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PETITIONER: JEEWANLAL (1929) LTD.ETC. ETC.

       Vs.

RESPONDENT: THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT &O

DATE OF JUDGMENT29/08/1984

BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) REDDY, O. CHINNAPPA (J) VENKATARAMIAH, E.S. (J)

CITATION:  1984 AIR 1842            1985 SCR  (1) 664  1984 SCC  (4) 356        1984 SCALE  (2)303  CITATOR INFO :  RF         1986 SC 458  (3)  RF         1988 SC 587  (12)

ACT:      Payment of Gratuity Act 1972, Sections 4(2) and 4(3)      Monthly-rated employee-Computation of gratuity-Scope of expression "fifteen days’ wages"- Explained.      Interpretation of  statutes Social Welfare legislation- Beneficient rule of construction-Adoption of.      Social  security  measures-Application  of  provisions- Doubt or  difficulty  arising-Necessity  for  Government  to introduce legislation to cure the defect without waiting for interpretation by highest Court-Suggestion for setting up of National Labour Commission for Periodical review.      Words &  Phrases:  appropriate  Government’-Meaning  of Section 2(a)(1) Payment of Gratuity Act 1972.

HEADNOTE:      The  respondent-a   monthly-rated   employee   of   the appellant-a public limited company, ceased to be an employee on attaining  the age  of superannuation after completing 35 years of  service. Since  he  was  entitled  to  payment  of Gratuity under  the  Payment  of  Gratuity  Act,  1972,  the appellant calculated  the amount  of gratuity  payable under sub-s.(2) of  s.4 on  the basis  that ’fifteen  days’ wages" meant half  of the  monthly wages  last drawn  i.e., for  13 working days.  there being  26 working  days in a month, The respondent being  dissatisfied with  this  payment,  made  a claim  under   sub-s(1)  of   s.7,  before  the  Controlling Authority, for  payment of  an additional sum of gratuity on the ground that the daily wages should be ascertained on the basis of  what he actually got for 26 days and the amount of "fifteen days’  wages" should be calculated accordingly, 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.      The Controlling Authority held; that for the purpose of calculating  "fifteen  days’  wages"  it  was  necessary  to ascertain one day’s wage and since a 665 month consists  of 26  working days,  the amount of gratuity should be  calculated by  dividing the  monthly  wages  last

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drawn by  26 and  multiplying by  ’fifteen’; and not by just taking half of the monthly wages or by dividing such monthly wages by 30.      On appeal, the Appellate Authority, held that there was an error  in the  mode  of  computation  of  the  amount  of gratuity that  was  payable,  and  held  that  the  gratuity payable would  have to  be calculated at half of the monthly rate of  wages, i.e. wages earned in a consecutive period of 15 days  and  the  daily  wages  had  to  be  multiplied  by "thirteen" and  not by "fifteen" for every completed year of service or part thereof not exceeding six months. The amount of gratuity payable was accordingly reduced.      The High  Court under  Article 226,  held following the decision of  this Court  in Shri Digvijay Woollen Mills Ltd. etc. v.  Mahendra Prataprai  Buch etc. 1981 1 SCR 64 that in order to  determine "fifteen days’ wages" of a monthly-rated employee under sub-s.(2) of s.4 of the Act, it was necessary to determine  one day’s  wages last  drawn by  him, and them multiply the same "fifteen’ times. and the resultant sum has to be  multiplied by  twenty to arrive at the maximum amount of gratuity  payable under  sub-s.(3) of s.4 of the Act. The orders of the Controlling Authority were restored.      In the  Appeals and  Special  Leave  Petitions  it  was contended on  behalf  of  the  Management:  that  the  words "fifteen days’  wages" occurring  in sub-s.(2) of s.4 of the Act are  clear and  unambiguous and must mean half a month’s wages and  therefore there  was no  scope for  an artificial calculation being  made by dividing the wages for a month by the number of working days.      Dismissing the Appeals and Special Leave Petitions, ^      HELD: 1.(i)  The Payment  of  Gratuity  Act,  1972  was enacted to  introduce a  scheme for  payment of gratuity for certain  industrial   and  commercial  establishments  as  a measure  of   social  security.  The  significance  of  this legislation lies  in the  acceptance  of  the  principle  of gratuity as  a compulsory  statutory retiral benefit. [672G; 673B]      (ii) In  construing a  social welfare  legislation, the Court should  adopt a beneficent rule of construction and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more  beneficial to the persons in whose interest the Act has been passed. When the language is plain and unambiguous. the Court  must give  effect  to  it  whatever  may  be  the consequence. The  argument of  inconvenience and hardship is only admissible  in construction  where the  meaning of  the statue is obscure and there are two methods of construction. In an  anxiety to  advance the  beneficent  purpose  of  the legislation, the  Court must  not yield to the temptation of seeking ambiguity when there is none. [675B-D]      2.(1) The intention of the Legislature in enacting sub- s.(2) of  s.4 of  the Act was not only to achieve uniformity and reasonable degree of certainty, but 666 also to  create and  bring into force a self-contained, all- embracing,  complete  and  comprehensive  code  relating  to gratuity as  a compulsory,  retiral benefit.  The quantum of gratuity payable  under sub-s(2) of s.4 of the Act has to be "fifteen days’  wages" based  on rate of wages last drawn by the employee  concerned for  every completed year of service or more  in excess  of six months ’subject to the maximum of 20 months’ wages as provided by sub-s. (3). [676G-H; 677A]      Shri Digvijay  Woollen  Mills  Ltd.  etc.  v.  Mahendra Prataprai Buch etc.,[1981] 1 SCR 64, referred to.

