IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION N0. 10611 OF 1993 WITH SPECIAL CIVIL APPLICATION NO. 10612 OF 1993 For Approval and Signature: HON'BLE MR.JUSTICE H.K.RATHOD ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : YES of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- INDIAN RED-CROSS SOCIETY Versus VIDYABEN H VYAS -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 10611 of 1993 MR K.M.THAKKAR for M/S TRIVEDI & GUPTA for Petitioner No. 1 MR PV HATHI for Respondent No. 1 RULE SERVED for Respondent No. 2 2. Special Civil Application No. 10612 of 1993 MR K.M.THAKKAR for M/S TRIVEDI & GUPTA for Petitioner No. 1 MR PV HATHI for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE H.K.RATHOD Date of decision: 27/08/2003 COMMON ORAL JUDGEMENT In both these petitions, on behalf of the petitioner learned advocate Mr.K.M.Thakkar is appearing and learned advocate Mr. P.V.Hathi is appearing on behalf of the respondent No.1. 2. In both the petitions, the petititoner-Society has challenged the order passed by the controlling authority as well as the appellate authority under Payment of Gratuity Act, 1972 ('the Act' for short). At the time of issuing notice by this Court in both the petitions, this Court has passed the following order: "Notice returnable on 1.11.93. The petitioner to deposit the entire amount as per the award of the controlling authority. The amount to be deposited before 1.11.93 before the controlling authority. On complying with the aforesaid direction, ad interim stay in terms of para 10(B). The learned counsel for the petitioner assures that the amount will be deposited." The aforesaid order has been passed by this Court on 11.10.1993. Then this Court has issued Rule on 19.8.1994. The order passed by this Court on 19.8.1994 is quoted as under: "It appears that pursuant to the order dated 11.10.1993 the petitioner has already deposited the due amount with the controlling authority. It is stated on behalf of the petitioner that the amount includes the interest as available on the said amount. Considering the question as to whether the Indian Red-Cross Society is subjected to the provisions of the Gratuity Act or not and in view of the other incidental questions, the matter is required to be considered in depth. Rule returnable on 19.10.1994. Mr. P.V.Hathi, ld. Advocate, waives service of Rule on behalf of respondent no.1. Affidavit-in-reply, if any may be filed within 15 days of receipt of Notice of this Court and Rejoinder thereto if any, be filed within one week thereafter. It is made clear that the Controlling authority may deposit the said amount in short Term Fixed Deposit with any Nationalised Bank and the respondent no.1 may be given the interest accruing on such deposit, without prejudice and subject to the result of this petition." In both the petitions, this court has passed identical orders and granted identical relief by passing first order on 11.10.1993 and second order on 19.8.1994. On behalf of respondent No.1 in both the petitions, affidavit-in-reply has been filed by the respondent. 3. Learned advocate Mr.P.V.Hathi has submitted that inspite of having a direction from this court to the petitioner to deposit the entire amount as ordered by the controlling authority, the petitioner has not deposited the entire amount. But in case of Vidyaben Harilal Vyas the petitioner has deposited the amount of Rs.28326.00 before the controlling authority and in case of Valiben, the amount of Rs.26625.00 has been deposited before the controlling authority. According to Mr. Hathi this being not the entire amount as ordered by the controlling authority. 4. In both the petitions the respondents have filed application before the controlling authority under the Act claiming the amount of gratuity from the petitioner. Before the controlling authority, the contention raised by the petitioner is that there is delay in filing the application by the respondents and also to the effect that the Act is not applicable to the petitioner-Society and petitioner-Society is not a 'commercial establishment' and therefore, the Act itself is not applicable. Except that, no other contention was raised before the controlling authority by the respondents. This contention has been dealt with by the controlling authority and ultimately the controlling authority has come to the conclusion that the petitioner-Society is covered by the definition of 'Industry' under Section 2 (J) of the Industrial Disputes Act, 1947 as well as being an establishment under Section 1 sub-clause (3) (b) of the Act. This finding was arrived at by the controlling authority on the basis of oral and documentary evidence produced by respective parties. Ultimately, on the basis of length of service, salary, which is not in dispute between the parties, the controlling authority has granted the amount with 10% interest in favour of the respondents. The order was passed by the controlling authority on 30.7.1991 in both the matters. Thereafter, the petitioner had filed appeal before the appellate authority under the Act. The appellate authority has rejected the appeal on the ground of delay in filing the appeal as well as not to deposit the amount as ordered by the controlling authority being a precondition to file appeal before the appellate authority. Therefore, the appellate authority has come to the conclusion that beyond 120 days appellate authority having no powers to condone the delay and to entertain the appeal and, therefore, on both the grounds the appeal has been dismissed by order dated 30.11.1992. Thereafter, the petition has been filed by the petitioner on 7.10.1993 though there was objection raised by the respondents in reply that there is delay in filing the petition and the petitioner challenging both the orders passed by the controlling authority and the appellate authority. 