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PETITIONER: ASPINWALL & CO., KULSHEKAR, MANGALORE

       Vs.

RESPONDENT: LALITHA PADUGADY & ORS. ETC.

DATE OF JUDGMENT26/07/1995

BENCH: PUNCHHI, M.M. BENCH: PUNCHHI, M.M. MANOHAR SUJATA V. (J)

CITATION:  1996 AIR  580            1995 SCC  (5) 642  1995 SCALE  (4)834

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      These five  civil appeals  bearing numbers 4086 to 4090 of 1986  would be  disposed of  by a  common order since the question of law raised in these in common.      In each case, there is a workman arrayed as respondent. Undisputably  that   workman  was  employed  in  a  seasonal establishment of the employer-appellant. The activity of the establishment is  curing coffee.  The industry  involved has been  declared   seasonal  under   section  25-A(2)  of  the Industrial Disputes  Act, 1947.  In each  calender year  the factory remains  closed from  the month of June to the month of September.  The establishment  as  a  consequence  is  in operation from  September  onward  till  June  in  the  year following. The  claim of each workman before the Controlling Authority under  the Payment  of Gratuity Act, 1972 was that he had  a right to have his gratuity computed at the rate of 7 day’s  wages for  two seasons in each calender year on the basis that  the calender  year is  a unit  and the period of work stood split into two seasons. Support for the claim was sought from  the fact  that the establishment maintained its accounting year from January 1 to December 31 and so, it was claimed, computation  of gratuity  has to  fall in line with the accounting year.      The  claims   of  the  workmen  were  disputed  by  the establishment  on   the  ground  that  there  was  only  one continuous season  starting from  September till June of the following calender  year; the  nature of  the work demanding closure of  the establishment  during the monsoon season. It was contended  that the  workmen were  entitled to  7  days’ wages as  gratuity for  such season,  the period necessarily not terminating by the end of the calender year and starting anew in the next calender year. The Controlling Authority by a reasoned  order dated July 8, 1983, accepting the claim of the workmen,  granted them  gratuity for  two seasons at the rate of  7 days’  wages per  season in  each calender  year.

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Challenge thereto made by the appellant-establishment before a learned  Single Judge  of  the  High  Court  of  Karnataka failed. Writ  appeals of  the appellants-establishment  were dismissed by a Division Bench of that High Court giving rise to these appeals.      At the outset we need to record prominently that we are concerned with  the state  of Law  as existing  prior to the year 1984,  as thereafter  substantial amendments  found way into the  Act. It  has to  be seen  whether in  the law then applicable, was  the  concept  of  the  calender  year  well ingrained bearing  any relevance,  for it is on that concept that the  High Court  as also  the departmental  authorities have based  their decision.  It would  be worthwhile at this stage to take stock of the provision in so far relevant:      Section  4   provides  for  payment  of  gratuity.  The relevant provisions are:      "PAYMENT OF GRATUITY- (1) 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:      PROVIDED further  that in  the  case  of      death of  the employee, gratuity payable      to him shall be paid to his nominee, or,      if no  nomination has  been made  to his      heirs.      EXPLANATION: XXXX      (2) For  every completed year of service      or part thereof in excess of six months,      the employer  shall pay  gratuity to  an      employee at  the rate  of fifteen  days’      wages based  on the  rate of  wages last      drawn by the employee concerned:      PROVIDED     XXXXXX      PROVIDED further  that in the case of an      employee   employed    in   a   seasonal      establishment, the  employer  shall  pay      the gratuity  at the rate of seven days’      wages for each season."      Two expressions  defined in  Section 2 would have to be taken note of as they are relevant:      2.DEFINITIONS- In  this Act  unless  the      context otherwise requires-      (a)   xxxxx      (b) "completed  year of  service"  means      continous service for one year;      (c)    "continuous     service"    means      uninterrupted   service   and   includes      service   which    is   interrupted   by      sickness,  accident,   leave,   lay-off,      strike or  a lock-out  or  cessation  of      work  not   due  to  any  fault  of  the      employee   concerned,    whether    such      uninterrupted or interrupted service was      rendered    before    or    after    the      commencement of this Act.

