Bombay High Court
Mohd. Hanif. Ismail. Hakam And 32 ... vs Oil And Natural Gas Corporation ... on 23 August, 2023
Bench: N. J. Jamadar
2023:BHC-OS:8840
WP2443-2022+.DOC
Santosh
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2443 OF 2022
1 Suryakand D. Lad
Sunny Apartment, Raboli No.2,
Shivajinagar, Thane (W)
2 Krishna V. Patil
3 Rahul A. Jadhav
4 M. Kashilingam, C/o Rajendra A.
Panchal
5 Padma Vilas Shinde
6 Gurunath B. Apankar
7 Kamlabai S. Joglekar (Deceased)
Through her Legal Representative
Rekha Ashok Darvesh ...Petitioners
Versus
1 M/s. Oil and Natural Gas Corporation
Ltd., Mumbai Region, NBP Green
Heights, C-69, Bandra Kurla Complex
Rd., Opposite MCA Club, G Block BKC,
Bandra East, Mumbai - 400 051
2 M/s. Noble Enterprises, A Wing, Flat
No.10, Om Amir Apartments, Opp. Ketki
Hotel, Shivaji Road, Panvel - 410 020 ...Respondents
WITH
WRIT PETITION NO. 2355 OF 2021
1 Mohd. Hanif Ismail Hakam
70, Maka Doom Manzil, R.No.697, V. S.
Marg, Mahim, Mumbai - 400 016
2 Ramswamy V. Dever
3 Shunmugham M. Devar
4 Muttupandi S. Devar
5 Paneersel A. Pariyar
6 Samuvell B. Nadar
7 Pushparaj G. Pariyar
8 Raman A. Yageshwaran
9 Essay N. Padayachi
10 Prafulla Shankar Salunke
11 Vijay Bapu Ambekar
12 C. H. Durai
1/46
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13 Murugam A. Yogeshwaran
14 Gopalan G. Yogeshwaran
15 Uchamani T. Devar
16 Gopi Kasi Nadar
17 G. Raja Singh
18 Prakash D. Pawal
19 Ashok Gurunath Malwade
20 Akhtar N. Girnari
21 Essay Mutthu S. Murathuver
22 Suyambuturai T. Nadar
23 Bharatlal Harishchandra
24 Girish Bhailal Patel
25 Chellapandi S. Nadar
26 Bhanuj T. Bhattacharya
27 Muthu Arumugaam Devar
28 Jairaj Kondanna Indrollu
29 Noorallah S. Sayyad
30 Ram Parvesh Ram Kurmi
31 Vell R. Chettiyar
32 Thangavelli K. Nadar
33 Tirumalai S. Subbaiah ...Petitioners
Versus
1 M/s. Oil and Natural Gas Corporation
Ltd., 4th Floor, Quadrant 1, NBP Green
Heights, Mumbai - 400 051
2 M/s. G. B. Mhatre
3 M/s. A. R. Naim and Sons ...Respondents
WITH
WRIT PETITION NO. 1724 OF 2021
1 Subramaniam S. Arjun
Plot No.5/E/7, Shivaji Nagar, Govandi,
Mumbai - 400 043
2 Mohammed Ahmed Mirza
3 Llyas Yakub Shaikh
4 Eknath Vitthal Kamble
5 V. Thagavell Nadar
6 Sultan Ismail Machiwala
7 Shivaji Shanker Khandagale
8 Subhash Dattaram Dalvi
9 Bhaskar L. Suryavanshi
10 Mohammed Tamil Abdul Masjit
11 Shantaram G. Dawal
12 Vilas Balavant Chavan
13 Dashrath C. Aroskar
2/46
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14 Baliram Rajaram Patekar
15 Isravell M. Nadar
16 Kashinath Y. Walande ...Petitioners
Versus
1 M/s. Oil and Natural Gas Corporation
Ltd., 4th Floor, Quadrant 1, NBP Green
Heights, Mumbai - 400 051
2 M/s. G. B. Mhatre ...Respondents
WITH
WRIT PETITION NO. 1826 OF 2021
Ramanathan A. Yogishwaran
C/4-2/1, Ardavinayak Housing Society,
Sector - 16, Nerul (W),
Mumbai - 400 706 ...Petitioners
Versus
1 Oil and Natural Gas Corporation Ltd., 4th
Floor, Quadrant 1, NBP Green Heights,
Mumbai - 400 051
2 G. B. Mhatre
3 A. R. Naim and Sons ...Respondents
Mr. Sanjay Singhavi, Senior Counsel, a/w Ms. Rohini
Thyagarajan, for the Petitioner in WP/2443/2021.
Ms. Nivedita Deshpande, i/b Mr. S. N. Deshpande, for the
Petitioners in WP Nos.2355/2021, 1724/2021 and
1826/2021.
Mr. Girish Paryani, i/b A&P Legal Associates LLP, for the
Respondent No.1 in WP Nos.2443/2021 and 2355/2021.
Ms. Hubab Sayyed, i/b Vidhi Partners, for Respondent No.1 in
WP Nos.1724/2021 and 1826/2021.
CORAM: N. J. JAMADAR, J.
RESERVED ON: 10th APRIL, 2023
PRONOUNCED ON: 23rd AUGUST, 2023
JUDGMENT:-
1. Rule. Rule made returnable forthwith and, with the
consent of the learned Counsel for the parties, heard finally.
2. As a common question of law arises for consideration in
these petitions in a, by and large, identical fact-situation, all
WP2443-2022+.DOC
these petitions are being decided together. Writ Petition
No.2443 of 2022 is considered as the lead petition.
3. Background facts can be stated in brief as under:
(a) Respondent No.1 - ONGC is a public limited
company registered under the Companies Act, 1956.
Respondent No.1 is a "State" within the meaning of Article 12 of
the Constitution of India. The petitioners claimed to have
worked on the premises of respondent No.1 - ONGC variously
from the period 1988 to 1995. The petitioners were engaged
through various contractors, the last of whom was M/s. Noble
Enterprises, respondent No.2. ONGC was thus the "principal
employer" of the petitioners within the meaning of Contract
Labour (Abolition and Regulation) Act, 1970 ("the Contract
Labour Act, 1970"). Eventually after having worked for years,
ranging between 15 to 25, the petitioners employment came to
an end in June, 2006 pursuant to the petitioners furnishing an
undertaking under Goodwill Package Scheme floated by ONGC.
(b) The petitioners claim as the petitioners and other
workmens' services were being utilized by ONGC for performing
work of a permanent and perennial nature, through the Trade
Unions dispute was raised to treat the petitioners and other
workmen as regular and permanent workers of ONGC, in writ
WP2443-2022+.DOC
petitions before this Court. An industrial reference was also
subjudice before the Central Government, Industrial Tribunal.
(c) On 8th June, 2006 ONGC floated a Goodwill Package
Scheme, purportedly to achieve industrial peace and harmony,
minimize litigation and jobless contract labour and address the
implications of closure, shifting, re-organization and re-
structuring of establishments of ONGC. Pursuant thereto
several Unions of contract workers executed a Memo of
Understanding (MoU) with ONGC. One of the principal terms of
the Goodwill Package Scheme was that in consideration of
payment of lumpsum compensation the contract workers would
withdraw from the pending litigation and cease to be engaged on
the premises of ONGC. Accordingly, on 13 th June, 2006, the
petitioners signed an, "affidavit-cum-declaration" to avail the
benefits under the said scheme and consequently withdrew from
the industrial reference.
(d) The petitioners claim, they were paid the amount in
accordance with the terms of Goodwill Package Scheme.
However, gratuity payable to them was not paid. Thus, the
union dispatched 'I' Forms in terms of Rule 7(1) of the Payment
of Gratuity (Central) Rules, 1972 framed under the Payment of
Gratuity Act, 1972 ("the Gratuity Act") to respondent Nos.1 and
WP2443-2022+.DOC
2. No action in conformity with the obligations of the employers
was taken by the respondents. Therefore the union submitted,
'N' Forms before the Controlling Authority under the Gratuity
Act.
