Appeals Nos 246 and 287 of 1965
Appeals by special leave from the Award dated March 5 1964 of the Seventh Industrial Tribunal West Bengal in Case No VIII 60 of 1963
M C Setalvad and D N MukherJee for the appellant in C A No 24665 and respondent in CA No 28765
AS R Chari and B P Maheshivari for respondent in CA No 24665 and appellant in CA No 28765
Two matters in dispute between the management and the workmen Were referred to the tribunal relating to i the age of retirement of the workmen at the head office and the factory of the company and ii the introduction of  gratuity scheme for workmen employed at the head office and the factory
The tribunal fixed the age of retirement for clerical an subordinate staff at 58 years and for workmen in the factory a 55 years
The tribunal also introduced a gratuity scheme after 5 2 5
considering the objections raised to the draft scheme proposed by the company
of the two appeals one is by the company relating to the gratuity scheme and the other by the workmen relating to the age of retirement as well as to the gratuity scheme
We shall first consider the question of age of retirement
It may be mentioned that there was no retirement age in force in this company and so the position when the reference was made was that the workmen could continue to work so long as they were physically or mentally fit
The workmen contended that the age of retirement both for the head office and factory workmen should be fixed at 60 years
The company however proposed that the age of retirement should be 55 years for all workmen
The tribunal as already indicated has fixed the age of retirement at 58 years for clerical and subordinate staff and 55 years for factory workmen and has apparently relied on the decision of this Court in Workmen of Jessop  Co Limited vs Jessop and Company Limited1
Now this is a case where there was no age of retirement before the reference was made and the workmen whether at the head office or at the factory were all entitled to work so long as they were physically or mentally fit
So far as the existing workmen are concerned we think that the tribunal should have fixed the age of retirement at 60 years both for the factory workmen as well as head office workmen
It is enough in this connection to refer tothe decision of this Court in Guest KeenWilliams Private Limited vs SterlingPJ 2 where in a similar situation this Court fixed the ageof retirement at 60 years in the case of existing workmen
Then there is the question as to future workmen and whether their age of retirement should also be fixed at the same level as in the case of existing workmen
We are of opinion that generally speaking there should not be any difference in the age of retirement of existing workmen and others to be employed in future in a case like the present unless there are special circumstances justifying such difference
In this connection our attention is drawn to the case of Guest Keen Williams P Limited2 where the age of retirement of future workmen was 55 years
In that case however the age of retirement of future workmen was fixed at 55 years by the Standing Order and the question whether that age of retirement should be changed was not before this Court for consideration
All that this Court had to consider in that case was whether the age of retirement of existing employees before the Standing Order fixing the age of retirement at 55 years was intro 1 2   526 educed should be 60 years or not
In the present company so far there is no age of retirement and unless there are valid and cogent reasons for making a diference in the age of retirement of existing workmen and those employed in future the future workmen should also have the benefit of the same age of superannuation
Considering that there has been a general improvement in the standard of health in this country and also considering that longevity has increased fixation of age of retirement at 60 years appears to us to be quite reasonable in the present circumstances
Age of retirement at 55 years was fixed in the last century in government service and had become the pattern for fixing the age of retirement everywhere
But time in our opinion has now come considering the improvement in the standard of health and increase in longevity in this country during the last fifty years that the age of retirement should be fixed at a higher level and we consider that generally speaking in the present circumstances fixing the age of retirement at 60 years would be fair and proper unless there are special circumstances justifying fixation of a lower age of retirement
Now so far as the clerical and subordinate staff are concerned we are of opinion that there is no reason for any difference in the age of retirement as between the existing staff and the future staff
Their work is exactly the same and in the circumstances there should be the same age of retirement
As to the factory workmen it is urged that their age of retirement should be fixed at a lower level as work in the factory is more arduous than the work of clerical and subordinate staff and in this connection reliance is placed on the decision of this Court in Jessop and Company1 where one age was fixed for clerical and subordinate staff and a slightly lower age was fixed for the factory workmen
Here again we are of opinion that generally speaking there is no reason for making a difference in the age of retirement as between clerical and subordinate staff on the one hand and factory workmen on the other unless such difference can be justified on cogent and valid grounds
It is only where work in the factory is of a particularly arduous nature that there may be reason for fixing a lower age of retirement for factory workmen as compared to clerical and sub ordinate staff
This appears to have been no in the case of jessop and Company1 for that was a heavy engineering concern where presumably work in the factory was much more arduous as com 11964 527 pared to the work of clerical and subordinate staff