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    Associated Cement  Co. Ltd. Kistna Cement Works, Kistna Guntur Distt.  v. The  Appellate Authority  under Payment of Gratuity Act  (Regional Assistant  Commissioner  of  Labour, Guntur) &  Ors. [1976]  1  LLJ  222  and  Swamy  &  Ors.  v. Controlling Authority  under Payment of Gratuity Act & Ors., [1978] 52 IFJ 138 over-ruled.      (ii) The  word ’rate’ appears twice in sub-s.(2) of s.4 and it  necessarily involves  the concept  of actual working days. Although  a month is understood to consist of 30 days, gratuity payable  under the  Act treats the monthly wages as wages for 26 working days. [675A]      (iii) Sub-ss.(2)  and (3)  of the  Act are  designed to achieve two  separate and  distinct objects and they operate at two  different stages.  While sub-s. (2) provides for the mode of  calculation of  the amount  of gratuity,  sub-s:(3) seeks to  impose a ceiling on the amount of gratuity payable at 20  months wages.  It is meant to provide in incentive to employees to  serve for the period of 30 years or more. Sub- s.(2) of  s.4 of the Act which uses the words "fifteen days’ wages" and  not half a months wages, cannot be called in aid for construction  of the  words "20 month’ wages’, appearing in sub-s.(3) of s.4 of the Act. [677F-G]      3.  The   definition  of  ’appropriate  government’  in s.2(a)(1)  in   relation  to   an  establishment   makes   a distinction  between   establishments  and   factories.   In relation to  an establishment  belonging to,  or  under  the control  of,   the  Central  Government  and  of  a  factory belonging  to,   or  under   the  control  of,  the  Central Government,  the   appropriate  government  is  the  Central Government. But  the Central  Government is  the appropriate government only  in  relation  to  an  establishment  having branches in  more than one State. There is no like provision made in  relation to  such an establishment having factories in different States. [678F-G]      4. Whenever  doubt or  difficulty is  expressed by  the High Courts  in the  application  of  provisions  of  social security  measures,   namely,  retiral  benefits,  gratuity, provident fund  etc., the  Government must  always introduce legislation to  cure the  defect rather  than wait  judicial interpretation by the highest Court.                                                       [680H]      Lalappa Lingappa  and  Ors.  v.  Laxmi  Vishnu  Textile Mills., Ltd. [1981] 2 SCR 797. referred to. 667      5. The  Government may  consider  the  desirability  of setting  up  a  National  Labour  Commission  which  may  be entrusted not only with the task of making periodical review of social welfare legislations from time to time but also to suggest radical  reform of  the laws  relating to industrial relations which  must be  brought in  tune with the changing needs of the society. [681A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos.  2332 1970, 2432,2784-2877 of 1981 and 7447 to 7497 of 1983      Appeals by  Special leave  from the  Judgment and Order dated the  19th June,  1981 of the Madras High Court in Writ Petition Nos.  338, 4263  of 1977,  4028/80, 2662/78,  4056, 2171,     2170/80,     4136/78,4339/80,     2028/78,2085/80, 2178/78,1590/76,3164, 2426/80,  2122/80,  2452/78,  4414/80, 2073/78, 1598/76,  1596/76,  4257/80,  614/79,  4057,  4254, 4411,   1732/80,    1597/76,   4259/80,    2664/78,    4252, 2175/80,2058/78, 3972/80,  26/79,4410/80,1592/76,3571, 4259,

