M. P. GOPALAKRISHNAN & others v Grasom Industries Ltd & The Labour Court, Kozhikode

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON & THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN FRIDAY, THE 12TH DAY OF AUGUST 2016/21ST SRAVANA, 1938 WA.No. 215 of 2012 () IN WP(C).35382/2004 ------------------------------------------AGAINST THE JUDGMENT IN WP(C) 35382/2004 of HIGH COURT OF KERALA DATED 18-10-2011 APPELLANTS: - -------------------- 1. M.P.GOPALAKRISHNAN CARD NO.6625, MUNDRAPPALLIYAL HOUSE, ELAMKULAM P.O., KUNNAKKAVU, MALAPPURAM DISTRICT. 2. P.KUNHUNNI CARD NO.6147, 'SREE NILAYAM', 19/1935 BHAJAN KOVIL ROAD, CHALAPPURAM, KOZHIKODE 673 002. 3. N.P.HARIDASAN CARD NO.6592, 'AISWARYA', THATTAMBALATH, PERUVAYAL P.O., KOZHIKODE. 4. P.PREMRAJ MOHAN CARD NO.6823, KUNNOTH HOUSE, KANNIPARAMBA P.O., MAVOOR,, KOZHIKODE. 5. B.SADANANDA PANICKER CARD NO.6902, 'USHALAYAM', KOTTATHPARAMBIL, KAKKANAD P.O.,, KOCHI-682 030. 6. K.T.UNNIKRISHNAN CARD NO.6862, KIZHAKKE THIRUTHIATTUMMAL HOUSE, P.O. MAVOOR, CALICUT 673 661. 7. V.J.ZACHARIA CARD NO.6617, VARAKUKALAYIL, 33/5577, CHEVAYOOR P.O., KOZHIKODE 673 017. 8. BALRAJ.A.P CARD NO.6802, 'DAMODAR NIVAS', P.O., CHERUPPA, KOZHIKODE. 9. G.R.WARRIER CARD NO.6781, 'SREERAG', PERUVAYAL P.O., KOZHIKODE. WA.No. 215 of 2012 -2- 10. N.PUSHPARAJAN CARD NO.7288, THUNDAZHIKATH HOUSE, T.K.M.COLLEGE P.O.,, PEROOR, KOLLAM-5. 11. SAVITHRI.K CARD NO.6822, 'SAKAMBARI' PIPE LINE JN., KATTANGAL ROAD, MAVOOR P.O., KOZHIKODE - 673 661. 12. P.CHANDRIKA CARD NO.6839, KONNARAYIL HOUSE, P.O.VELLALASSERY, R.E.C. (VIA), CALICUT 673 661. 13. CHANDRAN.P CARD NO.6966 PALAKKOT HOUSE, PALLIYOL MAVOOR P.O., KOZHIKODE 673 661. 14. U.JAYARAJAN CARD NO.6989 'GEETHANJALI', P.O.KANNIPARAMBA, MAVOOR (VIA), KOZHIKODE 673 661. 15. C.KUNNHIMOHAMMED CARD NO.6576 'AMAL', KALLERI, PERUVAYAL P.O., KOZHIKODE 673 024. 16. M.BHASKARAN CARD NO.2294 (S.F.D.), 'THRAYAMBAKAM', MANJAKOT, KANNIPARAMBA P.O., MAVOOR, KOZHIKODE. 17. T.V.KRISHNAN CARD NO.2295, THAZHATHU VEETTIL, PERUVAYAL P.O., KOZHIKODE. ## 18. MOHAN RAJAN.M CARD NO.2244, MANIYADATH HOUSE, 21/235, P.O.KALLAI, KOZHIKODE-673 003. 19. P.MOHAMMED IQUBAL CARD NO.2252, PATTANAYIL HOUSE, UGRAPURAM P.O., AREECODE, MALAPPURAM. 20. M.P. ANANDRAM CARD NO.2326, 'DEEPAM', MOOTOLIKANDY ROAD, KOZHIKODE 673 032. 21. N.SARANGADHARA KURUP CARD NO.2305, 'SERYAS', PERUMANNA P.O.,, KOZHIKODE - 673 026. WA.No. 215 of 2012 -3- 22. SURESHKUMAR.M.V CARD NO.2320, VAITHINARIPARAMBA, KUTIKADAVE, P.O.CHERUPPAD,, CALICUT 673 661. 23. MATHEW PHILIPOSE CARD NO.2261, KALAPPURATH HOUSE, THIRURKKAD P.O., PERINTALMANNA,MALAPPURAM. 24. N.P.VIJAYAN CARD NO.2265, NELLIYULLA PARAMBATH HOUSE, KAKKANJATH ROAD, MEPPAYIL, VATAKARA, KOZHIKODE. 25. T.K.PARAMESWARA KAIMAL CARD NO.2267, THOTTAYIL HOUSE, AVALOOKKUNNU P.O., ALLEPPEY. 26. N.MOHAN KUMAR CARD NO.2235, KODUKKATHURUTHIL, 'SOPANAM', PALLAMTHURUTH ROAD, PARAVOOTHARA, NORTH PARAVOOR, ERNAKULAM 683 513. ## BY ADV. SRI.ASOK M.CHERIAN RESPONDENT(S): -------------- 1. M/S.GRASOM INDUSTRIES LTD. BIRLAKOOTOM, MAVOOR, REPRESENTED BY ITS VICE PRESIDENT (FIN. COM) BIRLAKOOTOM, MAVOOR, KOZHIKODE - 673 002. 2. THE LABOUR COURT KOZHIKODE - 673 001. R1 BY ADV. SRI.E.K.NANDAKUMAR (SR.) R1 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR R1 BY ADV. SRI.P.GOPINATH THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 12-08-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **“CR”** ## **P.R.RAMACHANDRA MENON & ANIL K.NARENDRAN, JJ. -------------------------------------------------W.A.No.215 OF 2012** **-------------------------------------------------DATED THIS THE 12[th] DAY OF AUGUST, 2016** ## **JUDGMENT** ## **P.R.RAMACHANDRA MENON, J** . Challenge is against the verdict passed by the learned Single Judge in W.P.