# MESSRS. BRAHMACHARI RESEARCH INSTITUTE v. ITS WORKMEN

- **Citation:** [1960] 2 S.C.R. 45
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Case number:** Civil Appeal No. 4of1958
- **Bench:** B. P. Sinha, P. B. Gajendragadkar, K. N. Wanchoo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/messrs-brahmachari-research-institute-v-its-workmen-1872
- **Pages:** 7

## Headnote

45
Industrial
Dispute-Retrenchment
compensation-Gratuity
scheme for cases of retrenchment-Award by Tribunal-Whether
gratuity under award different from retrenchment compensationClaim by retrenched workmen for both gratuity and statutory compensation-Industrial Disputes Act, r947 (r4 of r947j), ss. 2(00), 25F,.
25].
The retrenched workmen of the appellant con~ern who were
paid compensation as provided in s. 25F of the Industrial Disputes
Act, 1947, claimed that they were entitled to be paid in .addition
gratuity under the gratuity scheme .in force in the appellant
concern as modified by the award of the industrial tribunal dated
August 18, 1952. The award provided: "The following gratuity
scheme shall be for Cdses of retrenchment or termination of service
by the company for any reason other than misconduct or for
cases of resignation with the consent of the management ... "·•
The Appellate Tribunal took the view that gratuity provided
under the award was different from compensation on retrenchment payable to a workman under s. 25F of the Act.
Held, that on a proper construction of the award the amount
payable thereunder to the workmen on retrenchment though
called gratuity was really compensation on account of retrenchment as provided under s. 25F of the Act, and that the workmen
were only entitled to one or the other, whichever was more
advantageous to them in view of .s. 25] of the Act.
It was not the intention of the legislature that a workman
on retrenchment should get compensation twice, i.e., once under
the Act and once again under the scheme in force providing for
retrenchment compensation, by whatever name the payment
might have been called .•

## Text

-
-
'
'
~·
' ...
_(
•
s.c.R.
SUPREME COURT REPORTS
MESSRS. BRAHMACHARI RESEARCH
INSTITUTE
v.
ITS WORKMEN
(B. P. SINHA, C.J., P. B. GAJENDRAGADKAR and
K. N. WANCHOO, JJ.)
45
Industrial
Dispute-Retrenchment
compensation-Gratuity
scheme for cases of retrenchment-Award by Tribunal-Whether
gratuity under award different from retrenchment compensationClaim by retrenched workmen for both gratuity and statutory compensation-Industrial Disputes Act, r947 (r4 of r947j), ss. 2(00), 25F,.
25].
The retrenched workmen of the appellant con~ern who were
paid compensation as provided in s. 25F of the Industrial Disputes
Act, 1947, claimed that they were entitled to be paid in .addition
gratuity under the gratuity scheme .in force in the appellant
concern as modified by the award of the industrial tribunal dated
August 18, 1952. The award provided: "The following gratuity
scheme shall be for Cdses of retrenchment or termination of service
by the company for any reason other than misconduct or for
cases of resignation with the consent of the management ... "·•
The Appellate Tribunal took the view that gratuity provided
under the award was different from compensation on retrenchment payable to a workman under s. 25F of the Act.
Held, that on a proper construction of the award the amount
payable thereunder to the workmen on retrenchment though
called gratuity was really compensation on account of retrenchment as provided under s. 25F of the Act, and that the workmen
were only entitled to one or the other, whichever was more
advantageous to them in view of .s. 25] of the Act.
It was not the intention of the legislature that a workman
on retrenchment should get compensation twice, i.e., once under
the Act and once again under the scheme in force providing for
retrenchment compensation, by whatever name the payment
might have been called .•
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
4of1958.
Appeal by special leave from the decision dated
September 19, 1956, of the Labour Appellate Tribunal
of India, Calcutta, in Appeal No. Cal. 235/56.
B. Sen, S. N. Mukherjee and B. N. Ghose, for the
appellants.
Sukumar Ghose, for the respondents.
