LAKSHMI VISHNU TEXTILE MILLS Vs. P S MAVLANKAR

JUDGEMENT

(1.) This group of cases raises an important question as to the true interpretation of the words "twenty months' wages" in S. 4(3) of the Payment of Gratuity Act of 1972 (hereinafter referred to as "the Act") indicating the maximum amount of gratuity payable to any employee, engaged in factories or other establishments covered by S. 1(3) of the Act. The petitioners are all employers, while the contesting respondents in all these cases are daily rated workmen. They claimed gratuity from the employer on their retirement. Section 4(1)(b) entitles every employee to gratuity on his retirement, on completion of continuous service for not less than five years. The word "continuous service" is defined in S. 2(c) of the Act. Gratuity is payable under S. 4(2) of the Act, at the rate of "fifteen days' wages" for every completed year of service on the basis of the last drawn wages. This rate applies to daily rated and piece rate workman and others, excepting employees of a seasonal establishment to whom gratuity is payable at the rate of seven days' wages for each season. Sub-section (3) of S. 4 then prescribes a ceiling for the amount of such gratuity. It reads as follows : "4(3) The amount of gratuity payable to an employee shall not exceed twenty months' wages".

(2.) The rate of gratuity fixed under S. 4(2) necessitates working out the quantum of daily wages of a workman without regard to whether he is paid on hourly, daily, weekly or monthly basis. The question of so working out daily wages in the case of daily rated workman cannot present any difficulty as it is fixed and he is paid on that very basis. But a dispute still arose as to how many days the words "fifteen days" and "twenty months" should cover. The workmen worked out their claim for gratuity at the rate of actual fifteen days' wages for every completed of service, by multiplying the amount of their actual daily wages by fifteen and of "twenty months' wages", in terms of S. 4(3), by multiplying it by 600, treating each month of 20 months to be of 30 days'.

(3.) The petitioners, on the other hand, contended that all workmen, without regard to the mode of payment of their wages, work only for 26 days' in a month. Fifteen days' period is equivalent to half a month. In the case of monthly rated workmen half a month's wages turn out actually to be those of 13 days' wages. The Legislature could not have intended to fix different or higher rate of gratuity for daily rated workmen and discriminate against monthly rated workmen. Thus, a month must be equated with 26 days according to the petitioners, and 15 days with the half a month. This is how employers insisted on limiting yearly rate of gratuity at 13 days' actual wages and maximum gratuity amount at 520 days' wages (13 X 2 X 20).