Teachers not covered under Payment of Gratuity Act

Thanks for
your service
My pleasure… but
only thanks…. for
more than 5 years of
service
Let me pay him
some money but
I Can pay only
upto 10 lacks
Okay .. I will pay as
15/26 days salary
for every year as
retirement gift
Yeah
…
;-p

 Derived from “Gratuitas” meaning “Gift” OR
“TOKEN OF APPRECIATION”
 Extends to whole of INDIA Except Jammu And
Kashmir (Article 370)
 Applies to Factory, oilfield, plantation,port and
railway company (on fulfilment of conditions)
 Act applies irrespective of their salary

 Employer used to give gift employees on
leaving the jobs a certain sum for their
commitment towards organisation.
 Retension of employee
 Providing social security to employee as of
retirement
 To provide security to dependents in case of
death.
 To show the relation between them.

1. Almost every Act needs to be updated over
time so as to :-
 Apprehend Applicability & coverage,
 Or Cover the loopholes,
 Or to make compliance easy.
Similarily the act was amended over time w.r.t
requirements of circumstance

1984 1987 1994 1998 2010
Monetory
ceiling & on
wages (1000
t0 1600
•Continous
service
LIMIT
1L to
3.5 L
Monet
ory
ceiling
(50K
T0
100k)
•Wage
s limit
•Intere
st
•insura
nce
LIMIT
sec4(3)
3.5 L to
10L
2004&20
09
2(e)
•Educa
tional
institut
ion
•teache
rs

STATE OF PUNJAB VS . LABOUR
COURT{1980}
(Read as Plantiff vs. Defendant)
HOT FACTS
State of Punjab appointed employee for construction
of Hydel power plant
Punjab govt. retrenched them on completion of work
and further refused to pay gratuity as is out of scope.
Employees/workers approached labour court and
court directed govt. to pay gratuity but later on govt.
appealed in High court.
Govt. filled case and and case was closed on losing by
govt.

 Employees eligible to receive gratuity on
Retirement or superannuattion, death or
disablement due to accident (completed 5 years
of continous service){section 4}.
 Employer means in relation to the
establishment , factory , mine , oilfield ,
plantation , port or railway company or shop
belonging under control of SG , CG .

 As the payment of wages applies to the govt.
Hydel power project of electricity generation so
it is covered under Establishment & hence
covered under gartuity.
 It is concluded that any termination before
superannuation (service completion) is
Retirement.
 Being employee was eligible in the case except
above two conditions.
 So, Payment of Gratuity Act, 1972 applies.

 A retrenched employee is entitled to payment
of gratuity.
 Electricity generation and distribution are to be
covered under Establishment.
 State of Punjab was directed to pay Gratuity to
employees

Administrator , shri Jagganth Temple
Vs.
shri Jagganth Padhi and ors. {1991}
HOT FACTS
 Administrator or Plantiff was employed under the
temple and left service on superannuation.
 Temple was body corporate & registered under
Jagganath Temple Act,1954.
 Jagganath padhi and ors. refused to pay Gratuity

 Employer means in relation to the establishment
,factory ,mine ,oilfield ,plantation , port or railway
company or shop belonging under control of SG , CG .
 Employees eligible to receive gratuity on Retirement or
resignation or superannuattion, death or disablement
due to accident (completed 5 years of continous
service){section 4}.

 Temple was registered under Jagganath Act ,1954 ,
it was unique space and spiritual institution and
was body corporate.
 It was not regarded as a trust
 Temple was covered under Establishment under
Industrial Dispute Act ,1947 and commercial
establishment Act ,1956.
 Applicability of Sec 1 clause 3 makes it clear such
establishment is covered under the act.(10 or more
employee on any day of year. )

 The judgement and proceeding under State of
Punjab Vs. Labour court is also considered.
 As establishment is not clearly defined under
Gratuity Act so meaning is considered as of
common sense and w.r.t to certain dictionaries

 Employes Employed in temples are also
included under establishment and hence under
gratuity Act.
 Amount is payable to the plantiff by defendant
being covered under gratuity act and as
plantiff was being paid less during his job with
full commitment.

