Supreme Court of India

Shri Digvijay Woollen Mills Ltd. v. Mahendra Prataprai Buch

Decided 23 Jul 1980[1981] 1 S.C.R. 641980 INSC 132Civil Appeal No. 1088 of 1976, with Civil Appeal No. 480 of 1977Bench: A.C. Gupta, N.L. Untwalia

How fifteen days' wages are worked out for the gratuity of a monthly-rated employee.

Decided under an earlier law

The Court decided this case under the Payment of Gratuity Act, 1972. Section 164 of the Code on Social Security, 2020 repeals the Payment of Gratuity Act, 1972. The Court's words are shown below beside the Code provision this library compares them with. This library does not say whether the decision holds good under the Code: compare the two texts.

What the Court decided

Each point is this library's summary, followed by the Court's own words, checked word for word against the Supreme Court's typed copy of the judgment (JUDIS file 4500). The pinpoint gives the page of the Supreme Court Reports and the margin letter (A to H) printed beside the line where the words begin.

  1. The Court declined to interfere where the authorities had worked out a monthly-rated employee's fifteen days' wages on the footing that a month's wages are earned for 26 working days, not 30. It found that method not unreasonable or perverse, and did not decide whether another view was possible.

    relating to the mode of calculating fifteen days' wages of a monthly rated employee under section 4(2) of the Payment of Gratuity Act, 1972
    [1981] 1 S.C.R. 64, at 65 C · open the report at p. 65
    Ordinarily of course a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month followed by the Gujarat High Court cannot be called perverse. It is not necessary to consider whether another view is possible.
    [1981] 1 S.C.R. 64, at 67 B · open the report at p. 67
    We are not inclined to interfere with the decision of the High Court because it seems to us that the view taken by the authorities is not in any way unreasonable or perverse.
    [1981] 1 S.C.R. 64, at 67 D · open the report at p. 67

The earlier provision and the Code

Payment of Gratuity Act, 1972, section 4(2)

As quoted in the judgment: [1981] 1 S.C.R. 64, at 65 D · open the report at p. 65

For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned: Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account: Provided further that in the case of an employee employed in a seasonal establishment, the employer shall pay the gratuity at the rate of seven days' wages for each season.

Social Security Code, section 53(2)

Payment of gratuity In force

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages or such number of days as may be notified by the Central Government, based on the rate of wages last drawn by the employee concerned:

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:

Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season:

Provided also that in the case of an employee employed on fixed term employment or a deceased employee, the employer shall pay gratuity on pro rata basis.

Wording in common: 83% of the words, in the same order.

Much of the wording is the same, but the Code is a new enactment: read the whole Code provision before relying on the decision.

Sources

  • Supreme Court Reports, [1981] 1 S.C.R. 64, pp. 64–68: our copy, saved from the Supreme Court's SCR portal, which gives no fixed link to the file.
  • Typed copy of the judgment (JUDIS file 4500): official copy · our copy. The quotations are checked against this text.
  • The Payment of Gratuity Act, 1972 (No. 39 of 1972), English and Hindi: Ministry of Labour & Employment copy · our copy. An earlier provision above is shown as the Court quoted it.

SHA-256 fingerprints of every file are on the sources page.

Official text reproduced from the Gazette of India, India Code and State Government sources. This is not legal advice; check the source PDF before relying on any provision.