Madhya Pradesh High Court
Cement Corporation Of India vs Shri Ram Singh Rajput on 8 May, 2026
Author: Vivek Rusia
Bench: Vivek Rusia
IN THE HIGH COURT OF MADHYA PRADESH
AT J A B A L P U R
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE PRADEEP MITTAL
ON THE 8th OF MAY, 2026
WRIT APPEAL No. 627 of 2026
CEMENT CORPORATION OF INDIA
Versus
SHRI RAM SINGH RAJPUT AND OTHERS
Appearance:
Shri Amit Khatri - Advocate for appellant.
Shri Sanjay Kumar Malvi - Advocate for respondent No.2. (through
V.C.)
Shri Parma Nand Sahu and Vivekanand Sahu - Advocate for
respondent No.1.
With
WRIT APPEAL No. 629 of 2026
CEMENT CORPORATION OF INDIA
Versus
SHRI DHANIRAM SAHU AND OTHERS
Appearance:
Shri Amit Khatri - Advocate for appellant.
Shri Parma Nand Sahu and Shri Vivekanand Sahu - Advocate for
respondent No.1.
Shri Sanjay Kumar Malvi - Advocate for respondent No.2.
WRIT APPEAL No. 630 of 2026
Signature Not Verified
Signed by: PRAVEEN
Signing time:
5/11/2026 6:15:59 PM
CEMENT CORPORATION OF INDIA
Versus
SHRI SHANKAR DAS BAIRAGI AND OTHERS
Appearance:
Shri Amit Khatri - Advocate for appellant.
Shri Sanjay Kumar Malvi - Advocate for respondent No.2.
WRIT APPEAL No. 631 of 2026
CEMENT CORPORATION OF INDIA
Versus
SHRI RAM NARESH SINGH AND OTHERS
Appearance:
Shri Sanjay Kumar Malvi - Advocate for respondent No.2.
Shri Parma Nand Sahu & Shri Vivekanand Sahu - Advocate for
respondent No.1.
ORDER
Per: Justice Pradeep Mittal This Writ Appeal challenges the judgment dated 06.01.2026 passed by the learned Single Judge of this Court in M.P. No. 3998/2025, whereby four misc. petitions filed by the Appellant Cement Corporation of India Ltd. (hereinafter 'CCI') under Article 227 of the Constitution of India, against concurrent orders of the Controlling Authority and the Appellate Authority under the Payment of Gratuity Act, 1972 (hereinafter 'the Act of 1972'), were dismissed.
Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PM2. The connected Writ Appeals arise from the same common judgment dated 06.01.2026 and involve the same Appellant, the same establishment, and identical legal issues. The details are:
(i) W.A. No. 630/2026 from M.P. No. 3996/2025 (Respondent: Shri Shankar Das Bairagi, appointed 01.02.1997, retired 30.11.2019);
(ii) W.A. No. 631/2026 from M.P. No. 4001/2025 (Respondent: Shri Ram Naresh Singh, appointed 1999, retired 01.01.2019);
(iii) W.A. No. 629/2026 from M.P. No. 4005/2025 (Respondent: Shri Dhaniram Sahu, appointed 1999, retired 31.12.2018).
Since all appeals are directed against one common judgment and raise identical issues, they are being decided by this common judgment. Facts are drawn from the leading matter i.e. M.P. No. 3998/2025.
3. Respondent No. 1, Shri Ram Singh Rajput (hereinafter 'the workman'), was engaged at the Nayagaon Unit of CCI in 1999. The Nayagaon Unit has been non-functional since 1997, having been referred to BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985. After a VRS Scheme for regular employees was implemented in 2007-2010, the Unit was maintained through contractual arrangements for security, housekeeping and other ancillary work. The workman was deployed through successive security contractors and retired on 30.09.2021 after approximately 22 years of continuous engagement at CCI's premises.
4. The Controlling Authority, vide order dated 22.01.2025, directed CCI to pay gratuity of Rs.1,03,060/- along with simple interest @10% p.a. from 31.12.2018. The Appellate Authority, vide order dated 30.06.2025, Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PM dismissed CCI's statutory appeal and confirmed the direction. Four writ petitions filed by CCI under Article 227 of the Constitution were dismissed by common judgment dated 06.01.2026 passed by the learned Single Judge. The present appeals are directed against the said judgment.