AHMEDABAD PVT.
PRIMARY TEACHERS'
VS.
ADMINISTRATIVE
OFFICER AND ORS ON 13
JANUARY, 2004
CASE -3

 This appeal has been preferred by Ahmedabad Private
Primary Teacher's Association. The Association
complains that in the petition filed by an individual
teacher employed in a school run by Ahmedabad
Municipal Corporation, the Full Bench of the High
Court of Gujarat by impugned judgment dated
04.5.2001 in Special Civil Application No. 5272 of 1987
not only rejected the claim of the teacher for payment
of gratuity under the provisions of Payment of
Gratuity Act. 1972 but has decided an important
question of law against the teachers as a class that they
do not fall within the definition of 'employee' as
contained in Section 2(e) of the Act and hence can raise
no claim to gratuity under the Act.

 The definition of employee contained in section 2(e) of the Act
of 1972 reads as under-
 '2(e). 'employee' means any person (other than an apprentice)
employed on wages, in any establishment, factory, mine,
olifield, plantation, port, railway company or shop, to do any
skilled, semi-skilled or unskilled, manual, supervisory,
technical or clerical work, whether the terms of such
employment are express or implied, [and whether or not such
person is employed in a managerial or administrative capacity,
but does not include any such person who holds a post under
the Central Government or a State Government and is
governed by any other Act or by any rules providing for
payment of gratuity].

 On the other hand, learned senior counsel Shri R.F, Nariman contends
that the Act is one of the labour welfare legislations. The words and
expressions used in the provisions of the Act should be considered in the
lignt of the provisions contained in other labour legislations where
similar expressions and definitions have been used. He has referred to the
definition of 'employee' in section 2(i) of the Minimum Wages .Act.
Section 2(13) of the Payment of Bonus Act and compared those provisions
with definition of 'employee' in section 2(1) of the Provident Funds Act.
Reference is also made to definition of 'workman' under section 2(s) of the
Industrial Disputes Act Thus, on comparative reading of the various
definitions in different enactments in the field of labour legislation, the
learned counsel appearing for the respondents argues that a teacher
cannot be said to be employed either for skilled, semi-skilled. unskilled,
manual, supervisory technical or clerical work. He/she is also not
employed in any managerial or adminastrative capacity. The teacher is
engaged in imparting education for intellectual or moral development of
student. He'She does not answer any of the above mentioned descriptions
in the definition clause with regard to the nature of work.

 We have critically examined the definition clause in the light of the arguments advanced
on either side and have compared it with the definitions given in other labour
enactments. On the doctrine of 'pari matreria, reference to other statutes dealing with the
same subject or forming pan of the same system is a permissible aid to the construction
of provisions in a statute. See the following observations contained in Principles of
Statutory Interpretation by G.P. Singh

 The definition of 'workman' contained in section 2(s) of the Industrial Disputes Act, 1947
meaning "any person employed in any industry to do any skilled or unskilled manual
supervisory technical, operational, or clerical work' came up for consideration before this
Court when teachers claimed that they are covered by the definition of the Industrial
Disputes Act. In the case of A. Sundarambal v. Govt. of Goa, Daman and Diu.[1988] 4
SCC 42 this Court negatived the claim of teachers that they are covered by the definition
of 'workman' under industrial Disputes Act thus:-
 "Even though an educational institution has to be treated as an 'industry', teachers in an
educational institution cannot he consulted as workman.
 The teachers employed by educational institutions whether the said institutions are
imparting primary, secondary, graduate or postgraduate education cannot be called as
'workman' within the meaning of Section 2(s) of the Act. Imparting of education which is
ihe main function of teachers cannot he considered as skilled or unskilled manual work
or supervisors work or technical work or clerical work Imparting of education is in the
nature of a mission or a noble vocation. The clerical work, if any. they may do, is only
incidental to their principal work of teaching."

