Full Judgment Text
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PETITIONER:
GENERAL MANAGER, E.I.D. PARRY (INDIA) LTD.
Vs.
RESPONDENT:
PRESIDING OFFICER, 2ND ADDL. LABOUR COURTMADRAS AND ORS.
DATE OF JUDGMENT02/05/1991
BENCH:
MISRA, RANGNATH (CJ)
BENCH:
MISRA, RANGNATH (CJ)
AHMADI, A.M. (J)
SAHAI, R.M. (J)
CITATION:
1991 AIR 1544 1991 SCR (2) 637
1991 SCC Supl. (1) 326 JT 1991 (2) 588
1991 SCALE (1)844
ACT:
Industrial Disputes Act, 1947: Sections 9-A, 33-C(2)
Payment of Gratuity Act, 1972.
Labour Law--Company--General Office Order No. 26 dated
1.12.1943--Provision for ’Retiring Allowance’ (Pension) and
gratuity--Memorandum of settlement between Company and
workmen--Employees given option under the settlement either
for Gratuity or Retiring allowance--Enforcement of Gratuity
Act, 1972--Workers’ claim for retiring allowance (Pension)
in addition to gratuity--Held settlement had not substituted
gratuity for pension--Employees held entitled to pension
notwithstanding the settlement.
HEADNOTE:
The General Office Order No. 26 dated 1.12.1943 of the
Appellant-Company provided that employees with 30 years’
service or more would be eligible to receive "Retiring
Allowance" (pension). The said office order also provided
that all permanent employees who were in the Company’s
service prior to 1.1.1947 and who do not qualify for
retiring allowance on retirement, will be eligible for
gratuity on finally leaving the Company’s service subject
to the prescribed conditions being fulfiled. In 1956 a
memorandum of settlement was signed by the appellant-
company and the Employees’ Union under which the employees
in service prior to 1.1.47 were required to opt at the time
of leaving service either for gratuity or in lieu of the
gratuity the retiring allowance. Later the Payment of
Gratuity Act 1972 came into force and the payment of
gratuity became statuory. The employer and the Employees’
Union jointly applied to the Government for exemption from
the provisions the statue which was refused.
Some of the retiring employees of company filed
applications under Section 33-C(2) of the Industrial
Disputes Act, 1947 before the Labour Court claiming pension
by alleging that payability of pension was a condtion of
service and the employer had stopped it without any
Justification. The Labour Court allowed the applications.
Against the-
638
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order of the Labour Court the employer preferred six writ
petitions. In the meantime the same dispute was referred to
the Industrial Tribunal and by an award the Tribunal
answered the reference against the employees. The
Employees’ Union challenged the award by filling a writ
petition in the High Court. All the writ petitions were
heard by a learned single judge of the High Court who
allowed the writ petitions of the management against the
order of the Labour Court and dismissed the writ petition
preferred by the Labour Union challenging the award of the
Tribunal. Writ appeals were carried against the single
Judges’ decision. The Appellate Bench of the High Court
held that gratuity provided under the settlement was not a
substitute of pension and the claim of pension was available
to employees notwithstanding the settlement. Hence this
appeal by the employer-company.
Dismissing the appeals, this Court,
HELD: The 1956 settlement between the parties does not
provide for payment of pension except to pre-1947 employees
and making the benefit liable to exercise of option under
clause 6(d) of the settlement. The retiral benefit
(pension) was payable to all qualfied employees as a matter
of practice. If under the settlement that was not done away
with, the benefit arising out of General Office order No. 26
would still be available and gratuity contemplated under the
settlement would not be a substitute of the retiral benefit
of pension. The Appellate Bench of the High Court was right
in holding that the entitlement to pension had not been
substituted by the settlement of 1956 and, therefore, the
claim to pension subject to qualification being satisfied
was available to be maintained notwithstanding the
settlement of 1956. The High Court rigtly came to the
conclusion that the Labour Court had justifiably worked out
the dues and the claim petition under section 33-C(2) of the
1947 Act. [641C-D, 642C-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1450-
1458 of 1990.
