# U.P. S.R.T.C. Kanpur v. State of U.P. & Ors

- **Citation:** (2019) 2 ILRA 1534
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-08-28
- **Case number:** Writ-C No. 6971 of 2017
- **Bench:** Dr. Yogendra Kumar Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/u-p-s-r-t-c-kanpur-v-state-of-u-p-ors-44604
- **Pages:** 13

## Headnote

A. Payment of Gratuity Act, 1972 -
Section 2(b), 2(c) and 2-A - An employee
on wages in establishment covered by
the Act, 1972 and in continuous service
of minimum five years, entitled for
gratuity.

Held:- In view of the foregoing discussions, it
follows that the entitlement to receive gratuity
flows from the provisions of the P.G. Act, 1972
and an "employee" having fulfilled
the
necessary
preconditions
for
claiming
entitlement in terms thereof would be liable to
be paid the gratuity amount due to him
2 All. U.P.S.R.T.C. Kanpur Vs State of U.P. & Ors.
1535
irrespective
of
the
fact
whether
his
employment was of a regular nature or
whether he was employed on a casual basis or
temporary basis or as a daily wager. (Para 26)

B. The Act accepts, as a principle,
compulsory payment of gratuity as a social
security measure to wage earners in
industries, factories and establishments.
The main purpose and concept of gratuity
is to provide for terminal benefits to a
workman upon his superannuation, or on
his retirement or resignation, or on his
death or disablement due to accident or
disease. (Para 28)

Writ Petition rejected (E-9)

List of Cases Cited: -

## Text

_Characters 0–39,948 of 41,590. This is a partial read: ask again with offset=39948 for what follows._

1534 INDIAN LAW REPORTS ALLAHABAD SERIES
neither raised nor considered and the decision
in the case of Shiv Ram Singh Vs. State of
U.P. and others (supra) had also recorded
that the possession in the said case was taken
over prior to 18.3.1999 consequent upon
which the petitioners would not be entitled to
the benefit of the Repeal Act, the Court was
impressed with the fact that the sewerage
treatment plant was being constructed and
substantial part of it had already been
constructed which itself dis entitled the
petitioners to claim relief as they were not
serious to approach the Court within the time.
The said judgement, we say respectfully
cannot be applied to the facts of the present
case for the reasons that the question of
manner of taking possession in the State of
U.P. and State of Assam are distinct and
separate
which
question
was
neither
adjudicated nor decided by the Court.

23. The question of delegatee not
empowered to further sub-delegate was
neither raised nor considered by the Court
as also in the present case there is no such
averment in the pleadings of the State
Government to demonstrate that some
project has come-up on the land in
question, which the petitioners were
aware and failed to agitate within a
reasonable time, these three factors being
different in the present case from that of
the case of Shiv Ram Singh Vs. State of
U.P. and others (supra), we respectfully
hold that the findings recorded in the said
case are clearly distinguishable. All these
aspects which were not considered in the
case of Shiv Ram Singh Vs. State of
U.P. and others (supra) were duly raised
and considered by this Court in the case
of Mohammad Suaif and another Vs.
State of U.P. (Supra).

24. Consequently, relying upon the
judgment in the case of Mohammad
Suaif and another Vs. State of U.P.
(Supra) and judgement in case of Nanku
Lal Yadav Vs. State of U.P. and 3
others (Supra) and considering the facts
of the case, the writ petition is allowed
declaring the petitioners to be owners
with
the
direction
to
the
State
Government to correct the revenue
records accordingly.
----------

(2019)10ILR A 1534

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 28.08.2019

BEFORE

THE HON'BLE DR. YOGENDRA KUMAR
SRIVASTAVA, J.

Writ-C No. 6971 of 2017

U.P. S.R.T.C. Kanpur ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Mritunjay Mohan Sahai

Counsel for the Respondents:
C.S.C., Sri Sachin Dubey, Sri Surendra
Nath Dubey

A. Payment of Gratuity Act, 1972 -
Section 2(b), 2(c) and 2-A - An employee
on wages in establishment covered by
the Act, 1972 and in continuous service
of minimum five years, entitled for
gratuity.

