A two-judge Bench of Justice Hemant Gupta and Justice V Ramasubramanian has held that an ad hoc payment made to the workers pursuant to interim orders passed by the Apex Court in the previous round of litigation could not form a part of 'wages' under Section 2(s) of Payment of Gratuity Act for the purpose of calculating gratuity.

In this case, the scale of the employees of PSUs was revised, however, when the benefit of such revision was not made available to the employees of Fertiliser Corporation of India and Hindustan Fertiliser Corporation Ltd., their employees filed Writ Petitions before various High Courts.

When at the instance of the Union of India, the pending Writ Petitions were transferred to Supreme Court, the Court by way of an interim order directed ad hoc monthly payments to four different categories of workers, as an interim measure, subject to the final outcome of the Writ Petitions.

Upon closure of the undertakings, the Writ Petitions got transferred to the Apex Court which were dismissed. The Court while dismissing had held that the interim relief was purely an ad hoc measure.

When the employees went out of employment, they started filing applications before the Controlling Authority under the Act in which the employees included the ad hoc payment made pursuant to the interim orders of the Court.

The Controlling Authority considered the ad hoc payments as part of the wages.

The issue which was dealt with by the Court was –

Whether the ad hoc monthly payment made by the Management pursuant to the interim orders passed by this Court was liable to be treated as part of the wages within the sweep of the said expression under Section 2(s) of the Act.

The Apex Court noted, "Whenever the State or instrumentalities of State come up litigants, this Court applies the test of proportionality to see whether the quantum of benefits granted to the individual concerned, justifies the examination of the question of law, at the cost of that little man from a far-off place. The refusal of this Court to go into the question of law in such cases, cannot be treated as tantamounting to answering the question of law in a particular manner."

The Bench further held that the Apex Court was clear in its interim order as to how the ad hoc payment ordered thereunder should be treated. Even in the final order, the Supreme Court had made it clear that what was paid was only ad hoc.

The Court in this context observed –

"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 interim order when the ultimate outcome of the case goes against him."

The Bench further placed reliance on The Straw Board Manufacturing Co. Ltd. vs. Its Workmen, wherein the Apex Court had clarified the meaning of the expression 'wages' under Section 2(s) and held that wages will mean and include basic wages and Dearness Allowance and nothing else.

Accordingly, the Court allowed the appeals and the orders of the High Court, the Controlling Authority, and the Appellate Authority under the Act, holding that the ad hoc payment made pursuant to the interim orders by the Apex Court will form part of the wages, were set aside.

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