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CASE NO.: Appeal (civil)  3889 of 2007

PETITIONER: M.C. CHAMARAJU

RESPONDENT: HIND NIPPON RURAL INDUSTRIAL (P) LTD

DATE OF JUDGMENT: 24/08/2007

BENCH: C.K. THAKKER & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 3889 OF 2007 ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 11321 OF 2006

Hon. C.K. THAKKER, J.

1.              Leave granted.

2.              This appeal is filed against the judgment and  order dated September 26, 2005, passed by the Division  Bench of the High Court of Karnataka at Bangalore in  Writ Appeal No. 2458 of 2005 (L-PG). By the said order,  the Division Bench of the High Court set aside the order  passed by the Controlling Authority and Assistant Labour  Commissioner (Central), Bangalore under the 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 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, 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 (1) of Rule 10 of the Payment of  Gratuity (Central) Rules, 1972. The Controlling Authority,  after hearing both the parties and 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 with interest @ 10%  p.a. from June 12, 1993 till the date of payment. 4.              Being aggrieved by the order of the Controlling

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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 Authority. 5.              The Management challenged the said order by  filing a writ petition in the High Court but the learned  Single Judge also dismissed the petition confirming 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 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. 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 confirmed by the learned Single Judge. It was also  submitted that while setting aside the orders, the  Division Bench has virtually re-appreciated 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 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 confirming 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. 11.             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 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 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. 13.             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

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full agreement with the findings of the CA. The  CA has given cogent reasons for arriving at his  conclusion that the respondent herein is  entitled for payment of gratuity right from  September 1984. The learned counsel for the  appellant has not countered the statement of  the respondent that Shri V.K. Poddar runs the  establishments of Aggarwal Investments,  Poddar Granites and Hind Nippon and that  there is just interchangeability in the services  of the respondent. Two witnesses have been  lead 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 me to show  that the said two companies are indeed run by  a different person 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 functional integrally among  these three establishments and that the  services of respondent has been merely  transferred to the appellant company without  his knowledge. It appears that the appellant  has been changing the employer-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".

14.             To us, the learned Single Judge was wholly  right in dismissing 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 than  five years continuously in the Company so as to be  eligible to claim gratuity. The Division Bench also  perused certain documents and observed that certain  letters said to have been written were not on the  letterhead of the 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 orders were set aside. 15.             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 ’judicial review’ which, in its inherent nature,  has limitations. This 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.  16.             There is another aspect also which is relevant.  The Act has been enacted with a view to grant benefit to  workers, a ’weaker section’ in industrial adjudicatory

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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 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. 17.             Finally, we are of the view that 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 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 ground, the Division Bench  should have refrained from quashing the orders. 18.             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 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. 19.             The payment to which the appellant-workman  is held entitled shall be made within a period of twelve  weeks from today.