PETITIONER:
WORKMEN OF METRO THEATRE LTD., BOMBAY
Vs.
RESPONDENT:
METRO THEATRE LTD., BOMBAY
DATE OF JUDGMENT31/07/1981
BENCH:
TULZAPURKAR, V.D.
BENCH:
TULZAPURKAR, V.D.
VARADARAJAN, A. (J)
CITATION:
1981 AIR 1685 1981 SCC (3) 596
1981 SCALE (3)1125
ACT:
Labour legislation-Retrospectivity of the award-
Discretion to make the Award with retrospective effect vests
with the Tribunal under section 17A(4) of the Industrial
Disputes Act, 1947-Linkage of dearness allowance with some
rational principle Cost of living index and consumer price
index principle or on the normal principle of industry-cum-
region should be uniform and desirable in one and the same
industry-Payment of Gratuity Act, section 4(5)-Award
includes any Award that would be made by an adjudicator
wherein better terms of gratuity could be granted to the
employees if the facts and circumstances warrant such grant.
HEADNOTE:
The wages and gratuity of the workers of Metro Theatre
were governed by an earlier award in Reference No. 1 of 1968
published in 3-7-1969 which was effective from 1-1-1967,
while dearness allowance was governed by the award in
Reference No. 440 of 1970 effective from 1-1-1970. Both
these awards were duly terminated by notice and fresh
demands for revision of wage scales, dearness allowance,
etc. effective from 1-1-1974 were submitted by the workers
Union to the Management on 15-4-1974. A reference (IT) No.
248 of 1975 was made on 10-7-1975 to the Industrial Tribunal
which by its award dated September 22, 1977 published in
Maharashtra Government Gazette on November 3, 1977 granted
the revision in wage scales and dearness allowance with
effect from 1-1-1977. While granting special leave against
the impugned award the Court confined the appeal to three
points, namely: (i) retrospectivity of the award: (ii)
linkage of dearness allowance to some rational principle and
(iii) construction of section 4(5) of the Payment of
Gratuity Act, 1971.
Allowing the appeal in part on the point of gratuity
and remanding to the Tribunal on the question of linkage of
dearness allowance, the Court.
^
HELD: 1. Under section 17A(4) of the Industrial
Disputes Act, 1947 it is a matter of discretion for the
Tribunal to decide having regard to the circumstances of
each case from which date its award should come into
operation and no general rule can be laid down as to the
date from which the Tribunal should bring its award into
force and the Supreme Court shall not interfere with the
Tribunal's order in that behalf unless substantial ground is
made out showing unreasonable exercise or its part. In the
instant case, in the absence of any material placed before
the Tribunal or even before the Supreme Court by either
party as to whether the profits earned by the Company for
the years 1974, 1975 and 1976 had been disbursed or were
still available with the Company at the time of making the
award, a factor relevant on the question of granting
retrospectivity and also in view of decreasing trend in the
profits made by the Company during the said three years,
according to the Exhibit U-5 marked by the appellant Union
itself, presumably the Tribunal felt that it would be proper
to give the revision in wage scales and dearness allowance
only from 1-1-1977 onwards and not to give any retrsopective
effect. [167 E-H, 168 A-C]
165
Wenger and Co. and others v. Their Workmen, 1963 II
L.L.J. 403: Bengal Chemical and Pharmaceutical Works Ltd. v.
Its Workmen and Another, 1969 I L.L.J. 751 and Hydro
(Engineers) (Pvt.) Ltd. v. Their Workmen, 1969 I L.L.J. 713,
followed.
2. On the question of linkage of dearness allowance
with some rational principle, uniformity is highly desirable
in one and the same industry. The very same adjudicator,
Shri B.B. Tambe, yet in other Reference (VA) No. 1 of 1979
dated June 27, 1980 had awarded payment of dearness
allowance linked with the cost living index, while in the
instant case, fixed dearness allowance on the normal
principle of industry-cum-region. [168 C, G-H, 169 A]
3:1. On true construction of section 4(5) of the
Payment of Gratuity Act, the expression "award" occurring in
the said provision does not mean and cannot be confined to
"existing award" but includes any award that would be made
by an adjudicator wherein better terms of gratuity could be
granted to the employees if the facts and circumstances
warrant such grant. In the first place, there is nothing in
the provision which limits the expression "award". Secondly,
it cannot be and was not that under the above provision a
gratuity scheme obtaining under existing agreement or
contract could be improved upon by a fresh agreement or
fresh contract between the employer and the employee and if
that be so, there is no reason why the expression "award"
should be construed as referring to an existing award and
not to include a fresh award that may be made by an
adjudicator or an Industrial Court improving in favour of
the employees the scheme obtained under the Act or the
existing award. Thirdly, the very fact that under the above
provision better terms of gratuity could be obtained by an
employee by an agreement or contract with the employer
notwithstanding the scheme of gratuity obtaining under the
Act clearly suggests that no standardisation of the gratuity
scheme contemplated by the Act was intended by the
Legislature. [171 D-H, 172 A]
3:2. It is true that the Payment of Gratuity Act enacts
a complete Code containing detailed provision covering all
essential features of the scheme for payment. But it is also
clear that scheme envisaged by the enactment secures the
minimum for the employees in that behalf and express
provisions are found in the Act under which better terms of
gratuity if already existing are not merely preserved but
better terms could be conferred on the employee in future.
