Full Judgment Text
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PETITIONER:
POLYCHEM LIMITED
Vs.
RESPONDENT:
R.D. TULPULE, INDUSTRIAL TRIBUNAL, BOMBAY &ANR.
DATE OF JUDGMENT15/03/1971
BENCH:
DUA, I.D.
BENCH:
DUA, I.D.
VAIDYIALINGAM, C.A.
MITTER, G.K.
CITATION:
1972 AIR 1967 1972 SCR (3) 855
1972 SCC (1) 885
ACT:
Labour- Law-Wage policy-Fixation of allowance-Principles to
be considered.
HEADNOTE:
The demand for vacation allowance of the workmen of the
appellants, at the same rate as was granted to the higher
staff, was granted by the Industrial Tribunal. The Tribunal
decided the question on the basis that the appellant-
employer had the financial capacity to stand the burden of
such allowance being granted to the workmen at the rate
claimed.
Allowing the appeal and remanding the matter to be
considered afresh by the Tribunal,
HELD : (1) The ultimate object of industrial adjudication in
this country is to help the growth and progress of national
economy; and for realising that object, industrial disputes
are settled on principles of fair play and justice
harmonising the conflicting claims of capital and labour
with full awareness of socioeconomic trends of thought.
industrial law in this country, is therefore, expected to
effectively secure, to the workers, conditions of service
reasonably conducive to the improvement of their social and
economic standard of living and their moral and material
development. The industrial labour problems in this coun-
try, having their roots in the historical background of
social, economic and political conditions have, little in
common with such problems in the United States or other
developed countries. Therefore, the American lines of
thought should not be too readily and indiscriminately
followed, [861 D-G]
(2) Wage policy relating to workmen is a complex and
sensitive of public policy, because, the relative status of
workmen in the society, their commitment to industry, their
attitude towards the management, their motivation towards
productivity, and their standard and way of life are all
conditioned by wages. It is not a purely economic policy in
which an employer and an employee alone are interested, but
the consumer and the society at large and a fortiori the
State, are also vitally interested. No wage policy can ever
be applied in vacuum in disregard of the realities of the
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social and economic conditions in our country Considering
the question of wages ’in the background of the Directive
Principles in the Constitution, a wage structure should
serve to promote a fair remuneration to labour ensuring due
social dignity, personality and security, a fair return to
capital, and strengthen incentives to efficiency,without
being unmindful of the legitimate interests and expectations
of the consumer in the matter of prices. Guided by this
principle, if the financial capacity of an industry permits
the workers should be allowed a due share in the prosperity
of the industry to which they have contributed by their
labour, so as to enable them, within reasonable limits to
improve their standard of living. [863 D-H]
(3) But in the present case, the Tribunal had committed a
serious error in not considering the other allowances and
amenities allowed to,
856
respondents-workmen, and comparing their total wage packet with
the total wage packet of those employees to whom the allowancer
had been allowed when determining the question. The difference
between the amenities allowed to the workmen and to the staff to
whom vacation allowance has been granted must in law and justice
be looked into and the question then decided whether or nor the
present workmen’s demand is justified. [863 H-864 A, B-C]
The principle of region-cum-industry has no doubt to kept ill
view but then the comparable industries in the region have to co
nsidered
from all the relevant aspects which have been laid down by this
Court in various decisions. The fact that in the refineries in
the region similar allowance is granted as a result of settlement
cannot, on that account alone be considered to be irrelevant,
because, that may appropriately indicate that the demand of the
workmen in those industries not considered, unjust. [864 B-D]
The total Wage packet of the various categories of employees in
the appellant’s industry itself, including the question of the
nature of their duties and functions. however, deserves to be
given primary importance. so that. there is no reasonable chance
of heart burning and discontentment amongst the different
categories of workmen on account of differential treatment which,
though seemingly justifiable may, in real effect be
discriminatory. [864 D-F]
Remington Rand of India Limited v. The Workmen, C.A. Nos. 856
of 1968, 1475 of 1968 and 2129 of 1968 decided on December 10,
1969. Alembic Chemical Works Co. Ltd. v. The Workmen, [1961] 3
S.C.R. 297, Delhi Cloth & General Mill.,; Co. Ltd. v. Workmen,
[1969] 2 S.C.R. 307, J. K. lron & Steel Co. Ltd. v. The Iron &
Steel Mazdoor Union Kanpur, [1955] 2 S.C.R. 1315 and Express News
Paper (P) LTD v. union of lndia [1959] S.C.R. 12, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2162 and 2163
of 1970.
