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PETITIONER: MANAGEMENT OF WENGER & CO.

       Vs.

RESPONDENT: THEIR WORKMEN(And Vice Versa)

DATE OF JUDGMENT: 11/12/1962

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. WANCHOO, K.N. GUPTA, K.C. DAS SHAH, J.C.

CITATION:  1964 AIR  864            1963 SCR  Supl. (2) 862  CITATOR INFO :  R          1965 SC 839  (3)  R          1966 SC 305  (47)  RF         1966 SC 732  (10)  F          1967 SC1206  (5)  E          1967 SC1286  (14)  E          1968 SC1076  (9)  RF         1969 SC 360  (38)  E          1970 SC 919  (8,36)  R          1970 SC1421  (16)  RF         1972 SC 343  (20)  F          1974 SC1132  (13)  RF         1976 SC2303  (1)  RF         1981 SC1685  (2)

ACT: Industrial Dispute-Hotels and Restaurants-Whether wine shops are  part of the Hotel establishment-Financial  position  of employer and wage Structure-Bonus-Remuneration of  partners- Extent  and Scope of interference of this Court  in  appeal- Firm  whether a legal person-Tips-whether to be excluded  in the  matter  of D.A.Gratuity scheme-Whether  justified  when provident  fund scheme available-Misconduct-Involving  moral turpitude-Retrospective  operation  of award-Nature  of  the Tribunal’s  power-Constitution of India, Art.  136-Industial Disputes Act, 1947 (14 of 1947), 8. 19A (4).

HEADNOTE: An industrial dispute arising out of the demands made by the employees  against 13 Hotel and Restaurant  institutions  in Delhi  was  -referred  for adjudication  to  the  Industrial Tribunal and they were heard together with another reference made to it concerning the disputes in the case of two  other hotels.   The  award  given by the  Tribunal  in  these  two references gave rise to the present four appeals by  special leave, two of which had been filed by the employees and  the other two by the employers. The  main contentions in the appeals were the following:  it was  contended on behalf of the employers that the  Tribunal was  in  error  in dealing with the two  hotels  and  eleven restau. rants together inasmuch as they were not similar  in

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character.   Their  next contention was  that  the  Tribunal committed  another error in treating the wine shops as  part of the restaurant esta. blishment.  Thirdly it was contended that in constructing the wage structure the Tribunal did not consider  properly the financial position of the  employers. The next contention was that the Tribunal erred in  reducing the amount of remuneration claimed by the employers for  the different partners who took active part in the management of their  respective,establishments.  It was further  contended on  their behalf that since each one of the workers got  Rs. 50/-to 60/- by way of tips no  863 D.A. should have been awarded to the waiters.  Another  con. tention  was  that  in  view  of  the  fact  that  Employees Provident  Fund Scheme had already been introduced in  these establishments  the introduction by the award of a  gratuity scheme was not justified.  It was the case of the  employers that  even if such a scheme was justified on  principle  the scheme  as contained in the present award is bad on  merits. It was further contended that the directions of the Tribunal regarding the decisions of the service charges in the future was  outside the jurisdiction of the Tribunal, because  this was  not  a matter referred to it  for  adjudication.   They lastly  contended  that the Tribunal had no  power  to  give retrospective operation to the award. The employees contended, among other things, that the  bonus awarded  was inadequate on the ground that  the  calculation made by the Tribunal in respect of income-tax claimed by the employees as a prior charge are obviously inconsistent  with the  decisions  of this Court in recent case  of  Tulsi  Das Khimji v. Their Workmen, [1963] 1 S.C.R. 675. Held,  that  though the nature of the  service  rendered  in Hotels  is  in some particulars different from that  of  the Restaurants, both the establishments are constituents of the catering  trade.   Taking into consideration that  they  are situated  in  similar  localities  and  carry  on  the  same business  it  is  desirable that  terms  and  conditions  of service  of the employees working in them should as  far  as possible  be  uniform;  such  uniformity  is  conducive   to industrial  peace and harmony and to better,  efficient  and satisfactory management. The  question  whether  there  is  functional   intregrality between  two units has to be decided according to the  facts of  each  case.  Absence of functional integrality  and  the fact  that the two units can exist one without the other  do not  necessarily  show  that  where  they  exist  they   are necessarily  separate  units  and  do  not  constitute   one establishment. Associated  Cement  Co. Ltd. v. Their Workmen, (1960)  1  L. L.L.J. 1, Pratap Press v. Their Workmen, (1960)1 L.L.J. 497, Pakshiraj  Studios  v. Its Workmen, (1961)  II  L.L.J.  380, South Indian Millowners’ Association v.’ Coimbatore District Textile Workers Union, (1962) 1 L. L. J. 223, Fine  Knitting Co.  Ltd.  v. Industrial Court, (1962) 1 L. L.  J.  271  and D.C.M. Chemical Works v. Its Workmen, (1962) 1 L.L.J. 388. Wine   shops   and  Restaurants  form  part  of   the   same establishment because there is unity of ownership, unity of 864 finance,  unity of management and unity of labour  and  they are not separately registered. Where  a wage structure is constructed and it  provides  for increments the financial position of the employer has to  be considered.   The  hypothetical  consideration  that   total prohibition  may  be introduced in the near  future,  cannot play  any  part in the decision of the wage problem  in  the

