Straw Board Mfg. Co Ltd. v. The Workmen

_;,.--. 91 STRAW BOARD MFG. CO LTD. v. THE WORKMEN _March_ 1, 1977 [V. R. KRISHNA IYER AND JASWANT SINGH, JJ.] _GratHity-Qualifying period_ _of service and calculation_ _of_ _amounts-Tests_ _for_ _determination._ Jn an industrial dispute between the appellant mill and its workmen relating 1o the payment of gratuity, the Industrial Tribunal framed a gratuity scheme and gave th~ necessary guidelines for its implementation. Special leave \Vas granted to the appellant by this Court on the limited question whether the correct principles on which gratuity should be payable had been followed in this case .or not. Since the making of th:! award, the Payment of Gratuity Act, 1972 \vas passed, which, by s. 4(5) gave an option to the workers to choose behveen the gratnity scheme under the award and the one under the statute. The \\'Ork.::1 s, however, did not put in their appearance in this Court. A B ###### c It was contended on behalf of the appellant that the qualifying period of 'Service for earning gratuity was ten years and for calculadng the amount of gratuity basic wages witho~t adding dearness allowance should be the basis as laid down by some decisions of this Court and the tribunal was wrOng in hold- D ing _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 reference to the completed years as defined in s. 2(c) of the Act. [100 C&F] ( 1) Jn some cases, this Court higlilighted the view that the determination of gratuity is not based on any definite' rules and each case must depend upon the prosperity l1f the concern, the needs of the workmen and the prevailing economic conditions examined in the light of the auxiliary benefits which the workn1en may get on determination of employment. 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 'T'ribunals are, to a large extent, free from the restrictions of 1echnica1 considerations imposed on courts. In short, the approach of the Tribunal should be what may be described 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 Jike _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 Tribunal's conscience in finalizing the terms of the gratuity schen1e. Colossal unemployment at all levels of workers in the country today means that a \Vorker \Vilt not Te2ve his employment merely because he has qualified himself for gratuity Jn an economic situation where there is a glut of labour in the market and un~ employment stares the working class in the face it is theoretical to centend that employees will hop from industry to industry unless the qualifying period for earning gratuity is raised to 10 years. [98 H; 99 D; 100 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 E F G H 92 SUPREME COURT REPORTS [1977] 3 S.C.R. **A** **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** **wrong** **in** **the exercise** **of** **its** **discretion** **the** **award** **should** s~and. **In** **the** **Payment** **of** **Gratuity Act also** **it** **is** **not basic** **wages** **but** **'gross** **wages inclusive** **of** **dearness** _**1----...**_ **allowance which** **had** **been taken** **as** **the basis.** **[101** **B;** **100 G-Hl** **B** _**Delhi Cloth**_ **&** _**General Mills Co.**_ **v.** _**Workmen**_ _**&**_ _**Ors.**_ **[1969] 2 SCR** **307,** _**British Paints**_ **[19691 2 SCR 523,** _**Hydro-Engineers**_ **[1969] 1 SCR 156,** _**Hindustan**_ _**Antibiotics,**_ **[1967] 1 SCR** **672,** _**Bengal Chemical**_ _**&**_ _**Pharlln1aceutical Works**_ _**Ltd ..**_ [1959] Suppl. 2 SCR 136, _Gaziabad Engineering Co.,_ [1970] 2 SCR 622 ancl _**l'alcutta fnsurance**_ _**Co.**_ _**Ltd.**_ **[1967] 2 SCR 596 referred to.** CIVIL APPELLATE JURISO!CTION : Civil Appeal No. 1539 of 1970. (Appeal by Special Leave from the Award dated 1/31-10-69 of **C** the Industrial Tribunal Allahabad in Ref. No. 20/58 'published in the U.P. Gazette dated the 10th Jan. 1970). **D** **E** **F** **G** **H** point of view something much more important than a mere - ' tautological proposition. 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 Constitution, fixed their minds far more intently on providing remedies for the enforcement of particular rights or for averting definite wrong·s, than upon any declarations of the Rights of Man or Englishmen." (Jurisprudence of Remedies: University of Pennsylvania Law Review, Vol. 117, Nov. 1968. p. 1, 16). It is more than rhetoric to say that courts belong to the people. _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) a1id its workmen, regarding a scheme of gratuity, was referred to the Industrial 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 traum~fic tantalization, have not turned i.p to argue their cause, although SIIri Parekh, as _amicus curiae,_ has filled the gap. Such an unhaP.PY and not infrequent phenomenon as considerable delay in adjudication and implementation is destructive of industrial peace and productive of disenchantment with labour jurisprudence. Naturally, even constitutional provisions and governmental decisions about labour and concern for its welfare cease to achieve the desired goals when the- iegal process limps and lingers and rights turn illusory when remedies prove elusive. The life of rights is remedie·s and a jurisprudence of ready reliefs alone can inhibit the weaker numbers of our l~nd asking the disturbing que5tion : 'Is Law Dead ?'