Workmen of Metro Theatre Ltd., Bombay
Vs. Metro Theatre Ltd., Bombay [1981] INSC 134 (31 July 1981)
TULZAPURKAR, V.D.
TULZAPURKAR, V.D.
VARADARAJAN, A. (J)
CITATION: 1981 AIR 1685 1981 SCC (3) 596 1981
SCALE (3)1125
ACT:
Labour legislation-Retrospectivity of the
award- Discretion to make the Award with retrospective effect vests with the
Tribunal under section 17A(4) of the Industrial Disputes Act, 1947-Linkage of
dearness allowance with some rational principle Cost of living index and
consumer price index principle or on the normal principle of industry-cum-
region should be uniform and desirable in one and the same industry-Payment of
Gratuity Act, section 4(5)-Award includes any Award that would be made by an
adjudicator wherein better terms of gratuity could be granted to the employees
if the facts and circumstances warrant such grant.
HEADNOTE:
The wages and gratuity of the workers of
Metro Theatre were governed by an earlier award in Reference No. 1 of 1968
published in 3-7-1969 which was effective from 1-1-1967, while dearness
allowance was governed by the award in Reference No. 440 of 1970 effective from
1-1-1970. Both these awards were duly terminated by notice and fresh demands
for revision of wage scales, dearness allowance, etc. effective from 1-1-1974
were submitted by the workers Union to the Management on 15-4-1974. A reference
(IT) No. 248 of 1975 was made on 10-7-1975 to the Industrial Tribunal which by
its award dated September 22, 1977 published in Maharashtra Government Gazette
on November 3, 1977 granted the revision in wage scales and dearness allowance
with effect from 1-1-1977. While granting special leave against the impugned
award the Court confined the appeal to three points, namely: (i)
retrospectivity of the award: (ii) linkage of dearness allowance to some
rational principle and (iii) construction of section 4(5) of the Payment of
Gratuity Act, 1971.
Allowing the appeal in part on the point of
gratuity and remanding to the Tribunal on the question of linkage of dearness
allowance, the Court.
HELD: 1. Under section 17A(4) of the Industrial
Disputes Act, 1947 it is a matter of discretion for the Tribunal to decide
having regard to the circumstances of each case from which date its award
should come into operation and no general rule can be laid down as to the date
from which the Tribunal should bring its award into force and the Supreme Court
shall not interfere with the Tribunal's order in that behalf unless substantial
ground is made out showing unreasonable exercise or its part. In the instant
case, in the absence of any material placed before the Tribunal or even before
the Supreme Court by either party as to whether the profits earned by the
Company for the years 1974, 1975 and 1976 had been disbursed or were still
available with the Company at the time of making the award, a factor relevant
on the question of granting retrospectivity and also in view of decreasing
trend in the profits made by the Company during the said three years, according
to the Exhibit U-5 marked by the appellant Union itself, presumably the
Tribunal felt that it would be proper to give the revision in wage scales and
dearness allowance only from 1-1-1977 onwards and not to give any retrsopective
effect. [167 E-H, 168 A-C] 165 Wenger and Co. and others v. Their Workmen, 1963
II L.L.J. 403: Bengal Chemical and Pharmaceutical Works Ltd. v.
Its Workmen and Another, 1969 I L.L.J. 751
and Hydro (Engineers) (Pvt.) Ltd. v. Their Workmen, 1969 I L.L.J. 713,
followed.
2. On the question of linkage of dearness
allowance with some rational principle, uniformity is highly desirable in one
and the same industry. The very same adjudicator, Shri B.B. Tambe, yet in other
Reference (VA) No. 1 of 1979 dated June 27, 1980 had awarded payment of
dearness allowance linked with the cost living index, while in the instant
case, fixed dearness allowance on the normal principle of industry-cum-region.
[168 C, G-H, 169 A] 3:1. On true construction of section 4(5) of the Payment of
Gratuity Act, the expression "award" occurring in the said provision
does not mean and cannot be confined to "existing award" but includes
any award that would be made by an adjudicator wherein better terms of gratuity
could be granted to the employees if the facts and circumstances warrant such
grant. In the first place, there is nothing in the provision which limits the
expression "award". Secondly, it cannot be and was not that under the
above provision a gratuity scheme obtaining under existing agreement or
contract could be improved upon by a fresh agreement or fresh contract between
the employer and the employee and if that be so, there is no reason why the expression
"award" should be construed as referring to an existing award and not
to include a fresh award that may be made by an adjudicator or an Industrial
Court improving in favour of the employees the scheme obtained under the Act or
the existing award. Thirdly, the very fact that under the above provision
better terms of gratuity could be obtained by an employee by an agreement or
contract with the employer notwithstanding the scheme of gratuity obtaining
under the Act clearly suggests that no standardisation of the gratuity scheme
contemplated by the Act was intended by the Legislature. [171 D-H, 172 A] 3:2.
