Calcutta High Court (Appellete Side)
M/S. Gkw Ltd vs Deputy Labour Commissioner & Appellate ... on 18 May, 2016
Author: Sambuddha Chakrabarti
Bench: Sambuddha Chakrabarti
IN THE HIGH COURT AT CALCUTTA
SPECIAL CIVIL JURISDICTION
APPELLATE SIDE
Present:
The Hon'ble Justice Sambuddha Chakrabarti
W. P. No. 21117 (W) of 2015
M/s. GKW Ltd.
Vs.
Deputy Labour Commissioner & Appellate Authority & Others.
With
W.P. No. 22922 (W) of 2015
Shushil Kumar Basak
Vs.
State of West Bengal & Others.
For the petitioner : Mr. Partha Sarathi Sengupta, Senior Advocate
Mr. Arunava Ghosh, Advocate
Mr. Jayanta Dasgupta, Advocate
Mr. Balaram Patra, Advocate
For the respondent nos. 3 : Mr. Bikash Ranjan Bhattacharjee, Senior Advocate
Mr. Soumya Majumder, Advocate
Mr. Victor Banerjee, Advocate
Mr. Trideb Chakraborty, Advocate
Heard on : 08.01.2016, 15.01.2016, 29.01.2016, 05.02.2016,
19.02.2016, 04.03.2016
Judgement on : 18.05.2016
Sambuddha Chakrabarti, J.:
"May we not say that in civilized society men must be able to assume that those with whom they deal in the general intercourse of society will act in good faith? If so, four corollaries will serve as the bases of four types of liability. For it will follow that they must be able to assume (a) that their fellow men will make good reasonable expectations created by their promises or other conduct, (b) that they will carry out their undertakings according to the expectation which the sentiment of the community attaches thereto, (c) that they will conduct themselves with zeal and fidelity in relations, offices, and callings and (d) that they will restore in specie or by equivalent what comes to them by mistake or unanticipated situation whereby they receive what they could not have expected reasonably to receive under such circumstances."
-Roscoe Pound - An Introduction to the Philosophy of Law (Yale University Press - Third Indian Reprint, 2003); p. 105 These two writ petitions have been heard together as the respective petitioners therein challenged the same order, though on very different grounds. Thus the object of challenge is the same with different reasons.
M/s. GKW Ltd., the petitioner in the first writ petition, is a company registered under the Companies Act. Sri Shushil Basak, the petitioner in the other writ petition, is an ex-employee of the said company.
The case of the company in the first petition in short is that it declared a suspension of work in a certain division with effect from August 30, 1998 by a notice of the preceding date. Suspensions of operation of other divisions were also declared with effect from November 13, 2000. The company states that in the notice declaring suspension of work it was mentioned that no workman/employee, other than the wage and ward staff and Fire Brigade Department, shall be eligible for any wages/salary and/or any other allowances from the time of suspension of works.
The workman employed at the Andul Division raised an industrial dispute through eight unions on the issue of suspension of work before the appropriate authority. The matter was referred to the 4th Industrial Tribunal for adjudication. On October 31, 2008 the tribunal passed a no-dispute award accepting the submissions of the unions that the dispute was no longer subsisting.
In the meantime the company had floated a Voluntary Separation Scheme ('VSS', for short) on July 1, 2008 giving all workmen an invitation to offer for availing themselves of benefits specified under the scheme. Sri Basak after about eight days from the date of notifying the VSS tendered resignation to avail himself of the benefits under VSS like many other employees and requested the management of the company to accept his resignation and to pay him the full and final settlement of all his duties and claims. After receiving the payments in terms of the VSS Sri Basak had discharged a full receipt declaring that he had no claim against the company and also gave an undertaking that he had understood the VSS and its terms and conditions.
About four months after receiving the monetary benefits from the company the employee, i.e., Sri Basak filed an application for additional gratuity. Finally, an application was filed before the Controlling Authority under the Payment of Gratuity Act on the basis of his assumed last drawn wages at Rs. 6,569/- and claimed additional gratuity to the tune of Rs. 37,803/-. The case of the company was that no wages was payable to or earned by the employee after the suspension of work till his resignation.
By an order dated November 20, 2014, the Controlling Authority accepted the claim of additional gratuity on the assumed last drawn wages as claimed by Sri Basak and directed the company to make payment within 30 days.
The company filed an appeal under Section 7(7) of the Payment of Gratuity Act ('the Act' for short) before the appellate authority. The appeal was contested by the employee.
The appellate authority rejected the appeal holding that the employee was entitled to get an additional amount of Rs. 35,312/- based on his own calculated last drawn monthly wages of Rs. 6,409/- and as per his claim of Rs. 6,569/-. For the purpose of calculation of the last drawn wages the appellate authority had taken a component of the wages, i.e., the dearness allowance, into consideration for the part of suspension of work as payable by the company. This order, as mentioned before, has been challenged by the company in the first writ petition.
The contention of Sri Basak in the second writ petition is that the company had been referred to the Board of Industrial and Financial Reconstruction (BIFR). In respect of the reference made to the BIFR and consequent orders passed therein the trade unions representing the employees filed a writ petition in Delhi High Court against the order passed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) wherein the payment made by the company pursuant to the Voluntary Retirement Scheme had fallen for consideration. The High Court at Delhi held that the proper course would be to approach the statutory authority under the relevant Act.
