[Cites 25, Cited by 0]
Jharkhand High Court
Signode India Limited (A Company ... vs The State Of Jharkhand on 8 January, 2026
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
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IN THE HIGH COURT OF JHARKHAND AT RANCHI
L.P.A No.145 of 2024
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Signode India Limited (A company incorporated under Companies Act,
1956), having its Registered Office at Signode India Limited, 3rd Floor,
Jyothi Majestic, 8-2-120/84, Road No. 02, Banjara Hills, PO & PS
Banjara Hills, District-Hyderabad, PIN-500034, (Telangana) and
having its Branch Office at Bhojania Palace, NH-33, PO & Ps Mango,
Town Jamshedpur, District East Singhbhum, through its authorized
signatory cum Manager- Human Resource, namely, Vidhu Shekhar,
aged bout 36 years, son of Kishore Kumar, resident of Semra Post, Jita
Chapra, Chhapra Horil, Muzaffarpur, PO & PS Muzaffarpur District-
Muzaffarpur, PIN-843127 (Bihar) .... ... Appellant
Versus
1. The State of Jharkhand, through Labour Commissioner, Jharkhand-
cum-Appellate Authority, having its office at Nepal House, Doranda,
PO & PS: Doranda, District Ranchi, PIN 834002 (Jharkhand).
2. The Deputy Labour Commissioner-cum-Controlling Authority,
Kolhan Division, Jamshedpur, having its office at New Sitaram Dera,
Town Jamshedpur, PO& PS: Golmuri, District: East Singhbhum,
Jharkhand.
3. Suresh Kumar Jha, son of late Dr. Markandey Jha, resident of 831,
Udaigiri, Vijaya Heritage, PO & PS: Kdama, Town Jamshedpur,
District East Singhbhum. ... ... Respondents
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CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
HON'BLE MR. JUSTICE ARUN KUMAR RAI
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For the Appellant(s) : Mr. Sumeet Gadodia, Advocate;
Ms. Shruti Shekhar, Advocate
For the Resp. No.3 : Mr. Mantra Narayan Thakur, Advocate;
Ms. Sunita Kumari, Advocate
For the Resp.-State :Mr. Ashwini Bhushan, AC to Sr.SC-II
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CAV On: 09.12.2025 PRONOUNCED ON:08 .01.2026
[Per: Sujit Narayan Prasad J.]
1. The present Appeal has been filed under Clause-10 of the Letters
Patent against the order dated 19.02.2024 passed by the learned Single
Judge in W.P.(S) No. 3244 of 2023, whereby and whereunder, the
learned Single Judge while dismissing the writ petition filed by the
petitioner (appellant herein) had not interfered with the order dated
18.4.2019 passed by the respondent no.2 in Case No. GA-3/2017 and
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order contained in Memo No. 732/Ranchi, dated 19.4.2023 passed by
Labour Commissioner, Jharkhand-cum-Appellate Authority under
payment of Gratuity Act, 1972 [in short, Act] in Appeal Case No.
P.G.-5 of 2019 and has held that the respondent no.3 is entitled for
claim of gratuity under the Payment of Gratuity Act, 1972.
Factual Matrix
2. The brief facts of the case as per the pleadings made in the writ
petition as well as impugned order needs to refer herein which reads
as under:
(I) Petitioner (appellant herein) is a Company incorporated under
the Companies Act, 1956 and is manufacturer and supplier of
the industrial packaging, consumables, equipment and services
to its customers across the country and its operations are spread
across geographical territory of India.
(II) The case of the petitioner is 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.
(III) 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
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Retainer and for which service certificate dated 05.01.2017 was
also issued by the Company.
(IV) 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 holding that the
respondent no. 3 is not entitled to any other payments other than
monthly Retainer Fee as per terms and conditions of the
agreement.
(V) Thereafter, an application was also filed by the respondent no.3
in Form-N under Gratuity Rules for payment of gratuity before
the Deputy Commissioner-cum-Controlling Authority, Kolhan
Division, Jamshedpur, which was registered as Case No. GA-
3/2017.
(VI) 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 to the tune of Rs.5,16,928/- under the Payment of
Gratuity Act, 1972.
(VII) Aggrieved by the same, an Appeal being Appeal Case No. PG-
05/2019 was filed by the petitioner (appellant herein) 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 gratuity with simple interest at the rate of 10%.
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(VIII) Being aggrieved by the order dated 18.04.2019 and order dated
19.4.2023 petitioner has preferred writ petition being W.P.(S)
No. 3244 of 2023, but the same was dismissed by the learned
writ Court, against which the present appeal has been filed.
3. It is evident from the factual aspect that the respondent no.3 being
aggrieved with the conduct of the appellant-management in not
making payment of gratuity has filed an application being case No.
GA-3/2017 which was decided on 18.4.2019 by the authority
concerned wherein it has been held that the respondent no.3 is
entitled for payment of full gratuity under the provision of section
4(2) of the Payment of Gratuity Act, 1972,by directing the appellant-
management to make payment of an amount of Rs. 5,16,928/-.
