Skip to content


Namburu Udaya Sundara Rao Vs. Maddula Venkata Panduranga Nayakulu and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAndhra Pradesh High Court
Decided On
Case NumberW.P. No. 4380 of 1977
Judge
Reported in(1983)IILLJ240AP
ActsAndhra Pradesh Shops and Establishments Act, 1966 - Sections 46; Constitution of India - Article 14
AppellantNamburu Udaya Sundara Rao
RespondentMaddula Venkata Panduranga Nayakulu and anr.
Excerpt:
labour and industrial - gratuity - section 46 of andhra pradesh shops and establishments act, 1966 and article 14 of constitution of india - order of district court allowing gratuity for resigned employee challenged - provisions for grant of gratuity not discriminatory - such provision prescribes six months unbroken service before termination of service for eligibility for gratuity - manner of termination irrelevant - held, grant of gratuity to employee who served twenty seven unbroken years on resignation justified. - .....had put in 27 years of unbroken continued service was entitled to payment of gratuity and also two months wages for non-payment of gratuity. he rejected the contention of the employer (petitioner herein) that the provisions of s. 40(3) were struck down in their entirety by the aforesaid judgment of this court. in that view he allowed the claim of the employee for gratuity of rs. 2,362-50 and wages for two months for non-payment of gratuity i.e. rs. 350/- and rejected the other claims as the counsel for the 1st respondent did not press for the same in the lower court. this order is now challenged in this petition. 6. sri t. veerabhadrayya, the learned counsel for the petitioner mainly contended that the provisions of s. 40(3) of the act which provide for payment of gratuity even in cases.....
Judgment:

Ramachandra Rao, J.

1. In this writ petition, the petitioner challenges an order of the District Court made under S. 46 of the A. P. Shops and Establishments Act, 1966, setting aside the order of the Principal District Munsif, Vijayawada passed under Ss. 43 and 44 of the said Act and allowing the claim of the 1st respondent for payment of Rs. 2,362-50 towards gratuity in addition to a sum of Rs. 350/- towards wages for two months for non-payment of gratuity.

2. The facts which are not in dispute are as follows : The 1st respondent Maddula Venkata Panduranga Nayakulu was employed as salesman in the shop run by the petitioner Namburu Udaya Sundarrao under the name and style of Seetharama General Stores, as a partnership firm, from 1945. In 1971 the shop which was run by the partnership firm was transferred exclusively in the name of the petitioner herein and the 1st respondent was continued in the service of the shop without any break. On 24th April, 1972 the 1st respondent sent an application for grant of leave till 28th April, 1972. As no reply was received the 1st respondent sent another application on 29th April, 1972 requesting for grant of leave for another month enclosing a medical certificate and also for payment of salary for April, 1972. Subsequently the 1st respondent sent an application for extension of leave and ultimately he sent a resignation letter which was accepted by the petitioner on 4th July, 1972. The 1st respondent demanded payment of salary and gratuity, but the petitioner did not pay full salary due to the 1st respondent and also the gratuity which he is entitled to on account of unbroken continuous service of 27 years. As the said amount was not paid by the petitioner, the 1st respondent preferred a claim under Ss. 43 and 44 of the Act before the Principal District Munsif, Vijayawada, claiming the following amounts (1) Rs. 38-20 towards difference of salary for the month of April, 1972; (2) Rs. 396-70 towards salary from 1st May, 1972 to 8th July, 1972; (3) Rs. 2,362-50 towards gratuity; (4) Rs. 350 towards wages for belated payment of gratuity; and (5) costs.

3. The petitioner filed a counter opposing the claim on the ground that the 1st respondent had voluntarily resigned the job and that the provisions of S. 40(3) of the Act were struck down by the High Court as violative of Art. 14 of the Constitution.

4. The learned Principal District Munsif rejected the claim for payment of gratuity and allowed the claim only to the extent of Rs. 246-67 with interest thereupon at 6% p.a. from the date of filing of the petition till date of payment.

