Holding

Because the respondents' wages exceeded the Rs 1,000 threshold, they were not "employees" under the Payment of Gratuity Act, 1972, rendering that Act inapplicable and allowing the State Act's Section 40(3) to govern the gratuity claim.

Summary

The respondents, former employees of E.I.D. Parry (I) Ltd., retired under a voluntary scheme in 1984 and received gratuity under the Payment of Gratuity Act, 1972. Because their monthly wages exceeded Rs 1,000, they were not covered by the definition of "employee" in Section 2(e) of the Central Act, and therefore could not claim further gratuity under it. They subsequently filed applications under Section 44 of the Andhra Pradesh Shops and Establishments Act, 1966 seeking the difference between the gratuity paid under the Central Act and that payable under Section 40(3) of the State Act, which was more beneficial. The trial court allowed the claim, but the appellate authority, the High Court, and finally the Supreme Court examined whether the Central Act pre‑empted the State Act. The Supreme Court held that the Central Act did not apply to the respondents and that the State Act could be invoked where it is more favourable, dismissing the appellant’s appeal. Consequently, the appeal was dismissed and the respondents’ claim under the State Act was upheld.

Issues considered

The Central Act's applicability versus the State Act under Article 254 of the Constitution.
Whether Section 40(3) of the Andhra Pradesh Shops and Establishments Act is invalid or repealed.
Whether Section 14 of the Payment of Gratuity Act overrides other enactments relating to gratuity.
Whether the respondents were already fully compensated under the Central Act and thus ineligible for additional claim.

Legislation cited

Constitution of Indias. Article 254
Payment of Gratuity Act, 1972s. 14, s. 2(e)

Subjects

gratuitycentral vs state legislationemployee definitionvoluntary retirement schemeArticle 254precedence of statutesAndhra Pradesh Shops and Establishments Act

Judgment

E.l.D. PARRY (I) LTD. A
-{
v.
G. OMKAR MURTHY AND ORS.

MARCH 27, 2001

[S. RAJENDRA BABU AND S.N. VARIAVA, JJ.] B

.. Labour Laws :

Payment of Gratuity Act, 1972-Section 2(e)-Andhra Pradesh Shops
and Establishments Act, 1966-Sec~ion 40(3)-Gratuity-Claim of-Under the
State Act-Permissibility of-Central Act not applicable to the claimants- c
State Act more beneficial than the Central Act-Held, the claim is permitted.

Respondents left service under voluntary retirement scheme, obtain-
ing benefits under Payment of Gratuity Act (Central Act). At the time of
the retirement their wages was more than Rs. 1600. Thereafter, they filed
D
application under Section 44 of Andhra Pradesh Shops and Establish-
ments Act (State Act), claiming difference of gratuity between the Central
Act and the State Act.

Trial Court granted relief to the respondents. Appeal filed by the
appellant was dismissed by the Appellate Authority. Revision petition E
before High Court was also dismissed.

In appeal to this Court, the appellant contended that the claims are
unsustainable because the Central Act prevails over the State Act by virtue
of Article 254 of the Constitution and Section 40(3) is invalid.
F
Dismissing the appeal, the Court

HELD : 1. At the relevant time when the resp1mdents voluntarily
... retired from service the definition of employee under Section 2(e) of the
Central Act read as not to include employee whose wages exceeded Rs.
1000 per mensem while the respondents-employees were all getting wages G
c
more than Rs. 1600 per mensem and, therefore, the Central Act could not
be applied. If that is so, it is permissible for the respondents to have made
> an application for payment of gratuity under Section 40(3) of the State
Act. Further the Scheme of the Central Act would indicate that it would
not be applicable in cases where the State Act is more beneficial than the H
807
808 SUPREME CvURT REPORTS [2001] 2 S.C.R.
A Central Act. In this case, the finding is that the State Act is more beneficial
than the Central Act. Therefore, the contentions sought to be advanced on
behalf the appellant as to repugnancy or otherwise of the State Act would
not arise at all. If both the enactments can co-exist and can operate where
one Act or the other is not available then there is no difficulty in making
the State Act applicable on the fact situation available as bas been done in
B
the present case. Therefore, the contentions raised on behalf of the appel·
Ian! are unsustainable. [809-E·G]

State of Punjab v. Labour Court, Ju/lunder & Ors., (1980) 1 SCR 953
and M.S.R. Murthys Arya Sumayajula Yagneswara Chenulu, (1985) LAB I.C.
C 189, distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 5956-5958
of 1999.