Against the same, the appellant-management has preferred an Appeal
before the appellate authority being Appeal Case No. PG-
05/2019which was also rejected vide order dated19.04.2023.
4. Both the orders passed by the controlling authority as well as appellate
authority have been assailed by the appellant-management by filing writ
petition being WP(S) No. 3244 of 2023.
5. The learned Single Judge has refused to interfere with the orders passed
by both the authorities by taking into consideration the provision of
section 2(e) of the Payment of Gratuity Act, 1972 as also section 4
thereof by holding that although the respondent no.3 was employed as
Retainer but taking into consideration the nature of work which was
being discharged by him, he should be considered as an employee.
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6. The dismissal of the said writ petition is the subject matter of the present
appeal.
7. Arguments advanced on behalf of the appellant/writ petitioner:
The learned counsel appearing for the appellant has taken following
grounds in assailing the impugned judgment:
(i) The learned Single Judge has not appreciated the fact that the
authority who has decided the issue by directing to make payment
of gratuity was not competent enough to do the same in view of
the provision of section 2 (a)(i)(b)of the Payment of Gratuity Act,
1972 in view of the fact that the appellant-management is having
branches across the country and due to implication of section
2(a)(i)(b) the appropriate authority for determination of the
entitlement of the respondent no.3 for gratuity will be the Central
Government but herein the State Government has decided the
issue being the competent authority.
(ii) It has been contended that that there is no master and servant
relationship between appellant and the respondent no.3 as the
respondent no. 3 worked as a Retainer under the contract and the
agreement was initially valid for a period of five years only
(iii)The learned Single Judge has also not appreciated the fact that
the respondent no.3 was appointed as Retainer to discharge duty
on specific terms and conditions along with the nature of duty
referred therein and, as such, holding the respondent no.3 as
employee within the meaning of section 2(e) of the Act 1972
cannot be said to be just and proper taking into consideration the
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nature of work assigned to him.
(iv) The learned counsel for the appellant has relied upon the
following judgments passed by the Hon'ble Apex Court, in
support of his arguments:
(a) Electronics Corpn. Of India Ltd. vs. Electronics Corpn.
of India Service Engineers Union reported in (2006)7 SC 330;
(b) Indian Medical Association vs.V.P. Shantha and others
reported in (1995) 6 SCC 651;
(b) Jeewanlal Ltd. and others vs. Appellate Authority and
others reported in (1984) 4 SCC 356;
(c) Yeswant Deorao Deshmukh vs. Walchand Ramchand
Kothari reported in 1950 SCC 766.
Arguments advanced on behalf of the Respondent No.3:
8. The learned counsel for the respondent no.3 has taken the following
grounds by defending the impugned order:
(i) The branch of appellant-management at Jamshedpur is
registered under the Jharkhand Shops and Establishment Act
and, as such, the appropriate authority to decide the issue will
be the authority appointed by the State Government and,
therefore, the Deputy Labour Commissioner, the functionary
of the State Government, has exercised the jurisdiction by
deciding the issue regarding entitlement of the respondent no.3
for payment of gratuity under Payment of Gratuity Act, hence,
it is incorrect on the part of the appellant-management that the
authority of the State Government is not competent to decide
the issue.
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(ii) 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 holds full jurisdiction and the order is
in consonance with the settled rules and laws which have been
elaborately dealt with by the appellate authority and the same
was not interfered with by the kerned single Judge.
(iii) The contention which has been raised by the learned
counsel for the appellant that the respondent no.3 was
appointed on the post of "Retainer" and he was to discharge
duty as per certain terms and conditions stipulated in the
contract/agreement is absolutely incorrect as if the nature of
work which has been assigned to the respondent no.3 will be
taken into consideration which has also been considered by the
authority concerned while deciding the issue and in coming to
the conclusion that the respondent no.3 was employee within
the meaning of Section 2(e) of the Act, therefore, the authority
on consideration of the nature of work of the respondent no.3
has come to the conclusion that the respondent no.3 is entitled
for gratuity under the fold of the Act, 1972 which has also
been considered by the learned Single Judge and, as such the
order of learned Single Judge not requires any interference.
Analysis:
9. Heard the learned counsel appearing for the parties and gone through
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the findings recorded by the learned Single Judge in the impugned
order as also the pleadings and other affidavits filed by the parties.
10. In the backdrop of the aforesaid factual aspect and also on the basis
of the arguments advanced on behalf of the learned counsel for the
parties the following issues are being framed for consideration:
(i) Whether the branch of the appellant management who
has been registered under Jharkhand Shops and Establishment
Act to be governed for the purpose of consideration of
entitlement of payment of gratuity under Payment of Gratuity
Act by the authority being functionary of State Government or
the Central Government merely because the branches of the
appellant management are also in the different States.
(ii) Whether merely on the basis of terms and conditions of
the contract of appointment or contrary to that the duty has
been assigned to the respondent no.3 showing the respondent
no.3 under the fold of the employee will it be just and proper
to negate the entitlement of gratuity within the meaning of
Payment of Gratuity Act, 1972.
