JEEWANLAL (1929) LTD ETC. ETC. versus THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT & ORS. ETC. ETC.

Citation: [1985] 1 S.C.R. 664 · Decided: 29-08-1984 · Supreme Court of India · Bench: O. CHINNAPPA REDDY · Disposal: Dismissed
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~64 
JEEWANLAL (1929) LTD. 
ETC. ETC. 
v. 
THE APPELLATE AUTHORITY UNDER THE 
PAYMENT OF GRATUITY ACf & ORS, ETC. ETC. 
August 29, 1984 
[0. CHINNAPPA REDDY, A.P. SEN AND E.S. VENKATARAMIAH, JJ.] 
Payment of Gratuity Act 1972, Sections 4(2) and 4(3) 
Monthly-rated em.,loyee-Computation of gratuity-·Scope of expression 
''fifteendays' wages"-Ex.1l•ined. 
Inter,,retilti•n •f st•lutes S•,i•I We/f11re letislilti6n-Benejicient rule of 
construction-Adoption of 
Social security measures-Application of provisions-Doubt or difficulty 
arising-Necessity for Government to introduce legislation to cure the defect with-
out wai1ing for interpretation by highest Court-Suggestion for setting up of 
Nation/ labour Commission for Periodical review. 
W•rds & Phrases : 'appropriate government'-Meaning of Section 2(a)(l) 
Payme1tt oiOrttlUilj ,1ct 1972. 
The respondent-a monthly-rated employee of the appellant -a public 
limited company, ceased to be an employee on attaining the age of superannua-
tion after completing 35 years of service. Since he was entitled to payment of 
Graluity under the Payment of Gratuity Act, 1972, the appellant calculated the 
amount of eratuity payable under sub-s.(2) of s.4 on the basis that '·fifteen days' 
wages" meant half of the_ monthly wages last drawn i.e., for 13 working days. 
there beine 26 working days in a month, The respondent being dissatisfied with 
this payment, made a claim under sub-s.(1) of s.7, before the Controlling 
Authority, for payment of an additional sum of gratuity on the ground that the 
daily wages should be ascertained on the basis of what he actually got for 26 
days and the amount of "fifteen days' wages" should be calculated accordingly, 
not by just taking half of his wages for a month of 30 days or fixing his 
daily waaes by dividine his monthly wages by 30. 
The Controlling Authority held ; that for the purpose of calculating 
"fifteen days' wages" it was necessary to ascertain one day's wage and since ~1 
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IEEWANLAL v. APPELLATE AUTHORiTY 
665 
month consists of 26 working days, the'"amount of gratuity should be calculated 
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by dividing the monthly wages last drawn by 26 and multiplying by 'fifteen' ; 
and not by just taking half of the monthly wages or by dividing such monthly 
wages by 30. 
On appeal, the Appellate Authority, held that there was an error in the 
mode of cqmputation of the amount of gratuity that was payable, and held that 
the gratuity payable would have to be calculated at half of the monthly rate of 
wages, i.e .. wages earned in a consecutive period of 15 days and the daily wages 
had to be multiplied by "thirteen" and not by "fift·~en"~for every completed year 
of service or part thereof not exceeding six months. The amount of gratuity 
payable was accordingly reduced. 
The High Court under Article 226, held following the decision of this 
Court in Shri Digvijay Woollen Mills Ltd. etc. v. Mahendra Pralaprai Buch etc. 
198 l 1 SCR 64 that in order to determine "fifteen days' wages" of a monthly-
rated employee under sub-s.(2) of s.4 of the Act, it was necessary to determine 
one day's wages last drawn by him, and them multiply the same "fifteen' times. 
and the resultant sum h.'.'s to be multiplied by twenty to arrive at the maximum 
amounl of gratuity payable under sub-s.(3) or s.4 of the Act. The orders of the 
Controlling Authority were restored. 
In the Appeals ~nd Special Leave Petitions it was contended oa beka.lf of 
the Management : that th~ words "fifteen days' wages" occurring in su\>.s.(2) 
of s.4 of the Act are clear a~d unambiguous and must mean half a month's 
wages and therefore there was no scope for an artificial calculatioa being made 
by dividing the wages for a month by the number of working days . 
Dismissing the Appeals and Special Leave Petitions, 
HELD : 1.(i) The Payment of Gratuity Act, 1972 was enacted to 
introduce a scheme for payment of gratuity for certain industrial and con1mercial 
establishments as a measure of social security. The significance of this 
lefislation lies in the acceptance of the principle of gratuity as a conlpulsory 
statutory retiral benefit. [672G ; 673Jll 
(ii) In construing a social welfare legislation, the Court should adopt a 
beneficent rule of construction and if a section is capable of two constructions, 
that conslruction should be perferred which fulfils the policy of the Act, and is 
more beneficial to the persons in whose interest the Act has
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