. Dicey wrote long air2 : _i_ "The saw _ubi jus ibi remedium,_ becomes from this .' ~ I STRAW BOARD _v._ WORKMEN _(Krishna Iyer,_ _!.)_ 93 '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 attention 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 of litigation 'from the cradle to the grave'. We are reluctant 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 absent, 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 legislative 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 tliis _lis_ and its zigzag climb up the precipice of justice contextually deserves brief narration. 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 November 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 guidelines 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 t)le question 'whether the correct principles on which gratuity should be payable have been followed in this case or not'. It is a fact, though unfortunate, lhf!t 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 tht award as>ailed by the appellant. We may mention. at this stage, that •he Parliament has enacted the Payment of Gtdtuity 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 gratuity 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 A B c D E F G H A B c D ·1: F G H 94 SUPREME COURT REPORTS [1977] 3 S.C.R. one or the other scheme. Early finality, credible certainty and mutually assented solutions, are the fiuer processes of conflict-resolutioua pur·suit 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 principles 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 ihe 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 _/is_ and the consequential disinclination we must display to disturb the award. He has urged that the total annual impact on the industry by the implementation of the award is of _the order of Rs. 3,000 /- to a substan.tial part of which the management has no objection. What is more, the appell" ant is prosperous enough to distribute dividends aroun<l ?0% over the years. Further, since 1972 an obligatory statutory gratuity scheme has come into force with the result that the economic C<'nsequences 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 conrt should, as .Part of high judicial policy to arrest the tidal flow of unsubstan.tial 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 le~al 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 jurisorudence with its primary concern for peace among the parties. contentment of the workers, the end product being increased production informed by distributive jus.tice. Law, especially Labour Law, is the art of economic order sustained by social justice. It aims at pra)\Jllatic success, but is guided by value-realities. It believes in relativity and rejects absolutes. The recent constitutional amendment (Art. 43A) which empha"sizes the workers' role in production as oartners in the process, read in the light of the earlier accent on workers' riohts and social justice, gives a new status and sensitivity to inrlustrial jurisprudence in our 'socialist republic'. This social ph;Josoohv must inform interpretation and adjudication, a caveat needed because precedents become time-barred when societal ethos progresses. We _.!_ STRAW BOARD _v._ WORKMEN _(Krishna Iyer,_ J.) 95 arc 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 l;>w rules the roost. Even so, are we fattered by inflexible norms hallowed by dated decisions ? Not in this jurisdiction. 'The golden rule' 1n a rapidly changing system, 'is that there are no golden rules'. We should \le 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 circum·stances. 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 generation badly, and which discards the old rule when it finds that another rule of law represents what should be according to the established and settled judgment of society, and no considerable property rights have become .\ested >n 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 charac. ter should not be left to the legislature. If judges have woefullv 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). A B ##### c D E ### • Indeed, we are stating no new proposition since the. profusion of decisions assiduously presented before us states, in 'sum, that each case has to be decided on the updated justice of the fact-situations F therein and the only law that we can reasonably discern from the ruling's we have read is that there is no law but only iustice, dependent on a variety 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, frequently exercised by higher Courts will G do donble injury. It will take aw~y the necessary initiative oE the tribunal to nrnrlnce sati'sfactory results. It will delay the finalitv of industrial adiudicafon and thereby defeat the paramount 'jluroose of early re-adiustment. Judicial decentralizati<m claims its price and it mnst be naid by ignoring errors less than orave. Once this pers-· pective is clear, our non-interference with this award is just. Moreover, an inr111strial tribunal must act on