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Structured Summary of the Judgment

Factual and Procedural Background

Two original petitions challenge identical or similar orders. Respondent 1 in Original Petition No. 587 of 1976 and respondent 1 in Original Petition No. 3507 of 1976 moved petitions under the Payment of Gratuity Act, 1972 before the Controlling Authority constituted under that Act. The employer (the petitioner in these writ petitions) opposed these petitions. After evidence and hearings the Controlling Authority passed orders in favour of the respondents; those orders were confirmed by the appellate authority. The petitioner challenged the appellate authority's orders by filing these two original petitions under Article 226 of the Constitution.

Facts concerning the working relationship: the petitioner owns Travancore Oil Mills (a factory engaged in copra crushing, pepper garbling and processing). Copra crushing is seasonal and intermittent. Respondent 1 in O.P. No. 587 was a cooper who attended to coopering work only on days when such work was available and, according to the petitioner, received only 6–7 days' work per month on a piece-rate basis. Respondent 1 in O.P. No. 3507 was a tinker who likewise worked only on certain days of a month. The petitioner contended these respondents did not have continuous service of five years and disputed the method of calculating daily wages and the quantum/multiple used to compute gratuity.

Legal Issues Presented

  1. Whether the respondents (intermittently engaged, piece-rate workers) had rendered “continuous service” for not less than five years within the meaning of Section 4 of the Payment of Gratuity Act, 1972.
  2. For piece-rate employees, how should “daily wages” be computed under proviso (i) to sub-section (2) of Section 4—i.e., should the total wages of the last three months be divided by the number of days actually worked in that period or by the total number of days in that three-month period?
  3. Whether the phrase “fifteen days' wages” in sub-section (2) of Section 4 should be understood as wages payable for fifteen days (i.e., 15 × daily wage) or as wages earned during a continuous period of fifteen days (which the petitioner argued would usually amount to wages for only 13 days, accounting for Sundays/non-pay days).
  4. Whether the respondents are excluded from the definition of “employee” because their notional monthly remuneration (if calculated on certain assumptions) might exceed Rs. 1,000 per mensem.

Arguments of the Parties

Petitioner's Arguments

  • The respondents did not satisfy the statutory tests for “continuous service” (e.g., 240 days under Explanation I or 75% of operational days under Explanation II for seasonal establishments) and therefore are not entitled to gratuity requiring five years' continuous service.
  • For piece-rate employees, the proviso should be applied by dividing the total wages received in the three-month period by the total number of days in that three-month period (e.g., ~90 days), which would produce a much lower daily wage and thus reduce gratuity payable.
  • “Fifteen days' wages” should be construed as wages payable during a continuous fifteen-day period; since Sundays (and other non-pay days) would typically occur in such a period, fifteen days' wages would amount to roughly thirteen days' pay and thus the multiple for calculating gratuity should be thirteen, not fifteen.
  • On the question of coverage, the petitioner argued that, based on the employees' claimed earnings, their monthly earnings could be treated as exceeding Rs. 1,000, thereby excluding them from the statutory definition of “employee”.

