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SUPREME COURT OF INDIA
17th March, 1960
P.B. GAJENDRAGADKAR AND K.N. WANCHOO, JJ.
Bharatkhand Textile Manufacturing Co. Ltd., Ahmedabad and others, Appellants
Versus
Textile Labour Association, Bhadra, Ahmedabad, Respondent.
Advocate-General for State of Bombay, Intervener.
Civil Appeal No. 1 of 1959.
Advocates appeared
Mr. M. C. Satelyad, Attorney General for India (Mr. I M. Nanavati, Advocate and M/s. S. N. Andley, I. B. Dadachanji, Rameshwar Nath and P. L. Vohra, Advocates for M/s. Rajinder Narain and Co. with him), for Appellants; C. K. Daphtary, Solicitor General of India (M/s. B. R. L. Iyengar and K. L. Hathi, Advocates, with him), for Respondent; Mr. C. K. Daphtary, Solicitor-General of India (M/s. H. J. Umrigar and R. H. Dhebar, Advocates, with him), for Intervener.
INDUSTRIAL DISPUTE - Modification of Award - Application under S. 116A of the Bombay Industrial Relations Act, 1947 - Maintainability - Scheme for gratuity - Framing of - Industry-wise basis - Validity.
Fact of the Case:
The respondent, Textile Labour Association, Ahmedabad, gave notice under Sec. 42 (2) of the Bombay Industrial Relations Act XI of 1947 (hereinafter called the Act) intimating to the Mill Owners Association at Ahmedabad (hereinafter called the Association) that it desired a change as specified in the annexure to the communication. The annexure showed that the respondent wanted a change in that a scheme for gratuity should be framed wherever services of an employee are terminated by the mills on grounds of old-age, invilidity, incapacity or natural death. The demand thus made was not accepted by the Association, as so it was referred to the Industrial Court. Pending the reference the Employees Provident Funds Act 19 of 1952 came into operation on March 4, 1952, and it was urged before the Industrial Court on behalf of the Association that since the statutory scheme of provident fund would soon become compulsory it would not be advisable to adjudicate upon the respondent s claim for the specified items of gratuity at that stage. This argument was accepted by the Industrial Court; it held that when the scheme envisaged by the new Act is introduced it would be possible to see from what date it would be operative, and that, if after the introduction of the said scheme it be found that a sufficient margin is left is would then be open to the respondent and the Association to make a fresh application for the institution of a gratuity fund either for all the employees or for the benefit of such of them as will have to retire within the next few years. It was on this ground that the demand made by the respondent was rejected on April 18, 1952.
Finding of the Court:
1. The application for modification made by the respondent under S. 116A is competent, because what the respondent seeks is not any modification of the earlier award which is permissible under S. 116A but a reversal and a revision of the said award which is not permissible under the said section. 2. The word "modification" has been used in S. 116A in a sense larger than its ordinary meaning. The Legislature realised that the procedure prescribed by S. 116, sub-s. (1) for terminating the award which necessitates the other subsequent steps was apt to be dilatory and involved and so it has purported to provide for an effective alternative speedy remedy for the change of the award under s. 116A. 3. The industrial court was right in rejecting the appellant s contention that the statutory provision for provident fund under the Employees Provident Funds Act is a bar to the present claim for a gratuity scheme. 4. The industrial court was right in observing that "there was no justification why an important textile centre like Ahmedabad should not have a gratuity scheme when the needs of the labour require it and the industry can afford it". 5. The scheme framed by the industrial court does not suffer from any infirmities as alleged by the appellants.
Issues: 1. Whether the application for modification made by the respondent under S. 116A is competent? 2. Whether the word "modification" has been used in S. 116A in a sense larger than its ordinary meaning? 3. Whether the industrial court was right in rejecting the appellant s contention that the statutory provision for provident fund under the Employees Provident Funds Act is a bar to the present claim for a gratuity scheme? 4. Whether the industrial court was right in observing that "there was no justification why an important textile centre like Ahmedabad should not have a gratuity scheme when the needs of the labour require it and the industry can afford it"? 5. Whether the scheme framed by the industrial court suffers from any infirmities as alleged by the appellants?
