{"id":64136,"date":"1968-09-27T00:00:00","date_gmt":"1968-09-26T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/delhi-cloth-general-mills-co-vs-workmen-and-ors-etc-on-27-september-1968"},"modified":"2015-03-28T11:51:29","modified_gmt":"2015-03-28T06:21:29","slug":"delhi-cloth-general-mills-co-vs-workmen-and-ors-etc-on-27-september-1968","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/delhi-cloth-general-mills-co-vs-workmen-and-ors-etc-on-27-september-1968","title":{"rendered":"Delhi Cloth & General Mills Co., … vs Workmen And Ors. Etc on 27 September, 1968"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Delhi Cloth & General Mills Co., … vs Workmen And Ors. Etc on 27 September, 1968<\/div>\n
Equivalent citations: 1970 AIR 919, \t\t 1969 SCR (2) 307<\/div>\n
Author: S C.<\/div>\n
Bench: Shah, J.C.<\/div>\n
           PETITIONER:\nDELHI CLOTH & GENERAL MILLS CO., LTD.\n\n\tVs.\n\nRESPONDENT:\nWORKMEN AND ORS. ETC.\n\nDATE OF JUDGMENT:\n27\/09\/1968\n\nBENCH:\nSHAH, J.C.\nBENCH:\nSHAH, J.C.\nRAMASWAMI, V.\nGROVER, A.N.\n\nCITATION:\n 1970 AIR  919\t\t  1969 SCR  (2) 307\n CITATOR INFO :\n RF\t    1970 SC 343\t (26)\n E&R\t    1970 SC1421\t (11,12,16,17,19)\n RF\t    1970 SC1967\t (3,4)\n F\t    1973 SC2344\t (2,3)\n R\t    1977 SC 941\t (15)\n RF\t    1980 SC1944\t (5)\n RF\t    1981 SC 852\t (16,18)\n R\t    1987 SC 447\t (12)\n\n\nACT:\n     Industrial\t Dispute--Gratuity Scheme--When\t region-cum-\nindustry principle is applicable--Whether gratuity should be\nrelated\t  to  basic  wage  or\tconsolidated   wage--Whether\nconditions  prevailing in the industry in the whole  country\ncould\tbe   taken  into   consideration--Whether   age\t  of\nsuperannuation\tshould\talso be\t fixed--When  misconduct  of\nworkmen\t does  not affect gratuity--When  payable  to  badli\nworkmen--Date  of  operation  of  award--Considerations\t for\nfixing--'Average of basic wage', meaning of.\n\n\n\nHEADNOTE:\n    In\tthe  Delhi  region there  are  four  textile  units.\nnamely,\t the D.C.M., the S.B.M., the B.C.M., and the  A.T.M.\nThe  D.C.M. and the S.B.M. are under one management.   Since\n1940 they had also a common retirement benefit scheme with a\nscale  of  gratuity.  The ' workmen in all  the\t units\twere\nreceiving basic wages plus dearness allowance.\tOn March  4,\n1958, an industrial dispute between the four units and their\nworkmen was  referred to the Industrial Tribunal and one  of\nthe matters in dispute related to gratuity.  The Tribunal in\nits  award  framed two schemes relating\t to the\t payment  of\ngratuity,  one\t relating  to D.C.M. and  S.B.M.,   and\t the\nother,\tto B.C.M. and A.T.M.  They were made operative\tfrom\nJanuary\t 1, 1964.  Both employers and employees appealed  to\nthis  Court.   On the questions: (1 ) Whether in view  of  a\nsettlement between the management of A.T.M. and its  workmen\nit  was open to the Tribunal  to ignore\t the settlement\t and\nimpose the scheme on the  management; (2) Whether in view of\nthe  unstable financial condition  of A.T.M. the  burden  of\npayment of gratuity on A.T.M.  was  excessive;\t(3)  Whether\na  uniform scheme applicable to the entire industry  on\t the\nregion-cum-industry  basis should have been adopted  instead\nof schemes  applicable\tto individual units; (4) Whether  in\ndetermining the quantum of gratuity, basic wage alone should\nbe  taken  into\t account  and  not  the\t consolidated\twage\nincluding  dearness allowance; (5) Whether in deciding\tthis\nquestion, an overall view of similar and uniform  conditions\nin  the industry in different centers in the country,  could\nhe  taken  into\t consideration;\t (6)  Whether  it  was\t not\nnecessary for the Tribunal to fix the age of  superannuation\nwhen  introducing  a gratuity scheme; (7)  Whether  gratuity\nshould\thave  been awarded even in cases  of  dismissal\t for\nmisconduct;   (8) Whether  provision should have  been\tmade\nfor payment of gratuity to badli workmen irrespective of the\nnumber\t of  days  for\twhich  they worked in  a  year;\t (9)\nWhether the schemes should have been made operative from the\ndate  of  reference;  and  (10) What is\t the  scope  of\t the\nexpression 'average of the basic wage'..\n    HELD:  (1)\tThe  settlement\t between  the  workmen\t and\nmanagement  of A.T.M. did not bar the jurisdiction   of\t the\nTribunal   to\tmake  the Scheme of gratuity  applicable  to\nA.T.M. [340]\n    Under the settlement all that was agreed to was, that an\naward should be made and if it he found that A.T.M. acquired\nfinancial  stability  then it would be liable  to  pay\t the\ngratuity  to  its  workmen.   It was  not  agreed  that\t the\nproceedings before the Tribunal\t should be dropped and\tthat\nit\n308\nwas only after A.T.M. became financially stable that a fresh\nclaim should be made by the workmen. [320 D-F]\n    (2)\t The trading accounts of A.T.M. showed\t that  since\n1959-60\t the Mills had achieved some stability, and that  by\n1961-62\t all  previous losses were  wiped  out.\t  Therefore,\nthough\tit  was a much weaker unit than the others,  it\t was\nfinancially stable from the date on which the scheme  became\noperative. [321 A-C]\n    (3) A unit-wise approach in framing the gratuity  scheme\n'for  the  four units was appropriate in the  present  case.\n[323 B--C; 340 D--E]\n    No\tinflexible  rule has been laid down  by\t this  Court\nthat  gratuity schemes should he framed only on the  region-\ncure-industry  principle.  In the present case, if a  common\nscheme\twas framed for the entire industry in Delhi for\t all\nfour  units, in view of the financial condition\t of  A.T.M.,\nthe benefits under such a scheme would be not only low,\t but\nwould  be  lower  than the existing  benefits  available  to\nworkmen\t in the D.C.M. and S.B.M. Units. [321 C--D,  H;\t 322\nE---F, H]\n    Garment  Cleaning Works v. Its Workmen,<\/a> [1962] 1  S.C.R.\n711:  [1961] 1 L.L.J. 513 and Burhanpur Tapti Mills Ltd.  v.\nBurhanpur  Tapti Mills Mazdoor Sangh,<\/a> [1965] 1\tL.L.J.\t453,\nfollowed.\n    Bharatkhand\t  Textile   Mfg.  Co.  v.   Textile   Labour\nAssociation<\/a> [1960] 3 S.C.R. 329, explained.\n    (4) The Tribunal was in error in  relating the  gratuity\nawardable  to the workmen to the consolidated wage   instead\nof the\tbasic  wage. [340 G]\n    (a) In determining the scope of an industrial  reference\nwords  used,  either  in  the  claim  or  in  the  order  of\nreference, should not necessarily be given the meaning\tthey\nhave  under the Industrial Disputes Act.  Therefore,  merely\nbecause the expression \"wages\" in the Act includes  dearness\nallowance, the Tribunal could not base the  gratuity  scheme\non consolidated wages. [325 D--F]\n    (b) An industrial tribunal cannot adjudicate on disputes\nnot referred; but when called upon to adjudicate' whether  a\ncertain\t  scheme,  on the terms indicated in  the  reference\nshould\t be framed, such basic guidance does not  limit\t its\njurisdiction.\tThe Tribunal, in this case, was in error  in\nthinking  that in determining the rate\tof gratuity  it\t was\nlimited\t to  the number of days of service in the  order  of\nreference  as the applicable multiple.\tOn that\t assumption,\nsince  the gratuity would be too low if only basic wage\t was\nchosen, it was not justified in choosing consolidated  wage.\nThe  proper  procedure would have been to choose   only\t the\nbasic  wage  and  fix upon  a larger  number   of   days  of\nservice\t as the appropriate multiple. [327 E--H]\n    (c) The decisions of this Court in May and Baker (India)\nLtd.  v. their Workmen, [1961] II L.L.J. 94 (S.C.),  British\nIndia  Corporation  v.\tIts Workmen,<\/a> [1965]  II\t L.L.J.\t 556\n(S.C.), British Paints (India) Ltd. v. Its Workmen,<\/a> [1966] 1\nL.L.J.\t407  (S.C.), Hindustan Antibiotics  Ltd.   v.  Their\nWorkmen,<\/a> [1967] 1 L.L.J. 114- (S.C.) and  Remington Rand  of\nIndia  v.  The\tWorkmen,<\/a>  [1968] 1  L.L.J.  542\t (S.C.)\t are\nconflicting and no principle can be extracted as to  whether\nbasic  wage  or consolidated wage should be  considered\t for\npurposes  of gratuity.\tOrdinarily, in those  circumstances,\nthis Court would not have interfered with the conclusion  of\nthe  Tribunal choosing consolidated wage; but, the  Tribunal\nhad failed\n309\nto  take into account the prevailing pattern in the  textile\nindustry all over the country.\tIt is country-wide  industry\nand  in\t that  industry, gratuity has never been granted  on\nthe basis of  consolidated  wages. [329 C--F; 330 A]\n    (d) The primary object of industrial adjudication is  to\nadjust\tthe relations between employers and  employees\twith\nthe object of promoting industrial peace.  If the basic wage\nalone is taken for purposes of gratuity, it would produce in\nthe present case, a scheme which deprives the workmen of the\nD.C.M.\tand S.B.M. of benefits\twhich had been\t granted  to\nthem   under  the  voluntary  scheme   introduced   by\t the\nmanagement   of\t those two units   and\tdisturb\t  industrial\npeace  therein.\t But on\t that account, the Tribunal was\t not\njustified   in\tintroducing  a\tfundamental  change  in\t the\nconcept\t of gratuity  granted  by numerous  schemes  in\t the\ntextile\t industry  all over the\t country.   The\t appropriate\nremedy\tis  to\tframe a scheme consistent  with\t the  normal\npattern\t  prevailing   in  the\t industry   and\t  introduces\nreservations protecting benefits already acquired. [326 C-F]\n    (e)\t In  the report of the Central Wage  Board  for\t the\ncotton\ttextile industry, also, gratuity was directed to  be\ngiven  on the basis of wages excluding\tdearness  allowance.\n[330 G]\n    (f)\t In D..C.M. Chemical Works v. Its Workmen,<\/a> [1962]  1\nL.L.J.\t388  (S.C.) this Court affirmed the  award  relating\ngratuity   to  consolidated  wages.  Though  the  unit\talso\nbelonged to D.C.M. it is a unit entirely independent of\t the\ntextile unit.  So, it cannot be regarded as an effective  or\npersuasive  precedent justifying variation from the   normal\npattern\t  of  gratuity schemes in operation in\tthe  textile\nindustry all over the country. [331 H; 332 A--B, D-E]\n(5) If all over the country, in textile centres, payment  of\ngratuity.  is  related\tto the basic wage  and\tnot  to\t the\nconsolidated  wage  any\t innovation Delhi  region  alone  is\nlikely to give rise to serious industrial disputes in  other\ncentres in the country.\t If maintenance of industrial  peace\nis  a  governing principle of  industrial  adjudication,  it\nwould be wise to maintain a 'reasonable degree of uniformity\nin the diverse units all over the country and not to make  a\nfundamental departure from the prevailing pattern.the  basic\nwage is low in all other centres, and if it does not play an\nimportant part, there is no reason why it should  play, only\nin the\tDelhi region, a decisive part so as to make a  vital\ndeparture from schemes in operation in other centres in\t the\ncountry.   The acceptance of the award the Tribunal  in\t the\npresent\t case  is  likely  to  create  conditions  of  great\ninstability  in other parts of the country  in\tthe  textile\nindustry.  Therefore, the Tribunal's award granting gratuity\non the basis of consolidated wage could not be upheld.\t[332\nG--H; 333 A--E]\n(6)  It\t is  not necessary, for a  gratuity   scheme  to  be\neffective,   that  here\t should be fixation of\tthe  age  of\nsuperannuation. [323 C--D]\nBurhanpur Tapti Mills Case, [1965] 1 L.L.J. 453, referred\nFurther,  on  the  terms of the reference the  plea  of\t the\nemployers  to  fix the age of superanuation was\t beyond\t the\nscope of the 'reference, nor was such fixation incidental to\nthe framing of\tthe  scheme.  [323 H 324 c]\n(7) The object of providing a gratuity scheme is to  provide\na  retiring  benefit to workmen who have rendered  long\t and\nunblemished service to the employer and thereby\t contributed\nto  the\t prosperity  of the  employer.It  is  therefore\t not\ncorrect to say that no misconduct, however grave, may not be\nvisited\t with forfeiture of gratuity. Misconduct  could\t  be\n(a)\n310\ntechnical misconduct which leaves no trail of  indiscipline;\n(b)  misconduct\t resulting  in\tdamage\tto  the\t  employers'\nproperty which may  be compensated by forfeiture of gratuity\nor part thereof; and (c) serious misconduct such as acts  of\nviolence  against  the\tmanagement or\tother  employees  or\nriotous\t or  disorderly behaviour in or near  the  place  of\nemployment  which, though not directly causing\tdamage,\t  is\nconducive   to grave indiscipline. The first should  involve\nno  forfeiture,\t the  second may involve  forfeiture  of  an\namount equal to the loss directly suffered  by the  employer\nin consequence of the misconduct, and the third will  entail\nforfeiture  of gratuity due to the workmen. [324  F--G;\t 336\nD--F; 341 A--B]\n    Garment   Cleaning\t Works v. Its\tWorkmen,<\/a>   [1962]  1\nS.C.R. 711; (1961) I L.LJ. 513, Wenger & Ca. v. Its Workmen,<\/a>\n[1963]\tII L.L.J. 403 (S.C.), Motipur Zamindari (P) Ltd.  v.\nTheir Workmen,<\/a> [1965] II L.LJ. 139 (S.C.) Calcutta Insurance\nCo.  v.\t Their\tWorkmen,<\/a>  [1967]  II  L.LJ.  1\t(S.C.),\t and\nRemington Rand of India v. The Workmen,<\/a> [1968] I L.L.J.\t 542\n(S.C.). referred to.\n    (8)\t The  award does not  require to  be  modified\twith\nregard to badli workmen.\n    If\tgratuity  is to be paid )for service  rendered\tthen\nthere  are no grounds for holding that a badli workman\tmust\nbe deemed to have rendered service giving rise W a claim  of\ngratuity,  merely because, for maintaining his name  on\t the\nrecord\tof the badli workmen, he is required to\t attend\t the\nmills. [338 A--B]\n    (9)\t The award needs no modification with regard to\t the\ndate of commencement of the schemes.\n    The\t liability of A.T.M. to pay gratuity arose after  it\nacquired   sufficient  financial  stability  and  the\tunit\nacquired financial stability only from January 1, 1964.\t  If\nin  respect  of the A.T.M. which had  no   scheme.  gratuity\nbecomes\t operative from January 1, 1964, there is no  reason\nwhy respect of B.C.M. any different rule should be  provided\nfor.  As regards D.C.M. and S.B.M. there was already a\tmore\nadvantageous gratuity scheme in operation and the workmen in\nthose two units were not prejudiced by directing the  scheme\napplicable  to them,  to commence from January 1, 1964.\t  If\neffect was given to the schemes before January 1, 19'64,  it\nmay   rake  up\tcases  in  which  workmen  have\t  left\t the\nestablishment many years ago and it would  not be  conducive\nto  industrial\tpeace to allow such questions to  be  raised\nafter  a long delay.  In the absence of any  principle,\t the\nmatter must be decided on considerations of expediency. [338\nG--H; 339 A--D]\n(10)  The expression 'average of the basic wage' means\twage\nearned by a workman during a month, divided by the number of\ndays for which he had worked, and multiplied by 26 in  order\nto  arrive  at\tthe  monthly wage  for\tthe  computation  of\ngratuity payable. [333 C--D]\n[Appropriate   directions   modifying\tthe   schemes\twere\naccordingly given.]\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL  APPELLATE JURISDICTION: Civil Appeal\t Nos.  2168,
\n2569, of 1966, 76, 123 and 560 of 1967.\n<\/p>\n
Appeals by special leave from the Award dated June 30, 1966
\nof the Industrial Tribunal, Delhi in I.D. No. 70 of 1958.
