“break in service” as a new ground for punishment in the Certified Standing Orders can not be added = The Division Bench, in our considered opinion, rightly concluded that a “break in service” cannot be allowed as a ground by way of punishment in Clause 16 of the Chapter of Punishment in Certified Standing Orders for the following reasons: 8 13. Firstly, the existing grounds enumerated in Clause 16 by way of punishment are sufficient to take care of any misconduct committed by any employee and there appears no reason to introduce one more new ground in the existing grounds specified in Clause 16 for imposing a new punishment. 14. Secondly, the proposed ground, if allowed, would likely to be misused by the employer against its employees for their own benefit and detrimental to the employees’ interest. 15. Thirdly, it would enable the employer to take action against its employees even in a situation where an employee is found absent even for a day and such absence will be treated as “break in service” under the Certified Standing Orders and also under the Payment of Gratuity Act. It will, therefore, be in conflict with the definition of the 9 expression “continuous service” defined under the Payment of Gratuity Act which gives different modes of calculation for determining the continuous service for payment of gratuity amount. 16. Fourthly, such ground will, therefore, defeat the very object of the Payment of Gratuity Act which is a beneficial legislation enacted for the benefit of the employees and lastly, it is neither bona fide nor reasonable and nor required and hence it cannot be allowed. 17. In our opinion, we find no good ground to differ with the reasoning assigned by the Division Bench mentioned above for rejecting the application made by the appellant (employer) for adding, “break in service” as a new ground for punishment in the Certified Standing Orders. The reasons given by the Division Bench, in our view, deserve to be upheld.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.1977 OF 2010
THE MANAGEMENT OF
SRI RAMNARAYAN MILLS LTD. .. Appellant(s)
Versus
SECRETARY COIMBATORE
DISTRICT TEXTILE
WORKERS UNION(HMS) AND ORS. .. Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. This appeal is filed against the final judgment
and order dated 13.08.2007 passed by the High
Court of Judicature at Madras in W.A. No. 2675 of
2002 whereby the Division Bench of the High Court
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dismissed the Writ Appeal and affirmed the order of
the Labour Court and Single Judge.
2. Facts of the case lie in a narrow compass.
They, however, need mention in brief infra to
appreciate the short controversy.
3. The appellant is a limited company having its
mill in Coimbatore. The appellant being an
employer applied to the Joint Commissioner of
Labour (Respondent No.3) praying in their
application that they be allowed to add one more
new ground namely “break in service” in Clause 16
of the Chapter of Punishment in Certified Standing
Orders in addition to the existing grounds specified
therein.
4. In other words, the appellant’s prayer was that
if any employee commits “break in service” in any
year, then it should be regarded as one of the
ground for punishment enabling the employer
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(appellant) to take action against such employee
under their certified standing order. They,
therefore, prayed that they may be allowed to add
this new ground in Clause 16 of the Chapter of
Punishment in Certified Standing Orders.
5. On 02.04.1992 the third respondent (Joint
Commissioner of Labour) allowed the said
application of appellant and permitted them to
amend their certified standing orders by adding
“brake in service” as one new ground in Clause 16
of the Chapter of Punishment in Certified Standing
Orders.
6. The Workers’ Union (Respondent No.1) felt
aggrieved by the order dated 02.04.1992 filed
appeal in the Labour Court. By order dated
06.02.1995, the Labour Court allowing the appeal
and setting aside the order dated 02.04.1992 held
that if the proposed amendment is allowed, it would
3
cause immense prejudice to the rights of the
workmen and further the employer would likely to
misuse this new ground of punishment mostly for
their benefit. It was also held that apart from these
two reasons, it would also defeat the object of the
Payment of Gratuity Act while calculating the
employee’s continuous service as defined under the
Payment of Gratuity Act which provides for different
modes of calculation.
7. The appellant felt aggrieved of the order of the
Labour Court and filed the writ petition in the High
Court at Madras questioning therein the legality
and correctness of the order of the Labour Court.
By order dated 19.07.2002, the learned Single
Judge dismissed the appellant’s writ petition which
gave rise to filing of the intra court appeal by the
appellant (employer) before the Division Bench of
the High Court.
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8. By impugned order, the Division Bench
dismissed the appeal and affirmed the order of the
Labour Court and Single Judge. It is against this
order; the appellant (employer) has felt aggrieved
and filed the present special leave to appeal in this
Court.
9. So the short question which arises for
consideration in this appeal is whether the Courts
below (Labour Court, Single Judge and the Division
Bench) were justified in rejecting the application
filed by the appellant (employer) to the Joint
Commissioner of Labour (certifying officer) seeking
therein a permission to add one more new
ground i.e. “break in service” in Clause 16 of the
Chapter of Punishment in Certified Standing
Orders.
10. Having heard the learned counsel for the
parties and on perusal of the record of the case and
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the written submissions, we find no merit in this
appeal.
