The Judgment of the Court was delivered by
Amiya Kumar Mookerji, J.:— These two appeals are directed against the judgment and order of Prodyot Banerjee, J., dated 21 September, 1970, setting aside the award of the Industrial Tribunal so far as the issue of gratuity is concerned and remitting the matter back to the said Tribunal for reconsideration of the said issue in accordance with law. The Appeal from Original Order No. 20 of 1971 is preferred by the employees' union against the said order of demand and Appeal No. 335 of 1970 is preferred by the order which affirms the Tribunal's award with respect to leave.
2. Jessop& Co., Ltd., is one of the leading engineering concerns in India. It employs about 10,000 employees in the head office and in its factory at Dum Dum. The company was a party before the Omnibus Tribunal known as Mercantile Tribunal and the award of the said Tribunal was made on 1 June, 1949. In 1955, the union, representing the workmen of Dum Dum Works, submitted a charter of demands. As the conciliation proceeding with respect to the said demands failed, the State Government made a reference in October 1957, to the Fourth Industrial Tribunal, West Bengal, for adjudication of certain issue regarding age for retirement. The said Tribunal's award was published in the Calcutta Gazette on 25 February, 1960. The employees' union moved the Supreme Court against the said award. The Supreme Court by its judgment, dated 2 August, 1963, modified the award of the Tribunal by raising the retiring age from 55 to 58 years. In view of the changed circumstances after that award in 1965, the employees' union made fresh demands and three conciliation proceedings started. The said conciliation proceedings failed. So, respondent 4, the State of West Bengal, by order, dated 11 October, 1966, made a reference under S. 10 of the Industrial Disputes Act, 1947, to the Fifth Industrial Tribunal, West Bengal. The issues referred to the said Tribunal for adjudication were:
(1) retiring age of the clerical and subordinate staffs,
(2) leave, and
(3) gratuity.
3. On 20 October, 1967, the Tribunal made and published its award. By the said award, the Tribunal refused to enhance the age of retirement, raised the ceiling of gratuity from Rs. 5,000 to Rs. 6,000 and, regarding the leave, the Tribunal found no material to increase the casual leave but, held that the members of the clerical staffs and the subordinate staffs could enjoy the same; there was no change in the medical leave but with regard to privilege leave, the Tribunal found that the said leave should be 14 days cumulative up to 28 days for those who have not completed ten years' service; and, for those who have completed ten years' service, privilege leave will be 21 days in a year cumulative up to 42 days.
4. On 25 April, 1968, the employer-company respondent 1, moved this Court in an application under Art. 226 of the Constitution against the said award of the Tribunal and obtained a rule nisi. The said rule was ultimately heard by Banerjee, J., and, the learned Judge by his judgment and order, dated 21 September, 1970, remanded the matter back to the Tribunal for consideration of the award so far as the gratuity was concerned and affirmed the Tribunal's award regarding the issue of leave.
5. The union of the employees and the employer-company being aggrieved by the said judgment of Banerjee, J., preferred these two appeals.
6. Sri Mukherjee, appearing on behalf of the appellants in the employees' union's appeal, contends that the learned trial Judge erred in remitting the case back to the Industrial Tribunal for further decision of the issue of gratuity upon the view that the Tribunal failed to take into consideration the relevant principle as laid down by the Supreme Court in Burhanpur Tapti Mills Ltd. v. Burhanpur Tapti Mills Mazdoor Sangh [A.I.R 1965 S.C 839 : 1965-I L.L.J 453]. Determination of gratuity, Sri Mukherjee submits, is not based on any definite rules. In each case it must depend upon the prosperity of the concern, needs of the workmen and the prevailing economic conditions. In support of his contentions, Sri Mukherjee draws our attention to a passage of the decision of the Supreme Court in Delhi Cloth and General Mills Company, Ltd. v. their workmen [A.I.R 1970 S.C 919 at 934 : 1969-II L.L.J 755].