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4058, 3570,  2007/80,2169/78, 2135,  4331/80, 2665/78, 2006, 4255,  4022/80,  1595/76,  4054/80,  1594/76,  4026,2174/80, 2168/78,   3567/80,2172/78,   2133/80,   2469/78,   5470/78, 1593/76, 3569/80,  1551/76, 1591/76, 2008, 3156, 4029, 3165, 4055,        4409,         4408,         2427,         3412, 4024,4023,4412,3166/80,2663/78,  4225,  2134,  3157,4253/80, 2454/78,4027/80,2471/78,                    1959/80,1635/76, 2453/78,2172,3163/80,2461/78,3158,     4053,4413/80,2073/78, 3568, 2005/80,1542,  1540,  1378,  1377/78,492,  339,340/77, 1541,1379/78,         3041/77,226/79,         3050,3056,3034 3038,3037/77,3767,4261,3058/77,168/79,  3766,  3039/77,3048, 3035, 3047,  4262, 4259,  3988, 3053,  4260, 4383/77,265/79, 4258,    2967,3055,3052,    3280,    3033,    3032,    3036, 3051,3049,3040,4381,4382, 3042/1977 & 264 of 1979.                             WITH      Civil Appeal  Nos. 2985-87, 3398-3410 of 1981, 369-410, 450-59, 3091-3092 of 1982, 60/83, 2560/83, 10778 of 1983,      Appeals  by   Special  leave  from  the  Order  of  the Appellate Authority,  Under the  payment  of  Gratuity  Act, Madras dated 29th May, 31st January, 27th February, of 1981, 17th, &  30th April  16th December  & 20th December, 1982 in P.G.A. Nos.  24/81, 31/80,90/80,138,132, 131, 134, 139, 129, 137, 92, 133,91,136, 135, of 1980, 19-23, 25-28, 30,29,31-39 of 1981, 61, 69, 101, 98,66, 73, 50, 63, 60, 32, 33, 34, 35, 36, 57, 58, 59, 62, 64, 65; 67,68,74-79, 97, 668 99, 100  & 49 of 1980 2 & 6 of 1981, 458/81, 48/82 and 12 of 1981                             AND                Civil Appeal No. 2559 of 1984.      Appeal by  Special leave  from the  Judgment and  Order dated 22nd  March, 1984,  of the Appellate Authority and the Regional Labour  Commissioner  (Central)  Madras  Under  the Payment of Gratuity Act, 1972 in Appeal No 17 of 1983.                             AND      Special Leave  Petition (Civil) Nos. 1819, 3324, 11382- 84, 14754 of 1982 and 4940 of 1984.      From the  Orders dated the 19th July, 1981, 28th July & 12th August,  1982 and 16th February, 1984, of the Appellate Authority and  the Regional  Labour  Commissioner  (Central) Madras Under  the Payment  of Gratuity  Act, 1972  in P.G.A. Nos. 20/81, 1/77, 9/82, 10 & 11/82 and 16 of 1983      Soli J.  Sorabjee,  A.N.  Haksar,  S.  Ramasubramaniam, Sanjay Mohan & D.N. Gupta for the Appellants in CAS. 1970/81 & 2560/83.      Dr. Y.S.  Chitale, S.  Ramasubramaniam,  Sanjay  Mohan, D.N. Gupta  for the  Appellants in  CAS. 2432/81, 10778/83 & 2559/84.      S. Padmanabhan, S. Ramasubramaniam, Sanjay Mohan & D.N. Gupta for the Appellants in CA. Nos. 2332/81 & 2985 of 1981      S. Ramasubramaniam,  Sanjay  Mohan  &  D.N.  Gupta  for Appellants in  rest of  the Appeals  and for  Petitioners in Special Leave Petitions.      S.H. Mehta  & M.C.  Tiwari for  Respondent No. I in CA. No. 3091/82.      H.S. Parihar for Respondent in CA. 60 of 1983.      Ambrish Kumar for the Respondent.      The Judgment of the Court was delivered by 669      SEN,  J.   These  appeals  by  special  leave  and  the connected   special leave  petitions from  the judgment  and order of  the Madras  High Court dated June 19, 1981 raise a question of  substantial importance. The question is whether the words  "fifteen days’  wages" occurring in sub-s. (2) of s.4 of  the  payment  of  Gratuity  Act,  1972  (hereinafter

