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Judgment
K. Chandru, J.—""It has been our sad experience to find employers trying to stifle the efforts of employees in their legitimate claims seeking
benefits under the Industrial Law by tiring them out in adjudication proceedings raising technical and hyper-technical pleas. Industrial adjudication
in bona fide claims have been dragged on by employers for years together on such pleas. It would always be desirable for employers to meet the
case of the employees squarely on merits and get them adjudicated quickly. This would help industrial peace. It is too late in the day for this Court
to alert the employers that their attempt should be to evolve a contended labour.
(Justice V. Khalid''s opinion expressed in H.D. Singh Vs. Reserve Bank of India and Others, ).
It is sad to note that Indian Railways have come before this Court for the third time to deny payment of gratuity payable to the contesting
respondents, who ekked their living on a wage of Rs. 2/- for collecting each cinder basket. Their wages did not exceed beyond Rs. 5/- per day.
After rendering more than two decades of service, the contesting respondents were made to wait for over 18 years to receive their gratuity. Their
claim made before the second respondent was successfully thwarted by the three rounds of litigation that the Railways have brought in. The
amounts claimed by the contesting respondents will be only a fraction of the amount, which the Railways had spent in these litigations. Neither there
was any principle of law was raised nor there was heavy financial stake involved in these writ petitions.
The Railways replaced steam locomotives by diesel locomotives. Before dieselisation, there were two steam loco sheds located at Salem and
Erode. Removal of ashes from the fire box of the engines and loading of coal were done in these loco sheds. The released ashes from the steam
engine contained half burnt coal pieces called as cinders. The Railwaymen from these areas demanded the half burnt coal pieces to be given to
them for their domestic cooking stoves. On account of demands made by the Railwaymen, the Senior Subordinate Officers in-charge of those two
loco sheds engaged persons to enter into the railway premises and for picking the cinders. The contesting respondents are such persons, who were
permitted to pick cinders. They were paid Rs. 2/- per cinder basket. Subsequent to the dieselisation of the broad gauge lines in the Palghat division
(in which Erode and Salem sheds were then located), the availability of cinders got substantially reduced and the contesting respondents were
made jobless. The contesting respondents were not declared as railway servants and they were not covered by any of service benefits available to
casual workers, who are declared as temporary servants. The petitioner Railways did not maintain any records in respect of these workmen.
Having rendered jobless, these workmen approached the Controlling Authority under the Payment of Gratuity Act, 1972 (for short Gratuity
Act), who is the second respondent herein. The amount of gratuity claimed by these contesting respondents were hardly less than Rs. 4000/- and
was based on an average daily wage of Rs. 12/-. It was claimed by the workmen that they used to collect six baskets of cinders per day. They had
been employees since the year 1962.
The applications filed by the contesting respondents were taken on file during the year 1992. It was heard by one S. Shivaswamy, who was the
then Assistant Labour commissioner (Central)-I, Chennai, and the notified Controlling Authority under the Gratuity Act. The petitioner Railways
entered appearance in respect of gratuity applications filed by 30 workmen. They contended that these applications were filed after 9 years and
hence barred by limitation. It was also stated that they were not railway employees and were paid only coolie on per basket rate. They did not sign
any attendance register and no identity cards were given for free treatment in the railway hospitals. There was no recovery from wages towards
Provident Fund. In essence, there was neither any agreement nor contract to hold any employer-employee relationship between them and the
contesting respondents. In view of the diselisation, steam engines went out of use and there was no cinders left for the contesting respondents to
collect. Hence they have stopped coming to work.
The Controlling Authority rejected the stand of the petitioners railways by his order, dated 24.1.1995. He held that the contesting respondents
were coolies and ''employees'' within the meaning of Section 2(e) of the Gratuity Act. He also held that these workmen have put in continuous
service and their average earning per day was roughly Rs. 14/-. In that view of the matter, he computed various amounts towards gratuity payable
to these workmen. He also held that the delay was attributable only to the railways'' administration, who with a view to deprive the workmen''s
coolie, had not paid their due gratuity in terms of Section 4(1) of the Gratuity Act. Thereore, he stated that he will be failing in his duty if he did not
order interest on the delayed gratuity payable.
