Indian Link Chain Manufacturers LTD. vs Workmen

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1971 Supreme(SC) 501

SUPREME COURT OF INDIA
C.A. VAIDIALINGAM AND P. JAGANMOHAN REDDY, JJ.
The Indian Link Chain Manufacturers Ltd. (In C. A. No. 204 of 1967); The Workmen (In C. A. No. 610 of 1967), Appellants
Versus
The Workmen (In C. A. No. 204 of 1967); The Indian Link Chain Manufacturers Ltd. and another (In C. A. No. 610 of 1967), Respondents.
Civil Appeal Nos. 204 and 610 of 1967, D/- 17-9-1971.
Advocates appeared
Mr. I. N. Shroff, Advocate, for Appellant (In C. A. No. 204 of 1967) and for Respondent No. 1(In C. A. No. 610 of 1967); M/s. Madan G. Phadnis and Janardan Sharma, Advocates, for Respondents (In C. A. No. 204 of 1967) and for Appellants (In C. A. No. 610 of 1967).

Headnote:
Industrial Disputes Act 1947 – Section 19 (2), 2, 2 (p), 19 - Payment of Bonus Act – Section 6 (a), 23 - Income-tax Act - Section 32 (1) - Civil Procedure Code, 1908 - Section 80 - Workmen - Grant an Adjustment in Wage Scale - Dearness Allowance - Bonus - Whether settlement in Ex. C-9 was in force at time when Government made reference of dispute - Whether provisions of Section 19 (2) read with Section 2 (p) of Act were complied with - Whether provisions of Section 19 (2) are complied with and in substance a notice is given as required - Whether there is any agreement, settlement or an award governing demand raised on behalf of Workmen in present dispute - Whether that rejection is valid or not – Whether any fitments should be made at all or if fitments are to be made, what adjustments should be effected – Held, General rule is that gratuity must be related to basic wage, in cases where wages are not very high and a consolidated wage has been fixed taking into account dearness allowance, scheme of gratuity may be related to consolidated wage, which will be basic wage in subsequent years - As Court pointed out earlier consolidated wage will be basic wage in subsequent years and at any future date having regard to price index, claim of workmen either for a rise in wage based on cost of living index or for grant of separate dearness allowance to neutralise that rise is bound to be considered and adjudicated - Lastly scheme is challenged as unfair and incongruous because those that retire are given larger benefits than those who are retrenched - But this criticism is equally unwarranted - In first clause of scheme a worker who voluntarily retires or resigns after 10 years of continuous service is to be paid as gratuity 21 days basic wages for each completed year of service subject to a maximum of 390 days basic wages, while under Clause 3, on termination of services of an employee after 10 years of continuous service he shall be paid as gratuity a sum equivalent to 17 days basic wages for each completed years - Difference between gratuity payable to persons who resign or retire voluntarily and those whose services are terminated is that latter will receive in addition to gratuity retrenchment compensation admissible to him under Industrial Disputes Act, while in case of former he will not be entitled to it - Scheme itself in Clause 3 makes this specific distinction – Court do not think that there is any justification for several criticisms directed against this scheme - In Court view scheme is not only reasonable but fair having regard to interests of workmen and financial capacity of industry - In result both Award is modified in respect of two items that a payment of bonus of Rupees 20,768/50 be made instead of Rupees 42,783/- awarded by Tribunal, and subject to directions already given there shall be a fitment of wages of workers in new scales awarded by Tribunal after taking into account one increment for every three years of completed service upto date of statement of claim - Appeals partly allowed.

Judgment

P. JAGANMOHAN REDDY, J.:- The Government of Maharashtra had referred the dispute between the Appellant and its Workmen to the Industrial Tribunal under the Industrial Disputes Act 1947 (hereinafter called the Act ) in respect of Wage scales, dearness allowance, bonus, gratuity and permanency. The Award made by it is the subject matter of this Appeal by Special Leave (Civil Appeal No. 204 of 1967) in which the dispute relating to wage scales and dearness allowance is contested only on the ground that there was a settlement between the workmen and the employers in a conciliation proceeding and as that has not been terminated by either party the Government has no jurisdiction to refer the dispute in relation thereto to the Tribunal. If this plea is not accepted the wage scales and dearness allowance as awarded by the Tribunal is not challenged. The claim for bonus as awarded is disputed as it often happens, on the manner and method of computation of depreciation and development rebate. It is the case of the employers that it has not the financial capacity to bear the burden of the gratuity scheme framed by the Tribunal for the workmen. Apart from this certain incongruities in this scheme are pointed out to which we shall refer and deal with at the appropriate place. The fifth issue relating to permanency is not pressed.

2. The workmen have also filed an Appeal (Civil Appeal No. 610 of 1967) against the Award in which the omission by the Tribunal to grant an adjustment in the wage scale by directing a fitment of the wages of workmen in the said scales in accordance with the length of their service is assailed. It is also pointed out that the Tribunal did not link the dearness allowance granted by it with the cost of living index and lastly the award did not compute the return on reserves in accordance with the Schedule 3 of the Payment of Bonus Act (hereinafter called the Bonus Act ).

3. A few facts may now be stated for a better appreciation of the matters in controversy. The Appellant was registered as a Public Limited Company in or about 1956 and commenced production in or about 1958. It employs approximately 170 persons of whom 155 are daily rated workers and it is the later category who are the Respondents in this case. In October 62 the General Secretary of the Mumbai Kamgar Union which represents the workers of the Appellant (hereinafter referred to as the Union ) made certain demands on their behalf relating inter alia to wage-scales and dearness allowance. These disputes formed the subject matter of conciliation proceedings in the course of which the parties arrived at an amicable settlement on 5th April 63, the relevant terms of which pertaining to the wage scale and dearness allowance are as under:

"Demand No. I - Wage scales:

The workers drawing at present upto Rs. 30.30np. per day will be given an ad hoc increment of 60 np. With effect from 1-1-1963 and another increment of 40 np. With effect from 1-1-1964.

(b)Persons drawing more than Rs. 3.30 np. per day will be given an ad hoc increment of 50 np. with effect from 1-1-1963 and another increment of 30 np. with effect from 1-1-1964.

Demand No. 2. Dearness allowance:

As the wage scale agreed to above are consolidated i. e. including allowance, the Union has withdrawn the demand."

4. The other two demands relating to Casual leave and paid holidays are not before us and need not be noticed. The parties also agreed to discuss the existing production bonus scheme and to finalise the suggestion for revising the same by the end of June 63 in view of the instalment of new machinery. This settlement was reduced to writing and signed by the Chief Executive of the Appellant, the Conciliation Officer and the General Secretary, Mumbai Kamgar Union and was considered a settlement as defined by clause P of Section 2 of the Act. It was averred that as this settlement was bind

Click Here to Read the rest of this document

1971 Supreme(SC) 501

Cases Referred (12)