Messrs. Shalimar Works Limited vs Their Workmen
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeals Nos. 317 and 318 of 1950
Decision Date: 08 May 1959
Coram: K.N. Wanchoo, Bhuvneshwar P. Sinha, P.B. Gajendragadkar
In the matter titled Messrs Shalimar Works Limited versus Their Workmen, the Supreme Court of India delivered its judgment on 8 May 1959. The judgment was authored by Justice K.N. Wanchoo, who was joined on the bench by Justices Bhuvneshwar P. Sinha and P.B. Gajendragadkar. The petitioner in the proceedings was Messrs Shalimar Works Limited and the respondent was the collective body of its workmen. The case was reported in the 1959 AIR 1217 and 1960 SCR (1) 150. The dispute concerned the provisions of the Industrial Disputes Act, particularly the issue of reinstatement of workmen during pending adjudication, an illegal strike launched by the workmen, and the discharge of workmen by the management without the permission of the tribunal. The Court was asked to consider whether the workmen were entitled to reinstatement based on a reference that was both delayed and vague.
The factual background recorded by the Court began on 23 March 1948, when several industrial disputes were already before a tribunal. On that date the workmen pressed the same demands upon the company that had been under consideration, insisting on an immediate resolution without waiting for the tribunal’s award. The company declined to meet these demands, after which the workmen commenced an illegal sit-down strike. In response, the company closed the plant indefinitely and issued a notice stating that all workmen who participated in the illegal strike were discharged effective from the date of the notice. Subsequently, on 5 July, the company announced that the works would reopen on 6 July and that all former employees could apply for re-engagement up to 21 July. A large majority of the former workmen applied within that period and were re-engaged, whereas applications received after 21 July were rejected.
Later, on 18 November 1953, the Government made a reference to the tribunal concerning the reinstatement of 250 former workmen who had not been re-engaged. No definitive list of those 250 workmen was forwarded to the tribunal, and no such list was filed during the adjudication. After the company’s arguments were concluded, the workmen submitted a hastily prepared list of 220 persons on 14 December 1953. The tribunal ordered reinstatement without identifying the specific individuals, directing the company to issue a general notice asking the strikers to return to work on a fixed date and to reinstate those who applied within the stipulated period. Upon appeal, the Labour Appellate Tribunal confirmed reinstatement for only 15 workmen.
The Supreme Court held that there was no justification for ordering the reinstatement of any workmen on the basis of a reference that was both vague and made after an unreasonable delay. The Court emphasized that disputes should be referred to a tribunal as soon as possible after they arise and after conciliation attempts fail, especially when an entire workforce has been discharged and new labour recruited. Although the workmen’s discharge during the pendency of the dispute violated section 33 of the Industrial Disputes Act, 1947, the appropriate remedy under section 33-A of that Act was not pursued by the workmen. The Court concluded that this procedural defect could be overlooked in the present case because of the illegal nature of the strike, the workmen’s failure to avail themselves of the remedy under section 33-A, and the delay and lack of clarity in the reference, all of which indicated that the workmen were not genuinely interested in reinstatement.
