Bombay High Court
Madhaodas Jankidas Mohta Ginning & ... vs Hirabai Wd/O Mohan Chavan on 20 April, 2017
Author: R.K. Deshpande
Bench: R.K. Deshpande
1
wp3023.3026.09.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
Writ Petition No.3023 of 2009
And
Writ Petition No.3026 of 2009
Writ Petition No.3023 of 2009
Madhaodas Jankidas Mohta
Ginning and Pressing Factory,
Through its Manager, Wardha,
District Wardha. ... Petitioner
Versus
Hirabai wd/o Mohan Chavan,
Major,
R/o C/o Shri Akhilesh Shrivastav,
Near Dr. Sharma's House,
Ramnagar, Wardha. ... Respondent
And
Writ Petition No.3026 of 2009
Madhaodas Jankidas Mohta
Ginning and Pressing Factory,
Through its Manager, Wardha,
District Wardha. ... Petitioner
Versus
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2
wp3023.3026.09.odt
Sk. Ramzan s/o Sk. Karim,
since deceased, through his LRs.:
1. Smt. Inyatbi Ramzan Sheikh,
Aged Major,
Occupation - Household.
2. Sk. Rehman Sk. Ramzan,
Aged Major,
Occupation - Not Known.
Both Residents of Station Falye,
Ward No.31, Near Boudha Mandir,
Wardha, Tahsil and District -
Wardha. ... Respondents
In both writ petitions :
Smt. Neeta Jog, Advocate for Petitioner.
Shri S.A. Kalbande, Advocate for Respondents.
Coram : R.K. Deshpande, J.
th Dated : 20 April, 2017 Oral Judgment :
1. In both these petitions, the Controlling Authority under the Payment of Gratuity Act, 1972 (for short, "the said Act") has passed an order holding that the respondent-employees are entitled to gratuity in terms of sub-section (2) of Section 4 of the ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 3 wp3023.3026.09.odt said Act for every completed year of service or part thereof in excess of six months, at the rate of fifteen days' wages based on the rate of wages last drawn by the employee. The case of the petitioner-employer before the authorities below was that both the employees were entitled to payment of gratuity at the rate of seven days' wages for each season, being employed in seasonal employment and covered by the second proviso below sub-section (2) of Section 4 of the said Act. According to the petitioner-employer, both the employees were paid accordingly the gratuity under the said proviso as seasonal employees and in fact the respondent-Sk. Ramzan s/o Sk. Karim in Writ Petition No.3026 of 2009 has accepted such payment of Rs.8,925/-
without any protest.
2. It is not in dispute that the employee Mohan Chavan in Writ Petition No.3023 of 2009 was working as Wireman in the establishment of Ginning and Pressing Factory run by the petitioner with effect from 1-10-1972 and he continued to work till his death, on 18-2-1997. The claim for gratuity was made by ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 4 wp3023.3026.09.odt his widow. Another employee Sk. Ramzan s/o Sk. Karim, the respondent in Writ Petition No.3026 of 2009, was employed in the said factory as Press Driver on 1-11-1972 and he continued to work till the age of superannuation was attained on 1-6-2001. The case of both the employees was that they worked throughout the year irrespective of season. The employee-Mohan Chavan is held entitled to total gratuity of Rs.82,800/- with interest at the rate of 12% per annum, whereas another employee-Sk. Ramzan is held entitled to total gratuity of Rs.34,845/- with 12% simple interest per annum.
3. The entitlement of the employees in the present case for gratuity is to be judged on the basis of the provision of Section 4 of the said Act. An employee, who has rendered continuous service for not less than five years, is entitled to gratuity on termination of employment, or on his attaining the age of superannuation, or on his retirement or resignation, or on his death or disablement due to accident or disease. It is not in dispute that both the employees in this case rendered continuous ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 5 wp3023.3026.09.odt service of not less than five years. The employee, Mohan Chavan, worked for 25 years, and the another employee, Sk. Ramzan, worked for about 29 years. Both the employees became entitled to receive gratuity in terms of sub-section (1) of Section 4 of the said Act. This finding of the authorities below, is not challenged.
4. The only question is whether the employees were entitled to gratuity at the rate of fifteen days of wages based on the rate of wages last drawn by them, as contemplated under sub-section (2) of Section 4, or whether they were entitled to the gratuity at the rate of seven days of wages for each season, as contemplated by the second proviso below sub-section (2) of Section 4 of the said Act.
