Civil Appeal Nos
2332 1970 24322784 2877 of 1981 and 7447 to 7497 of 1983 Appeals by Special leave from the Judgment and Order dated the 19th June 1981 of the Madras High Court in Writ Petition Nos 338 4263 of 1977 402880 266278 4056 2171 217080 413678433980 202878208580 2178781590763164 242680 212280 245278 441480 207378 159876 159676 425780 61479 4057 4254 4411 173280 159776 425980 266478 4252 217580205878 397280 26794410801592763571 4259 4058 3570 200780216978 2135 433180 266578 2006 4255 402280 159576 405480 159476 4026217480 216878 356780217278 213380 246978 547078 159376 356980 155176 159176 2008 3156 4029 3165 4055 4409 4408 2427 3412 402440234412316680266378 4225 2134 3157425380 245478402780247178 195980163576 24537821723163802461783158 4053441380207378 3568 2005801542 1540 1378 137778492 33934077 1541137978 30417722679 305030563034 30383037773767426130587716879 3766 3039773048 3035 3047 4262 4259 3988 3053 4260 43837726579 4258 296730553052 3280 3033 3032 3036 30513049304043814382 30421977  264 of 1979
WITH Civil Appeal Nos
2985 87 3398 3410 of 1981 369 410 450 59 3091 3092 of 1982 6083 256083 10778 of 1983 Appeals by Special leave from the Order of the Appellate Authority Under the payment of Gratuity Act Madras dated 29th May 31st January 27th February of 1981 17th  30th April 16th December  20th December 1982 in PGA Nos 2481 31809080138132 131 134 139 129 137 92 13391136 135 of 1980 19 23 25 28 302931 39 of 1981 61 69 101 9866 73 50 63 60 32 33 34 35 36 57 58 59 62 64 65 676874 79 97 668 99 100  49 of 1980 2  6 of 1981 45881 4882 and 12 of 1981 AND Civil Appeal No 2559 of 1984
Appeal by Special leave from the Judgment and Order dated 22nd March 1984 of the Appellate Authority and the Regional Labour Commissioner Central Madras Under the in Appeal No 17 of 1983
AND Special Leave Petition Civil Nos
1819 3324 11382 84 14754 of 1982 and 4940 of 1984
From the Orders dated the 19th July 1981 28th July  12th August 1982 and 16th February 1984 of the Appellate Authority and the Regional Labour Commissioner Central Madras Under the in PGA Nos 2081 177 982 10  1182 and 16 of 1983 Soli J Sorabjee AN Haksar section Ramasubramaniam Sanjay Mohan  DN Gupta for the Appellants in CAS
197081  256083
Dr YS Chitale section Ramasubramaniam Sanjay Mohan DN Gupta for the Appellants in CAS
243281 1077883  255984
section Padmanabhan section Ramasubramaniam Sanjay Mohan  DN Gupta for the Appellants in CA
233281  2985 of 1981 section Ramasubramaniam Sanjay Mohan  DN Gupta for Appellants in rest of the Appeals and for Petitioners in Special Leave Petitions
SH Mehta  MC Tiwari for Respondent No I in CA
No 309182
HS Parihar for Respondent in CA
60 of 1983
Ambrish Kumar for the Respondent
The Judgment of the Court was delivered by 669 SEN J
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 section
2 of s4 of the payment of Gratuity Act 1972 hereinafter referred to as the Act  in the case of monthly rated employes can only mean half a month s wages ie 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 section
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
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 Jeeva lal 1929 Ltd vs The Appellate Authority under the  Madras  Ors the respondent ceased to be an employee on attaining the age of superannuation after completing 35 year 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 section
2 of section 4 on the basis that fifteen days  wages meant half of the monthly wages last drawn by him ie for 13 working days there being 26 working days in a month
Being dissatisfied with such payment the respondent made a claim under sub section
1 of section 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 670 in sub section
2 of section 4 of the Act only meant 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 
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 ie 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 606900 as gratuity under sub section
1 of section 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 ie 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 ever completed year of service or part thereof not exceeding six months
It accordingly reduced the amount of gratuity payable to Rs 525980 p
It however appears that the Appellate Authority in several other cases took a view to the contrary such as the one in Civil Appeal No 2432 of 1981 relating to the same employer Messrs Jeevanlal 1929 Ltd as also in Civil Appeal No 1970 of 1981 relating to another employer Messrs Madura Coats Ltd as also in Civil Appeal No 2559 of 1984 relating to Ms Binny Ltd and upheld the orders of the Controlling Authority
As a result of these conflicting orders passed by the Appellate Authority the employers in some of these cases and the employes in others had to file petitions in the High Court under Article 226 of the Constitution and they have been disposed of in the judgment under appeal
The High Court following the decision of this Court in Shri Digvijay Woollen Mills Ltd etc
vs Mahendra Prataprai Buch etc
and that of the Bombay High Court in Lakshmi Vishnu Textile Mills vs PS Mavlankar held that in order to determine fifteen days  wages of a monthly rated employee under sub section
2 of section 4 of the Act it was necessary 671 to determine one day s wage last drawn by him and then multiply the same fifteen times and the resultant sum had to be multiplied by twenty to arrive at the maximum amount of gratuity payable under sub section
3 of section 4 of the Act