Respondents' / Employees' Arguments

  • The respondents are employees within the meaning of the Act and have been in continuous service such that they are entitled to gratuity after five years.
  • For piece-rate employees, the correct method to compute daily wages under the proviso is to divide the total wages received in the last three months by the number of days the employee actually worked during that period (i.e., compute average over actual working days), not by the total calendar days in the three months.
  • “Fifteen days' wages” should be taken to mean the wages payable for fifteen days (15 × daily wage), not wages for only thirteen days.
  • The respondents' actual or projected monthly earnings do not take them outside the statutory definition of “employee” (i.e., they remain within the wage ceiling for coverage).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Appeal Suits Nos. 789 of 1972 and 55 of 1973 (Division Bench) The distinction between “employ” (keeping a person in service) and mere “engagement”; casual workers engaged for intermittent, casual tasks are not necessarily employees for statutory schemes (ESI context). The Court relied on the principle to explain that the Act applies to persons who are truly "employed" on wages (kept in service). It used this reasoning to reject the petitioner's contention that intermittent work alone defeats continuous service where the person is otherwise in employment and absence of work is not due to the employee's fault.
Gnanambikai Mills, Ltd. v. Employees' State Insurance Corporation [Madras single Bench] Casual workers will not be taken within the scope of the term “employee” (in the ESI context); supports the distinction between casual engagement and employment. Referenced as supportive of the view that casual engagement may not create the status of “employee”; Court used this to frame the proper inquiry (whether the person is an employee kept in service) when assessing continuous service under the Gratuity Act.
K.P. Co-operative Society (by its President) v. Employees' State Insurance Corporation, Trichur [1975] “Employment” denotes a larger concept than “engagement”; reinforces that certain categories (e.g., paid apprentices) may not be “employees”. The court cited the view to support the proposition that not every engagement creates employment; but where a person is truly employed, periods without work (not due to employee's fault) count towards continuous service.
Employees' State Insurance Corporation v. United Electrical Industries, Ltd. [1975] Casual labourers are not within the scope of “employee” under the ESI Act; factual inquiry necessary to determine whether persons are “employed” or are essentially casual labour. The Court relied on the passage to underline how casual/engaged labour differs from employment and to support the controlling/appellate authorities' approach that respondents here were employees for the purpose of the Gratuity Act.
Hukum Chand Jute Mills, Ltd. v. State of West Bengal [1976 — II L.L.N 122] (Calcutta High Court) Interpreted “fifteen days' wages” as requiring determination of one day's wage and then multiplying by 15 — i.e., fifteen days' wages means wages for fifteen days rather than wages earned during a continuous fifteen-day period (which might exclude non-pay days). The Court expressly aligned with the Calcutta High Court's construction and cited it in support of reading “fifteen days' wages” as wages payable for fifteen days (15 × daily wage) and rejected the thirteen-days construction urged by the petitioner.
Associated Cement Company, Ltd., Kistna Cement Works' Kistna v. Appellate Authority under Payment of Gratuity Act (Regional Assistant Commissioner of Labour, Guntur) [1976 — I L.L.N 229] (Andhra Pradesh High Court) The Andhra Pradesh Court construed “fifteen days' wages” as meaning half a month's wages (interpreting the scheme to equate fifteen days with half a month, leading to the contention that fifteen days' wages may effectively amount to thirteen days' pay in practice). The judgment of this Court notes the Andhra Pradesh decision as taking an opposite view to the Calcutta decision. The present Court rejected the Andhra view for the reasons set out in its reasoning and preferred the Calcutta approach.
Jogendra Lal Malakar v. Regional Labour Commissioner [(1977) 51 F.J.R 241] Addressed the question whether an employee whose remuneration exceeds Rs. 1,000 per mensem can be excluded from the definition of “employee” under the Act; cited concerning the wage-ceiling issue. The Court referenced the case to reject the petitioner's suggestion that respondents should be treated as excluded from the Act on grounds of exceeding Rs. 1,000 per mensem; the Court accepted the controlling authority's daily-wage calculation which kept respondents within the statutory wage ceiling.

Court's Reasoning and Analysis

The Court proceeded in a structured manner addressing each principal issue raised by the petitioner, grounding its analysis strictly on the text of the Payment of Gratuity Act, 1972, statutory definitions and prior authorities cited in the opinion.

1. Continuous service (eligibility):

  • The Court examined Section 4 (payment of gratuity) and the definition of “continuous service” in Section 2(c), including Explanation I (240 days rule) and Explanation II (seasonal establishment rule).
  • The Court emphasized the statutory meaning of “continuous service” as “uninterrupted service” but clarified that the concept expressly includes service interrupted by sickness, accident, leave, lay-off, strike, lockout or cessation of work not due to the employee's fault. Periods where the employee did not actually work but the absence was not by his volition are to be included in continuous service.
  • The Court drew the critical distinction between being an “employee” and being merely “engaged” for particular tasks. If a person is a true employee (kept in service), periods without work (not attributable to the employee's fault) count towards continuity; if the person is merely casually engaged, the concept of continuous service does not arise.
  • Relying on the principles from ESI decisions (Appeal Suits Nos. 789/1972 & 55/1973 and related cases), the Court agreed with the controlling and appellate authorities that the respondents were employees kept in service rather than mere casual engagements and therefore their intermittent working pattern did not defeat continuity under the Act.

2. Computation of daily wages for piece-rate workers:

  • Sub-section (2) proviso (i) to Section 4 prescribes that for piece-rated employees daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding termination.
  • The Court considered the competing constructions: (a) employer's literal construction—divide the total wages of the three months by the number of days in that three-month period (e.g., 90/91 days); (b) employees' construction—divide the total wages by the number of days the employee actually worked during those three months.
  • The Court rejected the employer's construction as both an implausible literalism and unreasonable as a matter of statutory purpose. The Court explained that the three-month averaging device is practical to determine an appropriate “daily wage” for a piece-rate worker (whose day-to-day earnings vary) and that ordinary understanding of an average daily wage is total wages divided by days worked during the period considered.
  • The Court noted that allowing the employer's construction would perversely reduce a worker's daily wage in cases where the worker had few working days in the last quarter and would produce results inconsistent with the purpose of the provision; the controlling and appellate authorities had applied the employees' construction, and the Court found no error of law in those decisions.

