WANCHOO,J. - (1.) THESE two appeals by special leave arise out of the same award of the industrial tribunal at Bombay and will be dealt with together. Appeal No. 495 is by the employer (hereinafter referred to as the company) and Appeal No. 498 in by the employees (hereinafter referred to as the workmen). A large number of matters were referred to the tribunal for decision. The company's appeal is confined to gratuity and Privilege leave. The workmen's appeal raises a large number of points to which we shall refer when we deal with that appeal.
(2.) WE shall first consider the contention of the company on the question of gratuity. The company is a subsidiary or branch of the Gramophone Company, Ltd., which is a private limited company incorporated in the United Kingdom. The Indian branch was established over 50 years ago and is concerned mainly with the manufacture and/or sale of gramophone records, gramophone machines, needles, accessories, radio receivers, radiograms and record players. The head office and the factory of the Indian branch is at Dum Dum in West Bengal. While there is a branch office at Bombay with which the present appeals are concerned. There are about 72 workmen both clerks and subordinate staff employed in the Bombay office. On the other hand, there are about 1, 700 employees in the head office and factory at Dum Dum. The workmen at Bombay asked for the introduction of a gratuity scheme for them. This was opposed by the company and the main ground of such apposition was that the company had no financial capacity to bear the burden of the scheme. The tribunal went into the question of the financial capacity of the company and came to the conclusion that its financial capacity justified the introduction of a gratuity scheme in Bombay. But the scheme which the tribunal framed was a modest scheme as compared to the demand of the workmen. It is not necessary to refer to the details of the scheme framed by the tribunal, for the company does not question the detail. Its contention is that it has not the financial capacity to bear the burden of any gratuity scheme. In this connexion it is further contended that the tribunal went wrong not only in its appraisal of the financial capacity of the company but also in overlooking certain other facts which have an important bearing on the question. It is contended that the tribunal failed to notice that there was already a provident fund scheme in force for the employees of the company since 1950. It also ignored the effect which the grant of gratuity to the Bombay workmen would have on the Dum Dum employees where a large majority of the company's employees work. Lastly it is contended that the tribunal ignored the fact that an earlier demand by the Dum Dum employees for the introduction of a gratuity scheme was turned down by the industrial tribunal in Bengal at the end of 1955 on the ground that the company's financial position did not justify the introduction of a gratuity scheme in addition to the provident fund scheme, which was already in force.There is no doubt that the tribunal while dealing with the question of gratuity has not referred to the existence of the provident fund scheme for the employees of the company. It has also not considered the impact of the introduction of the gratuity scheme in Bombay where only 72 workmen work on the company's head office at Dum Dum where there are about 1, 700 employees. Nor has it adverted to the fact that in 1955 a tribunal in Calcutta had turned down the prayer for the introduction of a gratuity scheme for the employees at Dum Dum on the ground of lack of financial capacity. These omissions of the tribunal have certainly introduced an infirmity in the award relating to gratuity, and we have therefore heard learned counsel for the parties at length on the question, particularly with regard to the financial capacity of the company and its ability to bear the burden of a gratuity scheme. Before we consider the financial capacity of the company we should like to deal with the points which the tribunal failed to consider to see what effect they can have on the introduction of a gratuity scheme for the workmen in Bombay. The first fact to which reference may be made is that there is a provident fund scheme in force since 1950 to which the company contributes at the rate of 6 1/4 per cent of the consolidated salary of a workman. It is however well-settled now that the existence of a provident fund scheme is not a bar to the grant of a second retrial benefit in the shape of a gratuity scheme, provided the employer is able to bear the burden of two retrial benefits. That naturally depends on the financial capacity of the employer which we shall consider later. But the mere existence of a provident fund scheme is not by itself a reason for refusing a gratuity scheme, particularly when a good part of the services of the existing workmen was not covered by the provident fund scheme.The next fact which was not noticed by the tribunal was that the West Bengal industrial tribunal had turned down the demand of the Dum Dum employees of the company for a gratuity scheme at the end of 1955 on the ground of lack of financial capacity.. That also is no reason for refusing the introduction of a gratuity scheme for the Bombay workmen, if the financial capacity of the Company has in the meantime improved, and it is able to bear the burden of such a scheme. It may be mentioned that the West Bengal tribunal looked at the position of the company as it was up to 1954. Since then seven years had passed when the present tribunal came to make its award, and it is the financial position of these seven years which was not before the West Bengal tribunal that will have to be considered in deciding whether the company is able to bear the burden now of a gratuity scheme for the workmen in Bombay. The omission therefore of the tribunal to consider the existence of the provident fund scheme and to take into account the fact that the West Bengal tribunal had turned down the demand for the introduction of a