It is true that the Payment of Gratuity Act enacts a complete Code containing
detailed provision covering all essential features of the scheme for payment.
But it is also clear that scheme envisaged by the enactment secures the minimum
for the employees in that behalf and express provisions are found in the Act
under which better terms of gratuity if already existing are not merely
preserved but better terms could be conferred on the employee in future.
[172 A-C] State of Punjab v. Labour Court
Jullundur and Ors.
[1980] 1 S.C.R. 953, followed.
Alembic Chemical Works Company Ltd. v. Its
Workmen, [1961] 1 L.L.J. 328, explained.
3:3. The phrase "under any award,
agreement or contract with employer" occuring in section 4(5) of the
Payment of Gratuity Act is intended to cover future awards agreements or
contracts with the employer since existing better terms of gratuity are
intended to be protected by issuance of a notification under section 5 of the
Act. [173 B-C] 166 [To maintain uniformity and to be in conformity with the
Award made by the same adjudicator in Reference (VA) No. 5 of 1970 M/s. Alankar
and 39 others v. The Workmen employed under them, the Court directed that the
gratuity scheme as set out in paragraph 140 of that award be applicable to the
workmen of Metro Cinema with effect from 1-1-1970.]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1558 (L) of 1978.
Appeal by special leave from the Award dated
the 4th August, 1977 of the Industrial Tribunal Maharashtra, Bombay in
Reference (IT) No. 248 of 1975 published in M.O.G. Part I (L) dated 3rd
November, 1977.
C.L. Dudhia, K.L. Hathi and Mrs. Hemantika
Wahi, for the Appellant.
G.B. Pai, Manik A. Gagrat, G. Subramaniam,
S.S. Shroff, D.P. Mohanty and T.R. Das, for the Respondents.
The Judgment of the Court was delivered by
TULZAPURKAR. J. This appeal by special leave is directed against the award of
the Industrial Tribunal Maharashtra, Bombay, dated September 22, 1977, in
Reference (I.T.) No. 248 of 1975 in the industrial dispute between the
respondent and the workmen employed by it and published in Maharashtra
Government Gazette on November 3, 1977. Though the demands made by the workers'
Union and the adjudication thereon by the Tribunal related to items like wage
scale, dearness allowance, extra show allowance, gratuity, service conditions
of non-permanent staff and retrospectivity, while granting special leave this
Court confined the appeal to three points, namely, (i) retrospectivity of the
award, (ii) linkage of dearness allowance to some rational principle and (iii)
construction of s. 4 (5) of the Payment of Gratuity Act, 1972, and leave was
expressly refused in regard to the other grounds mentioned in the special leave
petition. We, therefore, proceed to deal with the aforesaid three points on
which arguments were advanced before us by counsel on either side.
It may be stated that prior to the impugned
award the wages and gratuity of the workers were governed by the earlier award
in Reference No. 1 of 1968 published on 3.7.1969 which was effective from
1.1.1967 while dearness allowance was governed by the award in Reference No.
440 of 1970 effective from 1.1.1970 Both these 167 awards were duly terminated
by notice and fresh demands for revision of wage scales, dearness allowance,
etc. effective from 1.1.1974 were submitted by the Union to the Management on
15.4.1974. The Reference to the Tribunal was made on 10.7.1975 and by the
impugned award the Tribunal granted the revision in wage scales and dearness
allowance with effect from 1.1.1977. Counsel for the appellant Union contended
that the Tribunal erred in not granting the revision with effect from 1.1.1974
as demanded and at any rate the same should have been granted from 10.7.1975
being the date of Reference, especially when the Tribunal found the financial
capacity of the respondent very sound and admittedly there had been a steep
rise in the cost of living index. He pointed out that the Tribunal while
refusing to grant retrospective effect had erroneously observed that there will
be "too much financial burden on the company" as, according to him,
such additional burden could not have been more than Rs. 1,00,000/- or Rs.
1,20,000/- a year during the three years 1974, 1975 and 1976. In support of his
contention counsel referred to three decisions of this Court, namely, Wenger
and Co. and others v. Their Workmen, Bengal Chemical and Pharmaceutical Works,
Ltd. v. Its Workmen and another and Hydro (Engineers) (Pvt.) Ltd. v. Their
workman.
