M.C. CHAMARAJU A

HIND NIPPON RURAL INDUSTRIAL (P) LTD.

AUGUST 24, 2007

{C.K. THAKKERANDTARUNCHATIERJEE, JJ.J B

Jabour Laws:

Payment of Gratuity Act, 1972; S. 7(4)/Payment of Gratuity (Central) C Rules, 1972; R.10(1):

Payment of Gratuity to workman-Eligibility-Held: Payment of Gratuity Act is a beneficial legislation-In interpreting the provisions of such a legislation, a liberal view should be taken-Since a small amount is involved, Division Bench of the High Court was not justified in interfering D with the findings of facts arrived at by the authorities and affirmed by the Single Judge of the High Court-The question raised before the authority was whether the workman in question had completed five years continuous service so as to be eligible to claim gratuity under the Act-Controlling authority as also the appellate authority, on the basis of evidence, came to the finding that he was qualified and thus entitled to claim gratuity under E the Act-Single Judge of the High Court rightly dismissed the writ petition filed by the employer on the basis of the findings recorded by the authorities- Division Bench of the High Court ought not to have gone through the question of fact, which exercise had been done by the controlling authority as also by the appellate authority-High Court was exercising power of F judicial review, which in its inherent nature, has certain limitations-Under the facts and circumstances of the case, the Division Bench of the High Court was wrong in setting aside the orders of the Single Judge and the authority- Hence, order passed by the Division Bench set aside and that of the controlling authority is restored-Constitution of India-Power of the High Court- Judicial Review-Interpretation of Statutes--Interpretation of provisions of G beneficial legislation.

Appellant was appointed as Supervisor in the respondent-company.

According to him, he worked as Supervisor for. more than five years at various offices of the Company. From March, 1993 onwards he was allegedly neither H 361

A paid salary nor any order of termination or dismissal was served .on him by the employer-company. The appellant-employee, therefore, requested the Management to settle his dues and also to pay gratuity under the Act. But it was not paid. He then approached the Controlling Authority by making an application under sub-section (4) of Section 7 of the Payment of Gratuity Act B read with sub-rule (1) of Rule 10 of the Payment of Gratuity (Central) Rules,

1972. The Controlling Authority held that the_ appellant was entitled to gratuity and ordered to make payment of the gratuity to him with interest@ 10% p.a. from June 12, 1993 till the date of payment. Aggrieved, the employer filed an appeal before the Appellate Authority, which was dismissed by the Appellate Authority. The employer challenged the order of the appellate C authority by filing a writ petition in the High Court, which was dismissed by the Single Judge of the High Court Appeal filed thereagainst by the employer was allowed by the Division Bench of the High Court by setting aside all the orders, dismissing the application filed by the workman. Hnce the present

appeal ·

Appellant-workman contended that the Division Bench of the High Court was wholly unjustified in setting aside the orders passed by the Authorities under the Act and confirmed by the Single Judge of the High Court; that while setting aside the orders, the Division Bench of the High Court has virtually re-appreciated the evidence which could not have been done and on E that ground also, the impugned judgment deserves to be set aside and that a finding of fact arrived at by the Authorities under the Act could not have been disturbed by the Division Bench of the High Court.

Allowing the appeal, the Court

F HELD: 1.1. The appeal deserves to be allowed. From the record, it is clear that the question which was raised before the Authorities under the Payment of Gratuity Act was whether the appellant had completed five years' continuous service so as to be eligible to claim gratuity under the Payment of Gratuity Act. The Authorities considered the said question and on the basis G of the evidence adduced before them, held that various units where the appellant had worked were "one and the same" and hence the entire service of the workman ought to be considered and taken into account for the purpose of computation of benefit of gratuity. On the basis of the above reasoning, the Controlling Authority as well as the Appellate Authority held that the appellant was qualified and entitled to gratuity under the Act.

H (Para 11] (365-G, H; 366-A)

M.C. CHAMARAJU 1•. ffiND NIPPON RURAL INDUSTRIAL(P) LTD. 363

1.2. Single Judge of the High Court was wholly right in dismissing the A writ petition filed by the Management on the basis of the findings recorded by the Authorities under the Act and in not interfering with the said orders.

[Para 13) [366-G]

1.3. The Division Bench of the High Court ought not to have undertaken the exercise which had been done by the Controlling Authority as also by the B Appellate Authority. The High Court was exercising power of'judicial review' which, in its inherent nature, has limitations. This is particularly true since the Single Judge also did not think it fit to interfere. Hence, the Division Bench was wrong in setting aside all the orders and in allowing the appeal of the Management and in dismissing the application filed by the workman.

C [Para 14) [367-B, C]

2. The Act has been enacted with a view to grant benefit to workers, a 'weaker section' in industrial adjudicatory process. In interpreting the provisions of such beneficial legislation, therefore, liberal view should be taken. A benefit has been extended by the Authorities under the Act to the D workman by recording a finding that the appellant had completed requisite service of five years to be eligible to get gratuity. Jn that case, even if another view was possible, the Division Bench of the High Court should not have set aside the findings recorded by the Authorities under the Act and confirmed by a Single Judge by allowing the appeal of the Management.