11. The Division Bench dealt with this issue in
Para 6 of the impugned order which reads as under:
“We have considered the above submission of
the learned counsel for the appellant. In
fact, what is sought for is to include ‘break in
service’ as one of the punishment under
Clause 16 of the Standing Orders. To say in
other words, if the workman does not come
for duty, for any reason, break in service will
be effected for such period of absent. By
permitting the appellant to modify the
Standing Order so as to include the break in
service as one of the punishment, in fact, will
enable the appellant to exercise the power to
impose the punishment in an arbitrary
manner i.e., if an employee is punished for
the absence in accordance with the existing
Standing Order, continuity of service of the
employee is not disrupted whereas, if the
appellant is permitted to modify the Standing
Order so as to include the break in service as
also one of the punishment, even a half day
absent from duty in a year of 12 months, will
give an opportunity to the appellant to take
disciplinary action against an employee
concerned at the end of the year and to
impose a punishment of break in service,
which will have a consequence of depriving
the employee’s right to get gratuity for that
particular year. When so many other
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punishments have been enumerated under
Clause 16 of the said Standing Order, there is
no need to include the punishment of break
in service as one of the punishments. In
fact, permitting the appellant to include
‘break in service’ as one of the punishment,
defects the object of the Payment of
Gratuity, that is to say, as per Gratuity Act,
on completion of every continuous service of
5 years, an employee is eligible to get the
gratuity. As referred above, if for a particular
period of absents, to say for a day also, this
proposed modification enables an employer
to impose a punishment of break in service.
Consequently, for that particular year, an
employee will not get gratuity inspite of the
fact that he had worked for 12 calendar
months. Now, only 240 days shall be taken
into account and not 240 days attendance
shall be taken into account. As such, if the
modification is allowed, the future right of
the employee to get a gratuity for a
particular year will get affected. Apart from
this, if an employee, for certain reasons
beyond his control, was forced to be absent
even for a day, he can be imposed with the
punishment of break in service which will
have consequence on his gratuity. That
apart, if an employee has to be punished for
the absent as referred above. The
punishment of either censure, reduction in
rank or payment cut etc. may be imposed
and continuity of service of that employee is
not disrupted. If the appellant is permitted
to include break in service also as one of the
punishment, even for one day or half a day
absent from duty in a year of 12 months, will
give power to the appellant to impose the
7
punishment of break in continuity of service
in order to deprive the employee’s right to
get the gratuity for that particular year. In
fact, this proposed amendment is against the
welfare of the employee and as rightly held
by the learned Single Judge, besides, this can
be exercised in an arbitrary manner,
consequently, the employees will be
penalized. That apart, as rightly held by the
learned Single Judge, on the appreciation of
the entire materials, the Labour Court has
arrived at a factual conclusion that the
amendment sought for, namely, inclusion of
break in service in Clause 16 is unreasonable
and it would be possible for the Management
to act arbitrarily. That apart, by including
the break in service as one of the
punishment, in fact, what the appellant
intends to do is only to get an opportunity to
impose punishment which will have an
impact in the gratuity of the employee of the
concerned year.”
12. The Division Bench, in our considered
opinion, rightly concluded that a “break in service”
cannot be allowed as a ground by way of
punishment in Clause 16 of the Chapter of
Punishment in Certified Standing Orders for the
following reasons:
8
13. Firstly, the existing grounds enumerated in
Clause 16 by way of punishment are sufficient to
take care of any misconduct committed by any
employee and there appears no reason to introduce
one more new ground in the existing grounds
specified in Clause 16 for imposing a new
punishment.
14. Secondly, the proposed ground, if allowed,
would likely to be misused by the employer against
its employees for their own benefit and detrimental
to the employees’ interest.
15. Thirdly, it would enable the employer to take
action against its employees even in a situation
where an employee is found absent even for a day
and such absence will be treated as “break in
service” under the Certified Standing Orders and
also under the Payment of Gratuity Act. It will,
therefore, be in conflict with the definition of the
9
expression “continuous service” defined under the
Payment of Gratuity Act which gives different modes
of calculation for determining the continuous
service for payment of gratuity amount.
16. Fourthly, such ground will, therefore, defeat
the very object of the Payment of Gratuity Act which
is a beneficial legislation enacted for the benefit of
the employees and lastly, it is neither bona fide nor
reasonable and nor required and hence it cannot be
allowed.
17. In our opinion, we find no good ground to
differ with the reasoning assigned by the Division
Bench mentioned above for rejecting the application
made by the appellant (employer) for adding, “break
in service” as a new ground for punishment in the
Certified Standing Orders. The reasons given by the
Division Bench, in our view, deserve to be upheld.
10
18. In the light of the foregoing discussion, we find
no merit in this appeal. The appeal thus fails and is
accordingly dismissed.

………………………………..J
(ABHAY MANOHAR SAPRE)
…..………………………………J.
(INDU MALHOTRA)
New Delhi,
November 02, 2018

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