(C)No.35382/2004, whereby interference was declined and the Writ Petition was dismissed, virtually affirming the verdict already passed by the Labour Court in a claim petition filed under Section 33C(2) of the Industrial Disputes Act. The sequence of events is as follows: 2. The appellants herein, along with other workers, were serving the 1[st] respondent Company and were receiving the benefits by way of Salary, Gratuity and such other instances based on the various Settlements entered into between the Management and the Trade Unions representing the workmen. In the course of time, existence of the Company itself came to be in peril and ultimately, the 1[st] respondent Company was decided to be closed down, of course, in accordance with the relevant provisions of law. In furtherance to the negotiations between the parties concerned, a W.A.No.215/2012 -2- settlement as borne by Ext.R1(c) was reached, providing for payment of compensation to the requisite extent as specified therein. According to the Management, the relief flowing from the said settlement was computed and satisfied, which was not so, according to the appellants/ petitioners. The quantum of compensation payable on giving effect to the agreed terms was the subject matter of challenge in the claim petition filed before the Labour Court. Ext.P1 is the claim statement, which was sought to be rebutted by filing Ext.P2 counter statement. The claimants filed Ext.P3 rejoinder as well. After hearing both the sides, the matter came to be finalised by the Labour Court, passing Ext.P4 verdict, whereby it was held that the idea and understanding of the claimants was thoroughly wrong and misconceived and hence interference was declined and the claim petition was dismissed. 3. Being aggrieved by the verdict passed by the Labour Court, some of the aggrieved workers approached this Court by filing W.P.(C)No.35382/2004. The claim was contested by the 1[st] respondent as well. After hearing both the sides, the learned Single Judge, as per the judgment under challenge, upheld the W.A.No.215/2012 -3- verdict passed by the Labour Court, thus dismissing the Writ Petition which, in turn, is taken up before this Court by way of appeal filed by some of the writ petitioners. 4. Heard Sri Asok M.Cherian, the learned counsel appearing for the appellants and Sri E.K.Nandakumar, the learned Senior Counsel appearing for the 1[st] respondent, besides the learned Senior Government Pleader. 5. The crux of the submissions made by the learned counsel for the appellants is that, there is a total misconception with regard to the computation of benefit in terms of the Settlement arrived at between the parties. By virtue of the relevant clause, particularly under paragraph 2(c) of Ext.R1(c), compensation was payable at the rate of 40 days' wages for every completed year of service and that the 'per day wage' was liable to reckoned as in the case of payment of Gratuity followed in the Company. In so far as payment of Gratuity was to be satisfied reckoning the daily wages, based on the verdict passed by the Apex Court in **Jeewanlal Ltd. and others** v. **Appellate Authority under the Payment of Gratuity Act and others (1984 (4) SCC 356)** ,it was to be by adopting a divisor of '26' in W.A.No.215/2012 -4- place of '30' and had it been done, the proper extent of compensation payable to the workers would have been much more. The Labour Court has gone wrong in this regard, which unfortunately came to be upheld by the learned Single Judge and hence the challenge. 6. The learned Senior Counsel appearing on behalf of the 1[st] respondent submits that there is no dispute with regard to the computation of 'daily wage' in so far as payment of Gratuity is concerned, in terms of the Payment of Gratuity Act, 1972. But, in so far as the 1[st] respondent Company is concerned, better Scheme was prevailing in the Company, enabling the workers to get Gratuity to a higher extent, based on the Settlement entered into, a copy of which has been produced as Ext.R1(d). By virtue of the said Scheme, higher rates/slabs were provided for payment of Gratuity, categorising the employees in different classes as between 5 years to 10 years, 10 years to 15 years, 15 years to 20 years and above 20 years, with a slanting graph to the higher side as to the number of days to be reckoned for the purpose of payment of Gratuity as above. In the case of persons who are having the service of upto 5 to 10 years, the Gratuity W.A.No.215/2012 -5- agreed to be paid was 15 days' wages and this being the position, it being the statutory minimum in terms of the Payment of Gratuity Act, the divisor had to be worked out in terms of Section 4(2) of the said Act and the law declared by the Apex Court in **Jeewanlal Ltd.