Supreme Court of India

Straw Board Mfg. Co Ltd vs The Workmen on 1 March, 1977

Equivalent citations: 1977 AIR 941, 1977 SCR (3) 91, AIR 1977 SUPREME COURT 941, 1977 2 SCC 329, 1977 LAB. I. C. 543, 1977 (1) LABLN 399, 1977 3 SCR 91, 1977 (1) LABLJ 463, 1977 2 SCJ 455, 34 FACLR 269

Author:
V.R. Krishnaiyer

Bench:
V.R. Krishnaiyer
,
Jaswant Singh

PETITIONER:
STRAW BOARD MFG. CO LTD.

Vs.

RESPONDENT:
THE WORKMEN

DATE OF JUDGMENT01/03/1977

BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
SINGH, JASWANT

CITATION:
1977 AIR 941 1977 SCR (3) 91
1977 SCC (2) 329

ACT:
Gratuity--Qualifying period of service and calculation
of amounts--Tests for determination.

HEADNOTE:
In an industrial dispute between the appellant mill and
its workmen relating to the payment of gratuity, the Indus-
trial Tribunal framed a gratuity scheme and gave the neces-
sary guidelines for its implementation. Special leave was
granted to the appellant by this Court on the limited ques-
tion whether the correct principles on which gratuity should
be payable had been followed in this case or not. Since the
making of the award, the
Payment of Gratuity Act, 1972
was
passed, which, by
s. 4(5)
gave an option to the workers to
choose between the gratuity scheme under the award and the
one under the statute. The workers, however, did not put in
their appearance in this Court.
It was contended on behalf of the appellant that the
qualifying period of service for earning gratuity was ten
years and for calculating the amount of gratuity basic
wages without adding dearness allowance should be the basis
as laid down by some decisions of this Court and the tribu-
nal was wrong in holding 5 years as the qualifying service
and basic wages and dearness allowance as the basis for
calculating the amount of gratuity.
HELD: There is nothing fundamentally flawsome in the 5-
year period being fixed as the qualifying service. The
Tribunal was realistic in fixing the period of eligible
qualifying service as continUoUs service counted with refer-
ence to the completed years as defined in
s. 2(c)
of the
Act. [100 C&F]
(1) In some cases, this Court highlighted the view that
the determination of gratuity is not based on any definite
rules and each case must depend upon the prosperity of the
concern, the needs of the workmen and the prevailing econom-
ic conditions examined in the light of the auxiliary bene-
fits which the workmen may get on determination of employ-
ment. It was also held that stability of the concern,
profits made 'in the past, the future prospects and capacity
should be the relevant circumstances which the Tribunal
should take into account in giving its award. Awards
are' given on circumstances peculiar to each dispute and the
Tribunals are, to a large extent, free from the restrictions
of technical considerations imposed on courts. In short,
the approach of the Tribunal should be what may be de-
scribed as its legal hunch or horse-sense. Cases like
Gaziabad Engineering Co. accept the position that. while
gratuity is usually related to the basic wage, a departure
may be made by relating it to the consolidated wage if there
be some strong evidence or exceptional circumstances
justifying that course. The real reason why some cases
like British Paints required a qualifying period of 10
years was that a longer minimum period for earning gratuity
in the case of voluntary retirement or resignation would
ensure that workmen did not leave one concern for another
after putting in the short minimum service qualifying for
gratuity. But current conditions must control the Tribu-
nal's conscience in finalizing the terms of the gratuity
scheme. Colossal unemployment at all levels of workers in
the country today means that a worker will not leave his
employment merely because he has qualified himself for
gratuity In an economic situation where there is a glut of
labour in the market and unemployment stares the working
class in the face it is theoretical to contend that employ-
ees will hop from industry to industry unless the qualifying
period for earning gratuity is raised to 10 years. [98 H;
99D; lOO A, D, E, F.]
(2) Wages will mean and include basic wages and dearness
allowance and nothing else. This corresponds to
s. 2(s)
of
the Act. Some of the decisions refer to basic wages and
others to consolidated wages as the foundation for
computation of gratuity. These are matters of discretion
and the "feel" of the circumstances prevalent in the indus-
try by the Tribunal and, unless it has gone wrong in the
exercise of its discretion the award should stand.
In the
Payment of Gratuity Act
also it is not basic wages but gross
wages inclusive of dearness allowance which had been taken
as the basis. [101 B; 100 G-H]
Delhi Cloth & General Mills Co. v. Workmen & Ors. [1969]
2 SCR 307, British Paints [1969] 2 SCR 523, Hydro-Engi-
neers [1969] 1 SCR 1.56, Hindustan Antibiotics, [1967] 1 SCR
672, Bengal Chemical & Pharamaceutical Works Ltd., [1959]
Suppl. 2 SCR 136, Gaziabad Engineering Co., [1970] 2 SCR
622 and Calcutta Insurance Co. Ltd. [1967] 2 SCR 596 re-
ferred to.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1539 of
1970.