3. Meaning of “fifteen days' wages”:

  • The Court analysed whether “fifteen days' wages” should be read as wages payable for fifteen days (15 × daily wage) or as wages earned during a continuous fifteen-day period (which, accounting for Sundays/non-pay days, might produce wages equivalent to roughly thirteen days).
  • The Court accepted the natural and plain meaning: “fifteen days' wages” denotes wages payable for fifteen days (i.e., fifteen times the daily wage). The Court found no textual reason to read “fifteen days' wages” as meaning thirteen days' wages and rejected the petitioner's arguments based on typical pay cycles or references to weekly off days.
  • The Court addressed the alleged anomaly with sub-section (3) (the maximum twenty months' wages) and held there was no inconsistency in the two subsections — the legislature deliberately used distinct units (days and months) and the maximum operates independently as a cap.
  • The Court acknowledged divergent High Court decisions (Calcutta favouring Court's view; Andhra Pradesh taking the opposite view) and expressly aligned with the Calcutta decision (Hukum Chand Jute Mills) which treated fifteen days' wages as 15 × daily wage, calling that construction reasonable and within a permissible range of interpretation.

4. Wage-ceiling exclusion (Rs. 1,000 per mensem):

  • The petitioner argued that on a certain method of computation the respondents' monthly wages might be treated as exceeding Rs. 1,000, thereby excluding them from the Act's definition of “employee”.
  • The Court relied on the daily wage calculations made by the controlling authority (Rs. 34.35 and Rs. 20.45 per day in the two petitions) and observed that even if the employees worked 26 days a month, their prospective monthly earnings would still be below Rs. 1,000 per mensem. Therefore the exclusion argument lacked basis.
  • The Court referenced Jogendra Lal Malakar for the principle that post-termination wages alone are not decisive in excluding a person who had earlier been within the wage ceiling for the continuity period; in any event, the controlling authority's computation kept the respondents within the statutory wage ceiling.

5. Conclusion on orders under challenge:

  • The Court found no error of law in the Controlling Authority's and the Appellate Authority's decisions: it affirmed their view on continuous service and on the method of calculating daily wages and gratuity multiples.
  • The Court treated the questioned constructions as reasonable and permissible interpretations of the provisions of the Act and held that there was no scope for interfering with those orders in proceedings under Article 226.

Holding and Implications

Holding: These original petitions are dismissed. The Court upheld the orders of the Controlling Authority and the Appellate Authority.

Implications (direct effects):

  • The Court endorsed the Controlling Authority's and Appellate Authority's approach that intermittent, piece-rate workers may qualify as “employees” for purposes of the Payment of Gratuity Act where they are truly employed (kept in service) and periods without work were not due to the employee's fault; such periods count towards continuous service.
  • The Court endorsed the method for piece-rate workers prescribed by the proviso to sub-section (2) of Section 4 to compute daily wages by averaging total wages over the days actually worked in the three months immediately preceding termination (as applied by the authorities below), rejecting the employer's argument to divide by all calendar days of the three-month period.
  • The Court held that “fifteen days' wages” means wages payable for fifteen days (i.e., fifteen times the daily wage) and not a notional thirteen days' pay; therefore gratuity is to be computed using 15 × daily wage per completed year (subject to the statutory maximum in sub-section (3)).
  • The Court rejected the petitioner's contention that the respondents should be excluded from the Act's coverage on the basis of a supposed monthly wage exceeding Rs. 1,000; on the controlling authority's computation the respondents remained within the wage ceiling.
  • Parties were directed to pay costs.

Note: Where the opinion did not provide extended hypothetical or policy discussion beyond the application of statutory text and cited precedents, this summary confines itself to the reasoning and results expressly recorded in the judgment.

    Vallabadas Kanji (Private), Ltd. v. Esmail Koya And Others

    JUDGMENT

    1. The petitioners in these two petitions are the same and similar orders are under challenge in these petitions Respondent 1 in Original Petition No. 587 of 1976, as well as respondent 1 in Original Petition No. 3507 of 1976, moved petitions under the provisions of the Payment of Gratuity Act, 1972, before the Controlling Authority constituted under that Act. This was opposed by the employer, the petitioner herein. After taking evidence and hearing the parties the Controlling Authority passed an order under the Payment of Gratuity Act (hereinafter called the Act). That was taken up by the petitioner in appeal before the appellate authority. The orders of the appellate authority confirming the order of the controlling authority are under challenge in these two petitions.