·· I959
,
October I6
I959
Brahmachari
Research Institute
v.
Their Worktnen
Wanchoo ].
46
SUPREME COURT REPORTS [1960(2)]
1959. October 16. The Judgment of the Court was
delivered by
WANOHOO J.-This appeal is directed against the
decision of the Labour Appellate Tribunal of India in
an industrial matter. The appellant is a partnership
concern carrying on business in the manufacture of
pharmaceutical products. There was a gratuity scheme
in force in the appellant-concern for a long time. This
scheme was modified by an award of the industrial
tribunal dated August 18, 1952 (hereinafter called the
Award), and since then the modified scheme has been
in force.
The financial condition of the appellant
deteriorated and consequently, it was compelled to
retrench a number of workmen. It, therefore, applied
to the Appellate Tribunal under s. 22 of the Industrial
Disputes {Appellate Tribunal) Act (No. XL VIII of 1950),
for permission to retrench 89 workmen. The Appellate
Tribunal granted permission for retrenchment of 75
workmen only.
Consequently, after obtaining such
. permission, the appellant retrenched the workmen and
paid them compensation as provided in s. 25F of the
Industrial Dispntes Act, 1947 (hereinafter called the
Act). Thereupon a dispute was raised by the retrenched workmen through the union in existence in the
appell11nt-concern for gratuity on retrenchment under
the award. This dispute was referred to the Second
Industrial Tribunal, vVest Bengal, on March 23, 1956,
for adjudication in the following terms:
"Whether the seventy-five retrenched employees
(as per attached list) are entitled to gratuity in addition to retrenchment benefits ?"
There was another matter included in the reference, but
we are not concerned with that in the present appeal.
The Industrial Tribunal came to the conclusion that the
retrenched workmen were only entitled to relief as provided under s. 25F of the Act and were not entitled to
any gratuity under the Award over and abo\-e the
compensation payable to them under the Act. Then
followed an appeal by the workmen to the Appellate
Tribunal which was allowed. The Appellate Tribunal
held that the workmen were entitled to gratuity
-·
-
-
1
S.O.R.
SUPREME COURT REPORTS
47
under the Award, as gratuity benefit therein was not a
retrenchment benefit.· The appellant then applied for
special leave to appeal, which was granted; and that
is how the matter has come up before us.
The general question has been considered by this
Court in The Indian Hume Pipe Company Limited v.
Its Workmen (1 ), judgment which is being delivered
today. As the penultimate paragraph in that judgment
shows, special considerations may arise on the terms of
agreements or awards in particular cases and it is this
aspect which falls to be considered in the present
appeal.
·
The sole question, therefore, for determination in
this appeal is whether the retrenched workmen are
entitled under the Award to gratuity provided therein
in addition to retrenchment benefit under s. 25F of the .
Act.
We may therefore reproduce here the relevant
part of the Award, which is in these terms :
,
"The following gratuity scheme shall be for cases
of retrenchment or termination of service by the
company for any reason other than misconduct or
for cases of resignation with the consent of the
management. The gratuity will be paid up to
a maximum of 15 months' basic pay at the following
rates. The period of service to qualify for the
gratuity shall be one year. Consistently with the
modification about the maximum qualifying service,
the basic pay for the purpose of gratuity shall be the
average of the last 12 months' basic pay drawn by
the workmen concerned."
Then followed the rates ; and it was also provided
that no gratuity would be payable before the completion of one year of service and that persons discharged
for misconduct would not be entitled to any gratuity.
Finally, it was provided that in case of death of an
emyloyee, his widow or children or other dependants
would be granted gratuity on the above basis.
It will be seen that the Award is a composite scheme
providing for what is termed gratuity therein under
three conditions, namely, (i) where there is retrenchment, (ii) where there is termiμation of service for any
(I) (1960] (2) S.C.R. 32.
r959
Brahmachari
Research Institute
v.
Their Workmen
Wanchoo /.
