Andhra Pradesh High Court - Amravati

Dr. Alladi Venkata Rama Prasad, vs Govt. Of A.P., Rep. By Its Prl. ... on 13 October, 2023

              *HON'BLE SRI JUSTICE RAVI NATH TILHARI
 +WRIT PETITION Nos.25019 OF 2011, 30226, 26330 & 26346 OF
   2012, 4078 OF 2013, 12576 OF 2014 AND 28232 OF 2017
                               % 13.10.2023

#Dr. Radha Krishna Sarma Chitta,
 S/o. Venkata Narasimham,
 Hindu, Aged about 71 years,
 Occupation: Professor Retired,
 R/o. 210, Rolin Residency,
 Czech Colony,
 Sanatnagar, Hyderabad
 and others.
                                                             ......Petitioners
And:
$1. Government of Andhra
    Pradesh, represented
    By its Principal Secretary,
    Department of Technical
    Education, Secretariat
    Buildings, Hyderabad
    and others.
                                          ....Respondents/Respondents.

!Counsel for the petitioners                  : Sri N. A. Ramachandra Murthy,
                                                Sri A. Veeraswamy
^Counsel for the respondents                  : Sri A. Veeraswamy,
                                                Learned Government Pleader
                                                for State authorities.

<Gist:
>Head Note:
? Cases referred:
   1. (2013) 2 ALT 707
   2. (2010) 2 SCC 44
   3. (1981) 1 SCC 449
   4. (1984) 4 SCC 356
   5. MANU/AP/1596/2022
   6. (1995) 5 SCC 642
   7. 2011 SCC OnLine AP 686
   8. 1997 (4) ALT 336 (DB)
                                     2




                HIGH COURT OF ANDHRA PRADESH

  WRIT PETITION Nos.25019 OF 2011, 30226, 26330 & 26346 OF
    2012, 4078 OF 2013, 12576 OF 2014 AND 28232 OF 2017



  Dr. Radha Krishna Sarma Chitta,
  S/o. Venkata Narasimham,
  Hindu, Aged about 71 years,
  Occupation: Professor Retired,
  R/o. 210, Rolin Residency,
  Czech Colony,
  Sanatnagar, Hyderabad
  and others.
                                                     ......Petitioners
And:
 1. Government of Andhra
    Pradesh, represented
    By its Principal Secretary,
    Department of Technical
    Education, Secretariat
    Buildings, Hyderabad
    and others.
                                        ....Respondents/Respondents.


       DATE OF JUDGMENT PRONOUNCED: 13.10.2023.
                               3




   SUBMITTED FOR APPROVAL:
      THE HON'BLE SRI JUSTICE RAVI NATH TILHARI

1. Whether Reporters of Local newspapers may be
   Allowed to see the judgments?                     Yes/No

2. Whether the copies of judgment may be marked
   to Law Reporters/Journals?                        Yes/No

3. Whether Your Lordships wish to see the fair
   Copy of the Judgment?
                                                     Yes/No


                                  ________________________
                                        RAVI NATH TILHARI, J
                                   4


      THE HON'BLE SRI JUSTICE RAVI NATH TILHARI

  WRIT PETITION Nos.25019 OF 2011, 30226, 26330 & 26346 OF
    2012, 4078 OF 2013, 12576 OF 2014 AND 28232 OF 2017
COMMON JUDGMENT:-

      These writ petitions involve common question of law and

pertain    to     the   same   Educational    Institution   namely

D.M.S.S.V.H. College of Engineering, Machilipatnam, Krishna

District (in short, the Educational Institution).

      2.        The petitioner(s) in W.P.Nos.25019 of 2011, 30226

of 2012, 4078 of 2013 and 12576 of 2014 are the Employees of

the Educational Institution and have filed the writ petition for

direction to make the payment of gratuity as admissible to them

under provisions of the Payment of the Gratuity Act, 1972 (in

short, the Act 1972).

      3.        The W.P.Nos.26346 of 2012, 26330 of 2012 and

28232 of 2017 are filed by the Educational Institution,

challenging the order dated 13.05.2012, passed by the 2nd

respondent in P.G.A. Case No. 4/2012; order dated 13.05.2012,

passed by the 2nd respondent in P.G.A. Case No. 3/2012, and

the order dated 29.07.2017, passed by the 2nd respondent in

P.G.A. Case No.1/2013, respectively, by which the Controlling

Authority under the Payment of Gratuity Act 1972, has allowed
                                   5


the claim for grant of Gratuity of the employees of the

Educational Institution, as involved therein.

      4.     Heard Sri N. A. Ramachandra Murthy, learned

counsel for the petitioner/employees in W.P.Nos.25019 of 2011,

30226 of 2012, 4078 of 2013 and 12576 of 2014; learned

Government Pleader for respondent - State authorities and

Sri A. Veeraswamy, learned counsel for the Educational

Institution for respondents in these writ petitions filed by the

employees as also for the petitioners, in the W.P.Nos.26346 of

2012, 26330 of 2012 and 28232 of 2017 i.e. the Educational

Institution. There is no representation for the employees

respondents in the writ petitions filed by the Educational

Institutions.

      5.     W.P.No.25019 of 2011 has been filed for the

following reliefs:-

        "Hence in the interests of the Justice it is prayed that
     this Hon'ble Court may be pleased to issue a Writ, Order or
     Direction(s) particularly one in the nature of Writ of
     Mandamus declaring the action of the respondents in not
     releasing the gratuity as per the provisions of payment of
     Gratuity Act, 1972 is illegal and arbitrary by holding that
     the rejection of claim of the Petitioners by the 3rd
     Respondent        in      Proceedings       No.       DMS
     SVHCE/Principal/01B/010, Dated: 30-04-2011 is illegal
     and contrary to the provisions of the Act and consequently
     direct the Respondents herein to release the gratuity
                                      6


     admissible to the Petitioners herein as per the provisions of
     payment of Gratuity Act, 1972 as amended by Act 47 of
     2009 for the period of service rendered by them with
     interest @ 12% per annum from the date of retirement and
     to pay the same, and pass such other Order or Orders as
     this Hon'ble Court may deem fit, proper and necessary in
     the circumstances of the case.‖


      6.       Facts

in brief and the prayer of the other writ

petition(s) are as under:-

      (i)      W.P.No.30226 of 2012:-

      Facts:-

      The      petitioner   joined       the   respondent   Educational

Institution on 24.06.1981 as a Junior Assistant and later

promoted as Senior Assistant in the year 2005. He retired on

31.03.2012 as Senior Assistant on attaining the age of

superannuation. He submitted a letter dated 29.03.2012 for

payment of gratuity, but the same was not paid.