** 's case (supra) thus reckoning the divisor as '26'. But, in respect of others, the number of days to be reckoned being higher and that higher benefits were being paid in terms of the settlement (which is much higher than the benefit of gratuity payable under the Act), the Company was perfectly justified in adopting the divisor of '30'. A table has also been given in this regard (which appears at page 72) where the particulars of the employees, the last drawn salary, the years of service, the divisor reckoned and the amount payable have been clearly mentioned. This being the position, the Labour Court was perfectly right in dismissing the claim, which has been correctly upheld by the learned Single Judge as well, submits the learned counsel. 7. Coming to the terms of Ext.R1(c) Settlement, the compensation was agreed to be paid in the following terms: “The Company will pay closure compensation to all the W.A.No.215/2012 -6- - permanent workmen of the Company on its rolls on the date of this settlement, including Trainees and Probationers, which will be as follows: - a) All the permanent workmen of the Company at Mavoor covered by this Settlement will be paid a lump sum amount of 27,500/- per person.₹ - b) They will be paid further compensation at the rate of 40 days' wage/salaries for every completed year of service or part thereof in excess of six months up to the date mentioned in Clause (1) above and thereafter also at the rate of 40 days' wages/salaries for every year of balance service until their normal date of retirement at the current rate of wages/salaries. - (c) Computation of the amounts payable as aforesaid will be based on the Salary/Wages as on 30.6.2001 and on the mode of computation of daily wages/salary followed for payment of Gratuity and the amounts so computed will be paid on or before 23[rd] July, 2001. - (d) In the case of 16 (sixteen) Trainees and Probationers, the total compensation payable shall not be less than 1,00,000/- (Rs. One Lakh only).”₹ 8. Under Clause (c), reference, of course, is made to the mode of computation of daily wage with reference to the course followed for payment of Gratuity. As such, the question is, what is the course that is followed by the Company for payment of W.A.No.215/2012 -7- Gratuity, i.e, whether it was in accordance with the terms of Payment of Gratuity Act or something better, based on the agreement or Settlement, if any. 9. There is no dispute with regard to the execution of Ext.R1(d) Settlement, which obviously provides for a better Scheme for payment of Gratuity than the extent payable under the Payment of Gratuity Act, 1972. Paragraph 16 of the said settlement deals with the terms, which are reproduced below for convenience of reference. ## “16. **GRATUITY** The existing Gratuity Scheme will continue with the following changes:- a) Payment The payment of Gratuity amount to the Staff covered by this Settlement shall be as under:- Duration of Service Gratuity rate for each year of service i) 5 to 10 years 15 days' Salary inclusive of DA ii) 10 to 15 years 20 days' Salary inclusive of DA iii) 15 to 20 years 23 days Salary inclusive of DA if) Over 20 years One month's Salary inclusive of DA (b) In the case of Staff, who is dismissed/discharged from service on the ground of misconduct involving theft, fraud and manipulation, he will be paid only 75% of the Gratuity due to him.” From the above, it is very clear that, in respect of persons having W.A.No.215/2012 -8- a service of 5 to 10 years, the rate of Gratuity payable for every completed year of service will be 15 days' salary, inclusive of DA and once a person crosses 10 years, it is 20 days' salary inclusive of DA (upto 15 years); whereas in respect of persons having still higher service, it will be 23 days' salary inclusive of DA (upto 20 years); while in respect of persons having more than 20 years of service, it will be one month's salary inclusive of DA. On going through the records, it is seen that, in respect of persons having service of 5 to 10 years, even as per the agreed terms by virtue of Ext.R1(d), Gratuity could only be 15 days' wages, inclusive of DA. This, obviously, is the minimum level as envisaged under Section 4(2) of the Payment of Gratuity Act, 1972. Under such circumstances, the 'per day wage' definitely has to be worked out in the manner as specified by the Apex Court in **Jeewanlal Ltd.