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present case.  It would be open to the employers to raise  a dispute for the reduction in the wage structure in case they are  able  to show that as a result of the  introduction  of total  prohibition their financial position is  weakened  to such an extent that they cannot bear the burden of the  wage structure directed by the award. When  this  court entertain appeals  in  industrial  matters under  Art.  136 of the Constitution it does not  act  as  a court  of  appeal  on  facts.   It  is  only  where  general ’questions  of law are raised that this Court  feels  called upon to pronounce its decision on them. A  firm  is  not a legal person within the  meaning  of  the Industrial Disputes Act.  It is the partners of the firm who are the employers. Tulsidas  Khimji  v.  Their Workmen, [19631  1  S.C.R.  675, referred to. It  would  not be right to treat the tips  received  by  the waiters  as being wholly irrelevant to the decision  of  the question about the matter of D.A. But it would not be  right to make a calculation about the tip; received and treat  the said amount as a substitute either whole or partial for  the D.A.  itself.  What can be done is to bear in mind the  fact that tips are received and make some suitable adjustment  in that behalf. State  Bank of India v. Their Workmen, (1939) 2 L.L  J.  205 and Morthaclav v. Regent Street Florida Restaurant, (I  951) 2 K.B. 277, distinguished. Workmen  of M/s.  A. Fingo’s Ltd. v. M/s.  A. Fingo’s  Ltd., (1953) L.A.C. 480, referred to. The  object  intended to be achieved by the  Provident  Fund Scheme is not the same as the object of the gratuity  scheme and in any case where the financial position of the employer justi.  fies the introduction of both benefits, there is  no reason why the employers should not get the benefits of both the schemes.  865 Bharatkhand  Textile  Mfg.   Co.  Ltd.  v.  Textile   Labour Association,  Ahmedabad,  (1960)  2 L.L.J.  21  and  Garment Cleaning Works v. Its Workmen, [1962] 1 S.C.R. 71, followed. For  the termination of service caused by the  employer  the minimum period of service for payment of gratuity should  be five years and if the employee resigns he would be  entitled to  get gratuity only if he has completed ten years  service or  more.   If the termination is the result  of  misconduct which  has caused financial loss to the employer  that  loss should  be first compen. sated from the gratuity payable  to the employee. Since the direction of the Tribunal for the decision of  the service  charges  in future is not covered by the  terms  of reference that direction is invalid. Under s. 17A (4) of the Industrial Disputes Act, 1947, it is open to the industrial Tribunal to name the date from  which it should come into operation.

JUDGMENT: CIVIL APPELLATE JURISDTCTION: Civil Appeals Nos. 609 and 610 of 1962.                             AND           Civil Appeals Nos. 622 and 623 of 1962. Appeals  by  special leave from the award  dated  March  16. 1962,  of the Industrial Tribunal, Delhi, in 1. D. Nos.  581 and 620 of 1959. G.S.  Pathak, Veda Vyasa, B. Datta, J. B. Dadachanji,  0.

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C. Mathur and Ravinder Narain, for the appellants (in C.  A. Nos. 609 and 610 of 1962) and the respondents (in C.A.  Nos. 622 and 623 of 1962). M.C.  Setalvad, Attorney-General for India  and  Janardan Sharma,  for the respondents (in C. A. Nos. 609 and  610  of 1962)  and for the appellants (in C.A. Nos. 622 and  623  of 1962). 1962.  December 11.  The judgment of the Court was delivered by 866 GAJENDRAGADKAR, J.-An industrial dispute arising out of  ten demands   made  by  the  employees  against  13  Hotel   and Restaurant  institutions in New Delhi, was referred  by  the Chief  Commissioner,  Delhi to the Industrial  Tribunal  for adjudication.   Reference in Ii.  D. No. 581 of  1959  which was  made on September 9, 1959, included  two  Hotels-Clari- dge’s  Hotel and Nirula Hotel-, whereas reference in  I.  D. No.  620/1959 which related to United Coffee House was  made on   December   12,  1959.   These   two   references   were consolidated  by the Tribunal and were heard together.   Out of  the  demands made by the employees, three  demands  were rejected  by the Tribunal ; they were demands Nos. 4, 9  and 10.  Demand No. 4 was in regard to medical treatment, No.  9 was  in  regard  to the revision of the  hours  of  work  of Chowkidars  and No. 10 was in regard to the  recognition  or appointment of Central Negotiating Committee on  Association or  Union  level.   The other demands  have  been  partially allowed.   The principal amongst these demands were a  claim for  a wage structure with adequate provision for  increment in  scales,  provision for Provident Fund and  Gratuity  and Bonus for the years 1956-57, ’57-58 and 58-59.  There  were, other  subsidiary demands to which reference would  be  made later.   The award pronounced by the Tribunal in  these  two references  has given rise to four appeals by special  leave before  this  Court.  Appeals Nos. 609-610,/1962  have  been preferred  by  the employers, whereas appeals Nos.  622  and 623/1962 have been filed by the employees. It would be convenient to set out briefly the broad features of  the directions issued by the Tribunal in respect of  the employees’ claims.  The Tribunal has examined the employees’ claim with regard to bonus for the three years in  question. It  took the claim for bonus in respect of each one  of  the employers,  it  examined  the  financial  position  of   the employer for the respective years and determined the  867 question  as to the available surplus by the application  of the Full Bench Formula in each individual case.  Claims made by  the  employers  for  deduction  of  certain  items  were examined in the light of the comments made by the  employees in respect of them.  The usual prior charges were taken into account,   and   on  determining  the   available   surplus, directions  were  issued for the payment of  bonus  for  the three  respective  years.  In some cases, the  employer  has been  asked to pay bonus for all the three years,  while  in some others the employer has been asked to pay bonus for one or two years according as the available surplus justified or did not justify the award of bonus for the particular year. The  Tribunal then proceeded to deal with the other  demands made by the employees.  The claim made by the employees  for suitable uniforms and other apparel according to the  nature of  the  duties  of individual workman  was,  in  substance, rejected by the Tribunal.  It has, however, ordered that all the  managements,  with the exception of  Delhi  Restaurant, should give winter uniforms consisting of a woollen coat and a  pair of woollen trousers to Waiters, Bearers, Page  Boys,

