Chhattisgarh Housing Board vs Appellate Authority Under the Payment of Gratuity Act and Controlling Authority Under the Payment of Gratuity Act

Satish K. Agnihotri, J.

By this petition, the petitioner challenges the validity of the order dated 11.7.2007 (Annexure P/5) passed by the Appellate Authority under the Payment of Gratuity Act, 1972 and Deputy Labour Commissioner, Raipur, whereby the appeal filed by the petitioner against the order dated 6.1.2007 (Annexure P/4) passed by the respondent No. 2, was dismissed. The petitioner further challenges the validity of the order dated 6.1.2007 (Annexure P/4), whereby the petitioner was directed to consider 28 years of service of the respondent No. 3 for the purpose of calculation of gratuity.

The brief facts, in nutshell, are that the respondent No. 3 was initially appointed in Chuna factory on 25.11.77. When the factory was closed on 21.03.1994, the employees, including the respondent No. 3 was taken over by the petitioner on 06.01.2001 with effect from 21.03.1994. The respondent No. 3 retired from service on 30.04.2005. The petitioner, after having calculated the service of the respondent No. 3 from 21.03.1994 to 30.04.2005, as 11 years, 1 month and 9 days, computed the gratuity amount to the tune of Rs. 20,000/- and paid the same.

Being aggrieved, the respondent No. 3 preferred an application before the respondent No. 2 for consideration of his service with effect from 25.11.1977. The respondent No. 2, vide order dated 6.1.2007 (Annexure P/4) considered the service period from first date of appointment in Chuna Factory i.e. 25.11.77 till 30.04.2005, as 28 years and directed to compute the gratuity on the basis of service of 28 years and to make the payment accordingly. Being aggrieved, the petitioner preferred an appeal before the respondent No. 1. The respondent No. 1, by its order dated 11.7.2007 (Annexure P/5) confirmed the findings recorded by the respondent No. 2 and dismissed the appeal. Thus, this petition.

Shri Sanjay Patel, learned Counsel appearing for the petitioner would submit that the respondent No. 3 was in seasonal establishment and has worked for less than fifty percent of the number of days during operation of the said establishment. The respondent No. 3 in his return dated 17.3.2008, in para 3, has admitted that he was a seasonal employee and no appointment order was issued to him. The respondent No. 3 had never worked even for fifty percent of the number of days when the old establishment i.e. Chuna factory was in operation and as such, the respondent No. 3 was not in continuous service before his services was taken over by the petitioner on 6.1.2001.

Shri Patel would further submit that Section 2A defines "continuous service" for the purpose of Payment of Gratuity Act, 1972 (hereinafter referred to as `the Gratuity Act''). Section 2A(3) of the Gratuity Act provides that where an employee employed in 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 for such period if he has actually worked for not less than seventy-five percent of the number of days on which the establishment was in operation during such period. Thus, the employee in a seasonal establishment has to work for not less than seventy-five percent of the number of days on which the establishment was in operation during such period. Thus, there was no continuity of service which can be taken into consideration for the purpose of computation of gratuity.

Shri Patel would next submit that the authorities below have failed to consider the legal provisions for the purpose of continuous service when admittedly, the respondent No. 3 had never worked even for fifty percent of number of days on which the establishment was in operation.

Shri Guha, learned Counsel appearing for the respondent No. 3 would submit that the respondent No. 3 was a seasonal employee working in Chuna factory from 25.11.77 to 21.03.1994. He had never worked even for 50 percent of number of days on which the establishment was in operation. Since 06.01.2001 the petitioner issued a circular whereby the service of the respondent No. 3 was taken over by the petitioner w.e.f. 21.03.1994 the date when the establishment was closed. The respondent No. 3 worked under the petitioner from 06.01.2001 to 30.04.2005.

I have heard and considered rival contentions advanced by the learned Counsel appearing for the parties, perused the pleadings and documents appended thereto. It is evident that the respondent No. 3, on his own admission had not worked even for fifty percent of the number of days on which the establishment was in operation. u/s 2A(3) of the Gratuity Act, in order to claim continuity in service in case of seasonal establishment, it is necessary that the employee should work for not less than 75 percent of the number of days on which the establishment was in operation during such period. Section 2A (1) and (3) of the Gratuity Act, 1972 reads as under:

2A. Continuous service. - For the purpose of this Act, -

(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) xxx xxx xxx (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 percent of the number of days on which the establishment was in operation during such period.

It is well settled position in law that admission is the best piece of evidence against the person making an admission. (See Delhi Transport Corporation v. Shyam Lal1).

The Supreme Court, in the matter of Banaras Hindu University, Varanasi and Anr. v. Dr. Indra Pratap Singh2, has held as under:

In Words and Phrases (Vol.9) the word "continuous employment" is assigned the following meaning:

It means working with reasonable regularity, and work does not cease to be `continuous'' because of interruption in occupation due to periods of temporary illness, such as are the incident to people of normal health. `Continuously'', as used in regulations defining total permanent disability under war risk policy, does not denote absolute continuity.

It is true that the gratuity for workers is no longer a gift but a right. The right flows from the provisions of the Gratuity Act. Bare perusal of the definition of continuous service as enshrined in Section 2A of the Gratuity Act, it is clear that the actual work is not necessary but for calculation of continuous service in seasonal establishment, the employee ought to have worked not less than 75 percent of the number of days during the period seasonal establishment was in operation. Chuna factory is admittedly a seasonal establishment and the respondent No. 3 in his return has admitted that he had never worked even for fifty percent of the total days during which the seasonal establishment i.e. Chuna factory was in operation.

The respondent No. 1 and 2 are in serious error while holding that the service of the petitioner should be counted from the initial date of appointment in seasonal establishment i.e. 25.11.1977. The authorities below have not considered the definition of continuous service in its right perspective as enshrined in Section 2A of the Gratuity Act.

The petitioner has rightly calculated 11 years, one month and 9 days for the purpose of gratuity and granted the gratuity from the date of taking over i.e. 21.03.1994 till the respondent No. 3 retired from service on 30.04.2005, and payment was made accordingly.

For the reasons mentioned hereinabove, this petition succeeds. The orders dated 11.7.2007 (Annexure P/5) and 06.01.2007 (Annexure P/4) are quashed. The petition is allowed.

No order asto costs.