\nS.T. Desai, Rameshwar Nath and Mahinder Narain, for the
\nappellant (in C.A. No. 2168 of 1966) and respondents Nos. 1
\nand 2 (in C.As. Nos. 123 and 560 of 1967).\n<\/p>\n
311<\/span><\/p>\n
    H.R. Gokhale, A.K. Sen, R.P. Kapur and 1. N. Shroff, for
\nthe appellant (in C.A. No. 256,9 of 1966) and respondent no.\n<\/p>\n
3 (in C.As. Nos. 123 and 560 of 1967).<\/span><\/p>\n
    B. Sen, 1. D. Gupta, M.N. Shroff for 1. N. Shroff,\t for
\nthe appellant (in C.A. No. 76 of 1967).\n<\/p>\n
    M.K.  Ramamurthi,  Madan  Mohan,  Shyamala\t Pappu\t and
\nVineet\tKumar, for the appellant (in C.A. No. 123 of  1967),
\nrespondents Nos. 1 (a) and 4(a) (in C.A. No. 2168 of  1966),
\nrespondent No. 1 (in C.A. No. 2569 of 1966), respondent\t No.
\n1 (in C.A. No. 76 of 1967) and respondent No. 5 (in C.A. No.
\n560 of 1967).\n<\/p>\n
    V.C.  Parashar  and O.P. Sharma, for the  appellant\t (in
\nC.A.  No. 560 of 1967) respondents Nos. 1 (b) and  4(b)\t (in
\nC.A. No. 2168 of 1966) respondent No. 2 (in C.A. No. 2569 of
\n1968) and respondent No. 2 (in C.A. No. 76 of 1967).
\nThe Judgment of the Court was delivered by
\n    Shah,  J.  These appeals arise out of an award  made  by
\nthe Industrial Tribunal, Delhi, in I.D. Reference No. 70  of
\n1958.  The first three appeals are filed by  the  employers,
\nand  the  last\ttwo  by the employees.\t By  its  award\t the
\nIndustrial Tribunal (Delhi, has framed two schemes  relating
\nto  payment  of\t gratuity to the workmen  employed  in\tfour
\ntextile\t units\tin the Delhi region. The employers  and\t the
\nworkmen\t are  dissatisfied with the schemes  and  they\thave
\nfiled  these appeals challenging certain provisions  of\t the
\nschemes.\n<\/p>\n
    In\tthe Delhi region there are four textile\t units;\t the
\nDelhi  Cloth  Mills  which will be referred to.\t as  D.C.M.;
\nSwatantra Bharat Mills–which will be referred to as S.B.M.;
\nBirla  Cotton Mills-which will be referred to as B.C.M.\t and
\nAjudhia\t Textile Mills-which will be referred to  as  A.T.M.
\nThe D.C.M. and S.B.M. are under one management.\t On March 4,
\n1958, the Chief Commissioner of Delhi made a reference under
\nss.   10(1)(d)\t  and 12(5) of the Industrial Disputes\tAct,
\n1947,  relating\t to  four matters in dispute, first of which
\nis as follows:\n<\/p>\n
   “Whether a gratuity for retirement benefit scheme  should
\nbe  introduced\tfor all workmen on the following  lines\t and
\nwhat directions are necessary in this respect ?\n<\/p>\n
  1. for service less than 5 years—Nil.\n<\/p>\n
  2.  for  service between 5-10 years–15  days’  wages\t for
\nevery year of service.\n<\/p>\n
  3.  for service between 10- 15 years–21 days’  wages\t for
\nevery year of service.\n<\/p>\n
312<\/span><\/p>\n
  4. for service over 15 years\tone month’s wages for  every
\nyear of service.”\n<\/p>\n
The  reference related to workmen only and did not apply  to
\nthe clerical staff or mistries.\n<\/p>\n
    There are two workmens’ Unions in the Delhi\t region–the
\nKapra  Mazdoor Ekta Union  hereinafter called ‘Ekta  Union’,
\nand the other, the Textile Mazdoor Union.  The\tEkta   Union
\nmade  a\t claim\tprincipally  for  fixation  of\tgratuity  in
\naddition to the benefit of provident fund admissible to\t the
\nworkmen\t under\tthe  Employees Provident  Fund\tAct,  to  be
\ncomputed  on  the consolidated wages inclusive\tof  dearness
\nallowance.   The  Ekta Union submitted by its  statement  of
\nclaim  that  a\tgratuity scheme\t based\ton  the\t region-cum-
\nindustry  principle i.e. a uniform scheme applicable to\t all
\nthe  four units be framed.  The Textile Mazdoor\t Union\talso
\nsupported the claim for the framing of\ta gratuity scheme on
\nthe  basis of the consolidated wages of workmen but  claimed
\nthat  the  scheme  should be unit-wise.\t At  the  trial,  it
\nappears that both the Unions pressed for a unit-wise  scheme
\nof gratuity.\n<\/p>\n
    The\t Tribunal entered upon the reference in\t respect  of
\nthe fixation of gratuity scheme in February 1964 and made an
\naward on June 30, 1966, operative from January 1, 1964.\t The
\naward  was  published on August 4, 1966.  By the  award\t two
\nschemes were framed  one relating to the D.C.M. and  S.B.M.,
\nand   another relating to the B.C.M. and A.T.M.\t  Under\t the
\nsecond\tscheme\tthe digit by which the number  of  completed
\nyear  of  service was to be multiplied\tin  determining\t the
\ntotal gratuity was smaller than the digit applicable in\t the
\ncase  of the D.C.M. and the S.B.M. The distinction was\tmade
\nbetween the two sets of units, because the D.C.M. and S.B.M.
\nwere,  in  the view of the Tribunal, more  prosperous  units
\nthan the D.C.M. and A.T.M.  The A.T.M., it was found, was  a
\nnewcomer  in the field of textile manufacture, and  had\t for
\nmany years been in financial difficulties.
\n    The\t D.C.M.\t employs  more than  8,000  workmen  in\t its
\ntextile unit; the S.B.M. has on its roll 5,000 workmen;\t the
\nB.C.M.\thas  6,271  workmen  and  the\tA.T.M.\thas    1,500
\nworkmen.   The\tD.C.M. and S.B.M. have a  common  retirement
\nbenefit scheme in operation since the year 1940.  Under\t the
\nscheme\tgratuity  payable to workmen is\t determined  by\t the
\nlength of service before retirement.  The scheme of gratuity
\nin operation in the D.C.M. and S.B.M. is as that,
\n\t\t “In case of retirement from service of\t the
\n\t      Mills as a result of physical  disability, due
\n\t      to   over-age or on account of death  after  a
\n\t      minimum of seven years’.\n<\/p>\n
313<\/span><\/p>\n
service in the concern:\n<\/p>\n
      7 years\t ….\tRs.  350\/-\n<\/p><\/blockquote>\n
      8 years\t ….\tRs.  425\/-\n<\/p><\/blockquote>\n
      9 years\t ….\tRs.  500\/-\n<\/p><\/blockquote>\n
      10 years\t ….\tRs.  575\/-\n<\/p><\/blockquote>\n
      11 years\t ….\tRs.  650\/-\n<\/p><\/blockquote>\n
      12 years\t ….\tRs.  725\/-\n<\/p><\/blockquote>\n
      13 years\t ….\tRs.  800\/-\n<\/p><\/blockquote>\n
      14 years\t ….\tRs.  875\/-\n<\/p><\/blockquote>\n
      15 years\t ….\tRs.  950\/-\n<\/p><\/blockquote>\n
      16 years\t….\tRs. 1,050\/-\n<\/p><\/blockquote>\n
      17 years\t ….\tRs. 1,150\/-\n<\/p><\/blockquote>\n
      18 years\t ….\tRs.. 1,250\/-\n<\/p><\/blockquote>\n
      19 years\t ….\tRs. 1,350\/-\n<\/p><\/blockquote>\n
      20 years\t ….\tRs. 1’500\/-\n<\/p><\/blockquote>\n
The  scale of gratuity, it is clear, is independent  of\t the
\nindividual  wage  scale of the workman.\t In the\t B.C.M.\t and
\nA.T.M. units there are no such schemes.\n<\/p>\n
    Till  the year 1958 there were no standardised wages  in
\nthe  textile  industry.\t  According to\tthe  Report  of\t the
\nCentral Wage Board for the Cotton Textile Industry which was
\npublished  on  November\t 22, 1959, there were  in  India  39
\nregions\t in  which the textile industry\t was  located.\t The
\nbasic monthly  wages of the workmen in the year 1958  varied
\nbetween\t Rs. 18\/- in Patna and Rs. 30\/- in  various  centers
\nlike  Bombay, Indore, Madras, Coimbatore, Madurai,  Bhiwani,
\nHissar, Ludhiana, Cannanore and certain regions in Rajasthan
\nand  Delhi.  The Wage Board recommended in Paragraph-106  of
\nits Report:\n<\/p>\n
\t\t  “The\tBoard  has come\t to  the  conclusion
\n\t      that  an increase at the average rate  of\t Rs.
\n\t      8\t per month per worker shall be given to\t all
\n\t      workers  in  mills  of  category\tI  from\t 1st
\n\t      January  1960, and a further flat increase  of
\n\t      Rs.  2 per month per worker shall be given  to
\n\t      them  from  1st  January\t1962.  Likewise\t  an
\n\t      increase\tat  the average rate of\t Rs.  6\t per
\n\t      month  per  worker shall be given to  all\t the
\n\t      workers  in  mills  of category  11  from\t 1st
\n\t      January  1960, and a further flat increase  of
\n\t      Rs.  2 per month per worker shall be given  to
\n\t      them  from 1st January 1962.  These  increases
\n\t      are  subject  to the condition that  the\tsaid
\n\t      sums of Rs. 8 and Rs. 6 shall ensure not\tless
\n\t      than  Rs.\t 7  and Rs. 5  respectively  to\t the
\n\t      lowest  paid, and that the increase of  Rs.  2
\n\t      from 1st January 1962 shall be flat for all.”\n<\/p><\/blockquote>\n
Category  I  included the Delhi region.\t  Since\t January  1,
\n1962,  the  basic  minimum  wage in  the  Delhi\t region\t is,
\ntherefore Rs. 40\/Sup. CI\/69–3
\n314<\/span>
\naccording  to the  recommendations of the  Wage\t Board.\t  In
\nBombay City and Island (including Kurla),  the basic   wage,
\naccording  to  the Report of the Wage Board,  was  also\t Rs.
\n30\/and by the addition of Rs. 10 the basic wage of a workman
\ncame  to Rs. 40\/-.  The workmen in other  important  textile
\ncentres also get the same rates.\n<\/p>\n
    The Tribunal was of the view that the average basic wage
\nof  the workmen is Rs. 60\/- since the implementation of\t the
\nWage  Board in the Delhi region.  No argument  was  advanced
\nbefore\tthis  Court  challenging  the  correctness  of\tthat
\nassumption,  by the employers or the workmen.  It  was\talso
\ncommon\tground\tthat practically uniform basic\twage  levels
\nprevail\t in  all  the large  textile  centres  like  Bombay,
\nAhmedabad, Coimbatore and Indore.\n<\/p>\n
    Besides  the  basic wage the  workmen  receive  dearness
\nallowance  under  diverse awards made  by   the\t  Industrial
\nTribunals  which  “seek\t to neutralize the  cost  of  living
\nindex.”\t There\tis also a provident fund  scheme  under\t the
\nEmployees.  Provident Fund Act, 1962, whereunder  8-1\/3%  of
\nthe basic wage and the dearnear allowance and the  retaining
\nallowance for the time being in force is contributed by\t the
\nemployee.   Besides,  there  is\t a  right  to\tretrenchment
\ncompensation   under  the Industrial Disputes Act, 1947\t (s.
\n25 FFF) and the Employees Insurance Scheme.. In view of\t the
\nobservations of this Court in Burhanpur Tapti Mills Ltd.  v.
\nBurhanpur  Tapti  Mills\t Mazdoor Sangh<\/a>(1), that\t “It  is  no
\nlonger\topen  to  doubt that a scheme  of  gratuity  can  be
\nintroduced  in\tconcerns where there.  already\texist  other
\nschemes such as provident fund or retrenchment compensation.
\nThis  has been ruled in a number of cases of this Court\t and
\nrecently  again\t in  Wenger  &\tCo.  and  others  v.   Their
\nWorkmen<\/a>(2),  and  Indian  Hume Pipe Company  Ltd.  v.  Their
\nWorkmen<\/a>(3).   It  is  held  in\tthese  cases  that  although
\nprovident  fund\t and  gratuity are  benefits   available  at
\nretirement  they  are not the same ,and one can\t exist\twith
\nthe  other”,  no  serious argument  was\t advanced  that\t the
\nexistence  of  these  additional  benefits  disentitled\t the
\nworkmen\t to obtain benefits under a gratuity scheme  if\t the
\nemployer is able to meet the additional burden.
