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PETITIONER: POLYCHEM LIMITED

       Vs.

RESPONDENT: R.D. TULPULE, INDUSTRIAL TRIBUNAL, BOMBAY &ANR.

DATE OF JUDGMENT15/03/1971

BENCH: DUA, I.D. BENCH: DUA, I.D. VAIDYIALINGAM, C.A. MITTER, G.K.

CITATION:  1972 AIR 1967            1972 SCR  (3) 855  1972 SCC  (1) 885

ACT: Labour- Law-Wage policy-Fixation of allowance-Principles  to be considered.

HEADNOTE: The  demand  for vacation allowance of the  workmen  of  the appellants,  at the same rate as was granted to  the  higher staff, was granted by the Industrial Tribunal.  The Tribunal decided  the  question  on the  basis  that  the  appellant- employer  had the financial capacity to stand the burden  of such  allowance  being granted to the workmen  at  the  rate claimed. Allowing   the  appeal  and  remanding  the  matter  to   be considered afresh by the Tribunal, HELD : (1) The ultimate object of industrial adjudication in this country is to help the growth and progress of  national economy; and for realising that object, industrial  disputes are   settled  on  principles  of  fair  play  and   justice harmonising  the  conflicting claims of capital  and  labour with  full  awareness of socioeconomic  trends  of  thought. industrial  law in this country, is therefore,  expected  to effectively  secure, to the workers, conditions  of  service reasonably conducive to the improvement of their social  and economic  standard  of living and their moral  and  material development.   The industrial labour problems in this  coun- try,  having  their roots in the  historical  background  of social,  economic and political conditions have,  little  in common  with  such problems in the United  States  or  other developed  countries.   Therefore,  the  American  lines  of thought  should  not  be too  readily  and  indiscriminately followed, [861 D-G] (2)  Wage  policy  relating  to workmen  is  a  complex  and sensitive of public policy, because, the relative status  of workmen in the society, their commitment to industry,  their attitude  towards the management, their  motivation  towards productivity,  and  their standard and way of life  are  all conditioned by wages.  It is not a purely economic policy in which an employer and an employee alone are interested,  but the  consumer  and the society at large and a  fortiori  the State, are also vitally interested.  No wage policy can ever be  applied in vacuum in disregard of the realities  of  the

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social  and economic conditions in our  country  Considering the  question of wages ’in the background of  the  Directive Principles  in  the Constitution, a  wage  structure  should serve to promote a fair remuneration to labour ensuring  due social  dignity, personality and security, a fair return  to capital,  and  strengthen incentives  to  efficiency,without being unmindful of the legitimate interests and expectations of  the  consumer in the matter of prices.  Guided  by  this principle, if the financial capacity of an industry  permits the workers should be allowed a due share in the  prosperity of  the  industry to which they have  contributed  by  their labour,  so as to enable them, within reasonable  limits  to improve their standard of living. [863 D-H] (3)  But  in the present case, the Tribunal had committed  a serious  error in not considering the other  allowances  and amenities allowed to, 856 respondents-workmen,  and comparing their total wage packet  with the  total wage packet of those employees to whom the  allowancer had  been allowed when determining the question.  The  difference between the amenities allowed to the workmen and to the staff  to whom vacation allowance has been granted must in law and  justice be  looked into and the question then decided whether or nor  the present workmen’s demand is justified. [863 H-864 A, B-C] The  principle  of region-cum-industry has no doubt to  kept  ill view but then the comparable industries in the region have to   co nsidered from  all the relevant aspects which have been laid down by  this Court  in various decisions.  The fact that in the refineries  in the region similar allowance is granted as a result of settlement cannot,  on that account alone be  considered  to  be irrelevant, because,  that may appropriately indicate that the demand of  the workmen in those industries not considered, unjust. [864 B-D] The  total Wage packet of the various categories of employees  in the  appellant’s industry itself, including the question  of  the nature  of  their duties and functions. however, deserves  to  be given primary importance. so that. there is no reasonable  chance of  heart  burning  and  discontentment  amongst  the   different categories of workmen on account of differential treatment which, though   seemingly   justifiable   may,   in   real   effect   be discriminatory. [864 D-F] Remington  Rand of India Limited   v. The Workmen, C.A. Nos.  856 of  1968, 1475 of 1968 and 2129 of 1968 decided on  December  10, 1969.  Alembic Chemical Works Co. Ltd. v. The Workmen,  [1961]  3 S.C.R.  297, Delhi Cloth & General Mill.,; Co. Ltd.  v.  Workmen, [1969]  2 S.C.R. 307, J. K. lron & Steel Co. Ltd. v. The  Iron  & Steel Mazdoor Union Kanpur, [1955] 2 S.C.R. 1315 and Express News Paper (P) LTD v. union of lndia [1959] S.C.R. 12, referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 2162 and  2163 of 1970. Appeals  by Special Leave from the Award dated June 9,  1970  ,of the Industrial Tribunal Maharashtra, Bombay in References  (I.T.) Nos. 284 of 1968 and 19 of 1969. S.V. Gupte, Mahesh Bhatt, Sunanda Bhandare and P. H. Parekh,  for the appellant (in both the appeals). K.Rajendra Chowdhary, for respondent No. 2 (in both the appeals). The Judgment of the Court was delivered by Dua, J. The short but important point raised in these two appeals by  special  leave relates to the validity of that  part  of  the award  of the Industrial Tribunal, Maharashtra, Bombay, by  which the  demand for vacation allowance of the workmen of  the  appel-

