Jharkhand High Court
Br. Baliram Beldar vs The Project Officer on 11 November, 2024
Author: Anubha Rawat Choudhary
Bench: Anubha Rawat Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(L) No. 282 of 2018
Br. Baliram Beldar, S/o Late Agnu Beldar, R/o Matigarha, P.O-
Nadkhurkee, P.S-Baghmara, Distt- Dhanbad.
... ... Petitioner
Versus
1. The Project Officer, Block-II O.C.P. Mines, Under Block II Area of
M/s B.C.C.L. P.O-Nadkhurkee, P.S- Baghmara, Distt-Dhanbad.
2. The Deputy Chief Labour Commissioner (Central) Dhanbad &
Appellate Authority under the Payment of Gratuity Act, 1972 At-
Sharam Bhawan, New Colony, Jagjivan Nagar, P.O-Jagjivan Nagar,
P.S-Saraidhela, Distt-Dhanbad.
3. Controlling Authority under payment of Gratuity Act, 1972 &
Assistant Labour Commissioner (Central) Dhanbad II, At-Sharam
Bhawan, New Colony, Jagjivan Nagar, P.O-Jagjivan Nagar, P.S-
Saraidhela, Distt- Dhanbad.
... ... Respondents
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CORAM :HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
---
For the Petitioner : Mr. Nipun Bakshi, Advocate : Mr. Shubham Sinha, Advocate For the Resp.- BCCL : Mrs. Prerna Jhunjhunwala, Advocate For the UOI : Kumari Ranjana Singh, Advocate
---
Lastly heard on 22.10.2024 Order No. 16 dated 11.11.2024
1. This writ petition has been filed for setting-aside the order dated 27.12.2017 (Annexure-9) passed in P.G. Appeal No. (18)/2017- A.7 by respondent no.2 under Payment of Gratuity Act, 1972 whereby the order dated 17.05.2017 (Annexure-5) in (P.G. Application) No. 36(78)/2015-E passed by the respondent no.3 has been modified and it has been held that gratuity of the petitioner for service beyond 30 years will be determined by taking one month as 26 days instead of 30 days as was held by the respondent no.3.
2. The sole point involved in the present case is -
Whether one month would be taken as 26 days (after deducting 4 Sundays) or it has to be taken as 30 days for 1 calculation of gratuity relating to service rendered beyond 30 years?
3. Foundational facts a. The petitioner was engaged as casual loader by the respondent no.1 in the year 1973 and was absorbed on 10.09.1980. After completion of period of service of more than 30 years, he attained the age of superannuation on 30.06.2011. b. The petitioner filed an application before the respondent no.3 for payment of differential gratuity amount of Rs. 2,16,956/- which was registered as PG Case No. 36/(78)/2015-E-4. The petition was allowed by the respondent no.3 and the employer (respondent no.1) was directed to pay a sum of Rs. 2,16,955/- in accordance with the provisions of section 4(5) of Payment of Gratuity Act, 1972 (hereinafter referred to as the Act of 1972). c. The employer filed an appeal which was registered as PG Appeal No. 18/2017-A-7 and the appellate authority (respondent no.2) allowed the appeal in part by holding that the period of one month for service rendered beyond 30 years has to be taken as 26 days and not 30 days and the order of the controlling authority was accordingly modified. Consequently, the gratuity amount was reduced and the reduced amount has already been paid to the petitioner.
4. Arguments of the petitioner.
A. The learned counsel, while assailing the impugned appellate order, has submitted that the provision of section 4(5) of the Act of 1972 is applicable in the present case, but the impugned order has been passed as if the proceeding was under section 4(2) of the Act of 1972.
B. The learned counsel has submitted that under section 4 of the Act of 1972, there are two different provisions; one under section 4(2) and the other under section 4(5). He has submitted that as per the provisions of section 4(5) nothing in the section 4 shall affect the right of an employee to receive better terms of 2 gratuity under any award or agreement or contract with the employer.