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Lift  Boys, Peons and Chowkidars and Butlers once  in  three years.   Similarly, the managements have been asked to  give to  ’Masalchis, Sweepers and Malis a woollen jersy  once  in three years. The  Tribunal then examined the claim for  additional  leave facilities  and  held that there was  no  justification  for granting  separately  sick leave as  such.   Three  national holidays  were allowed by the employers on the  January  26, August  15, and October 2. The Tribunal has held that  three more  holidays  should  be allowed, one for  Holi,  one  for Dussehra and one for Diwali. On  the  question of the introduction of  Provi.  dent  Fund Scheme and the, Cratuity Scheme, the 868 Tribunal  noticed  the fact that the P. F. Scheme  had  been introduced   by  the  employers  in  accordance   with   the requirements  of the relevant statute.  The employers’  case that  in  view  of  the fact that a  P.F.  Scheme  had  been introduced,  no  Gratuity  Scheme  should  be  framed,   was rejected and a provision has been made for the  introduction of the Gratuity Scheme. The  Tribunal then proceeded to consider the vexed  question about the construction of a suitable wage structure, and  in dealing  with this problem, the Tribunal first examined  the point  as  to  what  should be the  minimum  wage  in  those concerns.   It  appears  that before  the  Tribunal  it  was conceded by the managements that the total pay packet in the case of Hotels should be Rs. 70/- p.m. inclusive of  service charges  and  in  respect  of  Restaurants  Rs.  60/p.m.  he Tribunal came to the conclusion that, on the whole, it would be  fair  and reasonable if the minimum  total  wage  packet includes Rs. 65/- p.m. Rs. 30/- being the minimum basic wage and  Rs. 351being a flat dearness allowance payable to  each one  of the employees.  Having thus determined  the  minimum content  of  the total wage packet, the Tribunal  took  into account  the fact that several establishments gave food  and accommodation  to  some  of  their  employees  and  it   has accordingly  directed  that  for food  Rs.  15/-  should  be deducted from the D. A. for accommodation Rs. 51- should  be deducted and Rs. 7/- or Rs. 3/50 nP. should be deducted  for tea  according  as tea was given twice or  once.   In  other words,  having  fixed  the flat rate of  Rs.  35/-  for  the payment  of  D.A.  the  Tribunal  provided  for  appropriate deductions  for amenities which the employers gave to  their employees in this trade. The  Tribunal  then classified the workmen  into  unskilled, semi-skilled  and  skilled,  and in  the  last  category  it provided for two grades Grade II and Grade I.     Having thus classified the employees in three  869 categories,  the Tribunal prescribed a wage scale  for  each one  of them.  In respect of this wage scale,  the  Tribunal has   given  certain  appropriate  directions  as   to   the adjustment  of the employees in the new wage scale.  One  of the  important  directions given in that behalf  is  on  the usual lines that no workman should be prejudicially affected by  this  process of adjustment and that if he  was  getting higher emoluments than he would be entitled to by virtue  of the  adjustment in the new wage scale, he would continue  to get the higher emoluments. Then the Tribunal considered the question as to whether  the award should be given retrospective effect and it held  that it  should  come into effect as from January  1,  1961,  the award having been pronounced on March 16, 1962. The employees in the Claridge’s Hotel had made a demand  for

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a  share in the service charges collected by  the  employer. The  Tribunal  held  that  for  the  period  prior  to   the reference,  the employer had paid to the employees  about  3 months’ wages out of the service charges and so, it took the view  that no further direction was required in  respect  of the said period.  It however, proceeded to issue a direction to the management of the Claridge’s Hotel that from April 1, 1962,  it  should  distribute 85 per  cent  of  the  service charges collected by it among the workmen rateably according to and on the basis of the basic wage drawn by’ each one  of them  during  the  relevant year.  That, in  brief,  is  the nature  of the directions issued by the Tribunal in  respect of the demands which have been partially allowed. The first point which Mr. Pathak for the employers has urged before us is that the Tribunal was in error in dealing  with the  two  Hotels  and  eleven  Restaurants  together.    The argument is that the Hotels and Restaurants are not  similar in character 870 so as to justify the employees’ claims made against the  two sets  of  establishments to be tried together.   Service  in Hotels  is usually non-stop 24 hours’ service: in regard  to hotels, residence is provided for a number of employees, the nature  of  the  business is different and  the  nature  and extent  of  the  expenses incurred are not  also  the  same. Therefore,  it is urged that the Tribunal committed a  basic error  in  dealing  with  the  two  sets  of  establishments together. We  are not impressed by this argument.  It  is  significant that  the history of industrial adjudication in  respect  of catering establishments in New Delhi shows that  restaurants and hotels have been grouped together for the purpose of one adjudication  in  the  past.  It appears  that  in  1950,  a similar  industrial  dispute  in  respect  of  14   catering establishments was referred to Mr. Dulat; amongst them  were 3  Hotels and 11 Restaurants.  In fact, some of the  Restau- rants  in  the  present proceedings were  included  in  that reference.   Besides,  there  is no doubt  that  though  the nature  of  the  service  rendered  by  Hotels  is  in  some particulars different from that of the Restaurants, both the establishments  are  constituents of a catering  trade.   In fact,  Mr. Nirula is the Secretary of the Association  whose membership is open to both Hotels and Restaurants.  It  will be  noticed that all the Restaurants included in  the  refe- rence,  except  the Delhi Restaurant which  is  situated  at Karolbagh, work in Connaught Place, and Claridge’s Hotel  is situated  in  Aurangzeb  Road which  is  also  an  important locality.   Thus, the situation of the Restaurants  and  the Hotels  which  have been included in the  present  reference shows  that they are carrying on the same business in  about the  same  locality  and  it is  desirable  that  terms  and conditions  of  service  of the employees  working  in  them should, as far as possible, be uniform.  Such uniformity  is not  only  conducive  to  peace  and  harmony  amongst   the employees and their employers, but would be  871 helpful to the managements themselves because it would  tend to  avoid  migration  of labour from  one  establishment  to another.   It  is true that it might have been  possible  to classify these restaurants according to the extent of  their custom and their general financial position and standing  in the  trade  : but no material has been produced  before  the Tribunal in that behalf and no attempt appears to have  been made to suggest to the Tribunal that it would either be  po- ssible or appropriate to make any such classification.  That

