- The Hon’ble SC, in Chaiman-cum-MD Fertilizer Corporation of India Ltd and anr vs Rajesh Chandra Shrivastava and ors. has observed that the ad hoc payments made in compliance with the interim orders of the Court do not form the part of wage within the meaning of section 2(s) of the Payment of Gratuity Act, 1972 for the purpose of calculating gratuity.
- In the instant case, the scale of pay of the employees in various PSUs were revised with effect from 1-1-1992. When the benefit of the revised pay scale was not given to the employees of Fertiliser Corporation of India Limited and Hindustan Fertilizer Corporation Limited, their employees moved writ petitions in the various HCs in the year 1996 (first round of litigation). At the instance of the Union of India, all these writ petitions were transferred to the Apex Court.
- By an interim order dated 18-8-2000, Apex Court directed an ad hoc monthly payment of Rs. 1500, 1000, 700 and 500 respectively to four different classes of employees as an interim measure, which was subject to the final outcome of the writ petitions.
- In its final order after the implementation of the Voluntary Separation Scheme, the Court noted that the interim relief that had been ordered was purely an ad hoc measure.
- The employees then started filing petitions before the Controlling Authority and in their applications they included the ad hoc payments as a part of the wages.
- The issue that was raised was whether an ad hoc payment made to the workers pursuant to an interim order that was passed by the Supreme Court could form a part of wages within the meaning of section 2(s) of the Payment of Gratuity Act, 1972.
- The Court observed that the said definition of ‘wages’ can be divided into three parts, the first part indicates the meaning of the expression, the second part indicating what is included therein and the third part indicating what is not included. In the first part of the definition, what is emphasised is what is earned by the employee in accordance with the terms and conditions of his employment.
- The Court also referred to the case of Straw Board Manufacturing Co. Ltd. vs Its Workmen (1977) SCC where the Apex Court had clarified that wages under section 2(s) of the Act includes basic wages and dearness allowance and nothing else.
- The Court observed that it is a fundamental principle of law that a party who is in enjoyment of an interim order is bound to lose the benefit of such order if the final outcome of the case is against him.
- Thus, the orders of the HC and the Controlling Authority which held that the ad hoc payments made pursuant to the interim orders by the Apex Court will be a part of the wages was set aside.
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