When the Voluntary Retirement Scheme was floated a memorandum of settlement was already in operation which, inter alia, provided for wages and increments of the employees of the works division where Sri Basak was employed. He had applied for the Voluntary Retirement Scheme which was accepted by the company and payment was released. He had been paid a sum of Rs. 64,521.17 as gratuity on the basis of the last basic pay drawn by him along with the dearness allowance.
In the proceeding before the Controlling Authority, the company's stand had been that part of the benefit under the Voluntary Retirement Scheme had been paid as the projected salary which was payable on the date of severance of relationship between the company and the petitioner. But for gratuity the same had been paid on the basis of the last pay drawn as on the date of declaration of suspension of work.
It is not necessary to repeat the details of the sequence of events which is common to both the writ petitions.
It appears that the main reason for the employees' assailing the order of the appellate authority was reduction of the quantum of relief granted to him by the Controlling Authority and the failure to award interest on the short payment of gratuity paid by the company. One of the, inter alia, challenges thrown by him was that the definition of wages under Section 2(s) of the Act includes all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment.
Since the decision of the appellate authority has been under challenge by both the parties it is eminently necessary to appreciate the salient features of the said order before examining the validity of the respective cases.
The appellate authority considered the respective contentions and, inter alia, observed that the acceptance of VSS did not end the right of the employee to raise his claim for additional gratuity. The Act has an overriding capacity over any agreement or enactment under Section 14 of the Act. For the purpose of determining the amount of gratuity the payable wage was taken for consideration. The appellate authority further observed that the employee was under the coverage of a tripartite agreement between the company and all the unions where it was stated that the revised rate of neutralization of dearness allowance beyond CPI 1200 would be Rs. 1.85 per point rise or fall in CPI. By the said agreement the respondent was eligible for Rs. 160/- as yearly increment for eight years of service from the year 2000 to the year 2008. Since the increment in the basic payment is directly linked with regular performance and since the employee had not rendered any actual service from the year 2001 to 2008 the basic salary at the time of suspension of work was taken into account.
Considering all these factors the appellate authority held that the employer-employee relationship between the company Sri Basak ended in July, 2008, entitling the petitioner to gratuity for 27 years the last wage for gratuity calculation should be Rs. 6,409/- and the respondent is entitled to Rs. 99,832/- as total gratuity from the company and after receiving Rs. 64,520/- the employee is entitled to receive Rs. 35,312/- by way of an additional amount of gratuity without interest till date. The Controlling Authority was directed to modify the direction and direct the company to pay the amount as per the stipulated period of time.
Mr. Sengupta, the learned Senior Counsel appearing for the company, has practically assailed the order of both the authorities under the Act in almost every conceivable manner. He submitted that the decision of the management that no workman or employee would be eligible for any salary or allowance during the suspension of work was conveyed to all including Sri Basak in the relevant notice itself. The same was specially mentioned in the notice dated November 12, 2000 which covered the employee concerned.
Referring to the VSS notice, Mr. Sengupta argued that it was contained that the Scheme was entirely voluntary and had ended with a stipulation that: "The Scheme is entirely indivisible and there are no other terms expressed or implied. The gross payable amount of each workman on the rolls of all divisions of Andul Road works is shown in Annexure D". This, Mr. Sengupta submitted, represented the gross payable amount for VSS meaning thereby that no individual head of income had no relevance. One of the major aspects of the submission of the company was how the employee had offered himself for the said benefit, what he had written in the letter of resignation and how he had given the undertaking. In the undertaking, dated July 11, 2008, the employee had agreed to abide by the terms and conditions of the VSS and undertook to receive the benefits described in full and final settlement of all the dues from the company.
He had also clarified that the Scheme had been read out to him in the vernacular and he had signed the document having understood the main features and implications of it. He also discharged a receipt declaring that he did not have any claim or dispute against the company at any date in future. He had accepted the total amount which included Rs. 64,521.17 as gratuity as per the Act in full and final settlement of all his dues mentioned in the said receipt.
The company variously assailed the stand of the employee that his last drawn wages for the purpose of gratuity should be what he might have drawn on the date of resignation had there been no suspension of work. One of the contentions of the employee was that for the purpose of granting monitory benefit under the VSS the projected salary as on July 1, 2008 had been taken into consideration and the same principle should, therefore, be applied to gratuity as well.
Mr. Sengupta submitted that the last drawn wages means the rate of wages the employee drew last before the suspension of work as no wages was paid or payable after that date. So far as the VSS is concerned payment was made under two heads, viz, statutory and other benefits.
Gratuity being a statutory benefit it was paid as per the statutory provision on the basis of the rate of the last drawn wage. The benefits under other heads were extended under the management policy and discretion. The principle formulated and followed by the management for the purpose of other benefits was not required to be followed for the payment of gratuity. The company has questioned the power of Controlling Authority to nullify the management's decision contained in the notice of suspension of works as no wages or allowances were payable to the employees. Mr. Sengupta has described the basis of the claim of Sri Basak as an assumed sum unreceivable by him. Referring to Section 2(s) of the Act he argued that the assumed wages on the date of resignation cannot be the last drawn wages as contemplated under Section 4(2) of the Act.
