High Court of KeralaSingle JudgeDisposition: WP6510/2011 dismissed; WP27399/201...

W.P.(C) Nos. 6510/2011 and 27399/2011, High Court of Kerala at Ernakulam

Case / Petition Number:WP(C) Nos. 6510/2011 & 27399/2011

Case Details & Bench

Court
High Court of Kerala
Hon'ble Judges
  • Amit Rawal
Judgment Date
2023-07-05
Court Decision / Holding
This order disposes of two writ petitions. WP6510/2011 is dismissed, affirming the controlling and appellate authorities’ conclusions on gratuity entitlement. WP27399/2011 is allowed, holding that (i) workers who served before 1993 are entitled to gratuity calculated on seven days’ wages (with the Forum’s 1993 settlement forming a basis), and (ii) those after 1993 are entitled to fifteen days’ wages through the Forum, with wages to be computed on basic pay only (excluding various allowances). The court also clarifies that allowances such as Dearness, Cement, and Steel are not to be treated as wages under Section 2(1)(s) of the Payment of Gratuity Act, and that the Gratuity Controller’s jurisdiction remains limited; disputes about status should be pursued through other authorities. The decision modifies Exts.P7, P9, P13, and P14 accordingly and directs that gratuity be calculated as described.
Final Disposition
Disposition: WP6510/2011 dismissed; WP27399/2011 allowed. The appellate/controlling authority verdicts are modified; gratuity for pre-1993 period is seven days’ wages (based on basic pay) and for post-1993 period is fifteen days’ wages; allowances are excluded from wages; 1993 settlement does not bind all workers where not universally signed; judgment clarifies that certain prior judgments are limited and that jurisdiction of gratuity authorities remains restricted.

Parties to the Case

Appellants / Petitioners

  • John Sebastian
  • Mathew Banaband
  • Thobias Antony Thykoottathil
  • John Victor Nadivulayyathu
  • Pious Vellarian
  • Dominic Nicholas
  • George John
  • Antony Augustine
  • Paulose Kunju Vareeth
  • Alexander Karlose
  • Christopher Shakes
  • John Joseph (13th petitioner)
  • John Joseph (Legal Heirs of Late John Joseph)
  • Philadilise George
  • Magdalana
  • Justin
  • Saclax
  • Rini
  • Lusy Christopher
  • Cherupushpam.J
  • Jose.J
  • Thresia.J
  • Noble.J
  • Deric.J
  • Secretary, Indian Rare Earths Loading Unloading Workers Welfare Forum (as petitioner in WP27399/2011)

Respondents

  • Appellate Authority under the Payment of Gratuity Act, 1972 and Regional Labour Commissioner (C), Cochin
  • The General Manager, Indian Rare Earths Limited, Chavara, Kollam
  • The President IRE Loading and Unloading Workers Welfare Forum IRE Limited, CHAVARA, Kollam
  • The Secretary, IRE LOADING AND UNLOADING WORKERS WELFARE FORUM IRE LIMITED, CHAVARA, Kollam
  • Antony Augustine
  • Poulose Kunju Vareeth
  • John Joseph
  • Alexander Karlose
  • Christopher Shakes
  • Phildilise George
  • John Joseph (Cherupushpam Mandiram)
  • The Controlling Authority under the Payment of Gratuity Act, 1972 (Assistant Labour Commissioner (Central), Thiruvananthapuram)
  • The Appellate Authority under the Payment of Gratuity Act (Regional Labour Commissioner, Central, Kakkanad)

Legal Representation & Advocates

Counsels for Petitioners

  • • SRI.N.DHARMADAN (SR.)
  • • D.P.RENU
  • • V.R.LAKSHMI(K/739/2016)

Counsels for Respondents

  • • SRI.ARUN AJAY SANKAR
  • • SRI.P.BENNY THOMAS
  • • SRI.K.JOHN MATHAI
  • • SRI.E.K.NANDAKUMAR
  • • SRI.N.DHARMADAN (SR.)
  • • D.P.RENU

Case Synopsis & Summary

This judgment disposes of two writ petitions filed by retired loading and unloading workers of Indian Rare Earths Limited (IRE) challenging orders of the Appellate Authority under the Payment of Gratuity Act, 1972 and the Controlling Authority. The petitioners sought gratuity calculated at 15 days’ wages for every completed year, factoring in basic pay plus various allowances (Dearness, Cement, Steel, etc.), arguing that the 1993 settlement between the workers’ Forum and IRE prescribed a regime prioritising higher wages post-formation of the Forum. The controlling authority had rejected these claims, relying on the 1993 settlement (which provided 7 days’ wages prior to 1993 and 15 days’ wages after) and the broader definition of wages, excluding certain allowances. The Forum contended that the 1993 settlement binded the workers, while the respondents argued the settlement was not binding on all workers due to lack of signatures. The court discusses previous judgments, including Ext. P1 (OP No.798/1995) which granted 15 days in some circumstances, and 2009/2018 decisions that treated the pre/post-1993 regimes differently. Ultimately, the court dismisses WP6510/2011 and allows WP27399/2011, modifying the authorities’ orders: gratuity must be calculated with seven days’ wages for pre-1993 service and 15 days’ wages thereafter, and only basic pay should be counted as wages (excluding certain allowances). It also clarifies the limited jurisdiction of gratuity authorities and that certain settlements may be per incurium if not all workers were consulted.

