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2004 DIGILAW 790 (BOM)

Sukhdeo B. Alkunte v. Lalji Prasad & others

2004-07-02

S.J.VAZIFDAR

body2004
JUDGMENT - VAZIFDAR S.J., J. :-The petitioner seeks a writ of certiorari against the order dated 24th June, 2002 and 9th June, 2003 passed by the Controlling Authority and the Appellate Authority i.e. respondent Nos. 2 3 respectively under the Payment of Gratuity Act, 1972. 2. The broad facts are not in disputes. The first respondent was employed by one Shivram Alkunte who carried on business as a sole proprietor in the firm name and style of M/S. S.M. Alkunte. He was a contractor and had during his life time certain contracts with Tata Electric Company. Shivram Alkunte expired on 8th August, 1989. 3. It is the first respondent's case, and I will assume for the moment it is correct, that one Mohan Alkunte, Shivram's nephew took over his business. In the first respondents' application under the said Act, the petitioner was opponent No.1 and Mohan was Opponent No. 2. The first respondents' contention is that Mohan Alkunte continued the business of Shivram. In fact in law, this would be a separate employment with a different employer. As far as the contracts with Tata Electric Company are concerned, the same were admittedly not even transferred by Tata Electric Company to Mohan. 4. Thus upon Shivram's death, the first respondent started working with Mohan. 5. The petitioner's case is that on 17th December, 1990, the first respondent resigned from his services and a full and final settlement in respect of his dues was arrived at whereby inter alia, a sum of Rs. 38,400/- was paid by paid by Mohan to the first respondent towards his gratuity dues. The first respondent executed a receipt of full and final settlement in this regard. The first respondent's case is that the resignation was in fact fictitious and that the documents evidencing the same as well as the receipt of the payments by him in full and final settlement of his dues, were fictitious and only for the purposes of misleading the other employees into believing that the business had closed down. 6. Respondent Nos. 2 and 3 have both held that it was on 14th March, 1993 that the first respondent was employed by the petitioner. The finding has not been challenged by the first respondent. They have also held that the petitioner is a separate legal entity. These facts assume great importance while deciding the right of the first respondent qua the petitioner. 2 and 3 have both held that it was on 14th March, 1993 that the first respondent was employed by the petitioner. The finding has not been challenged by the first respondent. They have also held that the petitioner is a separate legal entity. These facts assume great importance while deciding the right of the first respondent qua the petitioner. The petitioner and Mohan are brothers. They however, carried on separate business. They are neither partners nor conduct business on behalf of each other. 7. The first respondent tendered his resignation in respect of the services with the petitioner on 21st February, 2000. 8. Thus the petitioner's liability for gratuity can only be for the period on 14th March, 1993 to 21st February, 2000. 9. Mr. Pai, the learned Counsel appearing on behalf of the first respondent, submitted that Shivram Alkunte, Mohan Alkunte and the petitioner are relatives and carried on the same nature of business and that therefore, the first respondent ought to be considered as having been in the employment of the petitioner for the period from which the first respondent's employment commenced with Shivram Alkunte till he tendered his resignation by his letter dated 21st February, 2000. The argument is unsustainable. Each of them is a separate, independent legal entity. Subject to anything to the contrary, which I do not find, the liability of one cannot in law be considered to be the liability of the others. 10. The second respondent held that there was only a change of ownership. From the narration of the fact, I am unable to decipher any reason in support of this finding. Curiously the second respondents has observed that the petitioner had accepted the liability of Mohan, who was Opponent No. 2 in the proceedings. There is nothing on record that even remotely suggests the same. Mr. Pai fairly conceded that there was nothing on record in support of his finding. Indeed once this finding is held to be incorrect, then even on the basis of the reasoning contained in the order of the second respondent, the petitioner cannot ordinarily be held liable for the gratuity dues of the first respondent for a period prior to 14th March, 1993. 11. However the petitioner by his letter dated 21st April, 2000 agreed to pay the gratuity dues for ten years of service. 11. However the petitioner by his letter dated 21st April, 2000 agreed to pay the gratuity dues for ten years of service. Thus the petitioner would be liable to pay the gratuity dues for ten years despite the fact that the first respondent was actually in the employment with the petitioner for a shorter period. 12. The third respondent in the impugned order has unfortunately not given any reasons whatsoever for upholding the order of the second respondent. The narration of the facts is reasonably accurate. The third respondent has also found that the first respondent was employed by the petitioner only from 14th March, 1993. He further holds that the petitioner's proprietary concern Swastic Construction is a separate legal entity. It is difficult to understand how after these two findings of the fact the third respondent upheld the order of the second respondent. The only reason for doing so is that the petitioner did not deposit the amount of gratuity. This cannot be a ground for making the petitioner liable for gratuity dues of the first respondent for a period when he was admittedly not in the employment of the petitioner. Moreover there is nothing in either of the order to indicate why Shivram and/or Mohan, are not liable for the period prior to 14th March, 1993. 