Shri Ramesh Wangnoo v. General Manager

13. At the threshold, it was argued that the Assistant Labour Commissioner (Central), Dehradun had no jurisdiction to entertain the gratuity claim filed by the Petitioner, as the Respondent Company is a factory governed by the Factories Act, 1948. It was submitted that under Section 2(a)(ii) read with Section 1 of the Payment of Gratuity Act, 1972, the appropriate Government in such cases is the State Government and not the Central Government.

14. It was further submitted that the claim made by the Petitioner for inclusion of Flexi Pay and Grade Pay within the ambit of ‘wages’ was legally untenable and factually misconceived.

15. It was contended that: (a) Flexi Pay was a performance-based variable component introduced in 2001 by the Respondent Company to incentivize high-performing employees. It was neither universal nor guaranteed and was subject to annual revision based on individual appraisal outcomes. (b) Grade Pay was introduced as a level-based benefit granted on the basis of managerial categorization (M1 to M12) and was akin to an allowance rather than a fixed salary component. (c) Both components were dependent upon the employee’s performance evaluation and not payable across-the-board to all employees, and hence failed the test of universality and regularity.

16. The Respondents emphasized that the nature and purpose of the Flexi and Grade components were evident internal office communications, salary structure letters, and appraisal-based revisions 4 Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India Limited Employees Group Gratuity Fund Scheme & Others Ashish Naithani J. spanning several years. Specifically, letters dated 25.04.2002, 25.09.2003,

21.04.2007, 05.04.2008, and 21.06.2010 were cited to demonstrate that these components were contingent, fluctuating, and not standard remuneration.

17. It was further contended that Section 2(s) of the Payment of Gratuity Act expressly excludes bonus, commission, and “any other allowance” from the definition of ‘wages.’ Since Flexi and Grade Pay were designed as incentives and performance allowances, they clearly fell outside the scope of 'wages' as contemplated under the Act.

18. It was argued that the LIC Gratuity Trust Agreement explicitly excluded “allowances and bonuses” from the scope of gross salary for gratuity computation. Though the Petitioner relied on the term “gross monthly salary,” learned Counsel clarified that the structure under the LIC Trust did not intend to include performance-based or non-fixed heads like Flexi or Grade Pay.

19. Additionally, it was pointed out that the Petitioner had himself declared a lower basic salary in the gratuity claim form filed at the time of retirement, and only later sought to dispute the computation by raising the present claim. This, according to the Respondents, amounted to an afterthought and undermined the credibility of his claim.

20. In conclusion, learned Counsel for the Respondents urged that the impugned order dated 26.10.2017 was based on a correct and reasoned interpretation of law and factual circumstances. Hence, the petition deserved to be dismissed.

21. Heard learned counsel for the Parties and perused the records.

22. The impugned appellate order proceeds on two distinct and well- articulated grounds: first, that the Assistant Labour Commissioner (Central) lacked jurisdiction to entertain the gratuity claim as the Respondent establishment fell under the administrative domain of the 5 Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India Limited Employees Group Gratuity Fund Scheme & Others Ashish Naithani J. State Government; and second, that the disputed components did not satisfy the statutory test of "wages" under Section 2(s) of the Payment of Gratuity Act, 1972.

23. On the issue of jurisdiction, it is trite that the classification of the “appropriate Government” under labour welfare legislations is to be determined in accordance with the express provisions of the statute. Section 2(a) of the Payment of Gratuity Act, read with Section 3 of the Act, delineates that in the case of factories governed by the Factories Act, 1948, the State Government is the appropriate Government unless the establishment is under the control of the Central Government or operates in sectors specified under the Act.

24. In the present case, the Respondent Company is admittedly a factory registered under the Factories Act and does not fall within the exceptions carved out for Central Government establishments. The Appellate Authority rightly held that the Central Government, through the Assistant Labour Commissioner (Central), was not competent to adjudicate the matter. The reliance placed by the Petitioner on internal departmental communications or prior administrative endorsements cannot override the statutory scheme. Administrative instructions cannot confer jurisdiction where the statute does not.

25. As regards the merits, the primary contention of the Petitioner is that ‘Flexi Pay’ and ‘Grade Pay’ formed part of his regular monthly emoluments and were thus liable to be included within the definition of “wages” for computing gratuity. However, a careful perusal of the documents placed on record, including internal office communications, appraisal-linked revision letters, and salary slips, reveals that these components were variable in nature, subject to annual performance assessments, and not uniformly applicable across the workforce. 6 Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India Limited Employees Group Gratuity Fund Scheme & Others Ashish Naithani J.

26. It is now well-settled that for any payment to qualify as “wages” under Section 2(s) of the Act, it must possess the attributes of regularity, universality, and certainty. Payments which are contingent upon individual performance outcomes, managerial grade, or are disbursed at the discretion of the employer, do not fall within the ambit of “wages.” The Hon’ble Supreme Court in TI Cycles of India v. M.K. Gurumani, AIR 2001 SC 3465, held that incentive payments which are variable and conditional in nature, even if paid regularly, do not amount to wages for gratuity purposes.

27. The Petitioner has not placed any convincing material to demonstrate that ‘Flexi Pay’ or ‘Grade Pay’ were uniformly applicable, non- discretionary, or fixed in quantum. On the contrary, the Respondents have brought on record sufficient evidence to show that these heads were linked to variable parameters such as managerial categorization (M1 to M12) and individual appraisal results. The submission that these were booked under “Salary and Wages” in the accounts is not conclusive of their character under the Act.

28. The invocation of the LIC Gratuity Trust Deed by the Petitioner is equally misplaced. While the Trust may use the term “gross salary,” its operative clauses explicitly exclude “allowances” and “bonuses.” It is evident from the scheme and administration of the Trust that performance- linked incentives such as Flexi Pay and Grade Pay, which were not fixed remuneration, were not intended to be reckoned for gratuity purposes.

29. Additionally, the Court cannot be unmindful of the fact that the Petitioner himself submitted a gratuity claim form at the time of retirement wherein he disclosed a lower basic salary and did not raise any objection regarding the calculation. The present challenge, made much later, appears to be an afterthought and is not backed by any cogent explanation for the delay or omission. 7 Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India Limited Employees Group Gratuity Fund Scheme & Others Ashish Naithani J.

30. It is a settled proposition that supervisory jurisdiction under Article 227 is not to be exercised as a matter of appellate review. This Court does not sit in judgment over the sufficiency of evidence or substitute its own view unless the findings are perverse or without jurisdiction. The order passed by the Appellate Authority is neither perverse nor without jurisdiction. It records cogent reasons, engages with the legal definitions and evidentiary materials, and reflects a reasoned application of mind. ORDER In view of the above discussion, this Court finds no illegality, procedural irregularity, or jurisdictional infirmity in the order dated

26.10.2017. The writ petition lacks merit and is liable to be dismissed. The writ petition stands dismissed. There shall be no order as to costs. Dated:24.07.2025 NR/ (Ashish Naithani J.) 8 Writ Petition (M/S) No. 1153 of 2018, Shi Ramesh Wangnoo Vs General Manager (finance) & Trustee Denso India Limited Employees Group Gratuity Fund Scheme & Others Ashish Naithani J.