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PETITIONER: ALEMBIC CHEMICAL WORKS CO., LTD.

       Vs.

RESPONDENT: THE WORKMEN

DATE OF JUDGMENT: 15/12/1960

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. WANCHOO, K.N. GUPTA, K.C. DAS

CITATION:  1961 AIR  647            1961 SCR  (3) 297  CITATOR INFO :  R          1967 SC1286  (24)  RF         1972 SC1967  (2,3)  F          1973 SC1156  (7)  RF         1978 SC 769  (3)  D          1981 SC1685  (9)

ACT: Industrial  Dispute-Award of  privilege  leave-Jurisdiction- Industrial  Disputes Act, 1947 (14 of 1947), s.  10  (1)(d)- Factories Act, 1948 (63 of 1948), ss. 79, 78, 84.

HEADNOTE: It  is not correct to say that S. 79 of the  Factories  Act, 1948,  standardises the grant of annual leave with wages  to employees  to  whom  the Act applies and  that  neither  the employer by voluntary agreement nor the Industrial  Tribunal by  its  award can vary that standard.  It is  well  settled that in construing the provisions of a welfare  legislation, such  as  the Act in question which has for its  object  the preservation  of the  health, safety and  welfare  of  the workmen,   courts  should  apply  the  rule  of   beneficent construction  and moreover, ss. 78 and 84 of the Act put  it beyond  doubt that S. 79(1) is not intended  to  standardise annual leave with wages by providing the maximum. Rightly construed S. 78(1) of the Act not only protects past laws,  awards, agreements and contracts but also those  that are  to  come  into existence in the  future  and  does  not prohibit  a more generous agreement than that prescribed  by S. 79(1). Likewise the scope of s. 84 of the Act which, in  empowering the State to exempt a factory from all or any provisions  of Ch.  VIII  of the Act, contemplates  better  amenities  than those  guaranteed  by  the Chapter,  cannot  be  limited  to benefits existing at the date of the Act but must also apply to  future  benefits  which an employer  may  grant  to  his employees. Consequently, in a case where the Industrial Tribunal, on  a consideration of awards and agreements between employers and employees  in comparable concerns, awarded annual  leave  in excess of what is prescribed by S. 79(1), Held, that the award was not open to challenge.

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Held,  further, that the distinction generally made  between operatives doing manual work and clerical and other staff is perfectly justifiable and so the award of privilege leave to the clerical staff could not be said to be discriminatory. Although  the  Industrial Tribunals  in  awarding  privilege leave  or sick leave must not fail to consider their  effect on  production  and so on the interest of the  community  in general,  this Court would be reluctant under Art.   136  of the  Constitution  to  interfere with an  award  unless  its provisions  are unsustainable on any reasonable grounds  and make  a  violent  departure  from  the  practice  and  trend prevailing in comparable concerns. 38 298

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 475 of 1960. Appeal by special leave from the Award dated March 31, 1960, of  the Industrial Tribunal, Bombay, in Reference  (I.   T.) No. 227 of 1959. M....C. Setalvad, Attorney-General for India, G. B. Pal  and J. B. Dadachanji, for the appellant. I. N. Shroff, for the respondents. 1960.  December 15.  The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by special leave arises  from an  industrial  dispute between the appellant,  the  Alembic Chemical  Works Co. Ltd., and the respondents, its  workmen. The  said  dispute related to a single demand  made  by  the respondents with regard to leave.  This demand consisted  of three  parts,  (a)  one month’s privilege  leave  with  full salary and dearness allowance on completion of eleven months service  in  a  year with a right  to  accumulate  upto  six months,  (b)  one month’s sick leave with  full  salary  and dearness  allowance for each year of service with  right  to accumulate  for the entire period of service, and (c)  every workman  should be entitled to take leave in  proportion  to the  number of days he is in service of the company  at  the time  of  his application for the same.   This  dispute  was referred by the Government of Bombay for adjudication before the Industrial Tribunal under s. 10(1)(d) of the  Industrial Disputes Act XIV of 1947. The  Tribunal  considered  the  contentions  raised  by  the appellant  against  the  respondents’  demands,  took   into account  awards  or agreements between employers  and  their employees  in  comparable concerns and made its  award.   In regard  to  privilege leave the Tribunal  has  ordered  that leave should be granted to the staff members covered by  the reference as follows: Privilege leave upto 3 ... 16 days as at present completed years of service      per year. Up to 9 completed years...     22 days per year.  And thereafter            ...  One month for every                               11 months of service. 299 The award allows accumulation of privilege leave upto  three years.  As regards sick leave, the Tribunal has ordered that the  appellant should give its staff covered by the  present award  15  days  sick  leave in a year  with  full  pay  and dearness allowance with a right to accumulate upto 45  days. It  has also directed that no medical certificate should  be demanded if sick leave for three days or less is asked  for. In  regard to the third item of demand concerning  leave  in

