Bangalore Metropolitan Transport Corporation vs The Deputy Labour Commissioner and The Appellate Authority and Others

Ram Mohan Reddy, J.—Petitioner-Road Transport Corporation aggrieved by the order dated 19.3.2009, Annexure-B, of the 2nd respondent-Controlling Authority under the Payment of Gratuity Act, 1972, for short Act, preferred an appeal to the 1st respondent-Deputy Labour Commissioner and Appellate Authority, which when rejected by order dated 28.8.2010, Annexure-D, has presented this petition. Facts briefly stated are:

The 3rd respondent entered service by inclusion of his name in the badli list on 18.11.1975 and attained the age of superannuation on 28.2.2005, having served the petitioner for 29 years. On his retirement, the petitioner-Corporation computed gratuity under the Karnataka State Road Transport Corporation Servants Gratuity Regulations, for short ''Regulations'', by reckoning wage component as Rs. 7,940/- and continuous service as 20 years and 4 months after excluding one year while on badli list and 7 years, 10 months and 13 days as break in service, due to leave, unauthorised absence, suspension, LWA etc., to determine Rs. 1,61,447/- as gratuity. Petitioner deducted Rs. 1,51,602/- being amounts due by the respondent towards discharge of loans secured from Banks and Co-operative Societies, as also festival advance and deduction of wage towards strike period and paid Rs. 9,845/- towards gratuity.

The 3rd Respondent dissatisfied with the computation of gratuity filed an application under Rule 10 of the Payment of Gratuity (Central) Rules, for short Rules, to the Controlling Authority to redetermine and direct payment of difference of gratuity on the premise of having served 29 years and reckoning the last drawn monthly wage as Rs. 12,300/- and the gratuity payable as Rs. 3,56,700/- and on effecting a deduction of Rs. 1,10,822/- since paid, to pay the balance of Rs. 2,45,878/-, with an explanation for condoning the delay of one year 11 months.

Petitioner on notice, entered appearance, filed objections denying the assertions, and contending that the 3rd respondent was not entitled to any sums of moneys.

Parties having entered trial adduced evidence both oral and documentary, the Controlling Authority by the order impugned, Annexure-B, determined Rs. 2,30,260/- as gratuity reckoning 29 years of service and last drawn ''wage'' as Rs. 7,940/-, while accepting the 3rd respondents'' assertions of having received Rs. 1,10,822/- and rejecting the plea of the petitioner-Corporation of deduction of Rs. 1,51,602/-, and directed payment of Rs. 1,19,438/- towards difference of gratuity with interest at 10% per annum from 28.3.2005 upto the date of payment. That order when carried in appeal, was confirmed.

Though, Learned Counsel for the petitioner submits that the period from 18.11.2005 to 20.7.2006 when the 3rd respondent was on badli rolls is required to be excluded, I am afraid, such an exclusion is impermissible, in the light of the definition of the term ''continuous service'' u/s 2(A) of the Act, coupled with the petitioner''s failure to produce relevant material to establish that during the said period, the 3rd respondent was neither engaged or assigned duties.

The next contention of the Learned Counsel for the petitioner that 7 years, 10 months and 13 days being the break in service is excluded from reckoning ''continuous service'', deserves to be rejected at the threshold. Section 2(A) of the Act defines ''continuous service'' providing for break in service only if orders are passed by the Management in accordance with rules and regulations, governing services of the workman, directing the period of absence etc., as break in service and in the absence of such relevant material, the contention must necessarily fail.

The further contention of the Learned Counsel that deduction of Rs. 1,413/- towards wages for period of strike, in the absence of relevant record or an order of the employer directing the deduction of the wages and treating it as break in service, is unacceptable and therefore, the deduction of the wages for the said period from out of the gratuity is illegal.

There is considerable force in the submission of the Learned Counsel for the petitioner that the amounts from out of the gratuity payable to the 3rd respondent were, on instructions remitted to his following accounts:-

(a) Subramaneshwar Shakara Bank

Rs.1,11,940/-

(b) Syndicate Bank

Rs. 13,875/-

(c) KSRTC Pathina Co-operative Society

Rs. 18,190/-

(d) BMTC Co-operative Society

Rs. 4,133/-

(e) Festival Advance

Rs. 2,050/-

The Controlling Authority and Appellate Authority having noticed the assertion of the petitioner over the aforesaid deductions, without considering as to whether the amounts were credited to the account of the 3rd respondent, rejected the said contention. It is no doubt true that this Court has held that the Corporation does not have the power to effect deduction from out of Gratuity so as to discharge the loans raised by the workman, but in the instant case, it is not disputed that the amounts from the gratuity are not retained by the Corporation, but are admittedly credited to the accounts of the 3rd respondent in the respective Banks/Societies, and therefore, it was for the 3rd respondent to place material before the Authorities, to establish whether amounts in excess was credited to his accounts. Learned Counsel for the 3rd respondent submits that he would take instructions in the matter and place relevant material, if granted reasonable time.

The last contention of the Learned Counsel for the petitioner that the Controlling Authority fell in error in accepting the claim of the 3rd respondent to have received Rs. 1,10,822/- in the absence of records and in the face of Exs.R2 and R3 being the extracts of acquitence register disclosing payment of Rs. 1,000/- and Rs. 8,845/- respectively, to the 3rd respondent towards gratuity, deserves acceptance. The Controlling Authority and Appellate Authority having not applied their minds to the material on record, has resulted in a perverse finding. In the result, petition is allowed. The orders of the Controlling Authority and Appellate Authority under the ''Act'' are quashed to the extent of accepting the claim of the 3rd respondent to have received Rs. 1,10,822/- and rejecting the plea of deduction of Rs. 1,51,602/- from the gratuity payable to the 3rd respondent, as noticed supra and in all other respect remains unaltered. The proceeding is remitted to the Controlling Authority, to extend reasonable opportunity of hearing to the parties as also adduce evidence in respect of the pleas noticed supra.

Parties, since represented by Learned Counsel, are directed to be present before the Controlling Authority on 7.9.2011, without further notice.