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lant-,  Messrs  Polychem  Ltd., Bombay, at the same  rate  as  is granted  to its higher staff both at the head office and  at  its Chambur  857 plant,  was allowed.  These two appeals are directed against  the impugned  award in two references under S. 1 0 ( 1 ) (d)  of  the Industrial  Disputes  Act, 1947, one of which (Ref.  No.  284  of 1968)  related to, the demands of the head office staff  and  the other (Reference No. 19 of 1969) to the workmen of Chembur plant. The  impugned portion of the award dated June 9, 1970.  reads  as under               "The only other demand which is now common to  both               the  references  is  the demand  for  the  vacation               allowance.  It appears that the company pays to its               officers or other staff drawing Rs. 600 and more as               basic wage one month’s salary for vacation in  case               his  leave exceeds 15 days and is not  accumulable.               The  demand  of  the workmen is  that  the  minimum               should be Rs. 300 and the maximum Rs. 2,000.  It is               pointed  out for the company that this was  refused               by  the Tribunals in Burmah Shell and Voltas.   The               Union  on  the  other hand contended  that  it  was               allowed in the banks and refineries by  settlements               though  refused  by  the Tribunals.   The  plea  of               discrimination,  it  was  pointed  out,  has   been               rejected by the Tribunals (see Parke Davis,  I.C.R.               1966  p. 151 and Alembic Chemical, [1961] 1  L.L.J.               P.  328).  1, however, feel that this  company  can               afford  to  pay this allowance to its  workmen  and               avoid  dissatisfaction.  In  socialistic  countries               this  is  considered as an amenity to  the  workmen               which should be provided such as subsidized or free               vacation  at  health resorts.  The  ideal  of  wage               fixation  is  the living wage  while  the  national               ideal  was  envisaged  in  the  constitution  is  a               socialistic state.  The company can join others  as               the trend seems to be appearing in this region.  It               ensures  a more contented and healthy  workmen.   I               therefore  award vacation allowance to the  workmen               at  the  same  rate  as the  staff  with  the  same               conditions." The  appellant’s  learned counsel, Shri S. V.  Gupte,  challenged this portion of the award on the ground that there is no evidence in support of the conclusions arrived at by the Tribunal and that it  proceeds on grounds which are irrelevant and contrary to  the settled  principles relating to industrial disputes.  Nowhere  in the  region is vacation allowance granted in  similar  industries and there is thus no comparable instance, contended the  counsel, adding  that the senior assistants in the present case  had  also not  pressed their claim to vacation allowances.  It was  further urged that workmen in the appellant’s industry get various  other amenities  like,.  dearness allowance, according to  the  revised textile rates, 858 overtime  wages,  lunch  allowance  (not  allowed  to  officers), gratuity  (with qualifying period of 5 years as against 15  years for  officers), uniforms and medical facilities.  Our-  attention was drawn, to a prepared’ statement produced before us on  behalf of the appellants for showing the difference in the pay packet of Workmen  employed at the appellant’s head office as a  result  of the  award given in Reference No. IT 284/68.  The respondent  did not  accept  this  statement  saving that it  was  based  on  the interpretation  placed by the appellant to support its  case.  In regard to overtime allowance and other facilities referred to  by Shri  Gupte. the learned counsel relying, inter alia, on  another