Prayer:-

"It is therefore prayed that this Hon'ble Court may be pleased to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the 4th respondent in refusing to pay the gratuity and encashment of earned leave to the petitioner in accordance with the applicable rules as arbitrary and illegal and in violation of Statutory Provision and Article 14 and 21 of the Constitution of India and to pass such other and order as

this Hon'ble Court may deem fit and proper in the circumstances of the case.‖

(ii) W.P.No.4078 of 2013:-

Facts:-

The petitioner joined S.V.H College of Engineering, later

renamed as D.M.S.S.V.H. College of Engineering, as Lecturer, in

Chemistry in the year 1981. He was promoted as Assistant

Professor in the year 2004 and as Professor in the year 2007.

He retired from service on 30.11.2012, after serving the

Institution for a period of 31 years. He was denied the gratuity

on the ground that the provisions of the Payment of Gratuity

Act, 1972 have no application to the Educational Institution.

Prayer:-

"Hence, in the interest of the Justice, it is prayed that this Hon'ble Court may be pleased to issue a writ, order or direction(s), more particularly one in the nature of Writ of Mandamus declaring that the action of the respondent College in not releasing the gratuity as per the provisions of the Payment of Gratuity Act, 1972 in illegal and arbitrary and consequently direct the respondent college herein to release the gratuity admissible to the petitioner herein as per the Provisions of the payment of Gratuity Act, 1972 as amended by Act 47 of 2009 and Act 15 of 2010 for the period of service rendered by him with the interest at 12% per annum from the date of retirement and to pay the same and pass such other order or orders, as deem fit, proper and necessary in the circumstances of the case.‖

(iii) W.P.No.12576 of 2014:-

Facts:-

The petitioner was appointed as Lecturer in the

Department of Maths in the respondent No.5 College on

14.12.1981. He was promoted as Assistant Professor on

06.11.2004 and as Professor on 20.11.2007. He worked as

such till 31.01.2012, the date of his superannuation. He had

rendered 30 years service in the Educational Institution. He

submitted a representation on 29.02.2012 to release the

gratuity which was not released.

Prayer:-

―Hence, in the interest of the Justice, it is prayed that this Hon'ble Court may be pleased to issue a writ, order or direction(s), more particularly one in the nature of Writ of Mandamus declaring that the action of the Respondents herein in not releasing the gratuity is illegal, arbitrary and contrary provisions of Payment of Gratuity Act, 1972 (as Amended by Act 47 of 2009) and consequently direct the respondents herein to pay the gratuity with interest at the rate of 18% per annum from the date of due to the date of payment and award compensation for illegally denying the statutory benefit and pass such other order or orders, as this Hon'ble Court may deem fit, proper and necessary in the circumstances of the case.‖

(iv) W.P.No.26330 of 2012:-

Facts:-

The respondent/employer filed P.G.A. Case No.4 of 2012

which was allowed by the controlling authority on 31.12.2011

for the amount of gratuity as determined there under, with

interest. The appellate authority dismissed the petitioner‟s

appeal (P.G.A. Case No.3 of 2012) by order dated 13.05.2012.

Prayer:-

"It is therefore prayed that this Hon'ble Court may be pleased to issue a writ, order or direction more particularly in the nature of writ of certiorari calling for the records relating to the orders of the 3rd Respondent in PG case No. 4/2010, dt. 31st Dec 2011 as confirmed by the Orders of 2nd Respondent in PGA Case No. 3/2012, dt. 13.5.2012 quash the same as illegal, contrary to law and violative of Provisions of payment of Gratuity Act and pass such other order or orders as this Hon'ble Court deems fit and proper in the interest of justice.‖

(v) W.P.No.26346 of 2012:-

Facts:-

The respondent employee filed P.G.A. Case No.3 of 2010,

which was allowed by the Controlling Authority for the amount

mentioned therein with interest, by order dated 31.12.2011.

The appeal filed by the petitioners was also dismissed by the

appellate authority.

Prayer:-

―It is therefore prayed that this Hon'ble Court may be pleased to issue a writ, order or direction more particularly in the nature of writ of certiorari calling for the records relating to the orders of the 3rd Respondent in PG Case No. 3/2010, dt. 31st Dec 2011 as confirmed by the Orders of 2nd Respondent in PGA Case No. 4/2012, dt. 13.5.2012 quash the same as illegal, contrary to law and violative of Provisions of Payment of Gratuity Act and pass such other order or orders as this Hon'ble Court deems fit and proper in the interest of justice.‖

(vi) W.P.No.28232 of 2017:-

Facts:-

The respondent No.1, employee of the Educational

Institution approached the controlling authority under the

Payment of Gratuity Act 1972 inter alia submitting that he had

completed continuous service of more than 35 years, but his

request for payment of gratuity was not accepted. The

petitioners of this writ petition took the stand that the Payment

of Gratuity Act 1972 was made applicable with effect from

03.04.1997. The employee/respondent No.1 did not apply

within one month after his retirement. The gratuity amount

shall be payable from 03.04.1997 only, and not for any period

earlier to 03.04.1997. The Controlling Authority/Assistant

Commissioner of labour held that the applicant (respondent

No.1 herein) was entitled for gratuity. It determined the amount

payable under the Act 1972 and also awarded interest @10%, in

terms of the order dated 29.07.2017.

