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IN THE HIGH COURT OF MADHYA PRADESH

AT JABALPUR

BEFORE

HON'BLE SHRI JUSTICE VIVEK JAIN

MISC. PETITION No. 3996 of 2025

CEMENT CORPORATION OF INDIA

Versus

SHRI SHANKAR DAS BAIRAGI AND OTHERS

WITH

MISC. PETITION No. 3998 of 2025

CEMENT CORPORATION OF INDIA

Versus

SHRI RAM SINGH RAJPUT AND OTHERS

MISC. PETITION No. 4001 of 2025

CEMENT CORPORATION OF INDIA

Versus

SHRI RAM NARESH SINGH AND OTHERS

MISC. PETITION No. 4005 of 2025

CEMENT CORPORATION OF INDIA

Versus

SHRI DHANIRAM SAHU AND OTHERS

Appearance:

Shri Amit Khatri - Advocate for petitioners.

Shri Parma Nand Sahu and Shri Rambachan Sahu - Advocates for respondent

No.1 in MP No.3998/2025, MP No.4001/2025 and MP No.4005/2025.

Shri Sanjay Kumar Malvi - Advocate for respondent No.2 in MP No.4001/2025.

ORDER

(Reserved on : 01.12.2025)

(Pronounced on : 06.01.2026)

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The present petitions are filed by the same employer against different

employees involving same legal issue and therefore, they are being heard and

decided by this common order. For the sake of convenience, facts shall be taken

from M.P. 3996/2025.

2. The employees in all these cases except in M.P. No.3996/2025 were

appointed in the year 1999, whereas the employee in M.P. No.3996/2025 was

appointed on 01.02.1997. The employee in M.P. No.3996/2000 has retired on

30.11.2019, employee in M.P. No.3998/2025 has retired on 30.09.2021,

employee in M.P. No.4001/2025 has retired on 01.01.2019 and that in M.P.

No.4005/2025 has retired on 31.12.2018. All these employees filed applications

before the Controlling Authority seeking gratuity in the year 2021 or 2022,

which is admittedly 2 to 3 years after their retirement.

3. It is contended by learned counsel for the petitioner that the

Controlling Authority as well as the Appellate Authority under Payment of

Gratuity Act, 1972 (for short referred to as Act of 1972) have erred in passing

the impugned orders and allowing the applications for payment of Gratuity filed

by the respondent employees. It is argued that the impugned orders cannot be

allowed to sustain, because the respondent employees were not the employees

of the petitioner-Cement Corporation of India, but they were employed through

contractors and they were outsourced employees. It is argued that application

for Gratuity is not maintainable against the present petitioner, which is a Public

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Sector Undertaking of Government of India, because the petitioner company

never employed the respondent employees directly and these employees had

been engaged through a contractor and were contractors' employees. It is argued

that as per Clause 21 of the contract executed between the petitioner company

and the contractors, the responsibility of payment of gratuity and terminal

benefits fell on the contractor. A copy of the contract, though is not part of the

record of these petitions, but was produced at the time of hearing of the present

petitioner before this Court, for perusal of the Court.

4. It is further argued that in absence of impleading the contractor, no

application for payment of Gratuity could be filed against the petitioner

company. It is further argued that the employees had filed applications before

the Controlling Authority with delays, because as per the provisions of Rule

7(2) of Payment of Gratuity Central Rules 1972, application for gratuity has to

be made within 30 days of the date from which the gratuity falls due and as per

Rule 7(3), even legal heir of a deceased employee has to make application

within one year from the date on which gratuity falls due. However, in the

present case, the applications were filed in the year 2021-2022, which is almost

2 to 3 years after retirement of the concerned respondents and therefore, the

authority could not have directed payment of gratuity, because the application

before the controlling authority had become barred by time.

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5. It is further argued that interest has been granted from the date of

superannuation, but it should have been granted from the date of application in

place of date of superannuation.