(Appeal by Special Leave from the Award dated 1/31-10-69
of the Industrial Tribunal Allahabad in Ref. No. 20/58
'published in the U.P. Gazette dated the 10th Jan. 1970).
I. N. Shroff, for the appellant.

P.H. Parekh, for the respondent.

The Judgment of the Court was delivered by.
KRISHNA IYER, J.--A dispute between the appellant mill
(the Strawboard Manufacturing Company Ltd) and its workmen,
regarding a scheme of gratuity, was referred to the Indus-
trial Tribunal, way back in February 1958, and, long 19
years later, this Court is pronouncing on the validity of
the award made by the Tribunal in favour of the workmen:

Small wonder the respondent workmen, after this tiring and
traumatic tantalization, have not turned up to argue their
cause, although Shri Parekh, as amicus curiae, has filled
the gap. Such an unhappy and not infrequent phenomenon as
considerable delay in adjudication and implementation is
destructive of industrial peace and productive of disen-
chantment with labour jurisprudence. Naturally, even consti-
tutional provisions and governmental decisions about labour
and concern for its welfare cease to achieve the desired
goals when the legal process limps and lingers and rights
turn illusory' when remedies prove elusive. The life of
rights is remedies and a jurisprudence of ready reliefs
alone can inhibit the weaker numbers of our land asking
the disturbing question: 'Is Law Dead ?'. Dicey wrote long
ago:

"The saw ubi jus ibi remedium, becomes
from this point of view something much more
important than a mere tautological proposi-
tion. In its bearing upon constitutional law,
it means that the Englishmen whose labors
gradually formed the complicated set of laws
and institutions which we call the Constitu-
tion, fixed their minds far more intently on
providing remedies for the enforcement of
particular rights or for averting definite
wrongs, than upon any declarations of the
Rights of Man or Englishmen."

(Jurisprudence of Remedies: University of Pennsylvania
Law Review, Vol. 117, Nov. 1968. p.l, 16).

