Andhra HC (Pre-Telangana)
Kothari Industrial Corporation, Unit : ... vs Appellate Authority Under The Payment ... on 12 September, 1997
Equivalent citations: 1997(6)ALT408
Author: A.S. Bhate
Bench: Avinash Somakant Bhate
ORDER A.S. Bhate, J.
1. These two writ petitions are being disposed of by a common order as the, points raised in both the writ petitions are similar.
2. The facts in W.P. No. 16967 of 1989 are : one Sri Narasanna joined the petitioner's mill on 24-6-1960 and died while in service on 15-1-1987. During this period in the years 1972, 1973, 1975, 1978, 1981 and 1982 he was absent without obtaining leave for certain periods in each of those years. The petitioner-management had imposed fine for such absence. It is thus alleged that the said Narsanna was not in continuous service for the purpose of calculating gratuity under Section 2-A(1) of the Payment of Gratuity Act, 1972 (hereinafter referred to as 'the Act'). It is urged that unless he had put in 240 days and actually worked for that period with the employer, he would not be entitled to claim gratuity for that particular year as per Section 2-A(2) of the Act. Due to imposition of penalty for his absence during the above said six years, Sri Narsanna was disentitied to claim gratuity for those years. He had actually worked only for 231 and 1-1/2 days, 221 days, 3 hours, 204 days 1-1/2 hours, 204 days 1-1/2 hours, 216 days, 204 days four hours and 203 days respectively. The petitioner, claims that the said Narsanna was entitled for gratuity for 21 years though his total apparently was for 26 years 8 months and 26 days. This being so, an application on behalf of late Sri Narsanna was filed by the widow of the said Narasanna, who is 3rd respondent herein, claiming gratuity for these six years also as it was not paid. The 2nd respondent, before whom the said application was preferred, after enquiry found that the workman i.e. Sri Narsanna was in continuous service even in those years as per the definition in Section 2-A(1) of the Act and therefore, entitled to gratuity. It is urged that respondent No. 2 erroneously held that the period of absence such as sickness, accident, leave, and absence from duty without leave or on account of the lay-off, strike, lock-out, any cessation of work not due to the fault of the employee were also to be included in calculating the days of service in any year. Respondent No. 1 affirmed the order of respondent No. 2. The contention of the petitioner is, that the judgment in Lalappa Lingappa v. Lakshmi Vishnu Textile Mills (1981) 2 SCC 238 covers the point laying down that unless the worker actually works for 240 days in a particular year, it cannot be held that the worker had served continuously for the said year. It is alleged that respondent Nos. 1 and 2 erroneously applied the decision in D.B.R. Mills Limited v. Appellate Authority, under P.G.A. 1985 (1) LLJ 181 (A.P.). It is argued that in the decision of the said D.B.R. Mills' case 1985 (1) LLJ 181 (A.P.) which is a judgment of this court, the question was interpretation of the main provision under Section 2(c) as it stood under the Act prior to bringing of Section 2-A on the Statute. It is contended that the above interpretation of the term 'continuous service' in the instant case was due to the fault of the worker as the absence from duty was visited with punishment for those six years. Thus it is alleged that respondents 1 and 2 were not justified in awarding gratuity for the said six years.
3. In W.P. No. 16964 of 1989 the worker was allegedly absent in 1969, 1972, 1973 and 1974. It is undisputed that the worker had joined the mill in May, 1968 and was in service throughout till 5-11-1985. The worker was absent without leave in the aforesaid four years for certain days and for this the petitioner had imposed fines on the said worker. The petitioner contends that the worker was not entitled to gratuity during those four years as required by the provisions of the Act. It may however be pointed out at this stage that this writ petition as against the worker, who was originally respondent No. 3, was dismissed on 17-4-1993 by this Court. The said writ petition is now pending only against respondent Nos. 1 & 2.
4. On the other hand, the learned Government Pleader on behalf of respondents 1 and 2 has supported the orders passed by respondents 1 and 2.