5. Learned advocate Mr. Thakkar appearing on behalf of the petitioner has raised the contention that petitioner-Society is not an establishment within the meaning of Payment of Gratuity Act, 1972. He also submitted that while condoning the delay in filing the application before the controlling authority by the respondent, the controlling authority has not given any reason in support of its order. He also submitted that the Act itself is not applicable to the petitioner-Society and, therefore, the controlling authority has no jurisdiction to entertain such application and to pass order against the petitioner. In support of his submissions, he relied upon one decision of the Apex Court in the case of V. SASIDHARAN V. M/S PETER AND KARUNAKAR AND OTHERS, AIR 1984 SC 1700. Relying on this decision, Mr. Thakkar has submitted that a lawyer or of a firm of lawyers is not a "commercial establishment" and therefore Kerala Shops and Commercial Establishments Act is not made applicable by the Apex Court in coming to the conclusion that a lawyer office is not a shop and also not a commercial establishment. Therefore, Mr. Thakkar has submitted that similarly, the petitioner-Society is not a shop and not a commercial establishment and, therefore, Payment of Gratuity Act, 1972 is not applicable. Mr. Thakkar has also relied upon one decision in the case of J.J.SHRIMALI V. DISTRICT DEVELOPMENT OFFICER, MEHSNA AND OTHERS, 1990(1) LLN 982. Relying upon that decision, Mr. Thakkar has submitted that a periodical appointment made by the petitioner-Society and by efflux of time if the termination is taken place, that is not a retrenchment and Section 2(oo) (bb) is applicable and therefore, such termination is outside the scope of definition of 'retrenchment'. Except the above submissions, no other submission has been made by Mr. Thakkar before this court and no other decision has been relied on by the learned advocate Mr. Thakkar. 6. Learned advocate Mr. P.V.Hathi appearing on behalf of the petitioner has submitted that the Act made it very clear in Section 1(3) and (3-A) that, it is not necessary that establishment must be a commercial establishment. He submitted that the controlling authority has considered the oral evidence and activities carried out by the petitioner-Society and come to the conclusion that the petitioner-Society is an 'establishment' within the meaning of definition given under the Act. He also submitted that the Act has not made clear in Section 1 (3)(a) (b) (c) and (3-A) that it cannot be a commercial establishment. In the provision, merely establishment has been referred or mentioned but not commercial establishment. Therefore, Mr. Hathi has submitted that the decision of the Apex Court relied upon by the petitioner is not applicable to the facts of the present case. Mr. Hathi has also submitted that under Rule 7, application for gratuity is required to be filed by the employee ordinarily within a period of 30 days from the date the gratuity become payable in Form I to the employer. Mr. Hathi has also relied upon Rule 7 clause (5) of the Payment of Gratuity (Central) Rules, 1972 to the effect that an application for payment of gratuity filed after the expiry of the period specified in this rule shall also be entertained by the employer, if the applicant adduces sufficient cause for the delay in referring his claim, and no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within the specified period. Any dispute in this regard shall be referred to the controlling authority for his decision. Therefore, Mr. Hathi has submitted that the object of the Act and the Rules is that, the benefit of gratuity cannot be denied to the employee only on the ground that he has not filed application within prescribed time limit. Therefore, learned advocate Mr. Hathi has submitted that the contention which has been raised by the petitioner that the Act is not applicable, is not correct and according to the provisions made in the Act, the Act is applicable to the petitioner-Societry and, as such, delay has rightly been condoned by the controlling authority. Therefore, according to him, the appellate authority has also rightly not entertained the appeal after the period of 120 days under the provisions of the Act and, Limitation Act is not applicable to the appeal filed by the petitioner before the appellate authority. Therefore, according to him both the authorities have rightly passed an order and, for that, none of the authorities has committed any error which require any interference by this Court while exercising the powers under Article 227 of the Constitution of India. 