From the Judgment and Order dated 21.11.1988 of the
Madras High Court in W.A. Nos. 864 to 870 of 1988 and W.P.
Nos. 1600 and 1601 of 1986.
Narayanswamy, N. Balasubramaniam and A.T.M. Sampath for
the Appellant.
M. Ramamurthy, Mrs. C. Ramamurthy, M.A. Krishnamoorthy,
639
for the Respondents.
R.C. Paul appeared in person.
The Judgment of the Court was delivered by
RANGANATH MISRA. CJ. These are appeals by special
leave and are directed against a common judgment of the
Madras High Court delivered in a group of writ appeals and a
writ petition.
E.I.D. Parry (India) Ltd. (hereinafter referred to as
‘the employer’) has one of its units located at Ranipet in
Tamil Nadu State where sanitary-ware, super phosphate and
insecticides are manufactured. Some of its retiring
employees filed applications under section 33-C(2) of the
Industrial Disputes Act, 1947 (‘1947 Act’ for short) before
the Labour Court at Madras claiming pension by alleging that
payability of pension was a condition of service and the
employer had stopped it without any justification and
without giving notice under section 9-A of the 1947 Act.
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The President Officer of the 2nd Additional Labour Court,
Madras, allowed the same by his order dated 30th May, 1983,
after computing the amounts. The employer preferred six
writ petitions. In the meantime the same dispute had been
referred to the Industrial Tribunal and it answered the
reference against the employees by award dated 13th
February, 1985. The award was assailed before the High
Court by the Union by filing of the seventh writ petition.
All the seven writ petitions were heard by a learned Single
Judge who allowed the writ petitions of the management
against the order of the Labour Court and dismissed the writ
petition preferred by the labour union challenging the award
of the Industrial Tribunal. Writ appeals were carried
against the Single Judge’s decision.
The main controversy before the Division Bench was as
to whether pension, or as is referred to by the parties,
"retiring allowance" was payable to the employees. This
dispute has a historical backdrop to which we may now
advert. Under General Office Order No. 26 dated Ist
December, 1943 "retiring allowances" were provided for. The
Office Order provided that normally only employees with
thirty years’ service or more would be eligible to receive
"Retiring Allowance". The Board reserved the right to alter
the scale of "retiring allowance". either generally or in
respect of individual employees and had the authority to
sanction ‘retiring allowance’ when first granted and
subsequent payment became a routine matter subject to annual
review.
640
Gratuities were also provided under the Office Order by
saying that all permanent employees (other than workers who
qualify for gratuities as per Factory Certified Standing
Order) who were in the Company’s service prior to 1.1.1947
and who do not qualify for Retiring Allowance on retirement,
will be eligible for gratuity on finally leaving the
Company’s service subject to one or other of the prescribed
conditions being fulfilled. In all four alternatives were
provided. Clause (4) indicated that employees recruited on
or after 1.1.1947 would not be entitled to any gratuity.
There was a Memorandum of Settlement between the
parties which may be referred to as the settlement of 1956.
Clause (6) thereof related to gratuity and provided:
"Gratuity shall in future be payable by the company
in accordance with the following rules:
(a)(i) Where, irrespective of the length of his
past service, an employee dies in service, or is
retired on a medical certificate acceptable to the
company, or is retired by the company on reaching
the age of superannuation, he shall be entitled to
gratuity calculated at the rate of one month’s
basic salary for each completed year of service,
and pro rata for any partly completed year of his
service ,subject to a maximum of 15 months’ basic
salary if his service is less than 30 years,
together with half of one month’s basic salary for
each completed year of service in excess of 30
years and pro rata for any partly completed year of
service in excess of 30 years...............
(d) Employees in service prior to Ist January, 1947
may opt, at the time of leaving service, either
for:
(i) Gratuity calculated in accordance with
these rules or in accordance with the current
provisions of General Office Order No. 26,
whichever he prefers, or
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(ii) in lieu of gratuity, a retiring allowance
calculated in accordance with the current
provisions of General Office Order No. 26."
