SHRI DIGVIJAY WOOLLEN MILLS LTD. ETC.versusMAHENDRA PRATAPRAI BUCH ETC.

     64

A

               SHRI DIGVIJAY WOOLLEN MILLS LTD. ETC.
                                               v.
                    MAHENDRA PRATAPRAI BUCH ETC.
B                                    July 23, 1980
                     [A. C. GUPTA, AND N. L. UNTWALIA, JJ.J
          Payment of Gratuity Act, 1972-Section 4(2}-Scope       of-Gratuity    how
     calculated.
          Section 4(2) of the Payment oli Gratuity Act, 1972 provides that for every
C,   completed year of service or part thereof in excess of six months, the employer
     shall pay gratuity to an employee at the rate of 15 days' wages based on the
     rate of wages las.t drawn by the employee concerned.
         The employers sought to pay gratuity by dividing the workman's monthly
     wages by 30 and computing the 15 days' wages on that basis but the workman
     demanded that his monthly wages should be takrn as what he got for 26
     working days and. not by taking half of his wages in a month of 30 days.
D         The Controlling Authority upheld the workman's contention. In dismissing
     the employer's petition under Art. 227 of the Constitution the High Court
     observed that a worker received a full month's wages not. by remaining on
     duty' for all the 30 da,ys within a month but by remaining on work and doing
     duty for only 26 days and, therefore, gratuity payable to him should be
     calculated on this basis.
E         Dismissing the employers' appeals,
          HELD : The view taken by the authorities, and upheld by the High Court,
      is not in any way unreasonable. Although a month is understood tD mean
      30 days, the manner of calculating gratuity payable under the Act to employees
     'who worked for 26 days a month followed by the High Court cannot be
     called perverse. [67C]
          Treating monthly wages as wages for 26 working days i.s not new or un·
F    known. The expression "average of the basic wage" occurring in an award
     has been interpreted by ibis Court to mean the wage earned by a workman
      during a month divided by the number of days for which he has worked
     and multiplied by 26 in order to arrive at the monthly wage for the compu-
     tation of .gratuity payable to the workman. [67D & HJ
          Delhi Cloth and General Mills Company Ltd. v. Workmen and others etc.,
G    (1969] 2 SCR 107, referred to.
         CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1083 of 1976
     and 480 of 1977.
         Appeals from the Judgments and Orders dated 19-4-1976 and
     12-10-1976 of the Gujarat High Court in S.C.A. No. 495/76 and
     S.C.A. No. 1641 /76 respectively.
H
         P. R. Mridul, P. H. Parekh and C. B. Singh and Miss Vineeta
     Caprihan for the. Appellant in CA No. 480/77.
      SHRI DIGVIJAY WOOLLEN MILLS v. MAHENDRA PRATAPRAI (Gupta. ].)       6i


         Gobind Das, A. N. Karkhanis and T. Sridharan ·and Mrs. Sunanda         A
     Bhandare for the Respondent in CA No. 480/77.
         Y. S. Chitale, P. H. Parekh, R. Karan Jawala and Miss Vineeta
.!   Caprihan for the Appellant in CA No. 1088/76.
         Y. M. Tarkunde, K. L. HaJhi and P. C. Kapur for the Respondent
     in CA No. 1088/76.                                                         B
         Shanker Ghosh, G. B. Pai, and D. N. Gupta for the,Intervener.
     (Superintendent, Mines and Quarries, Bisra Stone Lime Co. Ltd. & Anr.)
         Anil Kumar Gupta for the Intervener (Baba Jija Bhai Talekar).
         The Judgment of the Court was delivered by
                                                                                c
         . GUPTA, J. A common question arises for consideration in these
)·   two appeals relating to the mode of calculating fifteen days' wages
     of· a monthly rated employee under section 4(2) of the Payment of
     Gratuity Act, 1972 (hereinafter referred to as the Act). Section 4(2)
     provides :
                                                                                D
              "For every completed year of ~ervice 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
                                                                                E
         wages shall be computed on the average of the total wages received
         by him for a period of three months immediately preceding the
         termination of his employment, and, for this purpose, the wages
         paid for any overtime work shall not be 1aken into account :
              Provided further that in the case of an employee employed
         in a seasonal establishment, the employer shall pay the gratuity       F
         at the rate of seven days' wages for each season."
         "Wages" has been defined in section 2(s) of the Act as follows :
             " "wages" means all emoluments which are earned by an
         employee while on duty or on leave in accordance with the terms        G
         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, over-
         time wages and any other allowance."
          It is not necessary to state the facts in any great detail. In both
                                                                                H
     cases the respondent was a monthly-rated employee and the appel-
     lant, a public limited company, was his employer. In Civil Appeal
     No. 1088 of 1976 (Shri Digvijay Woollen Mills Limited-appellant v.
      66                            SUPREME COURT REPORTS        [1981] I S.C.R.

