ivil Appeal No 1558 L of 1978
Appeal by special leave from the Award dated the 4th August 1977 of the Industrial Tribunal Maharashtra Bombay in Reference IT No 248 of 1975 published in MOG Part I L dated 3rd November 1977
CL Dudhia KL Hathi and Mrs Hemantika Wahi for the Appellant
GB Pai Manik A Gagrat G Subramaniam SS Shroff DP Mohanty and TR Das for the Respondents
This appeal by special leave is directed against the award of the Industrial Tribunal Maharashtra Bombay dated September 22 1977 in Reference IT No 248 of 1975 in the industrial dispute between the respondent and the workmen employed by it and published in Maharashtra Government Gazette on November 3 1977
Though the demands made by the workers  Union and the adjudication thereon by the Tribunal related to items like wage scale dearness allowance extra show allowance gratuity service conditions of non permanent staff and retrospectivity while granting special leave this Court confined the appeal to three points namely i retrospectivity of the award ii linkage of dearness allowance to some rational principle and iii construction of section 4 5 of the  and leave was expressly refused in regard to the other grounds mentioned in the special leave petition
We therefore proceed to deal with the aforesaid three points on which arguments were advanced before us by counsel on either side
It may be stated that prior to the impugned award the wages and gratuity of the workers were governed by the earlier award in Reference No 1 of 1968 published on 371969 which was effective from 111967 while dearness allowance was governed by the award in Reference No 440 of 1970 effective from 111970 Both these 167 awards were duly terminated by notice and fresh demands for revision of wage scales dearness allowance etc
effective from 111974 were submitted by the Union to the Management on 1541974
The Reference to the Tribunal was made on 1071975 and by the impugned award the Tribunal granted the revision in wage scales and dearness allowance with effect from 111977
Counsel for the appellant Union contended that the Tribunal erred in not granting the revision with effect from 111974 as demanded and at any rate the same should have been granted from 1071975 being the date of Reference especially when the Tribunal found the financial capacity of the respondent very sound and admittedly there had been a steep rise in the cost of living index
He pointed out that the Tribunal while refusing to grant retrospective effect had erroneously observed that there will be too much financial burden on the company as according to him such additional burden could not have been more than Rs 100000 or Rs 120000 a year during the three years 1974 1975 and 1976
In support of his contention counsel referred to three decisions of this Court namely Wenger and Co and others vs Their Workmen Bengal Chemical and Pharmaceutical Works Ltd vs Its Workmen and another and Hydro Engineers Pvt Ltd vs Their workman
It is difficult to accept this contention and interfere with the discretion exercised by the Tribunal in the matter which can be done only if it is shown to have been unreasonably exercised
Under section 17A4 of the it is a matter of discretion for the Tribunal to decide having regard to the circumstances of each case from which date its award should come into operation and no general rule can be laid down as to the date from which the Tribunal should bring its award into force and this Court shall not interfere with the Tribunal s order in that behalf unless substantial ground is made out showing unreasonable exercise on its part
Even the three decisions cited by the counsel clearly brings out the aforesaid position in law
The Tribunal was deciding the Reference in August 1977 and though the additional burden may not have been more than Rs 100000 or Rs 120000 per year for the three years 1974 1975 and 1976 if retrospective effect was given to the revision no material was placed before the Tribunal by either party as to whether the profits earned by the Company for the said three years had been disbursed or were still available with the company at 168 the time of making the award a factor relevant on the question of granting retrospectivity
Even before us no light could be thrown on the point by counsel on either side
Further there was on record a statement showing the financial position of the company for the years 1968 to 1975 year ending being 31st August produced by the appellant Union itself at exhibit U5 which clearly showed that the profits of the company before taxation and depreciation had dwindled consistently for the years 1973 74 and 75 such profits for each of the said three years being Rs 680912  Rs 651181 and Rs 570884 
Presumably it was in view of such decreasing trend in the profits made by the company during the three years that the Tribunal felt that it would be proper to give the revision in wage scales and dearness allowance only from 111977 onwards and not to give any retrospective effect
It cannot be said that the discretion has been unreasonably exercised by the Tribunal
Coming to the second point of linkage of dearness allowance with some rational principle the Union s contention before the Tribunal was and the same contention has been reiterated by the counsel for the Union in the appeal that the dearness allowance should be linked with the cost of living index and Consumers  Price Index Number
It was pointed out that the Bombay Working Class Consumers  Price Index was 800 in 1970 when the earlier award in the matter of DA was given that it had gone upto 1372 in 1977 and that therefore dearness allowance on Index No 999 1000 should be fixed on 4 weekly basis with a variation for every ten points rise or fall
But the Tribunal negatived the contention and fixed the dearness allowance on the normal principle of industry cum region and only reason for not linking it to the cost of living index was that such linkage did not obtain in any concern falling in the category of Cinema Exhibiting Industry which could not be compared with manufacturing industries like textile where such linkage operated