E [Para 15] (367-D, E]

3. On the facts and in the circumstances of the case also, the Division Bench was not justified in setting aside the orders passed by the Authorities and confirmed by the Single Judge considering comparatively a small amount involved in the appeal. The appellant was held entitled to Rs.16,785/- along F with interest @ 10% p.a. Therefore, even on that ground, the Division Bench of the High Court should have refrained from quashing the orders.

[Para 16) [367-F, GJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3889 of2007.

From the final Judgment and Order dated 26.09.2005 of the High Court of Kamataka at Bangalore in Writ Appeal No. 2458 of 2005.

Ms. Minakshi Vij for the Appellant.

Ankur S.Kulksrni, Nimimesh Dube and Khwairakpam Nobin Singh, for H

A the Respondent.

The Judgment of the Court was delivered by

C.K. THAKKER, J. 1. Leave granted.

2. This appeal is filed against the judgment and order dated Septe"mber 26, 2005, passed by the Division Bench of the High Court of Karnataka at Bangalore in Writ Appeal No. 2458 of 2005 (L-PG). y the said order, the Division Bench of the High Court set aside the order pased by the Controlling Authority and Assistant Labour Commissioner (Central), Bangalore under the C Payment of Gratuity Act, 1972 (hereinafter referred to as 'the Act') and confirmed by the Appellate Authority and also by a Single Judge of the High Court.

3. Short facts giving rise to the present appeal are that according to the appellant, in September, 1984, he was appointed as Supervisor by Mr. V.K.

Poddar, Managing Director of Agarwal Investments, Poddar Granites and D Hind Nippon Co. Ltd. According to him, he worked as Supervisor in Poddar

Mines at Sira upto 1990 and thereafter was transferred to other quarry. He worked at various places like Bellary, Sira and Chamaraya Nagar. He worked till February, 1993. From March, 1993, however, he was neither paid his salary nor served with any order of termination or dismissal. On September 27, 1993, E the appellant addressed a letter asking the Management to settle his dues and also to pay gratuity under the Act. But it was not paid. He, therefore, approached the Controlling Authority and Assistant Labour Commissioner, Bangalore by making an application under sub-section ( 4) of Section 7 of the Act read with sub-rule (I) of Rule I 0 of the Payment of Gratuity (Central) Rules, 1972. The Controlling Authority, after hearing both the parties and F perusing the materials placed before him, held that the appellant was entitled to gratuity. Accordingly, an order was passed on May 26, 2003 that the appellant was entitled to a sum of Rs.16,875/- towards gratuity. Since the respondent-employer had not paid the amount of gratuity within 30 days of the leaving of services by the workman, the payment was ordered to be made G with interest @ I 0% p.a. from June 12, 1993 till the date of payment.

4. Being aggrieved by the order of the Controlling Authority, the respondent-Company filed an appeal before the Appellate Authority under the Act. The Appellate Authority vide his order dated December 20, 2004 dismissed the appeal and confirmed the order passed by the Controlling H Authority.

M.C. CHAMARAJU v. HIND NIPPON RURAL INDUSTRIAL (P) LTD. [C.K. THAKKER, J.) 3 65

5. The Management challenged the said ordr by filing a writ petition A in the High Court but the learned Single Judge also dismissed the pet!tion confinning the orders passed by the Authorities under the Act. The aggrieved Management challenged the order of the learned Single Judge in intra court appeal and as stated above, the appeal of the Management was allowed by the Division Bench setting aside all the orders and holding that the application B filed by the workman was liable to be dismissed.

6. The appellant has challenged the said order before this Court.

7. On July 10, 2006, notice was issued by this Court. Later on, the parties appeared and the matter was ordered to be posted for final hearing. c

8. We have heard learned counsel for the parties.

9. Learned counsel for the appellant contended that the Division Bench was wholly unjustified in setting aside the orders passed by the Authorities under the Act and confinned by the learned Single Judge. It was also submitted D that while setting aside the orders, the Division Bench has virtually reappreciated the evidence which could not have been done and on that ground also, the impugned judgment deserves to be set aside. It was further submitted that a finding of fact was recorded by the Authorities under the Act that different units where the appellant had worked, were 'one' and there E was 'funcitonal unity' and the appellant was entitled to gratuity since he had worked for more than five years. Such finding could not have been disturbed by the Division Bench. It was, therefore, submitted that the appeal deserves to be allowed by setting aside the judgment of the Division Bench and confinning the view taken by the Authorities under the Act and by the learned Single Judge.

10. Learned counsel for the respondent, on the other hand, supported the order of the Division Bench and submitted that since the appellant was not entitled to gratuity, the Division Bench was right in allowing the appeal and dismissing the application filed by him.

