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PETITIONER: THE HINDUSTAN TIMES LTD.,NEW DELHI

       Vs.

RESPONDENT: THEIR WORKMENVICE VERSA

DATE OF JUDGMENT: 14/12/1962

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

CITATION:  1963 AIR 1332            1964 SCR  (1) 234  CITATOR INFO :  R          1966 SC 305  (47)  RF         1967 SC 948  (9)  RF         1967 SC1175  (15)  R          1967 SC1286  (8)  RF         1969 SC 182  (10)  E          1969 SC 360  (11,15,19,28,32,35)  R          1970 SC  87  (4)  D          1970 SC 245  (9)  R          1972 SC 343  (13,14)  R          1976 SC2091  (7)  R          1978 SC1113  (26)  R          1979 SC1211  (8)  R          1980 SC  31  (8)  RF         1981 SC 599  (16)  RF         1981 SC1088  (16)

ACT: Industrial Dispute-Fixation of wage structure-Factors to  be considered-Fair   Wage-Living   Wage-Extent  of   power   to interfere under Art. 136 with wage scale fixed by  Tribunal- Dearness  allowance  on  basis  of  sliding   scales-Interim agreement  regarding interim relief not to be  ignored-Leave rules-Gratuity-Retirement  age-Retrospective  operation   of award-Delhi  Shops  & Establishment Act, 1954  (Delhi  7  of 1954)-Employees’  State  Insurance Act, 1948  (34  of  1948) ---Industrial Disputes Act, 1947, (14 of 1947).

HEADNOTE: The  Chief  Commissioner,  Delhi,  referred  an   industrial dispute for adjudication to the Industrial Tribunal,  Delhi, which gave its award on March 16, 1959.  Both the  appellant and  the  respondents were dissatisfied with the  award  and they  came  to this Court by special leave.  The  award  was challenged  by the appellant with regard to scales  of  pay, dearness  allowance, adjustments, leave rules, gratuity  and retrospective effect of the award.  The respondents attacked the  award  as regards the working hours,  leave  rules  and retirement age. Held, that while social justice demands that workmen  should get  a fair share of the national income which they help  to

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produce, it has also to be seen that that does not result in the  drying  up  of the source of  national  income  itself. Inroads  235 on the profits of the capitalists should not be such as have a  tendency to drive capital away from  fruitful  employment and  thereby affect prejudicially capital  formation  itself The  Tribunal  had applied the correct  principles  and  the award should not be disturbed, Held, also, that the Tribunal had erred in awarding a  fixed dearness  allowance  of Rs. 25 /-.  The object  of  dearness allowance  being to neutralise part of the rise or  fall  in the  cost  of living, it should ordinarily be on  a  sliding scale. Held,  that the contention of the appellant that in view  of the provisions of the Employees’ State Insurance Act,  1948, no  provision need be made about sickness leave at all,  was rejected.   It  was  pointed  out  that  in  providing   for periodical payments to an insured worker in case of sickness or for medical treatment or attendance to him or the members of his family under the Act of 1948, the Legislature did not intend to substitute any of these benefits for the workmen’s right to get leave on full ’Pay on the ground of sickness. Held, that as regards those workmen to whom the Delhi  Shops and  Establishments  Act, 1954, applied,. the  Tribunal  had acted  illegally  in fixing the period of sick leave  at  15 days and permitting accumulation.  The appellant shall allow to  the workmen to whom the Delhi Shops  and  Establishments Act applied, sickness or casual leave for a total period  of 12  days with full pay and allowances, and such leave  shall not  accumulate.   As  it  was not  desirable  to  have  two separate leave rules for two classes of workmen, one to whom the  Act of 1954 applied and tile other to whom the Act  did not  apply, it was held that the same rule should  apply  to other workers also. Held,  also, that tile scheme of gratuity as framed  by  the tribunal  was not unduly favourable to workmen and  it  also did not place any undue strain on the financial resources of tile  Company.   As regards the provision  in  the  gratuity scheme  that  an employee who is  dismissed  for  misconduct shall not be entitled to any gratuity; it was held that  the proper  provision  should  be  that  where  an  employee  is dismissed  for  misconduct which has resulted  in  financial loss to the employer, the amount of loss should be  deducted from the amount of gratuity due. The award of the Tribunal on tile question of retirement age was  set  aside  and the retirement age  was  fixed  at  58, subject to the proviso that it would be open to the  company to continue in its employment a workmen who had passed  that age,  The  rule was to apply to all tile  employees  of  the Company. 236 No  general formula could be laid down as to the  date  from which  a  Tribunal should make its  award  effective.   That question has to be decided by the Tribunal on  consideration of   the   circumstances  of  each  case.   There   was   no justification  for  interfering with the  direction  of  the Tribunal  that in this case the reliefs given by  it  should become effective from the date of the reference. Standard  Vacuum  Refining  Co., of India  v.  Its  workmen, [1961]  S.  C. R. 536, M/s.  Crown Aluminium  Works  v.  Its workmen,  [1958]  S. C. R. 651, Express Newspapers  Ltd.  v. Union  of  India, [1959] S. C. R. 12, M/S.  Lipton  Ltd.  v. Their Workmen [1959] Supp. 2 S. C. R. 150, Workmen Hindustan Motors  v. Hidustan Motors, (1962) 2 L. L. J. 3  52,  French

