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PETITIONER: THE BURMAH-SHELL REFINERIES LIMITED

       Vs.

RESPONDENT: THEIR WORKMEN.

DATE OF JUDGMENT: 01/02/1961

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

CITATION:  1961 AIR  917            1961 SCR  (3) 669

ACT: Industrial    Dispute--Payment   of   bonus   to    clerical staff--Practice Prevailing in oil companies--If must be Paid lower rate than tabour staff.

HEADNOTE: Payment of bonus being based on the contribution of  workmen to the profits of the company, that contribution, it is well settled,  has to be taken into consideration as a whole  and it is not relevant to enquire which class or section of  the workmen contributed how much to the profits. Burn and Co., Calcutta v. Their Employees [1956] S.C.R.  781 and Baroda Borough Municipality v. Its Workmen [1957] S.C.R. 33, referred to. Looked  at  from that stand-point, it is not  fair,  in  the absence   of  any  overriding  consideration,  to   make   a distinction  as  to the rate of bonus payable  to  different classes of workmen such as clerks and operatives, for it  is ordinarily impossible to say which class contributed more to the prosperity of the industry than another. Nor  can  it  be laid down as an inflexible  rule  that  the clerical  and  the labour staff must always be paid  at  the same   rate.   The  Industrial  Tribunals  must  have   wide discretion  in  the  matter,  which  this  Court  would   be reluctant to interfere with unless arbitrarily exercised. Consequently, where the Industrial Tribunal, on a full  con- sideration  of the difference in the wage scales  of  labour and the clerical staff, came to the conclusion that it would be  improper  to award lower rate of bonus to  the  clerical staff  who  belonged to the middle class and  suffered  more than the labour staff from the rise of price, and there  was nothing  to show that this was not so, the decision  of  the Tribunal was reasonable and must be upheld.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 250/1959. Appeal  by special leave from the award dated May 18,  1958, of  the Industrial Tribunal, Bombay, in Reference  (I.   T.) No. 106 of 1955.

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M.   C.   Setalvad,  Attorney-General  for  India,   S.   D. Vimadalal and 1. N. Shroff, for the appellants. Janardan Sharma, for respondent No. 1. 1961.   February 1. The Judgment of the Court was  delivered by 670 DAS GUPTA, J.-This appeal by special leave arises out of  an industrial dispute. between the appellant company, and their clerical  staff on the question of bonus for the year  1956. The  demand  of the workmen, was for bonus equivalent  to  8 months’  total earnings of the year.  The  company  resisted this demand mainly on the ground that there was in existence an  agreement between the company and its labour  employees- whereby  bonus for the year 1956 had been settled  at  4-1/2 months’ basic wages, that the general practice in awards  in the  matter of bonus had in the past been to award or  grant lesser  amounts  to clerical employees than to  labour,  and that  in  any  case,, to grant the same  rate  of  bonus  to clerical  employees  and  labour employees  would  be  "  to encourage or to invite strife and discontent." The  Tribunal held  that such an agreement as regards bonus for  1956  had been  voluntarily entered into on behalf of the workers  and was  beneficial to them; and was of opinion that. the  bonus to the clerical staff ought to be on the same scale.  On the one  hand, it rejected the clerical staff’s claim for  bonus at a higher rate than what the workmen were entitled to,  as this " would lead to industrial discontent and strife ", and on  the  other held that there was no reason  to  grant  the clerical  staff  bonus  at a  lower  rate.   Accordingly  it awarded bonus at the rate of 9/24ths of the basic wages,  to the clerical staff, for the year ending December 31, 1956. Two  contentions were raised in appeal.  The first  is  that the Tribunal erred in awarding bonus without having recorded a conclusion as regards the existence and extent of the  gap between  the actual wages received by these workmen and  the living  wage.  The second contention urged on behalf of  the appellant  is  that the Tribunal erred in  granting  to  the clerical staff bonus at the same rate as was payable to  the labour staff, on the basis of the agreement, and should have granted bonus to the clerical staff, at a lower rate. The  appellant cannot however be allowed to urge  the  first contention in this appeal because such a contention does not appear to have been seriously 671 raised  before the Tribunal.  It is true that in  the  first part  of the written statement filed before the Tribunal  on behalf  of  the  company a statement was  made  that  "  the company,  craves  leave  to  refer to and  rely  on,  as  if incorporated herein, its written statement filed before this Hon’ble Tribunal in Ref. (I.T.) 279 of 1957, and repeats and adopts  all the submissions and averments made therein"  and that in the written statement filed therein a question  that in  view  of  the high wage,% paid by  the  company  no  gap existed  between  the actual wage and the living  wage,  was taken.   Not only was no independent statement made  in  the separate  written statement which was filed in  the  present reference, i.e., Ref No. (I.T.) 106 of 1958 on this question but  we  find no reference at all in the award made  by  the Tribunal  which  heard both the references together  to  any contention of this nature.  No ground that the Tribunal  had granted bonus without coming to a conclusion as regards  the existence  and  extent  of a gap  between  the  actual  wage received by the workmen and the living wage was taken in the petition for special leave to appeal.  Even in the statement of  case filed on behalf of the appellant no  such  question

