Appeal No 621 of 1960
Appeal
by special leave from the Award dated January 15 1960 of the Industrial Tribunal Bombay in Reference IT No 94 of 1959 712 B Sen and I N Shroff for the appellant
C L Dhudia and K L Hathi for the respondent
April 3
The Judgment of the Court was delivered by GAJENDRAGADKAR J
Two demands made by the respondents the workmen of the appellant company the Garment Cleaning Works Bombay were referred for industrial adjudication to the industrial tribunal under section 125 of the  XIV of 1947
These demands were for gratuity and provident fund respectively
The tribunal has framed a gratuity scheme and has passed an order that the appellant should draw up a scheme of provident fund on the lines of the model provident fund scheme drawn by the Government under the Employees  Provident Funds Act 1952 XIX of 1952 with a rate of contribution of 6 14 per cent
of total wages
Both the gratuity scheme as drawn up and the directions as to the drawing up of a provident fund scheme are challenged by the appellant by its present appeal which it has brought to this Court by special leave
In regard to the direction as to the gratuity scheme the argument which has been urged before us by Mr Sen is that the problem of starting such a scheme should have been considered on an industry cum region basis and considerations relevant to the said basis should have been taken into account
In support of this argument he has relied upon a judgment of this Court in The Bharatkhand Textile Mfg Co Ltd  Ors
vs The Textile Labour Association Ahmedabad 1
In that case the industrial court had no doubt dealt with a claim for gratuity made by the workmen on the industry cum region basis and an attack against the validity of the said approach made by the employer in regard to the scheme was repelled by this Court
It would however be noticed that all that this Court decided in that case was that it was erroneous to contend that a gratuity scheme could never be based on industry cum region basis and in support of this conclusion several considerations were set forth in the 1 19603 SCR 329 713 judgment
It is clear that it is one thing to hold that the gratuity scheme can in a proper case be framed on industry cum region basis and another thing to say that industry cum region basis is the only basis on which gratuity scheme can be framed
In fact in a large majority of cases gratuity schemes are drafted on the basis of the units and it has never been suggested or held that such schemes are not permissible
Therefore the decision in the case of the Bharatkhand Textile Mfg Co Ltd  does not support the proposition for which Mr Sen contends
Mr Sen has then criticised some of the provisions in the gratuity scheme
Clause ii a of the gratuity scheme provides that on retirement or resignation of a workman after ten years  service ten day s consolidated wages for each year s service should be awarded as gratuity
Mr Sen quarrels with this provision
He contends that no gratuity should be admissible under this clause until and unless fifteen years  service has been put in by the employee
In support of this argument Mr Sen has referred us to certain observations made by this Court in the case of The Express Newspapers Private Ltd  Anr
vs The Union of India  Ors
In that case the provisions of section 5 1a iii of the Working Journalists Conditions of Service and Miscellaneous Provisions Act 1955 45 of 1955 was struck down on the ground that its provisions violated the fundamental right guaranteed by article 19lg The conclusion of this Court was that the provision for gratuity made by the said clause to an employee who had put in three years  service imposes an unreasonable restriction on the employer s right to carry on business and is therefore liable to be struck down as unconstitutional
Dealing with that provision this Court incidentally observed that where the employee has been in continuous service of the employer for a period of more than fifteen years he would be entitled to gratuity on his resigning his post
Mr Sen contends that this observation indicates that an employee who resigns his post cannot be entitled to any gratuity 1  2  154
90 714 unless he has put in fifteen years  service
In our opinion the observation on which this argument is based was not intended to lay down a rule of universal application in regard to all gratuity schemes and so it cannot be made the basis of an attack against a gratuity scheme where instead of fifteen years  service 10 years  minimum service is prescribed to enable an employee to claim gratuity at the rate determined if he resigns after ten years service
Therefore we do not think that the provision of cl
iia can be successfully challenged as being unreasonable
Clause iv is then challenged by Mr Sen
This clause provides that if a workman is dismissed or discharged for misconduct causing financial loss to the works gratuity to the extent of the loss should not be paid to the workman concerned
Mr Sen contends that this clause is inconsistent with the principles on which gratuity claims are generally based
Gratuity which is in the nature of retrial benefit is based on long and meritorious service and the argument is that if the service of an employee is terminated on the ground of misconduct it would not be open to him on principle to claim gratuity because misconduct puts a blot on the character of his service and that disqualifies him from any claim of gratuity
In this connection he has referred us to the definition of retrenchment  contained in section 2 oo of the 
Retrenchment according to the definition means inter alia the termination by the employer of the service of a workman for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action
Mr Sen suggests that the retrenchment benefit and gratuity are payments made to the employee for a similar purpose and if dismissal of an employee for misconduct does not entitle him to a claim for retrenchment benefit so should gratuity be denied to him in case he is dismissed for misconduct
A similar argument is based on the rules framed under the Employees  Provident Funds Act 1952
Rule 71 of the Provident Funds Scheme Rules provides for certain deductions from the account of a member dismissed for Serious and willful misconduct
By analogy 715 it is urged that this rule also shows that a dismissed employee is not entitled to gratuity
We are not impressed by these arguments
On principle if gratuity is earned by an employee for long and meritorious service it is difficult to understand why the benefit thus earned by long and meritorious service should not be available to the employee even though at the end of such service lie may have been found guilty of misconduct which entails his dismissal