5. Against the said order, the 1st respondent employee preferred an appeal to the District Court Krishna under S. 46 of the Act. The only question urged before the District Court was that the employee was entitled for payment of gratuity and wages for a period of two months for non-payment of gratuity. The learned District Judge on a consideration of the provisions of S. 40(3) of the Act and the decision of this Court in Suryapet Co-operative Marketing Society Ltd. v. Munsif Magistrate, Suryapet (1972) 2 APLJ 365, came to the conclusion that the employee who had put in 27 years of unbroken continued service was entitled to payment of gratuity and also two months wages for non-payment of gratuity. He rejected the contention of the employer (petitioner herein) that the provisions of S. 40(3) were struck down in their entirety by the aforesaid judgment of this Court. In that view he allowed the claim of the employee for gratuity of Rs. 2,362-50 and wages for two months for non-payment of gratuity i.e. Rs. 350/- and rejected the other claims as the counsel for the 1st respondent did not press for the same in the lower Court. This order is now challenged in this petition.

6. Sri T. Veerabhadrayya, the learned Counsel for the petitioner mainly contended that the provisions of S. 40(3) of the Act which provide for payment of gratuity even in cases where an employee resigns from service, was struck down by this Court in Suryapet Co-operative Marketing Society Ltd. v. Munsif Magistrate Suryapet and therefore the claim of the 1st respondent who had resigned from service, for payment of gratuity is not sustainable as he had voluntarily resigned from service. Sri G. V. R. Mohan Rao, the learned Counsel for the employee the 1st respondent on the other hand contended that the said decision does not apply to the facts of the present case, and that even otherwise, the said decision does not lay down the correct law. S. 40 of the Act prescribes the conditions for terminating the services of an employee and for payment of gratuity. Under sub-s. (1) of S. 40 no employer shall without a reasonable cause and except for misconduct, terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee, at least one month's notice in writing or wages in lieu thereof and a gratuity amounting to fifteen days average wages for each year of continuous employment; sub-s. (3) of S. 40 provides for payment of gratuity in other cases, i.e., in cases not covered by sub-s. (1) and it reads as follows :

'An employee who has completed the age of sixty or who is physically or mentally unfit having been so declared by a medical certificate, or who wants to retire on medical grounds or to resign his service, may give up his employment after giving to his employer notice of at least one month in the case of an employee of sixty years of age and fifteen days in any other case; and every such employee and the dependent of an employee who dies while in service shall be entitled to receive gratuity amounting to fifteen day's average wages for each year of continuous employment calculated in the manner provided in the explanation to sub-s. (1). He shall be entitled to receive the wages from the date of giving up the employment until the date on which the gratuity so payable is actually paid, subject to a maximum of wages for two months.'

7. The rest of the provisions of the said section are omitted as they are not relevant for the purpose of this case.

8. Now under sub-s. (3) an employee who wants to resign his service may give up his employment after giving a notice of one month, and every such employee shall be entitled to receive gratuity amounting to 15 day's average wages for each year of continuous employment calculated in the manner provided in the explanation to sub-s. (1). S. 40 has been amended in 1976, but the present case is governed by the provisions of S. 40 as they stood prior to its amendment in 1976. The language of sub-s. (3) of S. 40 is clear and unambiguous in providing for payment of gratuity to an employee who voluntarily resigns from service after giving the notice as prescribed therein. In the instant case, it is not disputed that the employee has given the notice to the petitioner employer of his intention to resign from service as required by the provisions of sub-s. (3) of S. 40. It is also not disputed that the employee had put in 27 years of unbroken continuous service in the shop of petitioner. Therefore, the claim of the 1st respondent employee squarely falls within the provisions of sub-s. (3) to S. 40 and he will be entitled to payment of gratuity as claimed by him. There is also no dispute about the quantum of gratuity claimed by the 1st respondent and also the two months wages claimed by him towards non-payment of gratuity. Therefore, the claim of the 1st respondent for payment of gratuity and two months wages for non-payment of gratuity was rightly allowed by the learned District Judge.

9. The only question that remains for consideration is whether the provisions of S. 40(3) are unconstitutional as infringing the right under Art. 14 of the Constitution. It is not disputed that the provisions of S. 40 of the Act providing for payment of gratuity is within the legislative competence of the State Legislature and covered by items 22 and 24 of List III of 7th Schedule of the Constitution. It could not also be contended that the provisions of S. 40(3) impose any unreasonable restrictions on the employer's right to carry on business. Such a challenge was negatived by this Court in the decision referred to supra.

