Workmen of Shri Bajrang Jute Mills
Ltd. Vs. Employers of Shri Bajrang Jute Mills Ltd. [1968] INSC 267 (31 October
1968)
31/10/1968 VAIDYIALINGAM, C.A.
VAIDYIALINGAM, C.A.
SHELAT, J.M.
BHARGAVA, VISHISHTHA
CITATION: 1970 AIR 878 1969 SCR (2) 593
ACT:
Wage
Scale--Determination--Industry-cure-region basis- Wage Board fixing uniform
wage scale irrespective of differing conditions in different regions-Validity-
Region wise classification, necessity of.
HEADNOTE:
The Central Wage Board was constituted for devising
a wage structure, based on the principle of fair wages payable in the Jute
industry. In determining the financial capacity of the industry the Board
selected 20 mills from West Bengal and 9 mills from the rest of the region as
representing a cross-section of the Industry. The respondent, a fairly small
mill in Andhra Pradesh. was considered 'as a comparable unit with two larger
mills in the State as also with some of the very big and prosperous mills in
West Bengal. The Management of the mill refused to accede to the demand of the
workmen to pay wages in accordance with the recommendations of the Board fixing
a uniform scale for the entire industry, on the plea that the mill had no
financial capacity to bear the burden of the wage scale.
The dispute was referred to the Industrial
Tribunal. The Tribunal upheld the claim of the management. In appeal to this
Court it was contended that the Wage Board recommendations did follow the
principles laid down by this Court in the matter of fixation of wages and as
such the Tribunal should have implemented its recommendations.
HELD: Dismissing the appeal.
The essential pre-requisite of deciding the
wage structure viz., consider the capacity of the industry to pay on the
principles laid down by this Court was absent in the recommendation of the Wage
Board. This Court has laid down that the capacity of the industry to pay should
be gauged on an industry-cum-region basis after taking a fair cross section of
the industry and that the cross-section to be truly representative and capable
of giving a true picture of the conditions of both industry and labour must be
one from each region where establishments of the industry in question are
situate. [608 E--F] In the present case taking 20 mills from West Bengal and 9 mills
from outside as forming a representative. cross- section was manifestly
incorrect as the West Bengal mills could not be said to be comparable units
with the rest of the mills. These mills so clubbed together could not reflect
the economic and other conditions prevailing in the mills in different regions
with their peculiar problems and differing conditions. The Board ought to have
considered the units in each area separately and determined the wage scales for
each such area by taking from that area a representative cross-section of the
industry where possible or where that was not possible by taking comparable
units from other industries within that area. [608 G--H] Express Newspapers
Ltd. v. Union of India, [1959] S.C.R.
12, French Motor Car Co. v. Workmen, [1963]
Supp. 2 S.C.R.
16 and Greaves Cotton & Co. v. Workmen,
[1964] 5 S.C.R.
362, followed.
594 If the wage-scale had been determined by
the Board in the mam aforesaid, even though the Board was not a statutory body
and decisions were only of a recommendatory character, it would be possi for
Industrial Tribunal to give due weight to its recommendations such
recommendations would have been in conformity with the principle of
industry-cum- region, a principle binding on the' tribunals. [609 H] [The difficulty
felt by the Tribunal faced with the dilemma whether not to follow the
recommendations of the Wage Board arrived at principles different from those
consistently followed in industrial adjucation should have been realised by the
Government before accepti the recommendations of the Wage Board.] [609 F-G]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 923 , 1966.
Appeal by special leave from the Award dated
May 29, 196 of the Industrial Tribunal, Andhra Pradesh in I.D. No. 12 1964.
M.K. Ramamurthi, Shyamala Pappu and Vineet
Kumar, f the appellants.
K. Srinivasamurthy, Naunit Lal and B.P.
Singh, for there. pondents.
The Judgment of the Court was delivered by
Vaidialingam, J. The workmen of Shri Bajrang Jute Mil Ltd., in this appeal by
special leave, attack the correctness of th award dated May 29, 1965 of the
Industrial Tribunal, Andhr Pradesh, Hyderabad, in I.D. No.
12 of 1964, by which it hel that the demand
of the workmen for implementation of the re commendations of the Central Wage
Board for Jute Industr (hereinafter referred to as the Wage Board), was not
justified.
In view of the fact that the
respondent-management decline to accede to the demand of the appellants to pay
wages in accordance with the recommendations of the Wage Board, the Stat of
Andhra Pradesh, by its order dated March 21, 1964, referres for adjudication to
the Industrial Tribunal, Hyderabad, the following question:
"Whether the demand of the workmen in
Sri Bajrang Jute Mills, Limited, Guntur, for implementation of the recommendations
of the Central Wage Board for Jute Industry is justified, and if so, to what
extent?" The Wage Board was constituted by the Central Government for
determining, among other matters, a wage structure, based on the principles of
fair wages payable in the jute industry. The Wage Board consisted of a
Chairnan, two independent Members, two Members representing the employers and
two Members representing the workers. It may be noted that the Members 595
representing the industry and labour were not chosen by the representative
bodies of the industry or the labour but were appointed by Government. In fact,
neither the industry nor the labour had any voice in the choice by the
Government of any of the members of the Wage Board. The Wage Board submitted
its report to the Government, making recommendations about the wage structure
and laying down principles for awarding bonus for the year 1962-63 and the
subsequent years.