Prayer:-

―It is therefore prayed that this Hon'ble Court may be pleased to issue any appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the order of the 2nd respondent in P.G. Case No. 1/2013 dated 29.07.2017 as unjust, arbitrary, contrary to law and violative of provisions of Payment of Gratuity Act and consequently set aside the same and pass such others as may be just.‖

7. All the writ petitions are being decided by this

common judgment making W.P.No.25019 of 2011 the leading

case.

8. The petitioner No.1, Dr. Radha Krishna Sarma

Chitta in W.P.No.25019 of 2011 joined as Lecturer in

Government Engineering College, Ananthapur in the year 1996.

The College was subsequently brought under the Jawaharlal

Nehru Technological Institute in the year 1972. He worked till

1988 and after taking Voluntary Retirement he joined S.V.H

College of Engineering, Machilipatnam, the 3rd respondent on

01.08.1988 and after serving for a period of 10 years he was

retired by the proceedings of the Secretary of the College dated

08.08.1998, with effect from the After-Noon of 30.06.1998.

9. The petitioner No.2, Sri R. N. Reddy worked in

Central Mechanical Research Laboratory, Durgapur, West

Godavari, and after taking Voluntary Retirement, he joined

S.V.H. College of Engineering, 3rd respondent in the year 1991.

He retired from service on 12.06.1998 after serving for a period

of 7 years.

10. On their application for payment of gratuity filed in

the year 2011, they were informed vide letter dated 30.04.2011,

individually, by the 3rd and 4th respondents that the petitioners‟

claim for gratuity did not attract the provisions of the Payment

of Gratuity Act, 1972. The claim of the petitioners was thus

virtually rejected on the said ground.

11. It is not evident from perusal of the letter dated

30.04.2011 as to how and why the provisions of the Payment of

Gratuity Act, 1972 were not attracted. Any Specific reason in

this regard was not assigned in the letter dated 30.04.2011.

12. The letter dated 30.04.2011 in the case of the

1st petitioner reads as under:-

―DAITA MADHUSUDANA SASTRY SRI VENKATESWARA HINDU COLLEGE OF ENGINEERING (DMS SVH College of Engineering) (Recognised by AICTE and affiliated to Krishna University) MACHILIPATNAM Web Site: www.svhce.org.in e-mails: 1) [email protected] Mail: [email protected] 2) [email protected] Ref: DMS SVHCE/ Principal/01B/010 Date: 30th April 2011 Dr. A. Krishna Sharma, B.E., M.E., Ph.D. (I.I.Sc.) Principal

---- Regd. Post with Acknowledgement due ----

To Dr. C.R.K. Sarma, 210 Rolin Residency, Czech Colony, Sanatnagar, Hyderabad - 500 018.

Sir, Sub: Reply to your letter dated 21st April 2011. Ref: Your letter dated 21st April 2011 claiming Gratuity, and encashment of Earned Leave--.

1) Your claim for Gratuity does not attract the provisions contained in the Gratuity Act 1972.

2) Your request for the encashment of Earned Leave after your retirement can not be granted.

Yours faithfully,

_________________________ (Dr. A. Krishna Sharma) Principal

Copy of the same letter is also sent by courier‖

Contention of the petitioners' counsel:-

13. Sri N. A. Ramachandra Murthy, learned counsel for

the petitioners submitted that the Government of India vide

notification dated 03.04.1997, published in the Gazette of India

in Part-II, Section 3(i) of the Gazette of India on 19th April 1997,

in exercise of the power conferred by Section 1 (3) (c) of the

Payment of Gratuity Act 1972, specified the educational

institutions in which ten or more persons are employed or were

employed on any day preceding 12 months, as a class of

establishments to which the Act, 1972 shall apply with effect

from the date of publication of the notification. Consequently,

the Payment of Gratuity Act, 1972 became applicable to the

respondent Educational institution, but the gratuity amount of

the petitioners as permissible has not been paid.

14. Learned counsel for the petitioners submitted that

the provisions of the Payment of Gratuity Act, 1972 are

attracted. He submitted that Section 2 (e) of the Act 1972

defines „employee‟. This provision, Section 2 (e) was substituted

by the Payment of Gratuity (Amendment) Act, 2009 (Act No.47

of 2009) with retrospective effect, from 03.04.1997. The

petitioners are covered within the expression „employee‟. The

non-payment of gratuity on the ground that the Act, 1972 is not

attracted, is unsustainable in law.

15. Learned counsel for the petitioners placed reliance

in the case of Secretary, Siddhartha Academy of General &

Technical Education, Vijayawada and another vs.

Appellate Authority under the A.P. Payment of Gratuity

Rules, 1972 and the Deputy Commissioner of Labour,

Eluru, West Godavari District and others1 and Allahabad

Bank and another vs. All India Allahabad Bank Retired

Employees Association 2.to support his contentions.

Contention of the counsel for the respondent Nos.3 and 4:-

16. Sri A. Veeraswamy, learned counsel for the

respondent Nos.3 and 4 submitted that the petitioners

approached for payment of gratuity, belatedly. They retired in

the year 1998 but filed their applications on 12.04.2011, with

delay of 13 years.

17. Sri A. Veeraswamy, further submitted that the

Payment of Gratuity Act, 1972 was applied to Education

Institutions only on 19.04.1997, prospectively. Consequently,

the period of continuous service, as defined under Section 2 (A)

of the Act, 1972, would be counted from 19.04.1997. The

petitioners did not complete minimum continuous service of not

less than 5 years, on the date of their retirement, w.e.f.

19.04.1997 and are therefore not entitled for payment of

gratuity.

18. At this stage, it deserves to be brought on record,

that in the counter affidavit, the respondent Nos.3 and 4 had

taken the stand that the Payment of the Gratuity Act, 1972 was

2013 (2) ALT 707

(2010) 2 SCC 44

made applicable from 03.04.1997 (correct date is 19.04.1997)

and consequently, the employees appointed by the Institution

after 03.04.1997 would be covered by the Act, 1972. The

petitioners were appointed before the Act, 1972 was made

applicable. The Act, 1972 being prospective, the petitioners

were not covered. However, during arguments learned counsel

for the respondent Nos.3 and 4 submitted that he is not raising

such argument, and his submission, is that the petitioners‟

have not completed the continuous service of not less than 5

years from the date the Act, 1972 was made applicable w.e.f.

