Dismissed

The Management of v. Joint Commissioner of Labour

Madras HC24 Oct 2018WP/29878/2010

Case brief

AI extract

What is this about?

The High Court dismissed the Bank's writ petition challenging the payment of gratuity. Upholding Supreme Court precedents, the Court affirmed that gratuity must be calculated based on 26 working days and ruled that a government letter could not alter an operative settlement.

What did the court decide?

Writ petition dismissed; no interference with appellate authority order; no order as to cost.

The Management of Vs Joint Commissioner of… — Pension and Retirement Benefits | Madras HC (2018)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 24.10.2018

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CORAM:

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THE HON'BLE Dr. JUSTICE S.VIMALA Writ Petition No.29878 of 2010 & M.P.No.1 of 2010 The Management of Coimbatore District Central Cooperative Bank Ltd., No.80 State Bank Road, Coimbatore 641 018 ... Petitioner Vs.

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Joint Commissioner of Labour, O/o. Deputy Commissioner of Labour, Dr. Balasundaram Road, Coimbatore – 18

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The Assistant Commissioner of Labour / Authority Under Payment of Gratuity Act, 1972, O/o. Deputy Commissioner of Labour, Dr. Balasundaram Road, Coimbatore – 18 3. Mrs. C.S.Saradha 4. E.Radhakrishnan 5. P.Shanmugam 6. Mrs. K.Saraswathi 7. Mrs. Balamani 8. Mrs. S.Gugapriya 9. Mrs. S.Sudhahari 10. V.K.Kesavan 11. N.Ragavendran 12. K.G.Balasubramaniam 13. R.Kuppusamy 14. K.P.Ramasamy 15. R.Swaminathan 16. S.Srinivasan 17. G.Jayalakshmi 18. V.Shanthi 19. G.Bhasker 20. G.Senthil 21. S.Sumathi 22. K.N.Pattappan 23. N.Umanathsingh 24. Mrs. Saraswathi 25. Velumani 26. Rajeswari 27. V.K.Subbannan 28. Mrs. V.Saraswathi

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https://hcservices.ecourts.gov.in/hcservices/

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Mr. V.Krishnasamy 30. O.S.Arumugam 31. S.Dhandapani 32. C.Kumarappan 33. V.Ponnusamy 34. M.Ilandiraiyan 35. K.Mayilsamy 36. K.R.Muthusamy 37. S.Gopal 38. A.Moses 39. D.Santhanakrishnan 40. S.Thiyagarajan 41. A.Govindasamy 42. P.Kumararajan 43. P.Rathinam 44. P.Vasudevan 45. P.Saravanan 46. P.Rengarajan 47. R.Gowtham 48. P.Muthukrishnan 49. P.Kannan 50. A.Sarojini 51. V.Ramanujam 52. G.Leelavathi 53. N.Soundharam 54. S.Kauveri 55. S.Karpagam 56. N.Agilandeshwari 57. N.Santhanalakshmi 58. N.Saravanachandhiran 59. Mrs. V.Nagarathinam 60. Mrs. V.Sathiyavathi 61. R.Rangaswamy 62. S.Karuppusamy 63. S.Ramakkal 64. Mrs. Nanjammal @ Chinnakal 65. Mr. P.Sivasubramanian 66. T.Palanisamy 67. K.Ganapathy 68. P.Eswaramoorthy 69. Mrs. L.Maragatham 70. L.Velmurugan 71. L.Sakthivel 72. L.Sundhravel 73. L.Subalakshmi 74. L.Senthilvel 75. P.Muthusamy 76. R.Sivanantham 77. R.Rathinam 78. M.Ramalingam

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... Respondents

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https://hcservices.ecourts.gov.in/hcservices/

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Prayer:Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari to call for the entire records pertaining to the common order of the firstrespondent, dated 19.11.2010 in AGA Nos.1 to 50 of 2010, consequent to the order of the second respondent's order, dated 15.04.2002 in G.A.Nos.1 to 34, 36 to 50 of 2002 and 297 of 2001 and to quash the same.

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For Petitioner : Mr.S.Saravanan For R-3 to R-34, R-36, R-38 to R-78 : Mr.C.Murugesan For R-37 : Died.

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For R-1 & R-2 : Mr. K.K.Ramesh.

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O R D E R

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The Government of Tamil Nadu appointed a Streamlining committee to go into the terms and conditions of the workmen employed in Cooperative Bank in the State of Tamil Nadu. The Committee has submitted its report on 24.07.1995.

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2.1. Government of Tamil Nadu issued G.O.No.161 on 05.09.1996, accepting 26 days will be reckoned as a month not only for arriving at pay but also for calculation of length of service for calculation of gratuity. Based on that, the management entered into 12(3) settlement with the recognized union. On the basis of this settlement, the employees claimed balance of gratuity invoking the provisions of Section 4(5) of Payment of Gratuity Act, 1972.