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proportion the Tribunal has made appropriate direction which it is unnecessary to set out for the purpose of this appeal. Before  the  Tribunal  the main  contention  raised  by  the appellant was in regard to the propriety and  reasonableness of  the demand and in regard to the practice  prevailing  in comparable  concerns.   Before  this  Court,  however,   the provision made by the award in regard to privilege leave has been attacked mainly on the ground that the Tribunal had  no jurisdiction  to  make such an award having  regard  to  the provisions of s. 79 of the Factories Act, 1948 (63 of  1948) (hereafter  called the Act).  It is urged that s. 79 of  the Act  has made exhaustive and self-contained provisions  with regard  to  the granting of annual leave with wages  to  the employees to whom the said Act applies, and the effect of s. 79  is to introduce standardisation in the matter of  leave; which  means  neither  the  employer  voluntarily,  nor   an Industrial  Tribunal  by  its award, can add  to  the  leave prescribed by the, said section.  In the matter of leave  s. 79  is a complete code, and no additions to the  said  leave can  be  made either by a contract or by an  award.   It  is common ground that the respondents are governed by the  pro- visions  of the Act.  This point was not raised  before  the Tribunal,  but  since it is a point of law which  arises  on admitted  facts  we  have permitted  the  learned  Attorney- General to argue it before us.  The Act was first enacted in 1934 as Act 25 of 1934.  Since then it has been amended from time to time.  Its main object is  to  consolidate and amend the law regulating  labour  in factories.   For the purpose of determining  which  concerns and which employees 300 would  be  governed  by  the Act  s.  2(m)  and  (1)  define "factory"  and "worker" respectively.  Even a broad view  of the scheme of the Act and a perusal of its provisions  would clearly  indicate that the Act is a beneficent  measure  and its  policy  is  to  make  reasonable  provisions  for   the preservation  of  health of the workmen,  their  safety  and their  welfare.  With that object in view, the Act has  made provisions  for the regulation of working hours  of  adults, has regulated the employment of young persons, and has  also provided  for annual leave with wages to the  workmen.   The amendments  made in the relevant provisions of the Act  from time  to  time indicate that the Act has been  pursuing  its beneficent  policy slowly but steadily and is attempting  to provide for the workmen better and larger amenities in their employment.   It is in the light of this obvious policy  and object of the Act that we have to decide the question raised before us by the appellant. Section 79(1) occurs in Chapter VIII which deals with annual leave with wages.  It provides thus:               "79.  (1).  Every worker who has worked for  a               period of 240 days or more in a factory during               a  calendar year shall be allowed  during  the               subsequent calendar year, leave with wages for               a number of days calculated at the rate of-               (i)...if  an adult, one day for  every  twenty               days  of  work  performed by  him  during  the               previous calendar year;               (ii)..if  a child, one day for  every  fifteen               days   of  work performed by  him  during  the               previous calendar year.               Explanation  1--For the purpose of  this  sub-               section-               (a)   any  days  of lay off, by  agreement  or               contract or as permissible under the  standing