5. Sub-section (2) of Section 4 of the said Act along with the second proviso and Explanation being relevant, is reproduced below :
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wp3023.3026.09.odt "4. Payment of Gratuity.- ...
(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 further that in case of an employee who is employed in a seasonal establishment, and who is not so 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."
Once it is accepted that the employee becomes entitled to payment of gratuity in terms of sub-section (1) of Section 4, then what follows is sub-section (2), which states that 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 an employee concerned. Sub-section (2) confers a right upon every ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 7 wp3023.3026.09.odt employee to get gratuity at the rate prescribed therein. The second proviso below sub-section (2) is for the benefit of an employer of the seasonal establishment to pay gratuity to an employee at the reduced rate of seven days' wages for each season. It is a deviation for denial of legal right to receive gratuity at a prescribed rate. The second proviso thus operates as an exception to sub-section (2) of Section 4 of the said Act.
6. Merely because an establishment is categorized as seasonal establishment, does not advance the case to claim benefit under the second proviso so as to qualify for the benefit of payment of gratuity at a reduced rate. To avail the benefit of second proviso below sub-section (2), two things are required to be established - (a) that an employee works only in season, and
(b) that he is not employed throughout the year. Thus, a real test is the period of employment of an employee in particular establishment for the purposes of second proviso. It is, therefore, the burden upon an employer to establish that an employee was working only during the season in the seasonal establishment ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 8 wp3023.3026.09.odt and was not so employed throughout the year. It is for an employer to come forward with such a specific case and lead evidence to establish it. It is a social welfare legislation, to be construed in beneficial way to the employees and unless the burden is satisfactorily discharged, a legal right cannot be taken away.
7. In the decision of the Apex Court in the case of Maharashtra State Co-operative Cotton Growers' Marketing Federation Ltd. and another v. Maharashtra State Co-operative Cotton Growers' Marketing Federation Employees' Union and another, reported in AIR 1994 SC 1046, relied upon by Smt. Jog, the learned counsel for the petitioner-employer in both these petitions, makes a distinction in para 4 between seasonal employment and seasonal employees. The said para is reproduced below :
"4. What is further necessary to note is that there is a difference between season employment and seasonal employees. The employments which are only seasonal may ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 9 wp3023.3026.09.odt require only seasonal employees and there are no perennial employees on their staff. On the other hand, an employment may have both perennial and seasonal work as in the present case, and hence require both kinds of workmen. Further, seasonal employees may be permanent or temporary. The permanent employees are employed from season to season successively and are entitled on that account for retention allowance and all other benefits referred to above during the off-season because of their permanency as seasonal employees which is different from permanency as perennial employees. The temporary seasonal employees are not obviously entitled to the said benefits as the permanent seasonal employees since the temporary employees are not engaged from season to season but only when there is an increase in work. So is the case with the casual employees. There are also part-time seasonal employees and they carry different scales of wages by the very nature of their employment as pointed out above. The seasonal employees like the perennial employees also belong to different categories and grades. As stated above, at the relevant time the perennial employees of all categories were 2200 whereas the seasonal employees were 4500. We have to stress this aspect because we find that there is a good deal of confusion by the Tribunal and the Courts below on these ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 10 wp3023.3026.09.odt aspects of the matter which has contributed to their erroneous conclusions."
The distinction made is that the employments which are only seasonal may require only seasonal employees and there are no perennial employees on their staff. An employment may have both perennial and seasonal work and hence require both kinds of workmen. Seasonal employees may be permanent or temporary. The permanent employees are employed from season to season successively and are entitled on that account for retention allowance and all other benefits referred thereto during the off-season because of their permanency as seasonal employees which is different from permanency as perennial employees. The temporary seasonal employees are not obviously entitled to the said benefits as the permanent seasonal employees since the temporary employees are not engaged from season to season but only when there is an increase in work. It holds that the seasonal employees like the perennial employees also belong to different categories and grades. This distinction has to be kept ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 11 wp3023.3026.09.odt in mind by the Court to judge the rights of employees.
8. The decision of Kerala High Court in the case of Consolidated Coffee Ltd. v. Uthaman, reported in 1979 (38) F.L.R. 365, in my view, covers the entire controversy involved in the present case. Paras 5 to 9 of the said decision delivered by Shri Kochu Thommen, J. (as he then was) being relevant, are reproduced below :
"5. A 'seasonal establishment' is not defined under the Payment of Gratuity Act. Nor is 'seasonal establishment' defined as such under the Employees' State Insurance Act or the Employees' Provident Funds Act, although under those two enactments a coffee curing factory, among others, is specifically mentioned as a seasonal establishment. The meaning of a seasonal establishment has therefore to be understood in the popular sense. Any factory which only works during certain seasons of the year, and not throughout the year, is a seasonal establishment."