C. The petitioner was seeking payment of gratuity in terms of Clause 9.1.4 of National Coal Wage Agreement No. III (NCWA-III). He submits that National Coal Wage Agreement has statutory force in terms of the judgment passed by the Hon'ble Supreme Court reported in (2007) 8 SCC 549 (Mohan Mahto Vs. Central Coal Field Ltd. and Others) and payment of gratuity in terms of Clause 9.1.4 was more beneficial to the petitioner.
D. As per Clause 9.1.4 of National Coal Wage Agreement (NCWA), gratuity amount for service rendered beyond 30 years shall be calculated at the rate of one month's wages last drawn by the employee for every completed year of service and there is no stipulation that one month would be calculated as 26 days after deducting the holidays (Sundays). It has been submitted that the term one month as mentioned in Clause 9.1.4 of NCWA has to be interpreted by golden rule of interpretation of statute and the plain meaning of the words mentioned therein is required to be considered. It has been submitted that as per the ordinary grammatical sense one month means 30 days and not 26 days for which a reference has been made to General Clauses Act [section 3(35)].
E. The controlling authority (respondent no.3), while passing the order was conscious of the fact that the Clause 9.1.4 of NCWA is a provision which would be covered by section 4(5) of the Act of 1972 and has accordingly calculated the gratuity amount for the service beyond 30 years by taking one month as 30 days. The learned counsel has also submitted that while considering the aforesaid aspect of the matter, the controlling authority had also relied upon the judgment passed by Hon'ble Bombay High Court, Nagpur Bench in the case reported in 2015 (145) FLR 1055 [Western Coalfields Limited Vs. Babulal Athankar (Dead) by Lrs.]. In the said judgment, the provision of section 3 4(5) of the aforesaid Act of 1972 was taken into consideration along with the provision of National Coal Wage Agreement (NCWA) and there was also a reference of the implementation instruction issued by the Coal India Limited which was dated 26.04.1984. The learned counsel has submitted that the case of the petitioner is fully covered by the judgment passed by Hon'ble Bombay High Court in the case of Babulal Athankar (Supra) and no interference was called for by the appellate authority.
F. The Appellate Authority framed two issues and the parties herein are concerned only with issue no. 2. He submits that while deciding the issue no. 2, the appellate authority held that the days per month beyond 30 years of service for each year would be taken as 26 days and not 30 days and has wrongly distinguished the judgment passed by the Hon'ble Bombay High Court in the case of Babulal Athankar (Supra).
5. Arguments of the respondent No.1 (employer-BCCL) I. There are two implementation instructions issued under NCWA related to this case both issued by Joint Bipartite Committee for the Coal Industry governing the payment of gratuity to the workmen; one dated 26.04.1984 and another dated 21.05.1987. Vide implementation instruction dated 26.04.1984, the mode of calculation has been provided and it has been mentioned therein that amount of gratuity for service beyond 30 years would be payable by referring to one month's wages appearing in Clause 9.1.4 to mean 26 days' last drawn salary and accordingly, gratuity will be calculated as follows: -
1 day wage X 26 days X number of completed years of service beyond 30 years.
II. Vide implementation instruction dated 21st May 1987 it was clarified that the employees who have put in service upto 30 years will be eligible for gratuity as per the provisions of Act of 1972 and not as per the illustration. The other conditions of implementation instruction of the year 1984 remained unaltered 4 and what was modified was only with respect to the payment of gratuity for those who had put in service upto 30 years. III. The learned counsel for the respondent-BCCL has relied upon the judgment passed in the case reported in (2018) 9 SCC 529 (Union Bank of India and others Vs. C.G. Ajay Babu and Another) and has submitted that with respect to the provisions of the Act of 1972, it has been held that the Act must prevail over the Rules framed by the employer on payment of gratuity and the provision of section 4(2) (explanation) of the Act of 1972 is binding on the parties.
IV. The explanation to section 4(2) of the Act of 1972 was added in order to clarify that in case of monthly rated employee, the 15 days wages for payment of gratuity shall be calculated as follows: -
monthly rate of wages last drawn by the employee X 15 days 26 V. It is submitted that the introduction of said explanation to section 4(2) of the Act of 1972 was preceded by the judgment passed by the Hon'ble Supreme Court in the case reported in (1980) 4 SCC 106 (Shri Digvijay Woollen Mills Ltd. Vs. Shri Mahendra Prataprai) and paragraphs 4 and 5 of the said judgment has been referred.
