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TMI Blog1964 (11) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant before us. The Burhanpur Tapti Mills Mazdoor Sangh (respondent) which represents the workers in the Company gave a notice of change under Section 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 Section 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 representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submitted that the Company was required to borrow large sums of money from the National Industrial Development Corporation land 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 reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atuity and a scheme of pensions have much in common. Gratuity is a lump sum payment while pension is a periodic payment of a stated sum. They are both "efficiency devices" and are considered necessary for an "orderly and humane elimination" from industry of superannuated or disabled employees who but for such retiring benefits would continue in employment even though they function inefficiently. The voluntary retirement of an inefficient or old or worn out employee on the assurance that he is to get a retiral benefit' leads to the avoidance of industrial disputes, promotes contentment among those who look for promotions, draws better kind of employees and improves the tone and morale of the industry. It is beneficial all round. It compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Both systems are admissible but regard must be had to the surrounding circumstances to select the right basis. Emphasis must always be laid upon the financial position of the employer and his profit-making capacity whichever method is selected. In the present case there is a general scheme of gratuity in the textile mills of the region and no evidence has been furnished that there is any other textile mill in this region where the scheme does not exist. The mills situated at distant places like Rajnandgaon and Raigarh cannot furnish a true guide because conditions of labour and the prospects of industry vary in units far removed to a far greater extent than in units which lie close together. This Company is not being singled out for in nov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts transferred to the depreciation fund) amounted to Rs. 93,7.3,441- It found four years in which there was loss but this loss totalled only Rs. 11,47,451. A portion of the profits in each year was transferred to the depreciation fund. The amount so transferred is over Rs. 37,00,000. The Industrial Court, however, made a mistake for the year 1947-48 and took Rs. 20,000 as transferred to the depreciation fund in that year whereas the correct amount was Rs. 2,90,000. The entry next below appears to have been read by mistake. This, however, makes only a slight difference because it does not depress the profits unduly. Even after deducting this extra amount, the net profits during this period stand at Rs. 67,00,000. It was contended before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unduly large profits in those years and we must not consider those years as representing the average years. It is, however, clear that the Company was able to lay by a general reserve of Rs. 15 lakhs in addition to the depreciation fund and has paid handsome dividends. It has even paid a sum of Rs. 1,37,000 as donations. The burden of the gratuity is not likely to be too much. The payment each year is not likely to be as high as Rs. 50,000 to Rs. 60,000 a year which is the amount determined by the Industrial Court. This Company has no age of superannuation, and taking the age of 60 years as the age at which gratuity would ordinarily be claimable the burden cannot be in the neighbourhood of Rs. 50,000 to Rs. 60,000. The average wage is Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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