    2. The petitioner is the owner of the Travancore Oil Mills at Alleppey which has a factory registered under the Factories Act engaged in copra crushing, pepper garbling and processing. According to the petitioner copra crushing is seasonal in nature and even during the season the copra crushing unit works only intermittently. Respondent 1 in Original Petition No. 587 of 1976, is a cooper in the copra crushing unit attending to coopering work on such of those days on which there is availability of such work. The petitioner avers that respondent 1 was getting only 6 to 7 days' work in a month and he was being paid on piece-rate basis. Respondent 1 in the other petition is a tinker who too has work to do only on certain days in a month. It is the petitioner's case that the respondents do not have the continuous work so much so they cannot claim gratuity on the plea that they have the minimum service which entitles them to the payment of gratuity. The second plea raised by the petitioner concerns the quantum of gratuity payable. According to the petitioner such quantum has to be determined on the basis of average wages per day which in turn has to be determined by dividing the total wages in a period of three months by the total number of days in a period of three months. The petitioner's further case is that wages that would be earned for thirteen days should be taken as fifteen days' wages which is due as gratuity for one year of service. These contentions were not accepted by the controlling authority as well as the appellate authority. These are the matters raised in these petitions.

    3. I will now refer to the relevant provisions of the Payment of Gratuity Act, 1972. Section 4 provides that:

    “4. Payment of gratuity.— (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, —

    (a) on his superannuation; or

    (b) on his retirement or resignation; or

    (c) on his death or disablement due to accident or disease:

    Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

    Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs.

    Explanation.— For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.”

    Sub-section (2) of that section reads as follows:

    “(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 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.”

    Sub-section (3) of this section is also relevant for our purpose. That reads:

    “(3) The amount of gratuity payable to an employee shall not exceed twenty months' wages.”

    “Continuous service” is defined in S. 2(c) thus:

    “‘continuous service’ means uninterrupted service and includes service which is interrupted by sickness, accident, leave, lay-off, strike or a lockout 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 75 per cent of the number of days on which the establishment was in operation during the year;”.

    Reference may also be made to the definition of “employee” in S. 2(e) of the Act. That reads:

    “(e) ‘employee’ means any person (other than an apprentice) employed on wages, not exceeding Rs. 1,000 per mensem, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, but does not include any such person who is employed in a managerial administrative capacity, or who holds a civil post under the Central Government or a State Government, or who is subject to the Air Force Act, 1950 (45 of 1950) the Army Act, 1950 (46 of 1950) or the Navy Act, 1957 (62 of 1957).”

    4. In order to earn gratuity it is necessary that the employee should have rendered continuous service for not less than five years and for every completed year of service or part thereof in excess of six months the gratuity is to be calculated at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned. The first question here is whether on the facts of these cases it could be said that the applicants for gratuity had continuous service of five years.

    5. According to the petitioner, the respondents, the workmen in these cases, did not have continuous service because they did not satisfy the test in explanation I of being in service for 240 days and even if the petitioner's factory is considered as a seasonal establishment they did not have service for 75 per cent of the days on which there was operation in the establishment in a year. Explanation I may have no application where a person is in continuous service within the meaning of that term in S. 2(c) of the Act. Continuous service means uninterrupted service. Supposing a person is employed but is given work on some days only of the month could it be said that his service is interrupted? If his service is interrupted by sickness, accident, leave, lay-off, strike or lockout the period concerned is not excluded as a period of interrupted service. These periods are part of the period of uninterrupted service. Similar is the case where cessation of work is not due to any fault of the employee concerned. If the employee was willing to work but work was not given to the employee, the period when he had no work cannot be considered as period of interrupted service. There must be an element of volition in absenting from work on the part of the workman. If not, the service would be continuous. That is what the section contemplates. It is possible that a person may work only for a few days in a month and nevertheless he may be said to be in continuous service provided the days when he did not work were days when he was either on leave or lay-off or such absence as explained by one or other of the circumstances mentioned in S. 2(c) of the Act including the cessation of work not due to the fault of the employee. The petitioner's counsel points out that there may be cases where the workmen are given some work now and then and they may not be entitled for that reason to claim gratuity as they cannot be said to be in continuous service. The test is not really the quantum of days they have actually worked but is whether the person concerned is an employee. If he is an employee then the fact that he did not work would be material if cessation of work was due to fault on his part. If he is an employee and he did not actually work because work was not given to him the period during which he did not work for no fault of his will also be taken into account for reckoning continuous service just as the period of leave or the period of strike or that of lay-off. Possibly it may be said, in some cases that because of the nature of the engagement of a workman he is not an employee at all. In such a case the question of continuous service does not arise, for, the term “continuous service” in the Act applies only to an employee. The definition of “employee” in so far as it is relevant for our purpose is that he is a person employed on wages to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work. Every person who works for another cannot be said to be an employee of the other. The term “employ” means keeping a person in service. It is different from engaging a person for some work. A person may employ a cook, a driver, a gardener and a housekeeper. If he employs for wages a person to paint his house he is really engaging such a person and the word ‘employment’ in the proper sense is out of place in that context. May be for the purpose of some statutes that also may be taken as falling within the term employment. But generally these concepts are independent and if on the terms of the statutes there is no reason to give a wider concept to the term employment it must exclude cases of mere engagement. A painter though paid daily wages and is subject to supervision in regard to the work he is engaged in, is not a person kept in the service of the person who engages him. So is the case with persons engaged for special and temporary work such as carrying loads, white-washing and other casual work. In such cases though in a very loose sense of the term we could say that the person is employed by other, in the sense in which the term is used in the Payment of Gratuity Act he cannot be said to be a person employed for wages. This is so also in regard to the definition of the term ‘employee’ in the Employees' State Insurance Act. Section 2(9) of that Act reads:

