Telangana High Court

M/S Virtusa Consulting Services Pvt Ltd vs Sri Swarna Sarath Babu on 16 July, 2024

               THE HON'BLE SRI JUSTICE PULLA KARTHIK

                     WRIT PETITION No.20720 of 2023
ORDER:

This Writ Petition, under Article 226 of the Constitution of India,

is filed seeking the following relief:

"... declaring the order passed by the 3rd respondent Appellate Authority under Payment of gratuity Act dated 15/06/2023 in Gratuity Appeal No. 1/2023 is against to the provisions of Payment of Gratuity Act, and is in violation of the settled legal principles and consequently quash the same and to allow this writ Petition with costs in the interest of Justice and equity and pass ..."

2) Heard Sri C. Niranjan Rao, learned counsel for the petitioner,

Sri S.S.R. Murthy, learned counsel for respondent No.1 and

Sri K. V. Rama Rao, learned Standing Counsel for Central Government,

appearing for respondents 2 and 3.

3) Learned counsel for the petitioner submits that the first

respondent-employee was appointed in the petitioner's Company on

29.10.2003 as System Analyst and his last drawn salary was

Rs.28,236/-. Later, he resigned to the services of the petitioner

Company on 16.08.2021 and accordingly relieved on 17.09.2021.

Thereafter, he was paid gratuity amount of Rs.2,28,060/- on

09.12.2021 and the same was received by the employee without any

protest. Thus, there is compliance of provisions of Payment of Gratuity

Act on the part of the petitioner. Despite the same, respondent No.1

filed an application before respondent No.2 i.e. the Controlling Authority

and the Assistant Labour Commissioner (Central) Hyderabad, vide

P.G.Application No.48/48/2022-E3, claiming further gratuity amount

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of Rs.17,71,940/- with interest @ 10% per annum. Without considering

the material on record and the judgments produced by the petitioner,

respondent No.2 passed the order dated 17.11.2022 directing the

petitioner Company to pay Rs.17,71,940/- together with interest

amount of Rs.2,06,726/- total amount of Rs.19,78,666/-. Even the

statutory appeal filed by the petitioner vide Gratuity Appeal No.1/2023

was dismissed by respondent No.3 without properly considering the

grounds urged by the petitioner. Learned counsel has contended that

the second and third respondents have failed to take into consideration

that the services rendered and the salary lastly drawn by the employee

in a different Company cannot be made the basis to determine the

gratuity. Learned counsel has further contended that after his

resignation in the petitioner Company, the employee has never worked

in the premises of the petitioner during the period from 31.07.2017 to

03.09.2021 i.e. 4 years 8 months and 2 days) but worked at UK

Company in PCS-LON on a secondment where he received salaries and

other benefits from the said Company at London. Therefore, the

Controlling Authority erred in treating the said period of 4 years 8

months and 2 days as continuous service and thereby erred in ordering

gratuity on the last drawn salary of the employee which he earned at

London in a different Company through UK Payroll in UK Sterling

Pounds. The said anomaly was not considered by respondents 2 and 3.

Learned counsel has further contended that respondent No.1 took up

the job at another Company at London during the period from

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31.07.2017 to 03.09.2021 where he has received a salary of

Rs.5,67,545/- per month, for which, he paid several taxes only at

London. Therefore, the said amount cannot be taken as last drawn

salary of the petitioner by converting the UK Sterling Pound to Indian

Rupee, which the respondents 2 and 3 have failed to appreciate.

Learned counsel has strenuously contended that respondent No.2 being

the quasi judicial authority has failed to record any evidence on behalf

of the parties before passing the order and the same is in violation of

mandatory provisions of Rules 11 and 13 of Payment of Gratuity Act

and without considering the said material irregularities, respondent

No.3, in a mechanical manner, has confirmed the orders of respondent

No.2, which is totally perverse and therefore liable to be set aside.

Learned counsel has further contended that the Controlling Authority

has ordered interest @ 10% per annum on gratuity amount

w.e.f.17.09.2021, which worked out to Rs.2,06,726/-, but, Section 3(A)

of Payment of Gratuity Act, 1972, is operative only in case where the

employer intentionally or deliberately delays the payment, which is not

attracted in the case on hand. Hence, granting interest is beyond the

scope and power of respondent Nos.2 and 3. Therefore, it is prayed to

set aside the orders passed by respondents 2 and 3 respectively. In

support of his contentions, learned counsel has placed reliance on the

decision of the Hon'ble Apex Court in Lalappa Lingappa v. Laxmi

Vishnu Textile Mills Ltd., Sholapur 1.

