# •959 I. G. N. & Rly. Co. Lid v. Th1ir Workn1sn Sinha]. I959 Octob~r I6

- **Citation:** [1960] 2 S.C.R. 32
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Bench:** B. P. Sinha, P. B. Gajendragadkar, K. N. Wanchoo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/959-i-g-n-rly-co-lid-v-th1ir-workn1sn-sinha-i959-octob-r-i6-1863
- **Pages:** 13

## Headnote

Industrial Dispute--Retrenchment compensation-Grnt11ityWorkmen's claim for both on retrenchment-Maintainability-Use of
Statement of objects and reasons for construing statute-ValidityOrdinance V of r953, s. 25E(b)-Indmtrial Disputes Act, r947 (I4
of I947), SS. 2(rr), 25F(b).
Section 25F(b) of
the Industrial Disputes Act, 1947,
provided : "No workman employed in any industry who has
been in continuous service for not less than one year under an
employer shall be retrenched by that employer until ... (b) the
workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for
e:'ery complete~ year of service or any part thereof in excess of
s1x months ...
The dispute between the appellant company and its workmen
related to the claim for gratuity made by the latter and it was
the appellant's contention that in the scheme of gratuity framed
by the Tribunal no gratuity should be paid to workmen who
would be entitled to receive retrenchment cou1pensation under
s. 25F of the Industrial Disputes Act, 1947· Before s. 25F was
introduced in the Act by Act 43 of 1953, workmen were given
the benefit of both retrenchment compensation and gratuity by
industrial awards, but the decisions were not always uniform.
Ordinance V was promulgated on October 24, 1953, by s. 25E(b)
of which it was provided that before a workman was retrenched
he must be paid at the time of retrenchment gratuity which shall
be equivalent to 15 days' average pay for every completed year
of service or any part thereof in excess of six months. The
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-
-
-
-
-
S.C.R.
SUPREME COURT REPORTS
33
Ordinance was followed by Act 43 of 1953, which was deemed to
have ceme into force on October 24, 1953; and in the statement
of aims and objects of the Act it was said "that a workman ...
shall not be retrenched until he has been given one month's notice
in writing or one month's wages in lieu of such notice, and also
a gratuity ... ". Section 25(F)(b) of the Act was in the same
terms as s. 25E(b) of the Ordinance, except that for the word
"gratuity" the expression " retrenchment compensation " was
substituted. The. appellant's case was that after s. 25F was
enacted there was no longer any scope for framing gratuity
schemes in addition to the statutory retrenchment compensation
for retrenched employees on the grounds(1) that both ins. 25E(b)
of the Ordinance and the statement of aims and objects of the
amending Act, the word "gratuity" had been used and not
retrenchment compensation, (2) that in determining the amount
of compensation payable to a retrenched workman the length of
his past service had been taken into account, and schP-mes of
gratuity also provide for payment of gratuity on similar considerations and adopt a similar measure, and (3) that a retrenched
workman would get both retrenchment compensation and gratuity
and so get more than what other workmen with corresponding
length -0f service would· get on their retirement.
_
Held: (1) that for construing s 25F of the Industrial
Disputes Act, 1947, the words used in the statement about the
aims and objects of the Act are not relevant and that the character of the payment prescribed by the section could only be
determined by the expression "retrenchment compensation"
used therein ; and,
(2) that in the absence of any provision in the Industrial
Disputes Act excluding the claim or grant of gratuity the mere
enactment of s. 25F cannot oust the jurisdiction of industrial
tribunals to entertain claims for gratuity schemes or make it
improper or unjust to frame such schemes for all employees
including those who are retrenched.
The object of granting retrenchment compensation is 'to
enable the workman who is given partial protection to tide over
the period of unemployment, and to keep his gratuity safe and
unused so.that it may be available to him after bis retirement.
The two claims complement each other, and the fact that they
appear to constitute a double benefit cannot affec

## Text

•959
I. G. N. & Rly.
Co. Lid.
v.
Th1ir Workn1sn
Sinha].
I959
Octob~r I6
32
SUPREME COURT REPORTS [1960 (2)]
in respect of Jahangir Sardar and Keayamat Hussain,
is set aside, (2) similarly, the order of reinstatement in
respect of the thirty seven workmen, who had been
convicted under s. 188 of the Indian Penal Code, is also
set a.side, and (3) the order for payment of full back
wages, etc., is modified by reducing those amounts by
half, for the period aforesaid.
