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PETITIONER: WORKMEN OF BALMER LAWRIE AND CO.

       Vs.

RESPONDENT: BALMER LAWRIE AND CO.

DATE OF JUDGMENT: 07/11/1963

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

CITATION:  1964 AIR  728            1964 SCR  (5) 344  CITATOR INFO :  R          1967 SC1286  (8)  RF         1969 SC 513  (15,22,23)  RF         1970 SC 512  (10)  RF         1972 SC1210  (15)  R          1972 SC2332  (74,118)  RF         1973 SC2758  (16)  R          1978 SC1113  (14)  R          1987 SC1415  (12)

ACT: Industrial  Dispute-Clerical  and subordinate  staff-Age  of retirement-Reduction of grades-Wage structure-Conditions for re-examination-Revision   of   wage   scales-Principles--Res judicata-Applicability-Comparable  character  of  industrial undertakings

HEADNOTE: Industrial  disputes  arose between the respondent  and  its employees  the  appellants.   The  appellants  demanded  the reduction  of  the  existing five grades  into  two  grades, increase  in the scales of pay, privilege and medical  leave and increase of the existing age of retirement which was 55. The Tribunal rejected all the demands of the appellants, but allowed  an increase of Rs. 10 in the initial salary of  all grades.  In appeal by special leave: Held:The age of retirement in case of the  respondent’s workmen  should be increased to 58.  Time has now  come  for increasing  the  age of retirement in the case  of  clerical staff and subordinate staff generally from 55 to 58. Guest, Keen Williams Private Ltd. v. P.J. Sterling,  (1960.) 1  S.C.R. 348 and Workmen of M/s.  Jessop & Co. Ltd. v.  M/s Jessop & Co., [1964] I.L.L.J. 451 1961, followed. (ii)In the present case having regard to the genesis and the manner in which these grades have functioned since 1949,  it is  not necessary to make any adjustments in the  grades  by reducing their number. (iii)The  question  as to the revision of  wage  scales must  be  examined on the merits in  each  individual  case. Technical  considerations  of  res judicata  should  not  be allowed to hamper the discretion of industrial adjudication. The  principle  of gradual advance towards the  living  wage

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which  industrial  adjudication  can  never  ignore,  itself constitutes   such   a   special   feature   of   industrial adjudication   that  it  renders  the  application  of   the technical  rule of res judicata singularly  in  appropriate. If the paying capacity of the employer increases or the cost of  living index shows an upward trend, or there  are  other anomalies,  mistakes,  or errors in the  award  fixing  wage structure, or there has been a rise in the wage structure in comparable  industries in the region,  industrial  employees would be justified in making a claim for the  re-examination of  the wage structure and if such a claim is  referred  for industrial adjudication, the Adjudicator would not  normally be  justified  in  rejecting it solely on  the  ground  that enough time has not passed after the making of the award, or that material change in 345 relevant  circumstances  had  not been proved.   It  is,  of course  not possible to lay down any hard and fast  rule  in the matter.  The question must be examined on the merits  in each case. Burn  &  Co. Ltd. v. Their Workmen (1959) 1 L.L.J.  450  and James  Finley & Co. Ltd.  Employees Union, Calcutta v.  M/s. James Finley & Co. Ltd.  Calcutta, 1957 L.A.C. 154, referred to. In dealing with industrial matters, industrial  adjudication should  not  normally encourage technical pleas  and  having regard  to  the  fact that cases are  conducted  before  the Tribunal  many  times  by laymen, the  significance  or  the importance of the argument that a particular question is not put to a particular witness should never be exaggerated. (iv)In dealing with the comparable character of  industrial undertaking, industrial adjudication does not normally  rely on oral evidence alone.  This question is considered in  the light   of  material  facts  and  circumstances  which   are generally proved by documentary evidence.  The total capital invested by the concern, the profits made by the concern the dividends paid, the number of employees, the standing of the concern in the industry, these and other matters have to  be examined  in determining whether one concern  is  comparable with  another  in  the  matter of  fixing  wage,  and  these questions  cannot  be  decided  merely  on  the   interested testimony of either the workmen or the employer and his wit- nesses.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 820 of 1962. Appeal by special leave from the award dated June 29,  1961, of  the First Industrial Tribunal, West Bengal in  Case  No. VIII-608 of 1960. P.K. Sanyal and P.K. Mukherjee, for the appellants. B. Sen, S. Ghosh and B.N. Ghosh, for the respondent No. 1. November  7, 1963.  The Judgment of the Court was  delivered by GAJENDRAGADKAR   J.-An   industrial  dispute   between   the respondent, M/s Balmer Lawrie & Co., and its employees,  the appellants, has given rise to the present appeal by  special leave.   The  dispute related to four demands  made  by  the appellants  and  it  was referred for  adjudication  by  the Government  of  West  Bengal  to  the  Industrial   Tribunal constituted under section 7A of the Industrial Disputes Act, 1947.  These demands were: grades 346 and  scales  of  pay, privilege  leave,  medical  leave  and