From the Judgment and Order dated 30.4.98 of the Andhra Pradesh
D High Court in C.R.P. Nos. 3941, 4047 and 4563 of 1997.

Narayan B. Shetye, V. Balaji and A.T.M. Sampath for the Appellant.

Ramesh Chandra Mishra for the Respondents.

E
The Judgment of the Court was delivered by ., .,
RAJENDRA BABU, J. In these cases the respondents-employees '
were in the employment of the appellant between the years 1958 and 1984.
On October I, 1984 voluntary retirement scheme was introduced and the
respondents availed of that benefit and left the services after obtaining the
F terminal benefits as provided under the Payment of Gratuity Act, 1972
[hereinafter referred to as 'the Central Act']. Thereafter petitions were filed
under Section 44 of the Andhra Pradesh Shops and Establishments Act, 1966
[hereinafter referred to as 'the State Act'] claiming the difference between
the gratuity received by them and the gratuity payable under Section 40 of
the State Act. Before the Authority under the State Act, three objections were
G raised that (i) there has been inordinate delay in preferring the claim; (ii) for
payment of gratuity the Central Act prevails over the State Act; and (iii) the
question whether the gratuity payable under the Central Act is more favour-
able than the State Act could not be examined by the trial court concerned.
The trial court, however, gave relief to the workmen. The appellate authority
H dismissed all the three appeals. Revision petitions filed before the High Court
E.I.D. PARRY (I) LID. v. G. OMKAR MURTHY [RAJENDRA BABU, J.] 809
also stood dismissed. Hence these appeals by special leave. A
Four contentions are put forth before us, namely, that

(i) '
The Central Act prevails over the State Act by virtue of Article
254 of the Constitution and Section 40(3) is invalid and the
claims are unsustainable; B
(ii) Section 40(3) of the State Act stood repealed on the coming into
force of the Andhra Pradesh Shops and Establishments Act,
1988 and gratuity became payable Wlder Section 47(5) of the
State Act where payment of gratuity is not payable under the
Central Act; C
(iii) Section 14 of the Central Act overrides other enactments in
relation to gratuity; and

(iv) The respondents have been paid gratuity Wlder the Central Act
for the period covered and for the balance period of service D
gratuity is paid Wlder the prevailing trust scheme.

At the relevant time when the respondents volWltarily retired from
service the definition of 'employee' under Section 2(e) of the Central Act
read as not to include employee whose wages exceeded Rs. 1,000 per mensem
while the respondents-employees were all getting wages more tl1an Rs. 1,600 E
per mensem and, therefore, the Central Act could not be applied. If that is
so, it is certainly permissible for the respondents to have made an application
for payment of gratuity Wlder Section 40(3) of the State Act. Further the
scheme of the Central Act would indicate that it would not be applicable in
cases where the State Act is more beneficial than the Central Act. In this case, F
the finding is that the State Act is more beneficial than the Central Act.
Therefore, the contentions sought to be advanced on behalf of the appellant
as to repuguancy or otherWise of the State Act would not arise at all. If both
the enactments can co-exist and can operate where one Act or the other is
not available then we find no difficulty in making the State Act applicable
G
on the fact situation available as has been done in the present case. Therefore,
we find that the contentions raised on behalf of the appellant are WlSUstainable.

Shri Narayan B. Shetye, the learned Senior Advocate appearing for the
appellant, submitted that the Central Act is a complete code containing
detailed provisions and creates right of payment of gratuity and, therefore, H
810 SUPREME COURT REPORTS [2001) 2 S.C.R.
A the Central Act should prevail over the State Act. Reliance has been placed
on the decision of this Court in Stale of Punjab v. Labour Court, Jullundur
& Ors., [1980) l SCR 953. In that case the issue before the Court was whether
for payment of gratuity an application could be made under Section 33-C(2)
of the Industrial Disputes Act, 1947, and it was held that such an application
could not be filed under the said Act. Therefore, this decision cannot be of
B
any assistance to the appellant inasmuch as the question before us is whether
the Central Act or the State Act would apply for payment of gratuity.

The decision in M.S.R. Murthy v. Arva Somayajula Yagneswara Chenulu,
(1985) LAB J.C. 189, also is of no use to the appellant inasmuch as the State
c Act is held not to operate to the extent the Central Act prevails. In the present
case, on facts, it is found that the Central Act is not applicable.

Therefore, we find no substance in any of the arguments advanced by
the appellant. The appeals, therefore, stand dismissed. No costs.

K.K.T. Appeals dismissed.
D

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