Case: The G.M. Eid Parry (I) Ltd Vs. The Presiding Officer

E.I.D. Parry (India) Ltd. (hereinafter referred to as `the employer) has one of its units located at Ranipet in Tamil Nadu State where sanitary-ware, super phosphate and insecticides are manufactured. Some of its retiring employees filed applications under section 33-C(2) of the Industrial Disputes Act, 1947 (`1947 Act for short) before the Labour Court at Madras claiming pension by alleging that payability of pension was a condition of service and the employer had stopped it without any justification and without giving notice under section 9-A of the 1947 Act. The President Officer of the 2nd Additional Labour Court, Madras, allowed t he same by his order dated 30th May, 1983, after computing the amounts. The employer preferred six writ petitions. In the meantime the same dispute had been referred to the Industrial Tribunal and it answered the reference against the employees by award dated 13th February, 1985. The award was assailed before the High Court by the Union by filing of the seventh writ petition. All the seven writ petitions were heard by a learned Single Judge who allowed the writ petitions of the management against the order of the Labour Court and dismissed the writ petition preferred by the labour union challenging the award of the Industrial Tribunal. Writ appeals were carried against the Single Judges decision.The main c ontroversy before the Division Bench was as to whether pension, or as is referred to by the parties, "retiring allowance" was payable to the employees. This dispute has a historical backdrop to which we may now advert. Under General Office Order No. 26 dated Ist December, 1943 "retiring allowances" were provided for. The Office Order provided that normally only employees with thirty years service or more would be eligible to receive "Retiring Allowance". The Board reserve d the right to alter the scale of "retiring allowance". either generally or in respect of individual employees and had the authority to sanction `retiring allowance when first granted and subsequent payment became a routine matter subject t o annual review.Gratuities were also provided under the Office Order by saying that all permanent employees (other than workers who qualify for gratuities as per Factory Certified Standing Order) who were in the Companys service prior to 1.1.1947 and who do not qualify for Retiring Allowance on retirement, will be eligible for gratuity on finally leaving the Companys service subject to one or other of the prescribed conditions being fulfilled. In all four alternatives were provided. Clause (4) indicated that employees recruited on or after 1.1.1947 would not be entitled to any gratuity.There was a Memorandum of Settlement between the parties which may be referred to as the settlement of 1956. Clause (6) thereof related to gratuity and provided:"Gratuity shall in future be payable by the company in accordance with the following rules: (a)(i) Where, irrespective of the length of his past service, an employee dies in service, or is retired on a medical certificate acceptable to the company, or is retired by the company on reaching the age of superannuation, he shall be entitled to gratuity calculated at the rate of one months basic salary for each completed year of service, and pro rata for any partly completed year of his service , subject to a maximum of 15 months basic salary if hi s service is less than 30 years, together with half of one months basic salary for each completed year of service in excess of 30 years and pro rata for any partly completed year of service in excess of 30 years...............(d) Employees in service prior to Ist January, 1947 may opt, at the time of leaving service, either for:(i) Gratuity calculated in accordance with these rules or in accordance with the current provisions of General Office Order No. 26, whichever he prefers, or(ii) in lieu of gratuity, a retiring allowance calculated in accordance with the current provision s of General Office Order No. 26."This settlement as a fact incorporated the relevant part of the Office Order.The Payment of Gratuity Act came into force with effect from September, 1972 an d payment of gratuity became statutory. When that Act came into force, the Employer and the Employees Union jointly applied to the Government for exemption from the provisions of the statute. The exemption was, however, not granted. Payability of gratuity is no longer in dispute. What is challenged is the claim of the workmen to retiring allowance (pension) under Office order No. 26. The stand of the employees has been that the retiring allowance under General Office Order No. 26 has not been substituted by the 1956 settlement and they are, subject to being qualified, entitled to the benefit of pension and the statutory advantage of gratuity. It is a fact that the settlement does not provide for payment of pension except to pre-1947 employees and making the benefit liable to exercise of option under clause 6(d) above. It is not in dispute that the retiral benefit (pension) was payable to all qualified employees as a matter of practice. If under the settlement that was not done away with, the benefit arising out of General Office Order No. 26 would still be available and gratuity contemplated under the settlement would not be a substitute of the retiral benefit of pension.The Appellate Bench of the High Court has found that gratuity provided under the settlement was not a substitute of pension.

Reasoning: We have, however, not been able to see any defect in the reasoning of the Division Bench decision of the High Court where it has ultimately come to the conclusion that the settlement had not substituted gratuity for pension. We find that by way of a n interim measure this Court by an order dated 5th May, 1989 had directed the employer to pay the pension to the employees in accordance with the order of the High Court with effect from Ist May, 1989 and that from the record appears to have been p aid.A petition had been filed in this Court on 23rd April, 1990 by the employer for modification of the condition indicated in the order granting special leave and we had heard counsel for both the sides on the said petition. We had ma de it clear at the hearing of the petition for modification of the order granting special leave that the question as to payability of retirement benefit after the 1956 settlement would be examined. The total number of employees involved in this dispute was about 347. Many of them had not only retired but had also died and in respect of those who were dead it would be a question of the benefits up to the date of death of the respective employees to be paid to their legal representatives. Mr. Narayanaswamy had emphatically contended that what was being decided was not a claim of 347 employees but it had its repercussion on the industrial peace between the employer and the employee at other places. We would like to make it clear that we have gone into the question confined to the claim to the employees of the Ranipet factory and not the liability of the employer generally, Beside s, Mr. Narayanaswamy had also told us at the hearing that there are special features in the arrangement in regard to employees elsewhere.We are satisfied that the Appellate Bench of the High Court was right in holding that the entitlement to pension had not been substituted by the settlement of 1956 and, therefore, the claim to pension subject to qualification being satisfied was available to be maintained notwithstanding the settlement of 1956, The High Court rightly came to the conclusion that the Labour Court had justifiably worked out the dues and the claim petitions under section 33-C(2) of the 1947 Act. We uphold the judgment of the High Court and dismiss these appeals. The employee s had asked for award of interest on their dues. The challenge of the employer was not groundless and we do not think in the facts of these cases the employees or their legal representatives would be entitled to interest. We hope and trust that the employer would not liquidate its liability without delay by satisfying the orders of the Labour Court and the claims of the workmen or their legal representatives as and when made.A sum of Rs. 10, 000 had been given by the employer t o Sri Pant for the Union to contest these matters and he has been paid the amount under this Courts order. No order for further courts.