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retiring age.  In regard to the claim of the appellants  for reducing the existing five grades into two grades  organised on a rational and scientific basis, the Tribunal held  that, on   the   whole,   .  the   grades   seemed   to   function satisfactorily, and so, no case had been made out for  their amalgamation.  The demand for increase in the scales of  pay was substantially rejected by the Tribunal, but it held that the appellants should be given some relief by increasing the initial salary of all the grades by Rs. 10.  The claims  for privilege  leave  and  medical leave were  rejected  by  the Tribunal;  it held that the mere fact that two  concerns  in the  neighbourhood  had agreed to give more  than  21  days’ privilege  leave,  was  no justification  for  changing  the present  rule  as  to privilege  leave  which  governed  the appellants, and as to medical leave, the Tribunal held  that the  construction  which the respondent was placing  on  the relevant  rule contained in Exbt.  F was  inadmissible,  and so, there was no necessity for introducing any rule that the production  of  a  medical  certificate  from  any   medical practitioner should suffice.  The Tribunal then examined the appellants’ claim as to the retirement age and it held  that the  existing  age of retirement which was at 55  needed  no change.  An award was accordingly passed in the light of the findings  recorded by the Tribunal on the four demands  made by the appellants.  It is this award which is challenged  by the appellants before us. In respect of the age of retirement, the approach adopted by the  Tribunal appears to be unsatisfactory.   This  question has been considered by this Court on several occasions.   In Guest,  Keen,  Williams  Private  Ltd.  v.  P.J.  Sterling.& Ors.(1)  this  Court  has discussed in  a  general  way  the considerations   which   are  relevant   and   material   in determining  a proper age for superannuation  in  industrial employments.  As has been observed by this Court recently in the case of Workmen of M/s Jessop & Co. Ltd. v. M/s Jessop & Co. & Ors. (2) (1) [1960] 1 S.C.R. 348. (2) [1964] 1 L.L.J. 451. 347 we feel that the time has now come for increasing the age of retirement in the case of clerical staff and the subordinate staff  generally  from  55  to  58.   It  appears  that  the attention  of  the Tribunal was not drawn  to  the  relevant decisions  of this Court; otherwise, the Tribunal would  not have  rejected  the  appellants’ claim.   In  fact,  in  the present  appeal, Mr. Sen for the respondent has agreed  that the,  age of retirement should be increased from 55  to  58. We  accordingly reverse the order passed by the Tribunal  in that  behalf  and direct that the age of retirement  in  the case of the respondent’s workmen should be 58 and not 55  as from the date of this judgment. That  takes  us to the question about the reduction  of  the grades  from 5 to 2. Mr. Sanyal for the appellants  contends that  generally  two  ’grades  are  adopted  by   industrial concerns  and he urges that the presence of five  grades  is both unscientific and inexpedient.  It may be conceded  that two  or  three grades are generally  adopted  by  industrial concerns’  but in the present case, it is necessary to  bear in mind the previous history of the creation of these grades and  to  take into account the fact that these  five  grades have, on the whole, satisfactorily functioned in the concern of  the  respondent.  In the award  pronounced  between  the parties, in 1949, these five grades were evolved.   Floormen who  are mentioned in the award correspond to Grade I  which is  described as the Sub-grade in the respondent’s  concern.