6. Rejoinder argument of the petitioner.
i. The present case is governed by section 4(5) of the Act of 1972 and not by section 4(2) and in such circumstances, the explanation which has been appended to section 4(2) would not come into play and the provision of National Coal Wage Agreement (NCWA) would prevail. He has also submitted that agreement is between the Union of the workmen and the employer i.e. various coal companies and the same cannot be modified by virtue of implementation instructions. ii. The learned counsel has relied upon reply affidavit filed on behalf of the petitioner dated 07.12.2022 and has submitted that from bare perusal of the implementation instruction dated 26.04.1984 it is apparent that though the heading is "Joint 5 Bipartite Committee for Coal Industries" but the same has been issued only by the Chief of Personnel of Coal India Limited. The learned counsel has referred to clause 12.3.1 of National Coal Wage Agreement-III to submit that it provides for mutual implementation of the NCWA for resolution of doubt and it mandates that the management of coal companies will not resort to any unilateral interpretation of NCWA.
iii. The respondents during the course of argument have not been able to distinguish the judgment passed by Hon'ble Bombay High Court in the case of Babulal Athankar (Supra) and even if the said judgment is not binding on this Court, but certainly it has persuasive value.
iv. The judgment passed by Hon'ble Bombay High Court in the case of Babulal Athankar (Supra) was rightly relied upon by the controlling authority and while distinguishing the said judgment, the learned Appellate Authority has recorded that the implementation instruction of NCWA-III was not cited before the Hon'ble Bombay High Court. He has submitted that the appellate authority has committed error of record by observing that the implementation instructions were not placed before Bombay High Court. In the present case, the said implementation instruction dated 26.04.1984 was relied upon by the employer for the first time before the appellate authority. v. So far as the implementation instruction issued in the year 1987 is concerned, the same was neither placed before the controlling authority nor was placed before the appellate authority and it has been relied upon by the employer for the first time through the counter-affidavit. He has submitted that otherwise also, the implementation instruction of the year 1987 simply modifies the implementation instruction of the year 1984 so far as it relates to payment of gratuity payable for a period less than 30 years of service which has no bearing in the present case. He submits that in the present case only the gratuity for the period beyond 30 years of service is involved.
6Findings of this Court
7. The petitioner was initially appointed as Causal Loader on 20.06.1973, absorbed on 10.09.1980 and superannuated on 30.06.2011. The petitioner filed an application under section 7(2) and 7(3) of the Act of 1972 praying for payment for differential amount of gratuity with interest by alleging that the respondent no. 1 had determined and paid the amount of gratuity with effect from 10.09.1980 ignoring his initial date of appointment i.e. 20.06.1973 and asserting that his total gratuity amount was Rs. 6,19,171.50 out of which he was paid an amount of Rs. 4,02,216.00 and the differential amount was Rs. 2,16,956/-.
8. In the proceeding before the controlling authority, it was further case of the petitioner that as per Clause 9.1.1 of the implementation instruction no. 14 of National Coal Wage Agreement-III, the total length of service will be taken into consideration for the purpose of counting total service even if the employee did not put in 190/240 days of attendance in a particular year.
It was further asserted by the petitioner before the controlling authority that as per Clause 9.1.4 of NCWA, it was provided that for the period of service rendered by an employee beyond 30 years, gratuity will be calculated at the rate of one month's wage last drawn by the employee for completed years of service and in respect of last year of service, proportionate amount of gratuity will be paid even if the full year of service was not completed.
Reliance was placed on the judgment passed by Hon'ble Bombay High Court in the case of Babulal Athankar (Supra) to submit that gratuity is payable at the rate of one month's wages last drawn for the period of service rendered beyond 30 years as per the provisions of NCWA in accordance with section 4(5) of the Act of 1972 under which an employee is entitled for better terms of gratuity.
