Gratuity schemes may coexist with other retiral benefits where employer finances and industry conditions support the obligation.

A gratuity scheme may coexist with provident fund and retrenchment compensation because each serves a distinct retiral purpose. In deciding whether such a scheme should be introduced, the controlling factors are the employer's financial position, profit-making capacity, existing retiral benefits, and surrounding industrial conditions. An industry-cum-region comparison was appropriate where similar textile mills in the region already provided gratuity. On the financial material, the company's profits, reserves, capacity to meet depreciation and machinery replacement, and the manageable annual burden showed sufficient ability to bear the obligation, so the Industrial Court was justified in directing the gratuity scheme.

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Issues: Whether the Industrial Court was justified in introducing a scheme of gratuity for the employees of the mill.

Analysis: A gratuity scheme can coexist with other retiral benefits such as provident fund and retrenchment compensation, because each serves a different purpose. In deciding whether such a scheme should be imposed, the controlling consideration is the employer's financial position and profit-making capacity, assessed in the light of the existing retiral benefits and the surrounding industrial conditions. The use of an industry-cum-region basis was appropriate where similar textile mills in the region already had gratuity schemes. On the financial material, the company's profits over the relevant years, its reserves, its ability to meet depreciation and machinery replacement, and the manageable annual burden of the scheme showed sufficient capacity to bear the obligation.

Conclusion: The Industrial Court was right in directing the introduction of the gratuity scheme, and the challenge to that award failed.

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