Appeals by Special Leave from the Award dated June 9, 1970 ,of
the Industrial Tribunal Maharashtra, Bombay in References (I.T.)
Nos. 284 of 1968 and 19 of 1969.
S.V. Gupte, Mahesh Bhatt, Sunanda Bhandare and P. H. Parekh, for
the appellant (in both the appeals).
K.Rajendra Chowdhary, for respondent No. 2 (in both the appeals).
The Judgment of the Court was delivered by
Dua, J. The short but important point raised in these two appeals
by special leave relates to the validity of that part of the
award of the Industrial Tribunal, Maharashtra, Bombay, by which
the demand for vacation allowance of the workmen of the appel-
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lant-, Messrs Polychem Ltd., Bombay, at the same rate as is
granted to its higher staff both at the head office and at its
Chambur
857
plant, was allowed. These two appeals are directed against the
impugned award in two references under S. 1 0 ( 1 ) (d) of the
Industrial Disputes Act, 1947, one of which (Ref. No. 284 of
1968) related to, the demands of the head office staff and the
other (Reference No. 19 of 1969) to the workmen of Chembur plant.
The impugned portion of the award dated June 9, 1970. reads as
under
"The only other demand which is now common to both
the references is the demand for the vacation
allowance. It appears that the company pays to its
officers or other staff drawing Rs. 600 and more as
basic wage one month’s salary for vacation in case
his leave exceeds 15 days and is not accumulable.
The demand of the workmen is that the minimum
should be Rs. 300 and the maximum Rs. 2,000. It is
pointed out for the company that this was refused
by the Tribunals in Burmah Shell and Voltas. The
Union on the other hand contended that it was
allowed in the banks and refineries by settlements
though refused by the Tribunals. The plea of
discrimination, it was pointed out, has been
rejected by the Tribunals (see Parke Davis, I.C.R.
1966 p. 151 and Alembic Chemical, [1961] 1 L.L.J.
P. 328). 1, however, feel that this company can
afford to pay this allowance to its workmen and
avoid dissatisfaction. In socialistic countries
this is considered as an amenity to the workmen
which should be provided such as subsidized or free
vacation at health resorts. The ideal of wage
fixation is the living wage while the national
ideal was envisaged in the constitution is a
socialistic state. The company can join others as
the trend seems to be appearing in this region. It
ensures a more contented and healthy workmen. I
therefore award vacation allowance to the workmen
at the same rate as the staff with the same
conditions."
The appellant’s learned counsel, Shri S. V. Gupte, challenged
this portion of the award on the ground that there is no evidence
in support of the conclusions arrived at by the Tribunal and that
it proceeds on grounds which are irrelevant and contrary to the
settled principles relating to industrial disputes. Nowhere in
the region is vacation allowance granted in similar industries
and there is thus no comparable instance, contended the counsel,
adding that the senior assistants in the present case had also
not pressed their claim to vacation allowances. It was further
urged that workmen in the appellant’s industry get various other
amenities like,. dearness allowance, according to the revised
textile rates,
858
overtime wages, lunch allowance (not allowed to officers),
gratuity (with qualifying period of 5 years as against 15 years
for officers), uniforms and medical facilities. Our- attention
was drawn, to a prepared’ statement produced before us on behalf
of the appellants for showing the difference in the pay packet of
Workmen employed at the appellant’s head office as a result of
the award given in Reference No. IT 284/68. The respondent did
not accept this statement saving that it was based on the
interpretation placed by the appellant to support its case. In
regard to overtime allowance and other facilities referred to by
Shri Gupte. the learned counsel relying, inter alia, on another
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statement relating to facilities accorded to the workmen in
1970-71produced before us, submitted that the workmen were
getting numerous other benefits not available to officers.
This submission Was however, sought to be founded on material not
on the court record. The learned counsel strongly contended that
the real criterion should have been to look to the overall pay
structure of the workmen in the light of the standard prevailing
in similar industries in the same region. Mere capacity of the
appellant to pay should not be the sole criterion, he added.
