Supreme Court of India
Lalappa Lingappa v. Laxmi Vishnu Textile Mills Ltd.
Whether years in which a worker actually worked fewer than 240 days count as continuous service for gratuity.
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 10130). 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.
In the deeming rule for workers not in uninterrupted service, 'actually employed' means 'actually worked'. Permanent employees who were absent without leave and actually worked for less than 240 days in a year were not entitled to gratuity for those years.
The expression 'actually employed' in Explanation I to s.2 (c) of the Act must, in the context in which it appears, mean 'actually worked'. It must accordingly be held that the High Court was right in holding that the permanent employees were not entitled to payment of gratuity under sub-s. (1) of s.4 of the Act for the years in which they remained absent without leave and had 'actually worked for less than 240 days in a year.
[1981] 2 S.C.R. 796, at 805 G · open the report at p. 805 Badli workers fall under that deeming rule, not the main definition of continuous service, so they were not entitled to gratuity for years of the badli period in which no work was allotted to them because they did not report for duty.
we uphold the view that the badli employees are not covered by the substantive part of the definition of 'continuous service' in s.2(c), but came within Explanation I and, therefore, are not entitled to payment of gratuity for the badli period, i.e. in respect of the years in which there was no work allotted to them due to their failure to report to duty.
[1981] 2 S.C.R. 796, at 807 B · open the report at p. 807 A welfare law that can bear two meanings is read in the way that better serves its purpose, but plain words are applied as they stand, whatever the consequences.
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. When, however, the language is plain and unambiguous, as here, we must give effect to it whatever may be the consequences
[1981] 2 S.C.R. 796, at 804 G · open the report at p. 804
The earlier provision and the Code
Payment of Gratuity Act, 1972, section 2(c)
As quoted in the judgment: [1981] 2 S.C.R. 796, at 801 D · open the report at p. 801
"continuous service" means uninterrupted service and includes service which is interrupted by sickness, accident, leave, lay-off, strike or a lock-out or cessation of work not due to any fault of the employee concerned, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act. Explanation I.-In the case of an employee who is not in uninterrupted service for one year, he shall be deemed to be in continuous service if he has been actually employed by an employer during the twelve months immediately preceding the year for not less than- (i) 190 days, if employed below the ground in a mine, or (ii) 240 days, in any other case, except when he is employed in a seasonal establishment. Explanation II.-An employee of a seasonal establishment shall be deemed to be in continuous service if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during the year.
Social Security Code, section 54
Continuous service In force
For the purposes of this Chapter,—
(A) an employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Code;
(B) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (A), for any period of one year or six months, he shall be deemed to be in continuous service under the employer—
(a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than—
(i) one hundred and ninety days, in the case of any employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;
(b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than—
(i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and
(ii) one hundred and twenty days, in any other case.
Explanation.— For the purposes of this clause, the number of days on which an employee has actually worked under an employer shall include the days on which—
(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946, or under the Industrial Disputes Act, 1947, or under any other law applicable to the establishment;
(ii) he has been on leave with full wages, earned in the previous year;
(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twenty-six weeks;
(C) where an employee, employed in a seasonal establishment, is not in continuous service within the meaning of clause (A), for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy-five per cent. of the number of days on which the establishment was in operation during such period.
Wording in common: 38% 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.