(e) The Controlling Authority issued notices to ONGC
and respondent No.2. After evaluating the material and the
evidence and considering submissions canvassed, including on
the objection as to the maintainability of the claim for gratuity
against ONGC - the principal employer, by an order dated 17 th
July, 2017, the Controlling Authority under the Gratuity Act
directed the ONGC to make payment of gratuity to the
petitioners. Liberty was granted to ONGC to recover the amount
so paid from respondent No.2 contractor and its predecessors.
The Controlling Authority, inter alia, held that the contract
workers were entitled to claim gratuity from the ONGC, who
was, at all material times, their principal employer and the fact
that they had accepted the compensation under the Goodwill
Package Scheme did not preclude them from claiming the
gratuity under the Gratuity Act.
(f) Being aggrieved, ONGC preferred an appeal before
the Appellate Authority under Section 7(7) of the Gratuity Act.
By the impugned order the Appellate Authority was persuaded
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to allow the appeal holding that the issue of liability of ONGC
was clearly covered by the decision of this Court in the case of
Cummins (I) Ltd. vs. Industrial Cleaning Services 1 and the
Controlling Authority had exceeded its jurisdiction in deciding
the question as to whether ONGC was the principal employer of
the petitioners and, therefore, liable to pay gratuity.
Writ Petition No.2355 of 2021
4. In Writ Petition No.2355 of 2021, the petitioners were
employed to work on the establishment of ONGC through
respondent Nos.2 and 3, the contractors. Those petitioners also
claim to have rendered services for years together as contract
employees.
Writ Petition No.1742 of 2021
5. In Writ Petition No.1742 of 2021, 16 petitioners worked as
contract workmen from varying periods commencing from 1980
to 1993 till the cessation of their employment under Goodwill
Package Scheme.
Writ Petition No.1826 of 2021
6. The petitioner claimed to have worked through the
contractors - respondent Nos.2 and 3.
12017 I CLR 612.
WP2443-2022+.DOC
7. In all these petitions, the Appellate Authority has
negatived the claim of the petitioners to gratuity primarily on
the ground that ONGC being the principal employer did not fall
within the definition of the employer under Section 2(f) of the
Gratuity Act as enunciated by this Court in the case of
Cummins (supra).
8. Being aggrieved, the petitioners have invoked the writ
jurisdiction.
9. Affidavits-in-reply have been filed on behalf of ONGC. The
entitlement of the petitioners to recover gratuity from ONGC is
contested on two counts. First, there was no privity of contract
between the petitioners and ONGC and, thus, no employer -
employee relationship. The fact that ONGC was the principal
employer of the petitioners within the meaning of the Contract
Labour Act, 1970 is of no significance as the definition of
"principal employer" contained in the Contract Labour Act, 1970
cannot be imported to fasten the liability under the Gratuity Act.
Under the provisions of the Gratuity Act only the person or
authority who has the ultimate control over the affairs of the
establishment is liable to pay the gratuity. Since the
contractors exercised ultimate control over the petitioners -
workmen, ONGC could not have been held liable to pay the
WP2443-2022+.DOC
gratuity, as was wrongly held by the Controlling Authority. This
defence heavily draws from the observations of this Court in the
case of Cummins (supra), to which a reference would be made
later.
10. Second, it is the contention of ONGC that in accordance
with the terms of Goodwill Package Scheme the workmen had
agreed to accept the goodwill package amount inclusive of all
statutory or otherwise due payments in full discharge of all past
and future claims whatsoever including any claims as may be
conceived under any law or otherwise. And the workmen agreed
and understood that the acceptance of the benefit under the
goodwill package shall be in full and final settlement of all their
past and future claims/demands of whatsoever nature, as may
be conceived under any law arising out of their
engagement/non-engagement in the establishment of ONGC
through contractors or otherwise. Thus, having accepted the
amount of compensation under the Goodwill Package Scheme
the petitioners were not entitled to claim gratuity.
11. In the backdrop of the aforesaid pleadings, I have heard
Mr. Sanjay Singhavi, the learned Senior Counsel for the
petitioners in WP/2443/2022, Ms. Nivedita Deshpande, the
learned Counsel for the petitioners in WP/2355/2021,
WP2443-2022+.DOC
WP/1724/2022 and WP/1826/2021, Mr. Girish Paryani, the
learned Counsel for respondent No.1 - ONGC in WP/2443/2022
and WP/2355/2021 and Ms. Hubab Sayyed, the learned
Counsel for ONGC in WP/1724/2021 and WP/1826/2021, at
length. The learned Counsel took the Court through the
pleadings in these petitions, the orders passed by the
authorities under the Gratuity Act and the material on record.
In elaboration of the submissions canvassed across the bar, the
petitioners and respondents have also tendered written notes.
12. Mr. Singhavi took a slew of exceptions to the impugned
order. Firstly, Mr. Singhavi would urge, the Appellate Authority
did not appreciate the factual context in a correct perspective
and proceeded to non-suit the workmen by relying upon the
decision of this Court in the case of Cummins (supra), though
it does not govern the facts of the case at hand. The impugned
order, according to Mr. Singhavi, singularly lacks consideration
apart from the reproduction of the observations of this Court in
the case of Cummins (supra). Secondly, the crucial element of
ONGC being an employer within the meaning of Section 2(f)(i) of
the Gratuity Act was not at all considered. This led to vitiation
as the decision of this Court in the case of Cummins (supra)
WP2443-2022+.DOC
was in the context of the definition of the employer contained in
Sub-clauses (ii) and (iii) of Section 2(f).
13. Thirdly, Mr. Singhavi would urge, the decision of this
Court in the case of Cummins (supra) which forms the basis of
the impugned order and the sheet anchor of the defence of
ONGC does not lay down a correct position in law. Taking the
Court through the judgment in the case of Cummins (supra) Mr.
Singhavi would urge that having noted that under the provisions
of Section 21(4) of the Contract Labour Act, 1970 a principal
employer is liable to pay the gratuity in the event of default by
the contractor, this Court proceeded on an incorrect premise
that the remedy of the workmen was not under the provisions of
the Gratuity Act but under the Payment of Wages Act, 1936 or
Section 33-C of the Industrial Disputes Act, 1947. Mr. Singhavi
strenuously submitted that it is well settled that the Gratuity
Act is a Code in itself and to enforce the payment of gratuity
recourse to the provisions of other enactments is impermissible.
To bolster up this submission, Mr. Singhavi placed a strong
reliance on the decision of the Supreme Court in the case of
State of Punjab vs. Labour Court, Jullunder and others2.
2(1980) 1 Supreme Court Cases 4.
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14. Fourthly, Mr. Singhavi would urge, the enunciation by this
Court in the case of Cummins (supra) that the Controlling
Authority under the Gratuity Act has no jurisdiction to decide
who the "employer" is, overlooks the purport and effect of the
amended definition of "employee" under Section 2(e) of the
Gratuity Act. It was submitted that if the amended definition of
"employee" under Section 2(e) is read in conjunction with the
definition of "employer" under Section 2(f)(i) of the Gratuity Act,
the liability of ONGC to pay the gratuity becomes absolutely
clear.
15. Lastly, in the facts of the case, according to Mr. Singhavi,
the determination that only the contractor is liable to pay the
gratuity causes serious prejudice to the workmen, as,
indisputably, ONGC had utilized the services of the petitioners
through various contractors. Since the gratuity is payable only
upon cessation of employment and for every completed year of
service and a part thereof in excess of six months, as provided
under Section 4(2) of the Gratuity Act, the last contractor
cannot be made liable to pay the gratuity for the entire service
tenure. At any rate, the Gratuity Act casts a dual responsibility
on the principal employer and contractor to discharge the
obligation under the said Act, urged Mr. Singhavi.
WP2443-2022+.DOC
16. Ms. Deshpande, the learned Counsel for the petitioners in
WP/2355/2021, WP/1724/2021 and WP/1826/2021, while
supplementing the submissions of Mr. Singhavi, laid emphasis
on the fact that ONGC squarely falls within the definition of
"employer" under sub-clause (i) of Clause (f) of Section 2 of the
Gratuity Act. ONGC had not contested the fact that it is an oil
field belonging to and under the control of the Central
Government. Failure to consider this material distinction
resulted in the application of the decision in the case of
Cummins (supra) to the facts of the instant case, submitted Ms.
Deshpande. It was further urged that liability to pay gratuity
under MoU dated 29th December, 2000 arrived at between
ONGC and Trade Unions has not been put in contest. Under
Clause 5.E.7 ONGC had agreed to evolve a Group Gratuity
Policy through Insurance Agencies which would cover the
contract workmen for the purpose of gratuity benefit as per the
Payment of Gratuity Act. This factor was also not adequately
considered by the Appellate Authority. Thus, according to Ms.
Deshpande, the Appellate Authority misdirected itself in setting
aside a well reasoned order of the Controlling Authority by
wrongly applying the decision in the case of Cummins (supra) to
the facts of the cases as hand.
WP2443-2022+.DOC
17. As against this, Mr. Paryani, the learned Counsel for
ONGC, submitted that no interference is warranted in the
impugned orders. The decision of this Court, according to Mr.
Paryani, in the case of Cummins (supra) sets the controversy at
rest and is on all fours with the facts of the case at hand. It was
urged, with a degree of vehemence, that the concept of
"principal employer" is completely alien to the payment of
Gratuity Act. The definition of "principal employer" contained in
the Contract Labour Act, 1970 cannot be imported while
determining liability of an employer under the Gratuity Act. The
Controlling Authority had fallen in error in importing the
concept of principal employer and the said mistake was rightly
corrected by the Appellate Authority in view of the enunciation
of law in the case of Cummins (supra).
18. Mr. Paryani would urge that it is the test of "the person
having ultimate control", which bears upon the liability to pay
the gratuity. In the case at hand, according to Mr. Paryani, the
said test is not fulfilled qua ONGC as it was only the contractor
who had the ultimate control and, thus, liable to pay the
gratuity under the Act. It was further urged that under the
provisions of the Gratuity Act the Controlling Authority has no
jurisdiction to adjudicate upon the liability of the principal
WP2443-2022+.DOC
employer, even if it is assumed that ONGC was the principal
employer.
19. In any event, in view of the terms of the goodwill package
especially Clauses 2.3 and 5.3, the petitioners, having accepted
the benefits under the goodwill package scheme with a clear
understanding that it was in full and final settlement of their
past or future claims/demands of whatsoever nature, are
precluded from claiming gratuity under the Gratuity Act. It was
further urged that gratuity is clearly excluded from the
definition of 'wages' under the Payment of Wages Act, 1936.
Looked at from any perspective, according to Mr. Pariyani,
ONGC cannot be fastened with the liability to pay the gratuity,
either in law or on the facts of the case.
20. Ms. Sayyed, the learned Counsel for ONGC in
WP/1724/2021 and WP/1826/2021 also supported the
impugned order. It was submitted that as enunciated in the
case of Cummins (supra) the domain of the Controlling
Authority is limited to enquire into the questions which are
necessary for the administration of the provisions of the
Gratuity Act, namely, whether applicant is an employee, whether
the opponent is an employer and whether the conditions for
entitlement to gratuity are satisfied, and, if yes, the quantum
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thereof. The Controlling Authority has no jurisdiction to decide
the question as to who the employer is.
21. Ms. Sayyed reiterated that even though it is an admitted
fact that ONGC was the principal employer of the petitioners yet
ONCG cannot made liable as an "employer" under the provisions
of Section 2(f) of the Gratuity Act. An endeavour was made to
draw home the point that even reliance on sub-clause (i) of
Clause (f) of Section 2 is of no assistance to the petitioners as it
does not define the employer qua the employees of the
contractor. Ms. Sayyed sought to supplement the submissions
of Mr. Paryani by canvassing a submission that the principal
employer was not statutorily liable to pay the amount paid by it
under the goodwill package, which were in the nature of ex
gratia.
22. The aforesaid submissions now fall for consideration.
23. To begin with, it may be apposite to note and keep in view
uncontroverted facts. It is incontestible that ONGC had been
availing the services of the workmen through contractors for
rendering specialized services in areas which are not prohibited
under the Contract Labour Act, 1970. Indisputably, ONGC has
employed the workmen through a number of contractors, few of
whom are co-respondents in the respective petitions. The fact
WP2443-2022+.DOC
that the petitioners in each of the petitions have rendered
services for a number of years and, at any rate, for the period
required to be eligible to claim gratuity under the Gratuity Act,
has not been seriously controverted. The status of ONGC as
"principal employer" qua the petitioners also seems to be not
put in contest though the implication thereof in the matter of
liability to pay gratuity is at the heart of the controversy. It is
not in dispute that the cessation of employment occurred upon
acceptance of goodwill package by the contract workmen, which
was professedly floated to ensure industrial peace in the
backdrop of the then subjudice industrial dispute. Equally
indisputable is the fact that ONGC had entered into the
settlement with the representative unions in respect of the
demands of the contract workmen and under the MoU dated
29th December, 2000, it was agreed that an effort would be made
to evolve a group gratuity policy through insurance agency,
which would cover the contract workmen for the purpose of
gratuity benefit as per the Gratuity Act.
24. In the backdrop of the aforesaid facts, before appreciating
the rival submissions, a reference to the relevant provisions of
the Gratuity Act may be necessary. Section 2(e) which came to
be substituted by Act No.47/2009 defines "employee" as under:
WP2443-2022+.DOC
"Section 2(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;]"
25. Clause (f) of Section 2 defines "employer" as under:
"Section 2(f) "employer" means, in relation to any
establishment, factory, mine, oilfield, plantation, port,
railway company or shop--
(i) belonging to, or under the control of, the Central
Government or a State Government a person or
authority appointed by the appropriate Government for
the supervision and control of employees, or where no
person or authority has been so appointed, the head of
the Ministry or Department concerned,
(ii) belonging to, or under the control of, any local
authority, the person appointed by such authority for
the supervision and control of employees or where no
person has been so appointed, the chief executive
officer of the local authority,
(iii) in any other case, the person, who, or the authority
which, has the ultimate control over the affairs of the
establishment, factory, mine, oilfield, plantation, port,
railway company or shop, and where the said affairs
are entrusted to any other person, whether called a
manager, managing director or by any other name,
such person;"
26. Under Section 4(1) of the Act, gratuity shall be payable to
an employee in the eventualities enumerated therein, which
includes termination of employment upon retirement or
resignation, under Clause (b), if the employee has rendered
continuous service for not less than five years. Sub-section (2)
of Section 4 prescribes the formula for computation of gratuity.
WP2443-2022+.DOC
Section 4(3) stipulates that the amount of gratuity payable to an
employee shall not exceed certain limits and thus puts a cap on
the amount payable towards gratuity. Section 4(5) provides that
nothing in the said section shall affect the right of an employee
to receive better terms of gratuity under, "any award or
agreement or contract with the employer".
27. Section 7 contains a fasciculus of provisions for
determination of amount of gratuity. In the event of any dispute
the Controlling Authority is empowered under Section 7(4)(c) to
determine the dispute as to the admissibility of any claim for
gratuity and/or quantum thereof. The said determination is
subject to an appeal before the Appellate Authority under
Section 7(7). Section 14 of the Act contains a non-obstante
clause and gives overriding effect to the provisions of the Act or
any Rule made thereunder notwithstanding anything
inconsistent therewith contained in any enactment other than
the said Act or any instrument or contract having effect by
virtue of any enactment other than the said Act.