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referred to  as the  ’Act’) in  the  case  of  monthly-rated employes, 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". A subsidiary question arises as to whether the words "twenty months’ wages"  occurring in  sub-s. (3)  thereof would only mean wages  for 520  working days  taking the actual working days in  20 months or must mean 600 days taking that a month consists of 30 days.      It is  not necessary  to state  the facts  in any great detail. In  all these  appeals, the  respondent in each case was a  monthly-rated employee  and the  appellant, a  public limited company,  was his  employer. The  facts in  each  of these cases  are more or less similar and it will suffice to state the  facts in one of them. In Civil Appeal No. 2332 of 1981-Messrs Jeeva lal (1929) Ltd. v. The Appellate Authority under the  Payment  of  Gratuity  Act,  Madras  &  Ors,  the respondent ceased  to be an employee on attaining the age of superannuation after completing 35 year of service. Since he was entitled  to payment  of gratuity  under  the  Act,  the appellant calculated  the amount  of gratuity payable to him under sub-s.  (2) of  s. 4  on the basis that "fifteen days’ wages" meant  half of  the monthly  wages last drawn by him, i.e., for  13 working days, there being 26 working days in a month. Being  dissatisfied with such payment, the respondent made a  claim under sub-s. (1) of s. 7 of the Act before the Controlling  Authority,  Madras  for  determination  of  the amount of  gratuity payable  to him.  He made  a demand  for payment of  an additional sum as gratuity on the ground that his daily  wages should  be ascertained on the basis of what he actually  got for  26 working  days  and  the  amount  of "fifteen days’  wages" should be calculated accordingly, 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. The appellant  contested the claim contending that the words "fifteen days’ wages" occurring 670 in sub-s.  (2) of  s. 4 of the Act only meant half a month’s wages and  since a  month consisted  of 26 working days, the amount’ of  gratuity was  rightly arrived  at by multiplying the daily wages by ’thirteen’.      The Controlling  Authority by its order dated September 23, 1978  held that for the purposes of calculating "fifteen days’ wages"  it was  necessary to  ascertain one day’s wage and since a month consists of 26 working days, the amount of gratuity should be calculated accordingly, i.e., by dividing the monthly  wages last  drawn by 26 multiplied by ’fifteen’ and not  by just  taking half of his wages for a month of 30 days or by dividing such monthly wages by 30. It accordingly directed the  appellant to pay Rs. 6069.00 as gratuity under sub-s. (1)  of s.  4 of  the Act.  On appeal  the  Appellate Authority, Madras by its order dated July 12, 1976 held that there was  an error in the mode of computation of the amount of gratuity  payable to the respondent. According to it, the gratuity  payable   to  the  respondent  would  have  to  be calculated at half of his monthly rate of wages, i.e., wages he would  have earned in a consecutive period of 15 days and his daily  wages had  to be multiplied by "thirteen" and not by "fifteen"  for ever  completed year  of service  or  part thereof not exceeding six months. It accordingly reduced the amount of gratuity payable to Rs. 5259.80 p.      It, however,  appears that  the Appellate  Authority in

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several other  cases took a view to the contrary such as the one in  Civil Appeal  No. 2432  of 1981 relating to the same employer, Messrs  Jeevanlal (1929)  Ltd. as  also  in  Civil Appeal No. 1970 of 1981 relating to another employer, Messrs Madura Coats  Ltd. as  also in Civil Appeal No. 2559 of 1984 relating to  M/s Binny  Ltd. and  upheld the  orders of  the Controlling Authority.  As a  result  of  these  conflicting orders passed  by the  Appellate Authority, the employers in some of  these cases  and the employes in others had to file petitions in  the  High  Court  under  Article  226  of  the Constitution and  they have been disposed of in the judgment under appeal.  The High Court following the decision of this Court in  Shri Digvijay  Woollen Mills Ltd. etc. v. Mahendra Prataprai Buch  etc. and  that of  the Bombay  High Court in Lakshmi Vishnu  Textile Mills v. P.S. Mavlankar held that in order to  determine "fifteen days’ wages" of a monthly rated employee under  sub-s. (2)  of s.  4  of  the  Act,  it  was necessary 671 to determine  one day’s  wage last  drawn by  him  and  then multiply the same "fifteen" times, and the resultant sum had to be  multiplied by  twenty to arrive at the maximum amount of gratuity  payable under sub-s. (3) of s. 4 of the Act. It accordingly  restored   the  orders   of   the   Controlling Authority.      In support  of these  appeals, learned  counsel for the appellants submitted that the decision of this Court in Shri Digvijay Woollen  Mills Ltd.  case does  not  lay  down  any principle but,  on the contrary the Court expressly observed that’ it was not necessary to go into the question as to the correctness of the conflicting views taken by different High Courts.’ Reliance  was placed on the decision of the learned Single Judge  of the Andhra Pradesh High Court in Associated Cement Co.  Ltd. Kistna  Cement Works, Kistna, Guntur Distt. v. The  Appellate Authority  under Payment  of Gratuity  Act (Regional Assistant  Commissioner of  Labour, Guntur) & Ors. which was  approved by  a Division  Bench of  the same  High Court in  Swamy & Ors v. Controlling Authority under Payment of Gratuity  Act &  Ors. In  all  fairness  to  the  learned counsel, it  must be  said that  they also  brought  to  our notice  the   decisions  of   the  Calcutta  High  Court  in Hukamchand Jute  Mills Ltd.  v. State  of West Bengal & Ors. that of  the Bombay  High Court  in Lakshmi  Vishnu  Textile Mills’ case  and that  of the  Gujarat High  Court  in  Shri Digvijay Woollen Mills’ case taking a view to the contrary.      It is  urged that  the  words,  ’fifteen  days’  wages" occurring in  sub-s.(2) of  s.4 of  the Act  are  clear  and unambiguous and must mean half a month’s wages and therefore there was  no scope for an artificial calculation being made by dividing  the wages  for a month by the number of working days  viz.,   26  for   determining  the   daily  wages  and multiplying the  same by  "fifteen" to  determine the amount representing 15  days wages  inasmuch  as  the  wages  of  a monthly-rated employee  were for  all the 30 days of a month and not  26 working  days alone and therefore "fifteen days’ wages" in  his case,  would amount  only to  half a  month’s wage. It  is further urged that Parliament amended sub-s.(3) of s.4  of the Act on recommendation of the Select Committee and raised  the ceiling of gratuity from 15 months’ wages to 20  months’  wages  and  the  reason  given  by  the  Select Committee was that there should be an incentive for 672 employees to  serve beyond  a period  of  30  years.  It  is submitted that  by providing  for a  maximum gratuity  of 20 months’ wages  the Select  Committee meant that it should be

