{"id":157728,"date":"1984-03-27T00:00:00","date_gmt":"1984-03-26T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/sudhir-chandra-sarkar-vs-tata-iron-steel-co-ltd-and-on-27-march-1984"},"modified":"2017-10-21T03:45:13","modified_gmt":"2017-10-20T22:15:13","slug":"sudhir-chandra-sarkar-vs-tata-iron-steel-co-ltd-and-on-27-march-1984","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/sudhir-chandra-sarkar-vs-tata-iron-steel-co-ltd-and-on-27-march-1984","title":{"rendered":"Sudhir Chandra Sarkar vs Tata Iron &amp; Steel Co. Ltd. And &#8230; on 27 March, 1984"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Sudhir Chandra Sarkar vs Tata Iron &amp; Steel Co. Ltd. And &#8230; on 27 March, 1984<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1984 AIR 1064, \t\t  1984 SCR  (3) 325<\/div>\n<div class=\"doc_author\">Author: D Desai<\/div>\n<div class=\"doc_bench\">Bench: Desai, D.A.<\/div>\n<pre>           PETITIONER:\nSUDHIR CHANDRA SARKAR\n\n\tVs.\n\nRESPONDENT:\nTATA IRON &amp; STEEL CO. LTD. AND OTHERS.\n\nDATE OF JUDGMENT27\/03\/1984\n\nBENCH:\nDESAI, D.A.\nBENCH:\nDESAI, D.A.\nSEN, A.P. (J)\nERADI, V. BALAKRISHNA (J)\n\nCITATION:\n 1984 AIR 1064\t\t  1984 SCR  (3) 325\n 1984 SCC  (3) 369\t  1984 SCALE  (1)586\n CITATOR INFO :\n F\t    1984 SC1683\t (7)\n\n\nACT:\n     Retiring Gratuity\tRules, 1937-Rule  1(g)-Definition of\n`Retirement' scope  of Employe\tafter working  for 29  years\nleft service  by resignation which was accepted by employer-\nWhether employee could be said to have retired from service.\n     Retiring Gratuity Rules, 1937-Rule 10 validity of. Part\nof Rule\t 10 which confers absolute discretion on employee to\npay  gratuity,\teven  if  it  is  earned,  at  its  absolute\ndiscretion, is ineffective and enforceable.\n     Industrial\t Employment  (Standing\tOrders)\t Act,  1946-\nSection 3-Certified  Standing orders-Nature  of-Whether form\npart of\t contract of  service-Whether their  breach  can  be\nrepaired by civil suit.\n     Words and\tPhrases-\"Gratuity\"-Concept of, Gratuity is a\nretiral benefit\t as measure  of social\tsecurity; it  is not\ngratuitous but\thas to\tbe earned  by  long  and  continuous\nservice; it can be recovered through civil suit.\n\n\n\nHEADNOTE:\n     The  appellant   who  resigned   from  service  of\t the\nrespondent company  after serving  for over 29 years was not\npaid retiring  gratuity by  the respondent,  even  when\t the\nappellant had  become eligible\tfor it\tunder  the  relevant\ngratuity rules\tstyled as  the Retiring Gratuity Rules, 1937\n(Gratuity Rules\t for short).  The appellant  filed a suit in\nthe Court  of Subordinate Judge for recovering the amount of\ngratuity. The  Subordinate Judge  decreed the suit. The High\nCourt allowed the appeal filed by the respondent. Hence this\nappeal.\t The  respondents  submitted;  (1)  that  since\t the\nappellant did  not retire  from the  service  but  left\t the\nservice by  resigning the  post, he  was  not  eligible\t for\ngratuity under\tRule 6 of the Retiring Gratuity Rules, 1937;\n(2) that  under Rule 10 the retiring gratuity was payable at\nthe absolute  discretion of  the respondent and could not be\nclaimed as a matter of right by the appellant even if he had\nbecome eligible for it; and (3) that claim to gratuity could\nnot be enforced in the civil court.\n     Allowing the appeal\n^\n     HELD:  Rule   6(a)\t which\tprescribed  the\t eligibility\ncriterion for  payment of  retiring gratuity provides, inter\nalia, that  every permanent  uncovenanted  employee  of\t the\nCompany,  will\t be  eligible  for  retiring  gratuity.\t The\nexpression `retirement'\t has been  defined in  Rule 1(g)  to\nmean `the  termination of  service by  reason of  any  cause\nother then  removal by\tdischarge due  to misconduct'. It is\nadmitted that  the appellant  was a  permanent\tuncovenanted\nemployee of\n326\nthe Company  paid on  monthly basis  and he rendered service\nfor over  29 years  and his service came to an end by reason\nof  his\t tendering  resignation\t which\twas  unconditionally\naccepted. It  is  not  suggested  that\the  was\t removed  by\ndischarge due  to misconduct. Unquestionably. therefore, the\nappellant has  within the  meaning of  the expression,\tthus\nretired from  service of  the respondent and he is qualified\nfor payment of gratuity in terms of Rule 6. [ 332D-F]\n     According to  the High Court, the service conditions of\nthe appellant were. governed by the Works Standing orders of\nthe respondent. No exception has been taken to this finding.\nThese Works  Standing orders were framed and certified under\nthe Industrial\tEmployment (Standing  orders) Act, 1946. The\nAct was\t a legislative response to the laissez faire rule of\nhire and  fire at  sweet will. It was an attempt at imposing\nstatutory contract of service between two parties unequal to\nnegotiate,  On\tthe  footing  of  equality.  The  intendment\nunderlying the\tAct and the provisions of the Act enacted to\ngive effect  to the  intendment and  the scheme\t of the\t Act\nleave no room for doubt that Standing orders certified under\nthe Act become part of the statutory terms and conditions of\nservice between\t the employer  and  his\t employee  and\tthey\ngovern the relationship between the parties.[333E-334G]\n     Western India  Match Company  Ltd. v. Workman; [1974] I\nSCR 434.  Work man  of <a href=\"\/doc\/1333489\/\">Messrs  Firestone Tyre &amp; Rubber Co of\nIndia (P)  Ltd. v.  Management and<\/a>  ors; [1973] 3 SCR 587 at\n612. Workman  in Buckingham and carnatic Mills Madras v. the\npresiding Officer,  labour Court, Meerut &amp; Ors; [1984] 1 SCC\n1. Agra\t\tElectricity Supply co. Ltd. v. Sri Alladin &amp;\nOrs;[1970] 1 SCR 806, referred to\n     Upon a  combined reading  of Standing  order  (S.O)  54\nalong with Rule 5 and 6(a) of the Gratuity Rules, it becomes\ndistinctly clear  that payment of gratuity was an express or\nstatutory conditions  of service  governing the relationship\nbetween the  appellant and  the\t respondent.  Therefore,  it\nwould be  obligation upon  the respondent to pay gratuity on\nretirement to  the appellant.  If the  respondent refuses to\npay or\tdischarge its statutory obligation, the claim can be\nenforce by  a civil  suit. The High Court was of the opinion\nthat in\t view of  Rule 1  of the Gratuity Rules, recovery of\ngratuity cannot\t be enforced  by a  civil suit.\t But upon an\nIndustrial dispute being raised, the Industrial Tribunal may\nbe in  a position to award the gratuity as a matter or right\neven under  the existing  rules. In reaching this conclusion\nthe High  Court\t overlooked  the  effect  of  the  certified\nStanding orders\t and the inter-relation between the Gratuity\nRules and S.O 54, When under 1946 Act, an obligation is cast\non the\temployer to  specifically and precisely lay down the\nconditions of service, Sec. 13(2) subjects the employer to a\npenalty if  any act is done in contravention of the Standing\norders certified  under\t the.  