9. Notice was issued to the respondent no. 1 by the controlling authority under the Act of 1972. It was asserted by the respondent no. 1 that the petitioner was enrolled in the muster roll on 20.06.1973 but had not worked continuously for 240 days in any calendar year during 7 the period 1973 to 1980 and therefore, the gratuity was rightly calculated. The prayer was opposed.
10. The controlling authority referred to Clause 9.1.1 of implementation instruction no. 14 of NCWA-III to hold that the said clause of NCWA clearly indicated that attendance short of 190/240 days in a particular year will also be taken into consideration for the purpose of calculation of total service rendered for payment of gratuity and referred to section 4(5) of the Act of 1972 and held that Clause 9.1.4 of NCWA entitles an employee for better terms of gratuity and accordingly, such benefit cannot be denied in accordance with the provisions of section 4(5) of the Act of 1972.
11. The controlling authority referred to Clause 9.1.4 of NCWA and while deciding the entitlement of gratuity for service rendered beyond 30 years the controlling authority referred to section 4(5) of the Act of 1972 and was of the view that the respondent no. 1 cannot deny payment of gratuity in better terms. The controlling authority relied upon the judgment passed in the case of Babulal Athankar (Supra) and held that the petitioner would be entitled to get amount of gratuity for the services rendered beyond 30 years on the basis of one- month wages for every completed year of service and calculated the amount payable @ 30 days wages for the period of service rendered beyond 30 years and directed for payment of Rs. 2,16,955.00.
12. Portions relevant for the purpose of this case from Section 4 of the Act of 1972 are quoted as under:
"4. Payment of gratuity. -(1) Gratuity shall be payable ..................
(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 an employee who is employed in a seasonal establishment and who is not so 8 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 such amount as may be notified by the Central Government from time to time.
(4) ............................
(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. (6) ............................
13. The provision regarding retiring gratuity under NCWA has been provided in Clause 9 of NCWA which is also quoted as under:
"9. Retiring Gratuity In respect of payment of gratuity the following points have been agreed to:
9.1.1 The total length of service will be taken into consideration for purpose of counting the total service i.e. even if the employee does not put in 190/240 days of attendance for a particular year that will not be excluded for purposes of computation of total service on the ground that the attendance falls short.
9.1.2 For purposes of length of service the period up to the end of the last day of the month, in which the employee retires will be taken into consideration.
9.1.3 The gratuity will be calculated on the last pay drawn instead of the current limit of Rs. 1000/- per month prescribed in the Payment of Gratuity Act. However, the maximum amount of gratuity payable to an employee shall not exceed Rs. 36,000/- as in the case of Government employees. If, however, this limit is enhanced by Government the same will be taken into consideration.
9.1.4 As has already been agreed to under NCWA-II the gratuity for service upto 30 years will be calculated at the rate of 15 days wages (Basic wage plus FDA, SDA, VDA and underground allowance where applicable) for every completed year of service. For service beyond thirty years gratuity shall be calculated at the rate of one month's wages last drawn by the employees for every completed year of service provided that in respect of last year of service 9 proportionate payment of gratuity will be made even if the full year is not completed.
9.1.5 In Singareni Collieries Company Ltd. and TISCO, the existing schemes and facilities will continue."
14. It is not in dispute that the National Coal Wage Agreement has the force of law. Clause 12 of the National Coal Wage Agreement deals with implementation of agreement and it has been provided under clause 12.3.1 that the managements of the Coal Companies, on their part, will not resort to unilateral interpretation of the Agreement and in case of any doubt or difficulty in interpretation or implementation of any clause of the Agreement, the same shall be referred to and settled by the JBCCI or a Sub-committee constituted by the JBCCI for the purpose in the spirit of mutual goodwill.
" 12.3.1. The managements of the Coal Companies, on their part, will not resort to unilateral interpretation of this Agreement.
In case of any doubt or difficulty in interpretation or implementation of any clause of this Agreement, the same shall be referred to and settled by the JBCCI or a Sub- committee constituted by the JBCCI for the purpose in the spirit of mutual goodwill."
