Messrs. Crown Aluminium Works v. Their Workmen

.Gujeiulragadkar J. cession would be withdrawn from July 1, 1952, and

' the workers in the rolling mills department would be

discharged with effect from August 1, 1952. The workmen resisted these proposals and took the indus-trial dispute arising therefrom to the Labour Com-missioner immediately. Thereafter a joint conference of the appellant and its workmen was held on July 4, 1952. The int~rvention of the Labour Commissioner was not effective as the proposals made by him to resolve the dispute between the parties amicably were not acceptable to the parties. The appellant thereupon discharged the workmen of the rolling mills depart-ment, 52 in number, with 14 days' notice pay and re-trenched other 227 workers of various categories as from July 26, 1952, with a similar notice pay. The Government of West Bengal found that conciliation was not possible and so the industrial dispute in ques-tion was referred to the Sixth Industrial Tribunal for adjudication.

As we are concerned in the present appeal only with the constitution of the wage structure and some questions incidental thereto we will now refer to the decisions of the lower tribunals only in respect of these matters. The Sixth· Industrial Tribunal considered the financial position of the appellant and revised and reconstituted the wage structure and the dearness allowance in the light of the Omnibus Engineering Awards in West Bengal published in 1948 and 1950. The tribunn.l held that the two hours' concession, facility bonus and the food concession were in the nature of bounty gratuitously paid by the appellant and as such thElY could be withdrawn by the appel-lant at its pleasure. The tribunal also came to the conclusion that since the wage structure had been revised and reconstituted properly, the appellant should be given liberty to abolish the said three con-cessional payments. It may be relevant to observe that the tribunal's conclusion in regard to the 1957 character of the alleged concessional payments· was Messrs. crow11 based principally on the view that in his award Aluminium Works Shri Palit had held that these payments were purely v. concessional payments and that the workmen had no Their Workmen right to claim them as constituents of their wage Gafenclragadkar;1, structure.

The Labour Appellate Tribunal has not agreed with this conclusion. The view that the Appellate Tribu-nal has taken is that these so-called concessional pay-ments have been enjoyed by the workmen for a pretty long time as of right and as part of their basic wages and dearness allowance and as such they have become a term of the conditions of their service. Besides, the appellate tribunal has observed that it has been the convention with industrial tribunals not to reduce the existing emoluments of the workmen to their pre-judice. In the result the wage structure constituted by the tribunal was modified by the .award of the appellate tribunal in respect of existing workm.en.

The main conditions introduced by these modifications were three:

"l. The total basic wages of a time-rated worker together with the two hours' concession immediately before 1-6-'52 shall hereinafter be called his existing basic wage. .

¶2The total of the temporary dearness allowance and the facility bonus as was available to a worker prior to 1-6-'52 and the food concession wherever admissible to a worker under the rules of the company shall hereinafter be called his existing dearness allow-ance, no matte~ i~ any portion of these benefits has been curtailed or stopped in the meantime.

¶3The two hours' concession, the facility bonus and the food concession shall cease to have any sepa-rate existence distinct from the basic wages and dear-ness allowance of the worker on and from the date when this decision comes into force, hereinafter called the relevant date."

Both the original and the appellate tribunals have agreed in providing that the. existing basic wages and the existing total emoluments shall not be reduced.

1957 F.or the appellant Mr. Sen has contended that the Messrs. Crown Labour Appellate Tribunal was in error in assuming Aluminium works' that it has been the convention in industrial adjudica-

v. tions not to reduce the existing emoluments of the Their workmen workmen to their prejudice in any case. He contends Ga) di - dka that just as the rise in the cost of living index or simi-

1 lar relevant factors may justify the revision of the raga '· · •

wage structure in favour of the workmen, so should the revision of the wage structure be permissible in favour of the employer in case the financial position of the employer has considerably deteriorated or other relevant factors indicate such a revision. Indeed Mr. Sen made it clear during the course of his argu-ments that in the present appeal he was more con-cerned to challenge the validity of the assumption made by the Labour Appellate Tribunal in that behalf, rather than the propriety or correctness of the actual modifications made by the Appellate Tribunal in its award. The point thus raised by Mr. Sen is no doubt of general importance and it must be considered in all its aspects.