Act.  A\tface  of  collective\nbargaining is  that any\t settlement. arrived  at between the\nparties would  be treated as incorporated in the contract of\nservice\t of   each  employee  governed\tby  the\t settlement.\nSimilarly,  certified\tstanding  Orders  which\t statutorily\nprescribe the  conditions of  service shall  be deemed to be\nincorporated in\t the contract of employment of each employee\nwith his  employer. If\tthe employer commits a breach of the\ncontract of  employment the same can be enforced or remedied\ndepending upon the\n327\nrelief sought  by a  civil suit.  The jurisdiction  of civil\ncourt amongst  others is  determined by the nature of relief\nclaimed.  If  the  relief  claimed  is\ta  money  decree  by\nenforcing statutory  conditions of  service, the civil court\nwould certainly\t have  jurisdiction  to\t grant\tthe  relief.\n[335F-337B]\n     Labour Law\t Text and  Materials by Paul Davies and Mark\nFreedland p  233 and system of Industrial Relations in Great\nB itain p. 58-59, referred to.\n     In the  instant case,  the\t appellant  filed  the\tsuit\nalleging that  he was  entitled to  payment of\tgratuity  on\ncompletion of  service for the period prescribed. He alleged\nit and the High Court accepted it as a condition of service.\nIts breach would give rise to a civil dispute and civil suit\nwould be the only remedy. In the case of workmen governed by\nthe Industrial Disputes Act, 1947, Sec. 33(c)(2) may provide\nan additional  forum to\t recover monetary benefit. It is not\nsuggested that\tappellant was  a  workman  governed  by\t the\nIndustrial Disputes  Act. The  High Court was, therefore, in\nerror in  holding that\tthe remedy  was only  by way  of  an\nindustrial dispute and not by a civil suit. [337C-D]\n     The Court while interpreting and enforcing the relevant\ngratuity rules\twill have  to bear  in mind  the concept  of\ngratuity. The  fundamental principle under-lying gratuity is\nthat it\t is a  retirement benefit  for\tlong  service  as  a\nprovision for old age. Demands of social security and social\njustice\t made\tit  necessary  to  provide  for\t payment  of\ngratuity. On  the enactment  of the Payment of Gratuity Act,\n1972 a\tstatutory liability  was cast on the employer to pay\ngratuity.\n     Pension and  gratuity which  have much  in\t common\t are\nwell-recognised\t retiral  benefits  as\tmeasures  of  social\nsecurity. It is now well-settled that pension is a right and\npayment of  it does  not depend\t upon the  discretion of the\nemployer, nor it can be denied at the sweet will or fancy of\nthe employer.  If pension  can be  recovered  through  civil\nsuit, there  is no  justification in  treating gratuity on a\ndifferent footing.  Pension and\t gratuity in  the matter  of\nretiral benefits  and for recovering the same must be put on\npar [339G-H; 340A]\n     <a href=\"\/doc\/1224577\/\">Burhanpur Tapti  Mills Ltd.  v. Burhanpur\tTapti  Mills\nMazdoor Sangh<\/a>;\t[1965] (1)  LLJ 453,  <a href=\"\/doc\/1566\/\">Deokinandan Prasad  v.\nState of Bihar &amp; Ors.,<\/a>[1971] Supp SCR 634, <a href=\"\/doc\/1881298\/\">State of Punjab &amp;\nAnr. v.\t Iqbal Singh,<\/a> [1976] 3 SCR 360, <a href=\"\/doc\/1416283\/\">D.S. Nakara &amp; Ors v.\nUnion of India,<\/a> [1983] 2 SCR 165; referred to.\n     If\t the   rules  for   payment   of   gratuity   become\nincorporated in\t the Standing-\torders and  thereby acquired\nthe  status  of\t the  statutory\t condition  of\tservice,  an\narbitrary denial  referable to\twhim, fancy or sweet will of\nthe employer  must be,\trejected as arbitrary. Sec. 4 of the\n1946 Act  which confers\t power on  the certifying officer or\nthe appellate  authority to  adjudicate upon the fairness or\nreasonableness of  the provisions would enable this Court to\nreject\tthat   part  of\t  Rule\t10  which  confers  absolute\ndiscretion on  the employer  to pay  gratuity even  if it is\nearned, at its absolute discretion, as utterly unreasonable,\nineffective and\t unenforceable. That  part of  Rule 10 must,\ntherefore, be  treated as  ineffective and  un\tenforceable.\n[340C-D]\n328\n     The claim\tto absolute  discretion not  to pay gratuity\neven when  it is  earned is a hang over of the laissez faire\ndays and utterly inconsistent with the modern notion of fair\nindustrial relations  and, therefore, it must be rejected as\nineffective and hence unenforceable. [340H]\n     <a href=\"\/doc\/1104358\/\">Western India  Match Company  Ltd. v. Workmen,<\/a> [1974] 1\nSCR 434: referred to.\n     Our Constitution  envisages a  society governed by rule\nof law. Absolute discretion uncontrolled by guidelines which\nmay permit  denial of equality before law is the anti-thesis\nof  rule   of  law.   Absolute\tdiscretion   not  judicially\nreviewable inheres  the pernicious  tendency to be arbitrary\nand is, therefore, violative of Art. 14. Equality before law\nand absolute  discretion to grant or deny benefit of the law\nare diametrically opposed to each other and cannot co-exist.\nTherefore also the conferment of absolute discretion by Rule\n10 of  the Gratuity Rules to give or deny the benefit of the\nrules  cannot\tbe  upheld   and   must\t  be   rejected\t  as\nunenforceable. [341A-C]\n\n\n\nJUDGMENT:\n<\/pre>\n<p>\t CIVIL APPELLATE JURISDICTION: Civil Appeal<br \/>\n\t\t      No. 1803 of 1070<br \/>\n     From the  Judgment and  order dated  6.8.1968 of  Patna<br \/>\nHigh Court in first appeal No. 444 of 1967.\n<\/p>\n<p>     D.N. Mukherjee,  Ranjan Mukherjee,\t A.K. Ganguli &amp; S.C.<br \/>\nGhosh for the appellant.\n<\/p>\n<p>     R.B. Datar and Ms. Vina Tamta for the respondents.<br \/>\n     The Judgment of the Court was delivered by<br \/>\n     DEASI J.  Appellant, an employee of Tata Iron and Steel<br \/>\nCompany Limited\t (`Company&#8217; for\t short) has  been chasing  a<br \/>\nmirage. to wit to recover a paltry sum of Rs 14040 being the<br \/>\namount\tof  gratuity  to  which\t he  was  entitled  for\t the<br \/>\ncontinuous service  rendered by\t him from  December 31, 1929<br \/>\ntill August  31, 1959  under what  are\tstyled\tas  Retiring<br \/>\nGratuity Rules,\t 1937 (`Gratuity  Rules&#8217; for short) from the<br \/>\nCompany and  in this  wholly unequal  fight he laid down his<br \/>\nlife before  enjoying the  pittance to which he was entitled<br \/>\nafter three decades of loyal service. What a dreadful return<br \/>\nfor  abject   loyalty?