It is more than rhetoric to say that courts belong to the
people.
'Judges occupy the public's bench of justice. They
implement the public's sense of justice'. If the Courts are
the fulcrum of the justice-system, there is a strong case
for the reform of Court methodology and bestowal of atten-
tion on efficient management of judicial administration.
Otherwise, the courts may be so overloaded or so mismanaged
that they grind to a halt and citizens' exercise of their
rights discouraged or frustrated. The vital aspects of
the jurisprudence of remedies include speeding the pace o[
litigation 'from the cradle to the grave'. We are reluc-
tant to make these self-critical observation's about putting
our house in order, but when the consumers of justice like
workmen lose interest in the judicial process and are ab-
sent, legislative unawareness of research and development as
to the needs of courts and simplification and acceleration
of the judicative apparatus become matters of national
concern. Law's delays are in some measure, caused by legis-
lative inaction in ,making competent, radical change in the
procedural laws and sufficient financing and modernising of
the justice system as a high priority programme.
The chequered career of this lis and its zigzag climb up
the precipice of justice contextually deserves brief narra-
tion. The order of reference was made early in 1958, the
usual processual exercise before the Tribunal resulted in an
award on May 1, 1958 where the tribunal refused the relief
bearing on gratuity. The disappointed workers challenged
the award before the High Court which set it aside in Novem-
ber 1963--too long a hibernation in the High Court for a
labour dispute where prompt adjudication is the essence of
industrial peace. Anyway, when the case came back to the
tribunal, its decision took another six inscrutable years
and, on October 31, 1969 a fresh award was made whereunder
the tribunal framed a gratuity scheme and gave the guide-
lines thereof. This time the appellant mill straight came
to the Supreme Court with the present appeal for which
special leave was granted in a limited way, in the sense
that it was confined to the question 'whether the correct
principles on which' gratuity should be payable have been
followed in this case or not. It is a fact, though unfortu-
nate, that this labour litigation arrived in this Court in
1970 but its final chapter is being written by this judgment
only in 1977. And it is noteworthy that the facts are
brief, the legal issues small, the arguments brief and this
judgment, but for general observations and traditional
reference to rulings cited at the bar, could have been
judiciously abbreviated.

The main battle at the bar has been over the correct
principles in a scheme of gratuity for factory workers and
further whether those principles have been departed from
under the award assailed by the appellant. We may mention.
at this stage, that the Parliament has enacted the
Payment
of Gratuity Act, 1972
, which has come into force with effect
from September 16, 1972.
Section 4(5)
of -the said Act
gives an option to the workers to choose between the gratui-
ty scheme under the award and the one under the statute.
Had the workers been represented before this Court it might
have been possible for us finally to close this controversy
or even produce a reasonable solution by discussion and
negotiation and persuade them to opt for
one or the other scheme. Early finality, credible certainty
and mutually assented solutions, are the finer processes of
conflict-resolution-a pursuit which baffles us here because
of labour's absence. All that we can do, therefore, is to
adjudicate upon the correctness or otherwise of the princi-
ples which have gone into the gratuity scheme prepared by
the tribunal in the light of the rulings of this Court and
the canons of industrial law.

We now proceed to itemise the grounds of attack levelled
by Shri I.N. Shroff for the appellant .and assay their worth
in the light of the submissions in defence of the award made
by Shri P.H. Parekh appearing as amicus curiae. Even here
we may place on record our appreciation of Shri Parekh's
services to the Court and the fairness of Shri Shroff in
making his points on behalf of the appelant.
The only dispute, which has ramified into a few issues,
relates to the gratuity scheme the tribunal has framed.
Shri Parekh is right in drawing our attention in limine to
the financial. insignificance, for the appellant, of the
subject matter of this lis and the consequential disinclina-
tion we must display to disturb the award. He has urged
that the total annual impact on the industry by the imple-
mentation of the award is of ,the order of Rs. 3,000/- to a
substantial part of which the management has no objection.
What is more, the appellant is prosperous enough to distrib-
ute dividends around 20% over the years. Further, since
1972 an obligatory statutory gratuity scheme has come into
force with the result that the economic consequences of this
litigation, even if the appellant loses are marginal or
nil. This makes us ponder whether, in matters of less than
grave moment, this court should, as part of high judicial
policy to arrest the tidal flow of unsubstantial litigation,
turn away at the portals those who invoke our jurisdiction
to examine every case where some legal principle has been
wrongly decided, regardless of a sense of 'summit court'
perspective and the rare use of its reserve power so as
to preempt a docket explosion and the injustice of delayed
justice and invest the High Courts and high tribunals with
final legal wisdom. The amplitude of
Art. 136
is ,meant more
for exceptional situations than to serve as hospitable
basket to receive all challenges to seemingly erroneous
judgments in the country.