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statement  relating  to  facilities accorded to  the  workmen  in 1970-71produced  before  us, submitted that the  workmen  were getting  numerous  other benefits not available  to  officers. This submission Was however, sought to be founded on material not on the court record.  The learned counsel strongly contended that the  real criterion should have been to look to the  overall  pay structure of the workmen in the light of the standard  prevailing in  similar industries in the same region.  Mere capacity of  the appellant  to  pay should not be the sole  criterion,  he  added. Reference  was  made to the decision of this Court  in  Remington Rand of India Limited v. The Workmen (1) where it was observed :               "As regards the first ground it is true that in the               present  case there was no question of the  company               being unable to bear the additional burden of lunch               allowance.   But the fact that an employer is  able               to  bear  the  burden is not  the  criterion.   The               foundation of the principle of  industry-cum-region               is  that  as  far  as  possible  there  should   be               uniformity  of conditions of service in  comparable               concerns  in  the industry in the  region  so  that               there is no imbalance in the conditions of  service               between  workmen in one establishment and those  in               the Test.  The danger otherwise would be  migration               of   labour  to  the  one  where  there  are   more               favourable  conditions from those where  conditions               are less favourable.  Therefore, the mere fact that               a   particular  concern  can  bear  an   additional               liability  would by itself be no ground  to  impose               upon  it such extra obligation.  Equally  important               is  the fact that the wage structure prevailing  in               the appellant company is undisputably fair and  the               dearness allowance paid to the workmen has been, as               aforesaid, linked with the index of cost of living.               These  must  take care of the rise in the  cost  of               living  from  time  to time.   If,  therefore,  the               company were to be compelled to pay lunch allowance               to ail               (1).  C,A, Nos. 856 of 1968, 1475 of 1968 and  2119               of 1968 decided on December 10, 1968.                859               workmen including those who work at the offices  it               would  in fact mean a,, double provision for,  the,               constituent  of the cost of food  already  provided               for  in the wage scales and the rates, of  dearness               allowance.  The force of this aspect was recognised               by this Court in Mcleon & Co. Ltd. v. Workmen(1)". It  was said on behalf of the respondents that in the case  cited there  was no discriminatory treatment in the same concern  among the employees of different grades of salaries at the same  place. The requirements of providing lunch to those who could not return to  the office from outdoor work outside the city limits  as  was the  fact  in  the cited case,  according  to,  the  respondents, furnish  a distinguishing feature in that case from the  present. Next  reliance  was  placed  by  Shri  Gupte  on  the   following observations in Alembic Chemical Works Co. Ltd. v. The Workmen  ( 2)               "Then  it is urged that the provision made  by  the               award for privilege leave introduces discrimination               between  the clerical staff covered by the  present               reference  and  operatives covered by  the  earlier               awards  made by the samee Tribunal.  We  were  told               that  operatives  had  made  a  similar  claim  for                             privilege  leave before the same Tribu nal,  and  the               said claim had been rejected.  The argument is that