5. Section 2(c) of the Act states that "continuous service" means continuous service as defined in Section 2-A(sic.). Section 2-A of the Act is as follows :-
"Section 2-A(1). An employee shall be said to be in continuous service, for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act;
(2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of Clause (1), for period of one year or six months, he shall be deemed to be in continuous service under the employer -
(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than -
(i) one hundred and ninety days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;
(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is not be made, has actually worked under the employer for not less than -
(i) ninety five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) one hundred and twenty days, in any other case;
Explanation :- For the purpose of Clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which -
(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(ii) he has been on leave with full wages, earned in the pervious year;
(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment and
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks;
(3) where an employee, employed in a seasonal establishment, is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during such period."
6. Section 4 of the Act states that the gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years. Thus the gratuity is payable on superannuation, or retirement, or resignation, or on death and/or on disablement due to accident or disease. It is not disputed that the workers in the present case were in the employment for five years or more. Smt. Sudha, the learned Counsel for the petitioner, has however, contended that as the workers did not actually work for 240 days or more in the particular years referred to, they were not entitled to gratuity during those years in view of Section 2-A(2) of the Act. Payment of gratuity during other years has not been disputed. It may be pointed out that Section 2-A of the Act has come on the statute book with effect from 11-2-1981 by Act 26 of 1984. Smt. Sudha has totally relied on Lakshmi Vishnu Textile Mills' case (supra) for the proposition that a permanent employee in entitled to payment of gratuity only for those years in which the worker has actually worked for not less that 240 days in a year. While urging this, it is however conveniently forgotten that Lakshmi Vishnu Textile Mills' decision (supra) was rendered in relation to law as it existed before Section 2-A was brought in the Act by way of an amendment in 1981.
7. The expression "continuous service" in the context of gratuity scheme was interpreted by the Supreme Court with reference to the then existing Section 2(c) in the Act. Section 2(c) as it existed then runs as follows :-
"Sec.2(c) : "continuous service" means uninterrupted service and includes service which is interrupted by sickness, accident, leave, lay-off, strike or a lock-out or cessation of work not due to any fault of the employee concerned, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.
Explanation - I ... In the case of an employee who is not in uninterrupted service for one year, he shall be deemed to be in continuous service it he has been actually employed by an employer during the twelve months immediately preceding the year for not less than -
(i) 190 days, if employed below the ground in a mine, or
(ii) 240 days, in any other case, except when he is employed in a seasonal establishment.
Explanation-II : An employee of a seasonal establishment shall be deemed to be in continuous service if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during the year."
The said Section 2(c) is now completely replaced. Now Section 2-A along with sub-sections has been brought on the statute book. The Apex Court pointed out that in construing the social welfare legislation, no doubt the Court should adopt a beneficient rule of construction, if a section is capable of two constructions. The Court further observed that when the language is plain and unambiguous, the same must be given effect to irrespective of the consequences. The argument of inconvenience and hardship is dangerous one, as per the observations of the Supreme Court. After observing this, the Court further observed;
"In dealing with interpretation of sub-section (1) of Section 4, we must keep in view the scheme of the Act. Sub-section (1) of Section 4 of the Act incorporates the concept of gratuity being a reward for long continuous and meritorious service. The emphasis therein is not on 'continuity of employment', but on rendering of 'continuous service'. The legislature inserted the two Explanations in the definition to extent the benefit to employees who are not in uninterrupted service for one year subject to the fulfilment of the conditions laid down therein. By the use of a legal fiction in these Explanations, an employee is deemed to be in 'continuous service' for purposes of sub-section (1) of Section 4 of the Act. The legislature never intended that the expression actually employed' in Explanation I and the expression 'actually worked' in Explanation II should have two different meanings because it wanted to extend the benefit to an employee who 'works' for a particular number of days in a year in either case. In a case failing under Explanation I, an employee is deemed to be in continuous service if he has been actually employed for not less than 190 days if employed below the ground in a mine, or 240 days in any other case, except when he is employed in a seasonal establishment. In a case failing under Explanation II, an employee of a seasonal establishment, is deemed to be in continuous service if he has actually worked for not less than 75 per cent of the number of days on which the establishment was in operation during the year."
All this was in relation to the interpretation of Section 2(c) as it existed then. However, the position is totally different after insertion of Section 2-A in the Act.