15. Clause 9 of the implementation instruction no. 14 dated 14.02.1984 is quoted as under:
"9. Retiring Gratuity: In respect of payment of gratuity the following points have been agreed to:
9.1.1. The total length of service will be taken into consideration for purpose of counting the total service (i.e.) even if the employee does not put in 190/240 days of attendance for a particular year that will not be excluded for purpose of computation of total service on the ground that attendance falls short. 9.1.2. For purpose of length of service, the period up to the end of the last day of the month in which the employee retires will be taken into consideration."
16. Clause 9.1.4 of the implementation instruction no. 14 dated 14.02.1984 is quoted as under:
"9.1.4 As has already been agreed to under NCWA-II the gratuity for service up to 30 years will be calculated at the rate of 15 days wages (Basic wage plus FDA, SDA, VDA and Underground Allowance where applicable) for every completed year of service. For service beyond thirty years gratuity shall be calculated at the 10 rate of one months' wages last drawn by the employees for every completed year of service provided that in respect of last year of service proportionate payment of gratuity will be made even if the full year of service is not completed."
17. The gratuity amount was calculated by the controlling authority for the entire period of service by taking wages for 30 days in a month taking the last drawn wage per day as Rs. 897.35. The calculation is as follows:
"His date of retirement is 30-06-2011 and his last drawn wages is Rs. 897.35 as per NCWA-III. This calculation of last drawn wages is given by the applicant in his rejoinder to the written statement of the management as per revision of NCWA-VIII and the same has not been challenged by the respondent. Thus his calculation of gratuity will be as under:-
Date of appointment : 20-06-1973
Date of retirement : 30-06-2011
Total length of service : 38 years 10 days
Last drawn wages : Rs. 897.35
Amount of gratuity : Rs. 897.35 x 15 x 30 =
for 30 years of service 4,03,807.50
Amount of gratuity : Rs. 897.35 x 30 x 08 =
for 08 years of service 2,15,364.00
Total Gratuity amt. : Rs. 6,19,171.50
Payable
Amount already paid : Rs. 4,02,216.60
Balance amount to be : Rs.2,16,954.90 (Rounded
payable to Rs. 2,16,955.00)"
18. So far as the learned appellate authority is concerned, it framed two issues as follows:
"Issue No. 1 Whether the casual period will be treated as continuous service for the purpose of computing the amount of gratuity?
Issue No. 2 Whether the determination of gratuity done by the Controlling Authority taking one month as 30 days instead of 26 days as claimed by the Respondent for the service rendered beyond 30 years is justified?"
19. The issue no. 1 was decided in favour of the petitioner and has attained finality.
1120. So far as issue no.2 is concerned, the respondent no.1- employer was aggrieved by determination of the amount of gratuity for the service beyond 30 years and insisted that in order to arrive at monthly salary, one day's wage should be multiplied by 26 (excluding 4 days holidays in a month ) and not 30 days. By referring to the judgment passed by the Hon'ble Supreme Court in the case of "Shri Digvijay Woollen Mills Ltd. Vs. Shri Mahendra Prataprai" reported in (1980) 4 SCC 106, it was argued that one month's wage has to be taken for doing duty for only 26 days and calculation is to be made accordingly. It was also argued that the interpretation of Hon'ble Bombay High Court was per incuriam and a prayer was made to set- aside the order of the controlling authority.
21. The learned appellate authority, while deciding issue no. 2, considered the point regarding payment of gratuity for the period beyond 30 years of service and accepted the argument of the employer that one day's wage is to be fixed by taking total working days as 26 by referring to the judgment passed by the Hon'ble Supreme Court in the case of Shri Digvijay Woollen Mills Ltd. (Supra) wherein it has been held that although a month is understood to mean 30 days, but a worker receives full month's wages not by remaining on duty for all the 30 days a month but by remaining on work and doing duty for only 26 days. Therefore, the argument of the petitioner that one month means 30 days was rejected.