It accordingly restored the orders of the Controlling Authority
In support of these appeals learned counsel for the appellants submitted that the decision of this Court in Shri Digvijay Woollen Mills Ltd case does not lay down any principle but on the contrary the Court expressly observed that  it was not necessary to go into the question as to the correctness of the conflicting views taken by different High Courts  Reliance was placed on the decision of the learned Single Judge of the Andhra Pradesh High Court in Associated Cement Co Ltd Kistna Cement Works Kistna Guntur Distt
vs The Appellate Authority under Regional Assistant Commissioner of Labour Guntur  Ors which was approved by a Division Bench of the same High Court in Swamy  Ors vs Controlling Authority under  Ors
In all fairness to the learned counsel it must be said that they also brought to our notice the decisions of the Calcutta High Court in Hukamchand Jute Mills Ltd vs State of West Bengal  Ors
that of the Bombay High Court in Lakshmi Vishnu Textile Mills  case and that of the Gujarat High Court in Shri Digvijay Woollen Mills  case taking a view to the contrary
It is urged that the words fifteen days  wages occurring in sub s2 of s4 of the Act are clear and unambiguous and must mean half a month s wages and therefore there was no scope for an artificial calculation being made by dividing the wages for a month by the number of working days viz 26 for determining the daily wages and multiplying the same by fifteen to determine the amount representing 15 days wages inasmuch as the wages of a monthly rated employee were for all the 30 days of a month and not 26 working days alone and therefore fifteen days  wages in his case would amount only to half a month s wage
It is further urged that Parliament amended sub s3 of s4 of the Act on recommendation of the Select Committee and raised the ceiling of gratuity from 15 months  wages to 20 months  wages and the reason given by the Select Committee was that there should be an incentive for 672 employees to serve beyond a period of 30 years
It is submitted that by providing for a maximum gratuity of 20 months  wages the Select Committee meant that it should be payable for a service of 40 years and that if the contention of the employees were to prevail the maximum gratuity would become payable even after completion of 34 years and 8 months instead of 40 years
We are afraid this contention cannot prevail
These submissions broadly stated give rise to two question
The first is whether for the purpose of computation of fifteen days  wages of a monthly rated employee under sub s2 of s4 of the Act the monthly wages last drawn by him should be treated as wages for 26 working days and his daily rate of wages should be ascertained on that basis and not by taking the wages for a month af 30 days or fixing his daily wages by dividing his monthly wages by 30
The second question is whether the words twenty months  wages occurring in sub s3 of s4 of the Act must be construed to mean wages for 520 days taking the actual working in days in twenty months or must mean wages for 600 days taking that a month consists of 30 days
As regards the first the answer must be in the affirmative in view of the decision of this Court in Shri Digvijay Woollen Mills s case but learned counsel for the appellant want us to take a second look at is as according to them nothing was settled in that case
As regards the second question the learned counsel contend that sub ss2 and 3 of s4 of the Act must receive a harmonious construction as they provide for the mode of calculating the total amount of gratuity payable to an employee upon termination of his services under sub sl of s4 of the Act and it is said that a month cannot mean 26 working days for the purpose of sub s2 and 30 days for the purpose of sub s3
The is enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments as a measure of social security
It has now been universally recognized that all persons in society need protection against loss of income due to unemployment arising out of incapacity to work due to invalidity old age etc
For wage earning population security of income when the worker becomes old or infirm is of consequential importance
The provisions of social security measures retiral benefits like gratuity provident fund and pension known as the triple benefits are of special importance
In 673 bringing the Act on the statute book the intention of the legislature was not only to achieve uniformity and reasonable degree of certainty but also to create and bring into force a self contained all embracing complete and comprehensive code relating to gratuity
The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit
As is true in every case involving construction of a statute our starting point must be the language employed by the legislature
It is necessary to set out the relevant statutory provisions of the Act
Sub s1 of s4 of the Act reads 41 Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years a on his superannuation or b on his retirement or resignation or b on his death or disablement due to accident or disease
Provided that the completion of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement Provided further that in the case of death of the employee gratuity payable to him shall be paid to his nominee or if no nomination has been made to his heirs