According to the company, the Controlling Authority misapplied Section 14 of the Act as gratuity was paid on the last drawn basic and D.A as per Section 4(2) read with Section 2(s) of the Act. Similarly, the appellate authority also committed a grievous mistake in holding that Section 14 of the Act had a overriding effect but did not refer to which enactment or agreement was less fabourable. Since no wage was payable after suspension of work the question of short payment on the ground of notional increase of wages did not rise. Moreover, the concerned employee did not earn any wage in terms of the suspension of work. The authority had on the one hand accepted that since the employee was not in active roll during the suspension of work increment in basic pay during the period should not be taken into consideration but increasing D.A. which is a component of wages was considered for determining the last drawn wages. The company is very seriously assail the approach as a misconceived one as, if the enactment in basis wage is not payable increasing D.A. cannot be separately taken into consideration for determining the last wages drawn. The calculation of the Dearness Allowance by the appellate authority without any pleading or evidence is a very perverse finding. No provision of the Act confers any power upon the authorities under the Act to declare the entitlement of notional increase in Dearness Allowance.
Relying on the notice, Mr. Sengupta strenuously argued that the VSS is an indivisible package of monetary benefit and the total sum payable to the employee was mentioned therein. The employees had the option to make or not to make any offer for availing themselves of the benefit of gratuity and other benefits under the VSS.
The company challenged the order of the appellate authority also on the ground that it did not accept the principle of waiver and estoppel. If the employee had a claim for additional amount on account of gratuity the management could have altered its stand by not allowing VSS. The employee cannot be permitted to question one particular component of the Scheme as VSS which is a composite and indivisible Scheme.
The employee Sri Basak has primarily contended that the Controlling Authority held that the company should have calculated gratuity on the basis of the rate of wages that might have been drawn by him on July 1, 2008 if the operation of the unit was not suspended. The appellate authority held that the years of service of the employee for the purpose of calculation of gratuity should be up to the date of Voluntary Separation but had reduced the yearly increment on wages. The bipartite settlement as it existed on July 1, 2008 was exhibited before the Controlling Authority in his evidence. That the notice for VSS was an invitation to offer which must have to be read as a promise to perform the obligation, to discharge the liability and to pay the gratuity as per the Act. Such an offer, therefore, should bind the employer.
Mr. Bhattacharjee, the learned Senior Counsel for the employee submitted that Section 14 of the Act laid down that the provision of the Act will have an overriding effect over other provisions on the subject. Therefore, it must receive a liberal interpretation in favour of the weaker section to mean that anything inconsistent therewith contained in any enactment other than the Act or other instrument or contract having been effected by virtue of any enactment other than the Act, is prohibited. A contract not entered by virtue of any other enactment is also prohibited by necessary intendment of the statute.
For Mr. Bhattacharjee, the employer has an obligation in terms of the VSS notice. The intention of the parties to the contract arising out of the VSS notice is based on the employer's promise to pay the gratuity as per the Act. It does not disclose the basis of calculation of the amount. It has been one of the contentions of the employee that since the company assured to pay the gratuity as per the Act promissory estoppel applied against it. The employer is estopped from denying liability to pay gratuity on the true construction of the promise declared under the VSS notice.
Mr. Bhattacharjee raised a bigger issue about the permissibility of the employer to treat different rates of wages last drawn for payment of gratuity and for other dues. The legislative intent has been to treat the wages on the date of severance of the relationship of employer and employee as the last drawn wages.
In support of his contention, Mr. Bhattacharjee relied on a judgment of the Gujarat High Court in the case of Limb Di Municipality Vs. Inayak Husen Nathuniya Saiyad and Another, reported in 2008-II-LLJ 942. In that case the order of the Controlling Authority as well as the appellate authority under the Act with regard to the payment of gratuity amount in consonance with the 5th Pay Commission was under challenge. It has been held that salary as per the recommendation of the 5th pay commission must have to be revised and that aspect was rightly considered by Controlling Authority and the amount of gratuity based thereupon was rightly granted by the Controlling Authority and confirmed by the appellate authority.
On a plain reading of the judgment it does not appear to have any application to the facts of the present case. In that case, because of the 5th Pay Commission report benefits were given on notional basis and notionally salary was fixed in respect of each and every employee. The salary was fixed as per the pay commission recommendation and that is why the High Court had observed that the employee could not claim arrears of salary as a consequence of the pay commission report but could claim benefit of gratuity on the basis of notional fixation of the salary. Here the issue is entirely different, i.e., whether the salary of the employee was to be notionally fixed as on the date the VSS offer was floated. That makes the basis of the cited judgment entirely different.
Bank of India and Others Vs. O.P. Swarnakar and Others, reported in (2003) 2SCC 721, has been relied on by the employee for a proposition that Voluntary Retirement Scheme constituted an invitation to treat and not a proposal for an offer. The acceptance of such an offer by an employee could result in a concluded contract. It must be noted that the common question that cropped up for consideration in that case was whether an employee who opted for Voluntary Retirement Scheme pursuant to or in furtherance of a Scheme floated by a nationalized bank would be precluded from withdrawing the said offer. The scope of consideration for the Court's determination being very different from the present one the portions relied on by Sri Basak must have to be judged in the context in which they were delivered. This judgment has been relied on by the workman as an authority for various aspects connected with a Voluntary Retirement Scheme floated by an employer. The Supreme Court had held that the request of employees seeking voluntary retirement was not to take effect until and unless it was accepted in writing by the competent authority. The competent authority had the discretion whether to accept or reject the request of the employee seeking voluntary retirement under the Scheme.