As success between the
parties has been divided, they are directed to bear
their own costs in this Court.
Appeal allowed in part.
THE INDIAN HUME PIPE CO. LTD.
v.
THE WORKMEN AND ANOTHER
(B. P. SINHA, C.J., P. B. GAJENDRAGADKAR, and
K. N. WANCHOO, JJ.)
Industrial Dispute--Retrenchment compensation-Grnt11ityWorkmen's claim for both on retrenchment-Maintainability-Use of
Statement of objects and reasons for construing statute-ValidityOrdinance V of r953, s. 25E(b)-Indmtrial Disputes Act, r947 (I4
of I947), SS. 2(rr), 25F(b).
Section 25F(b) of
the Industrial Disputes Act, 1947,
provided : "No workman employed in any industry who has
been in continuous service for not less than one year under an
employer shall be retrenched by that employer until ... (b) the
workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for
e:'ery complete~ year of service or any part thereof in excess of
s1x months ...
The dispute between the appellant company and its workmen
related to the claim for gratuity made by the latter and it was
the appellant's contention that in the scheme of gratuity framed
by the Tribunal no gratuity should be paid to workmen who
would be entitled to receive retrenchment cou1pensation under
s. 25F of the Industrial Disputes Act, 1947· Before s. 25F was
introduced in the Act by Act 43 of 1953, workmen were given
the benefit of both retrenchment compensation and gratuity by
industrial awards, but the decisions were not always uniform.
Ordinance V was promulgated on October 24, 1953, by s. 25E(b)
of which it was provided that before a workman was retrenched
he must be paid at the time of retrenchment gratuity which shall
be equivalent to 15 days' average pay for every completed year
of service or any part thereof in excess of six months. The
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-
-
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-
S.C.R.
SUPREME COURT REPORTS
33
Ordinance was followed by Act 43 of 1953, which was deemed to
have ceme into force on October 24, 1953; and in the statement
of aims and objects of the Act it was said "that a workman ...
shall not be retrenched until he has been given one month's notice
in writing or one month's wages in lieu of such notice, and also
a gratuity ... ". Section 25(F)(b) of the Act was in the same
terms as s. 25E(b) of the Ordinance, except that for the word
"gratuity" the expression " retrenchment compensation " was
substituted. The. appellant's case was that after s. 25F was
enacted there was no longer any scope for framing gratuity
schemes in addition to the statutory retrenchment compensation
for retrenched employees on the grounds(1) that both ins. 25E(b)
of the Ordinance and the statement of aims and objects of the
amending Act, the word "gratuity" had been used and not
retrenchment compensation, (2) that in determining the amount
of compensation payable to a retrenched workman the length of
his past service had been taken into account, and schP-mes of
gratuity also provide for payment of gratuity on similar considerations and adopt a similar measure, and (3) that a retrenched
workman would get both retrenchment compensation and gratuity
and so get more than what other workmen with corresponding
length -0f service would· get on their retirement.
_
Held: (1) that for construing s 25F of the Industrial
Disputes Act, 1947, the words used in the statement about the
aims and objects of the Act are not relevant and that the character of the payment prescribed by the section could only be
determined by the expression "retrenchment compensation"
used therein ; and,
(2) that in the absence of any provision in the Industrial
Disputes Act excluding the claim or grant of gratuity the mere
enactment of s. 25F cannot oust the jurisdiction of industrial
tribunals to entertain claims for gratuity schemes or make it
improper or unjust to frame such schemes for all employees
including those who are retrenched.
The object of granting retrenchment compensation is 'to
enable the workman who is given partial protection to tide over
the period of unemployment, and to keep his gratuity safe and
unused so.that it may be available to him after bis retirement.
The two claims complement each other, and the fact that they
appear to constitute a double benefit cannot affect their validity.
CrvrL APPELLATE JURISDICTION: Civil Appeal No.
169 of 1958.
·
-Appeal by special leave from the decision dated
June 29, 1955, of the Labour Appellate Tribunal of
India, Bombay, in Appeal (Bombay) No. 245 of 1955,
arising out of the Award dated July 14, 1955, of the
Industrial Tribunal, Bombay, in Reference (LT.) N<?:
100of1954.