 Having thus compared the various definition clauses of word
'employee' in different enactments, with due regard to the
different aims and objects of the various labour legislations, we
are of the view that even on plain construction of the words and
expression used in definition clause 2(e) of the Act, 'teachers' who
are mainly employed for imparting education are
 "Semi-skilled work. Work that may require some alertness and
close attention, such as inspecting items or machinery for
irregularities, or guarding property or people against loss or
injury.
 Skilled work. Work requiring the worker to use judgment, deal
with the public, analyze facts and figures, or work with abstract
ideas at a high level of complexity.
 Unskilled work. Work requiring little or no judgment, and
involving simple tasks that can be learned quickly on the job.

 The contention advanced that teachers should be treated as included in
expression 'unskilled' or skilled' cannot. therefore, be accepted. The
teachers might have been imparted training for teaching or there may be
cases where teachers who are employed in primary schools are untrained.
A trained teacher is not described in industrial field or service
jurisprudence as a 'skilled employee'. Such adjective generally is used for
employee doing manual or technical work. Similarly, the words 'semi-
skilled' and 'unskilled' are not understood in educational establishments a
describing nature of job of untrained teachers. We do not attach much
importance lo the arguments advanced on the question as to whether
'skilled', 'semi-skilled' and 'unskilled' qualify the words 'manual",
'supervisory', 'technical, or 'clerical' or the above words qualify the word
'work', liven if all the words are read disjunctively or in any other
manner, (rained or untrained teachers do not plainly answer any of the
descriptions of the nature of various employments given in the definition
clause, framed or untrained teachers are not 'skilled', 'semi-skilled',
'unskilled', 'manual', "supervisory", 'technical" or 'clerical' employees.
They are also not employed in 'managerial' or 'administrative' capacity.
Occasional!}, even if they do some administrative work as part of their
duty with teaching, since their main job is imparting education, they
cannot be held emploved in "managerial" or 'administrative' capacity. The
teachers are clearly not intended to be covered by the definition of
"employee".

 Our conclusion should not be misunderstood that
teachers although engaged in very noble profession of
educating our young generation should not be given
any gratuity benefit. There are already in several States
separate statutes, rules and regulations granting
gratuity benefits to teachers in educational institutions
which are more or less beneficial than the gratuity
benefits provided under the Act. It is for the
Legislature to take cognizance of situation of such
teachers in various establishments where gratuity
benefits are not available and think of a separate
legislation for them in this regard. That is the subject
matter solely of the Legislature to consider and decide.
 In conclusion, we find no merit in this appeal. It is,
hereby, dismissed but without any order as to costs.

 The Payment of Gratuity (Amendment) Bill, 2009 as passed by both the
Houses of Parliament has amended the definition of ‘employee’
contained in the Payment of Gratuity Act, 1972 for covering teachers in
private institutions.
 Amended Definition
Section 2(e) : “employee” means any persons (other than an apprentice)
who is employed for wages, whether the terms of such employment are
express or implied, in any kind of work, manual or otherwise, in or in
connection with the work of a factory, mine, oilfield, plantation, port,
railway company, shop or other establishment to which this Act applies,
but does not include any such person who holds a post under the Central
Government or a State Government and is governed by any other Act or
by any rules providing for payment of gratuity’.
The Government has made the amendment with retrospective effect from
April 3, 1997.

 This above observation paved the path to
revised the definition of word "employee".
subsequent to that Bill for amendment was
introduced in Loksabha and finally passed by
both houses and notifed in official Gazzatt of
India in Dec 2009.
After that there is no confusion on this issue,
now its clear that Payment of Gratuity Act is
applicable to Teachers also.