Before dealing with this point, it would be rele-vant to refer to the findings made by both the tribunals in regard to the financial position of the appellant. The present unit of the aluminium industry which was originally started by the Americans was taken over by the appellant from the Americans on August 9, 1951. The main business of the appellant is to manufacture household utensils from aluminium cir-cles. These circles were imported until the last war. During the war, import of these articles became diffi-cult and so a rolling mills department for manufactur-ing ·circles from scrap materials was started. It is true that utensils made from such circles were inferior in quality; but import difficulties were insurmountable and so even these inferior utensils found a good mar-ket. As soon, however, as better quality circles be-came available the demand for these utensils rapidly decreased and the business began to incur loss. The management was thus compelled to close down the rolling mills permanently in February, 1952. As we have already mentioned, the workmen employed in the rolling mills were ultimately discharged on July 19S7 15, 1952. · Messrs. Crown Al11minJHm Works The appellant placed before the tribunals below the v. relevant figures from the statements of accounts from Their Workmen 1947 . to September 1952. Both the tribunals have Ga"endr-;;dkor. J. examined these figures and have .::ome to the conclu- ~ g sion that the economic position of the appellant on the whole was none too bright. Fall in the sale of utensils was noticeable during these years and if the utensils were not disposed of in the market quickly they are likely to lose their lustre and glaze and would be even stained if they were to be stored in the godown for any length of time. This in turn would involve extra expenditure and would contribute to further losses. It appears to be the concurrent finding of both the tribunals that the manufacturing cost in 1952, as in some preceding years, exceeded the sale price and this undoubtedly would be a disquieting feature in any industrial concern. The original tribunal did not see any prospect of improvement in the appellant's finan-cial position; whereas the Appellate Tribunal was disposed to take the view that as a result of the sub-stantial retrenchment effected by the appellant "finan-Cial position of the relevant unit of the aluminium industry appears to have improved". It is in the background of these findings that Mr. Sen has con-tended that the wage structure constituted by the Appellate Tribunal would work a hardship on the appellant and his grievance is that in reconstituting the wage structure the Appellate Tribunal was very much influenced by the assumption that the wage structure can never be revised to the prejudice of workmen.

In dealing with this question, it is essential to bear in mind the main objectives which industrial adjudi-cation in a modern democratic welfare state inevitably keeps in view in fixing wage structures. "It is well known" observes Sir Frank Tillyard, "that· English Common Law still regards the wage bargain as a con-tract between an individual employer and an indivi-dual worker, and that the general policy of the law has been and is to leave to the two contracting parties 19$7 a general liberty of bargaining, so long as there are no Messrs. CTDWn terms against public policy" (1). In India as well as Aluminium Works in England and other democratic welfare states great rn.e· ,!; """ inroad has been made on this view of the Common

"~ • Law by labour welfare legislation such as the Mini-Gajendtagadkar, J. mum Wages Act and the Industrial Disputes Act.

With the emergence of the concept of a welfare state, collective bargaining between trade unions and capi-tal has come into its own and has received statutory recognition; the state is no longer content to play the part of a passive onlooker in an industrial dispute. The old principle of the absolute freedom of contract and the doctrine of laissez faire have.yielded place to new principles of social welfare and common good. Labour natilrally looks upon the constitution of wage structures as affording "a bulwark against the dangers of a depression, safeguard against unfair methods of competition between employers and a guarantee of wages necessary for the minimum requirements of employees"(°). There can be no doubt that in fixing wage structures in different industries, industrial adjudication attempts, gradually and by stages though it may be, to attain the principal objective of a wel-fare state, to secure "to all citizens justice, social and. economic". To the attainment of this ideal the Indian Constitution has given a place of pride and that is the basis of the new guiding principles of social welfare and common good to which we have just referred.

