Full Judgment Text
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PETITIONER:
THE MANAGEMENT OF TOCKLAI EXPERIMENTAL STATIONREPRESENTED BY
Vs.
RESPONDENT:
THE WORKMEN AND ANOTHER(And connected appeal)
DATE OF JUDGMENT:
24/11/1961
BENCH:
HIDAYATULLAH, M.
BENCH:
HIDAYATULLAH, M.
KAPUR, J.L.
SHAH, J.C.
CITATION:
1962 AIR 759 1962 SCR Supl. (1) 545
CITATOR INFO :
D 1965 SC 1 (11,12,19)
ACT:
Industrial Dispute-Bonus-Puja bonus-Basis of
the claim-Profit bonue-Housing accommodation-House
allowance.
HEADNOTE:
The appellant, a research institution
established for the purpose of improving the
quality of tea, was managed by the India Tea
Assciation. The employees made claims, inter
558
alia, for (1) free housing accommodation or
adequate allowance in lieu thereof, and (2) grant
of bonus. The tribunal, to which the matter was
referred by the Government considered the
financial position of the appellant and came to
the conclusion that the demand for housing
accommodation was not justified and that the ends
of justice would be met if a flat rate of
enhancement of Rs. 20/- was awarded. As regards
the demand for bonus the tribunal felt that it
would be inexpedient to apply the formula which
governed the decision of industrial claims for the
payment of bonus, but made an award directing the
appellant to pay puja bonus to its employees on
the ground that what was described as puja bonus
was being given to workmen who were similarly
situated as also to the clarical staff working at
the Indian Tea Association at Calcutta and that
refusing the workmen’s claim for bonus against the
appellant would amount to discrimination.
^
Held, that a demand for the provision of
housing accommodation can be reasonably
entertained where it appeared that the financial
position of the employer can bear the burden
involved, that under the present economic
conditions prevailing in the industry the
responsibility for providing housing accommodation
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cannot be placed solely on the shoulders of the
employer, and that in due course the problem would
have to be tackled by the industry in cooperation
with the State, which would have to bear a part of
that responsibility.
The Patna Electric Supply Co., Ltd. Patna v.
The Patna Electric Supply Workers’ Union, [1959]
Supp. 2. S.C. R. 761, relied on.
Held, further, that before a claim for the
grant of puja bonus could be sustained it must be
shown (1) that it was consistently paid by the
employer to his employees from year to year at the
same rate, and (2) that it had been paid even in
years of loss and that it had no relation to the
profit made by the employer during the relevant
year.
A claim for puja bonus could also be made on
the ground that the payment of such bonus was an
implied term in the contract of employment.
The Graham Trading Co. (Indian) Ltd. v. Its
Workmen, [1960] 1 S.C.R. 107 and M/s. Ispahani
Ltd., Calcatta v. Ispahani Employees’ Union,
[1960] 1 S.C.R. 24, followed.
Industrial profit bonus which is governed by
the application of the well known formula, cannot
be awarded unless a specific year for which the
claim is made is indicated and it is alleged that
there is available surplus in the hands of the
employer for that year.
559
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 459 and 460 of 1960
Appeals by special leave from the award dated
March 10, 1959, of the Industrial Tribunal, Assam,
in Reference No. 16 of 1958.
M. C. Setalvad, Attorney General for India,
B. Sen, S. N. Mukherji and B. N. Ghosh, for the
management appellant (in C. A. No. 459 of 60) and
the respondent (in C. A. No. 460 of 1960).
S. T. Desai, A. K. Dutt and Janardan Sharma,
for the workmen respondents (in C. A. No. 459 of
60) and the appellants (in C. A. No. 460 of 1960).
1961. November 24. The Judgment of the Court
was delivered by
GAJENDRAGADKAR, J.-Civil Appeals Nos. 459 and
460 of 1960 are cross appeals and they arise out
of an award pronounced by the Industrial Tribunal,
Assam, in an industrial dispute referred by the
Assam Government for its adjudication. This
industrial dispute was raised against the
management of the Tocklai Experimental Station
(hereafter called the Station) by its workmen. Six
out of the demands made by the workmen formed the
subject matter of reference. In the present
appeals we are concerned with three of them.
