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2003 DIGILAW 566 (KER)

Anappara Karinkallu Thozhilali Sahayam v. V. N. Many

2003-08-29

J.M.JAMES, K.A.ABDUL GAFOOR

body2003
Judgment :- Abdul Gafoor, J. A Co-Operative society is the appellant, Only, the granite quarry workers are the members of the Society. The society gets, on lease, quarries for quarrying, Willing members are employed for quarrying work. The remuneration is paid for the work done by the members. These are the admitted position. 2. The bye-law of the Society provides for payment of gratuity to the worker who retires. The provision in the bye-law is that for the purpose of computing gratuity, one should have worked for 240 days in an year. It will be taken as complete year for computation of gratuity. The first respondent, a member of the appellant-society, retired. He was paid gratuity in terms of the bye-law as aforesaid. 3. Dissatisfied with the quantum of gratuity he moved the Controlling officer appointed under the payment of Gratuity Act, 1972 (in short "the Act") for computation of the gratuity payable to him by the appellant. The Controlling Officer found that, as the workman, first respondent herein, did have 21 years of continuous service, he shall be paid Rs.35, 941.50. The formula applied was the last drawn wages of Rs.114.10 x 15 (half monthly wages) x 21 (number of years of service) = Rs. 35,941,50 and directed payment of Rs.11,980/- deducting the amount of Rs.23,961/-, already paid by the appellant. 4. The Appellate Authority, as per Ext.P4 order, upheld Ext.P2 when it was appealed against by the appellant. Aggrieved by Exts.P2 and P4, the appellant approached this court with O.P.No.172820/99. The learned single Judge dismissed the original petition. Therefore, this appeal. 5. It is contended by the appellant before us that gratuity is payable in terms of the provisions contained in the bye-laws. As already mentioned above, only the period during which the incumbent had worked for 240 days in an year alone would be counted for calculating the period of continuous service. In other words, in any particular year, if the incumbent had not worked for 240 days, that year will be deducted from out of the total service. Following that principle, an amount of Rs.23961/- has been arrived at by the appellant towards the gratuity payable to the first respondent. In other words, in any particular year, if the incumbent had not worked for 240 days, that year will be deducted from out of the total service. Following that principle, an amount of Rs.23961/- has been arrived at by the appellant towards the gratuity payable to the first respondent. Relying on the decision reported in Daman Singh v. State of Punjab {1985 SC 973} and E.S.I. Corporation v. Vattiyoorkavu H.W.Co-operative Society {1997(1) KLT 342}, it is submitted that, as the first respondent had become a member of the society, he lost his character as an individual worker while performing the work in the quarry leased out to the appellant. He will be governed only by the provisions in the bye-law and not by any other law so far as the inter se relationship between the society and its members is concerned. So, the provisions of the Act will not be applicable for payment of gratuity to the first respondent. 6. Of course, in the first among the two decisions, it has been held that a member loses it individual identity qua the society when he becomes member. That was a decision rendered by the Supreme Court in respect of a societal dispute as to the amalgamation of the society. That does not have any bearing on the liability of the society towards the members or regarding the payment to the member concerned for the work performed by him for the society. 7. The latter is in respect of the ESI contribution payable by a co-operative society of weavers. There, society had been supplying yarn to each of its members, who will convert the yarn using the looms installed at their residence. What was being paid by the society is the difference in the price of yarn and the finished products. There was no factory owned by the society. There was no common workshop. The work places were the individual houses of the members. The conversion charges will not attract the definition of payment of contribution under the Employee's State insurance Act. So, that decision also does not have any application to the fact frame of this issue. 8. Counsel also places reliance on another decision of the Andhra Pradesh High Court in respect of the relation inter se between the members of society. That also is a matter arising under the Employees' State Insurance Act. 9. So, that decision also does not have any application to the fact frame of this issue. 8. Counsel also places reliance on another decision of the Andhra Pradesh High Court in respect of the relation inter se between the members of society. That also is a matter arising under the Employees' State Insurance Act. 9. It is contended by the first respondent workman that the gratuity payable shall always be governed by the Act. Accordingly, on retirement of an employee, the employer has to compute the gratuity and make payment. In case there is delay in payment, the workman can move the Controlling Authority in terms of Sec. 7 of the Act. 10. Dissatisfied with the amount granted by the appellant, first respondent approached the Controlling Authority invoking Sec. 7 of the Act. Adjudicating the entitlement, in terms of Sec. 4, Ext.P2 order has been passed and it has been upheld in Ext.P4 by the Appellate Authority. There is nothing illegal in these two orders, as found by the learned single judge, he submits. 11. It is also pointed out, relying on the decision in Employees' State Insurance Corporation v. Apex Engineering Pvt. Ltd. {1998 (1) SCC 86} that even a Managing Director, who is also a member of the company, has been found to be an employee of that company. But that decision is also on a matter arising under the Employees' State insurance Act. We need not be detained to consider this decision as well to decide the dispute. 12. Sec. 2(f) of the Act provides that in relation to any establishment, belonging to or under the control of any Government or any local authority, "the person who, or the authority which has an ultimate of control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop" will be treated as employer. Admittedly, the appellant had taken on lease certain quarries. Necessarily, for the purpose of quarrying work, going by the definition, the appellant shall be the "employer". Here, no matter whether the appellant employs, to perform the work, the members or any one else. For such work, the member concerned is given wages. Necessarily, he will be an "employee" in terms of Sec. 2(e) of the Act. Necessarily, for the purpose of quarrying work, going by the definition, the appellant shall be the "employer". Here, no matter whether the appellant employs, to perform the work, the members or any one else. For such work, the member concerned is given wages. Necessarily, he will be an "employee" in terms of Sec. 2(e) of the Act. In Sec. 4(5) of the Act, it is specifically provided that: "Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer". Necessarily, the Act will apply only in the absence of a better provision for payment of gratuity than that is provided in the Act. The Act does not discriminate anyone, for the purpose of computation of gratuity and while reckoning the continuous service, whether one performs the work for 240 days or less. But the provisions in the bye-law makes it clear that only those who have worked for 240 days in an year will be eligible for gratuity. Therefore, the provisions contained in the bye-law is no more beneficial or better than what is contained in the Act. Therefore, the bye-law cannot have any application, when provision in the Act provides for better rate of gratuity. 13. Moreover, Sec. 14 of the Act makes it clear that "the provision of this Act and the Rules made there under shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other then this Act." The bye-law is an instrument registered in terms of the Co-operative Societies Act. Whatever provision contained therein cannot have application unless it did provide for a better rate of gratuity. In other words, the Act will override the provisions in the bye-law. So the payment of gratuity cannot be limited in terms of the bye-law. Appeal therefore, fails, dismissed.