There might therefore have been then some justification for fixing a lower age of retirement for factory workmen in the case of those factories where the work is of a particularly arduous nature
But the present company is a paints manufacturing company and there is in our opinion no reason to suppose that the work in the factory in the present case is particularly arduous as compared to the work of clerical and subordinate staff
We therefore think that even in the case of future factory workmen in the present concern there is no special reason why the age of retirement should be fixed at a lower level
It is of course always possible for an employer to terminature the services of a workman if he becomes physically or mentally incapable of working before the age of retirement
This power being there there is no reason to suppose that there will be inefficiency in work on account of fixing the age of retirement at 60 years on the other hand with the age of retirement at 60 years there HI be added advantage that more experienced workmen will be available to the management and that would be a cause for greater efficiency
On the whole therefore we are of opinion that the age of retirement in the case of factory workmen also in the present company should be fixed at the age of 60 years
We therefore modify the award of the tribunal and fix the age of retirement for the clerical and subordinate staff as well as for the factory workmen whether existing or future at the age of 60 yews
We now turn to the gratuity scheme
Two points have been urged on behalf of the company in this connection
The tribunal has fixed five years minimum service in order to enable a workman to earn gratuity
This has been provided in the event of a death of an employee while in service of the company b discharge or voluntary retirement of an employee on grounds of medical unfitness c voluntary retirement or resignation before reaching the age of superannuation d retirement on reaching the age of superannuation or e termination of service by the company for reasons other than misconduct resulting in loss to the company in money and property
The management objects to the minimum period being five years in the case of voluntary retirement or resignation before reaching the age of superannuation
It is contended that gratuity schemes usually provide for a longer minimum of service in the case of voluntary retirement or resignation before reaching the age of superannuation
We think that there is substance in this contention
The reason for providing a longer minimum period for earning gratuity in the case of 528 voluntary retirement or resignation is to see that workmen do not leave one concern after another after putting the short Minimum service qualifying for gratuity
A longer minimum in the case of voluntary retirement or resignation makes it more probable that the workmen would stick to the company where they are working
That is why gratuity schemes usually provide for a longer minimum in the case of voluntary retirement or resignation
We may in this connection refer to the Express Newspapers Private Limited vs the Union of India1 where a short minimum for voluntary retirement or resignation was struck down
Again in The Garment Cleaning Works vs Its Workmen2 10 years minimum was prescribed to enable an employee to claim gratuity if he resigned
In the Management of Wenger and Company vs Their workmen3 a distinction was made between termination of service by the employer and termination resulting from resignation given by an employee
In the first case the minimum was fixed at 5 years in the second the minimum period was fixed at 10 years by this Court
We therefore modify the gratuity scheme in this regard and order that in the case of voluntary retirement or resignation by an employee before reaching the age of superannuation the minimum period of qualifying service for gratuity should be ten years and not five years as prescribed by the tribunal
The next point that has been urged on behalf of the manage ment in this connection is that the tribunal has while fixing 21 days  basic wage or salary as the quantum for gratuity for each completed year of service included dearness allowance in the words basic wage or salary
It is urged that the usual pattern of gratuity scheme provides for gratuity on basic wages and dearness allowance generally speaking is not included in basic wages for fixing the quantum of gratuity
It is further urged that by including dearness allowance within the definition of basic wages or salary as given in the scheme in this case the tribunal has really more or less doubled the quantum of gratuity for each completed year of service
There is in our opinion force in this contention also
In May and Baker India Limited vs Their workmen4 the workmen claimed in this Court that gratuity should be fixed on gross salary
In that case the tribunal had fixed the quantum on basic salary ie it had not included 11955 SCR12 at p 158
3AIR 21962 1 SCR 711 714
4 1961 11 LLJ 529 dearness allowance for this purpose and the reason given by the tribunal for fixing the quantum of gratuity on basic salary was that the workmen in that case were getting double retiring benefit namely both gratuity and provident fund
That view of the tribunal was upheld by this Court
On the other hand it has been urged that in some cases quantum of gratuity has been fixed on gross salary ie basic wages plus dearness allowance and in this connection reference was made to British India Corporation vs The Workmen1
In that case this Court upheld the award of the tribunal fixing gratuity on the basis of consolidated wages
This Court pointed out that the usual pattern was to fix quantum of gratuity on the basis of basic wages but refused to interfere in that case because the practice in the concern in that case already existing was to fix gratuity on consolidated wages
In the present case also there is a provident fund scheme in force
