Pre-takeover gratuity liability remains with the original textile company when employment ended before vesting under takeover law.

Gratuity becomes payable on termination of employment, including resignation, under the Payment of Gratuity Act, 1972. Where an employee resigned before the appointed day on which management of a textile undertaking vested in the Central Government and was later transferred, the liability had already accrued against the original textile company. Section 3(7) of the Textile Undertakings (Take Over of Management) Act, 1983 preserves pre-appointed-day liabilities against the textile company, and that liability is not shifted to the Central Government, the Custodian, or the National Textiles Corporation. Section 6(1) does not curtail that effect, and the Preamble cannot override clear statutory language.

---

---

Issues: Whether the National Textiles Corporation was liable to pay gratuity to an employee whose employment had already ended before the textile undertaking was taken over under the Textile Undertakings (Take Over of Management) Act, 1983.

Analysis: Gratuity under the Payment of Gratuity Act, 1972 becomes payable on termination of employment, including resignation. The employee had resigned before the appointed day on which the management of the textile undertaking vested in the Central Government and was later transferred to the National Textiles Corporation. Section 3(7) of the 1983 Act expressly provides that any liability incurred by a textile company in relation to the textile undertaking before the appointed day remains enforceable against that company and not against the Central Government or the Custodian. The language of that provision is wide and unambiguous, and Section 6(1) does not curtail its effect in relation to pre-takeover liabilities. The Preamble could not be used to limit the plain scope of the statute.

Conclusion: The gratuity liability had accrued before the takeover and remained that of the original textile company. The National Textiles Corporation was not liable.

---