Payment Of Gratuity Act Is A Beneficial Legislation For Employees And Overrides Other Enactments: Andhra Pradesh High Court

Brief Facts of the case

The District Cooperative Central Bank Limited, Eluru had filed this writ petition under Article 226 of the Constitution of India for issue of a writ of certiorari to quash an order passed by Controlling Authority under Payment of Gratuity Act on the ground that the petitioner is not liable to pay the gratuity of Rs. 1,08,758/- to 2^nd respondent as it is not petitioner's employee.

The counsel for the petitioner submitted that after the 2^nd respondent was allotted to 3^rd respondent society under AP Cooperative Societies Act and Rules, the 3^rd respondent would be the employer of the 2^nd Respondent and not the petitioner. The petitioner cited Section 2(f) of the 1972 Gratuity Act to contend that it did not have ultimate control over the affairs of 3^rd respondent establishment and consequently the petitioner was not the 'employer'.

2(f) "employer" means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop –

…

(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment…

Finding of the Court

Justice Ravi Nath Tilhari observed that the 2^nd Respondent was appointed as paid secretary by the Chairman, Appointment Committee for the area of Eluru Cooperative Central Bank Limited in 1973. Thereafter, the General Manager of Petitioner transferred the 2^nd respondent to the 3^rd respondent from where the 2^nd respondent retired on 31.01.2001.

Based on the evidence on record the Court held that the petitioner had ultimate control over the affairs of the establishment of 3^rd respondent in which the 2^nd respondent was appointed and was transferred from time to time. The court in respect of relationship between the petitioner and the 2^nd respondent held as:

"The finding on relationship of employer and employee is a finding of fact and being based on evidence on record, which could not be shown to be suffering from any perversity or any other infirmity on such other permissible grounds, this Court is not inclined to interfere with such finding of fact in the exercise of writ jurisdiction."

In addition, the AP Cooperative Societies Act and Rules do not deal with the subject of gratuity and Payment of Gratuity Act overrides all the other enactments in view of Section 14 of the Act.

Furthermore, Payment of Gratuity Act is a piece of social welfare legislation.

"It is a piece of social welfare legislation and deals with the payment of gratuity which is a kind of retiral benefit like pension, provident fund etc. Gratuity in its etymological sense is a gift, especially for services rendered, or return for favours received. The provisions contained in the Act are in the nature of social- security measures to wage-earning population in industries, factories and establishments. The main purpose and concept of gratuity is to help the workman after retirement, whether retirement is a result of rules of superannuation or physical disablement or impairment of vital part of the body or on death to the nominee."

In view of the above, the Writ Petition was dismissed as the court found no illegality in the order passed by the Controlling Authority, directing the Petitioner jointly and severally for payment of the amount of gratuity to the 2^nd Respondent.

Case Title: The District Cooperative Central Bank Ltd. v. The Controlling Authority under Payment of Gratuity Act 1972

Citation: 2022 LiveLaw (AP) 124