 "Whether theft is an offence involving moral
turpitude and if so, if the services of an
employee had been terminated on the charge of
theft committed in the course of his
employment, the Gratuity payable to him
under the provisions of the Payment of
Gratuity Act, 1972 ('the Act' for short) stands
wholly forfeited in view of Section 4(6)(b)(ii) of
the Act ?"

 The third Respondent was a workman in the service of the
appellant at Bharath Gold Mines, Kolar. Disciplinary
proceedings were instituted against him on the charge that
he had committed theft of Gold of the value of Rs. 155, 61 in
the course of his employment in the Gold Mines. In the
inquiry he was found guilty of the charge. The Disciplinary
Authority accepted the findings and imposed the penalty of
dismissal from service against the third Respondent w.e.f.
18-8-1981 forfeiting all rights and privileges accrued to him
from his past service. The order of dismissal has not been
challenged by the third Respondent in any proceeding and
consequently it has become final. The third Act was not
attracted. Aggrieved by the said order, the appellant
presented the Writ Petition. The Writ Petition was rejected
without issuing 'Rule Nisi' on the ground that the Appellate
Authority had relied upon the order of this Court made in
W.P. No. 13303/19781. Aggrieved by the said order, the
appellant has presented this appeal.

 Sri B.V. Acharya, Learned Counsel, invited our
attention to the relevant passage in Words and
Phrases, Permanent Edition, Volume 27A at page
186. They read
 'Moral turpitude' is anything done contrary to
justice, honesty, modesty or good morals.
 'Moral turpitude' includes all acts done contrary to
justice, honesty, modesty or good morals.
 Learned Counsel submitted that the Court should
decide as to whether an offence involved moral
turpitude or not, in the light of the meaning given
to those words as above.

 It is clear that anything done contrary to justice, honesty, modesty
or good morals involves moral turpitude. Dishonesty is one of the
essential ingredients of the offence of theft. If there is no
dishonesty in removing or taking a property belonging to another,
it constitutes no offence of theft. Therefore, it is clear that when a
person is found guilty of the charge of theft, it means, he has acted
dishonestly and from this it follows that he has committed an
offence involving moral turpitude.
 9. The relevant portion of the judgment of the Learned Single
Judge in W.P. No. 13303 of 19781 on which the appellate authority
relied reads :
 A peon on the last day of his retirement from service, helps
himself to certain items of stationery from his master's locker. He
has committed an act of dishonesty or theft, but does it amount to
an offence involving moral turpitude so as to deny him the
gratuity that he had earned over 30 years blemisbless service. In
my view, certainly not.

 With great respect to the learned Judge, we are unable to
agree with the above view. In fact, it is universally accepted
that any offence committed contrary to honesty is an offence
which involves moral turpitude and our jurisprudence
makes no exception. As the very definition of the word
'theft' in Section 378 of the I.P.C. indicates that it is an act of
dishonest removal of property belonging to another without
his consent, it is not consistent to say that the offence of theft
might be dishonest but is not an offence involving moral
turpitude. The provisions of the Probation of Offenders Act
which provide for exempting an accused from undergoing
the sentence after conviction for an offence constitutes no
basis to say that the offence committed, if involved moral
turpitude, did not involve moral turpitude. We, therefore,
respectfully disagree with the view taken by the learned
Single Judge in Writ Petition No. 13303 of 19781 and hereby
over-rule the said decision.

 10. Accordingly, we answer the question set out first, as follows :
 "Theft is an offence involving moral turpitude and consequently if
the services of an employee had been terminated for committing
theft in the course of his employment, the Gratuity payable to him
under the provisions of the Act stands wholly forfeited in view of
Section 4(6)(b)(ii) of the Act."
 11. In order that Section 4(6)(b)(ii) of the Act applies to a given
case, the following conditions must exist :
 (i) The misconduct which constituted the basis for the
determination of the tenure of an employee, must be an offence
under the law, and
 (ii) The misconduct which is an offence under the law must
involve moral turpitude.
 Both these conditions exist in the present case. Hence, the
appellant was right in taking the view that the Gratuity payable to
the third respondent stood wholly forfeited in view of Section
4(6)(b)(ii) of the Act.