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             the  provision  for  privilege leave  made  by  the               present  award would create discontent amongst  the               operatives  to whom similar leave has been  denied,               and  that would disturb industrial peace.   We  are               not   impressed  by  this  argument.   It  is   not               seriously disputed that a distinction has generally               been made between operatives who do manual work and               clerical  and other staff; in fact the  appellant’s               standing orders themselves make different  relevant               provisions for the two categories of its employees.               It  is  also  not disputed that  in  practice  such               distinction  is  made by comparable  concerns,  and               awards based on the same distinction are  generally               made  in respect of the two separate categories  of               employees.  We are, therefore, unable to appreciate               the  argument that. in granting privilege leave  to               the   present   staff  the  Tribunal   has   either               overlooked its earlier award or has made a decision               which suffers from the vice of discrimination.  The               practice prevailing in comparable concerns and  the               trend   of  awards  both  seem  to  show   that   a               distinction  is  generally made  between  the  two,               categories   of  employees,  and  since  the   said               distinction is perfectly justifiable no question of               discrimination can arise."               (2) [1961] 3 S.C.R. 297 at 300.               860               According   to  the  respondents  the   distinction               between  operatives doing manual work and  clerical               and  other staff may be justified but that  is  not               the case here.  Besides, in the reported case, this               Court, in its concluding part said, that it was not               satisfied that any case for interference under Art.               136  had been made out whereas in the present  case               the  appellant  wants this Court to  interfere  and               reverse  the  impugned  part of the  award  on  the               ground  that  it is grossly erroneous  and  unjust.               Reference was then made on behalf of the  appellant               to the decision in Delhi Cloth & General Mills Co.,               Ltd.,  v.  Workmen(1), emphasis being laid  on  the               following passage at p. 327 :               "But  in the branch of law relating  to  industrial               relations  the temptation to be, crusaders  instead               of adjudicators must be firmly resisted.  It  would               not  be out of place to remember the  statement  of               the law made in a different context-but nonetheless               appropriate  here-by Doughlas, J., of  the  Supreme               Court of the United States in United Steel  Workers               of America v. Enterprise Wheel and Car  Corporation               (2):               "....... as arbitrator.... does not sit to dispense               his  own  brand of industrial justice.  He  may  of               course look for guidance from many sources, yet his               award  is legitimate only so long as it  draws  its               essence  from the collective bargaining  agreement.               When the arbitrator’s words manifest an  infidelity               to  this obligation, courts have no choice  but  to               refuse enforcement of the award.’               We  may at once state that we are not for a  moment               suggesting  that  the law of  industrial  relations               developed  in  our country has proceeded  on  lines               parallel to the direction of the law in the  United               States." The respondent, on the other hand, laid more emphasis on the last portion  of the above observations, submitting that the  problems

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of  our country in regard to labour welfare at the present  stage of our industrial development, particularly in the background  of our  egalitarian socialistic pattern of society as visualised  in our  Constitution,  are  materially  different  from  the  labour problems  requiring  solution in the developed  American  society under  that country’s constitution.  The following  passage  from pp. 326-327 from he D.C.M.’s case(1) is also worth quoting:               "We   consider   it  right  to  observe   that   in               adjudication  of industrial disputes settled  legal               principles  have little play : the awards  made  by               industrial  tribunals, are often the result  of  ad               hoc determination of disputed questions,               (1) [1969]2S.C.R.307.               (2) [1960] 363 U.S. 593.                861               and  each  determination  forms  a  precedent   for               determination  of  other disputes.  An  attempt  to               search for principle from the law built up on those               precedents  is  a futile exercise.  To  the  Courts               accustomed  to  apply settled principles  to  facts               determined  by  the  application  of  the  judicial               process,  an essay into the unsurveyed expanses  of               the  law  of industrial relations  with  neither  a               compass  nor  a  guide, but  only  the  pillars  of               precedents  is  a  disheartening  experience.   The               Constitution  has however invested this Court  with               power   to  sit  in  appeal  over  the  awards   of               Industrial Tribunals which are, it is said, founded               on  the somewhat hazy background of maintenance  of               industrial  peace which secures the  prosperity  of               the  industry and improvement of the conditions  of               work-men  employed  in  the industry,  and  in  the               absence  of  principles precedents may have  to  be               adopted guides-somewhat reluctantly to secure  some               reasonable  degree of uniformity of harmony in  the               process." In our view the ultimate object of industrial adjudication in our country  is to help the growth and progress of  national  economy and for realising that object the industrial disputes are settled on   principles   of  fairplay  and  justice,   harmonising   the conflicting  claims of capital and labour with full awareness  of the current of socioeconomic trends. of thought.  Our  industrial law, is there,fore, expected to effectively secure to the workers conditions of service reasonably conducive to the improvement  of their social and economic standard of living, and their moral and material  development.  The existing peculiar problems,  relating to  industrial labour in our country, having, their roots in  the historical  background  of  our social,  economic  and  political conditions have little in common with the current labour problems of  America  or other developed countries.  We  must,  therefore, guard  ourselves  against  the  temptation  of  too  readily  and indiscriminately  following the American line of  thought.   Shri Gupte next referred us to the decision in J. K. Iron & Steel  Co. Ltd. v. The Iron & Steel Mazdoor Union, Kanpur(1) relying on  the following passage at p. 1 32               "In  Bharat Bank Ltd. v. Employees of  Bharat  Bank               Ltd.(2)  this Court held by a majority that  though               these Tribunals are not Courts in the strict  sense               of  the term they have to discharge  quasi-judicial               functions and as such are subject to the overriding               jurisdiction of this Court under article 136 of the               Constitution.   Their powers are derived  from  the               statute that creates them and they have to function               within the limits imposed there               (1)[1955]2S.C.R.1315.