13. Mr. Pai relied upon a judgment of a learned Single Judge of Karnataka High Court in (Management of Samyuktha Karnataka (Lokashikshana Trust) v. Ranganna)1, 1995(II) C.L.R. 927. In that case, the institution viz. Samyuktha Karnataka Group of Publication was managed by a trust founded under the name of Loka Shikshana Trust. The paper was taken over twice by two companies. In 1983 the Karnataka High Court inter alia constituted a fresh trust for running the paper with effect from 10th March, 1986 and this board of trustees took over the management from that date. In respect of the gratuity dues of the employees of the newspaper, it was contended by the management that their liability to pay gratuity under the provisions of the Act commenced only from 10th March, 1986 and that they could not be held liable for any earlier periods. In paragraph 10, the learned Judge held as under : 10. In respect of the gratuity dues of the employees of the newspaper, it was contended by the management that their liability to pay gratuity under the provisions of the Act commenced only from 10th March, 1986 and that they could not be held liable for any earlier periods. In paragraph 10, the learned Judge held as under : 10. Another limb of the same argument that was advanced proceeds on the footing that a contract of service is co-extensive with the tenure of a management and that when a management changes, it is effectively a new employment and therefore for purposes of computation of length of tenure, that it is not one uninterrupted period. This contention, if adopted would have dangerous consequences mainly because, having regard to the level of ethics or lack of it, that is prevalent in the business world and the frequent changes in the management both of small and big business concerns for no fault of the employees, their period of service is liable to be decimated. The flaw in this argument is that a contract of services is between the institution and the employee and not the persons or organisations who administer the institution but only act as agents for the execution of that contract. Under these circumstances, where it can be demonstrated that the complexion of the employer or the institution has effectively remained unchanged regardless of cosmetic aspects such as the change of name, structure etc. and that the tenure of services has remained uninterrupted, the liability would be absolute.'' 14. The judgment is of no assistance to the first respondent for the liability was of the institution. The employment was with the institution. Merely because the management of the institution changed, it would not absolve the institution's liability for payment of gratuity. Infact the learned Judge in paragraphs 11 and 12 observed that regardless of the changes of personalities in the management, the liability devolves vis a vis the institution who is really the employer and that therefore any number of changes down the line would be of no consequence. Indeed in paragraph 12, it is further observed that the trustees are only the persons who are managing the institution and are therefore, required to disburse the payment on behalf of the institution which they were managing. 15. Indeed in paragraph 12, it is further observed that the trustees are only the persons who are managing the institution and are therefore, required to disburse the payment on behalf of the institution which they were managing. 15. In the present case, there was no question of either the institution or employer remaining the same. Shivram, Mohan and the petition are related but as observed in the impugned order also, each of them has a separate, independent legal entity. The liability of each of them is separate and district. In the circumstances, the judgment of the Karnataka High Court is of no assistance to the first respondent. 16. The liability, if any, for the remaining period, would clearly be that of Shivram and/or Mohan. However, the first respondent did not challenge the order of the second respondent in so far as it did not grant any reliefs against him. 17. The second and third respondents ought to have bifurcated the liability in respect of the gratuity dues of the first respondent between Shivram/his estate, Mohan Alkunte i.e. Opponent No. 2 to the application and the petitioner, which they have failed to do. 18. In the circumstances, the impugned order are quashed and set-aside and the following order is passed : i) The controlling authority under the Payment of Gratuity Act, 1972 shall compute the gratuity dues of the first respondent from the petitioner only for a period of ten years ending on 21st April, 2000. ii) Liberty to the first respondent to approach the Controlling Authority by an appropriate application to determine the liability, if any, of Opponent No. 2. Such application, if made, shall be decided in accordance with law. iii) The petitioner shall be entitled to withdraw the balance amount lying with the Appellate Authority together with accretions thereto forthwith. iv) Upon determination of the petitioner's liability in accordance with this order, appropriate direction shall be passed by the concerned authority for refund of amount, if any, by the concerned parties. v) The petition is accordingly disposed of with no order as to costs. 19. At the request of the learned Counsel appearing on behalf of the first respondent, the operation of this order is stayed for a period of eight weeks from today. Parties and all authority to act on an ordinary copy of this order duly authenticated by the Associate/Court Stenographer of this Court.