Judgment:
P.K. Shamsuddin, J.
1. In all these original petitions, common questions arise and therefore they were heard together and disposed of by a common judgment.
2. Some of the respondents were employees in cashew factories run by the petitioners. They were taken over by the Government of Kerala under the provision of the Kerala Cashew Factories (Acquisition) Act, 1974. All the employees became the employees of either Cashew Corporation or Cashew Workers Apex Industrial Co-operative Society Ltd. The said Act was passed mainly to prevent large scale unemployment among the workers in the cashew industry and to provide employment to workers, who were rendered unemployed and secure to them just conditions of service. The Act provided that if the Government is satisfied that the occupier of a cashew factory does not conform to the law relating to safety conditions of service or payment of wages to the workers of the factory or that there has been large-scale unemployment other than by way of lay-off or retrenchment of the workers of the cashew factory, etc., order of acquisition can be made by a declaration. Section 3(1) deals with such a declaration. Sub-section (3) of Section 3 provided that on the making of a declaration under Sub-section (1), the cashew factory to which the declaration relates, together with all machinery, other accessories and other movable properties as were immediately before the appointed day in the ownership, possession, power or control of the occupier in relation to the factory and all books of account, registers and other documents relating thereto, shall stand transferred to, and vest in the Government. Section 8 provided that the Government may, by order in writing, direct that a cashew factory vested in them under the Act shall, instead of continuing to vest in the Government, vest in the Corporation with effect from such date (not being a date earlier than the appointed day) as may be specified in the order. Sub-section (2) of Section 8 provided that where an order vesting a cashew factory in the Corporation is made under Sub-section (1), all the rights, liabilities and obligations of the Government in relation to such factory shall, on and from the date of such vesting, be deemed to have become the rights, liabilities and obligations respectively of the Corporation. Section 10 (1) provided that every person who is a workman within the meaning of the Industrial Disputes Act, 1947 (Central Act 14 of 1947), and has been, immediately before the appointed day, in the employment of a cashew factory vested under the Act in the Government or the Corporation, as the case may be, shall become, on and from the appointed day, an employee of the Government, or as the case may be, of the Corporation and shall hold office or service in the cashew factory on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if such cashew factory had not been transferred to, and vested in, the Government or the Corporation, as the case may be, and continue to do so, unless and until his employment in such cashew factory is duly terminated or until his remuneration, terms and conditions of employment are duly altered, by the Government or the Corporation, as the case may be. Sub-section (4) of Section 10 lays down that where under the terms of any contract of service or otherwise any person whose service becomes terminated or whose service becomes transferred to the Government or the Corporation by reason of the provisions of the Act, is entitled to any payment by way of gratuity or retirement benefits or for any leave not availed of, or any other benefits, such person may enforce his claim against the occupier of the cashew factory but not against the Government or the Corporation.
3. It is not disputed that all the employees involved in these cases were superannuated or died subsequent to the appointed date. In other words, at the time when they were superannuated or expired, they were not the employees of the petitioners, but the employees of the Cashew Corporation or the Cashew Workers Apex Industrial Co-operative Society Ltd. (hereinafter referred to as 'the CAPEX'). Neither the petitioners nor the respondents got a case that these employees were not entitled to gratuity. The rival contention raised in these original petitions is regarding the identity of the person who is liable to pay. According to the petitioners, they ceased to be the employers on the appointed date, and, therefore, they were not liable to pay, the gratuity for the period subsequent to that. The stand taken by the respondents, especially the CAPEX, is that they are not liable to pay the gratuity in respect of these employees for any period, at any rate, for the period prior to the appointed day. This question was considered by the controlling authority under the Payment of Gratuity Act in all the cases and he took the view that in regard to the period prior to the appointed day, petitioners are liable to pay the gratuity and for the subsequent period, the CAPEX was liable to pay gratuity. That finding has been upheld by the appellate authority, in all the cases, except Original Petition No. 6376 of 1991-H where no appeal was preferred against the order of controlling authority.
4. In these writ petitions, the finding that the petitioners were liable to pay gratuity for the period prior to the appointed day has been challenged by petitioners. The same question was considered by my brother K.A. Nayar, J., in a batch of cases and he took the view that there is no employer-employee relationship between the workers and the petitioners in those cases, (they were similarly situated like the petitioners herein) and in the circumstances, petitioners in those cases were not liable to pay any portion of the gratuity. Against the judgment of K.A. Nayar, J., W.A. Nos. 884, 887, 953, 954, 955, 956, 957 and 958 of 1992 were filed, which were disposed of by a common judgment by a Division Bench of this Court, upholding the view taken by the learned Single Judge.
5. Based on the decision of the Division Bench learned counsel for petitioners submitted that the petitioners are not liable to pay any portion of the gratuity and the view taken by the Controlling Authority and the appellate authority to the contrary is wrong and unsustainable and the orders are liable to be set aside.
6. Sri Pirappancode V.S. Sudheer, who appeared for the fourth respondent, attempted to distinguish the decision of the Division Bench by contending that the Division Bench in those decisions had considered only the scope of Section 10 (1) vis-a-vis Section 10(4) and had no occasion to consider the scope of Section 10A and IDA (5) and, in the circumstances, the decision of the Division Bench is not applicable to these cases. According to the counsel, it is only Section 10A and 10A (5) which are applicable to the instant case and that makes all the difference. It would be profitable to quote Section 10A (1), which reads as follows:
'10.A Continuance of employees where cashew factory is entrusted to the Federation or to a Workers' Co-operative Society or to an institution for management: (1) Where a cashew factory vested under this Act in the Government has been entrusted to the Federation or to any other institution approved by the Government in this behalf under Sub-section (1) of Section 8 for management every person who is a workmanwithin the meaning of the Industrial Disputes Act, 1947 (Central Act 14 of 1947), and has been immediately before the appointed day in the employment of the cashew factory shall become, on and from the date on which the cashew factory is so entrusted for management, an employee of the Federation, or, as the case may be, of the institution and shall hold office or service in the cashew factory on the same terms and conditions and with the same rights as to pension, gratuity and other matters as would have been admissible to him if such cashew factory had not been transferred to, and vested in the Government and continue to do so unless and until his employment in such cashew factory is duly terminated or until his remuneration, terms and conditions of employment are duly altered, by the Federation or the Institution, as the case may be.'
Learned counsel vehemently relied on the expression 'prior to the appointed day' used in Section 10-A (1) and contended that the expression would indicate that only the former employers are liable for gratuity and the CAPEX to whom the factory was transferred by virtue of the provisions contained in Section 10-A is not liable to pay gratuity to the workmen. I am unable to see anything in that section, which would persuade me to accept the contention raised by learned counsel. As a matter of fact, the question of payment of gratuity arises only on the death, retirement or superannuation of the employee and not before that. This is clear from Section 4 of the Payment of Gratuity Act which says that 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 or disease. The question that arose for consideration is whether there existed the relationship of employer-employee at the time when gratuity became payable in these cases.
7. Similar questions have arisen in Pankaja Mills v. Controlling Authority, 1983-I-LLJ-260, where the Madras High Court held that Section 4 of the Gratuity Act categorically states that the statutory obligation is only on the employer and if the relationship between the parties had ceased to be that of employer and employee, there is no scope to apply the provisions of the Gratuity Act.
8. The foregoing discussion would show that the direction contained in the order of the controlling authority and the appellate authority that the petitioners are also liable for payment of gratuity cannot be sustained and the direction of the controlling authority as well as the appellate authority to that effect is vacated and it is held that the petitioners are not liable to pay any portion of the gratuity.
9. Since the CAPEX Society has not disputed the length of service of the employees or the quantum of last drawn wages in these original petitions, the Society is directed to pay gratuity as ordered in the impugned orders, within a period of three months from the date of receipt of a copy of this judgment.
10. Original petitions are disposed of as above.