THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.182 OF 2004 DATED : 22.10.2009 BETWEEN Inty Krishna Rao … Petitioner And The Managing Director (FAC), A.S.M. Co-op. Sugars Limited, Palakollu – 534 260, West Godavari Dist. And Others … Respondents WRIT PETITION NO.207 OF 2004 DATED : 22.10.2009 BETWEEN Veera Sambasiva Rao … Petitioner And The Managing Director (FAC), A.S.M. Co-op. Sugars Limited, Palakollu – 534 260, West Godavari Dist. And Others … Respondents THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NOs.182 AND 207 OF 2004 COMMON ORDER These two writ petitions, grounded on similar facts and raising the same issue for consideration, are amenable to disposal by this common order. The petitioner in Writ Petition No.182 of 2004 assailed the proceedings of ASM Co-op. Sugars Limited, Palacole, the first respondent, in Roc.OM/ASM/6155/2003 dated 25.06.2003, whereby the petitioner’s request for adopting the pay drawn by him subsequent to 07.09.1993 for determination of his terminal benefits was rejected. The petitioner sought a consequential direction to pay him the difference in the gratuity amount, strictly in accordance with the explanation to Section 4 (2) of the Payment of Gratuity Act, 1972 (for short, ‘the Act of 1972’) along with earned leave salary. The petitioner joined the services of the first respondent on 30.11.1963 as a Helper. His services were made permanent in the year 1970. He was promoted as an Assistant Fitter in the year 1973 and as a Foreman in the year 1983. He is therefore an employee within the meaning of Section 2(e) of the Act of 1972. He claims to have been sent on deputation in the year 1973 to the Cuddapah Co- op. Sugar Factory, Doulathapuram, and to NVR Co-op. Sugar Factory, Jampani, in the year 1996. He retired from service on 30.06.2000 at which point of time, he was drawing the salary of Rs.5,246-40 Ps. without adding the benefit of the revised pay scales of 1998-99. The petitioner further stated that as the first respondent was facing a financial crisis, the Government decided to sell it in exercise of the powers conferred by Section 12-A of the A.P. Co-operative Societies Act, 1964. This exercise was handed over to the Implementation Secretariat, Public Enterprises Department, Government of Andhra Pradesh and the first respondent Unit was thereafter sold to M/s.Delta Paper Mills, West Godavari. However, the claims of all the retired employees of the first respondent had to be cleared from out of the sale consideration realized from the said sale, by the Officers of the Implementation Secretariat. The sale consideration was deposited with the Implementation Secretariat and the first respondent sent necessary bills for sanction and release of the amounts to the employees. It is the case of the petitioner that he is entitled to gratuity on the basis of the wages last drawn by him, i.e. Rs.5,246-40 Ps., in accordance with Section 4(2) of the Act of 1972, but the first respondent calculated the gratuity on the basis of the salary drawn by him during the year 1993, before his deputation to the Cuddapah Co- op. Sugar Factory. The Commissioner and Director of Sugar and Cane Commissioner, Andhra Pradesh, the second respondent, realized that a mistake was committed by the first respondent in this regard and through proceedings dated 28.02.2002, directed the first respondent to send revised bills according to law. In spite of the same, the first respondent calculated the gratuity on the basis of the petitioner’s last drawn pay in the year 1993, before his deputation and paid him a sum of Rs.45,675/- in the month of December, 2002. The petitioner claimed that the balance gratuity along with earned leave salary amounting to Rs.81,337/- was still due to him. He filed Writ Petition No.6155 of 2003 in this regard earlier and by order dated 09.04.2003, this Court permitted the petitioner to file a representation along with all necessary particulars and the first respondent was directed to pass appropriate orders thereon within a month. The petitioner made representation dated 12.04.2003, duly furnishing the correct particulars, but as the first respondent failed to pass orders within the time stipulated, he filed Contempt Case No.702 of 2003 before this Court. Thereupon, the first respondent issued the impugned proceedings dated 25.06.2003 rejecting the request of the petitioner to compute his gratuity amount on the basis of the last drawn salary of the petitioner immediately prior to his retirement in the year 2000. In Writ Petition No.207 of 2004 also, similar proceedings were passed by the ASM Co-op. Sugars Limited, Palacole, the first respondent, in Roc.No.3409/62 dated 25.06.2003 rejecting the request of the petitioner therein for payment of gratuity and other terminal benefits adopting his last drawn pay before his retirement. The petitioner in this case was working as a Blacksmith in the first respondent and claims to have been sent on deputation to NVR Co- op. Sugars Limited, Jampani. He retired from service in December, 2000. Similar factual assertions as were made in W.P.No.182 of 2004 with regard to the sale of the first respondent Unit and