11.Both the aforesaid issues are being taken up separately.
Issue No.1
12.This court in order to decide the aforesaid issue reiterates the
pleadings made in the plaint wherein the appellant-management has
referred the provision of section 2(a), the same is being referred
herein under:
"2. In this Act, unless the context otherwise requires,-
(a) "appropriate government" means-
(i) in relation to an establishment-
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(a) belonging to, or under the control of, the Central
Government,
(b) having branches in more than one State,
(c) of a factory belonging to, or under the control of, the
Central Government,
(d) of a major port, mine, oilfield or railway company, the
Central Government"
13.Thus from aforesaid it is evident that Section 2 (a) (i)(b) of the Act
1972 stipulates that in a case where the management is having
branches across the country then the appropriate authority would be
the functionary of Central Government.
14.Mr. Sumeet Gadodia, the learned counsel appearing for the appellant-
management in order to strengthen his argument in the aforesaid
context has relied upon the judgment rendered by the Hon'ble PEX
Court in the case of "Jeewanlal Ltd. and others vs. Appellate
Authority and others" reported in(1984) 4 SCC 356.
15.While on the other hand, Mr. Mantra Narayan Thakur, the learned
counsel appearing for the respondent no.3 has submitted by taking the
ground that since the appellant-management is also registered under
Jharkhand Shops and Establishment Act and, as such, the functionary
of the State Government will be the competent authority to decide the
payment of gratuity within the meaning of Payment of Gratuity Act.
16.This Court needs to consider the judgment passed by the Hon'ble
Apex Court in "Jeewanlal Ltd. and others" (supra), relied upon by
Mr. Gadodia, the learned counsel appearing for the appellant-
management, particularly paragraph no.15 thereof, but before that the
factual aspect of the said case needs to be referred herein.
17. In the aforesaid case the respondent ceased to be an employee on
attaining the age of superannuation after completing 35 years of
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service. Since he was entitled to payment of gratuity under this Act,
the appellant calculated the amount of gratuity payable to him under
sub-section (2) of Section 4 on the basis that "fifteen days' wages"
meant half of the monthly wages last drawn by him i.e. for 13
working days, there being 26 working days in a month. Being
dissatisfied with such payment, the respondent made a claim under
sub-section (1) of Section 7 of the Act before the Controlling
Authority, Madras for determination of the amount of gratuity
payable to him. He made a demand for payment of an additional sum
as gratuity on the ground that his daily wages should be ascertained
on the basis of what he actually got for 26 working days and the
amount of "fifteen days' wages" should be calculated accordingly, not
by just taking half of his wages for a month of 30 days or fixing his
daily wages by dividing his monthly wages by 30. The appellant
contested the claim contending that the words "fifteen days' wages"
occurring in sub-section (2) of Section 4 of the Act only meant half a
month's wages and since a month consisted of 26 working days, the
amount of gratuity was rightly arrived at by multiplying the daily
wages by "thirteen".
18.The Controlling Authority by its order dated September 23, 1978 held
that for the purposes of calculating "fifteen days' wages" it was
necessary to ascertain one day's wage and since a month consists of
26 working days, the amount of gratuity should be calculated
accordingly i.e. by dividing the monthly wages last drawn by 26
multiplied by 'fifteen' and not by just taking half of his wages for a
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month of 30 days or by dividing such monthly wages by 30. It
accordingly directed the appellant to pay Rs. 6069.00 as gratuity
under sub-section (1) of Section 4 of the Act. On appeal, the
Appellate Authority, Madras by its order dated July 12, 1976 held
that there was an error in the mode of computation of the amount of
gratuity payable to the respondent. According to it, the gratuity
payable to the respondent would have to be calculated at half of his
monthly rate of wages i.e. wages he would have earned in a
consecutive period of 15 days and his daily wages had to be
multiplied by "thirteen" and not by "fifteen" for every completed year
of service or part thereof not exceeding six months. It accordingly
reduced the amount of gratuity payable to Rs 5259.80 p.
19. Since, the Appellate Authority in several other cases took a view to
the contrary and as a result of conflicting orders passed by the
Appellate Authority, the employers in some of these cases and the
employees in others had to file petitions in the concerned High Court
under Article 226 of the Constitution and they have been disposed of
in the judgment under appeal. The High Court following the decision
of this Court in Shri Digvijay Woollen Mills Ltd. v. Mahendra
Prataprai Buch [(1980) 4 SCC 106 : 1980 SCC (L&S) 513 : (1981)
1 SCR 64 : (1980) 2 LLJ 252] and that of the Bombay High Court
in Lakshmi Vishnu Textile Mills v.P.S. Mavlankar [(1979) 1 LLJ
443 (Bom)] held that in order to determine "fifteen days' wages", of a
monthly-rated employee under sub-section (2) of Section 4 of the
Act, it was necessary to determine one day's wage last drawn by him
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and then multiply the same "fifteen" times, and the resultant sum had
to be multiplied by twenty to arrive at the maximum amount of
gratuity payable under sub-section (3) of Section 4 of the Act. It
accordingly restored the orders of the Controlling Authority.
