GSRTC vs Ravidev Mohanprasad Sharma

Honourable Mr. K.S. Jhaveri, J.—These petitions involve common questions on law and facts and hence, they are decided by this common judgment. By way of these petitions, the petitioner-Corporation has challenged the judgment and order passed by the Controlling Authority and the Appellate Authority under the Payment of Gratuity Act (for short, "the Act") whereby, the authority has directed to calculate Salary on the basis of Special Allowances.

It is the case of the petitioner-Corporation that earlier Special Pay was being paid to the employees of the petitioner-Corporation but, it was later withdrawn on account of financial crunch by Standing Orders. Accordingly, calculation of the amount of Gratuity was done excluding the amount of Special Pay. However, the authority seriously erred in directing to make payment of Gratuity after including the Special Allowance.

Reliance has been placed on a decision of the Apex Court in the case of The Straw Board Manufacturing Co. Ltd. Vs. Its Workmen, wherein it has been held that Gratuity is usually related to the basic wage and that a departure by relating it to the consolidated wage may be made if there be some strong evidence or exceptional circumstance justifying that course.

Heard learned counsel for both the sides. Considering the principle rendered in the above decision, it is clear that Gratuity amount is related to the basic pay and that no other allowances could be included in it unless exceptional circumstance exist. In the present case, the authorities below have directed to include special pay for calculating Gratuity amount, which is contrary to the principle laid down by the Apex Court in the above decision. Learned counsel for the respondent-workmen have not pointed out the existence of any exceptional circumstance which might entail inclusion of special allowance. In such case, the inclusion of special allowance for calculation of Gratuity deserves to be quashed and set aside. Hence, the impugned orders dated 10.06.2005, as confirmed vide judgment and order dated 28.12.2005, the order dated 05.05.2005, as confirmed vide judgment and order dated 30.09.2005 and also the order dated 06.05.2005, as confirmed vide judgment and order dated 30.09.2005 are required to be modified accordingly. For the foregoing reasons, the petitions are partly allowed. The impugned judgment and orders passed by the authorities below are modified to the extent that the amount of Gratuity shall be calculated on the amount of basic salary without including the amount of any special allowance. Rest of the impugned orders remain unaltered. The petitions stand disposed of accordingly. Rule is made absolute to the above extent with no order as to costs.