As stated earlier, we are confronted by an industrial
dispute and are called upon .to apply the principles of
industrial jurisprudence with its primary concern for peace
among the parties, contentment of the worker's, the end
product being increased production informed by distributive
justice. Law, especially Labour Law, is the art of economic
order sustained by social justice. It aims at pragmatic
success, but is guided by value-realities. It believes in
relativity and rejects absolutes. The recent constitutional
amendment (
Art. 43A
) which emphasizes the workers' role in
production as partners in the process, read in the light of
the earlier accent on workers' rights and social justice,
gives a new status and sensitivity to industrial jurispru-
dence in our 'socialist republic'. This social philosophy
must inform interpretation and adjudication, a caveat needed
because precedents become time-barred when societal ethos
progresses. We
are not called upon to interpret an Act since, in this area
of law, the
Payment of Gratuity Act
came in on a later date.
Judge-made law rules the roost. Even so, are we fattered by
inflexible norms halLowed by dated decisions ? Not in this
jurisdiction. 'The golden rule' in a rapidly changing
system, 'is that there are no golden rules'. We should be
guided by realistic judicial responses to societal problems,
against the back drop of the new, radical values implied in
'social justice' to labour, the production backbone of the
nation, adjusted to the environs of the particular industry
and its economics and kindered circumstances. The dynamics
of labour law, rather than the bonded of old-time case-law
answers questions of current justice. Cardozo had cautioned
in his 'The Nature of the Judicial Process':

"That court best serves the law which
recognizes that the rules of law which grew up
on a remote generation may, in the fullness of
experience, by found to serve another genera-
tion badly, and which discards the old rule
when it finds that another rule of law repre-
sents what should be according to the estab-
lished and settled judgment of society, and no
considerable property rights have become
vested in reliance upon the old rule. It is
thus great writers upon the common law have
discovered the source and method of its
growth, and in its growth found its health
and life. It is not and i, should not be
stationary. Change of this character should
not be left to the legislature. If judges
have woefully misinterpreted the mores of
their day, or if the mores of their day are no
longer those of ours, they ought not to tie,
in helpless submission, the hands of their
successors."

(Cardozo: The Nature of the Judicial Process: Yale
University Press pp. 151-152).

Indeed, we are stating no new proposition since the profu-
sion of decisions assiduously presented before us states,
in sum, that each case has to be decided; on the updated
justice of the fact-situations therein and the only law that
we can reasonably discern from the rUlings we have read is
that there is no law but only justice, dependent on a varie-
ty of socio-economic variables, that the tribunal's award,
if his performance is not perverse in the process or the end
product. must be left well alone by this Court even. if some
juristic failing or factual peccadillo can be discovered. A
quest for error and an inclination for correction, frequent-
ly exercised by higher Courts will do double injury. It
will take away the necessary initiative of the tribunal to
produce satisfactory results. It will delay the finality of
industrial adjudication and thereby defeat the paramount
purpose of early re-adjustment. Judicial decentralization
claims its price and it must be paid by ignoring errors less
than grave. Once this perspective is clear, our non-inter-
ference with this award is just. Moreover, an industrial
tribunal must act on a legal horse sense, rather than on
juristic abstractions, on rugged fairness rather than on
refined legalisms. It is shop-floor justice. not five-star
loveliness. The weaker qualify for protective order, in the
over-all view of the matter.
Gratuity for workers is no longer a gift but a right.
It is a vague, humanitarian expression of distributive
justice to partners in production for long, meritorious
service. We have, therefore, adopt a broad and generous
approach to the problems posed before us by Shri Shroff
without being mechanistically precedent-bound or finically
looked into evidence.

Speaking generally, Shri Shroff focussed his fire-power
firstly-on the qualifying period of five years for earning
gratuity as against ten years sanctified in some earlier
rulings and, secondly, on the basic wage, as contrasted with
the 'consolidated' wage being treated as the base for the
computation of gratuity. He did cite half-a-dozen of more
cases of this court in support which, on closer scrutiny
and studied in the light of other citations Shri Parekh
emphasized, stand neutralized.

