Smt. Vijay Lakshmi W/o Late Ramesh Chandra Sharma v. Uttarakhand Transport Corporation

The said order of termination was challenged by the petitioners before the learned Labour Court, Haldwani, District Nainital and the learned Labour Court vide order dated 30.06.1999 allowed the said claim petition and passed an order of reinstatement of the petitioners with continuity of service along with 50% back wages. The said order was challenged by the employer in Civil Misc. Writ Petition No.30688 of 2000 and Civil Misc. Writ Petition No.30694 of 2000 before 2 the Hon’ble Allahabad High Court and after creation of the State of Uttarakhand, the said writ petitions were transferred to this Court and the same were numbered as Writ Petition (M/S) No.1604 of 2001 and Writ Petition (M/S) No.1605 of 2001. The said writ petitions were partly allowed on 21.09.2005 and the order of reinstatement with continuity in service passed by the learned Labour Court was upheld but the back wages were reduced from 50% to 25%. Petitioner – Ramesh Chandra Sharma retired on 30.09.2015 and petitioner – Suresh Chand retired on 31.12.2012, however, gratuity for the entire period of service i.e. from appointment till retirement was not paid to the petitioners treating the period of termination till their reinstatement as break in service.

5. Thus, the petitioner Ramesh Chandra Sharma was not paid gratuity for the period of 10 years 7 months and 22 days and similarly, petitioner Suresh Chand was not paid the gratuity for the period of 11 years 11 months and 13 days treating the said period to be break in service and, accordingly, petitioners were not granted benefit of ACP on completion of 26 years of service.

6. Learned counsel for the petitioners submits 3 that the learned Labour Court set aside the order of termination and the petitioners were reinstated in service with continuity of service along with 50% back wages and in this regard he refers to the operative portion of the award which reads as under:- “eq[; U;kf;d eftLVªsV eqjknkckn ds U;k;ky; ls nksuksa eqyfte pkyd jes’k o ifjpkyd lqjs'k pUæ nks"keqDr djkj fn;s x;sA bUgha vkjksiksa ds vk/kkj ij Jfed foHkkx }kjk dh xbZ lsok lekfIr dk n.M vR;f/kd dBksjre n.M gS tks fujLr fd;s tkus ;ksX; gSA 7- çLrqr rF;ksa o rdksZa ij Hkyh HkkWafr fopkj djus ds mijkUr U;k;ky; bl fu.kZZ; ij igqaph gS fd lsok;kstd Jfed ij yxk;s x;s vkjksiksa dks bl U;k;ky; ds le{k fl} djus esa vleFkZ jgs gSa vkSj mUgha vkjksiksa ds vk/kkj ij lsok;kstdksa }kjk fookn lsa lEcfU/kr Jfed jes'k pUæ ‘kekZ] pkyd dks fnukad 28&12&91 ls lsok ls i`Fkd fd;k tkuk vuqfpr vkSj voS/kkfud gS vkSj lEcfU/kr Jfed viuh iqjkuh lsok dh rkjrE;rk lfgr lsok esa çfrLFkkfir gksus dk vf/kdkjh gSA tgk¡ rd csdkjh dhs vof/k ds osru dk ç'u gS] ;g vo'; gS fd Jfed }kjk b;wVh ij rSukr fujh{kd ds lkFk dksbZ vHknzrk @ vuq'kklughurk vo’; dh gS ftlds fy, og lsok lekfIr dh frfFk ls bl fu.kZ; ds ykxw gksus dh frfFk rd ns; osru o vU; fgrykHk dk 50 çfr'kr gh izkIr djuss dk vf/kdkjh gksxk vkSj 'ks"k 50 çfr'kr osru n.M Lo#i dkVk tkrk gS tks orZeku ifjfLFkfr esa mfpr o oS/kkfud gSA”

7. Learned counsel for the petitioners further submits that the said award was challenged by the employer/respondent before the Hon’ble High Court. The Hon’ble High Court only interfered in the award to the extent that 50% of the back wages were reduced to 25% back wages. In this regard he refers to paragraph no.7 of the order passed in the writ petitions which reads as under:-

7. “In view of the above, I do not find any perversity or illegality in the award impugned. However, in my opinion, the 50% back wages as awarded by learned Tribunal is grossly excessive. Therefore, it is provided that the workman shall be entitled for only 25% back wages. This portion of the award of the Labour Court should be reduced to this extent only” 4

