CWP No.5784 of 1989 --1-- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 5784 of 1989 Date of decision : 4.3.2010 Pir Chand and others ...Petitioners Versus State of Haryana & another ...Respondents CORAM : HON'BLE MR.JUSTICE AJAY KUMAR MITTAL **** Present: Mr. Subhash Ahuja, Advocate, for the petitioners. Mr. Ashwani Markanday, DAG, Haryana, for respondent No.1. Mr. Raman B Garg, Advocate, for respondent No.2. **** AJAY KUMAR MITTAL, J. (ORAL) This judgment shall dispose of Civil Writ Petition Nos. 2070 and 5784 of 1989 as the same are based on the identical facts and the following common question of law is involved therein:- Whether under Section 4(2) of the Payment of Gratuity Act, 1972 (in short 'the Act'), while calculating "fifteen days' wages", the monthly wages are to be taken as for 30 days or for 26 working days ? However, for brevity, the facts have been taken from Civil Writ Petition No.5784 of 1989. The petitioners except petitioner Nos.13 and 14 retired from the services of respondent No.2-Municipal Committee, Hissar, whereas petitioner Nos.13 and 14 are the legal heirs of its CWP No.5784 of 1989 --2-- ex-employees. The petitioners had earlier approached this Court by way of several writ petitions claiming gratuity for the work done by them with respondent No.2. The said writ petitions were allowed and respondent No.2 was held liable to make payment of gratuity to the petitioners therein, in accordance with the relevant provisions of the Act. However, while making the payment, the respondents had treated the monthly wages/salary as of 30 days. I have heard learned counsel for the parties and have gone through the files with their able assistance. Learned counsel for the petitioners submitted that the gratuity which was payable to the petitioners, should have been determined by calculating "fifteen days' wages" by taking their wages as of 26 working days and not of 30 days as had been done by the respondent-Municipal Committee. Learned counsel placed reliance upon the judgments of the Apex Court in Shri Digvijay Woolen Mills Ltd. V. Mahendra Prataprai Buch, AIR 1980 Supreme Court 1944 and M/s. Jeewanlal Ltd. V. The Appellate Authority, Unreported Judgments of the Supreme Court 1985, Vol. 17 page 106; and a judgment of this Court reported as Bhagwant Singh and others V. State of Haryana, 1988(1) SLR 434, in support of his submission. Learned counsel for the respondents, on the other hand, controverted the claim of the petitioners and supported the action of the Municipal Committee. He submitted that in case the Court does not accepts the stand of the respondent, then this Court may award interest on delayed payment of gratuity @ 9% p.a. in view of an amendment in Section 8 of the Act in the year 1987, according to which interest at the rate of 9% p.a. w.e.f. 1.10.1987 could be awarded. CWP No.5784 of 1989 --3-- After considering the rival contentions of the learned counsel for the parties, I find force in the submissions made by the learned counsel for the petitioners. Before delving into the submissions advanced by the learned counsel for the parties, it would be advantageous to refer to the statutory provisions on the subject. "Section 2(s) of the Act defines wages. It reads thus:- "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." Section 4(2) of the Act prescribes the quantum of gratuity to which an employee is entitled to receive at the time of superannuation. It provides as under:- "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 preceding the termination of his employment, 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." According to the aforesaid provision, an employee is entitled to receive fifteen days' wages which are to be calculated CWP No.5784 of 1989 --4-- on the basis of wages last drawn by him in respect of every completed year of service or more in excess of six months which is to be restricted to maximum of 20 months' wages as stipulated under sub-section (3) of Section 4 of the Act. The issue involved herein, mentioned in the opening para of this judgment, is no longer res integra. The Hon'ble Apex Court in M/s Jeewanlal Ltd. case (Supra), has after considering the provisions of the Act, held that for purposes of sub-section (2) of Section 4 of the Act, rate of wages last drawn referred to therein would mean monthly wages as wages for 26 working days and not of 30 days, as has been sought to be canvassed by the respondents. The conclusion recorded in paras 13 and 14 therein reads as under:- "13. The intention of the legislature enacting sub- s.(2) of S.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-s.(2) of S.4 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 months' subject to the maximum of 20 months' wages as provided by sub-s. (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-s. (3) of S.4 of the Act viz., that such amount shall not exceed 20 months' wages. The construction of sub-s.(2) of S.4 of the Act adopted by the learned Single Judge of the CWP No.5784 of 1989 --5-- 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-s.(2) of S.4 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. 14. The next question is: whether a month cannot mean 26 working days for the purposes of sub- s.(2) of S.4 of the Act and 30 days for purposes of sub.s(3) thereof. It is said that if a month under sub.s (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-s. (3) thereof must mean 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-ss. (2) and (3) of S.4 of the Act are designed to achieve two separate and distinct objects and they operate at two different stages. While sub-s. (2) provides for the mode of calculation of the amount of gratuity, sub-s. (3) seeks to impose a ceiling on the amount of gratuity payable at 20 months' wages. It is meant to provide an incentive to employees to serve for the period of 30 years or more. By no rule of construction, sub-s. (2) of S.4 of the Act which uses the words "fifteen days' wages" and not half a month's wages be called in aid for construction of the words "20 months' wages" appearing in sub-s. (3) of S.4 of the Act." This Court in Bhagwant Singh's case (Supra), following the aforesaid judgment of the Hon'ble Apex Court had directed CWP No.5784 of 1989 --6-- the respondent-Municipal Committee to compute the amount of gratuity payable to the petitioners by treating monthly wages as wages of 26 working days. In view of the above, the writ petition is allowed. It is directed that the gratuity payable to the petitioners shall be re- computed by treating their last monthly wages drawn as the wages of 26 working days. It is further directed that the amount found due to the petitioners shall be paid to them along with interest @ 9% per annum from the date it became due till the date of payment within a period of two months from the date of receipt of a certified copy of this order. March 04, 2010 (AJAY KUMAR MITTAL) atulsethi JUDGE