Counsel for the appellant Union pointed out that the same adjudicator Shri BB Tambe as Sole Arbitrator in Reference VA No 1 of 1979 in the industrial dispute between Ms Alankar Theatre and 38 other theatres of Bombay cinemas falling in classes A 1 A B and C and the workmen employed under them had made an award on June 27 1980 published in Maharashtra Government Gazette on October 9 1980 wherein dearness allowance has been linked with the rise in the cost of living index and the Consumers  Price Index Number
The result has been that in Cinema Exhibiting Industry all the other 39 theatres will be paying to their workers dearness allowance linked with the cost of living index while 169 in the case of workmen of Metro Theatre these will be no such linkage which would be contrary to normal uniformity which is always desirable in one and the same industry
We find considerable force in this contention urged by counsel for the appellant Union
On the other hand counsel for the Company pointed out that the aforesaid award of Shri Tambe in ReferenceVANo
1 of 1979 dated June 27 1980 is under challenge before the Bombay High Court in Writ Petition No 79 of 1981 at the instance of the management and as such the question whether dearness allowance in the Cinema Exhibiting Industry should be linked with the cost of living index is still pending consideration before the High Court
Moreover he urged that there are certain peculiar features of the Cinema Exhibiting Industry by reason of which it would be inappropriate to link the dearness allowance payable to worker in that industry with the cost of living index
For instance he pointed out that unlike manufacturing concerns
there is little scope for enhancing the profits in Cinema Exhibiting Industry inasmuch as the principal source of income being box office collection the same is connected with and limited by the seating accommodation in any theatre
However notwithstanding this limiting factor the same adjudicator has granted the linkage in case of 39 cinema houses in Bombay which shows that other factors must have weighed with him as outweighing this limiting factor
We are clearly of the opinion that uniformity on this aspect is highly desirable in one and the same industry
The main reason for the refusal to grant such linkage ie linking the D A with the cost of living index having disappeared the question will have to be considered afresh
We do not think that adequate and sufficient material is available on the record of this case before us to decide this issue satisfactorily
Further it would not be advisable to direct the parties before us to intervene in the matter pending before the High Court for material which may be peculiar to Metro Cinema may have to be produced and considered before the issue is properly decided
We therefore remand this issue back to the Industrial Tribunal for disposal in accordance with law with a direction that the Tribunal should give opportunity to both the parties to produce additional material and after hearing them should decide the same afresh
It will be open to the management to raise all contentions including the contention that dearness allowance should not be linked with cost of living index but should be granted on normal principle of industry cum region formula
We wish to make it clear that in case the issue is answered by the Tribunal in favour of the company the appellant Union shall not raise any contentions on the quantum of dearness allowance that has been 170 allowed by the Tribunal in its award on the basis of industry cum region formula for the quantum aspect of the revision has become final by reason of the limited leave that was granted by this Court while admitting the appeal
We shall next deal with the last question pertaining to the construction of section 45 of the 
The question of construction arises this way
It appears that existing scheme of gratuity in the Metro Theatre Bombay was as per the award in Reference IT No 1 of 1968 and the same had been modified by an agreement between the parties in this Court which the Union contended had become extremely inadequate and desired to have a more beneficial scheme in some respect for its workers
Counsel for the Union urged that it was open to the Tribunal to give more benefits than were available under the scheme contemplated by the Act and in that behalf reliance was placed on section 45 of the Act
Counsel for the Company contended the expression award  in section 45 meant an existing award and as such if under the existing award better terms were given to the employees these will not be affected
It was also urged that the Act was exhaustive and was intended to ensure uniform payment of gratuity to the employees throughout the country
The Tribunal accepted the contention of the Management and held that it could not go beyond the scheme contemplated by the Act and therefore directed that the gratuity scheme as per the Act shall prevail subject to the modifications arrived at under the terms of settlement if any if they were more beneficial
Counsel for the appellant Union urged before us that no standardisation of any gratuity scheme was contemplated by the Act as was clear from the express provisions contained in section 45 and section 5 of the Act and that enactment being a beneficial piece of legislation section 45 should be construed in favour of the employees and that therefore the Tribunal s view that it could not grant anything beyond the scheme contemplated by the Act was erroneous
In support of such construction reliance was placed upon this Court s decision in Alembic Caemical Works Company Ltd vs Its Workmen where a similar provision under the Factories Act was construed as conferring power on the Tribunal to fix the quantum 171 of leave on a scale more liberal than the one provided by the Act
We find considerable force in this submission
Section 41 of the Act provides that the 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 sub section
2 provides that 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 wages last drawn by the employee and sub section
