*HON’BLE SRI JUSTICE RAVI NATH TILHARI

+WRIT PETITION No.22498 of 2021

%22.04.2022

# The Executive Engineer, BRR

Vamsadhara Project,

Amadalavalasa, Srikakulam

District and another.

….Petitioners.

And:

1. Jogi Ramulu and others.

…..Respondents

! Counsel for the petitioners : G.P for Services-II

^ Counsel for the respondents : Sri V. Sudhakar Reddy for

1

st respondent

< Gist:

> Head Note:

? Cases referred:

1.2021 SCC OnLine SC 829

2.

AIR 1979SC 1981

3.

2013(2) ALD 325

4.

1988(2)SCC 537

5.978 (2) SCC 213

2

HON’BLE SRI JUSTICE RAVI NATH TILHARI

WRIT PETITION No.22498 of 2021

22.04.2022

Between:

The Executive Engineer, BRR

Vamsadhara Project,

Amadalavalasa, Srikakulam

District and another.

….Petitioners.

And:

1. Jogi Ramulu and others.

….Respondents

DATE OF JUDGMENT PRONOUNCED: 22.04.2022.

SUBMITTED FOR APPROVAL:

THE HON’BLE SRI JUSTICE RAVI NATH TILHARI

1. Whether Reporters of Local newspapers may Yes/No

be allowed to see the Judgments?

2. Whether the copies of judgment may be Yes/No

Marked to Law Reporters/Journals

3. Whether Your Lordships wish to see the fair

Copy of the Judgment? Yes/No

________________________

RAVI NATH TILHARI, J

3

HON’BLE SRI JUSTICE RAVI NATH TILHARI

WRIT PETITION No.22498 OF 2021

JUDGMENT :

1. Heard learned Government Pleader for Services -III for the

petitioners and Sri V. Sudhakar Reddy, learned counsel for the 1

st

respondent. The respondents 2 and 3 are the authorities who ha ve

passed the orders under challenge.

2. Learned Government Pleader for the petitioners submits that the

1

st

respondent herein was initially appointed as Nominal Muster Roll

(NMR) Man Mazdoor in the year 1972. He worked up to June, 1984 and

thereafter his services were terminated against which he approached

the Industrial Tribunal-cum-Labour Court, Visakhapatnam in I.D.No.51

of 1991 in which the award dated 25.09.1996 was passed directing the

petitioners herein to reinstate the first respondent into duty within two

months. Challenging the said award, the petitioners filed the Writ

Petition No.13371 of 1997 which was dismissed on 14.07.2003.

Thereafter, the first respondent was reinstated into duty. Again his

services were terminated on 05.01.2005. Challenging the said action,

the 1

st

respondent filed Writ Petition No.1498 of 2005 which was

disposed of vide judgment dated 31.03.2010 directing the petitioners

herein to consider him for regularization. Alleging disobedience of the

order dated 31.03.2010, the 1

st

respondent filed C.C.No.1373 of 2011 in

which the petitioners have filed their response. The first respondent

retired on 31.01.2015 on attaining the age of superannuation.

3. After his retirement, the first respondent filed P.G.No.1 of 2015

before the Assistant Commissioner of Labour, Srikakulam under the

Payment of Gratuity Act, 1972 (for short, “the Act 1972”) for payment of

gratuity of Rs.2,05,962/- in which the petitioners filed their written

statement inter alia stating that the 1

st

respondent was not entitled for

4

payment of any gratuity. However, the Assistant Commissioner of

Labour, Srikakulam-3

rd

respondent passed the award dated 20.08.2017

directing the first petitioner herein to pay an amount of Rs.2,05,962/-

to the 1

st

respondent together with interest at the rate of 12% per

annum from the date of retirement. The award was challenged by the

petitioners in P.G.F.A.No.1 of 2019 which was dismissed by the

appellate authority under the Act, 1972 and the Deputy Commissioner

of Labour (FAC), Srikakulam-2

nd

respondent, vide order dated

01.06.2020.

4. Challenging the aforesaid orders, the present writ petition under

Article 226 of the Constitution of India was filed for the following reliefs:

“It is hereby prayed that this Hon‟ble Court may be pleased to

issue a Writ of Certiorari and call for the record relating to

P.G.No.01 of 2015 dated 28.03.2017 passed by the 3

rd

respondent

and further confirmed in PGFA No.1 of 2019 dated 01.06.2020 by

the 2

nd

respondent and to quash or set aside the same by holding

as erroneous and contrary to the provisions payment of Gratuity

Act, 1972.”