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Motor  Car Co. v. Their Workmen, (1962)  2 L. L. J. 744  and Guest Keen, Williams (P) Ltd. v. P. J. Sterling [1961] 1  S. C. R. 348, referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos. 489 &  490 of 1961. Appeals  by  special leave from the award  dated  March  16, 1959, of the Second Industrial Tribunal, Delhi in  Reference I. D. No. 20 of 1958. G.S. Pathak, S. T. Desai, M. L. Sethi, B. Dutta and Anand Prakash,  for  the appellant (in C. A. No. 489/61)  and  the respondent (in C. A. No. 490/61). M.   C.   Setalvad,   Attorney-General   for   India    M.K. Ramamurthi,  D. P. Singh, R. K. Garg and S.C.  Agarwal,  for the respondents (in C.A. No. 489/61) and the appellants  (in C. A. No. 490/61). 1962.  December 14.  The judgment of the Court was delivered by DAs  GUPTA,.’ J.-These two appeals by special leave, one  by the  employer and the other by the workmen, arise out of  an industrial dispute that was referred for adjudication to the Industrial  Tribunal Delhi, by an order made on January  23, 1958  by the Chief Commissioner, Delhi.  The  Tribunal  made its award on March 16, 1959.  Out of the numerous  237 matters that were included in the terms of reference, we are concerned  in these appeals only with a few.   The  employer challenges  the  award as regards : (1) Scales of  pay,  (2) Dearness  allowance, (3) Adjustments, (4) Leave  Rules,  (5) Gratuity  and  (6) Retrospective effect of the  award.   The workmen also attacked the award as regards the scales of pay and dearness allowance.  In addition, they have attacked the award as regards the working hours, leave rules, night shift allowance,   retirement   age  and  procedure   for   taking disciplinary  action.  At the time of the hearing before  us however  the  learned Attorney General,  appearing  for  the workmen,  did not press their claim for modification of  the award  as  regards, night shift allowance, leave  rules  and procedure for taking disciplinary action and working hours. It appears that when the dispute was before the Conciliation Officer,  Delhi,  for settlement an  interim  agreement  was arrived at between the parties on December 20, 1957 by which the  management  agreed  to give  certain  interim  reliefs, ranging between Rs. 6/- to Rs. 10/- per month from the month of  November  1957.  One of the terms of the  agreement  was that  this  payment  "will be  adjusted  against  the  final outcome  of  the  demands  by  constitutional  means".   The Tribunal  has  in  its award given  a  direction  that  this interim relief shall remain unaffected.  Taking this to be a direction  that  the adjustment as agreed upon  of  payments under  the  interim  arrangement  shall  not  be  made,  the employer  has  in its appeal challenged the  correctness  of this direction also. The  most  important  of  the matters  in  dispute  are  the questions of the wage scale, the dearness allowance and  the adjustment  of existing employees into the new  scales.   It appears  that from 1946 onwards the Company’s  workmen  have had  a  consolidated wage scale, no distinction  being  made between 238 the basic wage and the dearness allowance.  This wage  scale has  remained practically unaltered except for some  special

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increments  given  in  the  year 1948.   By  the  award  the Tribunal has introduced new wage scale for certain  existing categories  of workmen and in some cases has introduced  new scales,  after  amalgamating more than one  category.   Thus certain  railway despatchers, advertisers, Box No.  sorters, filing clerks and bank clerks who were formerly in the scale of  Rs. 50-4-90-EB-4-115 and Junior Clerks etc., who  had  a scale of Rs. 60-100EB-4-115 have all been put on a new scale of   Rs.  70-5-100-EB-5-150.   There  has  been  a   similar amalgamation or clerks, assistants, cashiers, record keepers and  others some of whom were on Rs. 80-175 and some on  Rs. 80-203  scale, all of them being now put on a new  scale  of Rs.  90-200.   In both cases the starting  salary  has  been raised; the maximum has been raised for the first  category. Supervisors and others who were formerly on three  different scales,  some on Rs. 125-350, some on Rs. 125-300, and  some on Rs. 100-250, have all been amalgamated and have been  put on a new scale of Rs. 100-350. Obviously, this would mean  a lower  starting salary for some and maximum for  some.  ,job I)Daftries some of whom were on Rs. 70-115 scale and  others on Rs. 100-155 have all been put on a new scale of Rs. 80 to Rs.  11,15, resulting thus in a lowering of starting  salary for some and a rise of a higher maximum for all.  A  similar lowering  in the starting salary has also occurred in  cases of  some  of the jobmachinemen.  They were formerly  on  two scales, one of Rs.125-175 and the other of Rs. 75-175.   The Assistant Foremen in the job Department formerly on Rs. 125- 175 are put on a scale of Rs. 125-202.  Where there has been no  amalgamation  the  new scale has resulted  in  a  slight increase  in some cases both in the starting salary and  the maximum.   In  some catagories, no change has been  made  at all,  239 It  is  unnecessary to give more details of  the  difference between  the  old scale and the new scale as what  has  been mentioned  above  is sufficient to indicate that  there  has been  some  change  in favour of the  workmen,  though  this change is not much.  The employer’s contention before us  is that  there was no case for any revision whatsoever and  the Tribunal acted wrongly in making any change in the old  wage scale.  The workmen’s contention on the contrary is that the changes do not go far enough. The  fixation of wage structure is among the most  difficult tasks  that industrial adjudication has to tackle.   On  the one hand not only the demands of social justice but also the claims  of national economy require that attempts should  be made  to  secure  to workmen a fair share  of  the  national income  which they help to produce, on the other hand,  care has to be taken that the attempt at a fair distribution does not tend to dry up the source of the national income  itself On  the one hand, better living conditions for workmen  that can  only  be possible by giving them a "living  wage"  will tend to increase the nation’s wealth and income on the other hand, unreasonable inroads on the profits of the capitalists might  have a tendency to drive capital away  from  fruitful employment   and  even  to  affect   prejudicially   capital formation  itself.   The rise in prices that  often  results from the rise of the workmen’s wages may in its turn  affect other   members  of  the  community  and  may  even   affect prejudicially   the   living  conditions  of   the   workmen themselves.   The  effect  of such a rise in  price  on  the Country’s international trade cannot also be always ignored. Thus  numerous complex factors, some of which  are  economic and  some  spring  from  social  philosophy  give  rise   to conflicting  considerations that have to be borne  in  mind.