19.04.1997 and therefore they are not entitled for gratuity.

Contention of learned Government Pleader:-

19. Learned Government Pleader submitted that the

respondent No.3 is the Competent Authority for payment of

gratuity to the petitioners as per their eligibility and the 1st and

2nd respondents have no role to play. The petitioners cannot

seek any relief against 1st and 2nd respondents.

20. I have considered the submissions advanced by the

learned counsels for the parties and perused the material on

record.

Points for Determination:-

21. The following points arise for consideration:-

1) Whether the 5 years continuous service in Section 4

of the Act 1972 is to be counted from 19.04.1997 upto the date

of retirement for eligibility for payment of gratuity under the Act,

1972 or it is to be counted from the date of entering into service

in the Educational institution?

2) Whether the petitioners‟ claim for gratuity is belated

and whether on the ground of delay in submitting application,

their claim is liable to be rejected?

3) Whether the petitioners are entitled for payment of

gratuity from the respondent Nos.3 and 4 under the Payment of

Gratuity Act, 1972?

Facts not in dispute:-

22. The facts on which there is no dispute are as

follows:-

1) The Payment of Gratuity Act, 1972, is applicable to

the Educational institution, respondent Nos.3 and 4, vide

notification dated 03.04.1997 with effect from the date of

publication of that notification on 19.04.1997.

2) The petitioners are the „employees‟ under Section

2 (e) of the Act, 1972. It is not the case of the respondents

Educational Institution, neither in the counter affidavit nor in

the communication letter dated 30.04.2011, that the petitioners

are not the employees of the respondent Educational

Institution.

3) The petitioners have completed not less than 5

years of continuous service till the date of their respective

retirement from the date of their respectively joining services in

the Educational Institution.

Analysis: Point-1

23. Section 4 of the Payment of Gratuity Act, 1972

provides as under:-

―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: Provided that in the case of a piece-rated 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 [such amount as may be notified by the Central Government from time to time].

(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 caused;

(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.

24. Section 4 of the Payment of Gratuity Act 1972 thus

provides for payment of gratuity to an employee, on the

termination of his employment after he has completed

continuous service for not less than 5 years, a) on his

superannuation, or b) on his retirement/resignation or c) on his

death or disablement;

25. „Continuous service‟ has been defined under Section

2 A of the Act, 1972 as under:-

―[2A. Continuous Service.- (1) 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 not 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 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 [such period as may be notified by the Central Government from time to time];] (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.]‖

26. The object of making the Act 1972 applicable to the

Educational Institutions vide notification dated 03.04.1997 is to

grant benefit of gratuity to the employees of the Educational

Institutions as well. The Act 1972 is a beneficial legislation.

27. In Allahabad Bank (supra), the Hon‟ble Apex

Court held that the Remedial statutes in contradiction to penal

statutes, are known as welfare, beneficent or social justice

oriented legislation. 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. The Hon‟ble

Apex Court further held that the Welfare legislations have to be

broadly and liberally construed having due regard to the

directive principles of the State Policy. The judgment in Som

Prakash Rekhi vs. Union of India and another 3 was also

referred in which the Hon‟ble Apex Court held that the

benignant provisions must receive a benignant construction and

even if two interpretations are permissible, that which furthers

the beneficial object should be preferred.

28. It is apt to refer Paras 16 to 19 of Allahabad Bank

(supra) as under:-

―16. We shall proceed to examine the point urged by the learned counsel for the appellant. Remedial statutes, in contradistinction to penal statutes, are known as welfare, beneficient 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

(1981) 1 SCC 449

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.

17. Krishna Iyer, J. in Som Prakash Rekhi v. Union of India [(1981) 1 SCC 449 : 1981 SCC (L&S) 200] stated the principle in his inimitable style that benignant provision must receive a benignant construction and, even if two interpretations are permissible, that which furthers the beneficial object should be preferred. It has been further observed: (SCC pp. 483-84, para 66) ―66. ... we live in a welfare State, in a ‗socialist' republic, under a Constitution with profound concern for the weaker classes including workers (Part IV). Welfare benefits such as pensions, payment of provident fund and gratuity are in fulfilment of the Directive Principles. The payment of gratuity or provident fund should not occasion any deduction from the pension as a ‗set-off'. Otherwise, the solemn statutory provisions ensuring provident fund and gratuity become illusory. Pensions are paid out of regard for past meritorious services. The root of gratuity and the foundation of provident fund are different. Each one is a salutary benefaction statutorily guaranteed independently of the other. Even assuming that by private treaty parties had otherwise agreed to deductions before the coming into force of these beneficial enactments they cannot now be deprivatory. It is precisely to guard against such mischief that the non obstante and overriding provisions are engrafted on these statutes.‖ (emphasis supplied)

18. Interpreting the provisions of the said Act this Court in Sudhir Chandra Sarkar v. TISCO Ltd [(1984) 3 SCC 369 : 1984 SCC (L&S) 540] observed that pension and gratuity coupled with contributory provident fund are well recognised retiral benefits governed by various statutes. These statutes are legislative responses to the developing notions of the fair and humane conditions of work, being the promise of Part IV of the Constitution. It was observed: (SCC p.380. para 15) ―15. ... The fundamental principle underlying gratuity is that it is a retirement benefit for long service as a provision for old age. Demands of social security and social justice made it necessary to provide for payment of gratuity. On the enactment of Payment of Gratuity Act, 1972 a statutory liability was cast on the employer to pay gratuity.‖

19. Gratuity payable to an employee on the termination of his employment after rendering continuous service for not less than 5 years and on superannuation or retirement or resignation, etc. being a statutory right cannot be taken away except in accordance with the provisions of the Act where under an exemption from such payment may be granted only by the appropriate Government under Section 5 of the Act which itself is a conditional power. No exemption could be granted by any Government unless it is established that the employees are in receipt of gratuity or pension benefits which are more favourable than the benefits conferred under the Act.‖

29. In Jeewanlal Limited and others vs. Appellate

Authority under the Payment of Gratuity Act and others4,

the Hon‟ble Apex Court held that the Payment of Gratuity Act,

is enacted to introduce a scheme for payment of gratuity for

certain industrial and commercial establishments, as a measure

of social security. The provisions of social security measures,

retiral benefits like gratuity, provident fund and pension are of

special importance in dealing with interpretation of sub-section

(2) of Section 4 of the Act. The scheme of the Act must be kept

in view. In every case involving construction of a statute the

starting point must be the language in the legislature. It was

held that in construing 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. When the language is plain and unambiguous, the

Court must give effect to it whatever may be the consequence,

for, in that case, the words of the statute speak the intention of

the legislature. When the language is explicit, its consequences

are for the legislature and not for the courts to consider.