5
I959
The l>idian Hume
Pipe Co. Ltd.
v.
The Workmen
34
SUPREME COURT REPORTS [1960 (2)]
x959
0. K. Daphtary, Solicitor-General of India, Purshottam
-.-
Tricumdas and J. N. Shroff, for the appellant.
The Indian H u1ne
Pipe Co. Ltd.
N. V. Phadke and K. R. Chaudhuri, for the responv.
dents.
The JV01kn1en
1959. October 16. The Judgment of the Court was
delivered by
Gajendragadk., ].
GAJENDRAGADKAR J.-Are workmen entitled to the
double benefit of a gratuity scheme as well as retrenchment compensation? That is the main question
which falls to be considered in the present appeal.
The same question along with some other subsidiary
points arises in some other appeals and so all of them
have been grouped together and placed before us for
disposal. We propose to deal with the main point in
the present appeal and discuss the other points arising
in the other appeals separately.
This appeal by special leave arises from an industrial dispute between the Indian Hume Pipe Co. Ltd.,
Bombay (hereinafter called the appellant) and its
workmen monthly-rated including canteen boys employed under _jt (hereinafter called the respondents).
The dispute was in regard to the claim for gratuity
made by the respondents and it was referred to the
tribunal in these words : " Gratuity-employees should
be paid gratuity on the scale and the conditions prescribed in the industrial tribunal's award in Ref. (IT)
No. 82 of 1950 dated August 13, 1951. It should also
be paid to those whose services have been terminated
by the management after the termination of the aforesaid award." It appears that the respondents had
raised an industrial dispute in 1950 which covered
their claims for scale of pay, dearness allowance, provident fund and gratuity and it was referred to the
adjudication of Mr. Thakore.
On this reference
Mr. Thakore made his award on August 13, 1951,
which inter alia provided for a scheme of gratuity.
Both the parties had gone in appeal against the said
award but the appellate tribunal dismissed both the
appeals and confirmed the award. On June 2, 1953,
notice was given by the respondents terminating the
said award and making a fresh demand for gratuity at
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S.0.R.
SUPREME COURT REPORTS
35
a higher rate.
Conciliation proceedings were started
1959
but they failed; and so on July 1, 1954, the present The Indian Hume
reference was made.
Pipe co. Ltd.
Before the tribunal the employees urged that the
v.
State Government had no jurisdiction to confine their
The Workmen
demand to the scheme of gratuity as framed by
-
Mr. Thakore, and they urged the tribunal to considerGajendragadkar j.
their claim for a revision of the said scheme. The
tribunal held that its jurisdiction was limited by the
terms of reference and it could not entertain any such
plea; it also observed that even if it was open to the
respondents to agitate for the · revision of the said
award there was not much chance of their succeeding
in that demand. The appellant opposed the scheme
of gratuity framed by the earlier award and contended
that no gratuity should be paid to the workmen who
would be entitled to receive retrenchment compensation under s. 25F of the Industrial Disputes Act (hereinafter called the Act). This contention was negatived
by the tribunal. It held that the respondents were
entitled to claim both gratuity and retrenchment compensation. The tribunal then examined the financial
position of the appellant and held that the gratuity
scheme fran;ied by the earlier award should be enforced subject to certain modifications specified by it.
This award was challenged by the appellant before
the Labour Appellate Tribunal; and it was argued
that the -respondents _were not entitled to the double
benefit of the gratuity scheme and the statutory
retrenchment compensation. The appellate tribunal
agreed with the view taken by the tribunal and rejected the appellant's contention. It_ also examined
the financial position of the appellant and held that
it saw no reason to interfere with the discretion exercised by the tribunal in granting " the same gratuity
to the workmen in the case of retrenchment as in other
cases". Then the appellate tribunal considered the
merits of the scheme sanctioned by the tribunal and
made some changes and added one paragraph which
had been included in the earlier award but had been
omitted by the tribunal. This paragraph dealt with
the cases of persons retrenched after the date of
36
SUPREME COURT REPORTS [1960(2)]
x959
reference but before the award came into operation,
Th 1 -d -
H
and it directed that in the case of such persons no
;ip: ~~\,;m• additional gratuity shall be paid if they have already
v.
received unemployment or retrenchment compensation
The Workmen
in excess of the gratuity awarded above; in other cases
.
