Mineral Exploration Corporation Limited vs P. Nagendrakumar and Others

Z.A. Haq, J.—Heard Shri M.D. Samel, the learned advocate for the petitioner, Shri D.N. Mathur, the learned advocate for the respondent No. 1 and Mrs. Anjali Joshi, the learned advocate for the respondents 2 to 4.

The petition is filed by the employer challenging the order passed by the Controlling Authority under the Payment of Gratuity Act, 1972 and by the Appellate Authority upholding the claim of the respondent/employee in respect of the amount of gratuity considering his wages as Rs. 15,928/- which includes the amount of interim relief paid to the respondent/employee.

The submission on behalf the employer is that the subordinate Authorities have committed an error by directing payment of gratuity to the employee by calculating the wages including the amount of interim relief paid to the employee. According to the employer, the amount of interim relief paid to the employee cannot be included in the amount of wages for the purposes of calculating the amount of gratuity payable to the employee.

Shri Samel, the learned advocate for the employer has submitted that as per Section 2(s) of the Payment of Gratuity Act, 1972 the emoluments earned by the employee in accordance with the terms and conditions of his employment and which are paid or payable to him in cash along with dearness allowance only can be considered as "wages" for the purposes of computing the amount of gratuity payable to the employee. It is submitted that other emoluments like bonus, commission, house rent allowance, overtime wages and any other allowance paid to the employee cannot be included in the term "wages" for the purposes of computing the amount of gratuity. It is submitted that the amount of interim relief paid to the employee as per the office order dated 25th September, 1998 cannot be included in the term "wages" of the employee for the purposes of computing the amount of gratuity. The learned advocate has pointed out from the office order dated 25th September, 1998 that this was clarified stating that the interim relief will be sui-generis and it will neither be termed as "pay" nor "allowance" nor "wages". The learned advocate has submitted that the interim relief was paid to the employee as ex-gratia in anticipation of the pay revision, to avoid any disharmony and to ensure smooth functioning of the relationship of employer and employee. It is submitted that the amount of interim relief paid to the employee, does not entitle the employee to claim the gratuity on the basis of the amount of interim relief. In support of his submissions, the learned advocate has relied on the following judgments:

(i) Judgment given in the case of Voltas Limited Vs. Chandrkant Y. Bhramhane and Others, (2008) 116 FLR 186 : (2008) 1 LLJ 416 ,

(ii) Judgment given in the case of State Bank of India Vs. Laxmikant Vithal Palekar and Others, (2010) 5 BomCR 708 : (2011) 128 FLR 317 : (2011) 2 LLJ 844 : (2011) LLR 133 .

Per contra, Shri Mathur, the learned advocate for the respondent/employee has submitted that the term "wages" means all emoluments which are earned by the employee including the dearness allowance for the purposes of computing the amount of gratuity. It is submitted that the definition of "wages" is inclusive and only the items which are excluded as stated in the definition, are not required to be included in the term "wages". It is submitted that the bonus, commission, house rent allowance, overtime wages and any other allowance paid to the employee is not required to be included in the term "wages" for the purposes of computing the amount of gratuity payable to the employee. The learned advocate has submitted that the amount of interim relief paid to the employee does not fall in any of the categories which are excluded from the term "wages". In support of these submissions, the learned advocate has relied on the following judgments:-

(i) judgment given in the case of St. Xavier''s School Vs. State of Jharkhand and Ors. reported in 2013 III CLR 1035,

(ii) judgment given in the case of N. Sivadasan Vs. The Appellate Authority, Under The Payment of Gratuity Act-i, Madras-6 and others, (1997) 1 CTC 733 : (1997) 1 LLJ 1155 : (1997) 2 LW 828 : (1997) 2 MLJ 593 ,

(iii) judgment given in the case of Harrisons Malayalam Ltd., Owner of Arapetta Estate Vs. C. Mohammed Kutty and Others, (2004) 101 FLR 115 : (2004) 1 LLJ 550 ,

(iv) judgment given in the case of the Manager, Koney Estates Vs. Gnana Muthu, (2004) 1 ILR (Ker) 454 : (2004) 1 KLT 319 : (2004) 2 LLJ 171 ,