1 1981 AIR 852

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4) Per contra, the learned counsel for respondent No.1-employee has

contended that during the pendency of the case vide P.G.Application

No.48/48/2022-E3 before respondent No.2, the petitioner Company

has filed a Memo dated 18.10.2022 before the said authority stating

that since the two issues viz., (1) total service rendered by the employee

and (2) last salary drawn by the employee, alone are to be considered in

the matter, the recording of oral evidences may be dispensed with as

the parties have already filed their written statements along with

documentary evidences. Therefore, the petitioner now cannot urge

before this Court that the Controlling Authority has failed to follow

Rules 11 and 13 of Payment of Gratuity Act. It is further contended

that respondent No.1 was appointed as a System Analyst on 29.10.2003

in the petitioner company and was in continuous service of the

petitioner Company for almost (18) years, and has attained an

unequivocal right for gratuity. Considering the same, the controlling

authority has rightly ordered to pay the balance amount of gratuity with

simple interest at 10% for the delayed period from 17.09.2021 till the

date of actual payment of gratuity. Thereafter, on consideration of the

said aspects, the same was also rightly confirmed by the appellate

authority vide order dated 15.06.2023. Therefore, there are no merits

in the present writ petition and prays this Court to dismiss the present

writ petition.

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5) This Court has taken note of the rival submissions made by the

learned counsel for the respective parties.

6) A perusal of the record discloses that the petitioner Company

itself has filed a Memo on 18.10.2022 before the controlling authority,

wherein, it is stated as follows:

"It is submitted that there are only two issues to be considered by the Controlling Authority under Payment of Gratuity Act 1972 ie., (1) Total services rendered by the Applicant and (2) Last salary drawn by the Applicant in this case to arrive at the correct gratuity payable by the Respondent to the Applicant and that both the parties to the dispute have already filed their written statements alongwith documentary evidences which is sufficient to conclude the issues and hence recording of oral evidences may kindly be dispensed with in the interest of equity and justice."

7) Having filed the said memo before the Controlling Authority

requesting to dispense with the recording of oral evidence, now, the

petitioner cannot contend that the orders of the Controlling and

Appellate Authorities violate the mandatory provisions or the Payment

of Gratuity Act, 1972. It is specifically stated therein that there are only

two issues for consideration before the Controlling Authority i.e.,

(1) Total service rendered by respondent No.1.

(2) Last salary drawn by respondent No.1 to arrive at the correct

gratuity payable to respondent No.1 by the petitioner.

8) The record further discloses that respondent No.1 was initially

appointed as a System Analyst in the petitioner Company on

29.10.2003, and later seconded to the United Kingdom from 31.07.2017

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to 03.09.2021. It is pertinent to refer to clause 7 of the initial

appointment letter of respondent No.1 dated 29.10.2003, which is

extracted hereunder:

"7. PLACE OF POSTING AND TRANSFER: Your posting at present is at Hyderabad. During your employment with this company, you may be posted or transferred/attached to any other company of POLARIS or to any of the offices/subsidiaries/ units/associate offices of the company, to any town or city in India or abroad, at the sole discretion of the Management. While working in another company on transferred/attached, you shall be entitled to emoluments and perks as applicable in transferred/attached company and for all purposes you shall be deemed to be employed in the company transferred/attached."

9) It is clear from the above that the management has the authority

to transfer an employee to any location within or outside of the nation.

However, the question of whether such a transfer or deputation would

be treated as a break in service is left out in detail.

10) The record further discloses that respondent No.1 was relieved of

his duties at the petitioner Company on 28.07.2017, after being

seconded to Polaris Consulting and Services Limited UK, which is an

affiliated entity of the petitioner Company. The Letter Agreement for

Polaris Consulting and Services Limited (India) Employees on Long

Term International Secondment Agreement to the UK dated 28.07.2017

outlines the terms and conditions of the Secondment. It is relevant to

refer to paragraphs 3 and 4 of the Secondment Agreement, which are

extracted hereunder:

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"During the Secondment, you shall remain employed by your Home Employer and your current terms and conditions of employment shall remain unchanged, save as set out in this Agreement. Where there is any conflict between the terms and conditions of your employment and the terms of this Agreement, the terms of this Agreement shall prevail.