The Court noted that the workmen were not interested in reinstatement. The matter before the Court was a civil appellate jurisdiction involving Civil Appeals Numbers 317 and 318 of 1950. Both appeals were taken by special leave from the judgment and order dated 29 June 1955 issued by the Labour Appellate Tribunal of India at Calcutta in Appeals Numbers Cal. 61 and Cal. 81 of 1954. Counsel for the appellant in Civil Appeal Number 317 and for the respondent in Civil Appeal Number 318 represented the parties on one side, while counsel for the appellant in Civil Appeal Number 318 and for the respondents in Civil Appeal Number 317 represented the other side. The judgment was delivered on 8 May 1959 by Justice Wanchoo. The Court explained that the two appeals arose from the same decision of the Labour Appellate Tribunal in a dispute between Messrs Shalimar Works Limited, Howrah, referred to as the company, and its workmen who were represented by two unions, referred to as the workmen. Appeal Number 317 was filed by the company, and Appeal Number 318 was filed by the workmen; the Court decided to dispose of both appeals in a single judgment. The dispute between the company and the workmen covered several issues and had been referred by the Government of West Bengal to the Sixth Industrial Tribunal for adjudication. Of the many questions originally presented to the Tribunal, only two remained for determination: (1) the profit-sharing bonus scheme and (2) the reinstatement of two hundred and fifty former workmen. The Court first addressed the profit-sharing bonus question. It observed that the company operated a profit-sharing bonus scheme with specific thresholds. After certain deductions, if the remaining profit lay between Rs 1,50,000 and Rs 1,99,999, the workmen were entitled to a bonus equal to one-quarter of a month’s average basic pay. When the profit was between Rs 2,00,000 and Rs 2,49,999, the bonus increased to half a month’s average basic pay. For profits between Rs 2,50,000 and Rs 2,99,999, the bonus rose to three-quarters of a month’s average basic pay, and where the profit reached Rs 3,00,000 or more, the bonus equaled a full month’s basic pay. No bonus was payable if the profit fell below Rs 1,50,000. The scheme also stipulated that a workman who attended 275 days in a year, inclusive of holidays and leave with pay, would receive the full bonus, while those with fewer days of attendance would receive a proportionate amount, provided that any workman with attendance of fewer than 100 days would receive no bonus at all. The workmen sought a revision of this scheme. Their principal demand was that the bonus should commence when the profit after deductions was Rs 25,000, at which point the bonus would be equivalent to one week’s wages, and that the bonus should increase progressively until it reached three months’ wages as the profit rose.
In the matter before the Tribunal, the workmen proposed that when the profit after the usual deductions exceeded one lakh rupees but did not exceed three lakh rupees, the bonus should be determined according to the amounts already discussed, and that for each additional lakh of profit beyond three lakh rupees the bonus should increase by the equivalent of twenty-one days’ wages. The company opposed the workmen’s proposal, although it agreed that the quantum of bonus could be altered once the profit after deductions reached three lakh rupees. Under the scheme that then prevailed, the bonus equalled one month’s basic pay whenever the profit after deductions was three lakh rupees or more, and no further increase was permitted regardless of how great the profit might be. The company, seeking a limited revision, suggested a new tiered structure: when profit lay between three lakh and four lakh rupees, the bonus should be four weeks’ wages; when profit lay above four lakh and up to five lakh rupees, the bonus should be five weeks’ wages; and when profit exceeded five lakh rupees, the bonus should be six weeks’ wages. The Industrial Tribunal did not adopt either party’s full contentions, but it varied the existing scheme in certain respects. After the variation, the scheme fixed the bonus as follows: for a remaining profit between eighty thousand rupees and one crore ninety-nine thousand nine hundred ninety-nine rupees, the bonus was one week’s average basic pay; for a profit between two lakh rupees and two lakh forty-nine thousand nine hundred ninety-nine rupees, the bonus was half a month’s average basic pay; for a profit between two lakh fifty thousand rupees and two lakh ninety-nine thousand nine hundred ninety-nine rupees, the bonus was three-quarters of a month’s average basic pay; for a profit between three lakh rupees and four lakh rupees, the bonus was four weeks’ average basic pay; for a profit above four lakh rupees up to five lakh rupees, the bonus was six weeks’ average basic pay; and for a profit above five lakh rupees, the bonus was two months’ average basic pay. The Tribunal also affirmed that a workman who attended two hundred seventy-five days in a year, including holidays and paid leave, would earn the full bonus, that a proportionate bonus should be granted when attendance fell below two hundred seventy-five days, and that a minimum attendance of one hundred days was required to qualify for any bonus at all. Moreover, the Tribunal held that the bonus for the years 1951 and 1952 should be paid at the existing rates, while the revised rates should apply from the year 1953 onward.