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             orders;               (b)   in    the  case  of  a  female   worker,               maternity  leave  for any number of  days  not               exceeding twelve weeks; and               (c)...the  leave earned in the year  prior  to               that in which the leave is enjoyed;               shall be deemed to be days on which the worker               301               has worked in a factory for the computation of               the  period of 240 days or more, but he  shall               not earn, leave for these days." This  section  has  11 other sub-sections  which  deal  with different aspects and make relevant provisions in regard  to annual leave with wages.  It is not disputed that the  award purports to make provisions for privilege leave in excess of the  annual leave sanctioned by s. 79.  Can  the  Industrial Tribunal  direct  the appellant to provide  such  additional privilege  leave to its employees?; in other words, does  s. 79 purport to standardise annual leave with wages so that no departure from the said standard is permissible either  way? The  appellant’s contention is that except for  pre-existing awards, agreements, contracts or except for pre-existing law no departure from the standardised provision is  permissible after s. 79 was enacted. This argument raises the question of construing s. 79 in the light  of the other relevant provisions of the Act.  It  may be conceded that the provisions made by s. 79 are elaborate, and  in  that  sense may be treated  as  self-contained  and exhaustive.  It is also clear that s. 79(1) does not use the expression "not more than or not less than" as it might have done  if  the intention of the Legislature was to  make  its provisions  correspond either to the minimum or the  maximum leave claimable by the employees; but even so, when s. 79(1) provides that every worker shall be allowed leave as therein prescribed,  the  provision  prima  facie  sound,%  like   a provision for the minimum rather than for the maximum  leave which may be awarded to the worker.  If the intention of the Legislature was to make the leave permissible under s. 79(1) the  maximum to which a workman would be entitled, it  would have used definite and appropriate language in that  behalf. We  are, therefore, inclined to think that even on  a  plain construction of s. 79(1) it would be difficult to accede  to the  argument  that it prescribes standardised  leave  which inevitably would mean the maximum permissible until s. 79(1) itself is 302 Even  on  the  basis  that  s.  79(1)  is  capable  of   the construction sought to be placed on it by the appellant, the question  would still remain whether the  Raid  construction should  be preferred to the alternative construction  which, as  we  have just indicated, is  reasonably  possible.   The answer  to  this question must be in the  negative  for  two reasons;  first,  having regard,to the  obvious  policy  and object   of  the  Act,  if  s.  79(1)  is  capable  of   two constructions  that construction should be  preferred  which furthers the policy of the Act and is more beneficial to the employees in whose interest the Act has been passed.  It  is well settled that in construing the provisions of a  welfare legislation courts should adopt what is sometimes  described as  a beneficent rule of construction; but, apart from  this general  consideration  about the policy and object  of  the Act,  ss. 78 and 84 occurring in the same Chapter as  s.  79 clearly   indicate  that  s.  79(1)  is  not   intended   to standardise leave provisions as contended by the  appellant, and  that is the second reason why the appellant’s  argument

