Mercedes-Benz India Pvt. Ltd v. Mr. Noshir Nani Desai and Ors

Order.

9.

The next aspect is about the correctness of amount of gratuity which is payable to Mr. Desai. He demanded amount of Rs.16,51,652/- towards gratuity by taking into consideration not only the entire period of service from 1996 to 2012 but his annual 'base salary' payable at Daimler AG of Rs. 28,74,231/-. On the contrary, it is the contention of Mercedes Benz that 'basic salary' drawn by him would form basis for determining the gratuity payable to him. It is the contention of Mercedes Benz that an amount of Rs.5,59,292/- has already been paid to him towards gratuity, which is actually more than his entitlement.

¶10On the other hand, in Writ Petition No. 12201 of 2021 filed by the Mr. Desai, he is aggrieved by capping of Rs.10,00,000/- by the Appellate Authority while determining the entitlement of employee towards gratuity. According to Mr. Rao, there is email correspondence between the parties which clearly provided for payment of higher amount of gratuity and according to him, the same would constitute an exception within the meaning of Section 4(5) of the Gratuity Act. Sub-Section 5 of Section 4 reads thus:

(5) Nothing in this section shall affect the right of an employee receive better terms of gratuity under any award or agreement or contract with the employer.

11.

It is therefore necessary to examine whether there is any agreement between the parties for payment of higher amount of gratuity than the one provided under the Gratuity Act. I have gone through the email communications dated 24 October 2012 and 31 October 2012 which reads thus : "Payment of Gratuity-Even the gratuity was considered as part of retirals which were added in the post salary…. However, we have taken the reasonable approach and decided to pay gratuity on basis of your current salary as of 2012 which is over and above the amount legally paybale to you

"

. (emphasis added.)

¶12Perusal of the above email communication does not indicate, in any manner, that there is any agreement or settlement for payment of higher amount of gratuity than the one payable under the provisions of the Gratuity Act. Mr. Rao would rely upon the judgment of this Court in Transport Manager, Kolhapur Municipal Transport Undertaking, Kolhapur

¶1In that case, there was a settlement providing for payment of gratuity at the rate of 21 days wages per year which is better as compared to 15 days' wages per year as per Gratuity Act. It is in the light of such settlement that this Court held that the Respondent therein was entitled to better terms of gratuity under Section 4(5) of the Gratuity Act. The judgment would have no application to the present case, where there is no settlement or agreement for payment of higher/better gratuity than the one provided for in the Act. I therefore do not find any serious flaw in the view taken by the Appellate Authority in holding that the email-communication cannot be termed as contract admitting better terms under Section 4(5) of the Gratuity Act.

¶13In paras-25 and 26 of its Judgment and Order, the Appellate Authority has held as under : Transport Manager, Kolhapur Municipal Transport Undertaking, Kolhapur Vs. Pravin Bhabhutlal Shah and others. 2005 I CLR 998

¶25Now, coming to the objection that whether the Id Authority has computed gratuity as per the provisions of the It is incumbent upon the Controlling Authority under the Payment of Gratuity Act to have a computation of gratuity amout keeping in mind term "wages" defined in section 2 (s) of the Act. The applicant has calculated his gratuity as per notice in form on the basis of his last drawn wages of 2012. The Id. Controlling Authority has not taken into consideration difference between "base salary" on the basis of which the applicant has calculated his gratuity amount and "basic salary" which is required to be calculated as per provisions of the Act. The Ld. Controlling Authority even has not computed the actual amount of gratuity as per provisions of the Act which was essential while determining exact amount of gratuity.

¶26Therefore, it becomes clear that the Ld Authority has granted relief as prayed by the without considering the provisions of the Act. As such, in my opinion, the impugned order to the extent of direction to pay gratuity amount as prayed by the applicant in his original application, requires to be set aside with direction to the Id. Controlling Authority to decide the said aspect of computation of gratuity on the basis of provisions of Section 4 more particularly Section 4 (2) with Explanation. The Ld. Controlling Authority is also expected to calculate the amount of the gratuity in the light of definition of "wages" as contemplated under Section 2(s) of the Act. Needless to mention here that both the parties will be at liberty to lead evidence only to that extent, if they desire. The Ld. Labour Court is expected to decide the matter keeping in mind upper limit of amount of gratuity laid down under Section 4(3) of the Act. (emphasis added)

¶14Thus, the complaint has been remanded for the purpose of computing the exact amount of gratuity payable to the employee by taking into consideration the basic salary drawn by him as per the provisions of the Gratuity Act. In my view, the gratuity is required to be determined as per the definition of the term 'wages' under Section 2(s) of the Gratuity Act. The same would mean emoluments earned by an employee including Dearness Allowance but excluding the other allowances. The Controlling Authority would accordingly determine the exact emoluments that were drawn by him at the time of cessation of his services within the meaning of Section 2(s) of the Gratuity Act. The Appellate Authority has rightly held that the 'base salary' drawn by him with Daimler AG cannot be taken into consideration as 'wages' within the meaning of Section 2(s) of the Act. Both parties have been given an opportunity to lead evidence to prove the exact ' wages' drawn by Mr. Desai at the time of his resignation. The Controlling Authority would accordingly determine the 'wages' drawn by him for the purpose of drawl of gratuity.