-
the difference. alone shall be paid. It is against this
Ga1endragadkar J. award that the present appeal has been preferred.
On the contentions raised in the tribunals below, the
principal point which calls for our decision is whether
a scheme of gratuity can be framed by industrial
tribunals for workmen who are entitled to the benefits
of 25F of the Act. This question has been frequently
raised before industrial tribunals and has generally
been answered in favour of the employees. In dealing
with this question it is important to bear in mind the
true character of gratuity as distinguished from
retrenchment compensation.
Gratuity is a kind of
retirement benefit like the provident fund or pension.
At one time it was treated as payment gratuitously
made by the employer to his employee at his pleasure,
but as a result of a long series of decfoions of industrial tribunals gratuity has now come to be regarded as
a legitimate claim which workmen can make and
which, in a proper case, can give rise to an industrial
dispute. Gratuity paid to workmen is intended to
help them after retirement, whether the retirement is
the result of the rules of superannuation or of physical
disability.
The general prinCiple underlying such
gratuity schemes is that by their length of service
workmen are entitled to claim a certain amount as a
retiral benefit.
On the other hand retrenchment compensation is
not a retirement benefit at all.
As the expression
"retrenchment compensation" indicates it is compensation paid to a workman on his retrenchment
and it is intended to give him some relief and to soften
the rigour of hardship which retrenchment inevitably
causes.
The retrenched workman is, suddenly and
without his fault, thrown on the street and has to face
the grim problem of unemployment.
At the commencement of his employment a workman naturally
expects and looks forward to security of service
J
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1
..
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S.0.R.
SUPREME COURT REPORTS
37
spread over a long period ; but r-etrenchment destroys
z959
his hopes and expectations. The object of retrench- Th
-d. H
.
.
.
t' l
t t'
t th
e Jn ian
ume
ment compensation is to give par ia pro ec ion o
e
Pipe co. Ltd.
retrenched employee and his family to enable them to
v.
tide over the hard period of unemployment. Thus the
The Workmen
concept on which grant of retrenchment compensation
.
-
is based is essentially different from the concept on Ga;endragadkar f.
which gratuity is founded.
It is true that a retrenched workmen would by
virtue of his retrenchment be entitled to claim
retrenchment compensation in addition to gratuity ; ·
because industrial adjudication has generally taken the
view that the payment of retrenchment compensation
cannot affect the workmen's claim for gratuity. ln
fact the whole object of granting retrenchment compensation is to enable the workman to keep his
gratuity safe and unused so that it may be available
to him after his retirement. Thus the object of granting retrenchment compensation to the employee is
very different from the object which gratuity is
intended to serve. That is why on principle the two
schemes are not at all irreconcilable nor even inconsistent; they really complement each other; and so, on
considerations of social justice there is no reason why
both the claims should not be treated as legitimate.
The fact that they appear to constitute a double benefit
does not affect their validity. That is the view which
industrial tribuna,ls have generally taken in a large
number of reported decisions on this point.
·
Let us now refer to some of these decisions and
indicate very briefly the broad outlines of the development of industrial law on this subject. Whenever
industrial tribunals deal with the employees' claim for
gratuity they consider the financial position o.f the
employer before granting the employees' demand for
framing a gratuity scheme ; it is only if they are satisfied that the financial condition of the employer is satisfactory and the burden of the gratuity scheme can be
borne by him that they proceed to frame schemes of
gratuity and thereby secure for the employees the
retirement benefit in the form of gratuity. Though
awards framing such schemes had been made for some
38
SUPREME COUl~T REPORTS [1960 (2)]
z959
years before 1951, the question of framing a gratuity
T ' I a-:- H
scheme was carefully examined by the Labour Appelrle n ian
ume
.
.
Pipe co. Ltd.
late Tribunal m the case of The Army and Navy Stores
v.
Ltd., Bombay, And Their Workmen (1).
The scheme
The Workmen
framed in this case directed the payment of gratuity
on the following scale :
Gajendragadkar ].
( ) O
,
,
" 1
n the death of an employee while m the
service of the company or on his becoming physically or mentally incapable of further service-
:\ month's salary or wages for each year of continuous service, to be paid to the disabled employee
or, if he has died, to his heirs or legal represen-
~atives or assigns.