the consequent liability of meeting the claims of the retired employees from such sale consideration, are made in this case also. It is the case of the petitioner that he is entitled to payment of gratuity based on his last drawn pay prior to his retirement, but the first respondent computed the gratuity and terminal benefits on the basis of his pay in 1993 prior to his deputation. He accordingly claimed that a sum of Rs.77,179-50 was due to him towards the balance gratuity amount and earned leave salary, after deducting the amount already paid to him. The petitioner had earlier filed Writ Petition No.6140 of 2003 before this Court in this regard and by order dated 09.04.2003, this Court was pleased to permit him to file a representation furnishing necessary particulars as to his last drawn salary and the first respondent was directed to pass appropriate orders thereon within one month. However, in spite of his having made a representation on 12.04.2003 giving all necessary particulars, the first respondent failed to pass appropriate orders. He therefore filed Contempt Case No.701 of 2003 before this Court. Thereupon, the impugned proceedings dated 25.06.2003 were issued by the first respondent rejecting his request for re-computation of the gratuity and terminal benefits. Hence, these two writ petitions. A common counter-affidavit is filed in both the writ petitions on behalf of the first respondent admitting that the first respondent became sick and that a lay-off was imposed on 07.09.1993. The Unit was thereafter working with only skeleton staff and ultimately, the Government privatized the Unit on 27.12.2001, extending terminal benefits to the employees of the first respondent taking the date of closure of the Unit as 07.09.1993. The Revenue Divisional Officer, Narsapur, who deposed to the counter on behalf of the first respondent, being its in-charge Managing Director, stated that the petitioners in these two cases who had worked as Foreman and Blacksmith in the first respondent were discharged from service on 07.09.1993. He asserted that they were not continued as part of the skeleton staff. Basing on this assertion, he stated that the terminal benefits due to them were computed taking into account the date 07.09.1993 and a sum of Rs.54,666/- and Rs.48,118/- were paid to the petitioners in Writ Petition Nos.182 of 2004 and 207 of 2004 respectively. It is the case of the first respondent that after they were laid-off, the petitioners managed with the Managements of Cuddapah Co-op. Sugars Limited, Doulathapuram and NVR Co-op. Sugars Limited, Jampani, and worked there as seasonal employees. He stated that the representations made by the petitioners in pursuance of the orders of this Court in Writ Petition Nos.6155 and 6140 of 2003 were considered on merits and having found that the petitioners did not enjoy continuity of service after 07.09.1993, their request for computing the gratuity on the basis of the pay drawn by them subsequent to that date was not found worthy of consideration and accordingly, rejected. He stated that the question of deputing the petitioners to other Co-op. Sugar Factories did not arise and that the petitioners themselves voluntarily went and joined in such other factories. The first respondent accordingly denied the entitlement of the petitioners to claim re-computation of their gratuity and terminal benefits on the basis of the salaries drawn by them after 07.09.1993. It is relevant to note that in pursuance of the interim orders of this Court in these two writ petitions, an amount of Rs.81,337/- towards the petitioner’s claim in W.P.No.182 of 2004 and an amount of Rs.77,159/- towards the petitioner’s claim in W.P.No.207 of 2004 have been kept in deposit in a Nationalized Bank. The issue for consideration is whether the first respondent is justified in rejecting the request of the petitioners for re-computation of their gratuity and terminal benefits taking into account the salaries drawn by them after 07.09.1993, that is, immediately prior to their retirement from service in the year 2000. A perusal of the proceedings impugned in these two writ petitions would show that the first respondent rejected this request on the ground that the petitioners were not continued in the service of the first respondent as skeleton staff and that there was no continuity of service after 07.09.1993, so far as the first respondent was concerned. However, this stand of the first respondent, reflected not only in the impugned proceedings but also in its counter-affidavit filed before this Court, is belied by the material placed on record by the petitioners. A copy of the letter dated 15.07.2002 addressed by the first respondent to the Assistant Provident Fund Commissioner, Rajahmundry, is filed by the petitioner in W.P.No.182 of 2004 to show that the first respondent informed the said authority of his retirement on 30.06.2000 and requested him to settle his provident fund account. This proceeding would not have been issued if the petitioner in Writ Petition No.182 of 2004 had already been discharged from service on 07.09.1993. More clinching evidence is also forthcoming in