LexGRAND KAKATIYA SHERATON HOTEL & TOWERS EMPLOYEES & WORKERS UNION versus SRINIVASA RESORTS LTD. & ORS.
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(2009) 3 S.C.R. 668 • - A GRAND KAKATIYA SHERATON HOTEL & TOWERS EMPLOYEES & WORKERS UNION v. SRINIVASA RESORTS LTD. & ORS. (Civil Appeal No. 6499 of 2002) B FEBRUARY 27, 2009 [LOKESHWAR SINGH PANTA AND V.S. SIRPURKAR, JJ.] c Andhra Pradesh Shops and Establishments Act, 1988 - s. 47 (3) and (4) - Constitutional validity of - Held: The provisions are unconstitutional, discriminatory and violative of Articles 14 and 19 (1) (g) of the Constitution - On lifting the veil from s. 47 (3), it is clear that the 'service compensation' D is in fact 'gratuity' - The Act being a State Act is in conflict .. with the Central Act i.e. Payment of Gratuity Act, 1972 as both, operate in the common field - The Act cannot be saved by virtue of Article 254(2) unless shown that while obtaining Presidential asset for the State Act, conflict between two Acts E were brought to notice of the President- Constitution of India, 1950 - Article 254 (2) - Payment of Gratuity Act, 1972 - ss. 2(5), (8), (9), (10) and (21); 3, 3A, and 4 - Andhra Pradesh Shops and Establishments Act, 1966 - s. 40. F Doctrines/Principles: (1) 'Doctrine of occupied field' - Applicability of. (2) Wednesbury principle - Applicability. High Court, in a writ petition, declared ss. 47(3) and G 47 (4) of Andhra Pradesh Shops and Establishments Act, 1988, as unconstitutional, discriminatory and violative of Articles 14 and 19 (1) (g) of Constitution of India, 1950. Hence the present appeal. H Dismissing the appeal, the Court 668 \ GRAND KAKATIYA SHERATON HOTEL & TO\l\/ERS EMP. & WORKERS 669 UNION v. SRINIVASA RESORTS LTD . ..... ... HELD: 1.1 s. 47 (3) is nothing, but an award of A gratuity, though it has been given a nomenclature of "service compensation". Section 47(3), suggests that an employee, who has to be in a continuous service of not less than one year, becomes eligible for service compensation. The concept of gratuity as conceived in B the Payment of Gratuity Act and even earlier to that in ,. labour jurisprudence is that gratuity is a reward for long and continuous service. It is for the first time by that Act, a worker or an employee was made entitled to the gratuity by his rendering continuous service for five years. If this c is so, then providing only one year for entitlement to get the gratuity, is certainly unreasonable. [Para 13] [693:E- H; 694-A] ~ 1.2. If the court lifts the veil, then it is obvious that the unnatural name of "service compensation" is given to D what in fact, is a "gratuity". As if this is not sufficient, the proviso to sub-Section (3) provides that in case of termination of the employment due to death or disablement, even this one year's service will not be necessary. lnspite of the presumption of constitutionality E of a provision, such a provision cannot be held to be reasonable. It is undoubtedly an unreasonable inroad on the fundamental right of the respondent under Article 19(1 )(g) of the Constitution of India. [Para 13] [695-C-E] Peerless General Finance and Investment Co. Limited F and Anr. vs. Reserve Bank of India 1992 (2) SCC 343, referred to. 1.3. The definitions of "Commercial Establishment" and "Establishment" under the Shops Act disclose that G there are always two sets of employees in an establishment, being administrative or clerical and technical employees. While the factory owner would be required to pay the gratuity to the employee working in the factory only on his completing five years of H 670 SUPREME COURT REPORTS [2009] 3 S.C.R. A continuous service, in case of the employee working on the administrative or clerical side of the factory or in the office, which may be in the same premises where the factory is situated, merely one year of service or even lesser than that, would be sufficient and the factory 8 owners would have to pay the gratuity or the service compensation, as the case may be, to such person. Thus, the provision is clearly discriminatory and unreasonable. [Para 14) [694-F-H; 696-A] 1.4. The definition oj "Commercial Establishment" C would convince that the inclusion of an establishment of a factory or an industrial undertaking which falls outside the scope of Factories Act, 1948 and thereby entitling the employees working therein for the payment of service compensation, clearly brings out the discrimination D between such employees and the employees working in the factories as covered by Factories Act, 1
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