** 's case (supra) reckoning a divisor of '26' and not '30'. It was accordingly, that the 1[st] respondent Company had worked out the amount payable in respect of such persons, as given in the Table mentioned already. But coming to other groups of employees, by virtue of different slabs/rates mentioned in Ext.R1(d), stipulating to reckon higher number of days in respect of every completed W.A.No.215/2012 -9- year of service, over 10 years upto 15 years, between 15-20 and above 20 years, it is much more than the minimum level envisaged under the Payment of Gratuity Act. The law declared by the Apex Court directing to reckon '26' as the divisor, to be in conformity with the relevant provisions of the Act, was to ensure minimum payment envisaged under the Act, which is not applicable to the case, when it comes to payment of Gratuity on higher terms, based on a contract. 10. There is a contention for the petitioners that the 'per day wage' had to be calculated as per the course followed for payment of Gratuity and what was actually being practised by the Company was by reckoning the divisor of '26'. Reliance is sought to be placed on Ext.P5, where in respect of the employee concerned having a total service of 32 years, computation is effected with reference to the agreement dated 28.10.1988. The total Gratuity shown as payable is 66,671.75 and the Gratuity₹ has been reckoned as payable at the rate of '20' days' wages based on the position as it was prevailing prior to 1989. The figure would tally, only if the divisor is taken as '26' and not '30'. This Court does not find much force in the said submission in so W.A.No.215/2012 -10- far as the compensation payable pursuant to the closure of the Company has to be worked out based on Ext.R1(c) Settlement and if the terms are clear enough, no further divisor is necessary to have any wider interpretation. Even if there is a mistake in computing the Gratuity paid in respect of the concerned person as referred to above, the same will not replace law or the course which was being followed and the amount actually payable under the Act or under the Scheme, if any, would be something else. It is to be noted that the terminology used in Clause 2(c) mentioned above, with regard to the computation of 'per day wage' is not with reference to the Payment of Gratuity Act, 1972, but as followed in the Company for payment of Gratuity. What was followed in the Company is a separate Scheme, as borne by Ext.R1(d) and this provides for much more benefit than the minimum Gratuity in respect of several groups, enabling the workers to have the minimum Gratuity in terms of the Payment of Gratuity Act, with chance to gain more with reference to the actual number of years/service standing to their credit. It is in the said circumstance, that the 1[st] respondent Company has worked out the compensation as well in the case of such wage W.A.No.215/2012 -11- groups reckoning '26' as the divisor and multiplying the same by 15, whereas in the case of other groups, who were enjoying the benefit of Gratuity to a higher extent reckoning higher number of days, by adopting the divisor of '30'. This Court does not find anything wrong or arbitrary in the course pursued by the 1[st] respondent Company in this regard. The petitioners cannot be justified in aprobating and reprobating simultaneously, to have best from both the lots under the two different streams. We find support from the law declared by the Apex Court in **Beed District Central Co.op. Bank Ltd.** v. **State of Maharashtra & others (2006 (8) SCC 514)** . This has been followed by one of us [PRRM(J)] in **Julius** v. **Union of India (2009 (2) KLT 796)** as well. We find no merit in the appeal, which stands dismissed accordingly. Sd/- ## **P.R.RAMACHANDRA MENON** , **JUDGE** ## Sd/- **ANIL K.NARENDRAN, JUDGE** dsn True copy P.S. to Judge