Full Judgment Text
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PETITIONER:
WORKMEN OF SHRI BAJRANG JUTE MILLS LTD.
Vs.
RESPONDENT:
EMPLOYERS OF SHRI BAJRANG JUTE MILLS LTD.
DATE OF JUDGMENT:
31/10/1968
BENCH:
VAIDYIALINGAM, C.A.
BENCH:
VAIDYIALINGAM, C.A.
SHELAT, J.M.
BHARGAVA, VISHISHTHA
CITATION:
1970 AIR 878 1969 SCR (2) 593
ACT:
Wage Scale--Determination--Industry-cure-region basis-
Wage Board fixing uniform wage scale irrespective of
differing conditions in different regions-Validity-
Regionwise classification, necessity of.
HEADNOTE:
The Central Wage Board was constituted for devising a
wage structure, based on the principle of fair wages payable
in the Jute industry. In determining the financial capacity
of the industry the Board selected 20 mills from West Bengal
and 9 mills from the rest of the region as representing a
cross-section of the Industry. The respondent, a fairly
small mill in Andhra Pradesh. was considered ’as a
comparable unit with two larger mills in the State as also
with some of the very big and prosperous mills in West
Bengal. The Management of the mill refused to accede to
the demand of the workmen to pay wages in accordance with
the recommendations of the Board fixing a uniform scale for
the entire industry, on the plea that the mill had no
financial capacity to bear the burden of the wage scale.
The dispute was referred to the Industrial Tribunal. The
Tribunal upheld the claim of the management. In appeal to
this Court it was contended that the Wage Board
recommendations did follow the principles laid down by this
Court in the matter of fixation of wages and as such the
Tribunal should have implemented its recommendations.
HELD: Dismissing the appeal.
The essential pre-requisite of deciding the wage
structure viz., consider the capacity of the industry to pay
on the principles laid down by this Court was absent in the
recommendation of the Wage Board. This Court has laid down
that the capacity of the industry to pay should be gauged on
an industry-cum-region basis after taking a fair
cross section of the industry and that the cross-section to
be truly representative and capable of giving a true picture
of the conditions of both industry and labour must be one
from each region where establishments of the industry in
question are situate. [608 E--F]
In the present case taking 20 mills from West Bengal and
9 mills from outside as forming a representative. cross-
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section was manifestly incorrect as the West Bengal mills
could not be said to be comparable units with the rest of
the mills. These mills so clubbed together could not
reflect the economic and other conditions prevailing in the
mills in different regions with their peculiar problems and
differing conditions. The Board ought to have considered
the units in each area separately and determined the wage
scales for each such area by taking from that area a
representative cross-section of the industry where possible
or where that was not possible by taking comparable units
from other industries within that area. [608 G--H]
Express Newspapers Ltd. v. Union of India, [1959] S.C.R.
12, French Motor Car Co. v. Workmen, [1963] Supp. 2 S.C.R.
16 and Greaves Cotton & Co. v. Workmen, [1964] 5 S.C.R.
362, followed.
594
If the wage-scale had been determined by the Board in
the mam aforesaid, even though the Board was not a
statutory body and decisions were only of a recommendatory
character, it would be possi for Industrial Tribunal to give
due weight to its recommendations such recommendations would
have been in conformity with the princil of industry-cum-
region, a principle binding on the’ tribunals. [609 H]
[The difficulty felt by the Tribunal faced with the
dilemma whether not to follow the recommendations of the
Wage Board arrived at principles different from those
consistently followed in industrial adjucation should have
been realised by the Government before accepti the
recommendations of the Wage Board.] [609 F-G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 923 ,
1966.
Appeal by special leave from the Award dated May 29, 196
of the Industrial Tribunal, Andhra Pradesh in I.D. No. 12
1964.
M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, f the
appellants.
K. Srinivasamurthy, Naunit Lal and B.P. Singh, for the
re. pondents.
The Judgment of the Court was delivered by
Vaidialingam, J. The workmen of Shri Bajrang Jute Mil
Ltd., in this appeal by special leave, attack the
correctness of th award dated May 29, 1965 of the
Industrial Tribunal, Andhr Pradesh, Hyderabad, in I.D. No.
12 of 1964, by which it hel that the demand of the workmen
for implementation of the re commendations of the Central
Wage Board for Jute Industr (hereinafter referred to as
the Wage Board), was not justified.
In view of the fact that the respondent-management
decline to accede to the demand of the appellants to pay
wages in accordance with the recommendations of the Wage
Board, the Stat of Andhra Pradesh, by its order dated March
21, 1964, referres for adjudication to the Industrial
Tribunal, Hyderabad, th following question:
"Whether the demand of the workmen in
Sri Bajrang Jute Mills, Limited, Guntur, for
implementation of the recommendations of the
Central Wage Board for Jute Industry is
justified, and if so, to what extent?"
The Wage Board was constituted by the Central Government for
determining, among other matters, a wage structure, based
on the principles of fair wages payable in the jute
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industry. The Wage Board consisted of a Chairnan, two
independent Members, two Members representing the employers
and two Members representing the workers. It may be noted
that the Members
595
representing the industry and labour were not chosen by the
representative bodies of the industry or the labour but were
appointed by Government. In fact, neither the industry nor
the labour had any voice in the choice by the Government of
any of the members of the Wage Board. The Wage Board
submitted its report to the Government, making
recommendations about the wage structure and laying down
principles for awarding bonus for the year 1962-63 and the
subsequent years.
