SUBMISSION for ICE MODE II – CASE ANALYSIS

‘LABOUR AND INDUSTRIAL LAW’

Topic Assigned:
BAKSHISH SINGH v. DARSHAN ENGINEERING WORKS
1994 AIR 251

Submitted by:

Name: Yash Srivastava

PRN: 18010224120
Programme: B.B.A LL.B.
Div.: B
Semester: IX
Year: 5th Year
Batch: 2018-23

Symbiosis Law School, NOIDA

Symbiosis International (Deemed University)

In

August, 2022

Under the guidance of:

Mr. Yashashvi Virendra

Symbiosis Law School, NOIDA
Symbiosis International (Deemed University)

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 CERTIFICATE FOR MODE II
‘CASE ANALYSIS’

This Submission is based on original case analysis carried out by the undersigned for the
topic: Bakshish Singh vs Darshan Engineering Works, and is submitted by the
undersigned to Symbiosis Law School, NOIDA, Symbiosis International (Deemed
University), Pune for the course ‘‘LABOUR AND INDUSTRIAL LAW’’ as part of
Internal Continuous Assessment (ICE) Mode II.

The research work herein has not been submitted elsewhere for award of any degree or any
other purpose whatsoever.

The contents of the submission are original and not plagiarized, and not copied from any
real case. The material borrowed from other sources and incorporated in the submission
has been duly acknowledged.

I have also taken due care that the contents of my submission are not similar or same as
another learner’s submission for the aforesaid course.

I understand that I could be held responsible and accountable for plagiarism, if any, even if
detected later.

Yash (signed) (Signature of the Learner)

YASH SRIVASTAVA
Date: August 26, 2022
Name of the Learner: Yash Srivastava
PRN: 18010224120
Batch: 2018-23
Division: B
Programme: B.B.A. LL.B.
Symbiosis Law School, NOIDA
Symbiosis International (Deemed University), Pune

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 FACTS

In the present case after the employee’s resignation, the employer denied the gratuity on the
grounds that the employee had not achieved the 5-service year mark till superannuation age,
i.e., 58 years. Further, calculation of any gratuity should be done at the rate of salary drawn
on the date on which superannuation was achieved. The Controlling Authority and Appellate
Authority opined that since the employee worked for 10-years in service, the gratuity should
be granted to the employee for the term of whole service till resignation. However, on
Appeal, the High Court struck down Section 4(1)(b) of the Act being unconstitutional and
against Article 19(1)(g) of Constitution and did not grant the gratuity to the employee.

ISSUE

The issue in the present case was whether Section 4(1)(b) of the Payment and Gratuity Act,
1972 is infringing the right to practice any trade and profession enshrined by the
Constitution?

RULE

The following are the rule which were involved in the present case –

 Section 4(1) of the Payment of Gratuity Act, 1972 – An employee would be entitled
to gratuity after termination of services if he has serviced for minimum 5 years –
(a) Because of superannuation
(b) Due to retirement or resignation
(c) Due to death or disability caused by disease or accident.

 Article 19(1)(g) of the Constitution – Fundamental right of freedom to carry any

work, trade, business or occupation.

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 ANALYSIS AND CONCLUSION

The Court relied on the judgement of Crown Aluminium Works v. Workmen1, wherein it
was promulgated that Article 19(1)(g) can be attracted on the following two conditions –

a. Short qualifying period poses a severe financial burden which would force the
employer to shut down the establishment.
b. The provision is outside the purview of minimum service conditions, which are
necessary for the employees.

Further, in Garment Cleaning Works v. Workmen 2, gratuity scheme offered after having a
minimum 10-year service requirement was fulfilled was upheld by the court. The court noted
that dismissal due to misconduct of the employee after 10-service-years, instead of denying
the whole gratuity, only the amount for the loss caused should be deducted and the employee
is entitled to the remaining amount. Thus, gratuity is earned by an employee and is for a
meticulous service performed by him. Thus, after service social security is of paramount
importance which involves social benefit and hence, gratuity schemes were upheld.

In Wenger and Co. v. Workmen3, the court noted that while considering the obligations
under the gratuity scheme, it is crucial to consider the actual ramifications of the scheme
along with the theoretical effect. The court held that the scope and object of Provident Fund
scheme is different from the Gratuity scheme. The court considered the 5 year of service as
minimum qualifying period as valid relying on the fact that there were merely 3-4% of the
people who would retire every year, thus, the financial burden was much less than the
theoretical burden.

The court after due analysis decided that the Act does not exempt any factory or shop or any
other establishment and the gratuity benefits offered to the employees are not less favourable
than benefits offered under Act. Further, by virtue of Bijay Cotton Mills Ltd. v. State of
Ajmerl4, it is the law of the land that if establishment is not able to provide minimum service
conditions to their employees should not exist.

The Court concluded that the act was brought for the protection of interest of the public and
ensure the socio-economic justice to the employees. The intention and object are to ensure
1
1958 AIR 30
2
AIR 1962 SC 673
3
1964 AIR 864
4
1955 AIR 33

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that the workmen do not have to face hardships and could maintain a standard of living post
their service. The court held that the provision of Section 4(1)(b) of the act is a minimum
service condition, thereby making it indispensable from the employees’ rights, despite the
financial condition of the employer to sustain the grant of gratuity. Thus, the said provisions
constitute as a reasonable restriction on the fundamental rights granted under Article 19(1)(g)
of the Constitution and is sustainable. Further, the High Court admitted the finding of the
lower court that the employee had serviced for more than 10-years, yet they denied gratuity to
the employee. Therefore, the decision of the High Court was set aside and further, the
employer in the present case was ordered to pay the gratuity to the employee which was he
was entitled to.