ASSOCIATED CEMENT CO LIMITED KISTNA CEMENT WORKS Vs. APPELLATE AUTHORITY UNDER PAYMENT OF GRATUITY ACT

JUDGEMENT

(1.) THIS writ petition arises out of proceedings taken under the Payment of Gratuity Act, 1972 (hereinafter referred to as " the Act,") The petitioner is a company registered under the Companies Act engaged in the manufacture of cement and having for that purpose a number of factories, one of which is Kistna Cement Works in Guntur District. The writ petition is filed to quash the orders dated 12-1-1974 of the Appellate Authority under the Act, viz. , the Regional Assistant Commissioner of Labour, Guntur, the 1st respondent herein, confirming the order of the Controlling Authority under the Act dated 27-8-1973. The 3rd respondent was employed by the petitioner-company on 13-2-1945 and was retired on and with effect from 1-4-1973 on his reaching the age of superannuation which is 60 years of age. The rate of wages drawn by the 3rd respondent at the time of retirement was Rs. 14,37 per day. The 3rd respondent was offered payment of Rs. 5,230. 68 towards the amount due to him as gratuity for 28 years of service as per the provisions of Section 4 (2) of the Act. Payment of gratuity is provided under Section 4 (1) of the Act. It is provided under Sub-section (2) of Section 4 that for every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned. The question involved in the writ petition is what is meant by "fifteen days' wages. " Is it 15 times the rate of daily wage drawn by the 3rd respondent at the time of retirement or the wages he was drawing at the time of retirement in a period of fifteen days. According to the petitioner-company the gratuity has to be worked out only on the basis of the wages a retired employee was drawing in a period of fifteen days at the time of his retirement, and not fifteen times the daily wage based on the rate of wages last drawn by the employee. According to the recommendations of the Second Wage Board accepted by the Government with some modifications and the request made to the managements to implement the said recommendations for the operatives in Grades E to A the conversion ratio between monthly wages and daily wages is given as 1:26, i. e. , for instance if the monthly wage is Rs. 52 the daily wage will work out to Rs. 2 and similarly if the daily wage is Rs. 2 the monthly wage will work out to Rs. 52. This is on the basis of actual working days in a month excluding: the four Sundays which are holidays. On this basis, according to the petitioner-company the gratuity payable to the third respondent has to be worked out based on the rate of wages last drawn by the employee. It is not in dispute that the daily wage of the 3rd respondent based on the rate of wages last drawn by him at the time of his retirement was Rs. 14. 37 per day. If according to the petitioner-company the gratuity at the rate of fifteen days' wages based on the rate of wages is to be worked out, it will be thirteen times the daily wage and not fifteen times the daily wage as claimed by the 3rd respondent as in a period of 15 days there will be two Sundays and the actual working days will be 13 days. If gratuity is worked out on that basis it would come to Rs. 5,230-68 for the period of service rendered by the 3rd respondent and that is the amount which was offered to the 3rd respondent by the petitioner-company. If it is calculated as claimed by the 3rd respondent at the rate of fifteen times the daily wage per year of service it would come to Rs. 6,035-40, the difference between the two being Rs. 804-72. The 2nd respondent-controlling Authority, which is the authority under the Act as provided under Section 71 for determining the amount of gratuity whenever there is a dispute between the employer and the employee about its quantum by its order dated 27-8-1973 held that the 3rd respondent was entitled to the payment of the additional amount of Rs. 804-72 and directed the company to pay the said additional amount. In the appeal filed by the company against the order of the Controlling Authority, the Appellate Authority confirmed the order of the Controlling Authority by the coming to the conclusion that the words " at the rate of 15 days wages based on the rate of wages last drawn by the employee concerned " would clearly mean 15 times the daily rate of wage. It is this view taken by the Controlling Authority and the Appellate Authority that is assailed by the company in this writ petition.

(2.) ACCORDING to the petitioner-company the method of fixing the daily rate of operatives by dividing the monthly rate by 26 has a crucial bearing on the wage structure in the cement industry and that as the daily rate of wage of the 3rd respondent was evolved by dividing the monthly rate by 26, it already contained an element of wages for the weekly day of rest and, therefore, fifteen days wages would only mean 13 time the daily wage. Further, the expression " fifteen days " wages can only mean half a month's wages in view of the scheme of the Act and the context in which it is used, according to the petitioner, would appear from the following ;

(3.) I see considerable force in the contention of the petitioner. When it is mentioned in Sub-section (3) of Section 4 of the Act that the amount of gratuity payable to an employee shall not exceed twenty months' wages it must have been meant only at the rate of half a month for each year and equivalent to 15 days wages based on the rate of wages last drawn by the employee for each year. By a reading of the two provisions together, in my opinion, there is no escaping of the conclusion that when the Legislature mentioned 15 days' wages based on the rate of wages for each year in Sub-section (2) of Section 4 it only means half a month's wage, i. e. , the wages the employee was drawing by working half a month prior to the termination of his employment and that would become to 13 times the wages based on the rate of wages. In the context in which it is used, the expression " 15 days " wages based on the rate of wages can only mean the wages the employee would have got by working 15 days and not 15 times the daily wage. If really the Legislature intended it to be 15 times the daily wages, it would have mentioned it so clearly in the section. This intrpretation only would be harmonious and consistent with the provisions contained in Sub-section (3) of Section 4. A similar view was taken by the other High Courts in interpreting similar provisions in other enactments.