 Sri B. V. Acharya, Learned Counsel, submitted that the
appellant might pay a portion of Gratuity to respondent No.
3 on purely compassionate grounds. We asked the Learned
Counsel for the appellant, to consider the said submission
with sympathy. Learned Counsel after taking time,
submitted that the appellant was agreeable to pay a sum of
Rs. 3,000/- to respondent No. 3 on compassionate grounds
and in deference to the submission made by Sri B.V.
Acharya and the suggestion made by the Court. We make it
clear that the above submission cannot be regarded as
admission of any liability to pay in this case or any other
case.
We place on record our appreciation to the free legal aid
given by Sri B.V. Acharya to the poor Respondent No. 3.

 In the result, we make the following order :
 (i) The Writ Appeal is allowed.
 (ii) In reversal of the order made by the learned
Single Judge, Writ Petition No. 2398 of 1983 is
allowed and the orders of the first and the
second Respondents (Annexures-B and A
respectively) are set aside.
 (iii) The appellant is directed to pay the amount
of Rs. 3,000/-to Respondent No. 3 within two
months from today.

CASE LAW -5
AMBIKA SAW MILL
VS
ASST. LABOUR COMMISSIONER
(1986)
(Based on sec 2(s) Wages)

Facts Of The Case
 Ambika Saw Mills were engaged in the business of timber.
 According to the findings recorded opp. party was
working as a Supervisor under the petitioner i.e Ambika
saw mills from 10-10-1971 to 29-10-1981.
 Some dispute had arisen between the petitioner i.e Ambika
saw mill and opp. party on the issue of calculation of
gratuity but on the intervention of the District Labour
Officer, Mayurbhanj, a settlement was made.
 Subsequently, on 28-7-1982, O. P. filed an application before
the controlling authority under the provisions of
the Payment of Gratuity Act, 1972 claiming Rs. 2,200/-
towards gratuity which was not accepted by Ambika saw
mills.

 A case was accordingly registered on that basis and
the petitioner was noticed . The stand of the petitioner
in the said proceeding was that opp. Party was
temporary employee for a brief period and had left his
service after full settlement of his claims long back on
24-4-1978 and thereafter he had joined another firm.
In the said proceeding, the following findings of fact
have been recorded which were rightly not assailed
before us :
 (1) Opp. party was drawing a cash salary of Rs 230/-
per month besides free food while working as a
Supervisor in the petitioner's establishment, and (2) He
worked in that capacity from 10-10-1971 to 29-10-1981.

 On the basis of the above findings, opp. party
computed the sum of Rs. 2,596.15 as gratuity payable
by the petitioner taking the salary as Rs. 230/- per
month and adding thereto a sum of Rs. 220/- as
the money equivalent of the free food supplied to, an
amount even larger than that which was claimed.
 It is in this way that the question mentioned above
arises, as to whether Rs. 220/- could be added to the
salary of opp. Party as the money equivalent of the free
food for computing the gratuity.

It was decided that-
 "Since the applicant was employed in a similar
scheduled establishment, wages payable to him
definitely come to Rs. 250/."
 It was contended on behalf of the petitioner that opp.
party has committed a serious error of law in adding
Rs. 220/- to the wages for working out the amount of
gratuity.
 Thus it was decided that Rs 220 should not be added to
the basic wage rate of Rs 250 for the calculation of
gratuity.

According to section2(s) of “Payment Of Gratuity Act 1972”
"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.“
Thus the computation of the value of the food supplied by the
employer to the employee in terms of money for the purpose of
adding it to the monthly salary apparently seems to be outside
the purview of the above definitions . Thus the supply of free
food cannot be anything other that an amenity.