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is why we think Mr. Pathak is not justified in attacking the award on the ground that in approaching the problem, it  has considered all the establishments together. The next point which has been strenuously pressed before  us by Mr. Pathak on behalf of the employers is that in  dealing with the financial position of the managements, the Tribunal has  committed an error inasmuch as it has assumed that  the wine  shops  and  the  restaurants form  part  of  the  same establishment.   It appears that in several cases  the  same employer  conducts  a restaurant and a wine  shop;  and  the argument is that in determining the terms and conditions  of service in these establishments, wine shops should have been treated as separate units,-distinct from the restaurants. The  question as to whether industrial establishments  owned by  the  same managements constitute separate units  or  one establishment  has been considered by this Court on  several occasions. .-’Several factors are relevant in deciding  this question.   But  it is important to bear in  mind  that  the significance  or importance of these relevant factors  would not  be the same in each case; whether or not the two  units constitute one establishment or are really two separate  and independent units, must be decided on the facts of each case Mr.  Pathak  contends  that the Tribunal  was  in  error  in holding that the restaurants cannot 872 exist  without the wine shops and that there  is  functional integrality  between  them.   It may be  conceded  that  the observation  of  the  Tribunal  that  there  is   functional integrality  between a restaurant and a wine shop  and  that the  restaurants  cannot  exist without wine  shops  is  not strictly  accurate or correct.  But the test  of  functional integrality  or the test whether one unit can exist  without the other though important in some cases, cannot be stressed in every case without having regard to the relevant facts of that  case,  and so, we are not prepared to  accede  to  the argument that the absence of functional integrality and  the fact  that  the two units can exist one  without  the  other necessarily show that where they exist they are  necessarily separate  units and do not amount to one establishment.   It is  hardly  necessary to deal with  this  point  elaborately because  this Court had occasion to examine this problem  in several  decisions  in  the  past,  vide  Associated  Cement Companies  Ltd. v. Their Workmen (1); Pratap Press, etc.  v. Their  Workmen(2);  Pakshiraja Studios v. Its  Workmen  (3); South  India Millowners’ Association v. Coimbatore  District Textile   Workers  Union(4);  Fine  Knitting  Co.  Ltd.   v. Industrial  Court  (5)  and D.C.M,  Chemical  Works  v.  lts Workmen(6). Let  us  then  consider the relevant facts  in  the  present dispute.   It  is common ground that wherever  the  employer runs a restaurant and a wine shop, the persons interested in the  trade are the same partners.  The capital  supplied  to both  the units is the same.  Prior to 1956, wine shops  and restaurants  were not conducted separately, but  after  1956 when  partial prohibition was introduced in New Delhi,  wine shops  had  to be separated because wine cannot be  sold  in restaurants.   But  it is significant that the  licence  for running the wine shop is issued on the strength of the  fact that  the  management  was running a wine  shop  before  the introduction  of prohibition.  In fact, LII licence  to  run wine shops has been given in many (1)  (1960) 1 L.L.J. 1. (3)  (1961) 11 L.L.J.380 (5)  (1962) 1 L.L.J. 275: (2)  (1960) 1 L.L..T. 497.