6. Per contra, it is vehemently argued by learned counsel for the

respondent employees that the controlling authority has not erred in directing

payment of gratuity to the respondent employees, because the contract being

executed with contractor was only a camouflage, because the respondents have

been working continuously from 1998-1999 and had worked of almost 20 years

or even more till the date of their retirement in the year 2019 to 2021 after

having been appointed in the year 1997 to 1999. It is argued that the contractors

kept on changing every year, but the respondent-employees continued to work,

because whoever was the new contractor, the respondents were always engaged

for the same work which they were doing till their superannuation or

resignation, whichever was the case. It is argued that the contract was executed

with the contractors for one year period to provide security arrangements at the

cement factories managed by the petitioner company and the respondents

continued to be engaged by each succeeding contractor, and that continued for a

good period of more than 20 years. Therefore, the contract was only a

camouflage. Even otherwise, the petitioner-company being the principal

employer is bound to make the payment of Gratuity to the respondents. On

these assertions, it is prayed to confirm the orders of the Controlling Authority

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and the Appellate Authority and to reject the petitions filed by the petitioner

company.

7. Heard.

8. In the present case, the question arises that whether the application for

Gratuity of the respondent workmen was hit by limitation. It is undisputed that

the Act of 1972 does not lay down any limitation seeking payment of gratuity

and on the contrary, the said Act makes a provision in Section 7(3) that gratuity

shall be paid within 30 days from the date it becomes payable.Gratuity becomes

payable from the date of termination of service of the employee in terms of

Section 4 (1) whether the termination of service is on account of

superannuation, retirement, resignation or death.

9. The question that whether the application seeking Gratuity can be

stated to be hit by limitation once there is no limitation in the Act of 1972 and

whether the limitation having been set up in the rules, would defeat the

substantive right of the employee to receive gratuity conferred upon him by the

Act of 1972, has recently been considered by a Division Bench of this Court in

W.A.No.563/2023, wherein the Division Bench has held as under:-

“18. The date on which the gratuity becomes payable to an

employee is laid down in Section 4(1) as the date on which

employee leaves employment after rendering continuous service for

not less than five years either on account of superannuation,

retirement, resignation, death or disablement. Section 4 (1) is as

under:-

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“Section: 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:”

19. Aforesaid Section 4(1) of Act of 1972 when read in

juxtaposition to Section 7(2) & (3) and (3-A) makes it clear that the

date on which the gratuity becomes payable is the date on which

the employee leaves employment and it does not depend on

adjudication of claim of the employer in any manner nor it is

subjected to application to be made by employee.

20. When coming to the provisions of M.P. Rules, it is very

clear to this Court that even said rules though provide for

limitation but the second part of Rule 7(5) provides in no uncertain

terms that no claim for gratuity under this Act shall be invalid

merely because the claimant failed to present his application

within the specified period. Though it is mentioned that the dispute

in this regard shall be referred to the Controlling Authority for its

decision but as per substantive provision of Act laid down in

Section 7, the Controlling Authority is required to adjudicate the

disputes as per Section 4 of the Act of 1972 which are in the matter

of dispute as to the amount of gratuity payable to an employee or

as to the admissibility of claim of the employee for payment of

gratuity or as to the person entitled to receive the gratuity and

obligation is cast on the employer to deposit with the Controlling

Authority such amount as he admits to be payable by him as a

gratuity. Therefore, no jurisdiction has been conferred on the

Controlling Authority to adjudicate any dispute of limitation or as

to the claim of the employee being barred by the limitation because

such provision runs directly in conflict with the substantive

provisions of the Act of 1972 which is a social security welfare

legislation and Section 7(2) & (3) and 3 (A) as discussed above by

us in this order do neither provide for nor contemplate of any

limitation period for claiming gratuity and these provisions, more

particularly after amendment in the Act of 1972 in the year 1987,

no doubt remains that the liability to pay gratuity and the right to

receive gratuity matures on the date of exit from employment and it

does not mature on claim being made to the employer and the

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adjudication of claim to be made by the employer. The claim

becomes perfect and mature on the date of exit from employment

and Controlling Authority will adjudicate only if there is dispute as

to admissibility of the claim which may be in the matter of length of

service, wages last drawn, nature of employment, nature of exit

from employment, dispute as to forfeiture of gratuity as per Section

4(6) etc. However, the act does not contemplate any limitation for

raising claim for payment of gratuity by an employee nor it

contemplates defeating such claim by any law of limitation.

21. It is trite in law that limitation does not curtail

substantive right but curtails a remedy to claim substantive right.

