1. This industrial dispute has been referred to me under Clause (d) of Sub-section (1) of S. 10 of the Industrial Disputes Act, 1947, by the Labour and Social Welfare Department Order No. A.J.B. 41(2) 58, dated 21 August 1958. The demands of the workmen will be reproduced in due course.
2. This reference related to the 26 employees in the show room of the company located in the Fort area. The B. and C. Mills came into existence in the year 1860 as two separate concerns. They were amalgamated in the year 1920 or thereabout. The company manufactures cloth in its mills near Madras. It has five show rooms - 2 in Madras, 1 in Delhi, 1 in Bombay and 2 in Calcutta. The Madras show rooms have 10 and 17 employees respectively, the Delhi show room has 22 employees, the Calcutta show room has 23 employees and the Bombay show room has 26. It is stated in the statement of claim that on an average the daily sales from this show room amount to Rs. 8,000. The occupations in this show room are according to the statement of claim, cashier, clerks, salesmen, assistant salesmen, cutters, attenders, sweepers and darwan.
3. As regards the financial position of the company there is no dispute whatsoever. The statement of claim gives us the figures obtained from the balance sheets of the company. The written statement itself says in Para. 3 that 'the financial position of the company is sound because of the careful accumulation of reserves in the past earmarked for specific purposes which are not continuously utilized in the business of the company.' No doubt the written statement goes on to contend that it should not be supposed 'that the company has the financial capacity to make indiscriminate increases in the wages of their employees.' I shall not therefore dwell on the financial position of the company any more. The company as a whole employs over 15,000 workmen.
Demand No. 1 - Pay grades. - The following shall be the grades and scales of pay applicable to employees concerned with effect from 1 September 1957 :-
Clerical staff - Clerk ... Rs. 100-10-140-12 1/2-190-15-250-17 1/2-302 1/2. Salesmen ... Rs. 120-10-160-12 1/2-210-15-270-17 1/2-322 1/2. Assistant salesman Rs. 85-6-115-8-155-10-205 Cashier ... Rs. 175-12 1/2-250-17 1/2-356-20-415. Clerical staff - cont. Cutter attender ... Rs. 65-5-90-7-160. Subordinate staff - Sweeper ... Rs. 40-2-50-3-80. Durwan ... Rs. 45-2-55-3-85. Note. - (1) Assistant salesman at present attending to show-case display shall be paid an additional monthly allowance of Rs. 40 for the special work he is doing.
(2) Salesman who is also doing the work of handling cash in the ladies' section of the show room shall be paid a cash handling allowance of Rs. 20 per month in addition to the remuneration.
Demand No. 4 - Dearness allowance. - (a) Clerical staff. - Dearness allowance on the following basis shall be paid to clerical staff with effect from the date of 1 September 1957 :-
Dearness allowance when Variation for index 351-360 10 points On first 100 of salary ... 90 per cent or at the Rs. 5 rate payable to Bombay textile operatives from time to time but calculated for 30 or 31 days of the month, as the case may be, whichever is higher. On second 100 of salary ... 45 per cent 2 1/2 per cent On third 100 of salary ... 22 1/2 per cent. 1 1/4 per cent and above. (b) Subordinate Staff. - On the basis of 30 or 31 days' dearness allowance calculated at the daily rate payable to Bombay Mill workers, as from the date of 1 September 1957.
4. Since it is always better to take into consideration the total pay packet of a workman, these demands may be taken up together. The existing scales of pay are given in Ex C. 1. They are :
Salary Dearness allowance per month Rs. Rs. Salesman ... 120-7 1/2-172 1/2 ... 50 Assistant salesman ... 85-5-120 ... 50 Clerk ... 100-5-115-7-171 ... 50 Cashier ... 130-10-300 ... 50 Attender ... 47-2-75 ... 40 Sweeper ... 40-1 1/2-57 1/2 ... 40 Chowkidar ... 40-1 1/2-61 ... 40 Cutter ... 60-3-81 ... 40
5. Although it is generally correct to say that the duties of a clerk in one concern are, broadly speaking, the same as the duties of a clerk in another concern, the duties of clerks in a show room are not as varied as those of clerks in other head offices. The duties mainly consist of correspondence with the head office and maintaining of stock registers and accounts. These clerks do not have to enter into any correspondence with the public. The salesman and their helpers bring length of cloth from the godown and arrange them on racks, receive customers, use their intelligence and persuasiveness to sell the goods and make out bills. The cashier is in sole charge of accounts - quite a responsible job in view of very good sales. He pays Rs. 80 per annum as premium towards fidelity insurance. Then there are the cutters who measure required lengths of cloth and cut it, the attenders re-fold and rearrange the cloth taken out for the customers' inspection tip up parcels and do such other odd jobs. The sweepers sweep the hall, dust the furniture and the counters, clean and polish the glass windows and be at the beck and call of the manager and other employees. The darwan stands at the door and sometimes takes heavy parcels out to the customers' waiting cars.
6. Before I take up the demands I would refer to the case of Express Newspapers (Private), Ltd. [(1958-59) XIV F.J.R. 211], where their lordships of the Supreme Court laid down certain principles which should govern wage-fixation. Their lordships observe :
(1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity;
(2) that the capacity of the industry to pay is to be considered on an industry-cum-region basis taking a fair cross-section of the industry; and
(3) that the proper measure of gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the organization so that the industry could pay higher wages without difficulty and the possibility of increases in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of the demand for the product - no, doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business.'
In the present case, the capacity of the B. and C. Mills to pay wages which are higher than the bare subsistence or minimum wage is not in dispute. As regards the second principle of comparing the existing wages with those of a cross-section of the industry in the same, Greater Bombay - we must look to the salaries that exist in similar show rooms in Bombay.
7. At Ex U. 7 we have a table of salaries existing in (1) India United Mills. Ltd. (sales depot and cloth shop), (2) Kohinoor Mills, Ltd. (Show room), and (3) Khatau Mills, Ltd. (show room). It would not therefore be out of place to reproduced the pay-scales in these three concerns :
India United Mills, Kohinoor Khatau Ltd. Rs. Clerks ... 75-5-95-7 1/2- No scales ... No scales. Rs. 15 155-10-205-15-280 basic at start. Salesmen ... 75-5-95-7 1/2- Rs. 75 at start Rs. 190 basic at 155-10-195-210 plus Rs. 10 start. annual increase. Assistant salesmen ... Nil. Nil. Nil. Cashier ... 75-5-95-7 1/2- Nil. Nil. 155-10-205-15-280 Cutters; attenders ... Nil. Nil. Nil. Sweepers ... 35-2-65 for peons Rs. 35 basic at Rs. 50 basic 35-2-55 for plus Rs. 2 annual at start. sweepers increment Dearness allowance India United Mills, Ltd. - (1) Clerical - Index Variation 311 - 320 10 points Up to Rs. 100 ... Rs. 66 ... 3 per cent. 101 - 200 ... 20 per cent ... 1 1/2 per cent 201 - 300 ... 15 per cent ... 1 1/2 per cent 301 - 330 ... 10 per cent ... 1 per cent Above Rs. 330 dearness allowance on same basis as applicable to technical and supervisory staff. (2) Subordinate - Textile scale for 26 days. Kohinoor - (1) Clerical - Less than Rs. 100 ... Rs. 100 Rs. 100 and over ... 75 per cent No ceiling. (1) Subordinate - Rs. 90. Khatau - According to the Millowners's Association scale as per Bombay cost of living index figures.
It will be seen that except on the question of dearness allowance, the above table does not render much assistance on the question of salary scales. No incremental scales appear to exists in Kohinoor and Khatau Mills show rooms. Moreover it is not shown whether the rates of pay existing in the India United Mills or Kohinoor or Khatau Mills show room have been prescribed under any settlement award. It is always advisable to compare wage structures in comparable concerns where those wage structures are framed by awards or settlements. That obviates the danger of comparing one unsatisfactory salary scale with another equally unsatisfactory salary scale. [Vide Para. 19 of the Report of the Committee on Fair Wages.]
8. The union has produced pay-scales in various concerns in Bombay. The concerns are :
(1) The East Asiatic Company (Private), Ltd.
(2) Sandoz Products (Private), Ltd.
(3) G.B.C., Voltas Raptekos Brott & Co.
(4) Forbes Forbes Campbell & Co., Ltd. Glaxo Laboratories (Private), Ltd.
(5) Imperial Chemical Industries, Hoare Miller & Co., Ltd., and Scott and Pickstock, Ltd.
(6) Larsen & Toubro. Ltd.
(7) Imperial Tobacco Company of India, Ltd.
(8) Lever Brothers (India) (Private), Ltd.
(9) Mackinnon Mackenzie & Co. (see Ex. U. 1).
When the Supreme Court laid down in the case of Express Newspapers
'that the capacity of the industry to pay is to be considered on an industry-cum-region basis,' What their lordships obviously meant was comparable industry in a particular region. It is true that so far as peons, sweepers, clerks, typist, etc., are concerned, their nature of the work is about the same in any industry. But as I stated in Para. 5 above, in this particular case the show-room, employees do not have to do as varied type of work as the employees in the head office of any engineering or pharmaceutical or oil concern do. It will not therefore be proper to compare the salary scales of the employees in this show room with those, say, in Lever Brothers or Imperial Chemical Industries or such other concerns.
9. There can be no dispute that the salaries that are paid to the employees of this concern fall short of what is known as living wage. Only from that limited point of view if we were to look into the salary scale prevalent in the concerns mentioned at Ex. U1 we would find that those scales are much higher than those prevalent in the show room. There is therefore scope for improving the scales. The financial capacity of the concern being undisputed, there would be no danger of the financial burden becoming so heavy as to drive the employer out of business. In the case of Millowners' Association, Bombay 1955 II L.L.J. 35, the Labour Appellate Tribunal prescribed the following scales for clerical staff in the textile industry :-
Semi-clerks ... Rs. 40-3-70-E.B.-4-90-5-105 Junior clerks ... Rs. 65-5-95-7-140-E.B.-8-180-10-210 (Matrics start, on Rs. 70 and graduates on Rs. 80). Senior clerks ... Rs. 210-10-270. Chief clerks ... Rs. 270-15-330. The dearness allowance that these categories of employees in the textile industry get is : Salary Dearness Plus allowance Rs. A. P. Up to Rs. 100 ... Allowed as for operatives 7 8 0 From Rs. 101 to Rs. 200 ... Do. 15 0 0 From Rs. 201 to Rs. 300 ... Do. 22 8 0 Rs. 301 and above. Do. 25 0 0 The company has compared the total emoluments of a member of the clerical staff in the textile industry in Bombay with those of a similar employee in the show room now before me (see Ex. C. 5) and it would be seen that the latter emoluments are lower than the former, that the latter reach a maximum of Rs. 221 at the end of 12 years whereas the former reach a maximum of Rs. 314.85 at the end of 21 years.
10. We may now take up the various categories of employees in the show room :
(i) Salesmen. - There are according to the evidence of the manager of the show room, Sri Engineer, seven salesmen. Their duties are described in the annexure to the statement of claim thus :
'Selecting qualities of cloth from the godown, arranging the same at the counter with the help of their assistants, attending to customers, preparing bills, advising the manager in indenting the quality. One of them works as a cashier in the ladies' section.'
The arranging of cloth on the counters is generally done by workmen known as attenders. Attending to the requirements of customers, eulogising different varieties of cloth, persuading the customers to buy, preparing bills, are the main duties of salesmen. They constantly come in contact with the public. They have therefore to be very courteous in manners. The company pays them a starting salary which is Rs. 20 higher than the starting salary of clerks. The existing scale is Rs. 120-7 1/2-172 1/2. I revise it to Rs. 120-7 1/2-180-10-230.
(ii) Assistant Salesmen. - There are only two assistant salesmen. This is how their duties are described by Sri Engineer :
'The assistant salesman works under the instructions of the salesman of a particular counter. He attends to the customers, explains to them the quality of the cloth. He orders the cloth to be cut according to the customer's requirement.'
That shows that the nature of their work is not materially different from the work of salesman except that the ultimate responsibility would be placed on the salesman's shoulders. The assistant salesman would, if found fit, be eligible for promotion as salesman. Their existing scale is Rs. 85-5-120. In my opinion it is always a good incentive to increase the rate of increment after an employee has put in some of assistant salesmen to Rs. 85-5-125-7-174.
(iii) Clerks. - There are seven clerks. They have to prepare daily sales analysis, qualitywise summaries, monthly statements maintain sales tax register, prepare sales tax returns, leave record, etc. There is a clerk who does typing. One looks to the indenting of cloth from the mills, preparing invoices and sales notes. Then there is a delivery clerk who is called an attender by the company. His name is Rebello. He has given evidence before me and I am satisfied that his designation must be 'clerk.' He keeps a record of bill books issued, their numbers (?), salesmen to whom they are issued and so on. The company produced for my inspection the register that he maintains. The existing scale of clerks is Rs. 100-5-115-7-171. In my opinion this is very low. In other head offices the clerks have an opportunity of being promoted as senior clerks or even head or chief clerks. In this concerns there is no such likelihood. I would therefore revise their scale to Rs. 100-7(1/2)-160-210, taking care to maintain the initial difference of Rs. 20 between the starting salary of a salesman and that of a clerk.
(iv) Cashier. - There is one cashier who is placed in the scale of Rs. 130-10-300. He is responsible for collecting the amounts of bills, punch them on the cash registering machine and tally daily sales. Exhibit U. 10 shows that on an average there are more than 500 bills every day. In my opinion this scale should be Rs. 150-10-240-15-330. In fixing the scale I have taken into account the premium of Rs. 50 per annum which this employee has to pay for the fidelity insurance.
(v) Attenders; (vi) cutters. - The duties of these two categories of workmen are overlaping although the company has two different scales for them. Both these workmen bring cloth from the godown, arrange it on the counter as shown by the salesman, cut the required length of cloth, mark the rate of the cloth purchased and give it to the salesman for making out a bill. The duties of the two workmen are not watertight. Two of these workmen have given evidence before me and I find no ground to prescribe two separate scales for them. The existing scale of attenders is Rs. 47-2-75 and that of cutters is Rs. 60-3-81. In my opinion, their scale should be Rs. 60-3-84-4-112.
(vii) Darwan. - He is the watchman during day-time. He opens and closes the shop, collects passes attached to parcels and hands them over to the salesman in the evening. His existing scale is Rs. 40-1 1/2-61. I raise it to Rs. 46-2-65-3-80.
(viii) Sweepers. - There are three sweepers. They keep the show room, its furniture, show windows, clean, keep an earthen chatty full of drinking water and do all other duties that peons do in other offices. Their existing scale is Rs. 40-1 1/4-57 1/2. I raise it to Rs. 40-2-60-3-75. Thus the revised scales shall be : Rs. (1) Salesmen ... 120-7 1/2-180-10-230. (2) Assistant salesman 85-5-125-7-174. (3) Clerks ... 100-7 1/2-160-10-210. (4) Cashier ... 150-10-240-15-330. (5) Attenders and Cutters ... 60-3-84-4-112 (6) Darwan ... 45-2-65-3-80 (7) Sweepers ... 40-2-60-3-75
11. Note No. 1 to demand No. 1 is in regard to an additional monthly allowance of Rs. 40 to the assistant salesman who arrange the show-case display. It was concerned by Sri Buch, learned counsel for the workmen, that show-case display had been discontinued since January 1958. There is therefore no question of giving this allowance to anyone.
12. Note No. 2 demands that the salesman who handles in the ladies section should get a cash handling allowance of Rs. 20 per month. Beyond a contention in the statement of claim that the salesman in the ladies' section collects the amounts of bills from customers and hands then over to the cashier in the evening, there is no further proof on the point. Nor is there a denial of this practice in the company's written statement. I would therefore direct that if a salesman in the ladies' section remains in charge of the sales in the ladies' section for a whole day, tallies the amounts received with the bills issued and is responsible to the cashier for properly accounting for the amounts received in that section, then he should be paid a cash handling allowance of Rs. 10 per month.
13. This company pays a flat dearness allowance of Rs. 50 per month to the salesmen, assistant salesmen, clerks and cashier and Rs. 40 per month to the attenders, cutters, sweepers and darwan. This rate of dearness allowance has been in existence ever since 1952 when the show room was opened. As stated in the statement of claim, the average consumer price index number in Bombay in the year 1952 was 337 whereas during the last six or seven months is is in the vicinity of 400. There cab be no dispute about the need for a higher dearness allowance in view of the steep rise in the cost of living. All concerns which have been paying to their workmen dearness allowance linked with the consumer price index have been paying a much higher dearness allowance than what they were doing in 1952.
14. At the same time it is to be noted that in the case of the show room now before me, the starting salary of the different categories is fairly high. In fact, although I have revised the salary scales of the various categories, I have not raised their starting salary except in the case of cashier, attender and darwan. It is true that quite a number of concerns pay a sliding scale of dearness allowance to their employees. But paying a flat of dearness allowance also is not unknown. As the Labour Appellate Tribunal observed in the case of Millowners' Association, Bombay 1955 I L.L.J. 329 :
Page 345. - 'We say nothing about the propriety or the advantage of this flat rate of dearness allowance except that having regard to the fact that the lowest paid gets Rs. 30 and the highest paid Rs. 140, the payment of a flat dearness allowance of Rs. 66 or Rs. 75 does not in our view do any special injustice to the higher groups.'
In view of the fact that I have considerably raised the maximum of the scales in the present case, given higher increments after the employees put in a service of eight years and extended the span to 15 years, I deem it proper to retain the practice of paying a flat rate of dearness allowance. I would, however, raise the dearness allowance by Rs. 15 and direct that those who are getting a dearness allowance of Rs. 50 shall be paid a dearness allowance of Rs. 65 and those who are getting a dearness allowance of Rs. 40 shall be paid a dearness allowance of Rs. 55 per month.
Demand No. 2. - Classification assignment. - Employees shall be assigned to appropriate grades taking into consideration the nature of their duties, educational qualifications, responsibilities, and service in consultation with the representatives of the employees.
15. I do not see need to classify the 26 employees. Their duties are clear-cut and are, in my opinion, properly assigned. There was actually a difference of opinion only as regard attenders and cutters and I have held in Para. 10 above that both these categories of workmen do practically the same kind of work. I have therefore prescribed for them a uniform scale of pay. I have also held that Rebello who was designated as an attender was actually doing the work of a clerk and have held that his proper designation should be that of a clerk. Beyond this I see no reason to concede the demand.
Demand No. 3 - Adjustment. - Adjustment of salaries shall be on point-to-point basis but subject to the following conditions.
(a) Where an employee by virtue of adjustments effected as above is entitled to get a salary less than what he is drawing, he shall be stepped up to the nearest step in the grade and above the salary he now draws and he shall continue to get the increments due as according to the grade till he reaches the maximum of the grade.
(b) Where an employee is drawing an amount exceeding the maximum of the grade to which he has been assigned, he shall continue to get what he is drawing.
16. The only directions in regard to adjustment that I would give would be that those who are in receipt of a salary which is lower than the minimum prescribed for their category should be stepped up to the minimum; that those who are in receipt of a basic salary which is higher than the minimum but which is not a step in the scale should be stepped up to the next higher stage in the scale and those who are in receipt of a basic salary which is higher than the maximum prescribed for their category should continue to get it. No workmen should be adversely affected by reason of the revised salary scales.
17. Both for the revised salary scales and for the revised dearness allowance, the workmen have demanded retrospective effect as from 1 September 1957 on the ground that the charter of demands was served on the company on 28 August, 1957. Ordinarily where neither party is shown to be guilty of deliberately protracting the proceeding, the healthy practice is to grant retrospective effect as from the date of reference or from a date which is most conveniently nearest to the date of reference. The date of reference in the present case being 21 August, 1958, I grant retrospective effect to the revised pay-scales and dearness allowance as from 1 September, 1958. All arrears under this demand and other demand shall be paid to those entitled to them within three months of the date of the publication of this award.
Demand No. 5 - Washing allowance. - A washing allowance of Rs. 3 per month shall be paid to each member of the subordinate staff who is supplied with uniforms.
18. It is admitted that the sweepers and darwan get uniform but that they do not get any allowance for washing these uniforms. In my opinion Rs. 3 per month per employee who wears a uniform as washing allowance is a reasonable demand. I award accordingly. This part of the award shall come into force as from 1 May 1959.
Demand No. 6 - Privilege leave. - Privilege leave admissible to an employee shall be at the rate of one month after every eleven months' service and the leave so earned shall be accumulable for a period not exceeding 90 days at the end of each year.
Demand No. 7 - Sick leave. - Sick leave at the rate of 12 days per year of service as at present shall be available to an employee. The same shall be accumulable to the extent of 60 days at a time. It shall be granted on grounds of illness supported by a certificate from a registered medical practitioner. No medical certificate shall be required for sickness not exceeding three days at a time.
All the above leave shall be available with full pay and dearness allowance.
19. The employees of the show room enjoy 14 days' privilege leave, 12 days' sick leave, 10 days' casual leave and 16 paid holidays. In this reference the demand is restricted only to privilege leave and sick leave. Privilege leave is allowed to be accumulated up to 28 days. No accumulation is allowed for sick leave. In view of the fact that the employees thus get 52 days of paid leave (including 16 paid holidays), 52 days of weekly offs and 52 half working days, I consider the leave provision to be satisfactory. I, however, allow privilege leave to be accumulated up to 42 days and sick leave to be accumulated up to 36 days. This arrangement shall come into force as from 1 January 1959.
Demand No. 8 - Overtime. - (a) Employees shall be paid for work in excess of normal working hours, but not exceeding the statutory limits under the Shops and Establishments Act at the rate of basic pay plus dearness allowance, and
(b) for overtime work beyond the limits prescribed under the Shops and Establishments Act at double the basic pay and dearness allowance.
20. The normal working hours in the show room are 9-45 a.m. to 1 p.m. and 2 p.m. to 7 p.m. on Monday, Tuesday, Thursday to Saturday and 9-45 a.m. to 1 p.m. on Wednesday. They total up to 45 hours a week. Under the Shops and Establishments Act overtime payment is made of a workman works for over 48 hours a week or 9 hours a day. This payment is being made by the concern. The working hours each day are fairly long. I therefore direct that for working beyond the normal working hours of the show room but not exceeding the statutory working hours the concern shall pay an overtime allowance at the rate of basic pay and dearness allowance and that for working beyond the statutory limit the concern shall pay double the normal basic salary and dearness allowance. This part of the award shall come into force as from 1 January 1959.
Demand No. 9 - Acting allowance. - If an employee assigned to one grade is required to act in place of a person assigned to a higher grade, he shall be paid an acting allowance equal to 50 per cent of the difference between the salary drawn by him and the person for whom he acts, provided such officiating period exceeds 15 days at a time.
21. Sri Pai conceded at the bar that if a workman worked for 15 days or more in a post carrying a higher scale of pay, he would be paid acting allowance. I therefore direct that if a workman works for 15 days or more in a post carrying a higher scale of pay, he shall be paid the difference between his salary and the starting salary of the higher grade if the latter is higher than the former. If the starting salary of the higher grade is lower or the same as the salary of the concerned workman, the difference between the actual salary of the workman and the step in the higher grade which is next higher to what he is getting will be calculated. This direction will come into force as from 1 January 1959.
Demand No. 10 - Uniforms. - Sweepers and darwans should be provided with 4 pairs of pants, 4 shirts, 4 coast. 2 caps and an umbrella each year to each employee.
Despatcher should be provided with raincoats during the monsoon once in every two years.
22. The sweepers and darwan got two sets of uniforms per year. I consider this to be quite satisfactory. The demand is rejected.
23. Neither of the parties advanced any arguments on the question of rain-coat for the dispatcher. I however direct that if there is any workman in this concern who has to deliver letters or packages outside the office, he should be provided with an umbrella once in two years.
Demand No. 11 - Gratuity. - Gratuity scheme shall be introduced in the following terms :
(a) On death of workman while in the service of the company or on his becoming physically or mentally incapable of further service - One month's basic salary for each year of service to the disabled workman or if a man has died, to his heirs or legal representatives, assignees or nominees subject to a maximum of 15 months' salary.
(b) On voluntary retirement or on resignation after 15 years' continuous service - One month's basic wages for every year of continuous service subject to a maximum of 15 months' salary.
(c) On termination of service by the company -
(1) After 5 years but less than 10 years' continuous service. - Half month's basic salary for each year of completed service.
(2) After 10 years but less than 15 years' continuous service. - Three-fourth month's basic salary for each year of completed service.
(3) After 15 years' continuous service or over. - Gratuity equivalent to 15 months basic salary.
24. This is one of the demands which was very strenuously argued by both counsel. Sri Pai's argument has been that a similar demand made by the employees at Madras and Delhi has been turned down by the industrial tribunals of those places; that where an industrial tribunal refused to prescribe a scheme of gratuity for over 14,000 workmen, it would not be wise to prescribe that scheme for only 26 workmen; that the show room was started only in 1952 and that in any case the workmen would not become entitled to claim any gratuity until they put in a service of ten years, i.e., not before 1962, then why could not the workmen wait and make the the same demand a few years later; that if this tribunal prescribes a scheme of gratuity for these 26 workmen, the other employees of the company elsewhere would demand the scheme and the total burden that the company would have to bear would be in the vicinity of two crores; that if a gratuity scheme is started for the operatives, the company would voluntarily apply it to the clerical staff everywhere. Sri Buch for the workmen has stated that such an argument would be moving round a circle; that at no time can all the employees at all the show rooms come with a demand for a scheme of gratuity before a State industrial tribunal because they are working in different States; that simply because the Madras and Delhi tribunals rejected the demand, this tribunal need not do so; that all that this tribunal need see is whether the company is well established, whether it has made profits in the past, whether it has a bright future, whether it can bear the burden of a second retirement benefit; that the company is not going to have to spend two crores of rupees all at once; that even if a gratuity scheme were to be prescribed in 1962 the company would have to make it applicable right from the commencement of the employees' service and would have to make provision for meeting the employees' claim, then why not start it today and enable the company to set apart some part of its profits towards a gratuity reserve.
24A. I have very carefully listened to the arguments of both counsel and I have come to the conclusion that Sri Buch's argument must prevail. At Ex. C. 4 the company produced a copy of the decision of Sri Justice Ramaswami Gounder in an arbitration between the mills and their workmen. There his lordship considered the question of framing a scheme of gratuity and came to the conclusion that for the time being only a modified scheme of gratuity starting from 1 January, 1956, and ending on 31 December, 1960, should be framed. There was some kind of a gratuity scheme as early as in 1904. But in those days whatever amount the company kept aside for payment to the employee used to be paid to him from time to time. So at the end of his service he got very little benefit out of that scheme. Then in 1944 the company started a provident fund scheme. There too moneys which accrued to the credit of the workmen were paid to them from time to time. This continued till 1952 when the legislature enacted the Employees' Provident Funds Act, 1952, and fixed the rate of contribution at 6 1/2 per cent of the wages including dearness allowance. The learned arbitrator therefore observed :
Page 42. - 'That scheme has been working only for the past four years, and so, it is likely to benefit the workmen who have yet to put in many years of service in the company, and not so much the workmen who are likely to retire from the service of the company within the next few years.'
Therefore, he prescribed a short-term scheme of gratuity for those who were likely to retire in the next few years.
25. A scheme of gratuity for the clerical staff of the company has not been unknown in this mill. In the year 1951 an award was made prescribing a scheme of gratuity for the 700 members of the clerical staff of the mills 1951 I L.L.J. Supp. 68. That scheme is still in force. In Paras. 367 and 368 of said award the tribunal referred to several authorities and held that a gratuity scheme could be introduced over and above a provident fund scheme. In 1950 I.C.R. Bom. 8
'the tribunal observed that there was no system of paying gratuity to the mill clerks in Bombay till then yet and it was granted under the award following the principle laid down in the Banks award, that either gratuity or pension should be paid in addition to provident fund.'
'Page 369. - 'It is true that in the Madras State there is no case where mill clerks are allowed gratuity in addition to a provident fund scheme. The same principle, however, as in Bombay applies here. It was of course alleged for the management that as no other mill in the Madras State has a gratuity scheme for textile clerks, they must not be subjected to the additional burden. Since the necessity for the scheme cannot to questioned, the circumstances that other mills have no such scheme cannot be a justification to decline to introduce in the B. & C. Mills.'
So the tribunal introduced a scheme of gratuity, the rate being half a month's salary for each year of service subject to a maximum of 15 months' salary.
26. The Labour Appellate Tribunal has, in several cases, observed that a double retirement benefit could be introduced wherever possible. The following passage from the case of Arthur Butler 1952 II L.L.J 29 is often quoted :-
Page 32, Col. 2. - 'Before a scheme for gratuity can be sanctioned, other factors must be taken into consideration. The financial condition of the company must be considered in its broad aspects. Its profit earning capacity, the profits earned in the past, its reserves and the possibility of replenishing the reserves, if occasion arises, and the claim of capital to a fair share of the profits in the shape of dividend having regard to the risk of the investment, are material factors. In short, the general financial stability of the concern must be taken into consideration before a long-term scheme for gratuity is sanctioned.'
27. Almost simultaneously with Arthur Butler case the Labour Appellate Tribunal had to deal with a case where several cinema theatres owned by the Western India Theatres, Ltd., were involved. Their decision in that case is at 1952 II L.L.J. 207. There were 84 cinemas belonging to the company. It was stated that the tribunal should not prescribe a scheme of gratuity for the employees of only two theatres because the employees were transferable from one theatre to another and that there would be difficulty in the application of the scheme. It was also stated that the company was trying to evolve a scheme applicable to all the theatres. There was a provident fund scheme, the contribution by each party being one-twelth of the basic salary. The adjudicator declined to prescribe a scheme of gratuity for only two theatres as he thought that the company would constantly transfer employees from one theater to another and thwart the scheme. The Labour Appellate Tribunal observed as follows :
Page 209. - 'The employees of these two theatres have made a claim for gratuity and their claim must be considered on its merits. It does not mean that because the employees of the other theatres have not yet pressed a claim for gratuity or secured a reference for it, the employees of these two theatres should remain without a scheme of gratuity. We see no practical difficulty in the application of a scheme. The employers have already accepted the principle that a scheme of gratuity ought to be applied and indeed they could not do otherwise, but have been tardy in making up their minds as to what it should be. We propose by our decision to help them to make up their minds on the subject.'