(1984) 4 SCC 356

30. It is apt to refer Paragraphs 8 and 11 of Jeewanlal

Limited (supra) as under:-

―8. The Payment of Gratuity Act, 1972 is enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments, as a measure of social security. It has now been universally recognized that all persons in society need protection against loss of income due to unemployment arising out of incapacity to work due, to invalidity, old age etc. For wage-earning population, security of income, when the worker becomes old or infirm, is of consequential importance. The provisions of social security measures, retiral benefits like gratuity, provident fund and pension (known as the triple benefits) are of special importance. In bringing the Act on the statute-book, the intention of the legislature was not only to achieve uniformity and reasonable degree of certainty, but also to create and bring into force a self- contained, all embracing, complete and comprehensive code relating to gratuity. The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit.‖ "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. When, however, the a language is plain and unambiguous, the Court must give effect to it whatever may be the consequence, for, in that case, the words of the statute speak the intention of the legislature.

When the language is explicit, its consequences are for the legislature and not for the courts to consider. The argument

of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are two methods of construction. In their anxiety to advance beneficent purpose of legislation, the courts must not yield to the temptation of seeking ambiguity when there is none.‖

31. In District Cooperative Central Bank Ltd. vs.

Controlling Authority5, this Court held as under in Paras 60

to 63:-

―60. The Payment of Gratuity Act was enacted in the year 1972 to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shop or other establishments and for matters connected therewith and incidental thereto. It is a piece of social welfare legislation and deals with the payment of gratuity which is a kind of retiral benefit like pension, provident fund etc. Gratuity in its etymological sense is a gift, especially for services rendered, or return for favours received. The provisions contained in the Act are in the nature of social security measures to wage-earning population in industries, factories and establishments. The main purpose and concept of gratuity is to help the workman after retirement, whether retirement is a result of rules of superannuation or physical disablement or impairment of vital part of the body or on death to the nominee.

61. In Beed District Central Coop. Bank Ltd. v.

State of Maharashtra [(2006) 8 SCC 514] the Hon'ble Apex Court held that the Payment of Gratuity Act is a

MANU/AP/1596/2022

beneficial statute. When two views are possible, having regard to the purpose the Act seeks to achieve being a social welfare legislation, it may be construed in favour of the workman. In M.C. Chamaraju v. Hind Nippon Rural Industrial (P) Ltd.[(2007) 8 SCC 501] the Hon'ble Apex Court held that the Payment of Gratuity Act has been enacted with a view to grant benefit to workers, a ―weaker section‖ in the industrial adjudicatory process. In interpreting the provisions of such beneficial legislation therefore liberal view should be taken. In Poonam Devi v. Oriental Insurance Co. Ltd. [(2020) 4 SCC 55] where the Workmen's Compensation Act, 1923 (now christened as ―the Employee's Compensation Act, 1923‖) was involved, the Hon'ble Apex Court held that it was a piece of socially beneficial legislation. The provisions will therefore have to be interpreted in a manner to advance the purpose of the legislation, rather than to stultify it.

62. In Meeta Sahai v. State of Bihar [(2019) 20 SCC 17] the Hon'ble Apex Court held that it is the responsibility of the Courts to interpret the text in a manner which eliminates any element of hardship, inconvenience, injustice, absurdity or anomaly. Legislation must further its objectives and not create any confusion or friction in the system. If the ordinary meaning of the text of such law is non-conducive for the objects sought to be achieved, it must be interpreted accordingly to remedy such deficiency. The Hon'ble Apex Court reiterated that it may be necessary to resort to purposive interpretation of the provisions of the Statute in the light of its objectives. In Hira Singh v. Union of India [(2020) 20 SCC 272] referring to its earlier judgment in the case of Directorate of Enforcement v. Deepak Mahajan [(1994) 3 SCC 440] the Hon'ble Apex Court observed that every law is designed to

further ends of justice but not to frustrate on the mere technicalities. It further observed that to winch up the legislative intent, it is permissible for Courts to take into account the ostensible purpose and object and the real legislative intent. Otherwise, a bare mechanical interpretation of the words and application of the legislative intent devoid of concept of purpose and object will render the legislature inane. The Hon'ble Apex Court further observed that in given circumstances, it is permissible for Courts to have functional approaches and look into the legislative intention and sometimes it may be even necessary to go behind the words and enactment and take other factors into consideration to give effect to the legislative intention and to the purpose and spirit of the enactment so that no absurdity or practical inconvenience may result and the legislative exercise and its scope and object may not become futile.

