http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: THE DUNLOP RUBBER CO. (INDIA) LTD.

       Vs.

RESPONDENT: WORKMEN AND OTHERS

DATE OF JUDGMENT: 16/10/1959

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

CITATION:  1960 AIR  207            1960 SCR  (2)  51  CITATOR INFO :  R          1961 SC1175  (6,7,8,11)  R          1964 SC1886  (5)  RF         1972 SC2326  (18)  E          1984 SC 356  (2,4,5,11,17)  R          1986 SC 125  (7)

ACT:        Industrial  Dispute-Company  carrying on business  all  over        India-Claim  by  regional employees for raising  of  age  of        retirement  and  scale  of gratuity-  Power  of   industrial        Tribunal-if   can  modify  uniform  conditions  of   service        according to prevailing conditions.

HEADNOTE: The  appellant company was an all-India concern and  carried on the major part of its business in Calcutta.  Its clerical and non-clerical staff in Bombay raised disputes relating to gratuity and age of retirement and contended that the  scale of  gratuity  for both the clerical and  non-clerical  staff provided  by the existing scheme of the company was low  and should  be  raised and that the age of  retirement  for  the clerical staff should be raised from 55 to 60.  The  company resisted  the claim on the ground that the  existing  scheme having  been enforced on the basis of an  agreement  between the  company  and  the large majority  of  its  staff,  both clerical  and  non-clerical, working in Calcutta,  the  same could  not be changed at the instance of a  small  minority. The tribunal rejected this contention and raised the age  of retirement to 60.  It also raised the scale of gratuity  and made  it  uniform for the clerical and  non-clerical  staff. The appellant reiterated its contention in this Court. Held,  that  although  it was  advisable  for  an  all-India concern  to have uniform conditions of  service  ’throughout the country, that were not to be lightly changed, industrial adjudication in 52 India  being  based on an industry-cum-region  basis,  cases might  arise  where  it would be  necessary  to  change  the uniform scheme      so   that  it  might  accord  with   the prevailing   conditions   in  the       region   where   the Industrial Tribunal functioned, in order to       ensure

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

fair conditions of service. Consequently,  in  the instant case,  where  the  Industrial Tribunal found that the existing scheme was neither adequate nor in accord with the prevailing conditions in the  region, it was not bound to refrain from altering either the age  of retirement  or  the  gratuity  scheme  on  the  ground   the appellant’s concern was an all-India one. Nor  could the decision of the Tribunal to raise the age  of retirement  of  the clerical staff to 60 be said  to  be  an improper one. Guest,  Keen, Williams (Private) Limited, Calcutta v. P.  J. Sterling and Others, [1960] (1) S.C.R. 348 referred to.

JUDGMENT:        CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.159 and  160        of 1958.        Appeals  by special leave from the Award dated September  4,        1958, of the Industrial Tribunal, Bombay, in Reference  (IT)        Nos. 138 and 35 of 1958.        N.   A.  Palkhivala,  S.  N. Andley, J.  B.  Dadachanji  and        Rameshwar Nath, for the appellant.        C.   L. Dudhia and K. L. Hathi, for respondents No. 1 and 2.        1959.  October 16.  The Judgment of the Court was  delivered        by        WANCHOO  J.-These two appeals by special leave arise out  of        two   references  made  by  the  Government  of  Bombay   in        connection with a dispute between the appellant-company  and        two  sets of its workmen, namely, clerical staff  and  staff        other  than  clerical.  The clerical staff had  raised  four        questions  which were referred to the  Industrial  Tribunal,        Bombay for adjudication.  of these, only two points  survive        in the present appeal, namely, retirement age and  gratuity.        The  non-clerical  staff had raised two questions  of  which        only one relating to gratuity arises before us.        It  appears  that  the appellant-company  is  an  all  India        concern  but the major part of its business is  concentrated        in  Calcutta.   The  number of  non-clerical  staff  outside        Calcutta is very small as compared to the                                     53        non-clerical  staff  in Calcutta while  the  clerical  staff        outside  Calcutta  is much less than the clerical  staff  in        Culcutta.  The company had a gratuity scheme in force  which        applied  to  both clerical and  non-clerical  staff,  though        there  were  differences in the scale of  payment  depending        upon  whether the basic salary drawn by workmen  other  than        operatives  was  more  than Rs. 100 or  less.   In  case  of        operatives, there was a uniform scale equal to the scale for        workmen other than operatives drawing less than Rs. 100  per        mensem.   The  clerical  and non-clerical  staff  in  Bombay        raised disputes and their main contention was that the scale        fixed  by the scheme in force was low and should be  raised.        As  for the retirement age, the clerical staff claimed  that        it should be raised from 55 years to 60.        The  case of the appellant-company before the  tribunal  was        that  as the large majority of the staff both  clerical  and        non-clerical was in Calcutta and as the gratuity scheme  and        the  retirement age were enforced by virtue of an  agreement        arrived  at  between the appellant-company and  its  workmen        both  clerical  and  others  in Calcutta  who  are  a  large        majority of its total workmen, they should not be changed at        the  instance of a small minority of workmen  both  clerical        and  others  in Bombay.  The tribunal did  not  accept  this        contention and raised the age of retirement from 55 years to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