27A. In the case of Powells, Ltd. [Bombay Government Gazette, Part I-L, dated 7 February 1952, p, 703] only the 23 workmen in the orthopaedic appliance section demanded a scheme of gratuity. Sri P. S. Bakhle, the learned adjudicator, held that as all the workmen of the company were not before him, it would not be proper to prescribe a scheme of gratuity for only a section. The Labour Appellate Tribunal observed :
Page 705. - 'We think that he was in error in the view that he took. The reference concerned a particular section and they should not be penalized into a limitation of their claims just because the other workmen had not asked for a reference ... The number of workmen out of the 23 who would become eligible for gratuity in a year would be small, and the payment of such gratuity will not be a burden to the concern, although we do appreciate that the company has not been prosperous of late. We are of the view that the gratuity scheme we have given in the case of the Army and Navy Stores, Ltd. 1951 II L.L.J. 31, would be appropriate.'
28. Sri Pai was quick to distinguish the cases of the cinema theatres and of Powells, Ltd., from the case before me. He said that in those two cases other theatres or sections had not made a demand at all and that it was obviously unfair to the two theatres to the orthopaedic appliance section to turn down their demand simply because all the theatres, or all the sections had not made a similar demand. In our case, Sri Pai pointed out, the facts were quite the opposite. All the other employees - except the 23 employees of the Calcutta show room and the 26 employees of the Bombay show room - had made a gratuity demand and that demand had been turned down : and that therefore it would be unfair to introduce it in the Bombay show room, He also drew my attention to the cases of Burn & Co. : (1957)ILLJ226SC , and Baroda Borough Municipality 1957 L.L.J. 8, where their lordships of the Supreme Court held that unless all the employees could be paid bonus the employees only of a section should not be paid bonus.
29. In my opinion, payment of bonus and payment of gratuity stand on different footing. The former is an immediate liability; the latter a further liability. In the former case the whole amount must be provided for out of the available surplus; in the latter case the company goes on making a provision year after year and builds up a reserve out of which payment is made as occasion arises. In the former case bonus becomes payable only if the concern makes profit; in the latter case the financial position of the concern in its broad aspect has only to be considered. So if the tests laid down in Arthur Butler Case 1952 II L.L.J. 29 are fulfilled, there should be no harm in prescribing a scheme of gratuity for a section of the employees of a concern. The concerns would have to make a start in building up a gratuity reserve and there should be no objection to making the start now.
30. The next question is, what should be the rate at which gratuity should be paid. In the case of Army and Navy Stores, Ltd. 1951 II L.L.J. 31, the Labour Appellate Tribunal allowed gratuity at the rate of half a month's salary or wages for each year of service but set no ceiling. The same scheme was prescribed by them in the case of the cinema theatres and in the case of Powells, Ltd. In my opinion, the B. and C. Mills are financially sound enough to pay gratuity at the rate of one month's basic salary for each year of service subject to a maximum of 15 months' salary. I therefore prescribe the following scheme of gratuity :
(1) On the death of a workman while in the service of the company or on his becoming physically or mentally incapable of further service - One month's basic salary for each year of service to be paid to the disabled workmen or if a man had died, to his heirs or legal representatives, assignees or nominees subject to a maximum of 15 months' salary.
(2) On voluntary retirement or on resignation after 15 years' continuous service - One months' basic wages for every year of continuous service subject to a maximum of 15 months' salary.
(3) On termination of service by the company -
(a) After 5 years but less than 10 years' continuous service. - Half month's basic salary for each year of completed service.
(b) After 10 years but less than 15 years' continuous service. - Three-fourth month's basic salary for each year of completed service.
(c) After 15 years' continuous service. - One month's basic salary for each year of completed service subject to a maximum of 15 months' salary.
Salary for the purpose of gratuity shall be the average of the basic salary (exclusive of all allowances) drawn by the workman during the 12 months next preceding the date entitling him to gratuity. I further direct that workmen dismissed for misconduct causing financial loss to the company should not be paid gratuity to the extent of the loss caused.
Demand No. 12 - Medical aid. - When an employee has to incur medical expenses due to sickness, such employees shall be compensated to the extent of the expenses incurred by him but not exceeding two months' wages in any one year.
31. Although it is true that the Employees' State Insurance Act is not applicable to this show room, the total emoluments of the employees are now sufficiently revised and I do not think there is any need to throw on the company the burden of medical aid to the employees. The demand is rejected.
32. This award may be submitted to Government. No order as to costs.