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Nor  does the process of valuation of the  numorous  factors remain  static.  While international movements in the  cause of labour have for many years influenced thinking-and 240 some-times even judicial thinking--in such matters, in  this country,  the emergence of an independent demo cratic  India has   influenced   the   matter   even   more    profoundly. Gajendragadkar, J. speaking for the Court in Standard vacuum Refining Co., of India v. Its Workmen (1), has observed :-               "In  constructing a wage structure in a  given               case  industrial adjudication does  take  into               account to some extent considerations of right               and wrong, propriety and impropriety, fairness               and  unfairness.  As the social conscience  of               the  general community becomes more alive  and               active,  as  the welfare policy of  the  State               takes  a  more dynamic form, as  the  national               economy progresses from stage to stage, and as               under the growing strength of the trade  union               movement,  collective  bargaining  enters  the               field,  wage structure ceases to be  a  purely               arithmetical  problem.  Considerations of  the               financial  position  of the employer  and  the               state of national economy have their say,  and               the  requirements  of a workman  living  in  a               civilised and progressive society also come to               be recognised." In  trying  to  keep  true  to  the  two  points  of  social philosophy   and   economic  necessities   which   vie   for consideration,  industrial adjudication has set  for  itself certain  standards in the matter of wage fixation.   At  the bottom of the ladder, there is the minimum basic wage  which the  employer of any industrial labour must pay in order  to be allowed to continue an industry.  Above this is the  fair wage,  which may roughly be said to approximate to the  need based minimum, in the sense of a wage which is "adequate  to cover the normal needs of the average employee regarded as a human being in a civilised society." Above the fair wage  is the "living wage" a wage "which will maintain the workman in the  highest  state  of industrial  efficiency,  which  will enable him to (1)  [1961] S.C.R. 536, 543.  241 provide  his family with all the material things  which  are needed  for their health and physical well-being, enough  to enable him to qualify to discharge his duties as a citizen." (Cited  with  approval  by  Mr.  justice  Gajendragadkar  in Standard Vacuum Company’s Case (1) from "The living Wage" by Philip Snowden). While  industrial adjudication will be happy to fix  a  wage structure  which would give the workmen generally  a  living wage economic considerations make that only a dream for  the future.   That  is  why the  industrial  tribunals  in  this country  generally  confine their horizon to the  target  of fixing  a fair wage.  But there again, the economic  factors have  to be carefully considered.  For these  reasons,  this court has repeatedly emphasised the need of considering  the problem  on  an  industry-cum-region basis,  and  of  giving careful consideration to the ability of the industry to pay. (Vide  Crown  Aluminium’s Case (2); the  Express  Newspapers Ltd., Case (8) and the Lipton’s Case (4). On  an  examination of the Tribunal’s award as  regards  the wage  scale,  we are satisfied that all  the  considerations mentioned above were present in the mind of the  adjudicator and  we  are  of opinion that there is  nothing  that  would

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justify  us in modifying the award either in favour  of  the employer  or in favour of the workmen.  It is stated in  the award that before the Tribunal the Company’s  representative desired  that a fair wage level within its  paying  capacity should be evolved though at the time he argued that existing wage  structure  is quite fair ""looking  to  the  Company’s financial   position  as  well  as  the  comparative   rates prevailing  in  the  other concern." The  Tribunal  has  not accepted  the  Company’s contention that the  existing  wage structure is fair, though at the same time it has held  that the  wage system needs no such radical change as alleged  by the Union. (1)  [1961] S.C.R. 536, 543. (3)  [1939] S.C.R. 12. (2)  [1958] S.C.R. 651. (4)  [1959] Supp. 2 S.C.R. 150. 242 Mr. Pathak, who appeared before us for the Company, did  not seriously suggest that the present wage structure gives  the employees  "a fair wage." He argued generally that  no  case was  made out for any revision of the wage structure.   Such an  extreme proposition has only to be mentioned to  deserve rejection.   At the time the Tribunal was dealing with  this question  the wage scale of the workmen in this concern  had remained practically unaltered for almost 12 years-12  years of  momentous change through which social ideas  have  moved forward  in favour of workmen getting a better share of  the national  income;  12 years during which the new  India  was born  and a Constitution was framed for this  new  democracy "to secure to all its citizens, justice, social and economic and  political"  and  enshrining in  its  43rd  Article  the principle  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" among other things tea living wage and conditions of  work  ensuring  a  decent  standard  of  life  and  full enjoyment    of    leisure   and   social    and    cultural opportunities................... ". The mere passage of time and  these  revolutionary  changes would  be  sufficient  to convince any right thinking man of the need for revision  of wage  scales  which, on the face of it, were far  below  the "living  wage"  and  mostly also  below  the  "’fair  wage", provided the industry could bear the additional burden.  The case  for revision becomes irresistible when one takes  into consideration the further fact that the cost of living  rose steeply  during this period.  On the basis of 1939  cost  as 100,  the index for 1946 was 282.  By 1958 it had  risen  to 389.   It may be mentioned that since then there has been  a further  rise.  Nor can it be seriously suggested that  this concern  cannot bear the burden of an increased wage  scale. The  Tribunal was, in our opinion, right in  its  conclusion that the material on record shows that the Company has  been prospering and has financial  243 stability.   We  have for ourselves  examined  the  balance- sheets  and  the other materials on the record and  have  no hesitation  in agreeing with that conclusion.  Mr.  Pathak’s uphill  task in the face of these balance-sheets already  on the  record  to show that the Company would not be  able  to bear  the  burden of an increased wage scale has  been  made more  difficult by the discovery that even after the  imple- mentation  of the award the Company has made  large  profits during the years 1959-60, 1960-61 and 1961-62. It appears that when the Company was given special leave  to appeal  to this Court the operation of the Tribunal’s  award

