Gujarat High Court
The Indian Express (P) Limited vs State Of Gujarat on 12 June, 2025
NEUTRAL CITATION
C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17409 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17412 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17413 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17416 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17419 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17421 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17422 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 17424 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MRS. JUSTICE M. K. THAKKER
==========================================================
Approved for Reporting Yes No
✔
==========================================================
THE INDIAN EXPRESS (P) LIMITED
Versus
STATE OF GUJARAT & ORS.
==========================================================
Appearance:
MR VANDAN K BAXI(5863) for the Petitioner(s) No. 1
LEARNED SENIOR ADVOCATE MR.SUDHIR NANAVATI NANAVATI &
NANAVATI(1933) for the Petitioner(s) No. 1
MR AM BHATASARA(5846) for the Respondent(s) No. 4
MR BHUVNESH GAHLOT(10286) for the Respondent(s) No. 4
MS.SURBHI BHATI, AGP for the Respondent(s) No. 1,2,3
==========================================================
CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER
Date : 12/06/2025
Page 1 of 34
Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025
NEUTRAL CITATION
C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025
undefined
ORAL JUDGMENT
1. Rule returnable forthwith. Learned advocate Mr.Bhuvnesh Gahlot waives service of Rule on behalf of the respondent No.4. Learned AGP Ms.Bhati waives service of Rule on behalf of the respondent-State.
2. Since the issue raised in the these petitions are similar, they are being decided by a common judgment. Facts of Special Civil Application No.17409 of 2022 is taken for consideration of the disposal of these petitions.
3. This petition is filed under Article 226 and 227 of the Constitution of India challenging the order dated 17.03.2021 passed by the learned Controlling Authority and the order dated 31.05.2022 passed by the learned Appellate Authority under the Payment of Gratuity Act, 1972 directing the present petitioner to include the variable pay for the purpose of calculation of gratuity with 10% simple interest.
4. The case of the present petitioner is that they are engaged in the printing and publication of newspapers across the length and breadth of the country, with several industrial establishments located nationwide, Page 2 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined including one at Ahmedabad. The respondent was employed as a VDT Operator since 19.06.1979 and, upon completion of 35 years of qualifying service, retired on 06.09.2013. His last drawn wages were ₹24,259.50 per month (comprising Basic Pay of ₹11,425.00 and Variable Dearness Allowance of ₹12,834.50). Based on the said last drawn wages, gratuity amounting to ₹4,75,859/- was paid under the Payment of Gratuity Act, 1972, and the same was received by the respondent without any demur. Thereafter, an application under the Payment of Gratuity (Central) Rules, 1972 was submitted by filling Form No. N, claiming the differential gratuity amount of ₹7,02,406/-, contending that the component of variable pay was not considered while calculating the gratuity. The petitioner appeared before the learned Controlling Authority and objected to the claim for the differential amount. After considering the submissions made by both parties, the learned Controlling Authority, by order dated 17.03.2021, directed the petitioner to pay an amount of ₹2,09,954/- along with simple interest at the rate of 10%. Aggrieved, the petitioner preferred an appeal before the learned Appellate Authority, which Page 3 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined was dismissed by order dated 31.05.2022. The said order is the subject matter of challenge before this Hon'ble Court.
5. Heard learned Senior advocate Mr.Sudhir Nanavati with learned advocate Mr.Vandan Baxi for the petitioner and learned advocate Mr.Bhuvnesh Gahlot with learned advocate Mr.AM Bhatasara for the respondent No.4. Learned AGP Ms.Surbhi Bhati for respondent No.1, 2 and 3.