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The Secretary to Government, by a letter 8571/CC1/98-10, Cooperation, Food and Consumer dated 20.11.2001, cancelling the following clause found in G.O.Ms.No.161 dated 05.09.1996, which reads as under:

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“ The Committee recommends that for the purpose of calculation of gratuity, 26 days will be reckoned as a month not only for arriving at pay but also for calculation of length of service.”

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Based on the communication, the petitioner issued notice under Section 9A of the Industrial Disputes Act to all its employees intimating that gratuity will not be paid reckoning the length of service as 26 days and that the period will be reckoned only in terms of the provisions of linked gratuity insurance scheme as well as Payment of Gratuity Act. It was also informed that Clause 30 of the settlement expired on 30.06.1999 itself. Even though letter was sent, the Government Order was

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https://hcservices.ecourts.gov.in/hcservices/

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not amended. Whether the cancellation of clause in the settlement by a letter is valid or not, is the issue.

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Respondents 3 to 6, 10 to 16, 22, 23, 27 to 42, 50 to 52, 61 to 63, 66 to 68, 74 to 78 were the employees of the petitioner Bank and Respondents 7 to 9, 17 to 21, 24 to 26, 43 to 49 53 to 60, 64, 65, 69 to 74 were the legal heirs of the deceased employees and all the respondents had filed 50 gratuity applications seeking gratuity before the second respondent under the Payment of Gratuity Act, 1972, in G.A.Nos.1 to 34 of 2002, 36 to 50/2002 and 297 of 2001. By the order dated 15.04.2002, the authority under the Payment of Gratuity Act and it was allowed. Appeal was filed by the management on the ground that the settlement based on which the workmen were relying upon, had ceased to be operative and hence the order of the controlling authority is liable to be set aside. The appellate authority gave a finding that the settlement did not automatically ceased to be operative on the expiry of two months from the date of notice even if notice of the intention to terminate the settlement is given by either party and that the settlement is valid until the settlement is replaced by a valid contract or yet another settlement or by any award between the parties.

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Challenging the order of the appellate authority, the petitioner-Management, has filed the writ petition on the contending that this order by the appellate authority has been passed without jurisdiction, by misconstruing various provisions of law and all material documents.

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Heard both sides.

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It is the contention of the learned counsel appearing for the petitioner-Management that the petitioner-Bank is a cooperative body under the State Government and the same is controlled through the Registrar of Cooperative Societies and therefore, the petitioner cannot by itself grant the benefits without the concurrence of the above bodies; the petition is bad for non-joinder of Registrar of Cooperative Societies; appellate authority has not taken into account the nonapplicability of Section 18 (1) settlement to the claimants / employees, who were not the workman.

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The learned counsel for the petitioner further submitted that if 26 days is taken for calculating the length of service in a month, then the total number of months in a year will be 14 which is against the principles of natural justice; the calculation of gratuity as per the payment of Gratuity Act is 15/26 of a month multiplied by the length of service by last drawn salary; hence the claim made by the workmen is unjust and against law. The learned counsel further submitted that the workmen have not submitted the applications under Rule 7 of the

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https://hcservices.ecourts.gov.in/hcservices/

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Payment of the Gratuity Rules, 1972, in the prescribed manner.

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The learned counsel appearing for the workmen / respondents submitted that the orders passed by the original and appellate authorities are perfectly justified and does not warrant any interference by this Court.

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This Court has gone through the orders passed by the original authority as well as the appellate authority.

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It is not known, what made the petitioner herein to file this writ petitioner even after the well considered and reasoned order passed by the appellate authority. Each and every contentions raised by the petitioner herein have been answered by the appellate authority on the factual aspect as well as on the legal aspect.

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Answering the contentions of the petitioner again would only going to be a repetition of the order passed by the appellate authority. However, a few important questions of law raised alone are answered, as it is the duty of the Court to give reasons for the judgement.

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Before answering the contentions, it is necessary to quote Section 4 (5) of the Payment of Gratuity Act, which reads as under:-

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“Nothing in this Section shall affect the right of an employee to receive better terms of gratuity under any award or agreements or contract with the employer.”

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This Court is of the opinion that the contentions raised by the learned Counsel for the petitioner are bereft of merit, inasmuch as the issue raised has been concluded by various judgments.