It is difficult to accept this contention and
interfere with the discretion exercised by the Tribunal in the matter which can
be done only if it is shown to have been unreasonably exercised. Under s.
17A(4) of the Industrial Disputes Act, 1947 it is a matter of discretion for
the Tribunal to decide having regard to the circumstances of each case from
which date its award should come into operation and no general rule can be laid
down as to the date from which the Tribunal should bring its award into force
and this Court shall not interfere with the Tribunal's order in that behalf
unless substantial ground is made out showing unreasonable exercise on its
part. Even the three decisions cited by the counsel clearly brings out the
aforesaid position in law. The Tribunal was deciding the Reference in August
1977 and though the additional burden may not have been more than Rs.
1,00,000/- or Rs. 1,20,000/- per year for the three years 1974, 1975 and 1976
if retrospective effect was given to the revision, no material was placed
before the Tribunal by either party as to whether the profits earned by the
Company for the said three years had been disbursed or were still available
with the company at 168 the time of making the award-a factor relevant on the
question of granting retrospectivity. Even before us no light could be thrown
on the point by counsel on either side. Further there was on record a statement
showing the financial position of the company for the years 1968 to 1975 (year
ending being 31st August) produced by the appellant Union itself at Ex. U5
which clearly showed that the profits of the company before taxation and
depreciation had dwindled consistently for the years 1973, 74 and 75, such
profits for each of the said three years being Rs. 6,80,912/-, Rs. 6,51,181/-
and Rs. 5,70,884/-. Presumably it was in view of such decreasing trend in the
profits made by the company during the three years that the Tribunal felt that
it would be proper to give the revision in wage scales and dearness allowance
only from 1.1.1977 onwards and not to give any retrospective effect. It cannot
be said that the discretion has been unreasonably exercised by the Tribunal.
Coming to the second point of linkage of
dearness allowance with some rational principle the Union's contention before
the Tribunal was, and the same contention has been reiterated by the counsel
for the Union in the appeal-that the dearness allowance should be linked with
the cost of living index and Consumers' Price Index Number. It was pointed out
that the Bombay Working Class Consumers' Price Index was 800 in 1970 (when the
earlier award in the matter of D.A. was given), that it had gone upto 1372 in
1977 and that, therefore, dearness allowance on Index No.
999-1,000 should be fixed on 4 weekly basis
with a variation for every ten points rise or fall. But the Tribunal negatived
the contention and fixed the dearness allowance on the normal principle of
industry-cum-region and only reason for not linking it to the cost of living
index was that such linkage did not obtain in any concern falling in the
category of Cinema Exhibiting Industry which could not be compared with
manufacturing industries like textile where such linkage operated. Counsel for
the appellant Union pointed out that the same adjudicator (Shri B.B. Tambe) as
Sole Arbitrator in Reference (VA) No. 1 of 1979 in the industrial dispute
between M/s Alankar Theatre and 38 other theatres of Bombay (cinemas falling in
classes A-1, A, B and C) and the workmen employed under them had made an award
on June 27, 1980 (published in Maharashtra Government Gazette on October 9,
1980) wherein dearness allowance has been linked with the rise in the cost of
living index and the Consumers' Price Index Number. The result has been that in
Cinema Exhibiting Industry all the other 39 theatres will be paying to their
workers dearness allowance linked with the cost of living index while 169 in
the case of workmen of Metro Theatre these will be no such linkage which would
be contrary to normal uniformity which is always desirable in one and the same
industry. We find considerable force in this contention urged by counsel for
the appellant Union. On the other hand, counsel for the Company pointed out
that the aforesaid award of Shri Tambe in Reference(VA)No. 1 of 1979 dated June
27, 1980 is under challenge before the Bombay High Court in Writ Petition No. 79
of 1981 at the instance of the management and as such the question whether
dearness allowance in the Cinema Exhibiting Industry should be linked with the
cost of living index is still pending consideration before the High Court.
Moreover, he urged that there are certain peculiar features of the Cinema
Exhibiting Industry by reason of which it would be inappropriate to link the
dearness allowance payable to worker in that industry with the cost of living
index. For instance, he pointed out, that unlike manufacturing concerns. there
is little scope for enhancing the profits in Cinema Exhibiting Industry
inasmuch as the principal source of income being box-office collection the same
is connected with and limited by the seating accommodation in any theatre.
However, notwithstanding this limiting factor the same adjudicator has granted
the linkage in case of 39 cinema houses in Bombay which shows that other
factors must have weighed with him as outweighing this limiting factor.