8. Learned counsel for the petitioner thus submits that as the petitioners were reinstated in service along with continuity in service as such they are entitled for the payment of gratuity for the entire period they worked with the respondent and the action of the respondent treating the period of termination till reinstatement as break in service is illegal and arbitrary. Learned counsel for the petitioner placed reliance on the following judgments:- 1) Deepali Gundu Vs. Surwase Vs. Kranti Junior Adhyapak Mahavidyalaya (D.Ed.) and Others (2013) 10 SCC 324. 2) Sandhya Vs. State of Maharashtra and Others, reported in 2014 (142) FLR 618,

9. Per contra, learned counsel respondents submits the petitioners were reinstated in service with only 25% back wages and as a major penalty 75% back wages were curtailed against which the petitioners have not filed any appeal as such the period of absence / non-working during the said period is treated as break in service and has not been counted towards the calculation for the gratuity and, accordingly, the petitioners are not entitled for the 5 benefit of ACP also on completion of 26 years of service. In this regard, he relies on paragraph no.6 of the counter affidavit filed in WP No.11 (S/S) of 2017 which reads as under:- “6. That the petitioner raised the Industrial Dispute labour court against the order of the before the termination dated 28-02-1991. The Learned Labour Court after hearing both the parties was please to set aside the termination order and has directed the corporation to reinstate the petitioner/workman with 50% back wages vide award dated 30-06-1999. The Corporation filed the writ petition bearing No. 1604 (M/S) 2001 (UPSRTC V/s State of U.P. and others) before this Hon'ble Court the Hon'ble Court after hearing both the parties was please to partly allow the writ petition observing that 50% back wages as awarded by the Learned Tribunal is grossly Excessive and has passed the order that the workman shall be entitled for only 25% back wages. A photocopy of the Judgment passed by the Hon'ble Court has already been annexed as annexure No. 2 to the writ petition. A perusal of the award as well as the judgment of this Hon'ble Court dated 21-09-2005 clearly revealed that the petitioner was reinstated in service with only 25% of Back wages and as a major of penalty 75% back wages has been curtailed by the award and order of this Hon'ble Court and against which the petitioner has not filed any appeal. In pursuance to the above mentioned order the period of 10 years 7 months and 22 days as a break in service has not been counted towards the calculation of the amount of gratuity. In relevant to mentioned here that for the above mentioned period the petitioner was not paid any salary from the Corporation. The petitioner is only be entitled for counting the above mentioned period for the payment of gratuity only when he was reinstated in service with full back wages. A perusal of the chart showing the payment of gratuity specifically indicates all the detail and shows that total length of service of petitioner is 18 years 2 months and 1 day. The amount of gratuity has rightly been calculated by the respondent corporation there is no illegality on the above mentioned calculation. The above mentioned calculation of length of service has also been done while considering the case of petitioner for benefit of A.C.P.”

10. Similar stand was taken by the respondent in their counter affidavit filed in WP No.13 (S/S) of 2017.

11. Having heard learned counsel for the parties 6 and on perusal of records the facts which are undisputed in the present case are that the services of the petitioners were terminated and in pursuance of the order of the learned Labour Court, the petitioners were reinstated with continuity in service. The order of the learned Labour Court was modified by the Co-ordinate Bench of this Court only to the extent of reduction in back wages. The question which is to be determined by this Court is that, as to whether the respondents are justified in treating the period of termination till reinstatement as break in service and as to whether the petitioners are entitled for counting the said period for continuity in service and, accordingly, whether the petitioners are entitled for the payment of gratuity for their entire length of service and whether benefit of ACP after 26 years of service is available to them.

