Full Judgment Text
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PETITIONER:
AMRITSAR RAYON & SILK MILLS
Vs.
RESPONDENT:
THEIR WORKMEN
DATE OF JUDGMENT:
02/08/1962
BENCH:
GAJENDRAGADKAR, P.B.
BENCH:
GAJENDRAGADKAR, P.B.
GUPTA, K.C. DAS
MUDHOLKAR, J.R.
CITATION:
1966 AIR 1253 1966 SCR (3) 558
ACT:
Industrial Dispute-Gratuity scheme, Framing of-Validity
-Employer’s financial position Amount of gratuity-Ceiling,
if and when should be placed-Tribunal’s determination to
depend on relevant facts.
HEADNOTE:
The present appeal arises out of an industrial dispute
between the appellant and the respondents. The Industrial
Tribunal gave an award and the appellant filed an appeal to
this Court by way of special leave.
The main contention of the appellant was that no case bad
been before the tribunal for the framing of a gratuity
scheme. It was further urged that even if a gratuity scheme
had to be framed the tribunal was in error in not placing
any ceiling on the amount of gratuity payable to the
employees. The third point raised was that one month’s
basic wages which had been provided by the scheme was
excessive and it should be reduced to 15 days’ basic wages.
Held, that having regard to the financial position of the
appellant the framing of the gratuity scheme was justified.
As a general rule, where is no provision for superannuation
and gratuity is, paid at a fairly reasonable rate a ceiling
should be placed on the amount of gratuity payable under the
scheme. Even though gratuity schemes framed in the same
industry in the same region should not disclose radical or
violent differences the rate of gratuity which should be
awarded in’. a particular case will depend on the facts of
that case.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 394 of 1961,
Appeal by special leave from the Award dated November
6,1960, of the Industrial Tribunal, Punjab, in Reference No.
43 of 1968.
M. C. Setalvad, Attorney-General for India,
559
S. K. Kapur, Bishambher Lal, B. N. Kripal and K. K.
Jain, for the appellant.
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Janardan Sharma, for the respondents.
1962. August, 2. The Judgment of the Court was delivered
by
GAJENDRAGADKAR, J.- This, appeal arises out of an industrial
dispute between the appellant Amritsar Rayon & Silk
MillS,and its workmen.The dispute originally related to
seven demands made by the respondents against the appellant
and these seven demands were referred by the Punjab
Government for industrial adjudication to the Industrial
Tribunal, Jullundur under section 10(1)(d) of the Industrial
Disputes Act, 1917. The Tribunal has made its award in
respect of these demands. In the present appeal, which has
been brought to this Court by special leave, we are
concerned with the award in so for as it deals with the
respondents, claim for a gratuity scheme. The appellant
urged that no case had been made out for the framing of a
gratuity scheme. This plea has been rejected by the
Tribunal and a gratuity scheme has been framed. It is the
propriety and the validity of this scheme which are
challenged before us by Mr, Kapoor on behalf of the appel-
lant in this case.
The scheme framed by the Tribunal reads thus:-
(1) In case of death of an employee while,
he is in the service of the concern on his
becoming incapable of serving further due to
physical or mental disability. One month’s
basic wages for each year of his service,
560
In case of death, the gratuity will be payable
to the heirs or assigns of the deceased
workmen.
(2) On termination of an employees service
by the concern after he has put in five year a
service Half month’s basic wages for each
year of his service.
(3) No gratuity would be payable to an emp-
loyee who designs,his job ’but if he has
served for fifteen years continuously and is
rendered unfit to serve further by old age or
protracted ill health, he shall be given
gratuity calculated at the rate of one
month’s bastion wages for each completed year
of his service.
(4) No gratuity would be payable to an emp-
loyee who is dismissed for misconduct.
In rejecting the appellant’s contention that no scheme
should be framed, the Tribunal has found that the appellant
which was started in 1934 is the biggest Textile Mills Is in
Amritsar and its career so far has been one of success all
along the line. The invested capital of the concern is
Rs.14 lakhs and its working capital is Rs.2,70,000/-. On its
roll are employed 1,250 employees whose monthly wage bill
comes to Rs.1,20,000/-. It is admitted that the appellant
has been paying :bonus to its workmen since 1946 and has
allowed dividend on invested capital. It contributes to the
Provident Fund and the Employees State Insurance Scheme.
Having regard to this financial position of the appellant,
the Tribunal has held, and we think rightly, that the
appellant cannot successfully resist the demand for the
framing of a gratuity scheme.
Mr. Kapoor, however, contends that even if a gratuity scheme
has to be framed, the Tribunal
561
was in error in not placing any coiling on the amount of
gratuity payable to the employees. In our opinion, this
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contention is well-founded. Speaking generally, where there
is no provision for superannuation and gratuity is paid at a
fairly reasonable rate, gratuity schemes framed by
Industrial Tribunals generally provide for a ceiling, and
so, we do not see how the Tribunal was justified in
departing from this generally accepted position... The rate
fixed in the present case is not unduly low and admittedly,
there is no provision for superannuation. Therefore we
think that the appellant is " justified in contending that a
ceiling should be put on the amount of gratuity payable
under the scheme. On the whole, we think it would be reas-
onable if the maximum amount of gratuity payable under the
scheme is fixed at 15 months’ basic wages. We ought to make
it clear that in coming to this conclusion we do not propose
to lay down any hard and fast rule that a ceiling must be
placed in every case and that it should be of the order of
15 months’ basic wages; as we have repeatedly observed, in
framing gratuity scheme, all relevant factors have to be
taken into account and so, inevitably the schedule are
likely to differ from case to case.