(2) On voluntary retirement or resignation of
an employee after 15 years continuous service-
:\ month'.s salary or wages for each year of continuous servrne.
(3) On termination of service by the company-
~· month's salary or wages for each year of completed
service."
Under this scheme gratuity was not, however, payable to any employee dismissed for misconduct. This
scheme has been generally treated as a model scheme
in all subsequent disputes about gratuity.
It also appears that the benefit of gratuity schemes
has been generally given even to workmen whose
services have been terminated and who have thereby
become entitled to retrenchment compensation also.
In Bangalore Woollen, Cotton and Silk Mills Go. Ltd.,
And Binny Mills Labour Association (') the Labour
Appellate Tribunal gave permission to the company
to retrench 179 workmen subject to the condition that
the workmen sought to be retrenched shall be paid
by way of retrenchment relief a sum equivalent to
one month's basic wage for every year of completed
service in the company, and the basic wage on which
such calculation is to be made shall be the last basic
wage prior to the grant of this permission. It also
made it clear that the grant of such retrenchment
relief shall not in any way tend to prejudice the issue
(1) [1951] II L.L.J . .ir.
(<) (1952] I L.L.J. 656.
'
'
-
-
..
-
-
S.C.R.
SUPREME COURT REPORTS
39
of a gratuity scheme which. w~s before th~ adjudicr959
ator, and to which the adJudwator was directed to The Indian Hume
apply an altogether independent mind unaffected by
Pipe co. Ltd.
the decisi.on of the Labour Appellate Tribunal. It
v.
may, However, be conceded that sometimes, though
The Workmen
rarely; tribunals have thought it fit not to grant
. --k
.
.
f
l
-
h
.
h
b
Ga1endragad ar ].
gratmty m cases o won:men w ose servwes ave een
terminated on the ground that they would be entitled
receive compensation under the Act. But it is not
disputed that this dissenting note has been struck
only in a few cases (Vide Chemical, Industrial and
Pharmaceutical Laboratory Ltd., And Their Workmen (1 ).
Speaking generally, subject to the capacity of the
emp_loyer to pay, workmen have been given the benefit
of both retrenchment compensation and gratuity by
industrial awards prior to the enactment of s. 25F of
the Act. This question was elaborately considered by
the Labour Appellate Tribunal in the appeals against
the award of All-India Industrial Tribunal (Bank
Disputes) where it has been held that the award of
retrenchment compensation cannot adversely affect
the claim for gratuity. The two claims are made for
entirely different reasons and in a proper case both the
claims can be awarded.
The measure of compensation, however, varied from
case to case, and the awards made in that behalf
naturally were not always uniform. But it does appear
that the determination of the quantum of retrenchment compensation was generally linked with the
period of the past service rendered by the retrenched
workman. In Rashtriya Mill M azdoor Sangh and Gold
M ohur Mills (2) the Labour Appellate Tribunal accepted
the view that the quantum of compensation payable
to retrenched workmen should be calculated at the rate
of 10 days' basic wages plus dearness allowance for
each year of service; and it also held that no maximum limit should be put on this quantum, In the
Bombay Gas Go. Ltd., And Their Workmen(3) a detailed
·scheme was framed for the computation of\ the
retrenchment compensation. Those who had completed a year's service but less than three years' service
(1) [1955] II L.L.J. 355.
(2) [1953] II L.L.J. 660.
(3) [1950] L.L.J. 150,
40
SUPREME COURT REPORTS [1960 (2)]
'959
got wages for 26 days with dearness allowance, and
Th I -a· H
those who had completed three years of service or
e n tan
unie
.
Pipe co. Ltd.
more got 26 days' wages with dearness allowance for
v.
each year of service subject to a maximum ofl04 days'
The Workmen
wages with dearness ;i,llowance. In The National
Industrial Works And Their Workmen (1 ) a still more
Gajend,,lfiadkar f·elaborate scheme was framed for determining the
quantum of compensation. Thus it would be seen that
the result of industrial decisions was that workmen,
were held entitled both to gratuity and compensation
on retrenchment and the amount of retrenchment
compensation was measured by reference to the period
of service rendered by the retrenched employee. It
may, however, be stated that industrial decisions on
the twin topics of gratuity and retrenchment compensation were not always uniform, and sometimes they
disclosed an element of uncertainty and perhaps even
ambiguity in their approach.
