Andhra HC (Pre-Telangana)
Narra Koteswara Rao vs Appellate Authority Under Payment Of ... on 29 September, 2000
Equivalent citations: 2001(1)ALD66, 2000(6)ALT320, [2002(94)FLR698], (2001)ILLJ685AP
ORDER
1.The petitioner invoked the jurisdiction of this Court under Article 226 of Constitution of India for issuance of a writ of certiorari for calling the records and quash the order dated 28-2-2000 made in PGA No.5 of 1999 on the file of the first respondent by declaring as illegal arbitrary and contrary to the provisions of the Payment of Gratuity Act, 1972.
2. The petitioner who worked as Manager (Administration) of the third respondent company moved the second respondent for payment of gratuity under Section 4 of the Payment of Gratuity Act (for short PG Act, 1972) by filing an application under Section 7(4) of the PG Act, 1972 read with Rule 10(1) of A.P. Payment of Gratuity Rules. The second respondent by his order dated 5-9-1999 dismissed the application holding that he had no jurisdiction to entertain the application as the third respondent establishment is having offices in several States and advising the petitioner to file a claim petition before the Assistant Commissioner of Labour (Central). Aggrieved by the same, the petitioner preferred an appeal before the first respondent in PGA No.5 of 1999. The first respondent by the impugned order dismissed the appeal holding that the third respondent is having offices at Bombay, Chennai and Delhi and as such the appropriate Government for the establishment is the Central Government but not the State Government. Aggrieved by the same, the petitioner filed by the present writ petition contending that the appropriate authority to deal with the application filed by the petitioner is the State Government as the third respondent at Vijayawada is registered as Factory and the same will fall only under Section 2(a)(ii) "in any other case the State Government and as such the authority under PG Act, 1972 as well as the appellate authority erred in dismissing the application stating that it is only an establishment, therefore, the petitioner has to move the Assistant Commissioner of Labour (Central).
3. The respondent filed a counter admitting the fact of the petitioner worked in third respondent establishment. The third respondent further stated that the petitioner has forged his date of birth and continued in service for 5 years from 16-12-1992 to 16-12-1997 after the age of superannuation and illegally received a sum of Rs.4,58,367/- towards salary from 16-12-1992 to 16-12-1997 in excess of what is payable to him, in respect of which a criminal Case No. 523 of 1999 was filed by the State against the petitioner in the Court of IV Metropolitan Magistrate, Vijayawada for offences punishable under Sections 408, 420, 468 and 471 IPC and the same is pending for trial. He further stated that both the authorities came to the conclusion that the third respondent has got establishments in Bombay, Chennai and Delhi and this Court cannot reappreciate the evidence, as second respondent has rightly held that he had no jurisdiction to entertain the claim of the petitioner for payment of gratuity and it is only the controlling authority appointed by the Central Government that has got the jurisdiction to entertain the same in view of Section 2(a)(i)(b).
4. Sri G.V.R. Chowdhary, learned Counsel for the petitioner contended that the third respondent who is admittedly undertaking printing and magazines are published, the petitioner who worked as Manager in third respondent establishment retired as such, is entitled to gratuity under PG Act, 1972. He laid emphasis on the word 'establishment' which falls under Section 2(1)(ii) viz., in any other case the State Government and as such, respondent No.2 appointed by the State Government is alone entitled to deal with the application filed by the employees for payment of gratuity. He also contended that the second respondent erred in dismissing the application filed for payment of gratuity. The appellate authority also has not properly appreciated the facts and upheld the same. In support of his contention he placed reliance on the following judgments:
1. Neyvelilignite Corporation Ltd v. Satagopan, 1979 (2) LLJ 163.
2. Jeevanlal Ltd. v. Controlling Authority, Payment of Gratuity Act, 1982 (1) LLJ 86.
3. Jeewanlal (1929) Ltd v. Appellate Authority Under Payment of Gratuity Act, .
5. He further contended that the case would fall under Section 2(a) (ii), therefore, the second respondent had jurisdiction to entertain the case and decide the matter.
