1. Retrenched workmen claim gratuity under an industrial award in addition to statutory compensation under Section 25F of the Industrial Disputes Act, 1947. (Para 1 )
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1959 Supreme(SC) 184
SUPREME COURT OF INDIA
16th October, 1959.
B.P. SINHA, C.J.I., P.B. GAJENDRAGADKAR AND K.N. WANCHOO, JJ.
M/s. The Brahmachari Research Institute, Calcutta-4, Appellants
Versus
Their Workmen, Respondents.
Civil Appeal No. 4 of 1958.
Advocates appeared
Mr. B. Sen, Senior Advocate, (M/s. S. N. Mukherjee and B. N. Ghosh, Advocates, with him), for Appellants; Mr. Sukumar Ghose, for Respondents.
Advocates:
B.N.GHOSH, B.SEN, S.N.MUKHERJEE, SUKUMAR GHOSH
B.N.GHOSH, B.SEN, S.N.MUKHERJEE, SUKUMAR GHOSH
A payment termed "gratuity" in an award for retrenchment is essentially retrenchment compensation. Under Section 25J of the Industrial Disputes Act, 1947, a workman is entitled to the more beneficial of the statutory compensation or the award's provision, but not both.
Headnote:(A) Industrial Disputes Act, 1947 - Sections 2(oo), 25F and 25J - Retrenchment - Compensation vs. Gratuity - Whether retrenched workmen are entitled to gratuity under an award in addition to retrenchment benefits under Section 25F of the Act - If an award provides a composite scheme for payment in cases of retrenchment, termination for reasons other than misconduct, and resignation with consent, the payment for retrenchment, even if termed "gratuity," is in substance retrenchment compensation (Paras 4, 5) - Section 25F provides a uniform minimum payment for retrenchment - Section 25J ensures that the Act does not derogate from rights under an award, meaning a workman is entitled to the more advantageous of the two, but not both (Para 6).
Facts of the case:
A partnership concern manufacturing pharmaceutical products retrenched 75 workmen after obtaining permission from the Appellate Tribunal. The employer paid compensation as per Section 25F of the Industrial Disputes Act, 1947. The workmen claimed additional gratuity based on a modified gratuity scheme established by an industrial award. The Industrial Tribunal denied the claim, holding that the workmen were only entitled to relief under Section 25F. However, the Appellate Tribunal reversed this, holding that the gratuity benefit under the award was not a retrenchment benefit.
Findings of Court:
The court found that the "gratuity" provided under the award for cases of retrenchment was essentially retrenchment compensation. Since the statutory compensation under Section 25F was more beneficial than the award's provisions, the workmen were not entitled to additional payments under the award.
Issues: Whether retrenched employees are entitled to gratuity under an award in addition to the statutory retrenchment benefits provided under Section 25F of the Industrial Disputes Act, 1947.
Ratio Decidendi: The court held that where an award provides a composite scheme covering retrenchment and other forms of termination, the payment for retrenchment is compensation for retrenchment regardless of the label "gratuity." Under Section 25J, a workman is entitled to the more advantageous benefit between the Act and an award, but cannot receive double compensation for the same event.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether gratuity provided under an industrial award for retrenchment is a distinct benefit separate from statutory retrenchment compensation under Section 25F of the Industrial Disputes Act, 1947. (Para 1 , 3 )
3. The award's gratuity scheme is composite; payment for retrenchment, though termed gratuity, is substantively compensation for retrenchment and not a separate benefit. (Para 4 , 5 , 6 )
4. Statutory compensation under Section 25F and award-based retrenchment compensation are mutually exclusive; workmen are entitled to whichever is more advantageous, not both. (Para 6 )
5. Appeal allowed; decision of the Appellate Tribunal set aside and the Industrial Tribunal's order restored. (Para 6 )
6. Does a payment termed gratuity in an award for retrenchment constitute a separate benefit from statutory retrenchment compensation?
No. If an award provides payment for retrenchment as defined in Section 2(oo) of the Act, such payment is substantively compensation for retrenchment, regardless of whether it is termed gratuity or compensation. (Para 4 , 5 , 6 )
7. How does Section 25J of the Industrial Disputes Act, 1947, affect rights under an industrial award regarding retrenchment compensation?
Section 25J ensures statutory provisions do not derogate from rights under an award. If an award provides higher retrenchment compensation than Section 25F, the workman is entitled to the higher amount, but not both. (Para 6 )
8. Can a workman claim both statutory compensation under Section 25F and gratuity under an award if the award covers retrenchment?
No. A workman cannot receive compensation twice for the same retrenchment. They are entitled to either the statutory compensation or the award-based compensation, whichever is more advantageous. (Para 6 )
Judgment
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 18-8-1952 (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 23-3-1956, 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 held that the workmen were entitled to gratuity 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.
2. The general question has been considered by this Court in Indian Hume Pipe Company Ltd. v. Its Workmen , C. A. N. 169 of 1958: judgment in 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.
3. 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.
4. It will be seen that the Award is a composite scheme providing for what is termed gratuity therein under three conditions, namely, (I) where there is retrenchment, (ii) where there is termination of service fo
