Telangana High Court
M/S Virtusa Consulting Services Pvt Ltd vs Sri Swarna Sarath Babu on 16 July, 2024
THE HON'BLE SRI JUSTICE PULLA KARTHIK
WRIT PETITION No.20720 of 2023
ORDER:
This Writ Petition, under Article 226 of the Constitution of India, is filed seeking the following relief:
"... declaring the order passed by the 3rd respondent Appellate Authority under Payment of gratuity Act dated 15/06/2023 in Gratuity Appeal No. 1/2023 is against to the provisions of Payment of Gratuity Act, and is in violation of the settled legal principles and consequently quash the same and to allow this writ Petition with costs in the interest of Justice and equity and pass ..."
2) Heard Sri C. Niranjan Rao, learned counsel for the petitioner, Sri S.S.R. Murthy, learned counsel for respondent No.1 and Sri K. V. Rama Rao, learned Standing Counsel for Central Government, appearing for respondents 2 and 3.
3) Learned counsel for the petitioner submits that the first respondent-employee was appointed in the petitioner's Company on 29.10.2003 as System Analyst and his last drawn salary was Rs.28,236/-. Later, he resigned to the services of the petitioner Company on 16.08.2021 and accordingly relieved on 17.09.2021. Thereafter, he was paid gratuity amount of Rs.2,28,060/- on 09.12.2021 and the same was received by the employee without any protest. Thus, there is compliance of provisions of Payment of Gratuity Act on the part of the petitioner. Despite the same, respondent No.1 filed an application before respondent No.2 i.e. the Controlling Authority and the Assistant Labour Commissioner (Central) Hyderabad, vide P.G.Application No.48/48/2022-E3, claiming further gratuity amount -2- PK, J W.P.No.20720 of 2023 of Rs.17,71,940/- with interest @ 10% per annum. Without considering the material on record and the judgments produced by the petitioner, respondent No.2 passed the order dated 17.11.2022 directing the petitioner Company to pay Rs.17,71,940/- together with interest amount of Rs.2,06,726/- total amount of Rs.19,78,666/-. Even the statutory appeal filed by the petitioner vide Gratuity Appeal No.1/2023 was dismissed by respondent No.3 without properly considering the grounds urged by the petitioner. Learned counsel has contended that the second and third respondents have failed to take into consideration that the services rendered and the salary lastly drawn by the employee in a different Company cannot be made the basis to determine the gratuity. Learned counsel has further contended that after his resignation in the petitioner Company, the employee has never worked in the premises of the petitioner during the period from 31.07.2017 to 03.09.2021 i.e. 4 years 8 months and 2 days) but worked at UK Company in PCS-LON on a secondment where he received salaries and other benefits from the said Company at London. Therefore, the Controlling Authority erred in treating the said period of 4 years 8 months and 2 days as continuous service and thereby erred in ordering gratuity on the last drawn salary of the employee which he earned at London in a different Company through UK Payroll in UK Sterling Pounds. The said anomaly was not considered by respondents 2 and 3. Learned counsel has further contended that respondent No.1 took up the job at another Company at London during the period from -3- PK, J W.P.No.20720 of 2023 31.07.2017 to 03.09.2021 where he has received a salary of Rs.5,67,545/- per month, for which, he paid several taxes only at London. Therefore, the said amount cannot be taken as last drawn salary of the petitioner by converting the UK Sterling Pound to Indian Rupee, which the respondents 2 and 3 have failed to appreciate. Learned counsel has strenuously contended that respondent No.2 being the quasi judicial authority has failed to record any evidence on behalf of the parties before passing the order and the same is in violation of mandatory provisions of Rules 11 and 13 of Payment of Gratuity Act and without considering the said material irregularities, respondent No.3, in a mechanical manner, has confirmed the orders of respondent No.2, which is totally perverse and therefore liable to be set aside. Learned counsel has further contended that the Controlling Authority has ordered interest @ 10% per annum on gratuity amount w.e.f.17.09.2021, which worked out to Rs.2,06,726/-, but, Section 3(A) of Payment of Gratuity Act, 1972, is operative only in case where the employer intentionally or deliberately delays the payment, which is not attracted in the case on hand. Hence, granting interest is beyond the scope and power of respondent Nos.2 and 3. Therefore, it is prayed to set aside the orders passed by respondents 2 and 3 respectively. In support of his contentions, learned counsel has placed reliance on the decision of the Hon'ble Apex Court in Lalappa Lingappa v. Laxmi Vishnu Textile Mills Ltd., Sholapur 1.
