Transistor Products (Private), Ltd. v. P. Ranganathan
1979-08-21
S.PADMANABHAN
body1979
DigiLaw.ai
JUDGMENT 1. The petitioner, which is a private limited company, has filed this writ petition for the issue of a writ of certiorari to quash the order passed by the Additional Commissioner for Workmen's Compensation, Madras, on 31 August 1976, in the following circumstances. The first respondent, Ranganathan, was employed by the petitioner with effect from 18 September 1967. On 24 February 1971, a written contract of service was entered into between the first respondent and the petitioner. Under the said contract of service the duration of the petitioner's service was fixed to be for a period of three years with effect from 1 February 1971 to 31 January 1974. However, even after 31 January 1974, the first respondent continued to be in the service of the petitioner. He resigned his job on 15 May 1975. His request for payment of gratuity for the period of his service with the petitioner was not complied with. He, therefore, applied to the Controlling Authority under the Payment of Gratuity Act for determination of the amount of gratuity payable to him and for directions being issued to the petitioner to pay the said amount to him. The petitioner took the stand that on account of the fact that the service agreement stated that the service of the first respondent would automatically stand terminated on 31 January 1974, there is a break in the service of the first respondent and that consequently he would not be entitled to the payment of gratuity. The controlling authority, by his order, dated 28 January 1976, held that the first respondent was entitled to gratuity for a period of seven years and eight months, computed the amount at Rs. 2,100 and directed the same to be paid by the petitioner to the first respondent. 2. Against the said order of the controling authority the petitioner preferred an appeal to the Additional Commissioner for Workmen's Compensation who is the Appellate Authority under the Payment of Gratuity Act. The appellate authority, by its order, dated 31 August 1976, confirmed the order of the controlling authority and dismissed the appeal. It is in these circumstances that the petitioner seeks the issuance of a writ of certiorari to quash the order of the Appellate Authority under the Payment of Gratuity Act. 3. It is not in dispute that the first respondent joined the service of the petitioner on 18 September 1967.
It is in these circumstances that the petitioner seeks the issuance of a writ of certiorari to quash the order of the Appellate Authority under the Payment of Gratuity Act. 3. It is not in dispute that the first respondent joined the service of the petitioner on 18 September 1967. It is also not in dispute that he has been continuously working with the petitioner from that date till the date of his resignation on 15 May 1975. In this view, there is no dispute on the part of the petitioner that the first respondent had rendered continuous work for a period of seven years and eight months with the petitioner. But the case of the petitioner is this. On 24 February 1971, a service agreement was entered into by the first respondent with the petitioner. Under the said agreement of service the first respondent was to serve the petitioner for a period of three years with effect from 1 February 1971. Clause (1) of the said agreement provided that the services of the first respondent would automatically come to an end unless renewed or superseded by any other agreement. Sri Devanathan, learned counsel for the petitioner, contended that under this agreement the service of the petitioner came to an automatic end on 31 January 1974. Even though the first respondent continued to work without any physical break up to 15 May 1975, it must be deemed that there was in law a break in service and consequently the first respondent should not be considered to have been in continuous service from 18 September 1967 to 15 May 1975. In this view, in the submission of the learned counsel, the first respondent will not be entitled to any gratuity at all. 4. Section 4(1) of the Payment of Gratuity Act, 1972, reads as follows: “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 (c) on his death or disablement due to accident or disease.
(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 (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.” 5. “Continuous service” is defined in S. 2(c) of the Act thus: “‘Continuous service’ means uninterrupted service and includes service which is interrupted by sickness, accident, leave, lay-off, strike or a lockout or cessation of work not due to any fault of the employee concerned, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act.” 6. I have already stated that the contention of Sri Devanathan is that the duration of the appointment of the first respondent having come to an end on 31 January 1974, there was a break in service. It is admitted that the first respondent's services were entertained on 1 February 1974, and he did work on 1 February 1974, and on subsequent days till 15 May 1975, when he resigned. In view of this factual position, it must be deemed that the service agreement, dated 24 February 1971, was renewed as contemplated in Cl. (10) of the said agreement. Clause (10) of the agreement does not say that the renewal would only be by an agreement in writing. The very fact that the first respondent was allowed to continue to work with the petitioner and he did, as a matter of fact, work with the petitioner-concern, without any physical break, leads to the irresistible conclusion that there must have been a renewal of the agreement, dated 24 February 1971. 7. I do not agree with the contention of Sri Devanathan that even if the first respondent was allowed to continue in service from 1 February 1974, it must be under a fresh contract of service which cannot be tagged on to his service which ended on 31 January 1974, as per the agreement, dated 24 February 1971.
7. I do not agree with the contention of Sri Devanathan that even if the first respondent was allowed to continue in service from 1 February 1974, it must be under a fresh contract of service which cannot be tagged on to his service which ended on 31 January 1974, as per the agreement, dated 24 February 1971. If the contention of Sri Devanathan is accepted it will amount to ignoring the very purpose of the Payment of Gratuity Act which provides for payment of gratuity to employees who have been in continuous service for not less than five years. 8. Even otherwise, the definition of “continuous service” means uninterrupted service and includes service which is interrupted by sickness, accident, leave, lay-off, strike or a lockout or cessation of work not due to any fault of the employee concerned. The definition itself contemplates that the break in continuous service must be due to the fault of the employee. Here, there is no fault on the part of the employee. Even the employer himself did not choose to stop the services of the first respondent, since he was allowed to work on 1 February 1974. Therefore, the definition does not support the contention that when once the contract of service comes to an end on paper, there occurs a break in continuity of service even though the employee had continued to work with the employer without any physical break in service. If such an interpretation is given the very object of the Act will be defeated. I am, therefore, of the view that there has been no break in the service of the first respondent with the petitioner and that he had put in continuous service of seven years and eight months. In the result, the Appellate Authority and the Controlling Authority under the Payment of Gratuity Act were right in holding that lie will be entitled to gratuity for the period he worked with the petitioner. The writ petition, therefore, fails and is dismissed with costs of the first respondent. Advocate's fee is Rs. 150.