It appears from the Wage Board’s report that, at the
very outset, the Wage Board selected 20 mills from West
Bengal and 9 reporting mills from outside West Bengal which
it considered to form a representative cross-section of the
industry for a detailed study. The Wage Board took into
account the financial position of the said mills and also
collected other data and information not only from the mills
concerned but also from other quarters. The Wage Board took
into account the growth of paid-up capital, gross block
depreciation, profits made and dividends paid by the mills
and other allied matters and came to the conclusion that the
industry’s position was satisfactory and its future was
bright. The Wage Board was not required to fix a wage
structure on the peculiar financial position of any
particular unit, al though it was bound to take a fair
cross-section of the industry represented by units
reflecting the general conditions prevailing in the
industry as a whole. The Wage Board also considered the
principles for determination of bonus and recommended
payment of bonus for the year 1963 on the basis of the basic
wages drawn by the worker for the year 1962. It also
recommended that for future years the bonus was to be paid
according to the wages drawn in the preceding year. It
further recommended certain rules for determination of the
quantum of bonus. According to the appellants, the
respondent was bound to implement the recommendations of the
Wage Board in all respects and its refusal to do so was
illegal and unjustified.
The respondent pleaded that the recommendations of
the Wage Board could not be implemented as the Mill had no
financial capacity to bear the burden of the wage scales
recommended by the Wage Board. The respondent made an
attempt to implement the Wage Board’s recommendations to
some extent at least, provided the labour agreed for
revision of work loads, but the labour was not willing for
such revision. It was further stated that the respondent
company, though started in 1907, had been running at a loss
for a number of years and its loom-strength was only 120.
The mill was located at Guntur, which is not a jutegrowing
area, and in consequence almost all raw materials had to be
brought from Vijayanagaram, in Visakhapatnam District, and
from Calcutta. As the raw materials and other products had
to be brought from outside, it involved the mill in
considerable
596
expense due to freight charges etc. The products
manufactured in the mill were only cement bags and twine and
cement companies were its only customers. The company had
furnished replies to the questionnaire issued by the Wage
Board and had made it clear that the wages paid by it were
reasonable and it could not bear any additional burden in
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that regard. Even the interim relief, recommended by the
Wage Board, was implemented with considerable difficulty
though it involved the company in an additional revenue
expenditure of Rs. 1,53,000 a year.
The Wage Board’s recommendations fixed the wage scales,
dearness allowance etc., for all the employees working in
all the jute mills situated in the country, irrespective of
the financial position of individual mills. If the
recommendations of the Wage Board were to be implemented,
the company would be put to further expenditure of Rs.
2,75,385.60 in the first year, Rs. 3.25 lakhs in the second
year and Rs. 3.75 lakhs in the third year in addition to the
existing wage bill which the company had to meet. The
company has been making only negligible profits and it could
not pay any dividend on its equity shares for nearly 7
years. Its reserves also have been dwindling. The
financial position of the company, therefore, is such that
it is impossible for it to bear the burden of the additional
wage structure, dearness allowance etc., as recommended by
the Wage Board. The company further pleaded that the
Wage Board committed a serious mistake when it compared the
financial position of the respondent along with two other
large mills in the Andhra area viz., Nellimarla and
Chitavalasa Jute Mills. Further the wage scales fixed by
the Wage Board are on the basis of the position occupied by
big jute mills in West Bengal, having upto 2,561 looms
and 13,580 spindles. The Wage Board did not attempt to
make any distinction between small and uneconomic mills and
large mills, nor was any classification made in that
manner.
Regarding payment of bonus, the company pleaded that
this was covered by a settlement and the workmen were not
entitled to the same in view of the financial position of
the company and as there was no available surplus. The wage
structure, dearness allowances etc., fixed by the Wage Board
were not in accordance with the principles laid down by this
Court in several decisions. According to the decisions of
this Court, no fair wage can be fixed unless the unit in
question has the financial capacity to meet the additional
burden; and, in fixing the wage scale and dearness
allowance, the principle of industry-cum-region had to be
applied. Small and struggling units should not be compared
with large, flourishing concerns. The extent of business
carried on by them, the labour force, the capital invested,
quantum of reserves, dividends declared and profits made,
have all to be taken into account to see whether the units
could be compared for wage fixation.
597
All these circumstances have not been given due weight and
consideration by the Wage Board. The respondent mill has
only 120 looms and it has been compared with not only the
very big mills in West Bengal but also with the Nellimarla
and Chittavalasa Jute Mills which have 500 and 316 looms
respectively. No classification was made by the Wage Board
of the various jute mills as large, medium and small units;
and in prescribing uniform scales for all types of units no
distinction has been made between economic and uneconomic
units. Small and struggling units have been treated in
the same way as large and prosperous units. Finally, the
respondents pleaded that in view of the circumstances
indicated above, the Wage Board’s recommendations could
not be implemented by it and the labour’s claims, on the
basis of the Wage Board’s recommendations, were not
justified.