[172 A-C]
State of Punjab v. Labour Court Jullundur and Ors.
[1980] 1 S.C.R. 953, followed.
Alembic Chemical Works Company Ltd. v. Its Workmen,
[1961] 1 L.L.J. 328, explained.
3:3. The phrase "under any award, agreement or contract
with employer" occuring in section 4(5) of the Payment of
Gratuity Act is intended to cover future awards agreements
or contracts with the employer since existing better terms
of gratuity are intended to be protected by issuance of a
notification under section 5 of the Act. [173 B-C]
166
[To maintain uniformity and to be in conformity with
the Award made by the same adjudicator in Reference (VA) No.
5 of 1970 M/s. Alankar and 39 others v. The Workmen employed
under them, the Court directed that the gratuity scheme as
set out in paragraph 140 of that award be applicable to the
workmen of Metro Cinema with effect from 1-1-1970.]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1558 (L)
of 1978.
Appeal by special leave from the Award dated the 4th
August, 1977 of the Industrial Tribunal Maharashtra, Bombay
in Reference (IT) No. 248 of 1975 published in M.O.G. Part I
(L) dated 3rd November, 1977.
C.L. Dudhia, K.L. Hathi and Mrs. Hemantika Wahi, for
the Appellant.
G.B. Pai, Manik A. Gagrat, G. Subramaniam, S.S. Shroff,
D.P. Mohanty and T.R. Das, for the Respondents.
The Judgment of the Court was delivered by
TULZAPURKAR. J. This appeal by special leave is
directed against the award of the Industrial Tribunal
Maharashtra, Bombay, dated September 22, 1977, in Reference
(I.T.) No. 248 of 1975 in the industrial dispute between the
respondent and the workmen employed by it and published in
Maharashtra Government Gazette on November 3, 1977. Though
the demands made by the workers’ Union and the adjudication
thereon by the Tribunal related to items like wage scale,
dearness allowance, extra show allowance, gratuity, service
conditions of non-permanent staff and retrospectivity, while
granting special leave this Court confined the appeal to
three points, namely, (i) retrospectivity of the award, (ii)
linkage of dearness allowance to some rational principle and
(iii) construction of s. 4 (5) of the Payment of Gratuity
Act, 1972, and leave was expressly refused in regard to the
other grounds mentioned in the special leave petition. We,
therefore, proceed to deal with the aforesaid three points
on which arguments were advanced before us by counsel on
either side.
It may be stated that prior to the impugned award the
wages and gratuity of the workers were governed by the
earlier award in Reference No. 1 of 1968 published on
3.7.1969 which was effective from 1.1.1967 while dearness
allowance was governed by the award in Reference No. 440 of
1970 effective from 1.1.1970 Both these
167
awards were duly terminated by notice and fresh demands for
revision of wage scales, dearness allowance, etc. effective
from 1.1.1974 were submitted by the Union to the Management
on 15.4.1974. The Reference to the Tribunal was made on
10.7.1975 and by the impugned award the Tribunal granted the
revision in wage scales and dearness allowance with effect
from 1.1.1977. Counsel for the appellant Union contended
that the Tribunal erred in not granting the revision with
effect from 1.1.1974 as demanded and at any rate the same
should have been granted from 10.7.1975 being the date of
Reference, especially when the Tribunal found the financial
capacity of the respondent very sound and admittedly there
had been a steep rise in the cost of living index. He
pointed out that the Tribunal while refusing to grant
retrospective effect had erroneously observed that there
will be “too much financial burden on the company” as,
according to him, such additional burden could not have been
more than Rs. 1,00,000/- or Rs. 1,20,000/- a year during the
three years 1974, 1975 and 1976. In support of his
contention counsel referred to three decisions of this
Court, namely, Wenger and Co. and others v. Their Workmen,
Bengal Chemical and Pharmaceutical Works, Ltd. v. Its
Workmen and another and Hydro (Engineers) (Pvt.) Ltd. v.
