Gujarat High Court

Divisional Controller, Gujarat State ... vs Jayantibhai Ratilal Rana on 4 September, 2025

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                            C/SCA/9914/2025                               JUDGMENT DATED: 04/09/2025

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                                     IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                       R/SPECIAL CIVIL APPLICATION NO. 9914 of 2025

                                                          With
                                      R/SPECIAL CIVIL APPLICATION NO. 13567 of 2022

                       FOR APPROVAL AND SIGNATURE:


                       HONOURABLE MRS. JUSTICE M. K. THAKKER

                       ==========================================================

                                    Approved for Reporting               Yes           No
                                                                                       NO
                       ==========================================================
                            DIVISIONAL CONTROLLER, GUJARAT STATE ROAD TRANSPORT
                                                CORPORATION
                                                     Versus
                                        JAYANTIBHAI RATILAL RANA & ORS.
                       ==========================================================
                       Appearance:
                       MR HAMESH C NAIDU(5335) for the Petitioner(s) No. 1
                       MS FORUM BIMAL SUKHADWALA, ASST. GOVERNMENT PLEADER for
                       the Respondent(s) No. 2,3
                       Appearance in SCA 13567 of 2022
                       MR PARESH J BRAHMBHATT(9788) for the Petitioner(s) No. 1
                       MS FORUM BIMAL SUKHADWALA, ASST. GOVERNMENT PLEADER for
                       the Respondent(s) No. 1
                       MR HAMESH C NAIDU(5335) for the Respondent(s) No. 2
                       ==========================================================

                          CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER

                                                     Date : 04/09/2025
                                                     ORAL JUDGMENT

1 This petition is filed under Articles 226 and 227 of the Constitution of India challenging the order dated 25.03.2019 passed by the learned Controlling Authority under the Payment of Gratuity Act in

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Gratuity Case No.92 of 2017, as well as the order dated 30.05.2020 passed by the learned Appellate Authority in Appeal No.11 of 2019, whereby the authorities have allowed the claim of the respondent and directed the present petitioner to pay an amount of Rs.1,36,289/- towards gratuity with simple interest at the rate of 10%.

2 It is the case of the present petitioner before this Court that the respondent was appointed as a Badli Kaamdar with the petitioner-Corporation. The respondent had filed Reference (LCV) No.541 of 1987 claiming reinstatement with back wages. During the pendency of the said Reference, a settlement was arrived at between the parties, whereby it was agreed that the respondent would be appointed afresh and placed in the waiting list with effect from 17.09.1995, i.e. the date of settlement. Pursuant thereto, appropriate orders were passed, which were accepted by the respondent without any protest. Thereafter, on 14.03.1996, the respondent was appointed by the petitioner-Corporation and subsequently superannuated with effect from 30.06.2017.

2.1 On 29.11.2017, the respondent filed an application under the Payment of Gratuity Act

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claiming gratuity for the period from 14.01.1985 to 30.06.2017. The petitioner, however, paid gratuity only for the period from 22.01.1996 to 30.06.2017 and opposed the claim on the ground that prior to 22.01.1996 the respondent had never actually worked and was merely placed in the waiting list, and therefore, was not entitled to gratuity for that period. The learned Controlling Authority, while passing the impugned award, directed that the period from 14.01.1985 to 22.01.1996 be considered for the purpose of gratuity. The learned Appellate Authority, while affirming the said order, dismissed the petitioner's appeal. Hence, the present petition is filed praying for quashing and setting aside the orders passed by both the authorities and for allowing this petition.

