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PETITIONER: MESSRS.  BRAHMACHARI RESEARCHINSTITUTE

       Vs.

RESPONDENT: ITS WORKMEN

DATE OF JUDGMENT: 16/10/1959

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR, P.B.

CITATION:  1960 AIR  257            1960 SCR  (2)  45  CITATOR INFO :  R          1960 SC 413  (3)  E&D        1960 SC1028  (5,6,7)

ACT:        Industrial Dispute-Retrenchment compensation-Gratuity scheme        for cases of retrenchment-Award by Tribunal-Whether gratuity        under award different from retrenchment compensation-  Claim        by  retrenched  workmen  for  both  gratuity  and  statutory        compensation-Industrial Disputes Act, 1947 (14 of 1947), ss.        2(00), 25F, 25J.

HEADNOTE: The  retrenched  workmen of the appellant concern  who  were paid  compensation  as provided in s 25F of  the  Industrial Disputes  Act, 1947, claimed that they were entitled  to  be paid in addition gratuity under the gratuity scheme in force in  the  appellant concern as modified by the award  of  the industrial  tribunal  dated  August  18,  1952.   The  award provided: " The following gratuity scheme shall be for cases of retrenchment or termination of service by the company for any reason other than misconduct or for cases of resignation with the consent of the management". The Appellate Tribunal took the view that gratuity  provided under the award was different from compensation on retrench- ment payable to a workman under S. 25F of the Act. Held, that on a proper construction of the award the  amount payable  thereunder  to the workmen on  retrenchment  though called  gratuity  was  really  compensation  on  account  of retrenchment  as provided under S. 25F of the Act, and  that the  workmen  were  only  entitled  to  one  or  the  other, whichever was more advantageous to them in view of S. 25J of the Act. It  was not the intention of the legislature that a  workman on  retrenchment should get compensation twice,  i.e.,  once under  the  Act  and once again under the  scheme  in  force providing  for retrenchment compensation, by  whatever  name the payment might have been called.

JUDGMENT:

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      CIVIL APPELLATE JURISDICTION: Civil Appeal No.4 of 1958.        Appeal  by special leave from the decision  dated  September        19,  1956,  of  the  Labour  Appellate  Tribunal  of  India,        Calcutta, in Appeal No. Cal. 235/56.        B.   Sen,  S.  N.  Mukherjee  and  B.  N.  Ghose,  for   the        appellants.        Sukumar Ghose, for the respondents.        46             1959.   October  16.   The Judgment of  the  Court  was        delivered by        WANCHOO  J.-This appeal is directed against the decision  of        the  Labour  Appellate Tribunal of India  in  an  industrial        matter.  The appellant is a partnership concern carrying  on        business  in  the manufacture  of  pharmaceutical  products.        There  was  a  gratuity scheme in force  in  the  appellant-        concern  for  a long time.  This scheme was modified  by  an        award  of  the  industrial tribunal dated  August  18,  1952        (hereinafter called the Award), and since then the  modified        scheme  has been in force.  The financial condition  of  the        appellant deteriorated and consequently, it was compelled to        retrench a number of workmen.  It, therefore, applied to the        Appellate  Tribunal under s. 22 of the Industrial  -Disputes        (Appellate   Tribunal)  Act  (No.   XLVIII  of  1950),   for        permission  to retrench 89 workmen.  The Appellate  Tribunal        granted  permission  for retrenchment of  75  workmen  only.        Consequently, after obtaining such permission, the appellant        retrenched  the  workmen  and  paid  them  compensation   as        provided  in  s. 25F of the Industrial  Disputes  Act,  1947        (hereinafter  called  the  Act).  Thereupon  a  dispute  was        raised  by  the  retrenched workmen  through  the  union  in        existence   in   the  appellant-concern  for   gratuity   on        retrenchment under the award.  This dispute was referred  to        the  Second Industrial Tribunal, West Bengal, on  March  23,        1956, for adjudication in the following terms:        "  Whether  the seventy-five retrenched  employees  (as  per        attached  list)  are  entitled to gratuity  in  addition  to        retrenchment benefits ?"        There  was another matter included in the reference, but  we        are  not  concerned with that in the  present  appeal.   The        Industrial   Tribunal  came  to  the  conclusion  that   the        retrenched workmen were only entitled to relief as  provided        under  s.  25F  of  the Act and were  not  entitled  to  any        gratuity  under  the Award over and above  the  compensation        payable  to them under the Act.  Then followed an appeal  by        the  workmen  to the Appellate Tribunal which  was  allowed.        The  Appellate Tribunal held that the workmen were  entitled        to gratuity                                     47        under  the  Award,  as gratuity benefit therein  was  not  a        retrenchment  benefit.   The  appellant  then  applied   for        special leave to appeal, which was granted; and that is  how        the matter has come up before us.        The  general question has been considered by this  Court  in        The  Indian  Hume Pipe Company Limited v. Its  Workmen  (1),        judgment which is being delivered today.  As the penultimate        paragraph in that judgment shows, special considerations may        arise  on  the terms of agreements or awards  in  particular        cases and it is this aspect which falls to be considered  in        the present appeal.        The  sole  question, therefore, for  determination  in  this        appeal is whether the retrenched workmen are entitled  under        the  Award  to  gratuity provided  therein  in  addition  to        retrenchment  benefit  under  s. 25F of  the  Act.   We  may        therefore  reproduce  here the relevant part of  the  Award,        which is in these terms:

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      "  The  following  gratuity scheme shalt  be  for  cases  of        retrenchment  or termination of service by the  company  for        any reason other than misconduct or for cases of resignation        with  the consent of the management.  The gratuity  will  be        paid  up  to  a  maximum of 15  months’  basic  pay  at  the        following  rates.  The period of service to qualify for  the        gratuity   shall  be  one  year.   Consistently   with   the        modification about the maximum qualifying service, the basic        pay for the purpose of gratuity shall be the average of  the        last 12 months’ basic pay drawn by the workmen concerned."        Then  followed the rates; and it was also provided  that  no        gratuity would be payable before the completion of one  year        of service and that persons discharged for misconduct  would        not  be entitled to any gratuity.  Finally, it was  provided        that in case of death of an employee, his widow or  children        or  other dependents would be granted gratuity on the  above        basis.        It  will  be  seen  that the Award  is  a  composite  scheme        providing  for what is termed gratuity therein  under  three        conditions,  namely, (1) where there is  retrenchment,  (ii)        where there is termination of service for any        (1)  [1960] (2) S.C.R. 32.        48        reason  other  than  misconduct, and (iii)  where  there  is        resignation   with   the   consent   of   the    management.        Though the word " gratuity " has been used to cover    all        these  three  cases,  it is clear that  cases  of  retrench-        ment  as such are also covered by the Award and  payment  to        workmen retrenched has been called     "gratuity".  The name        given to the payment is, however, not material and it is the        nature  of  the payment that has to be  looked  into.   Now,        under  this  Award,  it  is obvious  that  this  payment  on        retrenchment  though called gratuity is really nothing  more        nor  less  than  compensation on  account  of  retrenchment.        Further  it  is obvious from the terms of the Award  that  a        retrenched workman could claim gratuity under the Award only        oil account of retrenchment and could not claim it under the        other two conditions therein.  In other words, on a fair and        reasonable  construction of the Award, what  the  retrenched        workman  got is only compensation for retrenchment  and  not        any amount by way of gratuity properly so called.        This brings us to the provisions of the Act with respect  to        retrenchment.   " Retrenchment " is defined under s. 2  (oo)        and  means " the termination by the employer of the  service        of a workman for any reason whatsoever, otherwise than as  a        punishment inflicted by way of disciplinary action, but does        not include (a) voluntary retirement of the workman; or  (b)        retirement  of the workman on reaching the age  of  superan-        nuation  if the contract of employment between the  employer        and  the  workman concerned contains a stipulation  in  that        behalf;  or (c) termination of the service of a  workman  on        the  ground of continued illhealth ". If this definition  is        compared with the provisions of the Award, it will be  found        that the Award provides payment not only for retrenchment as        such  but  also for other termination of  service  which  is        specifically excepted from the definition of "  retrenchment        ".  Clauses  (a) and (b) of s. 2 (oo) are  provided  in  the        Award by the words "cases of resignation with the consent of        the  management  ". Similarly, clause (c) of s.  2  (oo)  is        provided  for by the words " termination of service  by  the        company for any reason other                                     49        than misconduct ". It is, therefore, obvious that the  Award        provides not only for payment on retrenchment  but  also for        payment on termination of service for any reason other  than