1 1981 AIR 852 -4- PK, J W.P.No.20720 of 2023
4) Per contra, the learned counsel for respondent No.1-employee has contended that during the pendency of the case vide P.G.Application No.48/48/2022-E3 before respondent No.2, the petitioner Company has filed a Memo dated 18.10.2022 before the said authority stating that since the two issues viz., (1) total service rendered by the employee and (2) last salary drawn by the employee, alone are to be considered in the matter, the recording of oral evidences may be dispensed with as the parties have already filed their written statements along with documentary evidences. Therefore, the petitioner now cannot urge before this Court that the Controlling Authority has failed to follow Rules 11 and 13 of Payment of Gratuity Act. It is further contended that respondent No.1 was appointed as a System Analyst on 29.10.2003 in the petitioner company and was in continuous service of the petitioner Company for almost (18) years, and has attained an unequivocal right for gratuity. Considering the same, the controlling authority has rightly ordered to pay the balance amount of gratuity with simple interest at 10% for the delayed period from 17.09.2021 till the date of actual payment of gratuity. Thereafter, on consideration of the said aspects, the same was also rightly confirmed by the appellate authority vide order dated 15.06.2023. Therefore, there are no merits in the present writ petition and prays this Court to dismiss the present writ petition.
-5-
PK, J W.P.No.20720 of 2023
5) This Court has taken note of the rival submissions made by the learned counsel for the respective parties.
6) A perusal of the record discloses that the petitioner Company itself has filed a Memo on 18.10.2022 before the controlling authority, wherein, it is stated as follows:
"It is submitted that there are only two issues to be considered by the Controlling Authority under Payment of Gratuity Act 1972 ie., (1) Total services rendered by the Applicant and (2) Last salary drawn by the Applicant in this case to arrive at the correct gratuity payable by the Respondent to the Applicant and that both the parties to the dispute have already filed their written statements alongwith documentary evidences which is sufficient to conclude the issues and hence recording of oral evidences may kindly be dispensed with in the interest of equity and justice."
7) Having filed the said memo before the Controlling Authority requesting to dispense with the recording of oral evidence, now, the petitioner cannot contend that the orders of the Controlling and Appellate Authorities violate the mandatory provisions or the Payment of Gratuity Act, 1972. It is specifically stated therein that there are only two issues for consideration before the Controlling Authority i.e., (1) Total service rendered by respondent No.1.
(2) Last salary drawn by respondent No.1 to arrive at the correct gratuity payable to respondent No.1 by the petitioner.
8) The record further discloses that respondent No.1 was initially appointed as a System Analyst in the petitioner Company on 29.10.2003, and later seconded to the United Kingdom from 31.07.2017 -6- PK, J W.P.No.20720 of 2023 to 03.09.2021. It is pertinent to refer to clause 7 of the initial appointment letter of respondent No.1 dated 29.10.2003, which is extracted hereunder:
"7. PLACE OF POSTING AND TRANSFER: Your posting at present is at Hyderabad. During your employment with this company, you may be posted or transferred/attached to any other company of POLARIS or to any of the offices/subsidiaries/ units/associate offices of the company, to any town or city in India or abroad, at the sole discretion of the Management. While working in another company on transferred/attached, you shall be entitled to emoluments and perks as applicable in transferred/attached company and for all purposes you shall be deemed to be employed in the company transferred/attached."
9) It is clear from the above that the management has the authority to transfer an employee to any location within or outside of the nation. However, the question of whether such a transfer or deputation would be treated as a break in service is left out in detail.
10) The record further discloses that respondent No.1 was relieved of his duties at the petitioner Company on 28.07.2017, after being seconded to Polaris Consulting and Services Limited UK, which is an affiliated entity of the petitioner Company. The Letter Agreement for Polaris Consulting and Services Limited (India) Employees on Long Term International Secondment Agreement to the UK dated 28.07.2017 outlines the terms and conditions of the Secondment. It is relevant to refer to paragraphs 3 and 4 of the Secondment Agreement, which are extracted hereunder:
-7-
PK, J W.P.No.20720 of 2023 "During the Secondment, you shall remain employed by your Home Employer and your current terms and conditions of employment shall remain unchanged, save as set out in this Agreement. Where there is any conflict between the terms and conditions of your employment and the terms of this Agreement, the terms of this Agreement shall prevail.
