Delhi Cloth & General Mills Co.,
Ltd. Vs. Workmen & Ors  INSC 231 (27 September 1968)
27/09/1968 SHAH, J.C.
CITATION: 1970 AIR 919 1969 SCR (2) 307
RF 1970 SC 343 (26) E&R 1970 SC1421
(11,12,16,17,19) RF 1970 SC1967 (3,4) F 1973 SC2344 (2,3) R 1977 SC 941 (15) RF
1980 SC1944 (5) RF 1981 SC 852 (16,18) R 1987 SC 447 (12)
Industrial Dispute--Gratuity Scheme--When
region-cum- industry principle is applicable--Whether gratuity should be related
to basic wage or consolidated wage--Whether conditions prevailing in the
industry in the whole country could be taken into consideration--Whether age of
superannuation should also be fixed--When misconduct of workmen does not affect
gratuity--When payable to badli workmen--Date of operation of
award--Considerations for fixing--'Average of basic wage', meaning of.
In the Delhi region there are four textile
namely, the D.C.M., the S.B.M., the B.C.M.,
and the A.T.M.
The D.C.M. and the S.B.M. are under one
management. Since 1940 they had also a common retirement benefit scheme with a
scale of gratuity. The ' workmen in all the units were receiving basic wages
plus dearness allowance. On March 4, 1958, an industrial dispute between the four
units and their workmen was referred to the Industrial Tribunal and one of the
matters in dispute related to gratuity. The Tribunal in its award framed two
schemes relating to the payment of gratuity, one relating to D.C.M. and S.B.M.,
and the other, to B.C.M. and A.T.M. They were made operative from January 1,
1964. Both employers and employees appealed to this Court. On the questions: (1
) Whether in view of a settlement between the management of A.T.M. and its
workmen it was open to the Tribunal to ignore the settlement and impose the
scheme on the management; (2) Whether in view of the unstable financial
condition of A.T.M. the burden of payment of gratuity on A.T.M. was excessive;
(3) Whether a uniform scheme applicable to the entire industry on the
region-cum-industry basis should have been adopted instead of schemes
applicable to individual units; (4) Whether in determining the quantum of
gratuity, basic wage alone should be taken into account and not the
consolidated wage including dearness allowance; (5) Whether in deciding this
question, an overall view of similar and uniform conditions in the industry in
different centers in the country, could he taken into consideration; (6)
Whether it was not necessary for the Tribunal to fix the age of superannuation
when introducing a gratuity scheme; (7) Whether gratuity should have been
awarded even in cases of dismissal for misconduct; (8) Whether provision should
have been made for payment of gratuity to badli workmen irrespective of the
number of days for which they worked in a year; (9) Whether the schemes should
have been made operative from the date of reference; and (10) What is the scope
of the expression 'average of the basic wage'..
HELD: (1) The settlement between the workmen
and management of A.T.M. did not bar the jurisdiction of the Tribunal to make
the Scheme of gratuity applicable to A.T.M.  Under the settlement all that
was agreed to was, that an award should be made and if it he found that A.T.M.
acquired financial stability then it would be liable to pay the gratuity to its
workmen. It was not agreed that the proceedings before the Tribunal should be
dropped and that it 308 was only after A.T.M. became financially stable that a
fresh claim should be made by the workmen. [320 D-F] (2) The trading accounts
of A.T.M. showed that since 1959-60 the Mills had achieved some stability, and
that by 1961-62 all previous losses were wiped out. Therefore, though it was a
much weaker unit than the others, it was financially stable from the date on which
the scheme became operative. [321 A-C] (3) A unit-wise approach in framing the
gratuity scheme 'for the four units was appropriate in the present case.
[323 B--C; 340 D--E] No inflexible rule has
been laid down by this Court that gratuity schemes should he framed only on the
region- cure-industry principle. In the present case, if a common scheme was
framed for the entire industry in Delhi for all four units, in view of the
financial condition of A.T.M., the benefits under such a scheme would be not only
low, but would be lower than the existing benefits available to workmen in the
D.C.M. and S.B.M. Units. [321 C--D, H; 322 E---F, H] Garment Cleaning Works v.
Its Workmen,  1 S.C.R.
711:  1 L.L.J. 513 and Burhanpur Tapti
Mills Ltd. v. Burhanpur Tapti Mills Mazdoor Sangh,  1 L.L.J. 453,
Bharatkhand Textile Mfg. Co. v. Textile
Labour Association  3 S.C.R. 329, explained.
(4) The Tribunal was in error in relating the
gratuity awardable to the workmen to the consolidated wage instead of the basic
wage. [340 G] (a) In determining the scope of an industrial reference words
used, either in the claim or in the order of reference, should not necessarily
be given the meaning they have under the Industrial Disputes Act. Therefore,
merely because the expression "wages" in the Act includes dearness
allowance, the Tribunal could not base the gratuity scheme on consolidated
wages. [325 D--F] (b) An industrial tribunal cannot adjudicate on disputes not
referred; but when called upon to adjudicate' whether a certain scheme, on the
terms indicated in the reference should be framed, such basic guidance does not
limit its jurisdiction. The Tribunal, in this case, was in error in thinking
that in determining the rate of gratuity it was limited to the number of days
of service in the order of reference as the applicable multiple. On that
assumption, since the gratuity would be too low if only basic wage was chosen,
it was not justified in choosing consolidated wage.
The proper procedure would have been to
choose only the basic wage and fix upon a larger number of days of service as
the appropriate multiple. [327 E--H] (c) The decisions of this Court in May and
Baker (India) Ltd. v. their Workmen,  II L.L.J. 94 (S.C.), British India
Corporation v. Its Workmen,  II L.L.J. 556 (S.C.), British Paints (India)
Ltd. v. Its Workmen,  1 L.L.J. 407 (S.C.), Hindustan Antibiotics Ltd. v.
Their Workmen,  1 L.L.J. 114- (S.C.) and Remington Rand of India v. The
Workmen,  1 L.L.J. 542 (S.C.) are conflicting and no principle can be
extracted as to whether basic wage or consolidated wage should be considered
for purposes of gratuity. Ordinarily, in those circumstances, this Court would
not have interfered with the conclusion of the Tribunal choosing consolidated
wage; but, the Tribunal had failed 309 to take into account the prevailing
pattern in the textile industry all over the country. It is country-wide
industry and in that industry, gratuity has never been granted on the basis of
consolidated wages. [329 C--F; 330 A] (d) The primary object of industrial
adjudication is to adjust the relations between employers and employees with
the object of promoting industrial peace. If the basic wage alone is taken for
purposes of gratuity, it would produce in the present case, a scheme which
deprives the workmen of the D.C.M. and S.B.M. of benefits which had been
granted to them under the voluntary scheme introduced by the management of
those two units and disturb industrial peace therein. But on that account, the
Tribunal was not justified in introducing a fundamental change in the concept
of gratuity granted by numerous schemes in the textile industry all over the
country. The appropriate remedy is to frame a scheme consistent with the normal
pattern prevailing in the industry and introduces reservations protecting
benefits already acquired. [326 C-F] (e) In the report of the Central Wage
Board for the cotton textile industry, also, gratuity was directed to be given
on the basis of wages excluding dearness allowance.
[330 G] (f) In D..C.M. Chemical Works v. Its
Workmen,  1 L.L.J. 388 (S.C.) this Court affirmed the award relating
gratuity to consolidated wages. Though the unit also belonged to D.C.M. it is a
unit entirely independent of the textile unit. So, it cannot be regarded as an
effective or persuasive precedent justifying variation from the normal pattern
of gratuity schemes in operation in the textile industry all over the country.
[331 H; 332 A--B, D-E] (5) If all over the country, in textile centers, payment
of gratuity. is related to the basic wage and not to the consolidated wage any
innovation Delhi region alone is likely to give rise to serious industrial
disputes in other centers in the country. If maintenance of industrial peace is
a governing principle of industrial adjudication, it would be wise to maintain
a 'reasonable degree of uniformity in the diverse units all over the country
and not to make a fundamental departure from the prevailing pattern the basic
wage is low in all other centers, and if it does not play an important part,
there is no reason why it should play, only in the Delhi region, a decisive
part so as to make a vital departure from schemes in operation in other centres
in the country. The acceptance of the award the Tribunal in the present case is
likely to create conditions of great instability in other parts of the country
in the textile industry. Therefore, the Tribunal's award granting gratuity on
the basis of consolidated wage could not be upheld. [332 G--H; 333 A--E] (6) It
is not necessary, for a gratuity scheme to be effective, that here should be
fixation of the age of superannuation. [323 C--D] Burhanpur Tapti Mills Case,
 1 L.L.J. 453, referred Further, on the terms of the reference the plea
of the employers to fix the age of super anuation was beyond the scope of the
'reference, nor was such fixation incidental to the framing of the scheme. [323
H 324 c] (7) The object of providing a gratuity scheme is to provide a retiring
benefit to workmen who have rendered long and unblemished service to the
employer and thereby contributed to the prosperity of the employer. It is
therefore not correct to say that no misconduct, however grave, may not be
visited with forfeiture of gratuity. Misconduct could be (a) 310 technical
misconduct which leaves no trail of indiscipline;
(b) misconduct resulting in damage to the
employers' property which may be compensated by forfeiture of gratuity or part
thereof; and (c) serious misconduct such as acts of violence against the
management or other employees or riotous or disorderly behaviour in or near the
place of employment which, though not directly causing damage, is conducive to
grave indiscipline. The first should involve no forfeiture, the second may
involve forfeiture of an amount equal to the loss directly suffered by the
employer in consequence of the misconduct, and the third will entail forfeiture
of gratuity due to the workmen. [324 F--G; 336 D--F; 341 A--B] Garment Cleaning
Works v. Its Workmen,  1 S.C.R. 711; (1961) I L.LJ. 513, Wenger & Ca.
v. Its Workmen,  II L.L.J. 403 (S.C.), Motipur Zamindari (P) Ltd. v. Their
Workmen,  II L.LJ. 139 (S.C.) Calcutta Insurance Co. v. Their Workmen,
 II L.LJ. 1 (S.C.), and Remington Rand of India v. The Workmen,  I
L.L.J. 542 (S.C.). referred to.