"6. The second proviso to sub-section (2) of Section 4 ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 12 wp3023.3026.09.odt mentions a rate for each season during which a person is employed. If an employee is employed only in one season he would get the gratuity at the rate of seven days' wages for that season. Likewise, if he has been employed for more than one season, he would get gratuity at that rate for each of those seasons."
"7. It would therefore appear that the rate has to be determined for the purpose of gratuity with reference to the period of employment of an employee in a particular establishment. An establishment may be seasonal in so far as its seasonal employees are concerned, but vis-a-vis persons working throughout the year it is not a seasonal establishment. It has been found by the authorities that 36 employees work throughout the year in the factory whereas 160 employees work only during seasons. The factory is a seasonal establishment in respect of those persons who are employed seasonally, and it is a non-seasonal establishment in respect of others who are engaged throughout the year."
"8. Petitioner's counsel says that a coffee curing factory, having been treated as a seasonal establishment for the purpose of the Employees; Provident Funds Act as well as the Employees' State Insurance act, has to be so treated for ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 13 wp3023.3026.09.odt the payment of Gratuity Act as well. It is true--and as seen from Ext. P-5 memorandum of settlement--that the petitioner's factory is a seasonal establishment. One purpose for classifying a factory as a seasonal establishment is to allow the employer to apply the lesser rate in respect of an employee employed only seasonally. But the employer cannot take advantage of the reduced rate for persons employed throughout the year."
"9. I am of the view that having found that the 1 st respondent works throughout the year in the factory, the authorities were well justified in treating himself as a non-seasonal employee, and the factory vis-a-vis him as a non-seasonal establishment, for the purpose of allowing him gratuity at the higher rate of fifteen days' wages." In para 5, the Court defines 'seasonal establishment' as any factory which only works during certain seasons of the year and not throughout the year. The Court has held in para 7 that the rate of gratuity has to be determined with reference to the period of employment of an employee in a particular establishment. An employment may be seasonal insofar as its seasonal employees are concerned, but vis-a-vis the persons working throughout the ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 14 wp3023.3026.09.odt year it is not a seasonal establishment. The question required to be answered is whether the petitioner-Factory can be considered as seasonal establishment vis-a-vis the employees in question. A factory may be a seasonal establishment in respect of certain persons, who are employed seasonally, and it may be a non- seasonal establishment for the persons, who are engaged throughout the year.
9. Smt. Jog, the learned counsel for the petitioner-employer, has invited my attention to the circular/letter dated 31-3-1994 at Exhibit 41, issued by the office of the Joint Director, Industrial Safety and Health, stating that the Cotton Ginning and Pressing Factory is a seasonal factory for the purposes of Rule 5(2)(i) of the Maharashtra Factories Rules, 1963, as it does not work for more than 180 days in the aggregate calender year. She has also invited my attention to the agreement dated 15-9-1976 at Exhibit 42, of the petitioner with the Maharashtra State Electricity Board for supply of power, and the electricity bill at Exhibit 43. She has relied upon the oral ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 15 wp3023.3026.09.odt evidence of the Service Manager Haridas Thaori, examined by the petitioner, in which he has stated that the factory run by the petitioner works for six months in a year, and the employees are paid wages for the said period. She submits that the Ginning and Pressing Factory of the petitioner being a seasonal establishment, as mentioned under the second proviso below sub-section (2) of Section 4, the authorities below have committed an error in holding that the employees in question are covered by sub-section (2) of Section 4 of the said Act.
10. There is neither any pleading nor any evidence on record to show that the employment in the establishment of the Ginning and Pressing Factory run by the petitioner was only seasonal and requiring only seasonal employees and there were no employees on the establishment working throughout the year. There is no evidence on record to show that the employees in question were working only during particular season and not throughout the year or that it was a seasonal establishment vis-a-vis the employees. In case of seasonal employees, there has ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 16 wp3023.3026.09.odt to be an evidence to show that they are paid retention allowance and other benefits during the off-season because of their permanency as seasonal employees. Merely because the factory is categorized as seasonal for the purposes of Rule 5(2)(i) of the Maharashtra Factories Rules, 1963 for payment of fees for registration and grant of licence at Exhibit 41, it does not follow that the employees working throughout the year in a seasonal factory are not entitled to gratuity under sub-section (2) of Section 4 of the Payment of Gratuity Act, or that it is a case falling in Exception under the second proviso therein.