Provisions of Law Cited

Payment of Gratuity Act, 1972Section 4(2) of the Payment of Gratuity Act, 1972Section 2(1)(s) – Definition of wagesIndustrial Disputes ActContract Labour (Regulation and Abolition) Act

Legal Doctrines & Maxims

  • Judgment in per incuriam
  • Limited / restricted jurisdiction of the Gratuity Controller
  • Judgment in rem (conceptual reference)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contended that gratuity must be computed at 15 days’ wages for every completed year, including wages from basic pay and accrued allowances such as Dearness, Cement, and Steel; they challenged the 1993 settlement as binding only on some members and argued that the 1993 settlement could not override statutory norms, particularly since the agreement lacked signatures of the entire worker body. They relied on Ext. P1 (O.P.798/1995, 21.02.2002) recognizing higher gratuity in some contexts and on prior judgments that directed calculating gratuity with more favorable terms. They also argued that the Gratuity Controller’s jurisdiction is limited to determining status and that the inclusion of allowances in wages should be embraced with caution; they urged the court to declare entitlement for gratuity based on 7 days prior to 1993 and 15 days after, with wages computed on basic pay.

Contentions of Respondents

The respondents argued that the 1993 Settlement (20.11.1993) governs the Forum members and that seven days’ wages prior to 1993 and 15 days after 1993 reflect the settled position, so gratuity calculations must follow that regime. They contended that wages must be computed strictly under the statutory definition (basic pay) and not include allowances, and that disputes over employer-employee status fall outside the Gratuity Controller’s remit, requiring other authorities (Industrial Disputes Act/Contract Labour Act) to adjudicate. They asserted Ext. P1 is not a binding precedent on all pre- and post-1993 situations and that judgments pre-dating the present framework cannot override the statute. They also argued that the 7-day pre-1993 standard and the 15-day post-1993 standard reflect a negotiated compromise that should be respected.

Cited Precedents (3)