The Tribunal has itself referred to many rulings of this
Court, noted the features of the industry in question, the
high dividends and 'the low wages and reached a via media
which we may regard as a prudent judicial resolution of the
simple conflict. The flavour of the social milleu, the raw
realities of industrial conditions and the locale and life-
style out there, are sensed by the tribunal better than a
distant court of last resort primarily specialising in
declaration of law. So we are loathe to upset the scheme
unless the tribunal is grievously or egregiously in error.
Shri Shroff staked his case on case-law alone and culled
passages which upheld basic wages as basic and ten-year
service for eligibility. Even here, we must mention that the
basic wage at the relevant time (revised subsequently) was
in the miserable range of Rs. 20/- per mensem and to calcu-
late gratuity on this pitiful rate, when after 'long. and
meritorious service' the worker bids farewell to his labour
life in the industry, is to be callous to basic justice.
The Human Today cannot be held captive by the
less-than-human yesterday in a crucial area of social jus-
tice. So viewed, we are constrained to negative the two
preliminary contentions urged by Shri Shroff while agreeing
with him on the smaller points of clarification sought.
We reproduce, at this stage, the decretal part of the award:

"The award, therefore, is that the
employers should be required to frame a scheme
of gratuity for their workmen. The details of
the gratuity scheme are as under:

(a)On death of a workman while 15 days wages for each
in continous service or on att- completed year of service
ainment of the age of superann- subject to a maximum of
uation or on retirement or 15 months.

resignation due to continued
ill health or on being incapi-

citated,
(b) On voluntary abandoment 15 days wages for each
os service by a workman completaed year of cont-
in case not falling under inious service subject

(a) or termination of to the condition that no
service by employers gratuity will be payable
on a total service of
less than 5 years ,but
this condition will not
apply in case of resign-

ation or discharge on the
grounds of physical disa-

blement or incapacity

(i) For the purposes of gratuity of a period
of six months or over shall be reckoned as
'one year' while a period less than 6 months
will be ignored.

(ii) Gratuity shall be payable to the nominee
of the workman in case of his death or to his
legal heirs, if no one has been nominated by
the workman in this behalf.

(iii) 'Wages' shall mean and include basic
wages and dear food allowance but shall not
include bonus.

(iv) Gratuity will not be. allowed to a work-
man in case of a serious misconduct committed
by him such as insubordination, acts involving
moral turpitude, etc. In case of damage to
the property of employers or financial loss,
the a,mount to the extent of loss shall be
liable to be deducted from the amount of the
gratuity.

(v) The basis of payment of gratuity shall be
average earnings of a workman during the last
three years."

One of the leading cases both sides referred to is the

Delhi Cloth & General Mills Co., v. Workmen & Ors.
(1) In
this decision the court did make the point:

"That gratuity is not in its present day
concept merely a gift made by the employer in
his own discretion. The workmen have in
course of time acquired a right to gratuity on
determination of employment provided the
employer can afford, having regard to his
financial conditions to pay it."

Shah, J. speaking for the Court, also empha-
sized what we have already adverted to:

"We consider it right to observe that in
adjudication of industrial disputes settled
legal principles have little play; the awards
made by industrial tribunals are often the
result of ad hoc determination of dispnted
questions, and each determination for.as a
precedent for determination of other dis-
pute. An attempt to search for principle from
the law built up on those precedents is a
futile exercise. To the
(1) [1969] 2 S.C.R. 307.
Courts accustomed to apply settled principles
to facts determined by the application of the
judicial process, an essay into the unsur-
veyed expenses of the law of industrial rela-
tions with neither a compass.nor a guide, but
only the pillars of precedents is a disheart-
ening experience. The Constitution has howev-
er invested this Court with the power to sit
in appeal over the awards of Industrial Tribu-
nals which are, it is said, rounded on the
somewhat hazy background of maintenance of
industrial peace, which secures the prosperity
of the industry and the improvement of the
conditions of workmen employed in the indus-
try, and in the absence of principles, prece-
dents may have to be adopted as guides--some-
what reluctantly to. secure some reasonable
degree of uniformity of harmony in the proc-
ess."

