1968 (9) TMI 121 - SC - Indian Laws

Summary

Issues Involved:
1. Introduction of a gratuity scheme for workmen.
2. Financial condition and stability of the units.
3. Basis for calculating gratuity (basic wage vs. consolidated wage).
4. Applicability of the region-cum-industry principle.
5. Fixation of the age of superannuation.
6. Settlement between A.T.M. management and workmen.
7. Entitlement to gratuity upon dismissal for misconduct.
8. Gratuity for Badli workmen.
9. Effective date of the award.
10. Protection of existing benefits under voluntary schemes.

Issue-wise Detailed Analysis:

1. Introduction of a Gratuity Scheme for Workmen:
The appeals arose from an award by the Industrial Tribunal, Delhi, which framed two schemes relating to the payment of gratuity to workmen in four textile units. Both employers and workmen were dissatisfied with certain provisions and filed appeals challenging these provisions.

2. Financial Condition and Stability of the Units:
The Tribunal found that D.C.M. and S.B.M. were more prosperous compared to B.C.M. and A.T.M., with A.T.M. being a newcomer and having financial difficulties. The Tribunal held that the financial condition of the units justified the imposition of a gratuity scheme operative from January 1, 1964. The A.T.M. was found to have achieved financial stability by 1961-62.

3. Basis for Calculating Gratuity (Basic Wage vs. Consolidated Wage):
The Tribunal initially based the gratuity on consolidated wages (basic wage plus dearness allowance) to maintain the existing level of benefits. However, the Supreme Court held that the Tribunal erred in relating gratuity to consolidated wages, as the prevailing pattern in the textile industry across the country was to relate gratuity to basic wages alone.

4. Applicability of the Region-cum-Industry Principle:
The Tribunal adopted a unit-wise approach instead of the region-cum-industry principle due to the financial disparity among the units. The Supreme Court upheld this approach, stating that no rule mandates a region-cum-industry principle for all cases.

5. Fixation of the Age of Superannuation:
The Tribunal did not fix the age of superannuation, which was beyond the scope of the reference. The Supreme Court agreed, stating that a gratuity scheme could be implemented without fixing the age of superannuation.

6. Settlement Between A.T.M. Management and Workmen:
The A.T.M. management argued that a settlement barred the Tribunal's jurisdiction to make an award. However, the Supreme Court found that the settlement did not preclude the Tribunal from framing a gratuity scheme, as the financial stability clause in the settlement indicated that gratuity would be payable once the unit became financially stable.

7. Entitlement to Gratuity Upon Dismissal for Misconduct:
The Supreme Court held that workmen dismissed for misconduct involving acts of violence, riotous or disorderly behavior, or causing financial loss to the employer could forfeit their gratuity. However, technical misconduct without financial loss should not result in forfeiture.

8. Gratuity for Badli Workmen:
The Tribunal's condition that Badli workmen must have worked for at least 240 days in a year to qualify for gratuity was upheld by the Supreme Court, rejecting the contention that mere registration and availability should qualify them for gratuity.

9. Effective Date of the Award:
The Tribunal's decision to make the award operative from January 1, 1964, was upheld. The Supreme Court found no reason to alter this date, noting that neither party was dilatory in the proceedings, and the existing schemes in D.C.M. and S.B.M. provided some benefits during the interim period.

10. Protection of Existing Benefits Under Voluntary Schemes:
The Supreme Court directed that workmen of D.C.M. and S.B.M. employed before January 1, 1964, should be entitled to elect the higher of the two gratuity rates (voluntary scheme or Tribunal's award) at the time gratuity becomes due. Workmen employed after January 1, 1964, would be entitled to benefits under the Tribunal's award alone.

Modifications to the Schemes:
- D.C.M. and S.B.M.: Gratuity based on basic wage, with specific adjustments to the number of days' wages and maximum months' wages.
- B.C.M. and A.T.M.: Similar adjustments, with gratuity based on basic wage and specific provisions for voluntary retirement and misconduct.

Conclusion:
The Supreme Court made several modifications to align the gratuity schemes with the prevailing industry standards, ensuring financial stability and industrial peace. The judgment emphasized the need for legislative intervention to create a uniform gratuity scheme across the country.