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payable for  a  service  of  40  years;  and  that,  if  the contention of  the employees  were to  prevail, the  maximum gratuity would  become payable  even after  completion of 34 years and  8 months instead of 40 years. We are afraid, this contention cannot prevail.      These submissions,  broadly stated,  give rise  to  two question.  The   first  is   whether  for   the  purpose  of computation of  "fifteen days’  wages"  of  a  monthly-rated employee under  sub-s.(2) of  s.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 af  30 days  or fixing his daily wages by dividing his monthly wages  by 30.  The second  question is  whether  the words "twenty  months’ wages"  occurring in sub-s.(3) of s.4 of the  Act must  be construed  to mean  wages for  520 days taking the  actual working  in days in twenty months or must mean wages  for 600  days taking that a month consists of 30 days. As  regards the  first, the  answer  must  be  in  the affirmative in  view of  the decision  of this Court in Shri Digvijay Woollen  Mills’s case,  but learned counsel for the appellant want  us to take a second look at is as, according to them,  nothing was  settled in  that case. As regards the second question, the learned counsel contend that sub-ss.(2) and (3)  of  s.4  of  the  Act  must  receive  a  harmonious construction as they provide for the mode of calculating the total  amount  of  gratuity  payable  to  an  employee  upon termination of  his services  under sub-s.(l)  of s.4 of the Act and  it is said that a month cannot mean 26 working days for the  purpose of sub-s.(2) and 30 days for the purpose of sub-s.(3).      The  Payment  of  Gratuity  Act,  1972  is  enacted  to introduce a  scheme for  payment  of  gratuity  for  certain industrial and  commercial establishments,  as a  measure of social security. It has now been universally recognized that all persons  in society  need  protection  against  loss  of income due to unemployment arising out of incapacity to work due,  to   invalidity,  old   age  etc.   For   wage-earning population, security  of income, when the worker becomes old or infirm, is of consequential importance. The provisions of social security  measures, retiral  benefits like  gratuity, provident fund  and pension  (known as  the triple benefits) are of special importance. In 673 bringing the  Act on  the statute-book, the intention of the legislature     was  not  only  to  achieve  uniformity  and reasonable degree of certainty, but also to create and bring into force  a self-contained,  all embracing,  complete  and comprehensive code relating to gratuity. The significance of this legislation  lies in the acceptance of the principle of gratuity as a compulsory statutory retiral benefit.      As is  true in  every case  involving construction of a statute, our starting point must be the language employed by the legislature.  It is  necessary to  set out  the relevant statutory provisions of the Act. Sub-s.(1) of s.4 of the Act reads:      "4(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      (b)   on his  death or  disablement due  to accident or           disease.           Provided that  the completion  of five years shall      not  be   necessary  where   the  termination   of  the