The Industrial Tribunal, in its award under attack,
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accepted the pleas taken by the management. While
recognising the fact that the Wage Board’s recommendations
were made, after collecting considerable data, the Tribunal
was of the view that the Wage Board committed an error in
comparing the respondent mill with other big mills, not
only in Andhra Pradesh but also outside that State. The
Tribunal was also of the view that the principles laid down
by this Court that the fixation of wage scales should be on
an industry-cum-region basis and that-small units should
not be compared with large and flourishing concerns, were
not given due regard by the Wage Board. On the materials
placed before it, the Tribunal accepted the claim of the
respondent that it was a small concern considered from any
point of view, viz., of looms, paid up capital, reserves,
or the profits. In respect of the capacity to pay, the
Tribunal was of the view that the Wage Board had not
approached the question in the light of the principles laid
down by this Court. The Tribunal came to the conclusion
that the respondent, which is a fairly small unit, has not
the financial capacity to adopt the wage-structure fixed by
the Wage Board. The Tribunal accepted the claim of the
respondent regarding the additional financial burden it
would have to bear, even according to the phased programme
fixed by the Wage Board and has held that the financial
position of the company is such that it cannot bear this
burden. The TribUnal also came to the conclusion that as
the Wage Board was devising a fair-wage, the capacity of the
particular industry to bear the additional burden-which is
one of the essential circumstances to be taken into
consideration--has not been taken into account. On the
other hand, all jute mills, wherever situate, big or small,
prosperous or struggling, economic or uneconomic, have all
been treated alike and a uniform wage structure applicable
to all mills has been fixed. There has been no attempt at
classification of small and uneconomic mills for the purpose
of finding out their financial capacity. The Tribunal
finally came to the conclusion
598
that the demand of the workmen for implementation of the
recommendations of the Wage Board was not justified.
The same stand, taken before the Tribunal by the
management and the workmen, as mentioned earlier, have been
reiterated before us by Mr. M.K. Ramamurthy, learned
counsel for the Union, attacking the award and Mr. K.
Srinivasamurthy, learned counsel for the management, in
support of the award. Before we refer to the circumstances
under which the Wage Board was constituted, as well as
the approach made by it in the fixation of wage-scales and
other matters, it is necessary to refer to the principles
laid down by this Court in that regard and to examine
whether the Wage Board has properly applied those
principles. Mr. Ramamurthy, learned counsel for the
appellant,, has accepted the position that there is an
obligation on the Wage Board to follow correctly and apply
the principles laid down by this Court in the matter of
fixation of wages and dearness allowance. But his
contention is that the Wage Board has, in its
recommendations, followed those principles.
In Express Newspapers (Private) Ltd. v. The Union of
India(1) this Court has elaborately considered the concept
of (i) living wage; (ii) fair wage; and (iii) minimum wage,
as well as the machinery for fixation of wages, adopted in
various countries. So it is not necessary to cover the
ground over again. So far as fair wage is concerned, this
Court has stated that while the lower limit must obviously
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be the minimum wage, the upper limit is equally said to be
what may broadly be called the ’capacity of the industry to
pay’. It has further been stated that the capacity of the
industry to pay should be gauged on an industry-cum-region
basis, after taking a fair cross-section of that industry
and that in a given case it may be even permissible to
divide the industry into appropriate classes and then deal
with the capacity of the industry to pay class-wise. This
Court further laid down the principles in that regard as
follows, at p. 92:
"The principles which emerge from the
above discussion are:
(1) that in the fixation of rates of
wages which include within its compass the
fixation of scales of wages also, the
capacity of the industry to pay is one of the
essential circumstances to be taken into
consideration except in cases of bare
subsistence or minimum wage where the
employer is bound to pay the same irrespective
of such capacity;
(2) that the capacity of the industry to
pay is to be considered on an industry-cum-
region basis after
taking a fair cross Section of the
industry; and
(1) [1959] S.C.R. 12.
599
(3) that the proper measure for gauging
the capacity of the industry to pay should
take into account the elasticity of demand for
the product, the possibility of tightening up
the organisation so that the industry could
pay higher wages without difficulty and the
possibility of increase in the efficiency of
the lowest paid workers resulting in
increase in production considered in
conjunction with the elasticity of demand for
the product--no doubt against the ultimate
background that the burden of the increased
rate should not be such as to drive the
employer out of business."
The discussion on the question of capacity of an industry to
pay is wound-up at p. 191 with the following observations:
"Industrial adjudication is familiar
with the method which is usually adopted to
determine the capacity of the employer to pay
the burden sought to be imposed on him. If
the industry is divided into different
classes, it may not be necessary to consider
the capacity of each individual unit to pay
but it would certainly be necessary to
consider the capacity of the respective
classes to bear the burden imposed on
them. A cross section of these respective
classes may have to be taken for careful
examination and all relevant factors may have
to be borne in mind in deciding what b
urden the
class considered as a whole can bear. If
possible, an attempt can also be made, and is
often made, to project the burden of the wage
structure into two or three succeeding years
and determine how it affects the financial
position of the employer."
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In French Motor Car Co. Ltd. v. Workmen(1) this Court
observed at p. 20:
"It is now well settled that the
principle-of industry cum-region has to be
applied by an industrial court, when it
proceeds to consider questions like wage
structure, dearness allowance and similar
conditions of service. In applying that
principle industrial courts have to compare
wage scales prevailing in similar concerns in
the region with which it is dealing, and
generally speaking similar concerns would be
those in the same line of business as the
concern with respect to which the dispute is
under consideration. Further, even in the
same line of business, it would not be proper
to compare (for example) a small struggling
concern with a large flourishing concern."
[1963] Spp. 2 S.C.R. 16.
600
The principle that the basis of fixation of wages and
dearness allowance is industry-cum-region was reiterated in
Greaves Cotton & Co. v. Their Workmen(1).
According to Mr. Ramamurthy, the learned counsel for the
appellant, the principles laid down by the decisions,
referred to above have been borne in mind by the Wage Board
when it fixed the wage structure and dearness allowance.
Learned counsel . also urged that when a wage structure was
fixed for the industry as such, it is not necessary that the
capacity of individual units should also be considered and
that on the other hand it would be enough if a fair cross-
section of the industry was taken into account for this
purpose as was done by the Wage Board in the present case.
