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PETITIONER: STATE OF PUNJAB

       Vs.

RESPONDENT: LABOUR COURT, JULLUNDUR & ORS.

DATE OF JUDGMENT16/10/1979

BENCH: PATHAK, R.S. BENCH: PATHAK, R.S. KRISHNAIYER, V.R.

CITATION:  1979 AIR 1981            1980 SCR  (1) 953  1980 SCC  (4)   4  CITATOR INFO :  D          1981 SC1685  (8)

ACT:      Payment of  Gratuity Act,  1972-S.  1(3)(b)-Scope  of-A Government project whether an "Industrial Establishment".      Retrenched    workers-If    entitled    to    gratuity- "Retrenchment"-Meaning of.      Act, a  self-contained Code-Application for gratuity-If would lie under s. 33 C(2) of Industrial Disputes Act.

HEADNOTE:      The respondents,  who were  the employees  of the Hydel Department of  the Government  of Punjab, were retrenched on the completion of the work assigned to them. Their claim for payment of  gratuity under the Payment of Gratuity Act, 1972 having been  rejected by  the  appellants,  they  moved  the Labour Court  under s.  33-C(2) of  the Industrial  Disputes Act, 1947.  The Labour  Court allowed  their claim. The High Court dismissed the appellant’s appeal in limine.      In appeal  it was  contended that  (1) the  view of the Labour Court  that the  project was  an establishment within the meaning  of the definition of "Industrial establishment" contained in  s. 2(ii)  (g) of  the Payment of Wages Act was erroneous, and  the Payment of Wages Act being a Central Act is not  an enactment  contemplated  by  s.  1(3)(b)  of  the Payment of  Gratuity Act;  (2)  since  retrenchment  is  not superannuation or  retirement or  resignation  or  death  or disablement due to accident or disease as defined in s. 4(1) of the  Act, the  retrenched  employees were not entitled to gratuity; and  (3) the Payment of Gratuity Act being a self- contained code,  it excludes  recourse to  any other statute for claiming  relief under  this  Act  and,  therefore,  the respondents application  under s.  33-C(2) of the Industrial Disputes Act was misconceived.      Allowing the appeal in part; ^      HELD :  1(a). It  is not  correct to  say that  what is contemplated by s. 1(3)(b) of the Payment of Gratuity Act is a law enacted by the State Legislature and not a Central Act like the  Payment of  Wages Act.  There can be no doubt that when s.  1(3)(b) speaks  of "any  law for  the time being in force in relation to shops and establishments in a State" it

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includes the  Payment of  Wages Act, which is a law in force in the State. [956 B-C]      (b) The  Payment of Wages Act is a statute which, while it  may   not  relate  to  shops.  relates  to  a  class  of establishments, i.e.  industrial establishments. There is no warrant for limiting the meaning of the expression "law"  in s. 1(3)(b)  to  a  law  which  relates  to  both  shops  and establishments such  as  the  Punjab  Shops  and  Commercial Establishments Act, 1958. 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 954 and commercial  establishments and a law in relation to non- commercial establishments.  Had the  intention of Parliament been to refer to a law relating to commercial establishments it would  not  have  left  the  expression  "establishments" unqualified. There is no reason for giving a limited meaning to s.  1(3) (b). This section applies to every establishment within the meaning of any law for the time being in force in relation to establishments in a State. Such an establishment would include an industrial establishment within the meaning of s.  2(ii)(g) of  the Payment of Wages Act. Therefore, the Payment of Gratuity Act applies to an establishment in which any  work   relating,  among   others,  to  the  generation, transmission and  distribution of  electricity or  any other form of  power is  being carried on as defined in s. 1(3)(b) of the Act. [956 D-H, 957 A]      2. The expression "retrenchment" which has been defined in s.  2(q) to  mean  "termination  of  the  service  of  an employee otherwise  than on superannuation" is framed in the widest terms.  Except for superannuation, any termination of service would amount to "retirement" for the purposes of the Act.  Retrenchment   is  termination   of  service.   It  is immaterial that the termination is occasioned by the need to discharge surplus labour. [957 E-F]      Bersi Light  Railway Company  Labour v. K. M. Joglekar, AIR 1957 SC 121, referred to.      3(a). Parliament  intended that proceedings for payment of gratuity  due under  the Act must be taken under that Act and  not  under  any  other.  There  fore  the  respondents’ application did  not lie  under s. 33-C(2) of the Industrial Disputes Act.  and the  Labor Court  had no  jurisdiction to entertain it. [959-E]      (b). The  Payment of  Gratuity Act  is a  complete code containing derailed  provisions covering  all the  essential features of  the scheme  for payment  of gratuity.  For  the enforcement of  its provisions,  the Act  provides  for  the appointment of a Controlling Authority for administering the Act. He has been invested with an amplitude of power for the full discharge  of his  responsibilities under  the Act. Any error committed  by him  can be  corrected in  appeal by the appropriate   Government    or   an    appellate   authority particularly constituted under the Act. [959 B-D]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION :  Civil Appeal  No. 8 of 1977.      Appeal by  Special Leave  from the  Judgment and  Order dated 5-6-1975 of the Punjab and Haryana High Court in Civil Writ No. 3166/75.      Soli J. Sorabji, Solicitor General and O. P. Sharma for the Appellant.