5. Learned counsel for the petitioner submits that the Irrigation

Department is not an establishment under Section 1(3)(b) of the Act,

1972. He further submits that the 1

st

respondent hereinbeing Nominal

Muster Roll (NMR) is not an employee under Section 2(e) of the Act,

1972. Consequently the first respondent is not entitled to the payment

of any gratuity under the Act, 1972. The orders under challenge

deserve to be quashed. He has placed reliance on the judgment of the

Hon‟ble Apex Court in case of State of Madhya Pradesh and others vs.

Somdutt Sharma

1

.

6. Sri V. Sudhakar Reddy, learned counsel for the first respondent

submits that the Irrigation Department is an „establishment‟ within the

meaning of Section 1(3)(b) of the Act, 1972. He further submits that the

1

2021 SCC OnLine SC 829

5

first respondent is an „employee‟ within the meaning of Section 2(e) of

the Act, 1972. Consequently, the 1

st

respondent is entitled for payment

of gratuity under Section 4 of the Act, 1972. There is no illegality in the

orders impugned in the writ petition. He has placed reliance on the

judgments in the cases of State of Punjab vs. Labour Court Jullunder

and others

2

and Nihal Ahmed Sidiqi and another vs. Bharat Heavy

Electricals Ltd., Hyderabad and another

3

, in support of his

contentions.

7. I have considered the submissions advanced by the learned

counsels for the parties and perused the material available on record.

8. In view of the submissions advanced by the learned counsels for

the parties, the following points arise for consideration:-

i) Whether the Irrigation Department is an „establishment‟ under

Section 1(3)(b) of the Act, 1972?

ii) Whether the 1

st

respondent on Nominal Muster Roll (NMR)

Man Mazdoor, is an „employee‟ within the meaning of Section

2(e) of the Act, 1972?

iii) Whether the impugned orders call for any interference in the exercise

of writ jurisdiction under Article 226 of the Constitution of India?

9. To decide the first point, it is relevant to reproduce Section 1(3)(b)

of the Act, 1972, which defines „establishment‟ as under:-

Section.1

Short title, extent, application and commencement.

(1) ……………….

(2) ……………….

(3) It shall apply to—

(a) every factory, mine, oilfield, plantation, port and railway

company;

(b) every shop or establishment within the meaning of

any law for the time being in force in relation to shops

and establishments in a State, in which ten or more

persons are employed, or were employed, on any day of

the preceding twelve months;

(c) …………….

2

AIR 1979SC 1981

3

2013(2) ALD 325

6

(3A) A shop or establishment to which this Act has become

applicable shall continue to be governed by this Ac t

notwithstanding that the number of persons employed

therein at any time after it has become so applicable falls

below ten.]

(4)…………”

10. Learned counsel for the petitioners submits that “any law for the

time being in force in relation to Shops and Establishments in a State”

as used in Clause (b), in respect of the State of Andhra Pradesh, would

refer to the A.P Shops and Establishment Act, 1988” (In short, “the Act,

1988”) which defines „Establishment‟ under Section 2(10) of the Act,

1988 as under:

Section 2 definitions :-

In this Act unless the context otherwise requires:-

“(10).Establishment‟ means a shop, restaurant, eating-house,

residential hotel, lodging house, theatre or any place of public

amusement or entertainment and includes a commercial

establishment and such other establishment as the Government may

by notification, declare to be an establishment for the purposes of this

Act.”

Based on the aforesaid definition, learned counsel for the

petitioners submits that the Irrigation Department is neither a

shop as defined under Section 2(21) nor is a restaurant,

eating house, residential hotel, lodging, lodging house, theatre

as defined in Section 2(22), or any place of public amusement

or entertainment nor a Commercial Establishment as defined

under Section 2(5) of the Act, 1988. He submits that any

notification by the State Government to declare the Irrigation

Department as an establishment, has also not been issued.

Consequently, the Irrigation Department is not an

establishment under Section 1(3)(b) of the Act, 1972.

11. The aforesaid submission of the learned counsel for the

petitioners based on Section 2(10) of the Act, 1988 deserves rejection as

being without any substance.

12. A bare reading of the Clause (b) of Sub Section (3) of Section 1 of

the Act, 1972 shows that the payment of Gratuity Act, 1972 applies to

every shop or „establishment‟ within the meaning of any law for the time

being in force in relation to Shops and Establishment in a State in

7

which 10 or more persons are employed or were employed on any day of

the preceding twelve months.