Explanation For the purposes of this section disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement Sub ss2 and 3 of s4 of the Act provide as follows 42 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 Provided that in the case of a piece rated employee daily wages shall be computed on the average of the total wages received by him for a period of three months immediately proceeding the termination of his employment 674 and for this purpose the wages paid for any overtime work shall not be taken into account Provided further that in the case of an employee employed in a seasonal establishment the employer shall pay the gratuity at the rate of seven days  wages for each season  43 The amount of gratuity payable to an employee shall not exceed twenty months  wages
 The term wages  is defined in s2s as follows 2s 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
 In dealing with interpretation of sub ss2 and 3 of s4 of the Act we must keep in view the scheme of the Act
Sub section
1 of s4 of the Act incorporates the concept of gratuity being a reward for long continuous and meritorious service
Sub section
2 of s4 of the Act provides for payment of gratuity at the rate of fifteen days  wages based on the rate of wages last drawn by the employee concerned for every completed year of service
The legislative intent is obvious
Had the legislature stopped with the words fifteen days  wages occurring in sub section
2 of s4 of the Act there was something to be said for the submission advanced by the learned counsel for the appellants based upon the decision of learned Single Judge of the Andhra Pradesh High Court in Associated Cement s case which was later approved by a Division Bench of that Court in Swamy s case
But the legislature did not stop with the words fifteen days  wages in sub section
2 of s4 of the Act
The words fifteen days  wages are preceded by the words at the rate of and qualified by the words based on the rate of wages last drawn by the employee concerned
The emphasis is not on what an employee would have earned in the course of fifteen days during the month when his employment was last terminated but on the rate of fifteen days  wages for every completed year of service based 675 on the rate of wages last drawn by the employee concerned
The word rate appears twice in sub section
2 of s4 and it necessarily involves the concept of actual working days
In Shri Digvijay Wollen Mills  case the Court rightly observed that although a month is understood to consist of 30 days gratuity payable under the Act treating the monthly wages as wages for 26 working days is not new or unknown
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 a 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
It is not correct to say that the decision in Shri Digvijay Woolen Mills  case does not lay down any principle
Gupta J speaking for the Court set out the following passage from the Judgment of the Gujarat High Court in Shri Digvijay Woollen Mills  case The employer is to be paid gratuity for every completed year of service and the only yardstick provided is that the rate of wages last drawn by an employee concerned shall be utilized and on that basis at the rate of fifteen days wages for each year of service the gratuity would be computed
In any factory it is well known that an employee never works and could never be permitted to work for all the 30 days of the month
He gets 52 Sundays in a year as paid holidays and therefore the basic wages and dearness allowance are always fixed by taking into consideration this economic reality
A worker gets full month s wages not by remaining on duty for all the 30 days within a 676 month but remaining on work and doing duty for only 26 days
The other extra holidays may make some marginal variation into 26 working days but all wage boards and wage fixing authorities or Tribunals in the country have always followed this pattern of fixation of wages by this method of 26 working days
 And then observed The view expressed in the extract quoted above appears to be legitimate and reasonable The learned Judge then went on to say Ordinarily of course a month is understood to mean 30 days but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month followed by the Gujarat High Court cannot be called perverse He further observed that it was not necessary to consider whether another view was possible and declined to interfere under article 136 in a matter where the High Court had taken a view favourable to the employees and the view taken could not be said to be in any way unreasonable and perverse and then added Incidentally to indicate that treating monthly wages as wages for 26 working days is not anything unique or unknown
 We find that the same view has been taken by as many as three High Courts viz by the Calcutta Bombay and Gujarat High Courts in the cases referred to at the Bar
We find no compelling reason to take a view different from the one expressed by this Court in Shri Digvijay Woollen Mills  case
The intention of the legislature enacting sub section
2 of section 4 of the Act was not only to achieve uniformity and reasonable degree of certainty but also to create and bring into force a self contained all embracing complete and comprehensive code relating to gratuity as a compulsory retiral benefit
The quantum of gratuity payable under sub section 2 of s4 of the Act has to be fifteen days  wages based on the rate of wages last drawn by the employee concerned for every completed year of service or more in excess of six 677 months  subject to the maximum of 20 months  wages as provided by sub section