Held:- In view of the foregoing discussions, it
follows that the entitlement to receive gratuity
flows from the provisions of the P.G. Act, 1972
and an "employee" having fulfilled
the
necessary
preconditions
for
claiming
entitlement in terms thereof would be liable to
be paid the gratuity amount due to him
2 All. U.P.S.R.T.C. Kanpur Vs State of U.P. & Ors.
1535
irrespective
of
the
fact
whether
his
employment was of a regular nature or
whether he was employed on a casual basis or
temporary basis or as a daily wager. (Para 26)

B. The Act accepts, as a principle,
compulsory payment of gratuity as a social
security measure to wage earners in
industries, factories and establishments.
The main purpose and concept of gratuity
is to provide for terminal benefits to a
workman upon his superannuation, or on
his retirement or resignation, or on his
death or disablement due to accident or
disease. (Para 28)

Writ Petition rejected (E-9)

List of Cases Cited: -

1. U.P.S.R.T.C. & ors. Vs Ram Shankar Sharma
& ors., Writ C No.34125/1995

2. Baban Vs Estate Manager, M.H. St. Farming
Corp. Ltd. & ors, 2017 (152)FLR17

3. Netram Sahu Vs St. of Chhattisgarh &
anr.(2018) 5 SCC 430

4.Workmen of M/s Firestone Tyre & Rubber
Company of India Pvt. Ltd. Vs Management &
ors., (1973)1 SCC 813

5. B.D. Shetty & ors. Vs CEAT Ltd. & anr.,
(2002)1 SCC 193

6. Allahabad Bank & anr. Vs All India Allahabad
Bank Retired Employees Association, (2010) 2
SCC 44

7. Jeewanlal Ltd. & ors. Vs Appellate Authority
under the Payment of Gratuity Act & ors.,
(1984)4 SCC 356

8. Bharat Singh Vs Management Of New Delhi
Tuberculosis Centre, New Delhi & ors.,(1986) 2
SCC 614

(Delivered by Hon'ble Dr. Yogendra
Kumar Srivastava, J.)

1. Heard Sri Mritunjay Mohan
Sahai, learned counsel for the petitioner
and Sri Surendra Nath Dubey, learned
counsel appearing on behalf of respondent
no.4.

2. The present petition seeks to
challenge the order dated 16.07.2016
passed by the Controlling Authority under
the
Payment
of
Gratuity
Act,
1972/Assistant
Labour
Commissioner,
U.P., Kanpur in P.G. Case No.105 of
2014 and also the order dated 20.01.2017
passed by the Appellate Authority under
the
Payment
of
Gratuity
Act,
1972/Deputy Labour Commissioner, U.P.,
Kanpur whereby the appeal filed there
against has been rejected.

3. The factual background of the
case as reflected from the records
indicates that an industrial dispute was
raised
by
the
respondent-workman
whereupon a reference was made under
Section 4K of the U.P. Industrial Disputes
Act, 19471, registered as Adjudication
Case No.34 of 1993, before the Presiding
Officer, U.P., Kanpur. The question
referred for adjudication was as follows:-

"क्ा ेवायोिकोिं द्वारा श्रजमक श्री
आर०ए ०शमाच पुत्र श्री झब्बू लाल पररचालक
को जद० 2-6-92 को कायच े पृथक विंजचत जकया
िाना उजचत एविं वैधाजनक है? यजद नहीिं तो
 िंबिंजधत श्रजमक क्ा जहतलाभ/क्षजतपूजतच पाने का
अजधकारी है? जक जतजथ एविं अन्य जक जववरण
के ाथ?"

4. The aforementioned reference was
answered by the Labour Court vide its award
dated 27.05.1995 in the following terms:-

"इ जलए
मेरे
जवचार
 े
श्रजमक
आर०ए ०शमाच का नाम प्रतीक्षा ूची े
1536 INDIAN LAW REPORTS ALLAHABAD SERIES
काट कर हटाये िाने की कायचवाही में जनयम
का पूणचतः पालन नहीिं जकया गया है इ जलए
मेरा अजभमत है जक श्री आर०ए ०शमाच को
 ेवा माल्दप्त की जतजथ जदनािंक 2-6-92 े
पुनः ेवा में पररचालक के पद पर जलया
िाए और प्रतीक्षा ूची े पृथक जकये िाने
की जतजथ े अजभजनणचय की जतजथ तक की
अवजध के बीच का उ े आधा अन्य भत्ता
 जहत जदया िाये आधा वेतन इ जलए जक
उ ने इ बीच जक ी कायच को अिंिाम नहीिं
जदया है और आधा वेतन जदये िाने े कानून
का मिंशा भी पूरा हो िाता है। उक्त भुगतान
अजभजनणचय के प्रकाजशत होने के एक माह
के अन्दर जदया िाये।"

5. The award of the Labour Court
was put to challenge in the case of
U.P.S.R.T.C. & Ors. Vs. Ram Shankar
Sharma & Ors.2, which came to be
decided in terms of judgment and order
dated 07.02.2013, the relevant portion of
which reads as under:-

"...This writ petition has been filed
by the petitioner being aggrieved by an
award of the Labour Court dated
27.05.1995 passed in Adjudication Case
No.34 of 1993 by which the Labour Court
has reinstated the respondent workman
with 50% back wages. The Labour Court
has come to the conclusion that the
petitioner was working in the Corporation
as a 'Conductor' on a regular basis and,
therefore, has reinstated the workman
with 50% back wages. Under the interim
orders of this Court, the petitioner has
already reinstated the workman and
counsel for the workman states that he is
working since then without any hatch.

The back wages were stayed by this
Court. Insofar as the back wages are
concerned, the Labour Court has granted
50% back wages to the workman for the
period when he was not working up to the
date of passing of the award.

In view of the fact that the Labour
Court has not recorded any finding with
regard to the fact as to whether the
workman was gainfully employed or not
during the period the back wages have
been awarded, which could only be
justified to reduce the back wages to 50%
what has been granted by the Labour
Court.

Thus, in the interest of justice, the
award of the Labour Court is confirmed
subject to the modification that the back
wages are reduced to half of what has
been granted in view of the decision of
Hon'ble Apex Court in the case of U.P.
State Brossware Corporation Ltd. Vs.
U.N. Pandey reported in 2006 (1) SCC
479. The amount, which is due to the
workman shall be paid to him within the
next two months upon his making an
application.

The Writ Petition stands disposed of
as above. No costs."

6. Upon his superannuation, the
respondent-workman filed an application
before the Controlling Authority under
Section 7 of the Payment of Gratuity Act,
19723 for a direction, which was
registered as P.G. Case No.105 of 2014.
The claim application was allowed and a
direction was issued for payment of
gratuity
totalling
to
Rs.4,45,022/-
alongwith 10% interest from the date of
filing of the claim application upto the
date
of
payment.
Against
the
aforementioned
order
the
petitioner
preferred an appeal under Section 7(7) of
the P.G. Act, 1972, registered as P.G.
Appeal No.09 of 2016, which has been
rejected vide order dated 20.01.2017 and
the earlier order passed by the Controlling
2 All. U.P.S.R.T.C. Kanpur Vs State of U.P. & Ors.
1537
Authority
directing
payment
of
Rs.4,45,022/- has been affirmed.

7. Challenging the aforementioned
orders
passed
by
the
Controlling
Authority and the Appellate Authority,
the present writ petition has been filed.

8. Contention of the learned counsel
for the petitioner is that the Controlling
Authority as well as the Appellate
Auhority have erred in failing to consider
that the respondent no.4 was never treated
to be a regular employee and no
documentary evidence was placed on
record by the workman showing that he
was granted regularisation and as such the
computation of the amount of gratuity
payable to the workman is based on
conjectures.

9. Per contra, Sri Surendra Nath Dubey,
learned counsel for the respondents has
submitted that the respondent-workman was
selected in a regular selection held by the
Corporation in the year 1980 and was placed
in the wait list of conductors, and as such the
Corporation could not take a stand that he was
appointed on a daily-wage basis. Placing
reliance upon the award passed by the Labour
Court and the judgment of this Court in WritC No.34125 of 1995 it is contended that the
respondent-workman superannuated from
service working as a conductor and as such
the claim made by him for gratuity had rightly
been allowed. It is further submitted that the
P.G. Act, 1972 applies to all employees
whether they are regular or not, the only
condition being that the employee must have
worked for five years and that gratuity is to be
computed on the basis of the last drawn
wages.

10. Heard the counsel for the parties
and perused the records.

11. The records of the case indicate
that the reference made with regard to the
legality/validity of the termination of the
respondent-workman w.e.f. 02.06.1992
was answered by the Labour Court by
recording a conclusion that the removal of
the name of the respondent-workman
from the wait list was not as per the rules.
It was directed that the workman be
reinstated on the post of conductor from
the date of his termination i.e. 02.06.1992
and further that he may be granted 50%
back wages from the date of removal of
his name from the wait list till the date of
the award. The award of the Labour Court
was confirmed by this Court in its
judgment dated 07.02.2013 in Writ-C
No.34125
of
1995
subject
to
the
modification that the back wages were
reduced to half of what had been granted.

12. It is an admitted position
between the parties that the judgment of
this Court dated 07.02.2013 passed in
Writ-C No.34125 of 1995, confirming the
award subject to the only modification
that the back wages were reduced to half
of what had been granted, was not
subjected to any further challenge by
either of the parties, and was allowed to
attain finality.

13.

The
respondent-workman
continued to work as a conductor with the
petitioner-Corporation and attained his
superannuation working in the said
capacity.