3 Heard the learned advocate Mr.Naidu for the petitioner and the learned advocate Mr.Brahmbhatt for the respondent.

4 Learned advocate Mr. Naidu submits that during the course of adjudication before the learned Controlling Authority, a request was made to permit the petitioner to cross-examine the respondent in order to establish that during the period from 1985 to 1995 the respondent had never actually worked, and though he was merely placed in the waiting list, he

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filed a false claim before the learned Controlling Authority. It is submitted that in the settlement arrived at between the parties, it was specifically recorded that the respondent would be appointed afresh and placed in the waiting list with effect from 17.09.1995, and pursuant thereto, a pursis was filed by the Corporation before the learned Labour Court, whereupon the Reference was disposed of by recording the said settlement.

4.1 Learned advocate Mr. Naidu further submits that from 1995 till 2017 no grievance was ever raised regarding non-implementation of the settlement, and yet the respondent, by raising a false claim, contended that he was reinstated and thereby sought gratuity benefits from the date of his initial appointment in 1985. It is submitted that during the period from 1985 to 1995, the respondent did not render continuous service as contemplated under the Payment of Gratuity Act. Despite this, the learned Controlling Authority erroneously directed the petitioner to compute gratuity from the year 1985.

4.2 It is further submitted by the learned advocate Mr. Naidu that the respondent was in fact appointed only on 14.02.1996, and gratuity has already been paid for the period from such date till

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his superannuation. However, the learned Controlling Authority, without appreciating these facts, wrongly granted gratuity benefits from 1985. It is also submitted that the respondent was placed in the fresh waiting list with effect from 1995 and was subsequently taken as a Badli Kaamdar in 1996; therefore, the claim made by the respondent for the prior period is unsustainable.

4.3 Learned advocate Mr. Naidu has further contended that though the documents produced by the Corporation were not rebutted by the respondent, the authorities below have erroneously accepted the version of the respondent as gospel truth and discarded the petitioner's case, which was based on documentary evidence. Relying upon the judgment of the Apex Court in Lalappa Lingappa and others vs. Laxmi Vishnu Textile Mills Ltd., reported in (1981) 2 SCC 238, as well as the judgment in Nandkishore Shravan vs. Kosan Industries Pvt. Ltd., learned advocate Mr. Naidu has prayed for allowing the present petition by quashing and setting aside the orders passed by both the authorities below.

5 Per contra, learned advocate Mr. Brahmbhatt appearing for the respondent submits that pursuant

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to the settlement arrived at between the parties, the respondent was taken back into service and, as per the appointment order dated 14.02.1996, he was reinstated. Therefore, his service is required to be reckoned from his initial date of appointment, i.e. the year 1985. However, the petitioner corporation refused to consider such claim. Hence, the learned Controlling Authority has rightly granted gratuity by taking into account the period from the initial date of appointment, and no error has been committed by either of the authorities below. Accordingly, the petition filed by the petitioner is misconceived and is required to be dismissed.

6 Having considered the arguments advanced by the learned advocates for the respective parties, it emerges from the record that the Reference was filed in the year 1987 challenging the alleged illegal termination and praying for reinstatement on the original post. The settlement dated 17.09.1995 arrived between the parties indicates that the respondent was placed in the waiting list of Badli Kamdar w.e.f. 17.09.1995, and pursuant thereto, an order came to be passed on 14.02.1996 stating that the respondent, whose name appeared in the waiting list of 17.09.1995, had been considered for appointment and accordingly he was appointed as a

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driver with effect from 22.01.1996. The contention of the respondent is based on Clause (4) of the settlement, which provides that continuity of service would be counted and that during the period from termination till reinstatement, the benefit of pay fixation would be granted. However, the record reflects that in the settlement format, only Clause (7) was tick-marked, which specifically records that the respondent was placed in the waiting list of Badli Kamdar w.e.f. 17.09.1995. For the sake of arguments, even if Clause (4) is assumed to be applicable, it is an admitted position that the respondent never claimed any benefit of pay fixation as envisaged therein. The appointment order dated 14.02.1996 also records that the respondent was placed under the waiting list dated 17.09.1995, though the word 'reinstatement' is used, and he was directed to resume duty as a driver from 22.01.1996. It is not in dispute that the respondent was placed in the waiting list under the settlement from 17.09.1995, nor is it disputed that from 1985 to 1995 the respondent had not rendered any service.

