Messrs. Brahmachari Research Institute
Vs. Its Workmen [1959] INSC 124 (16 October 1959)
WANCHOO, K.N.
SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR,
P.B.
CITATION: 1960 AIR 257 1960 SCR (2) 45
CITATOR INFO :
R 1960 SC 413 (3) E&D 1960 SC1028 (5,6,7)
ACT:
Industrial Dispute-Retrenchment
compensation-Gratuity scheme for cases of retrenchment-Award by
Tribunal-Whether gratuity under award different from retrenchment compensationClaim
by retrenched workmen for both gratuity and statutory compensation-Industrial
Disputes Act, 1947 (14 of 1947), ss. 2(00), 25F, 25J.
HEADNOTE:
The retrenched workmen of the appellant
concern who were paid compensation as provided in s 25F of the Industrial Disputes
Act, 1947, claimed that they were entitled to be paid in addition gratuity
under the gratuity scheme in force in the appellant concern as modified by the
award of the industrial tribunal dated August 18, 1952. The award provided:
" The following gratuity scheme shall be for cases of retrenchment or
termination of service by the company for any reason other than misconduct or
for cases of resignation with the consent of the management".
The Appellate Tribunal took the view that
gratuity provided under the award was different from compensation on retrenchment
payable to a workman under S. 25F of the Act.
Held, that on a proper construction of the
award the amount payable thereunder to the workmen on retrenchment though
called gratuity was really compensation on account of retrenchment as provided
under S. 25F of the Act, and that the workmen were only entitled to one or the
other, whichever was more advantageous to them in view of S. 25J of the Act.
It was not the intention of the legislature
that a workman on retrenchment should get compensation twice, i.e., once under
the Act and once again under the scheme in force providing for retrenchment
compensation, by whatever name the payment might have been called.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No.4 of 1958.
Appeal by special leave from the decision
dated September 19, 1956, of the Labour Appellate Tribunal of India, Calcutta,
in Appeal No. Cal. 235/56.
B. Sen, S. N. Mukherjee and B. N. Ghose, for
the appellants.
Sukumar Ghose, for the respondents.
46 1959. October 16. The Judgment of the
Court was delivered by WANCHOO J.-This appeal is directed against the decision
of the Labour Appellate Tribunal of India in an industrial matter. The
appellant is a partnership concern carrying on business in the manufacture of
pharmaceutical products.
There was a gratuity scheme in force in the
appellant concern for a long time. This scheme was modified by an award of the
industrial tribunal dated August 18, 1952 (hereinafter called the Award), and
since then the modified scheme has been in force. The financial condition of
the appellant deteriorated and consequently, it was compelled to retrench a
number of workmen. It, therefore, applied to the Appellate Tribunal under s. 22
of the Industrial -Disputes (Appellate Tribunal) Act (No. XLVIII of 1950), for
permission to retrench 89 workmen. The Appellate Tribunal granted permission
for retrenchment of 75 workmen only.
Consequently, after obtaining such
permission, the appellant retrenched the workmen and paid them compensation as
provided in s. 25F of the Industrial Disputes Act, 1947 (hereinafter called the
Act). Thereupon a dispute was raised by the retrenched workmen through the
union in existence in the appellant-concern for gratuity on retrenchment under
the award. This dispute was referred to the Second Industrial Tribunal, West
Bengal, on March 23, 1956, for adjudication in the following terms:
" Whether the seventy-five retrenched
employees (as per attached list) are entitled to gratuity in addition to
retrenchment benefits ?" There was another matter included in the
reference, but we are not concerned with that in the present appeal. The
Industrial Tribunal came to the conclusion that the retrenched workmen were
only entitled to relief as provided under s. 25F of the Act and were not
entitled to any gratuity under the Award over and above the compensation
payable to them under the Act. Then followed an appeal by the workmen to the
Appellate Tribunal which was allowed.
The Appellate Tribunal held that the workmen
were entitled to gratuity 47 under the Award, as gratuity benefit therein was
not a retrenchment benefit. The appellant then applied for special leave to
appeal, which was granted; and that is how the matter has come up before us.
The general question has been considered by
this Court in The Indian Hume Pipe Company Limited v. Its Workmen (1), judgment
which is being delivered today. As the penultimate paragraph in that judgment
shows, special considerations may arise on the terms of agreements or awards in
particular cases and it is this aspect which falls to be considered in the
present appeal.
The sole question, therefore, for
determination in this appeal is whether the retrenched workmen are entitled
under the Award to gratuity provided therein in addition to retrenchment
benefit under s. 25F of the Act. We may therefore reproduce here the relevant
part of the Award, which is in these terms:
" The following gratuity scheme shall be
for cases of retrenchment or termination of service by the company for any
reason other than misconduct or for cases of resignation with the consent of
the management. The gratuity will be paid up to a maximum of 15 months' basic
pay at the following rates. The period of service to qualify for the gratuity
shall be one year. Consistently with the modification about the maximum
qualifying service, the basic pay for the purpose of gratuity shall be the
average of the last 12 months' basic pay drawn by the workmen concerned."
Then followed the rates; and it was also provided that no gratuity would be
payable before the completion of one year of service and that persons
discharged for misconduct would not be entitled to any gratuity. Finally, it
was provided that in case of death of an employee, his widow or children or
other dependents would be granted gratuity on the above basis.
It will be seen that the Award is a composite
scheme providing for what is termed gratuity therein under three conditions,
namely, (1) where there is retrenchment, (ii) where there is termination of
service for any (1) [1960] (2) S.C.R. 32.
48 reason other than misconduct, and (iii)
where there is resignation with the consent of the management.