It appears from the Wage Board's report that,
at the very outset, the Wage Board selected 20 mills from West Bengal and 9
reporting mills from outside West Bengal which it considered to form a
representative cross-section of the industry for a detailed study. The Wage
Board took into account the financial position of the said mills and also collected
other data and information not only from the mills concerned but also from
other quarters. The Wage Board took into account the growth of paid-up capital,
gross block depreciation, profits made and dividends paid by the mills and
other allied matters and came to the conclusion that the industry's position
was satisfactory and its future was bright. The Wage Board was not required to
fix a wage structure on the peculiar financial position of any particular unit,
although it was bound to take a fair cross-section of the industry represented
by units reflecting the general conditions prevailing in the industry as a
whole. The Wage Board also considered the principles for determination of bonus
and recommended payment of bonus for the year 1963 on the basis of the basic
wages drawn by the worker for the year 1962. It also recommended that for
future years the bonus was to be paid according to the wages drawn in the
preceding year. It further recommended certain rules for determination of the
quantum of bonus. According to the appellants, the respondent was bound to
implement the recommendations of the Wage Board in all respects and its refusal
to do so was illegal and unjustified.
The respondent pleaded that the
recommendations of the Wage Board could not be implemented as the Mill had no
financial capacity to bear the burden of the wage scales recommended by the
Wage Board. The respondent made an attempt to implement the Wage Board's
recommendations to some extent at least, provided the labour agreed for
revision of workloads, but the labour was not willing for such revision. It was
further stated that the respondent company, though started in 1907, had been
running at a loss for a number of years and its loom-strength was only 120.
The mill was located at Guntur, which is not
a jutegrowing area, and in consequence almost all raw materials had to be
brought from Vijayanagaram, in Visakhapatnam District, and from Calcutta. As
the raw materials and other products had to be brought from outside, it involved
the mill in considerable 596 expense due to freight charges etc. The products
manufactured in the mill were only cement bags and twine and cement companies
were its only customers. The company had furnished replies to the questionnaire
issued by the Wage Board and had made it clear that the wages paid by it were
reasonable and it could not bear any additional burden in that regard. Even the
interim relief, recommended by the Wage Board, was implemented with
considerable difficulty though it involved the company in an additional revenue
expenditure of Rs. 1,53,000 a year.
The Wage Board's recommendations fixed the
wage scales, dearness allowance etc., for all the employees working in all the
jute mills situated in the country, irrespective of the financial position of
individual mills. If the recommendations of the Wage Board were to be
implemented, the company would be put to further expenditure of Rs. 2,75,385.60
in the first year, Rs. 3.25 lakhs in the second year and Rs. 3.75 lakhs in the
third year in addition to the existing wage bill which the company had to meet.
The company has been making only negligible profits and it could not pay any
dividend on its equity shares for nearly 7 years. Its reserves also have been
dwindling. The financial position of the company, therefore, is such that it is
impossible for it to bear the burden of the additional wage structure, dearness
allowance etc., as recommended by the Wage Board. The company further pleaded
that the Wage Board committed a serious mistake when it compared the financial
position of the respondent along with two other large mills in the Andhra area
viz., Nellimarla and Chitavalasa Jute Mills. Further the wage scales fixed by
the Wage Board are on the basis of the position occupied by big jute mills in
West Bengal, having upto 2,561 looms and 13,580 spindles. The Wage Board did
not attempt to make any distinction between small and uneconomic mills and
large mills, nor was any classification made in that manner.
Regarding payment of bonus, the company
pleaded that this was covered by a settlement and the workmen were not entitled
to the same in view of the financial position of the company and as there was
no available surplus. The wage structure, dearness allowances etc., fixed by
the Wage Board were not in accordance with the principles laid down by this
Court in several decisions. According to the decisions of this Court, no fair
wage can be fixed unless the unit in question has the financial capacity to
meet the additional burden; and, in fixing the wage scale and dearness
allowance, the principle of industry-cum-region had to be applied. Small and
struggling units should not be compared with large, flourishing concerns. The
extent of business carried on by them, the labour force, the capital invested,
quantum of reserves, dividends declared and profits made, have all to be taken
into account to see whether the units could be compared for wage fixation.
597 All these circumstances have not been
given due weight and consideration by the Wage Board. The respondent mill has
only 120 looms and it has been compared with not only the very big mills in
West Bengal but also with the Nellimarla and Chittavalasa Jute Mills which have
500 and 316 looms respectively. No classification was made by the Wage Board of
the various jute mills as large, medium and small units;
and in prescribing uniform scales for all
types of units no distinction has been made between economic and uneconomic
units. Small and struggling units have been treated in the same way as large
and prosperous units. Finally, the respondents pleaded that in view of the
circumstances indicated above, the Wage Board's recommendations could not be
implemented by it and the labour's claims, on the basis of the Wage Board's
recommendations, were not justified.
The Industrial Tribunal, in its award under
attack, accepted the pleas taken by the management. While recognising the fact
that the Wage Board's recommendations were made, after collecting considerable
data, the Tribunal was of the view that the Wage Board committed an error in
comparing the respondent mill with other big mills, not only in Andhra Pradesh
but also outside that State. The Tribunal was also of the view that the
principles laid down by this Court that the fixation of wage scales should be
on an industry-cum-region basis and that-small units should not be compared
with large and flourishing concerns, were not given due regard by the Wage
Board. On the materials placed before it, the Tribunal accepted the claim of
the respondent that it was a small concern considered from any point of view,
viz., of looms, paid up capital, reserves, or the profits. In respect of the
capacity to pay, the Tribunal was of the view that the Wage Board had not
approached the question in the light of the principles laid down by this Court.