12. The term “continuous service” as defined in Section 2(c) of the Payment of Gratuity Act, 1972 means continuous services as defined in Section 2(A). Section 2(A) of the Payment of Gratuity Act, 1972 reads as under:- “2-A. Continuous service.—For purposes of this Act, - (1) an employee shall be said to be continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being 7 in accordance with absence in respect of which an order [***] treating the absence as break in service has been passed standing regulations governing establishment), lay off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act; employees order, (2) where an employee (not being an employee employed in a seasonal establishment) is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be continuous service under the employer – (a) for the said period of one year, if the employee during the period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than – (i) one hundred and ninety days, in the case of an employee employed below the ground in an establishment which works for less than six days in a week; and in a mine or (ii) two hundred and forty days, in any other case; (b) for the said period of six months, if the employee during the period of six calendar months preceding the date with reference to which the calculation is to be made, has actually worked under the employer for not less than – (i) ninety-five days, in the case of an employee employed below the ground in a mine or in an establishment which works for less than six days in a week; and (ii) one hundred and twenty days, in any other case; [Explanation: For the purpose of clause (2), the number of days on which an employee has actually worked under an employer shall include the days on which – (i) he has been laid-off under an agreement or as permitted by standing orders made Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicab1c to the establishment; (ii) he has been on leave with full wages, earned in the previous year; (iii) he has been absent due to temporary disablement caused by accident arising the course of his out of and employment; and 8 (iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks. (3) where an employee employed in a seasonal establishment, is not in continuous service within the meaning of clause (1), for any period of one year or six months, he shall be deemed to be in continuous service under the employer for such period if he has actually worked for not less than seventy-five per cent of the number of days on which the establishment was in operation during such period.”

13. Section 4(1) and Section 4(2) of the Act specifies the minimum period of service required for payment of gratuity and as to how the gratuity is to be calculated. Section 4(1) and Section 4(2) of the Payment of Gratuity Act reads as under: “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, - on his superannuation, or on his retirement or resignation, or on his death or disablement due to accident (a) (b) (c) or disease: Provided that the completion of continuous service of five years shall not be necessary where termination of the employment of any employee is due to death or disablement: [Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] Explanation.—For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he, was capable of performing before the accident or disease resulting in such disablement. (2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days wages 9 based on the rate of wages last drawn by the employee concerned: Provided the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account.: Provided further that in the case of [an employee who is employed in a seasonal establishment and who is riot so employed throughout the year], the employer shall pay the gratuity at the rate of seven days wages for each season. [Explanation: In the case of a monthly rated employee, the fifteen days wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.”]

14. The payment of gratuity under the Payment of Gratuity Act, 1972 is a statutory right given to an employee and is not a bounty and withholding of gratuity is not permissible under any circumstances except as enumerated in Section 4(6) of the Payment of Gratuity Act and it is not the case of the respondents that gratuity is not being paid to the petitioners invoking the provisions of Section 4(6) of the Act. Section 4(6) of the Act reads as under: “4. Payment of gratuity—(6) Notwithstanding anything contained in sub-section (1), - (a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused. (b) the gratuity payable to an employee may be wholly or partially forfeited] – (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or (ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence 10 is committed by him in the course of his employment. (7) 30[***]”

15. Reading of the above mentioned provisions of the Payment of Gratuity Act reveals that an employee is entitled for payment of gratuity if he has rendered continuous service for not less than five years and the interruption, if any, is not caused due to fault of employee. In the present case, the petitioners’ services were terminated and they remained out of work not due to their fault. Moreover, the order of termination was set aside and the petitioners were reinstated in service with continuity and the said finding of the learned Labour Court has not been disturbed by the High Court and respondents have also not challenged the said order any further and the same has attained finality.

16. Though in the present case, there is a specific direction of the learned Labour Court for reinstatement of petitioners in service with continuity, however, in cases where the learned Labour Court has passed the order of simple reinstatement only, it was held that the Labour Court having awarded reinstatement, continuity of service would follow as a matter of law. The said view of this Court is fortified by the decision of the Hon’ble Apex Court in the case of Nandkishore Shravan Ahirrao Vs. Kosan Industries Private Limited, 11 reported in (2021) 14 SCC 781.

17. In the said case, the learned Single Judge has held that learned Labour Court was correct reinstating the employees without continuity of service and the said order was affirmed by the Division Bench, however, the Hon’ble Apex Court has held as under: “5. The learned Single Judge held that the Labour Court rightly observed that the punishment which was imposed on the appellant was harsh. It appears that even the salary of the appellant was deducted for the period in question during which work was disrupted. However, the learned Single Judge held that the payment of back wages would not follow as a matter of course upon an award of reinstatement. Hence, the direction for the payment of 25% back wages was interfered with and set aside. The Single Judge also observed that the Labour Court has "rightly passed the judgment and award reinstating the respondent without continuity of service". 6. learned counsel appearing on behalf of the appellant is that the High Court was in error in misconstruing the award of the Labour Court as having denied continuity of service. We find merit in the submission. The award of the Labour Court is in the following terms: first grievance of The “The reference of second party Nandkishor Shravan Ahirrao, 94, Shriram Kutir, near Chikuvadi, Post Office Fatehnagar, Udhna, Surat- 304220 C/o. Bombay foods Ltd. and Kosan Industries Ltd. Worker/Employee Union, Surat is hereby partly allowed. And the first party of this case is hereby ordered. that, they have to reinstate the second party in service with 25% back-wages for his surplus days within 30 days from the publication of this order." facie,

7. Ex the Labour Court having awarded reinstatement to the appellant, continuity of service would follow as a matter of law. The award of the Labour Court dated 27 February 2008 does not specifically deny continuity of service. Hence observation of the High Court to the effect that the Labour Court had denied continuity of service is erroneous and would accordingly stand corrected in terms of what has been observed herein-above. The appellant would be entitled to continuity of service.”

