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PETITIONER: M/S.  MULLER & PHIPPS (INDIA) LTD.

       Vs.

RESPONDENT: K. C. SUD

DATE OF JUDGMENT: 11/04/1960

BENCH: GUPTA, K.C. DAS BENCH: GUPTA, K.C. DAS GAJENDRAGADKAR, P.B.

CITATION:  1960 AIR 1028            1960 SCR  (3) 508

ACT:        Industrial Dispute-Scheme for gratuity-Claim for gratuity by        workmen  under  the  scheme  in  addition  to   retrenchment        compensation  If  must  depend on the  construction  of  the        scheme-Industrial Disputes Act, 1947 (14 of 1947), S. 25F.

HEADNOTE: The  Labour  Court, Delhi, made an  award  framing  gratuity scheme, one of the provisions being that on the  termination of service by the company, the workmen shall be entitled  to half  a  month’s  basic  salary or wage  for  each  year  of completed  service  as  gratuity.  The  respondent  who  was retrenched  had  received compensation under S. 25F  of  the Industrial Disputes Act made an application under s. 33C  of the Act claiming the gratuity in accordance with the  scheme in   addition  to  the  retrenchment  compensation   already received.   The  contention of the appellant  was  that  the gratuity which the respondent claims was in essence the same thing  as  compensation for the retrenchment  and  to  allow gratuity in addition to the retrenchment compensation  under s.  25F would be to give double benefit for the same  event, i.   e., retrenchment : Held, that whether retrenched workmen can claim the  benefit of a gratuity scheme in addition to the retrenchment compen- sation  would  depend on the construction  of  the  material terms of 509 the  scheme  considered  in  the light  of  s.  25F  of  the Industrial  Disputes Act, 1947.  The  reasonable  conclusion from  the present scheme is that the gratuity that could  be claimed  under the award was intended to be in  addition  to the retrenchment compensation and not in lieu thereof.   The respondent was entitled to such gratuity even though he  had already received payment of compensation for retrenchment in accordance with the provisions of S.    25F of the Act. Indian  Hume  Pipe Co. v. Its Workmen, [1960] 2  S.C.R.  32, followed. Bramachayi  Research  Institute  v. Its  Workmen,  [1960]  2 S.C.R. 45, referred to.

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JUDGMENT:        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 147 of 1960.        Appeal  by  special leave from the decision  dated  May  18,        1959, of the Labour Court, Delhi, in L.C.A. No. 53/1959.        Purshottam  Tricumdas,  S. N. Andley, J. B.  Dadachanji  and        Rameshwar Nath, for the appellants.        Sukumar Ghose, for the respondent.        1960.  April 11.  The Judgment of the Court was delivered by        DAS GUPTA, J.-This appeal is against an order of the  Judge,        Labour Court, Delhi, in an application under s.   33C of the        Industrial Disputes Act by the respondent, K.     C. Sud, by        which the Court computed the amount due to the petitioner by        way  of  gratuity under an award to be Rs. 80.42  np.  only.        Sud,  who  was  a workman of  the  appellant  company,  M/s.        Muller  & Phipps (India) Ltd. was retrenched by the  company        on  January  31,  1958.  At that time  a  reference  on  the        question  of  introduction  of a  gratuity  scheme  for  the        workmen  of  the company was pending before  the  Industrial        Tribunal.   An  application  by Sud against  this  order  of        retrenchment  under S. 33A failed.  In the reference  above-        mentioned the Court made an award framing a gratuity  scheme        in the following terms:-        "  On the death of an employee while in the service  of  the        company, or on his becoming physically or mentally incapable        of further service, half a month’s basic salary or wages for        each  year  of  continuous  service shall  be  paid  to  the        disabled employees, or if he has died, to his heirs or legal        representatives or assigns.        67        510        On voluntary retirement or resignation of an employee, after        five years’ continuous service, half a month’s basic  salary        or wages for each year of continuous service.        On  termination  of service by the company, half  a  month’s        basic salary or wages for each year of completed service.  "        The  scheme  was also made applicable with effect  from  the        date  on  which  the reference had  been  made,  viz.,  June        28,1957.   It  was on the basis of this award that  Sud  has        made  his application under s. 33C, his case being  that  as        his  retrenchment amounted to termination of service  within        the  meaning of the award he was entitled to half a  month’s        basic salary for each year of completed service.  Admittedly        he  had  completed  two years of service.  It  is  also  not        disputed that his basic wage at the time of retrenchment was        Rs.  80.42  np.   If, therefore, he is entitled  to  have  a        gratuity  in  accordance with the scheme of  the  award  the        amount due to him will be Rs. 80.42 DP.        of  the many contentions raised on behalf of the company  in        resisting  the petition, all of which were rejected  by  the        Court  below, the only one which is pressed before us is  on        the  question whether the respondent is entitled to  recover        gratuity under this scheme in addition to the  compensation,        he  bad admittedly received already in accordance  with  the        provisions  of  s. 25F of the Industrial Disputes  Act.   In        support  of  this contention it is urged that  the  gratuity        which the respondent claims is in essence the same thing  as        compensation for his retrenchment and to allow him  gratuity        in addition to retrenchment compensation -under s. 25F would        be  to  give  double  benefit  for  the  same  event   i.e.,        retrenchment.   This it is urged is unfair to  the  employer        and is against the Industrial Disputes Act.        The  question whether a double benefit of a gratuity  scheme        as  well  as  retrenchment  compensation  can  be  given  to        workmen,  came  up for consideration before  this  Court  in        Indian  Hume Pipe Co. v. Its Workers (1).  This Court  there

