that of Technical Representative was justified and whether the demand of wages with effect from 25.07.1988 was justified. The said dispute was taken by the Labour Court, Chennai as I.D.No.1193 of 1989. The Labour Court by its final Award dated 07.02.1992, held that the transfer was not due to any malafide action and it was made due to exigencies prevailing in the Department. It was also held that the transfer was made within the city, but to a different post, but the Management had guaranteed that he will get the same wages and allowances. It was the third respondent who refused to accept the transfer and therefore, the Management was not liable to pay any wages.
6. As against the said Award, the Trade Union in which the third respondent was a member, filed W.P.No.14291 of 1992. The learned Judge of this Court dismissed the writ petition on 23.04.1993 confirming the Award of the Labour Court dated 07.02.1992. Aggrieved by the same, the Trade Union filed writ appeal being W.A.No.708 of 1993. The writ appeal was allowed by an order dated 06.03.1996. The Division Bench, in paragraph 9, held as follows:-
"9. ...However, as the employer and employee relationship has not been snapped, we are of the view that in the facts and circumstances of the case and weighing the rival submissions, the ends of justice would be met by directing payment of 25 per cent of the wages payable from 25.07.1988 to the employee Nagarajan...
....iii. The respondent/Management shall pay 25 per cent of the wages calculated for the period from 25.7.1988 till the date of Nagarajan joining duty as Sales Representative within two weeks from the date of his joining duty."
7. As against the order passed by the Division Bench,