      60.   It also made changes in the gratuity scheme  by  which        the  scale  was raised and made uniform  both  for  clerical        staff  and others.  Thereupon the appellant applied for  and        obtained special leave from this Court; and that is how  the        matter has come up before us.        Shri Palkhivala appearing for the appellant has raised  only        two  points  before  us,  relating to  the  raising  of  the        retirement age and the change in the scale of gratuity,  and        we shall confine ourselves to these two points only.  It  is        conceded   by   him  that  the   Industrial   Tribunal   has        jurisdiction to order the changes which it has ordered.  But        his contention is that though the jurisdiction may be there,        the  tribunal should take into account the special  position        of  an  all-India  concern  and  should  not  make   changes        particularly at the        54        instance  of a small minority of workmen as that would  lead        to  industrial unrest elsewhere.  He further  contends  that        the scale of gratuity and the age of retirement are  matters        which are independent of local conditions    and   therefore        should  be uniform thought India in concerns which  have  an        all-India  character.  He points out that the conditions  of        service  in  the appellant company  are  uniform  throughout        India  and were arrived at by agreement with the  unions  of        workmen at Calcutta where the large majority of the  workmen        are  employed,  and  in  these  special  circumstances,  the        tribunal  at Bombay should not have made any changes in  the        retiring  age or in the gratuity scheme at the  instance  of        the small minority of workmen in Bombay.        There  is no doubt that in the case of an all-India  concern        it would be advisable to have uniform conditions of  service        throughout  India and if uniform conditions prevail  in  any        such  concern  they should not be lightly changed.   At  the        same   time   it  cannot  be   forgotten   that   industrial        adjudication is based, in this country at least, on what  is        known as industry-cumregion basis and cases may arise  where        it  may  be necessary in following this  principle  to  make        changes even where the conditions of service of an all-India        concern  are uniform. Besides, however desirable  uniformity        may  be  in  the case of all-India  concerns,  the  tribunal        cannot  abstain from seeing that fair conditions of  service        prevail  in  the industry with which it  is  concerned.   If        therefore  any  scheme,  which may be  uniformity  in  force        throughout  India  in  the case  of  an  all-India  concern,        appears  to be unfair and not in accord with the  prevailing        conditions  in  such matters, it would be the  duty  of  the        tribunal  to make changes in the scheme to make it fair  and        bring  it into line with the prevailing conditions  in  such        matters, particularly in the region in which the tribunal is        functioning irrespective of the fact that the demand is made        by  only  a small minority of the workmen  employed  in  one        place out of the many where the all-India concern carries on        business.        Before  we come to consider the two questions raised  before        us, we may as well point out that the                                     55        scale  of  gratuity and the retirement age  were  originally        fixed  by  an  agreement arrived at  in  1956,  between  the        appellant  company  and its workmen in Calcutta who  form  a        large  majority.   That agreement was for a  period  of  two        years  ending  with December, 31, 1957.  Thereafter  it  was        replaced  by another agreement also for two years  beginning        from   1st  January,  1958.   In  that  agreement   it   was        specifically provided that no further major issues would  be        raised  excepting those relating to medical aid,  retirement