A    . Shri Mahendra Prataprai Buch-respondent) the respondent ceased to
       be an employee on attaining the age of superannuation after complet-
       ing 19 years of service. The appellant company calculated the amount
       of gratuiiy payable to him on the basis that fifteen days' wages was
       half of the monthly wages last drawn by him. The respondent demand-·
       cd an additional sum as gratuity on the ground thai his monthly
B     ·wages should be taken as what be got for 26 working days, his daily
        wages should be ascertained on that basis and his fifteen days' wages ·
        worked out accordingly, not by just taking half of his ~ages for a
        month of 30 days or fixing his daily wages by dividing his monthly
        wages by 30. The Controlling Authority under the Act accepted the
        respondent's contention and his decision was affirmed by the appellate
c       authority. .A division bench of the High Court of Gujarat at Aluueda-
        bad summarily dismissed the petition under Article 227 of the Consti-
        tution made by· the appellant company challenging the decision of the
        authorities under the Act. The learned Judges however gave reasons
       in support of the order made. The appeal before us is by special
       leave.
D·         !
             In Civil Appeal 480 of 1977 (The Maharana Mills Limited-appel-
        lant v. Shri Gopal Das Ladhabhai Kakkad-respondent) the respondent.
        resigned his job after a lit!!~ over 22 years of service. The appel!ant
        company paid him gratuity calculating his daily wages by dividing his
        monthly wages by 30 and computing fifteen days' wages on that basis.
E       Here also the respondent claimed an additional sum as gratuity. and
        the basis of the claim was the same as in the other appeal. The
       ·Controlling Authority accepted the respondent's contention and the
        appellate authority affirmed his decision following the view taken by
         the Gujarat High Court in the other case. In tbis case also the Guja-
        rat High Court summarily rejected the petition made ·by the appellant
F       company challenging the decision of the authorities under the Act.
     ·.This appeal however is brought on a certificate granted by the High
        Court. •
            In dismissing the petition in Digvijay Woollen Mills case the
       division bench of the Gujarat High Court observed as follows :
G
                    "The employee 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 utilised
                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 i.s
H               well kriown 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
 .SHRI DIGVJJAY WOOLLEN MILLS v. MAHENDM l'RATAl'RAI (Gupta,. J.)    67


     and dearness allowance are always fixed by taking into considera-     A
     tion this economic reality ............ A worker gets full month's
     wages not by remaining on duty for all the 30 days within a month
     but by 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 pat!ern of      B
     fixation of wages by this method of 26 working days."

       The view expressed in the extract quoted above appears to be
 legitimate and reasonable. Ordinarily of course a month is understood
  •to mean 30 days, but the manner of calculating gratuity payable under   c
  the Act to the employees who work for 26 days a month followed
 by the Gujarat High Court cannot be called perverse. It is not neces-
  sary to consider whether another view is possible. The High Court
  summarily dismissed the petition of the appellant in both the appeals
 before us and upheld the decision of the· authorities under the Act.
 We are not inclined to interfere with the decision of the High Court      D
 because it seems to us (hat the view taken by the authorities is ;10t
 in any way unreasonable or perverse. Incidentally, to indicate that
 treating monthly wages as wages for 26 working days is not anything
·unique or unknown, we may refer to a passage from the judgment of
 this Court in Delhi Cloth and General Mills Company Ltd. v Work-
 men and other. etc.( 1) which disposed of several appeals arising out     E
 of an award made by the Industrial Tribnnal, Delhi. In the award
 schemes were framed relating to the payment of gratuity. The expres- '
 sion "average of the basic wage" occurring in the schemes was explain~
·ed by this Court as follows:

                                                                           F
         "It was also urged by Mr. Ramamurthi that the expression
    "average of the basic wage" in the definition of "wages" in Cl. 4
    of the Schemes is likely to create complications in the implementa-
    tion of the Schemes. He urged that if the wages earned by a
    workman during a month are divided by the total nl)mber of
    working days, the expression "wages" will have an artificial mean-     G
    ing and especially where lhe workman is old or disabled or in-
    capacitated from rendering service, gratuity payable to him will
    be substantially reduced. We do not think that there is any cause
    for such apprehension. The expression "average of the basic
    wage" can only mean the wage earned by a workman during a
    month divided by ihe number of days for which he has worked            H

    (I) [1969] 2 S.C.R. 107.
                       i

        68                       SUPREME COURT REPORTS         [1981] 1 S.C.R.

    A        and multiplied by 26 in order to arrive at the monthly wage for
             the computation of gratuity payable. Counsel for the employers
             agree to this interpretation."
              In the view we take we do not find it necessary to consider the
        decisions of some of the High Courts cited at the bar taking one view
    B   or ·the other on the question involved in these appeals; also, the deci-
        sions based on some provisions of the Minimum Wages Act and other
        statutes which were relied on by either side are in our opinion not
        relevant on the question of computation of fifteen days' wages under-
        section 4(2) of the Payment of Gratuity Act.
             The appeals are dismissed, in civil appeal 480 of 1977 with costs,
    c   in civil appeal 1088 of 1976 this· Court while granting special leave
        on September 22, 1976 had directed the appellant to pay. the costs
        of the appeal in any event accordingly respondent Mahendra Prataprai
        Buch will be entitled to his costs.
        P.B.R.                                               Appeals dismissed ..




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