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2019 Supreme(Mad) 2636
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M. SUBRAMANIAM, J.
The District Management, Food Corporation of India, Tuticorin - Petitioner
Versus
A. Shanmugakani & Others - Respondents
W.P. Nos. 13579 to 13587 of 2004 & W.M.P. Nos. 15931 to 15939 of 2004
Decided On : 25-09-2019
For the Petitioner:A.S. Thambuswamy, Advocate.
For the Respondents:S. Arunachalam, Advocate.
The judgment established that the nature of work and the control and supervision by the employer are essential factors in determining the employer-employee relationship, impacting entitlement to gratuity under the Payment of Gratuity Act, 1972.
Headnote:
Gratuity - Employment Relationship - Payment of Gratuity Act, 1972 - Section 4(1)
Fact of the Case:
The Food Corporation of India contested the payment of gratuity to contract laborers engaged by a Cooperative Society, arguing that there was no employer-employee relationship between the corporation and the laborers.
Finding of the Court:
The court held that the services rendered by the laborers with the Cooperative society cannot be counted for the purpose of calculating the minimum required service under Section 4(1) of the Payment of Gratuity Act, as there was no employer-employee relationship with the Food Corporation of India prior to their engagement as direct payment employees.
Issues: The main issue was whether the laborers were entitled to gratuity under the Payment of Gratuity Act, 1972, considering their prior engagement with a Cooperative Society.
Ratio Decidendi: The court emphasized that the nature of the work and the control and supervision by the employer are crucial in determining the employer-employee relationship. It concluded that the laborers' services with the Cooperative society could not be considered as qualifying services for gratuity under the Act.
Final Decision: The court quashed the orders confirming the payment of gratuity to the laborers and allowed all the writ petitions, with no order as to costs.
ORDER :
(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari, calling for the records of the second respondent relating to order dated 08.03.2004 made in Gratuity Appeal No.284 of 2003, confirming the Order of the 3rd Respondent dated 28.02.2003/07.04.2003 made in G.A.No.1 of 2002 and to quash the same.)
1. The orders impugned passed by the 2nd respondent dated 08.03.2004 passed in Gratuity Appeal Nos.284, 285, 286, 287, 288, 289, 290, 291 & 292 of 2003, confirming the order of the 3rd respondent dated 28.02.2003/7.4.2003 made in G.A.Nos.1, 2, 3, 4, 5, 6, 7, 8 & 9 of 2002 respectively are sought to be quashed in the present writ petitions.
2. The writ petitioner is the Food Corporation of India. The learned counsel for the writ petitioner states that the respondent workman in all the writ petitions were initially engaged by the Labour Cooperative Society, which is a Cooperative Society registered under the provisions of the Tamil Nadu Cooperative Societies Act, the administration of the Cooperative Society is no way connected with the administration of the Food Corporation of India. The society was a separate legal entity and registered under the Tamil Nadu Cooperative Societies Act and therefore, the engagement of a Labour Cooperative Society is only a contract employment and no way connected with the employment of the Food Corporation of India. In other words, when the respondent workman were engaged by the Labour Cooperative Society, there was no employer-employee relationship existed between the Food Corporation of India as well as the respondent workman.
3. Thus, the contract labourers engaged by the Cooperative Society were subsequently considered for payment under the Direct Payment System by the Food Corporation of India. These contract labourers were performing the ancillary duties for the Food Corporation of India through the Cooperative society, the Food Corporation of India brought them under the Direct Payment System and thereafter, they are entitled for gratuity under the provisions of the Gratuity Act, 1972.
4. In this regard, the fact remains that the remains that the respondent workman were brought under the Direct Payment System by the Food Corporation of India in the year 1997 and they worked for three years and relieved from service in the year 2000. In view of the fact that these workman were completed the minimum requirement period of five years, they are not entitled for gratuity under the provisions of the Gratuity Act and accordingly, the writ petitioner not paid the gratuity under the scheme. However, the respondent workman approached the Controlling Authority under the Payment of Gratuity Act and the Controlling authority allowed the claim, stating that the reckoning of the qualifying service is to be taken into account from the date of appointment made by the Labour Cooperative Society. Based on the services rendered in the Cooperative Society, the Controlling authority directed the Food Corporation of India to settle the gratuity under the Gratuity Act. The writ petitioner preferred an appeal before the Appellate authority, who in turn, confirmed the order of the Controlling Authority, against which, the present writ petition is filed.
5. The learned counsel for the writ petitioner reiterated that these workmen were not the employees of the Food Corporation of India and they were engaged by the Labour Cooperative Society, which is a separate society registered under the Tamil Nadu Cooperative Societies Act and the Food Corporation of India is a Principal employer. The Principal employer is not liable in respect of the service benefits and the Principal employer has settled the wages as per the terms and conditions of the agreement with the Cooperative society. Thus, the services of the contract labourers engaged by the Labour Cooperative society cannot be taken into account for the purpose of calculating the services rendered by such contract l