So with the introduction of the gratuity scheme the employees will be getting double retiring benefit
In such circumstances we are of opinion that the tribunal should not have defined basic wages so as to include dearness allowance
Besides as the gratuity scheme is being introduced for the first time in this concern it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wages excluding dearness allowance especially when there is another retiring benefit in the shape of provident fund already existing in this concern
We therefore modify the award of the tribunal in this respect and order that gratuity should be paid at the rate of 21 days  basic wages or salary for each completed year of service and this basic wage will not include dearness allowance or any other allowance
Subject to these modifications the scheme framed by the tribunal will stand
The workmen have also assailed the gratuity scheme and their case is that they should have been granted 30 days wages as prayed for by them instead of 21 days  basic wages fixed by the tribunal
We do not think there is any case for increasing the quantum of gratuity fixed by the tribunal at 21 days  basic wages as modified by us for each completed year of service for there is a provident fund scheme also in force in this concern and the workmen are thus getting two retiring benefits
No other point has been pressed before us
1 1965 Vol
10 Factory Law Reports 244
5 30 We therefore partly allow the appeal of the company and make the two modifications in the gratuity scheme as indicated above
We also partly allow the appeal of the workmen and fix the retirement age for all workmen existing or future clerical subordinate and factory workmen at 60 years
In the circumstances we make no order as to costs in both the appeals
Appeals allowed in part


Summary:
Two matters in dispute between the management of a paints manufacturing company and their workmen namely 1 the are of retirement of the workmen and ii the introduction of a gratuity scheme for them were referred to the Industrial Tribunal
Before the reference was made the workmen were entitled to work so long as they were physically and mentally fit
The Tribunal fixed the age of retirement for clerical and subordinate staff at 58 years and for the factory workmen at 55 rears
The Tribunal also introduced a gratuity scheme
It fixed 5 years minimum service in order to enable a workman to earn gratuity and while fixing 21 days  basic wage or salary as the quantum for gratuity for each completed year of service included dearness allowance in the words basic wage or salary
 Both the management and workmen appealed to this Court
The workmen contended that  i the age of retirement both for the staff of the head office and the factory workmen should be fixed at 60 years and ii 30 days  wages instead of 21 days should have been fixed as the quantum for gratuity
The management objected to the minimum period of five years to enable a workman to earn gratuity even in the case of voluntary retirement or resignation and contended for a longer minimum of service
The management also urged that dearness allowance should not be included in the basic wages for fixing the quantum of gratuity
HELDi The award of the Tribunal should be modified fixing he age of retirement for the clerical and subordinate staff as well as for the factory workmen whether existing or futureat the age of 60 years
527 E Age of retirement of 55 years was fixed in the last century in government service and had become the pattern for fixing the age of retirement everywhere
But considering the improvement in the standard of health and increase in longevity the age of retirement should be fixed ordinarily it the higher level of 60 years
Since the work in the factory in the present case was not particularly arduous as compared to that of the clerical and subordinate staff even in the case of factory workmen there s no reason why the age of retirement should be fixed at a lower level specially when the management could always terminate the services of a workman if he becomes physically or mentally incapable of working before the age of retirement
With the age of retirement at 60 years here will be the added advantage that more experienced workmen will be available to the management and that would be a cause for greater efficiency
As there are no valid and cogent reasons for making a difference in the age of retirement of existing workmen and those employed in future the future workmen both clerical and subordinate staff as 524 well as factory workmen should also have the benefit of the same age of superannuation
526 B D 527 B D iiNo case for increasing the quantum of gratuity from 21 days basic wage to 30 days  basic wage had been made out by the workmen especially when there was a provident fund scheme also in force in the concern and the workmen were thus getting two retiring benefits
529 H iiiIn the case of voluntary retirement or resignation by an employee before reaching the age of superannuation the minimum period of qualifying service for gratuity should be 10 years and not 5 years as prescribed by the Tribunal
528 E The reason for pro tiding a longer minimum period of earning gratuity in the case of voluntary retirement or resignation is to see that workmen do no  leave one concern after another after putting in the short minimum service qualifying for gratuity and gratuity schemes usually provide for a longer minimum in the case of voluntary retirement or resignation
527 A B ivGratuity should be paid at the rate of 21 days  basic wage or Wary for each completed year of service but such basic wage would not include dearness or any other allowance
529 F As the gratuity scheme was being introduced for the first time in the concern it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wages excluding dearness allowance especially when there was another retiring benefit in the shape of provident fund already existing in the concern
529 E Case law reviewed