Both the employer and the workmen subsequently appealed the Tribunal’s award to the Labour Appellate Tribunal. The employer contended that the Appellate Tribunal should not order any revision beyond the changes it had already agreed to, whereas the workmen argued that the scheme they had proposed should be accepted, that the minimum attendance condition of one hundred days should be removed, and that the bonus for 1951 and 1952 should also be calculated at the revised rates. The Appellate Tribunal found no reason to disturb the Industrial Tribunal’s award on these points and dismissed both appeals, but it inserted a single modification. The modification directed that in any year where the bonus calculated under the Industrial Tribunal’s award proved to be less than the profit-bonus that would result from applying the Full Bench formula developed in the Mill-Owners’ Association case, the Full Bench formula should then govern the bonus payable.
In the matter of Bombay v. The Rashtriya Mill Mazdoor Sangh, Bombay (1), the Court explained that the workmen would be eligible for a bonus calculated under the prescribed formula, and only if that calculation resulted in a lower amount would the bonus be granted according to the scheme that the Industrial Tribunal had modified. In the appeals now before the Court, the company challenged the revision ordered by the Industrial Tribunal, a revision that the Appellate Tribunal had subsequently upheld, and also contested the additional condition that the Appellate Tribunal had imposed. Conversely, the workmen contested the wage scale fixed by the Industrial Tribunal, the directive that bonuses for the years 1951 and 1952 should be paid based on the pre-revision scheme, and the attendance requirements that had been attached to the bonus entitlement. Learned counsel for both sides, however, jointly expressed before the Court that the revision effected by the Industrial Tribunal was satisfactory to both parties and that the condition imposed by the Appellate Tribunal—requiring the application of the Full Bench formula whenever the scheme-derived bonus was lower—should be removed. Acting on this joint statement, the Court deleted the condition introduced by the Appellate Tribunal and directed that the bonus be paid in accordance with the scheme as revised by the Industrial Tribunal. Counsel for the workmen further argued that the requirement of a minimum of one hundred days of attendance for any bonus, and a minimum of two hundred seventy-five days for the full bonus, was arbitrary and ought to be set aside. The Court observed that both Tribunals had accepted this attendance condition, found it to be reasonable, and therefore saw no basis to interfere. The workmen also contended that the bonuses for 1951 and 1952 should have been calculated using the revised scheme; this contention had been rejected by both Tribunals, and the Court found no reason to differ. Consequently, the Court dismissed both appeals as regards the bonus, subject to the modification that the Appellate Tribunal’s condition be deleted. (1) 1950 L.L.J. 1247.
The Court then turned to the issue concerning the reinstatement of two hundred and fifty former workmen. It was necessary to set out certain factual background. The Government of West Bengal had established a Major Engineering Tribunal in October 1947 to adjudicate disputes between major engineering firms and their workmen. Both the company and the workmen were parties to the proceedings pending before that Tribunal, which addressed a wide range of industrial and employment disputes. While the Tribunal’s adjudication was still in progress, the workmen unexpectedly pressed specific demands on the company for an immediate resolution, despite those demands being under consideration by the Tribunal. The company, acting reasonably, refused to satisfy the demands while they remained under investigation. As a result, the workmen who reported for duty on 23 March 1948 initiated a sit-down strike after entering the premises. This strike continued for several days, leading to the involvement of police and subsequent events that formed the basis of the present reference.