6. Learned Senior Advocate Mr. Nanavati submits that both the Authorities have erred in not considering the fact that the petitioner, being a newspaper establishment, is governed by the provisions of the Working Journalists and Other Newspaper Employees (Conditions of Service and Miscellaneous Provisions) Act, 1955 and the wage Board namely Majithia Wage Board was constituted under the Working Journalist Act, 1955. The recommendations of the Majithia Wage Board, constituted under the 1955 Act, were approved by the Hon'ble Apex Court and as per the recommendation of the Majithia Wage Board, the variable pay was introduced by the Board. According to the Board's Page 4 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined report, 'basic wages' as defined under Section 1, Chapter XIX, refers to wages drawn in the prescribed scale of pay, including stagnation increments, if any, but excludes any other type of pay such as special pay, personal pay, etc. As per the definition of basic wages, the inclusion of variable pay was not contemplated, as variable pay can be regarded as incentive wages or bonus, therefore, the question of including variable pay while calculating gratuity under the Act of 1972 does not arise. It is further submitted by the learned senior advocate Mr.Nanavati that the variable pay recommended by the Wage Board as provided under section 52 of Chapter XIX of the Majithia Wage Board report, management would be free to pay more than recommended variable pay subject to performance of the workers as well as profitability and viability of the news paper establishment. The Board has recommended minimum maintainability for all employees including the contractual employees. The said variable pay would be in nature of the incentive pay and therefore, the same cannot be included under the Act, 1972. 6.1. Learned senior advocate Mr.Nanavati submits that Page 5 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined both the Authorities have relied on the report submitted by the Majithia Wage Board, however, as per the said report, there was no suggestion to include the variable pay in the basic wages for the payment of gratuity. Learned senior advocate Mr.Nanavati submits that both the Authority has relied on the judgment rendered by the Apex Court, however, in those cases also there were no directions or discussions to club the variable pay in the basic wages for the purpose of calculation of gratuity. It is further submitted by the learned senior advocate Mr.Nanavati that the learned Controlling Authority has relied upon the letter of Press Trust of India Limited suggesting that the variable pay is required to be included in the basic wages while calculating the gratuity under the Act, 1972. It is submitted by the learned senior advocate Mr.Nanavati that the said letter is not legally binding upon the petitioner and as one agency has paid, therefore, petitioner is also required to be paid even if the respondent is not entitled and therefore, the conclusion on the basis of the said recommendation is erroneous. It is further submitted by the learned senior advocate Page 6 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined Mr.Nanavati that both the Authorities have also misinterpreted the judgment of the Apex Court delivered in the case of A.B.P. Pvt. Ltd. and Another versus Union of India and Others, as in the above case the challenge was with regard to the validity and genuineness of the recommendation of the Majithia Wage Board and not the inclusion of the variable pay into the basic wages for calculating the last drawn wages for the purpose of payment of gratuity. 6.2. It is further submitted by the learned Senior Advocate Mr. Nanavati that the learned Authority has also erred in relying upon the judgment of Bridge & Roof Co. (India) Ltd. v. Union of India, reported in AIR 1963 SC 1474 wherein, the issue before the Apex Court in the contempt proceedings was with regard to the entitlement of the variable pay of the contractual employees. It is contended by the learned senior advocate Mr.Nanavati that neither the Board has recommended the calculation of variable pay while payment of gratuity, nor the judgment rendered by the Apex Court suggesting that inclusion of variable pay is required in the basic wages while calculating the Page 7 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined gratuity. However, learned Authorities have passed impugned order relying on the decision of the Apex Court as well as the Majithia Wage Board and relied on the recommendation addressed by the Press Trust of India and therefore, same is required to be interfered with by setting aside the impugned order.
7. As against the same, learned advocate Mr.Gahlot appearing for the respondent has submitted that Majithia Wage Board has recommended the variable pay as a part of basic pay and the recommendation was upheld by the Supreme Court in the petition filed by the A.B.P. Pvt. Ltd. and Another versus Union of India and Others being a WRIT petition (Civil 246 of 2011) and other allied matters. Learned advocate Mr.Gahlot submits that initially the Manisana Wage Board which is predecessor to the Majithia Wage Board recommended certain percentage of basic pay however, the same was not recommended as a variable pay and the Majithia Wage Board has categorized the basic and variable pay separately and accordingly, the concept of variable pay was recommended. The explanation to section 2(eee) which defines the wages, includes the new allowances Page 8 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined also. It is submitted by the learned advocate Mr.Gahlot that as per the interpretation of the Apex Court, the variable pay is part of the wages under section 2(s) of the Gratuity Act, 1972. Learned advocate Mr.Gahlot, relying on the definition of the wages provided under the Payment of Gratuity Act, 1972 has submitted that the wages include basic wages plus Dearness Allowance and restricting the meaning of wages only to the basic pay and Dearness Allowance would result in causing prejudice to the interest of the working class. The payment of the gratuity act is a social beneficial legislation and therefore, same is required to be interpreted liberally. The second part of the definition specifically excludes bonus, commission, house rent allowances, overtime wages and any other allowances. Accepting the HRA and other payment specified therein are not paid on regular basis and in fixed sums. Relying on the observation made by the learned Authority, it is submitted that bonus is paid normally on annual basis on the performance of the company or the employees, commission is paid on quantum of the sales made by an employee, overtime is paid on the extra hours of the Page 9 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined work put and similarly HRA is a kind of reimbursement/compensatory allowance for the house. 7.1. It is submitted by the learned Advocate Mr.Gahlot that the exclusionary clause ('any other allowances') cannot be interpreted to mean that all allowances, except Dearness Allowance, are to be excluded from the definition of wages. The clause has to be read in the context that any other allowance falling in the category of bonus, commission and overtime wages to be excluded and not otherwise. It is further submitted by the learned advocate Mr.Gahlot that learned Appellate Authority is justifying in holding that if this clause is understood to mean that all other allowance are to be excluded, it has the effect of nullifying the exclusive part of the definition appearing in the first part. It is submitted by the learned advocate Mr.Gahlot that petitioner, by not including the variable pay for calculating the gratuity has committed an error and has defying the directions issued by the Apex Court in the case of A.B.P. Pvt. Ltd. and Another versus Union of India and Others (Supra) and therefore, learned Authority was justified in directing the present petitioner Page 10 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined to pay the difference amount of the gratuity. It is submitted by learned advocate Mr.Gahlot that as per the recommendation of the Majithia Wage Board, the variable pay is integral part of the basic pay and after its inclusion it reaches the recommendation hike of approximately 2.9 to 3.2 times. It is submitted by the learned advocate Mr.Gahlot that both the Authorities have considered the report submitted by the Majithia Wage Board as well as orders of the Apex Court directing to include the amount of variable pay, therefore, no interference is required and the petition is required to be dismissed.
