As per Section 4 (1) of payment of Gratuity Act, 1972 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 :
As per section 2 A continuous of services means, if an employee render continuous service for a period of 240 days in a year he will be deemed to have continued in service for one year. Therefore if an employee who has completed 240 days for the fifth year subsequent to first 4 years should be deemed to have completed continuous service of five years and he is entitled for Gratuity.
~r 1998 LLR 1072
MADRAS mGa COURT
Hon~ble Mr. S.M. Abdul Wahab~ J.
W.P. No. 21350f1987
Decided on 12.6.1996
I MetturBeardseU Ltd. (represented by Its
Personnel Manager), Madras
Regional Labour Commissioner (Central)
:0 (Authority under Payment of Gratuity Act).
1. Madras & Others
PAYMENT OF GRATUITY ACT~ 1972-
Sections 2(a), 2(b), 2(c), 2(e) and 2A -
'Continuous serVice' - Qualifying period
of service by an employee -Entitlement
of Gratuity - An employee
rendering continuous service for a period
of 240 days in a year will be
deemed to have continued in service
for 'one year as stipulated by section 2A
of the Act -Thus an employee who has
P.ut in service for 10 months and 18
days for the fifth year subsequent to
first 4 years should be deemed to have
completed continuous s6rvice of five
years -His claim for gratuity is tenable.
. Para 5
S B. PAYMENT OF GRATUITY ACT, 1972 -
Claim by an employee from the new
partnership firm for the .service rendered
with previous firm -Whether his
claim for gratuity sustainable? Yes. .
1998 Mettur BeardseU Ltd.. Madras v. Regional Labour Commissioner (Central). Madras &Others 1073
HELD exceeding. Rs. 1.000. Hence. on these
Anemployee will be entitled to get gratuity for grounds the claim of the third respondent
the seroices rendered. with previous partner- must be rejected. The claim was entertained
ship.ftmt because at the time of entertrig into by the second respondent in P.G. Application
new partnership jU:m the petitlDner has rwt No. 49 of 1985 under S. 7(4) of the Payment of
taken any W1dertaking from the employees Gratuity Act. But it was dismissed on 15 April
that they will become employees of new part- 1986 on the ground that he was not an emnershipfirm.
Para 5 ployee for a pertod of not less than five years
on wages not exceeding Rs. 1.000 within the
meaning of explanation 2(e) of the Payment of
2. As against the said order. the third respondent
preferred an appeal to the first respondent
under S. 7(7) of the Payment of GratuityAct
in P.G. Appeal No. 58 of 1986. On 31
December 1986 the first respondent passed
orders holding that the third respondent's
wages crossed Rs. 1.000 only on 10 November
1982 and he had put in four years 10 months
and 18 days service. Hence there was continuous
semce under S; 2Aof the Payment of
.JUDGMENT Gratuity Act. He must be deemed to have
This writ petition is for a writ of certiorCJri to completed continuous service of five years. In
quash the order. dated 31 December 1986. in the said view the first respondent allowed the
P.G. Appeal No. 58 of 1986 on the file of the appeal of the third respondent. Therefore. the
first respondent. The cas~ of the petitioner is petitioner has preferred this writ petition unthat
on 23 December 1977 the third respon- der Art. 226 of the Constitution ofIndia.
dent was appointed as salesman and he was 3. The third respondent filed a counter. In
assigned to the thread division. From 1Janu- the counter he has mainly stated that he has
ary 1983. Mettur Textiles (Private). Ltd.. came produced documentary evidence to show that
to be known as Mettur Textiles. Thus the from 23.November 1977 to 4 November 1982
third respondent became an employee of the he was paid less than Rs. 1.000 and the con-
MetturTextiles from 1January 1983. Accord- tention that fiveyears calendar service is necing
to the petitioner. he ceased to be an-em- essary is untenable. He also contended that
ployee of Mettur Textiles. Ltd.. with effect the transfer of service from the petitioner to
from 31 December 1982. On 31 January Mettur Textiles did not cut his length of ser-
1983 the. third respondent resigned from the vice. Further his resignation was accepted
services and relieved on the said date. He was only by the writ-petiti()ner. as is evidenced by
getting Rs. 1.335 as monthly salary. Since. Exhibit P-5.
according to the third respondent. his basic 4. NowI will examine the contentions raised
salary crossed Rs. 1.000 with effect from 10 . by the learned counsel for the petitioner. Sec-
November 1982. he made a claim on 3 Marchtion 2(e)of the Payment of Gratuity Act was as
1983 for gratuity from Mettur Textiles. Hav- follows. before the amendment: .
