Supreme Court of India
Jeewanlal (1929) Ltd. v. Appellate Authority under the Payment of Gratuity Act
How fifteen days' wages are worked out for a monthly-rated employee, and whether the ceiling of twenty months' wages is counted in working days too.
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 9477). 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.
For a monthly-rated employee, the monthly wages last drawn are treated as wages for 26 working days, and the daily rate is worked out on that basis, as in Digvijay Woollen Mills.
The first is whether for the purpose of computation of "fifteen days’ wages" of a monthly-rated employee under sub-s.(2) of s.4 of the Act, the monthly wages last drawn by him should be treated as wages for 26 working days and his daily rate of wages should be ascertained on that basis
[1985] 1 S.C.R. 664, at 672 B · open the report at p. 672 As regards the first, the answer must be in the affirmative in view of the decision of this Court in Shri Digvijay Woollen Mills’s case
[1985] 1 S.C.R. 664, at 672 D · open the report at p. 672 We find no compelling reason to take a view different from the one expressed by this Court in Shri Digvijay Woollen Mills’ case.
[1985] 1 S.C.R. 664, at 676 F · open the report at p. 676 The ceiling of twenty months' wages works separately from the calculation, so it does not shrink to 520 working days.
It is said that if a month under sub-s. (2) connotes 26 working days in a month for purposes of calculating the amount of gratuity, then the rule of harmonious construction requires that the words "20 months’ wages" in sub-s. (3) thereof must mean wages for 520 working days taking the actual working days in 20 months and not 600 days taking that a month consists of 30 days. The contention is wholly misconceived.
[1985] 1 S.C.R. 664, at 677 D · open the report at p. 677 Sub-ss. (2) and (3) of s.4 of the Act are designed to achieve two separate and distinct objects and they operate at two different stages. While sub-s. (2) provides for the mode of calculation of the amount of gratuity, sub-s. (3) seeks to impose a ceiling on the amount of gratuity payable at 20 months wages.
[1985] 1 S.C.R. 664, at 677 F · open the report at p. 677 Where a provision of a social welfare law can be read two ways, the reading that fulfils the policy of the Act and is more beneficial to those it protects is preferred.
In construing a social welfare legislation, the court should adopt a beneficent rule of construction and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed.
[1985] 1 S.C.R. 664, at 675 B · open the report at p. 675
The earlier provision and the Code
Payment of Gratuity Act, 1972, section 4(2)
As quoted in the judgment: [1985] 1 S.C.R. 664, at 673 F · open the report at p. 673
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 proceeding 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: 82% 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.
Payment of Gratuity Act, 1972, section 4(3)
As quoted in the judgment: [1985] 1 S.C.R. 664, at 674 · open the report at p. 674
The amount of gratuity payable to an employee shall not exceed twenty months’ wages.
Social Security Code, section 53(3)
Payment of gratuity In force
(3) The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government.
Wording in common: 61% of the words, in the same order.
Wording differs; the decision may not carry over. The Code provision is not worded like the provision the Court interpreted.