A reference was also made to implementation instruction dated 26.04.1984 said to have been issued by the Chief of Personnel of Coal India Limited on behalf of Joint Bipartite Committee for Coal Industry governing payment of gratuity to workers who are covered by NCWA-III and clause 3(D) of the implementation instruction was quoted which dealt with amount of gratuity for service beyond 30 years wherein it was provided that one month wages appearing in Clause 9.1.4 would mean wages for 26 days last drawn and accordingly, gratuity will be calculated for service beyond 30 years by applying the formula "1 day wage x 26 x No. of completed years of service beyond 30 years".
12The learned appellate authority, while considering the judgment passed by the Hon'ble Bombay High Court in the case of Babulal Athankar (Supra), was of the view that the authority under the Act of 1972 cannot ignore the implementation instruction of NCWA and in the decision of Hon'ble Bombay High Court in the case of Babulal Athankar (Supra), the implementation instruction of NCWA-III was not cited. The appellate authority calculated the gratuity payable for the entire period of 38 years and 10 days of service and while calculating so, the difference of gratuity amount was reduced to Rs. 1,88,240/-.
22. In the following comparative chart, the provisions of Payment of Gratuity Act, 1972 and provisions of National Coal Wage Agreement-III dated 11.11.1983 (Annexure-A to the supplementary counter affidavit dated 16.11.2022) which are relevant for the purposes of this case are quoted as under:
Payment of Gratuity Act National Coal Wage Agreement 4(2) For every completed year of 9.1.4 As has already been agreed to service or part thereof in excess under NCWA-II the gratuity for of six months, the employer service upto 30 years will be shall pay gratuity to an calculated at the rate of 15 days employee at the rate of fifteen wages (Basic wage plus FDA, days' wages based on the rate of SDA, VDA and underground wages last drawn by the allowance where applicable) for employee concerned. every completed year of service. Provided that in the case of a For service beyond thirty years piece-rated employee, gratuity shall be calculated at the ..................... rate of one month's wages last Provided further that in the case drawn by the employees for every of an employee who is employed completed year of service provided in a seasonal establishment that in respect of last year of ........................... service proportionate payment of Explanation. - In the case of a gratuity will be made even if the monthly rated employee, the full year is not completed.
13
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.
(5) Nothing in this section shall
affect the right of an employee
to receive better terms of
gratuity under any award or
agreement or contract with the
employer.
23. In the judgment passed by the Hon'ble Supreme Court in the case of Shri Digvijay Woollen Mills Ltd. (Supra), section 4(2) of the Act of 1972 was under consideration and it was held that 15 days wages of a monthly rated employee was to be worked out only by ascertaining his daily wages on the basis of 30 days minus 4 Sundays i.e. 26 working days and multiplying the resulting amount by 15. The Hon'ble Supreme Court while taking the aforesaid view, accepted the view expressed by the Division Bench of Hon'ble Gujarat High Court which was subject matter in the appeal and was of the view that ordinarily a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month which was followed by Hon'ble Gujrat High Court, could not be said to be perverse. The Hon'ble Supreme Court also observed that treating monthly wages as wages for 26 working days is not anything unique or unknown and made reference to the judgment passed by Hon'ble Supreme Court in the case of "Delhi Cloth and General Mills Company Limited Vs. Workmen" reported in AIR 1970 SC 919 and quoted relevant extract of the said judgment.
24. This Court finds that an amendment was carried out in the Act of 1972 whereby an explanation was added to section 4(2) stating that in the case of monthly rated employees, the 15 days wages shall be 14 calculated by dividing the monthly rate of wages last drawn by the employee by 26 and multiplying the quotient by 15. Such explanation added to section 4(2) was certainly in the line of the judgment passed by the Hon'ble Supreme Court in the case of Shri Digvijay Woollen Mills Ltd. (Supra). So far as section 4(5) of the Act of 1972 is concerned, it is clear upon its plain reading that the law provides that nothing in section 4 shall affect the right of the employee to receive better terms of gratuity under any award or agreement or contract with the employer.