20.Against the said order of the High Court appeals were preferred
before the Hon'ble Apex Court wherein one of the issues was
jurisdiction of the controlling authority which is also the issue in the
instant case.
21. The Hon'ble Apex Court in paragraph 15 of the said judgment has
observed which reads as under :
15. We do not think it necessary to deal at length the last and third question
raised in some of these appeals viz., the objection to the jurisdiction of the
Controlling Authority under Section 3 of the Act to entertain the claim
against some of the appellants. It is said that Messrs Jeewanlal (1929) Ltd.
is an all-India concern having its branches in more than one State and
therefore the "appropriate Government" within the meaning of Section
2(a)(1)(b) of the Act in relation to them is the Central Government for
purposes of Section 3. The appropriate Government is the Central
Government in relation to an establishment belonging to or under the
control of the Central Government or having branches in more than one
State or of a factory belonging to, or under the control of the Central
Government or in the case of a major port, mine, oilfield, or railway
company. Section 2(a)(i) of the Act reads as follows:
"2. In this Act, unless the context otherwise requires,--
(a) "appropriate government" means,--
(i) in relation to an establishment --
(a) belonging to, or under the control of, the Central Government,
(b) having branches in more than one State,
(c) of a factory belonging to, or under the control of, the Central
Government,
(d) of a major port, mine, oilfield or railway company, the Central
Government,
(ii) in any other case, the State Government;"
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It would appear that the definition of appropriate Government in Section
2(a)(i) in relation to an establishment makes a distinction between
establishments and factories. In relation to an establishment belonging to,
or under the control of, the Central Government and of a factory belonging
to, or under the control of, the Central Government, the appropriate
Government is the Central Government. But the Central Government is the
appropriate Government only in relation to an establishment having
branches in more than one State. There is no like provision made in relation
to such an establishment having factories in different States. We feel that the
point relating to the jurisdiction of the Controlling Authority under Section
3 of the Act does not really arise. It appears that Messrs Jeewanlal (1929)
Ltd. have their registered and head office at Calcutta and branch offices
and factories at Calcutta, Bombay and Madras and sales offices at Delhi,
Hyderabad and Cochin. It has also two factories in Madras viz. Shree
Ganeshar Aluminium Works and Messrs Mysore Premier Metal Factory. It
employs about 300 members of clerical staff at the head office and its
branch offices throughout the country as well as in its two factories and
employs about 1300 workmen in its factories at Calcutta, Bombay and
Madras. We are inclined to the view that the Controlling Authority had
jurisdiction to entertain the claim of an employee working in an office
attached to a factory as such an office would be an adjunct of the factory
but that is not the question before us. The Controlling Authority has in fact,
confined the adjudication of claims in relation to workmen who were
employed at the two factories at Madras but declined to entertain the claims
of employees who were working either at the branch office at Madras or at
the office attached to the factories in question. That being so, the contention
relating to jurisdiction of the Controlling Authority under Section 3 of the
Act must fail."
22. It is evident that the Hon'ble Apex Court has taken into
consideration the definition of appropriate Government as stipulated
in Section 2(a)(i) has observed that the Central Government is the
appropriate Government only in relation to an establishment having
branches in more than one State. There is no like provision made in
relation to such an establishment having factories in different States.
It has further been observed that it appears that Messrs Jeewanlal
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(1929) Ltd. have their registered and head office at Calcutta and
branch offices and factories at Calcutta, Bombay and Madras and
sales offices at Delhi, Hyderabad and Cochin. It has also two factories
in Madras viz. Shree Ganeshar Aluminium Works and Messrs
Mysore Premier Metal Factory. It employs about 300 members of
clerical staff at the head office and its branch offices throughout the
country as well as in its two factories and employs about 1300
workmen in its factories at Calcutta, Bombay and Madras.
23. Taking into consideration the aforesaid fact the Hon'ble Apex Court
has observed that the Controlling Authority had jurisdiction to
entertain the claim of an employee working in an office attached to a
factory as such an office would be an adjunct of the factory and the
Controlling Authority has in fact, confined the adjudication of claims
in relation to workmen who were employed at the two factories at
Madras but declined to entertain the claims of employees who were
working either at the branch office at Madras or at the office attached
to the factories in question.
24. Thus, from the aforesaid may be inferred that if the posting has been
made in two different branches of the office situated in two different
States, then certainly the Central Government would be the
appropriate authority.
25.Herein, the facts of the present case is not similar to that of the
aforesaid case upon which the reliance has been placed, rather, here it
is admitted by the learned counsel for the appellant that the
respondent no.3 was posted in Jamshedpur and remained there for
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sixteen years having not been transferred to any other places.
26.This Court, therefore, of the view that in the facts of the present case
the reference which has been made by the Hon'ble Apex Court at
paragraph no.15 of the said judgment is not applicable for aiding the
appellant rather the Hon'ble Apex Court has clarifies that posting in
one place and even though in the branches at adjacent places, then the
appropriate authority would be the authority whose office is adjunct
to the office of the factory concerned.