Though social and economic justice is the ultimate ideal of industrial adjudication, its immediate objec-tive in an industrial dispute as to the wage structure is to settle the dispute by constituting such a wage structure as would do justice to the interests of both labour and capital, would establish harmony between them and lead to their genuine and wholehearted co-operation in the task of production. It is obvious that co-operation between capital and labour would lead to more production and that naturally helps national economy and progress. In achieving this immediate

(i) ''The Worker and the State" by Sir Frank Tillyard, 3rd Ed., p. 97. (•) "Wege Hour Law" Coverage-By Herman A. Wccht, p. o.

objective, industrial adjudication takes into account I9S7 several principles such as, for instance, . . the principle u s . c of comparable wages, productivity of the trade or messr ruw1r Aluml1rium works industry, cost of living and ability of the industry to v. pay. The application of these and other relevant Their Workmen principles . f leads to the constitution Th of different . cate-G . ,,-dk gories o wage structures. ese categories are some-u)enuraga ·or, times described as living wage, fair wage and mini-mum wage. These terms, or their variants, the com-fort or decency level, the subsistence level and the poverty or the floor level, cannot and do not mean the same thing in all countries nor even in different industries in the same country. It is very difficult to define or even to describe accurately the content of these different concepts. In the case of an expanding national economy the contents of these expressions are also apt to expand and vary. What may be a fair wage in a particular industry in one country may be a living wage in the same industry in another country.

Similarly, what may be a fair wage in a given industry today may cease to be fair and may border on the minimum wage in future. Industrial adjudication has naturally to apply carefully the relevant principles of wage structure and decide every industrial dispute so as to do justice to both labour and capital. In deciding industrial disputes in regard to wage structure, one of the primary objectives is and has to be the restoration of peace and goodwill in the industry itself on a fair and just basis· to be determined in the light of all relevant considerations. There is, however, one principle which admits of no exceptions. No industry has a right t-0 exist unless it is able to pay its work-men at least a bare minimum wage. It is quite likely that in under-developed countries, where unemploy-ment prevails on a very large scale, unorganised labour may be available Qn starvation wages; but the employ-ment of labour on starvation wages cannot be encouraged or favoured in a modern democratic wel-fare state. If an employer cannot maintain his enter-prise without cutting down the wages of his employees below even a bare subsistence or minimum wage, he would have no right to conduct his enterprise on such 1957 terms. In considering the pros and cons of the argu-

ment be b urged . before . d us by Mr. Sen, this position must M essrs. C rown Orne lO mm '

Aluminium Workl'

v.

Their Workmen The question posed before us by Mr. Sen is : Can

- the wage structure fixed in a given industry be never Gajenc/ragadkar, 1· revised to the prejudice of its workmen ? Considered

as a general question in the abstract it must be answer-ed in favour of Mr. Sen. We do not think it would be correct to say that in no conceivable circumstances can the wage structure be revised to the prejudice of workmen. When we make this observation, we must add that even theoretically no wage structure can or should be revised to the prejudice of workmen if the structure in question falls in the category of the bare subsistence or the minimum wage. If the wage struc- . ture in question falls io a higher category, then it

would be open to the employer to claim its revision even to the prejudice of the workmen provided a case for such revision is made out on the merits to the satis-faction of the tribunal. In dealing with a claim for such revision, the tribunal may have to consider, as in the present case whether the employer's financial difficulties could not be adequately met by retrench-ment in personnel already effected by the employer and sanctioned by the tribunal. The tribunal may also enquire whether the financial difficulties facing the employer are likely to be of a short duration or are going to face the employer for a fairly long time. It is not necessary, and would indeed be very difficult, to state exhaustively all considerations which may be relevant in a given case. It would, however, be enough to observe that, after considering all the relevant facts, if the tribunal is satisfied that a case for reduction in the wage structure has been established then it would be open to the tribunal to accede to the request of the employer to make appropriate reduction in the wage structure, subject to such conditions as to time or otherwise that the tribunal may deem fit or expedient to impose. The tribunal must also keep in mind some important practical considerations. Substantial re-duction in the wage structure is likely to lea.d to dis-content among workmen and may result in disbar-1957 mony between the employer and his employees; and Mess;,crown that would never be for the benefit of the industry as Aluminium Works a whole. On the other. hand, in asses1:11ng the value v. or importance of possible discontent amongst work-Their Workmen men resulting from the reduction of wages, industrial Gafendragadkar, J. tribunals will also have to take into account the fact thatif any industry is burdened with a wage structure beyond its financial capacity, its very existence may be in jeopardy and that would ultimately lead to un-employment. It is thus clear that in all such cases all relevant considerations have to be carefully weighed and an attempt has to be made in each case to reach a conclusion which would be reasonable on the merits and would be fair and just to both the parties. It would be interesting to notice in this connection that all the tribunals that have dealt with the present dis-pute have consistently directed that existing wages should not be reduced to the prejudice of the work-men. In other words, though each tribunal attempt-ed to constitute a wage structure in the light of mate-rials funiished to it, a saving clause has been added every time protecting the interests of such workmen as were drawing higher wages before. Eeven so, it would not be right to hold that there is a rigid and inexorable convention that the wage structure once fixed by industrial tribunals can never be changed to the prejudice of workmen. In our opinion, therefore, the point raised by Mr. Sen must be answered in his favour subject to such relevant considerations and limitations as we have briefly indicated.