25. Vide implementation instruction dated 26.04.1984 said to be issued by the Joint Bipartite Committee for the Coal Industry, Coal India Limited, it was provided that gratuity will be calculated on the last pay drawn and one days' wage will be calculated by following formula "wages drawn in the last month divided by 26 days" and the formula for calculation of amount of gratuity for service upto 30 years was as under:
"1 day wage x 15 x No. of completed year of service"
For calculating gratuity for service beyond 30 years, the formula adopted was:
"1 day wage x 26 x No. of completed yr. of service, beyond 30 years"
The calculation was explained through illustrations and the illustration relevant for the purposes of this case is illustration No. B (2) which is as under:
"A monthly rated employee has put in 41 years 1 month of service.
His last pay drawn was Rs. 1187.23 per month or Rs. 45.66 per day. He will be eligible for Gratuity as under:-
(i) For 1st 30 yrs. At 15 days per yr. of service = 450 days.
(ii) Next 11 yrs. @ 26 days per year of service = 286
(iii) Remaining 1 month i.e. 30 days, @ 1 days wages for every 14 days (30/14 = 2.2 i.e. 2 days) +2
----------------------
738 days 15 Amount of Gratuity:
738 days @ Rs. 45.66 per day = 33,697.08 P."
There was another implementation instruction dated 21st May 1987 whereby it was clarified that the employees who have put in service upto 30 years will be eligible for gratuity as per the provisions of Payment of Gratuity Act and not as per the illustration and the aforesaid implementation instruction dated 26th April 1984 and the illustration stood modified to the said extent. Other conditions of implementation instruction dated 26th April 1984 were to remain unaltered.
26. Thus, for the period up to 30 years of service the monthly rated employees are eligible for gratuity which is calculated by taking one days' wage calculated by following formula "wages drawn in the last month divided by 26 days". The calculation of one day's wage is in consonance with explanation to section 4(2) of the aforesaid Act of 1972 by taking the working days as 26 instead of 30 days a month. This is also in consonance with the judgement passed by the Hon'ble Supreme Court in the case of Shri Digvijay Woollen Mills Ltd (supra).
The formula for calculating amount of gratuity for the period of service upto 30 years is:
"1 day wage x 15 x No. of completed year of service"
Till this stage the petitioner has no grievance. The gratuity payable up to 30 years is last drawn monthly wage divided by 26 days and then multiplied by 15 days and further multiplied by 30 years.
27. The point of dispute arises with regards to the matter of calculation of gratuity for the period beyond 30 years of service. For those who have service period beyond 30 years are entitled for gratuity @ one month's wage per year beyond 30 years. For calculating gratuity amount for service beyond 30 years, the formula adopted as per the implementation instruction dated 26.04.1984 is:
"1 day wage x 26 x No. of completed yr. of service, beyond 30 years"16
28. The argument of the petitioner is that for calculation of gratuity relating to the period beyond 30 years as per NCWA, the 1 days' wage so arrived while calculating gratuity for the period up to 30 years should be multiplied by 30 days and not 26 days as the term used for such benefit under NCWA is one month's wage and accordingly, one month, that is, 30 days and not 26 days is required to be taken. This argument is also to be tested on the point as to whether there is any conflict between the mode of calculation as provided under implementation instruction dated 26.04.1984 and NCWA.
29. In order to test the aforesaid argument of the petitioner, this Court has closely seen the mode of calculation of gratuity as provided by the aforesaid implementation instruction dated 26.04.1984. The steps are: -
Step 1- calculation of wage per day Step -2 - gratuity up to 30 years @ 15 days' wages per year.
Step -3 - gratuity beyond 30 years @ 26 days wages per year.
30. The dispute in the present case is only in connection with step 3, that too limited to whether the number of days per year should be 26 days (as decided by the appellate authority) or 30 days (as decided by the controlling authority).
31. It is important to note that in the implementation instruction dated 26.04.1984 calculation of wage per day is the same for both, up to 30 years and beyond 30 years. In the given example as per the implementation instruction, last pay drawn was Rs. 1187.23 per month and in order to arrive at wage per day amounting to Rs. 45.66, monthly wage of Rs. 1187.23 has been divided by 26 after excluding 4 days of holidays in a month. This is in consonance with the Act of 1972 and the petitioner has no grievance and rightly so as the wage per day is higher when 26 days are taken in a month instead of 30 days.