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      considered in some detail the real nature and object of  the        retrenchment compensation        (1)  [1960] 2 S.C.R. 32.        511        provided  by s. 25F of the Industrial Disputes Act  and  the        nature  and  object  of a gratuity scheme  as  a  retirement        benefit.  It pointed out that while gratuity is intended  to        help   workmen  after  retirement  to  whatever  cause   the        retirement  may be due to, the retrenchment compensation  is        intended  to  give  relief for  the  sudden  and  unexpected        termination  of employment by giving partial  protection  to        the retrenched person and his family to enable them to  tide        over the hard period of unemployment.  The Court also traced        the history of development of the industrial law as  regards        gratuity schemes and retrenchment compensations, and after a        full  consideration of the question, came to the  conclusion        that  there  was nothing in law to prevent  a  workman  from        getting double benefit, one under a gratuity scheme and  the        other as retrenchment compensation.  The Court however  took        care  to point out that gratuity schemes may be  so  framed,        whether   by   consent  or  by  award,   that   retrenchment        compensation is thereunder payable only in lieu of  gratuity        and again they may be so framed as to provide for payment of        gratuity   in   addition   to   retrenchment   compensation.        Accordingly, the Court laid it down that the question as  to        whether  retrenched  workmen  can claim  the  benefit  of  a        gratuity scheme in addition to the retrenchment compensation        under s. 25F or not would depend on the construction of  the        material terms of the scheme considered in the light of  the        provisions of s. 25F of the Act.        On  the very day this pronouncement was made the Court  also        delivered judgment in Brahmachari Research Institute v.  lts        Workmen (1) in which the question as indicated above fell to        be  considered.   In  Brahmachari’s  case  the  Court  after        mentioning  that the general question as to double  benefits        of retrenchment compensation and gratuity being available to        workmen had already been considered in the Indian Hume  Pipe        Company’s case proceeded to examine the award that had  been        made  in a dispute between the Institute and its workmen  to        ascertain  whether  gratuity  in  addition  to  retrenchment        compensation  was provided thereby.  The Court  pointed  out        that in that award        (1)  [1960] 2 S.C.R. 45.        512        the word ’ gratuity’ had been used to cover all three cases,        viz.,  (i) retrenchment, (ii) termination of service by  any        reason other than misconduct and (iii) resignation with  the        consent of the management ; what deserved special notice was        that cases of retrenchment as such were specifically covered        by  the  award.   It was of opinion  that  such  payment  to        workmen for retrenchment as such did not lose its  character        of retrenchment compensation by reason of the mere fact that        it was described as gratuity.  It was mainly on the basis of        this   fact  that  the  award  had  provided  gratuity   for        retrenchment as such in addition to gratuity for other modes        of  termination  of  service  that  the  Court  decided   in        Brahmachari’s  case that the gratuity there on  retrenchment        was  nothing  more or less than compensation on  account  of        retrenchment as provided under s. 25F of the Act and decided        that  the  workmen were entitled to only one or  the  other,        whichever is more advantageous to them.        If  we examine the award in the case before us in the  light        of the two decisions of the Court mentioned above the  first        thing  that strikes us is that this award did not  make  any        provision  for  gratuity for retrenchment as  such.   It  is

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      important  to  notice that the workmen themselves  in  their        statement  of claim had urged for a distinct  provision  for        retrenchment  in addition to other modes of  termination  of        service.  The Tribunal however made no special provision for        retrenchment  but  provided in its scheme  of  gratuity  for        three  classes  of  cases, namely, (i) on the  death  of  an        employee or on his becoming physically or mentally incapable        of   further  service,  (ii)  on  voluntary  retirement   or        resignation  and  (iii)  on termination of  service  by  the        company.   Retrenchment,  it is true, will fall  within  the        termination of service.  That, however, as is clear from the        above cases, cannot by itself justify a conclusion that  the        gratuity  that could be claimed under such a scheme in  case        of  retrenchment was in lieu of  retrenchment  compensation.        If  the  intention  was that in cases  of  retrenchment  the        gratuity  will  be  in  lieu  of  retrenchment  compensation        provided  under  s. 25F the obvious thing would be  to  make        separate  provisions for gratuity for retrenchment  as  such        and        513        gratuity  for other modes of termination of  service.   That        was  the  method  followed  in  the  award  that  fell   for        consideration  in  Brahmachari’s  case.   That  method   has        however  not  been  followed in the award that  we  have  to        consider here.  In this case there is no specific  reference        in  the  award  to retrenchment  as  such.   The  reasonable        conclusion from the scheme as drawn up is that the  gratuity        that could be claimed under this award by retrenched workmen        because  of the fact that retrenchment is also one  kind  of        termination  of service within the meaning of the award  was        intended to be in addition to the retrenchment  compensation        and not in lieu thereof.        The  decision in Brahmachari’s case on the special facts  of        the  award  therein  is therefore of no  assistance  to  the        appellant.   We are bound to hold on an examination. of  the        award  in  the  present case that  the  gratuity  which  the        respondent claims on the basis of the award is distinct from        and  in  addition to the retrenchment  compensation  he  has        received.  We are of opinion therefore that the Tribunal was        right  in  holding that the respondent is entitled  to  such        gratuity  even  though he has already  received  payment  of        compensation   for  retrenchment  in  accordance  with   the        provisions of s. 25F of the Industrial Disputes Act.        The appeal is accordingly dismissed with costs.        Appeal dismissed.