14. The stand taken by the
petitioner-Corporation that the respondent
continued to work as a daily wager as on
the date of his superannuation is not
consistent with the material evidence
available on record. The inconsistency in
the stand of the petitioner-Corporation
1538 INDIAN LAW REPORTS ALLAHABAD SERIES
with regard to gratuity payable to the
respondent-workman is also reflected from
the ambivalent position taken by the
petitioner-Corporation
before
the
Controlling Authority. On one hand, a stand
was taken that the last drawn wages of the
workman together with the dearness
allowance was Rs.16,403/- and on the basis
of the same the total amount of gratuity due
to
the
workman
was
said
to
be
Rs.2,93,361/- as on 31.07.2011. On the
other hand the witness appearing on behalf
of the Corporation before the Controlling
Authority stated that the calculation of
gratuity was made treating the workman to
be a daily wager, and on the basis of the last
drawn wages at the rate of Rs.71.34/- per
day an amount of Rs.49,928/- was
computed towards gratuity. In his crossexamination the witness stated that the
workman concerned was appointed as a
daily wager in the year 1980 and since his
year of birth was 1953 he would have
superannuated upon attaining the age of 58
years in the year 2011.

15. The Controlling Authority upon
considering the documentary and oral
evidence and the arguments advanced by
the parties held that for the purposes of
computation
of
gratuity
under
the
provisions of the P.G. Act, 1972 what was
relevant was the length of service and the
last drawn wages, and the question as to
whether the workman had worked as a
daily wager or as a regular employee was
of no consequence. Taking notice of the
fact that there was no dispute between the
parties with regard to the length of service
which was admitted to be 31 years and in
the absence of any clear stand by the
employer-Corporation with regard to the
last drawn wages the claim made by the
workman
was
accepted
and
the
computation of gratuity was made.

16. The Appellate Authority upon
taking
notice
of
the
award
dated
27.05.1995 passed by the Labour Court in
Adjudication Case No.34 of 1993 and the
judgment of this Court dated 07.02.2013
passed in Writ-C No.34125 of 1995 in
terms of which the award had been
confirmed subject to the modification that
the back wages were reduced from 50%
to 25%, has drawn an inference that the
workman superannuated as a regular
employee of the Corporation and the
computation
of
gratuity
by
the
Controlling Authority on the basis of a
last drawn wages had rightly been made.
The Appellate Authority also took note of
the fact that the recovery certificate dated
09.08.2007 pursuant to the award passed
by the Labour Court had been issued
wherein the amount under recovery was
computed treating the workman to be a
regular employee. The finding of the
Controlling
Authority
that
for
the
purposes of gratuity the status of the
workman as a daily wager or as a regular
employee was inconsequential and what
was to be seen was the length of service
and the last drawn wages, was reiterated
by the Appellate Authority. In view of the
admitted position between the parties with
regard to the length of service being 31
years the computation of gratuity made by
the Controlling Authority on the basis of
the last drawn wages as claimed by the
workman was affirmed.

17. The sheet anchor of the
argument of the petitioner-Corporation is
that the respondent was never appointed
in a regular capacity nor was he granted
regularisation against any post and as
such the authorities under the Payment of
Gratuity Act, 19724 have erred in
allowing his claim for payment of
gratuity. On the other hand it has been
2 All. U.P.S.R.T.C. Kanpur Vs State of U.P. & Ors.
1539
argued on behalf of the respondentworkman that on the basis of a regular
selection held by the Corporation in the
year 1980 he was placed in the wait list of
conductors and that the stand of the
Corporation that he had been engaged as a
daily wager was incorrect. It was further
submitted that the award of the Labour
Court had directed his reinstatement on
the post of conductor w.e.f. 02.06.1992
and in terms of the judgment of this Court
passed in Writ-C No.34125 of 1995 the
award of the Labour Court was confirmed
subject to the only modification that the
back wages were reduced to half of what
had been granted.

18. In order to appreciate the rival
contentions of the parties the relevant
statutory provisions of the P.G. Act, 1972
may be adverted to:-

"2. Definitions.--In this Act, unless
the context otherwise requires,--

x x x x x

(b) "completed year of service"
means continuous service for one year;

(c)
"continuous
service"
means
continuous service as defined in Section
2-A;

x x x x x

(e) "employee" means any person
(other than an apprentice) who is
employed for wages, whether the terms of
such employment are express or implied,
in any kind of work, manual or otherwise,
in or in connection with the work of a
factory, mine, oilfield, plantation, port,
railway
company,
shop
or
other
establishment to which this Act applies,
but does not include any such person who
holds
a
post
under
the
Central
Government or a State Government and is
governed by any other Act or by any rules
providing for payment of gratuity;

x x x x x

(s) "wages" means all emoluments
which are earned by an employee while
on duty or on leave in accordance with the
terms and conditions of his employment
and which are paid or are payable to him
in cash and includes dearness allowance
but
does
not
include
any
bonus,
commission,
house
rent
allowance,
overtime wages and any other allowance.