On the other hand, according to Mr. Srinivasamurthy,
the learned counsel for the management, inasmuch as a fair
wage was being fixed, the Wage Board was bound to apply the
principle of industry-cure-region in fixing the wage
structure and dearness allowance and the Wage Board has
committed an error in not classfying the various units as
large, medium and small units and prescribing different
scales for different types of units.
We shall now proceed to consider the circumstances
under which the Wage Board was constituted, its composition
and the approach made by it in fixing the wage structure
and dearness allowance.
In Chapter XXVII, paragraph 25, of the Second Five Year
Plan of the Government of India, it is stated that
statistics of industrial disputes show that wages and allied
matters are the major source of friction between employers
and workers and that an acceptable machinery for settling
wage disputes will be one which gives the parties themselves
a more responsible role in reaching decisions. It is
further stated that an authority like a tripartite wage
board, consisting of equal representatives of employers and
workers and an independent chairman would probably ensure
more acceptable decisions and that such wage boards shouId
be constituted for individual industries in different areas.
In pursuance of this recommendation,, the Government of
India, by its Resolution No. WB-5(1)60, dated August 25,
1960, set up a Central Wage Board for Jute Industry. The
Board consisted of a Chairman, two independent Members and
two Members representing employers and two Members
representing employees. The terms of reference of the Board
were:
"(a) to determine the categories of
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employees (manual, clerical, supervisory, etc)
who should be
(8) [1964] 5 S.C.R. 362.
601
brought within the scope of the proposed wage
fixation;
(b) to work out a wage structure based
on the principles of fair wages as set forth
in the report of the Committee on Fair Wages."
In evolving a wage structure, the Board was also required to
take into account the needs of the industry in a developing
economy, the special features of the jute industry as an
export industry, the requirements of social justice and the
need for adjusting wage differentials in such a manner as to
provide incentives to workers for advancing their skill’.
The Wage Board was also required, within two months from
the date of its starting work, to submit its recommendations
regarding the demands of labour in respect of interim
relief, pending its final report.
The Wage Board recommended to the Central Government
the grant of interim relief of Rs. 2.85 from October 1 to
December 31, 1960 and Rs. 3.42 from January 1, 1961 in
respect of all jute mills in India, excepting the Katihar
Jute Mill in respect of which the interim relief at the rate
of Rs. 3.42 was granted from September 1, 1961. The Central
Government accepted this recommendation, by its Resolution
No. WB-5(3)/61, dated January 25, 1961 and requested the
jute mills to implement the same as soon as possible. There
is no controversy that the respondent mill complied with
this request though it involved the company in an additional
expenditure of Rs. 1,53,000. This claim of the company has
been accepted by the Industrial Tribunal. The Wage Board
submitted to the Central Government, on September 4, 1963
its final recommendations dated August 31, 1963 and
recommended that the new wage structure should be given
effect to. from July 1, 1963. The Central Government, by
its Resolution No. WB-5( 16)/63 dated September 27, 1963
accepted the report and made a request to the employers, the
workers and the State Governments to implement the same
expeditiously. The standardised basic wages of various
categories of workers of jute mills for a month of 26 days
or 208 hours are specified in Appendix XI of the Report; and
there is no controversy that the basic wages of all
categories of workers in the employ of the respondent jute
mill is the same as the standardised basic wage contained
in Appendix XI. But, there is a further recommendation that
so far as the appellant jute mill and another jute mill,
viz., Sri Krishna Jute Mill, were concerned,the wage
increase was to be on a phased basis.
We may refer now to the various aspects dealt with by the
Wage Board in its report. Chapter III deals generally with
the Industry. In para 3.5 it is stated that there is an
overwhelming concentration of jute industry in West Bengal
and only a sprink-
602
ling of it is to be found elsewhere in India. It is also
noted that the loomage at the time of the report in the
whole of India stood at 72,916 looms. The reasons for the
heavy concentration in West Bengal of jute mills are stated
to be factors like abundant supply of raw material,
proximity of coal fields in Ranigunge,navigability of the
Hooghly and the availability of the required type of labour
in the neighborhood. So far as jute mills at other places
in India are concerned, in para 3.6 of the Report it is
stated that small jute mills have come up in other States,
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including Andhra Pradesh, but the total loomage of all such
mills outside West Bengal is only 3,242 looms, and the mills
are distributed in various places.
Appendix VII of the Report contains a statement showing
the mills operating, number of looms and spindles in the
whole of India. So far as West Bengal is concerned, the
total number of looms is given as 65,383; in Andhra Pradesh
as 1,072; in Bihar 1,059; Uttar Pradesh 891 and Madhya
Pradesh 220. It will be noted from Appendix VII that in
Andhra Pradesh there are two fairly big units, the
Nellimarla and Chitavalsa having 316 and 500 looms
respectively, whereas the respondent mill lias only 120
looms. We are particularly referring to this aspect because
it is the grievance of the respondent that the Wage Board
has compared it with the Nellimarla and Chitavalsa and other
big units in West Bengal. A perusal of Appendix VII shows
that there are several jute mills having more than 1,000
looms and some having more than 2,000 looms, in West Bengal.
Chapter IV deals with the scope of enquiry. In para 4.1
it is stated that the Board’s recommendations will apply to
all the jute mills then existing and also to those that
might be started thereafter, and a list of all mills then in
existence is given in Appendix VII.
Chapter V deals with minimum wages in the jute industry.
In para 5.4 the Wage Board takes note of the fact that the
minimum wages in Nellimarla and Chitavalsa jute mills in
Andhra Pradesh are found to be the highest in the jute
industry. In para 5.26, the minimum wages in West Bengal
jute mills from 1948 and as obtaining from January 1, 1961
has been referred to. Such minimum wages from January 1,
1961 including Rs. 3.42 granted as interim relief by the
Wage Board and the dearness allowance, is stated to be Rs.