Their workman.
It is difficult to accept this contention and interfere
with the discretion exercised by the Tribunal in the matter
which can be done only if it is shown to have been
unreasonably exercised. Under s. 17A(4) of the Industrial
Disputes Act, 1947 it is a matter of discretion for the
Tribunal to decide having regard to the circumstances of
each case from which date its award should come into
operation and no general rule can be laid down as to the
date from which the Tribunal should bring its award into
force and this Court shall not interfere with the Tribunal’s
order in that behalf unless substantial ground is made out
showing unreasonable exercise on its part. Even the three
decisions cited by the counsel clearly brings out the
aforesaid position in law. The Tribunal was deciding the
Reference in August 1977 and though the additional burden
may not have been more than Rs. 1,00,000/- or Rs. 1,20,000/-
per year for the three years 1974, 1975 and 1976 if
retrospective effect was given to the revision, no material
was placed before the Tribunal by either party as to whether
the profits earned by the Company for the said three years
had been disbursed or were still available with the company
at
168
the time of making the award-a factor relevant on the
question of granting retrospectivity. Even before us no
light could be thrown on the point by counsel on either
side. Further there was on record a statement showing the
financial position of the company for the years 1968 to 1975
(year ending being 31st August) produced by the appellant
Union itself at Ex. U5 which clearly showed that the profits
of the company before taxation and depreciation had dwindled
consistently for the years 1973, 74 and 75, such profits for
each of the said three years being Rs. 6,80,912/-, Rs.
6,51,181/- and Rs. 5,70,884/-. Presumably it was in view of
such decreasing trend in the profits made by the company
during the three years that the Tribunal felt that it would
be proper to give the revision in wage scales and dearness
allowance only from 1.1.1977 onwards and not to give any
retrospective effect. It cannot be said that the discretion
has been unreasonably exercised by the Tribunal.
Coming to the second point of linkage of dearness
allowance with some rational principle the Union’s
contention before the Tribunal was, and the same contention
has been reiterated by the counsel for the Union in the
appeal-that the dearness allowance should be linked with the
cost of living index and Consumers’ Price Index Number. It
was pointed out that the Bombay Working Class Consumers’
Price Index was 800 in 1970 (when the earlier award in the
matter of D.A. was given), that it had gone upto 1372 in
1977 and that, therefore, dearness allowance on Index No.
999-1,000 should be fixed on 4 weekly basis with a variation
for every ten points rise or fall. But the Tribunal
negatived the contention and fixed the dearness allowance on
the normal principle of industry-cum-region and only reason
for not linking it to the cost of living index was that such
linkage did not obtain in any concern falling in the
category of Cinema Exhibiting Industry which could not be
compared with manufacturing industries like textile where
such linkage operated. Counsel for the appellant Union
pointed out that the same adjudicator (Shri B.B. Tambe) as
Sole Arbitrator in Reference (VA) No. 1 of 1979 in the
industrial dispute between M/s Alankar Theatre and 38 other
theatres of Bombay (cinemas falling in classes A-1, A, B and
C) and the workmen employed under them had made an award on
June 27, 1980 (published in Maharashtra Government Gazette
on October 9, 1980) wherein dearness allowance has been
linked with the rise in the cost of living index and the
Consumers’ Price Index Number. The result has been that in
Cinema Exhibiting Industry all the other 39 theatres will be
paying to their workers dearness allowance linked with the
cost of living index while
169
in the case of workmen of Metro Theatre these will be no
such linkage which would be contrary to normal uniformity
which is always desirable in one and the same industry. We
find considerable force in this contention urged by counsel
for the appellant Union. On the other hand, counsel for the
Company pointed out that the aforesaid award of Shri Tambe
in Reference(VA)No. 1 of 1979 dated June 27, 1980 is under
challenge before the Bombay High Court in Writ Petition No.
79 of 1981 at the instance of the management and as such the
question whether dearness allowance in the Cinema Exhibiting
Industry should be linked with the cost of living index is
still pending consideration before the High Court. Moreover,
he urged that there are certain peculiar features of the
Cinema Exhibiting Industry by reason of which it would be
inappropriate to link the dearness allowance payable to
worker in that industry with the cost of living index. For
instance, he pointed out, that unlike manufacturing
concerns. there is little scope for enhancing the profits in
Cinema Exhibiting Industry inasmuch as the principal source
of income being box-office collection the same is connected
with and limited by the seating accommodation in any
theatre. However, notwithstanding this limiting factor the
same adjudicator has granted the linkage in case of 39
cinema houses in Bombay which shows that other factors must
have weighed with him as outweighing this limiting factor.
