THE AKOLA ELECTRIC SUPPLY CO. versus J. N. JARARE & ORS.

Citation: [1964] 2 S.C.R. 513 · Decided: 25-03-1963 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

2 S.C.R. 
SUPREME COURT REPORTS 
513 
THE AKO LA ELECTRIC SUPPLY CO-
v. 
J. N. JARARE & ORS. 
(P. B. GaJENDRAGADKAR, K. N. WaNCHOO and 
K. C. Das GuP'rA JJ.) 
b&du•t.rial Dispute-State Efoctricity Board taking over 
/ram 1tpptllant company on the expiry of license-Award framing 
1cneme for payment of gratuity to employees-!/ justified-
Ot11lral Province• and 
Berar Industrial Disputes 
Settlement 
Ad, 1947 (G. P. and Berar Act XXIII of 1947), "· 38 (a). 
The appellant company was a licensee for supplying elec-
tricity. The State Electricity Board had by a notice intimated its 
intention to purchase the appellant's undertaking on the expiry 
of its license. Two days prior to the expiry of the licence 
the Indu1trial Court at Nagpur framed a scheme for payment 
of gratuity to the employees of the appellant company with 
cft'ect from the date of the order. On application by the appel-
lant company under Art. 227 of the Constitution the High 
Court of Nagpur set aside the Industrial Court's order and 
remanded the matter for the reconsideration. After remand the 
Industrial Court came to the conclusion that the appellant 
company was in a position to pay gratuity and made a fresh 
award framing a scheme for payment of gratuity to its 
employees at the rate oft month's average wage. This award 
was made more than a year after the company had closed its 
business. The present appeal is by way of special leave granted 
by this Court. 
The main contention in the appeal was that the Tribunal 
was not justified in imposing on the company a gratuity scheme 
at a time when it had already ceased to carry on its business. 
Held that the gratuity schemes are always made in the 
expectation of the industry continuing to function for a long 
time to come and hence the Industrial Court acted wrongly in 
framing any gratuity scheme for payment of gratuity by the 
company to its employees, 
btdian Hume 
Pipe 
Go. v. 
Its Workmen, 
[1960], 
2 S. C. R. 32 and Bharatk/tand 1'extile Mfg., Go., Ltd. v. 
Tt;Cti/e Labour .AaBociation, [I 960] 3 S.C.R. 329, distinguished. 
1963 
March 25 
1963 
AJ;ola Eftrlrfr Supply 
c.. 
v. 
J Ji/ Jar=rt 
Do.< C.pto J. 
514 SUPREME COURT REPORTS [1964) VOL. 
CIVIL APPELi.ATE Jt::R181l!CTION: Civil Appeal 
No. 63i ofl962. 
· 
Appeal by special leave from the award dated 
April 29, 1961 of the State Industrial Court at 
Nagpur in Industrial Reference l\'o. 13 of 195!!. 
Jf. C. Se{(j[vad, Vallabhdt1.s Jfchta and Sr1rda1· 
IJahadur, for the appellant. 
S . .1. Solwni, Slumti Su:aru.p K!tanditJa, L:i /it 
K v.ma.r and Grmpat Rrii, for the respondents. 
1963. 
March 25. 
The Judgment 
of the 
Court was delivered by 
DA~ GUPTA J.-This appeal by special leave 
is against 
an award of the Industrial Court at 
Nagpur under s. 38 (a) of the Central Provinces 
and Berar Industrial Disputes Settlement Act, 1947 
dated April 2!J, 1961. 
By an earlier award dated 
December 4, I 959, the Industrial Court ordered the 
payrrrnt of gratuity to the employees of the appe-
llant C:ompany on certain rates. 
The award was·to 
romc into force from December 4, 1959. 
On an 
application by the Company under Art. 22i of the 
Consritution, 
the 
Nagpur High Court set aside 
the Industrial Court's order and remanded the matter 
for rrconsideration of the question after examining 
the financial condition 
of the Company. 
After 
remand the Industrial Court took evidence of both 
parties as ·regards the financial condition of the 
Company and came to 
the conclusion 
that 
the 
Company was in a very sound financial position and 
could easily bear the burden of payment of gratuity 
to the ext~nt of Rs. 50,000/- or even more. 
l\ccord-
ingly, the Industrial Court 
n~ade a fresh 
awar'.! 
directing the payment of gratuity to the Company s 
employees at the rate of 1 month's average wag~ 
the average wage to be calculated for the · period 
December l, 1958 to November 30, 1959 to cv~ry 
2 s.c.R. SUPREME COURT REPORTS 
515 
employee who had to his credit uninterrupted con-
tinuous service of not Jess than five years on termina· 
tion of his service, except by dismissal on account of 
misconduct. The award was directed to come into 
force from April 29, l 9uL 
. The ·Appellant Company was a licensee for 
supplying electric energy to the public within the 
area approximating to the Municipal limits of 
Akola. 
The license expired on December 6, 1959. 
Prior to this the State Electricity Board had by a 
notice dated November 27, I 957, intimated it

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