7.2. It is further submitted by the learned advocate Mr.Gahlot that the Chairman and the Managing Director of the petitioner News Agency Mr.Vivek Goenka is one of the Directors of the Press Trust of India and the said News Agency has implemented the Majithia Wage Board report as well as the orders of the Supreme Court and computed the variable pay while calculating the gratuity. The petitioner agency is run by Mr.Goenka who is also one of the Directors in other News Agency where the payment of gratuity is made on calculating the Page 11 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined variable pay and therefore, also no error has been committed by both the Authorities in directing to pay the difference of amount of gratuity. By submitting the same, learned advocate Mr.Gahlot prays to dismiss the petition by upholding the order passed by both the Authorities.
8. Having considered the arguments advanced by both the parties as well as the records of the cases, it emerges that the petitioner has paid the amount of gratuity to the retired employees considering the basic wages and variable Dearness Allowance. In the year 1955, the Government of India has enacted the Working Journalist and other news paper employees and Miscellaneous Provisions Act, 1955 to regulate the condition of service of the Working Journalist and in the year 1974, the amendment was made for other news paper employees employed in news paper establishment. For the purpose of fixing or revising the rates of wages of the employees in news paper establishment, the Central Government was empowered under section 9 and 13(C) of the Act to constitute two Wage Boards viz., one for the Working Journalists and other for the non journalist news paper Page 12 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined employees respectively. Likewise, the Act also provides that the Central Government shall constitute Wage Boards as and when necessary. Since 1955, six Wage Boards have been constituted for the Working Journalists and four Wage Boards for non Journalists news paper employees, in order to fix or revise the rates of wages. The Government has constituted two Boards on 24.05.2007, one for the Working Journalists and the other for the non Journalists news paper employees under the Chairmanship of Dr.Justice Narayana Kurup. On 31.07.2008 Dr.Justice K.Narayana Kurup, the Chairman of the above Wage Boards submitted his resignation and subsequently Justice Mr.Gurubax Rai Majithia, a retired Judge of High Court of Mumbai, was appointed as a common Chairman of two Wage Boards that is for the Working Journalist and other news paper employees and the board submitted its recommendation. The Majithia Wage Board (hereinafter referred to as the MWB) categorized the basic pay and variable pay separately. The object of the recommendation was to ensure that wages of news paper employees can be treated at par with those employees working in other Page 13 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined Government sectors. Therefore, concept of variable pay was introduced in clause 9 by the MWB with following objects:-
"9: Variable Pay:.
The concept of variable pay has been introduced, which aims to achieve twin objectives as stated below:
a. The Sixth Pay Commission had recommended the concept of grade pay and the same was agreed to by the Government for implementation. On similar analogy the concept of variable pay needs to be introduced for all the employees working in newspaper establishments and news agencies. The variable pay will be the specified percentage of the basic pay drawn by an employee in the newspaper industry. All allowances, such as HRA, Transport Allowance, and Leave Travel Allowance etc. will be computed by taking the sun total of the revised basic pay and the variable pay applicable to an employee. b. Variable pay recommended by the Wage Boards would be the minimum maintainable for all employees including those working on contract basis and the management would be free to pay more than recommended variable pay subject to performance of the workers as well as profitability and viability of the newspaper establishments."
8.1. As per the above clause, all the allowances such as HRA, Transport Allowance, Leave Travel Allowance etc. will be computed by taking sum total of the revised basic pay and the variable pay applicable to the employee and Page 14 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined the said variable pay can be increased, subject to the performance of workers.