70.59, comprised of basic wages of Rs. 34.67--Rs. 3.42
(interim relief)+Rs. 32.50 (dearness allowance). Regarding
the jute mills in Andhra Pradesh, it is stated in para 5.35
that Nellimarla and Chitavalsa jute mills were paying from
January 1, 1961 the total emoluments of Rs. 81.21 per month
to the
603
lowest category of workers for 208 working hours, inclusive
:s. 3.42 interim relief granted by the Wage Board.
In para 5.38, it is stated that the respondent mill,
from Janury 1, 1961, is paying total emoluments of Rs. 52.17
per month, comprised of Rs. 19.50 (basic)+Rs. 3.42
(interim relief)+ is. 29.25 (dearness allowance). The jute
mills in Bihar State, s will be seen from para 5.43 were
paying total monthly emolunents ranging from Rs. 69.98 to
Rs. 70.59.
Chapter VI deals with the industry’s capacity to pay.
In para 6.1 it is stated that two matters which received the
highest consideration in the course of the deliberations of
the Wage Board were the needs of the workers and the
capacity of the industry to pay those needs. It is further
stated that the consequences of a fair wage upon the
employer or the capacity of the industry to maintain
production efficiently, have received the special
attention of the Wage Board. In para 6.8, reference is nade
to the Fair-Wages Committee’s Report that in determining .he
capacity of the industry to pay, it is wrong to
take the capacity of a particular unit or the capacity of
the entire industry in the country and that the practical
method is to take a fair cross-section of the jute industry.
In this connection the Wage Board refers to the claims
advanced by the workers and the industry. The workers
appear to have suggested the names of mills which were well-
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established and whose financial position was never in
doubt, whereas the industry urged that the capacity of the
weaker and marginal units should not be ignored as the wages
that are to be fixed by the Wage Board should be such as
could be paid without difficulty by all units of the
industry.
In para 6.9 it is stated that the Wage Board was of the
view that the only proper and practical methods was to take
a cross-section of the industry which could be considered
as fair in its view. Accordingly. twenty jute mills in West
Bengal were selected by it as representing a fair cross-
section of the industry in that region. The Wage Board also
decided to make a census survey of 9 reporting mills outside
the West Bengal region. Accordingly it selected all the
three in Andhra Pradesh, two in Bihar, three in Uttar
Pradesh and one in Madhya Pradesh. A list of the jute mills
in West Bengal and outside West Bengal region considered as
forming a representative cross-action of the jute mills is
given in Annexure A to the Report. So far as Andhra Pradesh
is concerned, all the three mills situate in the State have
been taken into account, being Nellimarla, Chitavalsa and
the respondent. The Wage Board then considers the capital
formation, bonus issue. total paid up capital, reserves and
surplus, percentage of dividend declared, profits made; but,
under each of these heads, the Wage Board grouped together
all the mills in West Bengal, Andhra Pradesh, Bihar, Uttar
Pradesh and Madhya Pradesh.
604
In para 6.44, the Wage Board expresses the view that it
would be possible for the industry to bear the extra burden
arising from the new wage structure recommended by it
without much difficulty and without affecting the economy of
the industry adversely.
In Chapter VII the Wage Board considers the principles
by which the Tribunal and other wage-fixing authorities were
guided in fixation of wages in West Bengal and outside that
State. In para 7.19 the Wage Board proceeds to state that
it has to devise a fair wage structure. It refers to the
report of the Committee on Fair Wages that with regard to a
fair wage, the lower limit must obviously be the minimum
wage and the upper limit is equally set by what may
broadly be called the capacity of the industry to pay. In
para 7.25 the Wage Board refers to the claim of the workers
that the minimum wages at Calcutta, at prices prevailing in
1960 should be Rs. 125 and that the minimum wage at Kanpur,
in Uttar Pradesh, should be Rs. 140 per month; while, on the
other hand, the Indian Jute Mills Association appears to
have pressed that the then existing wages in the jute
industry for all categories of workers were fair.
In para 7.34 the Wage Board refers to the fact that the
wages in the jute industry had not kept pace with wages in
cotton textile and engineering industries in West Bengal, as
would be seen from the fact that in 1959, while in the jute
industry the minimum wages had gone up by 46% over the 1946
wages, it had gone up in cotton textile and engineering
industries by 69.71% and 77.50% respectively. It further
notes the fact that the minimum wages in cotton textile
mills in West Bengal on April 1, 1963 were Rs. 83.50 and in
the engineering industry Rs. 82 per month. On the other
hand, the wages in the jute industry on April 1, 1963 were
Rs. 70.59. On this reasoning the Wage Board comes to the
conclusion in para 7.35 that there was a prima facie case
for increase in the wages of the jute workers. The Wage
Board expresses the opinion that the concept of the paying
capacity of the jute industry is not the same as it is
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generally understood in the case of other industries, in
view of the fact that the jute industry is principally an
export-oriented industry, depending upon the fluctuating
foreign markets.
In para 7.40 the Wage Board states that in fixing the
wage structure for the jute industry it has taken into
consideration the prevailing wage structure in the cotton
textile industry and the engineering industry in West
Bengal. It has noted that in West Bengal, as on April 1,
1963, the minimum wage in the. cotton textile industry Was
Rs. 84.10 per month and in engineering industry Rs. 82 per
month. As in the opinion of the Wage Board there is a great
similarity in the nature and condition of work between
cotton textile industry and jute industry, in para 7.43 it
605
decides to devise a wage structure in the jute industry
keeping in wages existing in the cotton textile industry in
West Bengal.