\n  But on behalf of all the employers it was, urged that\t (1)
\nin  determining\t the quantum of gratuity, basic\t wage  alone
\ncould  be taken into account and not the consolidated  wage;
\nand  (2\t )  it was necessary for the Tribunal  to  fix\twhen
\nintroducing   a\t gratuity scheme the age of  superannuation.
\nOn  behalf of the D.C.M., S.B.M. and B.C.M. it was urged  in
\naddition,  that\t a  uniform scheme applicable to the  entire
\nindustry  on  the region-cumindustry basis should have\tbeen
\nadopted and not a scheme or schemes applicable to individual
\nunits.\tOn behalf of the A.T.M.\n<\/p>\n
(1) [1965] 1 L.L.J. 453,     (2) [1963] II L.L.J. 403.
\n(3) [1959] II L.L.J. 830.\n<\/p>\n
315<\/span><\/p>\n
it  was\t urged that its financial condition is not  and\t has
\nnever  been stable and the burden of payment of gratuity  to
\nworkmen\t dying or disabled or on voluntary  retirement\tfrom
\nservice or when their employment is terminated is  excessive
\nand  the Unit was unable, to bear that burden. It  was\talso
\nurged  on behalf of the A.T.M. that in view of a  settlement
\nwhich was reached  between the management and workmen it was
\nnot  open  to the Tribunal to ignore the settlement  and  to
\nimpose\ta  scheme for payment of gratuity in favour  of\t the
\nworkmen in this reference.\n<\/p>\n
    While  broadly supporting the award of the Tribunal\t the
\nworkmen\t claim\tcertain modifications.\t They claim  that  a
\nshorter period of qualifying service for workmen voluntarily
\nretiring  should be provided, and gratuity should be  worked
\nout by the application of a larger multiple of days for each
\ncompleted  year\t of service; that the  ceiling\tof  gratuity
\nshould be related to a larger number of months’ wages;\tthat
\ngratuity   should   be\tawarded\t for  dismissal\t  even\t for
\nmisconduct;  that  provision should be made for\t payment  of
\ngratuity  to  Badli workmen irrespective of the\t number\t  of
\ndays  for  which they work in a year;  that  the  expression
\n“average   of  the  basic  wage”  should  be   appropriately
\nclarified  to  avoid disputes in the implementation  of\t the
\ngratuity scheme, and that the award should be made operative
\nnot from January 1, 1964, but from the date of the reference
\nto the Tribunal.\n<\/p>\n
    The two schemes which have been flamed may be set out:\n<\/p>\n
\t\t    ANNEXURE ‘A’
\n    “Gratuity scheme applicable to the Delhi Cloth Mills and
\nthe Swatantra Bharat Mills.’
\n     Gratuity will be payable to the employees concerned, in
\nthis  reference, on the scale and subject to the  conditions
\nlaid down below:\n<\/p>\n
     1. On the death of an employee while in the service  of
\nthe  mill company or on his becoming physically or  mentally
\nincapacitated for further service:\n<\/p>\n
     (a)  After 5 years continuous service and less than  10
\nyears’\tservice—12 days’ wages for each.completed year  of
\nservice.\n<\/p>\n
      (b)  After  continuous service of 10  years–15  days’
\nwages for each completed year of service.\n<\/p>\n
      The gratuity will be paid in  each  case under clauses
\n1(a)  and 1(b) to the employee, his heirs or  executors,  or
\nnominee as the case may
\n       Provided that in no case will an employee, who is  in
\nservice on the date on which this scheme is brought
\n316<\/span>
\n\t      into operation be paid an mount less than what
\n\t      he would have been entitled to under the\tpre-
\n\t      existing scheme of the Employees’ Benefit Fund
\n\t      Trust.\n<\/p>\n
\t\t    (ii)  Provided further that the  maximum
\n\t      payment  to  be  made  shall  not\t exceed\t the
\n\t      equivalent of 15 months  wages.\n<\/p>\n
\t\t    (iii)  Provided further   that  gratuity
\n\t      under  this scheme will not be payable to\t any
\n\t      employee\twho  has already  received  gratuity
\n\t      under the preexisting scheme of the Employees’
\n\t      Benefit Fund Trust.\n<\/p>\n
\t\t       2.   On\t voluntary   retirement\t  or
\n\t      resignation after 15 years’ service–15  days’
\n\t      wages for each completed year of service.
\n\t\t       Provided that the maximum payment  to
\n\t      be made shall not exceed the equivalent of  15
\n\t      months’ wages.\n<\/p>\n
\t\t       3.  On termination of service on\t any
\n\t      ground  whatsoever  except on  the  ground  of
\n\t      misconduct   As  in clauses 1 (a)\t and  1\t (b)
\n\t      above.\n<\/p>\n
\t\t\tProvided that the maximum payment to
\n\t      be made shall not exceed the equivalent of  15
\n\t      months’ wages.\n<\/p>\n
\t      4. Definitions:\n<\/p>\n
\t      (a) ‘Wages’
\n\t      The  term “wages” in the scheme will mean\t the
\n\t      average  of the basic wage plus the   dearness
\n\t      allowance\t drawn\tduring the  12\tmonths\tnext
\n\t      preceding\t death,\t incapacitation,   voluntary
\n\t      retirements,  resignation\t or  termination  of
\n\t\t\t    service and will not include overtime
\nwages.\n<\/p>\n
\t      (b) “Basic wages”\n<\/p>\n
\t      The term “basic wage” will have the meaning as
\n\t      defined in paragraph 110 of the Report of\t the
\n\t      First  Central Wage Board for  Cotton  Textile
\n\t      Industry.\n<\/p>\n
\t      (c)    “Continuous   service”    means\t un-\n<\/p>\n
\t      interrupted service and includes service which
\n\t      may  be  interrupted on account  of  sickness,
\n\t      authorised   leave,   strike  which   is\t not
\n\t      illegal,\tlock-out or cessation of work  which
\n\t      is  not due to any fault on the  part  of\t the
\n\t      employee:\n<\/p>\n
\t\t     Provided  that interruption in  service
\n\t      upto  six months’ duration at any one time and
\n\t      18<\/span>
\n317<\/span>
\n\t      months   duration\t in  the  aggregate  of\t the
\n\t      nature other than those specified above  shall
\n\t      not cause the employee to lose the credit\t for
\n\t      previous service in the Mills for the  purpose
\n\t      of  calculation of gratuity, but at  the\tsame
\n\t      time shall not entitle him to claim benefit of
\n\t      gratuity for the period of such  interruption.
\n\t      Service  for  the purposes ‘of  gratuity\twill
\n\t      include service under the previous  management
\n\t      whether  in  the\tparticular  mill   or  other
\n\t      sister mill under the same management.\n<\/p>\n
\t      (d) “Resignation”\n<\/p>\n
\t      The    word   “resignation”    will    include
\n\t      abandonment of service by an employee provided
\n\t      he Submits his resignation within a period  of
\n\t      three  months from the first day\t of  absence
\n\t      without leave.\n<\/p>\n
\t      (e) “Length of service”\n<\/p>\n
\t      For counting “length of service:’, fraction of
\n\t      a year exceeding six months shall count as one
\n\t      full year, and six  months  or  less  shah  be
\n\t      ignored.\n<\/p>\n
\t      5. “Application for gratuity”\n<\/p>\n
\t\t  Any  person eligible to claim\t payment  of
\n\t      gratuity\tunder this scheme shall, so  far  as
\n\t      possible,\t send a written application  to\t the
\n\t      employer within a\t period\t of  six months from
\n\t      the date its payment becomes due.\n<\/p>\n
\t      6. “Payment of gratuity”\n<\/p>\n
\t\t  The  employer\t shall\tpay  the  amount  of
\n\t      gratuity\tto the employee and in the event  of
\n\t      his  death  before payment to  the  person  or
\n\t      persons  entitled to it under clause  1  above
\n\t      within a period of 90 days of the claim  being
\n\t      presented to the employer and found valid.\n<\/p>\n
\t      7.  “Claims  by persons who are no  longer  in
\n\t      service”–\n<\/p>\n
\t\t  Claims  by  persons who are no  longer  in
\n\t      service  of  the Company on the  date  of\t the
\n\t      publication   of\t this  award  shall  not  be
\n\t      entertained  unless the claims  are  preferred
\n\t      within six months from the date of publication
\n\t      of this award.\n<\/p>\n
\t      8. “Badli service”\n<\/p>\n
\t\t  Gratuity  shall  be paid  for\t only  those
\n\t      years  of Badli service in which the  employee
\n\t      has worked for not less than 240 days.\n<\/p>\n
318<\/span><\/p>\n
\t      9. “Proof of incapacity”\n<\/p>\n
\t\t  In proof of physical or mental incapacity,
\n\t      it will be necessary to produce a\t certificate
\n\t      from any one of the Medical Authorities out of
\n\t      a panel to be jointly drawn up by the parties.\n<\/p>\n
\t      10. “Nomination”\n<\/p>\n
\t\t  (a) Each employee shall, within six months
\n\t      from  the\t date  of the  publication  of\tthis
\n\t      award,   make   a\t nomination  conferring\t the
\n\t      right  to receive the amount of gratuity\tthat
\n\t      may  be due to him in the event of his  death,
\n\t      before payment has been made.\n<\/p>\n
\t\t  (b) A nomination made under sub-clause (a)
\n\t      above  may, at any time, be modified   by\t the
\n\t      employee after giving a written notice of\t his
\n\t      intention\t of doing so.  if  the nominee\tpre-
\n\t      deceases\tthe  employee, the interest  of\t the
\n\t      nominee  shall revert to the employee who\t may
\n\t      make  a  fresh nomination in respect  of\tsuch
\n\t      interest.”\n<\/p>\n
\t\t\t\t       ANNEXURE ‘B’
\n\t\t  “Gratuity scheme applicable  to the  Birla
\n\t      Cotton  Spg.  &  Wvg. Mills  and\tthe  Ajudhia
\n\t      Textile Mills.\n<\/p>\n
\t\t  Gratuity will be payable to the  employees
\n\t      concerned in this reference, on the scale\t and
\n\t      subject to the conditions laid down below:-\n<\/p>\n
\t\t  1. On the death o\/an employee while in the
\n\t      service of the Mill company or on his becoming
\n\t      physically   or  mentally\t incapacitated\t for
\n\t      further service:\n<\/p>\n
\t\t  (a)  After 5 years continuous service\t and
\n\t      less   than  10\tyears\tservice—One-fourth
\n\t      month’s  wages  for  each\t competed  year\t  of
\n\t      service.\n<\/p>\n
\t\t  (b)\tAfter  continuous  service  of\t  10
\n\t      years—One  third  month’s  wages  for\teach
\n\t      completed year of service.\n<\/p>\n
\t\t  The  gratuity will be\t paid in each\tcase
\n\t      under  clauses 1(a) and 1(b) to the  employee,
\n\t      his  heirs  or executors, or nominee,  as\t the
\n\t      case may be.\n<\/p>\n
\t\t  Provided  that the maximum payment  to  be
\n\t      made  shah  not exceed the  equivalent  of  12
\n\t      months’ wages.\n<\/p>\n
\t\t  2. On voluntary retirement or\t resignation
\n\t      after  15 years service–On the same scale  as
\n\t      in 1 (b) above.\n<\/p>\n
\t\t  Provided  that the maximum payment  to  be
\n\t      made  shall  not exceed the equivalent  of  12
\n\t      months’ wages.\n<\/p>\n
\t\t  3.  On  termination  of  service  by\t the
\n\t      employer\tfor any reason whatsoever eXcePt  on
\n\t      the  ground of misconduct–As in clauses\t1(a)
\n\t      and 1(b) above.\n<\/p>\n
    319<\/span><\/p>\n
\t      provided\tthat the maximum payment to be\tmade
\n\t      shall not exceed the equivalent of 12  months’
\n\t      wages.”\n<\/p>\n
\t      [Clauses 4 to 10 of Annexure ‘B’ are the\tsame
\n\t      I\t  as  in  Annexure  ‘A’\t and  need  not\t  be
\n\t      repeated.]
\nWhether\t against the A.T.M. the Tribunal was incompetent  to
\nmake an award framing a .scheme for payment of gratuity\t may
\nfirst be considered. Counsel for the A.T.M. urged that there
\nwas a settlement between the workmen and the  management  of
\nthe  A.T.M.  in\t consequence  of  which\t the  Tribunal\t was
\nincompetent  to make an award.\tThe facts on which  reliance
\nwas  placed are these: After ,the dispute was  referred\t .to
\nthe Industrial Tribunal, there were negotiations between the
\nmanagement of the A.T.M. and workmen represented by the\t two
\nUnions and an agreement was reached, the terms whereof\twere
\nrecorded in writing.  Clauses 6 and 11 (4) of the  agreement
\nrelate to the claim for gratuity:\n<\/p>\n
\t\t   “6.\tThe workmen agree not to  claim\t any
\n\t      further increase in wages, basic or  dearness,
\n\t      or  make any other demand involving  financial
\n\t      burdens\ton  the\t Company  either  on   their
\n\t      initiative  or as a result of any award,\ttill
\n\t      such time as the Working of the mills  results
\n\t      in profits.\n<\/p><\/blockquote>\n
\t\t    11. The parties hereto agree to  jointly
\n\t      withdraw\tin  terms of  this  settlement,\t the
\n\t      following pending cases and proceedings before
\n\t      the  Courts,  Tribunals and  Authorities\tand’
\n\t      more especially–\n<\/p><\/blockquote>\n
\t\t\t   ………………………
\n\t\t    (4)\t With regard to I.D. No. 70 of\t1958
\n\t      the workers    agree not to claim any benefits
\n\t      that   ,may  be\tgranted\t under\t the   above
\n\t      reference by the\tHon’ble\t Industrial Tribunal
\n\t      in  case the award is. given in favour of\t the
\n\t      workmen, subject to clause 7 above.”<\/p><\/blockquote>\n
\t\t    (It is common ground that reference\t  to
\n\t      el. 7 is\t erroneous: it should be .to cl. 6.)
\nThe  workmen  and the management of the\t unit  submitted  an
\napplication  before  the  Tribunal  on\tDecember  28,  1959,
\nadmitting that there had been an “overall settlement” of all
\nthe  pending disputes between the management of\t A.T.M.\t and
\nits  workmen  represented by the two Unions,  and  requested
\nthat  an  interim award be made in terms  of  the  agreement
\ninsofar\t as the dispute related to the A.T.M.  No order\t was
\npassed\tby  the Tribunal on that application.\tOn  June  4,
\n1962, the Manager of the A.T.M. applied to the Tribunal that
\nan  interim award be pronounced in terms of  the  agreement.