Mr. Sen is, however, not right in contending that the final decision of the Appellate Tribunal is based solely or even chiefly on the alleged convention to which the Appellate Tribunal has referred. As we have already pointed out, the tribunal has also found that substantial retrenchment which has been sanc-tioned by both the tribunals would improve the finan-cial position of the appellant. In the opinion of the Appellate Tribunal, the downward tendency in the cost of living index on which the appellant partly relied could not be considered in the present.proceed-ings since no specific issue had been referred to the 1957 tribunal in that behalf. Besides, enough material had Messrs. C.·ow11 not been produced to show to what extent the cost of Aluminium v. Works l' 1vmg · m · d ex h a d f a 11 en an d w h et h er t h' 1s f a Jl was tem-Their Work111e11 porary or had come to stay. The Appellate Tribunal, Gajendragadkar,J. it appears, thought that the wages paid by the appel-

lant to its workmen "are the irreducible minimum or may at best be in the region of fair wages with a small margin over the minimum wage." If, in reaching its final conclusions, the Appellate Tribunal has relied not only upon the alleged convention but also upon the other circumstances just mentioned, it would not be fair to say that its conclusion is vitiated in law or is otherwise unsound. Normally, this court would be slow to entertain an objection that some of the con-siderations which have weighed with the Appellate Tribunal in reaching its final decision are either in valid or are not borne out by sufficient evidence on record.

There is another point which Mr. Sen has raised before us in regard to the true character of the con-cessional payments made by the appellant to its work-men and which have been incorporated by the Appel-late Tribunal in the wage structure. The Appellate Tribunal has taken the view that these concessional payments really amounted to payments made to the workmen as a matter of right and it is the correctness of this conclusion that is challenged before us by Mr. Sen. Let us then consider the genesis of these pay-ments. Prior to the new Factories Act, the appellant's workmen worked on an average for 59 hours of work made up of the usual 54 hours of work and overtime. After the Factories Act came into force, the working hours had to be reduced but in order to compensate the time-rate workers for reduction in· their wages, the management added to the daily earnings of such workers the wages for two hours. The additional two hours' wages thus awarded to the workers came to be known as two hours' concession or special bonus. This bonus was introduced in August, 1946. In April, 1945, facility bonus had been introduced at 3 as. per day for workers getting basic wages equal to or less than 10 as. per day and 4 as. per day for workers whose basic wages were over 10 as. per day. It appears that this facility bonus was revised from time to time in 1957 the upward direction, and it used to be paid prior to Messl's. Crowi: June 1952 at a graduated scale linked to the basic Atuminium Work" wages in slabs varying from 6 as. to 12 as. per day. v. B es1 'd es, the appe 11 ant mtro · d uce d f oo d concession • to Their _ IVorkmeu workers employed prior to 1951. Thus the constitu-Gajend,.agadka,. J. tion of the wage structure in the appellant's concern included dearness allowance, facility bonus aµd food concession. In dealing with the true nature of these payments it is necessary to take into account the ap-pellant's case as deposed to by the appellant's Labour Officer and Assistant to the Manager, Shri J aisuklal Shah. According to Shri Shah, the facility bonus was an additional allowance for the high cost of living very much on the same footing as dearness allowance. "Two .