7 At this stage, reference may be made to the decision rendered by the Apex Court in K. Jaymohan v. State of Kerala and Anr., reported in (1997) 5 SCC 170, wherein it has been held that candidates

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included in a waiting list have no indefeasible right to appointment. It is open for the Government not to make an appointment even if vacancies exist, provided there is a reasonable explanation for not doing so. It is also a settled position of law that a waiting list cannot be treated as a perennial source of recruitment for filling up vacancies, and a candidate whose name appears therein acquires no vested right of appointment. Therefore, when the respondent was merely placed in the waiting list, he cannot claim gratuity for the period during which he had neither rendered service nor completed continuous service as contemplated under the Payment of Gratuity Act.

8 At this stage, the reference of the definition provided under section 2A of the payment of gratuity act of the continuous service is required to be made, which is reproduced hereinbelow:

"2A: (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 order, 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

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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

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(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),

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or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicab1c to the establishment;

(ii) he has been on leave with full wages, earned in the previous year; (iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment and (iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.

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

9 It is an undisputed position that in order to establish that the respondent had worked from 1985 to 1995, no evidence whatsoever was placed before the learned Controlling Authority. Therefore, in the absence of proof of actual work rendered during the said period, the respondent cannot be held entitled to gratuity under the Payment of Gratuity Act.

10 This Court has also considered the decision rendered by the Apex Court in the case of Lalappa Lingappa (supra) wherein also it is held that Badli employees are not entitled to payment of gratuity and only on becoming the permanent employee the

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gratuity can be granted. It is held that for the Badli period in respect of years in which there was no work alloted to them the Badli employee are not covered under section 2C of the Act. The relevant observations are reproduced herein below:

"7. The Act is a piece of social welfare legislation and deals with matters relating to payment of gratuity which, like pension, provident fund etc., is a retiral benefit. Interrupted service by reason of sickness, leave, lay-off, strike, lock-out or cessation of work not due to any fault of the employee concerned should not be regarded as a break in continuity of his service. The inclusive part of the definition of 'continuous service' in s. 2(c) is to amplify the meaning of the expression by including interrupted service under certain contingencies which, but for such inclusion, would not fall within the ambit of the expression 'continuous service'. There were compelling reasons why the legislature gave an enlarged meaning to the expression 'continuous service' in s. 2(c) of the Act, so that the workers who have rendered long and meritorious service are not deprived of their right to gratuity by reason of absence from duty due to circumstances beyond their control.

8. The two Explanations have been inserted by the legislature to define the words 'one completed year of service' to benefit a class of employees who are not in uninterrupted service for one year. These Explanations employ a fiction which converts service of (a) 190 days, if employed below the ground in a mine, (b) 240 days, in any other case except when employed in a seasonal establishment, in a period of 12 calendar months, or (c) 75 per cent of the number of days which the seasonal establishment was in operation, to be one complete year.

9.The main point in controversy in these appeals is as to

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whether the expression 'actually employed' in Explanation I to s. 2(c) must, in the context in which it appears, mean 'actually worked'. The legislature has, no doubt, used two different expressions, namely, 'actually employed', in Explanation I and 'actually worked' in Explanation II. But, they are, in our view, having regard to the context and purpose with which they have been enacted, synonymous. Explanation I deals with the case of an employee who is not in uninterrupted service for one year. Such an employee shall be deemed to be in continuous service even though he falls outside the substantive part of the definition in s. 2(c) provided he has been actually employed for 240 days in a year. The expression 'actually employed' in Explanation I must, therefore, mean 'actually worked'. There is a reason why a different expression is used in Explanation II. In the case of a seasonal establishment it is difficult to predicate the number of days on which the establishment would be in operation in the year and an employee of such a seasonal establishment shall, therefore, be deemed to be in continuous service if he has actually worked for not less than 75% of the number of days on which the establishment was in operation.