2-A. Continuous service.--For the
purpose of this Act,--

(1) An employee shall be said to be
in continuous service for a period if he
has, for that period, been in uninterrupted
service, including service which may be
interrupted on account of sickness,
accident,
leave,
absence
from
duty
without leave (not being absence in
respect of which an order treating the
absence as break in service has been
passed in accordance with the standing
orders, rules or regulations governing the
employees of the establishment), lay-off,
strike or a lock-out or cessation of work
out due to any fault of the employee,
whether such uninterrupted or interrupted
service was rendered before or after the
commencement of this Act;

(2) where an employee (not being an
employee
employed
in
a
seasonal
establishment) is not in continuous
service within the meaning of clause (1),
for any period of one year or six months,
he shall be deemed to be in continuous
service under the employer--

(a) for the said period of one year, if
the employee during the period of twelve
calendar months preceding the date with
reference to which calculation is to be
made, has actually worked under the
employer for not less than--

(i) one hundred and ninety days, in
the case of an employee employed below
the ground in a mine or in an
1540 INDIAN LAW REPORTS ALLAHABAD SERIES
establishment which works for less than
six days in a week; and (ii) two hundred
and forty days, in any other case;

(b) for the said period of six months
if the employee during the period of six
calendar months preceding the date with
reference to which the calculation is to be
made, has actually worked under the
employer for not less than--

(i) ninety-five days, in the case of an
employee employed below the ground in
a mine or in an establishment which
works for less than six days in a week;
and

(ii) one hundred and twenty days, in
any other case;

Explanation.--For the purpose of
clause (2), the number of days on which
an employee has actually worked under
an employer shall include the days on
which--

(i) he has been laid-off under an
agreement or as permitted by standing
orders
made
under
the
Industrial
Employment (Standing Orders) Act, 1946
(20 of 1946), or under the Industrial
Disputes Act, 1947 (14 of 1947), or under
any
other
law
applicable
to
the
establishment;

(ii) he has been on leave with full
wages, earned in the previous year;

(iii) he has been absent due to
temporary disablement caused by accident
arising out of and in the course of his
employment; and

(iv) in the case of a female, she has
been on maternity leave; so, however, that
the total period of such maternity leave
does not exceed twelve weeks.

(3) where an employee, employed in
a seasonal establishment, is not in
continuous service within the meaning of
clause (1), for any period of one year or
six months, he shall be deemed to be in
continuous service under the employer for
such period if he has actually worked for
not less than seventy-five per cent of the
number
of
days
on
which
the
establishment was in operation during
such period.

x x x x x

4.
Payment
of
Gratuity.--(1)
Gratuity shall be payable to an employee
on the termination of his employment
after he has rendered continuous service
for not less than five years,--

(a) on his superannuation, or

(b) on his retirement or resignation,
or

(c) on his death or disablement due
to accident or disease:

Provided that the completion of
continuous service of five years shall not
be necessary where the termination of the
employment of any employee is due to
death or disablement :

Provided further that in case of death
of the employee, gratuity payable to him
shall be paid to his nominee or, if no
nomination has been made, to his heirs,
and where any such nominees or heirs is
minor, the share of such minor, shall be
deposited with the Controlling Authority
who shall invest the same for the benefit
of such minor in such bank or other
financial institution, as may be prescribed,
until such minor attains majority.

Explanation.--For the purposes of
this section, disablement means such
disablement as incapacitates an employee
for the work which he was capable of
performing before the accident or disease
resulting in such disablement.

(2) For every completed year of
service or part thereof in excess of six
months, the employer shall pay gratuity to
an employee at the rate of fifteen days'
wages based on the rate of wages last
drawn by the employee concerned:
2 All. U.P.S.R.T.C. Kanpur Vs State of U.P. & Ors.
1541

Provided that in the case of a piecerated employee, daily wages shall be
computed on the average of the total
wages received by him for a period of
three months immediately preceding the
termination of his employment, and, for
this purpose, the wages paid for any
overtime work shall not be taken into
account :

Provided further that in the case of
an employee who is employed in a
seasonal establishment, and who is not so
employed
throughout
the
year,
the
employer shall pay the gratuity at the rate
of seven days' wages for each season.

Explanation.--In
the
case
of
a
monthly rated employee, the fifteen days'
wages shall be calculated by dividing the
monthly rate of wages last drawn by him
by
twenty-six
and
multiplying
the
quotient by fifteen.

(3) The amount of gratuity payable to
an employee shall not exceed ten lakh
rupees.