Your period of continuous employment will remain unbroken. At the end of the Secondment, your Home Employer currently intends that you will return to your current position on the terms applying prior to the Secondment, or to a suitable alternative if that role no longer exists. However, this may change according to the needs of your Home Employer's business at that time."

A reading of the above would reveal that during the Secondment,

respondent No.1 was employed by his Home Employer (petitioner

herein) under the current terms and conditions of employment.

Furthermore, it was decided that there would be no breaks in the period

of continuous employment during the Secondment.

11) Clause 13 of the Secondment Agreement deals with termination,

which is extracted hereunder:

"13. Termination

You may terminate your Secondment providing Polaris UK and your Home Employer with not less than 1 month notice in writing.

You may terminate your employment with your Home Employer by providing your Home Employer with not less than 3 months' notice in writing or such longer period as may be required by the terms and conditions of your employment with your Home Employer.

Upon the termination of your Secondment you shall return to your Home Country to complete the termination process and related to Human Resource exit processes.

If, upon termination of your Secondment, you fail to return promptly to your Home Country then in addition to any other rights available under law or this Agreement, Polaris UK and your Home Employer shall, contact either the local

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British High Commission in the counter in which your Home Employer is situated or the UK Border Agency. This may jeopardise your ability to secure future visas."

12) It is abundantly clear from the above that the employee is

required to provide a written notice of one month to terminate the

Secondment and a notice of not less than three months to terminate

their employment with the Home Employer. Considering these aspects,

this Court is of the opinion that the employment of respondent No.1

with the petitioner Company did not cease on 28.07.2017, as claimed

by the petitioner. Furthermore, the conditions outlined in the

Secondment Agreement clearly indicate that respondent No.1 continues

to be an employee of the petitioner Company even after the

Secondment. The same is supported by the fact that a notice must be

served to the Home Employer in the event of termination of Secondment

and that the employee is obligated to give a notice of not less than three

months in order to terminate their services with his Home Employer.

This reaffirms that respondent No.1 remains an employee of the

petitioner Company even after the Secondment, as no party is required

to serve a notice of termination on a party with whom he has no

employer-employee relationship.

13) Furthermore, it is to be noted that the International Secondment

Agreement dated 28.07.2017 is only an agreement outlining certain

terms and conditions for respondent No.1's services at Polaris

Consulting and Services Limited UK, and not a letter of appointment.

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In case respondent No.1 was freshly appointed to work at the Polaris

Consulting and Services Limited UK, an official appointment letter

would be issued the Company. Nevertheless, in the absence of any

such appointment letter, respondent No.1's initial appointment letter

remains effective. Therefore, it is evident that respondent No.1 is

considered an employee of the petitioner Company even during the

Secondment period.

14) In view of the above, this Court is of the opinion that the Gratuity

Authority and the Appellate Authority have rightly held that there exists

an employer-employee relationship before the petitioner and respondent

No.1 and also that there was continuity of service of respondent No.1

with the petitioner Company from 01.10.2003 till the date of his

resignation on 17.09.2021. Furthermore, it is also rightly held that, as

defined under Section 2A of the Payment of Gratuity Act, 1972,

respondent No.1 is entitled for payment of gratuity for the entire period

of his continuous service with the petitioner Company, i.e., (18) years.

15) Further, regarding delay in making the payment of gratuity to

respondent No.1, he is entitled for interest as per Section 7(3A) of the

Payment of Gratuity Act, 1972. It is relevant to refer to Section 7(3) of

the Payment of Gratuity Act, 1972, which is extracted hereunder:

7. Determination of the amount of Gratuity:-

(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.

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(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub- section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:

Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the Controlling Authority for the delayed payment on this ground].

16) In view of the above made discussion, this Court does not find

any error in the order of the Controlling Authority dated 17.11.2022 in

P.G. Application No.48/48/2022-E3, and also in the order of the

Appellate Authority dated 15.06.2023 in Gratuity Appeal No.01 of 2023,

and the same are hereby confirmed. Hence, the judgment relied on by

the learned counsel for the petitioner is of no avail to him. Therefore,

the present writ petition is liable to be dismissed.