Though the word " gratuity " has
been used to cover all these three cases, it is clear that cases of retrenchment
as such are also covered by the Award and payment to workmen retrenched has
been called "gratuity". The name given to the payment is, however,
not material and it is the nature of the payment that has to be looked into.
Now, under this Award, it is obvious that this payment on retrenchment though
called gratuity is really nothing more nor less than compensation on account of
retrenchment.
Further it is obvious from the terms of the
Award that a retrenched workman could claim gratuity under the Award only oil
account of retrenchment and could not claim it under the other two conditions
therein. In other words, on a fair and reasonable construction of the Award,
what the retrenched workman got is only compensation for retrenchment and not
any amount by way of gratuity properly so called.
This brings us to the provisions of the Act
with respect to retrenchment. " Retrenchment " is defined under s. 2
(oo) and means " the termination by the employer of the service of a
workman for any reason whatsoever, otherwise than as a punishment inflicted by
way of disciplinary action, but does not include (a) voluntary retirement of
the workman; or (b) retirement of the workman on reaching the age of superannuation
if the contract of employment between the employer and the workman concerned
contains a stipulation in that behalf; or (c) termination of the service of a
workman on the ground of continued ill-health ". If this definition is
compared with the provisions of the Award, it will be found that the Award
provides payment not only for retrenchment as such but also for other
termination of service which is specifically excepted from the definition of
" retrenchment ". Clauses (a) and (b) of s. 2 (oo) are provided in
the Award by the words "cases of resignation with the consent of the
management ". Similarly, clause (c) of s. 2 (oo) is provided for by the
words " termination of service by the company for any reason other 49 than
misconduct ". It is, therefore, obvious that the Award provides not only
for payment on retrenchment but also for payment on termination of service for
any reason other than misconduct and on retirement. It is thus a composite scheme;
and merely because the payment is called gratuity even where it is payable on
account of retrenchment, it cannot be anything other than compensation so far
as the part of the Award relating to retrenchment is concerned.
Chapter VA, containing ss. 25F and 25J, with
which we are concerned, was added in the Act by Act 43 of 1953, with effect
from October 24, 1953. The reason for this addition was that though there were
schemes in force in many concerns for payment to workmen on ,retrenchment,
there were many other concerns where no such schemes were in force and the
workmen got nothing on retrenchment unless there was an award by a Tribunal.
Besides, where schemes were in force or awards were made rates of payment on
retrenchment varied.
The legislature, therefore, thought it fit by
enacting Chapter VA to provide by s. 25F a uniform minimum payment to workmen
on retrenchment. This payment was called compensation. Section 25F provides
that no workman employed in any industry who has been in continuous service for
not less than one year under an employer shall be retrenched without payment of
compensation which shall be equivalent to fifteen days' average pay for every
completed year of service or any part thereof in excess of six months. Then
comes s. 25J, sub-s. (1) whereof provides that the provisions of Chapter VA
shall have effect notwithstanding anything inconsistent therewith contained in
any other law including standing orders. There is, however, a proviso to sub-s.
(1), which says that nothing contained in the Act shall have effect to derogate
from any right which a workman has under any award for the time being in
operation or any contract with the employer. This clearly means that if by any
award or contract a workman is entitled to something more as retrenchment
compensation than is provided by S. 25F, the workman will be entitled to get
that and the provisions of s. 25F will not derogate 7 50 from that right of the
workman, i.e., will not reduce the compensation provided under the award or
contract to the level provided under s. 25F. It is obvious that it was not the
intention of the legislature that a work man on retrenchment should get
compensation twice, i.e., once under the Act and once under the scheme in force
providing for retrenchment compensation, by whatever name the payment might
have been called. We cannot agree with the Appellate Tribunal that the payment
of gratuity in the event of retrenchment has nothing to do with the
compensation payable to a workman under s. 25F of the Act.
The Appellate Tribunal seems to have been
carried away by the word " gratuity " used in the Award and it seems
to think that gratuity on retrenchment is something different from compensation
on retrenchment. We are of opinion that this is not correct. Whether it is called
"gratuity " or ,compensation " it is in substance a payment to
the workman on account of retrenchment; and if a scheme like the present
specifically provides payment for retrenchment as defined in s. 2(00), we see
no justification for compelling that payment twice over, once under s. 25F and
again under the scheme in force in the concern. The matter would be different
if the scheme in force in any concern or any award provides gratuity which is
different in nature from the retrenchment compensation under s. 25F. We also
cannot agree with the Appellate Tribunal that this gratuity under the Award in
this case is not a retrenchment benefit. We have already analysed the Award
above and shown that it deals with three contingencies, and one of them is payment
due on retrenchment. On the terms, therefore, of the Award in this case it must
be held that gratuity provided therein on retrenchment is not nothing more nor
less than retrenchment compensation provided under s. 25F of the Act, and the
workmen are only entitled to one or the other, whichever is more advantageous
to them in view of s. 25J. In the circumstances we are of opinion that the
Industrial Tribunal was right in holding that the scheme of the Award in this
case providing for gratuity on retrenchment was exactly the same as
compensation 51 provided under s. 25F, and as the provisions of s. 25F are
better than the provisions of the Award in respect of retrenchment the workmen
would be entitled to compensation provided under s. 25F only, and not both
under that section and under the Award. The appellant has already paid the
compensation provided under s. 25F; the workmen therefore are not entitled to
anything more under the Award. We therefore allow the appeal, set aside the
decision of the Appellate Tribunal and restore that of the Industrial Tribunal
in this matter. As this question has come up to this Court for the first time,
we order the parties to bear their own costs.
Appeal allowed.
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