# M/S. MULLER Re PHIPPS (INDJA) LTD v. K. C. SUD

- **Citation:** [1960] 3 S.C.R. 508
- **Court:** Supreme Court of India
- **Decided:** 1958-01-31
- **Bench:** P. B. Gajendragadkar, K. C. DAs GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-muller-re-phipps-indja-ltd-v-k-c-sud-1732
- **Pages:** 6

## Headnote

Industrial Dispute-Scheme for
gratuity-Claim for gratuity
by workmen under the scheme in addition to retrenchment compensation-If must depend on the construction of the schemeIndustrial Disputes Act, 1947 (14 of 1947), s. 25F.
The Labour Court, Delhi, made an award framing gratuity
scheme, one of the
provisions being that
on the termination of
service by the company, the workmen shall be entitled to half a
month's basic salary or wage for each year of completed service as
gratuity.
The respondent
who was
retrenched
had received
compensation under s. 25F of the Industrial Disputes Act made
an application under s. 33C of the
Act claiming the gratuity in
accordance with the
sche1ne in addition to the
retrenchment
compensation already
received.
The contention of the appellant
was that
the gratuity
which the
respondent claims
was in
essence the same thing as compensation for the retrenchment and
to allow gratuity in addition to the retrenchment compensation
under s. 25F would be to give double benefit for the same eYent,
i.e., .retrenchment:
_
Held, that whether retrenched workmen can claim the benefit
of a gratuity scheme in addition to the retrenchment compensation would depend on the construction of the material terms of
' -
•
3 S.C.R.·
SUPREME COURT 'REPORTS
509
the scheme considered in the light of s. 25F of· the Industrial Disputes Act, 1947. The reasonable
conclusion .from
the present
scheme is that the gratuity that could be daimed . under the award
was intended to be in addition to the retrcnchmenf compensation
and not in lieu thereof.
The
respondent was
entitled to such
gratuity even thoug!i he had already received payment of compensation for retrenchment in
accordance with the
provisions of
s .. 25F of the Act.
Indian Hume Pipe Co. v. Its Workman, [19601 2 S.C.R. 32,
followed.
.
Bramachari Research Institute v. Its· Workme~, [1~6o] 2 S.C.R.
45, referred to.·
·· •
'
: · ·
·
CrvrL APPELLATE JuRISDICTION:
Civil •Appeal No .
. 147 of 1960.
·
·
Appeal by special
leave from the
d~cision dated ·
May 18; 1959, of the Labotir Court, Delhi, in L.C.A.
No. 53/1959.
'.
.
Pnrshottam Tricwiidas, S. N. Andley, ]. . B. Dadachanji and Rameshwar Nath, for the appellrtnts.
·
Sulwmar Chose, for the respondent.
;·
1960. April 11.
The Judgment of the Court was
delivered by
·
'
DAs GuPTA, J.-This appeal is against an order of
the Judge, Labour Court, Delhi, in an application under
s. 33C of. the Industrial Disputes Act by the respondent,
K. C. Sud, by which the' ~Otlft ·computed the amount
fh1e to the petitioner
by way of ' g-ratuity under an
award to be Rs. 80.42 np. only.
Sud;·who was a workman of the appellant company, M /s. Muller & Phipps
(India) Ltd. was retrenched by the company on January
31, 1958.
At that time a lefere11ce on the question of
introduction of a gratu_ity' scheme for the workmen of
the company was pending before the Industrial Tribunal.
An application by Sud against this order of
retrenchment under s. 33A failed. In the reference
above-mentioned the Court. made an ·award framing a
gratuity scheme in th~_following terms:-
..
"On the death of an employee while in t~e service
of the company, or on· his becoming. physically m
mentally incapable of further service, half a !nonth's
basic salary or wages for each year of continuous
service shall be paid to the disabled employees, or
if he h:1~ died, to his he'irs or· legal representative~ or
•
llf
'
•
.
assigns. ·
67
3-6 SCI/ND/82
\
1960
Muller & Phipps
(India) Lttf.
v.
K. C. Sud
Dns Gupta].
' "
r
1960
ll!ul!tr & Phif;/is
(India) Ltd.
v.
/(.C.S,ud
Das G11/1fa }.
'
510
SUPREME COURT REPORTS
[1960]
On volnntarv
retirement or
resignation of an
emplovec, after. five \ears' continnons service, ha![ a
montJ{'s basic
salar)· or
wages for each
year of
continuous service.
On terminati.on of serl'ice by the company, half
a month's basic salary or wages for each year of
completecl service."