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14.In dealing with interpretation of sub-s. (1) of s.4, we must keep in view the scheme of the Act. Sub-s. (1) of s.4 of the Act incorporates the concept of gratuity being a reward for long, continuous and meritorious service. The emphasis therein is not on 'continuity of employment', but on rendering of 'continuous service'. The legislature inserted the two Explanations in the definition to extend the benefit to employees who are not in uninterrupted service for one year subject to the fulfillment of the conditions laid down therein. By the use of a legal fiction in these Explanations, an employee is deemed to be in 'continuous service' for purposes of sub-sec. (1) of s.4 of

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the Act. The legislature never intended that the expression 'actually employed' in Explanation I and the expression 'actually worked' in Explanation II should have two different meanings because it wanted to extend the benefit to an employee who 'works' for a particular number of days in a year in either case. In a case falling under Explanation I, an employee is deemed to be in continuous service if he has been actually employed for not less than 190 days if employed below the ground in a mine, or 240 days in any other case, except when he is employed in a seasonal establishment. In a case falling under Explanation II, an employee of a seasonal establishment, is deemed to be in continuous service if he has actually worked for not less than 75 per cent of the number of days on which the establishment was in operation during the year.

15. In our judgment, the High Court rightly observed : "It is important to bear in mind that in Explanation I the legislature has used the words 'actually employed'. If it was contemplated by Explanation I that it was sufficient that there should be a subsisting contract of employment, then it was not necessary for the legislature to use the words 'actually employed'." It is not permissible to attribute redundancy to the legislature to defeat the purpose of enacting the Explanation. The expression 'actually employed' in Explanation I to s.2 (c) of the Act must, in the context in which it appears, mean 'actually worked'. It must accordingly be held that the High Court was right in holding that the permanent employees were not entitled to payment of gratuity under sub-s. (1) of s.4 of the Act for the years in which they remained absent without leave and had 'actually worked for less than 240 days in a year.

16. As regards badli employees, there can be no doubt that they are not in uninterrupted service and, therefore, they do not fall within the substantive part of the definition 'continuous service' in s.2(c), but are covered by Explanation I. In Delhi Cloth and General Mills Co. v. Its

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Workmen(1) the Court, while dealing with a gratuity scheme, repelled the contention urged on behalf of the badli employees that since they had to register themselves with the management of the textile mills and were required every day to attend the mills for ascertaining whether work would be provided to them or not, the condition requiring that they should have worked for not less than 240 days in a year to qualify for gratuity was unjust and observed:

If gratuity is to be paid for service rendered, it is difficult to appreciate the grounds on which it can be said that because for maintaining his name on the record of the badli workmen, a workman is required to attend the mills he may be deemed to have rendered service and would on that account be entitled also to claim gratuity.

17. Standing Order No. 3 as settled by the Industrial Court under s.36(3) of the Bombay Industrial Relations Act, 1946 for Operatives in Cotton Textile Mills, in so far as material, provides:

3) Operatives shall be classed as (1) Permanent; (2) Probationer; (3) Badlis; (4) Temporary Operatives; and (5) Apprentices.

x x xx A "badli" is one who is employed on the post of a permanent operative or probationer who is temporarily absent.

xx xx It is not denied that the Management has got a separate register for the badli employees and that those who need work and when they call at the gate of the mills for work, such number of them are employed by the mills to fill up the vacancies of permanent operatives or probationers who are absent on a particular day either on account of illness or for any other cause."

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11 Considering the overall facts, it emerges that

the respondent has attempted to take undue

advantage of the appointment order wherein, instead

of using the term 'appointment,' the word

'reinstatement' has been mentioned. In the

considered opinion of this Court, when the

respondent himself has never claimed any benefit

alleged to have been accruing under the terms of

settlement till the date of his retirement, no relief can