(v) judgment given in the case of R.M. Engineering Works Vs. Khushalbhai Manilal Chavda and Others, (2013) LabIC 2652 : (2013) 3 LLJ 443 : (2013) 3 LLN 640 : (2013) LLR 803 ,

The learned advocate for the employee has submitted that the amount of interim relief was paid to the employee as solace as the employer failed to implement the pay revision and it was not given in anticipation of the pay revision as submitted on behalf of the employer. He has relied on the office order dated 25th September, 1998 (page No. 15 of the writ petition) which states that pay revision of I.D.A. Executives was due from 1st January, 1997 and wage revision of Unionised Regular Employees was due from 1st April, 1997 and, therefore, the Board of the petitioner Corporation in its 138th meeting held on 9th September, 1998 had approved the payment of adjustable interim relief by 10% of the basic pay subject to a minimum of Rs. 280/- per month. It is submitted that in these facts, the amount of interim relief has to be considered as part of the "wages" for the purposes of computing the amount of gratuity and the subordinate Authorities have rightly considered these aspects.

After hearing the learned advocates for the respective parties and on going through the judgments relied upon by them, I find that the issue raised by the petitioner in this petition is required to be dealt with on the basis of the facts of the case. Whether the amount of interim relief paid to the employee can be included in the term "wages" paid to the employee for the purposes of computing the amount of gratuity depends on the circumstances under which the amount of interim relief was paid to the employee.

The office order darted 25th September, 1998 (page No. 15 of the writ petition) shows that the pay revision of the I.D.A. Executives was due from 1st January, 1997 and the wage revision of Unionised Regular Employees was due from 1st April, 1997. The office order is issued after more than 17 months after the wage revision of the Unionised Regular Employees became due. The office order states that the Board of the Corporation in its 138th meeting held on 9th September, 1998 had approved the payment of adjustable interim relief by 10% of the basic pay subject to the minimum of Rs. 280/- per month. The most important fact which is required to be noted in the office order is that the amount paid as interim relief was to be fully adjusted in the final pay/wage revision package as stated in paragraph No. 2 of the above referred office order. The learned advocate for the employee has rightly submitted that the amount of interim relief was not given in anticipation of pay revision as submitted on behalf of the employer but it was given as solace to the employee as the employer failed to implement the pay revision. In this background, the statement in third paragraph of the office order that the interim relief will be sui-generis and it will not be termed as "pay" nor "allowance" nor "wages" cannot be construed to deprive the employee of his legitimate claim. It is apparent that the employer has consciously introduced this sentence to deprive the employee of the benefits for which the employee is entitled treating the amount of interim relief as part of the wages earned by him.

Considering the facts of the present case the judgment given in the case of Voltas Limited Vs. Chandrakant Y. Bhramhane and others (cited supra) does not assist the employer inasmuch as in that case the conveyance allowance paid to the employee was included in the wages of the employee for computing the amount of gratuity payable to the employee. Similarly, in the case of State Bank of India, Panaji-Goa Vs. Laxmikant Vithal Palekar and others (cited supra) the amount of gratuity payable to the employee was computed by including the special compensatory allowance and fixed personal allowance in the amount of wages. This Court found that the special compensatory allowance and fixed personal allowance paid to the employee in that case could not have been included in the wages for the purposes of computing the gratuity as they would fall in the category of "other allowances" which were excluded from "wages" as per Section 2(s) of the Payment of Gratuity Act, 1972.

In the present case, as is evident from the office order dated 25th September, 1998, the amount of interim relief was paid to the employee as the employer failed to implement the wage revision and the amount of interim relief paid to the employee was not on regular basis but it was until further orders and it was to be adjusted in the final pay/wage revision package. Considering the intention of the employer while making the payment of interim relief, it cannot be said that the amount of interim relief paid to the employee cannot be included in his "wages" for the purposes of computation of the amount of gratuity payable to the employee.

In view of the above, I see no reason to interfere with the impugned orders. The writ petition is dismissed with costs quantified at Rs. 2,000/- to be paid by the petitioner/employer to the respondent No. 1/employee. The amount of costs shall be paid within three months.