28. At this juncture, a reference to the provisions of the
Contract Labour Act, 1970 may also be necessary. Under
Section 2(h) wages defined therein is to have the meaning
assigned to it in Clause (6) of Section 2 of the Payment of Wages
WP2443-2022+.DOC
Act, 1936. Section 21(4) which casts an obligation on the
principal employer to make payment of wages provides that, in
case the contractor fails to make payment of wages within the
prescribed period or makes short payment, then the principal
employer shall be liable to make payment of wages in full or the
unpaid balance due, as the case may be, to the contract labour
employed by the contractor and recover the amount so paid by
the contractor either by deduction from any amount payable to
the contractor under any contract or as a debt payable by the
contractor.
29. In the context of the controversy, a reference to the
definition of "wages" under the Payment of Wages Act, 1936 may
also be apposite. The relevant part of the definition of "wages"
thereunder reads as under:
"5[(vi) "wages" means all remuneration (whether by way of
salary, allowances or otherwise) expressed in terms of
money or capable of being so expressed which would, if the
terms of employment, express or implied, were fulfilled, be
payable to a person employed in respect of his employment
or of work done in such employment, and includes-
(a) any remuneration payable under any award or settlement
between the parties or order of a Court;
(b) any remuneration to which the person employed is
entitled in respect of overtime work or holidays or any leave
period;
(c) any additional remuneration payable under the terms of
employment (whether called a bonus or by any other name);
(d) any sum which by reason of the termination of
employment of the person employed is payable under any
law, contract or instrument which provides for the payment
of such sum, whether with or without deductions but does
WP2443-2022+.DOC
not provide for the time within which the payment is to be
made;
(e) any sum to which the person employed is entitled under
any scheme framed under any law for the time being in
force;
but does not include--
.........
(6) any gratuity payable on the termination of employment
in cases other than those specified in sub-clause (d)]."
30. In the light of the aforesaid statutory provisions, the
controversy at hand primarily revolves around the question as
to whether ONGC satisfies the description of the employer, qua
the petitioners - contract workmen, within the meaning of the
Gratuity Act. As the impugned order is based on the decision of
this Court in the case of Cummins (supra) and the submissions
were also canvassed in the context of the correctness or
otherwise of the enunciation therein, it may be appropriate to
immediately notice the facts in the case of Cummins (supra) and
the decision thereon.
31. In the case of Cummins (supra) the petitioner therein had
initially entered into the contract with Dattatraya Vetal, the
Proprietor of, "Industrial Cleaning Services" as a contractor to
provide cleaning services at the petitioners factory at Pune. The
said contract was terminated with effect from 31 st December,
1984. The cleaning services, however, were continued by Mr. M.
A. Pathak in the same proprietary name by taking over the
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business. Mr. Pathak agreed to continue the employment of all
the then existing 74 employees, employed by Mr. Vetal. An
agreement was executed between Mr. Vetal and Mr. Pathak on
1st January, 1985 inter alia providing for payment of gratuity to
the employees engaged for cleaning service in the petitioners
factory by Mr. Pathak. A Trust was created for the said purpose
in the name of, "Industrial Cleaning Services Employees Group
Gratuity cum Life Assurance Trust".
32. Later on, industrial dispute arose. Eventually a MoU was
reached between the petitioner and the Union. The workmen
appointed through the contractor submitted letters of
resignation to Industrial Cleaning Services - respondent No.1
and joined the petitioner as its workmen. Thereupon a claim for
payment of gratuity was laid before the Controlling Authority,
initially against respondent No.1 and, subsequently, the
petitioner came to be joined as a party to the said proceedings.
The Controlling Authority thereafter determined the amount of
gratuity and directed the petitioner to pay the same to the
workman.
33. In the backdrop of the aforesaid facts, the petitioner
assailed the order of the Controlling Authority principally on the
ground that the Controlling Authority had no power to
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adjudicate, who the employer of the contract workmen was. A
learned Single Judge of this Court, after an elaborate
consideration of the provisions of the Gratuity Act ruled that, in
the facts of the said case, respondent No.1 therein or its partner
had the ultimate control over the affairs of the said
establishment and therefore respondent No.1 alone could be
termed as an employer in relation with the establishment. This
Court was also of the view that there was no reason to import
the definition of, "principal employer", into Clause (f) of Section
2 of the Gratuity Act. Adverting to the decision of the Supreme
Court in the case of Ahmedabad Pvt. Primary Teachers'
Association vs. Administrative Officer and others 3, this Court
held that it was impermissible to import the wide definition of
the term employee in the other enactments like Employees'
Provident Funds Act, 1952 in the Gratuity Act. The legislature
advisedly did not use these templates or introduce the concept
of "principal employer" in the definition of "employer" in Clause
(f) of Section 2 and there was no reason why this dichotomy
between a contractor and a principal employer should be
imported into the definition of "employer" under the Gratuity
Act. In the process, this Court distinguished the decisions of
the Madras High Court in the cases of Superintending Engineer,
3(2004) 1 Supreme Court Cases 755.
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Mettur Thermal Power Station, Mettur vs. Appellate Authority
Joint Commissioner of Labour, Coimbatore4 and Madras
Fertilisers Ltd. vs. Controlling Authority under Payment of
Gratuity Act5 .
34. Since considerable submissions were canvassed on the
observations of this Court in the case of Cummins (supra), to
retain emphasis and correctly appreciate the enunciation
therein, the observations in paragraphs 9 to12 are extracted
below:
"9. Coming now to the merits, the person liable to pay
gratuity must be an "employer" as defined in Clause (f) of
Section 2. Just as the employee is a person employed for
wages in, or in connection with the work of, an
establishment, to which the Gratuity Act applies, the
employer must be a person, who had the ultimate control
over the affairs of the establishment. It is not disputed that
the employees, with whom we are concerned in the present
case, were employed in the firm of respondent No.1. It is
this firm, which is the establishment for the purposes of
gratuity so far as these employees are concerned. It is
respondent No.1 or its partners who had the ultimate
control over the affairs of this establishment and it is
respondent No.1 who alone could be termed as an employer
in relation to the establishment. Respondent no.1 may be
carrying on business at its own business premises or at the
factory of the Petitioner. That is quite besides the point. The
authority in its impugned order seems to have proceeded on
the footing that in the present case, all Applicants were
working inside the factory premises of the Petitioner and
never on the premises of respondent No.1 and that the
employer in respect of these workmen was accordingly the
Petitioner who had ultimate control over the affairs of the
factory. This reasoning is essentially fallacious in that it
disregards that as far as the Applicants are concerned, the
establishment in which the Applicants were employed was
the establishment of respondent No.1, though they may be
physically working at another establishment as part of their
42012(III) CLR 242.
52003(1) LLJ Madras 325.
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duties with the former establishment. The mere fact that
they were designated to work inside the factory premises of
the petitioner does not make the factory premises an
"establishment" as far as these employees are concerned.
The Authority was not right in holding that for deciding the
liability of gratuity under the provisions of the Gratuity Act,
it was immaterial as to who was the immediate employer of
the Applicants or that the employer in respect of any
person, who works inside factory premises, is the occupier
of the factory premises.