(4) For the purpose of computing the
gratuity payable to an employee who is
employed, after his disablement, on
reduced wages, his wages for the period
preceding his disablement shall be taken
to be the wages received by him during
that period, and his wages for the period
subsequent to his disablement shall be
taken to be the wages as so reduced.

(5) Nothing in this section shall
affect the right of an employee to receive
better terms of gratuity under any award
or agreement or contract with the
employer.

(6)
Notwithstanding
anything
contained in sub-section (1),--

(a) the gratuity of an employee,
whose services have been terminated for
any act, wilful omission or negligence
causing any damage or loss to, or
destruction of, property belonging to the
employer shall be forfeited to the extent
of the damage or loss so causes;

(b) the gratuity payable to an
employee may be wholly or partially
forfeited.

(i) if the services of such employee
have been terminated for his riotous or
disorderly conduct or any other act of
violence on his part, or

(ii) if the services of such employee
have been terminated for any act which
constitutes an offence involving moral
turpitude, provided that such offence is
committed by him in the course of his
employment."

19. In terms of Section 2(e) of the
P.G. Act, 1972, an "employee" has been
defined as meaning any person (other than
an apprentice) who is employed for
wages, whether the terms of such
employment are express or implied, in
any kind of work, manual or otherwise, in
or in connection with the work of a
factory, mine, oilfield, plantation, port,
railway
company,
shop
or
other
establishment to which this Act applies.
The only exclusion is in respect of
persons holding a post under the Central
Government or a State Government who
are governed by any other Act or any
Rules providing for payment of gratuity.

20. Section 4 of the P.G. Act, 1972
provides for payment of gratuity to an
employee on the termination of his
employment
after
he
has
rendered
continuous service for not less than five
years, upon the occurrence of either the
following
contingencies:
(i)
on
his
superannuation, (ii) on his retirement, (iii)
on his death or disablement due to
accident or disease. Sub-section (2) of
Section 4 mandates that for every
completed year of service or part thereof
1542 INDIAN LAW REPORTS ALLAHABAD SERIES
in excess of six months, the employer
shall pay gratuity to an employee at the
rate of fifteen days' wages based on the
rate of wages last drawn by the employee
concerned. The expression "completed
year of service" has been defined under
Section 2(b) to mean continuous service
for one year. As per Section 2(c),
"continuous service" means continuous
service as defined in Section 2-A. Further,
in terms of Section 2-A an employee shall
be said to be in continuous service for a
period if he has, for that period, been in
uninterrupted service, including service
which may be interrupted on account of
sickness, accident, leave, absence from
duty without leave (not being absence in
respect of which an order treating the
absence as break in service has been
passed in accordance with the standing
orders, rules or regulations governing the
employees of the establishment), lay-off,
strike or a lock-out or cessation of work
out due to any fault of the employee,
whether such uninterrupted or interrupted
service was rendered before or after the
commencement of this Act.

21. A conjoint reading of the
aforementioned provisions leads to the
inference that gratuity becomes payable to
an "employee" on his superannuation after
he has rendered "continuous service", for
not less than five years. The computation
of the amount payable as gratuity is to be
made at the rate of fifteen days' wages, for
every completed year of service or part
thereof in excess of six months, based on
the rate of wages last drawn by the
employee concerned. The expression
"completed year of service" has been
defined under Section 2(b) as continuous
service for one year and the term
"continuous service" is defined under
Section 2(c) as per the terms of Section 2A of the P.G. Act, 1972 which is to mean
uninterrupted service including service
which may be interrupted on account of
certain exigencies specified therein.

22. It, therefore, follows that the
P.G. Act, 1972 does not make any
distinction between an employee on the
basis of the fact that the employee is paid
daily wages or weekly wages or monthly
wages. The only condition is that he
should be employed by the employer on
wages in an establishment covered by the
P.G. Act, 1972 and that he should be in
continuous service as required under
Section 2-A and that he should have
completed a minimum of five years of
service
in
the
said
capacity.
The
computation of gratuity as per terms of
Section 4 is to be made at the rate of
fifteen days' wages for every completed
year of service or part thereof in excess of
six months based on the rate of wages last
drawn.

23. It is thus clear that an employee,
subject to fulfillment of the other
conditions, is entitled to gratuity for the
period he was in employment of the
employer irrespective of the fact whether
his employment was of a regular nature or
whether he was employed on a casual
basis or temporary basis or as a daily
wager.

24. In this regard reference may be
had to the judgment in the case of Baban
Vs. Estate Manager, Maharashtra State
Farming Corporation Ltd. & Ors.
wherein it was held as follows:-

"15. This brings me to the first
contentious issue raised as regards the
manner of calculating the number of days
worked so as to be entitled for gratuity.
2 All. U.P.S.R.T.C. Kanpur Vs State of U.P. & Ors.
1543
The primary requirement is that an
employee must work continuously with
an employer at least for 5 years so as to be
eligible for gratuity, notwithstanding
whether he has put in temporary service
or as a daily wager or in any other
manner."