\tWhen   the  appellant\tretired\t  by<br \/>\nresignation from service he was paid his provident fund dues<br \/>\nbut gratuity  which he\twas entitled  to be  paid under\t the<br \/>\nrelevant rules\twas not\t paid to  him.\tWhen  the  appellant<br \/>\nclaimed payment of gratuity, the respondent turned deal<br \/>\n<span class=\"hidden_text\">329<\/span><br \/>\nears to\t it. Appellant\tsevred a  notice dated\tSeptember 6,<br \/>\n1981 calling  upon the\trespondent  to\tpay  the  amount  of<br \/>\ngratuity being\tRs. 14040-.  The Company  did not respond to<br \/>\nthe notice.  Thereupon the  appellant filed  M.S. No. 452 of<br \/>\n1962 in the court of Subordinate Judge at Jamshedpur.\n<\/p>\n<p>     The respondent  appeared and  contested the suit inter-<br \/>\nalia contending\t that `in  terms of  the contract of service<br \/>\nand particularly  having regard\t to the relevant rules under<br \/>\nwhich gratuity\tcan be\tclaimed,  the  same  is\t payable  on<br \/>\ncertification of  satisfactory service\tby the\thead of\t the<br \/>\ndepartment, and\t it is payable at the absolute discretion of<br \/>\nthe Company  irrespective of whether the employee has or has<br \/>\nnot performed  all or  any of  the conditions  stated in the<br \/>\nrules  and  no\temployee  howsoever  otherwise\teligible  is<br \/>\nentitled as of right to any payment under the rules.&#8217;<br \/>\n     The learned  trial Judge  framed the  issues  on  which<br \/>\nparties were  at variance.  The learned\t Judge held that the<br \/>\nplaint does disclose a cause of action and the plaintiff was<br \/>\nentitled to  claim and\trecover the  amount of gratuity with<br \/>\ninterest thereon.  Accordingly, the suit was decreed against<br \/>\nthe. Company  directing it  to pay the amount claimed in the<br \/>\nplaint with future interest at 6% per annum with costs.\n<\/p>\n<p>     The respondent  Company preferred\tFirst Appeal No. 444<br \/>\nof 1963 in the High Court of Judicature at Patna. A Division<br \/>\nBench of the High Court held: i) that the service conditions<br \/>\nof the\tplaintiff were governed by the Works Standing orders<br \/>\nand that  it was  an implied  condition of  service that the<br \/>\nplaintiff could get gratuity in accordance with the Gratuity<br \/>\nRules; (ii)  that in view of Rule 6, an employee governed by<br \/>\nthe Gratuity  Rules is\tnot entitled  to claim the same as a<br \/>\nmatter of  right  but  he  merely  attains  the\t benefit  of<br \/>\neligibility or suitability for the retiring gratuity and not<br \/>\nthe right;  iii)  that\tuntil  and  unless  the-Company\t has<br \/>\ndecided to  pay the  gratuity in  accordance with  Rule 7 or<br \/>\notherwise, the\tmere fact  of the employee becoming eligible<br \/>\nto get\tit under the relevant rules which can be enforced in<br \/>\na civil\t court because\tthe matter of payment of gratuity is<br \/>\nat the\tabsolute discretion  of the  Company as\t provided in<br \/>\nRule  10,   and\t the  employee,\t howsoever  unfortunate\t the<br \/>\nposition may be under the modern stage of the society is not<br \/>\nentitled to  claim it  as a  matter of\tright  because\teven<br \/>\nthough payment\tof gratuity  under the\tGratuity Rules is an<br \/>\nimplied condition of service,<br \/>\n<span class=\"hidden_text\">330<\/span><br \/>\nyet the\t condition is  further conditioned by the provisions<br \/>\nmade in\t the Rules  and is  subject to them; iv) that such a<br \/>\nclaim may  enforced before the Industrial Tribunal under the<br \/>\nIndustrial Disputes Act, 1947 but it is not possible to hold<br \/>\nthat the  law of  contract or  the law of master and servant<br \/>\nwhich is  the only  law to  be enforced in a civil court can<br \/>\njustify on  interpretation of the Gratuity Rules in question<br \/>\nthat the  plaintiff can\t be granted  decree for\t payment  of<br \/>\ngratuity on  the footing  that it  was the  unconditional or<br \/>\nunconditioned contractual  obligation of the employer to pay<br \/>\nsuch a\tmoney; v)  the payment\tof gratuity  money is  not a<br \/>\ngift-pure and  simple, but under the relevant rules it is in<br \/>\nthe nature  of an inchoate claim or interest and not a right<br \/>\nenforceable by\ta suit\tin court, because under the contract<br \/>\nof service,  the grant of gratuity has been left to the sole<br \/>\ndiscretion of  the employer  as the  relevant rules provided<br \/>\nthat no\t employee  howsoever  otherwise\t eligible  shall  be<br \/>\ndeemed to  be entitled\tas of right to any payment under the<br \/>\nrules. Accordingly  the appeal\twas allowed and the judgment<br \/>\nand decree  of the  trial  court  were\tset  aside  and\t the<br \/>\nplaintiff&#8217;s suit  was dismissed,  directing the\t parties  to<br \/>\nbear their costs.\n<\/p>\n<p>     Hence this appeal by the plaintiff by special leave.<br \/>\n     At the  outset it\tis necessary  to notice the relevant<br \/>\nrules relied  upon by  the  respondent\tin  support  of\t its<br \/>\nsubmission that\t the gratuity  cannot be claimed as a matter<br \/>\nof right  and the  claim to  gratuity cannot  be enforced in<br \/>\nthe civil court. The Retiring Gratuity Rules came into force<br \/>\nwith effect from April 1, 1937 and at the relevant time, the<br \/>\nrules as  amended in 1948 were in operation. Rule 5 provides<br \/>\nfor retirement of every uncovenanted employee of the Company<br \/>\non attaining the age of 60 years subject to the right of the<br \/>\ncompany\t to   grant  extension.\t  This\trule   is   a\tmere<br \/>\nincorporation of  S.O. 54  which provides  for retirement on<br \/>\nattaining the age of 60. Rules 6, 7 and 10 may be extracted:\n<\/p>\n<blockquote><p>\t  &#8220;6. (a)  Subject to  the conditions referred to in<br \/>\n     these rules,  every permanent  uncovenanted employee of<br \/>\n     the Company,  whether paid\t on monthly,  weekly  or  on<br \/>\n     daily basis,  including those borne on the pay rolls of<br \/>\n     the Company  of the  Collieries and  at ore  Mines\t and<br \/>\n     Quarries, will  be eligible  for  a  retiring  gratuity<br \/>\n     which shall  be equal to half a month&#8217;s salary or wages<br \/>\n     for every completed year of continuous service,<br \/>\n<span class=\"hidden_text\">331<\/span><br \/>\n     subject to\t a maximum  of twenty months salary or wages<br \/>\n     in all,\n<\/p><\/blockquote>\n<blockquote><p>\t  (b) Provided\tthat when  an employee dies, retires<br \/>\n     or is discharged under Rule 11(2)(ii) and (iii) hereof,<br \/>\n     before he\thas served  the\t Company  for  a  continuous<br \/>\n     period of\t15 years,  a gratuity  ordinarily limited to<br \/>\n     half a month&#8217;s salary or wages for each qualifying year<br \/>\n     may be paid subject, however, to a maximum of 6 months&#8217;<br \/>\n     salary or wages in all.