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was  stayed only in so far as it directed the management  to pay  arrears  of  the  wages  determined  thereby  but   the operation  of  the  award in so far as  it  related  to  the payment of wages from the date of the award was not  stayed; and  the management was directed to pay to the workmen  from that  date wages in accordance with the wage scale fixed  by the Tribunal by its award under appeal.  The result of  this has  been  that  the Tribunal’s award as  regards  the  wage scales has been implemented with effect from the date of the award  and  it is possible for this Court to know  how  such additional  payment has affected the financial  position  of the  Company.  It appears that after meeting the  additional charges and also after payment of bonus and appropriation to reserves  the net profits for the year 1959-60 rose  to  Rs. 8,04,508/-.   For  the year 1960-61 these profits  were  Rs. 8,44,627/-.   For the year 1961-62 the profits are shown  in the  balance-sheet  as Rs. 59,955/-.  That the  Company  has been  prospering  is clear.  It has its own  aeroplanes  and possesses  immovable properties of considerable  value.   It has  built up good reserves and inspite of that it has  been making  good profits.  It is reasonable to think  that  with the progress of education in the country and the  increasing news  mindedness of the people the future prospects  of  the Company are no less bright.  On a consideration 244 of  all this,, we are clearly of opinion that  Mr.  Pathak’s contention that the wage scale fixed by the Tribunal is  too heavy for the Company to bear, must be rejected. Equally  unacceptable is Mr. Pathak’s next  contention  that the  wage scale fixed by the Tribunal operates  unfavourably on  this  Company  vis-a-vis two  other  concerns  in  Delhi region,  viz., the Times of India, Delhi and the  Statesman, Delhi.   We  have  compared the wage  scales  in  these  two concerns viz., the Times of India, Delhi and the  Statesman, Delhi, with the wage scale under the award and have for  the purpose of comparison taken into consideration the  dearness allowance  as fixed by the Tribunal.  The  comparison  shows that  while in some cases the Company (the Hindustan  Times) will have to pay more to its workmen than what is being paid to workmen of the same category by the Times of India, Delhi and the Statesman, Delhi, in several cases it will be  less. It  has  also to be borne in mind that the Times  of  India, Delhi  and the Statesman, Delhi, are much smaller  units  of the  newspaper  industry than the  Hindustan  Times.   These Companies  are mere adjuncts to the Times of  India,  Bombay and the Statesman, Calcutta, respectively.  Therefore,  even if  for  some categories the wage scale under the  award  is higher  than  that  in the Times of  India,  Delhi  and  the Statesman, Delhi, that would be no ground for modifying  the award  in favour of the Company.  We have therefore come  to the  conclusion  that  there is  no  ground  whatsoever  for modifying the wage scale fixed by the award in favour of the Company. On  behalf of the workmen it was strenuously contended  that the increase given by the award over the previous wage scale falls far short of justice.  It is pointed out that even the Times  of India, Delhi and the Statesman, Delhi,  which  are much smaller  245 concerns and of lesser financial stability and strength, pay to some categories of its workmen higher wages than what has been fixed by the award.  Thus our attention has been  drawn to the fact that for Assistants, the Times of India,  Delhi, rate is Rs. 241-402, and in the Statesman, Delhi, it is  Rs. 190-297 for some and Rs. 264-463 for others while under  the

