K.A. Abdul Gafoor, J. 1. An employee in a Printing Press employed by the 2nd respondent in these appeals has filed these writ appeals. He retired from service on superannuation on 30.8.1986. He was issued with Ext. P1 communication (marked in O.P. No. 1679/1991) that he shall receive terminal benefits includes gratuity. But he was not paid the gratuity. He applied to the Controlling Authority as provided for in the Payment of Gratuity Act, 1972 (Central Act). The Controlling authority allowed his application by directing the employer to pay an amount of Rs.15,288/- as Gratuity. The controlling authority computed the gratuity in terms of the Kerala Industrial Employees Payment of Gratuity Act, 1970 (State Act). The employer appealed against the order of the controlling authority. The controlling authority allowed the appeal in part reducing the amount payable towards gratuity as Rs. 9937/- instead of Rs.15,288/-. The appellate order was challenged both by the employer as well as the employee. Employee was aggrieved because of the reduction of the gratuity amount. The employer was aggrieved as gratuity even to that extent was directed to be paid because the contention of the employer was that the employee was not entitled to gratuity. The appellate authority applied Payment of Gratuity Act, 1972, the Central Act. They filed O.Ps. 1679 of 1991 and 3149 of 1991 respectively. The learned Single Judge held that the establishment owned by the first respondent will not come within the definition of the 'Factory'. Therefore, the employee was not entitled to the gratuity. Accordingly, O.P. No. 3149 of 1991 filed by the employer was allowed and O.P. No. 1679 of 1991 filed by the employee was dismissed. These appeals are filed by the employee against the said judgments.
2. Two questions arise in these appeals as to
(i) whether the employee is entitled to gratuity in terms of either of the Acts and
(ii) which of the said Acts is applicable?
3. As per the State Act, 'Employee' means "any person employed in any factory, plantation, establishment or undertaking to do any skilled or unskilled, manual or clerical or supervisory work for hire or reward. There is no dispute with regard to the salary ceiling of the employee so as to attract exclusion from the purview of the employee. As per S. 1(3)(a) of the State Act, the above Act shall apply to "any factory as defined in clause (m) of S. 2 of the Factories Act, 1948 (Central Act, 63 of 1948)". The Central Act defines 'Employee' as follows:
"any person (other than an apprentice) employed on wages, not exceeding one thousand and six hundred rupees per mensem, many establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or electrical work, whether the terms of such employment are express or implied, and whet her or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any Rules providing for payment of gratuity".
S. 2(g) provides that the words "factory has the meaning assigned to it in clause (m) of S. 2 of the Factories Act, 1948 (63 of 1948)".
4. S. 2(m) of the Factories Act defines "Factory" as follows:
"factory" means any premises including the precincts thereof-
(1) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on ........" (only relevant portion) The employee is employed in a printing press. The work of the printing press is carried on with the aid of power. As per the definition in S. 2(k)(iv) 'manufacturing process' means "composing types for printing, printing by letter press, lithography, photogravure of other similar process or book binding". Thus, it is seen that the word printing press will also come within the purview of manufacturing process. But it is an admitted fact by either side that the number of employees employed in that printing press was less than 10 at any point of time. In order to come within the definition in S. 2(m) of the Factories Act, there shall be at least 10 workers if the manufacturing process is carried on with the aid of the power.
5. The main contention urged by the employer was that as there were only less than 10 workmen and at no point of time 10 or more workers had been employed by him, it is not a factory and therefore the petitioner will not come within the definition of employee either in terms of the State Act or in terms of the Central Act. This contention was accepted by the learned Single Judge to hold that the employee is not entitled to get gratuity.
6. In this respect, it is contended by the counsel for the appellant employee that apart from the definition of Factory as contained in S. 2(m) of the Factories Act, the notification issued under S. 85 of the Factories Act shall also be looked into to find whether the appellant was employed in a factory or not, S. 85 reads as follows:
"85. Power to apply the Act to certain premises-
(i) the State Government may, by notification in the Official Gazette, declare that all or any of the provisions of this Act shall apply to any place wherein a manufacturing process is carried on or without the aid of power or is so ordinarily carried on not withstanding that-
(i) the number of persons employed therein is less than ten, if working with the aid of power and less then twenty, if working without the aid of power...........
(only relevant portion)"
Sub-s. 2 thereof further provides as follows:
"(2) After a place is so declared, it shall be deemed to be a factory for the purposes of this Act, and the owner shall be deemed to be the occupier and any person working therein, a worker."