10. Mr. Naik for Respondent No.1 suggests that though
Respondent No.1 was the contractor who had engaged the
Applicants as employees, it is the Petitioner who was the
principal employer. He refers in this connection to the
definition of 'principal employer' under the Contract Labour
Act. There is no reason to import the definition of 'principal
employer' in Clause (f) of Section 2 of the Gratuity Act. The
Supreme Court in the case of Ahmedabad Primary
Teachers' Association vs. Administrative Officer (2004) 1
SCC 755 considered the definition of 'employee' in clause (e)
of Section 2 of the Gratuity Act. Definitions of the word
"employee" in diverse labour enactments including the
Employees' Provident Funds Act, 1952 were cited before the
Court and the Court was urged to construe the word
"employee" in clause (e) of Section 2 of the Gratuity Act
widely and include teachers within it. The Supreme Court
rejected the wide construction suggested in that case,
holding that the "legislature was alive to various kinds of
definitions of the word "employee" contained in various
previous labour enactments when the Act (i.e. the Gratuity
Act) was passed in 1972. If it intended to cover in the
definition of 'employee' all kinds of employees, it could have
as well used such wide language as is contained in section
2(1) of the Employees' Provident Funds Act, 1952 which
defines 'employee to mean 'any person who is employed for
wages in any kind of work, manual or otherwise, in or in
connection with the work of an establishment ...........Non-
use of such wide language in definition of 'employee' in
section 2(e) of the Act of l972 reinforces our conclusion that
teachers are clearly not covered in the definition." Even
here, the legislature whilst defining the word "employer" in
the Gratuity act, had before it various templates of
definitions of "employer" in different labour law legislations
including the concept of "principal employer" under the
Contract Labour Act. It advisedly did not use these
templates or introduce the concept of "principal employer" in
the definition of "employer" in clause (e) of Section 2. The
Contract Labour Act envisages 'contract labour' as a
workman employed in connection with the work of an
establishment where he is hired in or in connection with the
work of an establishment by or through a contractor. The
Contract Labour Act defines both "contractor" and "principal
employer" in relation to the "establishment". An
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'establishment' implies any place where any industry, trade,
business, manufacture or occupation is carried on. A
'contractor' in relation to such establishment is a person
who undertakes to produce a given result for the
establishment through contract labour or who supplies
contract labour for any work of the establishment, whereas
a 'principal employer' in relation to the establishment is a
person responsible for the supervision and control of the
establishment. There is no reason why this dichotomy
between a contractor and a principal employer should be
imported into the definition of "employer" under the Gratuity
Act. The Gratuity Act simply refers to an "establishment"
and an "employee" as a person employed in or in connection
with such establishment and an "employer" as a person
having the ultimate control over the affairs of the
establishment. The 'establishment' contemplated under
these definitions is any business establishment which
employs the employee. That establishment is obviously the
firm of Respondent No.1 here, and not the factory of the
Petitioner.
11. Mr. Naik relies on Section 21 of the Contract Labour
Act and submits that in any event, the responsibility to pay
'gratuity' as part of 'wages' is on the 'principal employer' as
defined under the Contract Labour Act and the Petitioner as
such principal employer is bound to pay the gratuity to the
concerned workmen even if they be employed by the
contractor. In other words, the argument is that, if not
under the Gratuity Act, the liability to gratuity can certainly
be fastened unto the Petitioner under the Contract Labour
Act. That may be so. Still, this liability does not arise under
the Gratuity Act and there is certainly no jurisdiction or
authority in the Controlling Authority to determine whether
any liability could be fastened unto the Petitioner under
Section 21 of the Contract Labour Act as the principal
employer under that Act. That would require the Authority
to embark on an inquiry as to whether Respondent No.1 is a
'contractor' and the Petitioner is a 'principal employer'
within the meaning of that Act and whether gratuity as
'wages' is payable and not paid by Respondent No.1 within
the meaning of that Act. These inquiries are foreign to the
Controlling Authority operating under the Gratuity Act and
determining matters specified in Clause (a) of sub-section
(4) of Section 7 thereof. As I have noted above, the matters
to be determined by the Authority are simply the following :
(i) Whether the applicant is an "employee" as defined in
clause (e) of Section 2 of the Gratuity Act, (ii) Whether the
opponent is an "employer" as defined in clause (f) of Section
2, (iii) Whether the conditions for entitlement to receive
gratuity under sub- section (1) of Section 4 of the Gratuity
Act are satisfied, and (iv) What is the quantum of such
gratuity and interest thereon, if any, having regard to sub-
sections (3), (4) and (5) of Section 7 of the Gratuity Act.
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Non-payment of wages, or of gratuity as part of wages, may
invite an action under Section 15 of the Payment of Wages
Act read with Section 21 of the Contract Labour Act or
alternatively, under Section 33-C of the Industrial Disputes
Act. In either case, the Authority under the Gratuity Act is
not the forum.
12 Mr. Naik relies on the judgments of Madras High Court
in the cases of Superintending Engineer, Mettur Thermal
Power Station, Mettur vs. Appellate Authority Joint
Commissioner of Labour, Coimbatore, 2012(III) CLR 242 and
The Management of Cruickshank and Company Ltd. vs. The
Appellate Authority under Payment of Gratuity Act, 1991,
MANU/TN/7635/2006 in support of his contention that
when a contractor who engages workmen does not pay the
amount of gratuity to workers engaged by him, by virtue of
Section 21(4) of the Contract Labour Act, the principal
employer is liable to pay all dues including the amount of
gratuity to the contractor's workers. The Madras High Court
relying on Section 21(4) of the Contract Labour Act has
affirmed the liability of the principal employer to pay
gratuity to contractor's workers. There is no dispute about
the principal employer's liability to pay gratuity to
contractor's workmen under Section 21(4) of the Contract
Labour Act. The point is, whether the Controlling Authority
acting under the Gratuity Act has the jurisdiction to enforce
this liability, which arises under Section 21(4) of the
Contract Labour Act. There is no discussion in the Madras
judgments referred to above on this point. Apparently, this
point was not even argued in those cases. The existence of
such jurisdiction may, however, be said to be implicit in
those judgments. The earliest of Madras High Court
judgments on this point brought to my notice is the case of
Madras Fertilisers Ltd. vs. Controlling Authority under
Payment of Gratuity Act, 2003 (I) LLJ Madras 325 . In that
judgment, the Madras High Court considered whether
gratuity is excluded from the definition of wages under
clause (vi) of Section 2 of the Payment of Wages Act by
reason of the exclusion contained in sub-clause (6) thereof.
The definition of wages in Clause (vi) of Section 2 of that Act
includes in sub-clause (d), "any sum which by reason of the
termination of employment of the person employed is
payable under any law, contract or instrument which
provides for the payment of such sum, whether with or
without deductions but does not provide for the time within
which the payment is to be made." Sub-clause (6), however,
excludes "any gratuity payable on the termination of
employment in cases other then those specified in sub-
clause (d)." The court held that on a correct reading of sub-
clause (6), it was clear that gratuity would be excluded from
the wages only if such gratuity was not covered in sub-
clause (d). The Court reiterated that the plain meaning of
the clause would be that where any sum was payable on
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termination of employment of the person under any law (in
this case, the Payment of Gratuity Act), it would be covered
under sub-clause (d), and therefore, excluded from the
operation of sub-clause (6) and would amount to "wages".
Based on this conclusion, the Court further held that once
this construction was accepted, it was clear that it would be
the responsibility of the principal employer under Section
21(4) of the Contract Labour Act to make the payment of
gratuity to the contractor's workmen and thereafter to
recover the same from the contractor, since the initial
responsibility to make payment of gratuity lied with the
contractor. It is not clear as how the Madras High Court
proceeded to thereafter consider the power of the
Controlling Authority under the Gratuity Act to order such
payment against the principal employer within the
jurisdiction conferred to it under clause (c) of sub-section (4)
of Section 7 of the Gratuity Act. The judgment of Madras
Fertilisers Ltd. seems to have been followed by that court in
the later cases of the Superintending Engineer, Mettur
Thermal Power Station and The Management of
Cruickshank and Company Ltd. (supra). Even these later
cases do not consider the further question as to whether the
authority under the Gratuity Act can determine the liability
of the principal employer within the meaning of Section
21(4) of the Contract Labour Act read with definition of
"wages" in clause (vi) of Section 2 of the Payment of Wages
Act. I am of the view that this aspect of the matter was not,
in terms, decided by the Madras High Court but insofar as
it can be said to be implicit in those decisions, I am in
respectful disagreement with that implicit conclusion.
