The Management of Tocklai Experimental
Station Vs. The Workmen & ANR [1961] INSC 329 (24 November 1961)
HIDAYATULLAH, M.
KAPUR, J.L.
SHAH, J.C.
CITATION: 1962 AIR 759 1962 SCR Supl. (1) 545
CITATOR INFO :
D 1965 SC 1 (11,12,19)
ACT:
Industrial Dispute-Bonus-Puja bonus-Basis of
the claim-Profit bonue-Housing accommodation-House allowance.
HEADNOTE:
The appellant, a research institution
established for the purpose of improving the quality of tea, was managed by the
India Tea Association. The employees made claims, inter 558 alia, for (1) free
housing accommodation or adequate allowance in lieu thereof, and (2) grant of
bonus. The tribunal, to which the matter was referred by the Government
considered the financial position of the appellant and came to the conclusion
that the demand for housing accommodation was not justified and that the ends
of justice would be met if a flat rate of enhancement of Rs. 20/- was awarded.
As regards the demand for bonus the tribunal felt that it would be inexpedient
to apply the formula which governed the decision of industrial claims for the
payment of bonus, but made an award directing the appellant to pay puja bonus
to its employees on the ground that what was described as puja bonus was being
given to workmen who were similarly situated as also to the clarical staff
working at the Indian Tea Association at Calcutta and that refusing the
workmen's claim for bonus against the appellant would amount to discrimination.
^ Held, that a demand for the provision of
housing accommodation can be reasonably entertained where it appeared that the
financial position of the employer can bear the burden involved, that under the
present economic conditions prevailing in the industry the responsibility for providing
housing accommodation cannot be placed solely on the shoulders of the employer,
and that in due course the problem would have to be tackled by the industry in
cooperation with the State, which would have to bear a part of that
responsibility.
The Patna Electric Supply Co., Ltd. Patna v. The
Patna Electric Supply Workers' Union, [1959] Supp. 2. S.C. R. 761, relied on.
Held, further, that before a claim for the
grant of puja bonus could be sustained it must be shown (1) that it was
consistently paid by the employer to his employees from year to year at the
same rate, and (2) that it had been paid even in years of loss and that it had
no relation to the profit made by the employer during the relevant year.
A claim for puja bonus could also be made on
the ground that the payment of such bonus was an implied term in the contract
of employment.
The Graham Trading Co. (Indian) Ltd. v. Its
Workmen, [1960] 1 S.C.R. 107 and M/s. Ispahani Ltd., Calcatta v. Ispahani
Employees' Union, [1960] 1 S.C.R. 24, followed.
Industrial profit bonus which is governed by
the application of the well known formula, cannot be awarded unless a specific
year for which the claim is made is indicated and it is alleged that there is
available surplus in the hands of the employer for that year.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 459 and 460 of 1960 Appeals by special leave from the award dated March
10, 1959, of the Industrial Tribunal, Assam, in Reference No. 16 of 1958.
M. C. Setalvad, Attorney General for India,
B. Sen, S. N. Mukherji and B. N. Ghosh, for the management appellant (in C. A.
No. 459 of 60) and the respondent (in C. A. No. 460 of 1960).
S. T. Desai, A. K. Dutt and Janardan Sharma,
for the workmen respondents (in C. A. No. 459 of 60) and the appellants (in C.
A. No. 460 of 1960).
1961. November 24. The Judgment of the Court
was delivered by GAJENDRAGADKAR, J.-Civil Appeals Nos. 459 and 460 of 1960 are
cross appeals and they arise out of an award pronounced by the Industrial
Tribunal, Assam, in an industrial dispute referred by the Assam Government for
its adjudication. This industrial dispute was raised against the management of
the Tocklai Experimental Station (hereafter called the Station) by its workmen.
Six out of the demands made by the workmen formed the subject matter of
reference. In the present appeals we are concerned with three of them.
