M/s.A.R.A.KhuddusChippi Beedi CompanyA Partnership Firm v. Union of India

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 09.11.2010CORAMTHE HONOURABLE MR. JUSTICE M.M.SUNDRESHW.P.NO.20273 OF 2001M/s.A.R.A.KhuddusChippi Beedi CompanyA Partnership Firm Rep.by its Managing PartnerA.K.A.ShukkurNo.9, Lascar StreetTrichy – 620 008. .. PetitionerVersus1. Union of India Rep.by its Secretary Labour Department Parliament Secretariat South Block New Delhi.2. Assistant Commissioner of Labour (Controlling Authority under the Payment of Gratuity Act, 1972) Trichirapalli.3.M.Rahamathulla ..RespondentsPRAYER : Petitions filed Under Article 226 of the Constitution ofIndia praying to issue a Writ of declaration, declaring the paymentof Gratuity Act, 1972 is not applicable to beedi and cigars workersof the petitioner firm without specific notification under Section 1(3)(c) of the Payment of Gratuity Act, 1972.For Petitioner: Mr.T.N.RajagopalanFor Respondent-1: Mr.G.Ravikumar, Central Govt., Standing CounselFor Respondent-3: Mr.A.Sirajudeen https://hcservices.ecourts.gov.in/hcservices/ O R D E RThe writ petition has been filed by the petitioner which ismanufacturing and selling beedis, seeking a writ of declaration todeclare that the Payment of Gratuity Act, 1972 is not applicable tothe beedis and Cigars workers of the petitioner's firm withoutnotification under Section 1(3)(c) of the Payment of Gratuity Act,1972.2.The case of the petitioner is that it is manufacturingand selling beedis and for doing the above said process which hasbeen engaging home workers for rolling beedis. The said home workershave been paid the salary directly by the petitioner. Contending thatthe provision of the Payment of Gratuity Act, 1972 cannot be madeapplicable to the home workers engaged by the petitioner without anotification as required under Section 1(3)(c) of the Payment ofGratuity Act, 1972 (hereinafter called as "the Act"), the presentwrit petition has been filed.3.The learned counsel appearing for the petitionersubmitted that the notification has not been published. TheCommissioner of Labour himself has stated that Section 2(8) of theAct is yet to be amended and the amendment is still awaited.Therefore, in the absence of a notification as required under Section1(3)(c) of the Act, the second respondent does not have the authorityof law to insist on the payment of gratuity for the home workersengaged by the petitioner.4.Per contra, the learned counsel appearing for the firstrespondent submitted that the provisions of the Act is a welfare,social legislation intended for the benefit of the workers working ina industry. Therefore, the provisions will have to be construedliberally taking into consideration of the object of the Act. It isfurther submitted that the petitioner's company would come under thedefinition of Section 1(3)(a) and (b) of the Act being a factory andalso an establishment. Therefore, in view of the above said position,the contention of the petitioner that in the absence of anotification as required under Section 1(3)(c) the provisions of theAct cannot be made applicable to the petitioner's case cannot besustained. 5.The learned counsel has made reliance upon the judgmentof the Honourable Apex Court in SUDHOO v. HAJILAL MOHD. BIRI WORKS[(1990) 4 SCC 37] and submitted that while construing the sociallegislation, the provisions should be literally interpreted. Thelearned counsel has also relied upon the judgment of the AndhraPradesh High Court rendered in K.GANGADHAR v. THE APPELLATE AUTHORITYUNDER PAYMENT OF GRATUITY ACT [(1993)-I-LLJ-342] and submitted that https://hcservices.ecourts.gov.in/hcservices/ the provisions contained under Section 1(3)(a) and (b) would be madeapplicable. Reliance was also made upon by this Honourable Court inDHAKSHINAMURTHY S. v. DEPUTY COMMISSIONER OF LABOUR (APPEALS)[(2003)-I-LLJ-142] for the legal position that in as much as thepetitioner is the principal employer, a duty is cast upon him to paythe gratuity for the employees concerned.6.The learned counsel appearing for the respondent No.3submitted that the word 'factory' cannot be given a narrowinterpretation by holding that only those employees who are workingwithin the premises of the factory alone would be covered under thepurview of the Act. The learned counsel submitted that what isimportant is the employment of an employee under the principalemployer for whose benefit the work is done and the place of work isirrelevant. In support of his contention, the learned counsel hasmade reliance on the judgment of the Honourable Apex Court inRAJANGAM, SECRETARY DISTT. BEEDI WORKERS UNION v. STATE OF T.N. ANDOTHERS [1990 STPL(LE) 15896 SC]. Therefore, the learned counselsubmitted that in as much as it is not in dispute that the employeesare the employees of the petitioner being home workers and they arehaving been paid by the petitioner, the provisions of the Act willhave to be made applicable to the petitioner. 