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Amritsar Rayon and Silk Mills Vs. their Workmen - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1966SC1253; [1962(5)FLR202]; (1962)IILLJ224SC; [1963]3SCR558
ActsIndustrial Disputes Act, 1947 - Sections 10(1); Employees Provident Funds Act, 1952
AppellantAmritsar Rayon and Silk Mills
Respondenttheir Workmen
Cases ReferredBombay. v. Millowners
Excerpt:
.....any ceiling on the amount of gratuity that was payable to the employees and thirdly, the excessive basic wages should be reduced - on the basis of the said objections, it was held that the framing of the said gratuity scheme was valid - section 28: [s.b. sinha & dr. mukundakam sharma, jj] appointment of lecturer eligibility criteria/qualification - held, it cannot be disputed that in the matter of selection of candidates, opinion of the selection committee should be final, but at the same time, the selection committee cannot act arbitrarily and cannot change the criteria/qualification in the selection process during its midstream. in the instant case, the advertisement which was issued for filling up the post of lecturer in chemistry in university polytechnic could not have been..........on his becoming incapable of serving further due to physical or mental disability. one month's basic wages for each year of his service. in case of death, the gratuity will be payable to the heirs or assigns of the deceased workmen. (2) on termination of an employee's service by the concern after he has put in five year's service - half month's basic wages for each year of his service. (3) no gratuity would be payable to an employee who resigns his job but if he has served for fifteen years continuously and is rendered unfit to serve further by old age or protracted ill health, he shall be given gratuity calculated at the rate of one month's basic wages for each completed year of his service. (4) no gratuity would be payable to an employee who is dismissed for misconduct. 3. in.....
Judgment:

Gajendragadkar, J.

1. This appeal arises out of an industrial dispute between the appellant Amritsar Rayon & Silk Mills and its workmen. The dispute originally related to seven demands made by the respondents against the appellant and these seven demands were referred by the Punjab Government for industrial adjudication to the Industrial Tribunal, Jullundur under section 10(1)(d) of the Industrial Disputes Act, 1947. The Tribunal has made its award in respect of these demands. In the present appeal, which has been brought to this Court by special leave, we are concerned with the award in so for as it deals with the respondents, claim for a gratuity scheme. The appellant urged that no case had been made out for the framing of a gratuity scheme. This plea has been rejected by the Tribunal and a gratuity scheme has been framed. It is the propriety and the validity of this scheme which are challenged before us by Mr. Kapoor on behalf of the appellant in this case.

2. The scheme framed by the Tribunal reads thus :-

(1) In case of death of an employee while he is in the service of the concern on his becoming incapable of serving further due to physical or mental disability. One month's basic wages for each year of his service.

In case of death, the gratuity will be payable to the heirs or assigns of the deceased workmen.

(2) On termination of an employee's service by the concern after he has put in five year's service - Half month's basic wages for each year of his service.

(3) No gratuity would be payable to an employee who resigns his job but if he has served for fifteen years continuously and is rendered unfit to serve further by old age or protracted ill health, he shall be given gratuity calculated at the rate of one month's basic wages for each completed year of his service.

(4) No gratuity would be payable to an employee who is dismissed for misconduct.

3. In rejecting the appellant's contention that no scheme should be framed, the Tribunal has found that the appellant which was started in 1934 is the biggest Textile Mills in Amritsar and its career so far has been one of success all along the line. The invested capital of the concern is Rs. 14 lakhs and its working capital is Rs. 2,70,000/-. On its roll are employed 1,250 employees whose monthly wage bill comes to Rs. 1,20,000/-. It is admitted that the appellant has been paying bonus to its workmen since 1946 and has allowed dividend on invested capital. It contributes to the Provident Fund and the Employees State Insurance Scheme. Having regard to this financial position of the appellant, the Tribunal has held, and we think rightly, that the appellant cannot successfully resist the demand for the framing of a gratuity scheme.

4. Mr. Kapoor, however, contends that even if a gratuity scheme has to be framed, the Tribunal was in error in not placing any ceiling on the amount of gratuity payable to the employees. In our opinion, this contention is well-founded. Speaking generally, where there is no provision for superannuation and gratuity is paid at a fairly reasonable rate, gratuity schemes framed by Industrial Tribunals generally provide for a ceiling, and so, we do not see how the Tribunal was justified in departing from this generally accepted position... The rate fixed in the present case is not unduly low and admittedly, there is no provision for superannuation. Therefore we think that the appellant is justified in contending that a ceiling should be put on the amount of gratuity payable under the scheme. On the whole, we think it would be reasonable if the maximum amount of gratuity payable under the scheme is fixed at 15 months' basic wages. We ought to make it clear that in coming to this conclusion we do not propose to lay down any hard and fast rule that a ceiling must be placed in every case and that it should be of the order of 15 month's basic wages; as we have repeatedly observed, in framing gratuity scheme, all relevant factors have to be taken into account and so, inevitably the schemes are likely to differ from case to case.