The scheme was also
made applicable with effect
from the d;ite on "·hich the reference had been mad

## Text

1960
111. r~ : Sant Rnm
Sit1ha C. J
1960
April Tl.
508
SUPREME COURT REPORTS
ll960J
cng·aging other a<h·ocates,
h:1s not been
accepted b)'
the Registrar.
It appears to have been the case that
not being a registered clerk, he could not do any job
perr111.ss1hle
for such a
clerk.
N:1t11rally,
therefore,
he \\'as found .wandering about in the corridors in circ11m.stanccs which led to the gem1ine belief th:1t he had
no other business in Court· than
that of touting· for
such legal practitioners as would engage him for that
nefarious activitv.
\\le cannot,
therefore, accede to
the argument that the appellant has been a l'ictim o[
mere
.suspicion.
The nidence
of general
repute
ag·a1nst hin1, in our opinion,
'vas suA.icient: to brand
him as a "!Out".
·
It follows
that there is no
merit in this appeal,
which is hereby dismissed.
AfJfJeal dismissed.
M/S. MULLER Re PHIPPS (INDJA) LTD.
v.
K. C. SUD
(P. B. GAJENDRAGADKAR and K. C. DAs
GUPTA, J.J.)
Industrial Dispute-Scheme for
gratuity-Claim for gratuity
by workmen under the scheme in addition to retrenchment compensation-If must depend on the construction of the schemeIndustrial Disputes Act, 1947 (14 of 1947), s. 25F.
The Labour Court, Delhi, made an award framing gratuity
scheme, one of the
provisions being that
on the termination of
service by the company, the workmen shall be entitled to half a
month's basic salary or wage for each year of completed service as
gratuity.
The respondent
who was
retrenched
had received
compensation under s. 25F of the Industrial Disputes Act made
an application under s. 33C of the
Act claiming the gratuity in
accordance with the
sche1ne in addition to the
retrenchment
compensation already
received.
The contention of the appellant
was that
the gratuity
which the
respondent claims
was in
essence the same thing as compensation for the retrenchment and
to allow gratuity in addition to the retrenchment compensation
under s. 25F would be to give double benefit for the same eYent,
i.e., .retrenchment:
_
Held, that whether retrenched workmen can claim the benefit
of a gratuity scheme in addition to the retrenchment compensation would depend on the construction of the material terms of
' -
•
3 S.C.R.·
SUPREME COURT 'REPORTS
509
the scheme considered in the light of s. 25F of· the Industrial Disputes Act, 1947. The reasonable
conclusion .from
the present
scheme is that the gratuity that could be daimed . under the award
was intended to be in addition to the retrcnchmenf compensation
and not in lieu thereof.
The
respondent was
entitled to such
gratuity even thoug!i he had already received payment of compensation for retrenchment in
accordance with the
provisions of
s .. 25F of the Act.
Indian Hume Pipe Co. v. Its Workman, [19601 2 S.C.R. 32,
followed.
.
Bramachari Research Institute v. Its· Workme~, [1~6o] 2 S.C.R.
45, referred to.·
·· •
'
: · ·
·
CrvrL APPELLATE JuRISDICTION:
Civil •Appeal No .
. 147 of 1960.
·
·
Appeal by special
leave from the
d~cision dated ·
May 18; 1959, of the Labotir Court, Delhi, in L.C.A.
No. 53/1959.
'.
.
Pnrshottam Tricwiidas, S. N. Andley, ]. . B. Dadachanji and Rameshwar Nath, for the appellrtnts.
·
Sulwmar Chose, for the respondent.
;·
1960. April 11.
The Judgment of the Court was
delivered by
·
'
DAs GuPTA, J.-This appeal is against an order of
the Judge, Labour Court, Delhi, in an application under
s. 33C of. the Industrial Disputes Act by the respondent,
K. C. Sud, by which the' ~Otlft ·computed the amount
fh1e to the petitioner
by way of ' g-ratuity under an
award to be Rs. 80.42 np. only.
Sud;·who was a workman of the appellant company, M /s. Muller & Phipps
(India) Ltd. was retrenched by the company on January
31, 1958.
At that time a lefere11ce on the question of
introduction of a gratu_ity' scheme for the workmen of
the company was pending before the Industrial Tribunal.
An application by Sud against this order of
retrenchment under s. 33A failed. In the reference
above-mentioned the Court. made an ·award framing a
gratuity scheme in th~_following terms:-
..