Demand No. 1 (a) was that the employees’ junior
staff of the Station should be given pension in
lieu of the existing practice of paying gratuity.
This demand has been rejected be the tribunal. The
other demand made by the employees was No. 3(b)
and it had reference to the claim for free housing
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accommodation or adequate allowance in lieu
thereof. This demand has been partially allowed by
the tribunal and it has directed that house
allowance in each case shall be raised at the flat
rate of Rs. 20/- instead of Rs. 101/-. The
decision of the tribunal in respect of these two
demands did not satisfy the workmen and so by
special leave of this Court they have filed Civil
Appeal No. 460 of 1960. The demand of the
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junior staff for bonus which was resisted by the
Station has been partially allowed by the
tribunal. It has ordered that the Station shall
give punja bonus at the same rate as the employees
working for the Indian Tea Association at Calcutta
are getting. This part of the award is challenged
by the Station in its appeal by special leave by
Civil Appeal No. 459 of 1960. That is how the two
cross-appeals arise.
We will deal first with the Station’s Appeal
in respect of bonus. The learned Attorney-General
contends that in making the demand for bonus the
workmen have entirely misconceived the true
position of the industrial law on the point, and
he argues that the Assam Government was not
justified in making the reference in the form it
has been made and the tribunal was not justified
in making the award in the manner it has done. The
workmen made their demand for bonus in these
words: "The Union requests the introduction of
bonus for the Tocklai Staff on the following
grounds". Then follow six grounds. It was urged
that the Station is an arm of the tea industry and
is maintained by the members of the I.T.A. who
give bonus to their employees, that the Station
exists and works for the advancement of the tea
industry and increasing its profits and thus is an
industry, that the I.T.A. employees at Calcutta
office are given bonus, that the employees of the
Bengal Chamber of Commerce receive bonus, that the
employees of Shamshernagar and Tulsipara branches
of this very Station used to be given bonus so
long as these branches were functioning and that
the personnel of the scientific research
laboratories attached to many industrial concerns
receive bonus, and so the workmen in the present
case were entitled to make a claim in that behalf.
In appreciating this claim it is necessary to
state that the Station is a research institution
established by the Indian Tea Association to make
research for the purpose of improving the quality
of
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tea and its production and the said Station is
managed by the parent Association and is
maintained by means of voluntary subscriptions
from members of the said Association. Broadly
stated the ground on which the workmen claimed
bonus was that the employees of the Association
were receiving bonus and that the personnel of
scientific research laboratories similarly
situated in other industrial concerns were also
given bonus.
When the Assam Government made the present
reference it included within the scope of the
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reference this claim of bonus along with the other
claims made by the workmen. The issue referred for
adjudication on this point was thus framed:
"2(a). Whether the demand of the
employees (Junior Staff) for bonus is
justified ? If so, at what rate should the
same be paid ?"
The tribunal considered this demand and
partially allowed it by directing that the workmen
should be paid puja bonus at the same rate as the
employees working in the I.T.A. at Calcutta are
getting. In dealing with this question the
tribunal has held that the Station is an industry
within the meaning of the Industrial Disputes Act
and so it could not resist the demand made by its
workmen on the ground that it is an academic body
devoted to research and as such outside the
purview of the Act. This position is not disputed
before us by the Station because it is concluded
by a decision of this Court in The Ahmedabad
Textile Industry’s Research Association v. The
State of Bombay (1). The tribunal has, however,
found in favour of the Station that it would be
inexpedient, if not impossible, to apply the
formula which governs the decision of industrial
claims for the payment of bonus. "There are
obvious difficulties", says the tribunal, "in
applying the formula laid down by their Lordships
of the Supreme Court to an experimental station
run
562
by the Association"; but it added that "it could
not be overlooked that payment of bonus to members
of the experimental staff is being made by some
companies". Then the tribunal referred to some
instances where bonus is paid to workmen who, in
the opinion of the tribunal, were similarly
situated, and it came to the conclusion that
refusing the workmen’s claim for bonus against the
Station would amount to discrimination. The
tribunal then took into account the fact that what
is described as puja bonus is paid to members of
the staff of the Bengal Chamber of Commerce
because it was admitted before it that the junior
staff of the Bengal Chamber of Commerce which
presumably was also serving the I.T.A. at Calcutta
was receiving a fixed annual gratuity
characterised as puja bonus. The tribunal conceded
that the claim for this kind of bonus "may not
directly satisfy the requirements of law", but it
added that "the fact that what was described as
puja bonus was given at the sub-stations and is
also given to the clerical staff working at the
I.T.A. at Calcutta, supports the demand to this
extent at least that the same treatment may be
meted out to them." It is on this reasoning that
the tribunal ultimately made the award in favour
of the workmen directing the Station to pay puja
bonus to its employees.