Reference was made to the decision of this Court in Remington
Rand of India Limited v. The Workmen (1) where it was observed :
"As regards the first ground it is true that in the
present case there was no question of the company
being unable to bear the additional burden of lunch
allowance. But the fact that an employer is able
to bear the burden is not the criterion. The
foundation of the principle of industry-cum-region
is that as far as possible there should be
uniformity of conditions of service in comparable
concerns in the industry in the region so that
there is no imbalance in the conditions of service
between workmen in one establishment and those in
the Test. The danger otherwise would be migration
of labour to the one where there are more
favourable conditions from those where conditions
are less favourable. Therefore, the mere fact that
a particular concern can bear an additional
liability would by itself be no ground to impose
upon it such extra obligation. Equally important
is the fact that the wage structure prevailing in
the appellant company is undisputably fair and the
dearness allowance paid to the workmen has been, as
aforesaid, linked with the index of cost of living.
These must take care of the rise in the cost of
living from time to time. If, therefore, the
company were to be compelled to pay lunch allowance
to ail
(1). C,A, Nos. 856 of 1968, 1475 of 1968 and 2119
of 1968 decided on December 10, 1968.
859
workmen including those who work at the offices it
would in fact mean a,, double provision for, the,
constituent of the cost of food already provided
for in the wage scales and the rates, of dearness
allowance. The force of this aspect was recognised
by this Court in Mcleon & Co. Ltd. v. Workmen(1)".
It was said on behalf of the respondents that in the case cited
there was no discriminatory treatment in the same concern among
the employees of different grades of salaries at the same place.
The requirements of providing lunch to those who could not return
to the office from outdoor work outside the city limits as was
the fact in the cited case, according to, the respondents,
furnish a distinguishing feature in that case from the present.
Next reliance was placed by Shri Gupte on the following
observations in Alembic Chemical Works Co. Ltd. v. The Workmen (
2)
"Then it is urged that the provision made by the
award for privilege leave introduces discrimination
between the clerical staff covered by the present
reference and operatives covered by the earlier
awards made by the samee Tribunal. We were told
that operatives had made a similar claim for
privilege leave before the same Tribu
nal, and the
said claim had been rejected. The argument is that
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the provision for privilege leave made by the
present award would create discontent amongst the
operatives to whom similar leave has been denied,
and that would disturb industrial peace. We are
not impressed by this argument. It is not
seriously disputed that a distinction has generally
been made between operatives who do manual work and
clerical and other staff; in fact the appellant’s
standing orders themselves make different relevant
provisions for the two categories of its employees.
It is also not disputed that in practice such
distinction is made by comparable concerns, and
awards based on the same distinction are generally
made in respect of the two separate categories of
employees. We are, therefore, unable to appreciate
the argument that. in granting privilege leave to
the present staff the Tribunal has either
overlooked its earlier award or has made a decision
which suffers from the vice of discrimination. The
practice prevailing in comparable concerns and the
trend of awards both seem to show that a
distinction is generally made between the two,
categories of employees, and since the said
distinction is perfectly justifiable no question of
discrimination can arise."
(2) [1961] 3 S.C.R. 297 at 300.
860
According to the respondents the distinction
between operatives doing manual work and clerical
and other staff may be justified but that is not
the case here. Besides, in the reported case, this
Court, in its concluding part said, that it was not
satisfied that any case for interference under Art.
136 had been made out whereas in the present case
the appellant wants this Court to interfere and
reverse the impugned part of the award on the
ground that it is grossly erroneous and unjust.
Reference was then made on behalf of the appellant
to the decision in Delhi Cloth & General Mills Co.,
Ltd., v. Workmen(1), emphasis being laid on the
following passage at p. 327 :
"But in the branch of law relating to industrial
relations the temptation to be, crusaders instead
of adjudicators must be firmly resisted. It would
not be out of place to remember the statement of
the law made in a different context-but nonetheless
appropriate here-by Doughlas, J., of the Supreme
Court of the United States in United Steel Workers
of America v. Enterprise Wheel and Car Corporation
(2):
"....... as arbitrator.... does not sit to dispense
his own brand of industrial justice. He may of
course look for guidance from many sources, yet his
award is legitimate only so long as it draws its
essence from the collective bargaining agreement.
When the arbitrator’s words manifest an infidelity
to this obligation, courts have no choice but to
refuse enforcement of the award.’