27.Here in the present case the respondent no.3 was never posted in
different branches situated in different States. Even on the basis of the
consideration so made by the Hon'ble Apex Court in paragraph no.
15 of the aforesaid judgment, this court is of the view that merely
because the branches of the management company situated in
different States it will not deprive the jurisdiction of the State
functionary and further the fact about the registration of the
management appellant under the Jharkhand Shops and Establishment
Act is not in dispute.
28. This Court by taking into consideration the factual aspect of the
present case as well as purport of the Jharkhand Shops and
Establishment Act is of the view that herein for all particular
purposes including the payment of gratuity is to be looked into by the
State appointed authority.
29.Such observation is being made also on the basis of the principle that
the Act 1972 is meant for the welfare of the workmen and the same
is to be taken into consideration.
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30. It needs to refer herein that the Payment of Gratuity Act, 1972 is
enacted to introduce a scheme for payment of gratuity for certain
industrial and commercial establishments, as a measure of social
security. It has now been universally recognized that all persons in
society need protection against loss of income due to unemployment
arising out of incapacity to work due to invalidity, old age etc. For
wage-earning population, security of income, when the worker
becomes old or infirm, is of consequential importance. The
provisions of social security measures, retiral benefits like gratuity,
provident fund and pension (known as the triple-benefits) are of
special importance.
31. It also requires to refer herein that The Payment of Gratuity Act was
enacted in the year 1972 to provide a scheme for the payment of
gratuity to employees engaged in factories, mines, oilfields,
plantations, ports, railway companies, shop or other establishments
and for matters connected therewith and incidental thereto. It is a
piece of social welfare legislation and deals with the payment of
gratuity which is a kind of retiral benefit like pension, provident fund
etc. Gratuity in its etymological sense is a gift, especially for services
rendered, or return for favours received. The provisions contained in
the Act are in the nature of social security measures to wage-earning
population in industries, factories and establishments.
32.In the case of Beed District Central Coop. Bank Ltd. v. State of
Maharashtrareported in (2006) 8 SCC 514, the Hon'ble Apex Court
held that the Payment of Gratuity Act is a beneficial statute. When
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two views are possible, having regard to the purpose the Act seeks to
achieve being a social welfare legislation, it may be construed in
favour of the workman.
33. Further inM.C. Chamaraju v. Hind Nippon Rural Industrial (P)
Ltd, (2007) 8 SCC 501 the Hon'ble Apex Court held that the
Payment of Gratuity Act has been enacted with a view to grant
benefit to workers, a "weaker section" in the industrial adjudicatory
process. In interpreting the provisions of such beneficial legislation
therefore liberal view should be taken, for ready reference the
relevant paragraph of the aforesaid order is being quoted as under:
"15. There is another aspect also which is relevant. The Act has
been enacted with a view to grant benefit to workers, a "weaker
section" in industrial adjudicatory process. In interpreting the
provisions of such beneficial legislation, therefore, liberal view
should be taken. A benefit has been extended by the authorities
under the Act to the workman by recording a finding that the
applicant (the appellant herein) had completed requisite service of
five years to be eligible to get gratuity. In that case, even if another
view was possible, the Division Bench should not have set aside the
findings recorded by the authorities under the Act and confirmed
by a Single Judge by allowing the appeal of the employer."
34. Same view has been reiterated in the case of Poonam Devi v.
Oriental Insurance Co. Ltd, (2020) 4 SCC 55 where the Workmen's
Compensation Act, 1923 (now christened as "the Employee's
Compensation Act, 1923") was involved, the Hon'ble Apex Court
held that it was a piece of socially beneficial legislation and the
provisions will therefore have to be interpreted in a manner to
advance the purpose of the legislation, rather than to stultify it.
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35. In the case of Meeta Sahai v. State of Bihar (2019) 20 SCC 17 the
Hon'ble Apex Court held that it is the responsibility of the Courts to
interpret the text in a manner which eliminates any element of
hardship, inconvenience, injustice, absurdity or anomaly. Legislation
must further its objectives and not create any confusion or friction in
the system. If the ordinary meaning of the text of such law is non-
conducive for the objects sought to be achieved, it must be interpreted
accordingly to remedy such deficiency. The Hon'ble Apex Court
reiterated that it may be necessary to resort to purposive interpretation
of the provisions of the Statute in the light of its objectives.
36.In the case of Hira Singh v. Union of India (2020) 20 SCC
272referring to its earlier judgment in the case of Directorate of
Enforcement v. Deepak Mahajan {(1994) 3 SCC 440} the Hon'ble
Apex Court observed that every law is designed to further ends of
justice but not to frustrate on the mere technicalities. It further
observed that to winch up the legislative intent, it is permissible for
Courts to take into account the ostensible purpose and object and the
real legislative intent. Otherwise, a bare mechanical interpretation of
the words and application of the legislative intent devoid of concept
of purpose and object will render the legislature inane. The Hon'ble
Apex Court further observed that in given circumstances, it is
permissible for Courts to have functional approaches and look into
the legislative intention and sometimes it may be even necessary to
go behind the words and enactment and take other factors into
consideration to give effect to the legislative intention and to the
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purpose and spirit of the enactment so that no absurdity or practical
inconvenience may result and the legislative exercise and its scope
and object may not become futile.
