M/S. Muller & Phipps (Indja) Ltd. v. K. C. Sud

· '

DAs GuPTA, J.-This appeal is against an order of Dns Gupta]. 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 work-man 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 Tri-bunal. 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 r 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 assigns. • llf · ' • .

[1960] On volnntarv retirement or resignation of an 1960

emplovec, after. five \ears' continnons service, ha![ a ll!ul!tr & Phif;/is montJ{'s basic salar)· or wages for each year of

(India) Ltd.

v. continuous service.

/(.C.S,ud On terminati.on of serl'ice by the company, half Das G11/1fa }.

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 termina-tion 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 com-pleted 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 res-pondent 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 r nature and object of the retrenchment compensation provided by s. 25F of the Industrial Disputes Act and 1960 the nature and object of a gratuity scheme as a retire-Muller & Phipps ment benefit. It pointed out that while gratuity (India) Ltd. is intended to help workmen after retirement . to v whatever' cause the retirement may be due to, the K. C. Sud retrenchment compensation is intended to give relief Das Gupta J. for the suaden and unexpected termination of employ-ment 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 compensa-tions, 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 retrench-ment 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 retrench-ment 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 Brahma-chari's case the Court after mentioning . that the general question as to double benefits of retrenchment.

compensation and gratuity being available to. work-men 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

512 SUPRE'NlE COURT REPORTS [1960]

1960 the word 'gratuity' had been used to coyer all three

cases, \'iz., (i) retrenchment, (ii) termination of service .A1ulkr PhijijJs by any reason. at.her than misconduct and (iii) resigna-

(India) Ltd.

v. tion with the consent of the . manag·ement; what K. Sud deserved special notice was that cases of reti·enchment Das Gupta J .. 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 gra-tuit\' for other modes of termination of service that l 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 retrench-ment 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 retire-ment 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 gratuity for other modes' oi termination of service. 1960 That was the method followed in the award that fell for comideration fr1 Brahmachari's case. That method Muller & Phij1ps .(India) Ltd. has however not been followed in the award that we · v. have to. consider here. ln this case there is no specific · K. C. Sud reference 'in the award to retrenchment as such: The Das Gupla 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 exami-nation 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 1960 Af,ril 14. v .

I (S. K. DAs, J. L. KAPUR and/M. 1-TmAYATULLAtt,JJ.)

Income-tax-Association of persons-Meaning o(-Indian In-cume-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