In support of the contention made by the employee that the offer must be read as a promise to perform the obligation reliance has been placed on paragraph 66 onwards of the said judgment wherein it has, inter alia, been held that the proposal of an employee when accepted by an employer would constitute a promise within the meaning of Section 2(b) of the Indian Contract Act only when the promise becomes an enforceable contract. Moreover, the Supreme Court observed that in terms of the Scheme no consideration passed so as to the constitute an agreement. Once it is found that by giving their option under the Scheme the employees did not derive any enforceable right the same in the absence of any consideration would be void in terms of Section 2(g) of the Contract Act as opposed to Section 2(h) thereof. The Supreme Court had very categorically held that a voluntary retirement scheme was not an offer but merely an invitation to treat and the applications filed by the employees constituted an offer.
Even though, the employee has very strongly relied on this judgment it has not much of relevance to the facts of the case as the context in which the judgment was delivered was very different. The moot question which was raised in the said case was whether the voluntary retirement scheme was an offer or proposal or merely an invitation to offer. That apart, the points decided by the Supreme Court on several issues support the contentions of the company in a very major manner. The supreme Court relied on an observation made in the case of Lachoo Mal Vs. Radhayshyam, reported in (1971) 1 SCC 619, wherein it has been held that everyone has a right to waive and agreed to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his capacity which may be without infringing any public right or public policy. Lachoo Mal's case quoted a passage from Hallsberry's Laws of England for the proposition that as a general rule any person can enter into the binding contract to waive the benefits conferred upon him by an Act of Parliament or he can contract him out of the Act unless, of course, it can be shown that such an agreement is contrary to public policy.
Mr. Bhattacharjee also relied on another Supreme Court judgment in the case of Beed District Central Coop Bank Ltd. Vs. State of Maharastra and Others, reported in (2006) 8 SCC 514 for a proposition that the gratuity scheme of the appellant bank provided for gratuity to superannuating employees at a certain rate. Yet again, the Scheme was floated raising the ceiling limit. However, in terms of the provisions of the Payment of Gratuity Act, the rate of gratuity was to be determined @15 days salary for every completed year of service upto a ceiling limit. The respondents retired during the currency of the Scheme of the bank. They claimed the benefit of the Scheme as also the ceiling limit fixed under the Act. The Supreme Court held that the question should be considered from the point of view the nature of the Scheme as also the fact that the parties agreed to the terms thereof. When better terms are offered a workman takes it as a part of the package. He may volunteer for the same, as he may not. Section 4(5) of the Act provides for a right in favour of an employee that such a right may be exercised by him.
This judgment also differs factually from the present case. The consideration before the Supreme Court was very different from the one that calls for the present exercise. There the moot question was whether the respondent could take benefit of the Scheme as well as the enhanced ceiling limit. A careful reading of the observations made in that judgment leaves no manner of doubt that the ultimate ratio went against the employees. The Supreme Court had held that Section 4(5) of the Act does not contemplate that the workman would be at liberty to opt for better terms of contract, while keeping the option open in respect of a part of the statute. A workman cannot opt for both the terms. Such a construction would defeat the purpose for which Section 4(5) of the Act has been enacted.
A.M. Sampath Vs. Bank of Baroda rep. its Chairman and Managing Director, Mumbai and Another, reported in 2009 LLR 534 has been relied on by the employee in support of his contention that no agreement or settlement can reduce gratuity; but can always enhance the same. A learned Judge of the Madras High Court held that the Payment of Gratuity Act is a beneficial piece of legislation and should receive an interpretation consistent with the principle of equity and fair play. Therefore, the term last drawn wage found in Section 4(2) of the Act should mean the right to receive its full amount and it cannot give any fractured interpretation. The petitioner of that case was paid the gratuity on the basis of a pay which was revised with retrospective effect and he was also paid the arrears of pay and allowances consequent upon the revision. There is no question of any revision of pay in the present case. The issue involved in that case was very different and cannot be equated with the present one.
Lastly, Mr. Bhattacharjee relied on a case of Rajamoni and Others Vs. Deputy Commissioner of Labour and Appellate Authority under Payment and Gratuity Act, Tiruchirapalli and Others, reported in 2001-II-LLJ 1453, for a proposition that by virtue of Section 7 and Section 14 the Act was to have overriding effect over any other enactment, instrument or contract inconsistent therewith. In that case on the retirement of the appellants the management instead of calculating the gratuity according to the Act obtained receipts for a lesser amount as against which they preferred claim before the appropriate authority under the Act. The Division Bench of the Madras High Court had held that in the light of the provision of the relevant Act the employer had no option except to pay the gratuity payable under it. There is no scope for any contract or instrument to takeaway the statutory right.
