Manager, E.I.D. Parry (India) Ltd. Vs. Presiding Officer &
Ors  INSC 125 (2
Rangnath (Cj) Misra, Rangnath (Cj) Ahmadi, A.M. (J) Sahai, R.M. (J)
1991 AIR 1544 1991 SCR (2) 637 1991 SCC Supl. (1) 326 JT 1991 (2) 588 1991
Disputes Act, 1947: Sections 9-A, 33-C(2) Payment of Gratuity Act, 1972.
Law--Company--General Office Order No. 26 dated 1.12.1943--Provision for
'Retiring Allowance' (Pension) and gratuity--Memorandum of settlement between
Company and workmen--Employees given option under the settlement either for
Gratuity or Retiring allowance--Enforcement of Gratuity Act, 1972--Workers'
claim for retiring allowance (Pension) in addition to gratuity--Held settlement
had not substituted gratuity for pension--Employees held entitled to pension
notwithstanding the settlement.
General Office Order No. 26 dated 1.12.1943 of the Appellant-Company provided
that employees with 30 years' service or more would be eligible to receive
"Retiring Allowance" (pension). The said office order also provided
that all permanent employees who were in the Company's service prior to
1.1.1947 and who do not qualify for retiring allowance on retirement, will be
eligible for gratuity on finally leaving the Company's service subject to the
prescribed conditions being fulfiled. In 1956 a memorandum of settlement was
signed by the appellant- company and the Employees' Union under which the employees in service prior to 1.1.47
were required to opt at the time of leaving service either for gratuity or in
lieu of the gratuity the retiring allowance. Later the Payment of Gratuity Act
1972 came into force and the payment of gratuity became statuory. The employer
and the Employees' Union jointly applied to the Government
for exemption from the provisions the statue which was refused.
of the retiring employees of company filed applications under Section 33-C(2)
of the Industrial Disputes Act, 1947 before the Labour Court claiming pension
by alleging that payability of pension was a condtion of service and the
employer had stopped it without any Justification. The Labour Court allowed the applications.
the- 638 order of the Labour
Court the employer
preferred six writ petitions. In the meantime the same dispute was referred to
the Industrial Tribunal and by an award the Tribunal answered the reference
against the employees. The Employees' Union
challenged the award by filling a writ petition in the High Court. All the writ
petitions were heard by a learned single judge of the High Court who allowed
the writ petitions of the management against the order of the Labour Court and dismissed the writ petition
preferred by the Labour Union challenging the award of the Tribunal. Writ
appeals were carried against the single Judges' decision. The Appellate Bench
of the High Court held that gratuity provided under the settlement was not a
substitute of pension and the claim of pension was available to employees
notwithstanding the settlement. Hence this appeal by the employer-company.
the appeals, this Court,
The 1956 settlement between the parties does not provide for payment of pension
except to pre-1947 employees and making the benefit liable to exercise of
option under clause 6(d) of the settlement. The retiral benefit (pension) was
payable to all qualfied employees as a matter of practice. If under the
settlement that was not done away with, the benefit arising out of General
Office order No. 26 would still be available and gratuity contemplated under
the settlement would not be a substitute of the retiral benefit of pension. The
Appellate Bench of the High Court was right in holding that the entitlement to
pension had not been substituted by the settlement of 1956 and, therefore, the
claim to pension subject to qualification being satisfied was available to be
maintained notwithstanding the settlement of 1956. The High Court rigtly came
to the conclusion that the Labour Court
had justifiably worked out the dues and the claim petition under section 33-C(2)
of the 1947 Act. [641C-D, 642C-D]
APPELLATE JURISDICTION: Civil Appeal Nos. 1450- 1458 of 1990.
the Judgment and Order dated 21.11.1988 of the Madras High Court in W.A. Nos.
864 to 870 of 1988 and W.P. Nos. 1600 and 1601 of 1986.
N. Balasubramaniam and A.T.M. Sampath for the Appellant.
Ramamurthy, Mrs. C. Ramamurthy, M.A. Krishnamoorthy, 639 for the Respondents.
Paul appeared in person.
Judgment of the Court was delivered by RANGANATH MISRA. CJ. These are appeals
by special leave and are directed against a common judgment of the Madras High
Court delivered in a group of writ appeals and a writ petition.
Parry (India) Ltd. (hereinafter referred to as
`the employer') has one of its units located at Ranipet in Tamil Nadu State where sanitary-ware, super
phosphate and insecticides are manufactured. Some of its retiring employees
filed applications under section 33-C(2) of the Industrial Disputes Act, 1947
(`1947 Act' for short) before the Labour Court at Madras claiming pension by
alleging that payability of pension was a condition of service and the employer
had stopped it without any justification and without giving notice under
section 9-A of the 1947 Act.
President Officer of the 2nd Additional Labour Court, Madras, allowed the same by his order
dated 30th May, 1983, after computing the amounts. The
employer preferred six writ petitions. In the meantime the same dispute had
been referred to the Industrial Tribunal and it answered the reference against
the employees by award dated 13th February, 1985. The award was assailed before the High Court by the Union by filing of the seventh writ petition.
the seven writ petitions were heard by a learned Single Judge who allowed the
writ petitions of the management against the order of the Labour Court and dismissed the writ petition
preferred by the labour union challenging the award of the Industrial Tribunal.
Writ appeals were carried against the Single Judge's decision.
main controversy before the Division Bench was as to whether pension, or as is
referred to by the parties, "retiring allowance" was payable to the
employees. This dispute has a historical backdrop to which we may now advert.