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      misconduct  and  on  retirement.  It  is  thus  a  composite        scheme;  and merely because the payment is  called  gratuity        even  where  it is payable on account  of  retrenchment,  it        cannot  be  anything other than compensation so far  as  the        part of the Award relating to retrenchment is concerned.        Chapter  VA, containing ss. 25F and 25J, with which  we  are        concerned,  was  added in the Act by Act 43  of  1953,  with        effect from October 24, 1953.  The reason for this  addition        was that though there were schemes in force in many concerns        for  payment  to workmen on ,retrenchment, there  were  many        other  concerns where no such schemes were in force and  the        workmen  got  nothing on retrenchment unless  there  was  an        award  by a Tribunal.  Besides, where schemes were in  force        or awards were made rates of payment on retrenchment varied.        The  legislature,  therefore,  thought it  fit  by  enacting        Chapter VA to provide by s. 25F a uniform minimum payment to        workmen   on   retrenchment.   This   payment   was   called        compensation.  Section 25F provides that no workman employed        in  any industry who has been in continuous service for  not        less  than  one year under an employer shall  be  retrenched        without payment of compensation which shall be equivalent to        fifteen  days’  average  pay for  every  completed  year  of        service  or any part thereof in excess of six months.   Then        comes   s.  25J,  sub-s.  (1)  whereof  provides  that   the        provisions  of Chapter VA shall have effect  notwithstanding        anything  inconsistent therewith contained in any other  law        including standing orders.  There is, however, a proviso  to        sub-s.  (1),  which says that nothing contained in  the  Act        shall have effect to derogate from any right which a workman        has  under any award for the time being in operation or  any        contract  with the employer.  This clearly means that if  by        any  award  or contract a workman is entitled  to  something        more  as  retrenchment compensation than is provided  by  S.        25F,  the  workman  will be entitled to  get  that  and  the        provisions of s. 25F will not derogate        7        50        from  that right of the workman, i.e., will not  reduce  the        compensation   provided   under  the   award   or   contract        to  the level provided under s. 25F.  It is obvious that  it        was  not  the  intention  of the  legislature  that  a  work        man on retrenchment should get compensation twice,i.e., once        under the Act and once under the scheme in             force        providing  for retrenchment compensation, by  whatever  name        the  payment might have been called.  We cannot  agree  with        the  Appellate Tribunal that the payment of gratuity in  the        event   of   retrenchment  has  nothing  to  do   with   the        compensation  payable to a workman under s. 25F of the  Act.        The  Appellate Tribunal seems to have been carried  away  by        the  word  " gratuity " used in the Award and  it  seems  to        think  that gratuity on retrenchment is something  different        from  compensation on retrenchment.  We are of opinion  that        this  is not correct.  Whether it is called "gratuity  "  or        ,compensation " it is in substance a payment to the  workman        on account of retrenchment; and if a scheme like the present        specifically provides payment for retrenchment as defined in        s.  2(00),  we  see no  justification  for  compelling  that        payment  twice over, once under s. 25F and again  under  the        scheme  in  force  in  the concern.   The  matter  would  be        different if the scheme in force in any concern or any award        provides  gratuity  which is different in  nature  from  the        retrenchment  compensation  under s. 25F.   We  also  cannot        agree  with the Appellate Tribunal that this gratuity  under        the  Award in this case is not a retrenchment  benefit.   We        have  already  analysed the Award above and  shown  that  it

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      deals  with three contingencies, and one of them is  payment        due on retrenchment.  On the terms, therefore, of the  Award        in this case it must be held that gratuity provided  therein        on  retrenchment is nothing more nor less than  retrenchment        compensation  provided  under  s. 25F of the  Act,  and  the        workmen are only entitled to one or the other, whichever  is        more  advantageous  to  them  in view of  s.  25J.   In  the        circumstances we are of opinion that the Industrial Tribunal        was  right in holding that the scheme of the Award  in  this        case  providing for gratuity on retrenchment was exacty  the        same as compensation                                     51        provided  under s. 25F, and as the provisions of s. 25F  are        better  than  the  provisions of the Award  in  respect   of        retrenchment  the workmen would be entitled to  compensation        provided under s. 25F only, and not both under that  section        and  under  the Award.  The appellant has already  paid  the        compensation  provided under s. 25F; the  workmen  therefore        are  not  entitled  to anything more under  the  Award.   We        therefore  allow the appeal, set aside the decision  of  the        Appellate  Tribunal  and  restore  that  of  the  Industrial        Tribunal  in this matter.  As this question has come  up  to        this Court for the first time, we order the parties to  bear        their own costs.        Appeal allowed.