Aggrieved by the order passed by the second respondent, the petitioner railways preferred an appeal u/s 7(7) of the Gratuity Act. Once again
they raised the ground that there was no employer-employee relationship between them and the contesting respondents. That they are not
employees within the meaning of Section 2(e) of the Gratuity Act as they were not railway servants. With reference to the certificates produced by
the contesting respondents regarding duration of employment certified by local officials, the railways took the stand that they were fabricated
documents given by retired employees and they were not authorised to issue such certificates. They also stated that the Controlling Authority''s
observation quoting the speech made by the Pundit Jawaharlal Nehru during the Constituent Assembly Debates were not relevant. It was alleged
that the Controlling Authority had assumed the role of protagonist of downtrodden and the direction to pay gratuity was based on humanitarian
ground rather than on law. However, the appeals filed by them were not prosecuted by them diligently and were allowed to be dismissed on
30.5.1999. The railways deposited the amount excluding the interest claimed before the Controlling Authority, which is a condition precedent for
filing appeals.
Though applications were filed for restoring the gratuity appeals, their applications were dismissed. Thereafter, the petitioner filed writ petitions
in W.P. No. 10441 of 1997 and batch cases challenging that order before this Court. Since workers due to their poverty were not able to appear
before this Court, this Court had appointed an amicus curiae to represent them in those proceedings. It was a sad feature that the contesting
respondents reduced to penury could not even make appearances before this Court in those batch of writ petitions. A learned Judge of this Court,
by his final order, dated 19.2.2003, allowed those writ petitions and restored those gratuity appeals. In paragraph 32 of the said judgment, he had
observed as follows:
As already pointed out, being a quasi judicial authority exercising powers of appeal, the second respondent''s power is co extensive with that
of the controlling authority and that apart the second respondent has incidental powers to restore an appeal which has been dismissed for non
prosecution.
Pursuant to the restoration of appeals, the matters were renumbered as appeals of the year 2003. It was at that time, the second respondent
Controlling Authority by name S. Shivaswamy got promoted as the Regional Labour Commissioner (Central) who was also the notified appellate
authority under the Gratuity Act.
A memo was filed by the Railways stating that it may not be proper for that officer to hear those appeals filed against his orders as an appellate
authority. The said officer committed a grave error due to his over enthusiasm. He passed an order, dated 30.8.2004 dismissing the appeals.
Therefore, it gave a second opportunity for the petitioner railways to come before this Court to file another batch of writ petitions being W.P. Nos.
28621 of 2005 and batch cases. Some of the writ petitions were even allowed to file in the year 2006. The petitioner Railways never explained the
enormous delay of nearly more than one year to one and half years in filing the writ petitions.
However, a division bench of this Court (before which the matters were placed) found that the action of S. Shivaswamy in hearing the appeals
was not proper. In that view of the matter allowed the writ petitions by a final order, dated 6.8.2007 and remanded the matter before the appellate
authority with a direction that it should be heard by a person other than S. Shivaswamy. In paragraphs 7 and 8 of the said order, the division bench
held as follows:
Therefore, applying the above said principles laid down by the Apex Court in Amar Nath Chowdhury Vs. Braithwaite and Company Ltd. and
Others, , to the facts and circumstances of the case, we are satisfied that when the said Shivaswamy, who acted as the Controlling Authority, and
disposed of the Gratuity Applications filed by the labours working under the writ petitioner on 30.11.1994, should not have acted as an Appellate
Authority, sitting on appeal, on the order passed by himself, inspite of the objections raised by the writ petitioner. Thus, the orders passed by the
said Shivaswamy amounts to bias and hit by the principles of natural justice and therefore, they are liable to be set aside.
Accordingly, following the above said judgment of the Supreme Court, we set aside the orders all dated 30.08.2004 passed by the second
respondent herein. The subject matters are remitted back to the appellate authority for fresh disposal, after giving due opportunity to both the
parties. It is made clear that the Appellate Authority shall be an officer other than Shri S. Shivaswamy. With such directions, all these Writ petitions
stand disposed of.