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             (2) [1950] S.C.R. 459, 497.                9-L1061SupCI/72               862                and  to  act according to its  provisions.   Those               provisions invest them with many of the ’trappings’               of  a  court  and deprive  them  of  ’arbitrary  or               absolute  discretion and, power.  There is, in  our               opinion,  an even deeper reason which is hinted  at               in the judgment of Mahajan J., (as he then was)  at               page 500 where he says ’that ’benevolent  despotism               is foreign to a democratic Constitution’.  That, in               our opinion, is the heart of the matter." To  give relief to the workmen merely because the  appellant  can bear  the  financial burden is, according to Shri  Gupte,  it  by these  observations.  According to the respondents, on the  other hand, the observations relied upon leave to be construed in their own  context  and so read they do not  prohibit  the,  industrial adjudication  from  granting just and fair  remuneration  to  the labour  in  lieu  of its contribution to the  prosperity  of  the industry,  provided the employer can, consistently with  its  own fair and just claim in lieu of its contribution to the prosperity of  the  industry and without detriment to  its  maintenance  and betterment, bear the financial burden.  The respondents’, learned counsel  Shri  Chaudhri drew our attention to the  admitted  act, that,  in the case of, Burmah Shell, Esso and Caltex  Refineries, vacation  allowance  (which was considered to be  identical  with travelling  allowance)  was  gianted to the  Workmen  by  way  of Settlement and submitted. that these industries, though different being refinties, are in the same region and the general  standard ’of.  remunerate  of, Workman in that region  performing  similar duties  and, functions should not. be materially different.   The fact, that those industries granted such allowance  by settlement shows  that such a demand by the workman has not been  considered by  those  industries  to be  unjustor  unacceptable.  Harmonious standardisation of wages in  a region in the absence of markeddiff erence in the character of the duties and functions of labouraccording to the resPondents, reduces the factors contributingdiscontentment and  promotes  the  chances  of  the  workers’commitment  to  the industry  whereas  unjustified differential-treatmeant  tends  to serve as a potential source of industrial unrest.  Shri  Chaudhri also referred us to the decision in Express Newspapers: (P) Ltd. v. Union of India(1) where at p. 81 it is observed               "It will be seen from this summary of the  concepts               of  the  living wage held in various parts  of  the               world-that  there  is general  agreement  that  the               living  Wage  should  enable the,  male  earner  to               provide  for himself and his family not merely  the               bare essentials of food, clothing and, shelter  but               a measure of frugal comfort including education for               the children, protection against ill-health,,               (1)[1959] S.C.R. 12.                863               requirements  of  essential  social  needs,  and  a               measure  of  insurance against the  more  important               misfortunes including old age.               Article 43 of our Constitution has also adopted  as               one  of  the Directive Principles of  State  Policy               that :               ’The  State shall endeavour to secure, by  suitable               legislation  or  economic Organisation  or  in  any               other way, to all workers, agricultural, industrial               or  otherwise, work, a living wage,  conditions  of               work  ensuring a decent standard of life, and  full               enjoyment  of  leisure  and  social  and   cultural