(8) The award does not require to be modified
with regard to badli workmen.
If gratuity is to be paid )for service
rendered then there are no grounds for holding that a badli workman must be deemed
to have rendered service giving rise W a claim of gratuity, merely because, for
maintaining his name on the record of the badli workmen, he is required to
attend the mills. [338 A--B] (9) The award needs no modification with regard to
the date of commencement of the schemes.
The liability of A.T.M. to pay gratuity arose
after it acquired sufficient financial stability and the unit acquired
financial stability only from January 1, 1964. If in respect of the A.T.M.
which had no scheme. gratuity becomes operative from January 1, 1964, there is
no reason why respect of B.C.M. any different rule should be provided for. As
regards D.C.M. and S.B.M. there was already a more advantageous gratuity scheme
in operation and the workmen in those two units were not prejudiced by
directing the scheme applicable to them, to commence from January 1, 1964. If
effect was given to the schemes before January 1, 19'64, it may rake up cases
in which workmen have left the establishment many years ago and it would not be
conducive to industrial peace to allow such questions to be raised after a long
delay. In the absence of any principle, the matter must be decided on
considerations of expediency. [338 G--H; 339 A--D] (10) The expression 'average
of the basic wage' means wage earned by a workman during a month, divided by
the number of days for which he had worked, and multiplied by 26 in order to
arrive at the monthly wage for the computation of gratuity payable. [333 C--D]
[Appropriate directions modifying the schemes were accordingly given.]
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 2168, 2569, of 1966, 76, 123 and 560 of 1967.
Appeals by special leave from the Award dated
June 30, 1966 of the Industrial Tribunal, Delhi in I.D. No. 70 of 1958.
S.T. Desai, Rameshwar Nath and Mahinder
Narain, for the appellant (in C.A. No. 2168 of 1966) and respondents Nos. 1 and
2 (in C.As. Nos. 123 and 560 of 1967).
311 H.R. Gokhale, A.K. Sen, R.P. Kapur and 1.
N. Shroff, for the appellant (in C.A. No. 256,9 of 1966) and respondent no. 3
(in C.As. Nos. 123 and 560 of 1967).
B. Sen, 1. D. Gupta, M.N. Shroff for 1. N.
Shroff, for the appellant (in C.A. No. 76 of 1967).
M.K. Ramamurthi, Madan Mohan, Shyamala Pappu
and Vineet Kumar, for the appellant (in C.A. No. 123 of 1967), respondents Nos.
1 (a) and 4(a) (in C.A. No. 2168 of 1966), respondent No. 1 (in C.A. No. 2569
of 1966), respondent No. 1 (in C.A. No. 76 of 1967) and respondent No. 5 (in
C.A. No. 560 of 1967).
V.C. Parashar and O.P. Sharma, for the
appellant (in C.A. No. 560 of 1967) respondents Nos. 1 (b) and 4(b) (in C.A.
No. 2168 of 1966) respondent No. 2 (in C.A. No. 2569 of 1968) and respondent
No. 2 (in C.A. No. 76 of 1967).
The Judgment of the Court was delivered by
Shah, J. These appeals arise out of an award made by the Industrial Tribunal,
Delhi, in I.D. Reference No. 70 of 1958. The first three appeals are filed by
the employers, and the last two by the employees. By its award the Industrial
Tribunal (Delhi, has framed two schemes relating to payment of gratuity to the
workmen employed in four textile units in the Delhi region. The employers and
the workmen are dissatisfied with the schemes and they have filed these appeals
challenging certain provisions of the schemes.
In the Delhi region there are four textile
units; the Delhi Cloth Mills which will be referred to. as D.C.M.;
Swatantra Bharat Mills--which will be
referred to as S.B.M.;
Birla Cotton Mills-which will be referred to
as B.C.M. and Ajudhia Textile Mills-which will be referred to as A.T.M.
The D.C.M. and S.B.M. are under one
management. On March 4, 1958, the Chief Commissioner of Delhi made a reference
under ss. 10(1)(d) and 12(5) of the Industrial Disputes Act, 1947, relating to
four matters in dispute, first of which is as follows:
"Whether a gratuity for retirement
benefit scheme should be introduced for all workmen on the following lines and
what directions are necessary in this respect ? 1. for service less than 5
2. for service between 5-10 years--15 days'
wages for every year of service.
3. for service between 10- 15 years--21 days'
wages for every year of service.
4. for service over 15 years one month's
wages for every year of service." The reference related to workmen only
and did not apply to the clerical staff or mistries.
There are two workmens' Unions in the Delhi
region--the Kapra Mazdoor Ekta Union hereinafter called 'Ekta Union', and the
other, the Textile Mazdoor Union. The Ekta Union made a claim principally for
fixation of gratuity in addition to the benefit of provident fund admissible to
the workmen under the Employees Provident Fund Act, to be computed on the
consolidated wages inclusive of dearness allowance. The Ekta Union submitted by
its statement of claim that a gratuity scheme based on the region-cum- industry
principle i.e. a uniform scheme applicable to all the four units be framed. The
Textile Mazdoor Union also supported the claim for the framing of a gratuity
scheme on the basis of the consolidated wages of workmen but claimed that the
scheme should be unit-wise. At the trial, it appears that both the Unions
pressed for a unit-wise scheme of gratuity.
The Tribunal entered upon the reference in
respect of the fixation of gratuity scheme in February 1964 and made an award
on June 30, 1966, operative from January 1, 1964. The award was published on
August 4, 1966. By the award two schemes were framed one relating to the D.C.M.
and S.B.M., and another relating to the B.C.M. and A.T.M. Under the second
scheme the digit by which the number of completed year of service was to be
multiplied in determining the total gratuity was smaller than the digit
applicable in the case of the D.C.M. and the S.B.M. The distinction was made
between the two sets of units, because the D.C.M. and S.B.M.
were, in the view of the Tribunal, more
prosperous units than the D.C.M. and A.T.M. The A.T.M., it was found, was a
newcomer in the field of textile manufacture, and had for many years been in
The D.C.M. employs more than 8,000 workmen in
its textile unit; the S.B.M. has on its roll 5,000 workmen; the B.C.M. has
6,271 workmen and the A.T.M. has 1,500 workmen. The D.C.M. and S.B.M. have a
common retirement benefit scheme in operation since the year 1940. Under the
scheme gratuity payable to workmen is determined by the length of service
before retirement. The scheme of gratuity in operation in the D.C.M. and S.B.M.
is as that, "In case of retirement from service of the Mills as a result
of physical disability, due to over-age or on account of death after a minimum
of seven years'.
313 service in the concern:
7 years .... Rs. 350/- 8 years .... Rs. 425/-
9 years .... Rs. 500/- 10 years .... Rs. 575/- 11 years .... Rs. 650/- 12 years
.... Rs. 725/- 13 years .... Rs. 800/- 14 years .... Rs. 875/- 15 years ....
Rs. 950/- 16 years .... Rs. 1,050/- 17 years .... Rs. 1,150/- 18 years ....
Rs.. 1,250/- 19 years .... Rs. 1,350/- 20 years .... Rs. 1'500/- The scale of
gratuity, it is clear, is independent of the individual wage scale of the
workman. In the B.C.M. and A.T.M. units there are no such schemes.
Till the year 1958 there were no standardised
wages in the textile industry. According to the Report of the Central Wage
Board for the Cotton Textile Industry which was published on November 22, 1959,
there were in India 39 regions in which the textile industry was located. The
basic monthly wages of the workmen in the year 1958 varied between Rs. 18/- in
Patna and Rs. 30/- in various centers like Bombay, Indore, Madras, Coimbatore,
Madurai, Bhiwani, Hissar, Ludhiana, Cannanore and certain regions in Rajasthan
and Delhi. The Wage Board recommended in Paragraph-106 of its Report:
"The Board has come to the conclusion
that an increase at the average rate of Rs.
8 per month per worker shall be given to all
workers in mills of category I from 1st January 1960, and a further flat
increase of Rs. 2 per month per worker shall be given to them from 1st January
1962. Likewise an increase at the average rate of Rs. 6 per month per worker
shall be given to all the workers in mills of category 11 from 1st January
1960, and a further flat increase of Rs. 2 per month per worker shall be given
to them from 1st January 1962. These increases are subject to the condition
that the said sums of Rs. 8 and Rs. 6 shall ensure not less than Rs. 7 and Rs.
5 respectively to the lowest paid, and that the increase of Rs. 2 from 1st
January 1962 shall be flat for all." Category I included the Delhi region.
Since January 1, 1962, the basic minimum wage in the Delhi region is, therefore
Rs. 40/Sup. CI/69--3 314 according to the recommendations of the Wage Board. In
Bombay City and Island (including Kurla), the basic wage, according to the
Report of the Wage Board, was also Rs.
30/and by the addition of Rs. 10 the basic
wage of a workman came to Rs. 40/-. The workmen in other important textile
centres also get the same rates.