Your period of continuous employment will remain unbroken. At the end of the Secondment, your Home Employer currently intends that you will return to your current position on the terms applying prior to the Secondment, or to a suitable alternative if that role no longer exists. However, this may change according to the needs of your Home Employer's business at that time."
A reading of the above would reveal that during the Secondment, respondent No.1 was employed by his Home Employer (petitioner herein) under the current terms and conditions of employment.
Furthermore, it was decided that there would be no breaks in the period of continuous employment during the Secondment.
11) Clause 13 of the Secondment Agreement deals with termination, which is extracted hereunder:
"13. Termination You may terminate your Secondment providing Polaris UK and your Home Employer with not less than 1 month notice in writing.
You may terminate your employment with your Home Employer by providing your Home Employer with not less than 3 months' notice in writing or such longer period as may be required by the terms and conditions of your employment with your Home Employer.
Upon the termination of your Secondment you shall return to your Home Country to complete the termination process and related to Human Resource exit processes.
If, upon termination of your Secondment, you fail to return promptly to your Home Country then in addition to any other rights available under law or this Agreement, Polaris UK and your Home Employer shall, contact either the local -8- PK, J W.P.No.20720 of 2023 British High Commission in the counter in which your Home Employer is situated or the UK Border Agency. This may jeopardise your ability to secure future visas."
12) It is abundantly clear from the above that the employee is required to provide a written notice of one month to terminate the Secondment and a notice of not less than three months to terminate their employment with the Home Employer. Considering these aspects, this Court is of the opinion that the employment of respondent No.1 with the petitioner Company did not cease on 28.07.2017, as claimed by the petitioner. Furthermore, the conditions outlined in the Secondment Agreement clearly indicate that respondent No.1 continues to be an employee of the petitioner Company even after the Secondment. The same is supported by the fact that a notice must be served to the Home Employer in the event of termination of Secondment and that the employee is obligated to give a notice of not less than three months in order to terminate their services with his Home Employer. This reaffirms that respondent No.1 remains an employee of the petitioner Company even after the Secondment, as no party is required to serve a notice of termination on a party with whom he has no employer-employee relationship.
13) Furthermore, it is to be noted that the International Secondment Agreement dated 28.07.2017 is only an agreement outlining certain terms and conditions for respondent No.1's services at Polaris Consulting and Services Limited UK, and not a letter of appointment. -9-
PK, J W.P.No.20720 of 2023 In case respondent No.1 was freshly appointed to work at the Polaris Consulting and Services Limited UK, an official appointment letter would be issued the Company. Nevertheless, in the absence of any such appointment letter, respondent No.1's initial appointment letter remains effective. Therefore, it is evident that respondent No.1 is considered an employee of the petitioner Company even during the Secondment period.
14) In view of the above, this Court is of the opinion that the Gratuity Authority and the Appellate Authority have rightly held that there exists an employer-employee relationship before the petitioner and respondent No.1 and also that there was continuity of service of respondent No.1 with the petitioner Company from 01.10.2003 till the date of his resignation on 17.09.2021. Furthermore, it is also rightly held that, as defined under Section 2A of the Payment of Gratuity Act, 1972, respondent No.1 is entitled for payment of gratuity for the entire period of his continuous service with the petitioner Company, i.e., (18) years.
15) Further, regarding delay in making the payment of gratuity to respondent No.1, he is entitled for interest as per Section 7(3A) of the Payment of Gratuity Act, 1972. It is relevant to refer to Section 7(3) of the Payment of Gratuity Act, 1972, which is extracted hereunder:
7. Determination of the amount of Gratuity:-
(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
- 10 -
PK, J W.P.No.20720 of 2023 (3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub- section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:
Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the Controlling Authority for the delayed payment on this ground].
16) In view of the above made discussion, this Court does not find any error in the order of the Controlling Authority dated 17.11.2022 in P.G. Application No.48/48/2022-E3, and also in the order of the Appellate Authority dated 15.06.2023 in Gratuity Appeal No.01 of 2023, and the same are hereby confirmed. Hence, the judgment relied on by the learned counsel for the petitioner is of no avail to him. Therefore, the present writ petition is liable to be dismissed.
17) According, the Writ Petition is dismissed.
Miscellaneous petitions pending, if any, in this writ petition shall stand closed. No costs.
_______________________ PULLA KARTHIK, J Date: 16.07.2024 GSP/sur