11. Neither the agreement at Exhibit 42 nor the electricity bill at Exhibit 43 constitute an evidence of the fact that the employees in question were working only during season or were not working throughout the year. The production of muster roll for specified period also does not advance the case of the petitioner to claim the benefit under the second proviso. The Service Manager examined by the petitioner has stated in his cross-examination that the deceased Mohan Chavan, working as ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 17 wp3023.3026.09.odt Wireman, was residing in the quarter which was provided to him by the petitioner for his availability at any time, and such quarter is allotted to the permanent employee. It is also admitted that after the death of Mohan Chavan, the respondent-widow - Hirabai Chavan - in Writ Petition No.3023 of 2009 vacated the quarter. The acceptance of gratuity at a reduced rate by the respondent-Sk. Ramzan in Writ Petition No.3026 of 2009 cannot be enforced in violation of the legal right under sub-section (2) of Section 4 of the said Act.
12. In the decision of the Apex Court in the case of Aspinwall & Co., Kulshekar, Mangalore v. Lalitha Padugady and others etc. etc., reported in AIR 1996 SC 580, relied upon by Smt. Jog, the learned counsel for the petitioner-employer, the claim was for payment of gratuity computed at the rate of seven days' wages for two seasons in each calender year on the basis that the calender year is a unit and the period of work stood split into two seasons. The Controlling Authority accepted the claim for two seasons at the rate of seven days' wages per season in ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 18 wp3023.3026.09.odt each calender year and this decision was confirmed by the learned Single Judge as also by the Division Bench of this Court. The Apex Court reversed the said decision and it is held that the view taken was in ignorance of the concept of 'continuous service for one year', which has a reference to an individual workman and not universally relatable to the calendar year. The Apex Court held that the employees were, therefore, entitled to gratuity at the rate of seven days' wages for each season, continuous as it is from September of a particular year till June of the following calendar year.
13. The Apex Court considered the provision of Section 4 of the Payment of Gratuity Act and it holds that the first proviso to sub-section (2) of Section 4 of the said Act relates to the right conferred upon the employees other than those employed in a seasonal establishment. The second proviso being so related prominently says that in case of an employee employed in a seasonal establishment, the employer shall pay gratuity at the rate of seven days' wages for each season. It holds that the word ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 19 wp3023.3026.09.odt 'season' presupposes that the employee has not been employed in annual or regularly durated work during the days in which the establishment was in operation during the year. The Court holds that tying all these ends together, the conclusion is thus inescapable that when gratuity at the rate of seven days' wages for each season requires to be worked out, then one has to see the number of seasons in each completed year of service of the workman, i.e. his continuous year of service, not regulated by the calendar year. It further significantly holds that the second proviso would have to be read in a purposive way, i.e. in the nature of an explanation tied and woven in Section 4 of the said Act. In working for each season thus the employee becomes entitled to gratuity at the rate of seven days' wages per season.
14. In the decision of the Apex Court in the case of Lalitha Padugady, cited supra, it was not a dispute involved as to whether an employee was entitled to payment of gratuity in terms of sub-section (2) of Section 4 or in terms of second proviso thereunder. The claim of the employee was for the ::: Uploaded on - 24/04/2017 ::: Downloaded on - 26/04/2017 00:03:15 ::: 20 wp3023.3026.09.odt gratuity in terms of the second proviso for two seasons in a calendar year which was negatived by the Apex Court, holding that the rate of seven days' wages has to be calculated for one season in a calendar year. Though, the question involved in this case was not for the consideration of the Apex Court, in fact the observations in the said decision supports the view which I have taken that the second proviso operates as an exception to sub-section (2) of Section 4 of the said Act. The decision was rendered on unamended provision. The amendment by Act No.25 of 1984, introduced with effect from 1-7-1984, in the second proviso below sub-section (2) of Section 4 introduces additional requirement that an employee was "not so employed throughout the year", which created additional burden upon the employer to establish such a fact.
15. In view of above, I do not find any fault in the view taken by the authorities below. Both the petitions are dismissed. Rule stands discharged. No order as to costs.
JUDGE.
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