63. Recently, in Franklin Templeton Trustee Services (P) Ltd. v. Amruta Garg [(2021) 4 SCC 138] also the Hon'ble Apex Court held that the legislative intent is gathered not by restricting it to the language of the provision, rather in the light of the object and purpose of the provision and the legislation. It has been emphasized that the Courts do lean towards a pragmatic and purposive interpretation as there is an assumption that the draftsmen legislate to bring about a functional and working result.‖

32. While making the Act 1972 applicable to

Educational Institution, the provisions of Section 2A

„continuous service‟ or/and Section 4 have not been „amended‟

so as to provide that „the continuous service‟ or „continuous

service for not less than 5 years‟ would be only from the date

the Act, 1972 has been made applicable. It has also not been

provided that any period of continuous service as defined under

Section 2A, rendered prior to the Act, 1972 becoming applicable

w.e.f. 19.04.1997, would be excluded from „continuous service

for not less than 5 years‟ in Section 4 (1). There is also no such

restriction imposed by any other provision in the Act, 1972 or in

the notification dated 19.04.1997, bringing the Educational

Institution, under the purview of the Act, 1972. The expression,

„he has rendered continuous service for not less than 5 years‟ in

Section 4 (1), remains unqualified. Consequently, keeping in

view the settled principles of interpretation of a beneficial

provision in a beneficial legislation, this Court is of the

considered view that the continuous service for not less than 5

years, is to be reckoned from the date of employee‟s joining in

the Educational establishment. It cannot be confined to only

that part of the service period, which is rendered post

publication of the notification dated 03.04.1997, i.e. w.e.f

19.04.1997.

33. Acceptance of the submission of the learned

counsel for the respondents 3 and 4 would be that any

employee in the Educational Institution of the 3rd respondent

would not be able to get any gratuity amount, at least till

completion of continuous 5 years service from the date of

applicability of the Act 1972 to such Educational Institution or

establishment, as no employee would have „not less than 5

years continuous service‟ till completion of 5 years w.e.f

19.04.1997. That is not the intention of the legislature.

Otherwise, the notification dated 03.04.1997 would have not

been made applicable with effect from the date of its publication

in the Official Gazette, dated 19.04.1997. The acceptance of the

submission of the learned counsel for the respondent Nos.

3 and 4, would be doing harm to the plain language in Section 4

of the Act. The Act, 1972 being a beneficial legislation, any

interpretation, restricting its applicability only after expiry of 5

years from 19.04.1997, would not advance the object of the Act

1972 and such an interpretation even if may be possible,

though it is not, is not to be preferred.

34. In Aspinwall & Company., Kulshekar,

Mangalore vs. Lalitha Padugady and others6, the Hon‟ble

Apex Court held that Section 4 postulates determination of the

"completed year of service". It was held that the starting point

of the said period is from the date an employee gets

employment, which in the nature of things would vary from

employee to employee. It is nowhere envisaged in the scheme

(1995) 5 SCC 642

that the continuous service of the employee would be computed

in a chain from calendar year to calendar year. The Hon‟ble

Apex Court laid down in clear terms that the Completed year of

service would clearly mean that continuous service for one year

reckonable from the date of joining employment.

35. It is apt to refer Para 7 of Aspinwall & Company

(supra) which is reproduced as under:-

―7. Section 4 postulates determination of the ―completed year of service‖, meaning thereby one year's period of continuous service, rendered by an employee for the purposes of computation of gratuity and therein is a method provided for determining a completed year of service. The starting point of the said period is from the date an employee gets employment, which in the nature of things would vary from employee to employee. It is no where envisaged in the scheme from the above provisions that the continuous service of the employee would he computed in a chain from calendar year to calendar year. Completed year of service would plainly mean continuous service for one year reckonable from the date of joining employment. It cannot be confused with that of a calendar year. The understanding of the year as a calendar year, as available in the General Clauses Act is not importable to shadow for our purposes the concept of ―completed year of service‖. To illustrate the point if an employee joins service in the first week of July in a particular year, it cannot be said that for the purposes of the provisions of the Act, he would be deemed to have worked for half an year to begin with, and

thereafter to have worked for each calendar year till the date of the last one, and then till the year of his termination. On the contrary, the Act envisages that the day an employee enters into service, his continuous service from year to year would be computed from the date of his joining. In the nature of things regimenting or streamlining the whole concept into calendar year apportionments is totally ill-filled (sic fitted) in the scheme of the Act.‖

36. In the light of the judgment of the Hon‟ble Apex

Court in Aspinwall & Company (supra), the starting point of

the period for counting the completed year of service being the

date an employee gets employment, any other view for counting

„continuous period of not less than 5 years‟ is not permissible in

the considered view of this Court. The starting point would be

the date, an employee gets employment.

37. In Secretary, Siddhartha Academy of General &

Technical Education (supra), the Combined High Court of

Andhra Pradesh held that the notification is operative only with

effect from the date on which it was published in the official

gazette. Since the notification was published in the official

gazette on 03.04.1997 (date wrongly mentioned as it was

published on 19.04.1997) it is prospective from the said date.

38. The learned counsels for both the sides placed

reliance in Secretary, Siddhartha Academy of General &

Technical Education (Supra). Learned counsel for the

petitioners placed reliance to contend that it applied from

19.04.1997 and at the time the notification was published the

petitioners were in service so it would apply to them. To the

contrary, learned counsel for the respondents 3 and 4 placed

reliance to contend that it is made prospective only with effect

from 19.04.1997 and therefore the service period is to be

counted from 19.04.1997.

39. There is no dispute that the Act 1972 is made

applicable to Educational Institutions vide notification dated

03.04.1997 published on 19.04.1997. There is also no dispute

that the same is prospective.

40. In Secretary, Siddhartha Academy of General &

Technical Education (Supra) the benefit of the Act 1972 was

not extended to the petitioners therein in Educational

Institution, as they had already retired in the year 1995. The

applicability of the Act 1972 being prospective, it could not be

applied retrospectively to cover the cases of the employees

already retired and not being in service on the date the Act,

1972 was made applicable to such Educational Institution. In

that context, this Court did not apply the Act 1972 to the

petitioners therein, the Act being prospective but in the present

case, the petitioners were in service when the Act 1972 was

made applicable to the respondents 3 and 4 Educational

Institution.

41. In another case, by the same name, Secretary,

Siddhartha Academy of General & Technical Education,

Vijayawada and another vs. Appellate Authority under the

A.P. Payment of Gratuity Rules, 1972 and the Deputy

Commissioner of Labour, Eluru, West Godavari District and

others7, the combined High Court of Andhra Pradesh held that

for the purposes of computation of the quantum only, the

service rendered by an employee prior to 03.04.1997 is required

to be reckoned and in doing so it does not amount to giving

retrospective effect to the notification.