a legal horse 'sense; rather H than on inr;suc abstractions, on rugged fairness rather than on refined Jega1; [0] ms. It is shop-floor ius•ice. not five-star lovel;ness. The weaker qualify for protective order, in the over-al! view of the matter. **A** **B** ##### **c** **D** E **F** **G** **H** **SUPREME COURT REPORTS** U 977] 3 S·C.R. Gratuity for workers is no longer a gift but a right. It is a vague, humanitarian exprcssiqp of distributive justice to partners in production for long, meritorious service. We have, therefore, to adopt a broad and generou~ approach to the problems posed before us by Shri Shroff without being mechanistically precedent-bound or finically looked into evidence. Speaking_ geaerally, 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 'consolid~ted' 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 ha·s itself referred to many rulings of this Court, noted the features of the industry in question, the hillh 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 tribun!ll is grievously or egregiously in error. Shri Shroff staked his case on case-law alone and culled passa~es which upheld basic wages as basi~ 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 mcnsem and to calculate jlrafuity 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 justice. So viewed, we are constrained to negative the two preliminary contentions urned bv Shri Sl1roff while agreeing with him on the smaller points of clarification sought. We reproduce, at this stage, the decrcta! part of the award : "The award, therefore, is that the employers should be required to frame a scheme of gratuity for t]Jeir workmen. The details of the gratuity 'scheme are as under : **(a)** **On** **death** **of** **a work1nan while in** **contini.:ous service or on attainment** **of the age of superannuation or on** **retiren1ent or resignation** **dve** **to** **continued ill health or** **on** **being** **incapicitated,** **15** **days wages for each con1pleted** **year** **of service subject io a maxi-** **mu111of15 n1onths.** STRAW BOARD _v._ WORKMEN _(Krishna Iyer,_ J.) 97 **(b)** **On voluntary abandoment** **of** **ser:** **J** **5 days wages for each completed** **vice** **by** **a workn1an** **in** **case not fall:** **year** **of continous service** **subject** **ing under (a) or termination of** **ser-** **to the condition that no gratuity** **vice by** **e1nployers.** **will be** **payable on a total** **service** **of less than** **5 years,** **But** **this** **con-** **Cition will** **not** **apply** **in** **case** **of** **resignation** **or** **discharge on the** **g1ounds** **of** **physical** **disablement** **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 ba'sic wages and dear food allowance but shall not include bonus. (iv) Gratuity will not be allowed to a workman 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 amount to the extent of loss shall be liable to be deducted from the amount of the gratuity. (v) The ba·sis 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.(')_ Jn this de_cision the court did make the point : ##### c I> **F** **(b)** **On voluntary abandoment** **of** **ser:** **vice** **by** **a workn1an** **in** **case not fall:** **ing under (a) or termination of** **ser-** **vice by** **e1nployers.** ##, "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 emphasized what we have already adverted to : **G** "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 di~puted questions, and each determination for.ms a precedent for determination of other dispute. An attempt to search for principle from the **H** law built up on those precedents is a futile exercise. To the (I) fl 969\ _2_ S.C.R. 307. A 8 D E 98 SUPREME COURT REPORTS U 9771 3 s.c.R. Courts accustomed to apply settled principles to facts determined by the application of the judicial process, an essay into the unsurveyed expenses of the law of industrial relations with neither a compass nor a guide, but only the pillars of precedents is a disheartening experience. The Constitution has however invested this Court with the power to sit in aP.peal over the awards of Industrial Tribunals which are, it is said, founded on the somewhat hazy background of maintenance of industrial peace, which ·secures the pros·perity of the industry and the improvement of the crnditions of workmen employed in the industry, "nd in the absence of principles, precedents mav have to be adopted as guides-somewhat reluctantly to secure some reasonable degree of uniformity of harmony in the process." 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 relating to the grant of gratuity and even generally in the settlement of disputes arising out of indu~trial 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 Appellate 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 _!hey are conflicting." 