When the remedy provided as per Section 7(4) of the Act of 1972 is

unconditional and does not depend on limitation and more

particularly Sections 7(2) (3) and (3A) make it clear that the right

would mature on the date of exit from employment and it becomes

obligatory for the employer to deposit admitted claim of the

employee with the Controlling Authority within 30 days of exit

from employment then the employer cannot raise the ground of

limitation to defeat or defend such claim of gratuity.

22. The aforesaid issue of applicability of limitation in case

of delayed approach to the Controlling Authority was dealt with by

a Single Bench of this Court in detail in the case of MP Madhya

Kshetra Vidyut Vitran Company Limited versus D.D. Singh

reported in 2014(3) MPLJ 641 and by taking note of the relevant

legal provisions in the matter of payment of gratuity, a single

bench of this Court dealt with the aspect of applicability of

limitation as per the Rules of 1973 and held that since in terms of

Rule 7(5), it has been provided that no claim for gratuity under the

act shall be invalid only because the claimant failed to present his

application within the specified period, the claims for gratuity

cannot be dismissed on the ground of limitation. The Single Bench

in the aforesaid case held as under:-

“12. So far the question of delay in approaching the

Authority is concerned, the Rule 7 of Payment of Gratuity

(M.P.) Rules, 1973 prescribes the method of submission of

application. Rule 7(5) provides that no claim for gratuity

under the Act shall be invalid merely because the claimant

failed to present his application within specified period.”

The aforesaid judgment stands affirmed in appeal by the

Division Bench in WA No. 2013/2014 (Gwalior).

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23. In the case of Mohan Lal (supra) a Division Bench of

this Court has considered the aforesaid Section 7 of the Act of

1972 as well as Rule 7 of M.P. Rules held that the claim of the

employee for gratuity would not be defeated by delay. The Division

Bench held as under:-

“6. We revert to the other ground which prevailed

with the Appellate Authority in holding that the claim-

petition was not maintainable because application filed with

the employer by the employee under Rule 7(1) was time

barred. That has a short and also a long answer. Sub-Rule

(5) of Rule 7 effectively rebuffs that contention. It provides

that on the sole ground that gratuity was claimed late and

application was not made within specified period to the

employer the claim shall not be treated invalid. However, the

same provision also contemplates that if there is any dispute

and if there is any controversy in regard to belated

application that shall be resolved by the Controlling

Authority. Evidently, for the first time in appeal, the ground

was urged to deprive the Controlling Authority of its

jurisdiction envisaged under Rule 7(5) to deal and decide the

controversy. That apart, it has been rightly urged by Shri

Lahoti, appearing for the petitioner/employee, that neither

section 7(1) nor Rule 7(1) is mandatory. That is made clear

not only by sub-rule (5) of Rule 7, but by the other parts of

the parent provisions contained in section 7. Sub-section (2)

makes it employer's duty to determine the amount of gratuity

and to give notice in writing to the employee of the gratuity

payable "whether an application referred to in sub-section

(1) has been made or not". Subsection (3) obligates the

employer to arrange payment of the gratuity within the time

prescribed and by sub-rule (4) he is required to deposit with

the Controlling Authority such amount as he admits to be

payable by him against gratuity. It is noteworthy that neither

clause (a) of sub-section (4) nor the explanation appended to

it prescribes any period of limitation for making application

to the Controlling Authority for deciding dispute of non-

payment of gratuity.”

24. Another Division Bench of this court in the case of L.S.

Patel (supra) was again seized of the similar issue and again held

that the claim of gratuity would not be defeated by limitation as

provided under the Rules and by taking note of the provisions of

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Section 7(1) (2) (3) and (3A) of Act of 1972, the Division Bench

held as under:-

“10. From aforesaid discussion, what comes out loud

and clear is that the principal amount of gratuity determined

and payable u/S 7(1) (2) and (3) of the 1972 Act is statutory

in nature and there is no limitation prescribed under the

1972 Act for claiming the same. Similarly, the amount of

interest payable under sub-section (3A) of Section 7 of the

1972 Act is also statutory in nature. When both i.e. the

principal amount of gratuity and the interest accrued

thereupon becoming payable due to failure of employer to

release gratuity within 30 days of retirement, then it follows

as a necessary consequence that the amount of statutory

interest worked out and becoming payable u/S 7(3A)

becomes part and parcel of the principal amount of gratuity

determined and payable u/S 7(1)(2) and (3) of the 1972

Act.”