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    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-For  the purposes  of this  section,      disablement means  such disablement as incapacitates an      employee  for   the  work   which  he  was  capable  of      performing before the  accident or disease resulting in      such disablement." Sub-ss.(2) and (3) of s.4 of the Act      provide as follows:           "4(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  that   in  the  case  of  a  piece-rated      employee, daily  wages shall be computed on the average      of the  total wages  received by  him for  a period  of      three months  immediately proceeding the termination of      his employment, 674      and, for  this purpose, the wages paid for any overtime      work shall not be taken into account:           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.’           "4(3):  The  amount  of  gratuity  payable  to  an      employee shall not exceed twenty months’ wages."      The term ’wages’ is defined in s.2(s) as follows:           "2(s): "wages"  means  all  emoluments  which  are      earned by  an employee  while on  duty or  on leave  in      accordance  with   the  terms  and  conditions  of  his      employment and  which are paid or are payable to him in      cash and  includes  dearness  allowance  but  does  not      include any  bonus, commission,  house rent  allowance,      overtime wages and any other allowance."      In dealing with interpretation of sub-ss.(2) and (3) of s.4 of  the Act, we must keep in view the scheme of the Act. Sub-s. (1)  of s.4  of the  Act incorporates  the concept of gratuity being a reward for long, continuous and meritorious service. Sub-s.  (2) of  s.4 of the Act provides for payment of gratuity  at the  rate of  "fifteen days’ wages" based on the rate  of wages  last drawn by the employee concerned for every completed  year of  service. The legislative intent is obvious. Had the legislature stopped with the words "fifteen days’ wages" occurring in sub-s. (2) of s.4 of the Act there was something  to be said for the submission advanced by the learned counsel  for the  appellants based upon the decision of learned  Single Judge of the Andhra Pradesh High Court in Associated Cement’s  case which  was  later  approved  by  a Division Bench  of that  Court  in  Swamy’s  case.  But  the legislature did  not stop  with  the  words  "fifteen  days’ wages" in  sub-s. (2)  of s.4 of the Act. The words "fifteen days’ wages"  are preceded by the words "at the rate of" and qualified by  the words  "based on  the rate  of wages  last drawn" by  the employee  concerned. The  emphasis is  not on what an  employee would have earned in the course of fifteen days  during   the  month   when  his  employment  was  last terminated, but on the rate of fifteen days’ wages for every completed year of service, based 675 on the  rate of  wages last drawn by the employee concerned. The   word ’rate  appears twice  in sub-s. (2) of s.4 and it

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necessarily involves  the concept of actual working days. In Shri Digvijay  Wollen Mills’ case the Court rightly observed that although  a month  is understood to consist of 30 days, gratuity payable under the Act treating the monthly wages as wages for 26 working days is not new or unknown.      In construing  a social  welfare legislation, the court should adopt  a beneficent  rule of  construction and  if  a section is  capable of  two constructions, that construction should be preferred which fulfils the policy of the Act, and is more  beneficial to the persons in whose interest the Act has been  passed. When, however, the a language is plain and unambiguous, the  Court must  give effect to it whatever may be the  consequence, for,  in that  case, the  words of  the statute speak  the intention  of the  legislature. When  the language  is   explicit,  its   consequences  are   for  the legislature and not for the courts to consider. The argument of inconvenience and hardship is a dangerous one and is only admissible in  construction where the meaning of the statute is obscure  and there  are two  methods of  construction. In their anxiety  to advance beneficent purpose of legislation, the courts  must not  yield to  the  temptation  of  seeking ambiguity when there is none.      It is  not correct  to say  that the  decision in  Shri Digvijay Woolen Mills’ case does not lay down any principle. Gupta, J.  speaking for  the Court  set  out  the  following passage from  the Judgment of the Gujarat High Court in Shri Digvijay Woollen Mills’ case:           "The employer  is to  be paid  gratuity for  every      completed  year  of  service  and  the  only  yardstick      provided is  that the  rate of  wages last  drawn by an      employee concerned  shall be utilized and on that basis      at the  rate of  fifteen days  wages for  each year  of      service, the gratuity would be computed. In any factory      it is well known that an employee never works and could      never be  permitted to  work for all the 30 days of the      month. He  gets 52  Sundays in  a year as paid holidays      and, therefore,  the basic wages and dearness allowance      are always  fixed by  taking  into  consideration  this      economic reality...  A worker  gets full  month’s wages      not by remaining on duty for all the 30 days within a 676      month but  remaining on work and doing duty for only 26      days. The  other extra  holidays may make some marginal      variation into 26 working days, but all wage boards and      wage fixing  authorities or  Tribunals in  the  country      have always  followed this pattern of fixation of wages      by this method of 26 working days." And then observed:           "The view  expressed in  the extract  quoted above      appears to be legitimate and reasonable." The learned Judge then went on to say:           "Ordinarily of  course 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 followed by the Gujarat High Court cannot      be called perverse." He further  observed that  it was  not necessary to consider whether another  view was possible and declined to interfere under Art.  136 in a matter where the High Court had taken a view favourable  to the  employees and  the view taken could not be  said to be in any way unreasonable and perverse, and then added:           "Incidentally, to  indicate that  treating monthly      wages as  wages for  26 working  days is  not  anything      unique or unknown."