JEEVANLAL LTD (1929)
VS
CONTROLLING AUTHORITY
(1981)
(Based on sec 2(c) - Continous Service

Facts Of The Case
 Messrs. Jeevanlal Limited is a public limited company,
incorporated under the Indian Companies act, 1913 and is
engaged in the business of manufacturing and selling
household utensils and other articles made out of
aluminium
 According to the findings employees were working under
jeevanlal from 21-7-1944. Their date of retirement was
9-5-1977.
 Accordingly they have to get the gratuity on the basis of
their 33 years of service
 However, according to the Jeevanlal, during the years 1974-
75, 1975-76 and 1976-77, the employee had not put in
completed years of service, or in other words, the employee
had not put in 240 days of work.

 On that ground, the employer refused to pay gratuity
amounts claimed by the employees.
 The employer decided some ratio for the payement of
gratuity, but employees didn’t agree to this ratio.
 The employees took this matter to statutory authorities

 Statutory authorities have taken the view that as
long as the relationship of employer and employee
subsisted between the parties, the fact that in some
of the years of service the employee had not put in
service for 240 days will not affect the number of
years of employment or disentitle the employee
from claiming gratuity in accordance with the
terms of the Act.
 The conclusion that could be reached is that the
employees cannot claim gratuity for those years in
which they had not put in the requisite number of
days of work.

References that were given -:
 It was decided that ratio that was determined
by the employer was rejected on the basis that
nothing is mention scheme of gratuity framed
by employer.
 It was said that 'continuous service' in the
context of the scheme of gratuity did not come
to an end merely because an employee was
absent without obtaining leave .(Calcutta vs
their workmen)

CASE LAW:7
PETITIONER:
Jaswant Singh Gill
RESPONDENT:
M/s. Bharat Coking Coal Ltd. & Ors.
DATE OF JUDGMENT: 10/11/2006
BENCH:
S.B. Sinha & Markandey Katju

 Respondent Bharat coal limited is a
government company incorporated and
registered under companies act 1956
 Appellant herein joined as a chief general
manager
 A charge sheet was issued against him on the
allegation of shortage of stock of coal in lodna
area.
 During departmental proceeding was allowed
to retire. He applied for gratuity under
payment of gratuity act,1972.

 His application was denied He, therefore, filed
an application before the Additional Labour
Commissioner, Dhanbad for payment of gratuity
on 4.01.2000.
Notices having been issued by the said authority,
Respondent filed reply that the gratuity amount
payable to the appellant had been withheld for the
purpose of making of adjustment, in the event
recovery from the said amount is directed to be
made for the frod.
Upon departmental enquiry by controlling
authority it is convinced that Shri Gill had a major
role in causing the shortages in the coal stock .

Therefore, the undersigned, Chairman- cum-
Managing Director, Coal India Limited
undersigned and also orders forfeiture of his
gratuity along with dismassal from service.

 "It is clear that Shri J.S. Gill
retired on superannuation as
per notice for
retirement,therefore he is
entitled for the payment of
gratuity under the P.G. Act,
1972. As per section 4(6)(a) &
4(6)(b) of the P.G. Act, 1972,
gratuity can be forfeited
partially or wholly when the
service of the employee is
terminated for any act, which
constitute an offence involving
moral turpitude provided that
such offence is committed by
him in the course of
employment.

Mathew K.C.
vs
Plantation Corporation
Of Kerala on 15
February, 2000

 Appellant was functioning as the
Administrative Officer of the
Corporation.
 Allegations were initiated against him
for alleged misconduct and
irregularities.
 One of the allegations was that he
caused huge loss to the Corporation by
several acts of omissions and
commissions. An enquiry was
conducted in the matter.

 After receiving the enquiry report a notice was
issued to the appellant to show cause as to why
action shall not be taken against him for
recovery.
 However, it was noted that since the appellant
was at the fag end of his career, it was decided
not to award any punishment as provided in
plantation corporation of Kerala services.
 Appellant was allowed to superannuate on
reaching the age of superannuation.

