Introduction:

In a significant decision dated May 23, 2025, a single‑judge bench of the Calcutta High Court, headed by Justice Shampa Dutt (Paul), adjudicated on WPA 2763 of 2025—a writ petition filed by the Midnapur District Service‑cum‑Marketing & Industrial Cooperative Union Ltd. (“the Union”)—that it fell within the ambit of the Payment of Gratuity Act, 1972 and was thus obligated to pay gratuity to its former employee, Rejaul Hoque. Hoque, who served the Union from 1974 to 2009 as a General Assistant, Cashier and ultimately Manager, sought his statutory dues amounting to ₹ 1.3 Lakh under Rule 10 of the West Bengal Payment of Gratuity Rules, 1973. Despite prior orders by the controlling and appellate authorities directing payment, the Union challenged these at the High Court, contending that it was not covered by the Act and therefore not required to pay gratuity.

Arguments of the Petitioner (the Union):

• Statutory Exclusion under Section 1(3)(c): The Union argued that it did not employ the requisite threshold of ten or more employees on any day during the preceding twelve months—a mandatory benchmark for the Act’s applicability.
• Lack of Central Government Notification: Relying on the Supreme Court’s precedent in Independent Schools’ Federation of India v. Union of India (Civil Appeal No. 8162 of 2012), the Union maintained that in the absence of a notification under Section 1(3), the Act does not apply.
• Absence of Formal Acknowledgement to Act: It argued that doing business as a co‑operative industrial union did not amount to a “factory” or “industrial establishment” satisfying the Act’s criteria.

Arguments of the Respondent (Rejaul Hoque):

• Threshold of Employees Exceeded: Hoque contended that the Union had multiple production centres—tile production, mat weaving—where at least 25 workers, including daily‑rated and welfare‑fund‑paid employees, were regularly engaged.
• Maintained Gratuity Fund as Admission: He argued that between 2001–2012, the Union maintained a gratuity fund, which was itself an acknowledgment of the Act’s applicability.
• Statutory Inclusivity of Workforce: Hoque referenced Section 1(2)(c), which defines covered establishments as those employing ten or more employees “whether meant for permanent or temporary use, including daily-rated casual labourers,” thereby reinforcing his position that casual workers ought to be counted.

Court’s Reasoning & Decision:

• Applicability under Section 1(2)(c): The Court affirmed that establishments are liable if they employ ten or more workers—including casual or daily-rated workers—on any day during the prior twelve months. Merely excluding non‑permanent staff cannot defeat this statutory condition.
• Inclusion of Daily‑Rated Workers: Drawing on Lakshmi Vishnu Textile Mills v. P.S. Mavlankar (Spl. C.As. No. 4676 etc., 1976–78), the Court held that daily-rated workers are unequivocally part of the employee strength for gratuity eligibility—nullifying arguments of the petitioner.
• Onus on Employer: The court articulated that once evidence of employee strength is raised, the burden shifts squarely onto the employer to disprove it, as relevant records rest with the Union and no contrary proof was placed on record.
• Recognition through Gratuity Fund: Maintenance of a gratuity fund over eleven years (2001–2012) reflected the Union’s acceptance of the Act’s applicability and contradicted their current stance.
• Unfair Labour Practice: Beyond statutory interpretation, the Court condemned the Union’s refusal to pay dues after 34 years of service as a clear example of unfair labour practice.
• Natural Justice Principles: Denial of statutory entitlement after such long service breached fundamental principles of fairness.
• Final Decision: The writ petition was dismissed, with the appellate order granting gratuity reaffirmed in its entirety. The Court upheld Hoque’s entitlement for 34 years of service deemed continuous and his corresponding entitlement under the Act.

Takeaways & Analysis:

• Construction of Section 1(2)(c): This ruling underscores that casual, daily‑rated, and welfare‑fund‑paid workers must be considered when calculating employee strength.
• Strategic Onus: Employers cannot simply plead lack of workforce; courts will require concrete evidence to rebut employee claims.
• Admissible Implied Admissions: Maintenance of gratuity funds or similar acknwledgments by employers may constitute indirect admissions of Act applicability.
• Clarion Call Against Delay: Courts will view denial of gratuity after decades of service as unfair labour practices, deserving of remedies.
• Bolstered Workers’ Protections: Ensures that employees in cooperatives and non‑traditional organizations are not denied benefits due to ill‑informed statutory interpretation.

Conclusion:

In a landmark ruling, the Calcutta High Court upheld the entitlement of Mr. Rejaul Hoque to gratuity following 34 years of service with a cooperative industrial union—even though the organization challenged its applicability under the Act. The Court decisively held that the Payment of Gratuity Act, 1972, applies to establishments employing ten or more workers, including daily-rated, casual, or welfare-funded staff under Section 1(2)(c). Relying on precedent from Lakshmi Vishnu Textile Mills, the bench affirmed that casual workers count towards the employee threshold, shifting the burden to the Union, which failed to disprove the claim. Notably, the court regarded the existence of a gratuity fund from 2001–2012 as an implied admission of its legal obligations. Describing the Union’s refusal as an unfair labor practice and violation of natural justice, the High Court reaffirmed the appellate direction and dismissed the writ petition. This verdict reinforces that long-serving employees cannot be deprived of their statutory rights due to technical arguments or misinterpretation of workforce composition. It highlights the protection offered to employees in cooperatives, reiterating that gratuity laws safeguard all deserving workers—ensuring justice and workplace equity.