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We find  that the  same view  has been  taken by  as many as three High  Courts viz.  by the Calcutta, Bombay and Gujarat High Courts  in the cases referred to at the Bar. We find no compelling reason  to take  a view  different from  the  one expressed by  this Court  in Shri  Digvijay  Woollen  Mills’ case.      The intention of the legislature enacting sub-s. (2) of s. 4  of the  Act was  not only  to achieve  uniformity  and reasonable degree of certainty, but also to create and bring into force  a self-contained,  all-embracing,  complete  and comprehensive code  relating to  gratuity as  a  compulsory, retiral benefit.  The quantum of gratuity payable under sub- s. (2) of s.4 of the Act has to be fifteen days’ wages based on the  rate of  wages last  drawn by the employee concerned for every completed year of service or more in excess of six 677 months’ subject  to the  maximum  of  20  months’  wages  as provided   by sub-s.  (3) thereof.  The whole  object is  to ensure that  the employee concerned must be paid gratuity at the rate  of fifteen  days’ wages  for 365 days in a year of service. The  total  amount  of  gratuity  payable  to  such employee at  that rate has to be multiplied by the number of years of  his service subject to the ceiling imposed by sub- s. (3)  of s.4  of the  Act viz., that such amount shall not exceed 20  months’ wages.  The construction of sub-s. (2) of s.4 of  the Act  adopted by  the learned Single Judge of the Andhra Pradesh  High Court  in Associated  Cement  Company’s case, and  later approved  by a Division Bench of that Court in Swamy’s  case would  make it  utterly unworkable.  If the determination of the amount of gratuity payable under sub-s. (2) of s.4 depends on the number of calendar days in a month in which  the services of the employee concerned terminates, the quantum  of  gratuity  payable  would  necessarily  vary between an  employee and  an employee, belonging to the same class, drawing  the same  scale of  wages, with like service for the same number of years. Obviously, this could not have been the legislative intention.      The next  question is:  whether a  month cannot mean 26 working days  for purposes  of sub-s.  (2) of s.4 of the Act and 30  days for  purposes of sub-s. (3) thereof. It is said that if a month under sub-s. (2) connotes 26 working days in a month  for purposes of calculating the amount of gratuity, then the  rule of  harmonious construction requires that the words "20  months’ wages"  in sub-s.  (3) thereof  must mean wages for 520 working days taking the actual working days in 20 months  and not  600 days taking that a month consists of 30 days.  The contention is wholly misconceived. Sub-ss. (2) and (3)  of s.4  of the  Act are  designed  to  achieve  two separate and  distinct  objects  and  they  operate  at  two different stages.  While sub-s. (2) provides for the mode of calculation of  the amount  of gratuity, sub-s. (3) seeks to impose a  ceiling on  the amount  of gratuity  payable at 20 months wages.  It  is  meant  to  provide  an  incentive  to employee to  serve for  the period of 30 years or more By no rule of  construction, sub-s.  (2) of  s.4 of  the Act which uses the  words "fifteen  days’ wages" and not half a months wages, be  called in  aid for  construction of the words "20 months’ wages" appearing in sub-s. (3) of s.4 of the Act.      We do not think it necessary to deal at length with the last and 678 third question  raised in  some of  these appeals  viz,  the objection to  the jurisdiction  of the Controlling Authority under s. 3 of the Act to entertain the claim against some of the appellants.  It is  said that  Messers Jeevanlal  (1929)

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Ltd. is  an all-India  concern having  its branches  in more than one  State and  therefore the  ’appropriate government’ within the meaning of s.2 (a) (1) (b) of the Act in relation to them  is the Central Government for purposes of s. 3. The appropriate government is the Central Government in relation to an establishment belonging to or under the control of the Central Government or having branches in more than one State or of  a factory  belonging to,  or under the control of the Central Government or in the case of a major port, mine, oil field, or  railway company.  Section 2  (a) (1)  of the  Act reads as follows:      "2: In this Act, unless the context otherwise requires      (a) "appropriate government" means-           (i) in relation to an establishment-      (a)  belonging to, or under the control of, the Central           Government,      (b)  having branches in more than one State,      (c)  of a  factory belonging  to, or  under the control           of, the Central Government,      (d)  of a  major  port,  mine,  oil  field  or  railway           company, the Central Government,           (ii) in any other case, the State Government: It  would   appear  that   the  definition   of  appropriate government in  s.2 (a)  (1) in  relation to an establishment makes a distinction between establishments and factories. In relation to  an establishment  belonging to,  or  under  the control  of,   the  Central  Government  and  of  a  factory belonging  to,   or  under   the  control  of,  the  Central Government,  the   appropriate  government  is  the  Central Government. But  the Central  Government is  the appropriate government only  in  relation  to  an  establishment  having branches in  more than one State. There is no like provision made in  relation to  such an establishment having factories in different  States. We feel that the point relating to the jurisdiction of  the Controlling  Authority under s.3 of the Act.  does   not  really   arise.  It  appears  that  Messrs Jeewanlal(1929) Ltd 679 have their registered and head office at Calcutta and branch offices and  factories at  Calcutta, Bombay  and Madras  and sales offices  at Delhi,  Hyderabad and  Cochin. It has also two factories in Madras viz., Shree Ganeshar Aluminium Works and Messrs  Mysore Premier  Metal Factory.  It employs about 300 members  of clerical  staff at  the head  office and its branch offices  throughout the country as well as in its two factories and employs about 1300 workmen in its factories at Calcutta, Bombay  and Madras.  We are  inclined to  the view that the Controlling Authority had jurisdiction to entertain the claim  of an employee working in an office attached to a factory as such an office would be an adjunct of the factory but that  is not  the question  before us.  The  Controlling Authority has  in fact,  confined the adjudication of claims in  relation  to  workmen  who  were  employed  at  the  two factories at  Madras but declined to entertain the claims of employees who  were working  either at  the branch office at Madras or  at  the  office  attached  to  the  factories  in question.  That   being  so,   the  contention  relating  to jurisdiction of  the Controlling  Authority under s.3 of the Act must fail.      It  has   been  our   unfortunate  experience   that  a beneficient  measure  like  Payment  of  Gratuity  Act  1972 providing for  a scheme  of retiral benefit, has been be set with many  difficulties in  its application.  It need not be over emphasised  that a  legislation of  this kind  must not suffer from  any ambiguity. In the recent past, the Court in

