T.K. Basu, J.
1. A short bat very interesting question of law arises for consideration in the present Rule. The petitioner Jogendra Lal Malakar joined the services of Macneill and Co., on the 1st March, 1932 as a clerk. It may be mentioned that this company by virtue of successive amalgamations is now known as Macneill and Magor Ltd.
2. In April, 1972 the petitioner was drawing a total salary of Rs. 1.040. On the 16th September, 1972 the Payment of Gratuity Act, 1972 (hereinafter referred to as the Act) came into force. On the 1st March, 1973 the petitioner retired after 41 years of service. His last pay drawn was Rs. 1,045 per month.
3. Thereafter the petitioner made a claim before the company for payment of gratuity under the provisions of the Act. The company contended that no gratuity was payable to the petitioner for reasons which are not necessary to go into at this stage. Thereafter the petitioner applied before the Controlling Authority under the Act for payment of gratuity to him. By its order dated the 26th March, 1975 the Controlling Authority directed the company to pay gratuity to the petitioner. From the aforesaid order, the company went up on appeal before the Appellate Authority appointed under the Act. The Appellate Authority by its order set aside the decision of the Controlling Authority and held that no gratuity was payable to the petitioner. The basis of the decision of the Appellate Authority was that the petitioner was not an 'employee' as defined in Section (e) of the Act and as such was not entitled to any gratuity.
4. In order to appreciate the respective contentions of the parties, it would be useful to set out the provisions of Section 2(e) of the Act together with the explanation thereto:
'Employee' means any person (other than an apprentice) employed on wages not exceeding one thousand rupees per mensem, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semiskilled, 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 or 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).
Explanation-In the case of an employee, who, having been employed for a period of not lets than five years on wages not exceeding one thousand rupees per mensem, is employed at any time thereafter on wages exceeding one thousand rupees per mensem, gratuity, in respect of the period during which such employee was employed on wages not exceeding one thousand rupees per mensem, shill be determined on the basis of the wages received by aim during that period.
5. Mr. Somnath Chatterjee, learned Counsel appearing on behalf of the petitioner contended that the petitioner was clearly an 'employee' as contemplated by the Act. He submitted that on a true interpretation of the definition clause an employee means any person belonging to the establishment and categories mentioned in Section 2(e) of the Act who is employed on wages not exceeding one thousand rupees per month. Admittedly, the petitioner was originally an employee at a salary much below one thousand rupees per month. That being so the petitioner would corns within the definition of an 'employee' within the meaning of the Act.
6. The explanation according to Mr. Chatterjee covered the cases of those employees who had been employed continuously for a period of not less than 5 years on wages not exceeding one thousand rupees per month, but subsequently received wages exceeding one thousand rupees per month. All that the explanation provides is that the gratuity in respect of the period daring which such employee was employed on wages not exceeding one thousand rupees per month shall be determined on the basis of wages received by him during the period. According to Mr. Chatter jee the mere fact that an employee was drawing a salary more than one thousand rupees per month at the time when the Act came into force would not deprive him of the benefits of gratuity payable under the Act provided he fulfilled the condition of having been employed for a period of not less than 5 years at a salary not exceeding one thousand rupees per month. Admittedly the petitioner fulfils this condition since his salary for nearly forty years was below the sum of one thousand rupees per month Consequently Mr. Chatter jee submitted that the Appellate Authority under the Act was wrong in disallowing the benefits of gratuity payable under the Act to the petitioner.
7. Mr. Ginwalla, learned Counsel attending on behalf of the company laid stress on the opening words of the definition of 'employee' in Section 2(e) of the Act which provides that an employee means any persons employed on wages not exceeding one thousand rupees per month. Mr. Ginwalla submitted that in order to obtain the benefit under the Act the petitioner must be an employee within the meaning of the Act on the date when the Act came into force. Since admittedly the petitioner was drawing more than one thousand rupees when the Act came into force according to Mr. Ginwalla the petitioner does not qualify for payment of gratuity under the Act. Mr. Ginwalla further submitted that the explanation does not cover the case of the petitioner.
8. I am unable to accept the contention of Mr. Ginwalla. It is to be remembered that the Act is a piece of social welfare legislation which provides for payment of gratuity to all employees who have rendered continuous services for not less than 5 years. The gratuity under the scheme of the Act is to be calculated at the rate of 15 days wages for every completed year of service at the rate last drawn not exceeding 20 months wages. In my view, it will be utterly wrong to hold that an employee who has rendered forty years service at the commencement of the Act would be deprived of the benefits of gratuity merely by virtue of the fortuitous fact that when the Act comes into force, he happens to draw a salary of more than one thousand rupees per month. In my view the explanation to Section 2(e) of the Act was clearly intended to cover the case of such an employee and prescribe the manner in which gratuity shall be calculated in respect of those employees. The contention of Mr. Chatterjee of this point, therefore, succeeds.
9. On the meaning of an explanation in a statute, Mr. Chatterjee drew my attention to a decision of the Supreme Court in the case of Hiralal Raton Lal v. Sales Tax officer reported in : 2SCR502 . In that case, it was contended that an explanation to a section cannot extend the scope of the main section. It can only explain that section. In dealing with this contention, their Lordships of the Supreme Court referred to several earlier decisions of the Supreme Court, and in particular to Bihar Co-operative Development & Cane Marketing Union Ltd. v. Bank of Bihar reported in : 1SCR848 , where an identical question arose. Dealing with this contention, Hegde, J., observed at para. 74 of the report as follows:
On the basis of the language of the explanation this Court held that it did not widen the scope of Clause (c). But from what has been said in the case, it is clear that if on a true residing of an explanation it appears that it has widened the scope of the main section, effect mist be given to the legislative intent notwithstanding the fact that the Legislature named that provision as an explanation. In all these matters the Courts have to find out the true intention of the Legislature.
10. Relying on the above observations Mr. Chatterjee submitted that although the provision relating to employees whose salary exceeds Rs. 1,000 comes within what has been termed as an explanation, it has the effect of an enlarging the scope of the sub-section and should be so held.
11. I accept this interpretation sought to be put forward by Mr. Chatterjee.
12. In that view of the matter, it most be held that the decision of the Appellate Authority is clearly wrong and should be set aside. The matter will now go back before the Appellate Authority to be decided according to law in the light of my observations indicated above.
13. In the result, this application succeeds and the Role is made absolute. The order of the Appellate Authority which is Annex. 'H' to the petition is quashed by a writ of certiorari and the respondents are directed by a writ of mandamus to desist from giving effect to the impugned order. The respondents will, however, be at liberty to proceed according to law in the light of my observations indicated above.
14. There will be no order as to costs of this application.