Payment of Gratuity Act not applicable to temples in Karnataka [Read Karnataka HC Judgment]

The Karnataka High Court on Thursday clarified that the Payment of Gratuity Act, 1972 (Gratuity Act) would not apply to temples in the State. Consequently, temple employees are not eligible to claim gratuity under the 1972 Act, the Court ruled..A Full Bench comprising Justices BV Nagarathna, KN Phaneendra and BA Patil passed a judgment to this effect, upon finding that temples in Karnataka do not fall under the definition of “establishment” or “commercial establishment”, to which the Gratuity Act is applicable. The Court arrived at this conclusion on finding that temples were not treated as an “establishment” as defined in the Karnataka’s Shops and Commercial Establishments legislation..Section 1(3)(b) of the Gratuity Act provides that it would apply to all establishments employing ten or more persons. The term “establishment” would be defined as per the prevailing State laws, the Section further states. At present, the only legislation defining an “establishment” in Karnataka is the Karnataka Shops and Commercial Establishments Act, 1961..Adverting to the said definition, the Court a ‘Temple’ as defined in Clause (27) of Section 2 of the Karnataka Hindu Religious Institutions and Charitable Endowments Act, 1997, does not answer the description of “commercial establishment” within the meaning of Clause (e) of Section 2 of the Karnataka Shops and Commercial Establishments Act, 1961..Hence, the Payment of Gratuity Act would be inapplicable to Temples..The Court ruled,.“The definition of establishment is exhaustive and not inclusive, it means a shop or a commercial establishment… it is apparent that, it does not extend to a temple. In other words, a temple is not a shop…a temple is excluded from the definition of commercial establishment, as it is not notified by the State Government and hence, is not included within the latter portion of the definition as of now….....temple would not come within the expression of commercial establishment. A temple is a religious institution used as a place of public religious worship dedicated to or for the benefit of or used as of right by the Hindu community or any section thereof as a place of public religious worship … the appellant being a temple cannot by any stretch of imagination be construed as an establishment under the provisions of the Act of 1961. No other enactment is brought to our notice which deals with shops and commercial establishment for beneficial consideration..… a ‘Temple’ as defined in Clause (27) of Section 2 of the Karnataka Hindu Religious Institutions and Charitable Endowments Act, 1997, does not answer the description of “commercial establishment” within the meaning of Clause (e) of Section 2 of the Karnataka Shops and Commercial Establishments Act, 1961 and hence, the Payment of Gratuity Act, 1972 is inapplicable to it...”.The ruling was passed in an appeal filed by the Mookambhika Temple, Kollur challenging the decisions allowing a former temple employee, Raviraja Shetty, to claim gratuity..Advocate K Anandarama appeared for the Mookambhika Temple. Raviraja Shetty was represented by Advocate T Mohandas Shetty. Additional Government Advocate SS Mahendra appeared for the labour authority and the appellate authority under the Payment of Gratuity Act, 1972..Factual Background.After his retirement, Shetty had made a claim for payment of gratuity under the Act. To this end, he obtained favourable verdicts from the Deputy Chief Labour Commissioner and the Appellate Authority under the Payment of Gratuity Act. This prompted the Mookambhika Temple to go on appeal before the High Court..A single judge rejected the temple’s plea, finding that it was already established that a temple would also fall under the definition of “establishment” under the 1972 Act. In this regard, reference was made to a Karnataka High Court Division Bench judgment in Management of Venkataramana Swamy Temple and Sri Hale Mariyamma Temple, Kapu, Udupi District v. Deputy Labour Commissioner. .On further appeal, however, the temple contended that the Venkataramana Swamy case was decided on an erroneous application of an Orissa High Court judgment in the case of Administrator, Shree Jagannath Temple, Puri v. Jagannath Padhi & others..In the Jagannath Temple case, the Orissa High Court found that the expression “Temple Trust” was included under the Shops and Commercial Establishments Act operating in the State of Orissa. However, as pointed out by the appellant-temple, the Orissa High Court judgment was based on the fact that the State Shops and Establishments legislation operating in Orissa defined temples as establishments. This was not the case in Karnataka..Temples in Karnataka do not constitute “establishments”, Venkataramana Swamy case is Per Incuriam.The Full Bench found merit in the submissions of the appellant-temple that the Court in the Venkataramana Swamy Temple case had wrongly relied upon the Orissa High Court’s verdict in the Jagannath Temple case.The Bench noted that the judgment of the Orissa High Court turns on its own facts and is based on the particular State law applicable in Orissa..“… the same [Orissa High Court Judgment] could not have become a precedent to be simply followed insofar as the temples in Karnataka are concerned, in view of the specific definition of the expression establishment and more specifically, commercial establishment under the provisions of the Act of 1961 are concerned.” .As further explained in the judgment,.“What is pertinent to note is under Section 1(3)(b) of the Act of 1972, the establishment must be one within the meaning of any law for the time being in force in relation to shops and establishments in a State. Therefore, it is not necessary to consider the relevant State enactment alone … .The Orissa High Court found that a Temple Trust came within the scope and ambit of the statute of that State relating to shops and commercial establishments in the said State and therefore, a Temple came within the ambit of Section 1(3)(b) of the Act of 1972. .But, in the State of Karnataka, the expression ‘Temple’ or ‘Temple Trust’ does not find a place under Section 2(i) of the Act of 1961 which refers to only a shop or a commercial establishment. The expression establishment has been given restrictive meaning to mean a commercial establishment.“.Therefore, the Full Bench concluded that the Venkataramana Swamy Temple case was decided per incuriam and could not be cited as a precedent..Karnataka Hindu Religious Institutions and Charitable Endowments Act, 1997 alone applicable to Temple Employees under present regime.The Bench also found that the Karnataka Hindu Religious Institutions and Charitable Endowments Act, 1997 and corresponding Rules of 2002 form a complete code as far as temples in Karnataka is concerned. It was observed that this special enactment would prevail over the general enactment in the Gratuity Act as far as temples in Karnataka are concerned..On a related note, the legal position may differ if the State or Central government were to officially notify that the temples in the State would constitute an “establishment”. However, the Court refrained from commenting on this aspect, stating,.“We do not wish to venture into any debate as to what would be the position if a temple is notified by the Central Government as an establishment under Section 1(3)(c) of the Act of 1972, when the same is juxtaposed with the provisions of the Act of 1997.“.Summary of Conclusions.Ultimately, the Court ruled,.The Division Bench judgment in the Venkataramana Swamy Temple case, wherein it was held that the Payment of Gratuity Act, 1972 would be applicable to temples in Karnataka as well, is overruled.The Payment of Gratuity Act, 1972 is not presently applicable to temples in Karnataka, since temples do not fall under the category of “establishment” under the prevailing laws.The provisions of the Karnataka Hindu Religious Institutions and Charitable Endowments Act, 1997 and the Rules of 2002 made thereunder would apply to temple employees in Karnataka as per the prevailing law..In view of these conclusions, the Court partly allowed the appeal but directed the appellant-temple to pay gratuity to the employee in accordance with the Act of 1997 and the 2002 Rules within four weeks..[Read Judgment]