8.2. The Board has also specified the Dearness Allowance, basic wages which is reproduced hereinbelow:-
"Dearness Allowance as recommended by the Majithia Wage Board and upheld by the Honourable Supreme Court of India is furnished here.
(1) The revised rates of Dearness Allowance shall be paid according to average all-India Consumer Price Index Number for the industrial worker (2001=100) compiled by Labour Bureau and will become operative with effect from 01-07-2010. (2) Dearness Allowance shall be payable bi-annually with effect from 1st July`and 1st January every year and shall be sanctioned as soon as the figures for the preceding 12 months, for which all
- India average consumer price index for industrial workers (Base 2001=100) used for determining rate of Dearness Allowance, becomes available. Dearness Allowance will become payable from the beginning of the month immediately succeeding the 12 month period for which All - India average index figures are used for determining the rate of Dearness Allowance. (3) The Rate of neutralization for determining Dearness Allowance payable Bi-annually on the basis of Consumer Price Index Number for Industrial Numbers would be 100 percent of basic pay for all groups of employees in newspaper establishments and will be calculated as per the formula in Table-IV. (4) Rate of neutralization for calculating Dearness Allowance will be 100% vide Table-IV.
Explanation for the purpose of this paragraph - The Dearness Allowance in respect of the period preceding the Page 15 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined date of implementation of the Award shall be given at the existing rates.
The Formula for calculating Dearness Allowance which is given in Table-IV is as below: The formula for calculating the Dearness Allowance would be the percentage increase of all-India Average Consumer Price Index for Industrial Workers (Base 2001=100) in preceding 12 months in question over the all-India Average Consumer Price Index for Industrial Workers (Base 2001=100) at 167 for the year July 2009 to June 2010 payable bi-annually with effect from 1st July and 1st January every year, which would be then be multiplied by the rate of neutralization and Basic Pay. Mathematically, it can be put as follows:
All-India Annual Average CPI - IW (Preceding 12 months in question) Minus All-India Annual Average CPI - IW (July 2009 to June 2010) D.A.---- -----X Rate of Neutralization (1.0) X Basic Pay All-India Annual Average CPI - IW (July 2009 to June 2010) So on the basis of the above formula, the Dearness Allowance is to be calculated.
Further, the All India Average Consumer Price Index (Base 2001=100) for industrial workers is as below:
ALL INDIA AVERAGE CONSUMER PRICE INDEX (BASE 2001=100) FOR INDUSTRIAL WORKERS* Year Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec 2006 119 119 119 120 121 123 124 124 125 127 127 127 2007 127 128 127 128 129 130 132 133 133 134 134 134 2008 134 135 137 138 139 140 143 145 146 148 148 147 2009 148 148 148 150 151 153 160 162 163 165 168 169 Page 16 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined 2010 172 170 170 170 172 174 178 178 179 181 182 185 2011 188 185 185 186 187 189 193 194 197 198 199 197 2012 198 199 201 205 206 208 212 214 215 217 218 219 2013 221 223 224 226 228 231 235 237 238 241 243 239 2014 237 238 239 242 244 246 252 253 253 253 253 253 2015 254 253 254 256 258 261 263 264 266 269 270 269 2016 269 267 268 271 275 277 280 278 277 278 277 275 2017 274 274 275 277 278 280 285 285 285 287 288 286 2018 288 287 287 288 289 291 301 301 301 302 302 301 2019 307 307 309 312 314 316 319 320 322 325 328 330 2020 330 328 326 329 330 332 *Source: The Ministry of Labour and Employment, Government of India On the basis of the above price index, the factor (digit) for the All India Annual Average CPI- IW (Preceding 12months in question) Minus All India Annual Average CPI-IW. (July 2009 to June 2010) is to be calculated. Here the All India Average CPI-IW for July 2009 to June 2010 is to be considered as 167 as shown in the above formula. So the said factor which is referred to as D.A. factor for the sake of brevity for the relevant period is calculated as below:
Month & Year D.A.Factor Month & Year D.A.Factor November- 2011. 17 January- 2016. 94 December- 2011. 17 July- 2016. 102 January- 2012. 25 January- 2017. 107 July- 2012. 33 July- 2017. 110 January- 2013. 42 January- 2018. 114 Page 17 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined July- 2013. 54 July- 2018. 120 January- 2014. 65 January- 2019. 128 July- 2014. 73 July- 2019. 139 January- 2015. 80 January- 2020 150 July- 2015 82 July- 2020 159 So the calculation of Dearness Allowance is to be done on the basis of the above formula and D.A. ------ Factor."
