K. Veeraswami, C.J.
1. This appeal arises from a judgment of Palaniswamy, J. who quashed an order of the Labour Court, Madras, in so far as it related to the second respondent's claim for gratuity. The learned Judge directed the Labour Court to restore his claim to file and make a suitable award in the light of the directions contained in his judgment. The second respondent was appointed on May 9, 1963 as an auditing assistant in the first respondent's company on a monthly salary of Rs. 125. With effect from September 30, 1967 he was retrenched which led to his claiming under Section 33C(2) of the Industrial Disputes Act a certain sum which included gratuity at the rate of one month's pay for four years. The claim as to gratuity was disallowed by the Labour Court notwithstanding the fact that an award in I.D. No. 3 of 1968 had provided for gratuity for the employees who would be bound by it. It appears that the award ceased to be operative with effect from February 22, 1962 following the termination notice under Section 19(6) of the Act.
2. The question in this case is whether, the second respondent having been employed subsequent to the termination of the award under Section 19(6) he would nevertheless be entitled to the benefit of the award in I.D. No. 3 of 1968 Palaniswamy, J., as we have indicated earlier, found for the second respondent. We are of the same view. The appellant-management contends before us that, once an award has been terminated under Section 19(6), any employee whose appointment was subsequent to such termination would not be entitled to the benefit of the award. Prima facie the contention would stand to reason based on such termination. But, on a deeper consideration, we are of the view that it is not so. Section 18(3)(d) makes it clear that an award of a Labour Court will be binding inter alia, on all persons 'who sub-sequently become employed in that establishment or part' At first night, it may appear that this provision might not be applicable to a case in which an award has been terminated under Section 19(1), for after such a termination, it would be futile to make an award not in existence binding on employees who came subsequent to the terminating of the award. But a combined reading of Section 18(3), Sub-sections (1) to (3) and (6) of Section 19, Section 23 and Section 29 leaves no doubt that, having regard to the whole purpose of the Act, to wit, to bring about, conserve and promote industrial peace, the termination of an award under Section 19(6) does not mean that the terms and conditions evolved by it and applied to the industrial relations concerned would be set at large. All that the termination under Section 19(6) would mean is that, thereafter, the parties will be at liberty to raise a fresh industrial dispute, if there is a basis there for. But, so long as the award terminated under Section 19(6) has not been substituted by an award, the industry concerned has to proceed on the basis that the terms and conditions of the award would continue to govern the terms of employment.
3. That was the view the Supreme Court was inclined to take in South Indian Bank v. Chacko : (1964)ILLJ19SC . We are aware that, in that case, the clerk in question who was promoted as an accountant was an employee at the time when the award there was in operation. But that does not detract from the ratio of the decision that, with the termination of an award under Section 19(6),the terms and conditions as entitled by the award would continue to govern not under the award but by a new contract which may well be assumed in the situation, in the interests of industrial peace. We do not think that, though it would be the intention of Section 19(6) since the award has been terminated there under, the relations between the employer and the employee would be set at large in such manner that there are no terms at all governing the industrial relationship. This idea seems to underlie Bum and Co. Ltd. v. Their Employees : (1957)ILLJ226SC , Mangal Das Narain Das v. Payment of Wages Authority : (1957)IILLJ256Bom and Amritsar Rayon and Silk Mills (P) Ltd. v. Amritsar Textiles Clerks' Association, . We are of the view, therefore, that the second respondent would be entitled to the benefit of the award in respect of gratuity.
4. The appeal is dismissed with costs of the second respondent. Counsel's fee Rs. 150-00.