10. The question that falls for consideration is whether the provisions of S. 40(3) are arbitrary and discriminatory and violate the right guaranteed under Art. 14 of the Constitution. In support of this contentions Sri Veerabhadrayya relies on the ruling of this Court in Suryapet Co-operative Marketing Society Ltd. v. Munsif Magistrate, Suryapet (supra). In that case the employee, i.e. a store keeper, employed in the Suryapet Co-operative Marketing Society Ltd., who had put in more than five years of service resigned from service and demanded payment of provident fund, gratuity and other benefits. As the said demand was not complied with, he filed a petition before the Munsif Magistrate, Suryapet, under S. 43 of the Act claiming gratuity and two months salary for non-payment of gratuity, 45 days leave salary and provident fund and bonus. The employer filed writ petition in this court challenging the provisions of S. 40 of the Act, as infringing Arts. 19(1)(g) and 14 of the Constitution. The learned Judges held that the provisions of S. 40 sub-s. (1) do not violate the right guaranteed under Art. 19(1)(g) but held :

'S. 40(3) of the Act in so far as it fixed the minimum qualification of six months unbroken service for entitlement to gratuity, even in cases of resignation, is unreasonable and violative of Art. 14 of the Constitution. Hence we hold that the portion of S. 40(3) of the Act is void and ineffective.'

11. In that view the petition was partly allowed with a direction to the Munsif Magistrate not to proceed with the enquiry with regard to the payment of gratuity, but only proceed to enquire into the other claims made by the employee.

12. First, it will be seen that S. 40(3) did not prescribe any minimum qualification of six months unbroken service for entitlement to payment of gratuity. On the other hand sub-s. (3) provides for payment of gratuity to an employee even in cases where he voluntarily resigns from service. Moreover, in that case the employee had put in more than five years of service before he voluntarily resigned from the service. The question of striking down the provisions of sub-s. (3) of S. 40 in so far as it fixed minimum qualification of six months unbroken service for entitlement to payment of gratuity did not arise for consideration and therefore, to that extent, the said observation made by the learned Judges are obiter dictum. Further, the observation extracted above proceeded on a wrong assumption that sub-s. (3) of S. 40 prescribed a minimum period of six months for payment of gratuity to am employee who voluntarily resigns from service. As observed by us the section does not prescribe any time limit for payment of gratuity in cases falling under sub-s. (3) including the cases of voluntary resignation from service by an employee. Therefore, the striking down on the provisions of sub-s. (3) of S. 40 of the Act on a wrong assumption that the section provides for the minimum qualification of six months unbroken service cannot be said to have laid down the law correctly. Normally the said decision would be binding, but inasmuch as the said decision was rendered on a misreading of the provisions of S. 40(3) and also as the said observations are obiter and as the said question did not at all arise for consideration, we do not think it necessary to refer the matter to a Full Bench.

13. In Halsbury's Laws of England, 3rd Edition, Volume 22, para 1687 at pages 799-800 it has been observed :

'The Court is not bound to follow a decision of its own if given per incuriam. A decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or a Court of a co-ordinate jurisdiction which covered the cases before it or when it has acted in ignorance of a decision of the House of Lords.'

14. In Salmond on Jurisprudence (12th Edition page 150) the learned author says :

'A precedent is not binding if it was rendered in ignorance of a statute or a rule having the force of a statute, i.e., delegated legislation.'

15. In the instant case as we have come to the conclusion that the decision in the above said case Suryapet Co-operative Marketing Society Ltd. v. Munsif Magistrate, Suryapet (1972-2 APLJ 365) was rendered on a misreading of the provisions of sub-s. (3) of S. 40 and also as the question did not directly arise for consideration there, with respect we are unable to follow the aforesaid decision.

16. We are also unable to see how the provisions of S. 40(3) violate the provisions of Art. 14 of the Constitution. The payment of gratuity to employees in Shops and Establishments governed by the said Act is uniformly applied to all employees who are situated alike. It is not shown how the provisions of sub-s. (3) of S. 40 constitute any hostile or invidious discrimination against the employers covered by the said Act. The provisions provide for payment of gratuity to all the employees at the same rate. Therefore, we do not find any substance in the contention of the learned Counsel for the petitioner that the provisions of S. 40(3) violate the provisions of Art. 14 of the Constitution.

17. For all the foregoing reasons, the writ petition fails and is dismissed. No costs. Advocate's fee Rs. 150/- Sri Veerabhadrayya, learned Counsel for the petitioners makes an oral application for grant of leave to appeal to the Supreme Court of India. But, we are unable to certify that the proposed. Appeal involves any substantial question of law of general or public importance which requires to be decided by the Supreme Court. Hence leave refused.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //