Confused About Gratuity Act 1972: Is the Central Government the Right Authority for Nationwide Branches?

One finance institution has a head office and branches in Kerala; they also have branches in many states in India.

Query on the Appropriate Government for the Payment of Gratuity Act 1972

My query is whether the appropriate government regarding the Payment of Gratuity Act 1972 is the Central Government. The definition in section 2(a)(i)(b) states that it is the Central Government. However, one of the controlling authorities in Kerala remarked that some court judgments are against it. So, I want some court judgments stating that for shops and commercial establishments with branches all over India, the appropriate government is the Central Government. Please provide clarification and court judgments.

Determining the Appropriate Government

The appropriate government would be the respective state government where the branch is located. The appropriate government is the central government if the firm belongs to the central government.

Dear Vincent,

I think that your query is simply based on the threadbare remarks of a Controlling Authority under the P.G. Act, 1972, and of course, the burden of the citation of the case law and how far its ratio decidendi conforms to his observation rests with him only.

In this connection, you may refer to Section 2(a) of the Payment of Gratuity Act, 1972, which defines the term "appropriate Government" in conjunction with the application aspect of the Act under Section 1(3).

As per part (i)(b) of clause (a) of Section 2, in relation to an establishment having branches in more than one State, the Central Government is the appropriate Government. The language employed herein is very simple as it is only indicative of the entity other than those mentioned in sub-clauses (a), (c), and (d).

Here, it is very pertinent to note that factory, mine, oilfield, plantation, port, and railway company mentioned in clause (a) of Section 1(3) of the Act have been categorically defined subsequently under clauses (g), (j), (l), (m), (n), and (p) respectively of Section 2 of the Act whereas the term "establishment" used repeatedly in the same Section 1 has not been defined.

Thus, the definition of Section 2(a)(i) makes a distinction between establishments and the other entities including factories. Here, I would like to quote the following observation of the Honorable Supreme Court in its judgment in JEEVANLAL Ltd v APPELLATE AUTHORITY [(1984) 4 SCC 356]:

"The Central Govt is the appropriate Govt only in relation to an establishment having branches in more than one State. But there is no like provision in relation to such an establishment having factories in different States.

Where a company has its registered and Head Office in a State and branch offices, sales offices, and factories in that State as well as other States, the controlling authority appointed by the State Govt in another State would have jurisdiction over employees working in an office attached to a factory situated in that State as such an office would be an adjunct of the factory located in that State."

I think that the particular learned controlling authority of Kerala you mentioned would have this case law in his mind while passing such a remark.

But, inasmuch as the Finance Institution you mentioned is only an establishment registered in Kerala and having branches in Kerala as well as many other States is not a factory, certainly the Central Government is the appropriate Government as per Section 2(a)(i)(b).

Controlling Authorities in Kerala Under the Payment of Gratuity Act

In Kerala, there is one controlling authority under the Payment of Gratuity Act with an office in Ernakulam. This authority has jurisdiction from Ernakulam to Kasargod and Palakkad. Another controlling authority has its office in Thiruvananthapuram, covering the rest of Kerala. Cases of all shops and establishments with branches in more than one state are heard in these offices. Please file cases of the claimant in the appropriate office, considering the last place of work of the employee.