Thereafter, the appeals were renumbered as appeals of the year 2007 and were heard by the first respondent appellate authority. By this
process, the same appeals of the year 1999, became the appeals of the year 2003 and again appeals of the year 2007. The appellate authority, i.e.
The first respondent held that the delay in moving the Controlling Authority was understandable and the contesting respondents satisfied the
definition of the term ''employee'' as found in Section 2(e) of the Act. The cinder pickers who are paid basket rates were employed by the
railways. Their employment was admitted by the railways. He also held that the Gratuity Act is retroactive and therefore, the services rendered
before the Act came into force can also be counted. It was also held that they are not independent contractors and the Controlling Authority''s
order was based on records produced before him. However, with reference to some of the claims, he held that though employees were claiming
Rs. 12/- per day, he fixed the average earning as Rs. 150/- per month and took it as the last drawn wages. After holding that the minor
discrepancies found in the claims made were understandable he ordered that if any excess amount was paid, that can be adjusted against the
interest payable.
With reference to the interest claim, the appellate authority held that Section 7(3)A of the Act provides for interest if employer did not pay
gratuity when it became due and payable, a simple interest as notified by the Central Government can be worked out. Therefore, the appeals filed
by the petitioner railways were rejected with some modifications in some of the appeals, which are not relevant to decide the present lis between
the parties. It is against this final order passed by the first respondent appellate authority, dated 31.10.2008, the present writ petitions have been
filed.
Heard Mr. V.G. Sureshkumar, learned Standing Counsel for the Railways and Mr. K. Sudarsanan, learned Counsel takes notice for the
contesting respondents.
The learned Counsel for the petitioners once again reiterated the same contentions raised before the Controlling Authority and the appellate
authority. The contentions raised can be summarised as below:
The contesting respondents are not workmen of railways and not covered by any rules framed by the railways. The delay in filing gratuity
applications were not satisfactorily explained. No records were produced to prove their services.
The first question as to whether the contesting respondents were employees within the meaning of Section 2(e) of the Gratuity Act has to be
examined. Section 2(e) reads as follows:
2(e) ""employees'' means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oil-field, plantation, port,
railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether the terms of such
employment are express or implied, [and whether or not such person is employed in a managerial or administrative capacity, but does not include
any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules
providing for payment of gratuity.]
Since the petitioner railways themselves have admitted that the contesting respondents were neither railway servants (permanent or temporary),
the exclusionary clause found therein is not attract. The contesting respondents do not hold any post under the Central Government. They come
within the main definition u/s 2(e). Before the Controlling Authority, it was contended that there were no registers to show their employment. They
were only paid Rs. 2/- per cinder basket. They were not regular in attendance. Hence there was no employe-employee relationship. The issues
raised by the petitioner railways are no longer res integra.
The Supreme Court vide its judgment in Silver Jubilee Tailoring House and Others Vs. Chief Inspector of Shops and Establishments and
Another, has held that the various tests laid down to determine an employer-employee relationship were not foolproof. Even the application of
supervision and control test may not be the sole criteria. In fact, the court applied the organisation test and held that if an employee is employed for
the purpose of rendering service to an organisation, then the employer-employee relationship can said to be established. In that case, the Supreme
Court held that there need not be any regular attendance nor there should be any supervision or control.
The said judgment was subsequently quoted with approval by a Constitution bench of the Supreme Court in Mangalore Ganesh Beedi Works
and Others Vs. Union of India (UOI) and Others, . The same view was reiterated once again by the Supreme court in Hussainbhai, Calicut Vs.
The Alath Factory Thezhilali Union, Kozhikode and Others, . Therefore, the authority was in correct in coming to the conclusion that the contesting
respondents are employees come within the meaning of Section 2(e) of the Gratuity Act.