37.From the above discussion, it is clear that the Gratuity Act is a
beneficial legislation. It is to be construed in favour of the employees.
It would be erroneous to say that one cannot go beyond the scheme of
gratuity contemplated under the Gratuity Act. It is also clear that the
Gratuity Act is not intended to do away with other retiral benefits
already existing and available to the employees. It is to confer extra
benefits. This is a social piece of legislation and the Court has to
construe the provision to help in achieving the object of the
legislation.
38.On the basis of the discussion made hereinabove this Court is of the
view that the Deputy Labour Commissioner while acting as
controlling authority in deciding the entitlement of the respondent
no.3 cannot be said to suffer from jurisdictional error.
39.Accordingly, the issue no.1 has been answered.
Issue No.2
40.The second issue is whether, the nature of the relationship between
the employer and employee depends solely on the designation or on
the work carried out and the role played by the employee concerned.
41.At this juncture it would be apt to refer herein Section 2(e), 2(f) and
2(s) of the Payment of Gratuity Act 1972, which define the
expressions 'employee', 'employer', and 'wages' respectively, which
read as under:
2026:JHHC:418-DB
(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;]
(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 the 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;
(s) "wages" means all emoluments which are earned by an employee
while on duty or on leave in accordance with the terms and conditions
of his employment and which are paid or are payable to him in cash
and includes dearness allowance but does not include any bonus,
commission, house rent allowance, overtime wages and any other
allowance.
42. Thus as per section 2 (e) of the Act 1972 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 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
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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.
43. Herein it is admitted fact that respondent no. 3 has worked with the
appellant management about 16 years. However, the appellant has
contended that respondent no.3 has worked under the capacity of
retainer and the post of retainer does not come under the purview of
the employee, therefore he is not entitled for gratuity.
44. But from the perusal of record and also from perusal of order dated
18.4.2019 passed by the respondent no.2 in Case No. GA-3/2017 and
order dated 19.4.2023 passed by Labour Commissioner, Jharkhand-
cum-Appellate Authority, it is evident that respondent no. 3 was
engaged as regular employee.
45.The relevant part of the order dated 18.4.2019 passed by the
respondent no.2 in Case No. GA-3/2017 is being quoted herein which
reads as under:
उपादान भुगतान अिधिनयम, 1972 की धारा-4(2) म यह उ ेख नहीं है क
रटे मेरशीप/ कॉ ै पर (िनयु ) कमचारी / पदािधकारी को उपादान
भुगतान से वंिचत िकया जा सकता है ।साय ही. वादी ारा समिपत माननीय
उ तम ायालय एवं अ ायालयों ारा पा रत आदे श की ित म
उ े खत है िक कमचारी की िनयु प मउ े खत श कीआधार पर
नहीं, ब उनसे िलए जाने वाले काय क आधार पर िकसी के पद
की ित िनभर करती है ।चूंिक गदी को दत गेट पास म उनका प नाम
"िसिनयर ए ी ूिटव व ् दशाया गयाहै . ऐसी ित म मेरा मानना है िक
ी सुरेश कुमार आ उपादान के कदार बनतेह।
2026:JHHC:418-DB
वाद के सुनवाई के दौरान यह आहै िक वादी का काय म योगदान के
समय वेतन सयमा 30.000 ित माह रहा है, तथा समय- समय ितवादी ारा
बादी को वेतन वृ दी गई है ।इस कार है िक वादी का अ म वेतन
पया 50,000 ित माह था।
उपरो सभी त ों, सा एवं दशों के आधार पर अधी ा री का िन ष
है िक वादी की एक रटे नर के प म एि मे कराया गया, पर ु ितवादी
ारा उन से रटे नर के िलए काय प रभािषत नहीं कराया गमा ब एक
िनयिमत कमचारी के प म काय कराया गया है अत वादी उपदान के
हकदार ह।चूंिक बादीक के अंितम पा र िमक की रािश पर ितवादी ारा
कोई आपि नहीं जताया गया है. अत उनके अंितम पा र िमक के आधार
पर उपादान की रािश की गणना की जातीहै , जो िन वतहै -
वादी का कुल सेवा अविध 15 वष 11 माह, ०िदन अथात, 16 वषउ पादान की
रािश (56,000+26 X 15) X 16 = 5,16,928 पये (पाँच लाख सोलह हजार
नौ सौ अट् ठाईस पये मा )
एथ अिधिनयम की धारा-7(3-A) के अनुसार चूक अविध के िलए मूल उपदान
की रािश पर 8% साधारण ाज के दर से साथ उ रािश आदे श िनगत की
