CSI Mission Hospitals vs The Appellate Authority and Others

K. Chandruw, J.—The Petitioner in all the three Writ Petitions is the CSI Mission Hospitals, Dharapuram. They have challenged the orders

passed by the 1st Respondent, the appellate authority under the Payment of Gratuity Act, 1972 made in AGA Nos. 39, 37 and 38 of 2002

respectively.

The Writ Petitions were admitted on 25.2.2004. Pending the Writ Petitions, an interim direction was granted by this Court directing the 2nd

Respondent not to disburse the amounts in favour of the contesting 3rd Respondent. The said interim order came to be made absolute on

9.7.2010.

The 3rd Respondents are admittedly employees of the Petitioner management, who are running a Mission Hospital at Dharapuram. The 3rd

Respondent in each of the Writ Petitions moved the Controlling Authority under the Payment of Gratuity Act, 1972, i.e., the 2nd Respondent

claiming gratuity for the period of service rendered by them. The Controlling Authority took up their cases in G.A. Nos. 72, 73 and 86 of 2000.

Before the authority, it was agreed that the management of the CSI Mission Hospital is willing to pay gratuity as per the Resolution of the Sub

Committee dated 27.1.1985. But, then the gratuity will be paid on 50; of the last drawn basic pay. Even though the contesting Respondents were

eligible to gratuity offered by the management since they are continuing to occupy the quarters owned by the Petitioner management, they have

withheld the amounts payable towards damages for the unauthorised occupation of the quarters.

In their evidence given by the workmen before the Controlling Authority, they have stated that they are not the tenants of the Petitioner

management and the quarters were not allotted in their names. In any event, the gratuity cannot be withheld on the ground of refusal to vacate the

quarters. As regards the contention of 50% of last drawn wage, it was contended that gratuity had to be paid only in terms of the Act and wages

will have to be calculated as provided under the Act.

The authority accepting the stand of the contesting Respondents computed the gratuity ranging various amounts by its final order. As against the

same, the Petitioner management filed appeals u/s 7(7) of the Payment of Gratuity Act, 1972 after depositing the amount computed by the

Controlling Authority. For the first time before the appellate authority, an additional ground was raised, namely that the Petitioner is a ''charitable

trust'' and therefore it cannot be held to be an establishment coming within the meaning of Section 2(f) of the Payment of Gratuity Act, 1972. Mere

fact that the CSI Mission Hospital has decided to have a scheme for gratuity will not make them liable to pay gratuity under the Act.

The 1st Respondent appellate authority took up those appeals and issued Notices to the contesting Respondents. They have also filed an

appropriate counter statements before the appellate authority. The Petitioner hospital filed a rejoinder dated ''nil'' (November 2002) and reiterated

their submission. They also relied upon a judgment of the Calcutta High Court reported in (1993) III LLJ (Suppl.) 404. The appellate authority

however by his order dated 25.8.2003 rejected their contention. The authority held that the Act applies to all establishments covered u/s 1(3)(b) of

the Payment of Gratuity Act and the reference made to Section 2(f) is a misnomer where the term ''employer'' was also defined. He also held that

the denial of gratuity on ground of overstaying the quarters cannot be accepted either for withholding or denying gratuity. Support was drawn from

the judgment of the Delhi High Court in Texmaco Limited v. Roshan Singh and Ors. reported in (2001) 2 LLJ 1982. Challenging this order, the

Writ Petition was filed as noted already.

After the Writ Petition was filed, the Petitioner also filed an additional typed set containing a Certificate issued by the Income Tax Department

dated 29.5.1992 to the effect that Church of South India Trust Association is a charitable Trust (CSITA) and consists of 20 Dioceses and 4

institutions. Under them, there are the various units, which include hospitals, schools, colleges, homes run by them under the respective jurisdiction.

They were declared to be a charitable and non-profit making organisation registered u/s 25 of the Companies Act.

Therefore, the only question that arises for consideration is whether the Petitioner establishment being a charitable trust is exempted under the

provisions of Payment of Gratuity Act?

u/s 1(3)(a) of Payment of Gratuity Act, 1972, the Act applies to every factory, mine, oil field, plantation, port and railway company. u/s 1(3)(b),

the Act applies to every shop or establishment within the meaning of any law for the time being in force in relation to shops. u/s 1(3)(c), if any

establishment wherein ten or more persons are employed, if notified by the Central Government, then to such establishments, the Act applies.

The Supreme Court while interpreting Section 1(3)(b) of Payment of Gratuity Act, 1972 in State of Punjab Vs. Labour Court Jullunder and

Others, , has held that the term ""law"" found under the Section not only relate to shops and establishments but also applies to every establishment

within the meaning of any law for the time being in force in relation to establishments in a State.

A Division Bench of this Court in the case of the Management of SIET Women''s College, Madras v. Mohamed Ibrahim and Ors. reported in

1992 (1) LLJ 91 has held that in relation to a private College run by a minority institution, since the Provident Fund Act applies to it, it is also an

establishment covered by Section 1(3)(b) of the Payment of Gratuity act.

Apart from the wider definition of an establishment provided u/s 1(3)(b) of the Act, the Central Government has also power to notify other

establishments u/s 1(3)(c) of the Act. The Central Government by a statutory order No. 2218 dated 22.8.1997 u/s 1(3)(c) of the Payment of

Gratuity Act had issued the following notification:

S.O.2218. In exercise of the powers conferred by clause (c) of Sub-section (3) of Section 1 of the Payment of Gratuity Act, 1972 (39 of 1972),

the Central Government hereby specifies the trusts or societies, registered under the Societies Registrtion Act, 1860 (21 of 1860) or under any

other law with respect of societies for the time being in force in any State, in which ten or more persons are employed or were employed for wages

on any day of the preceding 12 months as a class of establishmetns to which the said Act shall apply with effect from the date of publication of this

notification in the Official Gazette.

The contention that a particular institution is a charitable institution is not relevant for the purpose of determining the coverage under the Act.

The Act applies only if any Institution is covered by the provisions of the Act, notwithstanding the nature of activities or the philanthropical services

rendered by them.

It must be noted that the Supreme Court vide its judgment in Christian Medical College Hospital Employees'' Union and Another Vs. Christian

Medical College Vellore Association and Others, has held that ""those rights which are enforced through the several pieces of labour legislation in

India have got to be applied to every workman irrespective of the character of the management.

It was also held by a learned Judge of this Court in Management of Good Samaritan Rural Development Project v. T.A. Ramaiah and Ors.

reported in (2003) 1 LLN 378 that even charitable institutions are covered by the provisions of the Act.

In view of the above, no fault can be found with the order passed by the appellate authority. Hence all the three Writ Petitions will stand

dismissed. No costs. The connected Miscellaneous Petitions are closed. In view of the dismissal of the Writ Petitions, the contesting Respondents

are entitled to withdraw the amounts lying in deposit with the 2nd Respondent.