We are clearly of the opinion that uniformity
on this aspect is highly desirable in one and the same industry. The main
reason for the refusal to grant such linkage (i.e. linking the D-A. with the
cost of living index) having disappeared the question will have to be
considered afresh. We do not think that adequate and sufficient material is
available on the record of this case before us to decide this issue
satisfactorily. Further it would not be advisable to direct the parties before
us to intervene in the matter pending before the High Court, for, material
which may be peculiar to Metro Cinema may have to be produced and considered
before the issue is properly decided. We, therefore, remand this issue back to
the Industrial Tribunal for disposal in accordance with law with a direction
that the Tribunal should give opportunity to both the parties to produce
additional material and after hearing them should decide the same afresh. It
will be open to the management to raise all contentions including the
contention that dearness allowance should not be linked with cost of living
index but should be granted on normal principle of industry-cum-region formula.
We wish to make it clear that in case the
issue is answered by the Tribunal in favour of the company, the appellant Union
shall not raise any contentions on the quantum of dearness allowance that has
been 170 allowed by the Tribunal in its award on the basis of
industry-cum-region formula, for the quantum aspect of the revision has become
final by reason of the limited leave that was granted by this Court while
admitting the appeal.
We shall next deal with the last question
pertaining to the construction of s. 4(5) of the Payment of Gratuity Act, 1972.
The question of construction arises this way. It appears that existing scheme
of gratuity in the Metro Theatre Bombay was as per the award in Reference (IT
No. 1 of 1968 and the same had been modified by an agreement between the
parties in this Court, which, the Union contended, had become extremely
inadequate and desired to have a more beneficial scheme in some respect for its
workers. Counsel for the Union urged that it was open to the Tribunal to give
more benefits than were available under the scheme contemplated by the Act and
in that behalf reliance was placed on s. 4(5) of the Act. Counsel for the
Company contended the expression 'award' in s. 4(5) meant an existing award and
as such if under the existing award better terms were given to the employees
these will not be affected. It was also urged that the Act was exhaustive and
was intended to ensure uniform payment of gratuity to the employees throughout
the country. The Tribunal accepted the contention of the Management and held
that it could not go beyond the scheme contemplated by the Act, and, therefore
directed that the gratuity scheme as per the Act shall prevail subject to the
modifications arrived at under the terms of settlement, if any, if they were
more beneficial.
Counsel for the appellant Union urged before
us that no standardisation of any gratuity scheme was contemplated by the Act
as was clear from the express provisions contained in s. 4(5) and s. 5 of the
Act and that enactment being a beneficial piece of legislation s. 4(5) should
be construed in favour of the employees and that, therefore, the Tribunal's
view that it could not grant anything beyond the scheme contemplated by the Act
was erroneous. In support of such construction reliance was placed upon this
Court's decision in Alembic Caemical Works Company Ltd. v. Its Workmen where a
similar provision under the Factories Act was construed as conferring power on
the Tribunal to fix the quantum 171 of leave on a scale more liberal than the
one provided by the Act. We find considerable force in this submission.
Section 4(1) of the Act provides that the
gratuity shall be payable to an employee on the termination of his employment
after he has rendered continuous service for not less than five years-(a) on
his superannuation, or (b) on his retirement or resignation, or (c) on his
death or disablement due to accident or disease; sub-s. (2) provides that for
every completed year of service or part thereof in excess of six months, the
employer shall pay gratuity to an employee at the rate of fifteen days' wages
based on the wages last drawn by the employee and sub-s. (3) provides that the
amount of gratuity payable to an employee shall not exceed 20 months' wages.
This is the main scheme of gratuity contemplated by the Act. Then comes sub-s.
(5) which runs thus:
"5. Nothing in this section shall affect
the right of an employee to receive better terms of gratuity under any award or
agreement or contract with the employer." The question for consideration
is whether expression 'award' occurring in the above provision means an existing
award or would include any award whatsoever to be made by an adjudicator under
the Industrial Disputes Act. In the first place there is nothing in the
provision which limits the expression 'award'. Secondly, it cannot be and was
not that under the above provision a gratuity scheme obtaining under an
existing agreement or contract could be improved upon by a fresh agreement or
fresh contract between the employer and the employee and if that be so there is
no reason why the expression 'award' should be construed as referring to an
'existing award' and not to include a fresh award that may be made by an
adjudicator or an Industrial Court improving in favour of the employees the
scheme obtaining under the Act or the existing award. Thirdly, the very fact
that under the above provision better terms of gratuity could be obtained by
employee by an agreement or contract with the employer notwithstanding the
scheme of gratuity obtaining under the Act clearly suggests that no
standardisation of the gratuity scheme contemplated by the Act was intended by
the Legislature. This also becomes amply clear from the provisions of s. 5
which confer power upon the appropriate Government to exempt establishment to
which the Act applies from operation of the provisions of the Act if in its
opinion the employees in such establishment, are in receipt of gratuity
benefits not less favourable than benefits confer- 172 red under the Act.