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award  the  scale is Rs. 125-375.  There are  several  other cases  also where the wage scale under the award appears  to be  lower  than what is being paid by the  Times  of  India, Delhi and the Statesman, Delhi. It  has been urged by the learned Attorney-General  that  in view  of  the fact that the wage scale of  the  Company  has remained  practically stationary for the last 12  years  and that  it  is indisputably well below the fair wage  and  the further fact that even smaller concerns in this region, like the  Times  of India, Delhi and the Statesman,  Delhi,  have been paying more to some categories of its workmen, the wage scale as fixed by the Tribunal should be raised at least for some  of the categories. There is undoubtedly some force  in the contention and it maybe said that the Tribunal has  been rather  cautious in the matter of revision of  wage  scales. Even  so,  it  has to be remembered that where,  as  in  the present case, the proper principles have been applied by the Tribunal, it is not the practice of this Court to interfere, ordinarily, with details of this nature when exercising  its special jurisdiction under Art. 136 of the Constitution.  It also appears to us that the very fact that the Tribunal  has been  cautious in the matter of raising the wage scales  has influenced it in the directions it has given on the question of adjustment of the present employees into the wage  scale. In  this  way  some relief has been  given  to  the  present employees  which might otherwise have been given by  raising the  wage scale.  On a consideration of all these  facts  we have reached the conclusion that it will not be 246 proper  for  us  to  modify the wage  scales  fixed  by  the Tribunal in favour of the workmen also. On  the  question of dearness allowance it is  not  disputed before  us that in the circumstances of the resent case  the Tribunal  acted rightly in awarding dearness allowance at  a flat  rate for all categories of workmen.  On behalf of  the Company  it was however urged that the Tribunal has made  an obvious  mistake in fixing the amount of dearness  allowance at  Rs. 25/-.  For fixing the rate at Rs. 25/- the  Tribunal has said :-               "In  view  of the revised scales as  now  laid               down,  I  think  the same  should  further  be               supplemented in the circumstances stated above               by  a flat rate of dearness allowance  in  all               cases,  viz.,  Rs.  25/-  with   retrospective               effect from the date of reference so that  the               lowest  paid worker will start not  less  than               Rs. 75/-. 1 direct accordingly." Mr.  Pathak points out that the lowest paid worker for  whom wage scales have been fixed will be getting under the  award a  minimum of Rs. 6l0/- so that with the dearness  allowance of Rs. 25/- "the lowest paid worker" will start at Rs.  85/- and not Rs. 75/-.  Mr. Pathak suggests that the Tribunal has made  a mistake in its calculations and that having  decided that the lowest paid worker will start at not less than  Rs. 75/-,  it should have fixed Rs. 15/- and not Rs.  25/as  the dearness  allowance.   This argument however  overlooks  the fact  that the reference as regards the  dearness  allowance was  in  respect of all categories of  workmen,  though  the reference  as  regards  scales of pay  did  not  cover  some categories, viz., mazdoors and canteen boys.  They therefore continue to remain on their old scale of Rs. 50-3-85.   When the  Tribunal  in  considering  the  question  of   dearness allowance  was  thinking of the starting pay of  the  lowest paid worker  247

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it had obviously these categories in mind.  Having concluded that the lowest paid worker should start at Rs. 75/- as  the total  amount  of  basic  pay  and  dearness  allowance  the necessary  conclusion reached by the Tribunal was  that  Rs. 25/-  should be fixed as the dearness allowance.  It is,  in our   opinion,  proper  and  desirable  that  the   dearness allowance should not remain fixed at this figure but  should be  on  a sliding scale.  As was pointed out in  Workmen  of Hindusthan  Motors  v.  Hindusthan  Motors  (1),  the  whole purpose of dearness allowance being to neutralise a  portion of the increase in the cost of living, it should  ordinarily be on a sliding scale and provide for an increase on rise in the  cost of living and a decrease on a fall in the cost  of living.  On a consideration of all the circumstances of this case,  we  direct that a sliding scale be  attached  to  the dearness  allowance of Rs. 25/- per month as awarded by  the Tribunal on the lines that it will be liable to be increased or decreased on the basis of Re. 1/- for every ten points in case of rise and fall in the cost of living from the base of 400, the 1939 index being taken to be 100 the sliding  scale to take effect from April 1, 1959. This brings us to the question of adjustment of the existing employees  into the new scale.  The Tribunal has dealt  with this matter thus :-               "’......the adjustment in the new scales shall               be  made  with retrospective effect  from  the               date  of  the reference, viz.,  23rd  January,               1958.  In making adjustment in the new  scales               no  one  shall be adversely  affected  and  it               shall  be  on  the  line  laid  down  by   the               Industrial  Tribunal  in the  case  of  Caltex               India Ltd., 1951 LLJ. 654 at p. 659 read  with               para.  23  of  the  decision  of  the   Labour               Appellate Tribunal, reported in 1952 LLJ.  183               at page 188." It appears that in the case of Caltex India Ltd.,(Supra) the Industrial Tribunal, West Bengal, gave (1)  (1962) 2 L.L.J. 352. 248 the  following directions for adjustment of  employees  into the wage scale fixed by it.               "1. All employees for whom the scale has  been               stated above should be stepped up in the stage               next above which the present pay is drawn.   A               special increment at the rate of one increment               in  the  new scale for every  three  completed               years of service should be given.               2.    The  employees whose salaries  are  less               than the minimum prescribed will be pulled  up               to the minimum of the prescribed scale.               3.    If the existing salary of an employee is               higher than the salary he will be entitled  to               under  the prescribed scale, there will be  no               cut  and he will be stepped up to the  nearest               increase with the increments given above.               4.    After  the  salaries  are  adjusted,  no               employee  should  be  staggered  and  he  will               continue to get future increments.               5.    If  an  employee be  already  drawing  a               salary  which  is  higher  than  the   maximum               prescribed by the award, he will be  subjected               to no cut in his salary." This  was  followed by a direction as regards  the  date  by which  the adjustment was to be made.  The Labour  Appellate Tribunal  modified  these  directions  by  introducing   two