    “‘employee’ means any person employed for wages in or in connexion with the work of a factory or establishment, to which this Act applies and —

    (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or

    (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or

    (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service;

    and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof of with the purchase or raw materials for, or the distribution or sale of the products of, the factory or establishment; but does not include —

    (a) any member of the Indian naval, military or air forces; or

    (b) any person so employed whose wages (excluding remuneration for overtime work) exceed Rs. 1,000 a month:

    Provided that an employee whose wages (excluding remuneration for overtime work) exceed Rs. 1,000 a month at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;”.

    6. In the context of considering the scope of the term “employee” under that Act this Court said in the judgment in Appeal Suits Nos. 789 of 1972 and 55 of 1973, thus:

    “4. We are not inclined to agree with the case of the Corporation. The very term ‘employ’ means ‘keeping a person in service’. It is different from engagement which may be of a casual nature. A person employs his driver, his gardener, his house-keeper and ayaah for the children. But in that sense a person does not employ workman who are engaged casually to take goods from the shop to the residence, or to do such other work which is of a casual nature. The mere fact that wages are paid for a particular item of work does not create a relationship which may properly be termed as that of an employee. In other words, every engagement is not an employment. Employment excludes such engagements as are of a casual nature. That is quite in keeping with the spirit of the Act for, the Act envisages contribution by the employer as well as the employee and the benefit to be conferred upon such employee in the form of medical, maternity and other amenities. That being the case we do not think that a casual worker of the nature with which we are concerned in these cases would be an employee in whose case coverage is called for. A single Bench of the Madras High Court had occasion to consider this question in the decision in Gnanambikai Mills, Ltd. v. Employees' State Insurance Corporation [1970—II L.L.J 233]. Though the learned Judge did not consider the term employment or employee in the context of the Act with which the learned Judge was dealing he was of the view that casual workers will not be taken within the scope of the term. We are in agreement with that view.”

    7. The same Division Bench said in another case in K.P Co-operative Society (by its President) v. Employees' State Insurance Corporation, Trichur (by Regional Director) [1975 — II L.L.N 365], that:

    “‘employment’ denotes a larger concept than what is denoted by the term ‘engagement’.”

    The question there arose in connexion with the consideration of the scope of the term “employee” in the Employees' State Insurance Act and the question before the Court was whether a paid apprentice could be said to be an employee. That he was not an employee within the meaning of the term was held by the Court. The same Division Bench in Employees' State Insurance Corporation v. United Electrical Industries, Ltd. [1975 — II L.L.N 03], referred to the earlier Division Bench decision in Appeal Suits Nos. 789 of 1972 and 55 of 1973. The Court said in Para. 4 at page 304:

    “…But in regard to casual labourers, the Employees' State Insurance Corporation is not entitled to claim contribution for the reason that they are not ‘employees’ within the scope of the definition of that term in the Act. The Corporation has no case that the persons in respect of whom contribution was claimed as payable are not casual workmen. The mere fact that certain workmen are referred to as casual workmen does not, of course, determine their character but if, from the facts, it is found that they are not ‘employed’ by the employer but are mainly engaged for casual, labour, then, of course, there is no scope for demanding contribution in respect of such workmen. We need not go into this question further in view of what we have expressed on this in our decision in Appeal Suits Nos. 789 of 1972 and 55 of 1973.”