7. I have considered the submissions made by both the learned advocates and I have perused the order passed by both the authorities. 8. Before the controlling authority the hearing was fixed between 8.1.1991 to 31.5.1991. The application was preferred by the respondent on 10.12.1990 and the respondent retired on 31.12.1989. Before the controlling authority the respondent was examined wherein he deposed about length of service, salary and various activities carried out by the petitioner-Society. On behalf of the petitioner one Mr. Maniar Vipinchand was examined who also gave deposition about various activities carried out by the petitioner-Society and length of service and salary of the respondent. In the deposition of the petitioner witness Mr. Maniar Vipinchand he admitted the facts that petitioner-Society is covered within the definition of 'Establishments' under the provisions of the Act. But, it is not covered under the definition of 'Industry' of Industrial Disputes Act, 1947. The controlling authority has considered the aforesaid evidence lead by the respective parties and come to the conclusion that the delay which has been occurred in filing the application before the appellate authority has been condoned. No doubt, no reasons have been given by the controlling authority while condoning the delay in filing the application. But it is also necessary to note that no specific contention has been raised by the petitioner before the controlling authority or raised any objection before the controlling authority about filing the application after the period of one year or not within time limit. It was the contention raised before this Court first time by the petitioner. From the perusal of the order itself it is reflected that no such contention was raised by the petitioner in the oral evidence or in the written statement submitted before the controlling authority. Therefore, when there was no objection from the petitioner against the delay occurred in filing the application, naturally, the controlling authority is right in condoning such delay without giving any reason. But, apart from that, looking to the object of the Act and the Rules, the claim of gratuity cannot be considered to be invalid only on the ground that application is not filed within time limit. Therefore, according to my opinion, the controlling authority has not committed any error in not giving any reason for condonation of delay in filing the application. Thereafter, the controlling authority has considered various activities carried out by the petitioner-Society and ultimately, come to the conclusion that the petitioner-Society is covered by the definition of 'Establishments' under the Act and the Act is applicable to the petitioner-Society, result that the workman is entitled the amount of gratuity under the Act. Therefore, ultimately, the controlling authority has directed to the petitioner to make the payment of gratuity amount with 10% interest under Section 7 sub-clause (4) (b) of the Act. This order was passed by the controlling authority on 30.7.1991 and appeal was filed on 2.12.1991 after a period of 5 months, that is, not within the period of 120 days as prescribed under the Act. The written submission was made before the appellate authority by the petitioner and on behalf of the respondents also written submissions were made objecting the delay condonation application filed by the petitioner. Two contentions were raised by the respondents before the appellate authority; one is that delay is not within the time limit and the second is that the appellate authority has no jurisdiction to condone the delay beyond 120 days and amount has not been deposited being a precondition before the controlling authority by the petitioner and therefore, due to delay Appeal is required to be dismissed. This aspect has been considered by the appellate authority at page 30, internal page 3 of the order that whether appellant is entitled to file appeal after a period of 120 days and, without depositing the amount the appeal can be entertained by the appellate authority or not under the provisions of the Act and, whether the Act is applicable to the petitioner-Society or not. After raising this issue, the appellate authority has come to the conclusion that the petitioner had filed appeal after a period of four months and beyond 120 days, therefore, considering the provisions of Section 7 that appeal is required to be filed within 60 days and further extension of 60 days which comes to 120 days but the appeal was filed beyond that period, therefore, appeal was not entertained by the appellate authority. Provision under Section 7 of the Act provide that that appeal is required to be filed within 60 days and further 60 days if any delay, appellate authority has power to condone it. But the appeal has crossed both the period , that is, beyond 120 days, therefore, appellate authority has not entertained the same. The second aspect has also been examined by the appellate authority that while filing the appeal, the amount which has been ordered by the controlling authority is required to be deposited being a precondition which was undisputedly not deposited by the petitioner-Society and, therefore, considering this aspect, the appellate authority has rejected the appeal on 30.11.1992. 