25. The question as to whether
benefit of gratuity could be denied to an
employee who had been in more than 25
years of continuous service out of which
22 years were as a daily wager, fell for
consideration in the case of Netram Sahu
Vs. State of Chhattisgarh & Anr.6; and
upon considering the provisions contained
under Section 2(e) read with Section 2-A
of the P.G. Act, 1972, it was held that
there was no justifiable reason to deny
benefit of gratuity to the employee which
was his statutory right, and the question as
to from which date his services were
regularised was of no consequence for the
purposes of calculating the total length of
service
for
computing
the
gratuity
payable.

26. In view of the foregoing
discussions, it follows that the entitlement
to receive gratuity flows from the
provisions of the P.G. Act, 1972 and an
"employee" having fulfilled the necessary
preconditions for claiming entitlement in
terms thereof would be liable to be paid
the
gratuity
amount
due
to
him
irrespective of the fact whether his
employment was of a regular nature or
whether he was employed on a casual
basis or temporary basis or as a daily
wager.

27. In a case where the engagement
was initially as a daily wager and
subsequently
the
services
were
regularised the question as to from which
date the services were regularised would
be of no consequence for calculating the
total length of service for claiming
gratuity.

28. It may be noticed that the P.G.
Act, 1972 was enacted to introduce a
scheme for payment of gratuity for certain
industrial and commercial establishments
as a measure social security. The
significance of the legislation lies in the
acceptance of the principle of payment of
gratuity as a compulsory statutory retiral
benefit. The Act accepts, as a principle,
compulsory payment of gratuity as a
social security measure to wage earning
population in industries, factories and
establishments. The main purpose and
concept of gratuity is to provide for
terminal benefits to a workman upon his
superannuation, or on his retirement or
resignation,
or
on
his
death
or
disablement due to accident or disease.

29. The P.G. Act, 1972 being thus a
welfare legislation meant for the benefit
of the employees who serve their
employer for a long time, it would be the
duty of the employer to pay gratuity
amount to the employees rather than
denying the benefit on some technical
ground.

30. Applying the rule of beneficent
construction, the provisions of the P.G. Act,
1972 are to be interpreted liberally so as to
give it a wide meaning rather a restrictive
meaning which may negate the very object
of the enactment. A beneficial legislation, it
is well settled, as to be construed in its
correct perspective so as to fructify the
legislative intent underlying its enactment.

31. In construing a remedial statute
courts are to give it the widest amplitude
1544 INDIAN LAW REPORTS ALLAHABAD SERIES
which its language would permit. The
principle
of
applying
a
liberal
construction to a remedial legislation has
been emphasised in the Construction of
Statues by Crawford7 pp. 492-493 in the
following terms:-

"...Remedial statutes, that is, those
which
supply
defects,
and
abridge
superfluities, in the former law, should be
given a liberal construction, in order to
effectuate the purposes of the legislature,
or to advance the remedy intended, or to
accomplish the object sought, and all
matters fairly within the scope of such a
statute be included, even though outside
the letter, if within its spirit or reason."

32. To a similar effect is the
observation made by Blackstone in
Construction and Interpretation of
Laws8, by stating as under:-

"It may also be stated generally that
the courts are more disposed to relax the
severity of this rule (which is really a rule
of strict construction) in the case of
statutes obviously remedial in their nature
or designed to effect a beneficent
purpose."

33. In the context of beneficial
construction
as
a
principle
of
interpretation, it has been observed in
Maxwell on The Interpretation of
Statutes9 as follows:-

"...where they are faced with a choice
between a wide meaning which caries out
what appears to have been the object of
the legislature more fully, and a narrow
meaning which carries it out less fully or
not at all, they will often choose the
former. Beneficial construction is a
tendency, rather than a rule."

34. Further, in the same treatise, in
the context of industrial legislation, it has
been stated as follows:-

"Industrial legislation provides a
fruitful field for the application of the
tendency
towards
beneficial
construction..."

35. The principle of applying a
liberal construction to a labour welfare
legislation was emphasised in the case of
Workmen of M/s Firestone Tyre &
Rubber Company of India Pvt. Ltd. Vs.
Management & Ors.10 where in the
context of the provisions of the Industrial
Disputes Act, 1947, it was observed as
follows:-

"35. ...We are aware that the Act is a
beneficial piece of legislation enacted in
the interest of employees. It is well settled
that in construing the provisions of a
welfare legislation, courts should adopt,
what is described as a beneficent rule of
construction. If two constructions are
reasonably possible to be placed on the
section, it follows that the construction
which furthers the policy and object of the
Act and is more beneficial to the
employees, has to be preferred..."

