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Judgment
Patel, J.—These two petitions are cross-petitions and arise out of an award made by the industrial tribunal in reference No. 44 of 1962. In Special Civil Application No. 187 of 1964, the petitioners is the employer, the Himco (India) (Private), Ltd., Bombay, and in Special Civil Application No. 232 of 1964, the petitioners are the office-bearers of the unions of workmen.
In the year 1962, a demand was made by the workmen of this company for framing a scheme for gratuity for them. Eventually, the dispute was referred to the industrial tribunal, being Reference No. 44 of 1962. The statement of claims was field and by its written statement, the company resisted the demand for gratuity on the ground that the working conditions of the workers in this factory were satisfactory and that they were not entitled to any additional benefits, that the financial position of the was not sound and that it would not, therefore, be possible for it to bear the burden of gratuity. It also contended that it was giving provident fund benefit to its employees, and as that provision was existent, it was not necessary to provide a scheme for gratuity. It also relied upon its indebtedness in large sums of money to several persons. The tribunal, while deciding the question, has entered into a large number of generalizations without actually dealing with the position of the company in all its aspects as is required to be done according to well-established principles.
The company attempted to prove that it had sustained losses in the trading year 1961-62. It also tried to prove that a part of its business had stopped, that there was a great deal of competition and that, therefore the future position of the company was very shaky. It tried to justify this conclusion by the fact that Firestone Tyre and Rubber Company who supplied battery containers had stopped supplying them. The tribunal in Para. 18 of its award framed a scheme for gratuity to come into effect from 1 October, 1963. By this scheme, it provided :
"(a) Each worker who has put in a continuous service for a period of ten years shall be entitled to a payment of gratuity at the rate of seven days'' average wages for each completed year of service put in by him ....
(b) Each of the workers who have put in continuous service for a period of fifteen years shall be entitled to payments of gratuity at the rate of seven days'' average wages for each completed year of service with maximum limit of eight months'' salary ...
(c) In the event of a worker being dismissed for misconduct he would not be entitled to payment of gratuity under Clause (a) or (b)."
We have not mentioned Clause (d) as it merely defines the manner in which average wages have to be determined. The company has challenged Cls. (a) to (c) and the union has challenged Clause (d) of the award.
Sri Jaisinghani has raised four points before us. He contends
(1) that the tribunal was in error in holding that the burden lay upon the company to prove that gratuity should not be granted;
(2) that it has not considered all the matters which are required to be considered in deciding the question as to whether or not a scheme for gratuity should be brought into force;
(3) that it has taken into account extraneous factors; and
(4) that proper principal have not been followed.
It seems to us that points (2) and (4) overlap and ought to be considered together. In para. 7 of its award, the tribunal has dealt with the question of a scheme for gratuity. Having given the conditions of workmen generally without reference to this particular unit, it observed :
"Therefore, it becomes more urgently necessary to provide for a scheme for payment of gratuity if it can be introduced. This is adequate justification for the demand for introduction of a scheme for gratuity and it will be for the employer to show that introduction of such a scheme is likely to affect him adversely and is likely to affect the industry in an injurious manner. Therefore, the burden to justify non-introduction of the scheme would be on the employer having regard to the prevailing circumstances in this unit and in industry at present."
Sri Jaisinghani relies on a decision in Indian Patent Stores Workers'' Union v. Indian Patent Stores Company, Ltd. 10 F.J.R. 48 where the Labour Appellate Tribunal did observe that the burden lay on the workmen in such a case. On the other hand, Sri Chitale relying on some observations in Burhanpur Tapti Mills Ltd. Vs. Burhanpur Tapti Mills Mazdoor Sangh, contends that having regard to the nature of gratuity scheme, it would not be out of place to require the employer to prove that in his case it would not be fit and proper that such a scheme should be introduced. We do not think it is necessary to deal with this point as we are allowing the petition on other grounds.
Prima facie, it does appear that in some matters at least, the tribunal is in factual error while discussing whether or not a scheme for gratuity should be framed in this case. In para. 9 it has stated that the factory was started recently. Sri Jaisinghani has stated that the factory is working since about last twelve years. Sri Jaisinghani next referred us to the observations in Para. 7 of the award to the effect :
"It is clear from the examination of the wages prevailing in the present industry that the wages which are being paid to the workers are more or less at the level of minimum wage prevailing in Bombay."