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(41  (1962) 1 L.L.L.J. 223. (6)  (1962) 1 L.L.J. 388.  873 cases  to  previous restaurants on condition that  the  wine shops are run separately according to the prohibition rules. It  is true that many establishments keep separate  accounts and independant balancesheets for wine shops and restaurants ;  but that clearly is not decisive because it may  be  that the  establishments  want to determine from stage  to  stage which line of business is yielding more profit.  Ultimately, the profits and losses are usually pooled, together.   Thus, generally  stated,  there is unity of  ownership,  unity  of finances, unity of management and unity of labour; employees from the restaurant can be transferred to the wine shop  and vice versa.  Besides, it is significant that in no case  has the   establishment  registered  the  wine  shops  and   the restaurants  separately  under:,. 5 of the Delhi  Shops  and Establishments  Act, 1954 (No.  VII of 1954).  In fact  when Mr. Nirula, the Secretary of the Employers’ Association, was called  upon  to  register  his  wine  shop  separately,  he protested  and  urged  that  separate  registration  of  the several  departments  was  unnecessary;  and  that   clearly indicated that wine shop was treated by the establishment as one  of  its departments and nothing more.  The  failure  to register a wine shop as a separate establishment is, in  our opinion,  not consistent with the employers’ case that  wine shops are separate and independent units.  Having regard  to all  the  facts to which we have just referred,  we  do  not think  it would be possible to accept Mr. Pathak’s  argument that  the  Tribunal was in error in holding  that  the  wine shops  and  restaurants  form part of  the  same  industrial establishments. That  takes us to the question about the financial  position of the different establishments.  The Tribunal has carefully examined  the  relevant  balancesheets  and  considered  the profit and loss position of each establishment for the three years in respect of which bonus was claimed; they are  1956- 57,  57-58  and 58-59.  In constructing  a  wage  structure, industrial 874 adjudication  has  undoubtedly  to  take  into  account  the overall financial position of the employer because a  scheme of  wage structure including scales of increment is a  long- term  scheme  and before it is framed the Tribunal  must  be satisfied that the burden imposed by the scheme would not be beyond the means of the employer.  In regard to the  minimum wage, no such consideration arises because it is the duty of an  industrial  employer  to pay the basic  minimum  to  his employees.  But when a wage structure is constructed and  it provides  for  increments,  the financial  position  of  the employer  has  to  be  borne  in  mind.   The  Tribunal  has recognised  this.  principle and on examining  the  accounts produced  before it, it has come to the conclusion that  the establishments in question have shown uniform prosperity and all  of them, except the Delhi Restaurant, can  be  properly characterised  as  established concerns.   Besides,  it  has referred  to  the fact that in the Delhi region,  there  are various  establishments which have pay scales  for  workmen, though,  except for the award made by Mr. Dulat, there  were no  previous instances of pay scales having been  introduced in restaurants in the awards or settlements cited before the Tribunal.   It was, however, urged before the  Tribunal  and the  same  plea  has  been  repeated  before  us  that   the possibility of the introduction of total prohibition in  New Delhi  should  have been borne in mind  in  considering  the

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problem of wage structure in the present proceedings.  We do not  think that the award made by the Tribunal in this  case can  be  validly attached on the ground  that  the  Tribunal refused  to  attach  due  importance  to  the   apprehension expressed  before  it  by  the  employers  that  total  pro- hibitition may soon be introduced in New Delhi -and that may impair  the  prosperity  of the  trade.   The  Tribunal  has noticed   that  even  after  the  partial  introduction   of prohibition,  the  profits of the trade have not  shown  any adverse  effect.   On  the  contrary  they  show  an  upward tendency, and the Tribunal  875 was not satisfied that there was any evidence adduced before it  to justify the contention that in the very  near  future total prohibition would be introduced in New Delhi.  It  was urged  by the employees that all indications pointed to  the fact  that  total prohibition may not be introduced  in  New Delhi  and the Tribunal thought, and we think rightly,  that it  would be idle to speculate in this matter; if in  course of  time, total prohibition is introduced and it  materially affects the prosperity of the trade, it would be open to the employers  to raise a dispute for the reduction in the  wage structure and in case they are able to show that as a result of  the  introduction of total prohibition  their  financial position is weakened to such an extent that they cannot bear the  burden  of the wage structure directed by  the  present award,  the  matter may have to be examined on  the  merits. Therefore,   we   do  not  think   that   the   hypothetical consideration  that total prohibition may be  introduced  in the  near future, can play any part in the decision  of  the wage problem in the present proceedings. That  takes us to the question about bonus.  The main  point which  Mr.  Pathak raised in regard to bonus  was  that  the Tribunal was in error in reducing the amount of remuneration claimed by the employers for the different partners who took active  part  in running and supervising the  management  of their  respective establishments.  It appears  that  whereas each  partner  claimed  a thousand  rupees  per  month,  the Tribunal has reduced it to Rs. 500/-, and in one case it has ordered that Rs. 500/p. m. should be paid to three  partners together.  The argument is that this interference is  wholly unjustified.    In  dealing  with  this  contention  it   is necessary  to  emphasise  that when  this  Court  entertains appeals  in  industrial  matters  under  Art.  136  of   the Constitution, it does not act as a Court of Appeal on facts. It is only where 876 general  questions of law are raised that this  Court  feels called  upon  to  pronounce its decisions on  them  for  the guidance  of industrial adjudication in this  country.   The decisions  of Industrial Tribunals on questions of fact  and their conclusions in matters within their discretion are not usually revised by this Court under Art. 136.  Besides,  the claim  made by the employers by way of remuneration  to  the partners  has  not  been properly  established  by  adequate evidence.   That is the conclusion of the Tribunal,  and  on the  record  it seems to be well founded.  It  also  appears that in some cases, the amounts of remuneration claimed  are not  debited in the books of account; but the present  claim is  made for the purpose of working the Full Bench  Formula. Therefore,  on a question of this kind, we do not think  Mr. Pathak  is justified in making a grievance before  us  under Art. 136. The learned Attorney-General for the employees characterises the  award  in respect of bonus as inadequate  and  contends