The Tribunal came to the conclusion that the respondent, which is a fairly
small unit, has not the financial capacity to adopt the wage-structure fixed by
the Wage Board. The Tribunal accepted the claim of the respondent regarding the
additional financial burden it would have to bear, even according to the phased
programme fixed by the Wage Board and has held that the financial position of
the company is such that it cannot bear this burden. The TribUnal also came to
the conclusion that as the Wage Board was devising a fair-wage, the capacity of
the particular industry to bear the additional burden-which is one of the
essential circumstances to be taken into consideration--has not been taken into
account. On the other hand, all jute mills, wherever situate, big or small,
prosperous or struggling, economic or uneconomic, have all been treated alike
and a uniform wage structure applicable to all mills has been fixed. There has
been no attempt at classification of small and uneconomic mills for the purpose
of finding out their financial capacity. The Tribunal finally came to the
conclusion 598 that the demand of the workmen for implementation of the
recommendations of the Wage Board was not justified.
The same stand, taken before the Tribunal by
the management and the workmen, as mentioned earlier, have been reiterated
before us by Mr. M.K. Ramamurthy, learned counsel for the Union, attacking the
award and Mr. K.
Srinivasamurthy, learned counsel for the
management, in support of the award. Before we refer to the circumstances under
which the Wage Board was constituted, as well as the approach made by it in the
fixation of wage-scales and other matters, it is necessary to refer to the
principles laid down by this Court in that regard and to examine whether the
Wage Board has properly applied those principles. Mr. Ramamurthy, learned
counsel for the appellant,, has accepted the position that there is an
obligation on the Wage Board to follow correctly and apply the principles laid
down by this Court in the matter of fixation of wages and dearness allowance.
But his contention is that the Wage Board has, in its recommendations, followed
those principles.
In Express Newspapers (Private) Ltd. v. The
Union of India(1) this Court has elaborately considered the concept of (i)
living wage; (ii) fair wage; and (iii) minimum wage, as well as the machinery
for fixation of wages, adopted in various countries. So it is not necessary to
cover the ground over again. So far as fair wage is concerned, this Court has
stated that while the lower limit must obviously be the minimum wage, the upper
limit is equally said to be what may broadly be called the 'capacity of the
industry to pay'. It has further been stated that the capacity of the industry
to pay should be gauged on an industry-cum-region basis, after taking a fair
cross-section of that industry and that in a given case it may be even
permissible to divide the industry into appropriate classes and then deal with
the capacity of the industry to pay class-wise. This Court further laid down
the principles in that regard as follows, at p. 92:
"The principles which emerge from the
above discussion are:
(1) that in the fixation of rates of wages
which include within its compass the fixation of scales of wages also, the
capacity of the industry to pay is one of the essential circumstances to be
taken into consideration except in cases of bare subsistence or minimum wage
where the employer is bound to pay the same irrespective of such capacity;
(2) that the capacity of the industry to pay
is to be considered on an industry-cum- region basis after taking a fair cross
Section of the industry; and (1) [1959] S.C.R. 12.
599 (3) that the proper measure for gauging
the capacity of the industry to pay should take into account the elasticity of
demand for the product, the possibility of tightening up the organisation so
that the industry could pay higher wages without difficulty and the possibility
of increase in the efficiency of the lowest paid workers resulting in increase
in production considered in conjunction with the elasticity of demand for the
product--no doubt against the ultimate background that the burden of the
increased rate should not be such as to drive the employer out of
business." The discussion on the question of capacity of an industry to
pay is wound-up at p. 191 with the following observations:
"Industrial adjudication is familiar
with the method which is usually adopted to determine the capacity of the
employer to pay the burden sought to be imposed on him. If the industry is
divided into different classes, it may not be necessary to consider the
capacity of each individual unit to pay but it would certainly be necessary to
consider the capacity of the respective classes to bear the burden imposed on
them. A cross section of these respective classes may have to be taken for
careful examination and all relevant factors may have to be borne in mind in
deciding what b urden the class considered as a whole can bear. If possible, an
attempt can also be made, and is often made, to project the burden of the wage
structure into two or three succeeding years and determine how it affects the
financial position of the employer." In French Motor Car Co. Ltd. v.
Workmen(1) this Court observed at p. 20:
"It is now well settled that the
principle-of industry cum-region has to be applied by an industrial court, when
it proceeds to consider questions like wage structure, dearness allowance and
similar conditions of service. In applying that principle industrial courts
have to compare wage scales prevailing in similar concerns in the region with
which it is dealing, and generally speaking similar concerns would be those in
the same line of business as the concern with respect to which the dispute is
under consideration. Further, even in the same line of business, it would not
be proper to compare (for example) a small struggling concern with a large
flourishing concern." [1963] Spp. 2 S.C.R. 16.
600 The principle that the basis of fixation
of wages and dearness allowance is industry-cum-region was reiterated in
Greaves Cotton & Co. v. Their Workmen(1).
According to Mr. Ramamurthy, the learned
counsel for the appellant, the principles laid down by the decisions, referred
to above have been borne in mind by the Wage Board when it fixed the wage
structure and dearness allowance.
Learned counsel . also urged that when a wage
structure was fixed for the industry as such, it is not necessary that the
capacity of individual units should also be considered and that on the other
hand it would be enough if a fair cross- section of the industry was taken into
account for this purpose as was done by the Wage Board in the present case.
On the other hand, according to Mr.