48
SUPREME COURT REPORTS [1960 (2)]
1059
reason other than misconduct, and (iii) where there is
resignation with the consent of the management.
R
8 'ahmhaicha1'.1i 1 Though the word "gratuity" has been used to cover
esearc
ns i u 1
•
v.
all these three cases, it is clear that cases of retrenchThefr wo,kmen ment as such are also covered by the Award and
payment to workmen rntrenched has been called
Wanchoo J.
"gratuity". The name given to the payment is, however, not material and it is the nature of the pay-_
ment that has to be looked into. Now, under this Award,
it is obvious that this payment on retrenchment though
called gi:atuity is really nothing more nor less than
compensation on account of retrenchment. Further
it is obvious from the terms of the Award that a
retrenched workman could claim gratuity under the
Award only on account of retrenchment and could
not claim it under the other two conditions therein. In
other words, on a fair and reasonable construction of
the Award, what the retrenched workman got is only
compensation for retrenchment and not any amount
by way of gratuity properly so called.
This brings us to the provisions of the Act with
respect to retrenchment. "Retrenchment" is defined
under s. 2 ( oo) and means " the termination by the
employer of the service of a workman for any reason
whatsoever, otherwise than as a punishment inflicted
by way of disciplinary action, but does not include (a)
voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the
employer and the workman concerned contains a
stipulation in that behalf; or (c) termination of the
service of a workman on the ground of continued ill·
health". If this definition is compared with the provisions of the Award, it will be found that the Award
provides payment not only for retrenchment as such
but also for other termination of service which is
specifically excepted from the definition of " retrenchment". Clauses (a) and (b) of s. 2 (oo) are provided in
the A ward by the words "cases of resignation with
the consent of the management". Similarly, clause
(c) of s. 2 (oo) is provided for by the words "termination of service by the company for any reason other
•.
l
-
..
:;
,_
..._
I ... '
,
S.C.R.
SUPREME COURT REPORTS
49
than misconduct ". - It is, therefore, obvious that the
x959
Award provides not only for P. ayment on retrenchment
8
h
h ..
b
1
£
t
.
.
f
.
£
ra mac art
ut a so ior payment on ermmat10n o serv10e ior any Research Institute
reason other than misconduct and on retirement. It is
~.
·
thus a composite scheme; and merely -because the Their Workmen
payment is called gratuity even where it is payable on
account of retrenchment, it cannot be anything other
Wanchoof •
than compensation so far as the part of the Award
relating to retrenchment is concerned.
Chapter VA, containing ss. 25F and 25J, with which
we are concerned, was added in the Act by Act 43 of
1953, with effect from October 24, 1953. The reason
for this addition was that though there were schemes
in force in many concerns for payment to workmen on
retrenchment, there were many other concerns where
no such schemes were in force and the workmen got
nothing on retrenchment unless there was an award by
a Tribunal. Besides, where schemes were in force or
awards were made rate~ of payment on retrenchment
varied. The legislature, therefore, thought it fit by
enacting Chapter VA to provide bys. 25F a uniform
minimum payment to workmen on retrenchment. This
payment was called compensation. Section 25F provides that no workman employed in any industry who
has been in continuous service for not less than one
year under an employer shall be retrenched without
payment of compensation which shall be equivalent
to fifteen days' average pay for every completed year
of service or any part thereof in excess of six months.
Then comes s. 25J, sub-s. (1) whereof provides that t):ie
provisions of Chapter VA_ shall have effect notwithstanding anything inconsistent therewith contained in
any other law including standi:rj1g orders. There is,
however, a proviso to sub-s. (1), which says that
nothing contained in the Act shall have effect to
derogate from any right which a workman has under
ap.y award for the time being in op~ration or any
contract with the employer. This clearly means that
if by any award or contract a workman is entitled to
something more as retrenchment compensation than
is provided by s. 25]', the workman will be entitled to
get that and the provisions of s, 25F will not derogate
-
\
r
z959
Brahmachari
Hesearch Institute
v.
Their Workmen
Wanchoo ].