Demand No. 1 (a) was that the employees'
junior staff of the Station should be given pension in lieu of the existing
practice of paying gratuity.
This demand has been rejected be the
tribunal. The other demand made by the employees was No. 3(b) and it had
reference to the claim for free housing accommodation or adequate allowance in
lieu thereof. This demand has been partially allowed by the tribunal and it has
directed that house allowance in each case shall be raised at the flat rate of
Rs. 20/- instead of Rs. 101/-. The decision of the tribunal in respect of these
two demands did not satisfy the workmen and so by special leave of this Court
they have filed Civil Appeal No. 460 of 1960. The demand of the 560 junior
staff for bonus which was resisted by the Station has been partially allowed by
the tribunal. It has ordered that the Station shall give punja bonus at the
same rate as the employees working for the Indian Tea Association at Calcutta
are getting. This part of the award is challenged by the Station in its appeal
by special leave by Civil Appeal No. 459 of 1960. That is how the two
cross-appeals arise.
We will deal first with the Station's Appeal
in respect of bonus. The learned Attorney-General contends that in making the
demand for bonus the workmen have entirely misconceived the true position of
the industrial law on the point, and he argues that the Assam Government was
not justified in making the reference in the form it has been made and the
tribunal was not justified in making the award in the manner it has done. The
workmen made their demand for bonus in these words: "The Union requests
the introduction of bonus for the Tocklai Staff on the following grounds".
Then follow six grounds. It was urged that the Station is an arm of the tea
industry and is maintained by the members of the I.T.A. who give bonus to their
employees, that the Station exists and works for the advancement of the tea industry
and increasing its profits and thus is an industry, that the I.T.A. employees
at Calcutta office are given bonus, that the employees of the Bengal Chamber of
Commerce receive bonus, that the employees of Shamshernagar and Tulsipara
branches of this very Station used to be given bonus so long as these branches
were functioning and that the personnel of the scientific research laboratories
attached to many industrial concerns receive bonus, and so the workmen in the
present case were entitled to make a claim in that behalf.
In appreciating this claim it is necessary to
state that the Station is a research institution established by the Indian Tea
Association to make research for the purpose of improving the quality of 561
tea and its production and the said Station is managed by the parent
Association and is maintained by means of voluntary subscriptions from members
of the said Association. Broadly stated the ground on which the workmen claimed
bonus was that the employees of the Association were receiving bonus and that
the personnel of scientific research laboratories similarly situated in other
industrial concerns were also given bonus.
When the Assam Government made the present
reference it included within the scope of the reference this claim of bonus
along with the other claims made by the workmen. The issue referred for
adjudication on this point was thus framed:
"2(a). Whether the demand of the
employees (Junior Staff) for bonus is justified ? If so, at what rate should
the same be paid ?" The tribunal considered this demand and partially
allowed it by directing that the workmen should be paid puja bonus at the same
rate as the employees working in the I.T.A. at Calcutta are getting. In dealing
with this question the tribunal has held that the Station is an industry within
the meaning of the Industrial Disputes Act and so it could not resist the
demand made by its workmen on the ground that it is an academic body devoted to
research and as such outside the purview of the Act. This position is not
disputed before us by the Station because it is concluded by a decision of this
Court in The Ahmedabad Textile Industry's Research Association v. The State of
Bombay (1). The tribunal has, however, found in favour of the Station that it
would be inexpedient, if not impossible, to apply the formula which governs the
decision of industrial claims for the payment of bonus. "There are obvious
difficulties", says the tribunal, "in applying the formula laid down
by their Lordships of the Supreme Court to an experimental station run 562 by
the Association"; but it added that "it could not be overlooked that
payment of bonus to members of the experimental staff is being made by some
companies". Then the tribunal referred to some instances where bonus is
paid to workmen who, in the opinion of the tribunal, were similarly situated,
and it came to the conclusion that refusing the workmen's claim for bonus
against the Station would amount to discrimination. The tribunal then took into
account the fact that what is described as puja bonus is paid to members of the
staff of the Bengal Chamber of Commerce because it was admitted before it that
the junior staff of the Bengal Chamber of Commerce which presumably was also
serving the I.T.A. at Calcutta was receiving a fixed annual gratuity
characterised as puja bonus. The tribunal conceded that the claim for this kind
of bonus "may not directly satisfy the requirements of law", but it
added that "the fact that what was described as puja bonus was given at
the sub-stations and is also given to the clerical staff working at the I.T.A.
