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SUPREME COURT OF INDIA
J.C. SHAH, V. RAMASWAMI AND A.N. GROVER, JJ.
The Delhi Cloth and General Mills Co. Ltd. etc., Appellants
Versus
The Workmen and others etc., Respondents.
Civil Appeals Nos. 2168, 2569 of 1966, 76, 123 and 560 of 1967, D/- 27-9-1968.
Advocates appeared
Mr. S. T. Desai, Senior Advocate (M/s. Rameshwar Nath and Mahinder Narain, Advocates of M/s. Rajinder Narain and Co. with him), for Appellant (In C. A. No. 2168 of 1966 and Respondents Nos. 1 and 2 in C. As. Nos. 123 & 560 of 1967), 923 M/s. H. R. Gokhale and A. K. Sen, Senior Advocate (Mr. R. P. Kapur, Advocate for Mr. I. N. Shroff, Advocate with them), for Appellant (In C. A. No. 2569 of 1966 and Respondent No. 3 in C. As. Nos. 123 and 560 of 1967); Mr. B. Sen, Senior Advocate (Mr. I. D. Gupta, Advocate, and Mr. M. N. Shroof, Advocate for Mr. I. N. Shroof, Advocate with him), for Appellant (In C. A. No. 76 of 1967); M/s. M. K. Ramamurthi, Madan Mohan, Mrs. Shyamala Pappu and Mr. Vineet Kumar Advocates, for Appellant; (In C. A. No. 123 of 1967), Respondents Nos. 1 (a) and 4 (a), (In C. A. No. 2168 of 1966), Respondent No. 1 (In C. A. No. 2569 of 1966), Respondent No. 1 (In C. A. No. 560 of 1967); M./s. V. C. Parashar and O. P. Sharma, Advocates, for Appellant (In C. An. No. 560 of 1967) Respondents Nos. 1 (b) and 4 (b) (In C. A. No. 2168 of 1966), Respondent No. 2 (In C. A. No. 2569 of 1966) and Respondent No. 2 (In C. A. No. 76 of 1967).
Industrial Disputes Act, 1947 - Sections 10 (1) (d) and 12 (5) - Employees Provident Funds Act, 1952 - Workmen - Provisions of schemes - Challenged - There are two workmen s Unions in Delhi region - Union , and other - Ekta Union made a claim principally for fixation of gratuity in addition to benefit of provident fund admissible to workmen under Employees Provident Funds Act, to be computed on consolidated wages inclusive of dearness allowance - Ekta Union submitted by its statement of claim that a gratuity scheme based on region-cum-industry principles i. .e a uniform scheme applicable to all four units be framed - Textile Mazdoor Union also supported claim for framing of a gratuity scheme on basis of consolidated wages of workmen but claimed that scheme should be unit-wise - At trial, it appears that both Unions pressed for a unit-wise scheme of gratuity - Held, Remaining clauses will stand unaffected except that for words, "within six months from date of publication of this Award words "within six months from date of this judgment" will be substituted - Annexure B relating to B. C. M. and A. T. M. will be modified in following respects - In clause 1 (a) for expression "one-fourth months wages", expression "15 days wages" will be substituted - In clause 1 (b) for expression "one-third months wages" expression "21 days wages" will be substituted - In proviso for expression "12 months wages", expression "20 months wages" will be substituted - In clause 2 for words "15 years service", expression "10 years service" will be substituted - It clause 3 in proviso for expression "12 months wages", expression "20 months wages will be substituted and it will be followed by Explanation of "misconduct" as in Annexure A - In clause 4 the words "plus dearnesse allowance" - Order accordingly.
Key Points: - Gratuity should be based on basic wage, not consolidated wages including dearness allowance (!) (!) . - Minimum qualifying period for voluntary retirement reduced to 10 years; one month’s basic wage per year up to 20 months (!) (!) . - Misconduct involving violence or disorderly behavior may justify withholding gratuity; technical misconduct without financial loss should not (!) (!) .
Judgment
SHAH, J.: These appeals arise out of an award made by the Industrial Tribunal, Delhi, in I. D. Reference No. 70 of 1958: the first three appeals are filed by the employers, and the last two by the employees. By its award the Industrial Tribunal, Delhi, has framed two schemes relating to payment of gratuity to the workmen employed in four textile units in the Delhi region. The employers and the workmen are dissatisfied with the schemes and they have filed these appeals challenging certain provisions of the schemes.
2. In the Delhi region there are four textile units: the Delhi Cloth Mills - which will be referred to as D. C. M.; Swatantra Bharat Mills - which will be referred to as S. B. M.; Birla Cotton Mills- which will be referred to as B. C. M.; and Ajudhia Textile Mills - which will be referred to as A. T. M,. The D. C. M. and S. B. M. are under one management. On March 4, 1958 the Chief Commissioner of Delhi made a reference under Sections 10 (1) (d) and 12 (5) of the Industrial Disputes Act, 1947, relating to four matters in dispute, first of which is as follows:
"Whether a gratuity for retirement benefit scheme should be introduced for all workmen on the following lines and what directions are necessary in this respect?
1. for service less than 5 years .. Nil
2. for service between 5-10 years .. 15 days wages for every year of service
3. for service between 10-15 years .. 21 days wages for every year of service
4. for service over 15 years .. one month s wages for every year of service."
The reference related to workmen only and did not apply to the clerical staff or mistries.
3. There are two workmen s Unions in the Delhi region - the Kapra Mazdoor Ekta Union-hereinafter called Ekta Union , and the other, the Textile Mazdoor Union. The Ekta Union made a claim principally for fixation of gratuity in addition to the benefit of provident fund admissible to the workmen under the Employees Provident Funds Act, to be computed on the consolidated wages inclusive of dearness allowance. The Ekta Union submitted by its statement of claim that a gratuity scheme based on the region-cum-industry principles i. .e a uniform scheme applicable to all the four units be framed. The Textile Mazdoor Union also supported the claim for the framing of a gratuity scheme on the basis of the consolidated wages of workmen but claimed that the scheme should be unit-wise. At the trial, it appears that both the Unions pressed for a unit-wise scheme of gratuity.
4. The Tribunal entered upon the reference in respect of the fixation of gratuity scheme in February 1964 and made an award on June 30, 1966, operative from January 1, 1964. The award was published on August 4, 1966. By the award two schemes were framed - one relating to the D. C,. M. and S. B. M.. and another relating to the B. C. M. and A. T. M. Under the second scheme the digit by which the number of completed year of service was to be multiplied in determining the total gratuity was smaller than the digit applicable in the case of the D. C. M. and the S. B. M. The distinction was made between the two sets of units, because the D. C. M. and S. B. M. were, in the view of the Tribunal more prosperous units than the 924 B. C. M. and A. T. M. The A. T. M., it was found was a new-comer in the field of textile manufacture, and had for many years been in financial difficulties.
5. The D.C.M. employs more than 8000 workmen in its textile unit; the S. B. M. has on its textile unit; the S. B. M. has on its roll 5000 workmen; the B. C. M. has 6271 workmen and the A. T. M. has 1500 workmen. The D. C. M. and S. B. M. have a common retirement benefit scheme in operation since the year 1940. Under the scheme gratuity payable to workmen is determined by the length of service before retirement. The scheme of gratuity on operation in the D. C. M. and S. B. M. is as follows :
"In case of retirement from service of Mills as a result of physical disability due to overage or on account of death after a minim
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