hours' allowance",.said Shri Shah, "is referred to as special bonus or extra bonus. It was paid because the workers demanded a11d it was possible to pay it at that time". These statements lend considerable support to the workmen's case that the payments in question constituted a part of the wage strueture of the appel-lant. Indeed, even in the statement of the appellant before the industrial tribunal in the present proceed-ings, it is specifically averred in paragraph 2 that prior to June, 1952, the company's pay structure con-sisted of five items, viz., ( 1) basic wage, ( 2) dearness allowance, ( 3) special bonus or extra bonus, ( 4) faci-lity bonus or special allowance, and (5) food conces-sion. The attitude adopted by the appellant before Shri Palit is also consistent with this pleading and with the evidence given by Shri Shah in the present proceedings. Before Shri Palit, the appellant had urged that there was no occasion to grant increment to its workmen because under the categories of several allowances the company had substantially constituted its wage structure to the benefit of the workmen. In this connect.ion, it would also be material to point out that it was because these additional payments were made by the appellant to its workmen· that the work-men did not raise any dispute and did not join the arbitration before the Second Engitleering Tribunal.

1957 Besides, these payments have been made for some Messrs. Crown years and that also is a relevant factor to consider in Aluminium Works dealing with the true character of these payments. If

v. the Labour Appellate Tribunal took into account all Their Workmen these facts and held that the payments in question are Ga;endragadkor, J. not matters of bounty but that, in essence and in sub-

. stance, they form part of the basic wage and dearness

allowance payable to the workmen, we see no reason to interfere with its conclusion. It is not disputed before us that if this conclusion is right, the Labour Appellate Tribunal has properly· revised the wage structure as constituted by the original tribunal and included the payments in question in appropriate cate-gories.

There is one more paint which may be mentioned before we part with this case. Mr. Sen incidentally argued that the result of the award passed by the Labour Appellate Tribunal is that there will be two scales of wage structure, one for those who are already in the employment of the appellant and the other for the new entrants. Since we have held that the modi-fications made by the Appellate Tribunal in favour of the existing workmen cannot be successfully challeng-ed by the appellant, we do not think it necessary to consider.whether wage structure which has been fixed by the Appellate Tribunal in regard to new entrants into the service of the appellant is justified or not. The result is that both the contentions raised by Mr. Sen substantially fail. The appeal must accord-ingly be dismissed with costs.

Appeal dismissed.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 235 of 1956.

• Appeal by special leave from the judgment and order dated the 29th July, 1955, of the Labour Appel-late Tribunal of India, Calcutta, in Appeal No. Cal. 182 of 1953.

B. Sen. S. N. Mukherjee and B. N. Ghosh for the appellant. .._

N. C. Chatterjee, D. I.. Sen Gupta and Dipak Datta Chaudhury, for the respondent.

1957. October 15. The following Judgment of the 1957 Court was delivered by Messr.i. Crown GAJENDRAGADKAR J.-This appeal by special leave Aluminium Works arises out of an industrial dispute between the appel-v. Their workme11 lant M/s. Crown Aluminium Works, Belur, represent-ed by Jeewanlal (1929) Ltd., and its Workmen repre-Gajendragaclkar,J. sented by Bengal Aluminium Workers' Union. By their order dated July 31, 1952, the Government of West Bengal referred thirteen matters for adjudica-tion to Shri S. K. Niyogi who was appointed to con-stitute the Sixth Industrial Tribunal for adjudication under s. 10 of the Industrial Disputes Act, 1947. The learned adjudicator considered the pleas raised, and the evidence led, by the parties before him, investiga-ted into the financial position of the appellant and pro-nounced his award on October 9, 1953, on all matters referred to him. Both parties were aggrieved by the award and that led to two cross appeals. On July 11, 1955, the Labour ·Appellate Tribunal disposed of these appeals by a consolidated order. The workmen ap-pear to be satisfied with this order but the appellant is not and so the present appeal. The main grievance which Mr. Sen has made before us on behalf of the appellant is in respect of the revision made by the Appellate Tribunal.in the wage structure which wa.s constituted by the original tribunal. Thus, the con-troversy br::t ween the parties in the present appP.al lies within a very narrow compass; nevertheless, it would be necessary to mention the history of the dispute in some detail in order to appreciate properly the points at issue between them.