We may at once state that we are not for a moment
suggesting that the law of industrial relations
developed in our country has proceeded on lines
parallel to the direction of the law in the United
States."
The respondent, on the other hand, laid more emphasis on the last
portion of the above observations, submitting that the problems
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of our country in regard to labour welfare at the present stage
of our industrial development, particularly in the background of
our egalitarian socialistic pattern of society as visualised in
our Constitution, are materially different from the labour
problems requiring solution in the developed American society
under that country’s constitution. The following passage from
pp. 326-327 from he D.C.M.’s case(1) is also worth quoting:
"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 disputed questions,
(1) [1969]2S.C.R.307.
(2) [1960] 363 U.S. 593.
861
and each determination forms a precedent for
determination of other disputes. An attempt to
search for principle from the law built up on those
precedents is a futile exercise. To the Courts
accustomed to apply settled principles to facts
determined by the application of the judicial
process, an essay into the unsurveyed expanses 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
power to sit in appeal 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 prosperity of
the industry and improvement of the conditions of
work-men employed in the industry, and in the
absence of principles precedents may have to be
adopted guides-somewhat reluctantly to secure some
reasonable degree of uniformity of harmony in the
process."
In our view the ultimate object of industrial adjudication in our
country is to help the growth and progress of national economy
and for realising that object the industrial disputes are settled
on principles of fairplay and justice, harmonising the
conflicting claims of capital and labour with full awareness of
the current of socioeconomic trends. of thought. Our industrial
law, is there,fore, expected to effectively secure to the workers
conditions of service reasonably conducive to the improvement of
their social and economic standard of living, and their moral and
material development. The existing peculiar problems, relating
to industrial labour in our country, having, their roots in the
historical background of our social, economic and political
conditions have little in common with the current labour problems
of America or other developed countries. We must, therefore,
guard ourselves against the temptation of too readily and
indiscriminately following the American line of thought. Shri
Gupte next referred us to the decision in J. K. Iron & Steel Co.
Ltd. v. The Iron & Steel Mazdoor Union, Kanpur(1) relying on the
following passage at p. 1 32
"In Bharat Bank Ltd. v. Employees of Bharat Bank
Ltd.(2) this Court held by a majority that though
these Tribunals are not Courts in the strict sense
of the term they have to discharge quasi-judicial
functions and as such are subject to the overriding
jurisdiction of this Court under article 136 of the
Constitution. Their powers are derived from the
statute that creates them and they have to function
within the limits imposed there
(1)[1955]2S.C.R.1315.
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(2) [1950] S.C.R. 459, 497.
9-L1061SupCI/72
862
and to act according to its provisions. Those
provisions invest them with many of the ’trappings’
of a court and deprive them of ’arbitrary or
absolute discretion and, power. There is, in our
opinion, an even deeper reason which is hinted at
in the judgment of Mahajan J., (as he then was) at
page 500 where he says ’that ’benevolent despotism
is foreign to a democratic Constitution’. That, in
our opinion, is the heart of the matter."
To give relief to the workmen merely because the appellant can
bear the financial burden is, according to Shri Gupte, it by
these observations. According to the respondents, on the other
hand, the observations relied upon leave to be construed in their
own context and so read they do not prohibit the, industrial
adjudication from granting just and fair remuneration to the
labour in lieu of its contribution to the prosperity of the
industry, provided the employer can, consistently with its own
fair and just claim in lieu of its contribution to the prosperity
of the industry and without detriment to its maintenance and
betterment, bear the financial burden. The respondents’, learned
counsel Shri Chaudhri drew our attention to the admitted act,
that, in the case of, Burmah Shell, Esso and Caltex Refineries,
vacation allowance (which was considered to be identical with
travelling allowance) was gianted to the Workmen by way of
Settlement and submitted. that these industries, though different
being refinties, are in the same region and the general standard
’of. remunerate of, Workman in that region performing similar
duties and, functions should not. be materially different. The
fact, that those industries granted such allowance by settlement
shows that such a demand by the workman has not been considered
by those industries to be unjustor unacceptable. Harmonious
standardisation of wages in a region in the absence of markeddiff
erence
in the character of the duties and functions of labouraccording
to the resPondents, reduces the factors contributingdiscontentment
and promotes the chances of the workers’commitment to the
industry whereas unjustified differential-treatmeant tends to
serve as a potential source of industrial unrest. Shri Chaudhri
also referred us to the decision in Express Newspapers: (P) Ltd.
v. Union of India(1) where at p. 81 it is observed
"It will be seen from this summary of the concepts
of the living wage held in various parts of the
world-that there is general agreement that the
living Wage should enable the, male earner to
provide for himself and his family not merely the
bare essentials of food, clothing and, shelter but
a measure of frugal comfort including education for
the children, protection against ill-health,,
(1)[1959] S.C.R. 12.
