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PETITIONER: AMRITSAR RAYON & SILK MILLS

       Vs.

RESPONDENT: THEIR WORKMEN

DATE OF JUDGMENT: 02/08/1962

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. GUPTA, K.C. DAS MUDHOLKAR, J.R.

CITATION:  1966 AIR 1253            1966 SCR  (3) 558

ACT: Industrial  Dispute-Gratuity  scheme,  Framing   of-Validity -Employer’s  financial position Amount of  gratuity-Ceiling, if  and  when should be placed-Tribunal’s  determination  to depend on relevant facts.

HEADNOTE: The  present  appeal  arises out of  an  industrial  dispute between  the appellant and the respondents.  The  Industrial Tribunal gave an award and the appellant filed an appeal  to this Court by way of special leave. The  main contention of the appellant was that no  case  bad been  before  the  tribunal for the framing  of  a  gratuity scheme.  It was further urged that even if a gratuity scheme had  to be framed the tribunal was in error in  not  placing any  ceiling  on  the  amount of  gratuity  payable  to  the employees.   The  third point raised was  that  one  month’s basic  wages  which  had been provided  by  the  scheme  was excessive and it should be reduced to 15 days’ basic wages. Held,  that having regard to the financial position  of  the appellant the framing of the gratuity scheme was  justified. As a general rule, where is no provision for  superannuation and gratuity is, paid at a fairly reasonable rate a ceiling should be placed on the amount of gratuity payable under the scheme.   Even  though gratuity schemes framed in  the  same industry  in the same region should not disclose radical  or violent  differences  the rate of gratuity which  should  be awarded  in’. a particular case will depend on the facts  of that case.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 394 of 1961, Appeal  by  special  leave from  the  Award  dated  November 6,1960, of the Industrial Tribunal, Punjab, in Reference No. 43 of 1968. M.   C. Setalvad, Attorney-General for India, 559 S.   K. Kapur, Bishambher Lal, B. N. Kripal and K.     K. Jain, for the appellant.

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Janardan Sharma, for the respondents. 1962.  August, 2. The Judgment of the Court was   delivered by GAJENDRAGADKAR, J.- This, appeal arises out of an industrial dispute between the appellant Amritsar    Rayon    &    Silk MillS,and its workmen.The     dispute originally related  to seven demands  made by the respondents against the appellant and  these  seven  demands  were  referred  by  the   Punjab Government  for  industrial adjudication to  the  Industrial Tribunal, Jullundur under section 10(1)(d) of the Industrial Disputes  Act,  1917.  The Tribunal has made  its  award  in respect of these demands.  In the present appeal, which  has been  brought  to  this  Court  by  special  leave,  we  are concerned  with  the award in so for as it  deals  with  the respondents,  claim  for a gratuity scheme.   The  appellant urged  that no case had been made out for the framing  of  a gratuity  scheme.   This  plea  has  been  rejected  by  the Tribunal  and a gratuity scheme has been framed.  It is  the propriety  and  the  validity  of  this  scheme  which   are challenged  before us by Mr, Kapoor on behalf of the  appel- lant in this case. The scheme framed by the Tribunal reads thus:-               (1)   In  case of death of an employee  while,               he  is  in the service of the concern  on  his               becoming  incapable of serving further due  to               physical  or mental disability.   One  month’s               basic wages for each year of his service,               560               In case of death, the gratuity will be payable               to  the  heirs  or  assigns  of  the  deceased               workmen.               (2)   On  termination of an employees  service               by the concern after he has put in five year a               service Half  month’s basic wages  for  each               year of his service.               (3)   No gratuity would be payable to an  emp-               loyee  who  designs,his  job ’but  if  he  has               served  for fifteen years continuously and  is               rendered unfit to serve further by old age  or               protracted  ill  health,  he  shall  be  given               gratuity   calculated  at  the  rate  of   one               month’s bastion wages for each completed  year               of his service.               (4)   No gratuity would be payable to an  emp-               loyee who is dismissed for misconduct. In  rejecting  the  appellant’s contention  that  no  scheme should be framed, the Tribunal has found that the  appellant which was started in 1934 is the biggest Textile Mills Is in Amritsar  and its career so far has been one of success  all along  the  line.  The invested capital of  the  concern  is Rs.14 lakhs and its working capital is Rs.2,70,000/-. On its roll  are employed 1,250 employees whose monthly  wage  bill comes  to Rs.1,20,000/-. It is admitted that  the  appellant has  been  paying :bonus to its workmen since 1946  and  has allowed dividend on invested capital.  It contributes to the Provident  Fund  and the Employees State  Insurance  Scheme. Having  regard to this financial position of the  appellant, the  Tribunal  has  held, and we  think  rightly,  that  the appellant  cannot  successfully resist the  demand  for  the framing of a gratuity scheme. Mr. Kapoor, however, contends that even if a gratuity scheme has to be framed, the Tribunal  561 was  in error in not placing any coiling on the  amount  of gratuity  payable  to the employees.  In our  opinion,  this