13. The expression „Law‟ as used in Section 1(3)(b) of the Act, 1972,

was considered by the Hon‟ble Apex Court, in the case of State of

Punjab (supra), in which it has been held that the expression „law‟, in

the expression “any law for the time being in force in relation to the

Shops and Establishment in a State” under Section 1(3)(b) of the Act,

1972 is comprehensive in its scope, and can mean, a law in relation to

shops as well as separately, a law in relation to establishments, or a law

in relation to shops and commercial establishments , and a law in

relation to non commercial establishments. It was further held that

Section 1(3)(b) of the Act, 1972 applies to every establishments within

the meaning of any law for the time being in force in relation to

establishments in a State. Such an establishment would include an

Industrial Establishment within the meaning of Section 2( ii) of the

Payment of Wages Act. It was further held that the Payment of Gratuity

Act, 1972, shall apply to an establishment in which any work relating to

construction, development or maintenance of buildings, roads, bridges

or canals or relating to operations connected with navigation irrigation

or the supply of water or relating to the generation, transmission and

distribution of electricity or any other form of power is being carried on.

14. Paragraph 3 of State of Punjab (supra) is reproduced as under:

“3. In this appeal, the learned Additional Solicitor - General

contends on behalf of the appellant that the Payment of Gratuity Act,

1972 cannot be invoked by the respondents because the Project does

not fall within the scope of Section 1(3) of that Act. Section

1(3) provides that the Act will apply to :

"(a) every factory, mine, oilfield, plantation, port and railway

company;

(b) every shop or establishment within the meaning of any law for the

time being in force in relation to shops and establishments in a

8

State, in which ten or more persons are employed, or were employed,

on any day of the preceding twelve months;

(c) such other establishments or class of establishments, in which

ten or more employees are employed, or were employed, on any day

of the preceding twelve months, as the Central Government may, by

notification, specify in this behalf."

According to the parties, it is clause (b) alone which needs to be

considered for deciding whether the Act applies to the Project. The

Labour Court has held that the Project is an establishment within

the meaning of the Payment of Wages Act, section 2(ii) (g) of which

defines an "industrial establishment" to mean an "establishment in

which any work relating to the construction, development or

maintenance of buildings, roads, bridges or canals, or relating to

operations connected with navigation, irrigation or the supply of

water, or relating to the generation, transmission and distribution of

electricity or any other form of power is being carried on." It is urged

for the appellant that the Payment of Wages Act is not an enactment

contemplated by section 1(3)(b) of the Payment of Gratuity Act. The

Payment of Wages Act, it is pointed out, is a central enactment

and section 1(3)(b), it is said, refers to a law enacted by the State

Legislature. We are unable to accept the contention. Section 1(3) (b)

speaks of "any law for the time being in force in relation to shops and

establishments in a State." There can be no dispute that the Payment

of Wages Act is in force in the State of Punjab. Then, it is submitted,

the Payment of Wages Act is not a law in relation to "shops and

establishments". As to that, the Payment of Wages Act is a statute

which, while it may not relate to shops, relates to a class of

establishments, that is to say, industrial establishments. But, it is

contended, the law referred to under section 1(3) (b) must be a law

which relates to both shops and establishments, such as the Punjab

Shops & Commercial Establishments Act, 1958. It is difficult to

accept that contention because there is no warrant for so limiting the

meaning of the expression "law" in section 1(3) (b). The expression is

comprehensive in its scope, and can mean a law in relation to shops

as well as, separately, a law in relation to establishments, or a law in

relation to shops and commercial establishments and a law in

relation to noncommercial establishments. Had section

1(3)(b) intended to refer to a single enactment, surely the appellant

would have been able to point to such a statute, that is to say, a

statute relating to shops and establishments, both commercial and

non-commercial. The Punjab Shops & Commercial Establishments

Act does not relate to all kinds of establishments. Besides shops, it

relates to commercial establishments alone. Had the intention of

Parliament been, when enacting section 1(3)(b), to refer to a law

relating to commercial establishments, it would not have left the

expression "establishments" unqualified. We have carefully examined

9

the various provisions of the Payment of Gratuity Act, and we are

unable to discern any reason for giving the limited meaning

to section 1(3) (b) urged before us on behalf of the appellant. Section

1(3) (b) applies to every establishment within the meaning of any

law for the time being in force in relation to establishments in a

State. Such an establishment would include an industrial

establishment within the meaning of section 2(ii) (g) of the Payment

of Wages Act. Accordingly, we are of opinion that the Payment of

Gratuity Act applies to an establishment in which any work

relating to construction, development or maintenance of

buildings, roads, bridges or canals, or relating to operations

connected with navigation, irrigation or the supply of water, or

relating to the generation, transmission and distribution of electricity

or any other form of power is being carried on. The Hydel Upper

Bari Doab Construction Project is such an establishment, and

the Payment of Gratuity Act applies to it.”