7. In modifying and revising the existing gratuity scheme, the Tribunal is required to take into consideration the same factor as of framing of a gratuity scheme [vide Jardine Henderson, Ltd. v. their employees [1961-I L.L.J 641]. Even in a case where the demand is for revising the terms of a gratuity scheme which is likely to introduce additional burden, the capacity of the employer to bear the financial burden must always be taken into account. Pre-condition to framing of a gratuity scheme is to take into consideration the financial position of the employer. In Burhanpur Tapti Mills, Ltd. case [A.I.R 1965 S.C 839 : 1965-I L.L.J 453] (vide supra), the Supreme Court observed that emphasis must always be laid upon the financial position of the employer and his profit-making capacity. To judge whether the financial position of the employer would bear the strain the average number of retirements must be found out. That is one part of the inquiry. The next part of the enquiry is to see whether the employer can be expected to bear the burden from year to year, the present condition of his finance, the past history and the future prospects all enter into the appraisal of his ability. In the present case, the Tribunal in revising the existing gratuity scheme of the company took into consideration the comparative statement (Ex. 6) showing the amount of gratuity that would have been payable to the employees in different pay-scales, had there been no ceiling for Rs. 5,000, and also Ex, 4—five years' statement of accounts. The Directors' report (Ex. 1), where the financial position of the company and its future prospect and expansion have been set out, had not been taken into account by the Tribunal in raising the ceiling.
8. It is stated at p. 8 of the report regarding “future prospect”, that the chairman was not in a position to hold out an encouraging picture of the future. The high duty iron foundry at Durgapore has been commissioned but due to teething trouble it has yet to reach the target output. It is said in the said report,
“our plan to build up the Durgapore unit as a full-fledged ancillary of our main works is now being considerably slowed down. We are proceeding with caution and circumspection so that the Durgapore unit can be developed as an asset rather than a liability of the company.”
9. In Hindustan Antibiotics, Ltd. v. their workmen [A.I.R 1967 S.C 948 : 1967-I L.L.J 114], the Supreme Court refused to disturb the conclusion arrived at by the Tribunal because in that case the Tribunal considered all the relevant circumstances; the stability of the concern, the profits made by it in the past, its future prospect and its capacity, and came to the conclusion that in the concern in question the labour should be provided with gratuity scheme.
10. The observations of the Supreme Court in Delhi cloth Mills case [A.I.R 1970 S.C 919 : 1969-II L.L.J 755] which has been relied upon by Sri Mukherjee, have to be construed in their own context. In Delhi Cloth and General Mills Company case (vide supra) the Supreme Court had to consider whether gratuity payable to workmen in the textile industry in the Delhi region should be related to the consolidated wages. After referring to the scheme framed in respect of the industry in Bombay and Ahmedabad and other industries, the Supreme Court concluded
“that determination of gratuity is not based on any definite rules. In each case it must depend upon the prosperity of the concern, needs of the workmen and the prevailing economic conditions, examined in the light of the auxiliary benefits which the workmen may get on determination of employment.”
Those observations were made in the context of determination in the quantum of gratuity and the Supreme Court has not laid down in that case a general principle that determination of gratuity is not based on any definite rules.
11. It appears that the principle as laid down by the Supreme Court in Burhanpur Tapti Mills case [A.I.R 1965 S.C 839 : 1965-I L.L.J 453] (vide supra) has been uniformly followed by the Supreme Court in its subsequent decisions, namely, in National Iron and Steel Company, Ltd. v. State of West Bengal [A.I.R 1967 S.C 1207 : 1967-II L.L.J 23] in Chitavalsh, Jute Mills Company Ltd. v. their workmen [A.I.R 1968 S.C 1076 : 1969-I L.L.J 520] and Delhi Cloth and General Mil's Company, Ltd. v. its workmen [A.I.R 1970 S.C 91 : 1969-II L.L.J 755]. So, we are unable to accept the contentions of Sri Mukherjee that determination of gratuity is not based on any definite rules.
