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All these Writ Petitions can be dealt with together and decided, as they raise a common question of law for determination.

The Managing Committee of a private unaided Engineering College and the Principal of the said college are the petitioners. They challenge the correctness of the orders passed on 31.07.2000 by the Appellate Authority under the A.P. Payment of Gratuity Rules, 1972 reversing the orders passed by the Controlling Authority under the A.P. Payment of Gratuity Rules, 1972. The individual employee, at whose instance the case was initiated, has been impleaded as respondent to each of these Writ Petitions apart from the official respondents. An educational society, registered under the provisions of the Societies Registration Act, is got up for the purpose of running educational institutions imparting both general and technical education. This society has established an Engineering College at Kanuru, Vijayawada in the year 1977 after obtaining necessary approvals and permissions in terms of and in accordance with the All India Council for Technical Education Act, 1987 and the Andhra Pradesh Education Act, 1982. As of now, there are about 225 employees working in the said Engineering College, comprising of both teaching and non-teaching staff. For the purpose of easy grasp, I record the facts relating to the 3rd respondent in Writ Petition No. 16325 of 2000, which are almost identical in the other cases as well. The 3rd respondent worked as a Junior Mechanic in Mechanical Engineering Department of the Engineering College for the period from 21.10.1981 to 31.07.1998, when he was ultimately relieved consequent on his attaining the age of superannuation. Since the provisions of the Payment of Gratuity Act, 1972 (for short, the 'Act') are not attracted to the employees of educational institutions, according to the petitioners, the 3rd respondent has not submitted any application for payment of gratuity, as provided for in Rule 7(1) of the A.P. Payment of Gratuity Rules, 1972 (for short, 'the Rules'). Instead, the 3rd respondent straight away approached the 2nd respondent and lodged a claim for payment of gratuity in accordance with Rule 10(1) of the Rules on 30.07.1999. The 2nd respondent, upon contest by the petitioners herein, dismissed the application for condonation of delay and held that the claim petition is time barred. Aggrieved by the said orders passed by the 2nd respondent on 22.01.2000, the 3rd respondent had preferred an appeal in terms of Section 7(7) of the Act to the 1st respondent. The 1st respondent, by his order dated 31.07.2000, allowed the said appeal and hence, the present Writ Petitions.

It will be appropriate at the outset to notice the provisions of the Payment of Gratuity Act, 1972 and the Rules made there under.

The Government of Kerala was the first to enact a legislation for payment of gratuity. That was followed quickly by the State of West Bengal. Thereafter, some other States have also felt the necessity for making similar enactments in their respective States. Taking into account and consideration these concerns of various States, the Parliament felt it appropriate to make a law on the subject for ensuring uniform pattern for payment of gratuity to the employees through out the country. A broad consensus for a central legislation on the subject has emerged at the Labour Minister's conference held on 24th and 25th August 1971. A similar sentiment was expressed by the Indian Labour Conference at its session held on 22nd and 23rd October 1971. Thus, the Payment of Gratuity Act, 1972, Act No. 39 of 1972, a beneficial and social welfare legislation came to be made providing for a scheme for payment of gratuity to the employees engaged in factories, mines, oil fields, plantations, ports, railway companies, shops and other establishments. This enactment was brought into force through a notification dated 16.09.1972. Sub-section (3) of Section 1 of the Act spread the canvass for the applicability of this Act. It would be important to notice clause (c) thereof, which enabled the Central Government, by notification, to specify such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, for bringing them within the spread of this canvass. Accordingly, the Central Government, by a notification dated 03.04.1997, specified that 'educational institutions' in which ten or more persons are employed or were employed on any day preceding twelve months as a class of establishments to which the Payment of Gratuity Act, 1972 shall apply with effect from the date of publication of this notification. Thus, the college of Engineering run and managed by the petitioners has been brought within the purview of Payment of Gratuity Act, 1972. Section 4 of the Act makes payment of gratuity obligatory. Sub-section (1) thereof makes it clear that 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 -- (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. The first proviso added thereto makes it clear that completion of continuous service of five years shall not be necessary where the termination of the employment occurred due to death or disablement. Sub-section (2) thereof obligates every employer to pay gratuity to an employee at the rate of 15 days wages, based on the rate of wages last drawn by the employee concerned, for every completed year of service or part thereof in excess of six months. An explanation was added thereto through Amending Act 22 of 1987 specifying that in the case of monthly rated employees, the fifteen days wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen. Sub- section (3) has imposed a ceiling on the maximum amount of gratuity payable to an employee. Sub-section (5) thereof makes it clear that nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. Sub-section (6) dealt with the aspects relating to forfeiture of gratuity, which may not be really relevant for our scrutiny. Section 5 of the Act conferred power on the appropriate Government, by notification and subject to such conditions as may be specified, to exempt any establishment to which the Act applies from the provisions of the Act, if in the opinion of the appropriate Government, the employees in such establishment are in receipt of gratuity or pensionary benefits, not less favourable than the benefits conferred under this Act. The highlighted expressions namely "the benefits conferred under this Act" amply make it clear that the Act is intended to confer certain benefits on the employees. Section 7 dealt with the determination of the amount of gratuity. Sub-section (1) thereof makes it clear that a person, who is eligible for payment of gratuity under the Act or any other person authorized, in writing, to act on his behalf, shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. However, sub-sections (2), (3) and (3A) will be of significance for our enquiry and hence, I consider it appropriate to extract them:

Let us apply these salutary tests to the present fact situation and then deal with the contention canvassed by Sri Gunaranjan. Sub-section (1) of Section 7 required a person, who is eligible for payment of gratuity or any other person authorized by him, in writing, to act on his behalf, to send a written application to the employer within such time and in such form, as may be prescribed, for payment of such gratuity. State Government, exercising the power available to it under sub-section (1) of Section 15 of the Act, framed the A.P. Payment of Gratuity Rules,1972. Rule 7(1) has prescribed that the employee, who is eligible for payment of gratuity or any person authorized by him, in writing, to act on his behalf shall apply ordinarily within 30 days from the date the gratuity became payable and in Form I to the employer. Therefore, Sri Gunaranjan contended that the first and the foremost requirement is that an application in Form I shall be lodged by the eligible employee or any other person acting on his behalf with the employer and that too, within 30days from the date the gratuity becomes payable. Since the 3rd respondent has not lodged any such claim with the employer, the question of his approaching the competent authority under Section 7(4) of the Act read with Rule 10 seeking payment of gratuity would not arise and hence, entertaining the claim petition by the primary authority itself was contrary to the provisions of law and hence, it is an illegal exercise.

I am afraid, this contention is without much merit. Sub-section (2) of Section 7 holds the key to understand the contours of sub-section (1) of Section 7. In Sub-section (2), the most crucial expressions used read as under:

" Whether an application referred to in sub-section (1) has been made or not".

By the choice of using these expressions, the Parliament has made it explicitly clear that submission of an application, either by the employee or by anyone authorized by him on his behalf, in terms of sub-section (1) of Section 7, is purely a directory one, but not mandatory one. In fact, by using specifically the expressions "the application has been made or not", the Parliament has conveyed very firmly its intention that the gratuity becomes payable to an employee irrespective of the fact that an application for that purpose has been made or not. In other words, the payment of gratuity has been made mandatory and an application soliciting such payment is made purely directory. After all, the primary objective of this legislation was to secure payment of gratuity. That is the reason why the State Government, while framing the rules, used the expressions in Rule 7(1) that employee or any person authorized by him shall apply ordinarily within 30 days from the date of gratuity became payable. The intention is very clear. An application requiring payment of gratuity can ordinarily be made within 30 days, thus, implying that such an application can be lodged even beyond the said 30 days time. Thereby, indicating that right to receive gratuity does not get jeopardized all due to delay in applying. It would also be apt to notice that certain penal consequences would follow from the default committed in the matter of payment of gratuity. Under section 8, the arrears of gratuity become recoverable together with compound interest thereon at the rate of 9% per annum from the date of expiry of the prescribed time as arrears of land revenue. Further, Section 9 recognizes avoidance of payment of gratuity as penal and the offender can be punished with imprisonment for a term, which may extend to six months or with fine, which may extend to Rs.10,000/-, or with both. Therefore, when Sections 7, 8 and 9 are read together and kept in view, it becomes explicitly clear that the Parliament never intended that gratuity becomes payable only upon an application made by a party, who is eligible to receive the same. Perhaps, making an application for payment of gratuity acts merely as a catalyst to hasten the process of the payment of gratuity and thus avoid the follow up consequences emanating from default. I therefore, reject the contention of Sri C. Gunaranjan that the competent authority could not have entertained the claim for payment of gratuity without the employee concerned approaching and lodging a claim in terms of Sub-section (1) of Section 7 read with Rule 7 (1) of the A.P. Payment of Gratuity Rules, 1972.