JUDGMENT - Chandurkar M.N., J.: - This petition is directed at the order of the Appellate Authority under the Payment of Gratuity Act, namely, the President, Indus trial Court at Bombay (hereinafter referred to as the” Appellate Authority”) holding that respondent No.1(hereinafter referred to as “the employee”) was entitled to gratuity of Rs. 11,000 under the provisions of the Payment of Gratuity Act, 1972 (hereinafter referred to as “the Act”). 2. The facts in this case are not in dispute. The employee was admitedly in the employment of the petitioner-employer as an Assistant Foreman and then as a Foreman and was promoted to the Post of Assistant Production Manager with effect from 2nd June 1966. The employee resigned from employment on 1st May 1973. His claim for gratuity under the Act not having been entertained by the employer, he applied under section 8 of the Act to the Deputy Commissioner of Labour who was then the Controlling Authority appointed under section 3 of the Act as the authority responsible for the administration of the Act. When the employee resigned he was admittedly drawing more than Rs. 1000 per month. The Controlling Authority rejected the application of the employee on the ground that he was drawing a salary in excess of Rs. 1000 per month at the time when the Act came into force. The Act came into force on 16th September 1972. 3. The employee then filed an appeal under section 7 of the Act which was originally dealt with by the Commissioner of Labour as the notified Appellate Authority but was later transferred to the file of the President of the Industrial Court who was notified as the Appellate Authority under section 7(7) of the Act The Appellate Authority by an interim order dated 28th June 1974 remitted the following issue to the First Labour Court, Bombay, who was at that time the appropriate Controlling Authority under section 3. “Whether Shri Desai is not entitled to claim gratuity on the ground that from 1-4-1966 Shri Desai was Assistant Production Manager?” The scope of this issue was to decide the nature of the duties performed by the employee in his capacity as Assistant Production Manager and whether those duties were of a managerial or administrative nature so as to exclude him from the definition of employee in section 2(e) of the Act. 4. 4. Before the Labour Court oral evidence was given both on behalf of the employee and the employer. The employee examined himself and on behalf of the employer the Works Manager one Iyer was examined The Labour Court found that in the work which was done by the employee when he was the Foreman, there was no scope for performing any managerial or administrative duties and relying on the statement of Iyer that there was no difference in the work done by the employee even after he was promoted as Assistant Production Manager, the Controlling Authority came to the conclusion that even after Mr. Desai was designated as Assistant Production manager, he did not perform any managerial or administrative duties and he continued to do the duties of a Foreman which were supervisory and not managerial or administrative. 5. When this finding was forwarded to the Appellate Authority, two contentions seem to have been raised before the Appellate. Authority. The first contention was that the employee was not entitled to the benefits of the Act because he was drawing salary exceeding Rs. 1000 both on the date on which the Act came into force and on the date of the termination of his employment The other contention was that the employee was outside the Act because he was employed in managerial or administrative capacity. The Appellate Authority confirmed the finding of the Controlling Authority that the employee was performing the same functions after promotion as Assistant Production Manager as he performed as a Foreman of the Machine Shop and the Appellate Authority, therefore, came to the conclusion that the employee could not be said to be employed in managerial or administrative capacity. Having held that the employee was entitled to gratuity, the amount to which he was entitled was computed at Rs. 11,000 for the period of his service during which he was getting wages not exceeding Rs 1000 per month. This order of the Appellate Authority is now challenged in this petition. 6. In this petition the same grounds which were urged before the Appellate Authority have now been reiterated. Mr. Shetye appearing on behalf of the employer has argued that having regard to the definition of employee in section 2(e) of the Act, since the employee was drawing salary of more than Rs. 6. In this petition the same grounds which were urged before the Appellate Authority have now been reiterated. Mr. Shetye appearing on behalf of the employer has argued that having regard to the definition of employee in section 2(e) of the Act, since the employee was drawing salary of more than Rs. 1000 at the time of his resignation, he would not be covered by the definition of employee and was not, therefore, entitled to the benefits of the Act. 7. Now, it is not in dispute that at the time when the employee submitted his resignation, he was drawing a salary which exceeded Rs. 1000. The question which, therefore, has to be decided is whether because of this fact he stands excluded from the benefits under the Act This necessitates a consideration of the relevant provisions of the Act which deal with the right of an employee to gratuity made payable under the Act. 8. The right to receive gratuity is created by section 4 of the Act. Sub-sections(1),(2) and(3) of section 4 of the Act, which are relevant, read as follows :- “(1) Gratuity shall be payable to an employee after he has rendered continuous service for not less than five years,- (a) on his supenmnuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs. Explanation.