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that larger amounts should have been allowed, and he  argues that  the  calculations made by the Tribunal in  respect  of income-tax  claimed by the employers as a prior  charge  are obviously  inconsistent  with the recent  decision  of  this Court  in the case of Tulsidas Khimji v. Their Workmen.  (1) In that case., the majority decision was that a firm is  not a  legal  person within the meaning of  Industrial  Disputes Act.  It is the partners of the firm who are the  employers. It  is  that  fact  that has to be  taken  into  account  in considering  the  question  of  income-tax,  even  in  other matters like remuneration, etc., that is to say, the  amount of  tax  payable by each partner, qua the  business  of  the firm, irrespective of their other sources of income or loss, because notional is quite different from the actual,  though not  wholly  dissociated from it.  Mr. Pathak  has  conceded that the calculations made by (1)(1962) 1 L.L.J. 435, 441.  877 the  Tribunal in dealing with the question of  incometax  in the working of the formula must now be regarded as erroneous and  that  would clearly negative his plea  that  the  bonus should  not have been awarded or the amount  awarded  should have  been  less.   It  is true  that  the  employees  claim additional  bonus on this ground; but we are  not  satisfied that  the  difference  made by a fresh  calculation  of  the income-tax  according  to the decision of this  Court  would justify  any addition to the amount already awarded  by  the Tribunal  by  way  of  bonus for  the  respective  years  in question. The  next question to consider is about the wage  structure. As we have already pointed out, the employers conceded  that the  wage  packet in the case of Hotels should be  Rs.  70/- p.m.   including  service  charges  and  in  the   case   of Restaurants  should be Rs. 60/-, and the Tribunal has  fixed the  minimum content of the wage packet at Rs. 65/- p.m.  We see no reason to interfere with this decision.  The Tribunal has fixed Rs. 35/- as a flat rate for dearness allowance and has provided for appropriate deductions from the said amount for  amenities  like  food,  residence  and  tea  which  the employers  provide  to some of their employees.  We  see  no reason  to  interfere with this part of the award  as  well. The  categories of workers into unskilled, semi-skilled  and skilled also appear to us to be fully justified, and on  the material  adduced on the record, no case has been  made  out against the said categories either. The  main controversy in respect of the wage  structure  has centered  round  the problem of Dearness Allowance  qua  the waiters.   Mr. Pathak has strenously contended that no  D.A. should  be paid to the waiters at all, because,  he  argues, each  one of them gets Rs. 50/- to Rs. 60/- p.m. by  way  of tips in each one of these establishments.  The Tribunal  has taken the view that the tips earned by the waiters 878 must  be  excluded from consideration in  dealing  with  the question  of  D.A.,  and  in support of  this  view  it  has referred  to a decision of this Court in the case  of  State Bank  of  India v. Their Workmen (1).  Mr.  Pathak  contends that  the  Tribunal was obviously in error in  relying  upon this  decision in support of its conclusion on the  question of  tips.  This contention is well-founded.  In the case  of State Bank of India this Court was considering the  question as  to  whether  bonus  could  be  said  to  be  a  part  of remuneration within the meaning of that term under ss. 2 and 10 (1) (b) (2) of the Banking Companies Act, 1949 (unamended by Act XCV of 1956), and the decision was that in s. 10  the

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word " remuneration" has been used in its widest sense,  and in  that  sense,  it would undoubtedly  include  the  profit bonus.   It appears that in the course of discussion of  the bar, the decision in the case of Mrottaslav v. Regent Street Florida  Restaurant  (2)  was cited, and so, it  had  to  be incidentally  considered.   That decision was in  regard  to tips  and  it  held that when a customer gives a  tip  to  a waiter,  the money becomes the property of the  latter.   It was observed by this Court that the English decision  itself showed  that  the  word ""remuneration  must  be  given  its meaning  with  reference to the context in  which  the  word occurs  in the statute and that the said decision would  not justify cutting down the amplitude of the expression used by the relevant provision of the Banking statute with which the Court  was concerned.  It is hardly necessary to  point  out that   this  decision  cannot  be  cited  as   relevant   in determining the question as to whether tips paid to  waiters in  hotels and restaurants should not be taken into  account in  dealing with the problem of D.A. On the other  hand,  it does appear that in Workmen of M/s.  A. Fingo’s Ltd. v. M/s. A. Fingo’s Ltd., (3) the Labour Appellate Tribunal confirmed the award passed by the original Tribunal by which Rs.  15/- had been orderd to be deducted from the D.A. payable to boys and butlers.  It was found in (1) (1959) 11 L.L.J.  205.   (2) (1951) 2 K.B. 277. (3)  (1953) L.A.C. 480.  879 that  case on uncontradicted evidence that the value of  the tips  received  by the boys and butlers would be  about  Rs. 15/- or so per head per month.  Mr. Pathak contends that  in the  light  -of  this precedent, the  Tribunal  should  have considered  the  amount  of tips which  waiters  receive  in hotels and restaurants and should not have directed D.A.  to be paid to them at the flat rate of Rs. 35/- p.m. The  learned Attorney-General has supported the  finding  of the Tribunal and has referred to an earlier award passed  by the  same  Tribunal  in an industrial  dispute  between  the Management of the Marina Hotel and its workmen in 1958 where the  Tribunal refused to consider the tips in  dealing  with the  problem  of  wage structure  including  D.A.  The  said Tribunal took the same view when it pronounced its award  in an  industrial dispute between the management of  the  Hotel Ambassador and its employees in 1960.  The learned Attorney- General also suggested that the compromise award between the Swiss Hotel and its employees reached on December 31,  1959, would  tend to support his case that tips may not  be  taken into account in dealing with the question of D. A. The  question  thus raised before us needs to  be  carefully examined.   The employees contend that the basis of D.A.  is that  the  employer should make a suitable addition  to  the amount of basic wage in order to neutralise the rise in  the cost of living and it is not open to him to contend that  he is absolved from his liability to provide for either partial or complete neutralisation of the rise in the cost of living because  his customers pay tips to his employees.  Tips  are paid  not by the employer but by the customers and they  are paid not only for the service received in the restaurant  or the  hotel, but for the promptness shown by the  waiter  and his smartness and efficiency.  Besides it is urged that the 880 amount of tips is variable and uncertain and so, it would be unreasonable to take such an uncertain and indefinite factor into account in fixing the amount of D. A. On the other hand, the employers contend that tips are  paid as  a matter of conventional requirement in all  restaurants