Ratio Decidendi: 1. The word "modification" may include alteration in the details of the award or any other subsidiary incidental matters. In this connection it must be borne in mind that there is a radical difference between the meaning of the word "change" as distinguished from the meaning of the word "modification". Section 116 (2) allows for a change or modification of the registered agreement, settlement or award in terms of the agreement, and that clearly brings out the difference between the two concepts of "change" and "modification". Section 116A, however, is confined only to modification of the award and not its change. 2. The context in which the word modification has been used in S. 116A does not justify the adoption of the limited meaning of the word "modify" for which the appellants contend. The policy of the Act and the reason why S. 116A has been enacted show that the word "modification" has been used in a sense larger than its ordinary meaning. 3. A scheme for gratuity is an integrated scheme and it covers all classes of termination of service in which gratuity benefit can be legitimately claimed. Therefore, when the industrial court refused to frame a gratuity scheme in regard to the four categories brought before it on the earlier occasion, in substance its refusal amounted to a rejection of any scheme for gratuity at all; otherwise it is very difficult to assume that having rejected the claim for gratuity in respect of the said four categories it would still have entertained a claim for gratuity on behalf of other categories not included therein. 4. The statutory provision for the payment of retrenchment compensation under S. 25F is no bar to a claim for gratuity. 5. 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 on 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 minimised. Thus, from the point of view of both employers and employees industry-wise approach is on the whole desirable.
Final Decision: Appeal dismissed.
Judgment
GAJENDRAGADKAR J. : This appeal by special leave is directed against the award passed by the Industrial Court, Bombay, by which a scheme for gratuity has been framed in favour of the workmen represented by the respondent, Textile Labour Association, Ahmedabad, who are employed by the textile mills in Ahmedabad including the twenty appellants mills before us. In order to appreciate the points of law raised by the appellants in the present appeal we ought to state at the outset the material facts leading to the present dispute in which the impugned scheme for gratuity has been framed. On June 13, 1950, the respondent gave notice under Sec. 42 (2) of the Bombay Industrial Relations Act XI of 1947 hereinafter called the Act) intimating to the Mill Owners Association at Ahmedabad (hereinafter called the Association) that it desired a change as specified in the annexure to the communication. The annexure showed that the respondent wanted a change in that a scheme for gratuity should be framed wherever services of an employee are terminated by the mills on grounds of old-age, invilidity, incapacity or natural death. It was further claimed that the payment of gratuity in the said cases should be at the rate of one month s wages (including dearness allowance) per every year of service. Some incidental demands were also specified in the annexure. The demand thus made was not accepted by the Association, as so it was referred to the Industrial Court. Pending the reference the Employees Provident Funds Act 19 of 1952 came into operation on March 4, 1952, and it was urged before the Industrial Court on behalf of the Association that since the statutory scheme of provident fund would soon become compulsory it would not be advisable to adjudicate upon the respondent s claim for the specified items of gratuity at that stage. This argument was accepted by the Industrial Court; it held that when the scheme envisaged by the new Act is introduced it would be possible to see from what date it would be operative, and that, if after the introduction of the said scheme it be found that a sufficient margin is left is would then be open to the respondent and the Association to make a fresh application for the institution of a gratuity fund either for all the employees or for the benefit of such of them as will have to retire within the next few years. It was on this ground that the demand made by the respondent was rejected on April 18, 1952.
2. It appears that the prescribed scheme under the Provident Funds Act came into operation on October 1, 1952. In June 1955, a fresh notice of change was given by the respondent to all the mills in respect of the demand for gratuity and the said demand became the subject-matter of certain reference to the Industrial Court at Bombay under S. 73A of the Act. At that time the Association and the respondent had entered into an agreement to refer all their disputes to arbitration, and in accordance with the spirit of the said agreement the reference pending before the Industrial Court in respect of gratuity were withdrawn and referred to the Board of Arbitrators. Before the Board it was, however, urged by the Association that, so long as the award passed by the Industrial Court on the award passed by the Industrial Court on the earlier reference was subsisting and in operation, a claim for gratuity which was the subject matter of the said reference and award could not be properly or validly considered by the Board. This objection was upheld by the Board, and so it made no provision for gratuity. The decision of the Board of Arbitrators in the said proceedings was published on July 25, 1957.
3. After the said decision was made and before it was published the respondent made the present application for modification of the earlier award under S. 116A of the Act on July 6, 1957. In this application the respondent alleged that there was sufficient justification for modifying the previous award and for introducing a
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