5. Learned counsel for the Appellant contends: (i) the workman was not a direct employee of CCI but was engaged through contractors; (ii) Clause 21 of the contract expressly placed liability for gratuity on the contractor; (iii) non-impleadment of the contractor was fatal; (iv) the applications filed in 2021-2022 were barred by limitation; (v) the finding of 'camouflage' is perverse; (vi) Section 21(4) of the Contract Labour (Regulation and Abolition) Act, 1970 ('CLRA') does not extend to gratuity; and (vii) interest was wrongly awarded from the date of superannuation.
6. Per contra, learned counsel for Respondent No. 1 supports the impugned judgment and submits that all four workmen served continuously for over 20 years while the contractor entity kept changing periodically a circumstance conclusively establishing that the contractual arrangement was a camouflage. CCI, as principal employer, is obligated under Section 21(4) of the CLRA to pay gratuity in default of the contractor. Limitation does not defeat a statutory right to gratuity. Interest under Section 7(3A) runs mandatorily from the date of exit from employment.
We have heard learned counsel for the parties at length and perused the record.
Issue I - Limitation Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PM
7. The Act of 1972 does not prescribe any limitation period for claiming gratuity. The statutory scheme is as under:
Section 7(3) of the Payment of Gratuity Act, 1972:
"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."
Rule 7(5) of the Payment of Gratuity (Central) Rules, 1972:
"No claim for gratuity under this Act shall be invalid merely because the claimant failed to present his application within the specified period."
A Division Bench of this Court in W.A. No. 563/2023 has conclusively held that the right to receive gratuity matures on the date of exit from employment, neither the Act nor the Rules contemplate any period of limitation for raising such a claim; and the rule-based limitation cannot defeat the substantive statutory right. These decisions have been consistently followed by this Court. The further principle that retiral dues constitute property under Article 300-A of the Constitution and cannot be withheld without authority of law (State of Jharkhand v. Jitendra Kumar Shrivastava, 2013 AIR SCW 4749) further fortifies the conclusion. This ground fails.
Issue II - Camouflage and Principal Employer Liability
8. The undisputed factual matrix identical in all four matters is that the workmen were appointed in 1997/1999 and served continuously at CCI's Nayagaon Unit until retirement in 2018-2021, spanning over 20 years, while the contractor entity was routinely replaced every one to two years.
Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PMThe learned Single Judge, in paragraph 13 of the impugned judgment, has recorded:
"The aforesaid fact that the contractor agency was routinely replaced after every one or two years whereas the respondents continued for more than 20 years give rise to only one inference, that the respondents were in fact working with the petitioner and the contract was only a camouflage. A particular Contractor after having provided services for one or two years only, would otherwise also not be liable to pay Gratuity, unless the tenure under a particular Contractor was more than five years."
We are in complete agreement. When the workmen remained at CCI's premises performing the same duties for over two decades while the paper identity of the contractor changed annually, the only reasonable inference is that the arrangement was a device to avoid direct employment obligations. No perversity attaches to the finding of camouflage recorded by the learned Single Judge, which is fully supported by the undisputed facts.
Issue III - Whether Section 21(4) CLRA Extends to Gratuity
9. Section 21(4) of the Contract Labour (Regulation and Abolition) Act, 1970 reads:
Section 21(4) of the Contract Labour (Regulation and Abolition) Act, 1970:
"In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PM unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor."
Section 2(h) of the CLRA adopts the definition of 'wages' from Section 2(vi) of the Payment of Wages Act, 1936. Clause (d) of Section 2(vi) of the Payment of Wages Act, 1936 reads:
Section 2(vi)(d) of the Payment of Wages Act, 1936:
"'wages' means all remuneration... and includes-- (d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made;"
Gratuity payable under the Act of 1972 is a sum payable by reason of termination of employment under a law, and therefore falls squarely within clause (d) above. This view was taken by the Madras High Court in Superintending Engineer v. Appellate Authority, Joint Commissioner of Labour, 2012 SCC OnLine Mad 5357 (following Madras Fertilisers Ltd. v. Controlling Authority, 2003 (97) FLR 275 (Mad.)), and the learned Single Judge has correctly adopted the same. The Appellant, as principal employer under the CLRA, was therefore obligated to pay gratuity upon the contractor's default, with a right to recover the same from the contractor from bills, securities, and other dues. The argument that Section 21(4) is confined to salary simpliciter is rejected.
Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PMIssue IV -- Non-Impleadment of Contractor
10. In view of the findings on Issues II and III, this contention is untenable. Section 21(4) of the CLRA creates a direct obligation on the principal employer; the contractor's presence is not a precondition for fastening such liability. The remedy of recovery against the contractor is available to CCI in separate proceedings. The workmen cannot be non- suited on account of the absence of a party against whom it is for CCI itself to proceed in recovery.
