JEEWANLAL LIMITED JEEWANLAL LIMITED BINNY LIMITED MADRAS JEEWANLAL LIMITED Vs. AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT:N DURAISWAMY:G SURYANARAYANAN:E GOVINDAN

JUDGEMENT

(1.) These appeals by special leave and the connected special leave petitions from the judgment and order of the Madras High Court dated June 19, 1981 raise a question of substantial importance. The question is whether the words "fifteen days' wages" occurring in sub-sec. (2) of S. 4 of the Payment of Gratuity Act 1972 (hereinafter referred to as the 'Act') in the case of monthly-rated employees, can only mean half a month's wages:i.e. wages which they would have earned in a consecutive period of 15 days or in 13 working days and therefore in calculating the amount of gratuity payable to such employees the rate of wages earned by them has to be multiplied by "thirteen" there being 26 working days in a month and not by "fifteen". A subsidiary question arises as to whether the words "twenty months' wages" occurring in sub-sec. (3) thereof would only mean wages for 520 working days taking the actual working days in 20 months or must mean 600 days taking that a month consists of 30 days.

(2.) It is not necessary to state the facts in any great detail. In all these appeals the respondent in each case was a Monthly-rated employee and the appellant a public limited company was his employer. The facts in each of these cases are more or less similar and it will suffice to state the facts in one of them. In Civil Appeal No. 2332 of 1981 - Messrs Jeewanlal (1929) Ltd. v. The Appellate Authority under the Payment of Gratuity Act, Madras the respondent ceased to be an employee on attaining the age of superannuation after completing 35 years of service. Since he was entitled to payment of gratuity under the Act the appellant calculated the amount of gratuity payable to him under sub-sec. (2) of S. 4 on the basis that "fifteen days' wages meant half of the monthly wages last drawn by him i.e. for 13 working days there being 26 working days in a month. Being dissatisfied with such payment the respondent made a claim under sub-sec. (1) of S. 7 of the Act before the Controlling Authority, Madras, for determination of the amount of gratuity payable to him. He made a demand for payment of an additional sum as gratuity on the ground that his daily wages should be ascertained on the basis of what he actually got for 26 working days and the amount of "fifteen days' wages" should be calculated accordingly not by just taking half of his wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30. The appellant contested the claim contending that the words "fifteen days' wages" occurring in sub-sec. (2) of S. 4 of the Act only mean half a month's wages and since a month consisted of 26 working days the amount of gratuity was rightly arrived at by multiplying the daily wages by 'thirteen'.

(3.) The Controlling Authority by its order dated September 23, 1978 held that for the purposes of calculating "fifteen days' wages" it was necessary to ascertain one day's wage and since a month consists of 26 working days the amount of gratuity should be calculated accordingly i.e. by dividing the monthly wages last drawn by 26 multiplied by 'fifteen' and not by just taking half of his wages for a month of 30 days or by dividing such monthly wages by 30. It accordingly directed the appellant to pay Rs. 6069.00 as gratuity under sub-s. (1) of S. 4 of the Act. On appeal the Appellate Authority, Madras by its order dated July 12, 1976 held that there was an error in the mode of computation of the amount of gratuity payable to the respondent. According to it the gratuity payable to the respondent would have to be calculated at half of his monthly rate of wages i.e. wages he would have earned in a consecutive period of 15 days and his daily wages had to be multiplied by "thirteen" and not by "fifteen" for every completed year of service or part thereof not exceeding six months. It accordingly reduced the amount of gratuity payable to Rupees 5259.80 p.