    8. It appears to me that when once it is shown that a person is employed on wages as contradistinct to being engaged on wages the Payment of Gratuity Act applies to such person because the period of service including the period during which he was given no work due to no fault of his would be a period of continuous service. This is the view taken by the controlling authority and appellate authority and I cannot see any obvious error of law in that view.

    9. The next and most important question concerns the quantum of gratuity. This is a question of some importance to the petitioner and possibly to the business community in general. There are many workmen engaged in business similar to that of the petitioner who do not get employment on most of the days but who have been in the service of the employers for years together. Whether they are to be paid gratuity at fifteen days' wages for each completed year of service calculating the wages on the basis of the total wage drawn divided by the number of days in a period of three months is the question which arises in this context. In the case of piece-rate employee how daily wages is to be computed is mentioned in proviso (i) to Sub-sec. (2) of S. 4 of the Act. It is to be computed on the average of the total wages received by an employee for a period of three months immediately preceding the termination of his employment. Evidently the said period of three months is mentioned so that a person who might have started on lower wages at the beginning of his service is to be entitled not to fifteen days' wages at the rate at which he has been receiving wages at the commencement of his service or the wages that he has been receiving year to year but upon the last wages and the relevant period for determination of such last wages has been limited to three months. For the employee it is argued that the average of the total wages of the last three months is to be computed by dividing such total wages by the number of days he worked and not the number of days or even the number of working days in the said period of three months. For the employer it is contended that the division should be not by the number of days he actually worked during the said months but the number of days in the three months. If the employee had worked only for six days each in the last three months, he would have received wages only for eighteen days. If he had worked on piece-rate, wages for the eighteen days may vary and according to the employee the total wages received during the eighteen working days during the period of the last three months of service divided by the eighteen days would indicate the average wage for a day which average is to be adopted for determining the fifteen days' wages. That would be the amount due as gratuity for one year of service. According to the employer the method to be adopted is different. Though the employee had worked only for eighteen days the number of days in the three months, namely, ninety or ninety-one days is to be taken into account for dividing the wages received for eighteen days. But then resulting average would be actually about one-fifth of the average daily wage received by the workman. But according to the employer that is the literal interpretation of the proviso and that must be adopted. There is also a further dispute to as the multiple. I will refer to it later. It is sufficient here to note that the case of the employer is that there is no justification to determine the daily wage on the basis of average pay as determined in the manner indicated by the workmen. I am unable to agree with the case urged by the employer in this respect. The proviso does not lead to such a construction apart from the fact that it appears to me that such a construction is unreasonable. It may be that number of days a person works from quarter to quarter may vary. He may work for more or sometimes less than the number of days he normally works in a quarter in the last quarter and hat should have no relevance in determining he total gratuity to be computed for his total service. Proviso (i) to Sub-sec. (2) of S. 4 provides the practical method of determining the average in the case of a piece-rate worker because what he may receive as wages may vary from day to-day and the average of wages that he receives over several days could be adopted more or less as the average daily wage. When we speak of averages it is difficult to conceive of a daily average by dividing the total wages received in eighteen days by ninety, in common parlance too that would not be said to be average daily wage. On the other hand if total wages received on the days worked during the specified period is divided by the number of days in which the employee has so worked during the period of three months one should normally understand it as the average wage. Noticing the purpose for which the provision is made, namely, to apply the average as an average for the daily wage for determining the total gratuity payable to an employee taking fifteen days' wages as due for one year of service I see no reason to accept the contention of the petitioner in these petitions. I would even say that it is very unreasonable. Whatever that be, there is no scope for correcting the order of the controlling authority and the appellate authority, which have accepted the construction that has appealed to me too, in proceedings under Art. 226 of the Constitution.

    10. The further question is whether fifteen days' wages mentioned in Sub-sec. (2) of S. 4 should be taken as the wages that would be earned by an employee during the period of fifteen days or whether it should be taken as wages of thirteen days. This question arises only in Original Petition No. 587 of 1976. In the other case the appellate authority has held that only wages earned during thirteen days would be reckoned as fifteen days' wages and since that has not been challenged by the employee that has become final. There are two arguments advanced by petitioner's counsel in favour of the latter construction. According to him, normally during a period of fifteen days, two would be Sundays on which days workmen may not earn any wages. Therefore, during a period of fifteen days the wages would be payable only for thirteen days. Hence if fifteen days' wages is understood to mean wages that a person may earn during a specified period of fifteen continuous days he would be receiving wages only for thirteen days and, therefore, that multiple alone should be adopted. The second argument is that if the employee is paid at the rate of fifteen days' wages for the years of service that he puts in he would receive more than what the framers of the Act might have conceived as payable. If a person has put in twenty years of service he would then receive wages for three hundred days or ten full months and it is said that it could not have been the intention of the framers of the Act to give ten full months' wages taking the wage for a month as for thirty days, for, he would then the entitled to more then ten months' wages calculating a month as having twenty-six pay days. It is further said that in that event the maximum of twenty months' gratuity would be reached even without forty years of service.

