Gratuity must be based exclusively on actual wages drawn by an employee as defined in the Gratuity Act, without statutory provision for minimum wage adjustments.

JUDGMENT :

Gopinath P., J.

This writ petition has been filed challenging Ext.P3 order of the Controlling Authority under the provisions of the Payment of Gratuity Act, 1972 (hereinafter referred to as ‘the Gratuity Act’), Ext.P6 order of the Appellate Authority confirming Ext.P3 order of the Controlling Authority, and Ext.P8 order of the Appellate Authority refusing to review Ext.P6 order.

2. Smt. A. K. Preetha, the learned counsel appearing for the petitioner submits that the only issue that requires to be considered by this Court is whether the Controlling Authority could have directed the payment of gratuity based on any other amount of wages when the wages actually drawn by the 3^rd respondent, including allowances, were found and admitted by both sides to be Rs.12,000/- (Rupees Twelve Thousand Only). It is submitted that the Controlling Authority had calculated the gratuity payable based on the minimum wage notification, and there is no enabling provision in the Gratuity Act for such assessment. It is submitted that a reading of Ext.P3 order of the Controlling Authority will indicate that, though there was absolutely no dispute that the last drawn wages of the 3^rd respondent were Rs.12,000/- (Rupees Twelve Thousand Only), including allowances, the Controlling Authority found without any basis that the 3^rd respondent was actually entitled to a further sum of Rs.2,160/- (Rupees Two Thousand One Hundred Sixty Only) as wages and directed payment of gratuity on that basis. It is submitted that this finding is not supported by any statutory provision.

3. Sri. B. Ashok Shenoy, the learned counsel appearing for the 3^rd respondent, also fairly admits that the last drawn wages of the 3^rd respondent were a sum of Rs.12,000/- (Rupees Twelve Thousand Only) and that there was no dispute raised before the Controlling Authority regarding the wages paid to the 3^rd respondent.

4. Sri. Ashok M. Cherian, Additional Advocate General, assisted by Smt. Sabeena P. Ismail, Government Pleader, submits that Section 2 (s) of the Gratuity Act defines ‘wages’. He submits that, though there is no express enabling provision making the Minimum Wages Act, 1948 applicable to the determination of gratuity payable under the Gratuity Act, it is nevertheless expedient to give effect to the legislative intent underlying the Minimum Wages Act while interpreting the Gratuity Act, to achieve a harmonious construction consistent with the constitutional safeguard enshrined under Article 23 of the Constitution of India. In other words, it is his submission that the authority under the Gratuity Act does not fix the minimum wage; it merely recognises the statutory wage payable as the basis for computation of gratuity. He argued that this does not amount to the exercise of powers under the Minimum Wages Act, but is intended to give effect to Section 2 (s) of the Gratuity Act in consonance with Section 2 5 of the Minimum Wages Act and Article 23 of the Constitution of India. He relied on the judgments of the Supreme Court in U. Unichoyi v. State of Kerala , 1961 SCC OnLine SC 18, Chandra Bhavan Boarding and Lodging, Bangalore v. State of Mysore, (1969) 3 SCC 84, People’s Union for Democratic Rights v. Union of India , (1982) 3 SCC 235 and Sanjit Roy v. State of Rajasthan , (1983) 1 SCC 525 in support of his contentions and submitted that if an employer pays an employee wages below the notified minimum wage, the law itself substitutes the statutory minimum wage in place of the unlawful contractual wage. Hence, according to him, ‘wages’ under Section 2 (s) of the Gratuity Act must be understood as the minimum wage payable under law when the actual payment falls short of the