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provisions : (1) that the maximum of the grade should not be exceeded and (2) that the basic wage that was being paid  to an employee at the date of the award of the Tribunal is  not to  be affected to the employees’prejudice.  The  employer’s objection  is to the provision that a special  increment  at the rate of one increment in the new scale for every  249 three  completed  years of service should be given.   It  is argued  that such a provision may well be appropriate  in  a case  where wage scale is being fixed for the first time  or where  even if there was already a wage scale in  force  the rate of increment in the new scale is much higher than  that in  the  old wage scale, but not where, as  in  the  present case,  the increments under the new scale and the old  scale are  practically  the same.  We are not  impressed  by  this argument. As  was  pointed out by this Court in a recent  judgment  in French  Motor  Car  Co.,  Ltd.  v.  Its  Workmen  (1),  what adjustment should be given is to be decided when fixing wage scales  whether  for the first time or in place  of  an  old existing scale has to be decided by industrial  adjudication after  consideration of all the circumstances of  the  case. It  may  well  be true that in the absence  of  any  special circumstances  and  adjustment of the nature as  allowed  in this case by allowing special increment in the new scale  on the   basis   of  service  already  rendered  may   not   be appropriate.   Clearly,  however, in the  present  case  the Tribunal  took into consideration in deciding this  question of  adjustment the fact that it had been extremely  cautious as  regards increasing the old wage scales.  Apparently,  it thought  that  it would be fair to give some relief  to  the existing  employees  by  means of such increase  by  way  of adjustment while at the same time not burdening the employer with  higher  rates of wages for new incumbents.   In  these circumstances,   we  do  not  see  ally  Justification   for interfering with the directions given by the Tribunal in the matter of adjustment. It  will  be  convenient  to  consider  at  this  stage  the objection  raised in the Company’s appeal to the  Tribunal’s direction in connection with the interim agreement.  As  has been  stated earlier, this agreement was arrived at  between the  parties  when the dispute was before  the  Conciliation Officer.  The (1)(1962) 2 L.L.J. 744. 250 relevant portion of the agreement is in these words :-    "It is hereby agreed between the parties that:-               1.    The  Management agrees to  make  interim               relief   on  the  following  terms  to   every               employee,   excluding   working   journalists,               drawing salary up to Rs. 400 p.m.               (i)Advance payment ranging between Rs. 6/-  to               Rs. 10/- per month beginning from the month of               November, 1957 in the following manner :-               (a)   Those with annual increment of Rs.  3/-,               Rs. 4/-, and Rs. 5/-                                  Rs. 6/-               (b)   Those with annual increment       of Rs. 6/-Rs. 7/-  (c)  Thosewith annual increment       of Rs. 7/-Rs. 8/-  (d)  Thosewith annual increment               of Rs. 10/-                 Rs. 10/-               Note.      (i)   In  case  any  employee   has               already reached the ceiling of his grade, even

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             then  he  would  he  entitled  for  the  above               benefit.               (ii)  This  payment will be  adjusted  against               the  final out-come of the present demands  by               constitutional means." "The final out-come of the present demands by constitutional means’s  is  the  Tribunal’s  award.   Under  the  agreement therefore what has been received by  251 the  workmen as advance payment at Rs. 6/- or Rs.  71or  Rs. 8/-  or  Rs.  10/- per month as interim  relief  has  to  be adjusted  against what is due to be paid to them  under  the award.   In other words, the Company is entitled  under  the agreement to deduct the payments made as interim relief from what  is  payable to these very employees under  the  award. The  Tribunal’s  direction  that the  interim  relief  shall remain  unaffected is in effect an order that term  (ii)  of the  agreement  need not be complied with.  We can  find  no justification  for  such an order.  While it  is  true  that industrial  adjudication  can  and  often  has  to   modifiy existing  contracts  between an employer  and  its  workmen, there  can  be  no  justification  for  modification  of  an agreement  of  this  nature pending final  settlement  of  a dispute.   Such  a direction that the solemn  words  of  the workmen’s  representatives that interim relief which may  be given will be adjusted against the relief finally given need not be complied with, is not only unfair to the employer but is  also not calculated to serve the best interests  of  the workmen themselves.  For one thing, an order of this  nature in one case by a Tribunal that such an undertaking need  not be  carried  out  is likely to  hamper  interim  settlements generally;  it is also not desirable that workmen should  be encouraged  to  treat  their undertakings as  of  no  value. Industrial adjudication must be careful not to encourage bad faith  on  the  part  of the workmen  or  the  employer.   A direction  as  given by the Tribunal in this case  that  the term  in the agreement that payments made will  be  adjusted against  the  final outcome need not be  complied  with,  is unfortunately to have such effect on workmen.  We  therefore set aside the Tribunal’s direction that interim relief  will remain unaffected and direct that adjustments should be made in terms of the said interim arrangement. This brings us to the question of Leave Rules.  The  Company objects to the award as regards this matter in so far as  it directs the Company to allow 15 252 day’s   sick  leave  with  full  pay  and  allowances   with accumulation  up  to  six months on  production  of  medical certificate given by a registered medical practitioner.   It also  objects to the direction that the present practice  as to  insistence  on previous application for the  purpose  of casual leave should not be relaxed in cases where it  cannot possibly be so done in emergent and unforeseen circumstances and  the direction that up to 3 days no medical  certificate should  be  asked  for.   It appears  that  at  present  the Management  grants  10 days’ casual leave  to  the  business staff  and 7 days’ casual leave to all the other  categories and there is no sick leave facility available. Mr.  Pathak  has tried to convince us that in  view  of  the provisions  of the Employees’ State Insurance Act, 1948,  no provision  need be made about sickness leave at  all.,  That this  Act  has  been applied to the  Company  and  that  the workmen  of the Company get the benefit of this Act  is  not disputed.   It is difficult to see however how  the  benefit that  the  workmen will get under this Act  can  affect  the