50
SUPREME COURT REPORTS [1960 (2)]
from that right of the workman, i.e., will not reduce
the compensation provided under the award or contract
to the level provided under s. 25F. It is obvious that
it was not the intention of the legislature that a workman on retrenchment should get compensation twice,
i.e., once under the Act and once under the scheme in
force providing for retrenchment compensation, by
whatever name the payment might have been called.
We cannot agree with the Appellate Tribunal that the
payment of gratuity in the event of retrenchment has
nothing to do with the compensation payable to a
workman under s. 25F of the Act. The Appellate
Tribunal seems to have been carried away by the
word " gratuity " used in the A ward and it seems to
think that gratuity on retrenchment is something
different from compensation on retrenchment. We are
of opinion that this is not correct. Whether it is called
"gratuity" or "compensation 'l, it is in substance a
payment to the workman on account of retrenchment;
and if a scheme like the present specifically provides
payment for retrenchment as defined in s. 2(00), we
see no justification for compelling that payment twice
over, once under s. 25F and again under the scheme in
force in the concern. The matter would be different if
the scheme in force in any concern or any award provides gratuity which is different in nature from the
retrenchment, compensation under s. 25F. We also
cannot agree with the Appellate Tribunal that this
gratuity under the Award in this case is not a retrenchment benefit.
We have already analysed the Award
above and shown that it deals with three contingencies,
and one of them is payment due on retrenchment. On
the terms, therefore, of the Award in this case it must
be held that gratuity provided therein on retrenchment
is nothing more nor less than retrenchment compensation provided under s. 25F of the Act, and the
workmen are only entitled to one or the other, whichever is more advantageous to them in view of s. 25J.
In the circumstances we are of opinion that the
Industrial Tribunal was right in holding that the
scheme of the Award in this case providing for gratuity
on retrenchment was exacty the same as compensation
.. ..
...
S.C.R.
SUPREM~ COURT REPORTS
51
provided under s. 25F, and as the provisions of s. 25F
are better than the provisions of the A ward in respect
of retrenchment the workmen would be entitled to
compensation provided under s. 25F only, and not
both under that section and under the Award. The
appellant has already paid the compensation provided
under s. 25F; the workmen therefore are not entitled
to anything more under the Award. We therefore
allow the appeal, set aside the decision of the Appellate
Tribunal and restore that of the Industrial Tribunal in
this matter. As this question has come up to this
Court for the first time, we order the parties to bear
their own costs.
A j>peal allowed • .
THE DUNLOP RUBBER CO. (INDIA) LTD.
v.
WORKMEN AND OTHERS
(B. P. SINHA, C.J., P. B. GAJENDRAGADKAR and
K. N. WANCHOO, JJ.)
Industrial Dispute-Comp,any carrying on business all over
India-Claim by regional employees for raising of age of retirement
and scale of gratuity-Power of Industrial Tribunal-If can modify
uniform conditions of service according to prevailing conditions.
The appellant company was an all-India concern and carried
on the major part of its business in Calcutta. Its clerical and
non-clerical staff in Bombay raised disputes relating to gratuity
and age of retirement and contended that the scale of gratuity
for both the clerical and non-clerical staff provided by the existing
scheme of the company was low and should be raised and that
the age of retirement for the clerical staff should be raised from
55 to 60.
The company resisted the claim on the ground that
the existing scheme having been enforced on the basis of an
ilgreement between the company and the large majority of its
staff, both clerical and non-clerical, working in Calcutta, the. same
could not be changed at the instance of a small minority. The
tribunal rejected this contention and raised the age of retirement
to 60. It also raised the scale of gratuity and made it uniform
for the clerical and non-clerical staff. The appellant reiterated
its contention in this Court.
Held, that although it was advisable for an all-India concern
to have uniform conditions of service 'throughout the country,
that were not to be lightly changed, inqusfrial adjudication in
I959
Brahmachari
Research I nstitule
v.
Their Workmen
Wanchoo].
I959
October z6