\n<\/p><\/blockquote>\n<blockquote><p>\t  (Amended vide\t Board Resolution  No. VII dated 2nd<br \/>\n     July, 1953.)\n<\/p><\/blockquote>\n<blockquote><p>\t  (c) The  retiring gratuity  will be  based on\t the<br \/>\n     rate of  the salary or wages applicable to the employee<br \/>\n     in the  last month of active service or if the employee<br \/>\n     has retired  while on leave, in the last month prior to<br \/>\n     the employee going on leave.\n<\/p><\/blockquote>\n<blockquote><p>\t  (d) In  the case  of an  uncovenanted employee who<br \/>\n     has been  transferred  to\tanother\t Tata  concern,\t the<br \/>\n     retiring gratuity\tpayable to  him under Rule (4) 8 (a)<br \/>\n     hereunder will  be based  on the  rate of the salary or<br \/>\n     wages applicable  to the  employee in the last month of<br \/>\n     service with the Company,<br \/>\n\t  (In force  from 1.4.1946  as per  Board Resolution<br \/>\n     dated 8.4.1948.)\n<\/p><\/blockquote>\n<blockquote><p>\t  7. Notwithstanding  anything\tcontained  in  these<br \/>\n     Rules a  gratuity shall  become due  and be payable and<br \/>\n     shall always  have been  deemed to\t have become due and<br \/>\n     payable only  in such  instalments and over such period<br \/>\n     or periods as may be fixed by the Board of Directors of<br \/>\n     the Company or subject to the direction of the Board by<br \/>\n     the Managing  Agents. Until  any such  instalment shall<br \/>\n     become or\thave become due and payable, the employee or<br \/>\n     any dependent  who\t qualifies  for\t payment  under\t the<br \/>\n     Gratuity Rules  shall not\tbe eligible to receive or be<br \/>\n     paid any such instalment of the gratuity.\n<\/p><\/blockquote>\n<blockquote><p>\t  10. All  retiring gratuities\tgranted under  these<br \/>\n     Rules other  than special gratuity to be paid under the<br \/>\n     provisions of  Rule 22  hereof shall be at the absolute<br \/>\n     discretion of the Com-\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">332<\/span><\/p>\n<blockquote><p>     pany irrespective of whether an employee has or has not<br \/>\n     performed all  or any  of the  conditions herein  after<br \/>\n     stated and\t no employee  howsoever\t otherwise  eligible<br \/>\n     shall be  deemed to  be entitled  as of  right  to\t any<br \/>\n     payment under these Rule.\n<\/p><\/blockquote>\n<blockquote><p>\t  (Amended  vide   Board  Resolution   No.  v  dated<br \/>\n     25.8.1955).&#8221;<\/p><\/blockquote>\n<p>     The contention  of the respondent is that the plaintiff<br \/>\ndid not\t retire from  service but he left the service of the<br \/>\nCompany by  resigning his  post. This  aspect to some extent<br \/>\nagitated the  mind of  the High\t Court. It may be dealt with<br \/>\nfirst. It  is not  only not  in\t dispute,  but\tis  in\tfact<br \/>\nconceded that  the plaintiff  did render  continuous service<br \/>\nfrom December  31, 1929\t till  August  31,  1959.  On  exact<br \/>\ncomputation, the plaintiff rendered service for 29 years and<br \/>\n8  months.   Rule  6(a)\t which\tprescribed  the\t eligibility<br \/>\ncriterion  for\tpayment\t of  gratuity  provides\t that  every<br \/>\npermanent uncovenanted\temployee of the Company whether paid<br \/>\non monthly,  weekly or\tdaily basis  will  be  eligible\t for<br \/>\nretiring gratuity  which shall\tbe equal  to  half  a  month<br \/>\nsalary or  wages for  every  completed\tyear  of  continuous<br \/>\nservice subject to a maximum of 20 months salary or wages in<br \/>\nall provided  that when\t an employee  dies,  retires  or  is<br \/>\ndischarged under  Rule 11(2)(ii)  and (iii)  before  he\t has<br \/>\nserved the  Company for\t a continuous  period of 15 years he<br \/>\nshall be  paid a gratuity at the rate therein mentioned. The<br \/>\nexpression &#8216;retirement&#8217;\t has been  defined in  Rule 1 (g) to<br \/>\nmean &#8216;the  termination of  service by  reason of  any  cause<br \/>\nother than  removal by\tdischarge due  to misconduct&#8217;. It is<br \/>\nadmitted that  the plaintiff  was a  permanent\tuncovenanted<br \/>\nemployee of  the  Company  paid\t on  monthly  basis  and  he<br \/>\nrendered service  for over  29 years and his service came to<br \/>\nan end\tby reason  of his  tendering resignation  which\t was<br \/>\nunconditionally accepted.  It is  not suggested\t that he was<br \/>\nremoved by  discharge  due  to\tmisconduct.  Unquestionably,<br \/>\ntherefore, the plaintiff retired from service because by the<br \/>\nletter Annexure\t &#8216;B&#8217; dated  August 26, 1959, the resignation<br \/>\ntendered by  the plaintiff as per his letter dated July, 27,<br \/>\n1959 was  accepted and he was released from his service with<br \/>\neffect from September 1,1959. The termination of service was<br \/>\nthus on\t account  of  resignation  of  the  plaintiff  being<br \/>\naccepted by  the respondent.  The plaintiff  has, within the<br \/>\nmeaning of  the expression, thus retired from service of the<br \/>\nrespondent an  he is  qualified for  payment of\t gratuity in<br \/>\nterms of Rule 6.\n<\/p>\n<p><span class=\"hidden_text\">333<\/span><\/p>\n<p>     Rule 7,  in  our  opinion,\t has  hardly  any  relevance<br \/>\nbecause\t it   enables  the   Company  to   pay\tgratuity  by<br \/>\ninstalments.\n<\/p>\n<p>     It is  Rule 10  which is  material for  the purpose. It<br \/>\nprovides  that\t payment  of  retiring\tgratuity  under\t the<br \/>\nGratuity Rules, other than special gratuity to be paid under<br \/>\nthe provisions\tof Rule\t 22 which  is not  the case  herein,<br \/>\nshall  be   at\tthe   absolute\tdiscretion  of\tthe  Company<br \/>\nirrespective of whether an employee has or has not performed<br \/>\nall or\tany of\tthe conditions\thereinafter stated,  and  no<br \/>\nemployee howsoever  otherwise eligible shall be deemed to be<br \/>\nentitled as  of right  to any  payment under  the rules. The<br \/>\nstand taken  by the  respondent\t to  deny  gratuity  to\t the<br \/>\nplaintiff is  that gratuity  payable under  the rules  is  a<br \/>\nmatter of  employer&#8217;s  largesse\t to  be\t distribute  at\t the<br \/>\nabsolute discretion  of the Company and cannot be claimed as<br \/>\na matter  of right  even  if  the  concerned  employees\t has<br \/>\nfulfilled the eligibility criteria. It is the interpretation<br \/>\nof this Rule which would govern the outcome of this appeal.