3 thereof
The whole object is to ensure that the employee concerned must be paid gratuity at the rate of fifteen days  wages for 365 days in a year of service
The total amount of gratuity payable to such employee at that rate has to be multiplied by the number of years of his service subject to the ceiling imposed by sub section 3 of s4 of the Act viz that such amount shall not exceed 20 months  wages
The construction of sub section
2 of s4 of the Act adopted by the learned Single Judge of the Andhra Pradesh High Court in Associated Cement Company s case and later approved by a Division Bench of that Court in Swamy s case would make it utterly unworkable
If the determination of the amount of gratuity payable under sub section
2 of s4 depends on the number of calendar days in a month in which the services of the employee concerned terminates the quantum of gratuity payable would necessarily vary between an employee and an employee belonging to the same class drawing the same scale of wages with like service for the same number of years
Obviously this could not have been the legislative intention
The next question is whether a month cannot mean 26 working days for purposes of sub section
2 of s4 of the Act and 30 days for purposes of sub section
3 thereof
It is said that if a month under sub section
2 connotes 26 working days in a month for purposes of calculating the amount of gratuity then the rule of harmonious construction requires that the words 20 months  wages in sub section
3 thereof must mean wages for 520 working days taking the actual working days in 20 months and not 600 days taking that a month consists of 30 days
The contention is wholly misconceived
Sub sections
2 and 3 of s4 of the Act are designed to achieve two separate and distinct objects and they operate at two different stages
While sub section
2 provides for the mode of calculation of the amount of gratuity sub section
3 seeks to impose a ceiling on the amount of gratuity payable at 20 months wages
It is meant to provide an incentive to employee to serve for the period of 30 years or more By no rule of construction sub section
2 of s4 of the Act which uses the words fifteen days  wages and not half a months wages be called in aid for construction of the words 20 months  wages appearing in sub section
3 of s4 of the Act
We do not think it necessary to deal at length with the last and 678 third question raised in some of these appeals viz the objection to the jurisdiction of the Controlling Authority under section 3 of the Act to entertain the claim against some of the appellants
It is said that Messers Jeevanlal 1929 Ltd is an all India concern having its branches in more than one State and therefore the appropriate government  within the meaning of s2 a 1 b of the Act in relation to them is the Central Government for purposes of section 3
The appropriate government is the Central Government in relation to an establishment belonging to or under the control of the Central Government or having branches in more than one State or of a factory belonging to or under the control of the Central Government or in the case of a major port mine oil field or railway company
Section 2 a 1 of the Act reads as follows 2 In this Act unless the context otherwise requires a appropriate government means i in relation to an establishment a belonging to or under the control of the Central Government b having branches in more than one State c of a factory belonging to or under the control of the Central Government d of a major port mine oil field or railway company the Central Government ii in any other case the State Government It would appear that the definition of appropriate government in s2 a 1 in relation to an establishment makes a distinction between establishments and factories
In relation to an establishment belonging to or under the control of the Central Government and of a factory belonging to or under the control of the Central Government the appropriate government is the Central Government
But the Central Government is the appropriate government only in relation to an establishment having branches in more than one State
There is no like provision made in relation to such an establishment having factories in different States
We feel that the point relating to the jurisdiction of the Controlling Authority under s3 of the Act
does not really arise
It appears that Messrs Jeewanlal1929 Ltd 679 have their registered and head office at Calcutta and branch offices and factories at Calcutta Bombay and Madras and sales offices at Delhi Hyderabad and Cochin
It has also two factories in Madras viz Shree Ganeshar Aluminium Works and Messrs Mysore Premier Metal Factory
It employs about 300 members of clerical staff at the head office and its branch offices throughout the country as well as in its two factories and employs about 1300 workmen in its factories at Calcutta Bombay and Madras
We are inclined to the view that the Controlling Authority had jurisdiction to entertain the claim of an employee working in an office attached to a factory as such an office would be an adjunct of the factory but that is not the question before us
The Controlling Authority has in fact confined the adjudication of claims in relation to workmen who were employed at the two factories at Madras but declined to entertain the claims of employees who were working either at the branch office at Madras or at the office attached to the factories in question
