Back
2024 Supreme(Online)(GUJ) 21835
HIGH COURT OF GUJARAT
M. K. THAKKER, J
BABUBHAI PRABHUDAS PATEL – Appellant
Versus
THE MANAGER PHARMA LAB INDIA PRIVATE LIMITED – Respondent
R/SPECIAL CIVIL APPLICATION NO. 26874 of 2022
Special allowances are excluded from gratuity calculations under the Payment of Gratuity Act, 1972, as they do not meet the definition of 'wages'.
Headnote:
Gratuity - Payment of Gratuity Act, 1972 - Sections 2(e), 2(s), 4(2) - The court interpreted the definitions of 'employee' and 'wages' under the Act, concluding that special allowances are not included in gratuity calculations, affirming the authority's dismissal of the claim.
Fact of the Case:
The petitioner challenged the authority's decision regarding the calculation of gratuity, arguing that special allowances were improperly excluded from the calculation, leading to a significant shortfall in the gratuity amount owed.
Finding of the Court:
The court found that the authority correctly excluded special allowances from the gratuity calculation based on established legal definitions and precedents, affirming the authority's decision.
Issues: Whether special allowances should be included in the calculation of gratuity under the Payment of Gratuity Act, 1972.
Ratio Decidendi: The court held that special allowances do not constitute part of 'wages' as defined in the Act, thus cannot be included in gratuity calculations.
Final Decision: The petition is dismissed.
ORAL ORDER
1. This petition is filed under Article 226, 14, 19 and 21 of the Constitution of India with following prayers:
“(a) YOUR LORDSHIPS may be pleased to issue a writ of mandamus and / or an appropriate writ, order or direction in the nature of mandamus, quashing and setting aside the impugned orders (1) dated 07.11.2022 passed by the Learned Appellate Ann E' Authority, The Payment of Gratuity Act 1972, Ahmedabad in Gratuity Appeal No. 35 of 2022 and (2) dated 08.11.2021 passed by the Learned Controlling Authority, the Learned Controlling Ann' A' Authority, The Payment of Gratuity Act 1972, Mehsana in Gratuity Case No. 29 of 2021; in the interest of justice.
(b) YOUR LORDSHIPS may be pleased to direct the respondents to pay an amount of Rs. 72,269/- with 10% interest from the date of application; in the interest of justice (c) Grant such other and further relief as it may be deemed fit in the interest of justice”
2. Heard learned advocate Mr.K.I.Kazi for the petitioner.
2.1. Learned advocate Mr.K.I.Kazi submits that as per the calculation submitted before the competent authority his last salary including the basic salary alongwith special allowances were not considered by the respondent- Authority while calculating the amount of gratuity. Learned advocate Mr.K.I.Kazi submits that instead of dearness allowances, special allowances was required to be considered while calculating the gratuity in addition to the basic wages. Learned advocate Mr.K.I.Kazi submits that there is a difference of amount of Rs.1,43,641/- as the special allowances were not considered by the learned Controlling Authority while calculating the gratuity and therefore, he prays to set aside the impugned order qua not calculating the amount of special allowances while granting the benefit of gratuity.
3. Considering the submissions made by the learned advocate Mr.K.I.Kazi it transpires that respondent no.1- Authority, while passing the order for payment of gratuity calculated the basic wages, however, excluded the special allowances which is subject matter of challenge.
4. Considering the issue involved, decision rendered by the Apex Court in the case of State of West Bengal & Others versus Texmaco Ltd. Reported in 1999 1 SCC 198 is required to be referred wherein, the Apex Court has observed as under:
“1. The respondent-Company has a Scheme whereunder it pays to its employees what is called an "incentive bonus". The appellants took the stand that the incentive bonus fell within the definition of "salary" or "wage" contained in Section 2(j) of the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979, and, therefore, it was liable to the levy of tax under that statute, which the respondent-Company was bound e to deduct and pay on behalf of its employees. This contention was the subject-matter of applications before the West Bengal Taxation Tribunal. In its order under appeal, the Tribunal found that it was common ground that the incentive bonus was linked to production. It was paid at a certain rate for production in excess of a specified minimum quantity. It was payable only when production exceeded that quantity. If in a particular month, the production did not exceed the specified minimum quantity, there was no payment. If, on the other hand, there was in another month production exceeding the minimum quantity, the incentive bonus was payable commensurate with the additional production, which was naturally variable from month to month. Upon this basis, the Tribunal found that the payment of incentive bonus was not made on a regular basis and that, therefore, the requirement of the definition of "salary" or "wage" in Section 2(1) was not satisfied.
2.That definition says, so far as is relevant for our purposes, that "salary" or "wage" includes "pay, dearness allowance and all other remunerations received by any person on regular basis, whether payable in cash or in kind.…
3. The findings of fact reached by the Tribunal are clear. The
