SHALIMAR PAINTS EMPLOYEES UNION Vs. SHALIMAR PAINTS LTD
LAWS(CAL)-1981-1-25
HIGH COURT OF CALCUTTA
Decided on January 16,1981

SHALIMAR PAINTS EMPLOYEES UNION Appellant
VERSUS
SHALIMAR PAINTS LTD. Respondents




JUDGEMENT

- (1.)The appellants who are the workmen of the Shalimar Paints Limited represented by the Employees' Union have, in this appeal, challenged the propriety of the judgment of a learned single Judge of this Court whereby the learned Judge made the Rule Nisi obtained by the Respondent Company, Shalimar Paints Limited, absolute, on its application under Article 226 of the Constitution of India.
(2.)It appears that there was a settlement between the Respondent Company and its employees and the terms of such settlement were embodied in a memorandum, a copy of which has been annexed to the writ petition and marked Annexure 'D'. Clause 12 of the settlement provides that if will take effect on and from January 1, 1970 and will remain in force up to December 31, 1973. The relevant terms of settlement are as follows: - ?Retiring Benefits :
(a) Provident Fund: Provident Fund in accordance with the Employees' Provident Funds Act and Scheme, as at present.

(b) Pension: 50% of the last drawn basic pay plus dearness allowance at the rate of 80% of individual's basic pension with a minimum of Rs.20/- and maximum of Rs.40/. Henceforth there will be no deduction of ? % of company's contribution towards Provident Fund as was previously done from Pension or Gratuity as per Company's notice dated 19th August, 1969. (i)Full pension will be granted to employees on retirement after completion of 25 years of service in this company and proportionate pension after 20 years of service. (ii) The pension for life and is certain for a period of 5 years, that is to say, in case the retired employee dies before he has received pension for 5 years, his widow will be entitled to get the pension for the remaining period of 5 years but the widow will receive only basic pension without the dearness allowance.

(c) Gratuity Scheme: Gratuity is payable if an employee has to leave the service of the company on medical grounds or in case of death while in service after completion of 5 years of confirmed service to the widow of the deceased at the scheduled rate mentioned below. In the case of a widow three-quarters of the sum which would have been granted to the husband will be given to her. The company may also at its discretion pay gratuity to an employee who resigns after completion of 10 years of confirmed service. Gratuity could also be payable in lieu of pension if an employees has to retire due to incapacity after he has completed 20 years of service.?
There is no dispute that the settlement arrived at between the Respondent Company and its employees were given effect to by the Respondent Company. During the operation of the settlement, the West Bengal Legislature passed an Act known as the West Bengal Employees' Payment of Compulsory Gratuity Act, 1971, hereinafter referred to as the State Act. Later on Parliament also passed a similar Act known as the Payment of Gratuity Act, 1972, hereinafter referred to as the Central Act. The provisions of the Central Act are almost verbatim the same as those of the State Act. Needless to say, the State Act remained in force and operative till the enactment and enforcement of the Central Act. Section 4 of the Central Act is as follows: -
?4. Payment of gratuity - (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, (a) On his superannuation, or (b) On his retirement or resignation, or (c) On his death or disablement due to accident or disease; Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee, or, if no nomination has been made to his heirs. Explanation - For the purpose of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned : Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for the purpose, the wages paid for any overtime work shall not be taken into account : Provided further that in the case of an employee employed in a seasonal establishment, the employer shall pay the gratuity at the rate of seven days' wages for each season.

(3) The amount of gratuity payable to an employee shall not exceed twenty months' wages.

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

(6) Notwithstanding anything contained in sub-section (1), - (a) the gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee shall be wholly forfeited - (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or (ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment?.

(3.)It may be stated that the Respondent Company made an application under section 5 of the Central Act requesting the State Government to exempt the Respondent Company from the operation of the Central Act. The State Government, however, refused to grant such exemption. On October 1, 1973, the Respondent Company issued a circular to its employees to the effect that since gratuity was now compulsorily payable, the pension benefit should be withdrawn.


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