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cannot be accepted. Let  us  then  consider the provisions of  Bs.  78  and  84. Section  78(1) provides that the provisions of Chapter  VIII shall  not operate to the prejudice of any right to which  a worker  may  be entitled under any other law, or  under  the terms of any award, agreement or contract of service.  There is  a proviso to this sub-section which lays down that  when such  award, agreement or contract of service  provides  for longer annual leave with wages than provided in this Chapter the  worker  shall be entitled only to  such  longer  annual leave.   Section  78(2) exempts specified workers  from  the operation of Chapter VIII.  The first difficulty which  this section  raises  against  appellant’s argument  is  that  it undoubtedly recognises exceptions to the leave prescribed by s.   79(1).   It  is  well-known  that  standardisation   of conditions  of service in industrial adjudication  generally does  not  recognise or permit exceptions; if the  hours  of work  are standardised, for instance, or the  wage-structure is  standardised, it is intended to make hours of  work  and wages uniform in the whose industry brought 303 under  the working of standardisation  Standardisation  thus inevitably  means  levelling  up of those  whose  terms  and conditions   of  service  were  less  favourable  than   the standardised  ones, and levelling down those of such  others whose  terms  and conditions were more favourable  than  the standardised  ones.  That being so, if s. 79(1) intended  to standardise  annual leave with wages it would  normally  not have  made  provisions in regard to exceptions as  s.  78(1) obviously does. Besides,  the scope and extent of the exceptions  recognised by   s.  78(1)  are  decisively  against   the   appellant’s construction of s. 79(1).  The learned Attorney-General  has strenuously contended that the saving  provision of s. 78(1) applies   only  to  existing   law  and   existing   awards, agreements  or  contracts of service; in  other  words,  his argument is that the Legislature has deliberately decided to except  pre-existing arrangements and in that sense it is  a departure from the usual concept of standardisation.  In our opinion,  the  assumption  that  s.  78(1)  is  confined  to existing  arrangements is plainly inconsistent with  a  fair and  reasonable  construction of the  said  provision.  When s.78(1)  refers  to  any other law it could  not  have  been intended  that  it  is  only  to  existing  laws  that   the reference is made and that the idea underlying the provision was  that no law can be passed in future which would  grant more generous leave to the employees.  Such a restriction on the  legislative activities of the appropriate  Legislatures cannot  obviously have been intended.  If the  reference  to law is not confined only to existing law there is no  reason why reference to any award, agreement or contract of service should  be similarly circumscribed or limited.  We  feel  no difficulty in holding that what s. 78(1) protects are  laws, awards,  agreements or contracts of service which were  then existing  or which would come into existence later; that  is to say s. 78(1) does not affect preexisting arrangements and does  not also prohibit future arrangements which  would  be more  generous  than s. 79(1).  A law may be  passed  making more generous provisions, or agreements or contracts may 304 be  entered  into or awards made with the same  result.   If that  be  the true position s. 78(1) clearly  negatives  the theory that s. 79(1) provides for standardisation of  annual leave with wages. The provisions of s. 84 would also lead to the same  result.

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Section  84  provides  that where the  State  Government  is satisfied  that the leave rules applicable to workers  in  a factory  provide benefits which in its opinion are not  less favourable than those for which Chapter VIII makes provision it  may by written order exempt the factory from all or  any of the provisions of Chapter VIII subject to such conditions as may be specified in the order.  Now, the power to  exempt factories has to be exercised having regard to the effect of the  totality of the benefits which may be afforded  to  the workers by their respective factories.  This power to exempt also   necessarily  postulates  the  existence   of   better amenities  than those guaranteed by Chapter VIII,  and  that means  that if a factory provides better leave amenities  to its  employees, the State Government may in the interest  of the employees exempt the factory from the operation of  this Chapter.   The  scope  of s. 84, like the scope  of  s.  78, cannot be limited only to the more favourable benefits which may  be existing at the date when the Act was passed.   What is  true about the existing benefits would be  equally  true about  the benefits which may be granted by an  employer  to the  employees in future.  Let us illustrate what  the  con- sequence  would be if the appellant’s argument is  accepted. Take the case of an employer who has been exempted under  s. 84 on the ground that the benefits of leave conferred by him on  his  employees are more favourable to them.  In  such  a case,  the  employer  may  make  his  benefits  still   more favourable  after  exemption  is accorded  to  him;  but  an employer  who  has  already  not  provided  more  favourable benefits would be effectively precluded from making any such provisions in future.  It is difficult to imagine that  such a consequence could have been intended by the provisions  of this welfare legislation. 305 The   history  of  the  amendments  made  in  the   relevant provisions  of the Act also indicates that the Act has  been gradually making more liberal provisions in’ the interest of workmen  to whom it applies.  In the original Act as it  was passed (25 of 1934) s. 34 provided for weekly holiday but no provision was made for holidays with pay.  When the said Act was amended by Act 3 of 1945, s. 49A which is equivalent  to present  s. 78(1) without the proviso was inserted;  and  s. 49B  provided,  inter  alia,  that  every  worker  who   has completed a period of twelve months continuous service in  a factory  shall  be allowed during the subsequent  period  of twelve  months holidays for a period of ten days.   That  is how  provision  for  holidays  came  to  be  made.   By  the ;’amending  Act 63 of 1948, s. 78 with the  present  proviso was  enacted;  and s. 79 made a provision for  annual  leave with  wages.  While making provision for annual  leave  with wages  the  section then prescribed a minimum of  ten  days; subsequently, by amending Act 25 of 1954, s. 79 as it stands at  present was enacted; and in s. 78 the word "annual"  has been  added to qualify leave in the proviso.  We  have  thus briefly  referred to some changes made in the Act from  time to  time  in order to show that subsequent  amendments  have sought to make the provisions more liberal. There is one more point which may incidentally be  mentioned whilst  we  are considering the amendments made in  the  Act from time to time.  Section 49A which broadly corresponds to s.  78 of the present Act saved other laws and terms of  any award,  agreement  or contract of service just as  s.  78(1) does.   Now, if the said section is construed on  the  lines which  the appellant wants us to construe s. 78(1) it  would only  be  arrangements existing at the date  when  the  said amending Act came into force on January 1, 1946, that  would