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and hotels and they are paid not so much to the. waiters  as individuals   but  as  waiters  working  in   a   particular establishment.  The tips thus received by the employees  are incidental to their work as waiters and cannot be completely dissociated  from it.  In theory and in law, it may be  true that the tips received by the waiters become their property, but  they  are  received by them as  an  incident  of  their employment and so, it would be unreasonable not to take them into account in fixing the D. A. In our opinion, in dealing with this question, it would  not be  appropriate  to  adopt  an  academic  or  a  doctrinaire approach.   In considering the problem of wage structure  in regard  to hotels and restaurants,  industrial  adjudication has necessarily to adopt a pragmatic approach and in  fixing the wage structure and the D. A., it has to take care to see that  the legitimate demand of the employees is met  without doing injustice to the employer and without acting  unfairly by him.  If the object of D. A. is to neutralise the rise in the cost of living, it would be purely doctrinaire to ignore altogether  the  fact  that  as  waiters  working  in  their respective establishments they invariably get some amount of tips  from the customer , and so, we think it would  not  be right  to  treat the tips received by the waiters  as  being wholly irrelevant to the decision of the question about  the matter  of D. A. Similarly, it would not be right to make  a calculation  about  the  tips received and  treat  the  said amount as a substitute, either whole or partial, for the  D. A. itself.  All that we can do is  881 to  bear  in mind the fact that tips are received  and  make some suitable adjustment in that behalf It would, of course, not be right to treat these tips as substantially  amounting to  payments  made by or on behalf of the employers  for  if that were so, logically, it may be open to the employers’ to say that the said tips may be taken into account even  while fixing a basic wage.  That clearly is not and cannot be  the employers case.  It is true that the amount of tips may vary and in that sense be uncertain.  But if evidence adduced  by the  parties  satisfactorily proves that each  waiter  would invariably receive a certain amount of tips in the  minimum, it  would  not be unfair or un just to take such  a  minimum amount into account in determining the quantum of D. A. at a flat  rate.   Such  an  approach,  we  think,  would  do  no injustice  to  the employees’ claim for D. A. and  would  be fair to the employers as well. We  have, therefore, examined the evidence to find out  what amount  can  be reasonably taken to be the minimum  which  a waiter  is  bound to get in each one of  the  establishments before us.  As often happens, the witnesses examined by  the managements  have  made  overstatements  on  the  point  and witnesses  examined by the Union have made  understatements. According to the former set of witnesses, more than Rs. 60/- are  received  by  the waiter by way of  tips  every  month, whereas  according  to the latter, between Rs. 10/-  to  Rs. 15/are  received per month.  Some employers claimed that  if their  waiters  were sent out for service,  they  themselves compensated the waiters for the loss of their tips caused by outside service and paid appropriate amounts to them in that behalf, and in support of this claim, evidence,  documentary and  oral,  was  adduced.  We are satisfied  that  the  said evidence  is  not  reliable and the claim, based  on  it  is untenable.   Tips.  are  paid by the customers  and  not  by employers in any case.  It is commonground that 882 since  the  introduction of prohibition, tips  paid  to  the

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employees in the restaurants and hotels have gone down.  But it  seems  to  us that there is no  difficulty  whatever  in holding that each one of the waiters gets at least Rs.  10/- p.  in.  by way of tips.  This conclusion may amount  to  an under  estimate  in  regard to some  of  the  establishments before us because it is likely that waiters employed in  the more  prosperous establishments must be receiving by way  of tips  amounts very much larger than Rs. 10/- p. in., but  in the absence of adequate and satisfactory evidence in respect of  each  one  of  the  establishments  with  which  we  are concerned,  it  would  not be safe or advisable  to  make  a definite  finding  that more than Rs. 10/- are  received  by waiters in each one of these establishments.  That being the state  of evidence adduced by the employers in  the  present proceedings,  we would content ourselves with accepting  the principle  that in fixing D. A., a reasonable deduction  may be  made  in  respect of waiters on  the  ground  that  they receive a certain amount of minimum tips from the  customers every day.  We are, therefore, inclined to think that in the case  waiters  who receive tips, it would not be  unfair  or unjust  to direct that a deduction of Rs. 10/should be  made from Rs. 35/- per month.  In the case of waiters who receive food,  tea and accommodation from their employers, Rs.  27/- p. in. are already ordered to be deducted from the D. A.  In respect  of these waiters, we direct that only Rs.  8/should be  further deducted on account of tips because we  have  no doubt  that  Do deduction can be made on  account  of  these considerations from the basic wage. That takes us to the question of the gratuity scheme  framed by  the  Tribunal.  Mr. Pathak no doubt attempted  to  argue that  in  view of the fact that  Employees’  Provident  Fund Scheme has already been introduced in these  establishments, it would  883 not  be  right to burden the employers with  the  additional liability of the gratuity scheme.  This argument  has   been considered by this        Court on severaloccasions   and has  been consistently rejected. The object intended  to  be achieved by the Provident Fund Scheme is not the same as the object  of  the Gratuity Scheme and in any case,  where  the financial  position  of  the  employer  justifies  the   in- troduction  of  both benefits, there is no reason  why  ,the employees  should  not  get the benefit of both  the  P.  F. Scheme  and  the Gratuity Scheme, vide  Bhuratkhand  Textile Manufacturing  Co.  Ltd.  v.  Textile  Labour   Association, Ahmedabad,  (1)  and Garment Cleaning Works v.  Its  Workmen (2).   Besides,  in dealing with  the  financial  obligation involved  by  the introduction of a gratuity scheme,  it  is necessary  to  bear  in  mind  that  the  magnitude  of  the theoretical impact does not matter so much as the extent  of the Actual impact of the scheme.  As has been pointed out by this Court in Bharatkhand Textile Mafg.  Co. Ltd. (1)  there are two ways of looking at the problem of the burden imposed by the gratuity scheme.  One is to capitalise the burden  on actuarial basis and that would naturally show  theoretically that the burden would be very heavy; the other is to look at the scheme in its practical aspect and this would show that, speaking  broadly,  no  more than 3 to 4  per  cent  of  the employees  retire  every  year.  It  is  desirable  that  in assessing the impact of the gratuity scheme on the financial position of the employer, this practical approach should  be taken  into account.  Thus considered, we see no  reason  to accept Mr. Pathak’s argument that the financial position  of the  employers would be unable to bear the practical  burden which  the gratuity scheme would impose on them,  vide  Sone