42. The relevant part of Secretary, Siddhartha

Academy of General & Technical Education, Vijayawada

and another (supra-3) is being reproduced as under:-

―No notification shall be construed to have brought into force a provision of a statute with retrospective effect, unless it has been stated so explicitly or by necessary implication. The notification has never set out that it would have retrospective effect. To my mind, there is no such necessity either. All that is required by the Government of India was to notify ‗any other establishment' intended by it to be brought under the cover of the Act and for that purpose, it was required to be notified in accordance with

2011 SCC OnLine AP 686

and in terms of Section 1(3)(c). When once the Government of India issues any such notification, the provisions of the Payment of Gratuity Act, 1972 get attracted to all such establishments. Once the provisions of the said enactment got attracted, the rights and obligations created there under start flowing automatically. Consequently, if any employee of such an establishment has retired from service after 03.04.1997, on attaining the age of superannuation or tendered his resignation or suffered any disablement due to accident or disease or unfortunately died, one becomes eligible and entitled to be paid gratuity. A right is thus created for an employee, who falls within the scope of Section 4 of the Act, to receive gratuity.

Correspondingly, an obligation is cast upon the employer to make such a payment. Only for the purpose of working out the quantum of gratuity, the total service rendered by the employee till then is required to be reckoned. In other words, for the purpose of computation of the quantum only, the service rendered by such an employee prior to 03.04.1997 is required to be reckoned and in doing so, it does not amount to giving retrospective effect to the notification. I therefore, do not find any merit in this contention."

43. Consequently, the submission advanced by the

learned counsel for the respondents 3 & 4 that the continuous

period of not less than 5 yrs would start only from 03.04.1997

or 19.04.1997 is rejected. The period of employment of the

petitioners even prior to 19.04.1997, i.e. since the date of their

employment, shall be counted for the purpose of the Act, 1972.

44. On Point No.1, this Court holds that once the Act,

1972 became applicable to the Respondent Educational

Institution with effect from 19.04.1997, the period of

continuous service of not less than 5 years, as also for

completed years of service, under Section 4 of the Act 1972 is to

be reckoned from the date of the employee‟s

appointment/entering into service in such Educational

Institution/establishment and not only from 19.04.1997

onwards. In other words the continuous period of service prior

to 19.04.1997 cannot be excluded nor ignored. This Court

further holds that such counting of service of the employee,

rendered prior to 19.04.1997, does not amount to giving

retrospective effect to the notification dated 03.04.1997,

punished on 19.04.1997, if the employee was in service on the

date the Educational Institution was brought under the purview

of the Act 1972.

Analysis on Point No.2:-

45. The submission of the learned counsel for the

respondents is that the petitioners applied belatedly, after 13

years, for grant of gratuity. Consequently, they are not entitled.

46. The Court do not find force in the aforesaid

submission.

47. Section 7 of the Payment of Gratuity Act, 1972

reads as under:-

―7. Determination of the amount of Gratuity.- (1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (i) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined. [(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. (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].

(4)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the Controlling Authority such amount as he admits to be payable by him as gratuity.

[(b) Where there is a dispute with regard to any matter or matters specified in Clause (a), the employer or employee or any other person raising the dispute may make an application to the Controlling Authority for deciding the dispute.] [(c) The Controlling Authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and, if, as a result of such inquiry any amount is found to be payable to the employee, the Controlling Authority shall direct the employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer.] [(d) The Controlling Authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto. [(e) As soon as may be after a deposit is made under Clause (a), the Controlling Authority shall pay the amount of the deposit-

i) to the applicant where he is the employee; or

(ii) where the applicant is the employee, to the [nominee or, as the case may be, the guardian of such nominee or] heir of the

employee if the Controlling Authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity.

(5) For the purpose of conducting an inquiry under Sub-Section (4), the controlling authority shall have the same powers as are vested in a Court, while trying a suit, under the Code of Civil Procedure,1908 (5 of 1908), in respect of the following matters namely:-

(a) enforcing the attendance of any person or examining him on oath;

(b) requiring the discovery and production of documents;

(d) issuing commissions for the examination of witnesses. (6) Any inquiry under this Section shall be a judicial proceeding within the meaning of Sections 193 and 228, and for the purpose of Section 196, of the Indian Penal Code, 1860 (45 of 1860).

(7) Any person aggrieved by an order under sub-section (4), may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf:

Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days.

[Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling

authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub-section (4), or deposits with the appellate authority such amount.] (8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the controlling authority.‖

48. The payment of Gratuity Act under Section 7 (1)

provides that a person who is eligible for payment of gratuity or

any person authorized, in writing, to act on his behalf, shall

send a written application to the employer, within such time

and in such form, as may be prescribed, for payment of such

gratuity.

49. Sub-section (2) of Section 7, further provides that

as soon as gratuity becomes payable, the employer shall,

whether an application referred to in sub-section (1) has been

made or not, determine the amount of gratuity and give notice

in writing to the person to whom the gratuity is payable and

also to the controlling authority specifying the amount of

gratuity so determined.

50. So, even if a person who is eligible for payment of

gratuity does not send a written application as provided under

sub-section (1), still it is for the employer to determine the

amount of gratuity as soon as gratuity becomes payable and

give notice in writing to the person concerned to whom the

gratuity is payable and also to the controlling authority

specifying the amount of gratuity so determined. This is a

statutory duty cast upon the employer and is independent of

sub-section (1) of Section 7. In other words, whether the

employee has filed the application or not, the employer has to

act as per sub-section (2) of Section 7, which has been given

overriding effect, over sub-section (1) of Section 7, to that

extent, by use of the expression „whether an application referred

to in sub-section (1) has been made or not‟. Merely because the

employee has not given written application in time or no

application at all, he cannot be deprived of the payment of the

eligible gratuity on such ground. The respondent Nos.3 and 4

had to discharge their statutory duty under Section 7 (2) as also

under Section 4 of the Act, 1972, irrespective of no application

or belated application for payment of gratuity by the petitioners.