Section 7 of the Gratuity Act, which provides for the
jurisdiction of the Authority to determine the amount of
gratuity, makes it clear that it deals with eligibility of a
person "for payment of gratuity under this Act" (see, sub-
section (1) of Section 7); that the disputes that the Authority
decides are "with regard to any matter or matters specified
in Clause (a)" of sub-section (4) of Section 7 (See, clause (b)
of Section 7(4)); that clause (a) specifies matters including
the liability of the "employer" as defined under the Gratuity
Act to pay gratuity and interest (see, sub-sections (3) and
(3A) of Section 7). As I have explained above, there is no
scope for determining liability of any other person to pay
gratuity by virtue of any other law insofar as the Authority
under the Gratuity Act is concerned."
(emphasis supplied)
35. Evidently, this Court has proceeded on the premise that
the principal employer's liability to pay gratuity to contractors
workmen under Section 21(4) of the Contract Labour Act, 1970
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cannot be disputed. However, the Controlling Authority, acting
under the Gratuity Act, has no jurisdiction to enforce the said
liability which arises under Section 21(4) of the Contract Labour
Act. In the view of this Court, non-payment of wages, or of
gratuity as part of wages, may invite an action under Section 15
of the Payment of the Wages Act, 1936 read with Section 21 of
the Contract Labour Act or, alternatively, under Section 33-C of
the Industrial Disputes Act, 1947. In either case, the Authority
under the Gratuity Act is not the forum. Mr. Singhavi was at
pains to urge that this enunciation is not in consonance with
the settled legal position. I will advert to this aspect a little
later.
36. First and foremost, I deem it appropriate to examine the
question as to whether the aforesaid enunciation covers even
sub-clause (i) of Clause (f) of Section 2 of the Gratuity Act. I
have noted the facts in the case of Cummins (supra) in a little
detail, on purpose. Incontrovertibly, the petitioner therein was
not an establishment which could be termed to be belonging to
or under the control of the Central Government or a State
Government. Secondly, there was an express agreement
between the previous contractor and the successor contractor
that the liability to pay the gratuity to the contract workmen
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would be that of the successor contractor. Evidently, these facts
are absent in the cases at hand. In contrast, there is material
to indicate that ONGC had agreed to make a provision for
gratuity of the contract workmen for the purpose of gratuity
benefit as per the Gratuity Act.
37. In the context of the aforesaid distinguishing facts, I find
substance in the submission of Mr. Singhavi that in the case of
Cummins (supra) this Court was not primarily concerned with
the definition of employer in sub-clause (i) of Clause (f) of
Section 2 of the Gratuity Act. The observations of this Court,
extracted above, also indicate that this Court has applied the
test of, "ultimate control over the affairs of the establishment".
That test finds mention in sub-clause (iii) of Clause (f), which
defines an employer in the cases not covered by Clauses (i) and
(ii) as the person who or the authority which has the ultimate
control over the affairs of the establishment. Applying the
aforesaid test, Cummins enunciated that even if the workmen
therein were working inside the factory premises of the
petitioner therein, the employer in respect of those workmen
was the contractor. It was thus held that the mere fact that
those workmen were designated to work inside the factory
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premises of the petitioner did not make the "factory premises"
an "establishment" as far as those employees were concerned.
38. The aforesaid observations, if construed in the context of
the facts of the case in the case of Cummins (supra), in my
considered view, cannot be applied with equal force to the case
of an employer, which is covered by sub-clause (i) of Clause (f) of
Section 2 of the Gratuity Act.
39. This leads me to the enunciation in the said case that the
definition of principal employer under the Contract Labour Act
cannot be imported to the determination under the Payment of
Gratuity Act. At the outset, it must be noted that once it is held
that ONGC is covered under sub-Clause (i) of Section 2(f) and
satisfies the description of the "employer" therein, this question
does not strictly arise for determination in this case.
40. The proposition that while construing the provisions of an
enactment, it may not be appropriate to import the definition of
identical terms, defined in another enactment, cannot be
disputed. It is quite possible that the legislature designedly
uses an expansive or restrictive definition of an identical term,
in a given enactment so as to advance the object sought to be
achieved by that particular enactment. In such a situation, it is
impermissible to construe a particular term in one enactment
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by importing the definition of the same term in another
enactment.
41. This Court, in the case of Cummins (supra), while
supporting its view sought to draw support from the decision of
the Supreme Court in the case of Ahmedabad Primary Teachers'
Association (supra). The Supreme Court, in the case of
Ahmedabad Primary Teachers' Association (supra) while
enunciating that teachers were not entitled to claim gratuity as
they did not fall within the definition of employee as contained
in Section 2(e) of the Gratuity Act (as it then stood), enunciated
as under:
"25. The legislature was alive to various kinds of definitions
of the word "employee" contained in various previous labour
enactments when the Act was passed in 1972. if it intended
to cover in the definition of "employee" all kinds of
employees, it could have as well used such wide language as
is contained in Section 2(f) of the Employees' Provident
Funds Act, 1952 which defines "employee" to mean "any
person who is employed for wages in any kind of work,
manual or otherwise, in or in connection with the work of
an establishment ....". Non-use of such wide language in
the definition of "employee" in Section 2(e) of the Act of 1972
reinforces our conclusion that teachers are clearly not
covered in the definition."
42. It is necessary to note that the aforesaid judgment of the
Supreme Court in the case of Ahmedabad Primary Teachers'
Association (supra) necessitated an amendment in the definition
of "employee" under Section 2(e) of the Gratuity Act. The
statement of object and reasons of the Payment of Gratuity
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(Amendment) Act, 2009, refers to the aforesaid decision of the
Supreme Court and states that keeping in view the observations
of the Hon'ble Supreme Court, it was proposed to widen the
definition of "employee", under the said Act in order to extend
the benefit of gratuity to teachers. Resultantly, pursuant to the
said amendment, Clause (e), as extracted above, came to be
substituted. "Employee" under Section 2(e) is now defined to
mean any person other than an apprentice, who is employed for
wages, in any kind of work, manual or otherwise, in or in
connection with the work of a factory etc., 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. The
definition of employee has thus been expanded.
43. A profitable reference in this context can be made to a
decision of the Supreme Court in the case of Birla Institute of
Technology vs. State of Jharkhand and others6 wherein after
adverting to the aforesaid pronouncement of the Supreme Court
in the case of Ahmedabad Primary Teachers' Association (supra)
and the subsequent amendment in the definition of employee
under Section 2(e) of the Gratuity Act, it was held that the
decision in the case of Ahmedabad Primary Teachers'
6(2019) 15 Supreme Court Cases 586.
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Association (supra) stood statutorily overruled and the law laid
down in the said case, was no longer applicable against the
teachers, as if not rendered, and, second, the teachers were held
to be entitled to claim amount of gratuity under the Gratuity Act
from their employer with effect from 3rd April, 1997.
44. If the expansive definition of the employee under Section
2(e) is read in juxtaposition with the Sub-clause (i) of Section
2(f) of the Gratuity Act, it would be rather difficult to hold that
the definition of employer does not cover within its fold ONGC
over which the Central Government exercises control.
45. A submission was sought to be canvassed on behalf of the
respondents that even if it is admitted that ONGC was the
principal employer and liable to pay the wages under Section
21(4) of the Contract Labour Act, 1970, in the event of default
on the part of the contractor, the Controlling Authority under
the Gratuity Act had no jurisdiction to direct the principal
employer to pay the gratuity as it cannot enter into the
determination as to who the employer was. A strong reliance
was placed on an observations of this Court in Cummins that
even if the liability of the principal employer to pay the gratuity
was held to exist, the remedy lay before the forums other than
the authorities under the Payment of Gratuity Act. In Cummins
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this Court indicated, resort can be had to the provisions
contained in Payment of Wages Act, 1936 or, in the alternative,
to Section 33-C of the Industrial Disputes Act, 1947.