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Then  we have the remaining four grades described as  Junior Grade,  Senior  Grade,  Section Head  Grade  and  Supervisor Grade.  These correspond to the four grades Nos. 11, 111, IV &  V in the respondent’s concern.  Since 1949, these  grades have been maintained by the respondent.  That is the genesis of the 5 grades. It  cannot be seriously disputed that the employees  working in  the  Sub-grade  which is Grade I are  entrusted  with  a distinctly  inferior  type  of  work  and  they  cannot   be integrated with Grades II or III.  Then as to Grades 11  and 111,  it  is significant that there is  automatic  promotion from one to the other 348 (Annexure  D).   This  automatic promotion  is,  of  course, subject  to  the condition that the  Clerks  concerned  have satisfactory service records and it is granted on the  clear understanding that they would continue to undertake Grade 11 duties.  It also appears that a Clerk who joined the company in Grade 1 and was placed in Grade 11 prior to the abolition of  Grade 1, or on the date when this Grade  was  abolished, would  be  automatically  promoted and fitted  in  the  next higher  Grade,  subject to the conditions mentioned  in  the rule.   Thus,  it is clear that between Grades  11  and  III which  might have been amalgamated into one Grade, there  is automatic  promotion.   This  method has  the  advantage  of enabling  the employer to recognise outstanding merit  in  a Clerk working in the lower grade by promoting him  straight- away to the higher grade.  The appellants have not suggested that  such promotions in recognition of outstanding  service and efficiency have never been given, nor have they  alleged that  they  have  been given for improper  reasons.   As  to Grades IV and V, they are in the nature of selection  grades and the work entrusted to the employees in the two grades is of   such   a  distinctive  character  that  it   would   be unreasonable  to think of amalgamating them into one  grade. Therefore,  we  are  satisfied that  having  regard  to  the genesis   of  the  five  grades  which  prevailed   in   the respondent’s  concern and the manner in which  these  grades have functioned since 1949, it is not necessary to make  any adjustments   in  the  grades  by  reducing  their   number. Accordingly, we think the Tribunal was right in refusing  to accept  the  demand of the appellants to reduce  the  grades from five to two. The  next  question  to consider is one  in  regard  to  the increase  ’in the scales of pay.  The Tribunal has  rejected this  claim on the ground that no material change  had  been proved  in the relevant circumstances since the scales  were previously  fixed.   It appears that when  the  grades  were first  determined  by an award in 1949,  they  operated  for three years; then a revision 349 was made in 1952 and another revision was effected in  1955. By  these  revisions,  modification has  been  made  in  the maximum  salary  payable to the employees in  the  different grades, but the minimum remained unchanged.  That is why the Tribunal  has  made  an ad hoc addition of  Rs.  10  to  the minimum  salary  in  the respective  grades.   The  Tribunal thought  that  this  modification would  meet  the  ends  of justice.   The  other  reason  given  by  the  Tribunal  for rejecting the claim is that the plea of the high increase in the  cost of living on which the appellants relied  was  not valid, because dearness allowance was paid to the appellants under the Bengal Chambers of Commerce Formula and that,  the ’tribunal thought, answered the appellants’ contention about the rise in the cost of living.  The appellants also  relied