Case NameCitationTreatmentExplanation
O.P. 798/1995O.P.798/1995Partly Overruled / LimitedExt P1 (2002) awarding 15 days was treated as per incurium due to not considering the 1993 settlement; its broad application is limited.
Food Corporation of India and Another v. V. Mohammed Manzil2008(1) ILR 158PositiveHeld that contract employees under a contractor are not entitled to gratuity from the principal employer; cited to limit gratuity controller’s reach and to emphasize status-based determinations.
W.P.(C) No. 4999 of 2009W.P.(C) No. 4999 of 2009PositiveHeld that workers pre-1993 are entitled to gratuity computed on seven days’ wages and that gratuity must be calculated on basic pay; used to support the 7-day approach for pre-1993 service.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE AMIT RAWAL`** ## **`WEDNESDAY, THE 5[TH] DAY OF JULY 2023 / 14TH ASHADHA, 1945`** ## **`WP(C) NO. 6510 OF 2011`** ## **`PETITIONERS:`** - `1 JOHN SEBASTIAN SERIAL NO.12 PUTHUVEETTIL, KARITHURA, CHAVARA, KOLLAM.` - `2 MATHEW BANABAND SERIAL NO.10 NADUVILAZHIKATHU KOCHU VEEDU, KARITHURA,CHAVARA, KOLLAM.(*DIED. LR IMPLEADED)` - `3 THOBIAS ANTONY THYKOOTTATHIL KARITHURA, CHAVARA, KOLLAM.(*DIED. LR IMPLEADED)` - `4 JOHN VICTOR NADIVULAYYATHU VEEDU KARITHURA, CHAVARA, KOLLAM.` - `5 PIOUS VELLARIAN SERIAL NO.29 GRECI MANDIRAM, KULANGARABHAGOM, CHAVARA, KOLLAM. (*DIED. LR IMPLEADED)` - `6 DOMINIC NICHOLAS MEMBER SHIP NO.80 REJI COTTAGE, KARITHURA, CHAVARA, KOLLAM.(*DIED. LR IMPLEADED)` - `7 GEORGE JOHN MEMBER SHIP NO.31. KOICKALAZHIKATHU VEEDU, KOVILTHOTTAM, CHAVARA, KOLLAM.` - `8 ANTONY AUGUSTINE, VADAKKADATHU, PADINJATTATHIL, KULANGARA BHAGOM, CHAVARA, KOLLAM.` - `9 PAULOSE KUNJ VAREETH, MANASSERIL HOUSE, 132, MINING KOVILTHOTTAM, KOLLAM.(*DIED. LR IMPLEADED)` - `10 ALEXANDER KARLOSE, MAMPARAMBIL, KARITHURA, CHAVARA, KOLLAM.(*DIED. LR IMPLEADED)` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -2- ``` - `11 CHRISTOPHER SHAKES, VADAKKEDATHUTHOPPIL, KULANGARABHAGOM, CHAVARA, KOLLAM.(*DIED. LR IMPLEADED)` - `12 JOHN JOSEPH MEMBERSHIP NO.105 CHERUPUSHPAMANDIRAM, KARITHURA, CHAVARA, KOLLAM.(*DIED. LR IMPLEADED)` - `13 JOHN JOSEPH MEMBERSHIP NO.89 KOCHUPETHURU PURAYIDOM, KAITHURA, CHAVARA, KOLLAM.(` **`*DIED`** `) (` **`*`** `LEGAL REPRESENTATIVES OF LATE JOHN JOSEPH (13TH PETITIONER) ARE IMPLEADED AS ADDITIONAL P15 TO P18 AS PER ORDER IN IA NO.19207/11 DATED 3.12.2011)` - `14 PHILDILISE GEORGE, KUNNIL PADEETHATHIL, KARITHURA, CHAVARA, KOLLAM.` - `ADDL.15 MAGDALANA` ``` W/O.LATE JOHN JOSEPH (13TH PETITIONER), KOCHUPERETHIRU PURAYIDAM, KARITHURA, CHAVARA, KOLLAM. ``` ``` *ADDL.16JUSTIN S/O. LATE JOHN JOSEPH, KOCHUPERETHIRU PURAYIDAM, KARITHURA, CHAVARA, KOLLAM. ``` ``` *ADDL.17SACLAX S/O. LATE JOHN JOSEPH, KOCHUPERETHIRU PURAYIDAM, KARITHURA, CHAVARA, KOLLAM. ``` ``` *ADDL.18RINI D/O. LATE JOHN JOSEPH, KOCHUPERETHIRU PURAYIDAM, KARITHURA, CHAVARA, KOLLAM. ``` ``` *ADDL.19LILLY MATHEW, W/O.LATE MATHEW (LEGAL HEIR OF 2ND PETITIONER) RESIDING AT STERVIN DALE, EDATHURUTHU, CHAVARA-P.O., KOLLAM. ``` - `ADDL.20 AGNES.A, W/O.LATE THOBIAS` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -3- ``` ``` (LEGAL HEIR OF PETITIONER), RESIDING AT THIKKOOTTATHIL, KULANGARABHAGAM, CHAVARA-P.O., KOLLAM. ``` - `ADDL.21 JAIN PIOUS, W/O.PIOUS VELLARIAN (LEGAL HEIR OF 5TH PETITIONER), RESIDING AT GRACY MANDIRAM, KULANGARABHAGAM, CHAVARA-P.O., KOLLAM.` - `ADDL.22 PUSHPAMA DOMINIC, W/O.LATE DOMINIC NICHOLAS (LEGAL HEIR OF 6TH PETITIONER) RESIDING AT REJI COTTAGE, KARITHURA, CHAVARA-P.O., KOLLAM.` - `ADDL.23 ELIZEBATH, W/O.LATE PAULOSE KUNJU VAREETH (LEGAL HEIR OF 9TH PETITIONER) MENASSERIL VEEDU, KARITHURA(EDATHURUTHU), CHAVARA-P.O., KOLLAM.` - `ADDL.24 STELLA, W/O.LATE ALEXANDER KARIOS (LEGAL HEIR OF 10TH PETITIONER), MAMPARAMBIL, KARITHURA, CHAVARA-P.O., KOLLAM.` - `ADDL.25 LUSY CHRISTPHER, W/O.LATE CHRISTPHER SHAKES(LEGAL HEIR OF 11TH PETITIONER) VADAKKEDATH THOPPIL, KULANGARABHAGAM, CHAVARA-P.O., KOLLAM.` - `ADDL.26 CHERUPUSHPAM.J,` - `D/O.LATE JOHN JOSEPH (LEGAL HEIR OF 12TH PETITIONER) RESIDING AT CHERUPUSHPA MANDIRAM, KARITHURA, CHAVARA-P.O KOLLAM.` - `ADDL.27 JOSE.J, S/O.LATE JOHN JOSEPH (LEGAL HEIR OF 12TH PETITIONER) RESIDING AT CHERUPUSHPA MANDIRAM, KARITHURA, CHAVARA-P.O KOLLAM.` - `ADDL.28 THRESIA.J, D/O. LATE JOHN JOSEPH (LEGAL HEIR OF 12TH PETITIONER) RESIDING AT CHERUPUSHPA MANDIRAM, KARITHURA, CHAVARA-P.O KOLLAM.` ``` WP(C) NOs. 6510 & 27399 OF 2011 -4- ``` - `ADDL.29 NOBLE.J, S/O. LATE JOHN JOSEPH (LEGAL HEIR OF 12TH PETITIONER) RESIDING AT CHERUPUSHPA MANDIRAM, KARITHURA, CHAVARA-P.O KOLLAM.` - `ADDL.30 DERIC.J, S/O. LATE JOHN JOSEPH (LEGAL HEIR OF 12TH PETITIONER) RESIDING AT CHERUPUSHPA MANDIRAM, KARITHURA, CHAVARA-P.O., KOLLAM. (` **`*`** `LEGAL REPRESENTATIVES OF THE LATE PETITIONERS 2,3,5,6,9,10,11 AND 12 ARE IMPLEADED AS ADDITIONAL PETITIONERS 19 TO 30 IN WP(C) AS PER ORDER DATED 15.09.2023 IN IA NO.1 OF 2023)` ``` BY ADVS. SRI.N.DHARMADAN (SR.) D.P.RENU V.R.LAKSHMI(K/739/2016) ``` ## **`RESPONDENTS:`** - `1 APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 AND REGIONAL LABOUR COMMISSIONR (C), COCHIN` - `2 THE GENERAL MANAGER INDIAN RARE EARTHS LIMITED, CHAVARA, KOLLAM.` - `3 THE PRESIDENT IRE LOADING AND UNLOADING WORKERS WELFARE FORUM IRE LIMITED, CHAVARA, KOLLAM.` - `4 THE SECETARY, IRE LOADING AND UNLOADING WORKERS WELFARE FORUM IRE LIMITED, CHAVARA,, KOLLAM.` ``` BY ADVS. SRI.ARUN AJAY SANKAR, SR.GOVERNMENT PLEADER SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.E.K.NANDAKUMAR ``` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` **==> picture [22 x 9] intentionally omitted <==** ``` SRI.PAULSON C.VARGHESE ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.07.2023, ALONG WITH WP(C).27399/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -6- ``` ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE AMIT RAWAL ``` ``` WEDNESDAY, THE 5[TH] DAY OF JULY 2023 / 14TH ASHADHA, 1945 WP(C) NO. 27399 OF 2011 ``` ## **`PETITIONER:`** ``` THE SECRETARY, INDIAN RARE EARTHS, (IRE) LOADING UNLOADING WORKERS WELFARE FORUM, CHAVARA, KOLLAM. ``` ``` BY ADVS. SRI.PAULSON C.VARGHESE SRI.BABY JOSEPHKOCHI ``` ## **`RESPONDENTS:`** - `1 ANTONY AUGUSTINE, VADAKKADATHU PADINJATTATHIL, KULANGARA BHAGAM, CHAVARA, KOLLAM - 691 583.` - `2 POULOSE KUNJU VAREETH, MANASSERIL HOUSE, 132, MINING, KOVILTHOTTAM, KOLLAM - 691 001.` - `3 JOHN JOSEPH, MEMBERSHIP NO.89, KOCHUPETHURU PURAYIDAM, KARITHURA, CHAVRA, KOLLAM - 691 583.` - `4 ALEXANDER KARLOSE, MAMPARAMBIL HOUSE, KARITHURA, CHAVARA, KOLLAM - 691 583.` - `5 CHRISTOPHER SHAKES, VADAKKEDATHUTHOPPIL, KULANGARABHAGOM, CHAVARA, KOLLAM - 691 583.` ``` WP(C) NOs. 6510 & 27399 OF 2011 -7- ``` - `6 PHILDILISE GEORGE, KUNNIL PADEETTATHIL, KARITHURA, CHAVARA, KOLLAM - 691 583.` - `7 JOHN JOSEPH, CHERUPUSHPAMANDIRAM, KARITHURA, CHAVARA, KOLLAM - 691 583.` - `8 THE GENERAL MANAGER, INDIAN RARE EARTHS LIMITED, CHAVARA, KOLLAM.` - `9 THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 (ASSISTANT LABOUR COMMISSIONER (C), TRIVANDRUM.` - `10 THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 (REGIONAL LABOUR COMMISSIONER (C)), KAKKANAD.` ``` BY ADVS. SRI.ARUN AJAY SANKAR, SR.GOVERNMENT PLEADER SRI.N.DHARMADAN (SR.) D.P.RENU ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.07.2023, ALONG WITH WP(C).6510/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -8- ``` ## **`JUDGMENT`** ``` [WP(C) Nos.6510/2011, 27399/2011] ``` This order of mine shall dispose of two writ petitions W.P.(C) Nos.6510 of 2011 and 27399 of 2011. 2. W.P (C) No. 6510 of 2011 on behalf of the workers has been filed assailing the order of the Appellate authority under the Payment of Gratuity Act, 1972 dated 28.07.2010, Exts.P13 and P14, with a further prayer for mandamus to modify order of the controlling authority dated 28.08.2008 Exts.P7 and Ext.P9 and a declaration that petitioners are entitled to get gratuity at a rate to be fixed based on fifteen(15) days salary and wages for every completed year of service by taking into account basic pay, Dearness allowance, Steel allowance, Cement Allowance and Steel unloading charge, Cement unloading charge, Holiday wages, conveyance allowance and hardship allowances in accordance with the provisions of the payment of Gratuity Act, 1972 notwithstanding any of the adverse finding and ``` WP(C) NOs. 6510 & 27399 OF 2011 -9- ``` conclusions in the order of the appellate authority impugned, Ext.P14. 