We are clearly of the opinion that uniformity on this aspect
is highly desirable in one and the same industry. The main
reason for the refusal to grant such linkage (i.e. linking
the D-A. with the cost of living index) having disappeared
the question will have to be considered afresh. We do not
think that adequate and sufficient material is available on
the record of this case before us to decide this issue
satisfactorily. Further it would not be advisable to direct
the parties before us to intervene in the matter pending
before the High Court, for, material which may be peculiar
to Metro Cinema may have to be produced and considered
before the issue is properly decided. We, therefore, remand
this issue back to the Industrial Tribunal for disposal in
accordance with law with a direction that the Tribunal
should give opportunity to both the parties to produce
additional material and after hearing them should decide the
same afresh. It will be open to the management to raise all
contentions including the contention that dearness allowance
should not be linked with cost of living index but should be
granted on normal principle of industry-cum-region formula.
We wish to make it clear that in case the issue is answered
by the Tribunal in favour of the company, the appellant
Union shall not raise any contentions on the quantum of
dearness allowance that has been
170
allowed by the Tribunal in its award on the basis of
industry-cum-region formula, for the quantum aspect of the
revision has become final by reason of the limited leave
that was granted by this Court while admitting the appeal.
We shall next deal with the last question pertaining to
the construction of s. 4(5) of the Payment of Gratuity Act,
1972. The question of construction arises this way. It
appears that existing scheme of gratuity in the Metro
Theatre Bombay was as per the award in Reference (IT No. 1
of 1968 and the same had been modified by an agreement
between the parties in this Court, which, the Union
contended, had become extremely inadequate and desired to
have a more beneficial scheme in some respect for its
workers. Counsel for the Union urged that it was open to the
Tribunal to give more benefits than were available under the
scheme contemplated by the Act and in that behalf reliance
was placed on s. 4(5) of the Act. Counsel for the Company
contended the expression ‘award’ in s. 4(5) meant an
existing award and as such if under the existing award
better terms were given to the employees these will not be
affected. It was also urged that the Act was exhaustive and
was intended to ensure uniform payment of gratuity to the
employees throughout the country. The Tribunal accepted the
contention of the Management and held that it could not go
beyond the scheme contemplated by the Act, and, therefore
directed that the gratuity scheme as per the Act shall
prevail subject to the modifications arrived at under the
terms of settlement, if any, if they were more beneficial.
Counsel for the appellant Union urged before us that no
standardisation of any gratuity scheme was contemplated by
the Act as was clear from the express provisions contained
in s. 4(5) and s. 5 of the Act and that enactment being a
beneficial piece of legislation s. 4(5) should be construed
in favour of the employees and that, therefore, the
Tribunal’s view that it could not grant anything beyond the
scheme contemplated by the Act was erroneous. In support of
such construction reliance was placed upon this Court’s
decision in Alembic Caemical Works Company Ltd. v. Its
Workmen where a similar provision under the Factories Act
was construed as conferring power on the Tribunal to fix the
quantum
171
of leave on a scale more liberal than the one provided by
the Act. We find considerable force in this submission.
Section 4(1) of the Act provides that the gratuity
shall be payable to an employee on the termination of his
employment after he has rendered continuous service for not
less than five years-(a) on his superannuation, or (b) on
his retirement or resignation, or (c) on his death or
disablement due to accident or disease; sub-s. (2) provides
that for every completed year of service or part thereof in
excess of six months, the employer shall pay gratuity to an
employee at the rate of fifteen days’ wages based on the
wages last drawn by the employee and sub-s. (3) provides
that the amount of gratuity payable to an employee shall not
exceed 20 months’ wages. This is the main scheme of gratuity
contemplated by the Act. Then comes sub-s. (5) which runs
thus:
“5. Nothing in this section shall affect the right
of an employee to receive better terms of gratuity
under any award or agreement or contract with the
employer.”