The Tribunal was of the view that the average
basic wage of the workmen is Rs. 60/- since the implementation of the Wage
Board in the Delhi region. No argument was advanced before this Court
challenging the correctness of that assumption, by the employers or the
workmen. It was also common ground that practically uniform basic wage levels
prevail in all the large textile centers like Bombay, Ahmadabad, Coimbatore and
Besides the basic wage the workmen receive
dearness allowance under diverse awards made by the Industrial Tribunals which "seek
to neutralize the cost of living index." There is also a provident fund
scheme under the Employees. Provident Fund Act, 1962, where under 8-1/3% of the
basic wage and the dearnear allowance and the retaining allowance for the time
being in force is contributed by the employee. Besides, there is a right to
retrenchment compensation under the Industrial Disputes Act, 1947 (s. 25 FFF)
and the Employees Insurance Scheme.. In view of the observations of this Court
in Burhanpur Tapti Mills Ltd. v. Burhanpur Tapti Mills Mazdoor Sangh(1), that
"It is no longer open to doubt that a scheme of gratuity can be introduced
in concerns where there. already exist other schemes such as provident fund or
This has been ruled in a number of cases of
this Court and recently again in Wenger & Co. and others v. Their
Workmen(2), and Indian Hume Pipe Company Ltd. v. Their Workmen (3). It is held
in these cases that although provident fund and gratuity are benefits available
at retirement they are not the same ,and one can exist with the other", no
serious argument was advanced that the existence of these additional benefits
disentitled the workmen to obtain benefits under a gratuity scheme if the
employer is able to meet the additional burden.
But on behalf of all the employers it was,
urged that (1) in determining the quantum of gratuity, basic wage alone could
be taken into account and not the consolidated wage;
and (2 ) it was necessary for the Tribunal to
fix when introducing a gratuity scheme the age of superannuation.
On behalf of the D.C.M., S.B.M. and B.C.M. it
was urged in addition, that a uniform scheme applicable to the entire industry
on the region-cumindustry basis should have been adopted and not a scheme or
schemes applicable to individual units. On behalf of the A.T.M.
(1)  1 L.L.J. 453, (2)  II L.L.J.
(3)  II L.L.J. 830.
315 it was urged that its financial condition
is not and has never been stable and the burden of payment of gratuity to
workmen dying or disabled or on voluntary retirement from service or when their
employment is terminated is excessive and the Unit was unable, to bear that
burden. It was also urged on behalf of the A.T.M. that in view of a settlement
which was reached between the management and workmen it was not open to the
Tribunal to ignore the settlement and to impose a scheme for payment of
gratuity in favour of the workmen in this reference.
While broadly supporting the award of the
Tribunal the workmen claim certain modifications. They claim that a shorter
period of qualifying service for workmen voluntarily retiring should be
provided, and gratuity should be worked out by the application of a larger
multiple of days for each completed year of service; that the ceiling of
gratuity should be related to a larger number of months' wages; that gratuity
should be awarded for dismissal even for misconduct; that provision should be
made for payment of gratuity to Badli workmen irrespective of the number of
days for which they work in a year; that the expression "average of the
basic wage" should be appropriately clarified to avoid disputes in the
implementation of the gratuity scheme, and that the award should be made
operative not from January 1, 1964, but from the date of the reference to the
The two schemes which have been flamed may be
ANNEXURE 'A' "Gratuity scheme applicable
to the Delhi Cloth Mills and the Swatantra Bharat Mills.' Gratuity will be
payable to the employees concerned, in this reference, on the scale and subject
to the conditions laid down below:
1. On the death of an employee while in the
service of the mill company or on his becoming physically or mentally
incapacitated for further service:
(a) After 5 years continuous service and less
than 10 years' service---12 days' wages for each completed year of service.
(b) After continuous service of 10 years--15
days' wages for each completed year of service.
The gratuity will be paid in each case under
clauses 1(a) and 1(b) to the employee, his heirs or executors, or nominee as
the case may Provided that in no case will an employee, who is in service on
the date on which this scheme is brought 316 into operation be paid an mount
less than what he would have been entitled to under the pre- existing scheme of
the Employees' Benefit Fund Trust.
(ii) Provided further that the maximum
payment to be made shall not exceed the equivalent of 15 months wages.
(iii) Provided further that gratuity under
this scheme will not be payable to any employee who has already received
gratuity under the preexisting scheme of the Employees' Benefit Fund Trust.
2. On voluntary retirement or resignation
after 15 years' service--15 days' wages for each completed year of service.
Provided that the maximum payment to be made
shall not exceed the equivalent of 15 months' wages.
3. On termination of service on any ground
whatsoever except on the ground of misconduct As in clauses 1 (a) and 1 (b)
Provided that the maximum payment to be made
shall not exceed the equivalent of 15 months' wages.
(a) 'Wages' The term "wages" in the
scheme will mean the average of the basic wage plus the dearness allowance
drawn during the 12 months next preceding death, incapacitation, voluntary
retirements, resignation or termination of service and will not include
(b) "Basic wages" The term
"basic wage" will have the meaning as defined in paragraph 110 of the
Report of the First Central Wage Board for Cotton Textile Industry.
(c) "Continuous service" means un-
interrupted service and includes service which may be interrupted on account of
sickness, authorised leave, strike which is not illegal, lock-out or cessation
of work which is not due to any fault on the part of the employee:
Provided that interruption in service upto
six months' duration at any one time and 18 317 months duration in the
aggregate of the nature other than those specified above shall not cause the
employee to lose the credit for previous service in the Mills for the purpose
of calculation of gratuity, but at the same time shall not entitle him to claim
benefit of gratuity for the period of such interruption.
Service for the purposes 'of gratuity will
include service under the previous management whether in the particular mill or
other sister mill under the same management.
(d) "Resignation" The word
"resignation" will include abandonment of service by an employee
provided he Submits his resignation within a period of three months from the
first day of absence without leave.
(e) "Length of service" For
counting "length of service:', fraction of a year exceeding six months
shall count as one full year, and six months or less shah be ignored.
5. "Application for gratuity" Any
person eligible to claim payment of gratuity under this scheme shall, so far as
possible, send a written application to the employer within a period of six
months from the date its payment becomes due.
6. "Payment of gratuity" The
employer shall pay the amount of gratuity to the employee and in the event of
his death before payment to the person or persons entitled to it under clause 1
above within a period of 90 days of the claim being presented to the employer
and found valid.
7. "Claims by persons who are no longer
in service"-- Claims by persons who are no longer in service of the
Company on the date of the publication of this award shall not be entertained
unless the claims are preferred within six months from the date of publication
of this award.
8. "Badli service" Gratuity shall
be paid for only those years of Badli service in which the employee has worked
for not less than 240 days.
9. "Proof of incapacity" In proof
of physical or mental incapacity, it will be necessary to produce a certificate
from any one of the Medical Authorities out of a panel to be jointly drawn up
by the parties.
10. "Nomination" (a) Each employee
shall, within six months from the date of the publication of this award, make a
nomination conferring the right to receive the amount of gratuity that may be
due to him in the event of his death, before payment has been made.
(b) A nomination made under sub-clause (a)
above may, at any time, be modified by the employee after giving a written
notice of his intention of doing so. if the nominee pre- deceases the employee,
the interest of the nominee shall revert to the employee who may make a fresh
nomination in respect of such interest." ANNEXURE 'B' "Gratuity
scheme applicable to the Birla Cotton Spg. & Wvg. Mills and the Ajudhia
Gratuity will be payable to the employees
concerned in this reference, on the scale and subject to the conditions laid
1. On the death o/an employee while in the
service of the Mill company or on his becoming physically or mentally
incapacitated for further service:
(a) After 5 years continuous service and less
than 10 years service---One-fourth month's wages for each competed year of
(b) After continuous service of 10
years---One third month's wages for each completed year of service.
The gratuity will be paid in each case under
clauses 1(a) and 1(b) to the employee, his heirs or executors, or nominee, as
the case may be.
Provided that the maximum payment to be made
shah not exceed the equivalent of 12 months' wages.
2. On voluntary retirement or resignation
after 15 years service--On the same scale as in 1 (b) above.
Provided that the maximum payment to be made
shall not exceed the equivalent of 12 months' wages.
3. On termination of service by the employer
for any reason whatsoever eXcePt on the ground of misconduct--As in clauses
1(a) and 1(b) above.
319 provided that the maximum payment to be
made shall not exceed the equivalent of 12 months' wages." [Clauses 4 to
10 of Annexure 'B' are the same I as in Annexure 'A' and need not be repeated.]
Whether against the A.T.M. the Tribunal was incompetent to make an award
framing a .scheme for payment of gratuity may first be considered. Counsel for
the A.T.M. urged that there was a settlement between the workmen and the
management of the A.T.M. in consequence of which the Tribunal was incompetent
to make an award. The facts on which reliance was placed are these: After ,the
dispute was referred .to the Industrial Tribunal, there were negotiations
between the management of the A.T.M. and workmen represented by the two Unions
and an agreement was reached, the terms whereof were recorded in writing.
Clauses 6 and 11 (4) of the agreement relate to the claim for gratuity:
"6. The workmen agree not to claim any
further increase in wages, basic or dearness, or make any other demand involving
financial burdens on the Company either on their initiative or as a result of
any award, till such time as the Working of the mills results in profits.
11. The parties hereto agree to jointly
withdraw in terms of this settlement, the following pending cases and
proceedings before the Courts, Tribunals and Authorities and' more especially--
(4) With regard to I.D. No. 70 of 1958 the
workers agree not to claim any benefits that ,may be granted under the above
reference by the Hon'ble Industrial Tribunal in case the award is. given in
favour of the workmen, subject to clause 7 above." (It is common ground
that reference to el. 7 is erroneous: it should be .to cl. 6.) The workmen and
the management of the unit submitted an application before the Tribunal on
December 28, 1959, admitting that there had been an "overall
settlement" of all the pending disputes between the management of A.T.M.
and its workmen represented by the two Unions, and requested that an interim
award be made in terms of the agreement insofar as the dispute related to the
A.T.M. No order was passed by the Tribunal on that application. On June 4,
1962, the Manager of the A.T.M. applied to the Tribunal that an interim award
be pronounced in terms of the agreement.