3. All the petitioners were former loading and unloading workers of erstwhile Indian Rare Earths Limited, Chavara, Kollam on different period. IRE Loading and Unloading Workers Welfare Forum (hereinafter referred to as ‘IRE Forum’, for short) was formed and registered in 1988 for the welfare and equitable work distribution among loading and unloading workers. Prior to the formation of the Forum, workers were paid gratuity by taking into consideration seven(7) days wages for every completed year and the company paid the gratuity at the rate of 15 days wages for every completed year after the formation of Forum in 1988. One D.Nepolian, former employee of the second respondent preferred O.P.No.798 of 1995 wherein he had claimed the gratuity under Section 4(2) of the Payment of Gratuity Act by applying the multiplier fifteen(15) which was allowed by this Court by judgment ``` WP(C) NOs. 6510 & 27399 OF 2011 -10- ``` dated 21.02.2002 Ext.P1. The said judgment has attained finality. 4. All the petitioners preferred claims before the controlling authority for gratuity taking into consideration 15 days of wages. The contesting parties filed an objection by raising issue of maintainability and also relied on a settlement dated 20.11.1993. All the claims were tried together by the controlling authority. Parties to the lis were permitted to lead evidence in support of the respective claims. 5. Controlling authority vide two orders dated 28.08.2008 Exts.P7 and P9 rejected the case of the petitioners by taking into consideration the settlement of 1993 on the ground that prior to the settlement, the employees of erstwhile Indian Rare Earth were entitled to gratuity by calculating seven(7) days of wages for every completed year instead of fifteen(15) days as specified in the Act, but were also granted allowances like Dearness, Cement and Steel allowances. Aggrieved ``` WP(C) NOs. 6510 & 27399 OF 2011 -11- ``` of the aforementioned order both the forum and the workmen preferred two statutory appeals. Controlling Authority vide impugned orders Exts.P13 and P14 accepted the plea preferred by the Forum established as per the settlement of 1993 and rejected the appeal of workmen. It is in that background the present writ petition has been filed. 6. It is pertinent to mention here that there are other two writ petitions, W.P.(C)Nos.27399 of 2011 and 2500 of 2012 on behalf of the Forum challenging the orders of appellate authority dated 28.08.2008 whereby while modifying the order of the controlling authority ordered payment of gratuity for the period prior to 1993 included Dearness, Cement and Steel Allowances. The contention of the Forum is that the definition of wages provided under Section 2(s) of the Payment of Gratuity Act would not include the allowances as ordered, except for basic wages. 7. On the other hand, learned counsel ``` WP(C) NOs. 6510 & 27399 OF 2011 -12- ``` representing the workers submitted that the settlement dated 20.11.1993 relied upon by the erstwhile management would not have any impact upon the workers in the absence of any signatures of their representative or elected body. It was signed only by one person which would not have any binding effect on all the erstwhile workers. The allowances granted by the controlling authority in favour of the workmen are perfectly legal and justified and cannot be faulted with, in view of the judgment Ext.P1 which was a matter of similar situated employees rendered the services prior to 1993 who have been ordered to obtain gratuity by taking into consideration of fifteen(15) days of wages per year. That judgment has become final in the absence of any challenge. Therefore the order of the appellate authority be set aside and the writ petition may be allowed in terms of the findings rendered by this Court in judgment Ext.P1. 8. Per contra, Mr.E.K.Nandakumar assisted by ``` WP(C) NOs. 6510 & 27399 OF 2011 -13- ``` Ms.Pooja Menon on behalf of the 2[nd] respondent Indian Rare Earths Limited submitted that the controversy in the question is covered by the judgment of the Single Bench of this Court rendered in Writ Petition (C)No.4999 of 2009 dated 01.02.2018, wherein on consideration of the material i.e., provisions of the settlement of 1992, it has been held that the workers who have rendered the service prior to 1993 would be entitled to gratuity by taking into consideration seven(7) days of services in a month per year and not fifteen(15) days. It is also been held that the gratuity has to be assessed on Basic Pay without including other allowances as ordered by the appellate authority. The judgment Ext.P1 is the judgment per incurium for it has not taken into consideration the settlement ibid. Settlement is of 1993, workers cannot at their convenience lay challenge to the same by filing petitions in the year 2002 and 2006 respectively and urged this Court for dismissal of the writ petition. ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` **==> picture [30 x 9] intentionally omitted <==** 9. I have heard learned counsel representing the petitioners in W.P(C).No.6150 of 2011 preferred on behalf of the workers assailing the order of the appellate authority and Sri.Paulson C. Varghese representing the Forum in writ petition bearing No.27399 of 2011 wherein challenge has been laid to the order of the appellate authority with regard to the inclusion of other allowances for the purpose of calculating the gratuity and taking into consideration seven days of service per every completed year. 10. All the workers rendered the service in respondent No.2 prior to the settlement i.e., 1993. It would be axiomatic to extract the relevant portion of the terms and conditions of the settlement dated 20.11.1993. ## “Term of Settlement 1) The Forum will pay an ex-gratia payment in lieu of gratuity to those members retired/resigned/died on or after 1-4-1993 at the following rates: a) 7 days’s wages for the services rendered with independent Contractors prior to the ``` WP(C) NOs. 6510 & 27399 OF 2011 -15- ``` formation of the IRE Loading Unloading Workers Welfare Forum, and - b) 15 days’s wages for the services rendered after the formation of the Forum. 2) In view of the above ex-gratia payment in lieu of gratuity, the members or their unions will not claim gratuity in future, and 3) If at all by any reason if any authority decides in future that the Forum members are eligible for gratuity, then the ex-gratia payment made will be adjusted against gratuity.” 11. On perusal of the above, it is evident that the members who worked prior to 1993 would be entitled to seven days of wages of service rendered with independent contractors prior to the formation of IRE Loading and Unloading Workers Welfare Forum and fifteen (15) days wages for services rendered after the formation of the Forum. The question which now evolves for adjudication is whether all the workers worked in the company through contractors. In order to obviate the grievances of workers, a Forum was established to supply the man power to the company for facilitation of ``` WP(C) NOs. 6510 & 27399 OF 2011 -16- ``` the operations at work. Judgment Ext.P1 has been rendered on the basis of the facts but there is no reference of any settlement. It is settled law when the judgment has been passed without taking into consideration the other factors it cannot be treated as a judgment in rem but it would be judgment in per incurium. 12. On the contrary, by considering the terms and conditions of the settlement, similar controversy came for consideration before the Single Bench of this Court in the judgment in W.P.(C)No.4999 of 2009 cited supra on behalf of Mr.E.K.Nandakumar, learned Senior Counsel. Paragraph Nos.4, 5, 8 and 9 of the aforesaid judgment reads as follows: “4. In the impugned order itself, it is referred that the petitioners admitted that they had worked under the contractor in 1971 and in 1990. The learned counsel for the petitioners submits that there was no such admission. Anyhow, the question is whether when there is a serious question regarding the status of employer-employee relationship, whether the ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -17- ``` Gratuity Controller has jurisdiction to determine such relationship. 5. The stand of the first respondent is that the petitioners might have worked under the contractor and there was no employer-employee relationship. The case of the petitioners is that they worked under the first respondent directly. If the petitioners had worked directly under the first respondent, the formation of the Society and payment of gratuity by the Society does not arise. Assuming that the Society was formed as such to pass over the responsibility of the first respondent, there must be some evidence to show that there was an employer-employee relationship between the petitioners and the first respondent. The Society, admittedly, came into existence only in the year 1990. 