46. Mr. Singhavi countered by forcefully canvassing a
submission that the aforesaid course is not open as the Gratuity
Act is a complete Code in itself. Reliance placed by Mr. Singhavi
on the decision of the Supreme Court in the case of State of
Punjab (supra) in support of the aforesaid submission, seems
impeccable. In the case of State of Punjab (supra) the
respondents were employed as work-charged employees on a
construction project, with the Government of Punjab. Upon
being rentrenched, they claimed gratuity and other benefits. As
the claim was disputed the employees approached the Labour
Court under Section 33-C of the Industrial Disputes Act. The
Labour Court held that the employees were entitled to gratuity.
The challenge to the said decision in the High Court did not
succeed. Before the Supreme Court it was, inter alia, contended
that the employees were not entitled to apply under Section 33-
C(2) of the Act and should have, if at all, applied under the
provisions to the Gratuity Act.
47. The Supreme Court found substance in the said
contention and held that the proceedings for the payment of
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gratuity due under the Gratuity Act must be taken under that
Act and not under any other enactment. In the process, the
Supreme Court analysed the provisions of the Gratuity Act to
hold that it enacts a complete Code containing detailed
provisions covering all the essential features of a scheme for
payment of gratuity. The observations of the Supreme Court in
paragraphs 6 to 8 are instructive and hence extracted below.
"6. The third contention raised by the appellant is that the
employee respondents were not entitled to apply under
section 33-C(2) of the Industrial Disputes Act, 1947 for
payment of the gratuity, and should have, if at all, applied
under the provisions of the Payment of Gratuity Act. It is
urged that the Payment of Gratuity Act is a self-contained
code incorporating all the essential provisions relating to
payment of gratuity which can be claimed under that Act,
and its provisions impliedly exclude recourse to any other
statute for that purpose. The contention has force and must
be accepted. A careful perusal of the relevant provisions of
the Payment of Gratuity Act shows that Parliament has
enacted a closely knit scheme providing for payment of
gratuity. A controlling authority is appointed by the
appropriate Government under section 3. and Parliament
has made him responsible for the administration of the
entire Act. In what event gratuity will become payable and
how it will be quantified are detailed in section 4. Section
7(1) entitled a person eligible for payment of gratuity to
apply in that behalf to the employer. Under section 7(2), the
employer is obliged, as soon as gratuity becomes payable
and whether an application has or has not been made for
payment of gratuity, to determine the amount of gratuity
and inform the person to whom the gratuity is payable
specifying the amount of gratuity so determined. He is
obliged, by virtue of the same provision, to inform the
controlling authority also, thus ensuring that the
controlling authority is seized at all times of information in
regard to gratuity as it becomes payable. If a dispute is
raised in regard to the amount of gratuity payable or as to
the admissibility of any claim to gratuity, or as to the person
entitled to receive the gratuity, section 7(4) (a) requires the
employer to deposit with the controlling authority such
amount as he admits to be payable by him as gratuity. The
controlling authority is empowered. Under section 7(4)(b), to
enter upon an adjudication of the dispute, and after due
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inquiry, and after giving the parties to the dispute a
reasonable opportunity of being heard, he is required to
determine the amount of gratuity payable. In this regard,
the controlling authority has all the powers as are vested in
a court while trying a suit under the Code of Civil
Procedure, 1908 in respect of obtaining evidentiary material
and the recording of evidence. The amount deposited by the
employer with the controlling authority as the admitted
amount of gratuity will be paid over by the controlling
authority to the employee or his nominee or heir. Section
7(7) provides an appeal against the order of the controlling
authority under section 7(4) to the appropriate Government
or such other authority as may be specified by the
appropriate Government in that behalf. The appropriate
Government or the appellate authority is empowered under
section 7(8), after giving the parties to the appeal a
reasonable opportunity of being heard, to confirm, modify or
reverse the decision of the controlling authority. Where the
amount of gratuity payable is not paid by the employer with
in the prescribed time, the controlling authority is required
by section 8, on application made to it by the aggrieved
person, to issue a certificate for that amount to the
Collector. The Collector, thereupon, is empowered to recover
the amount of gratuity, together with compound interest
thereon at the rate of nine per cent per annum from the
date of expiry of the prescribed time, as arrears of land
revenue, and pay the same to the person entitled thereto.
7. It is apparent that the Payment of Gratuity Act enacts
a complete code containing detailed provisions covering all
the essential features of a scheme for payment of gratuity. It
creates the right to payment of gratuity, indicates when the
right will accrue, and lays down the principles for
quantification of the gratuity. It provides further for recovery
of the amount, and contains an especial provision that
compound interest at nine per cent per annum will be
payable on delayed payment. For the enforcement of its
provisions, the Act provides for the appointment of a
controlling authority, who is entrusted with the task of
administering the Act. The fulfillment of the rights and
obligations of the parties are made his responsibility, and he
has been invested with an amplitude of power for the full
discharge of that responsibility. Any error committed by him
can be corrected in appeal by the appropriate government or
an appellate authority particularly constituted under the
Act.
8. Upon all these considerations, the conclusion is
inescapable that Parliament intended that proceedings for
payment of gratuity due under the Payment of Gratuity Act
must be taken under that Act and not under any other. That
being so, it must be held that the applications filed by the
employee respondents under section 33-C(2) of the
Industrial Disputes Act did not lie, and the Labour Court
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had no jurisdiction to entertain and dispose of them. On
that ground, this appeal must succeed."
(emphasis supplied)
48. In view of the aforesaid exposition of law, the submission
on behalf of the respondents that even if the principal employer
is held liable to pay gratuity the said determination cannot be
made by the controlling authority under Section 7 of the
Gratuity Act, banking upon the aforesaid observations of this
Court in the case of Cummins (supra) does not merit
acceptance. The Controlling Authority under Section 7(4)(c) is
empowered to enter upon an adjudication of the dispute and
after due enquiry and opportunity of hearing to the parties to
the dispute, determine the question of admissibility of gratuity
and the quantum thereof and direct the "employer" to pay the
amount of gratuity. I find it rather difficult to accede to the
submission that the question as to "who is the employer" is
beyond the purview of enquiry and determination by the
Controlling Authority if all the disputes which might arise as
regards the liability to pay the gratuity are to be determined by
the authorities under the Gratuity Act and by no other forum.
49. In the instant case, in my considered view, the Appellate
Authority lost sight of the distinctive features of the facts of the
cases at hand. As noted above, the decision in the case of
Cummins (supra) was rendered in a completely different fact
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situation. Though there was a commonality of the jural
relationship of principal employer and contract workmen, yet,
the similarity stopped at that. The Appellate Authority ought to
have posed unto itself the question as to whether ONGC
satisfied the description of "employer" within the meaning of
Section 2(f)(i).
50. This takes me to the second ground of challenge of the
petitioners having been precluded from claiming gratuity under
the terms of Goodwill Package Scheme. The Controlling
Authority was of the view that there was no material to indicate
that whether gratuity was included in the benefits made
available under the Goodwill Package Scheme and in the
absence of such "clarity/special or separate order" the legal
dues/benefits available under a special statute like the Gratuity
Act cannot be denied to the workman.
51. A two-pronged submission was canvassed on behalf of the
respondents. One, in view of the express terms of Goodwill
Package Scheme the workmen agreed not to claim any benefit
apart from the lumpsum compensation made available
thereunder. Special emphasis was laid on the following clauses
of the Goodwill Package Scheme.
