IREL (India) Limited v The Controlling Authority under the Payment of Gratuity Act and The Appellate Authority under the Payment of Gratuity Act

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE AMIT RAWAL`** ``` THURSDAY, THE 25[TH] DAY OF AUGUST 2022 / 3RD BHADRA, 1944 ``` ## **`WP(C) NO. 7482 OF 2022`** ## **`PETITIONER:`** ``` IREL (INDIA) LIMITED, RARE EARTHS DIVISION, UDYOGAMANDAL, ERNAKULAM DISTRICT-683501, REPRESENTED BY ITS GM AND HEAD, RED MR.A VEERAMANI. ``` ``` BY ADVS.M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RAJA KANNAN ``` ## **`RESPONDENTS:`** - `1 T.RADHAKRISHNAN, SREE VIHAR, ELOOR NORTH, UDYOGAMANDAL, ERNAKULAM DISTRICT, PIN-683501.` - `2 THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT.` - `(ASSISTANT LABOUR COMMISSIONER (CENTRAL) KAKKANAD-682030.` - `3 THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT (DY.CHIEF LABOUR COMMISSIONER (CENTRAL) ) KAKKANAD-682030.` ``` BY ADVS.C.S.AJITH PRAKASH MANU S., ASG OF INDIA T.K.DEVARAJAN PAUL C THOMAS FRANKLIN ARACKAL M.B.SOORI BABU M. NIDHIN RAJ VETTIKKADAN HAARIS MOOSA ANCY THANKACHAN ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NO. 7482 OF 2022 -2- ``` ## **`JUDGMENT`** Orders of the Controlling Authority dated 20.03.2020 under the Payment of Gratuity Act, 1972 allowing the application of the 1[st] respondent - employee the payment of gratuity for the period referred to therein Ext.P5 and dismissal of the appeal vide order dated 09.07.2021 Ext.P7 by the Appellate Authority have been assailed on behalf of the petitioner establishment – management. 2. Petitioner is stated to be a company registered under the Companies Act, 1956 and in Administrative Control of Department of Atomic Energy engaged in the business of mining and processing of minerals. First respondent for the period 01.06.1991 to 31.05.1993, prior to his regular appointment from 01.06.1993 to 30.11.2018, was employed as Tradesman C, Plant Section. He submitted a claim for a period of two years i.e., from 01.06.1991 to 31.05.1993 and vide memo dated 29.05.1991 was appointed for a period of training of two ``` WP(C) NO. 7482 OF 2022 -3- ``` years and thereafter regularized with effect from 01.06.1993. Petitioner in response to the notice received from the office of the controlling authority under the Payment of Gratuity Act contested the claim by preferring counter statement dated 13.08.2019 Ext.P2. The period of training for two years could not be included for the purpose of calculating the gratuity and has to be excluded. As per the appointment letter the first respondent has been paid a consolidated stipend of Rs.800/- (Rupees eight hundred only) during the training period and after the successful completion, was appointed as a helper in the production department vide Ext.P14. On attaining the age of superannuation on 15.11.2018, was relieved from duty on 30.11.2018 and at that time the first respondent was drawing the wages of Rs.56552/- (Basic Pay + Personal Pay + Dearness Allowance) had put in up of twenty five (25) years five (5) months and thirty (30) days of service. The Controlling Authority rejected the contention of the petitioner management and considered the period of training for ``` WP(C) NO. 7482 OF 2022 -4- ``` the purpose of calculating the gratuity and the appeal preferred as noticed above has also been dismissed. 3. Learned counsel representing the petitioner submitted that both the authorities failed to appreciate that training period cannot be counted as a regular employment. 1[st] Respondent - employee was kept in different sections of the plant, so as to enable him to become conversant with the general working of the plant where processing of monazite was being carried out for extraction of Rare Earths Chloride, Thorium Hydroxide and Trisodium Phosphate. His nomenclature was akin to the apprentice as defined under Section 2(e) of the Payment of Gratuity Act and therefore could not claim the gratuity for the period aforementioned. 4. In support of the aforementioned contention counsel for the petitioner relied upon the judgment of this Court in **Indian Rare Earths Ltd. Vs. K.S.John and Others (2013 KHC 673)** wherein it is mentioned that a person undergoing training after the appointment ``` WP(C) NO. 7482 OF 2022 -5- ``` will not fall under section 2(e). In other words, he did not satisfy the definition of the 'employee' under Section 2(e) of the Payment of Gratuity Act which would mean other than an apprentice employed on wages in any establishment, factory, mine etc. Both the authorities wrongly treated the apprentices and trainees in different sense, whereas the apprentice is a person who is undergoing apprenticeship training in a designated trade in an establishment. Similar would be the case of a trainee who would be imparted training in an establishment without any obligation of either of the parties to accept or offer permanent employment. 