In this case the Court noted that the workmen entered the company’s premises on 23 March 1948 and began a sit-down strike that continued until 27 March. On that day the police removed the workmen from the premises, either by ejecting them in accordance with the company’s claim or by inducing them to leave, as alleged by the workmen. After the workers had left, the company issued a notice on the same day stating that the works would be closed indefinitely. A further notice dated 6 April 1948 declared that all persons who had taken part in the illegal strike from 23 March would be deemed to have been discharged as of that date. No work was carried out at the plant until 15 May 1948, when the company issued another notice announcing that if a sufficient number of suitable men applied for employment on or before 19 May, the works would be reopened on a limited scale from 20 May. The notice, however, did not result in any applications. Consequently, on 5 July the company issued a new notice stating that the works would reopen on 6 July 1948 and that all former employees could apply for reengagement; those reengaged would have their prior service counted and would be employed on the terms awarded by the Major Engineering Tribunal, which had rendered its award in the interim. The notice further specified that only former employees would be considered for engagement up to 21 July and that no fresh labour would be recruited before that date. After 21 July the majority of the old workmen applied for reinstatement and all who had applied by that deadline were reengaged. Subsequently the company refused to reengage certain former employees, some of whom submitted applications in November and December 1948, August 1951, February 1952 and January 1953. In November 1949 the Assistant Labour Commissioner was approached by a trade union concerning the non-employment of 249 workmen. The Commissioner wrote to the company, which responded that the workmen had been discharged for participating in an illegal strike and that it could not see a way to reemploy them. No further action appears to have been taken until 7 October 1952, when the first reference concerning the reinstatement of 250 former workmen was made before the tribunal chaired by Shri S.K. Niyogi. Shri Niyogi retired before disposing of the reference, and consequently a second reference was made on 18 November 1953 before the present tribunal chaired by Shri M.L. Chakraborty. No list of the 250 workmen was forwarded to the tribunal, and no list was filed in the Industrial Tribunal during the adjudication proceedings. Only after the company’s arguments concluded on 14 December 1953 was a list of names submitted; the list contained only 220 persons, although the reference concerned 250 workmen, and it was prepared carelessly, containing repeated names, missing entries for some serial numbers, and absent ticket numbers.
In this case the list that the company filed before the Industrial Tribunal contained only two hundred twenty names, even though the reference concerned two hundred fifty workmen. The Appellate Tribunal observed that the list had been prepared carelessly, with some names appearing more than once and, for certain serial numbers, neither a name nor a ticket number was provided. Despite these deficiencies, the Industrial Tribunal issued an order for reinstatement but failed to specify which individuals were to be reinstated, indicating that it did not actually know the identities of the persons concerned. Consequently the Tribunal directed the company to identify the workmen to be reinstated by placing a general notice on its notice-board. The notice invited any striker who wished to resume duties to appear on a fixed date and to be reinstated if they applied within the prescribed period. The Appellate Tribunal sharply criticised this award, describing the reinstatement order as “vague and highly objectionable”. It stated that no award could be made in such a loose and ambiguous manner. The Appellate Tribunal then examined whether the identities of the workmen could be fixed at all. For this purpose it relied upon remarks made by the company—remarks that the company had contested because the list was produced at a very late stage—under the Industrial Tribunal’s directions. From those remarks the Appellate Tribunal concluded that the identities of one hundred fifteen workmen had been established. It further found that one hundred of those fifteen-hundred workmen had already withdrawn their provident-fund accounts. Accordingly the Tribunal held that those one hundred workmen had, by withdrawing their provident fund, accepted the discharge and therefore could not obtain any further relief. The remaining fifteen workmen had not withdrawn their provident funds, and the Tribunal ordered that these fifteen individuals be reinstated. The Tribunal also held that no compensation could be awarded for the period between discharge and reinstatement because the workmen had delayed in seeking redress. The Appellate Tribunal explained that its decision to order reinstatement was driven by the fact that the discharge notice dated 6 April 1948 had not been served on each workman individually. It also observed that although a notice dated 5 July 1948 inviting the former workmen to rejoin the company had received wide publicity, it likewise had not been served on each workman personally. The Tribunal observed that the overall result was a defective communication of both the discharge notice and the reinstatement invitation, and that this defect had not been cured. Regarding the sit-down strike, both Tribunals held that the strike was the product of a pre-concerted action and that there was no justification for it while the dispute was pending before a tribunal for adjudication. The workmen’s claim that the strike arose spontaneously because of an insult offered by a manager to a deputation on 23 March was rejected by both Tribunals.
Both Tribunals rejected the claim that the sit-down strike had arisen spontaneously as a reaction to an insult allegedly offered by the manager to a deputation of workmen on 23 March. The company argued that, because the Tribunals had each found the strike to be unjustified, the company should have been permitted to dismiss the workmen under the particular circumstances of the case. The company further maintained that the dismissals occurred in April 1948, that the firm reopened in July 1948, and that it was improper for the dispute to be referred more than four years later without first providing the Tribunal with a list of the workers who had been discharged.