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Valley Portland Cement Co. v. Its Workmen(3). Turning  then to the merits of the scheme, we are  satisfied that some modifications must be made. (1) (1950) II L.L.J. 21.     (2) (1962) 1 S.C.R. 771. (3) [1962] 1 L.L.J. 218. 884 The scheme made by the Tribunal provides as under: For service of less than two years.                      Nil. For continuous service of      Fifteen day’s basic pay two years and more, on         for every year of completed termination of service of      service subject to a maximum the workman for whatever       of twelve month’s pay. reason except by way of dismissal for misconduct, involving moral turpitude. The  first criticism which Mr. Pathak has made against  this provision  is  that the clause  about  misconduct  involving moral  turpitude is unusual and would create  complications. This  position  is  not disputed by  the  learned  Attorney- General.   We would, therefore, delete the words  "involving moral  turpitude"  from  the  said  provision.   The  second criticism  made by Mr. Pathak against the provision is  that the  limit of two years imposed by the provision  is  unduly liberal.   We  think this criticism  also  is  well-founded. Besides, a distinction must be made between the  termination of  service  caused  by the  employer  and  the  termination resulting  from  the resignation given by the  employee.  We would, therefore, provide that for terminationof service caused by the employer, the minimumperiod  of   service for payment of gratuity should befive years,and in  regard to this category of terminationof service, we would like to  add that if the termination is the result of  misconduct which  has caused financial loss to the employer, that  loss should be first compensated from the gratuity payable to the employee  and the balance, if any, should be paid  to  him-. In  regard to resignation, we would like to provide that  if the  employee resigns, he would be entitled to get  gratuity only  if he has completed ten years’ service or  more.   The rate prescribed by the Tribunal for the payment  885 of  gratuity  and the ceiling placed by it  in  that  behalf would remain the same. There   is  one  more  point  which  still  remains  to   be considered,  and that is in regard to the claim for a  share in  the service charges in respect of the Claridge’s  Hotel. We  have  already  indicated the nature  of  the  directions issued  by  the Tribunal in that behalf.  The  Tribunal  has held  that  no direction need be issued in  respect  of  the employees’  claim for a share in the service charges  for  a period  prior  to the date of the award.  It  has,  however, purported to issue a direction in respect of the division of the service charges in future, and Mr. Pathak contends  that this  direction is outside the jurisdiction of the  Tribunal because  this  was  not  a matter referred  to  it  for  its adjudication.   Paragraph  I (d) of  the  reference  clearly supports  Mr.  Pathak’s contention.  This clause  is  worded thus :               "Are the workmen entitled to share the service               charges  collected  previously  by   different               managements  up  to the date of  reference  of               this dispute ? if so, what should be the  per-               centage  and what directions are necessary  in               this respect ?" It  is plain that the claim which has been referred  to  the

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Tribunal for adjudication does not cover a period subsequent to  the date of reference.  This position is  not  disputed. We  must accordingly set aside the direction issued  by  the Tribunal  in respect of the division of service  charges  in future. Mr.  Pathak no doubt attempted to argue that the  directions given  by  the  award in respect of  uniforms  and  holidays should  be  revised.  We are not impressed by  Mr.  Pathak’s argument on these points.  These are matters of detail which it  was for the Tribunal to consider on the merits  and  the grievance made by Mr. Pathak raises no question of law 886 on which we can interfere with the decision of the Tribunal. The  last point urged by Mr. Pathak is in regard to what  he characterised  as retrospective operation of the award.   It appears that the present demands were made by the  employees on October 1, 1958 and the references were made on September 9, 1959 and December 12, 1959 respectively.  Tile award  was pronounced  on March 16, 1962 and it has directed  that  its directions   should  take  effect  from  January  1,   1961. Technically  -speaking, this direction cannot be said to  be retrospective because it takes effect from a date subsequent to  the  date  of the reference.  Under  s.  17A(4)  or  the Industrial  Disputes Act, 1947 (No. 14 of 1947), it is  open to  the Industrial Tribunal to name the date from  which  it should  come into operation, and in cases where  the  Indus- trial  Tribunal  thinks that it is fair and  just  that  its award  should come into force from a date prior to the  date of  reference, it is authorised to issue such  a  direction. When   such   a  direction  is  issued,  it  may   be   said appropriately  that  the award  takes  effect  retrospective Apart  from this technical aspect of the matter’, if in  the circumstances of this case, the Tribunal held that the Award should take effect not from the date of reference but from a later  date which was January 1, 1951, we see no reason  why we should interfere with its direction. The  result  is,  the appeals  preferred  by  the  employers partially  succeed  inasmuch as the provisions made  by  the award in respect of dearness allowance, Gratuity and  future distribution  of  service charges have been  modified.   The appeals  preferred by the employees fail and are  dismissed. There would be no order as to costs. C.A. Nos. 609-610 of 1962 allowed in part. C.A. Nos. 622 623 of 1962 dismissed,  887