\nThe  workmen had apparently changed their attitude  by\tthat
\ntime  and filed a written statement and requested  that\t the
\n,prayer\t contained  in paragraph 3 of  the  application\t “be
\nrejected
\n320<\/span>
\nas  impermissible  in law”.  The Tribunal made an  order  on
\nNovember 26, 1962, and observed:\n<\/p>\n
\t\t   “……the  only interpretation that\t can
\n\t      be  given\t to clause 11(4) of  the  settlement
\n\t      read with clause 7 is, that the workers of the
\n\t      Ajudhia Textile Mills had bound themselves not
\n\t      to claim any benefits that might be granted by
\n\t      the  Tribunal  in\t the award  on\tthe  present
\n\t      reference, if it turns out to be in favour  of
\n\t      the  workmen unless and until the\t working  of
\n\t      the Mills results in profit. The fact that the
\n\t      passing  of  an  award  on  the  demands\t was
\n\t      envisaged\t under the settlement goes  to\tshow
\n\t      that  the demands were to be adjudicated\tupon
\n\t      in any case. The main case will now proceed in
\n\t      respect of all the mills and the effect of the
\n\t      settlement  and of the application dated\t28th
\n\t      December, 1959, and of the 5th July 1962\twill
\n\t      be considered at the time of the final award.”\n<\/p><\/blockquote>\n
But  in\t making\t the  final  award  the\t Tribunal  did\t not
\nspecifically refer to the settlement.  The terms of cl. 6 of
\nthe   settlement clearly show that if it be found  that\t the
\nA.T.M.\thad  acquired financial stability, it will be liable
\nto pay gratuity to the workmen. We are unable to agree\twith
\nthe  contention\t of  counsel  for the  A.T.M.  that  it\t was
\nintended  by the parties that the  adjudication\t proceedings
\nagainst\t the A.T.M. should be dropped, and after the  A.T.M.
\nbecame\tfinancially stable a fresh claim should be  made  by
\nthe  workmen  on  which\t a reference  may  be  made  by\t the
\nGovernment  for\t adjudication  of  the\tclaim  for  gratuity
\nagainst\t the A.T.M.  The contention by the management of the
\nA.T.M.\tthat the Tribunal was incompetent to  determine\t the
\ngratuity payable to the workmen of the A.T.M. must therefore
\nfail.\n<\/p>\n
    The other contention raised on behalf of the A.T.M. that
\nits  financial position was “unstable” need not\t detain\t us.
\nThe Tribunal has held that the A.T.M. was working at a\tloss
\nsince the year 1953-54 and the losses aggregated to Rs. 6.22
\nlakhs  in  the year 1958-59, but  thereafter  the  financial
\nposition of the Unit improved.\tThe trading account for\t the
\nperiod\tending March 31, 1960, showed profits  amounting  to
\nRs. 3.10 lakhs.\t In 1960-61 there was a surplus of Rs. 11.18
\nlakhs  out of which adjusting the depreciation,\t development
\nrebate\treserve and reserve  for  bad  and  doubtful  debts,
\nthere  was a balance of Rs. 7.10 lakhs.\t In 1961-62 the\t net
\nprofits\t of  the  Unit amounted to Rs. 7.48  lakhs  and\t the
\nA.T.M.\tdistributed  Rs. 52,500\/- as dividend.\t In  1962-63
\nthere  was  a  gross  profit of Rs.  4.18  lakhs  and  after
\nadjusting depreciation and development rebate reserve  there
\nwas  a net deficit of Rs. 30,517\/-.  In 1963-64 there was  a
\ngross  profit  of  Rs.\t14.29  lakhs  and  after   adjusting
\ndepreciation, reserve for doubtful debts, bonus to employees
\nand development rebate reserve,\t there re-\n<\/p>\n
321<\/span><\/p>\n
mained\ta  net\tprofit\tof Rs.\t4.71  lakhs.   The  Tribunal
\nobserved  that\tby 1961-62 all previous losses of  the\tUnit
\nwere  wiped  out and that even during the  year\t 1962-63  in
\nwhich  there  was  labour  unrest  the\tgross  profits\twere
\nsubstantial and taking into consideration the reserves built
\nby  the Company “the picture was not disheartening and\tfrom
\nthe  great progress that had been made since  1959-60  there
\nwas  every  reason  to\tthink that  the\t Mill  had  achieved
\nstability  and\treasonable  prosperity and that\t it  had  an
\nassured\t future”, and the Company was in a position to\tmeet
\nthe burden of a modest gratuity scheme.\t We see no reason to
\ndisagree with  the finding recorded by the Tribunal on\tthis
\nquestion.\n<\/p>\n
    On behalf of the D.C.M., S.B.M., and B.C.M. it was urged
\nthat  normally gratuity schemes are framed on  the   region-
\ncum-dustry  principle, i.e., a uniform scheme applicable  to
\nall  Units  in\tan industry in a region is  framed,  and  no
\nground\tfor departure from that rule was made out.   It\t was
\nurged\tthat   this  Court  has\t accepted   invariably\t the
\nregion-cum-industry  principle in fixing the rates at  which
\ngratuity should be p.aid.  In our judgment no such rule\t has
\nbeen enunciated by this Court.\tIn Bharatkhand Textile\tMfg.
\nCo. Ltd. v.  Textile Labour Association,  Ahmedabad<\/a>(1), this
\nCourt in dealing with the question whether  the\t  Industrial
\nCourt  had committed an error in dealing with the claim\t for
\ngratuity on industry-wise basis negatived the contention  of
\nthe  employers that the unit-wise basis was the\t only  basis
\nwhich could be adopted in fixing the rates of gratuity.\t  It
\nwas observed at p. 345:\n<\/p>\n
\t\t   “Equality  of competitive conditions\t  is
\n\t      in a sense necessary from the point of view of
\n\t      the employers themselves; that in fact was the
\n\t      claim made by the Association which  suggested
\n\t      that the gratuity scheme\tshould be framed  on
\n\t      industry-wise  basis  spread  over  the  whole
\n\t      of   the\tcountry.   Similarly   equality\t  of
\n\t      benefits such as gratuity is likely to  secure
\n\t      contentment and satisfaction of the  employees
\n\t      and  lead to industrial peace and harmony.  if
\n\t      similar  gratuity schemes are framed  for\t all
\n\t      the   units  of  the  industry  migration\t  of
\n\t      employees\t  from\tone  unit  to  another\t  is
\n\t      inevitably     checked,\t  and\t  industrial
\n\t      disputes\tarising\t from unequal  treatment  in
\n\t      that  behalf are minimaised.  Thus,  from\t the
\n\t      point of view of both employers and  employees
\n\t      industry-wise   approach\tis  on\t the   whole
\n\t      desirable.”\n<\/p><\/blockquote>\n
It  is\tclear  that  the Court rejected\t in  that  case\t the
\nargument  that rates of gratuity should be determined  unit-
\nwise:  the Court did not rule that in all cases the  region-
\ncum-industry principle should be adopted in fixing the rates
\nof  gratuity. That was made explicit in a later judgment  of
\nthis Court: Burhanpur Tapti Mills Ltd. v.
\n(1) [1960] 3 S.C.R. 329.\n<\/p>\n
322<\/span><\/p>\n
Burhanpur Tapti Mills Mazdoor Sangh(x).\t This Court observed
\nat p. 456:\n<\/p>\n
\t\t  “……it has been laid down by this Court
\n\t      that  there are two general methods of  fixing
\n\t      the  terms  of a gratuity scheme.\t It  may  be
\n\t      fixed on the  basis of industry-cum-region  or
\n\t      on  the  basis of\t units.\t  Both\tsystems\t axe
\n\t      admissible  but  regard  must be\thad  to\t the
\n\t      surrounding circumstances to select  the right
\n\t      basis.  Emphasis must always be laid upon\t the
\n\t      financial\t position  of the employer  and\t his
\n\t      profit-making   capacity whichever  method  is
\n\t      selected.”<\/p><\/blockquote>\n
    In\tGarment Cleaning Works v. Its Workmen<\/a>(1) this  Court
\nobserved at p. 713:\n<\/p>\n
\t\t   “……it  is one thing to hold that\t the
\n\t      gratuity\tscheme\tcan, in a  proper  case,  be
\n\t      flamed   on  industry-cum-region\tbasis,\t and
\n\t      another thing to say that\t industry-cum-region
\n\t      basis  is\t the only basis\t on  which  gratuity
\n\t      scheme  can  be framed.  In fact, in  a  large
\n\t      majority of cases gratuity schemes are drafted
\n\t      on  the  basis of the units and it  has  never
\n\t      been ,suggested or held that such schemes\t are
\n\t      not permissible.”\n<\/p><\/blockquote>\n
The Tribunal in the award under appeal observed:\n<\/p>\n
\t\t    “There  are\t  …..\t  certain   peculiar
\n\t      features\tin  the\t textile  industry  in\tthis
\n\t      region which militate against an indnstry-cum-
\n\t      region  approach.\t  Apart from the  fact\tthat
\n\t      one  of  the four units, namely,\tthe  Ajudhia
\n\t      Textile ‘Mills is a much weaker unit than\t the
\n\t      rest   and   has passed  through\ta  chequered
\n\t      career  during  its existence, it\t has  to  be
\n\t      borne  in\t mind that two of the  units  namely
\n\t      D.C.M.  and S.B.M. which axe sister  concerns,
\n\t      already  have some sort of a  gratuity  scheme
\n\t      providing for two important retiral  benefits,
\n\t      namely,  death and physical disablement  on  a
\n\t      scale which is independent of  wage variations
\n\t      and   is\tnot  unsubstantial  at\t least\t for
\n\t      categories in the lower levels.”\n<\/p><\/blockquote>\n
The Tribunal further observed:\n<\/p>\n
\t\t    “if\t a common scheme is framed  for\t the
\n\t      entire textile industry at Delhi i.e. for\t all
\n\t      the  four units the quantum\tof  benefits
\n\t      under  that scheme will naturally have  to  be
\n\t      much  lower in consideration of the  financial
\n\t      condition of the Ajudhia Textile Mill, than if
\n\t      a\t unit-wise scheme is framed. Moreover  in  a
\n\t      common  scheme  of  gratuity  the\t quantum  of
\n\t      benefits to be provided will have to be
\n(1) [1965] 1 L.L.J 453.\n<\/p><\/blockquote>\n
(2) [1962] 1 S.C.R. 711; [1961] I L.L.J. 513.\n<\/p>\n
323<\/span><\/p>\n
\t      lower  than the benefits already available  to
\n\t      workmen in the D.C.M. and S.B.M. units for the
\n\t      most   important\t contingencies\t for   which
\n\t      gratuity\tbenefits  are  meant, namely,  death
\n\t      and  retirement  on  account  of\tphysical  or
\n\t      mental  incapacity.   Such a lowering  of\t the
\n\t      quantum  of benefits would not in my  view  be
\n\t      desirable\t  as  it  would\t create\t  legitimate
\n\t      discontent.”\n<\/p>\n
In our judgment, no serious objection may be raised  against
\nthe  reasons set out by the Tribunal in support of the\tview
\nthat  unitwise approach should be adopted in  the  reference
\nbefore it and not the region-cum-industry approach.  No case
\nis  there\/ore made out for interference with the award\tmade
\ndetermining the\t  rates of gratuity unit-wise.\n<\/p>\n
      We  also agree with the Tribunal that on the terms  of
\nthe  reference\tit  was\t incompetent  to  fix  the  age\t  of
\nsuperannuation\t forworkmen.  We are unable to hold  that  a
\ngratuity  scheme  may  be implemented only  if\tthe  age  of
\nsuperannuation\tof the workmen is determined by\t the  award.
\nSupport\t was  sought  to  be  derived  by  counsel  for\t the
\nemployers in support of his plea from the observations\tmade
\nby this Court in Burhanpur  Tapti Mills Ltd.’s case(D, where
\nin examining the nature\t of  gratuity,\tit was observed:\n<\/p>\n
\t\t   “The\t   voluntary   retirement   of\t  an
\n\t      inefficient  or old’ or worn  out employee  on
\n\t      the  assurance  that he is to  get  a  retiral
\n\t      benefit  leads to the avoidance of  industrial
\n\t      disputes, promotes contentment among those who
\n\t      look  for\t promotions., draws better  kind  of
\n\t      employees\t and improves the tone and morale of
\n\t      the industry.  It is beneficial all round.  It
\n\t      compensates  the employee who as he grows\t old
\n\t      knows  that some compensation for the  gradual
\n\t      destruction of his wage-earning  capacity\t  is
\n\t      being   built  up.   By\tinducing   voluntary
\n\t      retirement  of  old and worn  out\t workmen  it
\n\t      confers on the employer a benefit akin to\t the
\n\t      replacing\t of old and worn out machinery.”
\nThere  is,  in our judgment, nothing in\t these\tobservations
\nwhich  justifies the view that a gratuity scheme  cannot  be
\neffective  unless it is accompanied by the fixation  of\t the
\nage of superannuation for the workmen in the industry.
\n    There is another objection to the consideration of\tthis
\nclaim made on behalf of the employers. By the express  terms
\nof  reference the Tribunal is called upon to  adjudicate  on
\nthe question of fixation of gratuity: there is no .reference
\neither\texpressly or by implication to the fixation  of\t the
\nage  of superannuation and in the absence of  any  reference
\nrelating  to the fixation of the age of (1) [1965]  1  LL.J.\n<\/p>\n
453.
\n324<\/span>
\nsuperannuation,\t the Tribunal was not competent to  fix\t the
\nage  of\t superannuation.   A gratuity  scheme  may,  in\t our
\njudgment,   be\timplemented even without fixing the  age  of
\nsuperannuation.\t  The  gratuity scheme in operation  in\t the
\nD.C.M. and S.B.M. has been effectively in operation  without
\nany age of superannuation for the workmen in the two  units.
\nAn   enquiry  into  the\t question  of  fixing  the  age\t  of
\nsuperannuation did not arise out of the terms of  reference.
\nNo such claim was made by workmen and’ even  in\t the written
\nstatement  filed  by the employers no direct  reference\t was
\nmade  to the fixation of the age of superannuation, nor\t was
\nthere  any plea that before framing a gratuity\tscheme\t the
\nTribunal  should provide for the age of superannuation.\t  We
\nagree  with  the  Tribunal  that  fixation  of\tthe  age  of
\nsuperannuation\twas  not incidental to the ,framing  of\t the
\ngratuity scheme ‘and it was neither necessary nor  desirable
\nthat it should be fixed.\n<\/p>\n
  Counsel   for\t the  employers\t urged\tthat  the   Tribunal
\ncommitted  a  serious error in relating the  computation  of
\ngratuity  payable  to  the  workmen  on\t retirement  on\t the
\nconsolidated  monthly  wage  and  not  on  the\tbasic  wage.