Srinivasamurthy, the learned counsel for the management, inasmuch as a fair
wage was being fixed, the Wage Board was bound to apply the principle of
industry-cure-region in fixing the wage structure and dearness allowance and
the Wage Board has committed an error in not classifying the various units as
large, medium and small units and prescribing different scales for different
types of units.
We shall now proceed to consider the
circumstances under which the Wage Board was constituted, its composition and
the approach made by it in fixing the wage structure and dearness allowance.
In Chapter XXVII, paragraph 25, of the Second
Five Year Plan of the Government of India, it is stated that statistics of
industrial disputes show that wages and allied matters are the major source of
friction between employers and workers and that an acceptable machinery for
settling wage disputes will be one which gives the parties themselves a more
responsible role in reaching decisions. It is further stated that an authority
like a tripartite wage board, consisting of equal representatives of employers
and workers and an independent chairman would probably ensure more acceptable
decisions and that such wage boards shouId be constituted for individual
industries in different areas.
In pursuance of this recommendation,, the
Government of India, by its Resolution No. WB-5(1)60, dated August 25, 1960,
set up a Central Wage Board for Jute Industry. The Board consisted of a
Chairman, two independent Members and two Members representing employers and
two Members representing employees. The terms of reference of the Board were:
"(a) to determine the categories of
employees (manual, clerical, supervisory, etc) who should be (8) [1964] 5
S.C.R. 362.
601 brought within the scope of the proposed
wage fixation;
(b) to work out a wage structure based on the
principles of fair wages as set forth in the report of the Committee on Fair
Wages." In evolving a wage structure, the Board was also required to take
into account the needs of the industry in a developing economy, the special
features of the jute industry as an export industry, the requirements of social
justice and the need for adjusting wage differentials in such a manner as to
provide incentives to workers for advancing their skill'.
The Wage Board was also required, within two
months from the date of its starting work, to submit its recommendations
regarding the demands of labour in respect of interim relief, pending its final
report.
The Wage Board recommended to the Central
Government the grant of interim relief of Rs. 2.85 from October 1 to December
31, 1960 and Rs. 3.42 from January 1, 1961 in respect of all jute mills in
India, excepting the Katihar Jute Mill in respect of which the interim relief
at the rate of Rs. 3.42 was granted from September 1, 1961. The Central
Government accepted this recommendation, by its Resolution No. WB-5(3)/61,
dated January 25, 1961 and requested the jute mills to implement the same as
soon as possible. There is no controversy that the respondent mill complied
with this request though it involved the company in an additional expenditure
of Rs. 1,53,000. This claim of the company has been accepted by the Industrial
Tribunal. The Wage Board submitted to the Central Government, on September 4,
1963 its final recommendations dated August 31, 1963 and recommended that the
new wage structure should be given effect to. from July 1, 1963. The Central
Government, by its Resolution No. WB-5( 16)/63 dated September 27, 1963
accepted the report and made a request to the employers, the workers and the
State Governments to implement the same expeditiously. The standardised basic
wages of various categories of workers of jute mills for a month of 26 days or
208 hours are specified in Appendix XI of the Report; and there is no
controversy that the basic wages of all categories of workers in the employ of
the respondent jute mill is the same as the standardised basic wage contained
in Appendix XI. But, there is a further recommendation that so far as the
appellant jute mill and another jute mill, viz., Sri Krishna Jute Mill, were
concerned,the wage increase was to be on a phased basis.
We may refer now to the various aspects dealt
with by the Wage Board in its report. Chapter III deals generally with the
Industry. In para 3.5 it is stated that there is an overwhelming concentration
of jute industry in West Bengal and only a sprink- 602 ling of it is to be
found elsewhere in India. It is also noted that the loomage at the time of the
report in the whole of India stood at 72,916 looms. The reasons for the heavy
concentration in West Bengal of jute mills are stated to be factors like
abundant supply of raw material, proximity of coal fields in
Ranigunge,navigability of the Hooghly and the availability of the required type
of labour in the neighborhood. So far as jute mills at other places in India
are concerned, in para 3.6 of the Report it is stated that small jute mills
have come up in other States, including Andhra Pradesh, but the total loomage
of all such mills outside West Bengal is only 3,242 looms, and the mills are distributed
in various places.
Appendix VII of the Report contains a
statement showing the mills operating, number of looms and spindles in the
whole of India. So far as West Bengal is concerned, the total number of looms
is given as 65,383; in Andhra Pradesh as 1,072; in Bihar 1,059; Uttar Pradesh
891 and Madhya Pradesh 220. It will be noted from Appendix VII that in Andhra
Pradesh there are two fairly big units, the Nellimarla and Chitavalsa having
316 and 500 looms respectively, whereas the respondent mill lias only 120
looms. We are particularly referring to this aspect because it is the grievance
of the respondent that the Wage Board has compared it with the Nellimarla and
Chitavalsa and other big units in West Bengal. A perusal of Appendix VII shows
that there are several jute mills having more than 1,000 looms and some having
more than 2,000 looms, in West Bengal.
Chapter IV deals with the scope of enquiry.
In para 4.1 it is stated that the Board's recommendations will apply to all the
jute mills then existing and also to those that might be started thereafter,
and a list of all mills then in existence is given in Appendix VII.
Chapter V deals with minimum wages in the
jute industry.
In para 5.4 the Wage Board takes note of the
fact that the minimum wages in Nellimarla and Chitavalsa jute mills in Andhra
Pradesh are found to be the highest in the jute industry. In para 5.26, the
minimum wages in West Bengal jute mills from 1948 and as obtaining from January
1, 1961 has been referred to. Such minimum wages from January 1, 1961 including
Rs. 3.42 granted as interim relief by the Wage Board and the dearness
allowance, is stated to be Rs.