Mr. Kapoor then contends that one month’s basic wages which
has been provided for by clauses (1) and (3) is excessive
and it should be reduced to 15 days basic wages. This
argument is that the usual pattern of gratuity schemes in
the Punjab shows that it is 15 days’ basic wages which is
provided under similar clauses. In support of his argument,
Mr. Kapoor has referred us to some of the awards produced by
him. In the gratuity scheme framed in the New India
Embroidery Mills, Chheharta, 15 days wages has been adopted
as the basis, but this award includes dearness allowance and
so, this provision is not very helpful because in the
present came, the rate has been fixed by
562
reference to the basic wages alone. The scheme framed in
the Niemla Textile Finishing Mills, Chheharta, is on the
same lines as the scheme under the New India Embroidery
Mills and the same comment, therefore, falls to be made
about it. The gratuity scheme in the Technological
Institute of Textiles, Bhiwani, has adopted the basis of 1/2
month’s basic wages for each completed year of service, but
there is no ceiling placed by the scheme. On the other
hand, the gratuity scheme in the Shambhu Nath & Sons Ltd.,
Amritsar, adopts one month’s basic wages for each completed
year of service and so does the scheme in the India Woollen
Textile Mills, Chheharta, and the India Calico Printing
Mills. The Jagatjit Cotton Textile Mills Ltd., Phagwara,
has 1/2 month’s basic wages; the Punjab Distilling
’Industries Ltd, provides for one month’s basic wages; so
does the New Egerton Woollen Mill, Dhariwal. The Jawala
Flour Mills Amritsar, provides for the rate of 1/2 month’s
basic wages in case of workmen with five years of service
and in case of workmen with service above five years at the
rate of one month’s basic wages. It would thus be seen.that
the claim made by the appellant that the pattern of gratuity
schemes in the Punjab invariably shows the adoption of the
rate of 15 days’ basic wages for each completed year of
service, is not supported by the several awards produced by
the parties before us, and so, it cannot be said that the
present award has departed from any fixed uniform pattern in
the matter.
Mr. Kapoor then referred to the decision of this Court ’in
Bharatkhand Textile Mfg. Co. Ltd. v. The Textile Labour
Association Ahmedabad(1) where the gratuity scheme provided,
inter alia, for one month’s basic wages for each completed
year of service for the Period before the coming into force
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of the Employees Provident Funds Act, 1952, and half
(1) (1960] 3 S. C. R. 329.
563
a month’s basic wages for each completed year of service
thereafter, subject to a maximum of 15 month’s basic wages.
This shows that the award with which this Court was dealing
in that case had made a distinction between gratuity schemes
prior to 1952 and those subsequent to it, and this distinc-
tion was based on the fact that the Employees’ Provident
Funds Act had come into force in 1952. Therefore, we do not
think it would be fair to suggest that because the scheme
thus framed was accepted by this Court in appeal it follows
that this Court has laid down that in every case half a
month’s basic wages should be paid after 1952.
Mr. Kapoor has also relied on the decision of the Industrial
Tribunal at Rajkot in Arvind Mills Co-operative Supply
Society Ltd., Ahmedabad v. Their Workmen,(1). The scheme
framed by the Tribunal in this case no doubt provides for 16
day’s basic wages as contended by Mr. Kapoor and prescribes
the ceiling of 10 month’s basic wages.. Similarly. in the
Rashtriya Mill Majdoor Sangh, Bombay. v. Millowners’
Association, Bombay (1) the gratuity schemes framed appears
to be substantially similar to the one framed in the
Bharatkhand Textile Mfg. Co. Ltd.(2). These decisions
merely show that 15 days basic wages has been adopted as a
rate by some of the gratuity schemes framed by Industrial
Tribunals. We would, however, not be prepared to accept Mr.
Kapoor’s contention that these decisions support the general
argument that invariably the rate of 15 days’ basic wages
must be adopted. That is a; question which has to be
decided by the Tribunal on the facts of each case; and
though it may be desirable that gratuity schemes framed in
the same industry in the same region should not disclose
radical or violent differences, it would not be possible to
introduce uniformity by accepting the argument that 15 days
(1) (1959) 2 L.L.J. 107 119 (2) (1956-57) II F.J. R. 372.
(3) [1960] 3 S.C.R. 329.
564
should be treated as the invariable rate in the gratuity
schemes. On the material adduced before us, we age not
prepared, to hold that the basis adopted by the award under
appeal has made either a violent or radical departure
from the pattern prevailing in the same industry in the
Punjab or is otherwise unjustified on the merits. The fact
that we decline to interfere with the rate prescribed by the
award under appeal does not also mean that according to us,
that rate should be adopted in other oases without
reference to the relevant facts in each of them.
The result is, the award. is modified by prescribing a
ceiling of 15 month’s basic wages. The rest of the award is
confirmed. There would be no order as to costs.