The workmen had apparently changed their
attitude by that time and filed a written statement and requested that the
,prayer contained in paragraph 3 of the application "be rejected 320 as
impermissible in law". The Tribunal made an order on November 26, 1962,
"......the only interpretation that can
be given to clause 11(4) of the settlement read with clause 7 is, that the
workers of the Ajudhia Textile Mills had bound themselves not to claim any
benefits that might be granted by the Tribunal in the award on the present
reference, if it turns out to be in favour of the workmen unless and until the
working of the Mills results in profit. The fact that the passing of an award
on the demands was envisaged under the settlement goes to show that the demands
were to be adjudicated upon in any case. The main case will now proceed in
respect of all the mills and the effect of the settlement and of the
application dated 28th December, 1959, and of the 5th July 1962 will be
considered at the time of the final award." But in making the final award
the Tribunal did not specifically refer to the settlement. The terms of cl. 6
of the settlement clearly show that if it be found that the A.T.M. had acquired
financial stability, it will be liable to pay gratuity to the workmen. We are
unable to agree with the contention of counsel for the A.T.M. that it was
intended by the parties that the adjudication proceedings against the A.T.M.
should be dropped, and after the A.T.M.
became financially stable a fresh claim
should be made by the workmen on which a reference may be made by the
Government for adjudication of the claim for gratuity against the A.T.M. The
contention by the management of the A.T.M. that the Tribunal was incompetent to
determine the gratuity payable to the workmen of the A.T.M. must therefore
The other contention raised on behalf of the
A.T.M. that its financial position was "unstable" need not detain us.
The Tribunal has held that the A.T.M. was
working at a loss since the year 1953-54 and the losses aggregated to Rs. 6.22
lakhs in the year 1958-59, but thereafter the financial position of the Unit
improved. The trading account for the period ending March 31, 1960, showed
profits amounting to Rs. 3.10 lakhs. In 1960-61 there was a surplus of Rs.
11.18 lakhs out of which adjusting the depreciation, development rebate reserve
and reserve for bad and doubtful debts, there was a balance of Rs. 7.10 lakhs.
In 1961-62 the net profits of the Unit amounted to Rs. 7.48 lakhs and the
A.T.M. distributed Rs. 52,500/- as dividend. In 1962-63 there was a gross
profit of Rs. 4.18 lakhs and after adjusting depreciation and development
rebate reserve there was a net deficit of Rs. 30,517/-. In 1963-64 there was a
gross profit of Rs. 14.29 lakhs and after adjusting depreciation, reserve for
doubtful debts, bonus to employees and development rebate reserve, there re-
321 mained a net profit of Rs. 4.71 lakhs. The Tribunal observed that by
1961-62 all previous losses of the Unit were wiped out and that even during the
year 1962-63 in which there was labour unrest the gross profits were
substantial and taking into consideration the reserves built by the Company
"the picture was not disheartening and from the great progress that had
been made since 1959-60 there was every reason to think that the Mill had
achieved stability and reasonable prosperity and that it had an assured
future", and the Company was in a position to meet the burden of a modest
gratuity scheme. We see no reason to disagree with the finding recorded by the
Tribunal on this question.
On behalf of the D.C.M., S.B.M., and B.C.M.
it was urged that normally gratuity schemes are framed on the region cum industry
principle, i.e., a uniform scheme applicable to all Units in an industry in a
region is framed, and no ground for departure from that rule was made out. It
was urged that this Court has accepted invariably the region-cum-industry
principle in fixing the rates at which gratuity should be p.aid. In our
judgment no such rule has been enunciated by this Court. In Bharatkhand Textile
Co. Ltd. v. Textile Labour Association, Ahmadabad(1),
this Court in dealing with the question whether the Industrial Court had
committed an error in dealing with the claim for gratuity on industry-wise
basis negatived the contention of the employers that the unit-wise basis was
the only basis which could be adopted in fixing the rates of gratuity. It was
observed at p. 345:
"Equality of competitive conditions is
in a sense necessary from the point of view of the employers themselves; that
in fact was the claim made by the Association which suggested that the gratuity
scheme should be framed on industry-wise basis spread over the whole of the
country. Similarly equality of benefits such as gratuity is likely to secure contentment
and satisfaction of the employees and lead to industrial peace and harmony. if
similar gratuity schemes are framed for all the units of the industry migration
of employees from one unit to another is inevitably checked, and industrial
disputes arising from unequal treatment in that behalf are minimaised. Thus,
from the point of view of both employers and employees industry-wise approach
is on the whole desirable." It is clear that the Court rejected in that
case the argument that rates of gratuity should be determined unit- wise: the
Court did not rule that in all cases the region- cum-industry principle should
be adopted in fixing the rates of gratuity. That was made explicit in a later
judgment of this Court: Burhanpur Tapti Mills Ltd. v. (1)  3 S.C.R. 329.
322 Burhanpur Tapti Mills Mazdoor Sangh(x).
This Court observed at p. 456:
"......it has been laid down by this
Court that there are two general methods of fixing the terms of a gratuity
scheme. It may be fixed on the basis of industry-cum-region or on the basis of
units. Both systems axe admissible but regard must be had to the surrounding
circumstances to select the right basis. Emphasis must always be laid upon the
financial position of the employer and his profit-making capacity whichever
method is selected." In Garment Cleaning Works v. Its Workmen(1) this
Court observed at p. 713:
"......it is one thing to hold that the
gratuity scheme can, in a proper case, be flamed on industry-cum-region basis,
and another thing to say that industry-cum-region basis is the only basis on
which gratuity scheme can be framed. In fact, in a large majority of cases
gratuity schemes are drafted on the basis of the units and it has never been
,suggested or held that such schemes are not permissible." The Tribunal in
the award under appeal observed:
"There are ..... certain peculiar
features in the textile industry in this region which militate against an
indnstry-cum- region approach. Apart from the fact that one of the four units,
namely, the Ajudhia Textile 'Mills is a much weaker unit than the rest and has
passed through a chequered career during its existence, it has to be borne in
mind that two of the units namely D.C.M. and S.B.M. which axe sister concerns,
already have some sort of a gratuity scheme providing for two important retiral
benefits, namely, death and physical disablement on a scale which is
independent of wage variations and is not unsubstantial at least for categories
in the lower levels." The Tribunal further observed:
"if a common scheme is framed for the
entire textile industry at Delhi i.e. for all the four units the quantum of
benefits under that scheme will naturally have to be much lower in
consideration of the financial condition of the Ajudhia Textile Mill, than if a
unit-wise scheme is framed. Moreover in a common scheme of gratuity the quantum
of benefits to be provided will have to be (1)  1 L.L.J 453.
(2)  1 S.C.R. 711;  I L.L.J. 513.
323 lower than the benefits already available
to workmen in the D.C.M. and S.B.M. units for the most important contingencies
for which gratuity benefits are meant, namely, death and retirement on account
of physical or mental incapacity. Such a lowering of the quantum of benefits
would not in my view be desirable as it would create legitimate
discontent." In our judgment, no serious objection may be raised against
the reasons set out by the Tribunal in support of the view that unitwise
approach should be adopted in the reference before it and not the
region-cum-industry approach. No case is there/ore made out for interference
with the award made determining the rates of gratuity unit-wise.
We also agree with the Tribunal that on the
terms of the reference it was incompetent to fix the age of superannuation for workmen.
We are unable to hold that a gratuity scheme may be implemented only if the age
of superannuation of the workmen is determined by the award.
Support was sought to be derived by counsel
for the employers in support of his plea from the observations made by this
Court in Burhanpur Tapti Mills Ltd.'s case(D, where in examining the nature of
gratuity, it was observed:
"The voluntary retirement of an
inefficient or old' or worn out employee on the assurance that he is to get a
retiral benefit leads to the avoidance of industrial disputes, promotes
contentment among those who look for promotions., draws better kind of
employees and improves the tone and morale of the industry. It is beneficial
all round. It compensates the employee who as he grows old knows that some
compensation for the gradual destruction of his wage-earning capacity is being
built up. By inducing voluntary retirement of old and worn out workmen it
confers on the employer a benefit akin to the replacing of old and worn out
machinery." There is, in our judgment, nothing in these observations which
justifies the view that a gratuity scheme cannot be effective unless it is
accompanied by the fixation of the age of superannuation for the workmen in the
There is another objection to the consideration
of this claim made on behalf of the employers. By the express terms of
reference the Tribunal is called upon to adjudicate on the question of fixation
of gratuity: there is no .reference either expressly or by implication to the
fixation of the age of superannuation and in the absence of any reference
relating to the fixation of the age of (1)  1 LL.J.
324 superannuation, the Tribunal was not
competent to fix the age of superannuation. A gratuity scheme may, in our
judgment, be implemented even without fixing the age of superannuation. The
gratuity scheme in operation in the D.C.M. and S.B.M. has been effectively in
operation without any age of superannuation for the workmen in the two units.
An enquiry into the question of fixing the age
of superannuation did not arise out of the terms of reference.
No such claim was made by workmen and' even
in the written statement filed by the employers no direct reference was made to
the fixation of the age of superannuation, nor was there any plea that before
framing a gratuity scheme the Tribunal should provide for the age of
superannuation. We agree with the Tribunal that fixation of the age of
superannuation was not incidental to the ,framing of the gratuity scheme 'and
it was neither necessary nor desirable that it should be fixed.
Counsel for the employers urged that the
Tribunal committed a serious error in relating the computation of gratuity
payable to the workmen on retirement on the consolidated monthly wage and not
on the basic wage.
"Gratuity" in its etymological
sense means a gift especially for services rendered or return for favours
received. For some time in the early stages in the adjudication of industrial
disputes, gratuity was treated as a gift made by the employer at his pleasure
and the workmen had no right to claim it. But since then there has been a long
line of precedents in which it has been ruled that a claim for gratuity is a
legitimate claim which the workmen may make and which in appropriate cases may
give rise to an industrial dispute.