70.59, comprised of basic wages of Rs.
34.67--Rs. 3.42 (interim relief)+Rs. 32.50 (dearness allowance). Regarding the
jute mills in Andhra Pradesh, it is stated in para 5.35 that Nellimarla and
Chitavalsa jute mills were paying from January 1, 1961 the total emoluments of
Rs. 81.21 per month to the 603 lowest category of workers for 208 working
hours, inclusive :s. 3.42 interim relief granted by the Wage Board.
In para 5.38, it is stated that the
respondent mill, from Janury 1, 1961, is paying total emoluments of Rs. 52.17
per month, comprised of Rs. 19.50 (basic)+Rs. 3.42 (interim relief)+ is. 29.25
(dearness allowance). The jute mills in Bihar State, s will be seen from para
5.43 were paying total monthly emolunents ranging from Rs. 69.98 to Rs. 70.59.
Chapter VI deals with the industry's capacity
to pay.
In para 6.1 it is stated that two matters
which received the highest consideration in the course of the deliberations of
the Wage Board were the needs of the workers and the capacity of the industry
to pay those needs. It is further stated that the consequences of a fair wage
upon the employer or the capacity of the industry to maintain production
efficiently, have received the special attention of the Wage Board. In para
6.8, reference is made to the Fair-Wages Committee's Report that in determining
.he capacity of the industry to pay, it is wrong to take the capacity of a
particular unit or the capacity of the entire industry in the country and that
the practical method is to take a fair cross-section of the jute industry.
In this connection the Wage Board refers to
the claims advanced by the workers and the industry. The workers appear to have
suggested the names of mills which were well- established and whose financial
position was never in doubt, whereas the industry urged that the capacity of
the weaker and marginal units should not be ignored as the wages that are to be
fixed by the Wage Board should be such as could be paid without difficulty by
all units of the industry.
In para 6.9 it is stated that the Wage Board
was of the view that the only proper and practical methods was to take a
cross-section of the industry which could be considered as fair in its view.
Accordingly. twenty jute mills in West Bengal were selected by it as
representing a fair cross- section of the industry in that region. The Wage
Board also decided to make a census survey of 9 reporting mills outside the
West Bengal region. Accordingly it selected all the three in Andhra Pradesh,
two in Bihar, three in Uttar Pradesh and one in Madhya Pradesh. A list of the
jute mills in West Bengal and outside West Bengal region considered as forming
a representative cross-action of the jute mills is given in Annexure A to the
Report. So far as Andhra Pradesh is concerned, all the three mills situate in
the State have been taken into account, being Nellimarla, Chitavalsa and the
respondent. The Wage Board then considers the capital formation, bonus issue.
total paid up capital, reserves and surplus, percentage of dividend declared,
profits made; but, under each of these heads, the Wage Board grouped together
all the mills in West Bengal, Andhra Pradesh, Bihar, Uttar Pradesh and Madhya
Pradesh.
604 In para 6.44, the Wage Board expresses
the view that it would be possible for the industry to bear the extra burden
arising from the new wage structure recommended by it without much difficulty
and without affecting the economy of the industry adversely.
In Chapter VII the Wage Board considers the
principles by which the Tribunal and other wage-fixing authorities were guided
in fixation of wages in West Bengal and outside that State. In para 7.19 the
Wage Board proceeds to state that it has to devise a fair wage structure. It
refers to the report of the Committee on Fair Wages that with regard to a fair
wage, the lower limit must obviously be the minimum wage and the upper limit is
equally set by what may broadly be called the capacity of the industry to pay.
In para 7.25 the Wage Board refers to the claim of the workers that the minimum
wages at Calcutta, at prices prevailing in 1960 should be Rs. 125 and that the
minimum wage at Kanpur, in Uttar Pradesh, should be Rs. 140 per month; while,
on the other hand, the Indian Jute Mills Association appears to have pressed
that the then existing wages in the jute industry for all categories of workers
were fair.
In para 7.34 the Wage Board refers to the
fact that the wages in the jute industry had not kept pace with wages in cotton
textile and engineering industries in West Bengal, as would be seen from the
fact that in 1959, while in the jute industry the minimum wages had gone up by
46% over the 1946 wages, it had gone up in cotton textile and engineering
industries by 69.71% and 77.50% respectively. It further notes the fact that
the minimum wages in cotton textile mills in West Bengal on April 1, 1963 were
Rs. 83.50 and in the engineering industry Rs. 82 per month. On the other hand,
the wages in the jute industry on April 1, 1963 were Rs. 70.59. On this
reasoning the Wage Board comes to the conclusion in para 7.35 that there was a
prima facie case for increase in the wages of the jute workers. The Wage Board
expresses the opinion that the concept of the paying capacity of the jute
industry is not the same as it is generally understood in the case of other
industries, in view of the fact that the jute industry is principally an
export-oriented industry, depending upon the fluctuating foreign markets.
In para 7.40 the Wage Board states that in
fixing the wage structure for the jute industry it has taken into consideration
the prevailing wage structure in the cotton textile industry and the
engineering industry in West Bengal. It has noted that in West Bengal, as on
April 1, 1963, the minimum wage in the. cotton textile industry Was Rs. 84.10
per month and in engineering industry Rs. 82 per month. As in the opinion of
the Wage Board there is a great similarity in the nature and condition of work
between cotton textile industry and jute industry, in para 7.43 it 605 decides
to devise a wage structure in the jute industry keeping in wages existing in
the cotton textile industry in West Bengal.