36. The mode of interpretation of a
social welfare legislation, in the context
of the provisions of the Industrial
Employment
(Standing
Orders)
Act,
1946, came up for consideration in the
case of B.D. Shetty & Ors. Vs. CEAT
Ltd. & Anr.11, and it was held as
follows:-

"12.
...a
beneficial
piece
of
legislation has to be understood and
construed in its proper and correct
perspective
so
as
to
advance
the
2 All. U.P.S.R.T.C. Kanpur Vs State of U.P. & Ors.
1545
legislative
intention
underlying
its
enactment
rather
than
abolish
it.
Assuming two views are possible, the
one, which is in tune with the legislative
intention and furthers the same, should be
preferred to the one which would frustrate
it."

37. The principle of applying a liberal
construction to a beneficial legislation having
a social welfare purpose was reiterated in the
context of the P.G. Act, 1972 in the case of
Allahabad Bank & Anr. Vs. All India
Allahabad
Bank
Retired
Employees
Association12, and it was observed as
follows:-

"16.
...Remedial
statutes,
in
contradistinction to penal statutes, are known
as welfare, beneficent or social justice oriented
legislations. Such welfare statutes always
receive a liberal construction. They are
required to be so construed so as to secure the
relief contemplated by the statute. It is well
settled and needs no restatement at our hands
that labour and welfare legislation have to be
broadly and liberally construed having due
regard to the Directive Principles of State
Policy. The Act with which we are concerned
for the present is undoubtedly one such
welfare oriented legislation meant to confer
certain benefits upon the employees working
in various establishments in the country."

38. A similar view was taken with
regard to adopting the beneficial rule of
construction in respect of social welfare
legislation, particularly in the context of the
P.G. Act, 1972 in the case of Jeewanlal Ltd.
& Ors. Vs. Appellate Authority under the
Payment of Gratuity Act & Ors.13, wherein
it was stated as follows:-

"11. In construing a social welfare
legislation, the court should adopt a
beneficent rule of construction ; and if a
section is capable of two constructions,
that construction should be preferred
which fulfils the policy of the Act, and is
more beneficial to the persons in whose
interest the Act has been passed..."

39. Reference may also be had to the
case of Bharat Singh Vs. Management
Of New Delhi Tuberculosis Centre,
New Delhi & Ors.14, where purposive
interpretation safeguarding the rights of
have-nots was preferred to a literal
construction in interpreting a welfare
legislation, and it was held as follows:-

"11. ...the court has to evolve the
concept of purposive interpretation which
has
found
acceptance
whenever
a
progressive social beneficial legislation is
under review. We share the view that
where the words of a statute are plain and
unambiguous effect must be given to
them. Plain words have to be accepted as
such but where the intention of the
legislature is not clear from the words or
where two constructions are possible, it is
the court's duty to discern the intention in
the context of the background in which a
particular Section is enacted. Once such
an intention is ascertained the courts have
necessarily to give the statute a purposeful
or a functional interpretation. Now, it is
trite to say that acts aimed at social
amelioration giving benefits for the havenots should receive liberal construction. It
is always the duty of the court to give
such a construction to a statute as would
promote the purpose or object of the Act.
A construction that promotes the purpose
of the legislation should be preferred to a
literal construction. A construction which
would defeat the rights of the have-nots
and the underdog and which would lead
to injustice should always be avoided..."
1546 INDIAN LAW REPORTS ALLAHABAD SERIES

40. In the case at hand, the
respondent-workman
having
been
directed to be reinstated on the post of
conductor with the petitioner-Corporation
w.e.f. 02.06.1992 in terms of the award
dated 27.05.1995 passed by the Labour
Court in Adjudication Case No.34 of
1993 and the said award having been
confirmed
vide
judgment
dated
07.02.2013 passed by this Court in Writ-C
No.34125
of
1995
with
the
only
modification that back wages were
reduced to half of what had been granted,
and the workman subsequently having
attained the age of superannuation, the
order passed by the Controlling Authority
allowing the claim for payment of gratuity
after recording a finding that for the
purposes of payment of gratuity under the
provisions of the P.G. Act, 1972 what was
mainly required to be seen was the
existence
of
the
employer-employee
relationship, the total length of service
and the last drawn wages, and the issue as
to whether the employee had worked on
daily wages or as a regular employee was
of no consequence, cannot be faulted
with. The length of service having been
held to be admitted between the parties
the computation of gratuity was made by
the Controlling Authority on the basis of
the claim made by the employee with
regard to the last drawn wages.