V N SUNDER Vs. STATE OF KERALA

JUDGEMENT

(1.) ALL these petitions challenge the validity of the kerala Industrial Employes' Payment of Gratuity Act, 1970, for short the Act which came into force on 18-2-1970. This Act replaced Ordinance 7 of 1969 which had come into operation on 10-1-69. The Act was superseded by the coming into force of the Payment of Gratuity Act, 1972 (hereinafter referred to as the central Act) passed by Parliament and which came into force on 16-9-1972. S. 14 of the Central Act specifically provides that the Central Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than the Central Act or in any instrument or contract having effect by virtue of any enactment other than that Act.

(2.) BEFORE we proceed to deal with the contentions raised by counsel it is necessary to state the scheme provided by the Act. S. 4 enjoins that "gratuity shall be payable to an employee - (a) on his superannuation; (b) on his retirement, resignation, retrenchment, discharge or dismissal from service after completion of a minimum period of five years of continuous service; (c) on his death or total disablement due to accident or disease. " The gratuity payable is at the rate of 15 days' wages on the last drawn wages for every completed year of service or part thereof in excess of six months subject to a maximum amount of 15 months wages. The Act saves the right of any better terms of gratuity or retirement benefits under any award or agreement or contract with the employer. The last two provisos to S. 4 of the act are in these terms: - "provided also that in the case of voluntary retirement or resignation from service in any particular year, not more than five percent of the total number of employees in the factory, plantation, establishment or undertaking shall be entitled to payment of gratuity and if the number of employees who voluntarily retire or resign from service exceeds five per cent of the total number of employees, the eligibility of an employee for payment of gratuity shall be determined on the basis of the length of the service of the employee in the factory, plantation, establishment on undertaking: Provided further that an employee who voluntarily retires or resigns from service shall be eligible to claim gratuity only if one months notice in writing of his intention so to retire or resign had been given to the employer".

(3.) THE Central Act contains similar provisions THE rate under that Act is also 15 days' wages. THE maximum however is a total of twenty months' wages. THE expression "continuous service" is defined in almost similar terms as in the Act. THE definition of the term "wages" in the Central Act however is not the same definition contained in the Act. S. 2 (s) of the Central Act defining wages is in these terms: "2 (s) "wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance".