Calcutta High Court directs payment of gratuity with interest in longstanding employment dispute
Safiya Malik
The Calcutta High Court has dismissed a petition challenging an order of the Appellate Authority under the Payment of Gratuity Act, 1972. The petitioner sought to set aside the decision that awarded gratuity and interest to a retired employee. The court held that the employer failed to discharge its statutory duty of maintaining and producing employment records and upheld the order directing payment.
The matter was adjudicated by Justice Shampa Dutt (Paul). The petitioner company contested the appellate order dated May 21, 2024, which had reversed an earlier decision of the Controlling Authority. The appellate decision granted gratuity for 34 years of service, along with 10% interest, amounting to a total sum of Rs. 1,33,358.85.
The respondent employee was engaged as a badli worker in the petitioner company on March 23, 1976. As per regulations prevailing at the time, an employee had to complete 120 days of work within six months to qualify for provident fund membership. The respondent became a member of the Employees' Provident Fund Scheme on April 23, 1980. On April 1, 2002, he was designated as a special badli worker, and he superannuated on February 13, 2010.
Upon retirement, the respondent was paid gratuity of Rs. 27,770.96 along with other retiral benefits. However, on November 13, 2013, he submitted Form "I," followed by an application in Form N on December 20, 2013, seeking additional gratuity, alleging an underpayment of Rs. 91,254.04.
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The Controlling Authority adjudicated the claim and, after examining the available records, dismissed the application on December 26, 2016. The authority recorded that the respondent had not been able to establish his eligibility for additional gratuity despite being given multiple opportunities.
The respondent then filed an appeal before the Appellate Authority under the Payment of Gratuity Act, 1972, Barrackpore, North 24 Parganas, on March 17, 2017. He argued that he had worked 240 days each year throughout his employment and was entitled to gratuity for his entire tenure.
The petitioner company opposed the appeal, stating that the respondent was a badli worker and not in continuous service. It contended that proving non-continuous service was an impossible burden and that the appellate order incorrectly shifted the onus onto the employer.
The Appellate Authority, while allowing the appeal, recorded:
"In the instant case, the appellant had discharged his initial onus by producing whatever documents available with him and in his custody to establish that he was on employment for 240 days in a year. The respondent company was in possession of the best evidence which he could not produce. So, an adverse inference may be drawn in view of the failure on the part of the respondent to produce the original service record even on being asked by the Ld. Controlling Authority."
The authority relied on Mahant Shri Srinivas Ramanuj Das vs. Surjanarayan Das & Anr. (AIR 1967 SC 256), observing that the failure to produce crucial records necessitated drawing an adverse inference against the employer. The order further cited a Calcutta High Court decision in WPA 19017 of 2023 and WPA 23207 of 2023, which held that the right to gratuity is a recognized legal right that cannot be waived, except under specific circumstances mentioned in Section 4(6) of the Payment of Gratuity Act, 1972.
Referring to these legal principles, the Appellate Authority concluded:
"Given above, drawing an adverse inference, I am left with no other option but to hold that the respondent employer failed to establish that the appellant workman had not rendered continuous service from 23/03/1976 to 13/02/2010 in his company."
The Calcutta High Court, upon examining the case records, found no grounds to interfere with the order of the Appellate Authority. The court observed that the respondent had served continuously for 34 years as a badli worker and later as a special badli worker. His employment involved carrying out the work of a permanent employee, and he had produced sufficient documentary evidence, including his ESI card, wage slips, and superannuation notice, to substantiate his claim.
The court noted that the petitioner company, as the employer, was legally obligated to maintain records of its employees, including muster rolls and attendance registers, as required under Section 25D of the Industrial Disputes Act. Despite this statutory duty, the employer failed to produce any records to disprove the respondent’s claim. Relying on judicial precedents, the court held that in cases where an employer fails to provide employment records, an adverse inference must be drawn against it.
The court also considered previous judgments, including Ranbir Singh vs. S.K. Roy, Chairman, Life Insurance, which held that the burden of proof regarding employment records lies with the employer. In the absence of such records, the benefit of doubt must favor the employee, particularly in cases involving statutory entitlements such as gratuity.
Based on these findings, the court upheld the order of the Appellate Authority, which had granted the respondent gratuity for the period of 34 years. Additionally, it held that as per Section 7(3A) of the Payment of Gratuity Act, 1972, the respondent was entitled to simple interest at the rate of 10% per annum from February 13, 2010, to December 26, 2016. The total amount payable, including gratuity and interest, was determined to be Rs. 1,33,358.85.
Accordingly, the court dismissed the writ Application stating that the appellate order was in accordance with the law and required no interference.
Advocates who appeared for the parties:
For the Petitioner : Mr. Soumya Majumder, Mr. Rabi Kumar Dubey, Mr. S.K. Singh.
For the Respondent : Ms. Sanghamitra Nandy, Mr. Aviroop Bhattacharya
Case Title: Hooghly Infrastructure Pvt. Ltd. vs. Sri Ram Okil Prasad & Ors.
Case Number: WPA 22777 of 2024
Bench: Justice Shampa Dutt (Paul)
[Read/Download order]
