Gujarat High Court
Chetan Biharilal Jani vs Gcs Medical College Hospital And ... on 11 February, 2025
NEUTRAL CITATION
C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 14505 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MRS. JUSTICE M. K. THAKKER
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Approved for Reporting Yes No
YES
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CHETAN BIHARILAL JANI
Versus
GCS MEDICAL COLLEGE HOSPITAL AND RESEARCH CENTRE
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Appearance:
MR DG SHUKLA(1998) for the Petitioner(s) No. 1
MR HARSHEEL D SHUKLA(6158) for the Petitioner(s) No. 1
NANAVATI & NANAVATI(1933) for the Respondent(s) No. 1
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HONOURABLE MRS. JUSTICE M. K. THAKKER
CORAM:
Date : 11/02/2025
ORAL JUDGMENT
1. Rule, returnable forthwith. Learning advocates for the respective parties waive service of notice of Rule. With the consent of all parties matter was heard finally.
2. Question arises for consideration before this court in the present petition is whether special allowances can be included while considering the amount of gratuity for the petitioner employee?
3. Facts need for answer to the above question is as under:
3.1. Petitioner, herein, was working with the respondent-
Institute as a Professor of Forensic Medicine from 02.02.2011 with a consolidated salary of ₹1,00,000/- per month as per Rules of the respondent Institute. On satisfactory completion of one year probation period, Page 1 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined respondent institute issued the office order dated 02.02.2012 confirming the service of the petitioner. The petitioner was granted an annual increment as well as a revision of the pay scale from time to time, and lastly, he was paid monthly salary of ₹4,10,562/- by the respondent Institute there. The petitioner gave voluntary resignation from the services of respondent Institute as a Professor and Head of Department of Forensic Medicine & Toxicology. On 12.06.2021, it was informed by the respondent institute that his resignation had been accepted and the petitioner would be relieved with effect from 12.06.2021 after working hours. A certificate was also issued on 12.06.2021 regarding completion of more than 10 years of service by the respondent-Institute. The petitioner made applications for receiving the amount of gratuity from the respondent institute. However, same was not paid. Therefore, an application was filed under the Payment of Gratuity Act, 1972, along with Form-I on 30.03.2022; however, no payment of the gratuity amount was made. Consequently, the petitioner submitted Form-N on 18.04.2022 to the learned controlling authority, claiming the amount of gratuity of ₹20,00,000/- along with 10% interest. The application was numbered as Gratuity Application No.390 of 2022. The respondent submitted its written statement before the learned controlling authority on 14.07.2022.
3.2. Thereafter, learned advocate for the petitioner employee submitted a list of documents on 28.07.2022, particularly the appointment order, office order of confirmation in Page 2 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined services, office order accepting his resignation and relieving him from the services, certificate and pays slips issued by the respondent institute. The Petitioner has also submitted his deposition on affidavit on 28.07.2022 and additional affidavit on 30.08.2022 before the learned controlling authority.
3.3. The respondent institute also submitted the deposition on affidavit of Mr.Ajit Poonamchand Shah, Assistant Officer, H.R. Administration, dated 14.11.2022, before the learned controlling authority, and he was cross examined by the learned advocate for the petitioner. Learned controlling authority allowed the application filed by the present petitioner by directing the respondent institute to pay ₹18,67,850/- as gratuity with 10%, simple interest with effect from 20.04.2022 untill the payment is released, by considering the last drawn salary of ₹ 3,23,750/- per month.
3.4. Being aggrieved and dissatisfied with order passed by learned controlling Authority, the respondent institute preferred an appeal before the learned appellate Authority under the Payment Of Gratuity Act, 1972, which was numbered as appeal No.140 of 2023. The petitioner submitted his reply on 11.12.2023 before the appellate authority. The learned appellate authority after hearing the parties, partly allowed the appeal filed by the respondent vide order dated 03.07.2024, reducing the amount of gratuity payable to the petitioner from Rs.18,67,850/- to Rs.11,84,250/- with simple interest of 10% from the date of application until the payment is released. The petitioner Page 3 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined contended that he is entitled of 10% interest with effect from 13.06.2021 i.e. date of retirement and also entitled for the amount towards special allowance, in addition to the basic wages which was denied by the learned authority, therefore, present petition is filed.
4. Heard the learning advocates Mr.D.G.Shukla for the petitioner along with Mr.Harshil Shukla, learned advocate and Mr Sudhir Nanavati, Senior Counsel along with Mr.Vandhan Bakshi, advocates for respondent.