5. On the other hand learned counsel appearing on behalf of the first respondent - employee opposed the aforementioned prayer by submitting that the management did not produce the job notification with the view to suppress the details. Any offer of appointment as evident from Ext.P3 would not have any bearing on the qualifying service rendered by the employee for the purpose of computing gratuity. The ``` WP(C) NO. 7482 OF 2022 -6- ``` post notified for appointment in the year 1991 was that of 'helper'. The nature of the job of the helper is equivalent to the worker which involves bringing of raw materials from general store to the plant section by pulling hand card. Employee had rendered twenty seven (27) years of service by including the period of two years as training. Controlling Authority give sufficient opportunities to both parties for contesting the matter but management failed to place on record any material to substantiate their submissions. The bald statements in the absence of material would not be sufficient for Controlling Authority to reject the case of the employee. 6. I have heard learned counsel for the parties and appraised the paper book and of the view that there is no force or merit in the submissions. 7. The main and predominate object of the training was that person should do work during the period of the training. In the present case under the guise of appointing as a training helper the 1[st] ``` WP(C) NO. 7482 OF 2022 -7- ``` respondent was in fact employed to all the works and discharged the duties like other regular employees. It would be axiomatic to extract the definition of Section 2(e) of the Payment of Gratuity Act which defines that the employee and any person employed for various other than apprentice would be covered by the said definition provided establishment in which the person is working is covered under the provisions of the Act. ## “ **Section 2(e) of the Payment of Gratuity Act, 1972** "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, [and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity].” ## 8. In a similar circumstance, petitioner had ``` WP(C) NO. 7482 OF 2022 -8- ``` approached this Court against the order of the authority vide Writ Petition (C) No.2254 of 2020 and this Court vide judgment dated 02.11.2020 dismissed the case. For the sake of brevity relevant portion of the same reads thus: “12. I am unable to concur with the views expressed by the learned Single Judge of the Karnataka High Court for the reason that a trainee is not excluded from the definition of the term 'employee' under the Gratuity Act. What is excluded is an 'apprentice'. On this aspect, the judgment of the Hon'ble Madras High Court in the matter of Arunachalam S (supra) is very clear. Paragraphs 6 and 7 of the said judgment reads thus: 6. The controversy arose when the petitioner demanded the payment of gratuity even for the period from 2.6.84 to 7.6.86, the period when the petitioner was appointed as trainee. The question to be resolved is whether the petitioner could be considered as an employee under Section 2(e) of "the Act" for the purpose of payment of gratuity for the period from 2.6.84 to 7.6.86. Section 2(e) of "the Act" reads as under. "Employee" means any person (other than ``` WP(C) NO. 7482 OF 2022 -9- ``` an apprentice) employed on wages in any establishment, factory, mine, oilfield, plantation, port, railways, company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity. A plain reading of the said Act shows that it excludes an apprentice from the application of the provisions of "the Act". In order to find out whether the word "apprentice" includes the trainee also, and in the absence of any definition of an apprentice under "the Act", this Court has to consider the same with reference to the dictionary meaning as well as the interpretation of the said Section with reference to the object of "the Act" coupled with the definition of apprentice or training in any other statute. In the Concise Oxford Dictionary the word "apprentice" means, "a person learning a trade from a skilled employer". In Black's Law Dictionary the word "apprentice" means, "a person bound by an indenture to work for an employer for