Karnataka High Court
The President vs Indian Red Cross Society on 10 December, 2015
Bench: S.Abdul Nazeer, R.B Budihal
IN THE HIGH COURT OF KARNATAKA
®
DHARWAD BENCH
DATED THIS THE 10TH DAY OF DECEMBER 2015
PRESENT
THE HON'BLE MR.JUSTICE S. ABDUL NAZEER
AND
THE HON'BLE MR.JUSTICE BUDIHAL R.B.
WRIT APPEAL NO.100121/2015 (L-PG)
Between:
1 The President,
Family Planning Association of India,
Dharwad Branch, Yemmikeri,
Dharwad.
2 The Secretary,
General Family Planning Association of India,
Headquarters, 1st Floor, Bajaj Bhavan,
Nariman Point, Mumbai. .... Appellants.
(By Sri Prakash S. Udikeri, Adv.)
And:
1 Indian Red Cross Society,
Dharwad Branch, Station Road,
Sali Photo Studio, Ground Floor,
Dharwad,
By its Secretary.
2
2 Basavaraj,
S/o Channappa Devagiri,
Aged about 64 years,
Occ;Retd. R/o Dundi Oni,
Hosayellapur, Dharwad.
3 Mani Mahindralal Nayyar,
aged about 64 years,
occ; Retd., R/o Ramadatta
Apartment, B Block, 2nd Floor,
H.No.3, Keshwapur, Hubballi.
4 Appellate Authority U/Payment of
Gratuity Act and Regional Labour
Commissioner, Central, Shramsadan,
3rd Cross, 3rd Main, 2nd Phase,
Tumkur Road, Yeshwanthpur,
Bengaluru.
5 Controlling Authority,
U/payment of Gratuity Act and
Asst. Labour Commissioner,
Hubballi. .... Respondents.
(By Sri Mahesh Wodeyar, Adv. for R1
Sri S.L.Matti, Adv. for R2 & R3
Sri M.B.Kanavi, Adv. for R4 & R5)
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This Writ Appeal is filed under Section 4 of the High
Courts Act, praying to set aside the impugned order in
W.P.No.104050/2014 dated 24.7.2014 passed by the learned
Single Judge of this Hon'ble Court, etc.
This Writ Appeal having been heard and reserved for
Judgment, this day S.ABDUL NAZEER.J., pronounced the
following:
JUDGMENT
This appeal is directed against the order in W.P.No.104050/2014 dated 24.7.2014 whereby the learned Single Judge has directed the appellants to pay gratuity to respondent Nos.3 and 4 from the date of their initial appointment till 9.10.2003 with interest at 10% per annum.
2. Respondent Nos.3 and 4 were appointed as Family Planning Feed Worker ('FPFW' for short) and Auxiliary Nursery Midwives ('ANM' for short) respectively at Urban Family Welfare Centre No.2, Dharwad, run by the Family Planning Association of India, appellant No.1 herein. The Dharwad Branch of Family Planning Association of India was taken over 4 by the Indian Red Cross Society, the first respondent herein along with the staff of the Centre vide Government Order at Annexure 'F' dated 6.9.2003. The entire Urban Family Welfare Centre No.2, Dharwad, with the existing staff, its activities and the assets was actually handed over to the first respondent on 9.10.2003. Thus, the services of respondent Nos.3 and 4 was transferred to the first respondent on 9.10.2003. They retired on 28.2.2005 and 31.7.2004 respectively on attaining the age of superannuation. They submitted a representation to the appellants for payment of gratuity. Since the said representation was not considered, they filed a writ petition in No.17811/2007 seeking a direction for payment of gratuity. This Court by order dated 14.1.2008 directed the petitioners to approach the Controlling Authority under the Payment of Gratuity Act, 1972 (for short 'the Act') for appropriate reliefs.
3. Respondent Nos.3 and 4 filed an application before the Controlling Authority for determination of the gratuity and to 5 direct the appellants and the first respondent to pay the gratuity with interest at 18% per annum. The Controlling Authority passed an order at Annexure 'N' dated 31.1.2012 holding that appellants are liable to pay gratuity with interest at 10% per annum within a period of 30 days from the date of the order. The first appellant challenged the said order by filing an appeal before the Appellate Authority for Payment of Gratuity and Regional Labour Commissioner, Bengaluru. The Appellate Authority by his order at Annexure 'A' dated 16.12.2013 directed the first respondent to pay gratuity. This order was challenged by the first respondent before the learned Single Judge. As noticed above, the learned Single Judge has allowed the writ petition and has directed the appellants herein to pay the gratuity to respondent Nos.3 and 4 from the date of their initial appointment till 9.10.2003 with interest at 10% per annum.