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    Hardev Singh for the Respondent.      The Judgment of the Court was delivered by      PATHAK J.-In  this appeal by special leave the State of Punjab appeals  against the  judgment and  order of the High Court of  Punjab &  Haryana refusing to quash an order under section 33-C(2) of the 955 Industrial Disputes Act, 1947 for payment of gratuity to the respondents under the Payment of Gratuity Act, 1972.      The Hydel  Department of  the Government  of Punjab had undertaken a Project described as the "Hydel Upper Bari Doab Construction Project."  The respondents  Nos. 2  to  8  were employed as workcharged employees. On completion of the work assigned to  them they  were  retrenched,  and  retrenchment compensation was  paid to  them.  The  employee  respondents claimed that  they were also entitled to gratuity, bonus and certain other  allowances and  benefits.  The  gratuity  was claimed under  the Payment  of Gratuity Act, 1972. The claim being disputed,  the respondents  applied under  section 33- C(2) of  the Industrial  Disputes Act,  1947 to  the  Labour Court, Jullundur. The Labour Court made an order dated April 30, 1975  that the employee respondents were entitled to the gratuity claimed  by them  but not  to bonus  and the  other allowances and  benefits.  A  writ  petition  filed  by  the appellant has  been dismissed in limine by the High Court of Punjab and Haryana.      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 Section 1(3) of that Act. Section 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, section  2(ii) (g)  of  which  defines  an  "industrial establishment" to  mean an  "establishment in which any work relating to the construction, development or maintenance of 956 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." It  is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by section 1(3)(b)  of the Payment of Gratuity Act. The Payment of Wages  Act, it is pointed out, is a central enactment and section 1(3)(b),  it is said, refers to a law enacted by the State Legislature.  We are  unable to accept the contention. Section 1(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

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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 section  1(3) (b) must be a law which relates  to both shops  and  establishments,  such  as  the  Punjab  Shops  & 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 section 1(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 noncommercial establishments.  Had section  1(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   & 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 section 1(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 section  1(3) (b)  urged  before  us  on behalf of  the appellant.  Section 1(3) (b) applies to every establishment within  the meaning  of any  law for  the time being in  force in  relation to  establishments in  a State. Such  an   establishment   would   include   an   industrial establishment within the meaning of section 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  construction,  development  or maintenance of buildings, 957 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 second  contention on  behalf of  the appellant  is that retrenchment  does not  fall within section 4(1) of the Payment of  Gratuity Act, under which gratuity is payable to an employee  on  the  termination  of  his  employment.  The termination envisaged occurs either      "(a) on his superannuation, or      (b)  on his retirement or resignation, or      (c)  on his  death or  disablement due  to accident  or           disease."      Having regard  to the definition of "superannuation" in section 2(r)  of the  Act, it  is clear that the case is not one under  clause (a).  Nor, admittedly,  is it a case which falls under  clause (c).  As regards clause (b), it is not a case of  resignation. The only question is whether it can be regarded under  clause (b)  as a  case  of  retirement.  The expression "retirement"  has been defined by section 2(q) to mean "termination  of the  service of  an employee otherwise than on  superannuation." The  definition is  framed in  the widest terms.  Except for superannuation, any termination of