gratuity scheme in 1955 will not matter if we find on a review of the financial capacity of the company that it is in a position to bear the burden of a gratuity scheme for the Bombay workmen. The last point which the tribunal omitted to consider was the impact of the introduction of the gratuity scheme for the Bombay workmen who number only 72 on the financial capacity of the company with respect to about 1, 700 employees in Dum Dum. It is contended on behalf of the company that if a gratuity scheme is introduced for the Bombay workmen it will not be possible for it to resist the demand for the introduction of a similar scheme for the Dum Dum workmen, and therefore in judging its financial capacity to bear the burden of the introduction of the gratuity scheme the overall position should have been taken into account and its capacity to bear the burden should be judged not merely on the basis of 72 workmen at Bombay, for it may have to provide for a similar scheme for its employees at Dum Dum. There is some force in this contention of the company, and its financial capacity has to be judged on the basis of the all-India position for it may not be able to resist the demand, for the introduction of a gratuity scheme in Dum Dum, if it has to introduce a gratuity scheme for the Bombay workmen. It appears from what counsel for the parties have told us that since the award under appeal contribution to the provident fund made by the company has been increased from 6 1/4 per cent to 8 per cent in the case of the factory employees in Dum Dum. It is also stated by learned counsel for the workmen that the burden of this increase in the company's contribution towards the provident fund of the factory employees in Dum Dum to more or less the same as the burden that would be cast on it by the introduction of a gratuity scheme like the one granted by the tribunal. Therefore, it is urged that so far as the large majority of the factory employees in Dum Dum are concerned, they have already got another benefit equal to the benefit which the workmen in Bombay would get by the introduction of the gratuity scheme and therefore they need not be taken into account in considering the total burden cast on the company by the introduction of the gratuity scheme for the Bombay workmen. It is only the non-factory workers who are a small percentage of the total number of employees in Dum Dum who may not be covered by the increase of the provident fund contribution who have to be taken into account in according what further burden would he thrown on the company by having to introduce a similar scheme for such employees as are not covered by the increased provident fund contribution. It is not in dispute that in Bombay the provident fund contribution has remained at 6 1/4 per centum as before as the Bombay workmen are not factory workers to whom only the increase applies. There is in our opinion force in this contention on behalf of the workmen and the impact of the scheme in view of this fresh development with respect to factory employees in Dum Dum would not be much with respect to a small percentage of its employees not covered by the increase in the provident fund contribution by the company in Dum Dum. We shall however bear in mind the impact of this small majority of employees in Dum Dum in judging the financial capacity of the company to bear the burden of this gratuity scheme for the Bombay workmen.We turn now to a consideration of the financial capacity of the company. In this connexion the company gave an estimate of the initial fund required for a gratuity scheme, which, according to it, works out to about between Rs. 33 and Rs. 34 lakhs on the basis of the demand of the workmen. This figure will be roughly halved, for the workmen had demanded one month's consolidated salary as gratuity for each year of service without any limit while the tribunal has awarded half a month's basic salary for each year subject to a maximum of fifteen months. Even so the figure would be in the region of Rs. 16 to Rs. 17 lakhs. If this was the real burden thrown on the company, at once a question may arise whether it will be able to bear this burden or not. But, as Was pointed out by this Court in Sone Valley Portland Cement Company v. Its workmen [1962 - I L.L.J. 218] (Civil Appeal No. 586 of 1960 decided on 25 January 1962) there are two ways of looking at the burden thrown on an employer by the introduction of a gratuity scheme. One way is to capitalize the burden, and if that is done the burden would certainly appear very high and that is what exactly the company has done in its estimate. But looking at it from a practical point of view, only 3 per cent to 4 Per cent of the workmen retire every year, and provision has to be made each year for only these workmen and the burden in the circumstances, assuming it to be Rs. 15 to Rs. 16 lakhs on the basis on which the company has calculated it, would immediately be reduced to about one lakh of rupees per year.
(3.) IT is however said that in the company a large number of employees are older men and the rate of retirement may be more than three to four Per centum. Even so we think calculating in the practical way the burden will not be more than Rs. 1 1/2 lakhs per year for the entire 1, 700 employees or so. Further if we exclude from this calculation the large number of factory workers at Dum Dum in whose case the provident fund contribution has been increased from 6 1/4 to 8 per centum, the total burden per year would be very much less indeed. What we have to see is whether the company is in a financial capacity to bear this burden of the present gratuity scheme awarded by the tribunal.We therefore turn to the financial position of the company after 1955 to see whether this burden can he borne by the company. Balance sheets have been filed by the company for the years 1956- 57 to 1960-61. The profits shown in these balance sheets for the various years are as below : Rupees Year in lakhs 1956-57 ... 7.6 1957-58 ... 7.2 1958-59 ... 1.6 1959-60 ... 1.49 1960-61 ... 6.04 ;