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had been raised.  It is not therefore open to the  appellant to urge such a contention now. In support of the other contention that the Tribunal was  in error  in granting to the clerical staff bonus at  the  same rate as was payable to the labour staff, on the basis of the agreement,  and that bonus should have been granted  to  the clerical  staff at a lower rate, it is urged that  for  many years  now, the practice in the petroleum industry has  been to make a distinction between the clerical employees and the operatives, giving a lower rate of bonus to the former, than what  is  given  to the latter.  It is  unnecessary  in  the present  case,  to consider, whether, if  the  premise  that there  had for many years been such a practice of  paying  a lesser  rate of bonus to clerical staff than to  the  labour staff,  that itself would preclude  industrial  adjudicators from awarding bonus to both classes of employees at the same rate.   For,  we find that the above premise  has  not  been established, While it is true that in some 672 years,  either  by  award  of  Industrial  Tribunal  or   by agreement,  clerical  staff of petroleum  concerns  has  got bonus  at  a lower rate, than the labour  employees,  it  is equally true that in some years at least, clerical staff and operatives have been given bonus at the same rate.  Thus for the  year 1951, we find that in disputes between  the  three oil companies-The Burmah Shell, the Caltex and the  Standard Vacuum,  and  their employees in their Calcutta  office  the Labour  Appellate Tribunal discussed the matter  in  Burmah- Shell Oil Co. Ltd. v. Their Workmen (1) thus :-               " In the matter for payment of bonus for 1950,               both the clerical staff and the working people               got  bonus  at the rate of  3  months’  wages,               though  there  was  an  observation  that  the               working class were on calculation entitled  to               4  months.   The effect-, was,  however,  that               both  the  groups got bonus at the rate  of  3               months’  basic wages.  During the pendency  of               the  Tribunal proceedings, all  the  companies               made agreements with the Union of the  workers               that bonus would be granted on the basis of 3-               1/2 months’ wages for the year 1951.  We  feel               that there; would be a serious repercussion if               we  allow  to the clerical staff  anything  in               excess of that amount.  On the other hand,  as               the  effect of the previous decision had  been               that  both groups got equally, paying  to  the               clerks  less than that what has been  paid  to               the  working class would give rise to  a  real               discontent. "  We find also that when the same  question, viz.,  whether the same rate of bonus should be paid to clerical staff  and operatives,  was  raised  before  the  Industrial  Tribunal, Ernakulam,  in  a dispute between the  Burmah-Shell  Co.  v. Their Workmen (2), learned counsel on behalf of the  company conceded  that  he would not press the point  for  making  a distinction  in  the matter of payment of  bonus.   We  find therefore  that there is no basis for the  assumption’  that ’the uniform or nearly uniform practice in the oil companies has  been  to pay bonus at a lesser rate to  clerical  staff than to operatives.  There is no substance. therefore in the argument that the award of bonus at (1) (1955) L.A.C. 787, 794. (2) (1959) (1) L.L.J. 198, 673 9/24ths of basic wages, to the clerical staff, is likely  to

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cause  discontent among the labour staff, which has  entered into an agreement to receive bonus at the same rate. The second argument is that as the pay scale of the clerical staff is higher than what the labour staff receive as wages, the gap between the living wage and wage actually  received, is less for the clerical staff, and so, it would be wrong to pay  bonus, which is primarily intended to bridge this  gap, at  the  same rate to these two classes  of  workmen.   This argument overlooks the important principle that the  payment of  bonus is based on the fact of contribution by labour  to the profits of the industry, and that it has been held  more than  once  by the court that the contribution to  be  taken into  consideration is the contribution made by the  workmen taken together as a class, and that it would not be relevant to  enquire which section of the workmen has contributed  to what  share  of profits.  It was observed by this  Court  in Burn  &  Co., Calcutta v. Their Employees  (1),  in  setting aside  an award of the Appellate Tribunal of  an  additional one month’s basic wages:-               "  The entire profits of the company  are  the               result  of the labour of all the  workmen  and               employees in all its units.  To grant a  bonus               to a section of them on the basis of the total               profits of the company will give them a  share               in   profits   to   which   they   have    not               contributed......   If   the  order   of   the               Appellate  Tribunal is to be given effect  to,               some of the employees of the company would get               a  bonus while, others not and as observed  in               Karam  Chand  Thaper & Bros.’ Workmen  v.  The               Company  (1953 L.A.C. 152), that must lead  to               disaffection among the workers, and to further               industrial disputes.  " A similar view was expressed by this Court in Baroda Borough Municipality v. Its Workmen (2). It is true that in the cases mentioned above, the Court  was considering  the  question whether one  class  of  employees could  be  granted  bonus, while  another  class  was  being granted none at all; and was not (1) [1956] S.C.R. 781. 795. (2) [1957] S.C.R. 33. 674 considering the question of propriety of different rates  of bonus being paid to different classes.  But the basis of the decision  that all the workmen, taken as a whole  contribute to  the profits, is relevant also for the  consideration  of the  question whether different rates of bonus  between  two different  classes of workmen are fair; and it is  necessary to  remember that it is ordinarily not possible to say  that one  class  or workmen, say clerks, contribute more  to  the prosperity   of  the  industry  than  another   class   like operatives.  In the absence of some overriding consideration it  would not be fair to make a distinction in the  rate  of bonus between different classes of workmen. We  do not wish however to lay down an inflexible rule  that clerical staff and labour staff must always be paid the same rate of bonus.  It may happen in a particular industry  that wages of labour staff are extremely low, while the pay scale of  the clerical staff is many times higher.  If a  Tribunal in a case like this, being of opinion, that payment of bonus at the same rate will not be fair, and may cause  discontent amongst  the  workers awards bonus at a lower  rate  to  the clerical staff, than to the labour staff, there would be  no reason  for disturbing the award.  The industrial  tribunals must  have  very wide discretion in  deciding  matters  like