These were what the employee had submitted. I have considered the submissions of the both. The submissions of the employee leaves a very major portion of the problem involved unanswered. That an employer is otherwise required to make payment of gratuity in accordance with law cannot be the subject matter of any dispute. That by itself does not pose a problem. The problem is, however, whether the employee having agreed to give a go by to a certain portion of the same can still insist on payment of gratuity as per the statute. The main thrust of company's argument is based on the equitable principle of estoppel and waiver. Mr. Sengupta variously drew attention of the court to different documents from which it appears that the petitioner had accepted the terms of VSS and the amount of gratuity with his eyes open. While tendering resignation, the employee requested the company to pay him his full and final settlement dues and claims of whatever nature as per the details of the final settlement notified to the annexure to the notice of the company.
It has not been the case of the employee that while signifying the consent he could not understand the implication of the Scheme and his undertaking. Neither was his case that the company ever played any fraud upon him when he discharged the receipt declaring that he would not have any other claim or dispute against the company in future. Based on this Mr. Sengupta has argued that having accepted the terms and conditions of VSS the employee cannot turn around after receiving the sum settled between the parties.
The submission of the employee that the employer's invitation must have to read as a promise to perform the obligation to discharge liability to pay gratuity binds the employer for performance is perhaps a submission which the employer does not seriously contest. Mr. Bhattacharjee tried to fix the responsibility of the company with reference to the obligation to pay gratuity as per the Act without disclosing the basis of calculation of the amount. Mr. Bhattacharjee introduced the concept of promissory estoppel binding the company. This, however, has not been elaborated by the employee how the company was bound by promissory estoppel.
On the contrary, I, for one, do not find any reason why the waiver and estoppel must not apply against an employee even if, it is on the basis of an undisclosed calculation. Similarly, Section 37 of the Contract Act read with Section 14 of the Payment of Gratuity Act had no application.
It has been repeatedly submitted by the employee that there cannot be too different rates of wages, viz., the last wage for the payment of gratuity and for other non-statutory dues. If the purpose of the legislative intent is to treat the wages on the date of severance of such relationship, such wages is to be taken as the last drawn wages. Based on that the employee sought to argue that increments and dearness allowance were payable till the date of the voluntary separation. The notional increment during the period of suspension of work could not be taken away.
This stand overlooks that what the company had given to the employee under the VSS included, apart from gratuity as a statutory benefit, leave encashment on the basis of the last pay and dearness allowance over which no dispute or further claim was raised. The difference between the last drawn wages before the suspension of work and the payment made for the non-statutory benefits cannot be overlooked. Gratuity is a statutory benefit and, therefore it has to be paid according to the provisions of the Act on the basis of last drawn wages. The other non-statutory benefits to a very large extent depend upon the discretion of the management. Payment of non-statutory benefits for the purposes of calculating the VSS does not by itself mean that statutory benefits for gratuity had been ignored or that the employee is entitled to more than the statutory prescription only because in one respect the discretion of the company permitted to receive more. The argument is lucrative, but must logically fail.
The question is whether the principle followed by the management for the purpose of other benefits was required to be adopted for the payment of gratuity as well. It has been a sheet anchor of the Company's case that the suspension of work has not been held to be unjust and the unions declared before the tribunal that the dispute had been settled. Therefore, the decision of the management that no wages or allowances would be payable during the period of suspension was not required to be and has not been altered. Gratuity cannot be fixed on the basis of an assumed sum which in terms of the relevant notice is not payable to the employee.
Mr. Sengupta has laid great stress on Section 2(s) of the Act where wage has been defined as meaning of all emoluments earned and paid or payable during leave or on duty. But in terms of notice of suspension of work no wage is earned or paid or payable and the period of suspension of work is not the period is the leave or duty. Therefore, the assumed wage on the date of resignation cannot be the last drawn wage as provided in Section 4(2) of the Act.
I find sufficient justification in the stand taken by the company and concomitantly fail to discover any reason how the Controlling Authority allowed additional gratuity on the basis of the assumed last drawn wage. There is no evidence for the assumed wages. It may be mentioned that in an earlier round of litigation a similar issue was raised by the employee. The company filed a writ petition which was disposed of by the learned Single Judge of this Court holding that the Controlling Authority was bound to apply the provisions of the Act after duly considering the provisions of Section 4(2) read with Section 2(s) and other provisions of the Act. But the Controlling Authority by the order impugned made the employee eligible for the wages during the period of suspension of work. His conclusion that the language of the letter was difficult for the employee to comprehend appears to be without any basis, far less any evidence. Similarly, the observation that the letter was written by legal experts is based on surmise and not on any actual evidence. The Controlling Authority appears to have proceeded on the basis of assumptions unbacked by any evidence led. For example, his conclusion that during the period of suspension of work the employees had no choice but to accept the proposal of the management regarding VSS and, therefore, the agreement between the employee and the company cannot curtail the right of the employee by raising further demands under Section 14 of the Act.
It cannot be gainsaid that the Controlling Authority approached the whole thing not strictly from the legal perspective. He observed that it will not be judicious to take into account the wage of November 2000 while calculating the last drawn wages. The question is not whether it is judicious, the question ought to have been whether it is justified or legal. In the process the reason for the conclusion that the employee cannot be estopped from getting the notional increment on the ground that he cannot be made to suffer twice for no fault of his, remain elusive. It must admitted that not only an employee, nobody can be made to suffer even for once for no fault of his. But that cannot be the reasoning of the statutory authority. The basis of the conclusion of the Controlling Authority that the company should have calculated gratuity on the basis of the rate of wages that might have been drawn by the employee on July 1, 2008 is clearly against the mandate of the statute. It is incorrect to say that the company did not raise any objection to the claim of the employee regarding the last drawn wages. On the contrary its letter, dated June 12, 2009, has proved the substratum of what the Controlling Authority has proceeded with to be entirely incorrect. The order of the Controlling Authority accepting Rs. 6,569/- as the last drawn wage of the employee must be reckoned to be an unbased one.