\n<\/p>\n<p>     It\t may   be  mentioned   that  the  High\tCourt  which<br \/>\nultimately upheld  the\tcontention  of\tthe  respondent\t has<br \/>\nspecifically held  that gratuity was an implied condition of<br \/>\nservice of  the plaintiff  in accordance  with the  relevant<br \/>\nrules. The  High Court\treached\t this  conclusion  by  first<br \/>\nreferring to  Works Standing  Orders framed  by the  Company<br \/>\nwhich govern  the conditions of service of the plaintiff. In<br \/>\nother  words  according\t to  the  High\tCourt,\tthe  service<br \/>\nconditions of  the plaintiff  were  governed  by  the  Works<br \/>\nStanding Orders.  It is therefore necessary to determine the<br \/>\ncharacter of  the Works Standing Orders Exh. C framed by the<br \/>\nCompany. This  aspect was  overlooked by the High Court with<br \/>\nthe consequence\t that the  High Court  found it difficult to<br \/>\nenforce the  claim of  gratuity against\t the respondent by a<br \/>\ndecree of the court. What then is the character of the Works<br \/>\nStanding Orders\t framed by  the\t Company  ?  Are  they\tmere<br \/>\nunenforceable rules  or are  they statutory  in character or<br \/>\nhave  a\t statutory  flavour  ?\tIf  they  are  statutory  in<br \/>\ncharacter and  they form  part of the contract of service of<br \/>\nevery employee governed by the same, then the question would<br \/>\nbe whether its breach can be repaired or enforced by a civil<br \/>\nsuit ?\n<\/p>\n<p>     The  Parliament   enacted\tthe   Industrial  Employment<br \/>\n(Standing Orders) Act, 1946 (&#8216;1946 Act&#8217; for short). The long<br \/>\ntitle of  the Act  provides that  it was  an act  to require<br \/>\nemployers in  industrial establishments\t formally to  define<br \/>\nconditions of employment under them.\n<\/p>\n<p><span class=\"hidden_text\">334<\/span><\/p>\n<p>The preamble  of the  Act provides  that it  is expedient to<br \/>\nrequire employers  in industrial  establishments  to  define<br \/>\nwith sufficient precision the conditions of employment under<br \/>\nthem and  to make  the\tsaid  conditions  known\t to  workmen<br \/>\nemployed by  them. By  Section 3,  a duty  was cast  on\t the<br \/>\nemployer governed  by the  Act to  submit to  the Certifying<br \/>\nOfficer draft  standing orders\tproposed by him for adoption<br \/>\nin his\tindustrial establishment.  After going\tthrough\t the<br \/>\nprocedure prescribed  in the Act, the Certifying Officer has<br \/>\nto certify the draft standing orders. Section 8 requires the<br \/>\nCertifying Officer  to keep  a copy  of standing  orders  as<br \/>\nfinally\t certified  under  the\tAct  in\t a  register  to  be<br \/>\nmaintained for the purpose. Sub-sec. 2 of Section 13 imposes<br \/>\npenalty on employer who does any act in contravention of the<br \/>\nstanding orders finally certified under the Act. The act was<br \/>\na legislative response to the laissez fairs rule of hire and<br \/>\nfire at\t sweet\twill.  It  was\tan  attempt  at\t imposing  a<br \/>\nstatutory contract of service between two parties unequal to<br \/>\nnegotiate, on  the footing  of equality.  This\twas  vividly<br \/>\nnoticed by this Court in <a href=\"\/doc\/1104358\/\">Western India Mntch Company Ltd. v.<br \/>\nWorkmen<\/a> as under :\n<\/p>\n<blockquote><p>\t  &#8220;In the  sunny days  of the  market economy theory<br \/>\n     people sincerely  believed that  the  economic  law  of<br \/>\n     demand and\t supply in  the labour market would settle a<br \/>\n     mutually beneficial  bargain between  the employer\t and<br \/>\n     the workmen.  Such a  bargain they took it for granted,<br \/>\n     would, secure  fair terms\tand conditions of employment<br \/>\n     to the workman. This law they venerated as natural law.<br \/>\n     They had  an abiding  faith in  the verity of this law.<br \/>\n     But the  experience of  the working  of this law over a<br \/>\n     long period has belied their faith.&#8221;<\/p><\/blockquote>\n<p>     The intendment underlying the Act and the provisions of<br \/>\nthe Act\t enacted to  give effect  to the  intendment and the<br \/>\nscheme of  the Act leave no room for doubt that the Standing<br \/>\nOrders certified  under the  1946 Act  become  part  of\t the<br \/>\nstatutory  terms  and  conditions  of  service\tbetween\t the<br \/>\nemployer and  his employee  and they govern the relationship<br \/>\nbetween the  parties. <a href=\"\/doc\/1586692\/\">Workmen  of Messrs  Firestone  Tyre  &amp;<br \/>\nRubber Co.  of India (P) Ltd. v. Management and Ors. Workmen<\/a><br \/>\nin <a href=\"\/doc\/722600\/\">Buckinghan  and Carnatic  Mills Madras  v. Buckingham and<br \/>\nCarnatic Mills and M\/s Glaxo Laboratories<\/a> (l)<br \/>\n<span class=\"hidden_text\">335<\/span><br \/>\n     Ltd. v.  The Presiding  Officer, Labour Court, Meerut &amp;<br \/>\nOrs.\n<\/p>\n<p>     The  High\tCourt  recorded\t the  finding  that  service<br \/>\nconditions of  the plaintiff  were  governed  by  the  Works<br \/>\nStanding  Orders.  No  exception  has  been  taken  to\tthis<br \/>\nfinding. It  may at  once be  noted that  the Works Standing<br \/>\nOrders of  the Company\tare Certified Standing Orders, under<br \/>\nthe 1946 Act evidenced by Certificate No. 45 dated March 18,<br \/>\n1950. S.O.  54 provides\t that every uncovenanted employee of<br \/>\nthe Company  shall retire  from service on attaining the age<br \/>\nof 60  years. This  S.O. 54 is bodily incorporated in Rule 5<br \/>\nof the\tGratuity Rules.\t Relying on S.O. 54 and the evidence<br \/>\nrecorded in  the case, the High Court reached the conclusion<br \/>\nthat payment of gratuity was an implied condition of service<br \/>\nof the\tplaintiff. Rule\t 6(a) provides\tthat &#8216;subject to the<br \/>\nconditions  prescribed\t in  the   rules,  every   permanent<br \/>\nuncovenanted employee  of the Company will be eligible for a<br \/>\nretiring gratuity  in the  manner and  to the  extent for  a<br \/>\nretiring gratuity  in the manner and to the extent mentioned<br \/>\ntherein. Retiring  gratuity becomes  payable on\t retirement,<br \/>\nwhich means  termination of  service by\t reason of any cause<br \/>\nother than  removal by\tdischarge due  to misconduct.  On  a<br \/>\ncombined reading  of S.O.  54 and the Rule 5 of the Gratuity<br \/>\nRules the  High Court  rightly\tconcluded  that\t payment  of<br \/>\ngratuity was  a condition  of service  but somehow  the High<br \/>\nCourt  qualified  it  by  saying  that\tit  was\t an  implied<br \/>\ncondition of  service. It  is well-settled  by a  catena  of<br \/>\ndecisions, that\t Certified Standing Orders bind all those in<br \/>\nemployment at  the time\t of service as well as those who are<br \/>\nappointed thereafter.&#8217;\t<a href=\"\/doc\/416759\/\">Agra Electricity  Supply Co. Ltd. v.<br \/>\nSri Alladin  &amp; Ors.  