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this;  and it is not for this Court to interfere with  their exercise of discretion, unless it is plainly arbitrary. In  the  present case, the Tribunal fully conscious  of  the difference  in the wage scales of labour and clerical  staff has pointed out that the clerical staff came from the middle class  whose  standard of living is higher, and  has  stated that this class has suffered perhaps more than the operative class from rise in prices, and has in consideration of these factors, concluded that it would be appropriate not to award a lower rate of bonus to them.  Nothing has been shown to us to  justify any doubt about the correctness of the  premises mentioned by the learned Tribunal; and the conclusion  seems eminenty reasonable. It was urged by the learned Attorney-General who appeared on behalf of the appellant company that 675 even  though it be true that the standard of living  of  the middle  class from which the clerical staff comes is  higher than  that  of  the operatives the  difference  between  the higher average wage received by the clerical staff and  that received by the operatives is much more than the  difference in  monetary terms between the living wage of  the  clerical staff  and  that  of the operatives.   From  the  statements furnished  before us it was attempted to be shown  that  the starting  rate  of  remuneration of  the  middle  grade  for operatives  together with what is received in  shapes  other than  the  wages was on January 1, 1958,  Rs.  188-94  while similar  receipts  by  the middle grade for  clerks  is  Rs. 404.45, that is, the starting remuneration of clerks  taking the  middle  grade  as the type is  113.91%  more  than  the starting  remuneration  for  middle grade  for  labour.   As against  this it is suggested, the living wage for  clerical staff  should  be  taken only 80% more  than  that  for  the operatives.  We may assume without further investigation the correctness  of  the statement as  regards  the  comparative remuneration  received  by middle grade  of  operatives  and middle grade of clerical staff as submitted on behalf of the company.   We find no basis however for the assumption  that the living wage of clerical staff is only 80% more than that of  operatives.   It  is true that in  connection  with  the determination of wages a formula which appears to have  been initiated  first  by Mr. Justice Rajadhyaksha  when  he  was enquiring  into  the  cost of  living  of  the  non-gazetted employees   in   the  Post  and  Telegraph   Department   of multiplying  the  figures  reached  on  the  basis  of   the requirements of the lower class employees by 180% has  often been accepted by the industrial tribunals.  Assuming however without  deciding  that  this coefficient of 180  %  may  be properly adopted for arriving at the fair wage  requirements of  clerical  staff  from  the  fair  wage  requirements  of operatives  it  does not by any means follow that  the  same coefficient  can  be usefully ,applied  in  calculating  the living  wage of the clerical staff from the living  wage  of the  operatives.   As has been clearly pointed out  by  this Court in a recent 676 judgment in C. A. No. 416 of 1958 (Standard Vacuum  Refining Co.,  Ltd.  versus Its Workmen) the components of  a  living wage  are largely different from those of a fair wage.   The difference  in  the living wage standards of  the  class  to which operatives generally belong and the class to which the clerical staff belongs may produce much greater  differences in  the money value in the components of the requirement  of living  wage as between the two classes than the  difference in the money value of the components of fair wage of the two

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classes. There  is no justification therefore for thinking  that  the living wage of the clerical staff is only 80% more than  the living  wage of the operatives and so ..no  conclusion  that the gap between the living wage and the actual wage is  less in the case of clerks than in the case of operatives can  be drawn  from  a  consideration  of  the  comparative   wage,% received by them. We  find nothing that would justify us in  interfering  with the  conclusion  of  the Tribunal that  the  clerical  staff should be awarded bonus at the same rate, as the operatives. The appeal is accordingly dismissed with costs.                                      Appeal dismissed.