4. The contention of the learned Counsel for the appellants is that the appellants are not liable to pay gratuity to 6 respondent Nos.3 and 4. It is argued that the first respondent was the employer of respondent Nos.3 and 4 as they were working with respondent No.1 at the time of their retirement from service. The liability to pay gratuity had accrued on the date of their retirement cannot be enforced against the appelllants.
5. On the other hand, learned Counsel appearing for respondent No.1 submits that the first respondent is not liable to pay gratuity as respondent No.1 was not the employer of the workmen from the date of their initial appointment till the date of their transfer to Dharwad branch of Family Planning Association of India. Therefore, the learned Single Judge has rightly directed the appellants to pay gratuity from the date of their appointment till the date of its handing over to the Indian Red Cross Society.
6. The undisputed facts are that respondent Nos.3 and 4 were working with the Dharwad Branch of Family Planning 7 Association of India from 2.2.1976 and 12.2.1977 respectively till it was transferred to the Indian Red Cross Society. The dispute is in relation to the payment of gratuity from the date of initial appointment of respondent Nos.3 and 4 till 9.10.2003.
7. The expression 'employer' has been defined under sub- section (f) of Section 2 of the Payment of Gratuity Act, 1972. Section 2(f)(i) and (ii) are not applicable to this case. Section 2(f)(iii) is applicable to the instant case, which is as under:
"Section 2(f): 'employer' means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop-
(i) xxxxx xxxxx xxxxx
(ii) xxxxx xxxxx xxxxx
(iii) in any other case, the person, who, or the authority which, has the ultimate control over the 8 affairs of the establishment, factory, mine, oilfield, plantation, port, railways 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."
8. It is clear from the above definition that the employer is the person, or the authority, which has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, etc., and any other person entrusted with the affairs of the establishment, etc., such as the manager, managing director. Therefore, whoever had the ultimate control of the affairs of the establishment or whoever was managing the establishment during the period of employment of workmen is required to be treated as an employer for the purpose of payment of gratuity.
9. In NATIONAL TEXTILE CORPORATION (SOUTH MAHARASHTRA) LTD. VS. BHAGIRATHI 9 GOPAL MARTAL & OTHERS - 1992 II LLJ 111, a Division Bench of Bombay High Court was considering a similar question. In the said case, the workman was employed in the Textile Mill. He retired on 1.4.1983. As the gratuity due to him was not paid by the Textile Mill, he filed an application before the Controlling Authority for payment. The management of the Textile Mill was taken over by the Central Government on October, 18, 1983. Therefore, National Textile Corporation was made party in the proceedings before the Controlling Authority. The Controlling Authority allowed the claim as against the Textile Mills and dismissed the claim against the National Textile Corporation. Since the workman died, his wife challenged the order of the Controlling Authority. According to her, the National Textile Corporation is also liable to pay the gratuity. The Appellate Authority accepted the claim and held that in the event of Textile Mill failing to deposit the gratuity, the amount shall be recoverable from the National Textile Corporation to the extent it had taken over the assets and other properties of 10 the Textile Mill. The National Textile Corporation challenged this order before the Division Bench. The Division Bench held that the National Textile Corporation cannot be treated as an employer and it cannot be fastened with the liability to make payment of gratuity. It is held thus:
"The textile Mill herein will come in the category of factory. The employer in the first instance is a person who has ultimate control over the affairs are entrusted to any other person, then such person called by any name, be treated as employer. In the present case, when the workman retired, the owners of the Textile Mill were certainly the persons who were in ultimate control over the affairs of the factory. It is they who were the employers. Assuming for the sake of arguments that the Custodian herein could also be treated 'employer' and made liable to make payment, in the absence of a dispute that the liability in respect of the gratuity accrued prior to the appointed date, Section 3(7) of the Act will still apply. It may not be out of place to mention here 11 that the lower authorities have given categorical findings that the employer was the Textile mill and the liability had accrued prior to the appointed date. These findings are neither seriously challenged before us nor are we inclined to interfere with them in the writ jurisdiction."
10. In the instant case, as long as respondent Nos.3 and 4 were working with the first appellant, the ultimate control over the affairs of the establishment was with appellant No.1. It is only after handing over of the said establishment to the first respondent i.e. w.e.f. 9.10.2003, the first respondent has become the employer. Therefore, the first appellant was the employer of respondent Nos.3 and 4 from the date of their initial appointment till the establishment was transferred to the first respondent. Therefore, the learned Single Judge has rightly directed payment of gratuity by the appellants to respondent Nos.3 and 4 from the date of their initial appointment till 9.10.2003.
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11. In the result, the appeal fails and it is accordingly dismissed. No costs.
Sd/-
JUDGE.
Sd/-
JUDGE.
BMM/-