Judgment

HIDAYATULLAH, J. : In this appeal by special leave the only question is whether the Industrial Court, Madhya Pradesh, Indore erred in introducing by its award dated December 29, 1962 a scheme of gratuity in the Burhanpur Tapti Mills Ltd., the appellant before us. The Burhanpur Tapti Mills Mazdoor Sangh (respondent) which represents the workers in the Company gave a notice of change under S. 31(2) of the Madhya Pradesh Industrial Relations Act, 1960 demanding a scheme of gratuity. The Company did not accept the demand and the Sangh forwarded under the Act to the Conciliator a statement of its case. The conciliation proceedings failed and the Sangh made a reference under S. 52 of the Act to the Industrial Court submitting its demand as follows :

"(1) Whether there is a case for awarding the introduction of the Scheme of gratuity to the employees of the Burhanpur Tapti Mills Ltd., Burhanpur.

(2) If so, whether the Scheme of gratuity as demanded by the representative union or some other adequate scheme of gratuity be granted. "

The case of the Sangh was that the financial condition of the Company was quite sound, that the textile industry in general and this Company in particular, had good prospects and that the Company was in a position to give this retiring benefit. The Sangh suggested a scheme into which it is not necessary to go. The Company resisted the demand and submitted that it suffered heavy losses in previous years and its profits were small except in the years 1960-61 and 1961-62 which were boom years for textile industry, that the financial condition of the Company was not sound and that it had no profit-making capacity. The Company contended that the demand of gratuity in addition to the statutory retrenchment compensation and the statutory provident fund which already existed was not justified. The Company further contended that in this region schemes of gratuity were generally not in vogue. The rival parties filed many documents. Some oral evidence was also given on the side of the Sangh. The Industrial Court overruled the contention of the Company and framed a scheme for gratuity holding that the burden would not be more than Rs. 50,000 to Rs. 60,000 a year and that the financial condition and the stability of the Company justified the introduction of a scheme in common with the Indore-Malwa region Mills.

2. In this appeal Mr. Setalvad contended that the Mill was old and all its machinery needed to be replaced. He submitted that the Company was required to borrow large sums of money from the National Industrial Development Corporation and the Madhya Pradesh Financial Corporation, and that its indebtedness was growing and its profits were falling and it had no capacity to bear the additional burden of the gratuity scheme. He pointed out that the Company was already contributing to the provident fund and was paying 4 per cent of the wages as annual bonus. He submitted that the Industrial Court had made glaring mistakes in appraising the financial condition of the Company and contended that if industry-cum-region basis were applied the Company should be compared with mills in the old Madhya Pradesh region and not with those in the Madhya Bharat region. The latter, according to him, flourished in the former Indore State because there was no Income-tax and the general level of taxation was also low. He contended that the contribution to the provident fund was all that could be provided and that there was no capacity to arrange for further benefits to the workmen.

3. It is no longer open to doubt that a scheme of gratuity can be introduced in concerns where there already exist other schemes such as provident fund or retrenchment compensation. This has been ruled in a number of cases of this Court and recently again in Wenger and Co. v. Workmen, (1963) Supp 2 SCR 862 and Indian Hume Pipe Co. Ltd. v. Workmen, AIR 1960 SC 251. It is held in these cases that although provident fund and gratuity are benefits available at