Payment of Gratuity Act, 1972 – s.2(s) – Whether ad hoc payment made by Management to the workers pursuant to interim orders passed by Supreme Court in a previous round of litigation could form part of “wages” within the meaning of the expression u/s.2(s) of the Payment of Gratuity Act, for the purpose of calculating gratuity, especially in the light of the order passed by Supreme Court in the case of Shri Kashi Prasad Tripathi – Held: The order passed in the case of Shri Kashi Prasad Tripathi does not deal with this question – s.2(s) of the Act defines wages – Irrespective of whether what was earned has been paid or remained payable, the same is included in the definition, provided it is in accordance with the terms and conditions of his employment – In the instant case, the employees initiated the first round of litigation (writ petitions) before various High Courts, for grant of the benefit of revision of pay scales, on ground that the employees of other PSUs were granted revision on par with the Government servants – Thus, what was claimed in the first round of litigation was not what was payable in accordance with the terms and conditions of employment – Therefore, the Supreme Court (to which the writ petitions got transferred) was clear in its interim order as to how the ad hoc payment ordered thereunder should be treated – Even in the final order (vide which the writ petitions were eventually dismissed), the Supreme Court made it clear that what was paid was only ad hoc – In a recent Supreme Court decision, it was clarified that wages mean and include basic wages and Dearness Allowance and nothing else – Ad hoc payment made pursuant to the interim orders by Supreme Court will not form part of the wages – Labour Laws.
Payment of Gratuity Act, 1972 – s.2(s) – Definition of “wages” – Held: The definition of the expression is in 3 parts, the first part indicating the meaning of the expression, the second part indicating what is included therein and the third part indicating what is not included therein – Labour Laws.
Judgment /Order – Interim order – Party who secured it, failed in the final stage – Effect – Held: A party who is in enjoyment of an interim order, is bound to lose the benefit of such interim order when the ultimate outcome of the case goes against him. Practice and Procedure – Appeals before Supreme Court, of State or instrumentalities of State against individual litigants – Refusal of Supreme Court to go into question of law in such cases – Held: Cannot be treated as tantamounting to answering the question of law in a particular manner – Whenever the State or instrumentalities of State come up with appeals challenging small benefits granted to individual litigants, the Supreme Court applies the test of proportionality to see whether the quantum of benefits granted to the individual concerned, justifies the examination of the question of law, at the cost of that little man from a far off place – Doctrines/Principles – Test of proportionality.
Allowing the appeals, the Court
HELD : 1. The order passed by this Court on 05.05.2015 in C.A.No.4258 of 2015 in the case of Shri Kashi Prasad Tripathi does not deal with this question. The said order has gone on the basis that the computation of the quantum of gratuity is exclusively within the domain of the authorities under the statute and that the High Court is not competent to interfere with the same. Therefore, the order passed in the case of Kashi Prasad Tripathi cannot be taken to have laid down any law to the effect that the ad hoc payment will form part of wages. The respondents, therefore, cannot really take advantage of the order passed in the case of Kashi Prasad Tripathi, merely on the ground that the very same question of law was raised by the Management in the civil appeal and thereafter in the petition for review and curative petition. At times, this Court refuses to go into the questions of law, when a single individual armed with an order in his favour from the High Court is pitted against the State. Whenever the State or instrumentalities of State come up with appeals challenging small benefits granted to individual litigants, this Court applies the test of proportionality to see whether the quantum of benefits granted to the individual concerned, justifies the examination of the question of law, at the cost of that little man from a far off place. The refusal of this Court to go into the question of law in such cases, cannot be treated as tantamounting to answering the question of law in a particular manner. [Para 15][92-C-G]
2. Section 2(s) of the Act defines wages. The definition of the expression is in 3 parts, the first part indicating the meaning of the expression, the second part indicating what is included therein and the third part indicating what is not included therein. In the first part of the definition, the emphasis is on what is earned by the employee “in accordance with the terms and conditions of employment”. Irrespective of whether what was earned has been paid or remained payable, the same is included in the definition, provided it is in accordance with the terms and conditions of his employment. [Paras 16, 17 and 18][92-H; 93-C-D]
3. In the instant case, the employees initiated the first round of litigation before various High Courts, for the grant of the benefit of revision of pay scales, way back in the year 1996, on the ground that the employees of other PSUs have been granted revision on par with the Government servants. Thus, what was claimed in the first round of litigation was not what was payable in accordance with the terms and conditions of employment. Therefore, this Court was clear in its interim order dated 18.08.2000 as to how the ad hoc payment ordered there under should be treated. Even in the final order, this Court made it clear that what was paid was only ad hoc. [Para 19][93-E-F]
4. It is a fundamental principle of law that a party who is in enjoyment of an interim order, is bound to lose the benefit of such interim order when the ultimate outcome of the case goes against him. Merely because of the fortuitous circumstance of the Voluntary Separation Scheme coming into effect before the transferred cases were finally dismissed by this Court by an order dated 25.04.2003, creating an illusion as though the last drawn pay included this ad hoc payment, it is not possible to go against the fundamental rule that the benefits of an interim order would automatically go when the party who secured it, failed in the final stage. [Para 20][93-G-H; 94-A]
5. In The Straw Board Manufacturing Co. Ltd. case, this Court clarified the meaning of the expression “wages” under Section 2(s) of the very same enactment, as follows: “We clarify that wages will mean and included basic wages and Dearness Allowance and nothing else”. [Para 21][94-B]
6. In view of the above, the Controlling Authority and the Appellate Authority under the Act, holding that the ad hoc payment made pursuant to the interim orders by this Court will form part of the wages, are set aside. However, in view of the efflux of time and taking into account the fact that few employees are now no more, the Management is directed not to effect any recovery, if payment has already been made to any of the respondents or their families. [Para 22][94-C]
The Straw Board Manufacturing Co. Ltd. v. Its Workmen (1977) 2 SCC 329 : [1977] 3 SCR 91 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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