Satyandrabhai B. Shah vs Torrent Power Ltd.

Mr. K.M. Thaker, J.(Oral)—Heard Mr. Raval, learned advocate for the petitioner and Mr.Wadhwa, learned AGP, Mr. Mehta, learned advocate for the respondent.

In present petition the petitioner has prayed, inter alia, that:�

"14a. To issue writ of certiorari or a writ in the nature of certiorari or any other writ order or direction quashing or setting aside the impugned orders at Annexure ''E'' and ''H'' attached to the petition of the controlling authority and the appellate authority respectively as being illegal arbitrary and against the provisions of the Gratuity Act."

At the outset it is relevant to mention that from the relief prayed for by the petitioner in the petition it emerges that the petitioner is aggrieved by the order passed by the Appellate Authority constituted under the Payment of Gratuity Act, 1972.

However, at the time of hearing of this petition, learned advocate for the petitioner submitted that actually the grievance of the petitioner is restricted only to the claim for interest.

4.1 It is admitted by learned advocate for the petitioner that the amount payable toward gratuity is paid however according to the claimant he is entitled for interest which is not paid and therefore he has taken out present petition.

So as to appreciate maintainability of the petitioner''s claim as well as the petition, it is necessary to take into account relevant factual background.

Before turning to the relevant facts it is appropriate to mention at the outset that the petitioner has, undisputedly, raised grievance against termination of his service and the industrial dispute wherein the petitioner has challenged the respondent company''s action of terminating his service, is pending before learned Labour Court.

6.1 On this count it has emerged from the submissions by learned advocate for the claimant and learned advocate for the company that the company terminated service of the petitioner. Upon termination of the service, the petitioner felt aggrieved and he raised industrial dispute. The dispute is referred for adjudication by way of reference to learned Labour Court. The reference is registered as Reference (LCA) No.437 of 2006.

6.2 It is undisputed fact that the said reference � and thereby the petitioner''s challenge against terminating his service order termination � is pending for adjudication before learned Labour Court, Ahmedabad.

6.3 It is during the pendency of the said dispute/reference against his termination of his service that the petitioner demanded gratuity.

From the fact that the petitioner raised industrial dispute against his termination from service and has challenged employer''s decision/order, it is clear that he has not accepted the order terminating his service.

7.1 In this view of the matter, the claim/demand for gratuity would, during pendency of the dispute, would be premature.

Though the service of the petitioner was terminated by way of dismissal/discharge and more particularly despite the fact that the challenge against order of termination was pending before learned Labour Court, since the claimant demanded gratuity, the company paid gratuity to the claimant on 14.12.2010.

8.1 It appears that after the company paid gratuity to the claimant, he demanded interest on the ground that his service was terminated in October 2005 and gratuity came to be paid in December 2010 and that therefore he would be entitled for interest or delay in payment of gratuity. With such claim for interest the petitioner herein filed application before Controlling Authority.

8.2 The application was registered as Gratuity Claim Application No. 95/2011.

8.3 The Controlling Authority considered the said Gratuity Claim Application and for the reasons recorded in the order dated 21.9.2011 the Controlling Authority rejected the said Gratuity Claim Application No.95/2011.

8.4 Feeling aggrieved by the said order dated 21.9.2011 the claimant filed Appeal before the Appellate Authority.

8.5 The Appellate Authority considered the Appeal and dismissed the Appeal vide order dated 31.5.2012.

8.6 It is against the said order that the petitioner has taken out this petition.

From above mentioned factual background, it emerges that against the order dated 24.10.2005 whereby the petitioner is dismissed from service, the petitioner has raised an industrial dispute and the said industrial dispute is referred for adjudication by the claimant by way of Reference No.437 of 2006 and the said reference is still pending before the learned Labour Court for adjudication.

It is relevant to note that if the petitioner succeeds in the said reference and if the learned Labour Court passes final award in favour of the petitioner and grants the relief of reinstatement, then the claimant would be continued in service.

10.1 In this view of the matter at this stage i.e. while dispute against termination from service is pending, the claim application either for gratuity amount and/or for interest would not be maintainable � besides other reasons � on the ground that at this stage the claim is premature and that termination by way of dismissal from service is not covered under section 4(1) of the Payment of Gratuity Act.

It is in this backdrop and in view of such provision that the petitioner''s claim for gratuity has to be considered.

The grievance of the petitioner against impugned orders has to be considered in light of above mentioned position and facts.

So far as the factual background is concerned, it has emerged from the record and from the submissions by learned advocate for the petitioner and the respondent that the service of the petitioner came to be terminated by present respondent company vide order dated 24.10.2005.

According to the petitioner, he is dismissed from service on the allegation he remained absent from duty without leave and permission.

Immediately after his service came to be terminated, the claimant raised industrial dispute and challenged the order of termination. The said dispute is referred for adjudication to the learned Labour Court by way of Reference No.437 of 2006. It is an admitted fact that the said reference is still pending adjudication before the learned Labour Court.