In this context, as to how to interpret the provisions of the Gratuity Act, it is necessary to refer to the judgment of the Supreme Court in
Jeewanlal (1929) Ltd. Vs. Appellate Authority under the Payment of Gratuity Act and Others, . In paragraph 11, the Supreme Court observed as
follows:
In construing a social welfare legislation, the court should adopt a beneficent rule of construction; and if a section is capable of two
constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the
Act has been passed. When, however, the language is plain and unambiguous, the Court must give effect to it whatever may be the consequence,
for, in that case, the words of the statute speak the intention of the Legislature. When the language is explicit, its consequences are for the
Legislature and not for the courts to consider. The argument of inconvenience and hardship is a dangerous one and is only admissible in
construction where the meaning of the statute is obscure and there are two methods of construction. In their anxiety to advance beneficent purpose
of legislation, the courts must not yield to the temptation of seeking ambiguity when there is none.
In K.P. Backiasamy v. Appellate Authority under the Payment of Gratuity Act, 1972 and Regional Labour Commissioner (Central), Chennai
and Ors. reported in 2008 (2) LLN 246, in paragraph 8, this Court had dealt with the defence of limitation and the same may be usefully extracted
below:
In the present case, when the workman sent a notice in Form I under Rule 10(1), there is no reply from the employer and they have also not
settled the gratuity within the due date. While for filing an appeal, Sectin 7(7) itself prescribes a time-limit, for presenting an application before the
controlling authority, under the Rule, no delegation has been given for the State to make the rule relating to limitation. In any event, the delay in filing
the application is not unduly long. On the contrary, as held by the Patna High Court in its decision reported in Mineral Area Development Authority
v. State of Bihar and Ors. 1998 (3) L.L.N. 484, the scheme of the Act must be kept in mind and it is only then, the application will have to be
decided. Similar view was also expressed by the Allahabad High Court in its decision reported in Rajendra Deva v. Additional Labour
Commissioner (Accounts) Kanpur-cum-Appellate Authority, and Anr. 1999 (3) L.L.N. 62....
With reference to the service details, the contesting respondents have produced certificates issued by the then loco shed officers and it was
found acceptance by the authority. The railways have pleaded that they have no records in respect of contesting respondents. Therefore, there is
no gainsaying those certificates were not valid as it had been issued by officers, who are not authorised to issue them. If that is the documentary
evidence available which was supported by the assertion made by the contesting respondents, there is nothing wrong in the officer accepting it
regarding his finding relating to their services.
In such circumstances, it is advisable to keep the Gandhian test applied by the Supreme Court in Gujarat Steel Tubes Ltd. and Others Vs.
Gujarat Steel Tubes Mazdoor Sabha and Others, . The following passage found in paragraph 148 may be usefully extracted below:
...Every proposal must be bottomed on the basic economic fact that the beneficiaries are from the many below the destitution line, This Court
has, in a very different context though, drawn attention to the Gandhian guide-line:
Whenever you are in doubt..apply the following test. Recall the fact of the poorest and the weakest man whom you may have seen, and ask
yourself, if the step you contemplate is going to be of any use to him.
It is apt here.
The authorities had also modified the last drawn wages into one of Rs. 150/- and in case if there was some excess claim, they allowed the
same to be adjusted against the interest payable. Therefore, the order cannot be found fault with on this score.
The last contention with reference to the interest payable, it must be stated that the Act itself provides it in case of default in payment. The
Controlling Authority had upheld the claims as early as in January, 1995. It is the Railways who have been dragging this matter for the last 15 years
with three rounds of litigation. By this process, they would have spent more amounts of money than what was payable to the contesting
respondents, who slogged for railways for over two decades with dare sustenance of Rs. 5/- per day. If the amount ordered by the authorities was
paid without interest, it would have lost its real value. The interest payable will not re-compensate its original value of money, which was due and
payable in the year 1983 itself and which was 27 years before.
Under these circumstances, all the writ petitions will stand dismissed. The petitioner railways are also directed to pay each Rs. 1000/- as cost
to each of the contesting respondents. Consequently, connected miscellaneous petitions also stand dismissed.
In view of the dismissal of the writ petitions, the contesting respondents are permitted to withdraw the amount already in deposit towards their
gratuity if not already withdrawn. If some of the contesting respondents are not alive as on date, then the Controlling Authority will ascertain the
legal heirs of such of those contesting respondents and pay the amounts to those legal heirs. The petitioner Railways are also directed to calculate
and pay the interest amounts to each of the contesting respondents within a period of four weeks from the date of receipt of copy of this order
without fail.