Regarding dearness allowance, the Wage Board
in para 7.44 decides to introduce a system of variable. dearness allowance
linked with the consumer price index.
In para 7.45 the Wage Board refers to the
special representations made by the jute mills outside West Bengal that in
comparison with the mills in West Bengal they have to pay higher freight
charges on coal, batching oil and that mill stores and electricity charges are
higher for them, that their productivity is low and that most of them have no
export trade. The Wage Board states that it has considered these problems and
though there are these locational difficulties for individual jute mills, it
has decided that the wage level in the jute industry should as far as possible
be uniform throughout the country. The Wage Board further states that the wages
in some of these jute mills were very low and in order to obviate their
financial difficulties in consequence of the raising of wage level, it has
decided that the wage level in these mills should be raised in a phased manner.
Having decided that the wage level in the
Jute Industry should be uniform throughout the country, the Wage Board, in para
7.52 decides that the total minimum wage in West Bengal should be fixed at Rs.
81 per month, consisting of(i) basic wage; (ii) Wage Board increment; and (iii)
variable dearness allowance. The Wage Board further, in para 7.56, states that
in addition to basic wages, all categories of workers should be paid an
increase of Rs. 8.33 per month inclusive of interim relief of Rs. 3.42 already
granted by it and accepted by the Central Government. This increment of Rs.
8.33 per month is desired to be shown as a
separate item under the heading Wage Board increment' in the case of all
categories of workers and that increment should be treated as part of the basic
wages for all purposes like bonus, provident fund, etc.
In para 7.57 the Wage Board states that the
dearness allowance of Rs. 32.50 that was being paid then should be considered
as the dearness allowance fixed at the working class consumer price index
number of 425, for Calcutta with base year 1939 as 100. It is further stated
that the dearness allowance should be a variable one and the rate of increase
or decrease should be at 0.20 nP. per point rise or fall in the average working
class consumer price index number for Calcutta. The dearness allowance is also
directed to be revised every six months in the months of February and August of
each year.
On the basis of these calculations, in para
7.58 the Wage Board fixes the total monthly minimum wage payable at Rs. 84 sup.
606 comprised of (a) Rs. 40.17 basic wage;
(b) Rs. 8.33 Wage Board increment; and (c) Rs. 32.50 being variable dearness
allowance. In para 7.59, the Wage Board states that the standardised basic
wages of various categories of workers of a jute mill for a month of 26 days or
208 hours are enumerated in Appendix XI to the Report.
When considering the wage structure for jute
mills outside West Bengal, in para 7.65(a) the Wage Board states that the basic
wages of all categories of workers in the jute mills mentioned by it, outside
West Bengal, which includes the respondent mill, should be the same as those in
jute mills in West Bengal mentioned in Appendix XI.
Therefore, it is clear that the ,minimum
basic wage fixed for the mills in West Bengal has been applied to all the mills
outside West Bengal, including the respondent. But, so far as the respondent
mill is concerned, the Wage Board, in the same paragraph, gives a direction
that the Standardised basic wages mentioned in Appendix XI of the Report is to
be adopted in a phased manner as follows:
During the first 24 months Basic wages of all
categories from the date on which the of workers should be 20 per
recommendation of the Board cent lass than the standar- will be effective dised
wages shown in Appen- dix XI During the next 12 months Basic wages of all
categories should be 10 percent less than the standardised wages shown in
Appendix XI During the next 12 months Basic wages of all categories should be 5
percent less than the standradised wages shown in Apendix XI Thereafter Basic
wages of all categories of workers should be the same as stadardised wages
shown in Appendix XI In paragraph 7.66 the Wage Board directs that all
categories of workers in jute mills situated outside West Bengal should also be
paid the Wage Board increment of Rs.
8.33 per month, inclusive of interim relief
of Rs. 3.42 already granted.
In para 7.67(c) it is stated that the rates
of dearness allowance of all categories of workers in the respondent mill and
in Sri Krishna Mill is fixed at Rs. 32.50 at the average working class consumer
price index number of 560 for Eluru for the last six months in 1962 with base
year 1935-36 as 100. It is further stated that the dearness allowance should be
a variable dearness allowance and the rate of increase or decrease should be
0.20 nP per point of rise or fall in the average working class consumer price
index number for Eluru and that it should be revised every six months in the
months of February and August.
Chapter VIII deals with bonus in jute
industry and in para 8..18 ,the Wage Board makes a recommendation that in the
jute 607 industry the payment of bonus should be governed by the rules
mentioned therein.
Lastly, in para 10.8 of Chapter X, the Wage
Board states that the new wage structure recommended by it should come into
force from July 1, 1963; and it is provided in para 10.9 that the payment of
wages at the new rates should start in any case not later than the week ending
November 2, 1963.
We have fairly exhaustively dealt with the
various matters considered by the Wage Board in its Report. It is no doubt true
that the Wage Board has gone elaborately in the matter of fixing of the wage
structure in the jute industry. We have earlier referred to the various
principles laid down by this Court which should govern the fixing of wages and
dearness allowance. The Board itself states that it was fixing a fair wage for
the industry. We have adverted to the fact that in the Express Newspapers
Case(1) this Court has held that in the case of fixation of fair wage, the
upper limit may broadly be stated to be the capacity of the industry to pay. It
has been further laid down that the capacity of the industry to pay should be
gauged on an industry-cureregion basis, after taking 'a fair cross-section of
that industry and that, in a given case, it may be even permissible to divide
the industry into appropriate classes and then deal with the capacity of the
industry to pay class-wise. As the Wage Board was fixing a fair wage for the entire
jute industry it may not have been strictly necessary to consider the financial
capacity of each individual unit. But, as pointed out in the Express Newspapers
Case(1), the requirement of considering the capacity of each individual unit to
pay may not become necessary if the industry is divided into different classes.