The order of the appellate authority also has left much to be desired from a legal point of view. The appellate authority while observing that Section 14 the Act has an overriding effect over any agreement or enactment it singularly failed to mention which enactment or agreement was found to be less favourable. That apart, how Section 14 of the Act is applicable to the facts of the present case has not been spelt out.
The reason for accepting the payable wages and not the actual last paid wages does not appear to have been founded on a very sound logic. The interpretation put on Section 2(s) on the word 'wage' as meaning the emoluments payable to him does not take note of the notice of suspension. Therefore, the appellate authority failed to address himself to a rather cardinal issue that the amount payable did mean that nothing was payable in the present case. The order appears to have been very seriously flawed when Rs. 4,142/- was taken as the last wage received by the employee suggesting that the last drawn wage was admitted by him. Merely because the employee was on his rolls upto July 2008 does not mean that it had to be different.
The word 'last drawn wage' as used in Section 4(2) of the Act signifies that the wage last earned and received by the employee. The tense of the word 'drawn' is used in past participle of the verb 'draw' in an adjective form signifying something which has happened and not something which was to happen.
The company made a grievance that the judgment of the Delhi High Court has been wrongly interpreted by the appellate authority. The appellate authority had held that the said judgment mentioned to approach the appropriate authority if there appeared any dispute in respect of payment of gratuity of the employees of the company. Mr. Sengupta submitted that the context of the said judgment was very different and the same ought not to have been relied upon by the appellate authority. Long before the VSS was floated the company was referred to the BIFR. The BIFR rejected the company's prayer for deregistration. Against that the company filed an appeal to the appellate authority which discharged the company from the Sick Industrial Companies (Special Provision) Act, 1985 as its net worth turned positive. The unions challenged the order of the appellate authority before the Delhi High Court. The writ petition before the Delhi High Court had nothing to do with the issue of gratuity. On the contrary the judgment was confined to the order of the appellate authority discharging the company from the SICA.
We have also to consider whether increase in Dearness Allowance should have been considered for determining the last drawn wage as an increment in basic wage. Increase in D.A. cannot be taken into consideration for determining the last wages drawn. The Act does not empower the authority to declare entitlement of notional increase in Dearness Allowance.
It was very specifically mentioned that the VSS was an indivisible package of financial benefits. The appellate authority seems to have entirely ignored that if the employee had a claim for additional amount on account of gratuity the management could have altered its stand by not floating the VSS. The submission of the employee that the company was maintaining two standards of the last drawn wages appears to ignore a very fundamental aspect of the matter that an employee cannot question one particular aspect of the VSS as the entire Scheme was indivisible.
A very major part of the company's case is based on the principle of estoppel. Estoppel is a rule by which a person will not be allowed to plead the contrary of a fact or state of things which he has formerly asserted by words or conduct. The basic principle underlying the rule of estoppel is that a person shall not be allowed to say one thing at a time and the opposite of it at another time. The principle of estoppel is based on equity and good conscience. If somebody by word spoken or by his conduct has made some other person to act which the latter would not have done the person who made the representation should not be allowed to go back on it to the detriment of another. In other words, if a man by his words or conducts signifies his consent to a certain thing and thereby induces somebody to act in a certain manner which he would not have so acted but for the representation made the former cannot question the legality of the act which he had sanctioned to the prejudice of those who have given faith to his words.
Based on this principle Mr. Sengupta relied on the judgment in the case of Moinuddin Vs. Guest Keen William Ltd., reported in 2012(3) CHN (CAL) 146. There also the petitioner had accepted the Voluntary Retirement Scheme floated by the company. The question that cropped up for consideration was whether the petitioner was entitled to claim further arrears of wages even after accepting the Voluntary Retirement Scheme and to file a writ petition for recovery of wages against the company. This Court had held that after the petitioner had accepted the Voluntary Retirement Scheme and the benefits flowing from the said Scheme he was estopped from raising any further claim against his former employer. This was all the more so when he had issued a receipt that he had received his benefits in full and final settlement of all his claims and shall have no claim against the company in future. In that judgment reliance was placed on in the case of A. K. Bindal and Another Vs. Union of India and Others., reported in (2003) 5 SCC 163 wherein the Supreme Court had specifically laid down that the main purpose of paying by way of Voluntary Retirement Scheme is to bring about a complete cessation of the jural relationship between the employer and the employee. "After amount is paid and the employee ceases to be under the employment of the company or the undertaking, he leaves with all his rights and there is no question of his again agitating for any kind of his part rights with his erstwhile employer including making any claim with regard to enhancement of pay scale for an earlier period. If the employee is still permitted to raise a grievance regarding enhancement of pay scale from a retrospective date, even after he has opted for Voluntary Retirement Scheme and has accepted the amount paid to him the whole purpose of introducing the Scheme would be totally frustrated", the Supreme Court observed. Based on that this Court held that the writ petitioner cannot be heard to agitate about his claim against his former employer.