In Garment Cleaning Works' case(1) it was
observed that gratuity is not paid to the employees gratuitously or merely as a
matter of boon. It is paid to him for the service rendered by him to the
employer. The same view was expressed in Bharatkhand Textile Mfg. Ltd.'s
case(2) and Calcutta Insurance Ltd. v. Their Workmen(a). Gratuity paid to
workmen is intended to help them after retirement on superannuation, death,
retirement, physical incapacity, disability or otherwise. The object of providing
a gratuity scheme is to provide a retiring benefit to workmen who have rendered
long and unblemished service to the employer and thereby contributed to the
prosperity of the employer. It is one of the 'efficiency-devices' and is
considered necessary for an 'orderly and humane elimination' from industry of
superannuated or disabled employees who, but for such retiring benefits, would
continue in employment even though they function inefficiently. It is not paid
to an employee .gratuitously or merely as a matter of boon; it is paid to him
for long and meritorious service rendered by him to the employer.
(1)  1 S.C.R. 711. (2)  3 S.C.R.
(3)  II L.L.J. 1.
325 On the findings recorded by the Tribunal
all the textile units in the Delhi region are able to meet the additional
financial burden, resulting from the imposition of a gratuity scheme. The
D.C.M. and S.B.M. have their own schemes which enable the workmen to obtain
substantial benefit on determination of employment. The B.C.M. though a weaker
unit is still fairly prosperous and is able to bear the burden: so also the
But the important question is whether these
four units should be made liable to pay gratuity computed on the consolidated
wage i.e., basic wage plus the dearness allowance. The Tribunal was apparently
of the view that in determining the question the definition of the word
"wages." in the industrial Disputes Act, 1947, would come to the aid
of work-men. The expression "wages" as defined in s. 2(rr) of the Industrial
Disputes Act means all remuneration, capable of being expressed in terms of
money, which would, if the terms of employment, expressed or implied, were
fulfilled, be payable to a workman in respect of his employment or of work done
in such employment and includes among other things, such allowances (including
dearness allowance) as the workman is for the time being entitled to.
But we are unable to hold that in determining
the scope of an industrial reference, words used either in the claim advanced
or in the order of reference made by the Government under s. 10 of the Industrial
Disputes Act must of necessity have the meaning they have under the Industrial
Disputes Act. Merely because the expression "wages" includes dearness
allowance within the meaning of the Industrial Disputes Act, the Tribunal is
not obliged to base a gratuity scheme on consolidated wages.
The Tribunal has observed that the basic
average wage of a workman in the textile industry in the Delhi region may be
taken at Rs. 60/- per month, and the dearness allowance at Rs. 100/per month,
and even if full one month's basic wage is adopted as the minimum quantum of
benefits to be allowed in the case of wage group with service of 5 years and
more the scale of benefit would be very much lower than the present scale in
the two contingencies provided in the Employees Benefit Fund Trust Scheme in
operation in the D.C.M. and S.B.M. And observed the Tribunal:
"In view of the limitations of the terms
of reference, the quantum cannot exceed 15 days' wages for every year of
service from 5 to 10 years and 21 days' wages for every year of service from
10-15 years. Any schemes framed within the limitations of the terms of
reference on the basis of basic wage alone will therefore mean a scale of
benefits much lower than even the present scheme under the Employees Benefit
Fund Trust. Such 326 a scheme cannot, therefore, be framed without causing
grave injustice and acute discontent, because it will mean the deprivation of
even the present scale of benefits in the case of a large body of workers. In
order to maintain, so far as possible, the present level of benefits I have,
therefore, no alternative but to frame for these two units a scheme based on
basic wage plus dearness allowance." A scheme of gratuity based on
consolidated wages was also justified in the view of the Tribunal because it
"was also necessary to compensate for the ever diminishing market value of
The Tribunal did however observe that
normally gratuity is based not on the consolidated wage but on basic wage. But
since 13,000 workmen out of a total of 20,000 workmen in the region would stand
to lose the benefits granted to them under a voluntary scheme introduced by the
D.C.M. and S.B.M. a departure from the normal pattern should be made and
gratuity should be based on the consolidated monthly wage.
In our judgment, the conclusion of the
Tribunal cannot be supported. The primary object of industrial adjudication is,
it is said, to adjust the relations between the employers and employees or
between employees inter se with the object of promoting industrial peace, and a
scheme which deprives workmen of what has. been granted to them by the employer
voluntarily would not secure industrial peace. But on that account the Tribunal
was not justified in introducing a fundamental change in the concept of a
benefit granted to the workmen in the textile industry all over the country by
numerous schemes., The appropriate remedy is to introduce reservations
protecting benefits already acquired and to frame a scheme consistent with the
normal pattern prevailing in the industry.
We consider it fight to observe that in
adjudication of industrial disputes settled legal principles have little play:
the awards made by industrial tribunals are often the result of ad hoc
determination of disputed questions, and each determination forms a precedent
for determination of other disputes. An attempt to search for principle from
the law built up on those precedents is a futile exercise. To the Courts
accustomed to apply settled principles to facts determined by the application
of the judicial process, an essay into the un-surveyed expanses of the law of
industrial relations with neither a compass nor a guide, but only the pillars
of precedents is a disheartening experience. The Constitution has however
invested this Court with power to sit in appeal over the awards of Industrial
Tribunals which are, it is said, rounded on the somewhat hazy background of
maintenance of industrial peace, which secures the prosperity of the industry
and improvement of the conditions of workmen employed in the industry, and in
327 the absence of principles precedents may have to be adopted as guides—some what
reluctantly to secure some reasonable degree of uniformity of harmony in the
But the branch of law relating to industrial
relations the temptation to be crusaders instead of adjudicators must be firmly
resisted. It would not be out of place to remember the statement of the law
made in a different context but nonetheless appropriate here---by Douglas, J.,
of the Supreme Court of the United States in United Steel Workers of America v.
Enterprise Wheel and Car Corporation(1):
"......as arbitrator does not sit to dispense
his own brand of industrial justice. He may of course look for guidance from
many sources, yet his award. is legitimate only so long as it draws its essence
from the collective bargaining agreement. When the arbitrator's words manifest
an infidelity to this obligation, courts have no choice but to refuse
enforcement of the award." We may at once state that we are not for a
moment suggesting that the law of industrial relations developed in Our country
has proceeded on lines parallel to the direction of the law in the United
One of the grounds which appealed to the
Tribunal in relating to the rate of gratuity to the consolidated wage was the
existence of a gratuity scheme in the D.C.M. & S.B.M. and-the assumption
that the Tribunal in adjudicating a dispute is always, in exercise of its
jurisdiction, limited when determining the rate of gratuity to the multiple
number of days of service in the order of reference, and cannot depart there from.
We are unable to hold that Industrial Tribunal is subject to any such
restriction. Its power is to adjudicate the dispute. It cannot proceed to
adjudicate disputes not referred: but when called upon to adjudicate whether a
certain scheme "on the lines indicated" should he framed, the basic
guidance cannot be deemed to impose a limit upon its jurisdiction.
As already stated, gratuity is not in its
present day concept merely a gift made by the employer in Iris own discretion.
The workmen have in course of time acquired a right to gratuity on
determination of employment provided the employer can afford having regard to
his financial condition, to pay it. There is undoubtedly no statutory direction
for payment of gratuity as it is in respect of provident fund and retrenchment
compensation. The conditions for the grant of gratuity are, as observed in
Bharatkhand (1)  363 U.S. 593.
325 Textile Mfg. Co. Ltd.'s case(1), (i)
financial capacity of the employer; (ii) his profit making capacity; (iii) the
profits earned by him in the past; (iv) the extent of his reserves; (v) the
chances of his replenishing them; and (vi) the claim for capital invested by
him. But these are not exhaustive and there may be other material
considerations which may have to be borne in mind in determining the terms and
conditions of the gratuity scheme. Existence of other retiring benefits such as
provident fund and retrenchment compensation or other benefits do not destroy
the claim to gratuity: its quantum may however have to be adjusted in the light
of the other benefits.
We may repeat that in matters relating to the
grant of gratuity and even generally in the settlement of disputes arising out
of industrial relations, there are no fixed principles, on the application of
which the problems arising before the Tribunal or the Courts may be determined
and often precedents of cases determined adhoc are utilised to build up claims
or to resist them. It would in the circumstances be futile to attempt to.
reduce the grounds of the decisions given by the Industrial Tribunals, the
Labour Appellate Tribunals and the High Courts to the dimensions of any
recognized principle. We may briefly refer to a few of the precedents relating
to the grant of gratuity. In May and Baker (India) Ltd. v. Their Workmen(2) the
claim of the workmen to fix gratuity on the basis of gross salary was rejected
by the Industrial Tribunal and the quantum was related to basic salary i.e.,
excluding dearness allowance. The view taken by the Tribunal was affirmed by
this Court. In British India Corporation v. Its Workmen(3) the existing
gratuity scheme directed payment of gratuity in terms of consolidated wages.
The Tribunal however modified the scheme while retaining the basis of
consolidated wages which was held to be justified and reasonable. This Court
observed that prima facie gratuity is awarded not by reference to consolidated
wages but on basic wages and the Tribunal had made a departure from that.
But in the view of the Court no interference
with the scheme framed by the Tribunal was called for. In British Paints
(India) Ltd. v. Its Workmen(4) the Court followed the judgment in May and Baker
(India) Ltd.(a) that it would be proper to follow the usual pattern of fixing
the quantum of gratuity on basic wage excluding dearness allowance. But the
same principle was not adhered to in all cases. For instance in Hindustan
Antibiotics Ltd. v. Their Workmen(5), it was observed:
(1)  3 S.C.R. 329. (2)  II L.L.J.
