Back
1971 Supreme(Del) 162
High Court Of Delhi
HINDUSTAN TIMES LIMITED - Appellant
Versus
AMAR SINGH - Respondent
Civil 130 of 1970
Decided On : 05/28/1971
A.B.SAHARIA, B.DUTTA, J.N.AGARWAL, O.P.MALHOTRA, RISHIKESH, V.M.TARKUNDE
The interpretation of a gratuity scheme and the calculation of gratuity payable to an employee.
Headnote:
GRATUITY - NEWSPAPER INDUSTRY - RETIREMENT AGE - GRATUITY SCHEME - INTERPRETATION - CALCULATION OF GRATUITY - BASIC WAGE OR CONSOLIDATED WAGE INCLUDING DEARNESS ALLOWANCE.
Fact of the Case:
The appellant, The Hindustan Times, a daily newspaper published in Delhi, had a gratuity scheme for its non-journalist staff. The respondent, a peon employed with the appellant, retired from service at the age of 58 years, which was the retirement age fixed by the Industrial Tribunal. The respondent claimed gratuity under clause (3) (c) of the gratuity scheme, which provided for 15 months' salary or wages for each completed year of service. The appellant contended that the respondent's case fell under clause (2) of the scheme, which provided for 15 days' salary or wages for each completed year of service in case of voluntary retirement or resignation after 15 years of continuous service.
Finding of the Court:
The Labour Court held that the respondent's case fell under clause (2) of the gratuity scheme and that gratuity was to be calculated on the total amount payable to a workman including pay and dearness allowance. The learned Single Judge accepted the respondent's contention and held that the case was covered by clause (3) (c). The learned Judge also up-held the decision of the Labour Court holding that gratuity is to be paid on the total amount payable to a workman including pay and dearness allowance.
Issues: 1. Whether the respondent's case fell under clause (2) or clause (3) (c) of the gratuity scheme? 2. Whether gratuity was to be calculated on basic wage or on the consolidated amount of salary and dearness allowance?
Ratio Decidendi: 1. The Court held that the respondent's case fell under clause (3) (c) of the gratuity scheme. The Court reasoned that the plain and simple meaning of clause (2) is that it refers to those cases where a person of his own accord, wants to retire from service. The Court further reasoned that the respondent's retirement was not voluntary as he was told by the management that his retirement would become effective on a certain date. 2. The Court held that gratuity was to be calculated on basic wage and not on the consolidated amount of salary and dearness allowance. The Court reasoned that the normal rule is that determination of gratuity should be related to basic pay unless there was evidence to show that the company's profits were abnormally high or the practice in the region was that other similar concerns paid gratuity on the basis of consolidated wages.
Final Decision: The Court allowed the appeal in part. The Court held that the respondent was entitled to gratuity under clause (3) (c) of the gratuity scheme, but that the gratuity was to be calculated on basic wage and not on the consolidated amount of salary and dearness allowance.
( 1 ) THIS appeal under clause 10 of the Letters Patent is connected with another appeal viz. LPANo. 49of 1971. Both these appeals arise out of the same judgment of the learned Single Judge. LPA No. 48 of 1971 is against the decision in Civil Writ Petition No. 518-D of 1964 while LPA No. 49 of 1971 is against the decision in Civil Writ Petition No. 199-D of 1965.
( 2 ) THE appellant in either case is the management of The Hindustan Times, a daily newspaper published in Delhi. The contesting res- pondent in both the appeals is Shri Amar Singh (respondent No. 1) who was a peon employed with the appellant. The other respondent is Shri Roop Chand who was the presiding officer of the Labour Court in Delhi.
( 3 ) THE question involved in both the appeals is with regard to the amount of gratuity payable to the respondent
( 4 ) IT appears that in an industrial Dispute between the appellant and its workmen (being Industrial Dispute No. 29 of 1959), the ageof retirement was fixed by the Industrial Tribunal at 55 years, but in appeal before the Supreme Court the age of retirement was raised to 58 years. In May 1963, respondent No. 1 reached the age of 58 years and retired from service. In the scheme of gratuity for the benefit of non-journalist staff (like respondent No. 1) the award had provided as under:--
(1) On the death of an employee while in 15 days salary or service of the company or his becoming wages for each comphysically or mentally incapable of future pleted year of service, subject to a service maximum of 15 months salary or wages payable to the disabled employee or if he dies to his heirs or legal representatives or assignees. (2) On Voluntary retirement or resignation 15 days salary or of an employee after 15 years conti- wages for each comnuous service, pleted year of service. {3) On termination of service of an employee by the company. (a) After completion of 5 years service - 1/2 months salary but less than 10 year service or wages for each completed year of service. (b) [after 10 years continuous service 3/4 months salary in the company but less than 15 or wages for each years, completed year of service. (c) After 15 years continuous service 5 months salary in the company, or wages. Respondent No. 1 having completed 19 years of service on the date of his retirement, made an application under Section 33-C (2) of the Industrial Disputes Act, 1947 for computation of the benefit due to him under the Gratuity Scheme. The application was heard by the Labour Court Delhi and the following two issues were framed :-
1. Whether the applicant is entitled to 15 months salary or wages as gratuity in accordance with clause (3) (c) of gratuity scheme or is only entitled to 15 days salary or wages for each completed year of service in accordance with clauses (1) and (2) of the scheme ? 2. Whether gratuity has to be calculated on basic salary or on the consolidated amount of salary and dearness allowance?
( 5 ) BY its award dated 22-5-1964 the Labour Court held on issue No. I that the case of respondent No. 1 fell under clause (2) of the gratuity scheme and not under clause (3) (c) as claimed by respondent No. 1. On issue No. 2 the Labour Court held that the gratuity is to be calculated on the total amount payable to a workman including pay and deal-ness allowance. Against the decision of the Labour Court on issue No. 1 the respondent No. 1 filed a Civil Writ Petition No. 518-D of 1964 while Civil Writ Petition No. 199-D of 1965 was filed by the management of the Hindustan Times against the decision on issue No-2
( 6 ) THE learned Single Judge accepted the contention urged on behalf of respondent No. 1 and held that the case was covered by clause (3) (c ). The learned Judge also up-held decision of the Labour Court holding that gratuity is to be paid on the total amount payable to a workman including pay and dearness allowance. The appellant has now come up in appeal against the decision of the learned Judge i