Under General Office Order No. 26 dated Ist December, 1943 "retiring
allowances" were provided for. The Office Order provided that normally
only employees with thirty years' service or more would be eligible to receive
"Retiring Allowance". The Board reserved the right to alter the scale
of "retiring allowance". either generally or in respect of individual
employees and had the authority to sanction `retiring allowance' when first
granted and subsequent payment became a routine matter subject to annual
Gratuities were also provided under the Office Order by saying that all
permanent employees (other than workers who qualify for gratuities as per
Factory Certified Standing Order) who were in the Company's service prior to
1.1.1947 and who do not qualify for Retiring Allowance on retirement, will be
eligible for gratuity on finally leaving the Company's service subject to one
or other of the prescribed conditions being fulfilled. In all four alternatives
were provided. Clause (4) indicated that employees recruited on or after
1.1.1947 would not be entitled to any gratuity.
was a Memorandum of Settlement between the parties which may be referred to as
the settlement of 1956.
(6) thereof related to gratuity and provided:
shall in future be payable by the company in accordance with the following
Where, irrespective of the length of his past service, an employee dies in
service, or is retired on a medical certificate acceptable to the company, or
is retired by the company on reaching the age of superannuation, he shall be
entitled to gratuity calculated at the rate of one month's basic salary for
each completed year of service, and pro rata for any partly completed year of
his service ,subject to a maximum of 15 months' basic salary if his service is
less than 30 years, together with half of one month's basic salary for each
completed year of service in excess of 30 years and pro rata for any partly
completed year of service in excess of 30 years...............
Employees in service prior to Ist January, 1947 may opt, at the time of leaving
service, either for:
Gratuity calculated in accordance with these rules or in accordance with the
current provisions of General Office Order No. 26, whichever he prefers, or
(ii) in lieu of gratuity, a retiring allowance calculated in accordance with
the current provisions of General Office Order No. 26." This settlement as
a fact incorporated the relevant part of the Office Order.
The Payment of Gratuity Act came into force with effect from September, 1972
and payment of gratuity became statutory. When that Act came into force, the
Employer and the Employees ' Union jointly
applied to the Government for exemption from the provisions of the statute. The
exemption was, however, not granted. Payability of gratuity is no longer in
dispute. What is challenged is the claim of the workmen to retiring allowance
(pension) under Office order No. 26. The stand of the employees has been that
the retiring allowance under General Office Order No. 26 has not been substituted
by the 1956 settlement and they are, subject to being qualified, entitled to
the benefit of pension and the statutory advantage of gratuity. It is a fact
that the settlement does not provide for payment of pension except to pre-1947
employees and making the benefit liable to exercise of option under clause 6(d)
above. It is not in dispute that the retiral benefit (pension) was payable to
all qualified employees as a matter of practice.
under the settlement that was not done away with, the benefit arising out of
General Office Order No. 26 would still be available and gratuity contemplated
under the settlement would not be a substitute of the retiral benefit of
Appellate Bench of the High Court has found that gratuity provided under the settlement
was not a substitute of pension. Mr. Narayanaswamy, learned senior counsel
appearing in support of the appeals took us through the various documents and
placed the matter at considerable length and with lucidity. He even relied on
what he described as the prevailing practice between 1956 and 1972- the
settlement and the Gratuity Act-when no retiral benefit was either claimed or
paid. We have, however, not been able to see any defect in the reasoning of the
Division Bench decision of the High Court where it has ultimately come to the
conclusion that the settlement had not substituted gratuity for pension. We
find that by way of an interim measure this Court by an order dated 5th May, 1989 had directed the employer to pay
the pension to the employees in accordance with the order of the High Court
with effect from Ist May, 1989 and that from the record appears to have been
petition had been filed in this Court on 23rd April, 1990 by the employer for modification of
the condition indicated in the order granting special leave and we had heard
counsel for both the sides on the said petition. We had made it clear at the
hearing of the petition for modification of the order granting special leave
that the question as to payability of retirement benefit after the 1956
settlement would be examined. The total number of employees involved in this
dispute was 642 about 347. Many of them had not only retired but had also died
and in respect of those who were dead it would be a question of the benefits up
to the date of death of the respective employees to be paid to their legal
representatives. Mr. Narayanaswamy had emphatically contended that what was
being decided was not a claim of 347 employees but it had its repercussion on
the industrial peace between the employer and the employee at other places.
would like to make it clear that we have gone into the question confined to the
claim to the employees of the Ranipet factory and not the liability of the
employer generally, Besides, Mr. Narayanaswamy had also told us at the hearing
that there are special features in the arrangement in regard to employees
satisfied that the Appellate Bench of the High Court was right in holding that
the entitlement to pension had not been substituted by the settlement of 1956
and, therefore, the claim to pension subject to qualification being satisfied
was available to be maintained notwithstanding the settlement of 1956, The High
Court rightly came to the conclusion that the Labour Court had justifiably
worked out the dues and the claim petitions under section 33-C(2) of the 1947
Act. We uphold the judgment of the High Court and dismiss these appeals. The
employees had asked for award of interest on their dues.
challenge of the employer was not groundless and we do not think in the facts
of these cases the employees or their legal representatives would be entitled
to interest. We hope and trust that the employer would not liquidate its
liability without delay by satisfying the orders of the Labour Court and the claims of the workmen or
their legal representatives as and when made.
of Rs. 10,000 had been given by the employer to Sri Pant for the Union to contest these matters and he has been paid the
amount under this Court's order. No order for further courts.