3 provides that the amount of gratuity payable to an employee shall not exceed 20 months  wages
This is the main scheme of gratuity contemplated by the Act
Then comes sub section
5 which runs thus 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
 The question for consideration is whether expression award  occurring in the above provision means an existing award or would include any award whatsoever to be made by an adjudicator under the 
In the first place there is nothing in the provision which limits the expression award 
Secondly it cannot be and was not that under the above provision a gratuity scheme obtaining under an existing agreement or contract could be improved upon by a fresh agreement or fresh contract between the employer and the employee and if that be so there is no reason why the expression award  should be construed as referring to an existing award  and not to include a fresh award that may be made by an adjudicator or an Industrial Court improving in favour of the employees the scheme obtaining under the Act or the existing award
Thirdly the very fact that under the above provision better terms of gratuity could be obtained by employee by an agreement or contract with the employer notwithstanding the scheme of gratuity obtaining under the Act clearly suggests that no standardisation of the gratuity scheme contemplated by the Act was intended by the Legislature
This also becomes amply clear from the provisions of section 5 which confer power upon the appropriate Government to exempt establishment to which the Act applies from operation of the provisions of the Act if in its opinion the employees in such establishment are in receipt of gratuity benefits not less favourable than benefits confer 172 red under the Act
Therefore on true construction we are clearly of the view that the expression award  occurring in the above provisions does not mean and cannot be confined to existing award  but includes any award that would be made by an adjudicator wherein better terms of gratuity could be granted to the employees if the facts and circumstances warrant such grant
It is true as has been observed by this Court in State of Punjab vs Labour Court Jullundur and Ors
that the Act enacts a complete Code containing detailed provisions covering all essential features of the scheme for payment of gratuity
But it is also clear that the scheme envisaged by the enactment secures the minimum for the employees in that behalf and express provisions are found in the Act under which better terms of gratuity if already existing are not merely preserved but better terms could be conferred on the employee in future
In other words the view taken by the Tribunal that it could not go beyond the scheme of gratuity contemplated by the Act is clearly erroneous
The decision of this Court in Alembic Chemical Works Limited supra which was under the Factories Act also lends support to such beneficent construction
In that case the Industrial Tribunal had fixed the quantum of leave privilege and sick for the staff of a manufacturing concern on a scale more liberal than the one in force for the operatives of the same concern
In also made necessary direction regarding accumulation of such leave
The quantum of leave so fixed by the Tribunal was larger than the quantum of leave prescribed under the provisions of section 791 of the Factories Act
It was contended that section 79 of the Act was exhaustive and had self contained provisions with regard to the granting of annual leave with wages to the employees that it had the effect of introducing standardisation in the matter of leave and that no addition to the said leave could be made either by a contract or by an award
This Court negatived the said contention on the language of section 791 itself
Additionally provisions of section 78 were relied upon which recognised exemptions to the leave prescribed by section 791
Section 781 provided that provisions of Chapter VIII including section 791 shall not operate to the prejudice of any right to which a worker may be entitled under any other law or under the terms of any award agreement or contract of service and a proviso to this sub section laid down that when such award agreement or contract of service provided for longer annual leave with wages than provided under the 173 Chapter the worker shall be entitled only to such longer annual leave
It was contended that the expression any award in section 781 applied only to existing award
The Court negatived this contention and held that the contention was plainly inconsistent with a fair and reasonable construction of the said provision and that section 781 protected not merely awards agreements or contracts of service then existing but also those that would come into existence later
In the instant case also we are clearly of the opinion that the phrase under any award agreement or contract with the employer occurring in section 45 is intended to cover future awards agreements or contracts with the employer since existing better terms of gratuity are intended to be protected by issuance of a notification under section 5 of the Act
We may also state here that in the other adjudication done by the same adjudicator Shri BB Tambe as the Sole Arbitrator in Reference VA No 1 of 1979 Ms Alankar Theatre and 38 other theatres vs The workmen employed under them he has come to a contrary conclusion and has held that under section 45 of the payment of Gratuity Act an adjudicator can grant better terms of gratuity and has actually proceeded to grant better terms of gratuity to the workmen employed in all the theatres concerned in that Reference
Vide para 140 of the Award
Realising this position counsel for the company before us fairly conceded that the employees in the Metro Cinema would also be entitled to better terms of gratuity the same as given to employees in other cinema Houses
Counsel for the parties therefore agreed before us that gratuity scheme as set out by Shri Tambe in para 140 of his award dt
27 6 1980 in Reference VA No 1 of 1979 should apply to the workmen of Metro Cinema