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question  of sickness leave being provided for the  workmen. This Act it has to be noticed does not provide for any leave to the workmen on the ground of sickness.  It provides in s. 46 (1) (a) for periodical treatment of any insured person in case  of  his  sickness if certified  by  a  duly  appointed medical practitioner.  It is unnecessary to mention here the several provisions in the Act; viz., Sections, 47, 48 and 49 which  deal  with the eligibility of  workmen  for  sickness benefit  and the extent of the benefit that may be  granted. Section  56 of the Act provides for medical benefits to  the insured  workman or in certain cases to the members  of  his family.   It appears to us clear however that  in  providing for  periodical  payments to an insured worker  in  case  of sickness  (sickness  benefit) or for medical  treatment  or, attendance  to  him  or  the  members  of  his  family,  the legislature did not intend  253 to substitute any of these benefits for the workmen’s  right to get leave on full pay on the ground of sickness. It  is  next  contended that  the  Tribunal’s  direction  as regards sickness leave offend the provisions of Delhi  Shops and Establishments Act, 1954.  Admittedly, a large number of workmen  covered  by  the  reference  are  governed  by  the provisions  as  regards  leave under  the  Delhi  Shops  and Establishments Act, 1954.  Section 22 of that Act fixes  the maximum for sickness or casual leave with wages to a  period of  12 days and further provides that such leave shall  riot be  accumulated.   It is thus clear that  as  regards  those workmen to whom the Delhi Shops and Establishments Act, 1954 applies  the  Tribunal  has acted illegally  in  fixing  the period of sick leave at 15 days and permitting accumulation. We  therefore  set  aside this direction in  the  award  and direct  instead that the Company shall allow to the  workmen to  whom  the  Delhi  Shops  and  Establishments  Act,  1954 applies, sickness or casual leave of a total of 12 days with full  pay  and allowances and that such leave shall  not  be accumulated.   We  are also of opinion that it will  not  be right  to have two separate leave rules for the two  classes of  workmen, one to whom the Delhi Shops and  Establishments Act, 1954 applies and the other two whom it does not  apply. For  that  is  likely to be a source  of  much  discord  and heartburning.   Therefore, in respect also of those  workmen to  whom the Delhi Shops and Establishments Act,  1954  does not  apply,  we think that the same period of 12 days  in  a year  with  full  pay and allowances  should  be  fixed  for sickness   or   causal  leave,  and  there  should   be   no accumultation of such leave; and we direct accordingly. We  cannot find any justification for the direction  of  the Tribunal that the practice of insistence on 254 previous application for the purpose of casual leave  should be relaxed in cases where it cannot possibly be  so done  in emergent  and unforeseen circumstances and that upto 3  days no medical certificate should be asked for.  The leave rules of  the  Company as they now stand provide  that  ordinarily previous  permission of the head of the department  and  the Establishment Manager shall be obtained before casual  leave is  taken but that when this is not possible due  to  sudden illness,  the head of the Department or the Manager as  soon as  may be practicable should be informed in writing of  the absence  from  work  and of the probable  duration  of  such absence.   In our opinion, this provision is reasonable  and is calculated to meet the needs of workmen for taking  leave without previous permission, in case of emergency.  In these circumstances,  the further directions as regards this  that

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have  been  given  by  the  Tribunal  appear  to  us  to  be unnecessary and are hereby set aside. On  the  question of gratuity, the only  argument  seriously pressed  by Mr. Pathak was that the scheme as framed by  the Tribunal  would put undue strain on the  Company’s  sources. We have already expressed our agreement with the  Tribunal’s conclusion that the Company’s financial resources are strong and stable and that not only has the Company been prospering in  recent  years  but that its future  prospects  are  also bright.   Therefore,  we  do not think that  the  scheme  of gratuity  as framed by the Tribunal is unduly favourable  to the  workmen  or  that it places any  undue  strain  on  the Company’s financial resources. One  provision  in  the gratuity scheme which  ought  to  be mentioned is that under it an employee who is dismissed  for misconduct  shall not be entitled to any gratuity.   It  has been  pointed out by this Court in more than one  case  that having  regard  to  the nature of gratuity it  will  not  be proper to deprive  255 an  employee  of the gratuity earned by him because  of  his dismissal for misconduct and the proper provision to make in this  connection is that where an employee is dismissed  for misconduct  which  has  resulted in financial  loss  to  the employer the amount lost should be deducted from the  amount of  gratuity  due.   As however in  the  present  case,  the workmen  have not appealed against the award as regards  the gratuity  scheme  framed  by the Tribunal, it  will  not  be proper for us to make the modification as indicated above. Coming  now to the question of retirement age on  which  the workmen have appealed, we find there is some controversy  as regards the existing position.  The workmen stated in  their written  statement  before the Tribunal  that  "’at  present there are no set rules in the Company in this matter." Their claim was that the retirement age should be fixed at 60  for all  the  employees  of  the  Company.   According  to   the Management’s written statement "the existing  superannuation system  is that the age of retirement is fixed at  55."  The Magagement  further stated that the age of  retirement  "’as fixed,  that is, 55 years" is appropriate and should not  be raised.   In  respect  of this controversy  as  regards  the existing position there appears to be little material on the record.   From  the  appointment  letters  of  some  of  the employees  that  we find on the record it appears  that  for some  appointments  made in 1955 the age of  retirement  was mentioned  as  55.  In the several letters  of  appointments made  prior  to  that year no age  of  retirement  has  been mentioned.  It is not clear, therefore, how on the  question of  retirement age the Tribunal proceeded on the basis  that the  "existing  retirement" age is 55.  Proceeding  on  this basis  the Tribunal directed "that the  existing  retirement age  at  55  years should continue but the  workers  may  be allowed  to remain in employment and work up to 60 years  if found fit.  The question of the further extension 256 should  rest  with  the discretion of  the  Management."  On behalf  of  the  workmen the  learned  Attorney-General  has contended  that the assumption that the existing  retirement age  is  55 is wrong in respect of most of the  workmen  and that  except  for  a few persons  appointed  after  1955  no retirement age is fixed either in the letters of appointment or  in  the standing orders of the Company.  For  all  these employees for whom no retirement age has been fixed already, the  learned  Attorney-General argued on the  basis  of  the decision of this Court in Guest Keen, Williams Private Ltd.,