18. In the case of Deepali Gundu Vs. Surwase 12 Vs. Kranti Junior Adhyapak Mahavidyalaya (D.Ed.) and Others (2013) 10 SCC 324, the Hon’ble Apex Court in paragraph no.21 and 22 held as under:

21. The word “reinstatement” has not been defined in the Act and the Rules. As per Shorter Oxford English Dictionary, Vol. 2, 3rd Edn., the word “reinstate” means to reinstall or re-establish (a person or thing in a place, station, condition, etc.); to restore to its proper or original state; to reinstate afresh and the word “reinstatement” means the action of reinstating; re-establishment. As per Law Lexicon, 2nd Edn., the word “reinstate” means to reinstall; to re-establish; to place again in a former state, condition or office; to restore to a state or position from which the object or person had been removed and the word “reinstatement” means establishing in former condition, position or authority (as) reinstatement of a deposed prince. As per Merriam-Webster Dictionary, the word “reinstate” means to place again (as in possession or in a former position), to restore to a previous effective state. As per Black's Law Dictionary, 6th Edn., “reinstatement” means: “To reinstall, to re-establish, to place again in a former state, condition, or office; to restore to a state or position from which the object or person had been removed.” 22. The very idea of restoring an employee to the position which he held before dismissal or removal or termination of service implies that the employee will be put in the same position in which he would have been but for the illegal action taken by the employer. The injury suffered by a person, who is dismissed or removed or is otherwise terminated from service cannot easily be measured in terms of money. With the passing of an order which has the effect of severing the employer- employee relationship, the latter's source of income gets dried up. Not only the employee concerned, but his entire family suffers grave adversities. They are deprived of the source of sustenance. The children are deprived of nutritious food and all opportunities of education and advancement in life. At times, the family has to borrow from the relatives and other acquaintance to avoid starvation. These sufferings continue till the competent adjudicatory forum decides on the legality of the action taken by the employer. The reinstatement of such an employee, which is preceded by a finding of the competent judicial/quasi-judicial body or court that the action taken by the employer is ultra vires the relevant statutory provisions or the principles of natural justice, entitles the employee to claim full back wages. If the employer wants to deny back wages to the employee or contest his entitlement to get consequential benefits, then it is for him/her to specifically plead and prove that during the intervening period the employee was gainfully 13 employed and was getting the same emoluments. The denial of back wages to an employee, who has suffered due to an illegal act of the employer would amount to indirectly punishing the employee concerned and rewarding the employer by relieving him of the obligation to pay back wages including the emoluments.”

19. The Hon’ble Apex Court in the case of Sandhya Vs. State of Maharashtra and Others, reported in 2014 (142) FLR 618 taking consideration the law laid down in the case of Deepali Gundu (supra) held in paragraph nos.11 to 18 as under: “11. Meanwhile, services of certain unpaid candidates were terminated by the respondents. The appellant’s service was also terminated by order dated 20th April, 1998.

12. The appellant and others challenged their respective orders of termination before the Maharashtra Administrative Tribunal, Mumbai Bench at Aurangabad and prayed regularisation of their services. for directions on respondents

13. After hearing the parties, the Tribunal by its common judgment dated 24th November, 2011 passed in (Smt. Rajani vs. Original Application No.202/1998 Government of Maharashtra etc.), including Original Application No.293/1998 preferred by the appellant, allowed the applications, set aside their respective orders of termination with direction to the respondents to take action for regularisation of services of all the applicants including the appellant herein in accordance with GR dated 10th March, 2005. It was directed to pass appropriate orders within three months.

14. Thereafter, respondent no. 3 vide his letter dated 7th August, 2012, intimated the appellant that her service cannot be regularized because of non-fulfillment of condition in GR dated 10th March, 2005. It was alleged that the appellant was not working on the date when GR came into force.