Even if the industry is divided into
different classes, it will still be necessary to consider the capacity of the
respective classes to bear the burden imposed on them. For this purpose a
cross-section of these respective classes may have to be taken for careful
consideration for deciding what burden the class considered as a whole can
bear.
The question is whether. the Wage Board has
adopted these principles when it fixed the wage structure for the entire jute
industry- From the various matters dealt with by the Wage Board and the manner
of approach made by it, as referred to above, we are satisfied that no attempt
has been made by the Wage Board to divide the industry into classes. It is also
clear that no cross-section of such classes has been taken for investigation to
decide what burden the units in each class can bear.
The approach of the Wage Board to determine
uniform wage scales for the entire industry must suffer from an inherent
weakness. Conditions, such as easy access to raw materials, transport, nearness
of market for disposal of the manufactured pro- (1) [1959] S.C.R. 12.
608 duct, availability of labour, the type of
market whether within or outside the country for which the manufactured
articles are intended and diverse other factors must vary from region to
region. Likewise, economic conditions affecting the consumer prices must and do
differ, as is well-known, from region to region, depending largely upon whether
a particular region is self sufficient or not in the elemental needs of its
citizens and these in turn are bound to affect living standards. It would
therefore be too artificial and unrealistic an approach to be oblivious of
these differences and to attempt to group together all establishments and
factories and devise common wage-scales applicable to all of them disregarding
the peculiar features of the industry in a particular region. Favourable
conditions prevailing in one region would place industrial concerns there in a
position better than those in other regions where such conditions do not occur.
Similarly, in regions where consumer prices are lower, labour would be better
off than in the rest of the regions where the living index is higher; yet, the
wage scales would be the same in all the regions. Uniformity of wage-scales,
irrespective of differences in conditions would place both the employees and
the employers in regions where such favourable conditions prevail in an
unfairly advantageous position over the employees and employers in the other
regions. Instead of attaining harmony there would as a result arise inevitably
a feeling of discrimination.
Though, as stated by this Court in Express
Newspapers' Case(1), it may not be possible or even necessary for a Wage Board
to scrutinise all the establishments separately and it would be enough to take
a representative cross-section of the industry for assessment, the
cross-section to be a truly representative one and capable of giving a true
picture of the conditions of both the industry and labour must be one from each
region where establishments of the industry in question are situate.
What the Wage Board, however, did was that
instead of proceeding region-wise and selecting a representative cross- section
from each region, it selected 20 mills from West Bengal and clubbed them with 9
reporting mills from the rest of the regions, viz., Bih'ar, U.P., Madhya
Pradesh and Andhra Pradesh where a few mills are scattered. The Board
considered these 29 mills as representing a cross-section of the industry. It
is obvious that these mills so clubbed together could not truly reflect the
economic and other conditions prevailing in the mills in different regions with
their peculiar problems and differing conditions. That in our view was not a
proper approach and was bound to result in injustice especially in view of the
peculiar feature of the jute industry that it is predominently concentrated in
West Bengal and is export-oriented.
Besides, the jute industry in the (1) [1959]
S.C.R. 12.
609 other regions suffers from a distinct
disadvantage as the raw materials have to be transported from a distance at
considerable cost. Taking the 20 mills from West Bengal and the 9 mills from
outside as forming a representative cross-section was manifestly incorrect as
the West Bengal Mills cannot truly be said to be comparable units for the rest
of the mills.
Another difficulty in accepting the Wage
Board's recommendations arises from the fact that the Board equated the cotton
textile industry in West Bengal with the jute industry there and finding the
wage-scales in the jute industry lower than those in the cotton textile
industry the Board raised the scales in the jute industry so as to bring them
to the level of the cotton textile industry. Having so done, the next step
which the Wage Board took was to raise also the wage-scales in mills outside
West Bengal to bring them in line with the scales proposed by it for the mills
in West Bengal. This process gave rise to two infirmities: (i) that the Board
treated cotton textile concerns in West Bengal as comparable to those. in jute
industry; and (ii) it treated the jute mills in West Bengal as comparable to
those outside, although conditions in the different regions where they were
situate were obviously different. This meant that the Board gave a go-by to the
well established principle of industry-cum-region consistently applied by
Industrial Tribunals whenever wage- scales had to be determined.
Such a disharmony in the approach to the
problem of determination of wage-scales by a Wage Board on the one hand and an
Industrial Tribunal on the other must inevitably occur because whereas the
attempt of a Board would be to uniforms wage-scales for the entire industry,
though it is spread over different parts of the country where conditions can
rarely be expected to be similar or the same, the concern of a Tribunal would
principally be to determine equitably the wage-scales of a single unit with
which it is for the time being concerned. The difficulty would be all the more
felt by such a Tribunal where it is faced with the dilemma whether or not it
should follow the Board's recommendations arrived at on principles different
from (as in the present case) those consistently followed in industrial adjudication.
One should have thought that this difficulty would have been realised before
the recommendations of the Wage Board were accepted by Government.