6. On the other hand, Sri M Chandra Sekhara Rao, the learned Counsel appearing for the respondent No.3 contended that it is not the case of the petitioner that he worked in a factory but his grievance before the authority was that the third respondent is not having any establishment in other States. The petitioner worked in the Administrative Office of the third respondent which is registered as an establishment under the Shop and Establishment Act, 1988 and comes within the definition of Section 2(a)(i) of the P.G. Act, 1972 and the third respondent establishment is having branches at Bombay, Madras, Delhi and Bangalore and the second respondent authority basing upon the evidence produced by the third respondent correctly held that he had no jurisdiction to entertain the petitioner's application and dismissed the same which was also upheld by the first respondent appellate authority and there is no error of jurisdiction committed by the authorities which warrants interference by this Court. He also contended that the judgment cited by the learned Counsel for the petitioner are not helpful to the case of the petitioner and requests the Court to dismiss the writ petition.
7. In view of the rival contentions of the parties, it is necessary to refer some of the provisions of the PG Act, 1972.
Sub-section (3) of Section 1 reads as follows:
(3) It shall apply to--
(a) every factory, mine, oilfiled, plantation, port and railway company;
(b) every shop or establishments within the meaning of any law of the time being in force in relation to shops and establishment in a State in, which ten to more persons are employed, or were employed on any day of the preceding twelve months;
(c) such other establishments or class of establishment in which ten or more employees are employed, or were employed, on any day of the preceeding twelve months, as the Central Government may, by notification, specify in this behalf.
Sub-sections (a) and (b) of Section 2 read as follows:
(i) in relation to an establishment,--(a) "appropriate Government means :
(a) belonging to, or under the control of, the Central Government,
(b) having branches in more than one State,
(c) of factory belonging to, or under the control of the Central Government,
(d) of a major port, mine, oilfield or railway company the Central Government.
(ii) in any other case, the State Government. Section 2 (g) reads as follows:
"Factory" has the meaning assigned to it in clause (m) of Section 2 of the Factories Act, 1948."
Section 2(m) of the Factories Act reads as follows:
"factory" means any premises including the precincts thereof--
(i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
(ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on, -- but does not include a mine subject to the operation of the Mines Act, 1952, or a railway running shed.
Section (10) and 2(5) of the A.P. Shops and Establishments Act, 1988 read as follows:
"establishment' means a shop, restaurant, eating-house, residential hotel, lodging house, theatre or any place of public amusement or entertainment and includes a commercial establishment and other establishment as the Government may, by notification, declare to be an establishment for the purpose of the Act.
"Commercial establishment" means an establishment which carries on any trade, business, profession or any work in connection with or incidental or ancillary to any such trade, business, or profession or which is a clerical department of a factory or an industrial undertaking or which is a commercial or trading or banking or insurance establishment and includes an establishment under the management and control of a co-operative society, an establishment of a factory or an industrial undertaking which falls outside the scope of the Factories Act, 1948, and such other establishment as the Government may, by notification, declare to be a commercial establishment for the purposes of this Act but does not include a shop".
8. It is not in dispute that the Payment of Gratuity Act shall apply to every factory, mine, oil field, plantation, port and railway company and every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State. To attract the Payment of Gratuity Act, either it should be a factory or an establishment. If it is an establishment, the appropriate Government as defined under Section 2(i)(a) is the Central Government where the establishment is having branches in more than one State and, if it is a factory belonging to or under the control of the Central Government, again the appropriate authority is the Central Government but under Section 2(a)(ii), it is the authority appointed by the State Government which is competent to decide the dispute if it falls in any other case. If the third respondent establishment comes under the Factories Act, 1948, there is no dispute that it will fall only under Section 2(a)(ii). The "factory" as defined under the Factories Act, 1948 has already been extracted above, Clause (m) of Section 2 of Factories Act defines a factory as meaning "any premises including the precincts thereof and it does not define it as meaning "any one premises including the precincts thereof. Under this definition, therefore, it is not required that the industrial establishment must be situate in any one of the premises only. Section 2(m) says that the premises must be such as in any part thereof a manufacturing process is being carried on. The expression 'manufacturing process' is defined in clause (k) of Section 2 of the Factories Act which reads as follows:
'manufacturing process' means any process for--
(i) making, altering, repairing, ornamenting, finishing, packing oiling washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or
(ii) x x x x
(iii)x x x x
(iv) composing types for printing, printing by a letter press, lithography, photogravure or other similar process or book binding
(v) x x x x.