12. It is next contended by Sri Mukherjee that where the Industrial Tribunal on appreciation of oral and documentary evidence gave its award on gratuity after considering the financial position of the company, the learned Judge of the trial Court in exercise of supervisory jurisdiction under Art. 226 of the Constitution erred in reviewing the findings of facts of the Tribunal below that the present maximum coiling of the gratuity of the company was low in view of the financial position of the company. In exercise of its supervisory jurisdiction, the High Court cannot convert itself into a Court of appeal and correct errors of fact, errors in the appreciation of oral and documentary evidence and errors in drawing inferences or omission to draw inferences. The Court will not review the findings of fact reached by the inferior Tribunal, even if they be erroneous. In support of his contentions, Sri Mukherjee relied upon the decision of the Supreme Court in Ghaziabad Engineering Company (Private), Ltd v. its workmen [(1969) 2 SCC 319 : A.I.R 1970 S.C 390 : 1969-II L.L.J 777] and a decision of this Court, in Workmen of Kettlewell Bullen Company, Ltd. v. Kettlewell Bullen Company, Ltd. [64 C.W.N 950 : 1960-II L.L.J 189].
13. In Ghaziabad Engineering case [(1969) 2 SCC 319 : A.I.R 1970 S.C 390 : 1969-II L.L.J 777], the Industrial Tribunal on appreciation of evidence came to the conclusion that the financial position of the company was sound, the Supreme Court refused to interfere with the findings of the Tribunal in an appeal under Art. 136 of the Constitution. In the present case, the material evidence, namely, the directors' report, Ex. 7, has not been considered by the Tribunal. Therefore, the decisions of the Ghaziabad Engineering case (vide supra) would be of no assistance to the appellants.
14. The Industrial Tribunals are created by the statute and their powers are derived from the statute that creates them. Jurisdiction to revise or modify an existing gratuity scheme depends upon the existence of the financial capacity of the employer. Where the Tribunal raises the quantum of maximum limit of the gratuity without considering the financial capacity of the employer to bear the additional burden, in our opinion, such revision or modification is without jurisdiction and the writ Court has ample jurisdiction to interfere in the matter. It is not a question of reviewing the findings of fact arrived at by the inferior Tribunal.
15. Sri Mukherjee contends that Ex. 4, the statement of five years' profit and loss, were before the Tribunal. So, the Tribunal considered the financial aspect of the company. Therefore, it cannot be said that the conclusion arrived at by the Tribunal is perverse. In Calcutta Insurance Company, Ltd. v. then-workmen [A.I.R 1967 S.C 1286 : 1967-II L.L.J 1], the Supreme Court observed that:
the problem of burden imposed by the gratuity scheme could be looked at in two ways;
One was
to capitalize the burden on actuarial basis which would show theoretically that the burden would be very heavy;
and the other was
to look at the scheme in its practical aspect and find out how many employees retire every year on the average and that this practical approach ought to be taken into account.
In the instant case, from the chart, Ex. 6, it appears that eight or nine persons retire every year. So, the financial burden, according to Sri Mukherjee, would not be more than Rs. 8,000 to Rs. 10,000 per annum and, in view of the balance sheet of five years, the Tribunal was justified in raising ceiling of the gratuity only to Rs. 1,000 from the existing ceiling.
16. In Airlines Hotel (Private), Ltd. v. their workmen [1961-I L.L.J 663], the Supreme Court observed that:
to impose such a burden without recording a definite finding as to the financial capacity of the employer to bear the additional burden, would be improper for the Industrial Tribunal.
17. Sri Banerjee, appearing on behalf of the respondent, contends that where 11,000 workers are employed in a factory, it is preposterous to conceive that only eight or nine workers retire every year and the additional burden of the company would be only Rs. 8,000 or Rs. 10,000 as contended by Sri Mukherjee. The company has exhausted its maximum limits of its available borrowings in obtaining advance from the banks. All assets of the company have been mortgaged to the banks. There are no other assets on which further money can be borrowed from the banks. In the report of the shareholders on the accounts for the year 1965–66, the chairman and the board of directors of the company pointed out that the future of the company was very gloomy.
18. On the prospect of the company, the Tribunal only considered that the factories started at Durgapore and Farakka and the company was exporting its products to different countries. But the chairman and the board of directors have stated in the thirty-fifth annual report, which is Ex, 7,
“we have trimmed our sail to meet the difficult challenge of coming years.”