5. At the outset, learned senior counsel, Mr.Sudhir Nanavati submitted that so far as interest part, i.e. entitlement from the date of retirement, is concerned, he is not disputing, and therefore, if the court would allow the petition granting the interest at the rate of 10% from the date of retirement i.e. on 13.06.2021, then he would not have any objection.
6. In view of above fair statement, only question remains for consideration is whether special allowance and professional allowance can be granted at the time of granting the gratuity under the Payment of Gratuity Act, 1972.
7. Learned advocate Mr.Shukla submitted that learned appellate authority has committed an error by excluding the amount of special allows of ₹1,11,469/- and the amount of professional tax of ₹7000 which computing of gratuity amount. It was submitted by the learned advocate Mr.Shukla that the same is considered for calculation of monetary benefit to an employee. Learned advocate Page 4 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined Mr.Shukla for the petitioner relied on the decision rendered by this Court in the case of R.M. Engineering Works v/s.
Kushalbhai Manilal Chavda rendered in Letters Patent Appeal No.529 of 2012 and submitted that the Division Bench of this Court has considered the travelling allowance while calculating the gratuity and therefore, learned appellate Court has committed an error in not granting the special allowance while calculating the gratuity amount. Learned advocate Mr.Shukla has also relied on the decision rendered by the Apex Court in the case of Regional Provident Fund Commissioner (II) West Bengal vs. Vivekanand Vidyamandir & Ors., reported in 2020 (17) SCC 643 and submitted that Apex Court has also granted the special allowance while calculating the Provident fund under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952.
8. Learned Advocate Mr. Shukla has submitted that the Controlling Authority committed a grave error in deducting the aforesaid amount while calculating the gratuity, and therefore, the petition is required to be allowed, and the order passed by the learned Controlling Authority is required to be upheld.
9. Per contra, learned senior counsel, Mr. Sudhir Nanavati, has submitted that the definition of wages provided under section 2(S) of the Payment of Gratuity Act referred only dearness allowances and specially excluded any amount of bonus, commission, HRA, overtime wages, and any other allowance. Learned senior counsel, harping on the word Page 5 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined "any other allowance," submitted that when the statute itself has excluded any other allowance, which is special allowance also, then that amount cannot be included while calculating the gratuity. Learned senior counsel Mr. Nanavati has relied on the proposed structure for GCS Medical College, Hospital, and Research Centre employees 2017-18 and submitted the structure of special allowance, including all other allowances such as academic allowance, children allowance, education allowance, transport allowance, etc. and if special allowance would be calculated for the purpose of gratuity, then this allowance would also be included, which is not permitted by the statue.
10.Learned senior counsel Mr.Nanavati submits that reliance, which was placed by the learned advocate for the petitioner on the decision rendered by the court with respect to the travel allowance, which was paid for reaching to place of work and to remain on duty. Learned senior counsel Mr.Nanavati further submitted that decision of the Apex Court in the case of Regional Provident Fund Commissioner (Supra) would also not applicable, as same was rendered under the Employees Provident Fund And Miscellaneous Provisions Act, 1952, where the definition of wage is defined under Section 2(rr) under the I.D.Act. Learned senior counsel Mr.Nanavati has relied on the decision rendered by this Court in the case of Arvind Dahyabhai Suthar rendered in Special Civil Application No.14240 of 2024 and submitted that this court has held that while calculating the amount of gratuity, the basic Page 6 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined wages and dearness allowance are only factors to be considered and therefore, also learned appellate authority has not committed any error in denying the amount of special allowance and professional allowance while calculating the gratuity amount.
11.Heard the learned advocates for the respective parties, and also considered the decisions relied by them to decide the issue in question that what was the purpose for granting the special allowance and which allowance has been included in the proposed salary structure, which was placed on record by the learned advocate for the respondent, is required to be referred, which is reproduce here in below.
PROPOSED SALARY STRUCTURE FOR GCH MCH & RC EMPLOYEES - 2017-18 PARTICULARS Salary (PER MONTH) Remarks Rs. Rs. Rs. Rs. Rs. Rs.
Basic salary 5000 10000 25,000 37500 50000 75000 50% of gross salary, (if less than 5000 then minimum 5000) House Rent 1000 4000 10000 15000 20000 30000 If gross is more than 10000 then 40% of Allowance basic, if less than 10000 then 20% of basic Transport 1600 1600 1600 1600 1600 1600 Fixed Allowance Medical 1250 1250 1250 1250 1250 1250 Fixed Reimbursemen t Children 100 100 100 100 100 100 Rs. 100 per child per month. Maximum Education two children Allowances Use of 0 0 1000 1000 1000 1000 If gross is more than 25000 then 1000 will Telephone / be given.