Regarding dearness allowance, the Wage Board in para
7.44 decides to introduce a system of variable. dearness
allowance linked with the consumer price index.
In para 7.45 the Wage Board refers to the special
representations made by the jute mills outside West Bengal
that in comparison with the mills in West Bengal they have
to pay higher freight charges on coal, batching oil and that
mill stores and electricity charges are higher for them,
that their productivity is low and that most of them have no
export trade. The Wage Board states that it has considered
these problems and though there are these locational
difficulties for individual jute mills, it has decided that
the wage level in the jute industry should as far as
possible be uniform throughout the country. The Wage Board
further states that the wages in some of these jute mills
were very low and in order to obviate their financial
difficulties in consequence of the raising of wage level, it
has decided that the wage level in these mills should be
raised in a phased manner.
Having decided that the wage level in the Jute Industry
should be uniform throughout the country, the Wage Board, in
para 7.52 decides that the total minimum wage in West Bengal
should be fixed at Rs. 81 per month, consisting of(i) basic
wage; (ii) Wage Board increment; and (iii) variable dearness
allowance. The Wage Board further, in para 7.56, states
that in addition to basic wages, all categories of workers
should be paid an increase of Rs. 8.33 per month inclusive
of interim relief of Rs. 3.42 already granted by it and
accepted by the Central Government. This increment of Rs.
8.33 per month is desired to be shown as a separate item
under the heading Wage Board increment’ in the case of all
categories of workers and that increment should be treated
as part of the basic wages for all purposes like bonus,
provident fund, etc.
In para 7.57 the Wage Board states that the dearness
allowance of Rs. 32.50 that was being paid then should be
considered as the dearness allowance fixed at the working
class consumer price index number of 425, for Calcutta with
base year 1939 as 100. It is further stated that the
dearness allowance should be a variable one and the rate of
increase or decrease should be at 0.20 nP. per point rise or
fall in the average working class consumer price index
number for Calcutta. The dearness allowance is also
directed to be revised every six months in the months of
February and August of each year.
On the basis of these calculations, in para 7.58 the
Wage Board fixes the total monthly minimum wage payable at
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Rs. 84 sup.
606
comprised of (a) Rs. 40.17 basic wage; (b) Rs. 8.33 Wage
Board increment; and (c) Rs. 32.50 being variable dearness
allowance. In para 7.59, the Wage Board states that the
standardised basic wages of various categories of workers of
a jute mill for a month of 26 days or 208 hours are
enumerated in Appendix XI to the Report.
When considering the wage structure for jute mills
outside West Bengal, in para 7.65(a) the Wage Board states
that the basic wages of all categories of workers in the
jute mills mentioned by it, outside West Bengal, which
includes the respondent mill, should be the same as those in
jute mills in West Bengal mentioned in Appendix XI.
Therefore, it is clear that the ,minimum basic wage fixed
for the mills in West Bengal has been applied to all the
mills outside West Bengal, including the respondent. But,
so far as the respondent mill is concerned, the Wage Board,
in the same paragraph, gives a direction that the
Standardised basic wages mentioned in Appendix XI of the
Report is to be adopted in a phased manner as follows:
During the first 24 months Basic wages of all categories
from the date on which the of workers should be 20 per
recommendation of the Board cent lass than the standar-
will be effective dised wages shown in Appen-
dix XI
During the next 12 months Basic wages of all categories
should be 10 percent less
than the standardised wages
shown in Appendix XI
During the next 12 months Basic wages of all categories
should be 5 percent less than
the standradised wages shown
in Apendix XI
Thereafter Basic wages of all categories
of workers should be the same
as stadardised wages shown in
Appendix XI
In paragraph 7.66 the Wage Board directs that all
categories of workers in jute mills situated outside West
Bengal should also be paid the Wage Board increment of Rs.
8.33 per month, inclusive of interim relief of Rs. 3.42
already granted.
In para 7.67(c) it is stated that the rates of dearness
allowance of all categories of workers in the respondent
mill and in Sri Krishna Mill is fixed at Rs. 32.50 at the
average working class consumer price index number of 560 for
Eluru for the last six months in 1962 with base year 1935-36
as 100. It is further stated that the dearness allowance
should be a variable dearness allowance and the rate of
increase or decrease should be 0.20 nP per point of rise or
fall in the average working class consumer price index
number for Eluru and that it should be revised every six
months in the months of February and August.
Chapter VIII deals with bonus in jute industry and in
para 8..18 ,the Wage Board makes a recommendation that in
the jute
607
industry the payment of bonus should be governed by the
rules mentioned therein.
Lastly, in para 10.8 of Chapter X, the Wage Board
states that the new wage structure recommended by it should
come into force from July 1, 1963; and it is provided in
para 10.9 that the payment of wages at the new rates should
start in any case not later than the week ending November 2,
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1963.
We have fairly exhaustively dealt with the various
matters considered by the Wage Board in its Report. It is
no doubt true that the Wage Board has gone elaborately in
the matter of fixing of the wage structure in the jute
industry. We have earlier referred to the various
principles laid down by this Court which should govern the
fixing of wages and dearness allowance. The Board itself
states that it was fixing a fair wage for the industry. We
have adverted to the fact that in the Express Newspapers
Case(1) this Court has held that in the case of fixation of
fair wage, the upper limit may broadly be stated to be the
capacity of the industry to pay. It has been further laid
down that the capacity of the industry to pay should be
gauged on an industry-cureregion basis, after taking ’a
fair cross-section of that industry and that, in a given
case, it may be even permissible to divide the industry into
appropriate classes and then deal with the capacity of the
industry to pay class-wise. As the Wage Board was fixing a
fair wage for the entire jute industry it may not have been
strictly necessary to consider the financial capacity of
each individual unit. But, as pointed out in the Express
Newspapers Case(1), the requirement of considering the
capacity of each individual unit to pay may not become
necessary if the industry is divided into different classes.