\n“Gratuity”   in\t its   etymological   sense  means  a\tgift
\nespecially  for\t services  rendered or\treturn\tfor  favours
\nreceived.   For\t some  time  in\t the  early  stages  in\t the
\nadjudication of industrial disputes, gratuity was treated as
\na gift made by the employer at his pleasure and the  workmen
\nhad  no right to claim it.  But since then there has been  a
\nlong  line of precedents  in which it has been ruled that  a
\nclaim  for gratuity is a legitimate claim which the  workmen
\nmay make and which in appropriate  cases may give rise to an
\nindustrial dispute.\n<\/p>\n
    In\tGarment\t Cleaning Works’ case(1)  it  was   observed
\nthat  gratuity is not paid to the employees gratuitously  or
\nmerely\tas  a  matter of boon.\tIt is paid to  him  for\t the
\nservice rendered by him to the employer.  The same view\t was
\nexpressed  in  Bharatkhand Textile Mfg. Ltd.’s\tcase(2)\t and
\nCalcutta Insurance Ltd. v. Their Workmen<\/a>(a).  Gratuity\tpaid
\nto  workmen is intended\t to  help them after  retirement  on
\nsuperannuation,\t death,\t retirement,  physical\t incapacity,
\ndisability or otherwise. The object of providing a  gratuity
\nscheme is to provide a retiring benefit to workmen who\thave
\nrendered  long and unblemished service to the  employer\t and
\nthereby\t contributed to the prosperity of the employer.\t  It
\nis  one\t of  the  ‘efficiency-devices’\tand  is\t  considered
\nnecessary   for\t  an ‘orderly and humane  elimination’\tfrom
\nindustry of superannuated or disabled employees who, but for
\nsuch  retiring benefits, would continue in  employment\teven
\nthough\tthey  function inefficiently. It is not paid  to  an
\nemployee .gratuitously or merely as a matter of boon; it  is
\npaid to him for long and meritorious service rendered by him
\nto the employer.\n<\/p>\n
(1) [1962] 1 S.C.R. 711.   (2) [1960] 3 S.C.R. 329.
\n(3) [1967] II L.L.J. 1.\n<\/p>\n
325<\/span><\/p>\n
    On the findings recorded by the Tribunal all the textile
\nunits  in the Delhi region are able to meet  the  additional
\nfinancial  burden,  resulting  from  the  imposition   of  a
\ngratuity  scheme.   The\t D.C.M. and S.B.M.  have  their\t own
\nschemes\t which\tenable\tthe workmen  to\t obtain\t substantial
\nbenefit on determination of employment. The B.C.M. though  a
\nweaker\tunit is still fairly prosperous and is able to\tbear
\nthe burden: so also the A.T.M.\n<\/p>\n
    But\t the important question is whether these four  units
\nshould\tbe  made liable to pay gratuity\t computed   on\t the
\nconsolidated  wage  i.e.,  basic  wage\tplus  the   dearness
\nallowance.  The Tribunal was apparently of the view that  in
\ndetermining the question the definition of the word “wages.”
\nin the industrial Disputes Act, 1947, would come  to the aid
\nof work-men.   The expression “wages” as defined in s. 2(rr)
\nof  the\t Industrial  Disputes Act  means  all  remuneration,
\ncapable\t of being expressed in terms of money, which  would,
\nif  the\t terms\tof employment, expressed  or  implied,\twere
\nfulfilled,  be\tpayable\t to  a workman\tin  respect  of\t his
\nemployment  or of work done in such employment and  includes
\namong  other  things, such  allowances\t(including  dearness
\nallowance) as the workman is for the time being entitled to.
\nBut  we are unable to hold that in determining the scope  of
\nan  industrial\treference, words used either  in  the  claim
\nadvanced or in the order of reference made by the Government
\nunder s. 10 of the Industrial Disputes Act must of necessity
\nhave  the  meaning they have under the\tIndustrial  Disputes
\nAct.  Merely   because\t the  expression  “wages”   includes
\ndearness  allowance  within the meaning\t of  the  Industrial
\nDisputes  Act,\tthe  Tribunal  is not  obliged\t to  base  a
\ngratuity scheme on consolidated wages.
\n    The Tribunal has observed that the basic average wage of
\na workman in the textile industry in the Delhi region may be
\ntaken  at Rs. 60\/- per month, and the dearness allowance  at
\nRs.  100\/per month, and even if full one month’s basic\twage
\nis adopted as the minimum quantum of benefits to be  allowed
\nin  the case of wage group with service of 5 years and\tmore
\nthe  scale  of\tbenefit would be very much  lower  than\t the
\npresent\t scale\tin  the two contingencies  provided  in\t the
\nEmployees  Benefit  Fund Trust Scheme in  operation  in\t the
\nD.C.M.\tand  S.B.M.  And  observed the Tribunal:\n<\/p>\n
\t\t  “In  view of the limitations of the  terms
\n\t      of reference,\tthe quantum cannot exceed 15
\n\t      days’  wages for every year of service from  5
\n\t      to 10 years and 21 days’ wages for every\tyear
\n\t      of  service  from\t 10-15\tyears.\tAny  schemes
\n\t      framed within the limitations of the terms  of
\n\t      reference\t on  the basis of basic\t wage  alone
\n\t      will  therefore\tmean  a\t scale\tof  benefits
\n\t      much lower than  even the present scheme under
\n\t      the Employees Benefit Fund Trust. Such
\n326<\/span>
\n\t      a scheme cannot, therefore, be framed  without
\n\t      causing grave injustice  and acute discontent,
\n\t      because  it will mean the deprivation of\teven
\n\t      the present scale of benefits in the case of a
\n\t\t\t    large  body of workers.  In order to
\nmaintain,
\n\t      so  far  as  possible, the  present  level  of
\n\t      benefits I have, therefore, no alternative but
\n\t      to frame for these two units a scheme based on
\n\t      basic wage plus dearness allowance.”\n<\/p><\/blockquote>\n
A  scheme of gratuity based on consolidated wages  was\talso
\njustified  in the view of the Tribunal because it “was\talso
\nnecessary  to  compensate for the  ever\t diminishing  market
\nvalue of the rupee”.\n<\/p>\n
    The Tribunal did however observe that normally  gratuity
\nis based not on the consolidated wage but on basic wage. But
\nsince 13,000 workmen out of a total of 20,000 workmen in the
\nregion\twould  stand to lose the benefits  granted  to\tthem
\nunder a voluntary scheme introduced by the D.C.M. and S.B.M.
\na  departure  from  the normal pattern should  be  made\t and
\ngratuity  should be based on the consolidated monthly  wage.
\nIn  our judgment, the conclusion of the Tribunal  cannot  be
\nsupported.   The primary object of  industrial\tadjudication
\nis,  it\t is  said,  to\tadjust\tthe  relations\tbetween\t the
\nemployers  and employees or between employees inter se\twith
\nthe object of promoting industrial peace, and a scheme which
\ndeprives  workmen of what has. been granted to them  by\t the
\nemployer voluntarily would not secure industrial peace.\t But
\non   that  account  the\t Tribunal  was\tnot   justified\t  in
\nintroducing a fundamental change in the concept of a benefit
\ngranted to the workmen in the textile industry all over\t the
\ncountry by numerous  schemes., The appropriate remedy is  to
\nintroduce reservations\tprotecting benefits already acquired
\nand  to\t frame a scheme consistent with the  normal  pattern
\nprevailing in the industry.\n<\/p>\n
    We consider it fight to observe that in adjudication  of
\nindustrial  disputes  settled legal principles\thave  little
\nplay: the awards made by industrial tribunals are often\t the
\nresult\tof ad hoc determination of disputed  questions,\t and
\neach  determination forms a precedent for  determination  of
\nother disputes.\t An attempt to search for principle from the
\nlaw  built up on those precedents is a futile exercise.\t  To
\nthe  Courts accustomed to apply settled principles to  facts
\ndetermined  by the application of the judicial\tprocess,  an
\nessay into the unsurveyed expanses of the law of  industrial
\nrelations  with neither a compass nor a guide, but only\t the
\npillars\t of precedents is a disheartening  experience.\t The
\nConstitution  has however invested this Court with power  to
\nsit in appeal over the awards of Industrial Tribunals  which
\nare, it is said, rounded on the somewhat hazy background  of
\nmaintenance   of   industrial  peace,  which   secures\t the
\nprosperity of the industry and improvement of the conditions
\nof workmen employed in the industry, and in
\n327<\/span>
\nthe absence of principles precedents may have to be  adopted
\nas  guides–some what reluctantly to secure some  reasonable
\ndegree of uniformity of harmony in the process.\n<\/p>\n
     But   the\tbranch\tof  law\t relating   to\t  industrial
\nrelations   the\t temptation  to\t be  crusaders\tinstead\t  of
\nadjudicators  must be firmly resisted.\tIt would not be\t out
\nof  place  to remember the statement of the law\t made  in  a
\ndifferent  context   but nonetheless  appropriate  here—by
\nDouglas,  J., of the Supreme Court of the United  States  in
\nUnited Steel Workers of America v. Enterprise Wheel and\t Car
\nCorporation(1):\n<\/p>\n
\t\t    “……as arbitrator does not sit to dis
\n\t      pense his own brand of industrial justice.  He
\n\t      may  of  course look for\tguidance  from\tmany
\n\t      sources, yet his\taward. is legitimate only so
\n\t      long   as\t it  draws  its\t essence  from\t the
\n\t      collective  bargaining agreement.\t   When\t the
\n\t      arbitrator’s  words manifest an infidelity  to
\n\t      this obligation, courts have no choice but  to
\n\t      refuse enforcement of the award.”\n<\/p><\/blockquote>\n
We may at once state that we are not for a moment suggesting
\nthat  the  law\tof industrial  relations  developed  in\t Our
\ncountry has proceeded on lines parallel to the direction  of
\nthe law in the United States.\n<\/p>\n
    One\t of the grounds which appealed to the\tTribunal  in
\nrelating  to the rate of gratuity to the  consolidated\twage
\nwas  the  existence  of a gratuity scheme in  the  D.C.M.  &
\nS.B.M. and-the assumption that the Tribunal in\tadjudicating
\na  dispute  is\talways, in  exercise  of  its  jurisdiction,
\nlimited\t when  determining  the\t rate  of  gratuity  to\t the
\nmultiple  number  of  days  of\tservice\t in  the  order\t  of
\nreference,  and cannot depart therefrom.  We are  unable  to
\nhold  that  Industrial\tTribunal  is  subject  to  any\tsuch
\nrestriction.  Its power is to adjudicate  the  dispute.\t  It
\ncannot\t proceed to adjudicate disputes not  referred:\t but
\nwhen called upon to adjudicate whether a certain scheme\t “on
\nthe  lines indicated” should he framed, the  basic  guidance
\ncannot be deemed to impose a limit upon its jurisdiction.
\n    As\talready stated, gratuity is not in its\tpresent\t day
\nconcept\t merely\t a  gift made by the employer  in  Iris\t own
\ndiscretion.   The workmen have in course of time acquired  a
\nright  to gratuity on determination of\temployment  provided
\nthe  employer  can  afford having regard  to  his  financial
\ncondition,  to\tpay it. There is  undoubtedly  no  statutory
\ndirection  for\tpayment of gratuity as it is in\t respect  of
\nprovident fund and retrenchment compensation. The conditions
\nfor the grant of gratuity are, as observed in Bharatkhand
\n(1) [1960] 363 U.S. 593.\n<\/p>\n
325<\/span><\/p>\n
Textile Mfg. Co. Ltd.’s case(1),  (i) financial capacity  of
\nthe  employer;\t(ii) his profit making capacity;  (iii)\t the
\nprofits\t earned by him in the past; (iv) the extent  of\t his
\nreserves; (v) the chances of his replenishing them; and (vi)
\nthe  claim for capital invested by him.\t But these  are\t not
\nexhaustive  and there may be other  material  considerations
\nwhich may have to be borne in mind in determining the  terms
\nand  conditions of the gratuity scheme.\t Existence of  other
\nretiring  benefits such as provident fund  and\tretrenchment
\ncompensation  or other benefits do not destroy the claim  to
\ngratuity: its quantum may however have to be adjusted in the
\nlight of the other benefits.\n<\/p>\n
    We\tmay repeat that in matters relating to the grant  of
\ngratuity  and even generally in the settlement\tof  disputes
\narising\t  out  of industrial relations, there are  no  fixed
\nprinciples, on the application of which the problems arising
\nbefore\tthe Tribunal  or  the Courts  may    be\t  determined
\nand    often\tprecedents   of cases determined  adhoc\t are
\nutilised to build up claims or to resist them.\tIt would  in
\nthe  circumstances  be\tfutile to  attempt  to.\t reduce\t the
\ngrounds of the decisions given by the Industrial  Tribunals,
\nthe  Labour Appellate Tribunals and the High Courts  to\t the
\ndimensions  of\tany recognized principle.   We\tmay  briefly
\nrefer  to a few of the precedents relating to the  grant  of
\ngratuity.  In May and Baker (India) Ltd. v. Their Workmen<\/a>(2)
\nthe  claim  of the workmen to fix gratuity on the  basis  of
\ngross salary was rejected by the Industrial Tribunal and the
\nquantum\t was  related\tto   basic  salary  i.e.,  excluding
\ndearness  allowance.   The view taken by  the  Tribunal\t was
\naffirmed by this Court. In British India Corporation v.\t Its
\nWorkmen<\/a>(3) the existing gratuity scheme directed payment  of
\ngratuity  in  terms  of consolidated  wages.   The  Tribunal
\nhowever\t modified  the scheme while retaining the  basis  of
\nconsolidated  wages  which  was held  to  be  justified\t and
\nreasonable. This Court observed that prima facie gratuity is
\nawarded not by reference to consolidated wages but on  basic
\nwages  and  the\t Tribunal  had made a departure\t from  that.
\nBut in the view of the Court no interference with the scheme
\nframed\tby  the Tribunal was called for. In  British  Paints
\n(India)\t Ltd.  v.  Its Workmen<\/a>(4)  the\tCourt  followed\t the
\njudgment  in May and Baker (India) Ltd.(a) that it would  be
\nproper to follow the usual pattern of fixing the quantum  of
\ngratuity on basic wage excluding dearness allowance. But the
\nsame  principle\t was  not  adhered to  in  all\tcases.\t For
\ninstance in Hindustan Antibiotics Ltd. v. Their\t Workmen<\/a>(5),
\nit was observed:\n<\/p>\n
(1)  [1960] 3 S.C.R. 329.\t (2) [1961] II L.L.J. 94
\n\t\t\t\t\t\t     (S.C.).\n<\/p>\n
(3)  [1965] II L.L.J. 556 (S.C.). (4) [1966] I L.L.J. 407.
