Jharkhand High Court
Signode India Limited Through Its ... vs The State Of Jharkhand Through Labour ... on 19 February, 2024
Author: S.N. Pathak
Bench: S. N. Pathak
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IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(S) No. 3244 of 2023
Signode India Limited through its Associate General Counsel
- APAC & Company Secretary namely Ankur Singhal
... Petitioner
VERSUS
1. The State of Jharkhand through Labour Commissioner, Jharkhand-cum-
Appellate Authority, Nepal House, Doranda, Ranchi
2. The Deputy Labour Commissioner-cum-Controlling Authority, Kolhan
Division, Jamshedpur.
3. Suresh Kumar Jha, son of Late Dr. Markandey Jha, Resident of 831,
Udaigiri, Vijaya Heritage, Kadma, Jamshedpur, District - East Singhbhum.
... Respondents
CORAM: HON'BLE DR. JUSTICE S. N. PATHAK
For the Petitioner :Mr. Sumeet Gadodia, Advocate
Mr. Shashank Kumar, Advocate
For the Respondents :Ms. Sunita Kumari, AC to Sr. SC-II
For the R. No. 3 :Mr. Mantra Narayan Thakur, Advocate
05/19.02.2024 Heard learned counsel for the parties.
PRAYER
2. Petitioner has approached this Court with a prayer for
quashing/setting aside the order as contained in Memo No. 732/Ranchi,
dated 19.04.2023 (Annexure-12), passed by Labour Commissioner,
Jharkhand-cum-Appellate Authority under Payment of Gratuity Act,
1972 in Appeal Case No. P.G.-5 of 2019. Petitioner has further prayed
for quashing/setting aside order dated 18.04.2019 (Annexure-9), passed
by respondent no. 2 - Deputy Labour Commissioner-cum-Controlling
Authority in Case No. GA-3/2017, wherein petitioner has been directed
for payment of gratuity of Rs.5,16,928/- to respondent no. 3. Petitioner
has further prayed for appropriate order holding that respondent no. 3 is
not entitled for payment of gratuity from the petitioner as he does not fall
under the category of émployee' under Payment of Gratuity Act, 1972.
FACTUAL MATRIX
3. Petitioner is a Company incorporated under the Companies Act,
1956 and the writ petition has been filed by one of the authorized
signatory who has been duly authorized by the Board. Petitioner is a
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manufacturer and supplier of the industrial packaging, consumables,
equipments and services to its customers across the country and its
operations are spread across geographical territory of India.
4. It is case of the petitioner that in view of agreement dated
04.11.2000, the respondent no. 3 was engaged as a retainer by the
Jamshedpur Unit of the Company with effect from 15.11.2000 for which
consultation fee of Rs.30,000/- was agreed to be paid to him. The
agreement was initially valid for a period of five years from 15.11.2000.
The said agreement was renewed from time to time and the last
extension was granted to him vide extension letter dated 23.08.2016. The
respondent no. 3 worked in the petitioner Company for the period from
23.11.2000 to 31.10.2016 as a retainer and for which service certificate
dated 05.01.2017 was also issued by the Company. The respondent no. 3
made an application in Form-1 under Payment of Gratuity Rule, 1972 for
payment of full gratuity, which was turned down by the Company as the
respondent no. 3 was not entitled to any other payments other than
monthly retainer fee as per terms and conditions of the agreement.
Further, an application was also filed in Form-N under Gratuity Rules for
payment of gratuity before the Deputy Commissioner - cum -
Controlling Authority, Kolhan Division, Jamshedpur. The Deputy
Labour Commissioner, vide his order dated 18.04.2019, allowed the case
no. GA-3/2017 in favour of the respondent no. 3 holding therein that he
is entitled for payment of gratuity of Rs.5,16,928/- under the Payment of
Gratuity Act, 1972. Aggrieved by the same, an Appeal was filed being
Appeal Case No. PG-05/2019 before the Labour Commissioner,
Jharkhand - cum - Appellate Authority. The Appeal was also rejected
affirming the earlier order dated 18.04.2019 passed in Case No. GA-
03/2017 with an order for payment of simple interest at the rate of 10%
on the amount of gratuity. Being aggrieved, petitioner has been
constrained to knock door of this Court.
