IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP No. 1350/2005 Reserved on:8.8.2008 Decided on:17.10.2008 Union of India and another. …Petitioners. Versus Bhagat Ram. …Respondent Coram The Hon’ble Mr. Justice Rajiv Sharma, J. Whether approved for reporting ?1. No For the petitioners : Mr. Sandeep Sharma, Assistant Solicitor General of India. For the Respondent : Mr. R.D. Kaundal, Advocate vice Mr. A.K. Gupta, Advocate. Rajiv Sharma, J. Brief facts necessary for the adjudication of this writ petition are that the respondent joined the services with effect from 2.5.1984. He discharged his duties upto 31.8.1985. He was re-engaged as a Chowkidar with effect from 10.10.1985 till his superannuation on 25.10.2002. The factum of the respondent’s engagement was not disputed by the petitioners before the authorities below. He filed an application under section 7 (4) of the Payment of Gratuity Act, 1972 and 1 Whether the reporters of Local Papers may be allowed to see the judgment? No 2 rule 11 (4) of the Payment of Gratuity (Central ) Rules, 1972 claiming a sum of Rs. 23,764/- towards gratuity. The Controlling Authority allowed the application on 9.3.2004 and directed the petitioners to pay the respondent a sum of Rs. 23,764/- with interest @ 10% per annum with effect from 26.10.2002. The petitioners feeling aggrieved by the order dated 9.3.2004 preferred an appeal before the appellate authority. The appellate authority dismissed the appeal on 26.10.2005. The present petition has been preferred against the appellate order dated 26.10.2005. Mr. Sandeep Sharma has strenuously argued that the orders dated 9.3.2004 and 26.10.2005 are not sustainable in the eyes of law. He also contended that the Postal Department does not fall within the ambit of “establishment” under the Payment of Gratuity Act, 1972 (hereinafter referred to as the Act for brevity sake). He further contended that the respondent was engaged on daily wage basis and his wages were paid from contingency fund and he cannot be termed as an employee under the Act. Mr. R.D. Kaundal, Advocate appearing vice counsel for the respondent has supported the orders passed by the statutory authorities. I have heard the learned counsel for the parties and perused the record carefully. The respondent had worked in two spells in the Postal Department. He was engaged with effect from 2.5.1984 upto 31.8.1985 and thereafter he was re-employed with effect from 10.10.1985 till his superannuation on 25.10.2002. It will be apt at this stage to reproduce clause (b) of sub- section (3) of section 1 of the Act, which reads thus: “1 (3) (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 3 employed, on any day of the preceding twelve months.” The expression ‘employee’ and ‘employer’ have been defined under section 2 of the Act. These expressions read thus: “Employee” means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, [and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.] ”Employer” means, in relation to any establishment, factory, mine, oilfield, plantation, port, Railway Company or shop- (i) Belonging to, or under the control of, the Central Government or State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry of Department concerned, (ii) Belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive officer of the local authority, (iii) In any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, 4 oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person.” A bare perusal of section 1 (3) (b) of the Act illustrates that it has been made applicable to every shop or establishment within the meaning of any law for the time being in force in relation to shops or establishment in a State. The Postal Department will fall within the expression of “establishment” within the meaning of section 1 (3) (b) of the Act since it is an establishment within the meaning of law which is in force in relation to establishment in the State of Himachal Pradesh. The parties are not at variance that various Central Acts, namely, Contract Labour (Regulation and Abolition) Act, 1970, Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, Industrial Disputes Act, 1947 and Apprentices Act, 1961, are in force in the State of Himachal Pradesh. Consequently, the Postal Department is an establishment within the meaning of law for the time being in force in the State of Himachal Pradesh where more than ten persons are employed. The appellate authority had come to a right conclusion that the Postal Department is an establishment within the meaning of section 1 (3) (b) of the Act. Their Lordships of the Hon’ble Supreme Court in State of Punjab versus The Labour Court, Jullandhar and others, AIR 1979 SC 1981 have held that Hydel Upper Bari Doab Construction Project is an establishment under the Payment of Gratuity Act, 1972 though the Hydel Project was the Department of the Government of Punjab. Their Lordships have held as under: 5 “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 S. 1(3) of that Act. S. 1(3) provides that the Act will apply to: (A) every factory, mine, oilfield, 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, S. 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 of power is being carried on". It is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by S. l(3)(b) of the Payment of Gratuity Act. The Payment of Wages Act, it is pointed out, is a central enactment and S. l (3)(b), it is said, refers to a law enacted by the State legislature. We are unable to 6 accept the contention. S. l(3)(b) speaks of "any law for the time being in force in relation to shops and establishments in a State". There can be no dispute that the Payment of Wages Act is in force in the State of Punjab. Then, it is submitted, the Payment of Wages Act is not a law in relation to "shops and establishments". As to that, the Payment of Wages Act is a statute which, while it may not relate to shops, relates to a class of establishments, that is to say, industrial establishments. But, it is contended, the law referred to under S. l(3)(b) must be a law which relates to both shops and establishments, such as the Punjab Shops and Commercial Establishments Act, 1958. It is difficult to accept that contention because there is no warrant for so limiting the meaning of the expression "law" in S. l(3)(b). The expression is comprehensive in its scope, and can mean a 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 S. l(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 S. l(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 S. l(3)(b) urged before us on behalf of the appellant. S. l(3)(b) applies to every establishment within the meaning of any law for the tirnei being in force in relation to establishments in a State. Such an establishment would include an 7 industrial establishment within the meaning of S. 2(ii)(g) of the Payment of Wages Act. Accordingly, we are of opinion that the Payment of Gratuity Act applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges'. or canals, or 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 of power is being carried on. The Hydel Upper Bari Doab Construction Project is such an establishment, and the Payment of Gratuity Act applies to it.” The question whether the workmen appointed on daily wages are entitled to payment of gratuity or not under payment of Gratuity Act, 1972 has been considered by Madhya Pradesh High Court in Municipal Council, Panna versus The Controlling Authority and another 2002 Lab. I.C. 1159,(MP). The Single Judge has held as under:- “From a bare reading of the above quoted notification, it is clear that Municipal Council is a local body and more than ten persons were in the employment as required under the notification. The petitioner/municipal Council cannot escape the observance of the provision of the Act of 1972. An “employee” has been defined in Section 2(e) of the Act of 1972 to mean that ‘any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi- skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, (and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity. 8 Thus, person working on daily wages or monthly wages is not excluded from the purview of the Act of 1972. It is not necessary that he should be in a permanent employment. Respondent No.2 was clearly an employee within the ken of definition of ‘employee’ in Section 2(e) of the Act of 1972.” The respondent-workman was appointed on daily wage basis and it is evident from the order passed by the Controlling Authority that he was drawing a sum of Rs. 1594/- + 829/- (salary+D.A.). He was not holding any post under the Central Government. He is an employee within the meaning of section 2 (e) of the Act. The fact that the workman was paid salary out of contingency fund will not exclude him from the category of employee as mentioned in section 2 (e) of the Act. The only requirement under section 2 (e) of the Act is that an employee is employed on wages in any establishment. The Central Civil Services (Pension) Rules, 1972 will not be applicable qua him. However, the learned authority below had come to a wrong conclusion that respondent-workman’s status is comparable with the Gram Dak Sevaks. The appointment of the Gram Dak Sevaks is regulated under different set of rules. Accordingly there are neither any jurisdictional errors nor any procedural irregularities in the orders passed by the authorities below. Consequently, there is no merit in the present writ petition and the same is dismissed. There will, however, be no order as to costs. 17.10.2008 (Rajiv Sharma ), J. *awasthi*