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  • Section 25 E
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  • Section 25 E
Smart Summary

Factual and Procedural Background

An industrial dispute regarding several employment benefits arose between M/s. Dalmia Cement (Bharat) Ltd. (“the appellant”) and its workmen (“the respondents”). The dispute was referred to an Industrial Tribunal, which upheld the existing gratuity scheme with minor alterations proposed by the workmen. The appellant challenged this decision before the Appellate Tribunal without success. The current proceeding is an appeal by special leave to the Supreme Court confined solely to the issue of gratuity.

Legal Issues Presented

  1. Whether the appellant’s gratuity rules should be modified so that workers who receive gratuity or retrenchment compensation under any other law or award cannot also claim gratuity under the company’s scheme (“the double benefit” question).
  2. Whether the appellant could rely on an alleged contract dated 26 May 1949 to prevent the tribunal from modifying the gratuity scheme.

Arguments of the Parties

Appellant’s Arguments

  • The gratuity rules should exclude workers who are entitled to gratuity or retrenchment compensation under any other statute or award, thereby preventing a “double benefit.”
  • An incidental contention (raised for the first time in the Supreme Court) that a subsisting contract of 26 May 1949 barred the tribunal from altering the gratuity scheme.

Respondents’ Arguments

  • Supported the Industrial Tribunal’s view that the existing gratuity scheme, with certain worker-proposed alterations, should remain in force.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Indian Hume Pipe Co. Ltd. v. Its Workmen, Civil Appeal No. 169 of 1958 Workmen may claim both gratuity and retrenchment compensation; the so-called “double benefit” is permissible. The Court followed its earlier holding to reject the appellant’s argument that the gratuity rules must be amended to avoid double benefits.
Brahmachari Research Institute v. Workmen, Civil Appeal No. 4 of 1958 Disputes about overlapping benefits should be resolved by construing the specific clauses of the governing scheme. Cited illustratively; the Court noted the appellant could raise such arguments in future litigation involving individual retrenched workmen.

Court's Reasoning and Analysis

1. The Court acknowledged that the appellant’s proposed modification squarely raised the general “double benefit” issue.
2. Relying on Indian Hume Pipe, the Court had already determined that workmen are entitled to both gratuity and retrenchment compensation; therefore, on the merits, the modification lacked substance.
3. Although the Appellate Tribunal may have been wrong in holding the appellant could not raise the issue, the error was “academic” because the substantive law was against the appellant.
4. The Court stressed that the present appeal concerned only the validity of the general modification, not any specific retrenched worker’s individual claim; such future disputes could turn on the wording of the company’s scheme.
5. The appellant’s late-raised contract argument could not be entertained because it had not been urged before either the Industrial Tribunal or the Appellate Tribunal.

Holding and Implications

APPEAL DISMISSED WITH COSTS.

Consequences: The award of the Industrial Tribunal, as affirmed by the Appellate Tribunal, remains intact. The gratuity scheme continues without the exclusion sought by the employer, thereby confirming that employees may, where the facts so warrant, receive both gratuity and statutory retrenchment compensation. No new legal test was articulated, but the decision reinforces the Supreme Court’s earlier stance on the permissibility of “double benefits.”

    Dalmia Cement Bharat Ltd. v. Their Workers Represented By The Dalmia Cement Workers' Union, Dalmia

    1. This appeal by special leave arises out of an industrial dispute between M/s. Dalmia Cement (Bharat) Ltd., (hereinafter called the appellant) and its workmen (hereinafter called the respondents) which was referred for adjudication to the industrial tribunal. The dispute related to several items of claim made by the respondents but in the present appeal we are concerned only with one of them; that is the respondents' claim for gratuity. The tribunal considered the objections raised by the appellant against the scheme of gratuity which was then in force and held that there was no substance in them. Certain alterations were suggested by the respondents in the said scheme some of which were accepted by the tribunal. In the result an award was made directing appropriate revision of the scheme of gratuity. Against this award the appellant preferred an appeal, and on its behalf the same contentions were raised and with the same result. The appellate tribunal saw no reason to interfere with the award made by the tribunal. It is against this part of the award that the present appeal has been preferred.

    2. It appears that two modifications were suggested by the appellant in the current gratuity rules. The second of these modifications was not pressed before the tribunal and need not be considered. The first modification suggested was that the rules regarding payment of gratuity should not be applicable in the case of a worker who is entitled to gratuity under any law or special award for the time being in force and applicable to him in which case the gratuity will be payable to him according to that law or special award, and not according to these rules. By this amendment the appellant sought to raise the general question which has been considered by us in the case of Indian Hume Pipe Co. Ltd. v. Its Workmen, Civil Appeal No. 169 of 1958, D/- 16-10-1959: . It is true that the modification proposed by the appellant refers to the gratuity payable to the workmen under any award for the time being in force; it does not refer in terms to retrenchment compensation. But the failure to use the words "retrenchment compensation" can be easily explained if it is remembered that the modification was suggested on December 1, 1953, when Ordinance V of 1953 was in force. As we have pointed out in the case of the Indian Hume Pipe Co. Ltd., (supra), Section 25 E of the Ordinance had itself used the word 'gratuity' which had been subsequently substituted by the words "retrenchment compensation" by Section 25F of the Act. Therefore it is clear that the contention raised by the appellant by suggesting this modification was based on the general argument that the workmen are not entitled to the double benefit of gratuity and retrenchment compensation. The learned Solicitor-General is, therefore, right in arguing that the appellate tribunal should not have held that it was not open to the appellant to raise the general issue under the head of this modification; but that is a matter of mere academic importance because on the general question which the appellant seeks to raise we have already held that what is described as a double benefit of gratuity and retrenchment compensation can be claimed by workmen. Therefore, on the merits the decision of the appellate tribunal which confirmed the award passed by the tribunal is right.

    3. We must, however, add that in the present appeal we are not dealing with the claim made by any retrenched workman for gratuity in addition to the compensation due to him under Section 25F. We are dealing with the general question as to whether the gratuity scheme originally framed by the appellant should be modified as suggested by it, and having regard to the view which we have taken on the general question we see no reason to interfere with the order passed by the appellate tribunal on this point. If the appellant's case is that under the scheme framed by it retrenchment compensation is provided for, it may be open to the appellant to raise such a plea if and when any retrenched workman claims the double benefit of gratuity and retrenchment compensation. The dispute would then be decided on a construction of the material clauses of the current scheme, Vide: Brahmachari Research Institute v. Workmen., Civil Appeal No. 4 of 1958 , in which we are delivering our judgment today.

    4. The learned Solicitor-General incidentally attempted to argue that there was a subsisting contract between the parties which had been entered into on May 26, 1949, and that in view of that contract it was not open to the tribunal to accede to the respondents' case for making modifications in the gratuity scheme. This point does not appear to have been raised either before the tribunal or in appeal before the appellate tribunal; and so we cannot allow the appellant to raise this point for the first time before us.

    5. The result is the appeal fails and is dismissed with costs.

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    Dalmia Cement Bharat Ltd. v. Their Workers Represented By The Dalmia Cement Workers' Union, Dalmia
    (Oct 16, 1959)