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Lalappa Lingappa and Ors. v. Laxmi Vishnu Textile Mills Ltd. faced  with   the  problem  as  to  whether  the  expression "actually employed"  in Explanation  I to s.2 (c) of the Act must, in  the context  in which it appeared, meant "actually worked". The inclusive part of the definition of ’continuous service’ in  s.2 (c)  is  to  amplify  the  meaning  of  the expression by  including interrupted  service under  certain contingencies which,  but for such inclusion, would not fall within the ambit of the expression ’continuous service’. But the use of the words ’actually employed’ in Explanation 1 to s.2 (c)  of the Act created a difficulty. The Court observed that it  was not  permissible to attribute redundancy to the words ’actually  employed’ and,  accordingly, held  that the expression ’actually  employed’ in  Explanation I to s.2 (c) of the Act meant ’actually worked’. The law declared by this Court in  Lalappa Lingappa’s case, supra, resulted in denial of gratuity to a large number of permanent 680 employees,   whose    short-term   absence    had   remained unregularised,  due   to  lack   of  appreciation   of   the significance  for   the  purpose   of  working   out   their entitlement to  gratuity. It  is to  be regretted  that  the Government  waited  for  a  period  of  three  years  before introducing the  Payment of  Gratuity (Amendment) Bill, 1984 to remove the lacuna in the definition of continuous service in s.2  (c) of  the Act  by specifically  providing  that  a period of  absence in  respect of  which  no  punishment  or penalty has  been imposed would not operate to interrupt the continuity  of   service  for  the  purpose  of  payment  of gratuity. It  also amplified  the definition  of  continuous service under s.2 (c) of the Act. Such a belated legislation must have  worked great  injustice  to  a  large  number  of permanent employees.      In these  cases now  before us, the Court is faced with the problem  of determining  the  mode  of  calculating  the amount of  gratuity payable to the employees concerned under sub-s. (1)  of s.4  of the Act upon the termination of their services. It turns on the much vexed question as to the true meaning of the words "fifteen days’ wages" occurring in sub- s. (2)  of s.4  of the Act. The section does not specify how the rate  of wages  last drawn  by such  employees are to be determined for  the  purpose  of  determining  the  rate  of "fifteen days’  wages" under  sub-s. (2)  of s.4 of the Act. This  gave   rise  to  some  doubt  and  difficulty  amongst different High Courts in computation of the retiral benefit. It is  always an  unequal struggle  between the  capital and labour, and  these cases  furnish an  instance where workmen after putting  in long  and meritorious  service for over 30 years or more have been driven from one court to another for the last  12 years due to the reason that the words "fifteen days’ wages"  occurring in sub-s. (2) of s.4 of the Act were susceptible of  two possible conflicting constructions. In a situation like  this, the  Government should have intervened at once  to introduce  a Bill  for inserting  an appropriate provision in  the Act specifying the mode of calculating the rate of  wages last  drawn by such employees for the purpose of determining  the rate of "fifteen days’ wages" under sub- s. (2) of s.4 of the Act.      In retrospect,  we wish  to impress upon the Government that whenever  such doubt  or difficulty is expressed by the High Courts  in the  application  of  provisions  of  social security  measures   viz.,   retiral   benefits,   gratuity, provident fund and pension and the like, 681 they must  always introduce  legislation to  cure the defect

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rather than  wait for judicial interpretation by the highest Court. We  may also add that the Government may consider the desirability of  setting up  a  National  Labour  Commission which may  be entrusted  not only  with the  task of  making periodical review  of such  social welfare legislations from time to  time but also to suggest radical reform of the laws relating to  industrial relations  which must  be brought in tune with the changing needs of the society.      In the  result the appeals as well as the special leave petitions must fail and are dismissed with costs throughout. The costs are quantified at the sum of Rs. 10,000 two-thirds of which shall be deposited with the Supreme Court Legal Aid Committee of which Shri Subba Rao is the Hony. Secretary and the remaining one-third shall be paid to the respondent. N.V.K.    Appeals and petitions dismissed. 682