7.It is not in dispute that the petitioner has been engagedin the manufacturing and selling beedis. It is also not in disputethat the petitioner has been engaging home workers for rolling beedisand after the said process, they have been handed over to thepetitioner. Further fact that the petitioner has been paying thesalary to those home workers are also not in dispute. In order toappreciate the contentions of the learned counsels appearing for theparties, it is useful to extract the relevant provisions of thePayment of Gratuity Act, 1972."1.Short title, extent, application andcommencement,-(1)This Act may be called thePayment of Gratuity Act, 1972.2.It extends to the whole of India:Provided that in so far as it relates toplantations or ports, it shall not extend to theState of Jammu and Kashmir.(3)It shall apply to-(a)every factory, mine, oilfield,plantation, port and railway company;(b)every shop or establishment within themeaning of any law for the time being in force inrelation to shops and establishments in a State,in which ten or more persons are employed, orwere employed, on any day of the preceding twelvemonths;(c)such other establishments or class ofestablishments, in which ten or more employees https://hcservices.ecourts.gov.in/hcservices/ are employed, or were employed, on any day of thepreceding twelve months, as the CentralGovernment may, by notification, specify in thisbehalf."8.Section 1(3)(a) of the Act speaks about the applicabilityof the provisions of every factory, mine, oil field, plantation, portand railway company. The legislation has thought it fit to includeevery factory under the definition. The said definition is anexhaustive definition and no exception has been carved from the same.Similarly, Section 1(3)(b) speaks about every shop or establishment.Therefore, all shops and establishment within the meaning of any laware to be included for the purpose of application of the provisionsof the Act. The above said provision would make it clear that thepetitioner would come under both within the definition under Section1(3)(a) and (b). Section 1(3)(c) is an exception to Section 1(3)(a)and (b) and therefore the same has got no application. The HonourableSupreme Court in SUDHOO v. HAJILAL MOHD. BIRI WORKS [(1990) 4 SCC 37]while interpreting the provisions of Beedi and Cigar Workers(Conditions of Employment) Act, 1966 has held as follows:"10.The High Court on the interpretation ofabove quote section came to the conclusion thatappellant Sudhoo was prevented from doing thework by the establishment and since no order ofretrenchment, discharge or dismissal was passedthe provisions of Section 31 were not attracted.The High Court was patently in error. The Act isa measure of social legislation to giveprotection to the workmen employed in the beediand cigar industry. The provisions of the Act areto be liberally construed. Whenever a workmanapproaches the Prescribed Authority under Section31(2) of the Act with a complaint that hisemployment has been brought to an end by theemployer without any reasonable cause, thePrescribed Authority is bound to adjudicate thesame. It hardly mattes whether the employment wasterminated by written order, oral direction or bystopping the workman from entering the place ofwork. The Prescribed Authority in this case foundas a fact that the appellant was employee ofrespondent-establishment and his services werearbitrarily terminated. We are, therefore, of theview that High Court was wrong in holding thatthe appeal of Sudhoo was not maintainable underSection 31(2) of the Act."9.Similarly, the High Court of Andhra Pradesh inK.GANGADHAR v. THE APPELLATE AUTHORITY UNDER PAYMENT OF GRATUITY ACT[(1993)-I-LLJ-342] has considered the scope of Section 1(3)(a) vis-a- https://hcservices.ecourts.gov.in/hcservices/ vis 1(3)(b) of the Act with respect to the workers of Beedi rollers.The Honourable High Court has held that a wider import will have tobe given for the definition of factory and in as much as