Employees eligible for Gratuity for period before their employment is regularised- HC

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Employees Eligible For Gratuity For Period Before Their Employment Is Regularised Karnataka High Court
This order directed government bodies to pay gratuity amounts claimed by former employees from the time they were employed as daily wage earners till their employment was regularised.

The Karnataka High Court has refused to overrule an order passed by the Controlling Authority/ Appellate Authority under the Payment of Gratuity Act, 1972.

This order directed government bodies to pay gratuity amounts claimed by former employees from the time they were employed as daily wage earners till their employment was regularised.

Background of the Case: Respondents (workers) were initially employed as daily wage workers. The Government by its order regularised the services of respondent No.1 with certain cut-off dates.

On retirement from the services, the workers receive their pension amounts and gratuity. After their retirement, they submitted the applications before the Controlling Authority claiming that they were entitled to gratuity from the date of their induction as daily wage workers.

Base For Proceedings: The grounds raised were that the orders of the Controlling Authority, statutory appeal as provided under Section 7 of the Act lies. Therefore the petitions are not maintainable.

Case Highlights: The petitioners opposed the applications of respondent No.1 on the ground that they were Government employees and not employees under Section 2(e) of the Act.

Therefore the Controlling Authority has no jurisdiction to entertain such claims. In some of the cases, the petitioners preferred the appeals before the Appellate Authority. They also came to be dismissed. Following this, they approached the High Court.

The Controlling Authority lacked jurisdiction to hear such claims. The petitioners preferred to take their cases to the Appellate Authority in some cases. They were dismissed as well. After that, they went to the High Court. 

The second contention is that respondent No.1 were employees within the meaning of Section 2(e) of the Act for the period commencing from their induction as daily wage workers till their regularisation. Therefore the said period should have been taken into consideration as the qualifying period of service for the purpose of computing gratuity.

A single-judge bench of Justice K S Mudagal while refusing relief in a batch of petitions, said “There is no merit in the contention that on their regularisation into service, respondent No.1 loose benefit of the Act.”

The bench referring to section 2(e) of the act said, “Of course on their regularisation, respondent No.1 was governed by the Karnataka Civil Services Rules (KCSR) and they have received pension and gratuity on their retirement. However, admittedly the petitioners paid gratuity only covering the period from the date of their regularisation till their retirement on attaining superannuation.”

“While paying gratuity, the petitioners did not take into consideration the services rendered by respondent No.1 from the date of their appointment as daily wage workers till the date of their regularisation. During that period, respondent No.1 was not governed by the KCSR or for any other rules for payment of gratuity.”

Findings For the Case

Then it relied on Supreme Court and High Court judgments in the case, “The Controlling Authority considering the admissions of the petitioners’ witness regarding date of employment of respondent No.1 as daily wage workers.

“Their regularisation and non-payment of gratuity for the period they worked as daily wage workers and also referring to the judgments of this Court, rightly rejected the contention of the petitioners and passed the impugned orders.”

It added, “In some of the cases, the petitioners did not even file an appeal before the Appellate Authority on the ground that the Act is not applicable, therefore the order of the Controlling Authority was without jurisdiction.”
However, the court considered that some of the respondents had filed their claim applications after 10 years etc.

It said, “The petitioners also being Government bodies and dealing with taxpayers money, this Court finds it just and proper to modify the order only with regard to the date from which the petitioners are liable to pay the interest.”

Accordingly, it held, “The petitions are partly allowed. The impugned orders regarding payment of gratuity are confirmed. The petitioners are jointly and severally liable to pay the gratuity amount to respondent No.1 with interest thereon at 10% per annum from the date of the applications till the date of deposit.”

Order for the Case

The court, on the other hand, found that some of the respondents had filed their claim applications after ten years, and so on.

“This Court finds it just and proper to modify the order only with regard to the date from which the petitioners are liable to pay the interest,” it stated. 

As a result, it was decided, “The petitions have been partially granted. The contested orders for gratuity payment have been confirmed. The petitioners are jointly and severally liable to pay the gratuity amount to respondent No.1 with interest there on at 10 percent per annum from the date of the applications till the date of deposit.”  With Livelaw inputs

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