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    EXPLANATION I - XXXXX      EXPLANATION  II   -  An  employee  of  a      seasonal establishment  shall be  deemed      to be  in continuous  service if  he has      actually  worked   for  not   less  than      seventy-five per  cent of  the number of      days on  which the  establishment was in      operation during the year;"      Section 4  postulates determination  of the  ‘completed year of  service’  meaning  thereby  one  year’s  period  of continuous service, rendered by an employee for the purposes of computation  of gratuity and therein is a method provided for determining  a completed  year of  service. The starting point of  the said  period is from the date an employee gets employment, which  in the  nature of  things would vary from employee to employee. It is no where envisaged in the scheme from the above provisions that the continuous service of the employee would  he computed in a chain from calender year to calender year.  Completed year of service would plainly mean continous service  for one  year reckonable from the date of joining employment.  It cannot  be confused  with that  of a calender year.  The understanding  of the year as a calender year, as  available  in  the  General  Clauses  Act  is  not importable  to  shadow  for  our  purposes  the  concept  of ‘completed year  of service’.  To illustrate the point if an employee joins  service in  the first  week  of  July  in  a particular year,  it cannot be said that for the purposes of the provisions of the Act, he would be deemed to have worked for half  an year  to begin  with, and  thereafter  to  have worked for each calender year till the date of the last one, and then  till the year of his termination. On the contrary, the Act  envisages that  the day  an  employee  enters  into service, his  continuous service  from year to year would be computed from  the date  of his  joining. In  the nature  of things regimenting  or streamlining  the whole  concept into calender year  apportionments is  totally ill-filled  in the scheme of the Act.      Explanation II to Section 2(c) plainly provides that an employee of  a seasonal  establishment shall be deemed to be in continuous  service, if  he has  actually worked  for not less than  seventy five  percent of  the number  of days  on which the  establishment was  in operation  during the year. Now what is that year. It obviously is the completed year of service of  an employee,  meaning thereby continuous service for one  year. The  provisions of  Section 4  clearly reveal that before  an employee  can claim  gratuity, he  must have rendered continuous  service for  not less  than five years. Further, for every completed year of service or part thereof in excess of six months, the employer is required to pay him gratuity at  the rate  of fifteen  days’ wages  based on the rate of  last drawn  wages by  the employee  concerned.  The first proviso  relates to  the right  conferred  under  sub- section (2)  to employees  other than  those employed  in  a seasonal establishment.  The second proviso being so related prominently says  that in  case of an employee employed in a seasonal establishment,  the employer  shall pay gratuity at the rate  of seven days’ wages for each season. Now the word ‘season’ herein  pre-supposes that the employee has not been employed in annual or regularly durated work during the days in which the establishment was in operation during the year. Were it  be so,  then the  employment would not be seasonal. Here the  unit of  reckoning  is  by  means  of  the  afore- understood continuous  service  of  one  year  containing  a season or  seasons. And  being seasonal,  the  span  of  the period of  such season  can by  the very nature of things be

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short or  large for  various reasons  but referable  yet  to continuous service within the meaning of Section 2(c). Tying all these  ends together, the conclusion is thus inescapable that when gratuity at the rate of seven days’ wages for each season requires  to be  worked out,  then one has to see the number of  seasons in  each completed year of service of the workman, i.e.  his continuous year of service, not regulated by the  calender year.  The second  proviso would have to be read  in   a  purposive  way,  i.e.  in  the  nature  of  an explanation tied and woven in Section 4. In working for each season thus the employee becomes entitled to gratuity at the rate of  seven days’ wages per season. Instantly no disputes had individually  been raised  in such manner with regard to identification of  seasons on  the basis of the count of the number of  working days  in each  completed year  of service pertaining to each workman.      For these  reasons, we  are of the considered view that the Controlling  Authority as  also both  the Benches of the High Court  in ignoring  the concept  of ‘continuous service for one  year’, which has reference to an individual workman and not  universally relatable  to the  calender  year,  had wrongly conferred  the benefit of two seasons to the workmen holding them  entitled to  fourteen days’ wages as gratuity. We,therefore,  upset   these  orders  and  direct  that  the appellant-employer shall  pay to the respondents gratuity at the rate  of seven  days wages for each season, continous as it is  from september  of a particular year till June of the following calender year. The appeals are thus allowed. Since there is no representation on the other side, there shall be no order as to costs.