Thus the different processes set out in sub-clauses (i) and (iv) of clause (k) of Section 2 must be with a view to include the premises where the same was used for the above purpose is a factory within the meaning of Factories Act. It is also brought on record and it is averred by the petitioner before the appellate authority that the third respondent is having its factories and offices in Vijayawada and in some other places in Andhra Pradesh from where their daily magazines are published and dispatched to other places for distribution. The opposite party has no other branch in any other State except in Andhra Pradesh. The third respondent in its counter only stated that it is only an establishment having branches in other States and if falls under sub-clause (i)(b) of clause 2(a), therefore, the appropriate Government would be the Central Government.
9. The contention of the learned Counsel for the third respondent that the establishment where the petitioner worked was registered as only a commercial establishment under the A.P. Shops and Establishment Act and it has a separate entity cannot be accepted for the reason that merely because registration is required to be obtained under a particular statute, namely, A.P. Shops and Establishments Act it does not make the business or undertaking so registered a separate legal entity except where a registration of incorporation is obtained under the Companies Act. The Factories Act and the A.P. Shops and Establishments Act are regulatory statutes and the registration under both the Acts is compulsory for providing certain benefits to the workmen employed in the factory or "establishment" as the case may be. From the definitions of "establishment" and "commercial establishment" referred to above, it is noticed that it should be an establishment or a factory or an industrial concern which falls outside the scope of the Factories Act, 1948. Unless the third respondent is able to establish that the said establishment of the factory falls outside the scope of Factories Act, 1948, it cannot be treated as an establishment. Thus noticing word "factory" does not occur in the definition of establishment while the establishment of a factory falls outside the scope of Factories Act, 1948 is a commercial establishment. In other words if an establishment is part of a factory as per the inclusive definition of a "factory" it cannot be a commercial establishment. The activities that may be carried on in an administrative office may also include marketing and sales operations of printing material published by the third respondent and supply of raw material required for the said purpose. A factory cannot produce or process goods unless raw material required for that purpose is purchased. Equally there cannot be a factory manufacturing or processing, printing and publishing unless the goods so manufactured or processed marketed and sold through administrative office, the one without the other ins practically impossible. Similarly no factory (printing press) can run unless salaries and other employment benefits are paid to the workmen nor can a factory function without the necessary accounting and statistical data being prepared. These are integral parts of the manufacturing activities of a factory.
The Supreme Court in Andhra University v. RPF Commissioner of A.P., uphled the view taken by the Division Bench of this Court that the Departments of publication and Press are 'factories'.
10. In the case of Neyveli lignite Corporation Ltd., (supra) the question that falls for consideration before the Madras High Court was whether the appropriate authority to deal with the application filed by an employee of the Neyveli Lignite Corporation Ltd., was the authority appointed by the Central Government or the State Government, did not directly arise for consideration. It was only contended that the employee who was working in the Material Control Office was a person engaged in works incidentally or connected with factories and mines of the corporation. While considering the same, the Supreme Court held as follows:
"On consideration of the matter, I think there is force in the argument of Mr. Gopalaratnam that there can only be a factory, mine, oilfeld, plantation, etc., and there cannot be an establishment of a factory, major port, mine, oilfiled etc., In Section 1(3) as well as Section 2(e) and (f) the word "establishment" has been used disjunctively in juxtaposition of the words "factory, mine, oilfield, plantation, etc." Merely because the preamble contains the words "or other establishments" and Section 2(a) being prefixed to the words "of a factory" occurring in sub-clause(c) and "of a major port, mine oilfield, or railway company" occurring in sub-clause (d), it is not possible to hold that the Legislature intended to enlarge the meaning of the words "factory, major port, mine, oilfied, etc., by tacking on the words "establishment" to them......."