He says, there was no evidence in respect of the same before the tribunal. Again in Para. 7 it is stated :
"Therefore, the burden to justify non introduction of the scheme would be on the employer having regard to the prevailing circumstances in this unit and in industry at present."
By this, it seems the tribunal means the conditions prevailing in the industry in general. Inasmuch as we set aside the award on grounds (2) and (4), it is really not necessary to consider the effect of these statements on the award.
We now come to the most important contention raised by Sri Jaisinghani that proper principles have not been borne in mind by the tribunal while considering the question as to whether a scheme for gratuity should be introduced in this unit of the industry. Sri Jaisinghani has referred us to decision of the Supreme Court in The Bharatkhand Textile Mfg. Co. Ltd. and Others Vs. The Textile Labour Association, Ahmedabad, , where the principles involved in the determination of the question have been formulated by the Supreme Court. The Court has observed in Para. 16 that gratuity is a retiral benefit and that, before framing a scheme for gratuity, the tribunal has to take into account factors such as
(1) the financial condition of the employers,
(2) his profit-making capacity,
(3) the profit earned by him in the past,
(4) the extent of his reserves and the chances of his replenishing them as well as the claims for capital investment by him, and
(5) other material considerations
It would seem, other material considerations would be such as the employer and the employees may suggest which would help the Court to consider whether the unit would be able to bear the burden. It has also been observed that the claim for gratuity depends upon the capacity of the employer to stand the burden on long-terms basis, and, that being so, no undue emphasis can be placed either on temporary prosperity or on temporary setbacks. It also appears that it was indicated by the Court that it is only on these material factors that ultimately the decision ought to depend. This has been reiterated in subsequent decisions, the last one being Burhanpur Tapti Mills Ltd. Vs. Burhanpur Tapti Mills Mazdoor Sangh, . It was again pointed out that framing of the scheme depends upon the financial position of the employer and his profit making capacity.
We have searched in vain in the award of the learned tribunal to find out if there is any discussion on any of the matters which according to the decision of the Supreme Court ought to be considered by the tribunal while framing a scheme for gratuity. We asked Sri Chitale repeatedly to show to us if any finding was given on any of the matters which are required to be considered by the tribunal. He was at a loss to point out any particular paragraph where any of these matters were discussed and found. Unfortunately, the whole of the award proceeds on generalizations only without reference to any material on the record. Having regard to this, it is impossible to sustain the award.
Sri Chitale tried before us to support the award by referring to the record. We do not have before us the entire material that was placed before the tribunal, and secondly, if we enter in to the material, we would be doing the work which was for the tribunal to do, a process uncalled for. The only alternative, therefore, for us is to set aside the award and remand the matter to the tribunal for reconsideration on the same material that was placed before it and for determination of the question as to whether or not a scheme for gratuity should be applied to this unit.
We may also point out that, while considering the financial liability involved and his capacity to bear it, the tribunal will bear in mind the principles enunciated by the Supreme Court in Burhanpur Tapti Mills Ltd. Vs. Burhanpur Tapti Mills Mazdoor Sangh, referred to above. It is pointed out in this case that, while determining the financial burden, the average number of retirements per year must be found and it has to be seen whether the employer can be expected to bear the burden from year to year. The tribunal will also have in view while deciding this question the principles laid down in Management of Wenger and Co. Vs. Their Workmen, .
In the petition by the unions it has been urged that tribunal was not justified in making the provision of Clause (d) in the award in view of the decision of the Supreme Court and this Court. In Special Civil Application No. 38 of 1964 with Special Civil Application No. 199 of 1964 (decided on 27 April, 1965 by the learned Chief Justice and Kotwal, J.) (vide P. 582 ante) it has been pointed out that it is not proper to make the provision as in Clause (d).
According to the decision of the Supreme Court the proper provision would be that where an employee is dismissed for misconduct which has resulted in financial loss to the employer, amount of loss should be deducted from the amount of his gratuity. If at all, on considering the matter in remand, the tribunal decides to frame a scheme for gratuity, it will make provision in regard to dismissed workmen in terms of the principles laid down by the Supreme Court.
Order accordingly. Costs will be costs in the causes.