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contention is well-founded.  Speaking generally, where there is no provision for superannuation and gratuity is paid at a fairly   reasonable   rate,  gratuity  schemes   framed   by Industrial  Tribunals generally provide for a  ceiling,  and so,  we  do  not  see how  the  Tribunal  was  justified  in departing from this generally accepted position... The  rate fixed in the present case is not unduly low and  admittedly, there  is  no provision for  superannuation.   Therefore  we think that the appellant is " justified in contending that a ceiling  should  be put on the amount  of  gratuity  payable under the scheme.  On the whole, we think it would be  reas- onable  if the maximum amount of gratuity payable under  the scheme is fixed at 15 months’ basic wages.  We ought to make it clear that in coming to this conclusion we do not propose to  lay down any hard and fast rule that a ceiling  must  be placed  in every case and that it should be of the order  of 15  months’ basic wages; as we have repeatedly observed,  in framing  gratuity  scheme, all relevant factors have  to  be taken  into  account  and so, inevitably  the  schedule  are likely to differ from case to case. Mr. Kapoor then contends that one month’s basic wages  which has  been provided for by clauses (1) and (3)  is  excessive and  it  should  be reduced to 15 days  basic  wages.   This argument  is that the usual pattern of gratuity  schemes  in the  Punjab shows that it is 15 days’ basic wages  which  is provided under similar clauses.  In support of his argument, Mr.  Kapoor has referred us to some of the awards  produced by  him.   In the gratuity scheme framed in the  New  India Embroidery  Mills, Chheharta, 15 days wages has been adopted as the basis, but this award includes dearness allowance and so,  this  provision  is not very helpful  because  in  the present came, the rate has been fixed by 562 reference  to the basic wages alone.  The scheme  framed  in the  Niemla  Textile Finishing Mills, Chheharta, is  on  the same  lines  as the scheme under the  New  India  Embroidery Mills  and  the same comment, therefore, falls  to  be  made about   it.   The  gratuity  scheme  in  the   Technological Institute of Textiles, Bhiwani, has adopted the basis of 1/2 month’s basic wages for each completed year of service,  but there  is  no ceiling placed by the scheme.   On  the  other hand,  the gratuity scheme in the Shambhu Nath & Sons  Ltd., Amritsar, adopts one month’s basic wages for each  completed year of service and so does the scheme in the India  Woollen Textile  Mills,  Chheharta, and the  India  Calico  Printing Mills.   The Jagatjit Cotton Textile Mills  Ltd.,  Phagwara, has   1/2  month’s  basic  wages;  the   Punjab   Distilling ’Industries  Ltd, provides for one month’s basic  wages;  so does  the  New Egerton Woollen Mill, Dhariwal.   The  Jawala Flour  Mills Amritsar, provides for the rate of 1/2  month’s basic  wages in case of workmen with five years  of  service and in case of workmen with service above five years at  the rate of one month’s basic wages.  It would thus be seen.that the claim made by the appellant that the pattern of gratuity schemes  in the Punjab invariably shows the adoption of  the rate  of  15 days’ basic wages for each  completed  year  of service, is not supported by the several awards produced  by the  parties before us, and so, it cannot be said  that  the present award has departed from any fixed uniform pattern in the matter. Mr.  Kapoor then referred to the decision of this Court  ’in Bharatkhand  Textile Mfg.  Co. Ltd. v. The  Textile  Labour Association Ahmedabad(1) where the gratuity scheme provided, inter  alia, for one month’s basic wages for each  completed year of service for the Period before the coming into  force

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of the Employees Provident Funds Act, 1952, and half (1)  (1960] 3 S. C. R. 329. 563 a  month’s  basic wages for each completed year  of  service thereafter, subject to a maximum of 15 month’s basic  wages. This shows that the award with which this Court was  dealing in that case had made a distinction between gratuity schemes prior to 1952 and those subsequent to it, and this  distinc- tion  was  based on the fact that the  Employees’  Provident Funds Act had come into force in 1952.  Therefore, we do not think  it would be fair to suggest that because  the  scheme thus framed was accepted by this Court in appeal it  follows that  this  Court has laid down that in every  case  half  a month’s basic wages should be paid after 1952. Mr. Kapoor has also relied on the decision of the Industrial Tribunal  at  Rajkot  in Arvind  Mills  Co-operative  Supply Society  Ltd., Ahmedabad v. Their Workmen,(1).   The  scheme framed by the Tribunal in this case no doubt provides for 16 day’s basic wages as contended by Mr. Kapoor and  prescribes the  ceiling of 10 month’s basic wages.. Similarly.  in  the Rashtriya   Mill  Majdoor  Sangh,  Bombay.  v.   Millowners’ Association, Bombay (1) the gratuity schemes framed  appears to  be  substantially  similar  to the  one  framed  in  the Bharatkhand  Textile  Mfg.  Co.   Ltd.(2).  These  decisions merely  show that 15 days basic wages has been adopted as  a rate  by some of the gratuity schemes framed  by  Industrial Tribunals.  We would, however, not be prepared to accept Mr. Kapoor’s contention that these decisions support the general argument  that invariably the rate of 15 days’  basic  wages must  be  adopted.   That is a; question  which  has  to  be decided  by  the  Tribunal on the facts of  each  case;  and though  it may be desirable that gratuity schemes framed  in the  same  industry in the same region should  not  disclose radical or violent differences, it would not be possible  to introduce uniformity by accepting the argument that 15 days (1) (1959) 2 L.L.J. 107 119  (2) (1956-57) II F.J. R. 372. (3)  [1960] 3 S.C.R. 329. 564 should  be  treated as the invariable rate in  the  gratuity schemes.   On  the material adduced before us,  we  age  not prepared, to hold that the basis adopted by the award  under appeal  has  made  either a violent or  radical  departure from  the  pattern prevailing in the same  industry  in  the Punjab or is otherwise unjustified on the merits.  The  fact that we decline to interfere with the rate prescribed by the award under appeal does not also mean that according to  us, that   rate  should  be  adopted  in  other  oases   without     reference to the relevant facts in each of them. The  result  is,  the award. is modified  by  prescribing  a ceiling of 15 month’s basic wages.  The rest of the award is confirmed.  There would be no order as to costs.