25. This is settled in law that amounts of retiral dues,

including gratuity, are not bounties. It is deferred payment to the

employee for the long services rendered by him to the Department.

This payment is made to the employees in December of their life

with a view to provide them a security. They can use this amount

for their own settlement, discharge of social obligations, etc. The

retiral dues are also recognized as property under the Article 300-

A of the Constitution. A person can be deprived of his property

only in accordance with a “law” made in this regard. In Bhaskar

Ramchandra Joshi v. State of M.P., reported in 2013 (4) MPLJ 35,

this Court has considered this aspect and opined as under:—

“10. The Apex Court on different occasions had

considered the scope and ambit of property. In Madhav Rao

Scindia v. Union of India, (1971) 1 SCC 85 : AIR 1971 SC

530 opined that Prievy Purse payable to exrulers is

property. In Nagraj, K. v. State of A.P., AIR 1985 SC 553,

Apex Court opined that right of person to his livelihood is

property which is subject to rules of retirement. In State of

Kerala v. Padmanabhan, (1985) 1 SCC 429 : AIR 1985 SC

356 the Apex Court opined that right of pension is property

under the Government service Rules, In Madhav Rao Scindia

v. State of M.P., AIR 1961 SC 298 and State of M.P. v.

Ranojirao, AIR 1968 SC 1053, the Apex Court opined that

property in the context of Article 300-A includes ‘money’,

salary which has accrued pension, and cash grants annually

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payable by the Government; pension due under Government

Service Rules; a right to bonus and other sums due to

employees under statute. This view was also taken in (1971)

2 SCC 330 : AIR 1971 SC 1409, Deokinandan v. State of

Bihar. Bombay High Court in the case reported in (2012) 3

Mah. L.J. 126, Shapoor M. Mehra v. Allahabad Bank opined

that retiral benefits including pension and gratuity constitute

a valuable right in property. In Deokinandan (supra) Apex

Court opined as under :-

“(i) The right of the petitioner to receive pension is

property under Article 31(1) and by a mere executive order

the State had 16 no powers to withhold the same. Similarly,

the said claim is also property under Article 19(1)(f) and it is

not saved by sub-article (5) of Article 19. Therefore, it

follows that the order denying the petitioner right to receive

pension affects the fundamental right of the petitioner under

Article 19(1)(f) and 31(1) of the Constitution and as such the

writ petition under Article 32 is maintainable.

11. In the light of aforesaid legal position, it is crystal

clear that right to get the aforesaid benefits is constitutional

right. Gratuity or retiral dues can be withheld or reduced

only as per provision made under M.P. Civil Services

(Pension) Rules, 1976. In the present case, there is no

material on record to show that respondents have taken any

action in invoking the said rules to stop or withhold gratuity

or other dues.”

26. The Apex Court in the case of State of Jharkhand v.

Jitendra Kumar Shrivastava, reported in 2013 AIR SCW 4749

opined as under:—

“14. Article 300A of the Constitution of India reads as

under: - “300A. Persons not to be deprived of property save

by authority of law No person shall be deprived of this

property save by authority of law.” Once we proceed on that

premise, the answer to the question posed by us in the

beginning of this judgment becomes too obvious. A person

cannot be deprived of this pension without the authority of

law, which is the Constitutional mandate enshrined in

Article 300A of the Constitution. It follows that attempt of

the appellant to take away a part of pension or gratuity or

even leave encashment without any statutory provision and

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under the umbrage of administrative instruction cannot be

countenanced”.

27. No other enabling provision is brought to the notice of

this Court which permits the employer to deprive the employee

from the right of gratuity, only on the ground of delay. In absence

of any enabling provision, in our opinion, employees cannot be

deprived of their right of gratuity which is derived from Article

300-A of the Constitution. Thus, ground of delay is of no help to the

appellant. It is therefore, held that the ground of delay taken by the

appellant is contrary to the provisions of the Act of 1972 and the

M.P. Rules.”

10. Therefore, in view of the matter having been conclusively decided by

the Division Bench, it has to be held that the claim of the respondent workman

could not have been defeated on the ground of delay and therefore, this

argument of the petitioners is discarded.