Gratuity is not paid to the employee gratuitously or merely as a matter of boon
It is paid to him for the service rendered by him to the employer and when it is once earned it is difficult to understand why it should necessarily be denied to him whatever may be the nature of misconduct for his dismissal
Then as to the definition of retrenchment in the  we are not satisfied that gratuity and retrenchment compensation stand exactly on the same footing in regard to the effect of misconduct on the rights of workmen
The rule of the provident fund scheme shows not that the whole provident fund is denied to the employee even if he is dismissed but it merely authorises certain deductions to be made and then too the deductions thus made do not revert to the employer either
Therefore we do not think that it would be possible to accede to the general argument that in all cases where the service of an employee is terminated for misconduct gratuity should not be paid to him
It appears that in awards which framed gratuity schemes sometimes simple misconduct is distinguished from gross misconduct and a penalty of forfeiture of gratuity benefit is denied in the latter case but not in the former but latterly industrial tribunals appear generally to have adopted the rule which is contained in el
ii b of the present scheme
If the misconduct for which the service of an employee is terminated has caused financial loss to the works then before gratuity could be paid to the employee he is called upon to compensate the employer for the whole of the financial loss caused by his misconduct and after this compensation is paid to the employer if any balance from the gratuity claimable 716 by the employee remains that is paid to him
On the whole we are not satisfied that the clause thus framed by the Industrial Tribunal in the present case needs to be revised
The last contention raised by Mr Sen in regard to the gratuity scheme has reference to cl
v of the scheme
This clause provides that for calculating years of service the entire service of the workmen should be taken into account
Mr Sen contends that though the word continuous has not been used either in cl
v or in clauses i ii and iii we should make it clear that the service referred to in all the said clauses referred to continuous service
This position is not disputed by Mr Dudhia for the respon dents
We would accordingly make it clear that the service referred to in clauses i ii and iii refers to continuous service
That takes us to the appellant s grievance against the direction issued by the Tribunal in regard to the framing of the provident fund scheme on the lines of the model provident fund scheme drawn by the Government in the Employees  Provident Funds Act
Mr Sen contends that in issuing this direction the tribunal has not properly assessed the extent of the financial obligation which the scheme would impose upon the appellant and the limited nature of its financial capacity
It appears that when the appellant produced its balance sheet and other relevant papers it claimed privilege under section 21 of the 
Inevitably the Tribunal could not discuss the figures disclosed by the said books in its award though it must have examined the said figures carefully
In the result the tribunal has naturally contented itself with the general observation as to the financial position of the appellant
It has observed that the question to consider in framing the provident fund scheme is whether the employer has made good profits whether its future is assured whether it has capacity to build up adequate reserves
Having thus posed the question the Tribunal ha  come to the conclusion that the appellant satisfies all these requirements
Mr Sen contends that the 717 tribunal did not take into account the fact that the appellant has no reserve and that it had borrowed large loans
We do not see how that would enable the appellant now to agitate a question which is purely a question of fact
Mr Sen realised the difficulties in his way because since his client had claimed the privilege of section 21 the Tribunal was fully justified in not discussing the figures in its award
He therefore faintly suggested that we may remand the case subject to any order as to costs that we may deem fit to make and ask the Tribunal to reconsider the matter in the light of the relevant documents and he assured us that he would not claim privilege under section 21 after remand
This request is plainly untenable
If the appellant wanted the tribunal to consider the figures and state its conclusions in the light of the said figures in its award it need not have claimed privilege under section 21 at the trial
It is now too late to suggest that the privilege be waived and that the matter be considered afresh by the tribunal or by us in the appeal
Therefore we see no reason to interfere with the direction given by the Tribunal in regard to the framing of the provident fund scheme
The result is the appeal fails and is dismissed with costs
Appeal dismissed


Summary:
The petitioner purchased some land from R R was declared to be an intending evacuee and be left for Pakistan
The Assistant Custodian issued a notice to the petitioner to show cause why the land should not be declared to be evacuee property and after hearing the petitioner he declared the land to be evacuee property
An appeal and a revision against the order were unsuccessful
The petitioner also applied to the Custodian under section 40 Of the  for confirmation of the sale but his application was rejected under section 404a on the ground that the evacuee did not act in good faith in effecting the sale
The petitioner contended that section 2d of the Act defining evacuee property and section 404 empowering the custodian to reject an application for confirmation violated article 312 as they enabled the State to take away property without the authority of law
Held that the provisions Of SS 2d and 404 were not affected by article 312 in view of article 315biii of the Constitution
The protection of article 31 5biii was not limited to a law which itself declared any property to be evacuee property but extended to a law which empowered an authority to declare any property as evacuee property and laid down the criteria for the declaration
Section 404a of the Act which empowered the Custodian to reject an application for confirmation on the ground that the transaction had not been entered into in good faith could not be challenged as conferring arbitrary powers on the Custodian
The power was in the nature of a judicial power and the absence of a standard for the determination of the question could not render the provision unconstitutional