G I 1. Having heard learned counsel for the parties, in our opinion, the appeal deserves to be allowed. From the record, it is clear that the question which was raised before the Authorities under the Act was whether the appellant had completed five years' continuous service so as to be eligible

to claim gratuity under the Act. The Authorities considered the said question H

A and on the basis of the evidence adduced before them, held that .various units where the appellant had worked were "one .and the same" and hence.the entire service of the workman oughtto be considered and taken into account for the purpose of computation of benefit of gratuity. On the basis of the above reasoning, the Controlling .Authority as well as the Appellate Authority B held that the appellant was qualified and entitled to gratuity under the Act.

12. The Appellate Authority, after considering the arguments of the parties and the findings recorded by the Controlling Authority, concluded;

"I have carefully perused the .records on which.the.CA has placed. reliance on. I am in full agreement with the.findings-of the CA. The.

CA ha5 given cogent reasons for arriving.at.his, conclusion that the respondent herein is entitled for payment of gr<!-tuity right from September 1984. The learned counseL for the.appellant has not countered the statement ofthe.respondeot.that.Shri V.K. Poddar runs the establishments of Aggarwal Investments,..Poddar. Granites and.

Hind Nippon and that there.is just:interchangeabilityin the.services of the respondent.- Two witnesses have beenlead:by the respondent herein before the CA in support of his claim that he"had. worked during the period from 1984, onwards .with. POddar_ Granites and.

Aggarwal Investments. Nothing has been.produced .. before. meto show that the said two companies are indeed run by a different perso11 other than Shri V.K. Poddar. Hence, I have to draw an adverse inference that the three companies including the appellant company is run by Shri V.K. Poddar and hence there is functionaUntegi:ally among these three establishments and that the services ofrespondent has been merely transferred to the appellant company without his knowledge.

It appears that the appellant has been .changng, the employr-ship of the respondent solely to deprive .him of the statutory_ benefits. Hence, I am of the considering opinion that the .decision. of the.CA under challenge is in order".

13. To us, the learned Single Judge-was wholly right'indismissing the writ petition on the basis of the findings recorded by the Authorities under the Act and in not interfering with the said orders. The Division Bench, surprisingly, went into the questions of fact and_came.to the conclusion that it was not established by the appellant-workman-that he.had worked for more H than five years continuously in the Company so as to be eligible to claim gratuity. The Division Bench also perused certain documents and observed

>--- -·

..J....

M.C. CHAMARAJU v. HIND NIPPON RURAL INDUSTRJAL (P) LTD. [C.K. THAKKER, J.J367

that certain letters said to have been written were not on the letterhead of the A Company and it could not be said that the appellant had worked for a period of five years continuously which was an essential requirement to claim gratuity.

On that reasoning, the Division Bench held that the case was of 'no evidence'.

The Bench also held that the onus to establish eligibility was on the employee and since it was not discharged by him, he should fail. Accordingly, the B orders were set aside.

14. In our considered opinion, the Division Bench ought not to have undertaken the above exercise which had been done by the Controlling Authority as also by the Appellate Authority. The High Court was exercising power of 1udicial review' which, in its inherent nature, has limitations. This C is particularly true since the learned Single Judge also did not think it fit to interfere. We are, therefore, of the view that the Division Bench was wrong in setting aside all the orders and in allowing the appeal of the Management and in dismissing the application filed by the workman.

15. There is another aspect also which is relevant. The Act has been D enacted with a view to grant benefit to workers, a 'weaker section' in industrial adjudicatory process. In interpreting the provisions of such beneficial legislation, therefore, liberal view should be taken. A benefit has been extended by the Authorities under the Act to the workman by recording a finding that the applicant (appellant herein) had completed requisite service of five years E to be eligible to get gratuity. In that case, even if another view was possible, the Division Bench should not have set aside the findings recorded by the Authorities under the Act and confirmed by a Single Judge by allowing the appeal of the employer.

16. Finally, we are of the view that on the facts and in the circumstances F of the case also, the Division Bench was not justified in setting aside the orders passed by the Authorities and confirmed by the learned Single Judge considering comparatively a small amount involved in the appeal. As already noted in the earlier part of the judgment, the appellant was held entitled to Rs.16,785/- along with interest@ 10% p.a. To us, therefore, even on that G ground, the Division Bench should have refrained from quashing the orders.

17. For the foregoing reasons, the appeal deserves to be allowed and is accordingly allowed. The order passed by the Division Bench of the High

Court is hereby set aside and the orders passed by the Controlling Authority H

A and Appellate Authority under the Payment of Gratuity Act, 1972 as confirmed _)._

by the learned Single Judge is hereby restored. In the facts and circumstances of the case, however, there shall be no order as to costs.

18. The payment to which the appellant-workman is held entitled shall be made within a period of twelve weeks from today.

S.K.S.

Appeal allowed.