While this was the state of industrial decisions on
this point, Ordinance V was promulgated on October 24, 1953. By s. 25E the Ordinance prescribed
conditions prec~dent to retrenchment of workmen.
One of the conditions thus prescribed by s. 25E(b)
was that before a workman is retrenched he must be
paid at the time of retrenchment, gratuity which shall
be equivalent to 15 days' average pay for every
completed year of service or any part thereof in excess
of six months. This Ordinance was followed by Act
43 of 1953, which is deemed to have come into force
force on October 24, 1953. It is by this amending
Act that s. 25F has been introduced in the Act.
Section 25F(b) is in the same terms as s. 25E(b) of
the Ordinance, except that for the word 'gratuity'
the expression "retrenchment compensation" has
been substituted, We may incidentally mention the
fact that in the statement of aims and objects of the
Act it was observed that "in regard to retrenchment
the bill ·provides that a workman who had been in
continuous employment for not less than one year
under the employer sh!.1-11 not be retrenched until he
has been given one month's notice in writing or one
\I) [1950) L.L.J. II4~·
.-
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s.c.R.
SUPREME COURT REPORTS
41
month's wages in lieu of such notice, and also a gratx959
uity calculated at 15 days' average pay for every
-.-.
completed year of service or any part thereof in excess Th;Ind~an i,1;m•
of six -months". The appellant's case is that after
•P• v~·
1
•
s. 25F was enacted there is no longer any scope for
The workmen
framing gratuity schemes in addition to the statuory
-
retrenchment compensation for retrenched employees. Gajendragadkar ].
In support of this contention the appellant sought
to rely on .the fact that both in s. 25E(b) of the Ordinance and the statement of aims and objects of the
amending Act, the word ' gratuity ' has been used and
not retrenchment compensation. It is obvious that
for construing s. 25F the words used in the statement
about the aims and objects of the Act are not relevant;
and in regard to the use oi the word 'gratuity' in
s. 25E(b) of the Ordinance it is significant that the
said word has been deliberately omitted and the words
"retrenchment compensation" have been .used in its
place by s. 25.F.
Therefore it would not be possible to
determine the character of the payment statutorily
prescribed by s. 25F by reference to the word 'gratuity'
used either by the Ordinance or in the statement about
the aims and objects of the Act. If we have to decide
the character of the payment merely by the words
used in describing it, then the words used s. 25F are
"retrenchment compensation "and not gratuity.
But apart from the mere use of words there can be
no doubt that s. 25F is intended to provide compen-
. sation to retrenched workmen solely on account of
the difficulties which they have to face on their
retrenchment. It is well.known that at the time when
the Ordinance was issued the problem of retrenchment
had become widespread and acute and Legislature
thought it necessary to step in and make a statutory
provision for the payment of adequate retrenchment
compensation. Legislature knew that retrenchment
compensation was being awarded by industrial tribunals; but it must have thought that in determining
the amount of compensation the tribunals considered
a varietv .of relevant factors with the result that there
was no uniformity or certainty in the matter i and so
6
42
SUPREME COURT REPORTS [1960 (2)]
z959
it decided to standardise the payment of compensation
Th 1 ;- H
by prescribing a statutory rule in that h0half.
The
;i;; ~:~ u:.me enactment of s. 25F thus merely standardises the
v.
payment of retrenchment compensation and nothing
The Workmen
more. If retrenchment compensation could be claimed
. -
by the employeps in addition to gratuity prior to the
Go1endragadkar J. enactment of s. 25F there is no reason why a similar
claim cannot be made by them subsequent to its
enactment.
It is then urged that in determining the amount of
compensation payable to a retrenched workman the
length of his past service has been taken into account,
and it is pointed out that schemes of gratuity also
provide for payment of gratuity on similar considerations and adopt a similar measure.
As we have
already pointed out, even before s. 25F was enacted
tribunals were adopting similar methods in determining the amount of retrenchment compensation, and so
the mere fact thrtt the length of the past service of the
retrenched workman is made the basis for computing
retrenchment compensation cannot clothe retn nchment compensation with the character of gratuity.
The claims for retrenC'hment compensation and gratuity proceed on different considerations and it would
be impossible to hold that the grant of one excludes
the claim or grant of the other.