After challenging the dismissal order and during pendency of above referred Reference No.437 of 2006, the petitioner demanded gratuity vide his notice in May 2007 i.e. about two years after the company dismissed him from service.

16.1 It appears that since the dispute against termination was pending, the company had not paid gratuity. However, the petitioner, again in October 2010 (i.e. registered notice dated 13.10.2010), demanded gratuity with interest.

16.2 It appears that though the dispute was pending before the learned Labour Court the company, considering the demand by the claimant, paid gratuity to the claimant � petitioner.

16.3 The claimant himself has admitted in the petition and learned advocate for the petitioner also admitted during hearing of the petition that the respondent company has paid gratuity and wages to the petitioner � claimant on 14.12.2010.

16.4 A document dated 14.12.2010 (i.e. a letter dated 14.12.2010 addressed by the company to the respondent) is available on record of this petition at Annexure�C, page 76. According to the details mentioned in the said letter, the petitioner company seems to have paid Rs.2,57,611/� towards gratuity and Rs.7,961.73 towards unavailed privilege leave and Rs.1,395.90 towards leave salary (i.e. total Rs.2,66,968.63). The said fact is not disputed by the claimant � petitioner and it translates into the fact that the amount payable towards gratuity is paid to the claimant.

16.5 Having received aforesaid amount towards gratuity, despite pendency of the dispute with regard to the dismissal from service, the petitioner demanded interest on the ground that the company had delayed payment of gratuity. The petitioner � claimant, vide his letter dated 7.1.2011, demanded interest @ 10% in respect of allegedly delayed payment of gratuity.

16.6 The said demand was not accepted by the company. Therefore, somewhere in February 2011, the claimant filed application before the Controlling Authority. The said application came to be registered as Gratuity Claim Application No.95 of 2011.

16.7 The Controlling Authority adjudicated the said application demanding interest over allegedly delayed payment and rejected the application vide order dated 21.9.2011. The authority rejected the application on the ground that though the company was entitled to forfeit the gratuity since the service was terminated by way of dismissal, the company had paid the amount towards gratuity even before the submission of claim application in prescribed Form�I and that, therefore, claim for interest cannot be granted.

16.8 The Controlling Authority specifically recorded in the order that so far as the claim towards gratuity is concerned, there is no dispute and the claimant/workman admits that the amount payable towards gratuity is paid in entirety and no amount towards gratuity, however, claim for interest survives.

16.9 As mentioned earlier, the Controlling Authority rejected the application on the ground that though the amount could have been forfeited in view of provision under Section 4(6), the company has paid amount and that, therefore, the claim for interest does not survive.

16.10 Feeling aggrieved by the said decision of the Controlling Authority, the petitioner filed appeal which came to be registered as Appeal No.126 of 2011.

16.11 The Appellate Authority considered rival submissions by the parties and having noticed the fact that the dispute against termination is pending by way of Reference No.437 of 2006, the Appellate Authority dismissed the appeal on the ground that the application would not be maintainable in view of pendency of the dispute before the learned Labour Court. It is the said order of the Appellate Authority which is challenged in this petition.

Mr. Raval, learned advocate for the petitioner submitted that the service of the petitioner was terminated on the charge that he remained absent without leave and that, therefore, provision under Section 4(6) would not be attracted and gratuity cannot be forfeited. Learned advocate for the petitioner submitted that the Controlling Authority failed to appreciate the fact that in view of the ground on which the petitioner''s service was terminated, there was no occasion for forfeiture of gratuity and that, therefore, the Controlling Authority could not have brought in picture the provision under Section 4(6). Learned advocate for the petitioner � claimant relied on the decision in the case of H. Gangahanume Gowda v. Karnataka Agro Industries Corporation Ltd. [(2003) 1 LLJ 1119].

Learned advocate for the respondent company opposed the petition and submitted that the petitioner has challenged order of the Appellate Authority and so far as the said order is concerned, the Appellate Authority has rejected the appeal in view of pendency of the dispute/reference before the learned Labour Court wherein the claimant � petitioner has challenged the dismissal from service and that, therefore, there is no error in the order of the Appellate Authority and the petition does not deserve to be entertained. Learned advocate for the respondent relied on the decision in the case of Sabarkantha District Central Co�operative Bank Ltd. v. Ramanbhai M. Patel and others [2010 (3) GLH (U.J.) 5].

I have considered the rival submissions and also considered the material available on record and I have also considered the orders passed by the Controlling Authority and the Appellate Authority.

It is not in dispute that the service of the petitioner is terminated by way of dismissal vide order dated 24.10.2005.

Undisputedly, the petitioner � claimant is dissatisfied with the dismissal order and the claimant � petitioner has raised industrial dispute against dismissal from service and the dispute/reference against the dismissal order dated 24.10.2005 is referred for adjudication to the learned Labour Court vide Reference No.437 of 2006 and the said reference is pending.

It is not in dispute that in view of the said demand by the workman, despite above mentioned facts, the company paid gratuity to the claimant � petitioner on 14.12.2010.