Several decisions which were referred to at the bar
have been touched upon
in
the above case
. At the end of the
consideration of these cases, the Court made two pregnant
observations which we extract:

"We may repeat that in .matters relat-
ing to the grant of gratuity and even general-
ly in the settlement of disputes arising out
of industrial relations, there are no fixed
principles, on the application of which the
problems arising before the Tribunal or the
Courts may be determined and often precedents
of cases determined ad hoc are utilised to
build up claims or to resist them. It would
in the circumstances be futile to attempt to
reduce the grounds of the decisions given by
the Industrial Tribunals, the Labour Appel-
late Tribunals and the High Courts to the
dimensions of any recognised principle."

x x x
x x
"It is not easy to extract any

principle from these cases; as precedents they
are conflicting."

These cautionary signals guide us too in the instant case.
It is true that on account of the peculiar circumstances
affecting the textile industry in the whole country the
Court felt that the Tribunal was in error in relating gratu-
ity to the consolidated wage in. stead of the basic wage.
The emphasis in the ruling is on the facts and circumstances
affecting the particular industry and the promotion of
industrial peace in that field. Rightly, if we may say so
with respect, did the Court high-light the view that deter-
mination of gratuity is hot based on any definite rules and
each case must depend upon the prosperity of the concern,
needs of the work, men and the prevailing economic condi-
tions, examined in the light of the auxiliary benefits
which the workmen may get on determination of employment.
In short, the core of the matter is the totally of the
circumstances and the stage of evolution of industrial
relations at a given time What held good a decade ago may
be given the go by years later.
Another leading case on the question of gratuity is the
British Paints(1) where, after referring to the special
features of the particular industry. and the other benefit
schemes enjoyed by the employees, the Court referred to May
& Baker where basic wages were treated as the basis and
British India Corporation where 'gross salary i.e., basic
wages plus dearness allowance' was held to be the basis. It
may be noted that in this case the minimum qualifying serv-
ice for gratuity was held to be 5 years except in cases
where termination resulted from resignation by the employee.
In Hydro-Engineers(2) this Court apparently upheld the
contentions now urged before us by Shri Shroff but stressed
that no hard and fast rule could be laid down and each case
must be decided on its own circumstances.

In Hindustan Antibiotics(3), again, this Court high-
lighted the relevant circumstances upon which the discre-
tion of the Tribunal could play, viz., the stability of the
concern, the profits made in the past, the future prospects
and capacity etc. This Court declined to disturb the gratu-
ity scheme
in that case
even though the wages which formed
the basis of the gratuity included dearness allowance.
In Bengal Chemical & Pharmaceutical Works Ltd., Calcut-
ta(4) a Bench of this Court entered the caveat which we have
underscored in the earlier part of this judgment that:

"a free and liberal exercise of the
power under
Art. 136
may materially affect the
fundamental basis of such decisions, namely,
quick solution to such disputes to achieve
industrial peace. Though
Art. 136
is couched
in widest terms, it is necessary for this
Court to exercise its discretionary jurisdic-
tion only in cases where awards are made in
violation of the principles of natural jus-
tice, causing substantial and grave injustice
to parties or raises an important principle of
industrial law requiring elucidation and final
decision by this Court and discloses such
other exceptional or special circumstances
which merit the consideration of this Court."

It was also mentioned, what is not oft remembered when
interfering with awards, that the
Industrial Disputes Act
is
"intended to be a self-contained one
and it seeks to achieve social justice on the
basis of collective bargaining, conciliation
and arbitration. Awards are given on circum-
stances peculiar to each dispute and the
tribunals are, to a large extent, free from
the restrictions of technical considerations
imposed on courts."

(1) [1969] 2 S.C.R. 523.

(2) [1969] 1 S.C.R. 156.

(3) [1967] 1 S.C.R. 672.

(4) [1959] Suppl. 2. S.C.R. 136.
This approach is what we earlier described as the Tribu-
nal's legal hunch or horse sense. Even Gqziabad Engineer-
ing Co.,(1) on which Shri Shroff heavily relied, accepts the
position that while gratuity is usually related to the
basic wage, a departure by relating it to the consolidated
wage may be made if there be some strong evidence or excep-
tional circumstance justifying that course.