\n(5)  [1967] I L.L.J. 114 (S.C.)==A.I.R. 1967 S.C. 948.\n<\/p>\n
329<\/span><\/p>\n
\t\t “The  learned counsel for the Company\tthen
\n\t      argued  that there is a flagrant violation  or
\n\t      departure\t from the accepted norms  in  fixing
\n\t      the wage structure and  the dearness allowance
\n\t      and  therefore,\tas an exceptional  case,  we
\n\t      should set aside the award of the Tribunal and
\n\t      direct it to. re-fix the wages.”\n<\/p><\/blockquote>\n
In  that case the Tribunal had awarded gratuity\t related  to
\nconsolidated wages and without any contest the order of\t the
\nTribunal  was confirmed. In Remington Rand of India  v.\t The
\nWorkmen<\/a>(1)  it was contended on behalf of the employer\tthat
\nthe  Tribunal was not justified in awarding gratuity on\t the
\nbasis  of  consolidated wages and should have awarded it  on
\nthe basic wages alone.\tIn dealing with that plea this Court
\nObserved  that\tthe Tribunal was on the facts  of  the\tcase
\njustified in proceeding in that way.\n<\/p>\n
    It\tis  not\t easy to extract  any  principle.from  these
\ncases;\t as precedents they are conflicting.  If the  matter
\nrested there,  we could not interfere with the conclusion of
\nthe  Tribunal,\tbut  the Tribunal has failed  to  take\tinto
\naccount\t the prevailing pattern in the textile industry\t all
\nover  the country.  The textile industry is spread over\t the
\nentire country, in pockets some large other small. There are
\nlarge  and  concentrated  pockets  in  certain\tregions\t and
\nsmaller pockets in other regions.  Except in two or three of
\nthe  smaller States, textile units are to be found all\tover
\nthe  country.  It  is a country-wide industry  and  in\tthat
\nindustry,  except  in  one case\t to  be\t presently  noticed,
\ngratuity   has\t never\tbeen  granted\ton  the\t  basis\t  of
\nconsolidated wages.  Out of 39 centres in which the  textile
\nindustry  is located there is no centre in  which  gratuity.
\npayable\t to  workmen in the textile  industry  pursuant\t  to
\nawards\t or settlements is based on consolidated wages.\t  In
\nthe  two  principal  centres  viz.,  Bombay  and  Ahmedabad,
\nschemes\t for payment .of gratuity to workmen in the  textile
\nindustry  the rates of gratuity are related to basic  wages.
\nThe B.C.M. have tendered before the Tribunal a chart setting
\nout the names of textile units in which the gratuity is paid
\nto the workmen on basic wages. These are the Textile  Units,
\nBhavnagar   (Gujarat)  Shahu  Chhatrapati  Mills,   Kolhapur
\n(Maharashtra);\t Jivajirao  Cotton  Mills,  Gwalior  (Madhya
\nPradesh); Madhya Pradesh Mill-owners Association,  (Indore),
\nBombay,\t Ahmedabad (Gujarat); New Sherrock Spg. &  Wvg.\t Co.
\nLtd.  Nadiad  (Gujarat); Raja Bahadur Motilal  Mills,  Poona
\n(Maharashtra);\t  Shree\t  Gajanan   Wvg.    Mills,    Sangli
\n(Maharashtra); T.I.T. Bhiwani (Haryana);  Jagatjeet   Cotton
\nMills,\tPhagwada (Punjab); 36 Textile Mills in West  Bengal;
\nand Umed Mills (Rajasthan).  It is true that the chart\tdoes
\nnot  set  out the gratuity schemes, if any, in\tall  the  39
\ncentres\t referred to in the Report of the First Wage  Board,
\nbut the chart relates to a fairly representative segment  of
\nthe industry.  No evidence has been
\n(1) [1968] I L.L.J. 542.\n<\/p>\n
3Sup. Cl\/69–4
\n330<\/span>
\nplaced\tbefore\tthe  Court  to\tprove  that  in\t determining
\ngratuity  payable under any other scheme in a  textile\tunit
\nthe  rate is related to consolidated wages.  The  two  large
\ncentres in which the industry is concentrated are Bombay and
\nAhmedabad.   In\t Rashtriya Mill Mazdoor\t Sangh,\t Bombay,  v.
\nMillowners  Association\t Bombay<\/a>(1), a scheme was  framed  by
\nthe  Industrial\t Court, exercising power  under\t the  Bombay
\nIndustrial Relations Act 11 of 1947, in which the quantum of
\ngratuity   was\trelated\t to  the  basic\t wages\talone.\t  In
\nparagraph-27  at p. 583 the Tribunal rejected  the  argument
\nadvanced by counsel for the workmen that since benefits like
\nprovident    fund,   retrenchment    compensation,     State
\nInsurance  Scheme,  are granted in terms of  monthly  wages,
\ngratuity should also be related to consolidated wages.\tThey
\nobserved  that in a large majority of awards of\t the  Labour
\nAppellate  Tribunals and Industrial. Tribunals gratuity\t had
\nbeen awarded in terms of basic wages, and that,
\n\t\t  “The basic wages reflect the differentials
\n\t      between  the  workers  more  than\t the   total
\n\t      wages,\tas    dearness\tallowance   to\t all
\n\t      operatives is paid at a flat rate varying with
\n\t      the  cost\t of  living  index.   The   gratuity
\n\t      schemes  for  the\t supervisory  and  technical
\n\t      staff as well as for clerks are also in  terms
\n\t      of basic wages.”\n<\/p>\n
They  accordingly  related gratuity with the  average  basic
\nwage  earned  by  the workman  during  the   twelve   months
\npreceding  death,  disability,\tretirement,  resignation  or
\ntermination of service. The scheme in the Bombay region\t was
\nadopted\t  in   the  dispute  between  the   Textile   Labour
\nAssociation and the Ahmedabad Mill Owners Association.\t The
\naward  is   reported  in  the  Textile\tLabour\tAssociation,
\nAhmedabad  v.  Ahmedabad  Millowners’  Association<\/a>(2).\t The
\nquestion  whether gratuity should be fixed on the basis\t ,of
\nconsolidated  wages  was apparently not mooted, but  it\t was
\naccepted  on  both  the\t sides\tthat   gratuity\t  should  be
\nrelated to basic wages.\t An appeal  against  that   decision
\nin the Ahmedabad Millowners’ Association case(2) was brought
\nbefore\tthis Court in Bharatkhand Textile Manufacturing\t Co.
\nLtd.’s\tcase(3),  but no objection was raised to  the  award
\nrelating  gratuity  to basic wages.  In the  report  of\t the
\nCentral Wage Board for the Cotton Textile Industry, 1959, in
\nparagraph-110  gratuity\t was  directed to be  given  on\t the
\nbasis.\tof wages plus the increases given  under  paragraph-
\n106, but excluding the dearness allowance.
\n    The only departure from the prevailing pattern to  which
\nour  attention is invited was made by the  Labour  Appellate
\nTribunal  in regard to the textile units in  the  Coimbatore
\nRegion:\t Rajalakshmi Mills Ltd. v. Their Workmen<\/a>(4).   There
\nwas apparently
\n(1) [1967] Industrial Court Reporter 561.
\n(2)  [1958] I L.LJ. 349.\n<\/p>\n
(3)  [1960] 3 S.C.R. 329.\n<\/p>\n
(4)  [1957] II L.L.J. 426.\n<\/p>\n
331<\/span><\/p>\n
no  discussion\ton  the question about the  basis  on  which
\ngratuity  should be awarded.  The Labour Appellate  Tribunal
\nobserved:\n<\/p>\n
\t\t    2.\t“In  all  the  appeals\tthere  is  a
\n\t      contest\tby   the mills on  the\tsubject\t  of
\n\t      gratuity,\t  and  it  is  contended  that\t the
\n\t      gratuity\tas awarded is too high.\t Both  sides
\n\t      had much to say on the subject of the gratuity
\n\t      scheme  as given by the  adjudicator.   During
\n\t      the course of the hearing we indicated to\t the
\n\t      parties the lines on which the gratuity scheme
\n\t      could  be\t suitably  altered  to\tmeet   their
\n\t      respective points of view.\n<\/p><\/blockquote>\n
\t\t    3.\tWe accordingly give  the   following
\n\t      scheme  in substitution of the scheme at\tPara
\n\t      85 of the award:\n<\/p><\/blockquote>\n
\t\t    ‘All  persons with more than five  years
\n\t      and less than ten years’ continuous service to
\n\t      their credit, on termination of their  service
\n\t      by the company, except in cases of  dismissals
\n\t      for  misconduct  involving  moral\t  turpitude,
\n\t      shall  be\t p.aid gratuity at the rate  of\t ten
\n\t      days’   average  rate  of\t pay  inclusive\t  of
\n\t      dearness allowance for  each completed year of
\n\t      service.’
\n\t\t\t ………………………….”\n<\/p><\/blockquote>\n
But this award was modified later by the Industrial Tribunal
\nin  Coimbatore\tDistrict Mill Workers’ Union and  Others  v.
\nRajalakshmi  Mills  Co. Ltd.<\/a>(1)\t The earlier award  made  in
\n1957  was  sought  to  be  reviewed  before  the  Industrial
\nTribunal.   The Tribunal observed that it would be the\tduty
\nof the Tribunal to modify a gratuity scheme based upon\tsome
\nagreement  or settlement if the terms of that agreement\t are
\nfound to be onerous and oppressive. The Tribunal stated that
\nthe original scheme was not applicable to all the units\t and
\ntaking\tinto  consideration  the  statutory  provident\tfund
\nscheme and “the fact that recently basic wages and  dearness
\nallowance  have leaped up”, there was no. justification\t for
\nincluding  the\tdearness allowance in any  new\tscheme\tthat
\nmight be framed for the new Mills; and that it would be most
\nundesirable to have two sets of gratuity schemes in the same
\nregion\twith  varying rates.  In the view  of  the  Tribunal
\nthere should be a uniform scheme for all the Mills, old\t and
\nnew,  and on that ground also the retention of the  dearness
\nallowance under the old scheme must be refused.
\n    Counsel for the workmen relied upon an award made by the
\nIndustrial  Tribunal in the Chemical Unit belonging  to\t the
\nD.C.M.\twhich is published in D.C.M. Chemical Works  v.\t Its
\nWorkmen<\/a>(2).   In   that\t case  gratuity\t  was\trelated\t  to
\nconsolidated wages. The unit though belonging to the  D.C.M.
\nis entirely independent of the tex-\n<\/p>\n
(1) [1964] I L.L.J. 638.   (2) [1962] 1L.L.J. 388.\n<\/p>\n
332<\/span><\/p>\n
tile  unit.  The Company was treating that unit as  separate
\nfrom  the  textile  unit and distinct for  the\tpurpose\t  of
\nrecruitment  of lab.our, sales and conditions of service for
\nthe  workmen  employed\ttherein.   The\tChemical  Unit\t had
\nseparate muster-rolls  for  its employees and transfers from
\none  unit  to.\tthe other, even where  such  transfers\twere
\npossible,   considering\t the  utterly  different  kinds\t  of
\nbusinesses  carried on in the different units, usually\ttook
\nplace  with  the  consent of  the  employee  concerned.\t  In
\nupholding  the\tgratuity  scheme  which\t was  based  on\t the
\nconsolidated wages, this Court observed:\n<\/p>\n
\t\t  “As to the burden of the scheme, we do not
\n\t      think  that,  looking at it from\ta  practical
\n\t      point of view and taking into account the fact
\n\t      that there are about 800 workmen in all in the
\n\t      concern,\tthe  burden per year  would’be\tvery
\n\t      high,   considering  that\t the\tnumber\t  of
\n\t      retirements  is  between\tthree  to  four\t per
\n\t      centum of the total strength.”\n<\/p><\/blockquote>\n
The  gratuity  scheme was in a chemical unit, and not  in  a
\ntextile\t unit.\tThe judgment of this Court  merely  affirmed
\nthe  award  of\tthe Tribunal and sets  out  no\treasons\t why
\ngratuity should be related to consolidated wages.  We do not
\nregard\tthe  affirmance by this Court of the  award  of\t the
\nIndustrial Tribunal as an effective or persuasive  precedent
\njustifying  a variation from the normal pattern of  gratuity
\nschemes\t in operation in the textile industry all  over\t the
\ncountry.\n<\/p>\n
    It\tis clear that in the gratuity schemes  operative  at
\npresent to which our attention has been invited, in force in
\nthe  textile industry payment of gratuity is related not  to
\nconsolidated  wages  but to basic wages.  It  is  true\tthat
\nunder  the  scheme which is in operation in the\t D.C.M.\t and
\nS.B.M. payment which is related to the length of service may
\nin some cases exceed  the  maximum awardable under a  scheme
\nof gratuity benefit related to basic wages.  That cannot  be
\na  ground for making a vital departure from  the  prevailing
\npattern\t in the other textile units in the country.  But  it
\nmay  be\t necessary to protect the interest  of\tthe  members
\ngoverned by the original scheme.\n<\/p>\n
    Determination  of gratuity is not based on any  definite
\nrules.\tIn each case it must depend upon the  prosperity  of
\nthe  concern,  needs  of  the  workmen\tand  the  prevailing
\neconomic conditions, examined in the light of the  auxiliary
\nbenefits  which\t the  workmen may get  on  determination  of
\nemployment.  If all over the country in the textile  centres
\npayment of gratuity is related to the basic wages and not on
\nconsolidated  wages  any innovation in the Delhi  region  is
\nlikely to give rise to serious industrial disputes in  other
\ncentres all over the country.  The award if confirmed  would
\nnot ensure industrial peace: it is likely to foment  serious
\nunrest in
\n333<\/span>
\nother  centres.\t  If maintenance of industrial\tpeace  is  a
\ngoverning principle of industrial adjudication, it would  be
\nwise  to maintain a reasonable degree of uniformity  in\t the
\ndiverse\t units\tall  over  the country and  not\t to  make  a
\nfundamental departure from the prevailing pattern.  We\tare,
\ntherefore,  of the view that the Tribunal’s  award  granting
\ngratuity on the basis of consolidated wage cannot be upheld.
\nTiffs  modification will not, however, affect  the  existing
\nbenefits which are available under the schemes framed by the
\nD.C.M. and S.B.M. insofar as those two units are. concerned.
\n    Mr.\t Ramamurthi for the workmen also. contended that  in
\nthe  matter of relating gratuity to  wages–consolidated  or
\nbasic–the   principle\tof  region-cum-industry\t should\t  be
\napplied\t and  an  “overall  view  of  similar  and   uniform
\nconditions  in\tthe  industry’ in different centres”  should
\nnot  be adopted.  It was also urged that the basic  wage  is
\nvery low and the class of wage to which gratuity was related
\nplayed\ta  very\t important  part  in  the  determination  of
\ngratuity.  The basic wage is however low in all the  centres
\nand if it does not play an important part in other  centres,
\nwe see no reason why it should play only in the Delhi region
\na  decisive  part so as to make a vital departure  from\t the
\nscheme in operation in the other centres in the country.  We
\nare  strongly impressed by the circumstance that  acceptance
\nof  the award of the Tribunal in the present case is  likely
\nto  create  conditions\tof great instability  all  over\t the
\ncountry\t in the textile industry.  In that view, we  decline
\nto uphold  the order of the Tribunal fixing gratuity on\t the
\nbasis of consolidated wages inclusive of dearness allowance.