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on an agreement between the parties and urged that by virtue of  the  said  agreement,  they were  entitled  to  claim  a revision of the wage scale, because four comparable concerns in  the  region  had in the  meanwhile  revised  their  wage scales.  The Tribunal was not impressed by this plea either. It  is these findings recorded by the Tribunal that need  to be examined in the present appeal. Taking  the first argument that there has been no change  in the   circumstances,  the  Tribunal  has  relied  upon   two decisions  in  support of the view that  unless  a  material change in circumstances is proved, there can be no change in the  wage structure.  In Burn & Co. Ltd. v. Their Workmen  & Ors.(1),  this  Court has observed that in  the  absence  of anything to show that between 1950 and 1955 when the present industrial  dispute was referred for  adjudication,  circum- stances  had so altered to make the existing scales  of  pay and grades unreasonable or inadequate to meet the conditions prevailing  at  the  time the industrial  dispute  had  been referred to the Tribunal, it must be held that any  revision of  the  existing  wage-scales or  grades  was  unjustified. Similarly,  in  James Finlay & Co. Ltd.   Employees’  Union, Calcutta v. M/s.  James (1)  [1959] 1 L.L.J. 450. 350 Finlay  &  Co.  Ltd.,  Calcutta(1),  the  Labour   Appellate Tribunal observed that though the principles of res judicata bad  no application to adjudication on industrial  disputes, on principle, a previous award should not be changed, except on   justifiable  grounds.   The  Appellate  Tribunal   then proceeded  to observe that some of the grounds on which  the award can be changed are: change of circumstances, principle of  gradual advance to the living wage; anomaly, mistake  or error  in the last award involving hardship to either  party or both. While  dealing with the question about the revision of  wage scales,  it  is  necessary to remember  that  the  technical considerations  of  res judicata should not  be  allowed  to hamper  the  discretion of industrial adjudication.   It  is undoubtedly  true  that  wage scales are  devised  and  wage structures  constructed as matters of long-term policy,  and so, industrial adjudication would naturally be reluctant  to interfere with the wage structures without justification  or in a lighthearted manner.  When a wage structure is  framed, all relevant factors are taken into account and normally  it should remain in operation for a fairly long period; but  it would  be  unreasonable to introduce considerations  of  res judicata   as  such,  because  for  various  reasons   which constitute   the  special  characteristics   of   industrial adjudication  the  said technical  considerations  would  be inadmissible.   As the Labour Appellate Tribunal itself  has observed,  the  principle  of gradual  advance  towards  the living wage which industrial adjudication can never  ignore, itself  constitutes  such a special  feature  of  industrial adjudication   that  it  renders  the  application  of   the technical rule of res judicata singularly inappropriate.  If the paying capacity of the employer increases or the cost of living shows an upward trend, or there are other  anomalies, mistakes  or errors in the award fixing wage  structure,  or there  has been a rise in the wage structure  in  comparable industries  in  the region, industrial  employees  would  be justified in making a claim for the re-exami- (1)  [1957] L.A.C. 154. 351 nation of the wage structure and if such a claim is referred for  industrial  adjudication,  the  Adjudicator  would  not

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normally  be justified in rejecting it solely on the  ground that  enough  time has not passed after the  making  of  the award, or that material change in relevant circumstances bad not been proved.  It is, of course, not possible to lay down any  hard and fast rule in the matter.  The question  as  to revision  must be examined on the merits in each  individual case   that  is  brought  before  an  adjudicator  for   his adjudication. Then as to the rise in the cost of living, the Tribunal  has no  doubt  observed  that having regard  to  the  fact  that dearness  allowance  is paid to the  appellants’  under  the Bengal  Chambers of Commerce formula, the  appellants’  plea was not valid; but it does not appear that the Tribunal  has considered  the  question  as to whether  the  said  formula affords complete neutralisation to the employees against the rise  in  the  cost of living.  We  propose  to  express  no opinion  on  this point, but we are concerned to  point  out that  unless the Tribunal had examined the matter  carefully and bad come to the definite conclusion that the formula  in question  gave  nearly complete neutralisation  against  the rise in the cost of living, it would be unreasonable to hold that   because  the  Chamber  formula  is  adopted  by   the respondent   for  payment  of  dearness  allowance  to   its employees,  the complaint of the appellants that  there  has been a rise in the cost of living and so, their wage  struc- tures should be revised, has no substance.  This is a matter which has to be carefully examined before any conclusion  is reached in a satisfactory way. That  leaves  another  Point to be  considered  and  it  has reference to the agreement between the parties on which  the appellants  relied.   In 1955, when by  agreement  the  wage scales were revised, the parties agreed that the pay  scales then introduced would remain unchallenged "unless amended by any   Mercantile   Omnibus  Tribunal  or   any   legislation prescribing  higher  rates of pay, or in the  event  of  any substantial  enhancement  of scales of  pay  being  effected generally 352 in  other  Mercantile Firms of Balmer Lawrie  &  Co.  Ltd.’s standing,.  or in the event of any extraneous  circumstances arising   resulting   in  a  general  demand   for   further enhancement of the scales of pay." The appellants  contended that  wage scales had been recently revised by the  Imperial Tobacco Co. Ltd., Shaw Wallace Co., Voltas Co. and Tata Iron & Steel Co., and in support of this plea, they examined four witnesses  who  proved  the revised scales  of  wages.   The argument was that these concerns are comparable concerns and since  there  has been a revision of wage  scales  in  these concerns,  the appellants were entitled to claim a  revision of  their  wage scales in accordance with the terms  of  the agreement.  After the appellants led their evidence in proof of  the  fact that the four concerns had revised  their  pay scales,  the  respondent  examined  some  witnesses  on  its behalf.   Amongst these witnesses was Kamal  Prasad  Sircar. In  his evidence he mentioned the names of six firms  which, according  to  him,  were comparable with the  firm  of  the respondent.  Amongst these firms, he did not include any  of the four firms referred to by the appellants.  The  Tribunal took  the view that since Sircar was not  cross-examined  on the  question as to whether any of the said four  firms  are comparable  to  the respondent’s concern, the  plea  of  the appellants  that  the  said firms  are  comparable  must  be rejected.  In our opinion, the reason given by the  Tribunal in rejecting the appellants’ claim is wholly  unsatisfactory and  the approach adopted by it in dealing with this  matter