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v. P. J. Sterling., (1) that it would not be fair to fix any age of superannuation.  It was held in that case that it was unfair  to  fix  the  age  of  superannuation  of   previous employees  by  a  subsequent  standing  order.   The  Labour Appellate  Tribunal had held that it would  be  unreasonable and unfair to introduce a condition of retirement at the age of 55 in regard to the prior employees having regard to  the fact  that  when  they entered service  there  was  no  such limitation.  This Court felt that it would not be  justified in reversing this decision of the Labour Appellate Tribunal. Dealing  next  with the question whether  it  followed  that there should be no rule of superannuation in regard to these previous employees the Court said :               "In our opinion it is necessary to fix the age               of  superannuation  even with  regard  to  the               prior employees, and we feel no difficulty  in               holding  that  it  would  not  be  unfair   or               unreasonable  to direct that  these  employees               should retire on attaining the age of 60.   An               option to continue in service even  thereafter               which   the  respondent  claimed   is   wholly               unreasonable and is entirely inconsistent with               the notion of fixing the age of superannuation               itself.   Once  the age of  superannuation  is               fixed  it  may  be open to  the  employer  for               special reasons to continue in its  employment               a workman who has passed that               (1)   [1960] 1 S.C.R. 348.                257               age  : but it is inconceivable that  when  the               age of superannuation is fixed it should be in               the  option  of the employee  to  continue  in               service thereafter.  We would accordingly hold               that  in  the circumstances of this  case  the               rule of retirement for the previous  employees               in the concern should be 60 instead of 55  and               that  the  rule  of 55  should  apply  to  all               employees   who  enter  the  service  of   the               appellant  after the relevant standing  orders               came into force." Assuming  therefore that for the majority of  the  employees there  is  no  existing  retirement  age  it  would  on  the authority of the above case, be open to the Tribunal to  fix the  age  of superannuation even with respect to  them.   As however  the Tribunal’s decision that this age should be  55 is  vitiated  by the incorrect assumption that there  is  an existing  retirement age of 55 it has been necessary for  us to  consider  the question for ourselves.  It  appears  that before  the  Tribunal  the  Union’s  representative  himself desired that the retirement age should be fixed at 58  years which  may be extended up to 60 years in fit cases.   Before us  the  Counsel for the Company did not  seriously  contest that  in consideration of the present day  circumstances  in the  country it would be fair to fix the retirement  age  at 58.   Accordingly, we set aside the Tribunals award on  this question  of  retirement age and fix the age  at  58  years, subject  to the proviso that it will be open to the  Company to continue in its employment a workman who has passed  that age.   This  rule should apply to all the employees  of  the Company. There   remains   for   consideration   the   question    of retrospective  operation of the award.  Under s. 17A of  the Industrial  Disputes  Act, 1947, an award  shall  come  into operation  with  effect from such date as may  be  specified therein but where no date is so specified it shall come into

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258 operation  on the date when the award  becomes  enforceable. Even  without  a  specific  reference  being  made  on  this question it is open to an industrial tribunal to fix in  its discretion  a date from which it shall come into  operation. The reference, in the present case, included as a matter  in dispute  the  question  of  retrospective  effect  in  these words :               "Whether all the above demands should be  made               applicable  retrospectively with  effect  from               April   1,  1956  and  what   directions   are               necessary in this respect ?" The Tribunal rejected the workmen’s claim for giving  effect to its award from April 1956.  Wherever however the Tribunal has  given relief the Tribunal has directed that  the  award should  come into effect from the date of reference, i.  e., January  23,  1958.   On behalf of the  Company  Mr.  Pathak contends  that  there is no reason why the award  should  be given  effect  to  from any date prior to the  date  of  its pronouncement.   We are not impressed by this argument .  No general formula can be laid down as to the date from which a Tribunal should make its award effective.  That question has to  be  decided  by  the  Tribunal  on  a  consideration  of circumstances  of  each case.  There have been  cases  where this  Court has made an award effective from the  date  when the demand was first made.  There are other cases where  the orders  of  the  Tribunal directing the  award  to  be  made effective from the date of the award has not been interfered with.  It is true that in some cases this Court has modified the Tribunal’s award in such a case.  But it does not appear however  that  any general principles have been  laid  down. Indeed,  it  is difficult and not even desirable  that  this Court  should  try to lay down general  principles  on  such matters that require careful consideration of the  259 peculiar  circumstances  of each case for  the  exercise  of discretion.    It  is  sufficient  to say that  we  find  no reason  to interfere with the Tribunal’s direction  in  this case  that  the reliefs given by it would  become  effective from the date of the reference. We therefore allow both the appeals in part by modifying the Tribunal’s award as regards dearness allowance, leave  rules and retirement age and also as regards the adjustment of the interim relief as mentioned above.  In all other matters  in appeal before us the award is confirmed.  The  modifications made as regards dearness allowance will, as already  stated, take  effect  from  April 1,  1959.   The  modifications  as regards leave rules and as regards retirement age will  take effect from this date.  In both the appeals the parties will bear their own costs. Appeals allowed in part.