"2.3. Goodwill Package amount (inclusive of all statutory or
otherwise due payments) equivalent to two months wages
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shall be computed on basic wage/base wage and dearness
allowance only, taking average of basic wage/base wage and
dearness allowance drawn during the period of last three
calendar months by the concerned workers of
contractors/direct employees and shall be in full discharge
of all past and future claims whatsoever including any
claims as may be conceived under any law or otherwise.
5.3. It is further agreed and understood by and between the
parties that acceptance of benefits under the Goodwill
Package by the concerned workers of contractors shall be in
full and final settlement of all their past or future
claims/demands of whatsoever nature as may be conceived
under any law arising out of their engagement/non-
engagement in the establishment of ONGC through the
Contractors or otherwise.
52. Evidently, the aforesaid clauses provide that the workers
agreed and understood that the payments under the Goodwill
Package Scheme were in full and final settlement of all their
claims under any enactment. That poses the question: whether
such a contractual provision, even if taken at par, impinges on
the statutory entitlement to gratuity?
53. The nature of gratuity assumes significance. Gratuity
connotes a payment made without any consideration - a
gratuitous payment to an employee who has rendered services
for a definite period before superannuation, otherwise
termination or death. It represents a sum paid as and by way of
a financial security to tide over after effects of cessation of
employment. It is a welfare measure. The Gratuity Act, 1972 is a
social security legislation. The provisions of the Act are required
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to be construed to advance the object of ensuring social and
economic security to the employees.
54. A profitable reference in this context can be made to a
judgment of the Supreme Court in the case of Maniben
Maganbhai Bhariya vs. District Development Officer Dahod and
ors.7, wherein the nature of gratuity and the object of the
Gratuity Act, 1972 were expounded as under:
"7. Act, 1972 on the genre of statutes like The Minimum Wages
Act, Employees State Insurance Act, etc. is a welfare measure to
secure social and economic justice to employees to assist them
in old age and to ensure them a decent standard of life on
retirement.
8. Derived from a Latin word 'Gratuitas', the term Gratuity
means a 'Gift'. In the industrial sector, gratuity is considered as
a gift from the employers to their employees. Gratuity is a limp
sum payment paid by an employer to the employee for his/her
past dedicated services. It is a gesture to appreciate the efforts of
a person towards the betterment, development and prosperity of
an establishment and that is the reason for which gratuity is
considered tobe a social security, and with passage of time, it
has become a statutory obligation on the part of employers.
9. Thus, gratuity, as a social welfare legislation, its effective
implementation is of paramount importance to fulfill the
legitimate expectation of the employees. So far as the
unorganized sectors are concerned, these Acts have been pillars
in social security and laid the foundation for improvement in
standards of living of the employees."
55. The provisions contained in Section 4(5) and (6)
underscore the inviolability of the statutory right to gratuity.
Sub-section (5) of Section 4 provides that nothing in the said
section shall affect the right of an employee to receive better
terms of gratuity under any award or agreement or contract
with the employer. It implies that if a better provision is made
72022 SCC OnLine SC 507.
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under any award or agreement or contract with the employer,
the employee cannot be deprived of a claim to such better
dispensation under any award or contract. Sub-section (6) of
Section 4 again emphasises that withholding gratuity is not
permissible under any circumstances other than those
specifically provided therein. Clause (a) of Sub-section (6)
provides for forfeiture all the gratuity to the extent of loss or
damage to the employer by an employee whose services have
been terminated for any act, willful omission or negligence
causing any damage or loss to, or destruction of, property
belonging to an employer to the extent of damage or loss so
caused. Under Clause (b) the gratuity payable to an employee
may be wholly or partially forfeited if the services of such
employee have been terminated for his riotous or disorderly
conduct or any act of violence or for any act which constitutes
an offence involving moral turpitude, provided such offence is
committed by him in the course of his employment. These
clauses by their very nature are required to be construed
strictly. They underscore the legislative intent that an employee
cannot be deprived of gratuity unless his case falls within the
aforesaid exceptions, which represent a close ended category.
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56. Section 14 of the Act which gives overriding effect to the
provisions of the Act and the Rules framed thereunder also
constitutes an answer to the submission sought to be canvassed
on behalf of the respondents. If properly construed, Section 14
prohibits contracting out from or waiver of the benefits
admissible under the Gratuity Act. I am, therefore, impelled to
hold that the endeavour of ONGC to contest the entitlement of
the petitioner to gratuity by resorting to the aforesaid terms in
the Goodwill Package Scheme does not merit acceptance.
57. Another submission sought to be canvassed on behalf of
the respondent was that, the liability to pay wages under
Section 21(4) of the Contract Labour Act, 1970, even if assumed
to exist, does not extend to the payment of gratuity as gratuity is
expressly excluded from the definition of "wages" under the
Payment of Wages Act, 1936. The submission is required to be
stated to be repelled. Under Section 2(vi)(6) "wages" does not
include any gratuity payable on the termination of the
employment in cases other than those specified in sub-clause
(d), which reads as under:
"2(vi)(d) any sum which by reason of the termination of
employment of the person employed in payable under any
law, contract or instrument which provides for the payment
of such sum, whether with or without deductions but does
not provide for the time within which the payment is to be
made."
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58. Evidently, what is excluded under Clause (vi)(6) is gratuity
payable on the termination of an employment otherwise than
under sub-clause (d). I find substance in the submission of Mr.
Singhavi that the exclusionary Clause (6) of the definition of
wages contemplates gratuity which is of an ex gratia character
and payable over and above the gratuity which is required to be
statutorily paid under the payment of Gratuity Act as Sub-
clause (d) expressly includes within the definition of wages any
sum which by reason of the termination of employment by the
person is payable under any law. It would be contextually
relevant to note that Section 4(1) of the Gratuity Act in terms
provides that gratuity shall be payable to an employee on the
termination of his employment (after he has rendered the
continuous services for the specified period) in the eventualities
stipulated therein. I am thus not persuaded to agree with the
aforesaid submission on behalf of ONGC that the petitioners are
otherwise not entitled to recover gratuity from ONGC.
59. Having dealt with the rival submissions, this Court in
exercise of plenary writ jurisdiction must look at the substance
of the matter and where justice of the case lies. The petitioners
rendered services as contract workmen to ONGC in excess of 15
years, on an average. The petitioners services were so utilized
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through different contractors. The contractors changed but the
principal employer remained constant. ONGC had entered into a
MoU to make a provision to extend the gratuity benefit to the
contract-workmen. In this setting of the matter, if the
submission on behalf of ONGC is to be accepted, the contractor
through whom the services of the petitioner were being used on
the date of the cessation of employment, would alone be the
person liable to pay the gratuity for the entire service tenure
and that would bring in the element of the liability of the last
contractor to pay gratuity even in respect of the past service for
which the contract employees were not employed by him. Such
liability can only be fastened either under a statutory obligation
or contractual stipulation. No statutory prescription to cover
such liability could be pressed into service by the ONGC. Nor
the Court finds any such contract between last contractor and
the predecessor contractors, or for that matter, between the last
contractor and ONGC. In contrast, in the case of Cummins
(supra), the successor contractor had incurred an obligation
pursuant to a contract with the predecessor contractor, to pay
gratuity.
60. The conspectus of aforesaid consideration is that the
Appellate Authority was in error in setting aside the order
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passed by the Controlling Authority fastening the liability on
ONGC to pay gratuity. Petitions thus deserve to be allowed.
61. Hence, the following order:
:ORDER:
(i) The petitions stand allowed.
(ii) Impugned orders passed by the Appellate Authority
in each of the petitions stand quashed and set aside.
(iii) The orders passed by the Controlling Authority in
each of the petitions stand restored.
(iv) Rule made absolute.
(v) In the circumstances, there shall be no order as to
costs.
[N. J. JAMADAR, J.]
