LexSTRAW BOARD MFG. CO LTD. versus THE WORKMEN
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_;,.--. STRAW BOARD MFG. CO LTD. v. THE WORKMEN March 1, 1977 [V. R. KRISHNA IYER AND JASWANT SINGH, JJ.] 91 GratHity-Qualifying period of service and calculation of amounts-Tests for determination. Jn an industrial dispute between the appellant mill and its workmen relating 1o the payment of gratuity, the Industrial Tribunal framed a gratuity scheme and gave th~ necessary guidelines for its implementation. Special leave \Vas granted to the appellant by this Court on the limited question whether the correct principles on which gratuity should be payable had been followed in this case .or not. Since the making of th:! award, the Payment of Gratuity Act, 1972 \vas passed, which, by s. 4(5) gave an option to the workers to choose behveen the gratnity scheme under the award and the one under the statute. The \\'Ork.::1 s, however, did not put in their appearance in this Court. It was contended on behalf of the appellant that the qualifying period of 'Service for earning gratuity was ten years and for calculadng the amount of gratuity basic wages witho~t adding dearness allowance should be the basis as A B c laid down by some decisions of this Court and the tribunal was wrOng in hold- D ing 5 years as the qualifying service and basic wages and dearness allowance as the basis for calculating the amount of gratuity. HELD : There is nothing fundamentally flawsome in the 5-year period being fixed as the qualifying service. The Tribunal was realistic in fixing the period of eligible qualifying service as continuous service counted with reference to the completed years as defined in s. 2(c) of the Act. [100 C&F] ( 1) Jn some cases, this Court higlilighted the view that the determination of gratuity is not based on any definite' rules and each case must depend upon the prosperity l1f the concern, the needs of the workmen and the prevailing economic conditions examined in the light of the auxiliary benefits which the workn1en may get on determination of employment. It was also held. that stability of the concern, profits made in the past, the future prospects and capacity should be the relevant circumstances which the Tribunal should take into account in giving its award. Awards are given on circumstances peculiar to each dispute and the 'T'ribunals are, to a large extent, free from the restrictions of 1echnica1 considerations imposed on courts. In short, the approach of the Tribunal should be what may be described as its legal hunch or horse-sense. Cases like Gaziabad Engineering Co. accept .the position that while gratuity is usually related to the basic wage, a departure may be made by relating it to the conso- lidated wage if there be some strong evidence or exceptional circumstances justifying that course. The real reason why some cases Jike British Paints required a qualifying period of 10 years was that a longer minimum period for earning gratuity in the case of voluntary retirement or resignation would ensure that workmen did not leave one concern for another after putting in the short minimum service qualifying for gratuity. But current conditions must control the Tribunal's conscience in finalizing the terms of the gratuity schen1e. Colossal unemployment at all levels of workers in the country today means that a \Vorker \Vilt not Te2ve his employment merely because he has qualified himself for gratuity Jn an economic situation where there is a glut of labour in the market and un~ employment stares the working class in the face it is theoretical to centend that employees will hop from industry to industry unless the qualifying period for earning gratuity is raised to 10 years. [98 H; 99 D; 100 A, D, E, F.] (2) Wages will mean and include basic wages and dearness allowance and nothing else. This corresponds to s. 2(s) of the Act. Some of the decisions refer to basic wages and others to consolidated wages as the foundation for E F G H 92 SUPREME COURT REPORTS [1977] 3 S.C.R. A computation of gratuity. These are matters of discretion and the "feel" of the circumstances prevalent in the industry by the Tribunal and, unless it has gone wrong in the exercise of its discretion the award should s~and. In the Payment B of Gratuity Act also it is not basic wages but 'gross wages inclusive of dearness 1----... allowance which had been taken as the basis. [101 B; 100 G-Hl Delhi Cloth & General Mills Co. v. Workmen & Ors. [1969] 2 SCR 307, Briti
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