It would be noticed that the demand
originally made by the workmen appears to be in
the nature of a demand for bonus which is usually
described as industrial profit bonus the payment
of which is governed by the application of the
well known formula. Such a demand is invariably
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made, and has to be made, by reference to a
particular year because the formula which
determines claims for profit bonus postulates the
examination of the available surplus in the hands
of the employer from which bonus may be directed
to be paid to the employees. A claim for profit
bonus cannot
563
be validly made unless a specific year for which
the claim is made is indicated and it is alleged
that there is available surplus in the hands of
the employer during that year. It is unfortunate
that this elementary aspect was overlooked by the
workmen when they made the claim and has not been
noticed even by the Assam Government when it made
the reference in respect of this claim. This
serious infirmity in the claim is present even in
the award made by the tribunal because the award
does not say for what year the bonus should be
paid, and like the claim made by the workmen in
very general terms for the introduction of bonus
the award also seems to make a direction in
similar terms for the payment of bonus. In our
opinion, this is a patent infirmity in the award.
Profit bonus, it is hardly necessary to emphasise,
can be awarded only by reference to a relevant
year and a claim for such bonus has, therefore, to
be made from year to year and has to be settled
either amicably between the parties or, if a
reference is made, it has to be determined by
industrial adjudication. A general claim for the
introduction of profit bonus cannot be made or
entertained in the form in which it has been done
in the present proceedings.
Besides, the other serious infirmity in the
award is that when a claim for profit bonus was
made the tribunal has proceeded to grant puja
bonus and that too solely on the ground that the
refusal to grant the said claim would amount to
discrimination. In our opinion, the approach
adopted by the tribunal in dealing with this
alternative claim for puja bonus which was not
made in the demand and which had not been
expressly referred to the tribunal is entirely
erroneous. The claim for puja bonus proceeds on
entirely different considerations. Customary puja
bonus undoubtedly prevails in many industries in
Bengal but there are certain tests which have to
be applied in
564
determining the validity of the claim. The amount
by of way of puja bonus, it must be shown, has
been consistently paid by the employer to his
employees from year to year at the same rate, that
it has been paid even in years of loss and that it
has no relation to the profit made by the employer
during the relevant year. The course of conduct
spreading over a reasonably long period between
the employer and the employees in the matter of
payment of puja bonus is of considerable
importance in dealing with the claim of customary
puja bonus [Vide: The Graham Trading Co. (India)
Ltd. v. Its Workmen (1)]. A claim for puja bonus
can also be made in a proper case of the ground
that the payment of such bonus is an implied term
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in the contract of employment [Vide: Messrs.
Ispahani Ltd., Calcutta v. Ispahani Employees’
Union(2). Such a claim again would necessarily
involve the consideration of several relevant
facts none of which has been alleged or proved in
the present proceedings. Therefore, the decision
of the tribunal awarding puja bonus to the workmen
cannot be sustained. Indeed, in awarding puja
bonus to the workmen the tribunal has failed to
consider that it was making out an entirely new
and inconsistent case for the workmen and granting
the said claim without any proof of the relevant
facts which would support such a claim. It is
rather surprising that even when the tribunal by
its award wanted to grant the demand for puja
bonus it did not think it necessary to clarify at
what rate the said bonus was to be paid. The award
is absolutely vague in that behalf and that is
another infirmity in the award. Since that is the
only point in Civil Appeal No. 459 of 1960
preferred by the Station we must hold that the
appeal succeeds and must set aside the award made
by the tribunal under issue No. 1 (a).