"Para 2(3) of Section I of Chapter XIX of the Majithia Wage Board Award "Basic wage" means wages drawn in the prescribed scale of wages, including tagnation increment, if any, but does not include any other type of wages or Tike special pay, personal pay, etc."
8.3. The Government has accepted the recommendation of the MWB and has issued notification on 11.11.2011.
Challenging the recommendation of the Board and the notification, the petition came to be filed before the Apex Court being Writ petition Civil No.246 of 2011 by A.B.P. Pvt. Ltd. and Another versus Union of India and Others (supra). The Apex Court vide its order dated 07.02.2014 has dismissed the petition and upheld the recommendation of the MWB. Thereafter, the contempt Page 18 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined petition came to be filed being Contempt Petition (Civil) No.411 of 2014 in Writ Petition Civil No.246 of 2011, alleging that the recommendation is not accepted in toto by various news agencies, as the contractual employees were not paid the benefits and the said petitions were disposed of on 19.06.2007 with directions that the complaints with regard to non implementation of the MWB award are to be dealt with in terms of the mechanism provided under the section 17 of the Act, 1955.
9. The Act 1955 wherein the provisions are made for the gratuity, however, that does not provide for the remedy to execute, however, there is no Authority specified which can be approached in the event of non receiving the benefits for the gratuity. Therefore, relevant would be the Payment of the Gratuity Act under which the application was preferred, as The Payment of Gratuity Act, 1972 is a self contained code incorporating all the essential provisions relating to the payment of gratuity which can be claimed under the Act and its provisions impliedly exclude recourse to any other statute for that purpose. The Act creates right of the payment of Page 19 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined gratuity, indicates when the rights will accrue, and lays down the principles for the quantification of the gratuity. It provides further for recovery of the amount, and contains an especial provision that compound interest at 9% per annum will be payable on delayed payment. For the enforcement of the provisions, the Act provides for the appointment of Controlling Authority, who is entrusted with the task of administering the Act. The fulfillment of the rights and obligation of parties are made his responsibility, and he has been invested with amplitude of power for full discharges of that responsibility. Any error committed by him can be rectified in appeal by the appropriate Government or an Appellate Authority particularly constituted under the Act. This Court has referred the decision rendered in the case of State of Punjab Versus Labour Court, Jullundur and Others reported in 1980 1 SCC 4 wherein the Apex Court has observed as under:-
"6. The third contention raised by the appellant is that the employee respondents were not entitled to apply under section 33- C(2) of the Industrial Disputes Act, 1947 for payment of the gratuity, and should have, if at all, applied under the provisions of the Payment of Gratuity Act. It is urged that the Payment of Page 20 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined Gratuity Act is a self-contained code incorporating all the essential provisions relating to payment of gratuity which can be claimed under that Act, and its provisions impliedly exclude recourse to any other statute for that purpose. The contention has force and must be accepted. A careful perusal of the relevant provisions of the Payment of Gratuity Act shows that Parliament has enacted a closely knit scheme providing for payment of gratuity. A controlling authority is appointed by the appropriate Government under section 3. and Parliament has made him responsible for the administration of the entire Act. In what event gratuity will become payable and how it will be quantified are detailed in section 4. Section 7(1) entitled a person eligible for payment of gratuity to apply in that behalf to the employer. Under section 7(2), the employer is obliged, as soon as gratuity becomes payable and whether an application has or has not been made for payment of gratuity, to determine the amount of gratuity and inform the person to whom the gratuity is payable specifying the amount of gratuity so determined. He is obliged, by virtue of the same provision, to inform the controlling authority also, thus ensuring that the controlling authority is seized at all times of information in regard to gratuity as it becomes payable. If a dispute is raised in regard to the amount of gratuity payable or as to the admissibility of any claim to gratuity, or as to the person entitled to receive the gratuity, section 7(4) (a) requires the employer to deposit with the controlling authority such amount as he admits to be payable by him as gratuity. The controlling authority is empowered. under section 7(4)(b), to enter upon an adjudication of the dispute, and after due inquiry, and after giving the parties to the dispute a reasonable opportunity of being heard, he is required to determine the amount of gratuity payable. In Page 21 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined this regard, the controlling authority has all the powers as are vested in a court while trying a suit under the Code of Civil Procedure, 1908 in respect of obtaining evidentiary material and the recording of evidence. The amount deposited by the employer with the controlling authority as the admitted amount of gratuity will be paid over by the controlling authority to the employee or his nominee or heir. Section 7(7) provides an appeal against the order of the controlling authority under section 7(4) to the appropriate Government or such other authority as may be specified by the appropriate Government in that behalf. The appropriate Government or the appellate authority is empowered under section 7(8), after giving the parties to the appeal a reasonable opportunity of being heard, to confirm, modify or reverse the decision of the controlling authority. Where the amount of gratuity payable is not paid by the employer with in the prescribed time, the controlling authority is required by section 8, on application made to it by the aggrieved person, to issue a certificate for that amount to the Collector. The Collector, thereupon, is empowered to recover the amount of gratuity, together with compound interest thereon at the rate of nine per cent per annum from the date of expiry of the prescribed time, as arrears of land revenue, and pay the same to the person entitled thereto.