8. Act 26 of 1984 by which Section 2-A was brought in place of old Section 2(c) in the Act was with specific object. The Statement of Objects and Reasons of Gratuity (Second Amendment) Act, 1984 which introduced Section 2-A may be extracted. The relevant portion of the Statement of Objects and Reasons for such amendment is as follow :-
"The Supreme Court had in its judgment in the case of Lalappa Lingappa v. Lakshmi Vishnu Textile Mills Ltd. (supra) held that in terms of the existing definition of 'continuous service' in Section 2(c) of the Act, the permanent employees were not entitled to payment of gratuity for the years they remained absent without leave and had actually worked for less than 240 days in a year. It has been represented that the enforcement of this ruling resulted in denial of gratuity to a number of employees, whose short term absence had remained unregularised due to lack of appreciation of its significance for the purpose of working out their entitlement to gratuity."
It will thus be seen that the very object of bringing in Section 2-A on the statute book was to overcome the narrow view taken in Lakshmi Vishnu Textile Mills Limited case (supra) by the Supreme Court. It is therefore, futile to contend that the judgment in Lakshmi Vishnu Textile Mills Limited case (supra) still holds the field and it should be applied to the instant case. It is difficult to accept the contention that merely because an employee is absent without obtaining leave, for which punishment is inflicted by the master, would by itself bring to an end the continuity of service of the employee. It may be that such absence may serve as a good cause for termination of service provided the relevant provisions in the Standing Orders justify such termination after departmental enquiry. Mere absence cannot be said to result in breach of continuity of service for the purpose of the Act.
9. Section 2-A(1) as it stands now, if analysed properly shows that every service rendered by the employee shall be continuous service for a period, even if there is interruption during that period on account of (1) sickness, or (2) accident, or (3) leave, or (4) absence from duty without leave except when there is break of service under orders passed as per the Standing Orders, Rules or Regulations and/or (5) lay-off, strike or lock-out or cessation of work not due to any fault of the employee concerned. All interruption of the above type have to be ignored and will not result in depriving the employee of the benefit of continuous service. It is only when the employee is absent from duty without leave and further if an order is passed by the employer treating this absence without leave as break in service in accordance with the Standing Orders, Rules and Regulations, that it would not amount to continuous service in that period. The petitioners in the instant case were allegedly absent on few days without leave and though they were penalised by the employer, merely giving such punishment of imposition of fine does not take away the case of the employees from the expression 'continuous service'. There was obviously no order passed by the employer in accordance with the Standing Orders, Rules or Regulations to the effect that the absence of the employees on those days or on any of those days was to be treated as break in service. The employees in both the cases fell squarely within the meaning of Section 2-A(1) of the Act and were therefore, in continuous service during those years for which they are sought to be deprived of the gratuity by the employer. It is only when the case of the employee does not fall within Section 2-A(1) of the Act, that the provisions of Section 2-A(2) come into play. The argument advanced on behalf of the petitioner that the employee had to put in 240 days of actual work in an year to entitle him to claim gratuity in that year is not a sound proposition of law in the instant case. Such is the requirement only when the case does not fall under Section 2-A(1) of the Act. Section 2-A(2) of the Act envisages a deeming fiction of continuous service under the employer (is envisaged) only when the employee is not in continuous service within the meaning of clause (1) of Section 2-A of the Act.
10. After having considered the arguments of the learned Counsel for the petitioner and after giving our anxious thoughts to the position of law obtainable after Section 2-A has been brought on the statute book, we are of the view that the employee in each of these cases was squarely covered by provisions of Section 2-A(1) of the Act and the question of counting the actual working days in respect of them does not arise. As a result, we find that the contention raised by the petitioner is totally meritless. The whole case of the petitioner was based on Lakshmi Vishnu Textile Mills Ltd. case (supra) which as pointed out already has been overcome by the Legislature itself by amendment in the Act by bringing in Section 2-A on the statute book, In result, both the writ petitions are, in our view, totally meritless and deserve to be dismissed.
11. The writ petitions are accordingly dismissed. The petitioner shall pay costs of Rs. 3,000/- to respondent No. 3.