15. Section 2(ka) of the Industrial Disputes Act, 1947 defines

Industrial Establishment as under:

"(ka) “Industrial establishment or undertaking" means an

establishment or undertaking in which any industry is

carried on: Provided that where several activities are

carried on in an establishment or undertaking and only

one or some of such activities is or are an industry or

industries, then,--

(a) if any unit of such establishment or

undertaking carrying on any activity,

being an industry, is severable from the

other unit or units of such establishment

or undertaking, such unit shall be deemed

to be a separate industrial establishment

or undertaking.”

16. Section 2(j) of the Industrial Disputes Act, 1947 defines „industry‟

as under:-

“(j) Industry" means any business, trade, undertaking,

manufacture or calling of employers and includes any calling,

service, employment, handicraft, or industrial occupation or

avocation of workmen”

10

17. In Des Raj and others vs. State of Punjab and others

4, the

Hon‟ble Apex Court held that the main functions of the Irrigation

Department where subjected to the Dominant nature test clearly come

within the ambit of industry. Paragraph 13 of Des Raj (supra) reads as

under:

“13. The Administrative Report of the facts found by the High

Court in the instant case have attempted to draw out certain

special features. The legal position has been indicated in the

earlier part of our judgment. On the tests, as already laid down

in the judgments, we do not think these facts found in this case

can take out the Irrigation Department outside the purview of

the definition of 'industry'. We have already referred to the

Dominant Nature test evolved by Krishna Iyer, J. The main

functions of the Irrigation Department where subjected to the

Dominant Nature test clearly come within the ambit of industry.

We have not been able to gather as to why even six years after

the amendment has been brought to the definition of industry

in section 2(j) of the Act the same has not been brought into

force. This Court on more than one occasion has indicated that

the position should be clarified by an appropriate amendment

and when keeping in view the opinion of this Court, the law was

sought to be amended, it is appropriate that the same should be

brought into force as such or with such further alterations as

may be considered necessary, and the legislative view of the

matter is made known and the confusion in the field is cleared

up.”

18. The petitioners have not laid any foundation in the writ petition

nor it has been contended by the learned counsel for the petitioners

that the irrigation department in State of Andhra Pradesh discharges

regal or sovereign functions of the State, nor that applying the

„Dominant nature test‟ as laid down in Bangalore Water Supply and

Sewerage Board vs. A. Rajappa

5, and applied in Des Raj (supra), the

main functions of the Irrigation Department in State of Andhra Pradesh

fall outside the purview of the definition of Industry.

19. Therefore, in view of the above pronouncement of law, the

Irrigation Department of State of Andhra Pradesh is also an „industry‟

4

1988(2)SCC 537

5

1978 (2) SCC 213

11

under Section 2(j) of the Act, 1947. It being an industry would be an

„Industrial Establishment‟ under Section 2(ka) of the Act, 1947 and in

view of the law laid down in the case of State of Punjab (supra) that

Section 1(3)(b) of the Act, 1972 applies to every establishment within

the meaning of any law for the time being in force in relation to

establishments in a State, including industrial establishment; and the

work of the Irrigation Department relating to the operations connected

with Irrigation supply of water, the „Irrigation Department‟ in the State

of A.P is also an „Establishment‟ under Section 1(3)(b) of the Payment of

Gratuity Act, 1972.

20. In Somdutt Sharma (supra), upon which reliance has been

placed by the learned counsel for the petitioners to submit that the

Irrigation Department is not an Industrial Establishment , the

expression „industrial establishment‟ was under consideration in the

context of Section 25(L) of the Industrial Disputes Act 1947.

21. Section 25(L) of the Industrial Disputes Act defines the Industrial

Establishment as under:

“25L. Definitions.- For the purposes of this Chapter,--

(a) "Industrial Establishment" means--

(i) a factory as defined in clause (m) of section 2 of the Factories

Act, 1948 (63 of 1948 );

(ii) a mine as defined in clause (i) of sub- section (1) of section 2 of

the Mines Act, 1952 (35 of 1952 ); or

(iii) a plantation as defined in clause (f) of section 2 of the

Plantations Labour Act, 1951 (69 of 1951 );

(b) notwithstanding anything contained in sub - clause (ii) of

clause (a) of section 2,--

(i) in relation to any company in which not less than fifty- one per-

cent of the paid- up share capital is held by the Central

Government, or

(ii) in relation to any corporation[ not being a corporation referred

to in sub- clause (i) of clause (a) of section 2] established by or

under any law made by Parliament, the Central Government shall

be appropriate Government.”