Even if the industry is divided into different classes, it
will still be necessary to consider the capacity of the
respective classes to bear the burden imposed on them. For
this purpose a cross-section of these respective classes may
have to be taken for careful consideration for deciding what
burden the class considered as a whole can bear.
The question is whether. the Wage Board has adopted
these principles when it fixed the wage structure for the
entire jute industry- From the various matters dealt with
by the Wage Board and the manner of approach made by it,
as referred to above, we are satisfied that no attempt has
been made by the Wage Board to divide the industry into
classes. It is also clear that no cross-section of such
classes has been taken for investigation to decide what
burden the units in each class can bear.
The approach of the Wage Board to determine uniform wage
scales for the entire industry must suffer from an inherent
weakness. Conditions, such as easy access to raw materials,
transport, nearness of market for disposal of the
manufactured pro-
(1) [1959] S.C.R. 12.
608
duct, availability of labour, the type of market whether
within or outside the country for which the manufactured
articles are intended and diverse other factors must vary
from region to region. Likewise, economic conditions
affecting the consumer prices must and do differ, as is
well-known, from region to region, depending largely upon
whether a particular region is self sufficient or not in
the elemental needs of its citizens and these in turn are
bound to affect living standards. It would therefore be too
artificial and unrealistic an approach to be oblivious of
these differences and to attempt to group together all
establishments and factories and devise common wage-scales
applicable to all of them disregarding the peculiar features
of the industry in a particular region. Favourable
conditions prevailing in one region would place industrial
concerns there in a position better than those in other
regions where such conditions do not occur. Similarly, in
regions where consumer prices are lower, labour would be
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better off than in the rest of the regions where the living
index is higher; yet, the wage scales would be the same in
all the regions. Uniformity of wage-scales, irrespective
of differences in conditions would place both the
employees and the employers in regions where such
favourable conditions prevail in an unfairly advantageous
position over the employees and employers in the other
regions. Instead of attaining harmony there would as a
result arise inevitably a feeling of discrimination.
Though, as stated by this Court in Express Newspapers’
Case(1), it may not be possible or even necessary for a Wage
Board to scrutinise all the establishments separately and it
would be enough to take a representative cross-section of
the industry for assessment, the cross-section to be a truly
representative one and capable of giving a true picture of
the conditions of both the industry and labour must be one
from each region where establishments of the industry in
question are situate.
What the Wage Board, however, did was that instead of
proceeding region-wise and selecting a representative cross-
section from each region, it selected 20 mills from West
Bengal and clubbed them with 9 reporting mills from the
rest of the regions, viz., Bih’ar, U.P., Madhya Pradesh and
Andhra Pradesh where a few mills are scattered. The Board
considered these 29 mills as representing a cross-section of
the industry. It is obvious that these mills so clubbed
together could not truly reflect the economic and other
conditions prevailing in the mills in different regions
with their peculiar problems and differing conditions. That
in our view was not a proper approach and was bound to
result in injustice especially in view of the peculiar
feature of the jute industry that it is predominently
concentrated in West Bengal and is export-oriented.
Besides, the jute industry in the
(1) [1959] S.C.R. 12.
609
other regions suffers from a distinct disadvantage as the
raw materials have to be transported from a distance at
considerable cost. Taking the 20 mills from West Bengal
and the 9 mills from outside as forming a representative
cross-section was manifestly incorrect as the West Bengal
Mills cannot truly be said to be comparable units for the
rest of the mills.
Another difficulty in accepting the Wage Board’s
recommendations arises from the fact that the Board equated
the cotton textile industry in West Bengal with the jute
industry there and finding the wage-scales in the jute
industry lower than those in the cotton textile industry the
Board raised the scales in the jute industry so as to bring
them to the level of the cotton textile industry. Having
so done, the next step which the Wage Board took was to
raise also the wage-scales in mills outside West Bengal to
bring them in line with the scales proposed by it for the
mills in West Bengal. This process gave rise to two
infirmities: (i) that the Board treated cotton textile
concerns in West Bengal as comparable to those. in jute
industry; and (ii) it treated the jute mills in West Bengal
as comparable to those outside, although conditions in the
different regions where they were situate were obviously
different. This meant that the Board gave a go-by to the
well established principle of industry-cum-region
consistently applied by Industrial Tribunals whenever wage-
scales had to be determined.
Such a disharmony in the approach to the problem of
determination of wage-scales by a Wage Board on the one hand
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and an Industrial Tribunal on the other must inevitably
occur because whereas the attempt of a Board would be to
uniformise wage-scales for the entire industry, though it is
spread over different parts of the country where conditions
can rarely be expected to be similar or the same, the
concern of a Tribunal would principally be to determine
equitably the wage-scales of a single unit with which it is
for the time being concerned. The difficulty would be
all the more felt by such a Tribunal where it is faced with
the dilemma whether or not it should follow the Board’s
recommendations arrived at on principles different from (as
in the present case) those consistently followed in
industrial adjudication. One should have thought that this
difficulty would have been realised before the
recommendations of the Wage Board were accepted by
Government.