Calcutta Insurance Co. Ltd. (2) also placed accent on
the practical approach in industrial adjudication and did
not interfere with the qualifying service of 5 years except
in the case of resignation by the employee where the quali-
fying period was raised to 10 years.

This survey of the cosmos of case-law can expand, but
no service will be rendered by that exercise. All that we
need say is that there is nothing fundamentally flawsome in
the 5-year period being fixed as qualifying service. The
real reason why some cases like British Paints required a
qualifying period of 10 years was that a longer minimum
period for earning gratuity in the case of voluntary retire-
ment or resignation would ensure that workmen do not leave
one concern for another after putting in the short minimum
service qualifying for gratuity.

We think that current conditions must control the tribu-
nal's conscience in finalizing the terms of the gratuity
scheme. Taking things as they are, in our country presently
there is unemployment at the level of workers--that being
the category we are concerned with. Colossal unemployment
means that the worker will not leave his employment merely
because he has qualified himself for gratuity. In an econo,
mic situation where there is a glut of labour in the market
and unemployment stares the working class in the face it is
theoretical to contend that employees will hop from industry
to industry unless the qualifying period for earning gratui-
ty is raised to 10 years. The tribunal was realistic in
fixing 5 years as the period of eligibility.
Our industrial realities do not provide for easy
mobility of labour. What is more, the sense of national
consciousness in this field is reflected in the
Payment of
Gratuity Act
which fixes a period of 5 years as the qualify-
ing period for earning gratuity.

Decisions have been brought to our notice some of which
refer to basic wages and others to consolidated wages as the
foundation for computation of gratuity. These are matters
of discretion and the "feel" of the circumstances prevalent
in the industry by the Tribunal and, unless it has gone
haywire in the exercise of its discretion the award should
stand. We see that in the
Payment of Gratuity Act
also,
not basic wages but 'gross wages inclusive of dearness
allowance, have been taken as the basis. This, incidental-
ly, reflects the industrial sense in the country which has
been crystallised into legislation.

(1) [1970] 1 S.C.R. 622.

(2)[1967] 2 S.C.R. 596.
All things considered, we are disinclined to alter the
award on the two critical issues on which it was challenged.
However, there are certain minor clarifications which will
eliminate ambiguity and, on that both sides are agreed.
We clarify that wages will mean and include basic wages
and dearness allowance and nothing else. This corresponds
to
Sec. 2(s)
of the Act. Likewise, we declare that qualify-
ing service is continuous service (counted with reference to
completed years) as defined in
Sec. 2(c)
. We hold that the
award will operate as directed therein i.e. from the date of
reference of the dispute. Both sides agree, in their state-
ment of the case, that in clause (a) of the award the ex-
pression due to continued ill-health or on being incapaci-
tated' governs only resignation although we feel on compas-
sionate grounds it should govern both situations. The ambi-
guity must be resolved in favour of the workers. In regard
to the other conflicts of construction possible, as set out
in grounds 7 and 8 of the appellant's statement of case, we
resolve them in favour Of the workmen, abandonment of serv-
ice being too recondite and the amount involved too trivial
for variation by this Court.

Shri I.N. Shroff fairly stated that the Court may make
an order regarding costs. We direct that the appellant do
pay the respondents costs which we quantify at Rs. 2000/-.
Out of this sum. Rs. 1000/will be paid direct to Shri Parekh
who has assisted the Court on behalf of the workers and the
balance of Rs. 1000/- shall be drawn by the present Presi-
dent of the Respondent Union. Our parting thought is that
negotiating settlements should be vigorously and systemati-
cally pursued even by tribunals since litigation, escalat-
ing. from deck to deck upto this Court, defeats both, whoev-
er wins or loses. This must be a sobering influence on
Labour and Management and agencies of conflictresolutions.
That is a legal beacon that can brighten the dark tunnel of
industrial conflict and promote national production cheered
by shared wealth.

P.B.R.