11. The second argument was raised with much vehemence that as per

Clause 21 of the agreement with the contractor, the liability to pay gratuity fell

on the contractor. The said Clause 21 is as under:-

“21. Gratuity/Terminal benefits

It will be the liability of the security agency to pay

Gratuity/Terminal benefits to the employees as per the existing

rates. The terminal benefits will be paid monthly in cash or as and

when the security guard leaves employment or soon after the

contract is over.”

12. The aforesaid provision in the agreement has been held to be

mandatory one so as to argue before this Court that in the absence of contractor

being impleaded as party, the application for gratuity was not maintainable

before the controlling authority.

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13. The aforesaid argument is very surprising in nature, because it is not

in dispute that contractors kept on changing every year or after every couple of

years and the respondents continued in employment for more than 20 years.The

aforesaid fact that the contractor agency was routinely replaced after every one

or two years whereas the respondents continued for more than 20 years give rise

to only one inference, that the respondents were in fact working with the

petitioner and the contract was only a camouflage. A particular Contractor after

having provided services for one or two years only, would otherwise also not be

liable to pay Gratuity, unless the tenure under a particular Contractor was more

than five years.

14. Even as per the Contract Labour Regulation and Abolition Act, 1970,

the following provision has been made for responsibility to pay wages to the

employees engaged through contractor.

“21. Responsibility for payment of wages.—(1) A contractor

shall be responsible for payment of wages to each worker

employed by him as contract labour and such wages shall be paid

before the expiry of such period as may be prescribed.

(2) Every principal employer shall nominate a representative

duly authorised by him to be present at the time of disbursement of

wages by the contractor and it shall be the duty of such

representative to certify the amounts paid as wages in such manner

as may be prescribed.

(3) It shall be the duty of the contractor to ensure the

disbursement of wages in the presence of the authorised

representative of the principal employer.

(4) In case the contractor fails to make payment of wages

within the prescribed period or makes short payment, then the

principal employer shall be liable to make payment of wages in full

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or the unpaid balance due, as the case may be, to the contract

labour employed by the contractor and recover the amount so paid

from the contractor either by deduction from any amount payable

to the contractor under any contract or as a debt payable by the

contractor.”

15. Section 21(4) makes it mandatory for the principal employer to make

payment of wages to the contract labour employed by the contractor and recover

the amount from the contractor in case the contractor fails to make payment of

wages. Therefore, once it is not disputed that the contractor has not paid gratuity

to the respondents, the petitioner being principal employer under Act of 1970

cannot raise an objection that in the absence of impleading contractor, no order

can be passed, because the record of working of the respondents must be with

the petitioners and so far as the liability to fall on the contractor is concerned,

Clause 21 of the agreement quoted above read with Section 21(4) of Act of

1970 gives a right to the petitioners to make a recovery from the contractor from

the bills, securities and other dues of the contractor to the extent of liability to

pay gratuity to the respondents, which would be paid by the petitioner in place

of the contractor. Therefore, even if it is inferred that the liability to pay

Gratuity fell on the Contractor, the workmen cannot be non-suited for non-

impleadment of the contractor.

16. So far as the liability of the petitioners to pay gratuity is concerned, in

terms of the Section 21(4) of Act of 1970 as quoted above, the principal

employer is under obligation to pay all wages. The wages referred to under the

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Act of 1970 are not “salary”, but the definition of wages as given under Act of

1970 as per Section 2(h) is as under:-

“2(h) “wages” shall have the meaning assigned to it in

clause (vi) of section 2 of the Payment of Wages Act, 1936 (4 of

1936);”

17. Coming to Section 2(vi) of Payment of Wages Act, 1936, the

definition whereof has been adopted for the purpose of Act of 1970, the said

definition is a very wide definition and reads as under:-

(vi) “wages” means all remuneration (whether by way of

salary, allowances, or otherwise) expressed in terms of money or

capable of being so expressed which would, if the terms of

employment, express or implied, were fulfilled, be payable to a

person employed in respect of his employment or of work done in

such employment, and includes—

(a) any remuneration payable under any award or settlement

between the parties or order of a Court;

(b) any remuneration to which the person employed is

entitled in respect of overtime work or holidays or any leave

period;

(c) any additional remuneration payable under the terms of

employment (whether called a bonus or by any other name);

(d) any sum which by reason of the termination of

employment of the person employed is payable under any law,

contract or instrument which provides for the payment of such

sum, whether with or without deductions, but does not provide for

the time within which the payment is to be made;