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service would amount to "retirement" for the purposes of the Act.  Retrenchment  is  a  termination  of  service.  It  is immaterial that the termination is occasioned by the need to discharge surplus  labour.  That  retrenchment  implies  the discharge of  surplus labour  was explained  in Bersi  Light Railway Company  Labour v.  K. M.  Joglekar. Nonetheless, it amounts to  termination of  service. We  are of opinion that the retrenchment  of the  employee respondents  falls within the scope  of section  4(1) of  the Payment of Gratuity Act, and the  employee  respondents  are  therefore  entitled  to gratuity under that provision.      The third  contention raised  by the  appellant is that the employee  respondents were  not entitled  to apply under section 33-C(2)  of the  Industrial Disputes  Act, 1947  for payment of the gratuity, and should have, if at all, applied under the  provisions of  the Payment of Gratuity Act. It is urged that  the Payment  of Gratuity Act is a self-contained code incorporating  all the essential provisions relating to payment of gratuity which can be claimed under that Act, and its provisions  impliedly  exclude  recourse  to  any  other statute for that purpose. The 958 contention has force and must be accepted. A careful perusal of the  relevant provisions  of the  Payment of Gratuity Act shows that  Parliament has  enacted a  closely  knit  scheme providing for  payment of  gratuity. A controlling authority is appointed  by the appropriate Government under section 3. and  Parliament   has   made   him   responsible   for   the administration of  the entire  Act. In  what event  gratuity will become  payable and  how  it  will  be  quantified  are detailed in  section  4.  Section  7(1)  entitled  a  person eligible for  payment of gratuity to apply in that behalf to the employer.  Under section  7(2), the employer is obliged, as  soon   as  gratuity   becomes  payable  and  whether  an application  has  or  has  not  been  made  for  payment  of gratuity, to determine the amount of gratuity and inform the person to whom the gratuity is payable specifying the amount of gratuity  so determined.  He is obliged, by virtue of the same provision,  to inform  the controlling  authority also, thus ensuring  that the  controlling authority  is seized at all times of information in regard to gratuity as it becomes payable. If  a dispute  is raised in regard to the amount of gratuity payable  or as to the admissibility of any claim to gratuity, or  as to  the  person  entitled  to  receive  the gratuity, section  7(4) (a) requires the employer to deposit with the  controlling authority  such amount as he admits to be payable  by him as gratuity. The controlling authority is empowered.  under   section  7(4)(b),   to  enter   upon  an adjudication of  the dispute,  and after  due  inquiry,  and after  giving  the  parties  to  the  dispute  a  reasonable opportunity of  being heard, he is required to determine the amount of  gratuity payable. In this regard, the controlling authority has  all the powers as are vested in a court while trying a  suit under  the Code  of Civil  Procedure, 1908 in respect of  obtaining evidentiary material and the recording of evidence.  The amount  deposited by the employer with the controlling authority  as the  admitted amount  of  gratuity will be  paid over  by  the  controlling  authority  to  the employee or  his nominee  or heir.  Section 7(7) provides an appeal against  the order of the controlling authority under section 7(4)  to the  appropriate Government  or such  other authority as  may be specified by the appropriate Government in that  behalf. The appropriate Government or the appellate authority is  empowered under section 7(8), after giving the parties to  the appeal  a reasonable  opportunity  of  being

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heard, to  confirm, modify  or reverse  the decision  of the controlling authority.  Where the amount of gratuity payable is not  paid   by the  employer with in the prescribed time, the controlling  authority is  required  by  section  8,  on application made  to it  by the aggrieved person, to issue a certificate for that amount to the Collector. The Collector, thereupon, is  empowered to  recover the amount of gratuity, together with  compound interest thereon at the rate of nine per cent per annum from the date 959 of expiry  of  the  prescribed  time,  as  arrears  of  land revenue, and pay the same to the person entitled thereto.      It is  apparent that the Payment of Gratuity Act enacts a complete  code containing detailed provisions covering all the essential  features of a scheme for payment of gratuity. It creates  the right to payment of gratuity, indicates when the right  will accrue,  and lays  down the  principles  for quantification of  the gratuity.  It  provides  further  for recovery of  the amount,  and contains an especial provision that compound  interest at  nine per  cent per annum will be payable on  delayed payment.  For  the  enforcement  of  its provisions, the  Act  provides  for  the  appointment  of  a controlling authority,  who is  entrusted with  the task  of administering the  Act. The  fulfilment of  the  rights  and obligations of  the parties are made his responsibility, and he has been invested with an amplitude of power for the full discharge of that responsibility. Any error committed by him can be  corrected in appeal by the appropriate Government or an appellate  authority particularly  constituted under  the Act.      Upon  all   these  considerations,  the  conclusion  is inescapable that   Parliament  intended that proceedings for payment of  gratuity due  under the  Payment of Gratuity Act must be  taken under  that Act and not under any other. That being so, it must be held that the applications filed by the employee respondents under section 33-C(2) of the Industrial Disputes Act  did not  lie, and  the  Labour  Court  had  no jurisdiction to  entertain and  dispose  of  them.  On  that ground, this appeal must succeed.      In the circumstances, it is not necessary to notice the further submission  on behalf  of the appellant that where a serious dispute exists in regard to the basis of a claim for payment of  gratuity, no  proceedings will lie under section 33-C(2) of the Industrial Disputes Act.      The appeal  is allowed,  and the  order dated April 30, 1975 of  the Labour  Court,  Jullundur  is  quashed.  Having regard to  the terms  on which  special leave was granted by this Court  to the appellant, the appellant shall pay to the employee respondents their costs of this appeal.      At this  stage we put to the learned Solicitor-General, who  appeared   for  the   State  whether   in  the  special circumstances it was not fair that the entire amount be paid by the appellant to the employees without 960 driving them  to a separate proceeding. He has fairly stated that the  appellant is  willing to do so and the sole object of this  litigation was  to  have  the  law  clarified.  We, therefore, direct  the appellant  to  pay  to  the  employee respondents within one month from today the amounts that may be due to them, if they have not already been paid. P.B.R.    Appeal allowed 961