SUBMISSION ON BEHALF OF PETITIONER
5. Mr. Sumeet Gadodia, learned counsel appearing for the petitioner
strenuously urges that the impugned orders are not sustainable in the
eyes of law and the same are fit to be quashed and set aside. Learned
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counsel further urges that there is no master and servant relationship
between petitioner and the respondent no. 3. The respondent no. 3
worked as a retainer under the contract. The agreement was initially
valid for a period of five years only. Learned counsel further argues that
even the impugned orders are without jurisdiction. The issue was duly
raised before the authorities but no consideration was shown. It has
further been argued that from the service certificate dated 05.01.2017,
issued by the petitioner - company, it is evident that the respondent no. 3
was working as a retainer of the petitioner - company and was not
entitled for the benefits of gratuity under the provisions of Payment of
Gratuity Act, 1972. Learned counsel further argues that from bare
perusal of Sections 2 and 4 of the said Act, it is crystal clear that the
gratuity is paid to an employee whereas respondent no. 3 was not the
employee of the petitioner - company rather he was working as a
retainer under the agreement.
6. To buttress his arguments, learned counsel places reliance on the
following Judgments:
(i) Electronics Corpn. Of India Ltd. Vs. Electronics Corpn. Of
India Service Engineers Union reported in (2006) 7 SCC 330 -
Para - 2, 3, 11, 14 and 18;
(ii) Bharat Petroleum Corporation Ltd. Vs. Regional Labour
Commissioner reported in 2019 SCC OnLine Mad 30977;
(iii) Indian Medical Association Vs. V.P. Shantha and others reported
in (1995) 6 SCC 651;
(iv) Jeewanlal Ltd. and others Vs. Appellate Authority under the
Payment of Gratuity Act and others and other analogous cases
reported in (1984) 4 SCC 356;
(v) Yeswant Deorao Deshmukh Vs. Walchand Ramchand Kothari
reported in 1950 SCC 766;
SUBMISSION ON BEHALF OF RESPONDENTS
7. Mr. Mantra Narayan Thakur, learned counsel appearing on behalf
of the respondent no. 3 opposes the contention of learned counsel for the
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petitioner and urges that the respondent no. 3 was performing his duty as
a Works Manager, which is evident from the order of the controlling
authority and that of the appellate authority. The said facts are admitted
and cannot be disputed by the Company. The authority hold full
jurisdiction and the order is in consonance with the settled rules and laws
which have been elaborately dealt with by the appellate authority.
8. Ms. Sunita Kumar, AC to learned Sr. SC-II argues that the order
impugned is fully justified and no interference is warranted by this
Court.
FINDINGS OF THE COURT
9. Before delving deep into the matter and coming to the conclusion
whether respondent no. 3 is entitled for gratuity, it would be apposite to
appreciate the term 'employee' as well as Section 4 of the Payment of
Gratuity Act. The term 'employee' as defined under Section 2(e) of the
Payment of Gratuity Act reads as under:
"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."
It is also relevant to quote Section 4 of the Payment of Gratuity
Act, which prescribes payment of gratuity to an employee and the said
provision reads as under:
"4. Payment of gratuity.
(1) Gratuity shall be payable to an employee on the
termination of his employment after he has rendered
continuous service for not less than five years, -
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five
years shall not be necessary where the termination of the
employment of any employee is due to death or disablement:
Provided further that in the case of death of the employee,
gratuity payable to him shall be paid to his nominee or, if no
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nomination has been made, to his heirs, and where any such
nominees or heirs is a minor, the share of such minor, shall be
deposited with the controlling authority who shall invest the
same for the benefit of such minor in such bank or other
financial institution, as may be prescribed, until such minor
attains majority.
Explanation.-- For the purposes of this section, disablement
means such disablement as incapacitates an employee for the
work which he was capable of performing before the accident
or disease resulting in such disablement.