(e) any sum to which the person employed is entitled under

any scheme framed under any law for the time being in force, but

does not include—

(1) any bonus (whether under a scheme of profit sharing or

otherwise) which does not form part of the remuneration payable

under the terms of employment or which is not payable under any

award or settlement between the parties or order of a Court;

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(2) the value of any house-accommodation, or of the supply

of light, water, medical attendance or other amenity or of any

service excluded from the computation of wages by a general or

special order of 2 [appropriate Government];

(3) any contribution paid by the employer to any pension or

provident fund, and the interest which may have accrued thereon;

(4) any travelling allowance or the value of any travelling

concession;

(5) any sum paid to the employed person to defray special

expenses entailed on him by the nature of his employment; or

(6) any gratuity payable on the termination of employment in

cases other than those specified in sub-clause (d).”

18. The said definition includes not only salary, but includes all

remuneration, additional remuneration as well as any sum which becomes

payable by reason of termination of employment of the employee under any

law, contract, instrument, etc. The dues of gratuity being dues which become

payable on termination of employment are therefore, covered within the larger

definition of “wages” as per Section 2(vi)(d) of Payment of Wages Act, 1936.

19. The same issue was raised before the Madras High Court in the case

of Superintending Engineer v. Appellate Authority, Joint Commissioner of

Labour, 2012 SCC OnLine Mad 5357 and the High Court of Madras held as

under:-

“6. The only question that has to be considered in this petition was whether

the petitioner is eligible for gratuity for the period from 16.2.1988 to

30.4.1999. While the stand of the workman was that he was employed by the

Board and also granted service certificate and the said Certificate was also

produced before the controlling authority. But however the stand of the Board

was that it is only after the abolition of the contract labour and pursuant to the

recommendations made by Justice Khalid's Commission, he was given

employment as helper with effect from 1.5.1999, but the controlling authority

held that even assuming that the service rendered from 16.2.1988 to 1.5.1999

is under contractor, in the absence of contractor being paid gratuity for the

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said period, the workman is eligible to get gratuity from the petitioner-Board,

which is the principal employer.

7. In this context, reliance was placed upon a judgment of this Court

in Madras Fertilisers Limited v. Controlling Authority under Payment of

Gratuity Act [2003 (97) FLR 275 (Mad.).] , by Justice V.S. Sirpurkar (as he

then was). In the said judgment, it was held that the contractor, who was

engaged the workmen do not pay the gratuity then by virtue of section 21(4) of

the Contract Labour (Regulation and Abolition) Act, the principal employer is

liable to pay all dues and in such circumstances, the principal employer, after

paying the amount, can collect the dues payable from the respective

contractor. In paragraphs 26 and 27 of the said judgment, this Court had

observed as follows:—

“20. Learned Counsel argues that payment of gratuity is clearly

excluded by % sub-clause (6) which has been reproduced above.

According to the learned Counsel, no gratuity could be payable even

under Clause (d) and, therefore, sub-clause (6) will apply on all fours

to the present case. Reading sub-clause (6) it is clear that gratuity

could be excluded from the Wages only if such gratuity is not Covered

in Clause (d). The language of sub-clause (6) is very clear. However,

the contention of the learned Counsel is that gratuity under the

Payment of Gratuity Act is not covered by Clause (d) at all and in fact,

that clause does not refer to the gratuity at all. This contention is

obviously incorrect for the simple reason that otherwise there was no

occasion for the legislature to mention the term “any gratuity” in sub-

clause (6). The very language of sub-clause (6) suggests that any

gratuity which is not covered by Clause (d) is excluded from the term

“wages”. This would presuppose that Clause (d) covers some gratuity.

Which would that gratuity be is the moot question to be answered. The

answer is to be found in the plain language of Clause (d) which opens

with the words “any sum which by reason of the termination of

employment of the person employed is payable under any law,…”

There can be no dispute that the termination of employment of

respondents 4 to 41 entitled them to receive the payment of gratuity

under the law called Payment of Gratuity Act. This clause is complete

in itself and, therefore, it can be safely held that the gratuity which is

payable under the Payment of Gratuity Act is well covered under

Clause (d). Learned Senior Counsel, however, suggests that the

subsequent clause starting from the words “contract or instrument”

suggests that such law, contract or instrument should not provide for

the time within which the payment is to be made and in fact, there is a

time limit prescribed in the Payment of Gratuity Act. In my view, such

cannot be the import of the last clause. The last clause qualifies only

the “contract or instrument” because of the user of the word

“provides”. Now if the letter “s” is added to the word “provide”, it

would be only when there is the user of singular subject as against the

plural subject. The phrase “contract or instrument”, because of the

existence of the word “or” would become a singular and, therefore,

the verb will have to be used with the addition of the letter “s”. But

such would not be the position if the word “law,” is also to be added.