ितिथ से 30 िदनों के अंदर भुगतान हेतु िनदिशत िकया जाता है, साथ ही इस
वाद को िन ािदत िकया जाता है।आज िदनांक- 18/4/19 को मेरे ह ा र
एवं मुहर सिहत िनणय िदया गया।प ों के सूिचतकर।
46. The aforesaid order has been affirmed by the appellate authority vide
order dated 19.4.2023 passed by Labour Commissioner, Jharkhand-
cum-Appellate Authority, the relevant paragraph is being quoted as
under:
वाद सं ा- जी०ए० 03/2017 म उप मायु जमशेदपुर-सह-िनयं ी
ािधकार उपदान संदाय अिधिनयम, 1972 ारा िदया गया िनणय िन वत है -
1. वादी ( ी सुरेश कुमार झा) को एक रटेनर के प म Agreement कराया
2026:JHHC:418-DB
गया पर ु ितवादी (Signode India Limited) ारा उनसे रटे नर के िलए
काय प रभािषत नहीं कराया गया, ब एक िनयिमत कमचारी के पम
काय कराया गया है , अत वादी उपदान के हकदार है ।
2. अिधिनयम अ गत गणना के आधार पर बादी के उपदान की रािश
₹5,16,928 है ।िजस पर चूक अविध के िलए मूल उपदान की रािश पर ४%
साधारण ाज दे य है ।
िनणय
संबंिधत ित ान का पजीकरण झारख दु कान एवं ित ान अिधिनयम के
तह करवाया गया है।अिधिनयम की धारा 1 (3) (b) के तहत भी िकसी
ित ान' को रा केअ गत माना गया है . उ धारा िन वतहै -
1. Short title, extent, application and commencement.-
(3) It shall apply to-
(b) every shop or establishment within the meaning of any law for the
time being in force in relation to shops and establishments in a State,
in which ten or more persons are employed, or were employed, on any
day of the preceding twelve months.
स म िनय ी ािधकार का िवषय वाद सं ा- जी०ए० 03/2017 की सुनवाई
म भी नहीं उठाया गया है अतः अपीलवाद म इस िब दु पर अिभ िनणयण
समीचीन नहींहै।
माननीय सव ायालय ारा S.K. Maini vrs Corona Sahu Company
Limited (1994 A.I.R. 1984) म िदये गये िनणय केअनुसार िकसी का
पदनामे नहीं ब उसक कायका रतl & va Employmem Letter &
Chatuse 7/म विणत काय की शत के अनुसार ी सुरेश कुमार झा पूण
कािलक प से Signode India Ltd. के अधीन काय कर रहे थे।यिद उनके
काय की कृित एक Retainer के प म केवल परामशदा ी की होती तो
अपने कायकाल केदौरान वे िकसी अ िनयोजक के अधीन /साथ भी काय
कर सकते थे।
Employment Letter के Clause 7 म िकसी अ कार के Payment नहीं
िदया जाना उ े खत है िक ु इससे उपदान सदाय अिधिनयम, 1972 का
काया यन भािवत नहीं होता है ।यह एक वैधािनक अिधकार है िजससे
िकसी को िकसी Agreement के मा म से विचत नहीं िकया जा
सकता है ।
अतः अपील वाद सं ा पी०जी० 05/2019 को खा रज िकया जाता है।साथ ही
ितवादी को चूक अविध के िलए उपदान की रािश पर 10% साधारण ाज
की दर से भुगतान करने का िनदश िदया जाता है।आज िदनांक- 17-04-
2026:JHHC:418-DB
23को मेरे ह ा र एवं मुहर सिहत िनणय िदया गया।उभय प को सूिचत
िकया जाय।
47. Thus, from the aforesaid orders, it is evident that the appellate
authority as well as competent authority has taken into consideration
that the respondent no.3 worked as Senior Executive Works in
contract work of the appellant company in M/S Tisco limited
therefore he entitled for payment of Gratuity. Further it has been
taken into consideration that the word used in the appointment letter
does not decide the status of employee rather in Industrial
Organization the work performed by him decides his status therein.
48.The Hon'ble Apex Court in the case of Srinibas Goradia vs. Arvind
Kumar Sahu & Ors 2025 INSC 1467 while appreciating the status of
an employee as a "workman" under Section 2(s) of the Industrial
Disputes Act, 1947, has observed that status must be decided by
applying the dominant nature test, which focuses on the principal
duties performed and not on the designation assigned by the
employer, for ready reference the relevant paragraph of the aforesaid
judgment is being quoted herein which reads as under:
5.7 In the modern-day nature of management, in every industrial
organisation the employees of a particular class may be required and
also expected to do the work which may have blend of supervision
with clerical or manual duties. An incidental performance of
supervisory work and vice versa may not become decisive to bring an
employee within the meaning of 'workmen' or to get him out of the
purview. Nature of duties to be performed by an employee, more often
than not would overlap therefore real criteria to judge whether a
'workman' within the meaning of Section 2(S) of the Act is the test
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what is called 'dominant nature test'. It is the main nature of work
assigned to the employee would become decisive.