That being so the contention relating to jurisdiction of the Controlling Authority under s3 of the Act must fail
It has been our unfortunate experience that a beneficient measure like providing for a scheme of retiral benefit has been be set with many difficulties in its application
It need not be over emphasised that a legislation of this kind must not suffer from any ambiguity
In the recent past the Court in Lalappa Lingappa and Ors
vs Laxmi Vishnu Textile Mills Ltd faced with the problem as to whether the expression actually employed in Explanation I to s2 c of the Act must in the context in which it appeared meant actually worked
The inclusive part of the definition of continuous service  in s2 c is to amplify the meaning of the expression by including interrupted service under certain contingencies which but for such inclusion would not fall within the ambit of the expression continuous service 
But the use of the words actually employed  in Explanation 1 to s2 c of the Act created a difficulty
The Court observed that it was not permissible to attribute redundancy to the words actually employed  and accordingly held that the expression actually employed  in Explanation I to s2 c of the Act meant actually worked 
The law declared by this Court in Lalappa Lingappa s case supra resulted in denial of gratuity to a large number of permanent 680 employees whose short term absence had remained unregularised due to lack of appreciation of the significance for the purpose of working out their entitlement to gratuity
It is to be regretted that the Government waited for a period of three years before introducing the Payment of Gratuity Amendment Bill 1984 to remove the lacuna in the definition of continuous service in s2 c of the Act by specifically providing that a period of absence in respect of which no punishment or penalty has been imposed would not operate to interrupt the continuity of service for the purpose of payment of gratuity
It also amplified the definition of continuous service under s2 c of the Act
Such a belated legislation must have worked great injustice to a large number of permanent employees
In these cases now before us the Court is faced with the problem of determining the mode of calculating the amount of gratuity payable to the employees concerned under sub section
1 of s4 of the Act upon the termination of their services
It turns on the much vexed question as to the true meaning of the words fifteen days  wages occurring in sub section 2 of s4 of the Act
The section does not specify how the rate of wages last drawn by such employees are to be determined for the purpose of determining the rate of fifteen days  wages under sub section
2 of s4 of the Act
This gave rise to some doubt and difficulty amongst different High Courts in computation of the retiral benefit
It is always an unequal struggle between the capital and labour and these cases furnish an instance where workmen after putting in long and meritorious service for over 30 years or more have been driven from one court to another for the last 12 years due to the reason that the words fifteen days  wages occurring in sub section
2 of s4 of the Act were susceptible of two possible conflicting constructions
In a situation like this the Government should have intervened at once to introduce a Bill for inserting an appropriate provision in the Act specifying the mode of calculating the rate of wages last drawn by such employees for the purpose of determining the rate of fifteen days  wages under sub section 2 of s4 of the Act
In retrospect we wish to impress upon the Government that whenever such doubt or difficulty is expressed by the High Courts in the application of provisions of social security measures viz retiral benefits gratuity provident fund and pension and the like 681 they must always introduce legislation to cure the defect rather than wait for judicial interpretation by the highest Court
We may also add that the Government may consider the desirability of setting up a National Labour Commission which may be entrusted not only with the task of making periodical review of such social welfare legislations from time to time but also to suggest radical reform of the laws relating to industrial relations which must be brought in tune with the changing needs of the society
In the result the appeals as well as the special leave petitions must fail and are dismissed with costs throughout
The costs are quantified at the sum of Rs 10000 two thirds of which shall be deposited with the Supreme Court Legal Aid Committee of which Shri Subba Rao is the Hony
Secretary and the remaining one third shall be paid to the respondent
NVK Appeals and petitions dismissed


Summary:
The respondent a monthly rated employee of the appellant a public limited company 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  the appellant calculated the amount of gratuity payable under sub s2 of s4 on the basis that fifteen days  wages meant half of the monthly wages last drawn ie for 13 working days
there being 26 working days in a month The respondent being dissatisfied with this payment made a claim under sub s1 of s7 before the Controlling Authority for payment of an additional sum of gratuity on the ground that the daily wages should be ascertained on the basis of what he actually got for 26 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 Controlling Authority held that for the purpose of calculating fifteen days  wages it was necessary to ascertain one day s wage and since a 665 month consists of 26 working days the amount of gratuity should be calculated by dividing the monthly wages last drawn by 26 and multiplying by fifteen  and not by just taking half of the monthly wages or by dividing such monthly wages by 30