863
requirements of essential social needs, and a
measure of insurance against the more important
misfortunes including old age.
Article 43 of our Constitution has also adopted as
one of the Directive Principles of State Policy
that :
’The State shall endeavour to secure, by suitable
legislation or economic Organisation or in any
other way, to all workers, agricultural, industrial
or otherwise, work, a living wage, conditions of
work ensuring a decent standard of life, and full
enjoyment of leisure and social and cultural
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opportunities. . . .’
This is the ideal to which our social welfare State
has to approximate in an attempt to ameliorate the
living., conditions of the workers."
Shri Gupte, however, emphasised that in India living wage on
standard prevalent in more advanced countries is not possible
the present level of our national income.
Wage policy relating to, workmen appears to be a co complex and
sensitive area of public policy. The reason is plain. The
relative status of workmen in the society, their commitment to
industry andtheir attitude towards, the management, their
motivation towardsproductivity and their standard and way of
life, are all con by wages. It is according no a purely
economic policy in which the employer and the employee alone are
interest-, ed. Besides the worker and the management, the
consumer and the society at large and a fortiori the State, are
also vitally, interested, and no wage policy can ever be applied
in vacuum in disregard of the realities of the social and
economic, conditions in our country. Considering the question of
wages in the background of the Directive Principles enshrined in
our Constitution a wage structure should serve, to promote, a
fair remuneration to labour ensuring due social dignity,
personality and security, a fair return to capital, and strength
incentives to efficiency without being unmindful of the
legitimate interest and expectation of the consumer in the,
matter of prices. Guided by this principle, if the financial
capacity of the industry permits, the workers should, broadly
speaking, be allowed their due share in the prosperity of the
industry, to which they have contributed by their labour so as to
enable them, within reasonable limits, to improve their standard
of living.
Turning now to the facts of the present case we are clearly of
the view that the Tribunal has committed a serious error in not
considering the other allowances and amenities allowed to the
864
respondents-workmen, and comparing their total wage packet with
the total wage packet of those employees to whom the allowance in
question has been allowed, when determining this question. The
Tribunal has virtually decided the question in issue exclusively
on the basis that the employer has the financial capacity to
stand the burden of such allowance being granted to the workmen
at the same rate as the higher staff, with the same conditions.
The difference between the amenities allowed to the workmen and
to the staff to whom the vacation allowance is granted must in
law and justice be looked into and the question then decided
whether or not the present workmen’s demand is justified. The
principle of region-cum-industry has no doubt to be kept in view
but then the comparable industries in the region have to be
considered from all the relevant aspects which have been laid
down by this Court in various decisions to which it is
unnecessary to refer, the principle being well settled. The fact
that in, the refineries in the region similar allowance isgranted
as a result of settlement cannot, on that account alone,be
considered to be irrelevant because that may appropriately
indicate that the demand of the workmen in those industries was
not considered unjust. But to what extent that should weigh with
the Tribunal is for the Tribunal to decide in the light of all
the relevant circumstances. The, total wage packet of the
various categories of employees in the appellant’s industry
itself, including the question of their nature of duties and
functions, however, deserves to be given primary importance so
that there is no reasonable, chance of heart-burning and
discontentment amongst the different categories of workmen on
account of the differential treatment which, though seemingly
justifiable, may, in real effect. be discriminatory., The
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importance of appropriate standardisation of wages in the
appellant-industry on a proper consideration of the duties and
functions of the different categories of employees must be kept
in view in deciding the present dispute.
We would accordingly allow the Appeals, set aside the award and
remit the case back to the Tribunal with a direction to decide
the dispute after considering all the relevant factors as
suggested. In the peculiar circumstances of the case there is no
order as to costs.
V.P.S.
Appeals allowence
865