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2025 Supreme(Mad) 3497
IN THE HIGH COURT OF JUDICATURE AT MADRAS
A.D.Maria Clete, J.
The Management of C.S.I Rainy Hospital Employees, Co operative Thrift and Credit Society Ltd. - Petitioner
Vs.
T.Rajeswari, W/o R.Vasu and ors. - Respondents
Writ Petition Nos. 18554 & 18268 of 2020 and W.M.P.Nos.23001, 22649 & 22650 of 2020
Decided On : 19-02-2025
Advocate Appeared:
For the Petitioner: Mr.L.P.Shanmuga Sundaram
For the Respondent: Mr.Ravi Bharathi & D.Gopinathan
The Payment of Gratuity Act applies only if an establishment employs 10 or more persons; the management's claims of non-applicability were upheld, while the workman's entitlement to Provident Fund and leave compensation was affirmed.
Headnote:(A) Payment of Gratuity Act, 1972 - Sections 1(3)(b), 2(3)(b), and 3A - Applicability of the Act to the management questioned - Management contended that they never employed 10 or more persons, thus not covered by the Act - The controlling authority allowed the workman's claim for gratuity based on her service duration - The Appellate Authority upheld the decision, leading to the management's writ petition - The court found that the management's arguments regarding the applicability of the Act were not adequately addressed by the authorities. (Paras 5, 6, 10, 11, 12, 13)
(B) Industrial Disputes Act, 1947 - Section 33C(2) - Workman's claim for Provident Fund and earned leave compensation - Labour Court ruled in favor of the workman, ordering payment based on evidence presented - Management's claims of irregular employment were dismissed as irrelevant to terminal benefits. (Paras 14, 15, 17, 18)
Facts of the case:
The workman, employed since 1999, claimed gratuity upon resignation after 18 years of service, which was granted by the controlling authority but contested by the management on grounds of non-applicability of the Gratuity Act.
Findings of Court:
The court allowed W.P.No.18554 of 2020, setting aside the order of the Appellate Authority regarding gratuity, while dismissing W.P.No.18268 of 2020, affirming the Labour Court's decision on Provident Fund and earned leave compensation.
Issues: The main issues were the applicability of the Payment of Gratuity Act to the management and the workman's entitlement to gratuity and other terminal benefits.
Ratio Decidendi: The court ruled that the management's failure to demonstrate the applicability of the Gratuity Act and the workman's entitlement to benefits based on her employment history warranted the annulment of the Appellate Authority's decision.
Result: Writ petitions allowed in part.
| Table of Content |
|---|
| 1. management contested gratuity claim (Para 7) |
| 2. controlling authority's decision (Para 8 , 9 , 10 , 11) |
| 3. management's arguments not addressed (Para 12) |
| 4. writ petitions outcome (Para 13 , 14 , 15 , 16 , 17 , 18) |
JUDGMENT :
A.D.Maria Clete, J.
Heard.
2. In both W.P.s, the petitioner is a Co-operative Society, henceforth referred to as the Management. The 1st Respondent in both petitions is the workman. W.P. No. 18554 challenges the decision rendered by the Appellate Authority under the Gratuity Act in P.G. Case No. 49/2019 on 18.2.2020. The 2nd writ petition contests the ruling issued by the Additional Labour Court-II, Chennai, in C.P. No. 08/2019 dated 28.2.2020.
3. During the hearing of the first writ petition on 16.12.2020, a notice of motion was issued. It was disclosed to the court that the complete sum of Rs.2,57,954/-, as ordered by the controlling authority (the 2nd Respondent), had been deposited with the said authority at the time the appeal was filed under the Gratuity Act. Consequently, an interim order was issued. Subsequently, the 1st Respondent submitted a counter affidavit dated Nil, November 2021.
4. In the second writ petition, W.P. No. 18268 of 2020, on 15.12.2020 (with the order corrected on 23.12.2020), this court issued a notice of motion. While the notice was pending, the Management was directed to deposit Rs. 3 lakhs into the credit of the Labour court in C.P. No. 08.2019. Following the issuance of the notice, the 1st Respondent submitted a counter affidavit dated Nil, November 2021.
5. The facts leading to the first writ petition are as follows: The 1st respondent joined the management as an Assistant on 1.1.1999. She was paid a consolidated salary until 31.7.2008, after which a service register was established, and she was subsequently placed on a time scale of pay. On 30.11.2016, she resigned from her position and was relieved on the same day. She subsequently filed a claim for gratuity with the controlling authority, which registered the case as P.G. Case No. 93/2017. On notice, the management submitted a counter-statement on 28.11.2018. On hearing both parties, the 2nd Respondent allowed the claim of the workman and calculated her service as 18 years. Based on her last drawn salary, she computed the gratuity at Rs. 2,57,954, and the same was directed to be paid within 30 days; it was also ordered that failure to do so would incur an additional interest of 10%.
6. Aggrieved with the decision, the management appealed under Section 7(7) of the Payment of Gratuity Act to the 3rd Respondent, which was registered as P.G. Appeal No. 49/2019. Upon hearing arguments from both sides, the 3rd Respondent Appellate Authority dismissed the appeal and upheld the order of the controlling authority, the 2nd Respondent. This led to the filing of W.P. No. 18554 of 2020, challenging the decision of the Appellate Authority.
7. The management contended that the Payment of Gratuity Act, 1972 , does not apply to them as they never employed 10 or more persons at any given time. Consequently, the Petitioner Management argued that they were not covered by the provisions of the Gratuity Act. Although their special bylaws governing employee service conditions do provide for gratuity, it is stipulated that these apply only to employees who retire or are deceased. Moreover, they characterized the workman’s employment as irregular, claiming she had entered the service through back door.
8. In her order dated 28.12.2018, the controlling authority did not determine whether the Payment of Gratuity Act, specifically Section 2(3)(b), applied to the Petitioner Management. The management firmly maintained that at no point neither at the establishment's inception nor thereafter, including during the period when the workman was employed did they have 10 employees. The controlling authority based her decision solely on a document submitted by the Respondent (Ex.RS), which suggests that even irregular employees are eligible for grat