8. The jurisdiction of the Gratuity Controller is limited. No doubt, the Gratuity Controller has a power to consider whether a particular claimant before him is an employee or not. However, when there is a bona fide dispute as to the status, which cannot be determined through the process otherwise than envisaged under the law. 9. This Court in **Food Corporation of India and Another v. V.Mohammed Manzil** ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -18- ``` **and Others [2008(1) ILR 158]** held that a contract employee under the contractor is not entitled to gratuity from the principal employer. That means the petitioners will have to prove that they had worked under the first respondent directly. If the employer-employee relationship will have to be established between the parties, under any relevant provisions of law like Industrial Disputes Act and the Contract Labour (Regulation and Abolition) Act etc., the Gratuity Controller cannot assume jurisdiction to decide such dispute. Considering the nature of the power conferred upon the Gratuity Controller, this Court is of the view that such disputes are beyond the scope of determination of the Gratuity Controller and the petitioners will have to move such other competent authority to determine their status and it is only after such declaration of the status as employees, they can claim gratuity from the first respondent. Therefore, this Court is of the view that both authorities had rightly rejected the claim of the petitioners. In fact, the Gratuity Controller had taken the view that the petitioners worked under the contractor and therefore, past service under the contractor cannot be reckoned for the purpose of determination of gratuity. Since the petitioners status has been disputed, this Court is of the view that, that question can be left open and the petitioners are free to raise their ``` WP(C) NOs. 6510 & 27399 OF 2011 -19- ``` objection in appropriate forum as to their status. The observation that the petitioners had worked under the contractor, therefore, will not have any significance if the petitioners want to have such declaration before the competent authority as to their status.” 13. On cumulative reading of the aforementioned, it is settled law that this Court by taking into consideration the terms and conditions of the settlement held that the workers working in the organization/ company i.e., respondent No.2 through contractors would be entitled to the gratuity by taking into consideration seven(7) days of wages from the contractors and after 1993, fifteen (15) days from the Forum. In any case the company was not held responsible for payment of gratuity. 14. In this view of the matter, I am of the view that there is no force on merit in the W.P.(C) No.6510 of 2011. Writ petition is dismissed by upholding the order of controlling authority as well as the appellate authority to the extent of rendering findings qua entitlement of ``` WP(C) NOs. 6510 & 27399 OF 2011 -20- ``` Gratuity at the rates and from whom. 15. Viz-a-viz the grant of benefits i.e., Dearness, Steel and Cement allowances cannot be construed to be 'wages' as specified in Section 2(s) of the Payment of Gratuity Act. For the sake of brevity, definition of wages under Section 2 of the Payment of Gratuity Act reads as under: ## “ **Section 2(i)(s) in The Payment of Gratuity Act, 1972** (s) “wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.” 