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In Sri Digvijay Woollen Mills Ltd. v. Shri Mahendra Prataprai Buch 1980 (41) F.L.R. 153, the Supreme Court approved the calculation of the gratuity on the basis of 26 days a month holding that-

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“Ordinarily, a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month should be taken as what they got for 26 working days and their fifteen days' wages worked out accordingly and not by just taking half of their wages for a month of 30 days or fixing their daily wages by dividing their monthly wages by 30. In other words,

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https://hcservices.ecourts.gov.in/hcservices/

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for the purpose of computing the amount of gratuity in respect of a monthly rated employee, his monthly wages should be taken as what he got for 26 working days, his daily wages should be ascertained on that basis and his fifteen days' wages worked out accordingly and not by just taking half of his wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30. Treating monthly wages as wages for 26 working days is not anything unique or unknown.

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Similar view was again held in Jeewanlal (1929) Ltd. etc. etc. v. The Appellate Authority (S.C.) and Ors. MANU/SC/0276/1984. wherein the Supreme Court held, as under:

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“The question is whether the words "fifteen days' wages" occurring in Sub-section (2) of Section 4 of the Payment of Gratuity Act, 1972 in the case of monthlyrated employees, can only mean half a month's wages, i.e., wages which they would have earned in a consecutive period of 15 days or in 13 working days and therefore, in calculating the amount of gratuity payable to such employees, the rate of wages earned by them has to be multiplied by "thirteen" there being 26 working days in a month and not by "fifteen.

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For the purpose of computation of "fifteen days' wages" of a monthly rated employee under Sub-section (2) of Section 4 of the Act, the monthly wages last drawn by him should be treated as wages for 26 working days and his daily rate of wages should be ascertained on that basis and not by taking the wages for a month of 30 days or fixing his daily wages by dividing his monthly wages by 30.”

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In Delhi Cloth & General Mills Co. Ltd. v. Workmen and Ors. etc. MANU/SC/0271/1968, the Supreme Court held-

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“The expression "average of the basic wages" can only mean the wage earned by a workman during a month divided by the number of days for which he has worked and multiplied by 26 in order to arrive at the monthly wage for the computation of gratuity payable. Counsel for the employers agree to this interpretation.”

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https://hcservices.ecourts.gov.in/hcservices/

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Based on these judgments, the learned counsel for the workmen would submit that the order passed by both the authorities are supported by the decisions of the Honourable Supreme Court and therefore those orders have to be upheld. This contention is perfectly justified and this Court uphold the reasoning given by the appellate authority.

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It is also pointed out that the settlement can be replaced only by another settlement or award and it cannot be altered by a letter issued by the Government Officer. This issue is answered by the decision of the Supreme Court reported in Life Insurance Corporation of India Vs D.J.Bahadur AIR 1980 SC 2181, wherein it was held as follows,

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“Even if a notice of its intention to terminate the settlement was given by either party, the settlement did not automatically cease to be operative on the expiry of two months from the date of the notice. The legal position is that the terms of a settlement continue to govern the relations between the parties after the notice of termination and the expiry of two months” thereafter, until the settlement is replaced by a valid contract or award between the parties.

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In South Indian Bank Ltd Vs A.R.Chacko AIR 1964 SC 1522.

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“ The provision in s.19(6) as regards the period for which the award shall continue to be binding is not in any way affected by s. 4 ofthe Industrial Disputes (Banking Companies) Decision Act. The different provisions made by the legislature in s. 19 (3)and s. 19(6) illustrate the distinction between an awardbeing in operation and an award being binding on theparties. Section 19(6) makes clear that after the period of operation of an award has expired, the award does not cease to be effective.”

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These decisions make it clear that the award entered into between the parties cannot be altered by the executive by writing a letter and it can be altered only another settlement or award.

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https://hcservices.ecourts.gov.in/hcservices/

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In view of the aforesaid reasons, this Court is of the opinion that no ground exists for interference in the impugned order. The writ petition fails and is dismissed. In the circumstances of the case, there shall be no order as to cost. Consequently, connected M.P. is closed.

Sd/-

Assistant Registrar

//True Copy//

Sub Assistant Registrar

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srk

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The Presiding Officer, Labour Court, George Town, Chennai.

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Joint Commissioner of Labour, O/o. Deputy Commissioner of Labour,

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Dr. Balasundaram Road, Coimbatore – 18

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The Assistant Commissioner of Labour / Authority Under Payment of Gratuity Act, 1972, O/o. Deputy Commissioner of Labour, Dr. Balasundaram Road, Coimbatore – 18

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+1cc to Government Pleader sr.73471 +1cc to Mr.S.Saravanan, Advocate sr.no.72662

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W.P.No.29878 of 2010

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kji(co) nr 05/03/2019

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https://hcservices.ecourts.gov.in/hcservices/

The Management of v. Joint Commissioner of Labour

Case brief

What is this about?

What did the court decide?

The Management of v. Joint Commissioner of Labour

Case brief

What is this about?

What did the court decide?

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