The difficulty referred to above arising from
the difference in the functions of the two bodies could well have been obviated
if the Wage Board instead of laying down uniform scales for the entire industry
irrespective of where its several units were situate and of the different
conditions prevailing in various areas. had considered the units in each area separately
and determined the 610 wage-scales for each such area by taking from that area
a representative cross-section of the industry where possible or where that was
not possible by taking comparable units from other industries within that area,
thus following the principle of industry cum-region. It is true that in doing
so uniformity of wage scales for the entire industry would not have been
attained. But in a vast country like ours, where conditions differ often
radically from region to region and even the index of living differs within a
fairly wide range, such a target cannot always be just or equitable. If the
wage-scales had been determined by the Board in the manner aforesaid, even
though the Board is not a statutory body and consequently its decisions are of
a recommendatory character, it would be possible for industrial tribunals to
give due weight to its recommendations as such recommendations would have been
in conformity with the principle of industry cum-region, a principle binding on
the tribunals. It would be difficult in that event for any unit in the industry
in that region 'to propound a grievance that its capacity to pay was not taken
into account as the scales so framed would have been determined after taking
into consideration scales prevailing in comparable units, whether in that
industry or other industries in that region depending on whether in a
particular area the accent was on the industry part or the region part of the
principle of industry cum-region. The Board, therefore, ought to have selected
comparable units from each of the regions where the lute mills are situate and
after their examination arrive at common wages cales for each of those regions
instead 'of grouping together 20 mills from West Bengal and 9 mills from the
other regions and treating them as constituting a cross-section representing
the industry. The position in which a Tribunal called upon to fix wage-scales
would be placed would not be an enviable one for it would find itself in an
embarrassing situation where it had either to accept the wage-scales fixed by
the Board though they were fixed in contravention of the principle of
industry-cum region, or discard them and proceed to fix them on its own on the
principle of industry-cum-region, a principle which, as the industrial law
stands today, it is bound to follow.
We have already pointed out that the Wage
Board has taken the view that the wage level in the entire jute industry should
be uniform throughout the country. It has also stated that the wage structure
for the jute industry in West Bengal has to be devised having regard to the
pattern of wage-structure existing in the cotton textile industry in that area.
It is on this basis, and after a comparison of the wage structure prevailing in
the cotton textile industry in that area, that the Wage Board has come to the
conclusion that the minimum monthly emoluments of a worker in West Bengal .must
be fixed at Rs. 81 taking in the basic wages, the Wage Board increment and the
variable dearness allowance.
611 The standardised basic wages enumerated
in Appendix XI has been made applicable to all the jute mills outside West
Bengal also, including the respondent mill. We have already referred to the
recommendation of the Wage Board in para 7.65 (c) that the respondent jute mill
should adopt the standardised basic wages axed in Appendix XI, in a phased
manner. Over and above that basic wage, the Wage Board has given an increase of
Rs. 8.33 per month, as Wage Board increment and a variable dearness allowance
of Rs. 32.50 per month. Though it had been pressed by the jute mills outside
West Bengal, that they had to pay higher freight charges on coal, batching oil
etc., and that mill stores and electricity charges were higher for them, the
Wage Board insisted that the Wage level in the jute industry should be uniform
throughout the country. The result of the Wage Board's recommendations, if they
are to be given affect to by the respondent mill, will be that as against the
minimum monthly wage of Rs. 52.17 that was being paid by the respondent there
is a very sharp rise in its wage bill. The claim of the respondent that the
recurring expenditure for implementation of the recommendation of the Wage
Board is over Rs. 3,75,000, and that it has not the financial capacity to bear
this burden, has been accepted by the Industrial Tribunal and that finding has
not been challenged before us by the appellant. The respondent mill, which has
only 120 looms, has been compared with the two big mills in Andhra Pradesh,
viz., Nellimarla and Chitavalsa, having 326 and 500 looms respectively, as also
with very large mills in West Bengal, some of whose loom capacity is more than
2,000. That clearly shows that all mills, small as well as large, economic as
well as uneconomic, have been clubbed together and treated alike by the Wage
Board. In considering the capacity, the Wage Board has taken 20 jute mills in
West Bengal as representing a fair cross-section of the industry in that region
and it has taken 9 reporting mills outside West Bengal for this purpose. Three
mills selected in Andhra Pradesh were the Nellimarla, Chitavalsa and the
respondent mills. We have already shown the large disparity that exists between
the mills in West Bengal as also between the Nellimarla and Chitavalsa and the
respondent mill. We have also referred to the decisions of this Court that to
compare wage scales comparable establishments in the region would be taken into
account and that a small, struggling concern should not be compared with a
large, flourishing one. But this is exactly what has happened, when the Wage
Board treated alike the respondent mill not only with Nellimarla and Chitavalsa
jute mills but also with some of the very big and prosperous mills in West
Bengal.
The various aspects, dealt with above,
establish that the essential prerequisite of deciding the wage structure.
viz., to consider the capacity of the
industry to pay on the principles laid down by 612 this Court, is absent in the
recommendations of the wage Board and that introduces a fatal infirmity in its
decision.
The question of bonus does not arise for our
consideration as the respondent has stated that the management has entered into
a settlement with its workmen and that they will. be entitled for bonus only if
the net profits exceed Rs. 75,000. It has further been stated that there is no
available surplus to warrant the payment of bonus. These statements have not
been controverted on behalf of the appellant.
To conclude, the award of the Industrial
Tribunal that the demand of the workmen for implementation of the
recommendations of the Wage Board is not justified, is correct. The appeal
fails and is dismissed. In the circumstances of the case, there will be no
order as to costs.
Y.P. Appeal dismissed.
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