The learned trial Judge is of opinion that what should be considered is, whether the financial position of the company, its profits or loss of the present, and future prospects would enable the company to bear the financial burden that may be imposed by raising of the maximum ceiling of the gratuity. We find no reason to differ from the view of the learned trial Judge.
19. Before the trial Court in the course of hearing, the company filed a supplementary affidavit showing changes in the circumstances and its state of financial position. Sri Mukherjee contends that if there is a change in the circum stances, the company might apply under S. 19(4) of the Industrial Disputes Act for reference to the appropriate Government. The matter after the award, Sri Mukherjee submits, would not be taken into consideration.
20. It is well-settled that the Court can take into consideration the subsequent events and decide the matter in view of those events. A reference under S. 19(4) of the Act is different from the reference under S. 10. Under S. 19(4), the Tribunal has to decide only the limited question whether the period of operation of the award should not, by reason of material change in the circumstances, be shortened. Therefore, we are unable to hold that in case of change of financial position of the company a reference under S. 19(4) of the Act is the appropriate remedy.
21. Lastly, Sri Mukherjee contended that the learned trial Judge was wrong in setting aside the award of gratuity in its entirety, the portion of the award and gratuity payable in eases of misconduct or misdemeanour was not challenged at all and the said portion of the award should have in any event been upheld by the learned Judge.
22. In Garment Cleaing Works v. its workmen [A.I.R 1962 S.C 673 : 1961-I L.L.J 513] it has been held by the Supreme Court that
once gratuity has been earned by service it does not become forfeited even after dismissal for misconduct, and that the amount due shall be paid off deducting the whole of the financial loss caused by the employee's misconduct.
The Tribunal in view of the said decision of the Supreme Court directed that the words
“for reasons other than misconduct or misdemeanour”
should be deleted in Sub-cl. (v) of Cl. (a) of Para. 4 of the gratuity scheme and a proviso should be added as follows:
“Provided that no workman who is dismissed for misconduct or misdemeanour should be entitled to receive gratuity only after completion of fifteen yearsa service, but where the misconduct or misdemeanour entails financial loss, the company would be entitled to set off the loss from the amount of gratuity payable.”
It seems to us that the attention of the learned trial Judge was not drawn by any of the parties; otherwise that part of the modification in the gratuity scheme must have been retained. However, we make it clear that in reconsidering the revision or modification of gratuity scheme, the Tribunal shall consider only the principle as laid down by the Supreme Court in Burhamur Tapti Mills case [A.I.R 1965 S.C 839 : 1965-I L.L.J 453] (vide supra) and, also the impact of the West Bengal Employees' Payment of Compulsory Gratuity Rules, 1971 (Act 7 of 1971), the other part of the award must remain unaltered.
23. Now, in the other appeal preferred by the company with respect to issue of leave, it is contended that the Tribunal did not take into account of the comparable units; financial burden was also not considered.
24. Before the trial Court the argument has proceeded on the ground that the Tribunal did not consider Factories Act or West Bengal Shops and Establishments Act or Employees' State Insurance Act in increasing the leave. A ground was, however, taken as ground 10 in the company's application under Art. 226 of the Constitution that the Tribunal had acted illegally and without jurisdiction in holding that
“the existing privilege leave as given by Jessop & Co. does not compare favourably with that of the other companies”
inasmuch as the Tribunal had completely ignored the basis of industry-cum-region, that is to say, comparison of comparable concern in the same region. The learned trial Judge found that in view of the Supreme Court decisions in Calcutta Insurance Company case [A.I.R 1967 S.C 1286 : 1967-II L.L.J 1] (vide supra), the Tribunal could award the leave in excess of the statutory limit and affirmed the award of the Tribunal so far as the revision of the privilege leave is concerned. These points were never rsised before the trial Court, although a ground was taken, but it appears that the said ground was not pressed before the learned trial Judge. So, under these circumstances, the appellants could not be allowed to raise a new point before the Appeal Court. We find no reason to interfere with the order passed by the learned trial Judge.
25. In the result, both the appeals are dismissed, the judgment and order of the trial Court are affirmed subject to the observations made in Appeal No. 20 of 1971.
26. There will be no order as to costs in either of the appeals.
27. B.C Mitra, J.:— I agree.