Uttarakhand High Court
Shri Ramesh Wangnoo vs General Manager (Finance) & Trustee ... on 24 July, 2025
2025:UHC:6524
Reserved on:03.07.2025
Pronounced on:24.07.2025
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
Writ Petition (M/S) No.1153 of 2018
Shri Ramesh Wangnoo ......Petitioner
Vs.
General Manager (finance) & Trustee Denso India Limited Employees
Group Gratuity Fund Scheme C/O Denso India Private Limited, Noida-
Dadri Road, P.O. Tilpatta - 203207 (Gautam Budh Nagar), U.P. & Others
.....Respondents
Presence:
Mr. Ramesh Wangroo, Petitioner in-person.
Mr. D.S. Patni, learned Senior Advocate assisted by Mr. Piyush Garg and
Ms. Sakshi Malhotra, learned counsels for the Respondent No.1.
Hon'ble Ashish Naithani, J.
1. The present writ petition under Article 227 of the Constitution of India has
been filed by the Petitioner challenging the judgment dated 26.10.2017
passed by the Deputy Chief Labour Commissioner (Central), Dehradun,
whereby the order dated 12.03.2017 passed by the Assistant Labour
Commissioner (Central), Dehradun in Case No. D-36(13)/2015-ALC has
been set aside.
2. In the present case, the petitioner had retired from Denso India Limited
and, upon calculating his gratuity, found that certain components of his
salary, specifically Flexi Pay and Grade Pay (also referred to as
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Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India
Limited Employees Group Gratuity Fund Scheme & Others
Ashish Naithani J.
2025:UHC:6524
performance-linked pay), were not included in the calculation of his
gratuity. Aggrieved, he approached the Controlling Authority under the
Payment of Gratuity Act, 1972, which initially ruled in his favour by
including these components as part of "wages."
3. However, on appeal by Denso India Limited, the Appellate Authority set
aside the said order, holding that:
4. The Assistant Labour Commissioner lacked jurisdiction as Controlling
Authority since the appropriate Government was the State Government,
not the Central Government, given the establishment's classification as a
factory under the Factories Act, 1948.
5. The performance incentive, Flexi Pay, and Grade Pay do not constitute
"wages" under Section 2(s) of the Payment of Gratuity Act, 1972 and
therefore should not be considered for gratuity calculation.
6. Learned Counsel for the Petitioner assailed the impugned order dated
26.10.2017 passed by the Deputy Chief Labour Commissioner (Central),
Dehradun primarily on two grounds--jurisdictional error and erroneous
appreciation of the legal definition of 'wages' under the Payment of
Gratuity Act, 1972.
7. At the outset, it was submitted that the Appellate Authority committed a
jurisdictional error in holding that the Assistant Labour Commissioner
(Central), Dehradun lacked competence to adjudicate the gratuity claim.
The Petitioner relied upon official correspondence issued by the Ministry
of Labour and Employment, Government of Indiaspecifically letters dated
16.05.2016 and 23.06.2016whereby the Assistant Labour Commissioner
(Central), Dehradun was expressly designated as the competent
Controlling Authority under the Payment of Gratuity Act in respect of the
Petitioner's claim. The Petitioner argued that having initially exercised
jurisdiction and directed the matter to be taken up, the Appellate Authority
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Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India
Limited Employees Group Gratuity Fund Scheme & Others
Ashish Naithani J.
2025:UHC:6524
could not later reverse course and hold that the Central Government had
no jurisdiction in the matter.
8. On the merits, it was contended that the components termed 'Flexi Pay'
and 'Grade Pay' were regular, predetermined, and performance-linked
components of the Petitioner's monthly remuneration. These were neither
ad hoc incentives nor discretionary bonuses but were fixed as part of the
salary structure and booked accordingly under the head of "Salary and
Wages" in the Company's financial records. It was further contended that
the Respondent Company itself had acknowledged this structure in its
internal communications and salary statements.
9. It was submitted that the LIC Gratuity Trust Rules, entered into by the
Respondent Company for the management of gratuity payments, explicitly
stipulated that gratuity was to be calculated on the basis of gross monthly
salary/wages. The said Trust Deed excluded only "allowances and
bonuses" but made no mention of excluding "performance-linked pay" or
"flexi pay," which were consistently shown as part of the employee's gross
earnings.
