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PETITIONER: MANAGEMENT,  CHITAVALSAH JUTE MILLS LTD.

       Vs.

RESPONDENT: WORKMEN OF CHITAVALSAH JUTE MILLS

DATE OF JUDGMENT: 02/02/1968

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. MITTER, G.K.

CITATION:  1968 AIR 1076            1968 SCR  (3)   8

ACT:        Industrial   Dispute--Gratuity   scheme   framed   by Tribunal--Considerations in framing scheme.

HEADNOTE: The  appellant  was a jute mill.   The  Industrial  Tribunal framed a gratuity scheme for its workers.  It was challenged by  the appellant before this Court in an appeal under  Art. 136 of the Constitution.  Two contentions were urged, namely : (i) that the wage board was unable to recommend a gratuity scheme  for the jute industry and hence there was no  justi- fication  to frame the impugned scheme; (ii) in view of  the losses  incurred by the appellant during the years  1960-65, no  additional  burden  should  have  been  cast  on  it  by introducing a gratuity scheme. HELD : (i) The Wage Board’s recommendation pertained to  the jute  industry  as  a  whole  and  not  to  any   individual industrial  unit.  It cannot be understood  as  recommending that there should be no gratuity scheme for the employees in any particular unit in that industry.  What was relevant  to find out was whether the appellant could bear the additional burden. [10 B] (ii)  The  Tribunal recommended the  gratuity  scheme  after taking  into  consideration the financial  position  of  the appellant as well as the fact that in a sister concern  such a  scheme  was  in existence.  The losses  suffered  by  the appellant  were considered by the Tribunal to be  a  passing phase.  What is of essence is the profit making capacity  of the  concern.  In determining that question one has to  take into  consideration the paid up capital of the company,  its reserves, its earnings in the past and its future prospects. A practical view of the question has to be taken. [10 D, G] In the light of these principles and on the material  placed before  the  Tribunal it was not possible to hold  that  the Tribunal’s conclusion was without any just basis. [12 A] National  Iron  &  Steel Co. Led. & Ors. v.  State  of  West Bengal & Anr. [1967] 2 S.C.R. 391 and Calcutta Insurance Co. Ltd. v. Their Workmen, [1967] 2 S.C.R. 596, relied on.

JUDGMENT:

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1627 of 1967. Appeal by special leave from the Award dated March 31,  1967 of  the  Industrial Tribunal, Andhra Pradesh  in  Industrial Dispute No. 55 of 1965. H.   R. Gokhale and D. N. Gupta, for the appellant. M.   K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the respondents. The Judgment of the Court was delivered by Hegde,  J.  This appeal has been brought to  this  Court  by special  leave.   It  arises  from  the  decision’  of   the Industrial Tribunal, 9 Andhra  Pradesh, Hyderabad.  The only question  that  arises for decision is whether on the basis of the material on  the record  there was any justification for framing  a  gratuity scheme for appellant’s staff. The admitted facts are these : The appellant concern is hav- ing  about  500  looms.’ It has a subscribed  capital  of  a little over 3 5 lakhs.  Its built up reserve is over  thirty lakhs.   In  three out of the six years  during  the  period 1960-65  it  has suffered substantial losses.   Out  of  the remaining three years, in one year it made a profit of about Rs. 45,000 in another year about Rs. 13,000 and in 1962 over rupees twelve lakhs.  The annual expenses of the appellant’s concern  under  the  head ’salaries, wages  and  bonus’  are nearly 47 lakhs. It was found by the tribunal that the appellant concern  and the Nellimarla Jute Mills are sister concerns.  Both of them are  under  a  single management,  viz.,  M/s.   Mcleod  and Company, Calcutta.  They are located in the same region, the distance   between  the  two  being  about  25  miles.    In Nellimarla Jute Mills a gratuity scheme for the staff is  in existence  and that in addition to provident fund  benefits. Our  attention was not invited to any material on record  to show that these findings are not correct.  In the  appellant concern  also  there  is a provident  fund  scheme  for  the staff.. The appellant in its counter-affidavit filed  before the tribunal admitted that it had always been the policy  of the  management to introduce identical terms  of  employment for  the  workmen at Nellimarla and Chitavalsah.   From  the material  before  us  it is not possible  to  find  out  the financial position of the Nellimarla mills.  We  ascertained from  the  learned  counsel  for  the  appellant  that   the appellant concern had made a profit of over a lakh of rupees in  1966.  The tribunal has found and that finding  was  not challenged before us that the additional burden to be  borne by  the appellant as a result of the gratuity scheme  framed by it is about Rs. 3,000 per year. On behalf of the appellant two contentions were advanced  in opposition  to the proposed gratuity scheme.  They  are  (1) the wage board was unable to recommend a gratuity scheme for the  jute industry and hence there was no  justification  to frame  the  impugned scheme, and (2) in view of  the  losses incurred  by  the appellant during the  years  1960-65.,  no additional burden should have been cast on it by introducing a gratuity scheme. So  far as the Wage Board recommendations is  concerned,  it pertains to the jute industry as a whole.  After taking into consideration the ’importance of the jute industry for.  the national L4Sup.  Cl/68-2. 11 Burhanpur  Tapti  Mills Ltd. v. B. T.  Mills  Mazdoor  Sangh [(1965) 1 LLJ 453]:               "........there  are  two  general  methods  of

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             fixing the terms of a gratuity scheme. It  may               be  fixed on the basis of  industry-cum-region               or  on the basis of units.  Both, systems  are               admissible  but  regard must, be  had  to  the               surrounding circumstances to select the  right               basis.  Emphasis must always be laid upon  the               financial  position ,of the employer  and  his               profit-making  capacity  whichever  method  is               selected,   and  it  must  be   further   seen               "whether  the  industrial court was  right  in               appraising  the  financial condition  and  the               profit-making  capacity  of  the  company-   A                             scheme for gratuity no doubt imposes a   burden               on  the  finances  of  the  concern  but   the               pressure  is  ex facie  distributed  over  the               years  for  it  is limited to  the  number  of               retirements  each year.  The employer  is  not               required to provide the whole amount at  once.               He may create a fund, if he likes and pay from               the  interest which accrues on  a  capitalised               sum  determined actuarially.  This is  one  of               providing  the money.  Ordinarily the  payment               is  made  each year to those who  retire.   To               judge  whether  the financial  position  would               bear   the  strain  the  average   number   of               retirements per year must be found out.   This               is one part of the inquiry.  The next part  of               the inquiry is to see whether the employer can               be  expected to bear the burden from  year  to               year.  The present condition of his  finances,               the past history  and the future prospects all               enter into the appraisal of. his ability."               In  Calcutta  Insurance  Co.  Ltd.  v.   Their               Workmen(1), this Court observed               "On  the  financial  aspect  ’of  a   gratuity               scheme, we were referred to the case of Wenger               &  Co. v. Their workment [(1963) II LIJ  403].               There  it was observed by this Court that  the               problem of the burden imposed by the  gratuity               scheme could be looked at in two ways. one was               to  capitalise the burden on actuarial  basis.               which would show theoretically that the burden               would be very heavy; and the other was to look               at the scheme in its practical aspect and find               out  how many employees retire every  year  on               the average.  According to this Court, it  was               this  practical  approach which  ought  to  be               ’taken into account." (1)  [1967] 2 S.C.R. 596. 12 In  the  light  of the principles noted  above  and  on  the material  placed before the tribunal it is not  possible  to hold  that  the tribunal’s conclusion was without  any  just basis. For  the reasons mentioned above this appeal fails  and  the same is dismissed with costs. G.C.                                   Appeal dismissed. 13