Tushar Kanti Roy Vs. Eighth Industrial Tribunal, Kolkata, reported in 2013(1) CHN (CAL) 504 is also an authority on the point mentioned in the preceding paragraph. With reference to the facts of that case it was observed that the petitioner had himself asked for the money from the concerned respondent and it was only for this that the respondent had decided to make the payment. Otherwise the respondent no. 2 could have challenged the award itself. Relying on this observation Mr. Sengupta submitted that in the present case also the employee offered to resign voluntarily on the terms of the VSS and it was on his asking that the resignation was accepted and payment was made. Otherwise it would have been open to the company not to have accepted the voluntary resignation. The company laid great stress on the observation made in the said judgment where it was recorded that the petitioner having not indicated on the receipts themselves that he had accepted the amounts without prejudice forfeited his right to ask for more amount from the company.
The rule of estoppel was the basis of the judgment in the case of Tushar Kanti Roy inasmuch as it was observed that the petitioner by his conduct had induced the respondents to believe in a certain state of things and accordingly was now estopped from altering his stand to the detriment of the respondents. The principle enunciated therein was on the basis of an act of waiver and the doctrine of election on the part of the petitioner. The Court also relied on case of In re Lart. Wilkinson Vs. Blades., reproted in 1896(2) Chancery 788, where it was held that a person who is fully cognizant of the proceedings and who stands by and deliberately takes the benefit of a decision on the construction of a will under which a particular fund is distributed, is estopped by his conduct from reopening any of the questions covered by the former judgment by means of a fresh action. In the present case also the employee was made aware about the quantum of the gratuity. There was no compulsion or coercion to accept the payment. He had taken more than a week's time to consider the propriety of the same. It is really in these premises that the company accepted his resignation which the company may rightly claim that it would not have otherwise done.
Mr. Sengupta next relied on a Division Bench judgment of the Court in the case of Guest Keen Williams Ltd. Vs. Fifth Industrial Tribunal, West Bengal and Others, reported in 1995(II) CHN 19, for a proposition that it is the total receivable amount that was to be taken into account and not under what head or nomenclature the same was being paid. Drawing on the same it has been argued that the total amount payable by the company was mentioned in the Scheme and in consideration thereof the employee had opted for the VSS. That precludes him from asking for increase in the total amount on the plea of shortfall on account of gratuity and seeking to establish that it could be adjusted against the sum payable under the heading of other benefits.
On the true nature and scope of VSS the company referred to the case of HEC Voluntary Retd. Employee Welfare Society and Another Vs. Heavy Engineering Corpn. Ltd. and Others, reported in 2006 SCC (L & S) 602. The Supreme Court had held that VSS is a special Scheme as contrasted with the general scheme of employment governing the terms and conditions of service or which is part of the statutory rules governing the service of the employees. It has further been observed in that case:
An offer for voluntary retirement in terms of a scheme, when accepted, leads to a concluded contract between the employer and the employee. In terms of such a scheme, an employee has an option either to accept or not to opt therefor. The scheme is purely voluntary, in terms whereof the tenure of service is curtailed, which is permissible in law. Such a scheme is ordinarily floated with a purpose of downsizing the employees. It is beneficial both to the employees as well as to the employer. Such a scheme is issued for effective functioning of the industrial undertakings. Although the Company is "State" within the meaning of Article 12 of the Constitution, the terms and conditions of service would be governed by the contract of employment. Thus, unless the terms and conditions of such a contract are governed by a statute or statutory rules, the provisions of the Contract Act would be applicable both at the formulation of the contract as also the determination thereof. By reason of such a scheme only is an invitation of offer floated. When pursuant to or in furtherance of such a Voluntary Retirement Scheme an employee opts therefor, he makes an offer which upon acceptance by the employer gives rise to a contract. Thus, as the matter relating to voluntary retirement is not governed by any statute, the pro visions of the Contract Act, 1872, therefore, would be applicable too. (See Bank of India V. O.P. Swarnakar.)"
In the case of Bank of India and Others Vs. O.P. Swarnakar and Others (Supra) has also been relied on by the company. Since the judgment has been considered in details earlier further reference to it is not necessary.
The entire argument of the company thus revolves round various subtle facets of the doctrine of estoppel operational at various stages and on various counts against the employee consequent upon his acceptance of the terms offered by the company. The substratum of the argument of Mr. Sengupta is that the conduct of the employee precludes him from taking a stand different from the one he had given out to the company. This in classical law is known as estoppel in pais. Within its fold it includes every statement or act of a party trusting on which another party has been led to act and to change is position. In such a situation, the first party should not be allowed to deny. The company has built up the case in a manner reminiscent of the syllogistic conclusion drawn in deductive logic.
But it is not understood how the employee sought to apply the concept of promissory estoppel against the company. The submission of the employee that the assurance of the employer to pay gratuity as per the Act makes a rule of promissory estoppel applicable does not appear to have been founded on a very sound logic. As has been observed by the Supreme Court in the case of D.Boopalan Vs. Madras Metropolitan WSS Board, reported in (2007) 12 SCC 569 that the doctrine of promissory estoppel is not only really based on principle of estoppel but it is a doctrine evolved by equity in order to prevent injustice. Since the doctrine of promissory estoppel is an equitable principle it must yield to the equity so requires. The doctrine is neither in the realm of contract nor in the realm of estoppel. It is an essential feature to the doctrine of promissory estoppel that for its application that the promisee must establish that he had suffered any detriment or altered his position by reliance on the promise. The employee must have glossed over a basic rule of law that the doctrine of promissory estoppel does not provide a cause of action for a petitioner relying on a gratuitous promise.