ing failed in his attempt to get gratuity from '''employee'means any person (other than
Mettur Textiles. he preferred a claim on 14 an apprentice) employed on wages. not
February 19~5 against Mettur Beardsell. the exceeding one thousand rupees per
petitioner herein. The claim.was after a delay mensem. in any establishment. factory.
of two years and one month. The claim was mine. oil field.. plantation. port. railway
resisted by the petitioner on the ground that company or shop. to do any skilled. semihe
ceased to be an employee with them from skilled. or unskilled. manual. supervi"
31 I;>ecember 1982. Further. he was not em- sory. technical or clertcal work. whether
played for a period of five years on a wage not the terms of such employment are ex-
1. P. Raghavulu and Sons v. Addfttonal Labour Court.
2. Surendra Kumar Verma v. Central Government Industrial
Trfbunal-cum-labour Court. New Delhi &
ForPetitioner: Sh S. Ravindran. Advocate.
ForRespondents: Smt. Meera Gupta. Ms. R
Vaigaiand Sh. Anna Mathew."Advocates.
1074 Divisional Controller. G.S.R.C. v. C.J. Rana LLR I
press or implied. but does not include any tablishments Act. 1966. providing for treating I
such person who is employed in a mana- a fraction of a year exceeding six months as a
gerial or administrative capacity. or who year and a fraction of a year less than six
holds a civil post under the Central Gov- months as not a year. The contention that
ernment or a State Government. or who is was accepted by the learned Judge was that
subject to the Air Force Act. 1950 the the aforesaid explanation applies only for cal-
Army Act. 1950. or the Navy Act. 1957." culating the period for which gratuity is pay-
B. Section 2A defines continuous service. able and not applicable to the qualifying pe-
According to this section. if an employee ren- riod of years. The learned judge has probably
ders continuous service for a period of 240 relied upon the words. "for. which gratuity is
days in a year he will be deemed to have con- to be given." m. s. 40(1) of the Andhra Pradesh
, tinued in service for one year. This deeming Shops and Establishments Act. 1966. But
provision contained in S. ,2A must be applied this decision is not applicable to our case bein
interpreting the period of five years men- cause as stated above the definitions of "one
tioned in S. 4(1). Section 2(b) also supports year." "completed year," "continuous year."
this interpretation because as per the said under Ss. 2(aJ. 2(b) and 2(c) go to show that
section completed year of sen1ce means con- whenever year is mentioned in the enact-
-tinuous service for one year. Therefore. these ment, it must be taken as the year defined in
provisions are emphatic in stating that if the the aforesaid provisions. Another contention
employee serves continuously for a period of raised by the learned counsel for the peti-
240 days in a year. he must be deemed to tioner is that the petitioner-company ceased
have continuously served for one year. In this to exist after it was merged with MeUur
case ~dmittedly ~e third respondent has Beardsell, Ltd.. with effect from 1 January
served for 4 years, 10 months and 18 days. 10 1983. But this contention is untenable bemonths
and 18 days service is definitely more cause at the time of entennginto partnership
than 240 days. Therefore when the third re- the petitioner has not taken any undertaking
spondent was relieved from service he has from the employees that they will become emthus
completed five years of service. In the de- ployees of the new partnership firm MeUur
cision reported in Surendra Kumar Verma v. Textiles. and cease to be employees of the
Central Government Industrial Tribunal-cum- MeUur Beardsell. Ltd. But. as found earlier.
Labour Court. New Delhi. and Another the third respondent was relived only by the
(1980(2) LLN 456]. their Lordships have ob- petitioner. Therefore. I am not convinced with
served as follows. in Para. 13. at page 462: the contentions raised by the learned counsel
... It is sufficient for the purpose of S. for the petitioner. Hence the writ petition fails
25B(2)(a)(ti) that he has actually worked and it is dismissed. However, there will be no
for not less than 240 days. It is no longer order as to costs.
necessary fora workman to show that he
has been in employment during a preceding
period of twelve calendar months in
order to qualify within the terms of S.
The learned counsel for the petitioner relied
upon a case reported in P.Raghuvulu W1Sons
v. Additional Labour Court (1985 (1)LLN612).
A Single Judge of the Andhra Pradesh High
Court has held the service rendered for 4
years and 11 months and 10 days will not enable
an employee to avail gratuity. The said
case arises under the Andhra Pradesh Shops
and Establishments Act. 1966. The question
was whether as per Cl. (d)of explanation to S.
40(1) of the Andhra Pradesh Shops and Es-
Hon"ble Mr. R. A. Mehta, J.
Special CivilApplication No. 11407 of 1994
Decided on 3.3.1998.
Divisional Controller, G.B.R.C.