\n    We may refer to the contentions advanced by counsel\t for
\nthe  workmen  in  the two appeals filed\t by  them.   It\t was
\nurged,,\t that  the Tribunal was in error in denying  to\t the
\nworkmen gratuity when employment is determined on the ground
\nof  misconduct.\t It was urged that it is now a rule  settled
\nby decisions of this Court that the employer is bound to pay
\ngratuity  notwithstanding termination of employment  on\t the
\nground\tof  misconduct.\t  It  may be  noticed  that  in\t the
\nRashtriya   Mill  Mazdoor  Sangh’s  case(1)    and  in\t the
\nAhmedabad  Millowners’\tAssociation  case(2)  provision\t was
\nexpressly made denying gratuity to the workmen dismissed for
\nmisconduct.   But in later cases a less rigid  approach\t was
\nadopted.  In  Garment  Cleaning Works  case(3)\ttiffs  Court
\nobserved:\n<\/p>\n
\t\t  “On principle, if gratuity is earned by an
\n\t      employee for long and meritorious service,  it
\n\t      is  difficult to understand why.\tthe  benefit
\n\t      thus  earned by long and\tmeritorious  service
\n\t      should  not be available to the employee\teven
\n\t      though at the end of such service he may\thave
\n\t      been found guilty of misconduct which  entails
\n\t      his  dismissal.  Gratuity is not paid  to\t the
\n\t      employee gratui-\n<\/p><\/blockquote>\n
(1) [1957] Industrial Court Reporter, 561.
\n(2) [1958] I L.L.J. 349.\n<\/p>\n
(3) [1962] 1 S.C.R. 711.\n<\/p>\n
334<\/span><\/p>\n
\t      tously  or merely as a matter of boon.  It  is
\n\t      paid to him for the service rendered by him to
\n\t      the  employer, and when it is once earned,  it
\n\t\t\t    is\tdifficult  to  understand  why\tit
\n   should
\n\t      necessarily  be denied to him whatever may  be
\n\t      the nature of misconduct of his dismissal.”
\nIn  later judgments also the Courts  upheld  the view\tthat
\nthe denial of the right to gratuity is not justified even if
\nemployment   is\t determined  for  misconduct.\tIn   Motipur
\nZamindari (P) Ltd. v. Their Workmen<\/a> ( 1 ), this Court opined
\nthat  the  workmen  should not be wholly  deprived  o.f\t the
\nbenefit earned by long and meritorious service, even  though
\nat  the\t end  of  such service he may  be  found  guilty  of
\nmisconduct  entailing  his  dismissal,\tand  therefore\t the
\ncondition  in a gratuity scheme that no gratuity  should  be
\npayable\t to a workman dismissed “for  misconduct   involving
\nmoral  turpitude”  should be held  unjustified.\t  The  Court
\ntherefore  modified  the condition and directed\t that  while
\npaying\t gratuity  to  a  workman  who\twas  dismissed\t for
\nmisconduct  only  such amount should be deducted  .from\t the
\ngratuity  due  to him in respect of which the  employer\t may
\nhave suffered loss by the misconduct of the employee.
\n    A similar view was expressed in Remington Rand of  India
\nLtd.’s\tcase (2). In  Calcutta\tInsurance  Company  Ltd. ‘s
\ncase(3)\t however  protest was raised against  acceptance  of
\nthis rule without qualification.  Mitter, J., observed at p.
\n9  that\t it was difficult to concur in\tprinciple  with\t the
\nopinion\t expressed  in the Garment Cleaning  Works  case(4).
\nMitter, J., observed:\n<\/p>\n
\t\t “We   are   inclined  to  think   that\t  it
\n\t      (gratuity) is paid to a workman to ensure good
\n\t      conduct  throughout the period he\t serves\t the
\n\t      employer.\t ‘Long and meritorious service\tmust
\n\t      mean  long  and  unbroken\t period\t of  service
\n\t      meritorious  to  the end.\t As  the  period  of
\n\t      service\tmust  be  unbroken,  so\t  must\t the
\n\t      continuity   of\tmeritorious  service  be   a
\n\t      condition\t  for  entitling  the\tworkman\t  to
\n\t      gratuity.\t   If\ta   workman   commits\tsuch
\n\t      misconduct  as  causes financial loss  to\t his
\n\t      employer,\t  the  employer\t would,\t under\t the
\n\t      general  law, have a right of  action  against
\n\t      the employee for the loss caused, and making a
\n\t      provision for withholding payment of .gratuity
\n\t      where  such  loss was caused to  the  employer
\n\t      does  not\t seem  to  aid\tto  the\t  harmonious
\n\t      employment of labourers or workmen.   Further,
\n\t      the misconduct may be such as to undermine the
\n\t      discipline in the workers—a case in which it
\n\t      would  be\t extremely difficult to\t assess\t the
\n\t      financial loss to the employer.”\n<\/p><\/blockquote>\n
(1) [1965] II L.L.J. 139.\t(2) [1968] I L.L.J. 542.
\n(3) [1967] II L.L.J. 1.\t\t(4) [1962] 1 S.C.R. 711.\n<\/p>\n
335<\/span><\/p>\n
“Misconduct”  spreads  over  a wide  and  hazy\tspectrum  of
\nindustrial  activity: the most seriously subversive  conduct
\nrendering  an employee wholly unfit for employment  to\tmere
\ntechnical  default  are\t covered  thereby.   The  parliament
\nenacted\t the  Industrial Employment (Standing  Orders)\tAct,
\n1946,  which  by  s.  15  has  authorised  the\t appropriate
\nGovernment  to make rules to carry out the purposes  of\t the
\nAct  and in respect of additional matters to be included  in
\nthe  Schedule.\t The Central Government has  framed  certain
\nmodel  standing\t rules by notification\tdated  December\t 18,
\n1946,  called ‘The Industrial Employment  (Standing  Orders)
\nCentral Rules, 1946’.  In Sch. I-Model Standing\t Orders–cl.
\n14 provides:\n<\/p>\n
(1) ………………………………
\n(2)  A workman may be suspended for a period  not  exceeding
\nfour  days at a time, or  dismissed without  notice  or\t any
\ncompensation in lieu of notice, if he is found to be  guilty
\nof misconduct.\n<\/p>\n
(3)  The  following acts and omissions shall be\t treated  as
\nmisconduct :–\n<\/p>\n
(a) wilful insubordination or disobedience, whether alone or
\nin  combination with others, to any lawful   and  reasonable
\norder of a superior,\n<\/p>\n
(b)  theft,  fraud  or dishonesty  in  connection  with\t the
\nemployer’s business or property,\n<\/p>\n
(c)  wilful  damage  to\t or  loss  of  employer’s  goods  or
\nproperty,\n<\/p>\n
(d) taking or giving bribes. or any illegal gratification,\n<\/p>\n
(e) habitual absence without leave or absence without  leave
\nfor more than 10 days,\n<\/p>\n
(f) habitual late attendance,\n<\/p>\n
(g)   habitual\tbreach\tof  any\t law  applicable    to\t the
\nestablishment,\n<\/p>\n
(h) riotous or disorderly behaviour during working hours  at
\nthe establishment or any act subversive of discipline,\n<\/p>\n
(i) habitual negligence or neglect of work,\n<\/p>\n
(j)  frequent repetition of any act or omission for which  a
\nfine may be imposed to a maximum of 2 per cent of the  wages
\nin a month,\n<\/p>\n
(k)  striking  work or inciting. others to  strike  work  in
\ncontravention  of the provisions of any law, or rule  having
\nthe force of law.”\t\t      ‘
\n336<\/span>
\nA  bare\t perusal of the Schedule shows that  the  expression
\n“misconduct”  covers a large area of human conduct.  On\t the
\none   hand  are\t the  habitual\tlate  attendance,   habitual
\nnegligence  and\t neglect  of work: on  the  other  hand\t are
\nriotous or disorderly behaviour during working hours at\t the
\nestablishment  or any act subversive of\t discipline,  wilful
\ninsubordination\t or disobedience.  Misconduct falling  under
\nseveral\t of these latter heads\tof  misconduct\tmay  involve
\nno  direct loss or damage to the employer, but would  render
\nthe functioning of the establishment impossible or extremely
\nhazardous.   For  instance,  assault on the  Manager  of  an
\nestablishment  may not directly involve the employer in\t any
\nloss   or damage which could be equated in terms  of  money,
\nbut  it\t would\trender\tthe  working  of  the  establishment
\nimpossible.    One  may\t also  envisage\t several   acts\t  of
\nmisconduct  not directly involving the establishment in\t any
\nloss, but which are destructive of discipline and cannot  be
\ntolerated.   In\t none  of  the\tcases  cited  any   detailed
\nexamination  of what type of misconduct would of  would\t not
\ninvolve to the employer loss capable of being compensated in
\nterms of money was made: it was broadly stated in the  eases
\nwhich  have  come  before this\tCourt  that  notwithstanding
\ndismissal  for\tmisconduct  a workman will  be\tentitled  to
\ngratuity   after  deducting  the  loss\toccasioned  to\t the
\nemployer.   If\tthe cases cited do not enunciate  any  broad
\nprinciple we think that in the application of those cases as
\nprecedents  a distinction should be made  between  technical
\nmisconduct   which   leaves  no\t  trail\t  of   indiscipline,
\nmisconduct  resulting in damage to the employer’s  property,
\nwhich  may be compensated by forfeiture of gratuity or\tpart
\nthereof,  and serious misconduct which though  not  directly
\ncausing\t damage\t such  as  acts\t of  violence  against\t the
\nmanagement  or\tother  employees or  riotous  or  disorderly
\nbehaviour,  in or near the place of employment is  conducive
\nto   grave  indiscipline.   The\t first\tshould\tinvolve\t  no
\nforfeiture:  the second may involve forfeiture of an  amount
\nequal  to  the\tloss directly suffered by  the\temployer  in
\nconsequence  of\t the  misconduct and the  third\t may  entail
\nforfeiture of gratuity due to’ the workmen.  The  precedents
\nof this Court e.g. Wenger & Co.\n<\/p>\n
v. Its Workmen(1), Remington Rand of India Ltd. case(2)\t and
\nMotipur\t Zamindari  (P) Ltd.’s case(a) do not compel  us  to
\nhold  that no misconduct however grave may be  visited\twith
\nforfeiture  of gratuity.  In our judgment, the rule set\t out
\nby  this  Court\t in Wenger &  Co.’s  case(1)   and   Motipur
\nZamindari   (P)\t Ltd.’s case(3) applies only to those  cases
\nwhere there has been by actions wilful or negligent any loss
\noccasioned   to\t the  property\tof  the\t employer  and\t the
\nmisconduct does not  involve  acts of  violence against\t the
\nmanagement or other employees, or riotous  or  dis-
\n(1) [1963] II L.L.J. 403.  (2) [1968] I L.L.J. 542 (S.C.).
\n(3) [1965] II L.L.J. 139 (S.C.).\n<\/p>\n
337<\/span><\/p>\n
orderly\t behaviour in or near the place of  employment.\t  In
\nthese  exceptional  cases–the\tthird class  of\t cases\t the
\nemployer may exercise the right to forfeit gratuity: to hold
\notherwise   would  be\tto  put\t a  premium   upon   conduct
\ndestructive of maintenance  of discipline.
\n    It\twas urged on behalf of the workmen that the  minimum
\nperiod\tof  15 years fixed for voluntary retirement  is\t too
\nlong and it should be reduced to 10 years. In Hume Pipe\t Co.
\nLtd. v. Their Workmen<\/a>(1) and Hydra (Engineers) Private\tLtd.
\nv.  The\t Workmen<\/a>(2) the minimum period\tfor  qualifying\t for
\ngratuity on voluntary retirement was fixed at 15 years.\t  In
\nother  cases  a\t shorter period of  10\tyears  was  adopted:
\nGarment\t Cleaning  Works(a); British Paints (India) Ltd.(4);
\nCalcutta Insurance Co. Ltd.(5), and Wengel & Company(x).
\n    Counsel   for   the\t employers  have    accepted\tthat
\nqualifying length of service for voluntary retirement should
\nbe reduced to 10 years.\t Counsel for the employers have also
\naccepted  that\thaving\tregard\tto  all\t the  circumstances,
\nnotwithstanding the direction given by the Tribunal and\t the
\nschemes prevailing in the other parts of the country in\t the
\ntextile industry, the maximum gratuity should not exceed  20
\nmonths’\t basic wages and not 15 months’ as directed  by\t the
\nTribunal.  Further  counsel for the D.C.M. and\tS.B.M.\thave
\nagreed\tthat  in  case\tof  termination\t of  employment\t  on
\nvoluntary  retirement one full months basic wages  for\teach
\ncompleted  year\t of service not exceeding 20  months’  wages
\nshould\tbe granted to workmen.\tCounsel for the\t B.C.M.\t has
\nagreed that gratuity at the rate of 21 days’ wages for\teach
\ncompleted year of service in case of voluntary retirement or
\nresignation  after  10\tyears’ service\tmay  be\t awarded  as
\ngratuity to the workmen. Counsel for the A.T.M. has shown no
\ndisinclination to fall in line with this suggestion. Counsel
\nfor  the  A.T.M.  has  also  not  objected  to\t appropriate
\nadjustments   in  view\tof  the\t concessions  made  by\t the
\nmanagement of the D.C.M., S.B.M. and B.C.M.
\n    It\twas  urged  by\tcounsel for  the  workmen  that\t  in
\nproviding  that gratuity shall be paid to Badli workmen\t for
\nonly those years in which a workman has worked for 240 days,
\nthe  Tribunal has committed an error.  It was urged  that  a
\nBadli workman has to register himself with the management of
\nthe  textile  unit and is required every day to\t attend\t the
\nfactory\t premises  for ascertaining whether  work  would  be
\nprovided  to  him, and since a Badli workman has  to  remain
\navailable  throughout the year when the factory is  open,  a
\ncondition  requiring that the Badli workman has\t worked\t for
\nnot  less than 240 days to qualify for gratuity\t is  unjust.
\nWe
\n(1) [1959] II L.L.J. 830.\n<\/p>\n
(2) C.A. No. 1934 of 1967 decided on April 30, 1968.
\n(3)  [1962] 1 S.C.R. 711.\n<\/p>\n
(4)  [1966] I L.L.J. 407 (S.C.)
\n(5) [1967] II L.L.J. 1 (S.C.).\n<\/p>\n
(6)  [1963] II L.L.J. 403 (S.C.)