"On the death of an employee while in t~e service
of the company, or on· his becoming. physically m
mentally incapable of further service, half a !nonth's
basic salary or wages for each year of continuous
service shall be paid to the disabled employees, or
if he h:1~ died, to his he'irs or· legal representative~ or
•
llf
'
•
.
assigns. ·
67
3-6 SCI/ND/82
\
1960
Muller & Phipps
(India) Lttf.
v.
K. C. Sud
Dns Gupta].
' "
r
1960
ll!ul!tr & Phif;/is
(India) Ltd.
v.
/(.C.S,ud
Das G11/1fa }.
'
510
SUPREME COURT REPORTS
[1960]
On volnntarv
retirement or
resignation of an
emplovec, after. five \ears' continnons service, ha![ a
montJ{'s basic
salar)· or
wages for each
year of
continuous service.
On terminati.on of serl'ice by the company, half
a month's basic salary or wages for each year of
completecl service."
The scheme was also
made applicable with effect
from the d;ite on "·hich the reference had been made,
viz., June '-2s, 19;,7, It was on the basic of this .award
that Sud has made his application under s. ~l3C, his case
being that as his retrenchment amounted to termination of se1'vice within the
meaning of the award he
was entitled to half a month's basic salary for
each
year of completed serl'ice.
Admittedly he had completed two years of service.
It is also not disputed
that his basic wage at the time of retrenchment was
Rs. 80.42 np.
If, therefore,
he is entitled to have a
gratuity in accordance with the scheme of the award
the amount due to him "·ill be Rs. 80.42 np.
Of the manv contentions raised on behalf of the
company in re;lsting the petition,
all of which were
rejected by the Court below,
the only one which is
pressed before us is on the question whether the respondent
is entitled
to recover gratuity under this
scheme in
addit:ion to the
compensation,
he had
admittedly received
already in accordance
with the
provisions of s. 2iiF of the Industrial Disputes Act.
In
suppon of this contention it is urged th~t the gratuity
which the respondent claim's is in essence the same
thing· as
compensation
for his
retrenchment
and
to allow him gratuity in addition to retrenchment
compensation ui1der s. 2.'iF woulrl be to gi,·e double
benefit for the same event i.e., retrenchment.
This it is
urs·ed is unfair to the
employer am! is
against the
Industrial Disputes Act.
,
The <]Ue,stion whether a double benefit of a gratuity
scheme as well as retrenchment compensation can be
given to workmen, came up for consideration before
this Court in Indian Hume Pifu: Co. v. !Is Worhl'rs (').
This Court there considered in some detail the real
nature and object of the retrenchment compensation
(I) [1960]2 S.C.R.3 2.
-.
•
. "
;.
r
'
3 S.C.R. SUPREME COURT REPORTS
511
provided by s. 25F of the Industrial Disputes Act and
the nature and object of a gratuity scheme as a retirement benefit. It pointed out that while gratuity
is intended to help workmen after retirement . to
whatever' cause the
retirement may be due to, the
retrenchment compensation is
intended to give relief
for the suaden and unexpected termination of employment by giving partial protection to the retrenched
person and his family to enable them to tide over the
hard period of uncm polyment.
The Court also traced
the history of development of
the industrial law as
regards gratuity schemes and retrenchment compensations, and. after a full . consideration of the question,.
came to the conclusion that there was notliing in law
to prevent a workman from•getting double benefit, one
under a gratuity scheme and the other as retrenchment cqmpensation. The Court however took care to
point out that
gratuity schemes may
be so framed,
whether by consent or by award, that retrenchment
confpensation is thereunder payable only in lieu of
gratuity
and again ·they
may be .so
framed as to
provide for payment of gratuity in adition to retrenchment compensation.
Accordingly, the Court laid it
down that the. question as to whether
retrenched
workmen can claim the benefit of a gratuity scl;ieme in
addition to ·the retrenchment
compensation
m!der
s. 25F or not would depend on the construction of the
material terms of the .scheme <::onsidered in the ljght
of the provisions of', s. 25F of the Act.
On the very day this pronouncement was made the
Court also delivered judgment in Brahmachari Research
Institute v. Its W orkme·r~ (1) in which the question as
indicated above fell
to be considered. In Brahmachari's
case the
Court after
mentioning . that the
general question as to double benefits of retrenchment.
compensation and gratuity being available to. workmen had already been considered in the Indian Hume
Pipe Company's case proceeded to examine the award
, that had been made in a dispute between thet Institute
and its workmen
to ascertain. whether
gratuity. in
addition to retrenchment compensation was provided
thereby.