at Calcutta, supports the demand to this extent at least that the same
treatment may be meted out to them." It is on this reasoning that the
tribunal ultimately made the award in favour of the workmen directing the
Station to pay puja bonus to its employees.
It would be noticed that the demand
originally made by the workmen appears to be in the nature of a demand for
bonus which is usually described as industrial profit bonus the payment of
which is governed by the application of the well known formula. Such a demand
is invariably made, and has to be made, by reference to a particular year
because the formula which determines claims for profit bonus postulates the
examination of the available surplus in the hands of the employer from which
bonus may be directed to be paid to the employees. A claim for profit bonus
cannot 563 be validly made unless a specific year for which the claim is made
is indicated and it is alleged that there is available surplus in the hands of
the employer during that year. It is unfortunate that this elementary aspect
was overlooked by the workmen when they made the claim and has not been noticed
even by the Assam Government when it made the reference in respect of this claim.
This serious infirmity in the claim is present even in the award made by the
tribunal because the award does not say for what year the bonus should be paid,
and like the claim made by the workmen in very general terms for the
introduction of bonus the award also seems to make a direction in similar terms
for the payment of bonus. In our opinion, this is a patent infirmity in the
award.
Profit bonus, it is hardly necessary to
emphasise, can be awarded only by reference to a relevant year and a claim for
such bonus has, therefore, to be made from year to year and has to be settled
either amicably between the parties or, if a reference is made, it has to be
determined by industrial adjudication. A general claim for the introduction of
profit bonus cannot be made or entertained in the form in which it has been
done in the present proceedings.
Besides, the other serious infirmity in the
award is that when a claim for profit bonus was made the tribunal has proceeded
to grant puja bonus and that too solely on the ground that the refusal to grant
the said claim would amount to discrimination. In our opinion, the approach
adopted by the tribunal in dealing with this alternative claim for puja bonus
which was not made in the demand and which had not been expressly referred to
the tribunal is entirely erroneous. The claim for puja bonus proceeds on
entirely different considerations. Customary puja bonus undoubtedly prevails in
many industries in Bengal but there are certain tests which have to be applied
in 564 determining the validity of the claim. The amount by of way of puja
bonus, it must be shown, has been consistently paid by the employer to his
employees from year to year at the same rate, that it has been paid even in
years of loss and that it has no relation to the profit made by the employer
during the relevant year. The course of conduct spreading over a reasonably
long period between the employer and the employees in the matter of payment of
puja bonus is of considerable importance in dealing with the claim of customary
puja bonus [Vide: The Graham Trading Co. (India) Ltd. v. Its Workmen (1)]. A
claim for puja bonus can also be made in a proper case of the ground that the
payment of such bonus is an implied term in the contract of employment [Vide:
Messrs.
Ispahani Ltd., Calcutta v. Ispahani
Employees' Union(2). Such a claim again would necessarily involve the
consideration of several relevant facts none of which has been alleged or
proved in the present proceedings. Therefore, the decision of the tribunal awarding
puja bonus to the workmen cannot be sustained. Indeed, in awarding puja bonus
to the workmen the tribunal has failed to consider that it was making out an
entirely new and inconsistent case for the workmen and granting the said claim
without any proof of the relevant facts which would support such a claim. It is
rather surprising that even when the tribunal by its award wanted to grant the
demand for puja bonus it did not think it necessary to clarify at what rate the
said bonus was to be paid. The award is absolutely vague in that behalf and
that is another infirmity in the award. Since that is the only point in Civil
Appeal No. 459 of 1960 preferred by the Station we must hold that the appeal
succeeds and must set aside the award made by the tribunal under issue No. 1
(a).