On appeal the Appellate Authority held that there was an error in the mode of computation of the amount of gratuity that was payable and held that the gratuity payable would have to be calculated at half of the monthly rate of wages ie wages earned in a consecutive period of 15 days and the 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
The amount of gratuity payable was accordingly reduced
The High Court under Article 226 held following the decision of this Court in Shri Digvijay Woollen Mills Ltd etc
vs Mahendra Prataprai Buch etc  that in order to determine fifteen days  wages of a monthly rated employee under sub s2 of s4 of the Act it was necessary to determine one day s wages last drawn by him and them multiply the same fifteen  times
and the resultant sum has to be multiplied by twenty to arrive at the maximum amount of gratuity payable under sub s3 of s4 of the Act
The orders of the Controlling Authority were restored
In the Appeals and Special Leave Petitions it was contended on behalf of the Management that the words fifteen days  wages occurring in sub s2 of s4 of the Act are clear and unambiguous and must mean half a month s wages and therefore there was no scope for an artificial calculation being made by dividing the wages for a month by the number of working days
Dismissing the Appeals and Special Leave Petitions  HELD 1i The was enacted to introduce a scheme for payment of gratuity for certain industrial and commercial establishments as a measure of social security
The significance of this legislation lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit
672G 673B ii 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 the language is plain and unambiguous
the Court must give effect to it whatever may be the consequence
The argument of inconvenience and hardship is only admissible in construction where the meaning of the statue is obscure and there are two methods of construction
In an anxiety to advance the beneficent purpose of the legislation the Court must not yield to the temptation of seeking ambiguity when there is none
675B D 21 The intention of the Legislature in enacting sub s2 of s4 of the Act was not only to achieve uniformity and reasonable degree of certainty but 666 also to create and bring into force a self contained all embracing complete and comprehensive code relating to gratuity as a compulsory retiral benefit
The quantum of gratuity payable under sub s2 of s4 of the Act has to be fifteen days  wages based on rate of wages last drawn by the employee concerned for every completed year of service or more in excess of six months subject to the maximum of 20 months  wages as provided by sub section
676G H 677A Shri Digvijay Woollen Mills Ltd etc
vs Mahendra Prataprai Buch etc
   referred to
Associated Cement Co Ltd Kistna Cement Works Kistna Guntur Distt
vs The Appellate Authority under Regional Assistant Commissioner of Labour Guntur  Ors
and Swamy  Ors
vs Controlling Authority under  Ors
 1978 52 IFJ 138 over ruled
ii The word rate  appears twice in sub s2 of s4 and it necessarily involves the concept of actual working days
Although a month is understood to consist of 30 days gratuity payable under the Act treats the monthly wages as wages for 26 working days
675A iii Sub ss2 and 3 of the Act are designed to achieve two separate and distinct objects and they operate at two different stages
While sub section
2 provides for the mode of calculation of the amount of gratuity sub s3 seeks to impose a ceiling on the amount of gratuity payable at 20 months wages
It is meant to provide in incentive to employees to serve for the period of 30 years or more
Sub s2 of s4 of the Act which uses the words fifteen days  wages and not half a months wages cannot be called in aid for construction of the words 20 month  wages  appearing in sub s3 of s4 of the Act
677F G 3
The definition of appropriate government  in s2a1 in relation to an establishment makes a distinction between establishments and factories
In relation to an establishment belonging to or under the control of the Central Government and of a factory belonging to or under the control of the Central Government the appropriate government is the Central Government
But the Central Government is the appropriate government only in relation to an establishment having branches in more than one State
There is no like provision made in relation to such an establishment having factories in different States
678F G 4
Whenever doubt or difficulty is expressed by the High Courts in the application of provisions of social security measures namely retiral benefits gratuity provident fund etc the Government must always introduce legislation to cure the defect rather than wait judicial interpretation by the highest Court
680H Lalappa Lingappa and Ors
vs Laxmi Vishnu Textile Mills Ltd referred to
667 5
The Government may consider the desirability of setting up a National Labour Commission which may be entrusted not only with the task of making periodical review of social welfare legislations from time to time but also to suggest radical reform of the laws relating to industrial relations which must be brought in tune with the changing needs of the society
681A B