-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 (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 preceding the termination of his employment, 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. (3) The amount of gratuity payable to an employee shall not exceed twenty months wages.” 9. The provisions of section 4(1) will show that gratuity is made payable to an employee on termination of his employment, but it must be shown that he has rendered continuous service of not less than five years. Gratuity is made payable (1) on superannuation of an employee, (2) on retirement or resignation, or (3) on his death or disablement due to accident or disease. The condition of continuous service of five years is not required to be satisfied where the termination of employment of an employee is due to death or disablement. Sub-section(2) prescribes the rate at which gratuity becomes payable. For every completed year of service or part thereof in excess of six months, the employee becomes entitled to gratuity at the rate of 15 days wages based on the rate of wages last drawn by the employee. The first proviso deals with computation of gratuity in case of a piece-rated employee and the second proviso deals with computation of gratuity in the case of employee in a seasonal establishment. Sub-section(3) puts a limit on the maximum amount of gratuity claimable or payable at 20 months wages. The provisions of sub-sections(4), (5), (6) of section 4 do not become relevant for the purposes of this petition. 10. Section 4 refers to gratuity being payable to an employee. Sub-section(3) puts a limit on the maximum amount of gratuity claimable or payable at 20 months wages. The provisions of sub-sections(4), (5), (6) of section 4 do not become relevant for the purposes of this petition. 10. Section 4 refers to gratuity being payable to an employee. Employee is defined in section 2(e) of the Act which reads as follows:- “Employee means any person other than an apprentice employed” on wages, not exceeding one thousand rupees per mensem, in any establishment, factory, mine, oil field, plantation, port, railway company or shop to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether terms of such employment are express or implied, but does not include any such person who is employed in a managerial or administrative capacity, or who holds a civil post under the Central Government or a State Government, or who is subject to the Air Force Act, 1950, the Army Act, 1950, or the Navy Act, 1957. Explanation :- In the case of an employee, who having been employed for a period of not less than five years on wages not exceeding one thousand rupees per mensem, is employed at any time thereafter on wages exceeding one thousand rupees per mensem, gratuity in respect of the period during which such employee was employed on wages not exceeding one thousand rupees per mensem shall be determined on the basis of the wages received by him during that period.” The definition of the word employee will show that it excludes firstly an apprentice: secondly, it excludes a person whose wages exceed Rs. 1000 per month and thirdly, it excludes a person whose employed in a managerial or administrative capacity. The other persons excluded are these who bold civil posts under the Central Government or a State Government or who are subject to the Air Force Act, 1950 or Army Act, 1950 01 the Navy Act, 1957 The definition also refers to the places of employment, namely, any establishment, factory, mine, oil-fields, plantation, port, railway company or shop and says that the persons who are entitled to gratuity should be employed for doing any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied. There is an Explanation added to the definition. There is an Explanation added to the definition. The Explanation provides for a specific kind of case where an employee who having been employed for a period of not less than five years on wages not exceeding Rs. 1000 earns at any time thereafter wages exceeding Rs. 1000 per month and the Explanation provides that gratuity in respect of the period during which the employee was employed on wages not exceeding Rs. 1000 shall be determined on the basis of wages received by him during that period. 11. Now, the question is whether merely because the main part of the definition of employee refers only to a person employed on wages not exceeding Rs. l000 per mensem the employee in the instant case should be held to be excluded from the benefits under the Act. The definition of employee in the main part of clause(e) of section 2 must be read along with the Explanation. The Explanation in this case is really in the nature of a substantive provision providing for computation of gratuity in case of persons who are initially employed on wages not exceeding Rs. 1000 and who having thus been employed for a period of not less than five years thereafter earn wages exceeding Rs. 1000. The Explanation makes it very clear in unambiguous language that notwithstanding the fact that a person, who had been in employment for more than five years on wages not exceeding Rs. 1000, draws wages which exceed Rs. 1000 per month at any time thereafter, his claim for grartuity is to be determined on the basis of the wages received by him during the period when he was drawing less than Rs. 1000 per month. The intention of the Legislature in enacting the Explanation obviously was to make it clear that the fact that at the time when anyone of the events referred to in section 4(1) occurs, the employee is drawing wages exceeding Rs. 1000 will not deprive him of the benefits under the Act if it is shown that earlier for a period of five years, the employee concerned was employed on wages not exceeding Rs. 1000. Having regard to the definition of employee, it becomes therefore clear that the wages drawn by an employee at the time of either retirement, resignation, superannuation, death or disablement being in excess of Rs. 1000. Having regard to the definition of employee, it becomes therefore clear that the wages drawn by an employee at the time of either retirement, resignation, superannuation, death or disablement being in excess of Rs. 1000 per month will not alone be the determining factor for deciding whether the claim for gratuity should be rejected. Even in such a case the Legislature has created an entitlement in favour of an employee if he is able to show that he was employed for a period of not less than five years on wages not exceeding Rs. 1000. 12. Apart from the fact that this is the only construction possible on the-terms of the definition of employee read with the Explanation, we may point out that the Explanation came to be added on the recommendation made in the report of the Select Committee who had expressed an anxiety to make sure that a person who had earlier drawn wages less than Rs 1000 per month should not be deprived of the claim to gratuity under the Act on the ground that at the time of the occurrence of the event specified in section 4(1), he was drawing more than Rs. 1000 per month The report of the Select Committee is to be found in the Gazette of India Extraordinary, Part II, section 2, dated 2nd May 1972, at page 321. Originally the limit of wages in the definition of employee as contained in the Bill was only Rs, 750 and the recommendation of the Select Committee was that it Should be revised to Rs. 1000. Dealing with the definition of employee, the report of tile Select Committee reads as follows: - “in order to widen the coverage of the Bill, the Committee recommend that the present limit of Rs. 750 be raised to Rs. 1000 per mensem as provided in the Employees Provident Fund Scheme. The Committee feel that it should be ensured that a person who was initially employed on wages not exceeding Rs. 1000 per mensem and had been employed fora continuous period of 5 years on wages not exceeding Rs. 1000 per mensem may not become disentitled to receive gratuity when his wages exceed Rs 1000 per mensem. The Committee feel that it should be ensured that a person who was initially employed on wages not exceeding Rs. 1000 per mensem and had been employed fora continuous period of 5 years on wages not exceeding Rs. 1000 per mensem may not become disentitled to receive gratuity when his wages exceed Rs 1000 per mensem. The Committtee, therefore, recommend that in the case of such an employee, gratuity should be paid in respect of the period during which the employee was employed on wages not exceeding Rs. 1000 per mensem on the basis of the wages received by him during that period.” The Bill with the modifications proposed by the Select Committee is at page 332 and contains a note that “Words underlined or side-lined indicate the amendments suggested by the Committee”. The Explanation in the modified bill is side-lined which indicates that the Explanation was inserted consequent on the recommendation of the Select Committee. 13. Thus having regard to the Explanation and the definition of employee read with the Explanation, it is clear that merely on the ground that the employee was drawing salary exceeding Rs. 1000 at the time of his resignation, his claim for gratuity could not be totally rejected and having regard to the Explanation, he would clearly be entitled to gratuity for the period during which his salary did not exceed Rs. 1000. 14. Mr. Sherye has fairly pointed out to us that such a view has been taken by the Gujarat High Court and the Calcutta High Court also. In (Sarabhai Chemicals v. Ambaram Amtharam Pute)! (l978) I L.L.J. 105. The facts show that the pay of the employee who was originally employed as a chemist in 1959 but was later appointed as the Section Head of the Quality Control Department was Rs 950 per month up to 31st March 1974 and he was getting a salary of Rs. 1050 per month till he resigned on 29th June 1974. The claim of the employee for gratuity was contested on the ground that on the date of resignation he was receiving wages of more than Rs. 1000 per month and was Working in a managerial capacity and it Was held that the mere fact that the employee was receiving the wages at more than Rs. The claim of the employee for gratuity was contested on the ground that on the date of resignation he was receiving wages of more than Rs. 1000 per month and was Working in a managerial capacity and it Was held that the mere fact that the employee was receiving the wages at more than Rs. 1000 per month or was working in the managerial capacity on the date on which he resigned would not disentitle him to the payment of gratuity contemplated by section 4 of the Act. 15. In (Jogendra Lal Malakar v. Regional, Labour Commissioner)2 (1977) II L. L.J. 520, the Calcutta High Court was concerned with the case of an employee who retired on 1st March 1973 after 41 years of service and his last pay drawn was Rs. 1045 per month. The argument was that since the employee was drawing Rs. 1000 per month when the Act came into force, he did not qualify for payment of gratuity under the Act. The learned single Judge of the Calcutta High Court held that the case of the employee was clearly covered by the Explanation to section 2(e) and that the employee could net be deprived of the benefit of the Gratuity Act merely by virtue of the fartuitous fact that he happened to draw salary of more than Rs. 1000 per month when the Act came into force. Having regard to the construction which we have placed on the definition of employee, we must reject the contention advanced on behalf of the employer that the employee was not entitled to the benefits of the Act. 16. The second contention which is raised by Mr. Shetye is that the Appellate Authority was in error in holding that the employee was not employed in a managerial or administrative capacity. 17. Now, if the definition of employee is read it would show that if the employee is working in a supervisory capacity, he is entitled to the benefits of the Act. Only an employee who is employed in a managerial or administrative capacity is excluded from the benefits under the Act. How in the context of the fact whether an employee who has supervisory functions is included in the definition while determining whether the function is of a managerial nature or not, that function must substantially differ in nature and character from a supervisory function. How in the context of the fact whether an employee who has supervisory functions is included in the definition while determining whether the function is of a managerial nature or not, that function must substantially differ in nature and character from a supervisory function. A managerial function with necessarily involve the power to direct and control production in the business- which the employer is doing. The employer in this case is a manufacturer of textile machinery and his business consists of bleaching, dyeing, finishing printing vanaspati and chemical plants, stainless steel fabricators, machine builders and designers and general engineering work such as mechanical engineering air-conditioning and welding. The employee was working in the machine shop originally as an Assistant Foreman and then as a Foreman. It can hardly be disputed that as a Foreman the nature of the work of the employee would be of a supervisory nature because as a Foreman he would Dot be personally required to do any manual work. What is, however, important in the instant case is that there is an unequivocal admission of the Works Manager Iyer that there is not much difference between the nature of the work which the employee was doing as a Foreman and the nature of the work which he was doing as an Assistant Foreman, Iyer was the only witness examined on behalf of the employer. His evidence does not show that the employee was required to exercise any independent judgment or direction or control in the matter of production. If the work which he was doing as an Assistant Foreman before was not very different from the work which be was doing as a Foreman, then even according to the employer, there is no difference in the nature of his work in spite of the fact that he now occupies a post of promotion. If on this evidence, the Controlling Authority and the Appellate Authority have come to the conclusion that the employee was not doing any managerial or administrative work, it will not be possible for us to interfere with that finding, apart from the fact that on the material produced, there does not seem to be any infirmity in that finding. The employee was, therefore, clearly entitled to the benefits under the Act. 18. The correctness of the amount of gratuity which has been computed at Rs. The employee was, therefore, clearly entitled to the benefits under the Act. 18. The correctness of the amount of gratuity which has been computed at Rs. 11,000 for the period during which the employee was getting wages not exceeding Rs. 1000 per month has not been disputed before us. What is, however, pointed out by Mr. Shetye is that the employer has already deposited Rs. 5771.06 in pursuance of a direction of the Appellate Authority. It is most disputed on behalf of the employee by Mr. Naik that the said amount has been withdrawn though after furnishing security. The employer has also deposited Rs, 6000 in pursuance of the order of this Court dated 10th April 1975. Though the order of this Court gave liberty to the employee to withdraw that amount, he has not done So. According to Me Shetye, having regard to the earlier deposit of Rs. 5711, the employee will now be entitled to only Rs 5228.94 and that the rest of the amount should be directed to be refunded to the petitioner. There is no difficulty in granting this request Subject to the fact that since we are inclined to award costs to the employee in respect of this petition, we direct that the petitioner will be entitled to withdraw out of the deposit of Rs. 6000 not only Rs. 5228.94 but also the amount of costs of this petition which are computed at Rs. 250. Mr. Shetye is agreeable that in round figures the employee should be permitted to withdraw Rs, 5480 and the balance of the amount Rs. 520 out of the amount of Rs. 6000 tying in deposit in this Court should be refunded to the petitioner. The security furnished by the employee when he withdrew the amount of Rs. 5771.06 will also stand discharged. Rule is discharged with costs. Rule discharged -----