It is true that a retrenched workman would get both
the retrenchment compensation and gratuity, and in
a sense, on his retrenchment he would get more than
what other workmen with corresponding length of
service would get on their retirement; but it must be
remembered that the retrenched workman gets compensation because involuntarily he has been forced to
face unemployment, and it is to enable him to tide
over the period of unemployment that retrenchment
compensation is paid to him. So, on the general
contention raised before us that the employees are not
entitled to claim the double benefit of gratllity and
retrenchment compensation there can be only one
answer, and that is that there is no conflict between
the two claims, and industrial tribunals are right in
recognising that both claims can be entertained and
y
-
'
X.
-
. '
...
S.C.R.
SUPREME COURT REPORTS
43
•
granted, and reasonable gratuity schemes can and
x959
~hould be framed even after the enactment of s. 25F The Indian Hume
Ill the Act.
Pipe Co. Ltd.
In this connection it would be relevant to refer to
v.
the definition of wages under s. 2(rr) of the Act inasThe Workmen
much as it excludes any gratuity payable on the
.
termination of the employee's service. This shows Ga;endragadkar r.
that Legislature was aware that gratuity can be claimed
by employees and is often awarded to them. If
Legislature had intended that the statutory retrenchment compensation provided for by s. 25F should
affect the·employees' claim for gratuity it would have
expressly made a suitable provision in that behalf.
Legislature makes such provisions when it thinks necessary to do so. Section 17 of the Employees' Provident
Funds Act, 1952 (Act 19 of 1952), for instance, confers
on the appropriate Government power to exempt from
the operation of all or any of the provisions of the
scheme, establishments which have already introduced
provident fund benefits which, on the whole, are not
less favourable to the employees than the benefits
provided under this Act. In the absence of any such
provision in the Industrial Disputes Act it would be
unreasonable to hold that the mere enactment of
s. 25F either ousts the jurisdiction of industrial tribunals to entertain claims for gratuity schemes or makes
it improper or unjust to frame such schemes for all
employees including those who are retrenched.
So far we have dealt with the general question as it
arose on the contentions of the pa.rties; but in fairness
we must add that the learned Solicitor-General conceded that he could not urge that, as a matter of law,
the point raised by his client should be answered in
his favour.
He, however, strenuously urged that in
framing gratuity schemes industrial tribunals should
m·ake appropriate provision for giving gratuity to
retrenched workmen on a basis different from that on
which gratuity to other workmen is calculated.
The
argument is that since the retrenched workmen get
statutory compensation on a very liberal scale they
should not get gratuity at the rates fixed by the scheme
for other workmen. They may and should get gratuity
44
SUPREME COURT REPORTS [1960 (2)]
r959
but at a lesser rate and on less generous terms and condiTh I -d. H
tions. Indeed he suggested that we should make suitable
e n ian
u1ne
.
.
Pipe co. Ltd.
amendments m the gratuity scheme framed by the
v.
. appellate tribunal in that behalf.
We do not think
The Workmen
we can accede to this request. Whether or not a two-
-
fold scheme of gratuity should be framed, one applioGajcndragadkar f. able to retrenched workmen and the other to the rest,
is a matter which may, if necessary, be raised before
the tribunal in a proper case.
Besides it may be
pertinent to observe that the question as presented
in this form is not one of general importance, for in
the present state of our economy which has received
and is receiving the stimulus of national plans, our
industries may not have to face the problem ofretrenchment on an appreciable or extensive scale; but apart
from this consideration we cannot entertain or decide
the point raised by the learned Solicitor-General in an
appeal under Art. 136.
Before we part with this appeal, we ought to· refer
to another aspect of the matter which our present
decision does not consider or decide. It is likely that
gratuity schemes framed by consent. or by awards
may provide for payment of com pcnsation to retrenched workmen either in lieu of or in addition to gratuity;
in such cases the question as 1.o whether the retrenched workmen can claim the benefit of such a scheme in
addition to the retrenchment compensation under
s. 25F would depend on the construction of the material
terms of the relevant scheme considered in the light
of the provisions of s. 25F of the Act. In the present
appeal we are not called upon to consider such a
question.
Therefore, our decision has and can have
no reference to cases which would fall to be decided
under s. 25F of the Act.
In the result the appeal fails and is dismissed wi~h
costs.
Appeal dismissed.