The word 'establishment' used in Sec.1 (3) (b) of the Payment of Gratuity Act, 1972 should not be read as confined to commercial establishment but should be given a liberal interpretation keeping in view the purpose sought to be achieved by the Act.

G. S. Singhvi, J.

1. Whether Municipal Committee/council falls within the ambit of Sec.1 (3) (b) of the Payment of Gratuity Act, 1972 (hereinafter referred to as the Act) is the only question which arises for adjudication in this Letters Patent Appeal.

2. Although the aforementioned question has already been answered by a Division Bench in Kundan Lal Narang V/s. State of Haryana and Ors. , (C. W. P. No.427 of 1987 decided on August 25, 1987) in the affirmative, learned counsel for the appellant has challenged the correctness of that decision on the ground that the Bench which decided Kundan Lal Narangs case did not take into consideration the provisions of the Punjab Shops and Commercial Establishments Act, 1958 (hereinafter called as the Act of 1958 ). We have reconsidered the issue in the light of the submissions at the Bar and are convinced that the decision of Kundan Lal Narangs case does not require reconsideration.

3. Succinctly stated, the facts of the case are that the respondents who were employed in the services of the Municipal Committee, Thanesar instituted C. W. P. No.3408 of 1986 for quashing; the circular dated January 20, 1986 issued by the Commissioner and Secretary to the Government, Haryana, Local Government Department whereby he directed that only those municipal employees who had retired on or after September 16, 1972, should be paid gratuity in accordance with the provisions of the Act. They prayed that the respondents be directed to pay them gratuity under the Act. The Municipal Committee, Thanesar (appellant herein) contested the claim of the respondents primarily on the ground that the provisions of the Act are not applicable to it inasmuch as the municipalities are not covered by Sec.1 (3) (b) of the Act. It also pleaded that in view of the notification issued by the Government of India on January 8, 1982 under Sec.1 (3) (c), the provisions of the Act will apply only to those employees who retired on or after January 8, 1982 and as the petitioners had retired prior to that date they are not entitled to be paid gratuity under the Act.

4. The learned Single Judge accepted the writ petition in view of the law laid down in Kundan Lal Narangs case (supra) and directed the appellant to pay gratuity to the writ petitioners except to those who had retired before the enforcement of the Act.

5. Learned counsel for the appellant strongly pleaded for reconsideration of the view taken by the Division Bench in Kundan Lal Narangs case and urged that the Division Bench has erred in holding that the municipalities fall within the ambit of the term establishment used in Sec.1 (3) (b) of the Act. Shri Chaudhary submitted that the only law which is applicable to the shops and commercial establishments in the State of Haryana is the Act of 1958 and as the municipalities are not covered by the definition of shop or commercial establishment or establishment under the Act of 1958, the provisions contained in Sec.1 (3) (b) of the Act cannot be invoked by the employees of the municipalities. Learned counsel for the respondents supported the judgment of the Division Bench as well as the impugned judgment. He argued that the word establishment used in Sec.1 (3) (b) of the Act should not be read as confined to commercial establishment but should be given a liberal interpretation keeping in view the purpose sought to be achieved by the Act.

6. In order to appreciate the rival contentions and decide whether the judgment of Kundan Lal Narangs case requires re-consideration, we may briefly refer to the background in which the Act was enacted.

7. The need for this enactment was felt because there was no central legislation to regulate the payment of gratuity to industrial workers except the working journalists who were governed by the provisions of the Working Journalists (Conditions of Service and Misc. Provisions) Act, 1955. The Governments of the States of Kerala and West Bengal had enacted legislations for payment of gratu