16. I find force in the argument of Mr.Paulson C.Vaghese representing the petitioner Forum in Writ petition (C)No.27399 of 2011 assailing the finding of the controlling authority to the limited extent of awarding such benefits as the appellate authority could not have added such allowances for the purpose of calculation of gratuity. Gratuity is purely on the basis of pay and not ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` **==> picture [30 x 10] intentionally omitted <==** other allowances. It cannot partake the character of wage adding the allowances as in the case of the definition of wages under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Thus the finding of the controlling authority in the impugned order viz a viz granting the benefits to the workers regarding clearances are struck down. The order of controlling authority shall be modified. W.P(C).No.27399 OF 2011 stands allowed. It is made clear that the workers who have worked before 1993 would be entitled to gratuity by calculating the wages of seven (7) days per year from the contractor and thereafter fifteen(15) days from the Forum. ``` Sd/- ``` ``` AMIT RAWAL JUDGE ``` ``` VV ``` ``` APPENDIX OF W.P.(C) NO.6510/2011 ``` ## **`PETITIONER’S EXHIBITS`** - `EXHIBIT P1` ``` TRUE COPY OF THE JUDGMENT DATED 21.02.2002 IN O.P.798/1995. ``` - `EXHIBIT P2` - `TRUE COPY OF THE PRELIMINARY OBJECTION PETITION DATED 27.08.2003 FILED BEFORE THE AUTHORITY.` - `EXHIBIT P3 TRUE COPY OF THE JUDGMENT DATED 13.03.2007 IN WRIT APPEAL NO.1317/2004.` - `EXHIBIT P4 TRUE COPY OF LETTER NO.ADM/15107/88/6356 DATED 29.07.1988 ISSUED BY THE 2ND OPPOSITE PARTY.` - `EXHIBIT P5 TRUE COPY OF BYE LAW OF THE I.R.E LOADING UNLOADING WORKERS WELFARE FORUM.` ``` EXHIBIT P6TRUE COPY OF MEMORANDUM OF SETTLEMENT DATED 20.11.1993 ``` - `EXHIBIT P7` - `TRUE COPY OF ORDER DATED NO.28.08.2008 BY ASST.LABOUR COMMISSIONER.` - `EXHIBIT P8` ``` TRUE COPY OF THE APPEAL MEMORANDUM FILED BY THE 2ND PETITIONER. ``` - `EXHIBIT P9 TRUE COPY OF ORDER DATED 28.08.2008 BY ASST.LABOUR COMMISSIONER.` - `EXHIBIT P10` - `TRUE COPY OF AN APPEAL MEMORANDUM FILED BY THE 13TH PETITIONER BEFORE THE AUTHORITY.` ``` EXHIBIT P11(a)TRUE COPY OF PAY SLIP OF THE 10TH PETITIONER. ``` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -23- ``` ``` EXHIBIT P11(b)TRUE COPY OF PAY SLIP OF-DO EXHIBIT P11(C)TRUE COPY OF PAY SLIP OF-DO ``` ``` EXHIBIT P12TRUE COPY OF THE ONE APPEAL MEMORANDUM DATED 4.11.08 FILED BY RESPONDENTS 3 & 4. ``` ``` EXHIBIT P13TRUE COPY OF A COMMON ORDER OF APPEALS DATED 28.07.2010 BY APPELLATE AUTHORITY. ``` ``` EXHIBIT P14TRUE COPY OF THE OTHER COMMON DISMISSAL ORDER OF SEPARTE APPEALS FILED BY RESPONDENT NOS. 3 AND 4 AGAINST PETITIONER NOS.8 TO 14 DATED 28.07.2010 ``` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -24- ``` ## **`APPENDIX OF WP(C) 27399/2011`** ## `PETITIONER EXHIBITS` ``` EXHIBIT P1TRUE COPY OF THE APPLICATION FILED BEFORE THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT 1972 (CENTRAL) THIRUVANANTHAPURAM. ``` - `EXHIBIT P2 TRUE COPY OF THE WRITTEN STATEMENT DATED 16.03.2007 FILED BEFORE THE CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT (ASST.LABOUR COMMISSIONER (C) TRIVANDRUM.` ``` EXHIBIT P3(A)TRUE COPY OF THE ORDER DATED 28.08.2008OFTHECONTROLLING AUTHORITYANDASSISTANTLABOUR COMMISSIONER (CENTRAL) IN GRATUITY APPLICATION GA NO.71/2006. EXHIBIT P3(B)TRUE COPY OF THE ORDER DATED 28.08.2008OFTHECONTROLLING AUTHORITYANDASSISTANTLABOUR COMMISSIONER (CENTRAL) IN GRATUITY APPLICATION GA NO.72/2006. EXHIBIT P3(C)TRUE COPY OF THE ORDER DATED 28.08.2008OFTHECONTROLLING AUTHORITYANDASSISTANTLABOUR COMMISSIONER (CENTRAL) IN GRATUITY APPLICATION GA NO.73/2006. EXHIBIT P3(D)TRUE COPY OF THE ORDER DATED 28.08.2008OFTHECONTROLLING AUTHORITYANDASSISTANTLABOUR COMMISSIONER (CENTRAL) IN GRATUITY APPLICATION GA NO.12/2007 EXHIBIT P3(E)TRUE COPY OF THE ORDER DATED 28.08.2008OFTHECONTROLLING AUTHORITYANDASSISTANTLABOUR ``` ``` WP(C) NOs. 6510 & 27399 OF 2011 ``` ``` -25- ``` ``` COMMISSIONER (CENTRAL) IN GRATUITY APPLICATION GA NO.32/2007 ``` ``` EXHIBIT P3(F) ``` ``` EXHIBIT P3(G) ``` ``` EXHIBIT P4 ``` ``` EXHIBIT P5 ``` ``` TRUE COPY OF THE ORDER DATED 28.08.2008OFTHECONTROLLING AUTHORITYANDASSISTANTLABOUR COMMISSIONER (CENTRAL) IN GRATUITY APPLICATION GA NO.33/2007 ``` - `TRUE COPY OF THE ORDER DATED 28.08.2008 OF THE CONTROLLING AUTHORITY AND ASSISTANT LABOUR COMMISSIONER (CENTRAL) IN GRATUITY APPLICATION GA NO.35/2007` ``` TRUE COPY OF THE MEMORANDUM OF APPEAL (GRATUITY APPEAL NO.26/08) DATED 04.11.2008 FILED BEFORE THE APPELLATE AUTHORITY UNDER THE PAYMENT GRATUITY ACT (REGIONAL LABOUR COMMISSIONER CENTRAL, KAKKANAD). ``` ``` TRUE COPY OF THE ORDER DATED 28.07.2010 OF THE APPELLATE AUTHORITY UNDER PAYMENT OF GRATUITY ACT (REGIONALLABOURCOMMISSIONER (CENTRAL) COCHIN IN GRATUITY APPEAL GA NO.25/08 TO 31/08. ```