(3)  II L.L.J. 556 (S.C.). (4)  I
(5)  I L.L.J. 114 (S.C.)==A.I.R. 1967
329 "The learned counsel for the Company
then argued that there is a flagrant violation or departure from the accepted
norms in fixing the wage structure and the dearness allowance and therefore, as
an exceptional case, we should set aside the award of the Tribunal and direct
it to. re-fix the wages." In that case the Tribunal had awarded gratuity
related to consolidated wages and without any contest the order of the Tribunal
was confirmed. In Remington Rand of India v. The Workmen(1) it was contended on
behalf of the employer that the Tribunal was not justified in awarding gratuity
on the basis of consolidated wages and should have awarded it on the basic
wages alone. In dealing with that plea this Court Observed that the Tribunal
was on the facts of the case justified in proceeding in that way.
It is not easy to extract any principle from
these cases; as precedents they are conflicting. If the matter rested there, we
could not interfere with the conclusion of the Tribunal, but the Tribunal has
failed to take into account the prevailing pattern in the textile industry all
over the country. The textile industry is spread over the entire country, in
pockets some large other small. There are large and concentrated pockets in
certain regions and smaller pockets in other regions. Except in two or three of
the smaller States, textile units are to be found all over the country. It is a
country-wide industry and in that industry, except in one case to be presently
noticed, gratuity has never been granted on the basis of consolidated wages.
Out of 39 centres in which the textile industry is located there is no centre
in which gratuity.
payable to workmen in the textile industry
pursuant to awards or settlements is based on consolidated wages. In the two
principal centres viz., Bombay and Ahmedabad, schemes for payment .of gratuity
to workmen in the textile industry the rates of gratuity are related to basic
The B.C.M. have tendered before the Tribunal
a chart setting out the names of textile units in which the gratuity is paid to
the workmen on basic wages. These are the Textile Units, Bhavnagar (Gujarat)
Shahu Chhatrapati Mills, Kolhapur (Maharashtra); Jivajirao Cotton Mills,
Gwalior (Madhya Pradesh); Madhya Pradesh Mill-owners Association, (Indore),
Bombay, Ahmedabad (Gujarat); New Sherrock Spg. & Wvg. Co. Ltd. Nadiad
(Gujarat); Raja Bahadur Motilal Mills, Poona (Maharashtra); Shree Gajanan Wvg.
Mills, Sangli (Maharashtra); T.I.T. Bhiwani (Haryana); Jagatjeet Cotton Mills,
Phagwada (Punjab); 36 Textile Mills in West Bengal;
and Umed Mills (Rajasthan). It is true that
the chart does not set out the gratuity schemes, if any, in all the 39 centres
referred to in the Report of the First Wage Board, but the chart relates to a
fairly representative segment of the industry. No evidence has been (1) 
I L.L.J. 542.
3Sup. Cl/69--4 330 placed before the Court to
prove that in determining gratuity payable under any other scheme in a textile
unit the rate is related to consolidated wages. The two large centres in which
the industry is concentrated are Bombay and Ahmedabad. In Rashtriya Mill
Mazdoor Sangh, Bombay, v.
Millowners Association Bombay(1), a scheme
was framed by the Industrial Court, exercising power under the Bombay
Industrial Relations Act 11 of 1947, in which the quantum of gratuity was
related to the basic wages alone. In paragraph-27 at p. 583 the Tribunal
rejected the argument advanced by counsel for the workmen that since benefits
like provident fund, retrenchment compensation, State Insurance Scheme, are
granted in terms of monthly wages, gratuity should also be related to
consolidated wages. They observed that in a large majority of awards of the
Labour Appellate Tribunals and Industrial. Tribunals gratuity had been awarded
in terms of basic wages, and that, "The basic wages reflect the
differentials between the workers more than the total wages, as dearness
allowance to all operatives is paid at a flat rate varying with the cost of
living index. The gratuity schemes for the supervisory and technical staff as
well as for clerks are also in terms of basic wages." They accordingly
related gratuity with the average basic wage earned by the workman during the
twelve months preceding death, disability, retirement, resignation or
termination of service. The scheme in the Bombay region was adopted in the
dispute between the Textile Labour Association and the Ahmedabad Mill Owners
Association. The award is reported in the Textile Labour Association, Ahmedabad
v. Ahmedabad Millowners' Association(2). The question whether gratuity should
be fixed on the basis ,of consolidated wages was apparently not mooted, but it
was accepted on both the sides that gratuity should be related to basic wages.
An appeal against that decision in the Ahmedabad Millowners' Association
case(2) was brought before this Court in Bharatkhand Textile Manufacturing Co. Ltd.'s
case(3), but no objection was raised to the award relating gratuity to basic
wages. In the report of the Central Wage Board for the Cotton Textile Industry,
1959, in paragraph-110 gratuity was directed to be given on the basis. of wages
plus the increases given under paragraph- 106, but excluding the dearness
The only departure from the prevailing
pattern to which our attention is invited was made by the Labour Appellate
Tribunal in regard to the textile units in the Coimbatore Region: Rajalakshmi
Mills Ltd. v. Their Workmen(4). There was apparently (1)  Industrial
Court Reporter 561.
(2)  I L.LJ. 349.
(3)  3 S.C.R. 329.
(4)  II L.L.J. 426.
331 no discussion on the question about the
basis on which gratuity should be awarded. The Labour Appellate Tribunal observed:
2. "In all the appeals there is a
contest by the mills on the subject of gratuity, and it is contended that the
gratuity as awarded is too high. Both sides had much to say on the subject of
the gratuity scheme as given by the adjudicator. During the course of the
hearing we indicated to the parties the lines on which the gratuity scheme
could be suitably altered to meet their respective points of view.
3. We accordingly give the following scheme
in substitution of the scheme at Para 85 of the award:
'All persons with more than five years and
less than ten years' continuous service to their credit, on termination of
their service by the company, except in cases of dismissals for misconduct
involving moral turpitude, shall be p.aid gratuity at the rate of ten days'
average rate of pay inclusive of dearness allowance for each completed year of
service.' ..............................." But this award was modified
later by the Industrial Tribunal in Coimbatore District Mill Workers' Union and
Rajalakshmi Mills Co. Ld.(1) The earlier
award made in 1957 was sought to be reviewed before the Industrial Tribunal.
The Tribunal observed that it would be the duty of the Tribunal to modify a
gratuity scheme based upon some agreement or settlement if the terms of that
agreement are found to be onerous and oppressive. The Tribunal stated that the
original scheme was not applicable to all the units and taking into
consideration the statutory provident fund scheme and "the fact that
recently basic wages and dearness allowance have leaped up", there was no.
justification for including the dearness allowance in any new scheme that might
be framed for the new Mills; and that it would be most undesirable to have two
sets of gratuity schemes in the same region with varying rates. In the view of
the Tribunal there should be a uniform scheme for all the Mills, old and new,
and on that ground also the retention of the dearness allowance under the old
scheme must be refused.
Counsel for the workmen relied upon an award
made by the Industrial Tribunal in the Chemical Unit belonging to the D.C.M.
which is published in D.C.M. Chemical Works v. Its Workmen(2). In that case
gratuity was related to consolidated wages. The unit though belonging to the
is entirely independent of the tex (1) 
I L.L.J. 638. (2)  1L.L.J. 388.
332 tile unit. The Company was treating that
unit as separate from the textile unit and distinct for the purpose of
recruitment of labour, sales and conditions of service for the workmen employed
therein. The Chemical Unit had separate muster-rolls for its employees and
transfers from one unit to. the other, even where such transfers were possible,
considering the utterly different kinds of businesses carried on in the
different units, usually took place with the consent of the employee concerned.
In upholding the gratuity scheme which was based on the consolidated wages,
this Court observed:
"As to the burden of the scheme, we do
not think that, looking at it from a practical point of view and taking into
account the fact that there are about 800 workmen in all in the concern, the
burden per year would' be very high, considering that the number of retirements
is between three to four per centum of the total strength." The gratuity
scheme was in a chemical unit, and not in a textile unit. The judgment of this
Court merely affirmed the award of the Tribunal and sets out no reasons why
gratuity should be related to consolidated wages. We do not regard the
affirmance by this Court of the award of the Industrial Tribunal as an
effective or persuasive precedent justifying a variation from the normal
pattern of gratuity schemes in operation in the textile industry all over the
It is clear that in the gratuity schemes
operative at present to which our attention has been invited, in force in the
textile industry payment of gratuity is related not to consolidated wages but
to basic wages. It is true that under the scheme which is in operation in the
D.C.M. and S.B.M. payment which is related to the length of service may in some
cases exceed the maximum awardable under a scheme of gratuity benefit related
to basic wages. That cannot be a ground for making a vital departure from the
prevailing pattern in the other textile units in the country. But it may be
necessary to protect the interest of the members governed by the original
Determination of gratuity is not based on any
definite rules. In each case it must depend upon the prosperity of the concern,
needs of the workmen and the prevailing economic conditions, examined in the
light of the auxiliary benefits which the workmen may get on determination of
employment. If all over the country in the textile centres payment of gratuity
is related to the basic wages and not on consolidated wages any innovation in
the Delhi region is likely to give rise to serious industrial disputes in other
centres all over the country. The award if confirmed would not ensure
industrial peace: it is likely to foment serious unrest in 333 other centres.
If maintenance of industrial peace is a governing principle of industrial
adjudication, it would be wise to maintain a reasonable degree of uniformity in
the diverse units all over the country and not to make a fundamental departure
from the prevailing pattern. We are, therefore, of the view that the Tribunal's
award granting gratuity on the basis of consolidated wage cannot be upheld.
Tiffs modification will not, however, affect
the existing benefits which are available under the schemes framed by the
D.C.M. and S.B.M. insofar as those two units are. concerned.
