Case Note & Summary
The case involves four writ petitions filed by M/s. Terna Polytechnic and M/s. Terna Engineering College (the petitioners) against Shri Ravi Bhadrappa Randale (the respondent), challenging orders of the Controlling Authority and Appellate Authority under the Payment of Gratuity Act, 1972. The respondent had served as a lecturer under Terna Polytechnic from 1994 to 2002, and then under Terna Engineering College from 2002 to 2015. Both institutions are part of the same educational trust and under the same management. The respondent claimed gratuity for both periods, and the authorities directed payment of two separate gratuity amounts. The petitioners contended that the service was continuous under the same employer, and thus only one gratuity was payable. The High Court analyzed the definition of 'employer' under Section 2(e) of the Act and the concept of continuous service under Section 2A. It held that since both institutions are under the same management and the respondent's service was continuous, he is entitled to a single gratuity calculated on the total period of service, subject to the maximum limit under Section 4(3). The Court set aside the impugned orders and directed the petitioners to calculate and pay the gratuity accordingly within eight weeks. The petitions were allowed.
Headnote
A) Gratuity - Continuous Service - Same Employer - Sections 4, 2A, 2(e), 2(f) Payment of Gratuity Act, 1972 - The issue was whether an employee who served under Terna Polytechnic and later under Terna Engineering College, both under the same management, is entitled to two separate gratuities or a single gratuity for continuous service. The High Court held that the service was continuous under the same employer, and thus only one gratuity is payable, calculated on the total period of service. The orders of the Controlling and Appellate Authorities directing two separate gratuities were set aside. (Paras 2-10) B) Gratuity - Same Management - Single Employer - Section 2(e) Payment of Gratuity Act, 1972 - The Court interpreted 'employer' to include entities under the same management, and held that the employee's service with both institutions constituted continuous service under the same employer, entitling him to a single gratuity. (Paras 5-8) C) Gratuity - Calculation - Maximum Limit - Section 4(3) Payment of Gratuity Act, 1972 - The Court noted that the gratuity amount is subject to the maximum limit prescribed under the Act, and directed the employer to calculate the gratuity accordingly. (Para 9)
Issue of Consideration
Whether an employee who renders two tranches of service under two different entities (Terna Polytechnic and Terna Engineering College) is entitled to two separate gratuity payments or a single gratuity calculated on the basis of continuous service, given that the entities are under the same management.
Final Decision
The High Court allowed the writ petitions, set aside the orders of the Controlling Authority and Appellate Authority, and directed the petitioners to calculate and pay a single gratuity to the respondent for the entire period of continuous service, subject to the maximum limit under Section 4(3) of the Payment of Gratuity Act, 1972, within eight weeks.
Law Points
- Continuous service
- same employer
- single gratuity
- Payment of Gratuity Act
- 1972
- Section 4
- Section 2A
- Section 2(e)
- Section 2(f)
- Controlling Authority
- Appellate Authority
- writ jurisdiction
- High Court