It appears that in 1947, the first Omnibus Engineer-ing Tribunal was constituted to adjudicate upon the industrial disputes for the engineering industry in West Bengal an.cl the matters referred to the tribuniil included inter alia disputes in regard to basic wages, dearness allowance and leave. This tribunal gave a comprehensive award which was published on June 30, 1948. The appellant was a party to these adju-dication proceedings and was governed by the said award. Soon thereafter industrial disputes again arose between the engineering industry and its employees and these were referred to another 1957 tribunal which in due course examined the Messrs. Crow/I disputes and pronounced its award. This award Aluminium Works was published on September 21, 1950. By

v. this award the dearness allowance fixed by the first Their Workmen tribunal was increased on the ground of rise in the Gajend~ , J. cost of living index and the leave rules prescribed by

0 the earlier award were modified in the light of the pro-

'

visions of the Indian Factories Act, 1948. After the first award had come into force the appellant revised its facility bonus from time to time with the object of keeping pace with the rise in the cost of living index. The result was that several components which constituted the wage structure paid by the appellant to his workmen left no cause for grievance to the work-men. So they did not raise any dispute for increase in their dearness allowance and the appellant and its workmen were not parties to the second arbitration proceedings. Meanwhile, a minor industrial dispute arose between the appellant and its workmen and it was referred to the arbitration of Shri G. Palit by the Government of West Bengal by tll.eir order dated November 24, 1950. One of the points referred to the Tribunal was in regard to the amount of increment which should be granted to workers in 1950 and the date from which it should be so granted. 'The appel-lant denied its liability to pay the increment on the ground that there was no wage structure which per-mitted such a claim. The appellant also urged before Shri Palit that its workers were on the whole hand-somely remunerated. In this connection relian~e was placed by the appellant on the payments made by the appellant to its workmen by way of special allowance and bonus, besides dearness allowance and standard wages. It would thus appear that the appellant resisted the claim of its workmen for the increment in wages on the ground that in the wage structure of the appellant additional components had been introduced which made ample provision for the rise in the cost of living. Shri. Palit was, however, not impressed with this plea. He thought that by introducing these components in the wage structure the Managing Director "chose to hold the key in his own hands so that he can manipulate the quantum of benefit under · 1951 this head and could adjust it to the output in the fac-Messrs. O:owtt tory". Shri Palit, therefore, granted the workmen's Aluminium Works demands· by allowing one anna per ~ increment . v. though he frankly confessed that this was not based Their Workmen. on any actual calculation. He accordingly, directed Gojendragadka~. J. the appellant to pay the arrears within one month of the award coming into operation to all workmen who were in the roll of the appellant at the end of 1950.

Then Shri Palit addressed a word of caution to the appellant and said that it was necessary that the appel-lant should fix a wage structure as soon as practicable to secure durable peace in the factory. "It will be pru-dent", observed Shri Palit in his award, "for the com-pany to have a hide bound wage structure instead of having so many flexible component parts of the wage which merely will create unrest". This in brief is;

the previous history of the dispute between the appel-lant and its workmen.

On March 28, 1952, the appellant issued a notice to its workmen proposing to make certain modifica-tions. The notice indicated that a reduction of the factory hours from 47 to 40 would be made, the faci-lity bonus would be reduced by 3 as. per day and temporary dearness allowance for the salaried workers would be similarly reduced by 10% of the then cur-rent rates. The appellant pleaded in this notice that these economy measures had become necessary owing to the financial set-back of the appellant. and would come into effect on June 1, 1952. The Union opposed these changes. A joint discussion was then arranged on June 2 and June 26, 1952. It appears that further economy measures were introduced for discussion between the parties by the notice dated May 30, 1952.

These further economy measures related to the reduc-tion of the facility bonus by a further amount of 6 as.

per day, withdrawal of two hours' concession of special bonus ·and discharge of workers of the rolling mills department. The Union did not agree to any of these measures except the reduction of working hours from 47 to 42! hours a week. Since joint consultations did not lead to any agreement, the appellant, by its notice 1957 dated June 27, 1952, intimated to the workers that the Messrs. Crown reduction of working hours and in the facility bonus Aluminium Worksand dearness allowance as notified on March 28, 1952,

v. would be brought into operation from June 1, 1952. Their Workmen The workers were also told that the two hours' con-