111 These cautionary signals guide us too in the instant case. H 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 gratuity to the consolidated wage instead 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-li~ht the view that determination of gra •tuity is bot based 011 any definite rules and each case must depend upon the prosperity of the concern, needs of the ·.vork.men and the prevailing economic conditions, 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 hefd good a decade ago may be given the go by years later. ' STRAW BOARD _v._ WORKMEN _(Krishna Iyer,_ J.) 99 Another leading case on the question of gratuity is the _British_ _Paints(')_ where, after referring to the special features of the parti cular industry and the other benefit schemes enjoyed by the employees, the Court referred to _May_ & _Baker_ whei;e 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 !ht> basis. It ~ay be noted that in this case the minimum qualifying service for gratuity was held to be S years except in cases where termination resulted from resignation by the employee. B '· #### r ' _I_ I _,r_ I ~· # In _Hydro-Engineers(')_ this Court apparen!ly upheld the contentions now urged before us by Shri Shroff but stressed that no bard and fast rule could be laid down and each case must be decided on its own C **circumstances.** In _Hindustan Antibiotics('),_ again, this Court highlighted the relevant circumstances upon which the discretion of the Tribunal could play, _viz.,_ the stability of the concern, the profits made in the past, the futur~ prospects and capadty etc. This Court declined to disturb the gratuity scheme in that case even though the wages which **D** formed the basis of the gratuity included dearness allowance. In _Bengal Chemical_ & _Pharmaceutical Works Ltd., Calcutta('}_ 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 ifs discretionary jurisdiction only in cases where awards are made in violation. of the principles of natural justice, 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.n** 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 ba1gaining, conciliation and arbitration. 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." (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. **G** **H** 100 SUPREME COURT REPORTS [l 977J 3 S-C.R. _.A_ This approach is what we earlier de"scribed as the Iribunal"s legal hunch or horse sense. Even _Gqziabad Engineering Co.,(')_ 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 exceptional circumstance justifying that course. _Calcutta lllsurance_ _Co._ _Ltd._ (') 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 qualifying period was raised to I 0 years. This survey of the cosmos of case-Jaw can expand, but no service will be rendered by that exercise. All that we need say is that there is nothing fundamentally fiawsome in the 5-year period being fix·~d as qualifying service. The real reason why some case:s like _British_ P~ints 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 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 tribunal's conscience in finalizing the terms of the gratuity scheme. Taking things as - they are, in our country pre·sently there is unemployment at the level of workers-that being the category we are conoernecl with. Colossal unemployment means that the worker will not leave his employment merely because he has qualified himself for 1,Cratuity. 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 employees will hop from industry to industry unless the qualifying period for earning gratuity 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 consciousne·ss in this field is reflected in the Payment of Gratuity Act which fixes a period of 5 years as the qualifying period for earning gratuity. ' ' I \ ... H 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 hut 'gross wages inclusive of dearness allowance' have been taken as the basis. This, incidentally, reflects the industrial sense in the country which has been crystallised into legislation. (1) 11970] I S.C.R. 622. (2) I 1967] 2 S.C.R. 596. STRAW BOARD _v._ WORKMEN _(Krishna Iyer,_ _!.)_ I 0 I All things considered, we are disinclineJ to alter tb" award on the two critical is~sues on which it was challenged. However, there arc certain minor clarifications which will eliminate ambiguity and, on that, both sides are agreed. **A** We clarify that wages will mean and include basic wages and dearness allowance and nothing else. This corresponds to Sec. 2 ( s) of the **B** Act. Likewise, we declare that qualifying service is continuous service (counted with reference to completed years) as defined in Sec. 2 _(_ c). We hold that the award will operate as d'rected therein _i.e._ from the date of reference of the dispute. Both sides agree, in their statement of the case, that in clause (a) of the award the expression 'due to continued ill-health or on being incapacitated' governs only resignation although we feel on compassionate grounds it shou.Jd govern both situations. The C ambiguity 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 service 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 President of the Respondent Union. Our parting thought is that negotiating settlements should be vigorously and systematically pursued even by tribunals since litigation, escalating from deck to deck upto this Court, defeats both, whoever wins or loses. This must be a sobering influence on Labour and Management and agencies of confiictresolutions. 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.** **D** **E**