1"he Court pointed out that in that award
(I) [1960) ~ S.C.HA5.
1960
Muller & Phipps
(India) Ltd.
v
K. C. Sud
Das Gupta J.
1960
.A1ulkr & PhijijJs
(India) Ltd.
v.
K. C. Sud
Das Gupta J ..
512
SUPRE'NlE COURT REPORTS
[1960]
the word 'gratuity' had been used to coyer all three
cases, \'iz., (i) retrenchment, (ii) termination of service
by any reason. at.her than misconduct and (iii) resignation
with the
consent of the . manag·ement;
what
deserved special notice was that cases of reti·enchment
as such were specifically
covered by t.he
award. It
was of opinion that
such payment to workmen for
retrenchment as such did not lose
its
character of
retrenchment compensation by reason of t.he mere fact
that it was described as gratuity. Jt was mainly on
the basis of this fact that the
award had
provided
gratuity for retrenchment as such in addition t.o gratuit\' for other modes of
termination of service that
the 'court~decided in
Brahmachari's case
that the
gTatuity there on ret.rcnchn1c11t
lras nothing 111orc or
less than compensation on account of retrenchment as
provided
under s. 25F of the Act and decided that
the workmen were entitled to only one or the other,
whichever i~ more adv•intageous to them.
lf we examine the award in the case
before us in
the light: of the two decisions of the Court mentioned
above the first thing that strikes us is tl1at this a'\rard
did not. make any provision for gratuity for retrenchment as such.
It
is important: to notice that
the
worknlt!n themselves in their statement of claim had
urged for
a distinct
provision for , retrenchment in
addition to
other modes of termination
of service.
The Tribunal holl'ever made n6 special provision for
retrenchment but: provided in its scheme of gratuity
for three classes of cases, namely, (i) on the death of
an employee or on his becoming physically or mentally
incapable of further sb-vice, (ii) on voluntary retirement or resig·nation and (iii) on termination of service
by the company.
Retrenchment,
it is true, will fall
within the termination of service.
Tlpt, however, as
is clear from the above cases, cannot by itself justify
a conclusion that the gratuity that could be claimed
under such a schen)e in case
of ret renchrnent was in
lieu of retrenchment: compensation.
If the intention
was that in cases of retrenchment the gratuity will be
in lieu of retrenchment compensation provided under
s. '25F the ohviom thing woulcl be' to make scpar:itc
provisions for· gratuity for retrenchment as such and
l
-
...
(
•
...
>
• I
3 S.C.R.
SUlJREME COURT REPORTS
513
gratuity for other modes' oi
termination of
service.
That was the method followed in the award that fell
for comideration fr1 Brahmachari's case.
That method
has however not been followed in the award that we ·
have to. consider here.
ln this case there is no specific
reference 'in the award to retrenchment as such:
The
reasonable conclusion from the scheme as · drawn up
is that the gratuity that could be claimed under this
award by retrenched
workmen because of the fact
that retrenchment is also one kind of termination !l'of
service vl'ithin the meaning of the award was intended
to be in addition to the retrenchment compensation
and not in lieu thereof.
The decision in
Brahmachari.'s case on the special
facts of the award therein is therefoi;e of no assistance
to the appeUai1t.
\Ve are bound to hold on an examination of the
award in the · present case
that the
gratuity which the respoi1dent claims on the basis of
the award is distinct
from and
in addition
to the
retrenchment compensatioh he has received.
v\Te are
of opinion therefore
that the Tribunal was right in
holding that the respondent· is e1ititlecl to such gratuity
e11en though
he has
already
received
payment of
compensa'tion ·for
retrenchment in
accordance with
the provisions of
s. 25F of the
Industrial Disputes
Act.
The appeal 1s accordingly' dismissed with costs.
A jJ/JCal disntissed.
COMivIISSIONER OF INCOME-TAX, BOMBAY
I
v .
(S. K. DAs, J. L. KAPUR and/M. 1-TmAYATULLAtt,JJ.)
Income-tax-Association of persons-Meaning o(-Indian Incume-tax Act, 1922 (XI of .1922), s. 3.
A Hindu governed by the Mitakshara School of Hindu Law
died leaving three widows as his legal heirs.
The widows took
the estate as joint tenants and
did not exercise their right to
separate possession and enjoyment.
The main income was from -
dividends and from
immovable property.
The latter was held
under s. 9(3) of the Income-tax Act not to be assessable as income
1960
Muller & Phij1ps
.(India) Ltd.
v.
· K. C. Sud
Das Gupla ].
1960
Af,ril 14.