making ofbeedis is a manufacturing process it would come under the purview ofthe definition of factory as defined under Section 1(3)(a) of theAct. While dealing with the above said principle of law, theHonourable Andhra Pradesh has observed as follows:"4.Dealing with the first contention thatthe provisions of the Gratuity Act, 1972 are notapplicable on the ground that the management isneither a factory nor an establishment, I repelthe contention of the management. The word'factory' is defined under Section 2(m) ofFactories Act, 1948 and the contention of themanagement is that there is no premises forcarrying on manufacturing process by themanagement and as such, it cannot be construed asa factory, is not acceptable for the reason that,it is the manufacturing process which is thecriterion and not the premises or place inquestion. It cannot be disputed that the makingof beedis is a manufacturing process and thewords 'manufacturing process' under definitionclause contained under Section 2(k) of Beedi andCigar Workers (Conditions of Employment) Act,1966 clearly take in the process of making beedisas a manufacturing process, wherever themanufacturing process is carried. May be, aparticular place, a premises or the same arescattered over, nevertheless, the object beingthe manufacturing process, a definite place orpremises loses its significance and instances aregalore, where in judicial precedents, it was heldthat any place, even that of a sea shore, whereprawn are processed, can be construed as afactory within the meaning of Factories Act,1948. As such, I have got no hesitation to holdthat the management is a factory."10.In so far as the applicability of provisions of Section1(3)(b) of the Act is concerned, after making reliance upon thejudgment of the Honourable Apex Court, the High Court of the AndhraPradesh in K.GANGADHAR v. THE APPELLATE AUTHORITY UNDER PAYMENT OFGRATUITY ACT [(1993)-I-LLJ-342] has observed as follows:"9.As stated above, the making of beedisbeing manufacturing process and the employeebeing a worker, whether working in industrialpremises or in establishment, the latter takingin even the home worker, in any event of thematter, the management is an establishment and https://hcservices.ecourts.gov.in/hcservices/ such an establishment need not be Central orState and need not be one covered by A.P. Shopsand Establishments Act, as the Beedi and CigarWorkers (Conditions of Employment) Act, 1966 isan independent Act by itself and for conferringthe benefits under the said Act, there is no needto have resort even to the Factories Act or tothe A.P. Shops and Establishments Act. The saidAct of 1966 dealing with workmen engaged in themanufacturing process of Beedis and Cigars, isfor welfare of labour. The true nature andcharacter of the legislation shows that it is forenforcing better conditions of labour amongstthose who are engaged in the manufacturing ofbeedis and cigars. It is intended to achievewelfare benefits and amenities for the labour.10.The Supreme Court while construing thescope of section 1(3)(b) of Payment of GratuityAct, 1972 has held in State of Punjab v. LabourCourt, Jullundur MANU/SC/0375/1979 that it isdifficult to accept the contention that lawreferred to under Section 1(3)(b) of Payment ofGratuity Act, 1972 must be a law which relates toboth shops and establishments such as the PunjabShops and Commercial Establishments Act, 1958 andthat there is no warrant for So limiting themeaning of the expression "law" under Section 1(3)(b). Held, the Supreme Court further, that theexpression is comprehensive in its scope and canmean a law in relation to shops as well as,separately, a law in relation to establishment,or a law in relation to shops and commercialestablishments and a law in relation to non-commercial establishments and further held thatSection 1(3)(b) of Payment of Gratuity Act, 1972applies to every shop within the meaning of anylaw for the time being in force in relation toshops in a State. Relying upon the said judgment,a Division Bench of Bombay High Court has held inB.N.Sarada Pvt. Ltd. v. Kisan K.BoradaMANU/MH/0513/1980 that the word 'establishment'employed under Section 1(3)(b) of Payment ofGratuity Act, 1972 is comprehensive in nature andrules emphatically that the provisions of Beediand Cigar Workers (Conditions of Employment) Act,1966 will show that it is positively alegislation in relation to a particular kind ofestablishment where the workers are engaged inthe manufacturing