Mr. Ramamurthi for the workmen also.
contended that in the matter of relating gratuity to wages--consolidated or
basic--the principle of region-cum-industry should be applied and an
"overall view of similar and uniform conditions in the industry' in
different centres" should not be adopted. It was also urged that the basic
wage is very low and the class of wage to which gratuity was related played a
very important part in the determination of gratuity. The basic wage is however
low in all the centres and if it does not play an important part in other
centres, we see no reason why it should play only in the Delhi region a
decisive part so as to make a vital departure from the scheme in operation in
the other centres in the country. We are strongly impressed by the circumstance
that acceptance of the award of the Tribunal in the present case is likely to
create conditions of great instability all over the country in the textile
industry. In that view, we decline to uphold the order of the Tribunal fixing
gratuity on the basis of consolidated wages inclusive of dearness allowance.
We may refer to the contentions advanced by
counsel for the workmen in the two appeals filed by them. It was urged,, that
the Tribunal was in error in denying to the workmen gratuity when employment is
determined on the ground of misconduct. It was urged that it is now a rule
settled by decisions of this Court that the employer is bound to pay gratuity
notwithstanding termination of employment on the ground of misconduct. It may
be noticed that in the Rashtriya Mill Mazdoor Sangh's case(1) and in the
Ahmedabad Millowners' Association case(2) provision was expressly made denying
gratuity to the workmen dismissed for misconduct. But in later cases a less
rigid approach was adopted. In Garment Cleaning Works case(3) tiffs Court
"On principle, if gratuity is earned by
an employee for long and meritorious service, it is difficult to understand
why. the benefit thus earned by long and meritorious service should not be
available to the employee even though at the end of such service he may have
been found guilty of misconduct which entails his dismissal. Gratuity is not
paid to the employee gratuitously - (1)  Industrial Court Reporter, 561.
(2)  I L.L.J. 349.
(3)  1 S.C.R. 711.
334 or merely as a matter of boon. It is paid
to him for the service rendered by him to the employer, and when it is once
earned, it is difficult to understand why it should necessarily be denied to
him whatever may be the nature of misconduct of his dismissal." In later
judgments also the Courts upheld the view that the denial of the right to
gratuity is not justified even if employment is determined for misconduct. In
Motipur Zamindari (P) Ltd. v. Their Workmen ( 1 ), this Court opined that the
workmen should not be wholly deprived of the benefit earned by long and
meritorious service, even though at the end of such service he may be found
guilty of misconduct entailing his dismissal, and therefore the condition in a
gratuity scheme that no gratuity should be payable to a workman dismissed
"for misconduct involving moral turpitude" should be held
unjustified. The Court therefore modified the condition and directed that while
paying gratuity to a workman who was dismissed for misconduct only such amount
should be deducted .from the gratuity due to him in respect of which the
employer may have suffered loss by the misconduct of the employee.
A similar view was expressed in Remington
Rand of India Ltd.'s case (2). In Calcutta Insurance Company Ltd. 's case(3)
however protest was raised against acceptance of this rule without
qualification. Mitter, J., observed at p.
9 that it was difficult to concur in
principle with the opinion expressed in the Garment Cleaning Works case(4).
Mitter, J., observed:
"We are inclined to think that it
(gratuity) is paid to a workman to ensure good conduct throughout the period he
serves the employer. 'Long and meritorious service must mean long and unbroken
period of service meritorious to the end. As the period of service must be
unbroken, so must the continuity of meritorious service be a condition for
entitling the workman to gratuity. If a workman commits such misconduct as
causes financial loss to his employer, the employer would, under the general
law, have a right of action against the employee for the loss caused, and
making a provision for withholding payment of .gratuity where such loss was
caused to the employer does not seem to aid to the harmonious employment of
labourers or workmen. Further, the misconduct may be such as to undermine the
discipline in the workers---a case in which it would be extremely difficult to
assess the financial loss to the employer." (1)  II L.L.J. 139. (2)
 I L.L.J. 542.
(3)  II L.L.J. 1. (4)  1 S.C.R.
335 "Misconduct" spreads over a
wide and hazy spectrum of industrial activity: the most seriously subversive
conduct rendering an employee wholly unfit for employment to mere technical
default are covered thereby. The parliament enacted the Industrial Employment
(Standing Orders) Act, 1946, which by s. 15 has authorised the appropriate
Government to make rules to carry out the purposes of the Act and in respect of
additional matters to be included in the Schedule. The Central Government has
framed certain model standing rules by notification dated December 18, 1946,
called 'The Industrial Employment (Standing Orders) Central Rules, 1946'. In
Sch. I-Model Standing Orders--cl.
(2) A workman may be suspended for a period
not exceeding four days at a time, or dismissed without notice or any
compensation in lieu of notice, if he is found to be guilty of misconduct.
(3) The following acts and omissions shall be
treated as misconduct :-- (a) wilful insubordination or disobedience, whether
alone or in combination with others, to any lawful and reasonable order of a
superior, (b) theft, fraud or dishonesty in connection with the employer's
business or property, (c) wilful damage to or loss of employer's goods or
property, (d) taking or giving bribes. or any illegal gratification, (e)
habitual absence without leave or absence without leave for more than 10 days,
(f) habitual late attendance, (g) habitual breach of any law applicable to the
establishment, (h) riotous or disorderly behaviour during working hours at the
establishment or any act subversive of discipline, (i) habitual negligence or
neglect of work, (j) frequent repetition of any act or omission for which a
fine may be imposed to a maximum of 2 per cent of the wages in a month, (k)
striking work or inciting. others to strike work in contravention of the
provisions of any law, or rule having the force of law." ' 336 A bare
perusal of the Schedule shows that the expression "misconduct" covers
a large area of human conduct. On the one hand are the habitual late
attendance, habitual negligence and neglect of work: on the other hand are
riotous or disorderly behaviour during working hours at the establishment or
any act subversive of discipline, wilful insubordination or disobedience.
Misconduct falling under several of these latter heads of misconduct may
involve no direct loss or damage to the employer, but would render the
functioning of the establishment impossible or extremely hazardous. For
instance, assault on the Manager of an establishment may not directly involve
the employer in any loss or damage which could be equated in terms of money,
but it would render the working of the establishment impossible. One may also
envisage several acts of misconduct not directly involving the establishment in
any loss, but which are destructive of discipline and cannot be tolerated. In
none of the cases cited any detailed examination of what type of misconduct
would of would not involve to the employer loss capable of being compensated in
terms of money was made: it was broadly stated in the eases which have come
before this Court that notwithstanding dismissal for misconduct a workman will
be entitled to gratuity after deducting the loss occasioned to the employer. If
the cases cited do not enunciate any broad principle we think that in the
application of those cases as precedents a distinction should be made between
technical misconduct which leaves no trail of indiscipline, misconduct
resulting in damage to the employer's property, which may be compensated by
forfeiture of gratuity or part thereof, and serious misconduct which though not
directly causing damage such as acts of violence against the management or
other employees or riotous or disorderly behaviour, in or near the place of
employment is conducive to grave indiscipline. The first should involve no
forfeiture: the second may involve forfeiture of an amount equal to the loss
directly suffered by the employer in consequence of the misconduct and the
third may entail forfeiture of gratuity due to' the workmen. The precedents of
this Court e.g. Wenger & Co.
v. Its Workmen(1), Remington Rand of India
Ltd. case(2) and Motipur Zamindari (P) Ltd.'s case(a) do not compel us to hold
that no misconduct however grave may be visited with forfeiture of gratuity. In
our judgment, the rule set out by this Court in Wenger & Co.'s case(1) and
Motipur Zamindari (P) Ltd.'s case(3) applies only to those cases where there
has been by actions wilful or negligent any loss occasioned to the property of
the employer and the misconduct does not involve acts of violence against the
management or other employees, or riotous or disorderly - (1)  II L.L.J.
403. (2)  I L.L.J. 542 (S.C.).
(3)  II L.L.J. 139 (S.C.).
337 behaviour in or near the place of
employment. In these exceptional cases--the third class of cases the employer
may exercise the right to forfeit gratuity: to hold otherwise would be to put a
premium upon conduct destructive of maintenance of discipline.
It was urged on behalf of the workmen that
the minimum period of 15 years fixed for voluntary retirement is too long and
it should be reduced to 10 years. In Hume Pipe Co.
Ltd. v. Their Workmen(1) and Hydra
(Engineers) Private Ltd.
v. The Workmen(2) the minimum period for
qualifying for gratuity on voluntary retirement was fixed at 15 years. In other
cases a shorter period of 10 years was adopted:
Garment Cleaning Works(a); British Paints
Calcutta Insurance Co. Ltd.(5), and Wengel
Counsel for the employers have accepted that
qualifying length of service for voluntary retirement should be reduced to 10
years. Counsel for the employers have also accepted that having regard to all
the circumstances, notwithstanding the direction given by the Tribunal and the
schemes prevailing in the other parts of the country in the textile industry,
the maximum gratuity should not exceed 20 months' basic wages and not 15
months' as directed by the Tribunal. Further counsel for the D.C.M. and S.B.M.
have agreed that in case of termination of employment on voluntary retirement
one full months basic wages for each completed year of service not exceeding 20
months' wages should be granted to workmen. Counsel for the B.C.M. has agreed
that gratuity at the rate of 21 days' wages for each completed year of service
in case of voluntary retirement or resignation after 10 years' service may be
awarded as gratuity to the workmen. Counsel for the A.T.M. has shown no
disinclination to fall in line with this suggestion. Counsel for the A.T.M. has
also not objected to appropriate adjustments in view of the concessions made by
the management of the D.C.M., S.B.M. and B.C.M.