It is not in dispute that so far as quantification of the amount payable towards gratuity is concerned, the claimant has admitted that the company has paid full and final amount payable towards gratuity and nothing is outstanding so far as the principal amount towards gratuity is concerned. However, the claimant raised dispute before the Controlling Authority for claiming interest.

At this stage, it would be appropriate to take into account relevant provisions under the Act i.e. section 4(1) and section 7 of the Payment of Gratuity Act. Section 4(1) provides that when gratuity would become payable. The said section 4(1) and sections 7(3A) and 7(4b) read thus:

"4(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,�

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease; Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

a [Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.]

Explanation.�For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

7(3A) If the amount of gratuity payable under subsection (3) is not paid by the employer within the period specified in sub�section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long�term deposits, as the Government may, by notification specify : Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.".

7(4)(b) Where there is a dispute with regard to any matter or matters specified in clause (a), the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute."

It is pertinent that according to the said provision, gratuity would be payable when an employee retires from service after completion of service of 5 years and when he reaches prescribed age of superannuation after completion of service of 5 years or when he tenders resignation, after completion of service of 5 years or he dies while in service. It is pertinent that the said Section 4(1) of the Act does not include cessation of service on account of dismissal or discharge. The cause of action/claim under section 7(4)(b) arises when service comes to end as contemplated under section 4(1) and the claimant complies the eligibility criteria prescribed by section 4(1) of the Act. It is only then that a person would be entitled for gratuity and/or interest and on non�payment or short payment or delay in payment he can file claim under section 7. The said section 7 reads thus:

"7(1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form as may be prescribed, for payment of such gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in subsection (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.

(3A) If the amount of gratuity payable under subsection (3) is not paid by the employer within the period specified in sub�section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long�term deposits, as the Government may, by notification specify:

Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.

(4)(b) Where there is a dispute with regard to any matter or matters specified in clause (a), the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute."

An application under section 7(4)(b) can be filed by eligible employee when cause for payment/claim for gratuity arises. The claim for interest can be raised in accordance with section 7(3A). Section 7(1) and (2) read with section 7(4)(b) brings in picture section 4(1).

Thus, when the petitioner � claimant has not accepted the order of dismissal and has challenged the order of dismissal and when the said dispute is pending before the learned Labour Court, in the first instance, the claim for gratuity itself would be premature because the dispute with regard to the order of dismissal/termination of service is pending and alive before the learned Labour Court and if the petitioner succeeds before the learned Labour Court and the order of dismissal is set aside and the learned Labour Court finds that the claimant''s demand for reinstatement is justified and accordingly grants reinstatement, then the petitioner would continue in service. Therefore, during pendency of such dispute cause for demanding gratuity or cause for payment of gratuity would not be maintainable and cannot be entertained and consequently claim for interest would not be maintainable.

Under the circumstances, the claim for gratuity would be premature at the stage when the dispute is pending before the learned Labour Court against the order of termination and that, therefore, claim for interest would not lie.

The Controlling Authority failed to take into account the said position and instead, the Controlling Authority proceeded on different ground but reached to right conclusion. Thus, when the conclusion by the authority is the same which it would have otherwise reached to, had it considered above mentioned position, and in view of the fact that the said order of the Controlling Authority has merged into Appellate Authority''s order and having regard to the fact that the Appellate Authority has refused to entertain the claim on the ground of pendency of the dispute, the orders do not warrant interference.

So far as the decision on which the learned advocate for the petitioner placed reliance is concerned, the said decision does not help the petitioner in light of the facts of present case. Learned advocate for the petitioner relied on the said decision to support the submission that if the payment of gratuity is delayed, then the workman is entitled for interest. He also relied on the decision to support the case that when the service of employee is terminated by way of absence without leave, section 4(6) would not be attracted. However, in light of the facts of present case it is clear that the employer has not invoked and not applied section 4(6) and any action of forfeiture is not taken by the employer. Actually, learned advocate for the petitioner misdirected himself by relying on Section 4(6) of the Act and misconstrued the provision under the Act and claimed that the company had caused delay in payment of gratuity and that, therefore, he is entitled for interest. The employer has already paid gratuity. When challenge against the dismissal order is pending before the learned Labour Court and when the claimant � petitioner has not accepted the order of dismissal from service, then the cause for demanding gratuity does not arise and that, therefore, at this stage question of payment for interest and claim for interest are matter of distant � remote claim. Hence, at this stage an application demanding gratuity and/or for claim of interest is not maintainable and such application is premature application. Therefore, the said decision is not applicable in view of the facts of present case.

In this view of the matter, present petition does not deserve to be entertained at this stage and is required to be rejected with clarification that if, as a final result in the reference case in connection with the dispute against petitioner''s dismissal from service, the petitioner is defeated and the order of termination is not disturbed by the learned Labour Court and if demand for reinstatement is rejected, then on final conclusion of the dispute with regard to the termination, the petitioner may raise any claim in accordance. If, at that stage, the claimant raises any demand/claim, it would be considered and decided in accordance with law.

With the aforesaid clarifications and decisions, the petition is disposed of. Rule is discharged.