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

      age,  and retirement benefits.  It is clear  therefore  that        even the workmen in Calcutta had reserved the right to raise        a  dispute with respect to retirement age and  gratuity,  if        necessary.   The reason for this is that the references  out        of  which those appeals have arisen were pending before  the        tribunal  in  Bombay and the unions in  Calcutta  wished  to        await  the  decision of the Bombay tribunal  before  finally        agreeing  to continue the rules relating to  retirement  age        and  gratuity.   The appellant-company also agreed  to  make        this reservation in the said agreement arrived at between it        and  the unions in Calcutta.  Therefore, strictly  speaking,        it  cannot  be  said in this case that  there  was  a  final        agreement in force with respect to these two matters between        the   appellant  and  large  majority  of  its  workmen   in        September, 1958 when the Bombay Tribunal gave its award.  In        any case the Bombay Tribunal was bound to go into the merits        of  the  matter  with respect to these  two  items,  namely,        retirement  age and gratuity, keeping in mind the  all-India        character of the concern and the previous agreement of 1956,        and this is what the tribunal has actually done.        We  shall  first take the question of retirement  age.   The        tribunal  found  that retirement age was  fixed  between  55        years and 60 in various concerns in Bombay.  It was also  of        opinion  that  55 years was too low an age to be  fixed  for        retirement for the clerical staff and that the trend in  all        the  awards had in recent times been to fix it at 60  years.        It, therefore, ordered that so far as the clerical staff was        concerned retirement age should be fixed at 60 years instead        56        of 55.  We may in this connection refer to a recent decision        of   this   Court   in  Guest   Keen,   Williams   (Private)        Limited,  Calcutta v. P. J. Sterling and Others  (1),  where        the age of superannuation of employees in service before the        Standing  Orders came into force, in that concern was  fixed        at 60 years.  In these circumstances if the tribunal thought        that it would be fair to      fix  60  years as the  age  of        retirement  for clerical staff in spite of the fact that  in        the  agreement  of 1956 the retirement age was fixed  at  55        years,  it cannot be said that the tribunal’s order was  not        in accord with the prevailing conditions in many concerns in        that region.  In these circumstances we are of opinion  that        no interference is called for in this matter.        We now come to the question of gratuity. The gratuity scheme        in  force  in  the appellant-company on  the  basis  of  the        agreement of 1956, provided for threequarters of one month’s        average  basic salary for each completed year of  continuous        service  for staff other than operatives drawing up  to  Rs.        100  per menses and thereafter half a month’s average  basic        salary for each year.  It also provided three weeks’ average        basic  wages for each completed year of  continuous  service        for operatives.  Three years service was the minimum  period        for eligibility to gratuity under special circumstances like        death,  physical and mental incapacity and 15 years  service        in  all  other  cases.   There  was  also  a  provision  for        "deducting some amount in lieu of provident fund credited by        the company in 1941 in respect of service prior to 1st July,        1941.   The tribunal was of the opinion that the scheme  was        not adequate and contained features which were not usual  in        other  prosperous concerns it pointed out that the scale  of        gratuity for clerks was on a lower basis than for operatives        and  that this was against the general conditions of  things        prevailing in that region.  It further pointed out that  the        clerical and the supervisory staff had a higher standard  of        living,  and  had to meet heavier expenses of  education  of        their children who get employment at a late age as  compared

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

      to operatives.  It was, therefore, of opinion that a uniform        scale of gratuity should be fixed for all        (1)  [1960] (1) S.C.R. 348.                                     57        including those getting wages above Rs. 100 per menses.   It        also  pointed out that the requirement of a minimum  service        of  three  years in case of death and  physical  and  mental        incapacity  was another unusual feature of this  scheme  and        held  that it should be changed.  It was further of  opinion        that the usual provision in such schemes was a scale of  one        month’s  basic salary for each completed year of  continuous        service in case of death, physical and mental incapacity and        after 15 years’ continuous service and that some gratuity at        a  lower  scale  was  provided  usually  even  in  case   of        termination  of service before the completion of  15  years’        service.   It  therefore provided for half a  month’s  basic        salary for each -completed year of continuous service  after        5  years  but  upto ten years  and  three-fourths  of  basic        monthly salary for each year of completed service after  ten        years but less than fifteen years continuous service and one        month’s  basic salary for each year for the rest.   Finally,        it took into account the fact that there was a supplementary        gratuity scheme in force in the company with respect to  the        employees in the employ of the company from before September        1,  1946,  and with respect to them it provided  that  those        employees  should either opt for the scheme as framed by  it        or continue in the gratuity scheme of the company along with        the  supplementary  gratuity scheme.  It  appears  therefore        from the gratuity scheme finally sanctioned by the  tribunal        that  it removed those features from the scheme in force  in        the appellant-company which were unusual and unfair and  not        in  consonance  with  the  prevailing  conditions  for  such        schemes  in that region.  In these circumstances we  are  of        opinion that the tribunal was not bound merely because  this        is  an  all-India  concern  to  refrain  from  altering  the        gratuity  scheme  which in its opinion had  certain  unusual        features   and  was  not  in  accord  with  the   prevailing        conditions  in  that  region.   The  appellant’s  contention        therefore on this head also fails.        The appeals are hereby dismissed with one set of costs.        58