51. In Secretary, Siddhartha Academy of General &

Technical Education (supra-3), the employee therein retired in

the year 1998 upon attaining the age of superannuation. He

made the claim before the controlling authority under the

Payment of Gratuity Act, 1972 after almost one year, in the year

1999 along with a petition for condonation of delay in filing the

claim petition. The Controlling Authority dismissed the petition

for condonation of delay. The appellate authority allowed the

appeal and directed the management of the college to effect

payment of gratuity to the employee. The order of the appellate

authority was challenged in the High Court. The combined High

Court of Andhra Pradesh referred to the Division Bench

judgment in V. Venkateswara Rao v. Chairman/Governing

Body S.M.V.M. Polytechnic, Tanuku8, wherein it was held that

ordinarily the delay in making the applications for gratuity

should be condoned unless for special reasons the same can be

rejected, and further, the fact that the claim for payment of

gratuity was not made within the time limit specified did not

render any such claim petition invalid.

52. This Court in Secretary, Siddhartha Academy of

General & Technical Education (supra), further held that the

Parliament has made it explicitly clear that submission of an

application, either by the employee or by anyone authorized by

him on his behalf, in terms of sub-section (1) of Section 7, is

purely a directory one, but not mandatory one. In fact, by using

specifically the expressions "the application has been made or

not", the Parliament has conveyed very firmly its intention that

1997 (4) ALT 336 (DB)

the gratuity becomes payable to an employee irrespective of the

fact that an application for that purpose has been made or not.

53. It is apt to refer relevant part of Secretary,

Siddhartha Academy (supra) as under:-

―......Sub-section (2) of Section 7 holds the key to understand the contours of sub-section (1) of Section 7. In Sub-section (2), the most crucial expressions used read as under:

―Whether an application referred to in sub- section (1) has been made or not‖.

By the choice of using these expressions, the Parliament has made it explicitly clear that submission of an application, either by the employee or by anyone authorized by him on his behalf, in terms of sub-section (1) of Section 7, is purely a directory one, but not mandatory one. In fact, by using specifically the expressions "the application has been made or not", the Parliament has conveyed very firmly its intention that the gratuity becomes payable to an employee irrespective of the fact that an application for that purpose has been made or not. In other words, the payment of gratuity has been made mandatory and an application soliciting such payment is made purely directory. After all, the primary objective of this legislation was to secure payment of gratuity. That is the reason why the State Government, while framing the rules, used the expressions in Rule 7(1) that employee or any person authorized by him shall apply ordinarily within 30 days from the date of gratuity became payable. The intention is very clear. An application

requiring payment of gratuity can ordinarily be made within 30 days, thus, implying that such an application can be lodged even beyond the said 30 days time.

Thereby, indicating that right to receive gratuity does not get jeopardized all due to delay in applying. It would also be apt to notice that certain penal consequences would follow from the default committed in the matter of payment of gratuity. Under section 8, the arrears of gratuity become recoverable together with compound interest thereon at the rate of 9% per annum from the date of expiry of the prescribed time as arrears of land revenue. Further, Section 9 recognizes avoidance of payment of gratuity as penal and the offender can be punished with imprisonment for a term, which may extend to six months or with fine, which may extend to Rs.10,000/-, or with both. Therefore, when Sections 7, 8 and 9 are read together and kept in view, it becomes explicitly clear that the Parliament never intended that gratuity becomes payable only upon an application made by a party, who is eligible to receive the same. Perhaps, making an application for payment of gratuity acts merely as a catalyst to hasten the process of the payment of gratuity and thus avoid the follow up consequences emanating from default. I therefore, reject the contention of Sri C. Gunaranjan that the competent authority could not have entertained the claim for payment of gratuity without the employee concerned approaching and lodging a claim in terms of Sub-section (1) of Section 7 read with Rule 7 (1) of the A.P. Payment of Gratuity Rules, 1972.‖

54. Additionally, such a ground has not been

mentioned in the endorsement sent to the petitioners denying

their claim for gratuity. The only ground taken is that the

Payment of Gratuity Act, 1972 is not attracted. The

respondents cannot by way of counter affidavit supply the

ground of refusal. It is settled in law that the order is to be

supported on the ground in the order itself. It cannot be

supplemented on new ground raised in the counter affidavit.

55. On Point No.2, this Court holds that the petitioners

cannot be denied payment of gratuity on the ground that they

filed the application belatedly after 13 years.

Analysis on Point No.3:-

56. In view of what this Court has held on point Nos.1

and 2 (supra) it is held on point No.3, that the petitioners are

entitled for grant and release of the gratuity under the Payment

of Gratuity Act 1972 for the period of service rendered by them

in the respondent Nos.3 and 4 Educational Institution/

Establishment, taking into account their service period from the

date of their respective entry in service in the Educational

Institution/Establishment subject to the maximum statutory

amount as provided under Section 4 of the Act, 1972.

57. The petitioners have been deprived of their valuable

right to property, gratuity, under Article 300-A of the

Constitution of India. The petitioners are held entitled for

payment of interest @ 9% with effect from the date the gratuity

became payable to them upto the date of release and the

respondent Nos.3 and 4 are held liable to pay the gratuity as

also the interest.

Result:-

58. In the result:-

1) The Educational Institution (Establishment)

respondents in all the writ petitions filed by the

employees are directed to make the payment of

gratuity to the respective petitioners for the period of

service rendered in the establishment, counting the

same from the date of their entry in service, (without

excluding the period prior to 19.04.1997) but subject

to the maximum statutory amount, in the light of this

judgment, within a period of one month from today

with interest thereon @ 9% p.a. from the date the

gratuity became payable till the date of actual

payment.

2) If the payment as aforesaid is not made

within one month from today, the petitioners shall

approach the Controlling Authority under the Act,

1972, who shall proceed to issue certificate for the

amount due, as per aforesaid, to the District Collector

of the concerned District. The District Collector, shall

proceed to recover the same together with compound

interest @ 9% from the date of expiry of one month

from today upto the date of realization, as the arrears

of land revenue against the respondent Educational

Institution/establishment and after recovering the

same, shall pay the amount to the respective

petitioners.