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             opportunities. . . .’               This is the ideal to which our social welfare State               has to approximate in an attempt to ameliorate  the               living., conditions of the workers." Shri Gupte, however, emphasised that in India living wage on standard  prevalent  in more advanced countries is  not  possible the present level of our national  income. Wage  policy relating to, workmen appears to be a co complex  and sensitive  area  of public policy.  The reason   is  plain.   The relative  status of workmen in the society, their  commitment  to industry andtheir  attitude  towards,  the  management,  their motivation towardsproductivity  and their standard and  way  of life, are all con   by  wages.   It  is  according  no  a  purely economic policy in which the employer and the employee alone  are interest-,  ed.  Besides  the  worker  and  the  management,  the consumer  and the society at large and a fortiori the State,  are also vitally, interested, and no wage policy can ever be  applied in  vacuum  in  disregard  of the realities  of  the  social  and economic, conditions in our country.  Considering the question of wages in the background of the Directive Principles enshrined  in our  Constitution  a wage structure should serve, to  promote,  a fair   remuneration  to  labour  ensuring  due  social   dignity, personality and security, a fair return to capital, and  strength incentives   to  efficiency  without   being  unmindful  of   the legitimate  interest  and  expectation of the  consumer  in  the, matter  of  prices.  Guided by this principle, if  the  financial capacity  of  the industry permits, the workers  should,  broadly speaking,  be  allowed their due share in the prosperity  of  the industry, to which they have contributed by their labour so as to enable them, within reasonable limits, to improve their  standard of living. Turning  now to the facts of the present case we are  clearly  of the  view that the Tribunal has committed a serious error in  not considering the other allowances and amenities allowed to the 864 respondents-workmen,  and comparing their total wage packet  with the total wage packet of those employees to whom the allowance in question  has been allowed, when determining this question.   The Tribunal has virtually decided the question in issue  exclusively on  the  basis that the employer has the  financial  capacity  to stand  the burden of such allowance being granted to the  workmen at  the same rate as the higher staff, with the same  conditions. The  difference between the amenities allowed to the workmen  and to  the staff to whom the vacation allowance is granted  must  in law  and  justice be looked into and the  question  then  decided whether  or not the present workmen’s demand is  justified.   The principle of region-cum-industry has no doubt to be kept in  view but  then  the  comparable industries in the region  have  to  be considered  from  all the relevant aspects which have  been  laid down  by  this  Court  in  various  decisions  to  which  it   is unnecessary to refer, the principle being well settled. The fact that in, the refineries in the region similar allowance isgranted as  a  result  of settlement cannot,  on  that  account  alone,be considered  to  be  irrelevant  because  that  may  appropriately indicate  that the demand of the workmen in those industries  was not considered unjust.  But to what extent that should weigh with the  Tribunal is for the Tribunal to decide in the light  of  all the  relevant  circumstances.   The, total  wage  packet  of  the various  categories  of  employees in  the  appellant’s  industry itself,  including  the question of their nature  of  duties  and functions,  however, deserves to be given primary  importance  so that  there  is  no  reasonable,  chance  of  heart-burning   and discontentment  amongst  the different categories of  workmen  on account  of  the differential treatment which,  though  seemingly justifiable,  may,  in  real  effect.  be  discriminatory.,   The

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importance  of  appropriate  standardisation  of  wages  in   the appellant-industry  on a proper consideration of the  duties  and functions  of the different categories of employees must be  kept in view in deciding the present dispute. We  would accordingly allow the Appeals, set aside the award  and remit  the case back to the Tribunal with a direction  to  decide the  dispute  after  considering  all  the  relevant  factors  as suggested.  In the peculiar circumstances of the case there is no order as to costs. V.P.S. Appeals allowence 865