Issue V -- Interest from the Date of Superannuation
11. Section 7(3A) of the Payment of Gratuity Act, 1972 provides:
Section 7(3A) of the Payment of Gratuity Act, 1972:
"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."
The provision is unambiguous. Interest accrues from the date gratuity becomes payable i.e., the date of exit from employment as per Section 4(1) of the Act and not from the date of the application before the Controlling Authority. The proviso relieving the employer of interest Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PM applies only where the delay was due to the fault of the employee and written permission was obtained from the Controlling Authority neither condition obtains here.
So far as the specific rate of 10% per annum is concerned, Section 7(3A) does not itself prescribe the rate, it mandates the Central Government to notify a rate not exceeding the rate payable on long-term deposits. In exercise of the said power, the Central Government issued Notification No. S.O. 873(E) dated 01.10.1987, the operative text of which reads as under:
Notification No. S.O. 873(E) dated 01.10.1987 (Ministry of Labour, Government of India):
"In exercise of the powers conferred by sub-section (3-A) of section 7 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specifies ten per cent. per annum as the rate of simple interest payable for the time being by the employer to his employee in cases where the gratuity is not paid within the specified period. This notification shall come into force on the date of its publication in the Official Gazette."
This notification has been in force since 01.10.1987 and has not been superseded or substituted by any subsequent notification. As held by the Jharkhand High Court in M/s. Tata Steel Limited v. The State of Jharkhand & Ors. (W.P. (L) No. 4762/2023, decided on 18.12.2024):
"Section 7(3-A) of the Act of 1972 provides the parameter for fixing the rate of interest but the section by itself does not fix any rate of interest. However, the rate of interest is to be notified by the Central Government in terms of Section 7(3-A) of the Act of 1972 which has been notified vide Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PM notification dated 01.10.1987 @ 10%. Further, Section 7(3-A) does not provide for automatic change of rate of interest. The notification issued in terms of Section 7(3-A) can be modified only by issuing a fresh notification in terms of the said section. In the absence of any fresh Government notification with regard to interest payable on gratuity amount, the notification dated 01.10.1987 is binding." This Court is in respectful agreement with the aforesaid view. The award of 10% per annum interest by the Controlling Authority, affirmed by the Appellate Authority and the learned Single Judge, is therefore in strict conformity with the Central Government's notification and is not open to challenge. The argument that the rate is excessive or arbitrary is rejected.
Issue VI -- Scope of Article 227 Jurisdiction
12. The learned Single Judge, after examining all contentions on merits, correctly declined to interfere with concurrent findings of two statutory authorities. The scope of Article 227 is supervisory and not appellate. As held by the Supreme Court in Shalini Shyam Shetty v. Rajendra Shankar Patil, (2010) 8 SCC 329:
"A High Court in exercise of its jurisdiction under Article 227 of the Constitution does not act as an appellate court. It is in the nature of a supervisory jurisdiction to keep the inferior courts and tribunals within the bounds of their authority. The High Court can interfere where there is perversity or patent lack of jurisdiction."
The findings of the statutory authorities are neither perverse nor jurisdictionally infirm. There is no basis for interference. This contention is accordingly rejected.
Signature Not Verified Signed by: PRAVEEN Signing time: 5/11/2026 6:15:59 PM13. For all the reasons aforesaid, we find no merit in this Writ Appeal. The judgment dated 06.01.2026 passed by the learned Single Judge is correct on facts and law and calls for no interference. Accordingly: (i) The leading Writ Appeal arising from M.P. No. 3998/2025 (Respondent: Shri Ram Singh Rajput) is hereby dismissed.
(ii) The connected Writ Appeals arising from M.P. No. 3996/2025 (Shri Shankar Das Bairagi), M.P. No. 4001/2025 (Shri Ram Naresh Singh), and M.P. No. 4005/2025 (Shri Dhaniram Sahu) also stand dismissed in terms of and for the reasons recorded in this common judgment.
(iii) The respective respondent-workmen in all four matters shall be entitled to withdraw the amounts deposited before the Controlling/Appellate Authority, along with any deficit amounts payable under the respective orders of the statutory authorities, forthwith.
No order as to costs.
(VIVEK RUSIA) (PRADEEP MITTAL)
JUDGE JUDGE
Praveen
Signature Not Verified
Signed by: PRAVEEN
Signing time:
5/11/2026 6:15:59 PM