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inappropriate.    In   dealing  with   industrial   matters, industrial   adjudication  should  not  normally   encourage technical pleas and having regard to the fact that the cases are conducted before the Tribunal many times by laymen,  the significance  or  the  importance of  the  argument  that  a particular  question  is  not put to  a  particular  witness should  never  be exaggerated.  Besides,  the  Tribunal  has overlooked  the  fact that though evidence was  led  by  the appellants in respect of the four concerns obviously on  the ground  that they were comparable concerns, Sircar  did  not positively  take  the  oath that they  were  not  comparable concerns, and so, it would 353 not  be reasonable to make a finding against the  appellants on  the ground that Sircar was not asked any question  about it. Besides,  it is necessary to emphasise that in dealing  with the   comparable  character  of   industrial   undertakings, industrial  adjudication  does  not  usually  rely  on  oral evidence alone.  This question is considered in the light of material facts and circumstances which are generally  proved by documentary evidence.  What is the total capital invested by the concern, what is the extent of its business, what  is the  order of the profits made by the concern, what are  the dividends  paid,  how  many employees are  employed  by  the concern,  what is its standing in the industry to  which  it belongs,  these  and other matters have to  be  examined  by industrial  adjudication in determining the question  as  to whether one concern is comparable with another in the matter of  fixing wages.  Now, it is obvious that  these  questions cannot be decided merely on the interested testimony  either of  the  workmen,  or of the  employer  and  his  witnesses. Unfortunately, the Tribunal has lost sight of this important feature.  Therefore, we are satisfied that the Tribunal  was in  error  in  refusing  to  consider  the  merits  of   the appellants’ claim in regard to the modification and increase in the wage scales. In  regard  to  the  appellants’  grievance  in  respect  of privilege leave and medical leave, we see no substance. The result is, the award rejecting the appellants’ claim for modification  and revision of the wage scales is  set  aside and the matter is sent back to the Tribunal for disposal  of this  issue  in accordance with law.  Parties  would  be  at liberty  to  lead additional evidence in  support  of  their respective cases.  The order made by the’ Tribunal giving ad hoc  increase  of Rs. 10 in the initial salaries  fixed  for different  grades is confirmed.  The other directions  given by  the  award in respect of the other claims  made  by  the appellants  are also confirmed.  Having regard to  the  fact that 1 SCI/64-23 354 the  appellants have succeeded in respect of the  retirement age  and  that an order of remand has been passed by  us  in their  favour  for a reconsideration of their  claim  as  to revision  of the wage scales, we direct that the  respondent should pay the appellants their costs in this Court. Award partly set aside and case remanded.