Thus, the promissory estoppel as sought to be invoked by the employee against the company is plainly misadventure. When the company assured to pay gratuity as per the Act it was merely stating the legal position and in such a case promissory estoppel has no application. It's worth recounting that the notice of suspension of work clearly stipulated that no workman would be entitled to any wage during the suspension of work except those class of employees mentioned in this notice. Therefore, no employee was not entitled to any wages during the period and the last drawn wage for the employee was the wage drawn by him on the date of suspension of work. That apart, if the VSS was an indivisible one the consideration must be the gross amount and not the parts comprising the same.
Mr. Bhattacharjee's submissions that the word 'payable' in Section 2(s) of the Act means an entitlement of an employee on the date of his retirement has been belied by the notice of suspension of work.
Similarly, I find no justification in the submission of the employee that by virtue of Section 2A of the Act the employee should have been considered to be in continuous service and, therefore, the increments payable should be accrued during the continuous service even if there might be lock out in the company. That period of suspension of work or lock out is considered as an uninterrupted service has been statutorily recognized. But the company has taken the same into account and calculated the amount of gratuity treating the employee to be in continuous service till the cessation of jural relationship. That does not detract us from the propriety and validity of the case made by the company. Mr. Sengupta has drawn a distinction between continuous service during the period of suspension of work and forced leave. In the case of forced leave, leave with wages is allowed under compelling circumstances. Employees are not entitled to gratuity on the basis of notional wages or a calculation based on more than 15 days or completion of more than five years. I am of the considered opinion that since no wages or allowances was payable after suspension of operation in terms of the notice of suspension of work the gratuity amount which was paid on the wages last drawn by the employee was rightly done by the company.
There is no basis for the submission of the employee that the company is estopped from denying its liability to pay gratuity on the true construction of its promise declared in the VSS notice. I have already found that it is on the true construction of the VSS notice itself that the petitioner is not entitled to any additional amount of gratuity. Further discussion will be repetitive, but shall not improve the case of the employee.
It is not understood how the employee pressed Section 14 of the Act into service in vindication of its contention to get additional gratuity. Section 14 of the Act, inter alia, says that the provisions of the Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than the act or in any instrument or contract having effect by virtue of the enactment other than this Act.
A bare reading of the said provision makes it very clear that the provisions of the Act shall have overriding effect notwithstanding anything inconsistent in any other enactment or any construction or contract having effect by virtue of any enactment than this Act.
Viewed from a different angle the stand taken by the employee based on Section 14 of the Act goes against his own contention. As laid down in United India Insurance Co. Ltd. etc. Vs. H. K. Khatau and Others, reported in 1984 LAB. I. C. 33 the scope of Section 14 clearly provides that the right to claim gratuity by an employee under this Act is not based on any contract but a right which arises out of the provisions of the statute itself. Therefore, the concept of a contract binding the company and Section 14 of the Act are mutually exclusive, mistakenly sought to be encapsuled in a single fold, and that too not by way of an alternative plea, but by pleas invalid by themselves. In this respect, the employee's case has been very seriously flawed. As a matter of fact Section 14 of the Act gives space to the company to argue and establish that gratuity has been paid in terms of the Act itself as provided in Section 4(2) of the Act.
Similarly, the employees' effort to substantiate its case for additional gratuity with reference to Section 37 of the Contract Act appears to be glossly misplaced. How the employee sought to apply the doctrine of promissory estoppel on the principle contained in Section 37 of the Contract Act is not comprehensible. Section 37 of the Contract Act deals with obligation of parties to a contract. It says that parties to a contract must either perform or offer to perform their respective promises unless such performance is dispensed with or excused under the provisions of the Act, or of any other law. Section 37 lays down the obligation of the parties to the contract to perform their respective promises unless there are circumstances excusing a party from doing the same. If the employee wants to rely on it on the premise that the company must have to perform its part of the obligation resort to Section 37 of the Contract Act is a misconceived one. And, moreover, the company's assertion to have complied with its part of the obligation could not be shaken by the employee. The recurrent motif of his submission throughout the hearing has been a clamour for adherence to the statute, i.e., he should be paid his gratuity according to the Act. The company has unhesitatingly admits the same, but adds, so he has been paid. The discussion above makes the latter claim quite easy to accept. The employee's claim for a similar relief rests on an extra-statutory interpretation.
I thus find sufficient merit in the case of the company and equally no merit in the contentions of the employee. The orders impugned in the writ petition being W.P. No. 21117 (W) of 2015 are set aside and quashed. The writ petition is allowed. The writ petition being W.P. No. 22922 (W) of 2015 for the reasons mentioned above is dismissed.
There shall, however, be no order as to costs.
Urgent Photostat certified copy of this order, if applied for, be supplied to the parties on priority basis upon compliance of all requisite formalities.
(Sambuddha Chakrabarti, J.) S. Banerjee