7. It is apparent that the Payment of Gratuity Act enacts a complete code containing detailed provisions covering all the essential features of a scheme for payment of gratuity. It creates the right to payment of gratuity, indicates when the right will accrue, and lays down the principles for quantification of the gratuity. It provides further for recovery of the amount, and contains an especial provision that compound interest at nine per Page 22 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined cent per annum will be payable on delayed payment. For the enforcement of its provisions, the Act provides for the appointment of a controlling authority, who is entrusted with the task of administering the Act. The fulfilment of the rights and obligations of the parties are made his responsibility, and he has been invested with an amplitude of power for the full discharge of that responsibility. Any error committed by him can be corrected in appeal by the appropriate Government or an appellate authority particularly constituted under the Act."
10. The moot question arising for consideration before this Court is whether, after the MWB report, while calculating gratuity under the Payment of Gratuity Act, 1972, and taking into account the definition of 'wages' under Section 2(s), the respondents are entitled to the inclusion of variable pay as part of basic wages/basic pay?
11. The definition of wages provided under section 1972 is required to be referred at this stage which is reproduced herein below:-
"2(s) "wages" ,means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance."Page 23 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025
NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined 11.1. The definition branches into two heading namely inclusive definition and exclusive definition. So far as the inclusive definition is concerned, it encompasses within its sweep all emoluments which an employee earns while on duty or on leave in accordance with the terms and conditions of his employment and would also include Dearness Allowance. However, the exclusive clause excludes the components of bonus, commission, HRA, over time wages and any other allowance which the employee may earn. The words "any other allowance"
used in the section is a contentious issue in the present petitions and this Court has to examine whether variable allowances are to be construed as a part of wages or not. If the words "any other allowances" is excluded from the definition clause and is read, it would read and include only those allowance as enumerated therein, which gets excluded and no other allowances. Likewise when the inclusive clause is applied and the definition of wages is examined, it would be all emoluments including Dearness Allowance.
12. The Appellate Authority has gone to the extent that Page 24 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined liberal interpretation has to be made, as the Act, 1972 is beneficial legislation and exclusion has to be read in context of bonus, commission, HRA, overtime allowance only. To examine that whether the same is permissible or not reference of the judgments of Apex Court are required to be made, which is reproduced herein below:-
12.1. The Apex Court in Southern Petrochemicals Industries Co.Ltd. v. Electricity Inspector and Etio and others (2007) 5 SCC 447, has held as under:
"...Omission of words in a particular statute may play an important role. The intention of the legislature must be, as is well known, gathered from the words used in the statute at the first instance and only when such a rule would give rise to anomalous situation, may the court take recourse to purposive construction. It is also a well-settled principle of law that casus omissus cannot be supplied. [See J.Srinivasa Rao v. Government of A.P. (2006) 12 SCC607]."
12.2. The Apex Court in Bhuwalka Steel Industries Ltd.
v. Bombay Iron and Steel Labour Board and another reported in (2010) 2 SCC 273, has held as under:
"We have already pointed out that the plain meaning of the language is almost a rule and it is only by way of an exception that the external aids of interpretation can be used. In Bhaiji vs. SDO this Court has reiterated that where the language of the Page 25 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined statute is clear and unambiguous, the external aids for interpretation should be avoided. In Cable Corporation of India Ltd. vs. Commissioner of Labour, this Court observed in para 16 that when the language is plain and unambiguous and admits of only one meaning, no question of construction of a statute arises, for the Act speaks for itself."
12.3. The Apex Court in Satheedevi v. Prasanna and another, reported in (2010) 5 SCC 622 has held as under:
"12. Before proceeding further, we may notice two well recognised rules of interpretation of statutes. The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself. If the words used are capable of one construction, only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act. The words used in the material provisions of the statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of giving effect to the policy or object of the Act can legitimately arise-Kanai Lal Sur v. Paramnidhi Sadhukhan AIR1957 SC 907.
13. The other important rule of interpretation is that the court cannot rewrite, recast or reframe the legislation because it has no power to do so. The court cannot add words to a statute or read words which are not there in it. Even if there is a defect or an omission in the statute, the court cannot correct the defect or supply the omission-Union of India vs. Deoki Nandan Aggrawal 1992 Supp (1) SCC 323 and Shyam Kishori Devi v. Patna Page 26 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined Municipal Corporation AIR 1966 SC 1678."