    11. There is reference in proviso (i) to Sub-sec. (2) of S. 4 to “daily wages.” That proviso mentions that such daily wages is to be computed on the average of the total wages received by an employee for a period of three months immediately preceding the termination of his employment. The daily wages having been thus determined for the purpose of Sub-sec. (2) it seems to be reasonable to treat the term fifteen days' wages mentioned in Sub-sec. (2) as the wages payable for fifteen days and not during a period of fifteen days. It is difficult to read “fifteen days' wages” stated in unequivocal terms in this section as thirteen days' wages. If the intention was to limit it to thirteen days there is no reason why it could not have been so stated in the section. If there is no anomaly in construing this in this manner — as I will presently show there is no such anomaly as contended for — there is no reason to compel a construction against the plain language of the section. It is true that seven days may be a week and fourteen days may be two weeks and fifteen days may be half a month. But if a statute specifies seven days' wages as payable without anything more one should take it that it is the wages payable for work done on seven days. In other words, one need not assume that it is wages paid for a continuous period of seven days during which period there might be days of no work also. The fifteen days' wages should, therefore, normally mean the wages payable for fifteen days, or, in other words, wages payable for a day multiplied by fifteen. How daily wages are to be determined is mentioned in the proviso and the main sub-section specifies the determination of gratuity on the basis of fifteen days' wages. I see no reason to limit the claim to thirteen days' wages.

    12. Anomaly there appears to be none. It is open to the Legislature to envisage payment of gratuity on the basis of fifteen days' wages that being determined at fifteen times the daily wages. It is one thing to say that a person receives wages only for twenty-six days a month and another thing for a statute to determine gratuity payable on the basis of fifteen days' wages, that term being understood in the manner indicated. There is also no conflict between Sub-secs. (2) and (3) of S. 4. Sub-section (3) only lays down the maximum and if the maximum is exceeded even if the length of service is less than forty years naturally the quantum must be limited to the maximum. Whether twenty months wages should be read to mean wages for twenty months calculating the wage for one month as the wage for twenty-six days is again a matter on which I am not purporting to decide here because that is not necessary for the purpose of this case. Assuming that it is so even then there is no anomaly, for, that would be the maximum and there is no indication that the maximum should be for a service of forty years.

    13. I must notice here the conflicting views on this question indicated in the decisions of the Calcutta High Court and the Andhra Pradesh High Court. The view that I have expressed in this judgment is in consonance with the view taken by the Calcutta High Court, but is contrary to the view expressed by the Andhra Pradesh High Court. The decision of the Calcutta High Court is in Hukum Chand Jute Mills, Ltd. v. State of West Bengal [1976 — II L.L.N 122] and that of the Andhra Pradesh is that in Associated Cement Company, Ltd., Kistna Cement Works' Kistna v. Appellate Authority under Payment of Gratuity Act (Regional Assistant Commissioner of Labour, Guntur) [1976 — I L.L.N 229]. Sabyasachi Mukharji, J., said in Para. 3 at page 124 in the Calcutta decision thus:

    “…Counsel for the petitioner contended that the Act had to be construed harmoniously and the Legislature could not have intended to discriminate between weekly paid time-rated workmen and monthly paid time-rated workmen and piece-rated workmen. The maximum was a month and fifteen days should be construed to mean half of a month. In my opinion, in order to determine the fifteen days' wages it was necessary to determine one day's wage and in order to do that the formula followed by the appellate authority, in my opinion, is a possible one. It is not necessary in order to find out fifteen days' wages, to find out what one would have earned during fifteen days or in course of fifteen days. In the aforesaid view of the matter. I am of the opinion that this view is a possible view and it cannot be said that such a view is perverse or it contains any error of law to be rectified in an application under Art. 226. Furthermore, it is a beneficial piece of social legislation and should be construed, if possible, in favour of those for whose benefit it is intended. The argument that such a construction might not ensure such benefit equally to all those who would be affected is not relevant. In such a situation no question of discrimination against any one arises. The construction canvassed for by the petitioner would not have ensured any benefit to other workmen but would have deprived weekly paid time-rated workmen of same benefit. The fact that the view taken might lead to certain discrimination between the two classes or categories of workmen is not decisive on the question.”