Before we part with this appeal, however, we
ought to add that after special leave was granted
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to the Station to prefer its appeal it applied for
stay of the award directing the payment of puja
bonus and stay was granted by this Court on
condition that the amount of puja bonus should be
paid by the Station to its employees on their
furnishing security to the satisfaction of the
management. Accordingly the Station has paid to
its workmen puja bonus for three years. We
suggested to the learned Attorney General that in
case his appeal were to succeed the Station may
consider whether it would partially forego its
claim to recover the amount already paid by it to
its workmen, and the learned Attorney-General,
after consulting his client, has stated before us
that the Station would forego one-third of the
total amount paid by it to its employees under the
orders of this Court. This one-third amount, we
were told, is in the neighborhood of Rs. 65,000/-
The learned Attorney-General also stated that the
balance of two-third amount which it would recover
from its employees can be paid by each one of them
either by easy instalments or at the time when he
would receive his gratuity or provident fund; the
employee may exercise his option in that behalf.
It appears that some of the employees who received
the said amount have left the service of the
Station and at that time have refunded the amount
received by them. The Station would be prepared to
give back to such employees one-third of the said
amount. In our opinion, the attitude adopted by
the Station in this matter is very fair and it
would relieve the workmen from their liability to
return one-third of the total amount received by
them in pursuance of the orders of this Court.
That takes us to Civil Appeal No. 460 of 1960
preferred by the workmen. Mr. S. T. Desai, who
argued this appeal, could not seriously press the
workmen’s case against the refusal of the tribunal
to allow their demand for pension in lieu of the
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existing practice of paying gratuity. On a
consideration
566
of the relevant facts the tribunal came to the
conclusion that this demand was not justified,
and, in our opinion the conclusion of the tribunal
is well founded. Then, as regards the other demand
which is the subject-matter of the appeal the
tribunal has increased the house allowance at a
flat rate of Rs. 20/- instead of Rs. 10/- and this
increased rate has been paid by the Station as
from the date when the award became enforceable.
Mr. Desai contends that the tribunal should have
made an award granting the demand for
accommodation or in the alternative should have
awarded larger amount by way of house allowance.
We are not impressed by this argument. A demand
for the provision of housing accommodation can be
reasonably entertained where it appears that the
financial position of the employer can bear the
burden involved in the said demand. Under the
present economic conditions prevailing in the
industry the responsibility for providing housing
accommodation cannot reasonably be placed solely
on the shoulders of the employer. In due course
the problem may have to be tackled by the industry
in co-operation with the State. The State will
have to bear a part of that responsibility [Vide:
The Patna Electric Supply Co. Ltd., Patna v. The
Patna Electric Supply Workers’ Union (1))]. The
tribunal has considered the financial position of
the Station, the urgency of the damned made by the
workmen, and has come to the conclusion that the
demand for housing accommodation was not justified
and that the ends of social justices would be met
in the present case if a flat rate of enhancement
of Rs. 20/- is awarded. It is true that the
Station gives housing accommodation for members of
the senior staff but as the tribunal has pointed
out there are special reasons how more favourable
terms have to be offered to senior research staff
in order to get the services of properly trained
and properly equipped personnel. In our opinion,
the tribunal was right in refusing
567
to draw an analogy between the requirements of the
senior research staff and the junior staff with
whose claims the tribunal was dealing. Therefore,
we are not satisfied that there is any substance
in the grievance made by the workmen against the
award passed by the tribunal in respect of house
allowance. The result is Civil Appeal No. 460 of
1960 fails and is dismissed.
There would be no order as to costs in both
the appeals.
Appeal No. 459 allowed.
Appeal No. 460 dismissed.