9. Now, considering the above background, the provisions made in the Payment of Gratuity Act, Section 1 sub-section (3) (a) (b) (c) and 3 (A), Section 4 sub-section 1 & 2, Section 7 sub-section 7 & 8 are quoted as under: (3) It shall apply to,- (a) every factory, mine, oil field, plantation, port and railway company; (b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; (c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf. (3-A) A shop or establishment to which this Act has become applicable shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten. 4(1) 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 c) on his death or disablement due to accident or disease: Provided that the completion of continuous service 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, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution as may be prescribed, until such minor attains majority, if no nomination has been made, to his heirs. Explanation.- For the purpose 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. 4(2) 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 who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season. Explanation.- In the case of a monthly-rated employee, the fifteen days wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen. 7(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf: Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days: Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the Controlling Authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub-section (4) or deposits with the appellate authority such amount. 7(8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the Controlling Authority. 10. The above provisions are related to decide the controversy which has been raised by the petitioner before this court. Under Section 1 (3) of the Act, there is nowhere referred 'commercial establishments' but merely referred 'establishments'. This aspect has been examined by the Apex Court in the case of STATE OF PUNJAB V. LABOUR COURT, JALLLUNDER AND OTHERS, 1980 (1) SCC PAGE 4. While incorporating Section 1 sub-section 3, in para 3, the Apex Court has observed that Section 1 sub-section 3(b) applies to every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State. The very contention raised by Mr. Thakkar has been negatived by the Apex Court while observing as under: " The expression comprehensive in its scope and can mean law in relation to shops as well as, separately, a law in relation to establishments or a law in relation to shops and commercial establishments and a law in relation to non-commercial establishments. Had Section 1 (3) (b) intended to refer to a single enactment, surely the appellant would have been able to point to such a statute, that is to say, a statute relating to shops and establishments both commercial and non-commercial. The Punjab Shops And Commercial Establishments Act does not relate to all kinds of establishments. Besides shops, it relates to commercial establishments alone. Had the intention of Parliament been, when enacting Section 1(3) (b), to refer to a law relating to commercial establishments it would not have left the expression 'establishments' unqualified. We have carefully examined the various provisions of the Payment of Gratuity Act, and we are unable to discern any reason for giving the limited meaning to Section 1(3) (b) urged before us on behalf of the appellant." In light of the above observations the relevant paragraph 3 is quoted as under: "In this appeal, the learned Additional Solicitor-General contends on behalf of the appellant that the Payment of Gratuity Act, 1972 cannot be invoked by the respondents because the Project does not fall within the scope of Section 1(3) of that Act. Section 1(3) provides that the Act will apply to: (a) every factory, mine, oil field, plantation, port and railway company; (b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; (c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf. According to the parties, it is clause (b) alone which needs to be considered for deciding whether the Act applies to the Project. The Labour Court has held that the Project is an establishment within the meaning of the Payment of Wages Act, Section 2(ii) (g) of which defines an "industrial establishment" to mean any "establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form or power is being carried on". It is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by Section 1(3)(b) of the Payment of Gratuity Act. the Payment of Wages Act, it is pointed out, is a Central enactment and Section 1(3)(b), it is said, refers to a law enacted by the State legislature. We are unable to accept