the form of the letters addressed by the first respondent speaking of the deputation of the petitioner. A copy of the letter of the first respondent in Rc.No.Layoff/Deputation/93-94/G dated 04.10.1993 is placed on record which speaks of deputation of employees to Cuddapah Co-op. Sugars Limited, Doulathapuram, and the name of the petitioner in Writ Petition No.182 of 2004 is at Sl.No.1. Similarly, a copy of the letter of the first respondent in Ref.Deputation 2/94-G3, dated 09.12.1997 is placed on record. This letter was addressed by the first respondent to the Managing Director, NVR Sugars Limited, Jampani, and speaks of the deputation of the petitioner in W.P.No.182 of 2004. Specific instructions were given in the said letter with regard to the deductions to be effected from the salary of the petitioner. This material goes to show that the first respondent continued to treat the petitioner in WP.No.182 of 2004 as part of its establishment till the date of his retirement in the year 2000. Similarly, in Writ Petition No.207 of 2004 the petitioner therein placed on record the proceedings of the NVR Co-op. Sugar Limited, Jampani, in Rc.No.14/Estt-E1/94 dated 10.12.1994 speaking of the deputation of staff from the first respondent and another organization. Reference is made to the letter of the first respondent dated 28.11.1994 in this regard. The name of the petitioner in Writ Petition No.207 of 2004 finds mention at Sl.No.9 in the list of the employees who were brought on deputation. A copy of the proceedings of the first respondent in Rc.No.30/94/G3 dated 09.11.2000 is also placed on record. This proceeding speaks of the retirement dates of the employees on attaining the age of superannuation. The name of the petitioner in Writ Petition No.207 of 2004 finds mention at Sl.No.3 of the departmental employees and his date of retirement is shown as 31.12.2000. It is relevant to note that the petitioners’ name does not find mention amongst the seasonal employees and is separately mentioned under the caption ‘Department’ along with others. Another proceeding which speaks in favour of the petitioner is that of the first respondent in Ref.Deputation 2/94/G3 dated 19.07.1997 whereby the first respondent through its Person-in-Charge, the Joint Collector, addressed the NVR Co-op. Sugars Limited, Jampani, stating that the petitioner in W.P.No.207 of 2004 was working on deputation with it and was sanctioned an annual increment with effect from 01.02.1997. The first respondent therefore requested payment of the same with effect from the said date. In the light of the aforestated proceedings, it is clear that the first respondent continued to treat the petitioners in both these cases as part of its establishment till the date of their retirement. That being so, it is not open to the first respondent to baldly claim that they did not enjoy continuity of service after 07.09.1993. Though the first respondent in its counter stated that the petitioners could not have been sent on deputation to the other Co-op. Sugar Factories, no material has been placed on record to show that the same was not permitted as per the bye-laws of the first respondent. It is relevant to note that the proceedings placed before this Court reflect that one P.Bathi Reddy was not only the Managing Director of the first respondent, but was also the Managing Director of NVR Co-op. Sugars Limited, Jampani. In such circumstances, it is not possible for this Court to glean as of what understanding may have prevailed between the Sugar Companies at that point of time whereby the employees of the first respondent were sent on deputation to the other sugar factories. Be that as it may, the proceedings of the first respondent make it amply clear that the petitioners in these two cases were treated as its own employees upto the date of their retirement in the year 2000. In such circumstances, the impugned proceedings rejecting the request of the petitioners for re-computation of their gratuity and terminal benefits taking into account their last drawn salary immediately prior to their retirement, cannot be sustained. Section 4(2) of the Act of 1972 requires the employer to pay gratuity at the rate of 15 days wages for every completed year of service on the rate of wages last drawn by an employee. The respondents shall therefore re-compute the gratuity payable to the petitioners on the basis of the salary last drawn by them immediately prior to their retirement, in accordance with Section 4(2) of the Act of 1972 and shall pay the same with interest as per the provisions of the Act of 1972 along with earned leave salary so re- computed, from out of the amounts deposited with the Nationalized Bank in pursuance of the interim orders of this Court duly supplementing the same, if inadequate. The said exercise shall be completed within a period of two months from the date of receipt of a copy of this order. The writ petitions are accordingly allowed. There shall be no order as to costs. -------------------------- SANJAY KUMAR,J _____OCTOBER, 2009. PGS THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NOs.182 AND 207 OF 2004 _____OCTOBER, 2009.