Now<\/a> upon  a combined reading of S.O. 54<br \/>\nalong with Rule 5 and 6(a) of the Gratuity Rules, it becomes<br \/>\ndistinctly clear  that payment of gratuity was an express or<br \/>\nstatutory condition  of service\t and to\t this limited extent<br \/>\nthe finding of the High Court has to be modified.\n<\/p>\n<p>     If payment\t of gratuity is thus shown to be a statutory<br \/>\nor express  condition of  governing the relationship between<br \/>\nthe plaintiff  and the\tcompany, it would be obligatory upon<br \/>\nthe company  to\t pay  the  gratuity  on\t retirement  of\t the<br \/>\nplaintiff. If  the company  declines or\t refuses to  pay  or<br \/>\ndischarge its  statutory  obligation,  could  the  claim  be<br \/>\nenforced by a civil suit ? The High Court was of the opinion<br \/>\n<span class=\"hidden_text\">336<\/span><br \/>\nthat even  though payment  of gratuity\twas a  condition  of<br \/>\nservice in  view of  the provision contained in Rule 10, the<br \/>\nsame cannot  be claimed as a matter of right or its recovery<br \/>\ncannot be  enforced by\ta civil\t suit. The  High  Court\t was<br \/>\nconstrained to\tobserve that  Rule 10 which confers absolute<br \/>\ndiscretion on  the Company  to pay the gratuity at its sweet<br \/>\nwill is\t unconscionable and  incompatible  with\t the  modern<br \/>\nnotions or  conditions which  ought to\tgovern the relations<br \/>\nbetween employer  and that  upon an industrial dispute being<br \/>\nraised, the  Industrial Tribunal  may be  in a\tposition  to<br \/>\naward the  gratuity as\ta matter  or right  even  under\t the<br \/>\nexisting rules,\t but according\tto High\t Court, it cannot be<br \/>\nenforced by  a civil  suit. In\treaching this conclusion the<br \/>\nHigh Court  overlooked\tthe  effect  of\t certified  Standing<br \/>\nOrders and  the inter-relation between the Retiring Gratuity<br \/>\nRules and S.O. 54.\n<\/p>\n<p>     At this  stage it\twould be  appropriate to examine the<br \/>\neffect of  a breach  of condition of service which is either<br \/>\nstatutory in  character or  has the  statutory flavour. When<br \/>\nunder 1946  Act, an  obligation is  cast on  the employer to<br \/>\nspecifically  and  precisely  lay  down\t the  conditions  of<br \/>\nservice, Sec.  13(2) subjects  the employer  to a penalty if<br \/>\nany act\t is done  in contravention  of the  Standing  Orders<br \/>\ncertified  under   the\tAct.   It  would  appear  that\tsuch<br \/>\nconditions of  service prescribed  in  Standing\t Orders\t get<br \/>\nincorporated in\t the contract  of service  of each  employee<br \/>\nwith his  employer. A facet of collective bargaining is that<br \/>\nany settlement\tarrived at  between  the  parties  would  be<br \/>\ntreated as  incorporated in  the contract of service of each<br \/>\nemployee governed  by the  settlement.\tSimilarly  certified<br \/>\nStanding Orders\t which statutorily  prescribe the conditions<br \/>\nof service  shall  be  deemed  to  be  incorporated  in\t the<br \/>\ncontract of  employment of  each employee with his employer.<br \/>\nAs far\tas the\tincorporation of  the results  of collective<br \/>\nbargaining into\t the individual\t contract of  employment  is<br \/>\nconcerned, the\tcourts have  in effect created a presumption<br \/>\nof more\t or less  systematic translation  of the  results of<br \/>\ncollective bargaining  into individual contracts where these<br \/>\nresults\t are   in  practice   operative\t and   effective  in<br \/>\ncontrolling the\t terms\ton  which  employment  takes  place:<br \/>\n(Labour Law  Text and  Materials by  Paul  Davies  and\tMark<br \/>\nFreedland  p.\t233)  O\t Kahn  Freund  describes  collective<br \/>\nbargaining  as\t crystalised  custom  to  be  imported\tinto<br \/>\ncontracts of  employment on  the same  basis as trade custom<br \/>\n(System of  Industrial Relations in Great Britain p. 58-59).<br \/>\nThis would be all the more true of certified Standing Orders<br \/>\ngoverning conditions  of service  between  workman  and\t his<br \/>\nemployer. If  the employer  commits a breach of the contract<br \/>\nof employment, the same can be en-\n<\/p>\n<p><span class=\"hidden_text\">337<\/span><\/p>\n<p>forced or  remedied depending  upon the\t relief sought\tby a<br \/>\ncivil suit. If contract for personal service is sought to be<br \/>\nspecifically enforced  by a decree of civil court, the court<br \/>\nwill have  to keep  in view the provisions of Sec. 14 of the<br \/>\nSpecific Relief\t Act, 1963  which provides that contract for<br \/>\npersonal service cannot be specifically enforced. We are not<br \/>\nconcerned with the exceptions to this rule such as the power<br \/>\nof Industrial  Tribunal to grant relief of reinstatement. We<br \/>\nare concerned  with the\t jurisdiction of  civil\t court.\t The<br \/>\njurisdiction of\t civil court amongst others is determined by<br \/>\nthe nature of relief claimed. Now if the relief claimed is a<br \/>\nmoney decree  by enforcing  statutory conditions of service,<br \/>\nthe civil  court would\tcertainly have jurisdiction to grant<br \/>\nthe relief.  Plaintiff filed  the suit\talleging that he was<br \/>\nentitled to payment of gratuity on completion of service for<br \/>\nthe period  prescribed. He  alleged it\tand the\t High  Court<br \/>\naccepted it as a condition of service. Its breach would give<br \/>\nrise to\t a civil  dispute and  civil suit  would be the only<br \/>\nremedy. In  the case  of workman  governed by the Industrial<br \/>\nDisputes Act,  1947, Sec. 33(c)(2) may provide an additional<br \/>\nforum to  recover monetary benefit. It is not suggested that<br \/>\nplaintiff was  a workman governed by the Industrial Disputes<br \/>\nAct. The High Court was, therefore, in error in holding that<br \/>\nthe remedy  was only by way of an industrial dispute and not<br \/>\nby a civil suit. In reaching this conclusion, the Court High<br \/>\nclosed the door of justice to every employee though entitled<br \/>\nto gratuity but would not be a workman within the meaning of<br \/>\nthe Industrial\tDisputes Act,  1947  to\t recover  the  same,<br \/>\nexcept where  a prosecution can be successfully launched for<br \/>\nan offence under Sec. 13(2) against the employer.\n<\/p>\n<p>     One more  difficulty the  High Court experienced in the<br \/>\nway of the plaintiff maintaining the suit and recovering the<br \/>\namount of  gratuity was\t that under  Rule  10  gratuity\t was<br \/>\npayable at  the absolute discretion of Company and cannot be<br \/>\nclaimed as  a matter  of right. Undoubtedly, Rule 10 confers<br \/>\ndiscretion on  the company  to pay  the gratuity even if the<br \/>\nsame is earned by satisfying the conditions subject to which<br \/>\ngratuity  becomes   payable.  