(2) For every completed year of service or part thereof in
excess of six months, the employer shall pay gratuity to an
employee at the rate of fifteen days' wages based on the rate
of wages last drawn by the employee concerned:
Provided that in the case of a piece-rated employee, daily
wages shall be computed on the average of the total wages
received by him for a period of three months immediately
preceding the termination of his employment, and, for this
purpose, the wages paid for any overtime work shall not be
taken into account:
Provided further that in the case of 2[an employee who is
employed in a seasonal establishment and who is not so
employed throughout the year], the employer shall pay the
gratuity at the rate of seven days' wages for each season.
[Explanation.-- In the case of a monthly rated employee, the
fifteen days' wages shall be calculated by dividing the
monthly rate of wages last drawn by him by twenty-six and
multiplying the quotient by fifteen.
(3) The amount of gratuity payable to an employee shall not
exceed 4[5[such amount as may be notified by the Central
Government from time to time].
(4) For the purpose of computing the gratuity payable to an
employee who is employed, after his disablement, on reduced
wages, his wages for the period preceding his disablement
shall be taken to be the wages received by him during that
period, and his wages for the period subsequent to his
disablement shall be taken to be the wages as so reduced.
(5) Nothing in this section shall affect the right of an
employee receive better terms of gratuity under any award or
agreement or contract with the employer.
(6) Notwithstanding anything contained in sub-section (1),-
(a) the gratuity of an employee, whose services have been
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terminated for any act, wilful omission or negligence causing
any damage or loss to, or destruction of, property belonging
to the employer, shall be forfeited to the extent of the damage
or loss so caused;
(b) the gratuity payable to an employee 6[may be wholly or
partially forfeited]--
(i) if the services of such employee have been terminated for
his riotous or disorderly conduct or any other act violence on
his part, or
(ii) if the services of such employee have been terminated for
any act which constitutes an offence involving moral
turpitude, provided that such offence is committed by him in
the course of his employment."
10. It is case of the petitioner that Section 4(2) of the Payment of
Gratuity Act does not apply to the respondent no. 3 since it does not term
to be employee as there is no relationship of employer-employee. It is
not in dispute that the respondent no. 3 worked in the establishment of
the petitioner - Company in relation to discharge of his contractual
relation. Merely because employer's letter mentioned "Retainer" does
not disqualify the respondent no. 3 from such benefits because the
respondent no. 3 had worked as a full time employee with designation of
Senior Executive Works. The respondent no. 3 was prohibited to work
with any other organization during the period of his employment in
petitioner - Company. The function of the retainership is advisory in
nature whereas the respondent no. 3 worked as Executive in the
petitioner-Company all along his service period. Since respondent no. 3
worked as an Executive with the petitioner - Company, he is entitled for
the amount of gratuity which has been affirmed by the two authorities
i.e. the controlling and the appellate authority.
11. It has been held by the controlling authority that the respondent
no. 3 was paid salary as a Senior Executive Works to the tune of
Rs.56,000/- per month. The respondent no. 3was working as a regular
employee and as such he was entitled for the amount of gratuity. Since
the last salary drawn by the petitioner was never disputed, the controlling
authority has held that as he has worked for 15 years 11 months and 8
days i.e. approximately 16 years, the amount of gratuity for which he
was entitled was calculated as Rs.5,16,928/-. The appellate authority has
clearly observed that merely because in the appointment letter at clause-
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7 'retainer' was mentioned, but admittedly he was working as a regular
employee. The entitlement of amount of gratuity is the Constitutional
right, the same cannot be snatched away by way of any agreement. The
appellate authority rightly placed reliance on the Judgment of the
Hon'ble Apex Court passed in the case of S.K. Maini Vs. Corona Sahu
Company Limited reported in 1994 AIR 1984.
12. Since there is concurrent finding of two authorities and the
amount has already been deposited and the same is lying before the
controlling authority (Deputy Labour Commissioner, Jamshedpur), this
Court is in full agreement with the findings of two authorities and hence
it is ordered to release amount of gratuity in favour of the respondent no.
3 as per terms and conditions of appellate order.
13. Having heard rival submission of the parties across the bar, this
Court is of the considered view that no interference is warranted in the
instant writ petition and as such the same stands dismissed. The interim
order dated 06.07.2023 stands vacated.
(Dr. S.N. Pathak, J.)
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