We accordingly direct that the gratuity scheme as set out in paragraph 140 of the above award would be applicable to the workmen of Metro Cinema with effect from 111977
In the result the appeal is partly allowed on the point of gratuity as indicated above and on the question of linkage the appeal is remanded to the Tribunal for disposal according to law as directed above
The appeal as regards retrospectivity is dismissed
In the circumstances the parties will bear their own costs
VDK Appeal allowed in part


Summary:
The wages and gratuity of the workers of Metro Theatre were governed by an earlier award in Reference No 1 of 1968 published in 3 7 1969 which was effective from 1 1 1967 while dearness allowance was governed by the award in Reference No 440 of 1970 effective from 1 1 1970
Both these awards were duly terminated by notice and fresh demands for revision of wage scales dearness allowance etc
effective from 1 1 1974 were submitted by the workers Union to the Management on 15 4 1974
A reference IT No 248 of 1975 was made on 10 7 1975 to the Industrial Tribunal which by its award dated September 22 1977 published in Maharashtra Government Gazette on November 3 1977 granted the revision in wage scales and dearness allowance with effect from 1 1 1977
While granting special leave against the impugned award the Court confined the appeal to three points namely i retrospectivity of the award ii linkage of dearness allowance to some rational principle and iii construction of section 45 of the Payment of Gratuity Act 1971
Allowing the appeal in part on the point of gratuity and remanding to the Tribunal on the question of linkage of dearness allowance the Court
 HELD 1
Under section 17A4 of the it is a matter of discretion for the Tribunal to decide having regard to the circumstances of each case from which date its award should come into operation and no general rule can be laid down as to the date from which the Tribunal should bring its award into force and the Supreme Court shall not interfere with the Tribunal s order in that behalf unless substantial ground is made out showing unreasonable exercise or its part
In the instant case in the absence of any material placed before the Tribunal or even before the Supreme Court by either party as to whether the profits earned by the Company for the years 1974 1975 and 1976 had been disbursed or were still available with the Company at the time of making the award a factor relevant on the question of granting retrospectivity and also in view of decreasing trend in the profits made by the Company during the said three years according to the Exhibit U 5 marked by the appellant Union itself presumably the Tribunal felt that it would be proper to give the revision in wage scales and dearness allowance only from 1 1 1977 onwards and not to give any retrsopective effect
167 E H 168 A C 165 Wenger and Co and others vs Their Workmen 1963 II LLJ 403 Bengal Chemical and Pharmaceutical Works Ltd vs Its Workmen and Another 1969 I LLJ 751 and Hydro Engineers Pvt Ltd vs Their Workmen 1969 I LLJ 713 followed
On the question of linkage of dearness allowance with some rational principle uniformity is highly desirable in one and the same industry
The very same adjudicator Shri BB Tambe yet in other Reference VA No 1 of 1979 dated June 27 1980 had awarded payment of dearness allowance linked with the cost living index while in the instant case fixed dearness allowance on the normal principle of industry cum region
168 C G H 169 A 31
On true construction of section 45 of the Payment of Gratuity Act the expression award occurring in the said provision does not mean and cannot be confined to existing award but includes any award that would be made by an adjudicator wherein better terms of gratuity could be granted to the employees if the facts and circumstances warrant such grant
In the first place there is nothing in the provision which limits the expression award
Secondly it cannot be and was not that under the above provision a gratuity scheme obtaining under existing agreement or contract could be improved upon by a fresh agreement or fresh contract between the employer and the employee and if that be so there is no reason why the expression award should be construed as referring to an existing award and not to include a fresh award that may be made by an adjudicator or an Industrial Court improving in favour of the employees the scheme obtained under the Act or the existing award
Thirdly the very fact that under the above provision better terms of gratuity could be obtained by an employee by an agreement or contract with the employer notwithstanding the scheme of gratuity obtaining under the Act clearly suggests that no standardisation of the gratuity scheme contemplated by the Act was intended by the Legislature
171 D H 172 A 32
It is true that the Payment of Gratuity Act enacts a complete Code containing detailed provision covering all essential features of the scheme for payment
But it is also clear that scheme envisaged by the enactment secures the minimum for the employees in that behalf and express provisions are found in the Act under which better terms of gratuity if already existing are not merely preserved but better terms could be conferred on the employee in future
172 A C State of Punjab vs Labour Court Jullundur and Ors   followed
Alembic Chemical Works Company Ltd vs Its Workmen  explained
The phrase under any award agreement or contract with employer occuring in section 45 of the Payment of Gratuity Act is intended to cover future awards agreements or contracts with the employer since existing better terms of gratuity are intended to be protected by issuance of a notification under section 5 of the Act
173 B C 166 To maintain uniformity and to be in conformity with the Award made by the same adjudicator in Reference VA No 5 of 1970 Ms Alankar and 39 others vs The Workmen employed under them the Court directed that the gratuity scheme as set out in paragraph 140 of that award be applicable to the workmen of Metro Cinema with effect from 1 1 1970