10. Learned Counsel argued that the Deputy Chief Labour Commissioner
fell into error by treating Flexi Pay and Grade Pay as excluded
components based solely on their nomenclature, without considering the
nature, consistency, and purpose of such payments. It was pointed out that
the exclusion clause under Section 2(s) of the Act does not apply to fixed
and recurring components of salary, even if performance-linked, provided
they are not discretionary or variable in nature.
11. Lastly, it was urged that the order dated 12.03.2017 passed by the
Assistant Labour Commissioner (Central), Dehradun was reasoned,
lawful, and based on proper appreciation of facts and applicable law. The
subsequent interference by the Appellate Authority was unwarranted and
arbitrary, and therefore, liable to be set aside by this Hon'ble Court.
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Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India
Limited Employees Group Gratuity Fund Scheme & Others
Ashish Naithani J.
2025:UHC:6524
12. Learned Counsel for the Respondents defended the order dated
26.10.2017 passed by the Deputy Chief Labour Commissioner (Central),
Dehradun and contended that the appellate authority had rightly set aside
the award passed by the Assistant Labour Commissioner (Central),
Dehradun on both jurisdictional and substantive legal grounds.
13. At the threshold, it was argued that the Assistant Labour Commissioner
(Central), Dehradun had no jurisdiction to entertain the gratuity claim filed
by the Petitioner, as the Respondent Company is a factory governed by the
Factories Act, 1948. It was submitted that under Section 2(a)(ii) read with
Section 1 of the Payment of Gratuity Act, 1972, the appropriate
Government in such cases is the State Government and not the Central
Government.
14. It was further submitted that the claim made by the Petitioner for
inclusion of Flexi Pay and Grade Pay within the ambit of 'wages' was
legally untenable and factually misconceived.
15. It was contended that:
(a) Flexi Pay was a performance-based variable component introduced
in 2001 by the Respondent Company to incentivize high-performing
employees. It was neither universal nor guaranteed and was subject
to annual revision based on individual appraisal outcomes.
(b) Grade Pay was introduced as a level-based benefit granted on
the basis of managerial categorization (M1 to M12) and was akin to
an allowance rather than a fixed salary component.
(c) Both components were dependent upon the employee's
performance evaluation and not payable across-the-board to all
employees, and hence failed the test of universality and regularity.
16. The Respondents emphasized that the nature and purpose of the Flexi
and Grade components were evident from the internal office
communications, salary structure letters, and appraisal-based revisions
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Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India
Limited Employees Group Gratuity Fund Scheme & Others
Ashish Naithani J.
2025:UHC:6524
spanning several years. Specifically, letters dated 25.04.2002, 25.09.2003,
21.04.2007, 05.04.2008, and 21.06.2010 were cited to demonstrate that
these components were contingent, fluctuating, and not standard
remuneration.
17. It was further contended that Section 2(s) of the Payment of Gratuity
Act expressly excludes bonus, commission, and "any other allowance"
from the definition of 'wages.' Since Flexi and Grade Pay were designed
as incentives and performance allowances, they clearly fell outside the
scope of 'wages' as contemplated under the Act.
18. It was argued that the LIC Gratuity Trust Agreement explicitly
excluded "allowances and bonuses" from the scope of gross salary for
gratuity computation. Though the Petitioner relied on the term "gross
monthly salary," learned Counsel clarified that the structure under the LIC
Trust did not intend to include performance-based or non-fixed heads like
Flexi or Grade Pay.
19. Additionally, it was pointed out that the Petitioner had himself declared
a lower basic salary in the gratuity claim form filed at the time of
retirement, and only later sought to dispute the computation by raising the
present claim. This, according to the Respondents, amounted to an
afterthought and undermined the credibility of his claim.
20. In conclusion, learned Counsel for the Respondents urged that the
impugned order dated 26.10.2017 was based on a correct and reasoned
interpretation of law and factual circumstances. Hence, the petition
deserved to be dismissed.
21. Heard learned counsel for the Parties and perused the records.
22. The impugned appellate order proceeds on two distinct and well-
articulated grounds: first, that the Assistant Labour Commissioner
(Central) lacked jurisdiction to entertain the gratuity claim as the
Respondent establishment fell under the administrative domain of the
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Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India
Limited Employees Group Gratuity Fund Scheme & Others
Ashish Naithani J.
