Full Judgment Text
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PETITIONER:
MANAGEMENT, CHITAVALSAH JUTE MILLS LTD.
Vs.
RESPONDENT:
WORKMEN OF CHITAVALSAH JUTE MILLS
DATE OF JUDGMENT:
02/02/1968
BENCH:
HEGDE, K.S.
BENCH:
HEGDE, K.S.
MITTER, G.K.
CITATION:
1968 AIR 1076 1968 SCR (3) 8
ACT:
Industrial Dispute--Gratuity scheme framed by
Tribunal--Considerations in framing scheme.
HEADNOTE:
The appellant was a jute mill. The Industrial Tribunal
framed a gratuity scheme for its workers. It was challenged
by the appellant before this Court in an appeal under Art.
136 of the Constitution. Two contentions were urged, namely
: (i) that the wage board was unable to recommend a gratuity
scheme for the jute industry and hence there was no justi-
fication to frame the impugned scheme; (ii) in view of the
losses incurred by the appellant during the years 1960-65,
no additional burden should have been cast on it by
introducing a gratuity scheme.
HELD : (i) The Wage Board’s recommendation pertained to the
jute industry as a whole and not to any individual
industrial unit. It cannot be understood as recommending
that there should be no gratuity scheme for the employees in
any particular unit in that industry. What was relevant to
find out was whether the appellant could bear the additional
burden. [10 B]
(ii) The Tribunal recommended the gratuity scheme after
taking into consideration the financial position of the
appellant as well as the fact that in a sister concern such
a scheme was in existence. The losses suffered by the
appellant were considered by the Tribunal to be a passing
phase. What is of essence is the profit making capacity of
the concern. In determining that question one has to take
into consideration the paid up capital of the company, its
reserves, its earnings in the past and its future prospects.
A practical view of the question has to be taken. [10 D, G]
In the light of these principles and on the material placed
before the Tribunal it was not possible to hold that the
Tribunal’s conclusion was without any just basis. [12 A]
National Iron & Steel Co. Led. & Ors. v. State of West
Bengal & Anr. [1967] 2 S.C.R. 391 and Calcutta Insurance Co.
Ltd. v. Their Workmen, [1967] 2 S.C.R. 596, relied on.
JUDGMENT:
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1627 of 1967.
Appeal by special leave from the Award dated March 31, 1967
of the Industrial Tribunal, Andhra Pradesh in Industrial
Dispute No. 55 of 1965.
H. R. Gokhale and D. N. Gupta, for the appellant.
M. K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the
respondents.
The Judgment of the Court was delivered by
Hegde, J. This appeal has been brought to this Court by
special leave. It arises from the decision’ of the
Industrial Tribunal,
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Andhra Pradesh, Hyderabad. The only question that arises
for decision is whether on the basis of the material on the
record there was any justification for framing a gratuity
scheme for appellant’s staff.
The admitted facts are these : The appellant concern is hav-
ing about 500 looms.’ It has a subscribed capital of a
little over 3 5 lakhs. Its built up reserve is over thirty
lakhs. In three out of the six years during the period
1960-65 it has suffered substantial losses. Out of the
remaining three years, in one year it made a profit of about
Rs. 45,000 in another year about Rs. 13,000 and in 1962 over
rupees twelve lakhs. The annual expenses of the appellant’s
concern under the head ’salaries, wages and bonus’ are
nearly 47 lakhs.
It was found by the tribunal that the appellant concern and
the Nellimarla Jute Mills are sister concerns. Both of them
are under a single management, viz., M/s. Mcleod and
Company, Calcutta. They are located in the same region, the
distance between the two being about 25 miles. In
Nellimarla Jute Mills a gratuity scheme for the staff is in
existence and that in addition to provident fund benefits.
Our attention was not invited to any material on record to
show that these findings are not correct. In the appellant
concern also there is a provident fund scheme for the
staff.. The appellant in its counter-affidavit filed before
the tribunal admitted that it had always been the policy of
the management to introduce identical terms of employment
for the workmen at Nellimarla and Chitavalsah. From the
material before us it is not possible to find out the
financial position of the Nellimarla mills. We ascertained
from the learned counsel for the appellant that the
appellant concern had made a profit of over a lakh of rupees
in 1966. The tribunal has found and that finding was not
challenged before us that the additional burden to be borne
by the appellant as a result of the gratuity scheme framed
by it is about Rs. 3,000 per year.
On behalf of the appellant two contentions were advanced in
opposition to the proposed gratuity scheme. They are (1)
the wage board was unable to recommend a gratuity scheme for
the jute industry and hence there was no justification to
frame the impugned scheme, and (2) in view of the losses
incurred by the appellant during the years 1960-65., no
additional burden should have been cast on it by introducing
a gratuity scheme.
So far as the Wage Board recommendations is concerned, it
pertains to the jute industry as a whole. After taking into
consideration the ’importance of the jute industry for. the
national
L4Sup. Cl/68-2.
11
Burhanpur Tapti Mills Ltd. v. B. T. Mills Mazdoor Sangh
[(1965) 1 LLJ 453]:
"........there are two general methods of
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fixing the terms of a gratuity scheme. It may
be fixed on the basis of industry-cum-region
or on the basis of units. Both, systems are
admissible but regard must, be had to the
surrounding circumstances to select the right
basis. Emphasis must always be laid upon the
financial position ,of the employer and his
profit-making capacity whichever method is
selected, and it must be further seen
"whether the industrial court was right in
appraising the financial condition and the
profit-making capacity of the company- A
scheme for gratuity no doubt imposes a
burden
on the finances of the concern but the
pressure is ex facie distributed over the
years for it is limited to the number of
retirements each year. The employer is not
required to provide the whole amount at once.
He may create a fund, if he likes and pay from
the interest which accrues on a capitalised
sum determined actuarially. This is one of
providing the money. Ordinarily the payment
is made each year to those who retire. To
judge whether the financial position would
bear the strain the average number of
retirements per year must be found out. This
is one part of the inquiry. The next part of
the inquiry is to see whether the employer can
be expected to bear the burden from year to
year. The present condition of his finances,
the past history and the future prospects all
enter into the appraisal of. his ability."
In Calcutta Insurance Co. Ltd. v. Their
Workmen(1), this Court observed
"On the financial aspect ’of a gratuity
scheme, we were referred to the case of Wenger
& Co. v. Their workment [(1963) II LIJ 403].
There it was observed by this Court that the
problem of the burden imposed by the gratuity
scheme could be looked at in two ways. one was
to capitalise the burden on actuarial basis.
which would show theoretically that the burden
would be very heavy; and the other was to look
at the scheme in its practical aspect and find
out how many employees retire every year on
the average. According to this Court, it was
this practical approach which ought to be
’taken into account."
(1) [1967] 2 S.C.R. 596.
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In the light of the principles noted above and on the
material placed before the tribunal it is not possible to
hold that the tribunal’s conclusion was without any just
basis.
For the reasons mentioned above this appeal fails and the
same is dismissed with costs.
G.C. Appeal dismissed.
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