    I am in agreement with the view expressed by the learned Judge as I have indicated earlier in this judgment.

    14. In the case before the Andhra Pradesh High Court the controlling authority and the appellate authority had taken the view that the words

    “at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned”

    would clearly mean fifteen times the daily rate of wage. This view was assailed by the employer in a petition under Art. 226 of the Constitution before the High Court. It was contended therein that the method of fixing the daily rate of wages by dividing the monthly rate by 26 has a crucial bearing on the wage-structure in the cement industry and that as the daily rate of wage of the employee was evolved by dividing the monthly rate by 26, fifteen days' wages would only mean thirteen times the daily wage. It was further contended that the expression “fifteen days' wages” can only mean half a month's wages in view of the scheme of the Act. Reference was made to the report of the Select Committee appointed by the Parliament on Payment of Gratuity Bill, 1971. In the context of raising of the ceiling of gratuity the report had recommended that the ceiling be raised from fifteen months' wages to twenty months' wages so as to provide an incentive to employees to work beyond thirty years of service. It was indicated that this showed that the object was to provide for gratuity at half a month's wages per year of service. If the intention was that the gratuity should be calculated at fifteen times the daily rate per year of service, the ceiling of fifteen months' wages would be reached by twenty-six years' service and not by thirty years' service. This, it is said, indicates the intention that fifteen days' wages really meant half a month's wages. Reference is also made to S. 4(3) which lays down that gratuity shall not exceed twenty months' wages and since in Sub-sec. (2) the unit referred to was fifteen days and in Sub-sec. (3) three months, the Court took it that two terms must stand in some relationship to each other. Hence, the concept of fifteen days, it was assumed, can only mean half a month.

    15. The very fact that Sib-sec. (2) uses the words fifteen days' wages and Sub-sec. (3) has chosen to use the words twenty months' wages would show that the Legislature has chosen to use two different terms. Therefore, it is not necessary to read fifteen days' wages in Sub-sec. (2) as meaning half a month's wages and, therefore, limit the wages to that for thirteen days. I have already indicated that what is prescribed in Sub-sec. (3) is only the maximum and the maximum may probably be reached by a service of less than forty continuous years. That does not compel this construction that Sub-sec. (2) refers to half a month's wages.

    16. I do not see any error in the order of the controlling authority or appellate authority in so far it has come to the conclusion that for the purpose of determining the gratuity, fifteen days' wages has to be taken as wages earned on fifteen days and not wages earned during a period of fifteen days including the days on which the employee is not entitled to payment of wages.

    17. There is a further anomaly that in the case of persons like respondent 1 in the two petitions if we consider fifteen days' wages as the wages for the period during which they had worked it may be that even thirteen days' wages may not be due, for, it is possible that in no period of fifteen days they had worked even for thirteen days. In their cases, apart from Sundays, there were a good many other days they did not receive their pay as they were not given work.

    18. There is yet another objection raised by petitioner's counsel in these petitions and that concerns the right of the employees to claim gratuity. While, on the one hand, the petitioner would say that what was being actually received by the employees all these years was very much less than Rs. 1,000 per mensem particularly when they were having only 6 or 7 days' work in a month it is argued for the purpose of this contention that based on the claim of the workmen the employees should be found to be persons on wages above Rs. 1,000 and, therefore, should be excluded from the definition of the term “employee”. Daily wage determined by the controlling authority is a sum of Rs. 34.35 per day in Original Petition No. 587 of 1976, and Rs. 20.45 per day in Original Petition No. 3507 of 1976. Even if there is work for these employees for twenty-six days in a month the total would be less than Rs. 1,000 per mensem. That would be sufficient to counter the case of the petitioner in this regard. It is also contended for the workmen that it is not the remuneration that they received at the time of the termination that is material since, if earlier they have been in receipt of wages less than Rs. 1,000 for a period of five continuous years the fact that subsequently that has gone beyond Rs. 1,000 may not take them out of the category of employees under the Act. Reference is made to a decision in Jogendra Lal Malakar v. Regional Labour Commissioner [(1977) 51 F.J.R 241]. For reasons already indicated there is no basis for the case that the employees I am concerned with in these cases are not entitled to gratuity on account of the quantum of their monthly wages.

    19. In the result, these original petitions are dismissed. Parties are directed to suffer costs.

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