Rule  10\tprovides  that\tjail<br \/>\nretiring gratuities  granted under the rules shall be at the<br \/>\nabsolute discretion  of the  Company irrespective of whether<br \/>\nan employee  has or  has not  performed all  or any  of\t the<br \/>\nconditions set\tout in\tthe rules  and no employee howsoever<br \/>\notherwise eligible  shall be  deemed to\t be entitled  as  of<br \/>\nright  to  any\tpayment\t under\tthe  rules.&#8217;  Such  absolute<br \/>\ndiscretion  is\t wholly\t destructive  of  the  character  of<br \/>\ngratuity  as   a  retiral   benefit.  It  is  satisfactorily<br \/>\nestablished and the High<br \/>\n<span class=\"hidden_text\">338<\/span><br \/>\nCourt has  so ruled that payment of gratuity was a condition<br \/>\nof service  albeit implied  condition of  service which part<br \/>\ndoes not  stand scrutiny.  1946 Act was amended specifically<br \/>\nin 1956\t by Amending  Act 36  of 1956  by  which  power\t was<br \/>\nconferred upon the Certifying Officer or appellate authority<br \/>\nto adjudicate  upon the\t fairness or  reasonableness of\t the<br \/>\nprovisions of  any standing  orders. It is not clear whether<br \/>\nthe Rule  10 which appears to have been framed in the heyday<br \/>\nof laissez  faire has  been recast,  modified or  amended to<br \/>\nbring the  same in  conformity with  the modern\t notions  of<br \/>\nsocial justice\tand Part IV of the Constitution. Assuming it<br \/>\nis not\tdone, the court while interpreting and enforcing the<br \/>\nrelevant rules\twill have  to bear  in mind  the concept  of<br \/>\ngratuity. The  fundamental principle  underlying gratuity is<br \/>\nthat  it  is  a\t retirement  benefit  for  long\t service  as<br \/>\nprovision for old age. Demands of social security and social<br \/>\njustice\t made\tit  necessary  to  provide  for\t payment  of<br \/>\ngratuity. On  the enactment of Payment of Gratuity Act, 1972<br \/>\na statutory  liability was  cast  on  the  employer  to\t pay<br \/>\ngratuity.\n<\/p>\n<p>     Pension  and   gratuity   coupled\t with\tcontributory<br \/>\nProvident Fund\tare well  recognised retiral benefits. These<br \/>\nretiral benefits  are now  governed by various statutes such<br \/>\nas the Employees Provident Fund and Miscellaneous Provisions<br \/>\nAct, 1952, the Payment of Gratuity Act, 1972. These statutes<br \/>\nwere legislative responses to the developing notions of fair<br \/>\nand humane  conditions of work, being the promise of Part IV<br \/>\nof the\tConstitution. Art.  37 provides\t that the provisions<br \/>\ncontained in  Part-IV-Directive Principles  of State Policy,<br \/>\nshall not  be enforceable  by any  court, but the principles<br \/>\ntherein\t laid  down  are  nevertheless\tfundamental  in\t the<br \/>\ngovernance of  the country  and it  shall be the duty of the<br \/>\nState to  apply these  principles in  making laws.&#8221;  Art. 41<br \/>\nprovides that  &#8216;the State  shall within\t the limits  of\t its<br \/>\neconomic capacity  and development, make effective provision<br \/>\nfor securing  the right\t to work, to education and to public<br \/>\nassistance in  cases of\t unemployment, old age, sickness and<br \/>\ndisablement, and in other cases of undeserved want.&#8217; Art. 43<br \/>\nobligates the  State to\t secure, by  suitable legislation to<br \/>\nall workers,  a living\twage, conditions  of work ensuring a<br \/>\ndecent\t standard    of\t  life\t and   full   enjoyment\t  of<br \/>\nleisure&#8230;&#8230;..&#8217; The  State  discharged\t its  obligation  by<br \/>\nenacting these\tlaws. But  much\t before\t the  State  enacted<br \/>\nrelevant legislation,  the trade unions either by collective<br \/>\nbargaining or  by statutory  adjudication  acquired  certain<br \/>\nbenefits, gratuity  being one  of them. Pension and gratuity<br \/>\nare both  retiral benefits ensuring that the workman who has<br \/>\nspent his useful span<br \/>\n<span class=\"hidden_text\">339<\/span><br \/>\nof life\t in rendering  service and  who never  got a  living<br \/>\nwage, which  would have enabled him to save for a rainy day,<br \/>\nshould not  be reduced\tto destitution and penury in his old<br \/>\nage. As a return of long service he should be assured social<br \/>\nsecurity to  some extent  in the  form\tof  either  pension,<br \/>\ngratuity or  provident fund  whichever\tretiral\t benefit  is<br \/>\noperative in  the industrial  establishment. It\t must not be<br \/>\nforgotten that\tit is not a gratuitous payment, it has to be<br \/>\nearned by long and continuous service.\n<\/p>\n<p>     Can such  social security\tmeasures be  denuded of\t its<br \/>\nefficacy and  enforcement by  so interpreting  the  relevant<br \/>\nrules that  the workman\t could be  denied the  same  at\t the<br \/>\nabsolute discretion of the employer notwithstanding the fact<br \/>\nthat he\t or she\t has earned  the  same\tby  long  continuous<br \/>\nservice ?  If Rule 10 is interpreted as has been done by the<br \/>\nHigh Court,  such would\t be  the  stark\t albeit\t unpalatable<br \/>\noutcome. It  is therefore  necessary to\t take a\t leaf out of<br \/>\nhistory bearing\t on the\t question of  retiral benefits\tlike<br \/>\npension to  which gratuity  is equated.\t <a href=\"\/doc\/1224577\/\">In Burhanpur  Tapti<br \/>\nMills Ltd.  v. Burhanpur  Tapti Mills  Mazdoor Sangh<\/a> wherein<br \/>\nthis Court  observed that  :&#8221; a\t Scheme of  gratuity  and  a<br \/>\nscheme of  pension have\t much in  common. Gratuity is a lump<br \/>\nsum payment  while pension  is a  period payment of a stated<br \/>\nsum.&#8221; Undoubtedly  both\t have  to  be  earned  by  long\t and<br \/>\ncontinuous service.\n<\/p>\n<p>     For centuries  the courts\tswung in  favour of the view<br \/>\nthat pension  is either a bounty or a gratuitous payment for<br \/>\nlocal service  rendered depending  upon the  sweet  will  or<br \/>\ngrace  of   the\t employer  not\tclaimable  as  a  right\t and<br \/>\ntherefore, no  right to\t pension  can  be  enforced  through<br \/>\ncourt. This  view held\tthe field  and\ta  suit\t to  recover<br \/>\npension was  held not  maintainable. With the modern notions<br \/>\nof social  justice and\tsocial security,  concept of pension<br \/>\nunderwent a  radical change  and it is now well-settled that<br \/>\npension is  a right  and payment  of it does not depend upon<br \/>\nthe discretion\tof the employer, nor can it be denied at the<br \/>\nsweet will  or fancy  of the employer. <a href=\"\/doc\/1566\/\">Deokinandan Prasad v.<br \/>\nState of Bihar &amp; Ors., State of Punjab &amp; Anr.<\/a> v. <a href=\"\/doc\/1416283\/\">Iqbal Singh<br \/>\nand D.S.  