Before we part with this appeal, however, we
ought to add that after special leave was granted 565 to the Station to prefer
its appeal it applied for stay of the award directing the payment of puja bonus
and stay was granted by this Court on condition that the amount of puja bonus
should be paid by the Station to its employees on their furnishing security to
the satisfaction of the management. Accordingly the Station has paid to its
workmen puja bonus for three years. We suggested to the learned Attorney
General that in case his appeal were to succeed the Station may consider
whether it would partially forego its claim to recover the amount already paid
by it to its workmen, and the learned Attorney-General, after consulting his client,
has stated before us that the Station would forego one-third of the total
amount paid by it to its employees under the orders of this Court. This
one-third amount, we were told, is in the neighborhood of Rs. 65,000/- The
learned Attorney-General also stated that the balance of two-third amount which
it would recover from its employees can be paid by each one of them either by
easy installments or at the time when he would receive his gratuity or
provident fund; the employee may exercise his option in that behalf.
It appears that some of the employees who
received the said amount have left the service of the Station and at that time
have refunded the amount received by them. The Station would be prepared to
give back to such employee’s one-third of the said amount. In our opinion, the
attitude adopted by the Station in this matter is very fair and it would
relieve the workmen from their liability to return one-third of the total
amount received by them in pursuance of the orders of this Court.
That takes us to Civil Appeal No. 460 of 1960
preferred by the workmen. Mr. S. T. Desai, who argued this appeal, could not
seriously press the workmen's case against the refusal of the tribunal to allow
their demand for pension in lieu of the existing practice of paying gratuity.
On a consideration 566 of the relevant facts the tribunal came to the
conclusion that this demand was not justified, and, in our opinion the
conclusion of the tribunal is well founded. Then, as regards the other demand
which is the subject-matter of the appeal the tribunal has increased the house
allowance at a flat rate of Rs. 20/- instead of Rs. 10/- and this increased
rate has been paid by the Station as from the date when the award became
enforceable.
Mr. Desai contends that the tribunal should
have made an award granting the demand for accommodation or in the alternative
should have awarded larger amount by way of house allowance.
We are not impressed by this argument. A
demand for the provision of housing accommodation can be reasonably entertained
where it appears that the financial position of the employer can bear the
burden involved in the said demand. Under the present economic conditions
prevailing in the industry the responsibility for providing housing
accommodation cannot reasonably be placed solely on the shoulders of the
employer. In due course the problem may have to be tackled by the industry in
co-operation with the State. The State will have to bear a part of that
responsibility [Vide: The Patna Electric Supply Co. Ltd., Patna v. The Patna
Electric Supply Workers' Union (1))]. The tribunal has considered the financial
position of the Station, the urgency of the damned made by the workmen, and has
come to the conclusion that the demand for housing accommodation was not justified
and that the ends of social justices would be met in the present case if a flat
rate of enhancement of Rs. 20/- is awarded. It is true that the Station gives
housing accommodation for members of the senior staff but as the tribunal has
pointed out there are special reasons how more favourable terms have to be
offered to senior research staff in order to get the services of properly
trained and properly equipped personnel. In our opinion, the tribunal was right
in refusing 567 to draw an analogy between the requirements of the senior
research staff and the junior staff with whose claims the tribunal was dealing.
Therefore, we are not satisfied that there is any substance in the grievance
made by the workmen against the award passed by the tribunal in respect of
house allowance. The result is Civil Appeal No. 460 of 1960 fails and is
dismissed.
There would be no order as to costs in both
the appeals.
Appeal No. 459 allowed.
Appeal No. 460 dismissed.
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