12.4. The Court in Vijaya Bank v. Shyamal Kumar Lodh reported in (2010) 7 SCC 635 has held as under:
"19....Every word used by the legislature carries meaning and therefore effort has to be made to give meaning to each and every word used by it. A construction brushing aside words in a statute is not a sound principle of construction. The court avoids a construction, if reasonably permissible on the language, which renders an expression or part of the statute devoid of any meaning or application.
20. The legislature never wastes its words or says anything in vain and a construction rejecting the words of a statute is not resorted to, excepting for compelling reasons...."
12.5. The Apex Court in Afcon Infrastructure Limited and another v. Cherian Varkey Construction Company Private Ltd. and others reported in (2010) 8 SCC 24, has held as under:
"The principles of statutory interpretation are well settled. Where the words of the statute are clear and unambiguous, the provision should be given its plain and normal meaning, without adding or rejecting any words. Departure from the literal rule, by making structural changes or substituting words in a clear statutory provision, under the guise of interpretation will pose a great risk as the changes may not be what the legislature intended or desired. Legislature wisdom cannot be replaced by the Judge's views. As observed by this Court in a somewhat different context:
"6....When a procedure is prescribed by the legislature, it is not Page 27 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined for the court to substitute a different one according to its notion of justice. When the legislature has spoken, the judges cannot afford to be wiser." (See Shri Mandir Sita Ramji vs. Lt. Governor of Delhi (1975) 4 SCC 298 p 301, para 6."
12.6. The Apex Court in Competition Commission of India v. Steel Authority of India Ltd. and another, reported in (2010) 10 SCC 744 has held as under:
"45. To us, the language of the section is clear and the statute does not demand that we should substitute "or" or read this word interchangeably for achieving the object of the Act. On the contrary, the objective of the Act is more than clear that the legislature intended to provide a very limited right to appeal. The orders which can be appealed against have been specifically stipulated by unambiguously excluding the provisions which the legislature did not intend to make appealable under the provisions of the Act. It is always expected of the court to apply plain rule of construction rather than trying to read the words into statute which have been specifically omitted by the legislature.
52. A statute is stated to be the edict of legislature. It expresses the will of legislature and the function of the court is to interpret the document according to the intent of those who made it. It is a settled rule of construction of statute that the provisions should be interpreted by applying plain rule of construction. The courts normally would not imply anything which is inconsistent with the words expressly used by the statute. In other words, the court would keep in mind that its function is jus dicere, not jus dare. The right of appeal being creation of the statute and being a statutory right does not invite unnecessarily liberal or strict construction. The best norm would be to give literal construction Page 28 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined keeping the legislative intent in mind."
12.7. The Apex Court in Shanker Raju v. Union of India reported in (2011) 2 SCC 132 has held as under:
"34....In a court of law or equity, what the legislature intended to be done or not to be done can only be legitimately ascertained from what it has chosen to enact either in express words or by reasonable and necessary implication. It is apt to remember to the words of Lord Salmon in IRC vs. Rossminster Ltd. It is stated (AC p.1017) "...However, much the courts may deprecate an Act they must apply it. It is not possible by torturing its language or by any other means to construe it so as to give it a meaning which Parliament clearly did not intend it to bear."
35. We may also add that where the legislature clearly declares its intent in the scheme of a language of statute, it is the duty of the court to give full effect to the same without scanning its wisdom or policy and without engrafting, adding or implying anything which is not congenial to or consistent with such express intent of the legislature. Hardship or inconvenience cannot alter the meaning employed by the legislature if such meaning is clear on the fact of the statute. If the statutory provisions do not go far enough to relieve the hardship of the Member, the remedy lies with the legislature and not in the hands of the court." 12.8. The Apex Court in B. Premchand and others v.
Mohan Koikal and others, reported in 2011 (3) SCALE 598 has held as under:
"15. In M/s. Hiralal Ratanlal v. STO, AIR 1973 SC 1034, this Court observed:Page 29 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025
NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined "In construing a statutory provision, the first and foremost rule of construction is literal construction. All that the Court has to see at the very outset is what does the provision say. If the provision is unambiguous and if from the provision the legislative intent is clear, the Court need not call the into aid the other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear." (emphasis supplied).
16. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule, vide Swedish Match AB vs. Securities and Exchange Board, India, AIR 2004 SC 4219. As held in Prakash Nath Khanna vs. C.I.T. 2004(9) SCC 686, the language employed in a statute is the determinative factor of the legislative intent. The legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency, vide Delhi Financial Corporation vs. Rajiv Anand 2004 (11) SCC 625. Where the legislative intent is clear from the language, the Court should give effect to it, vide Government of Andhra Pradesh vs. Road Rollers Owners Welfare Association 2004(6) SCC 210, and the Court Page 30 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined should not seek to amend the law in the garb of interpretation."
13. In the opinion of this Court, the interpretation cannot be made and the provision cannot be molded according to the need. If the intention of the legislation was to include any other components within the definition clause, it would have found a place in the enactments or any other words, the legislation would have also used the word "any other allowances" in the inclusive definition. Thus, "any other allowances" not been found in the inclusive definition and the one and only conclusion which can be drawn is that other allowances like bonus, commission, HRA, overtime wages and other allowances would get excluded from the purview of definition of wages.
13.1. This Court has also referred the decision rendered by the Apex Court in the case of Straw Board Manufacturing Company Limited versus Its Workmen reported in 1977 SC 941 wherein paragraph 26 and 28 is held as under:-
"26. Decisions have been brought to our notice some of which refer to basic wages and others to consolidated wages as the foundation for computation of gratuity. These are matters of discretion and the 'fee' of the circumstances Page 31 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined prevalent in the industry by the Tribunal and. unless it has gone haywire in the exercise of its discretion the award should stand. We see that in the Payment of Gratuity Act also, not basic wages but 'gross wages' inclusive of Dearness Allowance, have been taken as the basis. This Lincidentally, reflects the industrial sense in the country which has been crystallised into legislation.
(Emphasis supplied)
28. We clarify that wages will mean and include basic wages and Dearness Allowance and nothing else. This corresponds to Sec. 2(s) of the Act. Likewise, we declare that qualifying service is continuous service (counted with reference to completed years) as defined in Sec. 2(c). We hold that the award will operate as directed therein i.e. from the date of reference of the dispute. Both sides agree, in their statement of the case, that in clause (a) of the award the expression due to continued ill-health or on being incapacitated' governs only resignation although we feel on compassionate grounds it should govern both situations. The ambiguity must be resolved in favour of the workers. In regard to the other conflicts of construction possible, as set out in grounds 7 and 8 of the appellant's statement of case, we resolve them in favour of the workmen, abandonment of service being too recondite and the amount involved too trivial for variation by this Court."
13.2. Even if one would consider the definition of basic wages provided by the Board which is referred herein above, it also suggests that basic wages including the stagnation increment if any, but does not include any Page 32 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined other type of wages or pay like special pay, personal pay etc. The basic wages as well as the variable allowances both were defined separately by the Board in its report. If the intention of the board was to include variable pay in the basic wages, then the Board might have included variable pay alongwith the stagnation increment. However, as the variable pay is on the basis of the performance of the workers, the Board has not clarified with regard to the inclusion of the variable pay in the basic wages for the purpose of consideration of the gratuity 13.3. Reliance which was placed on the communication addressed by the Press Trust of India would also not come to the rescue of the present respondent as the said Press Trust of India is not a Judicial Authority and is only the news agency who opined according to their understanding and therefore, the said letter would not bind the petitioner in the event when the respondents are not entitled under the Act.
14. In that background, this Court is of the considered view that the variable allowance has been erroneously brought within the purview of the components Page 33 of 34 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025 NEUTRAL CITATION C/SCA/17409/2022 JUDGMENT DATED: 12/06/2025 undefined (basicWages) by the Authorities.
15. Resultantly, this Court passed following orders:-
(a) The writ petitions are allowed and the order dated 17.03.2021 passed in Gratuity Application being PG CaseNo.ALC/ADI/48(06)/2020,No.ALC/ADI/48(02)/202 0, No.ALC/ADI/48(43)/2019, No.ALC/ADI/48(3)/2020, No.ALC/ADI/48(48)/2019,No.ALC/ADI/48(18)/2019, No.ALC/ADI/48(53)/2019 and No.ALC/ADI/48(4)/2020, and order dated 31.05.2022 passed in Appeal Nos.AH/DY CLC/48(13)/2021, No.AH/DY CLC/48(12)/2021, No.AH/DY CLC/48(14)/2021, No.AH/DY CLC/48(09)/2021, No.AH/DY CLC/48(07)/2021, No.AH/DY CLC/48(08)/2021, No.AH/DY CLC/48(11)/2021 and No.AH/DY CLC/48(10)/2021 are hereby set aside.
(b) No order as to cost.
(c) Rule made absolute.
(M. K. THAKKER,J)
NIVYA A. NAIR
Page 34 of 34
Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Tue Jun 17 2025 Downloaded on : Tue Jun 17 22:25:42 IST 2025