The difficulty referred to above arising from the
difference in the functions of the two bodies could well
have been obviated if the Wage Board instead of laying down
uniform scales for the entire industry irrespective of where
its several units were situate and of the different
conditions prevailing in various areas. had considered the
units in each area separately and determined the
610
wage-scales for each such area by taking from that area a
representative cross-section of the industry where possible
or where that was not possible by taking comparable units
from other industries within that area, thus following the
principle of industrycum-region. It is true that in doing
so uniformity of wagescales for the entire industry would
not have been attained. But in a vast country like ours,
where conditions differ often radically from region to
region and even the index of living differs within a fairly
wide range, such a target cannot always be just or
equitable. If the wage-scales had been determined by the
Board in the manner aforesaid, even though the Board is not
a statutory body and consequently its decisions are of a
recommendatory character, it would be possible for
industrial tribunals to give due weight to its
recommendations as such recommendations would have been in
conformity with the principle of industrycum-region, a
principle binding on the tribunals. It would be difficult
in that event for any unit in the industry in that region
’to propound a grievance that its capacity to pay was not
taken into account as the scales so framed would have been
determined after taking into consideration scales prevailing
in comparable units, whether in that industry or other
industries in that region depending on whether in a
particular area the accent was on the industry part or the
region part of the principle of industrycum-region. The
Board, therefore, ought to have selected comparable units
from each of the regions where the lute mills are situate
and after their examination arrive at common wagescales
for each of those regions instead ’of grouping together 20
mills from West Bengal and 9 mills from the other regions
and treating them as constituting a cross-section
representing the industry. The position in which a Tribunal
called upon to fix wage-scales would be placed would not be
an enviable one for it would find itself in an embarrassing
situation where it had either to accept the wage-scales
fixed by the Board though they were fixed in contravention
of the principle of industry-cumregion, or discard them
and proceed to fix them on its own on the principle of
industry-cum-region, a principle which, as the industrial
law stands today, it is bound to follow.
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We have already pointed out that the Wage Board has
taken the view that the wage level in the entire jute
industry should be uniform throughout the country. It has
also stated that the wage structure for the jute industry in
West Bengal has to be devised having regard to the pattern
of wage-structure existing in the cotton textile industry
in that area. It is on this basis, and after a comparison
of the wage structure prevailing in the cotton textile
industry in that area, that the Wage Board has come to the
conclusion that the minimum monthly emoluments of a worker
in West Bengal .must be fixed at Rs. 81 taking in the basic
wages, the Wage Board increment and the variable dearness
allowance.
611
The standardised basic wages enumerated in Appendix XI has
been made applicable to all the jute mills outside West
Bengal also, including the respondent mill. We have already
referred to the recommendation of the Wage Board in para
7.65 (c) that the respondent jute mill should adopt the
standardised basic wages axed in Appendix XI, in a phased
manner. Over and above that basic wage, the Wage Board has
given an increase of Rs. 8.33 per month, as Wage Board
increment and a variable dearness allowance of Rs. 32.50 per
month. Though it had been pressed by the jute mills
outside West Bengal, that they had to pay higher freight
charges on coal, batching oil etc., and that mill stores and
electricity charges were higher for them, the Wage Board
insisted that the Wage level in the jute industry should
be uniform throughout the country. The result of the Wage
Board’s recommendations, if they are to be given affect to
by the respondent mill, will be that as against the
minimum monthly wage of Rs. 52.17 that was being paid by the
respondent there is a very sharp rise in its wage bill. The
claim of the respondent that the recurring expenditure for
implementation of the recommendation of the Wage Board is
over Rs. 3,75,000, and that it has not the financial
capacity to bear this burden, has been accepted by the
Industrial Tribunal and that finding has not been challenged
before us by the appellant. The respondent mill, which
has only 120 looms, has been compared with the two big mills
in Andhra Pradesh, viz., Nellimarla and Chitavalsa, having
326 and 500 looms respectively, as also with very large
mills in West Bengal, some of whose loom capacity is more
than 2,000. That clearly shows that all mills, small as well
as large, economic as well as uneconomic, have been clubbed
together and treated alike by the Wage Board. In
considering the capacity, the Wage Board has taken 20 jute
mills in West Bengal as representing a fair cross-section of
the industry in that region and it has taken 9 reporting
mills outside West Bengal for this purpose. Three mills
selected in Andhra Pradesh were the Nellimarla, Chitavalsa
and the respondent mills. We have already shown the large
disparity that exists between the mills in West Bengal as
also between the Nellimarla and Chitavalsa and the
respondent mill. We have also referred to the decisions of
this Court that to compare wage scales comparable
establishments in the region would be taken into account and
that a small, struggling concern should not be compared with
a large, flourishing one. But this is exactly what has
happened, when the Wage Board treated alike the respondent
mill not only with Nellimarla and Chitavalsa jute mills but
also with some of the very big and prosperous mills in West
Bengal.
The various aspects, dealt with above, establish that
the essential prerequisite of deciding the wage structure.
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viz., to consider the capacity of the industry to pay on the
principles laid down by
612
this Court, is absent in the recommendations of the wage
Board and that introduces a fatal infirmity in its decision.
The question of bonus does not arise for our
consideration as the respondent has stated that the
management has entered into a settlement with its workmen
and that they will. be entitled for bonus only if the net
profits exceed Rs. 75,000. It has further been stated
that there is no available surplus to warrant the payment of
bonus. These statements have not been controverted on
behalf of the appellant.
To conclude, the award of the Industrial Tribunal that
the demand of the workmen for implementation of the
recommendations of the Wage Board is not justified, is
correct. The appeal fails and is dismissed. In the
circumstances of the case, there will be no order as to
costs.
Y.P. Appeal dismissed.
613