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Judgment
Syed Shah Mohammed Quadri, J.—The petitioner is a public limited company and respondents 2 to 11 are its former employees. Under a scheme introduced by the employer, the employees opted to take voluntary retirement. They were to receive compensation equivalent to 15 days wages for every completed year of service in addition to their eligible gratuity as per the Payment of Gratuity Act, 1972, for short "the Gratuity Act".
The employer worked out the compensation payable under the agreement on the basis of 30 days a month and paid the compensation. The employees filed petitions before the 1st respondent u/s 33-C(2) of the Industrial Disputes Act, 1947. The said petitions were disposed of by a common order by the first respondent on July 22, 1987, directing the employer to pay the difference of wages on calculating the compensation for 15 days on the basis of 26 days a month. It is the correctness of the common order of the first respondent that is assailed in this writ petition.
The learned Counsel for the petitioner vehemently contends that the employees worked for the whole month and are given paid holidays, therefore Sundays should also be included while calculating 15 days wages. The method of calculation, submits the learned Counsel, envisaged under the Gratuity Act would not apply to payment made under an agreement between the employer and the employees and that the wages will have to be paid only on calculating on the basis of 30 days a month.
Mr. Y. Jagan Mohan, the learned Counsel appearing for the employees, submits that the clause under which the compensation is payable uses the same phrase as is used in the Gratuity Act and, therefore, the intention of the parties to the agreement was to pay the wages as contemplated under the Gratuity Act and the 1st respondent has rightly calculated the wages and there is no illegality, much less an error apparent on the face of the record to warrant interference in this writ petition.
The agreement under which the entitlement to the compensation arose was executed between the employer and the employees u/s 18(1) of the Industrial Disputes Act on July 12, 1986. The relevant portion of the agreement reads as follows :
VOLUNTARY RETIREMENT SCHEME :
(a) Workers who are affected by the abolition of posts are eligible for the voluntary retirement scheme.
(b) Such workers shall be paid compensation equivalent to 15 days wages for every completed year of service besides their eligible gratuity as per Gratuity Act, 1972.
xxx xxx xxx".
From a perusal of the clause, extracted above, it is clear that the workers are entitled to be paid compensation equivalent to 15 days wages for every completed year of service in addition to the eligible gratuity as per the Gratuity Act.
The question that arises for consideration is while arriving at 15 days wages for the monthly rated employees whether the last drawn wages should be divided by 26 days or 30 days.
It would be relevant to refer to Section 4 of the Payment of Gratuity Act, 1972 in so far as it is relevant for this case, which runs thus :
"4. Payment of Gratuity :-
(1) xxxxxxxxxxx
(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days'' wages based on the rate of wages last drawn by the employee concerned;
Explanation :- In the case of a monthly rated employee, 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.
Provided that in the case of a piece rated employee, daily wages shall be computed on the average of the total wages received by him for period of three months immediately preceding the termination of his employment, and for this purpose, the wages paid for any over-time work shall not be taken into account.
Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year the employer shall pay the gratuity at the rate of seven days'' wages for each season.
(3) to (7) xxx xxx xxx".
It is thus clear from Sub-section (2) of Section 4 of the Act, extracted above, that for every completed year of service or part thereof in excess of six months the employer shall pay gratuity to an employee at the rate of fifteen days'' wages based on the rate of wages last drawn by the employee concerned. It is this section which was interpreted by various High Courts as well as the Supreme Court. In view of the judgment of the Supreme Court in Jeewanlal (1929) Ltd. Vs. Appellate Authority under the Payment of Gratuity Act and Others, it may not be necessary to refer to the judgments of the other High Courts. In that case Sub-section (2) of Section 4 fell for consideration of their Lordships of the Supreme Court. The contention of the employer was referred to in para 6 of the judgment. It was contended that the words "fifteen days'' wages" occurring in Sub-section (2) of Section 4 of the Act were clear and unambiguous and must mean half a month''s wages and, therefore, there was no scope for an artificial calculation being made by dividing the wages for a month by the number of working days, viz., 26, for determining the daily wages and multiplying the same by "fifteen" to determine the amount representing 15 days'' wages in as much as the wages of a monthly rated employee were for all the 30 days of a month and not 26 working days alone and therefore "fifteen days'' wages" in his case would amount only to half a month''s wages. Almost the same contention is now urged before me. That contention was not accepted by the Supreme Court. Justice A.P. Sen, speaking for the Supreme Court referred with approval to the judgment of the Gujarat High Court in Digvijay Woollen Mills Ltd. Vs. Shri. Mahendra Prataprai Buch, wherein the Gujarat High Court observed that a worker would get full months'' wages not by remaining on duty for all the 30 days within a month but remaining on work and doing duty for only 26 days and the other extra holidays might make some marginal variation in the 26 working days but all Wage Boards and wage fixing authorities or Tribunals in the country had always followed that pattern of fixation of wages by that method of 26 working days. The learned Judge also referred to the observation of the Gujarat High Court in Shri Digvijay Woollen Mills'' case (supra) to the effect that ordinarily, of course, a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month followed by the Gujarat High Court could not be called perverse, and that method was not anything unique or unknown. It may be pointed out that the explanation to sub-section (2) of Section 4 was added by Act 25 of 1984 subsequent to the said judgment of the Supreme Court. Therefore, it cannot be contended that the calculation of wages at 26 days a month under the Act is because of the explanation. The Supreme Court construed 15 days'' wages to mean calculated on the basis of dividing the last drawn wages of a month by 26 and multiplying the same by 15. The mere fact that the agreement provides that the employee would be entitled to gratuity in addition to the compensation would make no difference for calculation of the 15 days wages as mentioned above. In the instant case the first respondent has followed the same method. In my view wherever compensation or wages have to be calculated for 15 days whether under the Payment of Gratuity Act or under settlement u/s 18 of the Industrial Disputes Act or any other agreement, unless otherwise expressly provided, it would only be on the basis of daily wages worked out by dividing the last drawn wages of a month by 26 and multiplying the same by 15.
I, therefore, find no illegality in the order of the first respondent. The writ petition is without any merit. It is accordingly dismissed but in the circumstances of the case I make no order as to costs.