The question for consideration is whether expression
‘award’ occurring in the above provision means an existing
award or would include any award whatsoever to be made by an
adjudicator under the Industrial Disputes Act. In the first
place there is nothing in the provision which limits the
expression ‘award’. Secondly, it cannot be and was not that
under the above provision a gratuity scheme obtaining under
an existing agreement or contract could be improved upon by
a fresh agreement or fresh contract between the employer and
the employee and if that be so there is no reason why the
expression ‘award’ should be construed as referring to an
‘existing award’ and not to include a fresh award that may
be made by an adjudicator or an Industrial Court improving
in favour of the employees the scheme obtaining under the
Act or the existing award. Thirdly, the very fact that under
the above provision better terms of gratuity could be
obtained by employee by an agreement or contract with the
employer notwithstanding the scheme of gratuity obtaining
under the Act clearly suggests that no standardisation of
the gratuity scheme contemplated by the Act was intended by
the Legislature. This also becomes amply clear from the
provisions of s. 5 which confer power upon the appropriate
Government to exempt establishment to which the Act applies
from operation of the provisions of the Act if in its
opinion the employees in such establishment, are in receipt
of gratuity benefits not less favourable than benefits
confer-
172
red under the Act. Therefore, on true construction we are
clearly of the view that the expression ‘award’ occurring in
the above provisions does not mean and cannot be confined to
‘existing award’ but includes any award that would be made
by an adjudicator wherein better terms of gratuity could be
granted to the employees if the facts and circumstances
warrant such grant. It is true, as has been observed, by
this Court in State of Punjab v. Labour Court Jullundur and
Ors. that the Act enacts a complete Code containing detailed
provisions covering all essential features of the scheme for
payment of gratuity. But it is also clear that the scheme
envisaged by the enactment secures the minimum for the
employees in that behalf and express provisions are found in
the Act under which better terms of gratuity if already
existing are not merely preserved but better terms could be
conferred on the employee in future. In other words, the
view taken by the Tribunal that it could not go beyond the
scheme of gratuity contemplated by the Act is clearly
erroneous.
The decision of this Court in Alembic Chemical Works
Limited (supra), which was under the Factories Act, also
lends support to such beneficent construction. In that case
the Industrial Tribunal had fixed the quantum of leave,
privilege and sick, for the staff of a manufacturing concern
on a scale more liberal than the one in force for the
operatives of the same concern. In also made necessary
direction regarding accumulation of such leave. The quantum
of leave so fixed by the Tribunal was larger than the
quantum of leave prescribed under the provisions of s. 79(1)
of the Factories Act. It was contended that s. 79 of the Act
was exhaustive and had self contained provisions with regard
to the granting of annual leave with wages to the employees,
that it had the effect of introducing standardisation in the
matter of leave and that no addition to the said leave could
be made either by a contract or by an award. This Court
negatived the said contention on the language of s. 79(1)
itself. Additionally, provisions of s. 78 were relied upon
which recognised exemptions to the leave prescribed by s.
79(1). Section 78(1) provided that provisions of Chapter
VIII including s. 79(1) shall not operate to the prejudice
of any right to which a worker may be entitled “under any
other law or under the terms of any award, agreement or
contract of service”, and a proviso to this sub-section laid
down that when such award, agreement or contract of service
provided for longer annual leave with wages than provided
under the
173
Chapter, the worker shall be entitled only to such longer
annual leave. It was contended that the expression “any
award” in s. 78(1) applied only to existing award. The Court
negatived this contention and held that the contention was
plainly inconsistent with a fair and reasonable construction
of the said provision and that s. 78(1) protected not merely
awards, agreements or contracts of service then existing but
also those that would come into existence later. In the
instant case also we are clearly of the opinion that the
phrase “under any award, agreement or contract with the
employer” occurring in s. 4(5) is intended to cover future
awards, agreements or contracts with the employer since
existing better terms of gratuity are intended to be
protected by issuance of a notification under s. 5 of the
Act.
We may also state here that in the other adjudication
done by the same adjudicator (Shri B.B. Tambe) as the Sole
Arbitrator in Reference (VA) No. 1 of 1979 (M/s. Alankar
Theatre and 38 other theatres v. The workmen employed under
them) he has come to a contrary conclusion and has held that
under s. 4(5) of the payment of Gratuity Act an adjudicator
can grant better terms of gratuity and has actually
proceeded to grant better terms of gratuity to the workmen
employed in all the theatres concerned in that Reference.
(Vide para 140 of the Award). Realising this position,
counsel for the company before us fairly conceded that the
employees in the Metro Cinema would also be entitled to
better terms of gratuity-the same as given to employees in
other cinema Houses. Counsel for the parties, therefore,
agreed before us that gratuity scheme as set out by Shri
Tambe in para 140 of his award dt. 27-6-1980 in Reference
(VA) No. 1 of 1979 should apply to the workmen of Metro
Cinema. We accordingly, direct that the gratuity scheme as
set out in paragraph 140 of the above award would be
applicable to the workmen of Metro Cinema with effect from
1.1.1977.
In the result the appeal is partly allowed on the point
of gratuity as indicated above and on the question of
linkage the appeal is remanded to the Tribunal for disposal
according to law as directed above. The appeal as regards
retrospectivity is dismissed.
In the circumstances the parties will bear their own
costs.
V.D.K. Appeal allowed in part.
174