¶15In my view, the directions issued by the Appellate Authority in paras-25 and 26 of its order would enable the Controlling Authority to compute the exact amount payable to Mr. Desai towards gratuity under the Act. It appears that an amount of Rs.5,59,292/- has already been paid by the Mercedes Benz to him. I am sure that the Controlling Authority will take the said payment into consideration and that amount would actually act as a set-off towards amount of gratuity to which Mr. Desai would ultimately be found entitled under the Act.

¶16No interference is therefore warranted in the order passed by the Appellate Authority. Both Writ Petitions are accordingly disposed of.

SANDEEP V. MARNE, J. NEETA SHAILESH SAWANT Digitally signed by NEETA SHAILESH SAWANT Date: 2024.01.19 +0530

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 12202 OF 2023 Mercedes-Benz India Pvt. Ltd. And Ors. ….Petitioner V/s. Noshir Nani Desai ….Respondent ALONGWITH WRIT PETITION NO. 12201 OF 2023 Noshir Nani Desai ….Petitioner V/s. Mercedes-Benz India Pvt. Ltd. And Ors. ….Respondents ________ Mr. D.J. Bhanage for the Petitioner in WP-12202 of 2023 and for Respondent in WP-12201 of 2023. Mr. A.S. Rao, for Respondent in WP-12202 of 2023 and for Petitioner in WP-12201 of 2023. __________ CORAM : SANDEEP V. MARNE, J. Dated : ORAL JUDGMENT: 1. These are cross petitions filed by the Employer-Mercedes Benz India Pvt. Ltd and by its ex-employee, Mr. Noshir Nani Desai challenging the Judgment and Order dated 4 October 2021 passed by the ' Appellate Authority Under Payment of Gratuity Act, 1972 and Member, Industrial Court at Pune (Appellate Authority) by which the Appellate Authority has partly allowed the Appeal filed by the employer and has set aside the order passed by the Controlling Authority on 17 December 2018 with further direction that the application filed by the employee shall stand remanded to the Controlling Authority for determination of the exact amount of gratuity payable to the him as per the provisions of the Payment of Gratuity Act, 1972 (Gratuity Act). 2. It appears that the Mr. Noshir Nani Desai (Mr. Desai) was in service of Mercedes Benz India Pvt. Ltd (Mercedes-Benz) during the period 1996 to 2004. Mercedes Benz decided to post him on foreign assignment with its group company Daimler AG in Germany (Host Company). Accordingly, an Agreement of Assignment of Contract of Appointment was executed between Mercedes Benz and Mr. Desai, by which his services were placed with the Host Company. Mr. Desai continued to work in terms of the said agreement upto to 25 June 2012 when he came to be relieved by the Host Company, consequent to the resignation tendered by him on 5 April 2012. 3. The dispute is about payment of gratuity in respect of the services rendered by the employee during 1996 to 2012. Mr. Desai filed an application before the Controlling Authority under the Gratuity Act. The Controlling Authority proceeded to allow the application and directed that gratuity demanded by him of Rs. 16,51,652/- be paid. Mercedes Benz filed appeal before the Appellate Authority, which has remanded the proceedings before the Controlling Authority for determination of exact amount of gratuity payable to Mr. Desai by recordings certain findings that there is continuity between two spells of services, that cap of Rs. 10 Lakh under Gratuity Act would apply, etc. Mercedes-Benz has challenged the Order of the Appellate authority to the extent of treating two spells of services as continuous and making it liable to pay further amount towards gratuity over and above Rs.5,59,292 already paid by it. On the other hand, Mr. Desai is aggrieved by the Appellate Authority's Order as it seeks to set aside the Controlling Authority's Order. 4. I have heard Mr. Bhanage, the learned counsel appearing for Mercedes Benz and Mr. Rao, the learned counsel appearing for Mr. Desai. 5. The first objection of the Mercedes Benz is about severity of Mr. Desai's relationship with Mercedes Benz upon assignment of his service with Daimler AG w.e.f. 1 March 2004. The Controlling Authority has proceeded to treat the entire services rendered from 1996 to 2012 as continuous service for the purpose of determining the entitlement of Mr. Desai for gratuity. Though, Mr. Bhanage has attempted to urge before me that the two Companies are different and therefore there is no continuity in service, I am not inclined to accept the said argument on the basis of plain reading of the Agreement which is titled as 'Supplementary Agreement for an International Assignment (Transfer Long Term)'. The Agreement undoubtedly shows that Mercedes Benz continued to remain "Home Company" whereas Daimler AG was merely 'Host Company'. The Agreement clearly pro