Government of Kerala has issued a notification published in Part I Kerala Gazette No. 49 dated 21.12.1979 in terms of S. 85(1) of the Factories Act, applying the provisions of Sections 1 to 5 and certain other provisions of the Factories Act to the establishments where the manufacturing process relating to "printing, ruling on paper or book binding" is carried on. Therefore, irrespective of the number of persons employed by the employer it shall be deemed to be a factory. When it is so deemed as Factory, all the provisions in the Act including S. 2(m) of the Factories Act, shall apply to the establishment concerned. Deeming provision is meant to enlarge the scope of the provisions contained in the Act. By reason of such notification, deeming it to be a factory, there is an admission that it is a factory. To fortify this conclusion, the counsel has relied on the Decision in G. Viswanathan v. The Hon'ble Speaker Tamil Nadu Legislative Assembly, Madras & Anr. and Azhagu Thirunavukkarasu v. The Hon'ble Speaker Tamil Nadu Legislative Assembly, Madras & Anr. (JT 1996 (1) SC 607) dealing with the scope of legal fiction and deeming provisions. The Supreme Court held as follows:
"The scope of the legal fiction enacted in the explanation (a) to paragraph 2(1) of the Tenth Schedule assumes importance in this context. By the decision of this Court it is fairly well settled that a deeming provision is an admission of the non-existence of the fact deemed. The Legislature is competent to enact a deeming provision for the purpose of assuming the existence of a fact which does not even exist. It means that the Court must assume that such a state of affairs exist as real, and should imagine as real the consequences and incidents which inevitably flow therefrom, and give effect to the same."
Therefore, the counsel contends that even if the establishment does not strictly come within S. 2(m) of the Factories Act, because of the notification issued in terms of S. 85 and because of the deeming provision contained in S. 85(2) it has to be supposed that it is a factory for all purposes and court must suppose such existence and all the consequences and incidents shall inevitably flow to all concerned, conferring rights and causing liability on either side.
7. In such circumstances, especially, where an employee is employed in a factory he comes within the definition of employee defined both in the Central as well as State Act concerning payment of gratuity. In much circumstances, which ever be the Legislation applicable, the petitioner will be entitled to payment of gratuity. Gratuity payable in terms of both the Acts is same.
8. It is further contended by the counsel for the appellant that Gratuity Act is a social welfare legislation and therefore, it shall be interpreted in a beneficial manner as to confer the benefits on the employees and not exclude one from the Act. The interpretation shall be always liberal and with amplitude to include as many employees within the fold of the Act to confer them the benefits arising out of the Act. He relies on the decision reported in Madan Singh Shekhawat v. Union of India & Other (1999 (6) SCC 459) the Supreme Court held as follows:-
"It is the duty of the court to interpret a provision, especially a beneficial provision, liberally so as to give it a wider meaning rather than a restrictive meaning which would negative the object of the rule".
9. There cannot have any doubt on the object of the Payment of Gratuity Act. It is a place of Social Welfare Legislation as pointed out by the Supreme Court in Lalsppa Lingappa & Ors. v. Laxmi Vishnu Textile Mills. Sholapur (1981 (1) LLJ 308). It was held as follows:
"The Act is a piece of social welfare legislation and deals with matters to payment of gratuity which, like pension, provident fund, etc., is a retiral benefit".
10. As already mentioned above, because of the notification issued in terms of S. 85(1) of the Factories Act, 1940 and because of the deeming provision contained in S.85(2), the establishment where the appellant was employed shall be a factory, even if that factory did not employ, at any point of time, at least 10 workers. So long it is deemed as factory and the appellant was employed in such a factory, necessarily, interpreting the provisions in the definition concerning employee as well as factory, in a liberal manner as held by the Supreme Court in Madan Singh Shekhawat v. Union of India and Ors. (1999 (6) SCC 459) and Lalappa Lingappa & Ors. v. Laxmi Vishnu Textile Mills. Sholapur (1981 LLJ 308), it has to be held that the petitioner was employed in a factory.
11. The contention of the employer is that in order to constitute it as a factory, there shall be at least 10 employees at one point of time employed in the factory to satisfy S. 2(m) of the Factories Act. Then alone it will become a factory to attract the provisions of the Payment of Gratuity Act. Therefore, the deeming provisions contained in S. 85(2) read with notification issued in terms of 85(1) of the Factories Act cannot help the applicant employee to contend that he was employed in a factory to attract the provisions of Payment of Gratuity Act. As already found above, when the Gratuity Act itself is a social welfare legislation, beneficial to the workmen who are retiring after serving long as an employee in a factory, such provision shall be given liberal interpretation and wider connotation. As per the Payment of Gratuity Act, if an employee is employed in a factory, it shall be one as defined in S. 2(m) of the Factories Act. The notification under S. 85(1) of the Factories Act makes applicable the provision in S.2(m) also to a factory which did not employ 10 persons, if there is any manufacturing process which includes printing as well. In terms of S. 85(2) on issuance of such notification, an establishment will thus be deemed as a factory. When it is thus deemed as a factory by way of legal fiction, it shall confer all the benefits available to the employees working in a factory and in such circumstances such employee will also come within the purview of employee as defined by the Central as well as State Act and therefore, he will be entitled to gratuity irrespective of whether the State Act or Central Act is applicable.
12. S. 1(2) of the Payment of Gratuity Act, 1972 (Central Act) provides that "it extends to the whole of India". The Parliament was aware of the existence of the Industrial Employees Payment of Gratuity Act, 1970 enacted in the State of Kerala at that time. The Supreme Court also in Bakshiab Singh v. M/s. Darshan Engineering Works & Ors. and Union of India v. M/s. Darshan Engineering Works and Ors. (1993 AIR SCW 3710) has made it clear. While considering the provisions of the Payment of Gratuity Act, 1972 (Central Act) that "the provisions of the present Act extends to whole of India, except the plantations or ports and in the State of Jammu & Kashmir". Therefore, it shall be taken that Central Act applies to his case.
13. Therefore, the decision of the learned Single Judge that the Payment of Gratuity Act does not apply to the establishment where the appellant was employed has to be set aside. Consequently, he is entitled to be paid gratuity in terms of the Act. The original authority awarded an amount of Rs. 15,288/- to the appellant. That was reduced to Rs. 9937 by the appellate authority. The reasoning contained in Ext. P5 in O.P. No. 1679 of 1991 is as follows:
"First proviso to S. 4(3) of the above Act clearly shows that the maximum gratuity payable to an employee shall not exceed fifteen months' wages. There is no dispute in regard to the number of years of service or the amount of wages last drawn. The last drawn wages is Rs. 662.50. Thus the gratuity amount entitled to the employee in this case is only Rs. 9937.50/-."
14. Admittedly, the appellant was drawing Rs. 662.50. It is contended by the learned counsel for the appellant that the last drawn wages shall be taken as wages representing the work for 26 days in a month and when 15 days wages is calculated out of that as provided in S. 4(2), it shall be 662.50/26 x 15. This will come to the amount originally awarded by the controlling authority. S.1(2) of the Payment of Gratuity Act, reads as follows:
"For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned."
This provision came up for consideration of the Supreme Court in Jeewanlal Ltd. v. Appellate Authority (1984 (4) SCC 356), the Supreme Court held as follows:
"10. In dealing with interpretation of sub-ss. (2) and (3) of S. 4 of the Act, we must keep in view the scheme of the Act. Sub-s. (1) of S. 4 of the Act incorporates the concept of gratuity being a reward for long, continuous and meritorious service. Sub-s. (2) of S. 4 of the Act provides for payment of gratuity at the rate of "fifteen days' wages" based on the rate of wages last drawn by the employee concerned for every completed year of service. The legislative intent is obvious. Had the Legislature stopped with the words "fifteen days' wages" occurring in sub-s. (2) of S. 4 of the Act there was something to be said for the submission advanced by the learned counsel for the appellants based upon the decision of teamed Single Judge of the Andhra Pradesh High Court in Associated Cement case which was later approved by a Division Bench of that Court in Swamy Case. But the Legislature did not slop with the words "fifteen days' wages" in sub-s. (2) of S. 4 of the Act. The words "fifteen days' wages" are preceeded by the words "at the rale of" and qualified by the words "based on the rale of wages last drawn" by the employee concerned. The emphasis is not on what an employee would have earned in the course of fifteen days during the month when his employment was last terminated, but on the rate of 15 days' wages for every completed year of service, based on the rate of wages last drawn by the employee concerned. The word 'rate' appears twice in sub-s. (2) of S.4 and it necessarily involves the concept of actual working days. In Shri. Divijay Woollen Mills Case the Court rightly observed that although a month is understood to consist of 30 days, gratuity payable under the Act treating the monthly wages as wages for 26 working days is not new or unknown."
15. Therefore, the mode of computation adopted by the appellate authority is not in consonance with S. 4(2) of the Act. So, the reduction made by the appellate authority is illegal. The controlling authority has calculated it correctly on the same rate of wages as Rs. 15,288/-. In the aforesaid circumstances, the appeals are allowed setting aside the judgments of the learned Single Judge and restoring the order of the controlling authority Ext. P2 in O.P.No. 1679 of 1991, however with no order as to costs.