of beedis and cigars and it is https://hcservices.ecourts.gov.in/hcservices/ clearly a law in relation to an establishment ascontemplated by the provisions of Section 1(3)(b)of Payment of Gratuity Act, 1972. It held thatfor the applicability of Payment of Gratuity Act,1972, it may be a shop or establishment withinthe meaning of any law, whether it is a State Lawor Central Law and that the provision of thePayment of Gratuity Act, 1972 will be applicablein the case of the employees in thatestablishment if the employees fall within thedefinition under Section 2(e) of the said Act.Similar contentions were also raised before thesaid Court with regard to non-applicability ofPayment of Gratuity Act, 1972. Repelling the saidcontention, the said court held that the Beediand Cigar Workers (Conditions of Employment) Act,1966, is a law enacted by the Parliament anddeals with the establishment where themanufacturing of beedis is carried on and thatthe said establishment comes within the ambit ofSection 1(3)(b) of Payment of Gratuity Act andconsequently, the said beneficial legislationi.e., Payment of Gratuity Act, 1972 is applicableto beedi and cigar workers.11.Having regard to the interpretationplaced on the scope of Section 1(3)(b) of Paymentof Gratuity Act, 1972 vis-a-vis the provisions ofBeedi and Cigar Workers (Conditions ofEmployment) Act, 1966, I hold that themanagement, in the instant case, is anestablishment within the meaning of the Beedi andCigar Workers (Conditions of Employment) Act,1966 and the said Act is a law relating toestablishments operative in the State of AndhraPradesh and as such, come within the purview ofSection 1(3)(b) of Payment of Gratuity Act, 1972and consequently, the workers are entitled forthe payment of gratuity under the provisions ofPayment of Gratuity Act, 1972 and the managementis liable to pay the same as specified under thesaid statute and the rules made thereunder."11.This Court is in respectful agreement that the ratiolaid down by the learned judge of the Andhra Pradesh High Court.Considering the object of the enactment and the intention to benefitthe workers the Act being the welfare legislation, a widerinterpretation will have to be given paying wages for the benefitunder the Act. Therefore, this Court is of the opinion that thecontention of the learned counsel for the petitioner that the https://hcservices.ecourts.gov.in/hcservices/ provisions of the Act contained in Section 1(3)(a) and (b) are notapplicable to the present case cannot be accepted.12.Further as submitted by Shri.A.Sirajudeen, learnedcounsel appearing for the respondent No.3 the word 'Factory' cannotbe given a restrictive meaning as confined to the place of theindustry is concerned. In RAJANGAM, SECRETARY DISTT. BEEDI WORKERSUNION v. STATE OF T.N. AND OTHERS [1990 STPL(LE) 15896 SC] theHonourable Apex Court has held as under:"6.The Acts which are relied upon orreferred to are Central Acts intended to benefitthe workers. It is not in dispute that about 95%of the bidis is actually rolled outside the realfactory. This Court as early as 1958 in"Chintaman Rao v. State of Madhya Pradesh", 1958SCR 1340 : (AIR 1958 SC 388) indicated that thelaw relating to factory has to be extended to theplace where manufacturing process, outside thefactory, is carried on. The net effect of thatposition is that the benefit available under theFactories Act are available to those who areconcerned with the manufacturing process even intheir own residences for rolling of bidis."13.Further, a declaratory relief cannot be granted by thisCourt for the mere asking unless it is very apparent that theproposed action is one without the authority of law. As and when suchan action is taken by the authorities constitutionally under the Act,it is always open to the petitioner to agitate his rights instead ofseeking a declaration before this Court.14.Therefore, for the reasons stated above, this Court isof the opinion that the writ petition is liable to be dismissed.Accordingly, the same is dismissed. No costs.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarsriTo1. The Secretary Union of India Labour Department Parliament Secretariat South Block, New Delhi. https://hcservices.ecourts.gov.in/hcservices/

2.Assistant Commissioner of Labour (Controlling Authority under the Payment of Gratuity Act, 1972) Trichirapalli.1 cc To Mr.A.Sirajudeen, Advocate, SR.802722 cc To Mr.G.Ravikumar, Advocate, SR.80114W.P.NO.20273 OF 2001MBS (CO)RH (25.11.10)