Mobile
Academic 0 0 1000 1000 1000 1000 If gross is more than 40000 then 1000 will
Allowance be given
Other 1050 3050 10050 17550 25050 40050 Gross Salary - (Basic + HRA+Tr
Allowance Allowance+Medical +Education -
including Telephone - Academic-Coupon - Driver's
bonus Sal. - Car Reimbursement)
Gross Salary 10000 20000 50000 75000 10000 150000
0
Annual Salary 1,20,0 2,40,0 6,00,000 9,00,00 12,00, 18,00,0
(A) 00 00 0 000 00
Less
Exemption u/s
10
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NEUTRAL CITATION
C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025
undefined
-House rent Lower of the following:
allowance (I) Actual HRA Received
(ii) Rent Paid - 10% of Basic salary
(iii) 40% of basic salary provided
accommodation is in Ahmedebad
-Children Rs. 100 per child per month. Maximum
Education two children
Allowance
-Academic Obtain declaration that the amount is
Allowance spend for academic purpose and allow
deduction of Rs. 12,000.
Transport Rs. 1600 per month. No proof required.
Allowance
Medical Up to 15000 subject to production of
Reimbursemen medical bill. To allow deduction after
t obtaining prooof.
-Use of To obtain proof and allow deduction of
telephone / least of bill or allowance paid.
mobile
Total
Exemption u/s
10 (B)
Less: Maximum Rs. 2400/-
Professional
Tax (C)
Total Salary
(A)-(B)-(C)
12.As per the above structure, all other allowances were considered for the purpose of calculating the special allowance, which is ₹1,11,469 as per the payslip of May 2021 and June 2021. This special allowance has a direct nexus with all other allowances. At this stage, the definition of wages provided under Section 2(S) of the Act, 1972, is required to be referred to, and is reproduced here 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 employment and which arc paid or arc 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.
13.From the above definition, it is clear that the definition of the term "wages" or "basic wages" would not include the components which are specifically excluded. Since "other Page 8 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined allowances" are specifically excluded, which is an expression of wide amplitude, it would take in its fold "special allowance." At this stage, the decision rendered by this Court in Special Civil Application No. 14240 of 2024 is required to be referred, which is reproduced hereinbelow:
"6.The definition of the wages suggests that the wages would include dearness allowance, but does not include any bonus, commission, HRA, overtime wages and any other allowances. In this context, the judgment of the Apex Court rendered in the case of State of West Bengal & Ors gs. Texmaco Ltd., reported in (1999) 1 SCC 198 which is required to be referred wherein the Apex Court has observed as under:
"1. The respondent-Company has a Scheme whereunder it pays to its employees what is called an "incentive bonus". The appellants took the stand that the incentive bonus fell within the definition of "salary" or "wage" contained in Section 2(j) of the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979, and, therefore, it was liable to the levy of tax under that statute, which the respondent- Company was bound e to deduct and pay on behalf of its employees. This contention was the subject-matter of applications before the West Bengal Taxation Tribunal. In its order under appeal, the Tribunal found that it was common ground that the incentive bonus was linked to production. It was paid at a certain rate for production in excess of a specified minimum quantity. It was payable only when production exceeded that quantity. If in a particular month, the production did not exceed the specified minimum quantity, there was no payment. If, on the other hand, there was in another month production exceeding the minimum quantity, the incentive bonus was payable commensurate with the additional production, which was naturally variable from month to month. Upon this basis, the Tribunal found that the payment of incentive bonus was not made on a regular basis and that, therefore, the requirement of the definition of "salary" or "wage" in Section 2(1) was not satisfied.
2.That definition says, so far as is relevant for our purposes, that "salary" or "wage" includes "pay, dearness allowance and all other remunerations received by any person on regular basis, whether payable in cash or in kind....Page 9 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025
NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined
3. The findings of fact reached by the Tribunal are clear. The Scheme of the respondent-Company providing for incentive bonus sets out that it is a payable only when production exceeds a specified minimum quantity. This implies that the incentive bonus is not paid when production does not exceed that minimum quantity. If so, clearly, the incentive bonus is not a remuneration received by the respondent-Company's employees "on regular basis".
4.Learned counsel for the appellant submitted, however, that there was a Scheme and that suggested regularity of payment. Judged only upon the basis of the Scheme, it must be held that it contemplates situations where the incentive bonus is payable and situations where it is not payable. Judged on the Scheme, therefore, the payments of incentive bonus are not on a regular basis. It would have been another matter had the appellants been able to place material before the Tribunal to show that, despite the terms of the Scheme, there had in fact been, over a substantial period of time, payment of incentive bonus from month to month.
5.In the result, the appeals are dismissed. There shall be no order as to costs."
7.It is apposite to refer the oral judgment of this Court in the case of "Rama Multitech Ltd. Through H.R. Managar- Gimi Samual Davi Vs. Deputy Labour Commissioner and others recorded in Special Civil Application No. 10999 of 2013 dated 22.11.2016" wherein the Co-ordinate Bench of this Court has enunciated the principle in Para-10.1 to 13 onwards and more particularly Para12, which reads as under :-
"12. From the above quoted observations, it is clear that the definition of the term "wages / basic wages" would not include the components which are specifically excluded. Since specifically exclude "other allowance" - which is an expression of wide amplitude - it would take in its fold "special allowance".
8. It is also apposite to refer the judgemnt of the Hon'ble Apex Court in the case of "T.I. Cycles of India Ambattur Vs. M.K. Gurumani and others reported in (2001) 7 SCC 204", more particularly Para-8, 9 & 10 which reads as Page 10 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined under :-
"8. Section 2(s) of the Act defines the term wages as under:
"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 employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, HRA, overtime wages and any other allowance."
9. Under Section 2(b) of the PF Act, the term basic wages is defined which reads as follows:
"2 (b) 'basic wages' means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or are payable in cash to him, but does not include (i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to any employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;"
10. A comparison between these two provisions will make it clear that there is no basic difference between the two expressions used in these two enactments insofar as the exclusion of bonus from the emoluments is concerned. The High Court has been carried away by the expression basic wages used in the PF Act while the term wages is used in the Act but that distinction will not be of any impact, if we closely examine the manner in which the two terms are defined in the respective Acts. The nomenclature of the two expressions will not alter the contents of the two terms. Therefore, the High Court ought to have considered this aspect of the matter. Further this Court in Straw Board Mfg. Co. Ltd. Vs. Its Workmen, was concerned with the gratuity scheme formulated prior to the Act and this is how this Court interpreted this aspect of the matter:
"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 Page 11 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined discretion and the 'feel' of the circumstances 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 so as the basis. This, incidentally, reflects the industrial sense in the country which has been crystallised into legislation. (emphasis supplied) xxxxxxxxxxx
27. We clarify that wages will mean and include basic wages and dearness allowance and nothing else."
9.This Court has also relied on the judgment of the Hon'ble Apex Court in the case of "Maniben Maganbhai Bhariya Vs. District Development Officer, Dahod and others reported in 2022 (3) GLR 2213", wherein the Hon'ble Mr. Justice Abhay S. Oka has observed in Para-28, which reads as under :-
"28. Clauses (e), (f), and (s) of Section 2 of the 1972 Act which define 'employee', 'employer' and 'wages' are relevant. The same read thus:
"(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity;
(f) "employer" means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop :-
(i) belonging to, or under the control of, the Central Government or a State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,
(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and Page 12 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined control of employees or where no person has been so appointed, the chief executive officer of the local authority.
(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, or managing director or by any other name, such person;
(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 employment 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."
10. In the case of "Maniben Maganbhai Bhariya Vs. District Development Officer, Dahod and others reported in 2022 (3) GLR 2213" Hon'ble Mr. Justice Ajay Rastogi has also observed in Para-6, which reads as under :-
"6. When we talk about the mandate of the Act 1972, if one looks into the scheme in a holistic manner, gratuity is a reward for good, efficient and faithful service rendered for a considerable period and the employee who remains in continuous service for 5 years or more including superannuation / retirement / resignation / untimely death becomes qualified to claim gratuity in terms of the computation as has been provided under Sub section (2) of Section 4 of the Act, 1972 which covers in its fold, the large sector of organized/unorganized workers/employees who are employed in various class of establishments covered under Section 1(3)(a) & (b) and also notified by the Central Government under Section 1(3)(c) of the Act 1972. Such of the employees working under the establishments referred to under Section 1(3)(a), (b) and (c ), as the case may be, shall be eligible to claim payment of gratuity in terms of Section 4 of the Act, 1972 and so far as the term 'wages' defined under Section 2(s) of the Act 1972 is concerned, it appears to be only for the purpose of computation as provided under Sub section (2) of Section 4 of the Act and withholding of gratuity is not permissible under any circumstances other than those enumerated under Sub-section (6) of Section 4 of the Act, 1972. The employee defined under Section 2(e) has a right to claim gratuity as a statutory right while working in the Page 13 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined establishment covered under Section 1(3) of Act 1972. Section 1(3) and 2 (e) and 2(s) of Act, 1972 relevant for the purpose are referred to as under :-
"1(3) It shall apply to -
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) 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, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, or, any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.
2. Definitions. - In this Act, unless the context otherwise requires,-
............... ........................
(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity ...............
(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."
11. This Court has also referred to the judgment of Hon'ble Apex Court in the case of "Chairman-cum-Managing Director Fertilizer Corporation of India Ltd. And another Vs. Rajesh Chandra Shrivastava and Ors. reported in GLR 2022(3) 2325", more particularly Para-
Page 14 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined 16, 17, 18, 20 and 21, which reads as under :-
"16. Section 2(s) of the Act defines wages, as follows:-
"2. Definitions.--In this Act, unless the context otherwise requires,--
Xxx xxx xxx
(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."
17. The definition of the expression is in 3 parts, the first part indicating the meaning of the expression, the second part indicating what is included therein and the third part indicating what is not included therein. In the first part of the definition, the emphasis is on what is earned by the employee "in accordance with the terms and conditions of employment".
18. Irrespective of whether what was earned has been paid or remained payable, the same is included in the definition, provided it is in accordance with the terms and conditions of his employment.
Xxxxxx
20. It is a fundamental principle of law that a party who is in enjoyment of an interim order, is bound to lose the benefit of such interim order when the ultimate outcome of the case goes against him. Merely because of the fortuitous circumstance of the Voluntary Separation Scheme coming into effect before the transferred cases were finally dismissed by this Court by an order dated 25.04.2003, creating an illusion as though the last drawn pay included this ad hoc payment, it is not possible to go against the fundamental rule that the benefits of an interim order would automatically go when the party who secured it, failed in the final stage.
21. In 'The Straw Board Manufacturing Co. Ltd. Vs. Its Workmen, 1977(2) SCC 329, this Court clarified the meaning of the expression wages" under Section 2 (s) of the very same enactment, as follows: "We clarify that wages will mean and included basic wages and Dearness Allowance and nothing else".
12. Considering the law laid down by the Apex Court, it is Page 15 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined clear that while calculating the amount of gratuity, basic wages and the dearness allowance is to be considered for calculating the amount of gratuity and, even if, the dearness allowance is not paid then also the other allowances cannot be termed as a dearness allowance for calculating the gratuity.
13.In view of the above, this Court is of the view that both the authorities have not committed any error in excluding the special allowance while calculating the amount towards the gratuity therefore, no interference is required and petition is required to be dismissed."
14.So far as the reliance placed by the learned advocate Mr. Shukla for the petitioner on the decision of the Regional Provident Fund Commissioner (supra) is concerned, the same was rendered under the Employees Provident Fund and Miscellaneous Provisions Act, where the definition of basic wages provided under section 2B is altogether different from the definition of wages under the Act, 1972. Therefore, this judgment would not help the present petitioner.
15.Considering overall circumstances, this court is of the view that learned appellate authority has not committed any error in excluding the special allowance as well as professional allowance while calculating the amounts towards the graduaty.
16.Resultantly, this petition is partly allowed. The impugned order dated 03.07.2024 passed by the learned appellate Page 16 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025 NEUTRAL CITATION C/SCA/14505/2024 JUDGMENT DATED: 11/02/2025 undefined authority is confirmed. So far as granting the interest from the date of filing of the application is concerned, in view of admission made by the learning senior counsel, Mr. Nanavati, the same is set aside, it is held that petitioner is entitled for the interest amount from 13.06.2021 at the rate of 10% till the date of realisation. Amount lying with the learned controlling authority as directed by the learned appellate authority shall disburse in favour of the present petitioner, without prejudice to the rights and contentions to challenge.
17.Rule is made absolute to the above extent.
(M. K. THAKKER,J) M.M.MIRZA Page 17 of 17 Uploaded by M.M.MIRZA(HC01407) on Fri Feb 14 2025 Downloaded on : Sat Feb 15 02:32:02 IST 2025