15. The appellant being aggrieved, filed a contempt petition in Original Application No. 292/1998. The same was rejected by order dated 18th December, 2012. The order passed by the Tribunal was challenged by the appellant before the High Court in writ petition no. 1047 of 2013. After hearing the parties, the High Court rejected the writ petition on the ground that the appellant did not fulfill the requirement as laid down under GR dated 10th March, 2005.

16. In the said writ petition, the respondents took a similar plea before the High Court that the appellant did not attend the office since 8th July, 2002. She ceased to 14 be in employment since then. It was contended that on the date of issuance of Government Resolution dated 10th March, 2005, since the appellant was not in employment the benefits as per Government Resolution cannot be extended in her favour. The Division Bench accepted the said plea and upheld the order passed by the Tribunal.

17. Learned counsel for the appellant rightly contended that the High Court has misguided itself by holding that the appellant was not in service since July, 2002 and was not working on the date of Government Resolution dated 10th March, 2005.

18. The order of termination dated 20th April, 1998 was set aside by the Tribunal by its order dated 24th November, 2011. The Tribunal directed the respondents to consider the case of appellant for regularization in terms of Government Resolution dated 10th March, 2005. The order of termination being set aside, in the eye of law the appellant shall be deemed to be continued in service even on 10th March, 2005 i.e. the date when the Government Resolution was issued. Such being the position of regularization. But the High Court was not correct in holding that the appellant was not in service on 10th March, 2005 and wrongly rejected her claim regularization.” the appellant is entitled law,

20. Thus for all practical purposes, after their reinstatement with continuity in service the petitioners are to be treated to have rendered the service without any break and as such they are entitled for the payment of gratuity for the entire period of service i.e. from their date of initial appointment till their superannuation and the respondents are liable to calculate the gratuity taking into account the entire service period of the petitioners.

21. Contentions of the respondents that during the period of termination till reinstatement as the petitioners were not paid salary as such gratuity cannot be calculated for the aforesaid period is also bereft of 15 merit. The petitioners were ordered 25% of the back wages and for calculating the gratuity, as per Section 4(2) of the Payment of Gratuity Act, for every completed year of service the employer has to pay gratuity @ 15 days wages based on the rate of wages last drawn by the employee. Thus, as per the Act, the gratuity is to be calculated for every completed year of service and the petitioners being reinstated in service with continuity, the entire length of service is to be taken into account for payment of gratuity and the gratuity is to be paid @ 15 days last drawn wages.

22. The petitioners after their reinstatement continued in service and till their superannuation were paid their salary on the basis of the orders passed by the Court in their favour.

23. In view of the above discussion, this Court is of the considered opinion that the action of the respondents in non-payment of gratuity petitioners for their entire length of service rendered by them is illegal and arbitrary and the said action cannot be sustained.

24. So far as the claim of petitioners for grant of ACP after completion of 26 years of service is concerned, a perusal of the record reveals that there is no 16 representation / demand made by the petitioners to this effect before the authorities. The notice enclosed with the writ petition reveals that the petitioners had only submitted their grievances with respect to non-payment of gratuity for the entire length of service and there is no representation submitted for grant of benefit of ACP.

25. In that view of the matter, the following directions are issued:- 1) A mandamus is issued commanding the respondents to pay the gratuity to the petitioners for their entire length of service i.e. from their date of appointment till their superannuation along with interest. 2) Smt. Vijay Lakshmi – legal heir of petitioner Ramesh Chandra Sharma in WP No.11 (S/S) of 2017 shall be paid the gratuity for the period of 10 years 7 months and 22 days along with 6% interest per annum on the delayed payment of gratuity. 3) Suresh Chand petitioner in WP No.13 (S/S) of 2017 shall be paid the gratuity for the period of 11 years 11 months and 13 days along with 6% interest per annum on the delayed payment of gratuity. 17 4) The petitioners are permitted to submit a representation for the redressal of their grievances with regard to the grant of benefit of ACP after completing 26 years of service. In case, petitioners submit representation before respondent no.1 within a period of two weeks from today, the same shall be considered and decided by a reasoned and speaking order taking into consideration the observations made in the preceding paragraphs of this order with reference to continuity of service within a period of six weeks from the date of production of a certified copy of this order.

26. With the above observations, the writ petition stands disposed of.

27. Pending application, if any, also stands disposed of. Sukhbant (SUBHASH UPADHYAY, J.) 21.11.2025 18