a specific period to learn a craft, ``` WP(C) NO. 7482 OF 2022 -10- ``` trade or profession and a learner in any field of employment or business." As per P. Ramanatha Aiyar's Law of Lexicons the word "apprentice" means, "a learner is one who is taken to learn a trade, a person under a contract of apprenticeship, to a master to learn from him his trade or business and to serve him during his time of the apprenticeship". Correspondingly, as per Concise Oxford Dictionary the word "trainee" means, "a person undergoing training for a particular job or profession". As per P. Ramanatha Aiyars Law of Lexicons, the word "training" means "systematic instruction". From the above expression from various dictionaries, it is seen that both the words "apprentice" and "trainee" are not either similar, identical or same as both the words have been distinctly defined with reference to the nature of job. As referred to in Black's Law Dictionary, "apprentice" means, "a person must be either a learner in any field of employment or business or a person was bound by indenture to work for an employer for specific period to learn a craft, trade or profession". With the above definitions on the background, it is to be now considered as to the nature of the duties that were performed by the petitioner. According to the petitioner, the petitioner was treated as a full member of the department and he was allotted duties equivalent to other staff of ``` WP(C) NO. 7482 OF 2022 -11- ``` personnel department and he was also asked to do the following works: "(i) Correspondence, follow up and submission for orders in the matters relating to training, absorption and confirmation of employees. (ii) Tamil notices. (iii) Reimbursement of conveyance expenses to officers/fuel allowance [o workmen. (iv) Provision of furniture. (v) Issuance of transfer orders. (vi) National and festival holidays. (vii) Salary advance/court matters and insurance claims. (viii) Any other work that may be assigned by A.M. (A&P) then and there." In the course of cross-examination of the management witness, he has clearly stated as follows. In fact, the Bombay High Court in the judgment reported in Khanderan P. Rajopadhye v. United Western Bank Ltd., and others, 1984 LAB I.C.1910 has also considered that mere nomenclature of post is not of much consequence and what is to be seen is the nature of the duties performed by the employee concerned so as to arrive at a conclusion as to whether he is an employee within the meaning ``` WP(C) NO. 7482 OF 2022 -12- ``` of Section 2(e) of "the Act". On the above facts, it is seen that the petitioner was appointed not for learning a trade from a skilled employer, was appointed as a trainee not to learn any designated trade alone and therefore cannot be considered as apprentice. 7. Further, while the provisions of any Act is interpreted, the Court has to read the provisions literally in its ordinary, natural and grammatical meaning as used by the legislature. The Supreme Court in the judgment reported in Jugalkishore Saraf v. M/s. Raw Cotton Co. Ltd., 1955 SC 376 has held that when any of the provisions of Statute is interpreted, the provision has to be read in its ordinary, natural and grammatical meaning. I had an occasion to consider the said judgment of the Supreme Court as to the interpretation of the Statute in W.P.No. 17927 of 1994 dated 14.8.2001. After considering the said judgment, I had also taken the view that while interpreting a statute, the object of the Act also has to be kept in mind. The object of Payment of Gratuity Act is to provide a scheme for payment of gratuity to the employees engaged in factory, mine, oilfield, port, railway company or shop, or other establishments. The Act is mainly intended to the provisions for payment of gratuity. As per the definition of Section 2(e) of "the Act", all employees arc entitled to the payment of ``` WP(C) NO. 7482 OF 2022 -13- ``` gratuity except an apprentice which would necessarily mean that the Legislature intended to exclude the applicability of the provisions of the Act only in case of apprentice. They have done it so in clear terms by excluding only an apprentice from the applicability of the provisions of the said Act. As laid down by the Supreme Court in the judgment referred to supra, if the literal meaning of apprenticeship is considered along with the meanings given in the various dictionaries, it would be clear that the petitioner who has been appointed for a definite period and who has been assigned various duties and not only to a particular designated