By the Court.—The special appeal has arisen from a judgment and order of a learned Single Judge dated 6 February 2015 allowing a writ petition filed by the first and second respondents. The writ petition was filed by the first and second respondents for the payment of an amount of Rs. 2,45,360/- towards the balance of dues on account of gratuity payable in respect of the services of a deceased employee.

2. Mani Ram was initially engaged as a Welfare Officer Grade-III on 3 June 1973 by Mahavir Sugar Mill Pvt. Ltd. The Mill was taken over under the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971 (Acquisition Act). After acquisition, the services of the employee were transferred under Section 16 of the Acquisition Act on the same terms and conditions on which he was engaged by the private mill which was acquired. Mani Ram retired on attaining the age of 60 years on 29 February 2008 and was paid an amount of Rs. 3.50 lacs as gratuity under the Payment of Gratuity Act, 1972 (Gratuity Act). He filed a writ petition before this Court seeking the benefit of the payment of gratuity under the Uttar Pradesh Factories Welfare Officers’ Rules, 1955 (Factories Welfare Rules). Under Section 4(3) of the Gratuity Act, there was a ceiling of Rs. 3.50 lacs applicable, at the material time, on the gratuity admissible. Under Rule 8-A (3) of the Factories Welfare Rules, there was a ceiling of twenty months’ pay. The basis of the claim of the employee was that under the Factories Welfare Rules, he was entitled to a total amount of Rs. 5,95,360/- towards gratuity. After giving credit for the amount of Rs. 3.50 lacs which had already been disbursed to him, a balance of Rs. 2,45,360/- lacs was claimed as due and payable.

3. The writ petition was disposed of by this Court by an order dated 17 May 2011 by directing the General Manager to consider and pass orders on the representation submitted by the employee. The General Manager passed an order on 18 August 2011 holding that Shahganj Sugar Mill, in which the employee had been engaged, had been sold in a slump sale prior to the date of the order of this Court on 17 May 2011 and hence, the liability for the payment of gratuity could not be foisted on the appellant. A writ petition was filed in order to challenge the order passed by the General Manager on 18 August 2011 and for a mandamus to the appellant to pay the balance of the dues on account of gratuity in the amount of Rs. 2,45,360/- together with interest from the date of retirement.

4. Before the learned Single Judge, pleadings were completed by the parties. The contention of the appellant was that under Clause 2(6) of the sale agreement between the appellant and a purchaser, all contingent liabilities stood transferred by the appellant to the purchaser who alone would be responsible. According to the appellant, the employee had been rightly paid the amount of gratuity admissible under the U.P. State Sugar Corporation Ltd. General Service Rules, 1988 (General Service Rules) and a claim for the payment of the balance of Rs. 2.45 lacs under the Factories Welfare Rules was not maintainable.

5. The learned Single Judge allowed the writ petition filed by the employee holding that the unit was sold by the appellant to Wev Industries Pvt. Ltd. on 1 November 2010, whereas the employee had retired after 35 years service rendered between January 1973 and February 2008. Since on the date of retirement, the employee was in the employment of the appellant, the learned Single Judge held that the claim for the discharge of liability on account of gratuity could not be denied. The order of the General Manager dated 18 August 2011 was quashed and a direction was issued to pay gratuity to the employee, while allowing the writ petition. The employee has after the filing of the writ petition died. The first and second respondents who are his legal heirs have been brought on the record. The battle in law continues.

6. The submission which has been urge