Nakara &amp;  Ors. v. Union of India. If<\/a> pension which<br \/>\nis the\tretiral benefit\t as a measure of social security can<br \/>\nbe recovered<br \/>\n<span class=\"hidden_text\">340<\/span><br \/>\nthrough civil  suit, we\t see no\t justification\tin  treating<br \/>\ngratuity on a different footing. Pension and gratuity in the<br \/>\nmatter of  retiral benefits and for recovering the same must<br \/>\nbe put on par.\n<\/p>\n<p>     The question then is: Can the court ignore Rule 10 ? If<br \/>\ngratuity is  a retiral benefit and can be earned as a matter<br \/>\nof right on fulfilling the conditions subject to which it is<br \/>\nearned, any rule conferring absolute discretion not testable<br \/>\non reason,  justice or\tfair-play must be treated as utterly<br \/>\narbitrary and  unreasonable  and  discarded.  If  rules\t for<br \/>\npayment of  gratuity became  incorporated  in  the  Standing<br \/>\nOrders\tand   thereby  acquired\t  the  status  of  statutory<br \/>\ncondition of service, an arbitrary denial referable to whim,<br \/>\nfancy or  sweet will  of the  employer must  be rejected  as<br \/>\narbitrary. Sec. 4 of the 1946 Act which confers power on the<br \/>\nCertifying Officer or appellate authority to adjudicate upon<br \/>\nthe fairness  or  reasonableness  of  the  provisions  would<br \/>\nenable this  Court to reject that part of Rule 10 conferring<br \/>\nabsolute discretion on the employer to pay or not to pay the<br \/>\ngratuity even  if it  is earned\t as utterly unreasonable and<br \/>\nunfair. It must be treated as ineffective and unenforceable.<br \/>\nIt is  well-settled that  if the  Certifying Officer and the<br \/>\nappellate authority  under the 1946 Act while certifying the<br \/>\nStanding Orders has power to adjudicate upon the fairness or<br \/>\nreasonableness of  the provisions  of any  standing  orders,<br \/>\nthis Court  in appeal under Art. 136 shall have the power to<br \/>\ndo the\tsame thing  when especially  it is  called  upon  to<br \/>\nenforce the  unreasonable and  unfair part  of the  Standing<br \/>\nOrder. It  therefore follows  that part\t of  Rule  10  which<br \/>\nconfers absolute  discretion on the employer to pay gratuity<br \/>\neven  if  it  is  earned,  at  its  absolute  discretion  is<br \/>\nineffective  and   unenforceable.  This\t approach  does\t not<br \/>\nacquire any  precedent but  if one is needed the decision of<br \/>\nthis Court  in Western India Match Company Ltd. case clearly<br \/>\nrules to  that effect. In that case, the company relied on a<br \/>\nspecial agreement  which was to some extent in derogation of<br \/>\nthe provisions\tof the\tcertified Standing  Order. The Court<br \/>\nobserved that  to uphold  such special\tagreement would mean<br \/>\ngiving\ta   go-by  to\tthe   principle\t  of   three   party<br \/>\nparticipation, in the settlement of the terms of employment,<br \/>\nas  represented\t  by  the   certified  Standing\t Orders\t and<br \/>\ntherefore, the\tinconsistent part  of special  agreement  is<br \/>\nineffective  and   unenforceable.  The\t claim\tto  absolute<br \/>\ndiscretion not\tto pay\tgratuity even when it is earned is a<br \/>\nhangover of  the laissez faire days and utterly inconsistent<br \/>\nwith the  modern notions  of fair  industrial relations\t and<br \/>\ntherefore, it  must be\trejected as  ineffective  and  hence<br \/>\nunenforceable.\n<\/p>\n<p><span class=\"hidden_text\">341<\/span><\/p>\n<p>     Viewed   from   a\t slightly   different\tangle,\t our<br \/>\nConstitution envisages\ta society  governed by\trule of law.<br \/>\nAbsolute discretion  uncontrolled by  guidelines  which\t may<br \/>\npermit denial  of equality  before law is the anti-thesis of<br \/>\nrule of\t law. Absolute\tdiscretion not judicially reviewable<br \/>\ninheres the  pernicious tendency  to  be  arbitrary  and  is<br \/>\ntherefore violative  of Art.  14. Equality  before  law\t and<br \/>\nabsolute discretion  to grant or deny benefit of the law are<br \/>\ndiametrically opposed  to each\tother and  cannot  co-exist.<br \/>\nTherefore, also\t the conferment\t of absolute  discretion  by<br \/>\nRule 10 of the Gratuity Rules to give or deny the benefit of<br \/>\nthe  rules   cannot  be\t upheld\t and  must  be\trejected  as<br \/>\nunenforceable.\n<\/p>\n<p>     The High  Court reversed  the decree of the trial court<br \/>\non  the\t sole  ground  that  Rule  10  confers\tan  absolute<br \/>\ndiscretion on  the respondent-company  to pay  or not to pay<br \/>\ngratuity at  its sweet will. Once Rule 10 is out of the way,<br \/>\nthe  judgment\tof  the\t High  Court  has  to  be  reserved.<br \/>\nAccordingly, this  appeal  succeeds  and  will\thave  to  be<br \/>\nallowed.\n<\/p>\n<p>     The trial court decreed the plaintiff&#8217;s suit with costs<br \/>\nand with  interest at 6% per annum. Interest at 6% per annum<br \/>\nhas become utterly irrelevant in these days with devaluation<br \/>\nof the\trupee. Further\tin our opinion, the company declined<br \/>\nto meet\t its obligation on an utterly unreasonable stand and<br \/>\ndenied to  the plaintiff  or a\tperiod of  a  quarter  of  a<br \/>\ncentury what the plaintiff was legitimately entitled without<br \/>\nthe slightest shadow of doubt. Therefore, while allowing the<br \/>\nappeal in  order to  compensate the  loss  suffered  by\t the<br \/>\nplaintiff who died before enjoying the fruits of his decree,<br \/>\nwe direct  that the  interest shall be paid at 15% per annum<br \/>\nand full costs throughout.\n<\/p>\n<p>     Accordingly, this\tappeal is  allowed and\tthe judgment<br \/>\nand decree of the High Court are set aside and the decree of<br \/>\nthe trial  court is restored with this modification that the<br \/>\ninterest shall be paid on the principal amount of Rs. 14,040<br \/>\nat 15%\tfrom 1.7.1959 till payment and full costs throughout<br \/>\nbe paid\t to the plaintiff. The costs plaintiff in this Court<br \/>\nis quantified at Rs. 5,000. The payment shall be made within<br \/>\na period of two months from today.\n<\/p>\n<pre>H.S.K.\t\t\t\t\t     Appeal allowed.\n<span class=\"hidden_text\">342<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Sudhir Chandra Sarkar vs Tata Iron &amp; Steel Co. Ltd. And &#8230; on 27 March, 1984 Equivalent citations: 1984 AIR 1064, 1984 SCR (3) 325 Author: D Desai Bench: Desai, D.A. PETITIONER: SUDHIR CHANDRA SARKAR Vs. RESPONDENT: TATA IRON &amp; STEEL CO. LTD. AND OTHERS. DATE OF JUDGMENT27\/03\/1984 BENCH: DESAI, D.A. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-157728","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Sudhir Chandra Sarkar vs Tata Iron &amp; Steel Co. Ltd. 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