1981 (6) TMI 129 - HC - Indian Laws

Summary

Issues Involved:
1. Constitutional validity of the Payment of Gratuity Act.
2. Jurisdiction of the State Government vs. Central Government under the Act.
3. Interpretation of "rate of fifteen days' wages" and "twenty months' wages" under Section 4 of the Act.
4. Applicability of the Act to employees who were re-employed after superannuation.
5. Determination of continuous service for gratuity eligibility.
6. Delay in filing claims and appeals under the Act.

Issue-wise Detailed Analysis:

1. Constitutional Validity of the Payment of Gratuity Act:
The petitioners contended that the Act violates Articles 14, 19(1)(f), 19(1)(g), and 31 of the Constitution, arguing that it imposes a rigid liability on employers irrespective of their financial capacity. However, the court noted that the Supreme Court and various High Courts have upheld the Act's constitutionality, emphasizing that the Act aims to provide a minimum benefit to employees, which aligns with the directive principles of State Policy under Article 43 of the Constitution. The court concluded that the Act does not violate the Constitution.

2. Jurisdiction of the State Government vs. Central Government:
The petitioners argued that the Central Government is the appropriate authority under Section 2(a) of the Act, as their company operates in multiple states. However, the court referred to previous judgments, including Neiveli Lignite Corporation Ltd. v. J. Satagopan, and held that the State Government has jurisdiction over the petitioner's factories in Madras. The court rejected the argument that the Central Government should be the appropriate authority.

3. Interpretation of "Rate of Fifteen Days' Wages" and "Twenty Months' Wages" Under Section 4 of the Act:
The court addressed the interpretation of these terms, noting that the Supreme Court in Digvijay Wollen Mills Ltd. v. Mahendra Prataprai Buch upheld the calculation of gratuity based on 15 working days' wages per year and 20 months' wages as 600 days' wages. The court rejected the petitioners' contention that 15 days' wages should be interpreted as half a month's salary or 13 days' wages, affirming that the Act requires payment based on 15 actual working days.

4. Applicability of the Act to Employees Re-employed After Superannuation:
The court considered cases where employees were re-employed after reaching the age of superannuation. It held that such employees are entitled to gratuity under the Act for their entire period of service, including re-employment, as long as there was no break in service. The court emphasized that the Act overrides previous schemes or awards unless they provide more favorable terms to the employees.

5. Determination of Continuous Service for Gratuity Eligibility:
The court examined the definition of continuous service under Section 2(c) of the Act, which includes uninterrupted service and service interrupted by sickness, accident, leave, lay-off, strike, or lock-out. The court referred to the Supreme Court's approval of the Bombay High Court's decision in B. U. D. & B. Mills v. N. T. More, which emphasized that continuous service means actual rendering of service. The court held that employees must have worked for the requisite number of days (240 days in most cases) in each year to be eligible for gratuity.

6. Delay in Filing Claims and Appeals Under the Act:
The court addressed several cases where claims or appeals were filed beyond the prescribed period. It upheld the discretionary power of the controlling authority to condone delays if sufficient cause is shown, as provided under Rule 10 of the Tamil Nadu Payment of Gratuity Rules. The court found that in cases where the employer failed to discharge their statutory obligation to determine and pay gratuity, the delay in filing claims by employees was justified.

Conclusion:
The court dismissed most of the writ petitions filed by the managements, upholding the orders of the controlling and appellate authorities under the Act. It allowed a few petitions where the appellate authority needed to determine the exact number of years of completed service for gratuity calculation. The court also rejected the applications for leave to appeal to the Supreme Court, as the judgment was based on established precedents.