Therefore, on true construction we are clearly of the view that the expression
'award' occurring in the above provisions does not mean and cannot be confined
to 'existing award' but includes any award that would be made by an adjudicator
wherein better terms of gratuity could be granted to the employees if the facts
and circumstances warrant such grant. It is true, as has been observed, by this
Court in State of Punjab v. Labour Court Jullundur and Ors. that the Act enacts
a complete Code containing detailed provisions covering all essential features
of the scheme for payment of gratuity. But it is also clear that the scheme
envisaged by the enactment secures the minimum for the employees in that behalf
and express provisions are found in the Act under which better terms of
gratuity if already existing are not merely preserved but better terms could be
conferred on the employee in future. In other words, the view taken by the
Tribunal that it could not go beyond the scheme of gratuity contemplated by the
Act is clearly erroneous.
The decision of this Court in Alembic
Chemical Works Limited (supra), which was under the Factories Act, also lends
support to such beneficent construction. In that case the Industrial Tribunal
had fixed the quantum of leave, privilege and sick, for the staff of a manufacturing
concern on a scale more liberal than the one in force for the operatives of the
same concern. In also made necessary direction regarding accumulation of such
leave. The quantum of leave so fixed by the Tribunal was larger than the
quantum of leave prescribed under the provisions of s. 79(1) of the Factories
Act. It was contended that s. 79 of the Act was exhaustive and had self
contained provisions with regard to the granting of annual leave with wages to
the employees, that it had the effect of introducing standardisation in the
matter of leave and that no addition to the said leave could be made either by
a contract or by an award. This Court negatived the said contention on the
language of s. 79(1) itself. Additionally, provisions of s. 78 were relied upon
which recognised exemptions to the leave prescribed by s. 79(1). Section 78(1)
provided that provisions of Chapter VIII including s. 79(1) shall not operate
to the prejudice of any right to which a worker may be entitled "under any
other law or under the terms of any award, agreement or contract of
service", and a proviso to this sub-section laid down that when such
award, agreement or contract of service provided for longer annual leave with
wages than provided under the 173 Chapter, the worker shall be entitled only to
such longer annual leave. It was contended that the expression "any
award" in s. 78(1) applied only to existing award. The Court negatived
this contention and held that the contention was plainly inconsistent with a
fair and reasonable construction of the said provision and that s. 78(1)
protected not merely awards, agreements or contracts of service then existing
but also those that would come into existence later. In the instant case also
we are clearly of the opinion that the phrase "under any award, agreement
or contract with the employer" occurring in s. 4(5) is intended to cover
future awards, agreements or contracts with the employer since existing better
terms of gratuity are intended to be protected by issuance of a notification
under s. 5 of the Act.
We may also state here that in the other
adjudication done by the same adjudicator (Shri B.B. Tambe) as the Sole
Arbitrator in Reference (VA) No. 1 of 1979 (M/s. Alankar Theatre and 38 other
theatres v. The workmen employed under them) he has come to a contrary
conclusion and has held that under s. 4(5) of the payment of Gratuity Act an
adjudicator can grant better terms of gratuity and has actually proceeded to
grant better terms of gratuity to the workmen employed in all the theatres
concerned in that Reference.
(Vide para 140 of the Award). Realising this
position, counsel for the company before us fairly conceded that the employees
in the Metro Cinema would also be entitled to better terms of gratuity-the same
as given to employees in other cinema Houses. Counsel for the parties,
therefore, agreed before us that gratuity scheme as set out by Shri Tambe in
para 140 of his award dt. 27-6-1980 in Reference (VA) No. 1 of 1979 should
apply to the workmen of Metro Cinema. We accordingly, direct that the gratuity
scheme as set out in paragraph 140 of the above award would be applicable to
the workmen of Metro Cinema with effect from 1.1.1977.
In the result the appeal is partly allowed on
the point of gratuity as indicated above and on the question of linkage the
appeal is remanded to the Tribunal for disposal according to law as directed
above. The appeal as regards retrospectivity is dismissed.
In the circumstances the parties will bear
their own costs.
V.D.K. Appeal allowed in part.
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