 He was directed to show cause why the said amount
shall not be recovered from him. Explanation
submitted was not found acceptable and the
impugned order annexed as Ext. P-16 to the original
petition was passed, which was challenged in the
original petition. By the said order, inter alia recovery
was directed.
 Stand of the appellant was that recovery from
gratuity payable to him is not a punishment which is
enumerated under the Rules, and therefore there was
no scope for recovering the amount in the
departmental proceedings.

lCorporation took the stand that the order passed was
not one which is connected with any punishment. It
was in fact an order directing to recover the loss
sustained to the Corporation on account of
misconduct/irregularities committed by the appellant.

The show cause notice itself
indicated that the Corporation did
not want to impose any punishment
because appellant had almost
reached superannuation age. What
was sought to be recovered was the
liability fixed. Since the amount of
gratuity was available with the
Corporation, same was adjusted
towards the liability.

Rule 19 of the Rules provides punishments
that can be imposed and the same reads as
follows:
"Rule 19. Punishments: An officer can be
punished either by censure, stoppage of
increments, suspension, reduction in rank,
discharge or dismissal by the Managing Director
for a misconduct proved against him."
Obviously recovering any amount in respect of
loss sustained by the Corporation is not one of
the punishments provided for.

1-This act may be called the Payment of Gratuity
[Amendment] Act , 2010.
2- In section 4 of the Payment of Gratuity Act,
1972 in sub – section {3}, for the words “three
lakhs and fifty thousand rupees”, the words
“ten lakh rupess” shall be substituted.
3- It shall come into force on such date as the
Central Government may, by Amendment of
section 4 of the Act 39 of 1972

 1- This act may be called the Payment of
Gratuity {Amendment} Act, 2012.
 2- It shall come into the force on such date as
the Central Government may be the
notification in the Official Gazette, appoint.
 3- In sub –section {2}of Section 4 of Payment of
Gratuity Act 1972, for the words “at the rate of
fifteen days”the words “at the rate of thirty
days wages” shall be substituted.

 The sub – section {2} of Section 4 of the
Payment of Gratuity Act , 1972 provides for
payment of gratuity to the employees at the
rate of fifteen days wages based on the rate of
wages last drawn for every completed year of
service. In todays world of high prices and
inflation the gratuity of fifteen days wages for
every completed year is too meager.At such a
small rate, a person cannot get enough amount
for post retirement settlement. It should
therefore be atleast at the rate of thirty days
salary for every completed year of service.

Forfeiture to the extent of Damage/loss- In case
of any employee whose service has been
terminated for any act, willful omission
or negligence causing any damage or loss
to, or destruction of, property belonging to
the employer, gratuity payable to that
employee shall be forfeited to the extent of
damage or loss caused to the
employer{Section4{6}}. In this situation,
the right of forfeiture of the employer is
limited to the extent of damage or loss so
caused.

Wazir Chand Vs. Union
of India 2001.
CASE -9

wazir chand was a retired Railway
servant. Admittedly , he even after
superannuation, continued to occupy the
Government quarter, though being placed
under hard circumstances. For such
continuance, the Government in accodance
with Rules, has charged penal rent from
the retired Govermnent servant, and after
adjusting the dues of the government , the
balance amount of the gratuity which was
payable, has been offered to be paid.

The court was unable to accept the prayer of
the appellant {wazir chand} in the facts and
circumstances of the present case. The
appellant having unauthorisedly occupied the
Government quarter, was liable to pay the
penal rent in accordance with Rules, and
therefore, there is no illegality in those dues
being adjusted against the death-cum-
retirement dues of the appellant. The court
therefore, saw no illegality in this and
government has the full right

Kerela High Court
JUDGMENT K. Narayana
Kurup,J.
CASE -10

 1. The third respondent was an employee of the
petitioner-Company. He retired on superannuation on
june 19, 1984. Since the petioner refused to pay
gratuity amount due to the third respondent he
approched the second respondent , Controlling
Authority under the Payment of Gratuity Act, 1972 for
relief. Exhibit P1 is the order passed by the second
respondent a sum of Rs 14, 450. 34 being the balance
amount of gratuity due after adjusting a sum of Rs 6,
207.20 being the advance amount received by the third
respondent. The petitioner took up Exhibit P1 in
appeal before the first respondent , who by Exhibit P-2
confirmed Exhibit P1 rejecting the petitioners appeal.

 2. The thrust of the petitioners contention before
the respondents 1 and 2 was that the third
respondent is entitled to get the gratuity amount
only on final settlement of his account - . What is
treated by the petioner –Compamy as failure to
settle the account by the third respondent is the
latters failure to surrender possesion of an extent
of 30 percent of land which according to the
petitioner – company belongs to them and has
been given to the third respondent under a licence
and the third respondent is bound to surrender the
same as and when directed to do so by the
petitioner –Company.

 The third respondent has filled a counter affidavit
in which it is stated as follows:
 3rd respondent was working as a chargeman in the
petitioner company and has retired on
superannuation on June19, 1984. 3rd respondent
did not apply for licence for cultivating the portion
of the properties as alleged As property in the
possesion of the 3rd respondent does not belong to
the petioner company , the question of surrender
of the same does not arrive at all. The
petcomopany has no right, title or the authority
over the property posssed by the third respondent.
3rd respondent was in absolute possesion and
enjoyment of the property for more than 35 years.

 Tax receipts were also produced before the
respondents 1 and 2. Before the authorities below the
contention of the petitioner company was that property
was given on lease to the third respondent and the
extent allotted was 30 cents of land. 3rd respondent is
actually in possession of 50 cents of property. The
allegation was that the property possessed by the third
respondent is covered by title deeds. From the alleged
title deed produced by the company and the tax
receipts produced by the third respondent it could be
seen that the sub division and the survey number are
different. That itself shows that the property possessed
by the third respondent does not belongs to the
company.

 The petitioner company produced before the
authorities below certain documents including
an agreement alleged to have been executed by
the third respondent. Third respondent denied
his signature in the agreement the documents
are put up and documents and the signature of
the third respondent was forged. The petitioner
company has no right, title or authority over
the property possessed by the third respondent

 Having regard to the rival contentions I am
satisfied that the controversy between the
parties involves adjudication of disputed
question of fact relating to title, possession etc,
to immovable property which cannot be
effectively done in the proceedings under
Article 226 of the Constitution of India.
Accordingly , the petitioner is relegated to have
recourse to appropriate remedies available to
them under other forums.


 That apart , the main question is whether the petitioner
–company will be justified in withholding the gratuity
amount due to the third respondent on the specious
plea that the third respondent failed to surrender the
land which is in occupation by him. The eligibility of
the third respondents gratuity has to be decided on the
basis of the provisions contained in the Act, under
which the conditions contained in Sections 4 {6}13 and
14 of the Act. Under the act, the employer is entitled to
withhold the gratuity of an employee only if the
termination of the employee is under Section 4 {6} of
the Act. The petitioner –company therefore is not
entitled to withhold the gratuity on the pretext that the
third respondent is in occupation of the land belonging
to the petitioner comapany.

 In other words , the amount of gratuity due to an
employee can be withheld only on any of the
grounds mentioned in the Act and not otherwise
and any rate refusal of the employee to surrender
the land in his occupation in violation of the
directive issued by the petitioner – company,
employer, even if is assumed that the land belongs
to the employer cannot be treated as failure to
settle the account by the employee thereby
forming a basis for withholding dispersal of
arrears of the gratuity.
 In the result , the Original Petition is dismissed.

 PRESENTED BY ;-
R.No Name
128 SHUBHAM PAHWA
148 SIMRAN SHAH SINGH
176 SPARSH THUKRAL
180 BANPREET SINGH
228 GURKARAN SINGH

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