This settlement as a fact incorporated the relevant part of
the Office Order.
641
The Payment of Gratuity Act came into force with effect
from September, 1972 and payment of gratuity became
statutory. When that Act came into force, the Employer and
the Employees ’ Union jointly applied to the Government for
exemption from the provisions of the statute. The exemption
was, however, not granted. Payability of gratuity is no
longer in dispute. What is challenged is the claim of the
workmen to retiring allowance (pension) under Office order
No. 26. The stand of the employees has been that the
retiring allowance under General Office Order No. 26 has
not been substituted by the 1956 settlement and they are,
subject to being qualified, entitled to the benefit of
pension and the statutory advantage of gratuity. It is a
fact that the settlement does not provide for payment of
pension except to pre-1947 employees and making the benefit
liable to exercise of option under clause 6(d) above. It is
not in dispute that the retiral benefit (pension) was
payable to all qualified employees as a matter of practice.
If under the settlement that was not done away with, the
benefit arising out of General Office Order No. 26 would
still be available and gratuity contemplated under the
settlement would not be a substitute of the retiral benefit
of pension.
The Appellate Bench of the High Court has found that
gratuity provided under the settlement was not a substitute
of pension. Mr. Narayanaswamy, learned senior counsel
appearing in support of the appeals took us through the
various documents and placed the matter at considerable
length and with lucidity. He even relied on what he
described as the prevailing practice between 1956 and 1972-
the settlement and the Gratuity Act-when no retiral benefit
was either claimed or paid. We have, however, not been able
to see any defect in the reasoning of the Division Bench
decision of the High Court where it has ultimately come to
the conclusion that the settlement had not substituted
gratuity for pension. We find that by way of an interim
measure this Court by an order dated 5th May, 1989 had
directed the employer to pay the pension to the employees in
accordance with the order of the High Court with effect from
Ist May, 1989 and that from the record appears to have been
paid.
A petition had been filed in this Court on 23rd April,
1990 by the employer for modification of the condition
indicated in the order granting special leave and we had
heard counsel for both the sides on the said petition. We
had made it clear at the hearing of the petition for
modification of the order granting special leave that the
question as to payability of retirement benefit after the
1956 settlement would be examined. The total number of
employees involved in this dispute was
642
about 347. Many of them had not only retired but had also
died and in respect of those who were dead it would be a
question of the benefits up to the date of death of the
respective employees to be paid to their legal
representatives. Mr. Narayanaswamy had emphatically
contended that what was being decided was not a claim of 347
employees but it had its repercussion on the industrial
peace between the employer and the employee at other places.
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We would like to make it clear that we have gone into the
question confined to the claim to the employees of the
Ranipet factory and not the liability of the employer
generally, Besides, Mr. Narayanaswamy had also told us at
the hearing that there are special features in the
arrangement in regard to employees elsewhere.
We are satisfied that the Appellate Bench of the High
Court was right in holding that the entitlement to pension
had not been substituted by the settlement of 1956 and,
therefore, the claim to pension subject to qualification
being satisfied was available to be maintained
notwithstanding the settlement of 1956, The High Court
rightly came to the conclusion that the Labour Court had
justifiably worked out the dues and the claim petitions
under section 33-C(2) of the 1947 Act. We uphold the
judgment of the High Court and dismiss these appeals. The
employees had asked for award of interest on their dues.
The challenge of the employer was not groundless and we do
not think in the facts of these cases the employees or their
legal representatives would be entitled to interest. We
hope and trust that the employer would not liquidate its
liability without delay by satisfying the orders of the
Labour Court and the claims of the workmen or their legal
representatives as and when made.
A sum of Rs. 10,000 had been given by the employer to
Sri Pant for the Union to contest these matters and he has
been paid the amount under this Court’s order. No order for
further courts.
T.N.A. Appeals dismissed.
643