trade cannot be called as apprentice. In support of the above conclusion, the judgment of the Orissa High Court reported in Orissa Mining Corporation Ltd. rep. by Chairman-cumManaging Director v. Controlling Authority under Payment of Gratuity Act -cum -Assistant Labour Commissioner and others, 1994 (2) LLN 1130 may be also referred to wherein the Orissa High Court while considering the applicability of the provisions of Payment of Gratuity Act, 1972, held that a trainee employee under a contract of employment is not an apprentice under the Apprentices Act unless he is undergoing apprentice training in designated trade in pursuance to a contract of apprentice. The Orissa High Court had in fact considered the definition of "apprentice" under the ``` WP(C) NO. 7482 OF 2022 -14- ``` provisions of Apprentices Act, 1961 wherein the apprentice has been defined in Section 2(a) of the Apprentices Act, 1961 as follows: "Apprentice" means a person who is undergoing apprenticeship training in a designated trade in pursuance of a contract of apprenticeship." 13. Trainees give various duties during the course of the so called training and who is not deputed in a particular designated trade cannot be called as an apprentice or learner. The nomenclature of the post is not of much consequence while interpreting the beneficial provisions of the welfare statute. The Gratuity Act is undoubtedly a welfare statute which only bars an apprentice from the benefit of payment of gratuity during such training period. However, designating an employee as trainee, extracting regular work from him and then denying him the benefit of Gratuity Act under the pretext of such employee being a trainee would certainly defeat the object of the welfare statute. The Hon'ble Orissa High Court has also considered similar case in the matter of **Chairmancum-Managing Director, Orissa Mining Corpn. Ltd** (supra) and following are the observations found in paragraph 4. “... A trainee employed under a contract of employment is not an apprentice, under the ``` WP(C) NO. 7482 OF 2022 -15- ``` Apprentices Act, unless he is undergoing apprenticeship training in a designated trade in pursuance of a contract of apprenticeship...”. In the light of the foregoing discussions, neither error of fact nor error of law can be found in the impugned orders passed by the authorities below while holding that the 1st respondent is entitled for gratuity for the period from 16.07.1991 to 15.07.1993 in the wake of proven fact that during the said period, he was not undergoing any training and as such was not an apprentice so as to exclude his case from the beneficial legislation i.e. Payment of Gratuity Act, 1972. In the result, this writ petition is dismissed. ” The aforementioned fact and reasoning has not been denied by the learned counsel for the petitioner. For the reason aforementioned the orders under challenge does not suffer from any illegality or perversity. No ground for interference is made out. Writ petition is dismissed. ``` Sd/- ``` ``` AMIT RAWAL ``` ``` vv JUDGE ``` ``` WP(C) NO. 7482 OF 2022 -16- ``` ## **`APPENDIX OF WP(C) 7482/2022`** ## **`PETITIONER EXHIBITS`** - `Exhibit P1` ``` TRUE COPY OF THE APPLICATION FOR GRATUITY DATED 20.03.2019 FILED BY THE 1ST RESPONDENT. ``` - `Exhibit P2 TRUE COPY OF THE COUNTER STATEMENT DATED 13.08.2019 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.` - `Exhibit P3 TRUE COPY OF THE OFFER LETTER DATED 29.05.1991 ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT.` - `Exhibit P4 TRUE COPY OF THE ORDER DATED 5.6.1993 ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT.` - `Exhibit P5 TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT DATED 20.03.2020 IN APPLICATION NO,.48(41)/2019/D1.` - `Exhibit P6 TRUE COPY OF THE APPEAL MEMORANDUM DATED 2.12.2020 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT AGAINST GC NO.48/(41)/2019/D1.` - `Exhibit P7 TRUE COPY OF THE ORDER OF THE 3RD RESPONDENT DATED 9.7.2021 IN GA NO.39/02/2021/B6.` ## **`RESPONDENT EXHIBITS`** - `Exhibit R1(A) A TRUE COPY OF THE REQUEST SUBMITTED BY THE 1ST RESPONDENT DATED 09.08.2021 BEFORE THE 2ND RESPONDENT.` - `Exhibit R1(B)` - `A TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE GENERAL MANAGER HEAD RED IRE, TO PAY THE DIFFERENCE IN GRATUITY DATED` ``` WP(C) NO. 7482 OF 2022 -17- ``` ``` 12.08.2021. ``` ``` Exhibit R1(C)A TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE GENERAL MANAGER HEAD - RED DATED 30.09.2021. ``` ``` Exhibit R1(D)A TRUE COPY OF THE JUDGMENT IN WP(C) NO.2254/2020 DATED 02.11.2020. ```