It was urged by counsel for the workmen that
in providing that gratuity shall be paid to Badli workmen for only those years
in which a workman has worked for 240 days, the Tribunal has committed an
error. It was urged that a Badli workman has to register himself with the
management of the textile unit and is required every day to attend the factory
premises for ascertaining whether work would be provided to him, and since a
Badli workman has to remain available throughout the year when the factory is
open, a condition requiring that the Badli workman has worked for not less than
240 days to qualify for gratuity is unjust.
We (1)  II L.L.J. 830.
(2) C.A. No. 1934 of 1967 decided on April
(3)  1 S.C.R. 711.
(4)  I L.L.J. 407 (S.C.) (5)  II
L.L.J. 1 (S.C.).
(6)  II L.L.J. 403 (S.C.) 338 are
unable to agree with that contention. If gratuity is to be paid for service
rendered, it is. difficult to appreciate the grounds on which it can be said
that because for maintaining his name on the record of the Badli workmen, a
workman is required to attend the Mills he may be deemed to have rendered
service and would on that account be entitled also to claim gratuity. The
direction is unexceptionable and the contention must be rejected. - It was also
urged by Mr. Ramamurthi that the expression "average of the basic
wage" in the definition of "wages" in cl. 4 of the Schemes is
likely to create complications in the implementation of the Schemes.
He .urged that if the wages earned by a
workman during a month are divided by the total number of working days, the
expression "wages" will have an artificial meaning and especially
where the workman is old or disabled or incapacitated from rendering service,
gratuity payable to him will be substantially reduced. We do not think that
there is any cause for such apprehension. The expression "average of the
basic wage" can only mean the wage earned by a workman during a month
divided by the number of days for which he has worked and multiplied by 26 in
order to arrive at the monthly wage for the computation of gratuity payable.
Counsel for the employers agree to this interpretation.
It was then urged that whereas the reference
to. the Industrial Tribunal was made by the Delhi Administration sometime in
March 1958, the award is .given effect to from January 1, 1964, and-for a
period of nearly six years the workmen have been deprived of gratuity, when the
delay in the disposal of the proceedings was not due to. any fault or delaying
tactics on the part of the workmen. The reference was made in the first week of
March, 1958. The Textile Mazdoor Union then applied to be impleaded on September
15, 1958, the D.C.M. and S.B.M. moved the High Court of Punjab at Delhi and
obtained an order for stay of proceedings in writ petition filed against the
order of the Tribunal impleading the Textile Mazdoor Union. That writ petition
was dismissed in February 1961 and the proceedings were resumed on December 12,
1962. Thereafter preliminary issues were decided and on December 3, 1963, ,an
interim award relating to other disputes was made. It must, however, be noticed
that there were four claims and the claim relating to gratuity was taken in
hand by the Tribunal after disposal of the other claims. Neither party was
dilatory in the prosecution of any claim before the Tribunal. It has also to be
noticed that in the D.C.M. and S.B.M. there was in fact a gratuity scheme
already in operation. The liability of the A.T.M. to pay gratuity arises after
that unit acquired sufficient financial stability and it is not suggested that
the unit had acquired financial stability before January 1, 1964. The is.sue
remains a live issue only in respect of the B.C.M. It is true that the gratuity
339 scheme of the D.C.M., and S.B.M. was related only to the length of service
and did not take into account the varying rates of wages received by the
workmen. But the question if at all would, be one of making minor adjustments
in the liability of the two units to pay gratuity in the event of gratuity
being payable under this award at a higher rate than the gratuity awardable
under the scheme already in operation in the two units. If in respect of the
which had no scheme gratuity for all
practical purposes becomes operative from January 1, 1964, we do not see any
reason why in respect of the B.C.M. any different rule should be provided for.
Again, the Tribunal has fixed January 1, 1964, as the date for the commencement
of the schemes. Giving the schemes effect before January 1, 1964, may rake up
cases. in which the workmen have left the establishments many years ago. It
would not be conducive to industrial peace to allow such questions to be raised
after this long delay. The question is not capable of solution on the
application of any principle and must be decided on the consideration of
expediency. We do not think that any ground is made out for altering the award
of the Industrial Tribunal in this behalf.
It was then urged that in any event the
workmen of the D.C.M. and S.B.M. should not be deprived of the right to
gratuity under the scheme of the two units, if gratuity at a higher rate is
payable to them under the voluntary scheme.
This contention must be accepted. We direct
that in respect of all workmen of the D.C.M. and S.B.M. who were employed
before January 1, 1964, and continued to remain employed till that date,
gratuity at the higher of the two rates applicable to each workman when he
becomes entitled to gratuity either computed under the Employees Benefit Fund
Trust scheme of the D.C.M. and S.B.M. or under the terms of this award shall be
paid. Workmen employed after January 1, 1964, will be entitled to the benefit
of this award alone.
Industrial disputes have given rise to
considerable strife holding up development of industry and the economic welfare
of the nation. Awards have been made by the Tribunals often on considerations
adhoc and based on no principle and Courts have upheld or modified those awards
without enunciation of any definite or generally accepted principle. In the
present case we have been largely guided b37 the consideration of securing a
reasonable degree of uniformity in the fixation of gratuity in the textile
industry, for, in our view, a departure made from the prevailing pattern in one
region is likely to give rise to claims all over the country for modification
of the gratuity schemes in operation, and have been accepted as fixing the
basis. of gratuity schemes. If having regard to the deteriorating value of the
rupee, it is thought necessary that more generous benefits should be available
to the 340 workmen by way of gratuity, the remedy lies not before the
adjudicators or the Courts, but before the legislative branch of the State. In
respect of the bonus, provident fund, retrenchment compensation, State
Insurance Schemes as well as medical benefits, legislation has been introduced
bringing a reasonable degree of certainty in the laws governing the various
benefits available to the workmen and we are of the view that even in respect
of gratuity a reasonably uniform scheme may be evolved by the Legislatures
which could prevent resort to the adjudicators in respect of this complicated
matter of dispute between the employers and the employees. It may not be
difficult to evolve a scheme which would meet the legitimate claims. of both
the employers and the employees and which might, while eliminating cause for
friction,' simultaneously conduce to greater certainty in the administration of
the law governing industrial disputes, and secure benefits to the employers as
well as the employees and conduce to the prosperity of the industry as well as
of the workmen.
We propose to summarise the effect of our judgment:
(1) A unit-wise approach in framing the
gratuity scheme for the four units was appropriate, and on the terms of the
reference the plea of the employers to fix the age of superannuation was beyond
the scope of reference. The financial condition of the D.C.M., S.B.M. and
B.C.M. justifies imposition of gratuity schemes as from January 1, 1964. Even
the A.T.M. which is the weakest of the four units is financially stable from
the date on which the award becomes operative;
(2) The settlement between the workmen and
the A.T.M. did not operate to bar the jurisdiction of the Tribunal to make the
scheme of gratuity payable to the workmen of the A.T.M.;
(3) That the Tribunal was in error in
relating gratuity awardable to the workmen to the consolidated wage;
(4) That the minimum period for .
qualifying for voluntary retirement should be
reduced to 10 years and one months basic wage in the case of D.C.M. and S.B.M.
and 21 days' basic wage in the case of B.C.M. and A.T.M.
for each completed year of service should be
paid but not exceeding 20 months wages in the aggregate. (This direction is
made with the consent of the Advocates of the employers);
341 (5) That workmen dismissed or discharged
from service for misconduct will not be entitled to gratuity if guilty of
conduct involving acts of violence against the management or other employees,
or riotous or disorderly behaviour in or near the place of employment;
(6) No modification need be made with regard
to Badli workmen;
(7) The award needs no modification with
regard to the date of operation of the award;
and (8) The workmen of the D.C.M. and S.B.M.
who commenced service and continued to serve
till January 1, 1964, and thereafter will be entitled to elect at the time when
gratuity becomes due to claim gratuity either on the scheme in force under the
Employees Benefit Fund Trust of the employers or under this award.
We have made some incidental changes to
streamline the scheme. On the view we have taken of the schemes, Annexure 'A' relating
to the D.C.M. and S.B..M. of the award will be modified in the following
In clause 1 (a) instead of "12 days'
wages", the expression "20 days' wages" will be substituted;
In clause 1 (b) for the expression "15
days' wages", the expression "1 month's wages" will be
In proviso (ii) to clause 1 for the
expression "15 months' wages", the expression "20 months'
wages" will be substituted;
In clause 2 for the expression."15 days'
wages", the expression "1 months wages will be substituted; and for
the expression ' 15 years service , 10 years service will be substituted;
In the proviso to clause 2 for the expression
"15 months' wages", the expression "20 months' wages" will
In clause 3 in the proviso for the expression
"15 months' wages", the expression "20 months' wages" will
Clause 3 will be followed by an Explanation:
"misconduct" means acts involving violence against the management or
other employees, or riotous or disorderly behaviour in or near the place of
342 Where the workman is guilty of conduct
which involves the management in financial loss, the loss occasioned may be
deducted from the gratuity payable." In clause 4 the words "plus the
dearness allowance" will be omitted.
The remaining clauses will stand unaffected
except that for the words "within six months from the date of publication
of this Award"' the words "within six months from the date of this
judgment" will be substituted.
Annexure 'B' relating to the B.C.M. and
A.T.M. will be modified in the following respects:
In clause 1 (a) for the expression "one
fourth month's wages", the expression "15 days' wages" will be
In clause 1 (b) for the expression "one
third month's wages", the expression "21 days' wages" will be
In the proviso for the expression "12
months' wages", the expression "20 months' wages" will be
In clause 2 for the words "15 years'
service", the expression "10 years' service" will be
In clause 3 in the proviso for the expression
"12 months' wages", the expression "20 months' wages" will
be substituted and it will be followed by the Explanation of
"misconduct" as in Annexure 'A'.
In clause 4 the words "plus the dearness
allowance" will be omitted.
There will be no order as to costs in these
V.P.S. Award modified accordingly.