In all such cases, the decisive aspect considered is whether an
employee is a "workman" or not, is the substantial, essential and
principal nature of work for which the employee is engaged. In
Burmah Shell Oil Storage and Distribution Company of India Limited,
this Court, after referring to Ananda Bazar Patrika, referred to, with
approval, certain English decisions which also advocated and
emphasized the criteria of substantial nature of employment. In Re
Dairymen's Foremen and Re Tailor's Cutters16, it was observed that
although the employees might perform manual labour, the question
was whether that was the real substantial employment for which they
were engaged or whether it was incidental or accessory to it. It was
observed, "the actual labour of cutting out cloth might be manual
labour, but the position he really occupied was a manager of a
business department. His duties therefore substantially were not those
involving manual labour and he was not workman within the Act".
6. Therefore, the acid test is, what may be called the dominant nature
test to determine whether the employee is a "workman" or not. It is
the dominant nature of work or the main employment to which the
employee is engaged, that would make or unmake the status as a
"workman" for such employee. This test is based on the realistic
consideration of the principal nature of work performed by the
employee. On the other hand, incidental trapping of supervisory work
does not make an employee the supervisor. Even in manual duties,
certain supervisory work would be in-built, but it cannot be a ground
to exclude the employee from the definition of workman. What is to be
applied is the acid test of dominant nature. Supervisor may have to
perform clerical work attendant to his principal job.
6.1 Furthermore, the designation or nomenclature is also not the
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guiding consideration. One has to look and assess only the prominent
and dominant nature of work in which the employee is engaged by the
employer.designations and nomenclatures are often designed by the
management to suit itself and to embellish the post with high sounding
names such as manager or supervisor or executive, as in the present
case. When an employee so designated substantially and essentially
works manually without any supervisory domain, he cannot be termed
as supervisor, to put him out of the purview of the definition in Section
2(s) of the Act. Such an employee, notwithstanding the designation
given to him, would be a "workman" for the reason that the
substantial and essential nature of duties assigned to him and
performed by him, are manual and non-supervisory, who possesses no
command over other."
49.Thus, from the aforesaid it is evident that the dominant nature of
work or the main employment to which the employee is engaged, that
would make or unmake the status as a 'workman' for such employee.
50.Further it has also been taken into consideration by the appellate
authority as well as by the competent authority that the retainers are
free to work with many organizations at a time but this respondent
(respondent no.3) was prohibited to work with any other organization
during the entire tenure of his appointment.
51.Further, the question of appointment of the respondent no.3 on the
post of Retainer based upon the terms and conditions of the
contract/agreement has been raised by the learned counsel for the
appellant.
52.In order to appreciate the aforesaid issue this Court has gone through
the same from where it is evident that the appellant has been
2026:JHHC:418-DB
conferred with the work as per terms of the contract/agreement was to
give advice but as it has come on record that in addition to the
consultancy work, the day to day work was also being taken by him,
which has been taken note by the Deputy Labour Commissioner in
the order dated 18.4.2019 which has been affirmed in the order dated
19.4.2023 passed by the appellate authority. The fact about taking
work in addition to the consultancy work has not been disputed by the
learned counsel for the appellant-management and the same cannot be
disputed since the same has been considered by the competent
authority based upon the documents.
53.The employee has been defined under section 2(e) of the Payment of
Gratuity Act 1972 as per which any employee, directly or indirectly,
as referred in the aforesaid provision, the work is being taken by him
then he will be entitled for gratuity.
54.Herein also, it has not been disputed that the respondent no.3 had
been engaged to take work directly or indirectly on making payment
or remuneration and, as such, even though some terms and conditions
referred in the offer of appointment, it will not dilute the statutory
provision rather the fact which has been taken into consideration is
regarding the work which has been performed by the respondent no.3,
on the basis of which he was taking remuneration then he will come
under the fold of the employee within the meaning of section 2(e) of
the Payment of Gratuity Act, 1972.
55.This Court, therefore, answered the issue no.2 against the appellant
and in favour of the respondent no.3.
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56.This Court adverting to the judgment passed by the learned Single
Judge has found that the learned Single Judge has taken into
consideration the order passed by both the competent authorities as
also taken into consideration the definition of the employee within the
meaning of section 2(e) of the Payment of Gratuity Act, 1972 and the
offer of appointment and nature of work being taken by the
respondent no.3 and accordingly has not interfered with the impugned
orders.
57.Therefore, the view as has been taken by the learned Single Judge
according to our considered view is a correct approach taking into
consideration the object and intent of the Payment of Gratuity Act,
1972 which has been enacted for the purpose of providing security
measure to the employee(s).
58.Accordingly, the instant appeal fails and is dismissed.
59.Pending IA(s),if any, stands disposed of.
I Agree (Sujit Narayan Prasad, J.)
(Arun Kumar Rai, J.) (Arun Kumar Rai, J.)
Jharkhand High Court
Dated:08/ 01/202
KNR/AFR