5. Mr. Kapoor then contends that the month's basic wages which has been provided for by clauses (1) and (3) is excessive and it should be reduced to 15 days' basic wages. This argument is that the usual pattern of gratuity schemes in the Punjab shows that it is 15 days' basic wages which is provided under similar clauses. In support of his argument, Mr. Kapoor has referred us to some of the awards produced by him. In the gratuity scheme framed in the New India Embroidery Mills, Chheharta, 15 days' wages has been adopted as the basis, but this award includes dearness allowance and so, this provision is not very helpful because in the present case, the rate has been fixed by reference to the basic wages alone. The scheme framed in the Niemla Textile Finishing Mills, Chheharta, is on the same lines as the scheme under the New India Embroidery Mills and the same comment, therefore, falls to made about it. The gratuity scheme in the Technological Institute of Textiles, Bhiwani, has adopted the basis of 1/2 month's basic wages for each completed year of service, but there is no ceiling placed by the scheme. On the other hand, the gratuity scheme in the Shambhu Nath & Sons Ltd., Amritsar, adopts one month's basic wages for each completed year of service and so does the scheme in the India Woollen Textile Mills, Chheharta, and the India Calico Printing Mills. The Jagatjit Cotton Textile Mills Ltd., Phagwara, has 1/2 month's basic wages; the Punjab Distilling Industries Ltd. provides for one month's basic wages; so does the New Egerton Woollen Mill, Dhariwal. The Jawala Flour Mills Amritsar, provides for the rate of 1/2 month's basic wages in case of workmen with five years of service and in case of workmen with service above five years at the rate of one month's basic wages. It would thus be seen that the claim made by the appellant that the pattern of gratuity schemes in the Punjab invariably shows the adoption of the rate of 15 days' basic wages for each completed year of service, is not supported by the several awards produced by the parties before us, and so, it cannot be said that the present award has departed from any fixed uniform pattern in the matter.

6. Mr. Kapoor then referred to the decision of this Court in Bharatkhand Textile Mfg. Co. Ltd. v. The Textile Labour Association Ahmedabad : (1960)IILLJ21SC where the gratuity scheme provided, inter alia, for one month's basic wages for each completed year of service for the period before the coming into force of the Employees Provident Funds Act, 1952, and half a month's basic wages for each completed year of service thereafter, subject to a maximum of 15 month's basic wages. This shows that the award with which this Court was dealing in that case had made a distinction between gratuity scheme prior to 1952 and those subsequent to it, and this distinction was based on the fact that the Employees' Provident Funds Act had come into force in 1952. Therefore, we do not think it would be fair to suggest that because the scheme thus framed was accepted by this Court in appeal it follows that this Court has laid down that in every case half a month's basic wages should be paid after 1952.

7. Mr. Kapoor has also relied on the decision of the Industrial Tribunal at Rajkot in Arvind Mills Co-operative Supply Society Ltd., Ahmedabad v. Their Workmen (1959) 2 L.L.J. 107. The scheme framed by the Tribunal in this case no doubt provides for 15 day's basic wages as contended by Mr. Kapoor and prescribes the ceiling of 10 month's basic wages. Similarly, in the Rashtriya Mill Majdoor Sangh, Bombay. v. Millowners' Association, Bombay [1956] 2 F.J.R. 372 the gratuity schemes framed appears to be substantially similar to the one framed in the Bharatkhand Textile Mfg. Co. Ltd. : (1960)IILLJ21SC . These decisions merely show that 15 days basic wages has been adopted as a rate by some of the gratuity schemes framed by Industrial Tribunals. We would, however, not be prepared to accept Mr. Kapoor's contention that these decisions support the general argument that invariably the rate of 15 days' basic wages must be adopted. That is a question which has to be decided by the Tribunal on the facts of each case; and though it may be desirable that gratuity schemes framed in the same industry in the same region should not disclose radical or violent differences, it would not be possible to introduce uniformity by accepting the argument that 15 days should be treated as the invariable rate in the gratuity schemes. On the material adduced before us, we are not prepared to hold that the basis adopted by the award under appeal has made either a violent or radical departure from the pattern prevailing in the same industry in the Punjab or is otherwise unjustified on the merits. The fact that we decline to interfere with the rate prescribed by the award under appeal does not also mean that according to us, that rate should be adopted in other cases without reference to the relevant facts in each of them.

8. The result is, the award is modified by prescribing a ceiling of 15 month's basic wages. The rest of the award is confirmed. There would be no order as to costs.


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