\n338<\/span>
\nare unable to agree with that contention.  If gratuity is to
\nbe paid for service rendered, it is. difficult to appreciate
\nthe  grounds  on  which\t it can be  said  that\tbecause\t for
\nmaintaining  his name on the record of the Badli workmen,  a
\nworkman is required to attend the Mills he may be deemed  to
\nhave rendered service and would on that account be  entitled
\nalso  to claim gratuity.  The direction\t is  unexceptionable
\nand the contention must be rejected.\t     –\n<\/p>\n
    It\t was  also  urged  by  Mr.  Ramamurthi\t that\t the
\nexpression “average of the basic wage” in the definition  of
\n“wages”\t in  cl.  4  of the  Schemes  is  likely  to  create
\ncomplications\tin  the\t implementation\t of   the   Schemes.
\nHe  .urged that if the wages earned  by\t a workman during  a
\nmonth  are divided  by the  total number  of  working  days,
\nthe  expression “wages” will have an artificial meaning\t and
\nespecially   where  the\t workman  is  old  or  disabled\t  or
\nincapacitated  from rendering service, gratuity payable\t  to
\nhim  will  be substantially reduced.  We do not\t think\tthat
\nthere  is any cause for such apprehension.   The  expression
\n“average of  the  basic wage” can only mean the wage  earned
\nby  a workman during a month divided by the number  of\tdays
\nfor  which  he has worked and multiplied by 26 in  order  to
\narrive\tat the monthly wage for the computation of  gratuity
\npayable.    Counsel   for  the\temployers  agree   to\tthis
\ninterpretation.\n<\/p>\n
    It\twas  then urged that whereas the reference  to.\t the
\nIndustrial  Tribunal was made by the  Delhi   Administration
\nsometime  in March 1958, the award is .given effect to\tfrom
\nJanuary\t 1, 1964, and-for a period of nearly six  years\t the
\nworkmen\t have been deprived of gratuity, when the  delay  in
\nthe  disposal of the proceedings was no.t due to. any  fault
\nor  delaying  tactics  on  the part  of\t the  workmen.\t The
\nreference  was made in the first week of March,\t 1958.\t The
\nTextile\t Mazdoor  Union\t then applied  to  be  impleaded  on
\nSeptember  15,\t1958, the D.C.M. and S.B.M. moved  the\tHigh
\nCourt  of Punjab at Delhi and obtained an order for stay  of
\nproceedings in writ petition filed against the order of\t the
\nTribunal  impleading the Textile Mazdoor Union.\t  That\twrit
\npetition was dismissed in February 1961 and the\t proceedings
\nwere  resumed on December 12, 1962.  Thereafter\t preliminary
\nissues\twere  decided and on December 3, 1963,\t,an  interim
\naward  relating\t to  other  disputes  was  made.   It  must,
\nhowever,  be  noticed that there were four  claims  and\t the
\nclaim relating to gratuity was taken in hand by the Tribunal
\nafter  disposal\t of  the other claims.\t Neither  party\t was
\ndilatory  in  the  prosecution\tof  any\t claim\tbefore\t the
\nTribunal.  It has also to be noticed that in the D.C.M.\t and
\nS.B.M.\tthere  was  in fact a  gratuity\t scheme\t already  in
\noperation.   The  liability of the A.T.M.  to  pay  gratuity
\narises\t after\tthat  unit  acquired  sufficient   financial
\nstability and it is not suggested that the unit had acquired
\nfinancial  stability  before January 1, 1964.\t The  is.sue
\nremains\t a live issue only in respect of the B.C.M.   It  is
\ntrue that the gratuity
\n339<\/span>
\nscheme\tof  the D.C.M., and S.B.M. was related only  to\t the
\nlength of service and did not take into account the  varying
\nrates of wages received by the workmen.\t But the question if
\nat  all\t would, be one of making minor\tadjustments  in\t the
\nliability  of the two units to pay gratuity in the event  of
\ngratuity  being\t payable under this award at a\thigher\trate
\nthan  the gratuity  awardable  under  the scheme already  in
\noperation  in  the two units.  If in respect of\t the  A.T.M.
\nwhich  had  no scheme gratuity for  all\t practical  purposes
\nbecomes\t operative from January 1, 1964, we do not  see\t any
\nreason\twhy  in\t respect of the B.C.M.\tany  different\trule
\nshould\tbe  provided  for.  Again, the\tTribunal  has  fixed
\nJanuary\t 1,  1964, as the date for the commencement  of\t the
\nschemes.  Giving the schemes effect before January 1,  1964,
\nmay  rake  up  cases. in which the  workmen  have  left\t the
\nestablishments many years ago.\tIt would not be conducive to
\nindustrial peace to allow such questions to be raised  after
\nthis long delay.  The question is not capable of solution on
\nthe  application of any principle and must be\tdecided\t  on
\nthe  consideration of expediency.  We do not think that\t any
\nground is made out for altering the award of the  Industrial
\nTribunal in this behalf.\n<\/p>\n
    It\twas  then urged that in any event the\tworkmen\t  of
\nthe D.C.M. and S.B.M. should not be deprived of the right to
\ngratuity under the scheme of the two u,nits, if gratuity  at
\na higher rate is payable to them under the voluntary scheme.
\nThis contention must be accepted.  We direct that in respect
\nof  all workmen of the D.C.M. and S.B.M. who  were  employed
\nbefore\t January  1, 1964, and continued to remain  employed
\ntill  that  date, gratuity at the higher of  the  two  rates
\napplicable  to\teach  workman when he  becomes\tentitled  to
\ngratuity  either computed under the Employees  Benefit\tFund
\nTrust scheme of the D.C.M. and S.B.M. or under the terms  of
\nthis award shall be paid.  Workmen employed after January 1,
\n1964, will be entitled to the benefit of this award alone.
\n    Industrial\tdisputes  have given  rise  to\tconsiderable
\nstrife\tholding up development of industry and the  economic
\nwelfare\t of  the  nation.   Awards have\t been  made  by\t the
\nTribunals  often  on considerations adhoc and  based  on  no
\nprinciple  and Courts have upheld or modified  those  awards
\nwithout\t enunciation of any definite or\t generally  accepted
\nprinciple.  In the present case we have been largely  guided
\nb37  the  consideration of securing a reasonable  degree  of
\nuniformity  in\tthe  fixation of  gratuity  in\tthe  textile
\nindustry,  for,\t in  our view, a  departure  made  from\t the
\nprevailing  pattern in one region is likely to give rise  to
\nclaims all over the country for modification of the gratuity
\nschemes\t in operation, and have been accepted as fixing\t the
\nbasis.\tof  gratuity  schemes.\t If  having  regard  to\t the
\ndeteriorating  value of the rupee, it is  thought  necessary
\nthat more generous benefits should  be\tavailable  to  the
\n340<\/span>
\nworkmen\t by way of gratuity, the remedy lies not before\t the
\nadjudicators  or  the  Courts, but  before  the\t legislative
\nbranch\tof  the State.\tIn respect of the  bonus,  provident
\nfund,  retrenchment compensation, State Insurance Schemes as
\nwell  as medical benefits, legislation has  been  introduced
\nbringing  a  reasonable\t degree of  certainty  in  the\tlaws
\ngoverning the various benefits available to the workmen\t and
\nwe  are\t of  the view that even in  respect  of\t gratuity  a
\nreasonably uniform scheme may be evolved by the Legislatures
\nwhich could prevent resort to the adjudicators in respect of
\nthis complicated matter of dispute between the employers and
\nthe employees.\tIt may no.t be difficult to evolve a  scheme
\nwhich  would  meet  the\t legitimate  claims.  of  both\t the
\nemployers   and\t the  employees\t and  which   might,   while
\neliminating  cause for friction,’ simultaneously conduce  to
\ngreater certainty in the administration of the law governing
\nindustrial disputes, and secure benefits to the employers as
\nwell  as the employees and conduce to the prosperity of\t the
\nindustry as well as of the workmen.\n<\/p>\n
We propose to summarise the effect of our judgment:\n<\/p>\n
\t\t  (1)  A unit-wise approach in\tframing\t the
\n\t      gratuity\t scheme\t for  the  four\t units\t was
\n\t      appropriate,   and  on  the   terms   of\t the
\n\t      reference the plea of the employers to fix the
\n\t      age of superannuation was beyond the scope  of
\n\t      reference.   The\tfinancial condition  of\t the
\n\t      D.C.M.,\t S.B.M.\t   and\t B.C.M.\t   justifies
\n\t      imposition of gratuity schemes as from January
\n\t      1, 1964. Even the A.T.M. which is the  weakest
\n\t      of  the four units is financially stable\tfrom
\n\t      the   date  on  which   the   award    becomes
\n\t      operative;\n<\/p><\/blockquote>\n
\t\t  (2) The settlement between the workmen and
\n\t      the   A.T.M.  did\t not  operate  to  bar\t the
\n\t      jurisdiction  of\tthe  Tribunal  to  make\t the
\n\t      scheme  of gratuity payable to the workmen  of
\n\t      the A.T.M.;\n<\/p><\/blockquote>\n
\t\t  (3)  That  the Tribunal was  in  error  in
\n\t      relating gratuity awardable to the workmen  to
\n\t      the consolidated wage;\n<\/p><\/blockquote>\n
\t\t  (4)\tThat  the  minimum  period   for   .
\n\t      qualifying for voluntary retirement should  be
\n\t      reduced to 10 years and one months basic\twage
\n\t      in the case of D.C.M. and S.B.M. and 21  days’
\n\t      basic  wage in the case of B.C.M.\t and  A.T.M.
\n\t      for  each completed year of service should  be
\n\t      paid  but not exceeding 20  months   wages  in
\n\t      the  aggregate. (This direction is  made\twith
\n\t      the   consent   of  the\tAdvocates   of\t the
\n\t      employers);\n<\/p><\/blockquote>\n
341<\/span><\/p>\n
\t\t  (5)  That workmen dismissed or  discharged
\n\t      from  service  for  misconduct  will  not\t  be
\n\t      entitled\tto  gratuity if\t guilty\t of  conduct
\n\t      involving\t  acts\tof  violence   against\t the
\n\t      management or other employees,  or riotous  or
\n\t      disorderly  behaviour in or near the place  of
\n\t      employment;\n<\/p><\/blockquote>\n
\t\t  (6)  No  modification need  be  made\twith
\n\t      regard to Badli workmen;\n<\/p><\/blockquote>\n
\t\t  (7)  The award needs no modification\twith
\n\t      regard to the date of operation of the  award;
\n\t      and
\n\t\t  (8)  The workmen of the D.C.M. and  S.B.M.<\/p><\/blockquote>\n
\t\t\t    who\t commenced  service and continued
\nto  serve
\n\t      till  January 1, 1964, and thereafter will  be
\n\t      entitled\tto elect at the time  when  gratuity
\n\t      becomes  due to claim gratuity either  on\t the
\n\t      scheme  in force under the  Employees  Benefit
\n\t      Fund  Trust  of the employers  or\t under\tthis
\n\t      award.\n<\/p>\n
We  have  made\tsome incidental changes\t to  streamline\t the
\nscheme. On the view we have taken of the schemes,   Annexure
\n‘A’relating  to the D.C.M. and S.B..M. of the award will  be
\nmodified in the following respects:\n<\/p>\n
\t\t     In\t clause 1 (a) instead of  “12  days’
\n\t      wages”,  the expression “20 days’ wages”\twill
\n\t      be substituted;\n<\/p><\/blockquote>\n
\t\t     In clause 1 (b) for the expression\t “15
\n\t      days’ wages”,
\n\t      the  expression  “1  month’s  wages”  will  be
\n\t      substituted;\n<\/p><\/blockquote>\n
\t\t     In\t proviso (ii)  to clause 1  for\t the
\n\t      expression “15 months’ wages”, the  expression
\n\t      “20 months’ wages” will be substituted;
\n\t\t      In  clause  2 for\t the  expression.”15
\n\t      days’  wages”, the expression “1 months  wages
\n\t      will be substituted;  and for the expression ‘
\n\t      15  years service , 10 years service  will  be
\n\t      substituted;\n<\/p><\/blockquote>\n
\t\t      In  the  proviso to clause 2  for\t the
\n\t      expression “15 months’ wages”, the  expression
\n\t      “20 months’ wages” will be substituted;
\n\t\t       In  clause 3 in the proviso  for\t the
\n\t      expression “15 months’ wages”, the  expression
\n\t      “20 months’ wages” will be substituted;
\n\t\t\tClause\t3  will be  followed  by  an
\n\t      Explanation:\n<\/p><\/blockquote>\n
“Explanation.–The  expression\t“misconduct”   means\tacts
\ninvolving   violence   against\tthe  management\t  or   other
\nemployees, or riotous or disorderly behaviour in or near the
\nplace of employment.\n<\/p>\n
342<\/span><\/p>\n
    Where  the workman is guilty of conduct  which  involves
\nthe management in financial loss, the loss occasioned may be
\ndeducted from the gratuity payable.”\n<\/p>\n
    In clause 4 the words “plus the dearness allowance” will
\nbe omitted.\n<\/p>\n
    The remaining clauses will stand unaffected except\tthat
\nfor   the  words  “within  six\tmonths\tfrom  the  date\t  of
\npublication  of\t this Award”‘ the words “within\t six  months
\nfrom the date of this judgment” will be substituted.\n<\/p>\n
     Annexure ‘B’ relating to the B.C.M. and A.T.M. will  be
\nmodified in the following respects:\n<\/p>\n
     In clause 1 (a) for the expression “one fourth  month’s
\nwages”, the expression “15 days’ wages” will be substituted;\n<\/p>\n
      In clause 1 (b) for the expression “one third  month’s
\nwages”, the expression “21 days’ wages” will be substituted;\n<\/p>\n
      In the proviso for the expression “12 months’  wages”,
\nthe expression “20 months’ wages” will be substituted;\n<\/p>\n
       In  clause 2 for the words “15 years’  service”,\t the
\nexpression “10 years’ service” will be substituted;\n<\/p>\n
       In   clause 3 in the proviso for the  expression\t “12
\nmonths’\t wages”, the expression “20 months’ wages”  will  be
\nsubstituted  and it will be followed by the  Explanation  of
\n“misconduct” as in Annexure ‘A’.\n<\/p>\n
\tIn clause 4 the words “plus the dearness  allowance”
\nwill be omitted.\n<\/p>\n
There will be no order as to costs in these appeals.\n<\/p>\n
V.P.S.\t\t\t\t Award modified accordingly.\n343<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Delhi Cloth & General Mills Co., … vs Workmen And Ors. Etc on 27 September, 1968 Equivalent citations: 1970 AIR 919, 1969 SCR (2) 307 Author: S C. Bench: Shah, J.C. PETITIONER: DELHI CLOTH & GENERAL MILLS CO., LTD. Vs. RESPONDENT: WORKMEN AND ORS. ETC. DATE OF JUDGMENT: 27\/09\/1968 BENCH: SHAH, […]<\/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-64136","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nDelhi Cloth & General Mills Co., ... vs Workmen And Ors. 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