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be protected and saved, and nothing that happened either  by way  of  legislation  or  by  way  of  awards  or  contracts subsequent to the said date would attract the provisions  of the said s. 49A or s. 78 which subsequently took its  place. This obviously is not 39 306 intended  by the Legislature which incidentally shows   that s.  78(1)  cannot be confined to  existing  arrangements  or laws,  but takes within its sweep future  laws,  agreements, contracts  or  awards.   Therefore,  the  challenge  to  the validity of the award based on the assumption that s.  79(1) provides  for standardised award of annual leave with  wages fails. 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  same Tribunal.   We were told that operatives had made a  similar claim for privilege leave before the same Tribunal, and  the said  claim  had been rejected.  The argument  is  that  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. It  is  then  argued  that  making  liberal  provisions  for privilege  leave  and sick leave are really opposed  to  the modern  trend  in industrial thought, and  so  such  liberal awards should be discouraged and corrected. 307 There is no doubt that when industrial adjudication seeks to do  social  justice it cannot ignore the needs  of  national economy;  and so in considering matters of leave, either  in the  form  of privilege leave or sick leave,  the  Tribunals should not ignore the consideration that unduly generous  or liberal   leave  provisions  would  affect  production   and obviously  production  of essential commodities  is  in  the interest  of  not only the employers and the  employees  but also of the general community; but it is difficult for us to accept   the   argument  that  we   should   make   suitable modifications in the provisions made by the award in  regard to  privilege  leave  or  sick  leave.   These  are  matters primarily  for  the  Industrial  Tribunal  to  consider  and decide.   The  Tribunal  is more  familiar  with  the  trend prevailing  in  comparable concerns, and unless  it  appears that  the  impugned provisions cannot be  sustained  on  any reasonable ground or that they mark a violent departure from

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the  prevailing practice or trend, we would be reluctant  to interfere with the decision of the Tribunal.  After all,  in deciding what ,would be a reasonable provision for privilege leave  or sick leave, the Tribunal has to take into  account all  relevant factors and come to its own decision.   As  we have  already  indicated, in making the  present  award  the Tribunal  has  considered  previous  decisions  which   were relevant  and prevailing agreements in comparable  concerns. We  have  carefully  considered the criticism  made  by  the learned Attorney-General against the provisions contained in the  award,  but we are not satisfied that a case  has  been made out for interference in an appeal under Art. 136. The result is the appeal fails and is dismissed with costs. Appeal dismissed. 308