32. When the same quantum of wage per day as calculated for the period up to 30 years of service is considered for the period beyond 30 17 years of service and if one month's wage is taken as wage for 30 days as argued by the petitioner, the amount of wage for 30 days will come to Rs.1,369.80 (Rs. 1187.23 X 30) which exceeds the monthly wage of Rs. 1187.23 although NCWA contemplates only 1 month's wage for each completed year of service. Such mode of calculation would be contrary to NCWA and cannot be accepted.
Further, if monthly wage last drawn is taken as it is, that is Rs. 1187.23 per month there is no ambiguity. It is to be noted that this figure of monthly wage of Rs. 1187.23 is naturally arrived by multiplying per day wage of Rs. 45.66 with 26 days as Rs. 45.66 has been arrived at by dividing monthly wage by 26 days and not 30 days as explained above.
In view of the aforesaid findings, the argument of the petitioner that the gratuity amount for the period of service beyond 30 years should be calculated by taking 30 days multiplied by per day wage as calculated for the period up to 30 years, cannot be accepted. In the judgement passed by Hon'ble Bombay High Court in the case of Babulal Athankar (Supra) also, the Hon'ble High Court has upheld the order passed by the subordinate authorities directing the petitioner of the said case to pay the amount of gratuity calculated at the rate of one month wage for the period of service rendered beyond the period of 30 years in terms of the NCWA by referring to section 4(5) of the Act of 1972 and by observing that explanation below section 4(2) had not role to play.
33. As discussed above, even without resorting to the mode of calculation as per explanation appended to section 4(2) of the Act of 1972, the petitioner would be entitled to gratuity calculated at the rate of one month wage last drawn for the period of service rendered beyond the period of 30 years in terms of the NCWA as per the formula given under the implementation instruction dated 26.04.1984; however one month's wage will not be calculated by taking the one day's wage [calculated by taking 26 days for a month and dividing one month's wage by 26] and multiplying such one day's wage by 30 but one month's wage will be taken as it is. If aforesaid calculation of 18 one day's wage as calculated for the period up to 30 years is to be taken into account, the monthly wage has to be calculated by multiplying one day's wage with 26 days failing which the monthly wage so arrived and hence the amount of gratuity payable for each year will exceed one month's actual wage and will be contrary to NCWA. The aforesaid can be explained in terms of mathematical equation which is as under: -
One month's wage last drawn divided by 26 =Rs. x per day. Rs. x multiplied by 26 = one month's wage last drawn Rs. x multiplied by 30 will be greater than One month's wage last drawn.
34. There is no dispute with regards to calculation of gratuity for the period of service up to 30 years which undisputedly has been done by calculating one day's wage by dividing the monthly wage by 26 days. For the computation of gratuity for the period beyond 30 years, reference has been made to one month's wage last drawn which can also be arrived by multiplying one day's wage [as calculated by taking 26 days a month] with 26 and not by multiplying with 30 in view of the fact that such an approach will result in an amount greater than one month's wage last drawn. Gratuity for period beyond 30 years can also be calculated by taking one month's wage last drawn as it is and would result in the same amount.
35. Thus, there is no conflict between the mode of calculation as provided under implementation instruction dated 26.04.1984 and the benefits provided under NCWA and both are in consonance with section 4 of the Act of 1972.
36. Thus, the calculation made by the appellate authority in the impugned order by multiplying one day's wage [as calculated by taking 26 days a month] with 26 and then with number of years exceeding 30 years does not call for any interference. The same amount would have been arrived if one month's wage last drawn is directly taken for computation. Gratuity for service beyond 30 years is based on one month's wage last drawn.
1937. Considering the totality of facts and circumstances of this case, the order passed by the learned appellate authority does not call for interference.
38. This writ petition is accordingly dismissed.
39. Pending interlocutory application, if any, is closed.
(Anubha Rawat Choudhary, J.) Pankaj/AFR 20