(Para 10)
11. Neyveli Lignite Corporation Ltd (supra) was again falls for consideration in Jeevan lal's case (supra). The Division Bench of the Madras High Court accepting the ratio in Neyveli Lignite Corporation Limited (supra) held as follows:
"Having considered the judgment of Bopanna, J., and the judgment of one of us referred to be, we are of the opinion that the view taken in Neyveli Lignite Corporation Ltd v. J. Satagopan, (1979-IILTJ 163) is more acceptable. It is, no doubt, true a debate similar to the one now raised viz., whether the appropriate authority to deal with the application filed by an employee of the Neyveli Lignite Corporation was the authority appointed by the Central Government Or the State Government, did not directly arise for consideration in that case. Even so, it must be pointed out that the meaning to given to the word "establishment" occurring in Section 2(a) had been fully considered for rendering judgment in that case. Hence, accepting the ratio in that judgment, we cannot sustain the argument of Mr. Govind Swaminathan that the petitioner's factories in various States must be deemed as branches of an establishment of the petitioner with its head office in Calcutta, and, as such, the appropriate Government, would be only the Central Government and consequently, respondents 2 and 3 appointed by the State Government did not have jurisdiction to deal with the applications filed by the employees. On the other hand, the petitioner's factories in Madras will fall only under Section 2(a)(ii); viz., "in any other case" the State Government and as such, respondents 2 and 3 appointed by the State Government were alone entitled to deal with the applications filed by the employees of the petitioner for payment of gratuity. Hence, we are unable to accept the contention of the petitioner that appropriate Government for the petitioner's factories at Madras is not the State Government, but only the Central Government, and as such, the impugned orders passed by the respondents 2 and 3 are without jurisdiction ......." (Para 11)
12. While considering the above two judgments by the Apex Court in Jeewanlal (1929) Ltd. v. Appellate Authority U/POG Act (supra) held as follows:
".............But the Central Government is the appropriate Government only in relation to an establishment having branches in more than one State. There is no like provision made in relation to such an establishment having factories in different States. We feel that the point relating to the jurisdiction of the Controlling Authority under Section 3 of the Act does not really arise. It appears that Messrs. Jeewanlal (1929) Ltd., have their registered and head office at Calcutta and branches office and factories at Calcutta, Bombay and Madras and sales offices at Delhi, Hyderabad and Cochin. It has also two factories in Madras viz., Shree Ganeshar Aluminium Works and Messrs. Mysore Premier Metal Factory. It employs about 300 members of clerical staff at the head office and its branch office throughout the country as well as in its two factories and employs about 1300 workmen in its factories at Calcutta, Bombay and Madras. We are inclined to the view that the Controlling Authority had jurisdiction to entertain the claim of an employee working in an office attached to a factory as such an office would be an adjunct of the factory but that is not the question before us.........."
(Para 15) But in the case on hand, the second respondent dismissed the petition filed by the petitioner on the preliminary objection of jurisdiction. As no evidence was let in by either parties that the Administrative office where the petitioner had worked controls the factory or all activities of the factory are routed through the administrative office. If once it is established that the entire activities being carried on by the third respondent at its factory are controlled and distributed through the Administrative Office, it definitely falls under the definition of 'factory'. In view of the same, once the third respondent establishment is also a factory within the definition of Section 2(m) of the Factories Act, Payment of Gratuity Act is applicable. May be the Administrative Office has been registered as an establishment under A.P. Shops and Establishments Act as a regulatory measure that will not take away it from the definition of a 'factory'. Once it is a factory for the purpose of the Factories Act and also an establishment under the Shops and Establishment Act, the same falls under Section 2(a)(ii). Under clause (i) of Section 2(a) where the establishment is having branches in more than one State, the appropriate Government is the Central Government. If it falls under the definition of factory and also registered as an establishment, Section 2(a)(ii) is attracted and the authority appointed by the State Government certainly has the jurisdiction to go into the dispute. In view of the same, the first and second respondent erred in coming to the conclusion that the authorities appointed by the State Government have no jurisdiction to decide the dispute. In that view of the matter, the order passed by the appellate authority confirming the dismissal order passed by the second respondent cannot be sustainable and the same is accordingly quashed and the matter is remitted back to the second respondent to entertain the application filed by the petitioner and dispose of the same in accordance with law.
The writ petition is accordingly allowed. No costs.