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It will then become “law and contract or instrument” in which case,

the verb will have to be used as if the subject is plural. Therefore, it is

clear that the clause starting from the word “contract” and ending

with the words “is to be made” is an independent clause and the

qualification given in that clause is only for “contract or instrument”

and not for “law”. The plain meaning of the clause would be that

where any sum is payable on termination of employment of the person

under any law (in this case Payment of Gratuity Act), it would be

covered under Clause (d) and, therefore, it excluded from the

operation of sub-clause (6) and therefore will amount to wages. Once

this construction is accepted, it is clear that;.t will be the basic

responsibility, under section 21(4) of the Contract Labour Act, of the

petitioner to make the payment of gratuity and the petitioner will have

a right to recover that su/n from the third respondent contractor

because, according to me, the initial responsibility to make the

payment of gratuity lies with the third respondent-contractor.

21. Accordingly, the petition is allowed to this extent only. Resultandy,

the petitioner shall make the payment of gratuity as per the

calculations and shall be entitled to recover the same from the third

respondent-contractor.”

8. As against the order passed by the controlling authority, the petitioner

preferred an appeal under section 7(7) of the Payment of Gratuity Act to the

first respondent. The first respondent took up the appeal on his file as A.G.A.

No. 52 of 2006 and issued notice to the second respondent-workman. The

second respondent, workman, also filed his objections. Thereafter, after

hearing both the parties, the authority confirmed the order passed by the

controlling authority. In doing so, he held that even the contractor liability to

pay gratuity can be fastened on the principal employer.

9. The case of the second respondent is fully supported by the aforesaid

judgment of this Court in Madras Fertiliser's case (referred to above). Hence,

the writ petition stands dismissed. However, it is made clear that it is open to

the second respondent to withdraw the amount lying in deposit with the

controlling authority, which is a condition precedent for preferring the appeal.

No costs. Consequently the connected MPs are closed.”

20. This Court is in respectful agreement with the view taken by the

Madras High Court, which in turn is based on an earlier view taken by the same

High Court. The provisions of labour laws are beneficial in nature and for that

purpose, the definition of wages under the Payment of Wages Act is larger then

mere salary and includes retiral benefits and therefore, the petitioners being the

principal employer under Act of 1970 were liable to pay “wages”, which

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included not only salary, but also retiral benefits, though they are having right to

recover the amount paid to the respondents from the contractor concerned, if

any Contractor can be fastened with such liability.

21. So far as question of interest is concerned, as per Section 7(3)(A), the

following has been provided :-

“Section: 7 Determination of the amount of gratuity-

(3A) If the amount of gratuity payable under sub-section (3)

is not paid by the employer within the period specified in sub-

section (3), the employer shall pay, from the date on which the

gratuity becomes payable to the date on which it is paid, simple

interest at such rate, not exceeding the rate notified by the Central

Government from time to time for repayment of long-term deposits,

as that Government may, by notification specify:

Provided that no such interest shall be payable if the delay

in the payment is due to the fault of the employee and the employer

has obtained permission in writing from the controlling authority

for the delayed payment on this ground.]”

22. The aforesaid provision clearly makes it mandatory for the employer

to pay interest on the amount of gratuity from the date gratuity becomes

payable. As per Section 7(3), gratuity does not become payable from the date of

application, but it becomes payable from the date of exit from employment and

has to be paid 30 days and therefore, the Controlling Authority has not erred in

awarding interest from the date of exit from employment till actual date of

payment/deposit of gratuity.

23. Consequently, this Court does not find any good reason to interfere in

the order passed by the Controlling Authority and the Appellate Authority. The

petitions fail and are dismissed. The respondents are at liberty to withdraw the

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amount, which is stated to be deposited before the Controlling/Appellate

Authority and also to recover the deficit, if any.

(VIVEK JAIN)

JUDGE

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