22. A perusal of the above definition of „industrial establishment‟

shows that it is only for the purposes of Chapter-V of B of the I.D. Act.

12

23. According to Section 25(L)(a)(i), „Industrial Establishment‟ means

a factory as defined in Clause (m) of Section2 of the Factories Act, 1948.

24. In Somdutt Sharma (supra), the Hon‟ble Apex Court recorded

that there was no finding that the Irrigation department was doing

manufacturing activity as provided in Sub Clause (k) of Section 2 of the

Factories Act; it was in the context of Section 25 L(a)(i) of Section 2(k) of

the Factories Act. The definition of „Industrial Establishment‟ under

Section 2(ka) of the Industrial Disputes Act, 1947, is a wider definition

than under Section 25L of I.D Act.

25. I am of the considered view that the Irrigation Department is an

industry covered under the expression „Industrial Establishment‟ under

Section 2(ka) of the Act, 1947and therefore it would also be an

„establishment‟ under Section 1(3)(b) of the Act, 1972, in view of the law

laid down in State of Punjab (supra), even if it may not be an industrial

establishment under Section 25L for the purposes of Chapter-V B of

the I.D Act.

26. Now coming to the next point whether 1

st respondent is an

employee under Section2(e) of the Act, 1972 or not.

27. Section 2(e) of the Act, 1972 defines „employee‟ as under:

“(e) “employee" means any person (other than an apprentice)

employed on wages, 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, and whether or not such p erson is employed in a

managerial or administrative capacity, but does not include any

such person who holds a post under the Central Government or a

State Government and is governed by any other Act or by any rules

providing for payment of gratuity.”

28. Learned counsel for the petitioners submits that the 1

st

respondent is not an employee within the meaning of Section 2(e) of the

Act, 1972 as the 1

st

respondent is a Nominal Muster Roll (NMR).

13

29. The point is no more res integra as in the case of Nihal Ahmed

Sidiqui (supra), this Court held that the definition of the expression

„employee‟ in Section 2(e) of the Act, 1972 is liberal and in wide terms.

Any person employed on wages in any establishment or factory to do

any skilled, semi skilled or unskilled, manual, supervisory, technical

or clerical work, whether the terms of such employment are express or

implied is an employee. It was further held that the services rendered by

an employee on N.M.R basis or on work-charged establishment cannot

be ignored completely for the purposes of payment of gratuity by the

establishment and for the services rendered by an employee on NMR

basis or on work charged establishment, he earns a right to seek

gratuity for the corresponding length of service put up by him.

30. Paragraphs 15 to 17 of NihalAhmed Sidiqi supra) are being

reproduced as under:

“15. When we look at the definition of the expression

`employee‟ as defined in Section 2(e) of the Payment of Gratuity

Act, 1972, one would appreciate that that it is couched in very

liberal and in wide terms. Any person employed on wages in any

establishment or factory to do any skilled, semi -skilled or

unskilled, manual, supervisory, technical or clerical work,

whether the terms of such employment are express or implied, he

answers the definition of the expression `employee‟.

16. As per Section 4 of the Payment of Gratuity Act, Gratuity

becomes payable to such an employee on termination of his

employment after he has rendered continuous services 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.

17. It therefore becomes imminently clear that for the

service rendered by an employee on Nominal Muster Roll basis or

on Work-charged establishment, he earns a right to receive

gratuity for the corresponding length of service put in by him. In

the instant case, the service rendered by the petitioners on NMR

basis or work-charged establishment could not have been ignored

completely for the purposes of payment of gratuity by BHEL, upon

accepting their offer to retire voluntarily.”

14

31. In view of the aforesaid, for the services rendered by the 1

st

respondent as NMR he is entitled for payment of gratuity.

32. Thus considered on point No.1 it is held that the irrigation

department is an establishment under Section 1(3)(b) of the Payment of

Gratuity Act, 1972. On point No.2 it is held that an employee is

entitled for gratuity under the provisions of the Act, 1972 even for the

services rendered by him as N.M.R basis or on work charged

establishment. Accordingly, on point No.3, it is held that the impugned

orders do not suffer from any illegality and call for no interference in the

exercise of writ jurisdiction.

33. The writ petition lacks merit and is dismissed. No order as to

costs.

Consequently, the Miscellaneous Petitions, if any, shall also stand

closed.

_________________________

RAVI NATH TILHARI, J

Date:22.04.2022,

Note:

L.R copy to be marked.

B/o.

Gk

15

HON’BLE SRI JUSTICE RAVI NATH TILHARI

48

WRIT PETITION No.22498 OF 2021

22.04.2022

Gk