2025:UHC:6524
State Government; and second, that the disputed components did not
satisfy the statutory test of "wages" under Section 2(s) of the Payment of
Gratuity Act, 1972.
23. On the issue of jurisdiction, it is trite that the classification of the
"appropriate Government" under labour welfare legislations is to be
determined in accordance with the express provisions of the statute.
Section 2(a) of the Payment of Gratuity Act, read with Section 3 of the
Act, delineates that in the case of factories governed by the Factories Act,
1948, the State Government is the appropriate Government unless the
establishment is under the control of the Central Government or operates
in sectors specified under the Act.
24. In the present case, the Respondent Company is admittedly a factory
registered under the Factories Act and does not fall within the exceptions
carved out for Central Government establishments. The Appellate
Authority rightly held that the Central Government, through the Assistant
Labour Commissioner (Central), was not competent to adjudicate the
matter. The reliance placed by the Petitioner on internal departmental
communications or prior administrative endorsements cannot override the
statutory scheme. Administrative instructions cannot confer jurisdiction
where the statute does not.
25. As regards the merits, the primary contention of the Petitioner is that
'Flexi Pay' and 'Grade Pay' formed part of his regular monthly
emoluments and were thus liable to be included within the definition of
"wages" for computing gratuity. However, a careful perusal of the
documents placed on record, including internal office communications,
appraisal-linked revision letters, and salary slips, reveals that these
components were variable in nature, subject to annual performance
assessments, and not uniformly applicable across the workforce.
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Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India
Limited Employees Group Gratuity Fund Scheme & Others
Ashish Naithani J.
2025:UHC:6524
26. It is now well-settled that for any payment to qualify as "wages" under
Section 2(s) of the Act, it must possess the attributes of regularity,
universality, and certainty. Payments which are contingent upon individual
performance outcomes, managerial grade, or are disbursed at the
discretion of the employer, do not fall within the ambit of "wages." The
Hon'ble Supreme Court in TI Cycles of India v. M.K. Gurumani, AIR 2001
SC 3465, held that incentive payments which are variable and conditional
in nature, even if paid regularly, do not amount to wages for gratuity
purposes.
27. The Petitioner has not placed any convincing material to demonstrate
that 'Flexi Pay' or 'Grade Pay' were uniformly applicable, non-
discretionary, or fixed in quantum. On the contrary, the Respondents have
brought on record sufficient evidence to show that these heads were linked
to variable parameters such as managerial categorization (M1 to M12) and
individual appraisal results. The submission that these were booked under
"Salary and Wages" in the accounts is not conclusive of their character
under the Act.
28. The invocation of the LIC Gratuity Trust Deed by the Petitioner is
equally misplaced. While the Trust may use the term "gross salary," its
operative clauses explicitly exclude "allowances" and "bonuses." It is
evident from the scheme and administration of the Trust that performance-
linked incentives such as Flexi Pay and Grade Pay, which were not fixed
remuneration, were not intended to be reckoned for gratuity purposes.
29. Additionally, the Court cannot be unmindful of the fact that the
Petitioner himself submitted a gratuity claim form at the time of retirement
wherein he disclosed a lower basic salary and did not raise any objection
regarding the calculation. The present challenge, made much later, appears
to be an afterthought and is not backed by any cogent explanation for the
delay or omission.
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Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India
Limited Employees Group Gratuity Fund Scheme & Others
Ashish Naithani J.
2025:UHC:6524
30. It is a settled proposition that supervisory jurisdiction under Article 227
is not to be exercised as a matter of appellate review. This Court does not
sit in judgment over the sufficiency of evidence or substitute its own view
unless the findings are perverse or without jurisdiction. The order passed
by the Appellate Authority is neither perverse nor without jurisdiction. It
records cogent reasons, engages with the legal definitions and evidentiary
materials, and reflects a reasoned application of mind.
ORDER
In view of the above discussion, this Court finds no illegality, procedural irregularity, or jurisdictional infirmity in the order dated 26.10.2017. The writ petition lacks merit and is liable to be dismissed.
The writ petition stands dismissed.
There shall be no order as to costs.
(Ashish Naithani J.) Dated:24.07.2025 NR/ 8 Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India Limited Employees Group Gratuity Fund Scheme & Others Ashish Naithani J.