Conversely, the workmen contended that a dispute was pending between them and the company, and that, under section 33 of the Industrial Disputes Act, the company could not lawfully dismiss the workmen without first obtaining the Tribunal’s permission. They argued that the notice of dismissal dated 6 April 1948 was issued without such sanction, thereby breaching section 33 and rendering the dismissal unlawful. Consequently, they claimed that the workmen were entitled to reinstatement.
The Court observed that, strictly speaking, the company’s order of dismissal on 6 April 1948, issued while the dispute was clearly pending, did contravene section 33, as noted in Punjab National Bank Ltd. v. Employees of the Bank (see Punjab National Bank Ltd. v. Employees of the Bank,(1)). The remedy for a breach of section 33 is provided in section 33-A, which allows an individual workman to apply to the Tribunal. Therefore, if the workmen who were dismissed on 6 April 1948 believed that the company had violated section 33, they should have filed an application individually or collectively under section 33-A. None of the workmen pursued that remedy.
The Court also recorded that a letter was addressed to the Assistant Labour Commissioner in November 1949, as cited in (1) [1953] S.C.R. 680, but that the correspondence was extremely delayed and no further action appears to have been taken for almost three more years, until the first reference was made on 7 October 1952. Although no statutory limitation exists for referring disputes to an industrial tribunal, the Court emphasized that it is reasonable for disputes to be referred promptly after they arise and after conciliation attempts have failed, especially when the dispute involves wholesale dismissal of workmen. The Court noted that the industry must continue to operate, and when an entire workforce has been dismissed, the industry closed, and later reopened with fresh recruitment, it is essential that a dispute concerning the reinstatement of a large number of workers be referred for adjudication within a reasonable period. In the present case, the Court concluded that the dispute was not referred for adjudication within a reasonable time, as it was sent
In this case, the reference to the Industrial Tribunal was made more than four years after most of the former employees had already been re-employed. It was observed that the workers themselves could have individually filed an application under section 33-A, but none of them did so, and the dispute was not referred for adjudication within a reasonable period. Consequently, the view was expressed that the tribunal would be justified in refusing the relief of reinstatement so as to avoid dislocating the industry, and that such a refusal would constitute the correct order. Further, the reference was considered vague because the names of the two-hundred and fifty workers to be reinstated were not transmitted to the Industrial Tribunal, and a list of those individuals was not supplied until practically after the entire proceeding had concluded. Even when the list was eventually provided, it was so deficient that the tribunal deemed it pointless to act upon it and instead directed the company to issue a notice to the strikers inviting them to seek re-employment within a stipulated time. The company had already issued such a notice on 5 July 1948; that notice attracted considerable publicity and resulted in the majority of the workers presenting themselves for re-employment by 21 July. Under these circumstances there was no justification for ordering the reinstatement of any individual on the basis of such an ambiguous reference after an unreasonable lapse of time. The defect in the discharge order dated 6 April, which lacked permission under section 33, could be disregarded because the workers who did not rejoin in July 1948 were not interested in reinstatement: first, due to the circumstances in which the order was passed following an illegal and unjustified sit-down strike; second, because the workers themselves did not avail themselves of the remedy provided by section 33-A; and third, because the reference was made after an undue delay and in an indefinite manner. Therefore, the opinion was that the Appellate Tribunal should not have ordered reinstatement even of the fifteen workers, whose case was identical to that of the hundred workers except for the issue of provident-fund withdrawal. After the application for special leave was allowed, the Court ordered on 26 September 1955 that the company should pay seven days’ wages each month to the fifteen workers who had been ordered to be reinstated. According to the company’s counsel, only seven of those fifteen have reported to receive the payment, while eight never appeared, indicating that those eight are not interested in reinstatement. Of the seven who did appear, two have obtained other employment and one is said to be a member of Parliament. The company was prepared to reinstate, out
In this case, the Court observed that, aside from humanitarian considerations, the company is not legally required to reinstate any of the four remaining workmen among the fifteen. The four workmen that the company is prepared to accept back are identified as Nitai Manji, Satya Charan Das, Mustafa Khan and Akil-ud-Din. The company's willingness to re-engage these four individuals was expressly stated and formed the basis for the Court's determination concerning them. Accordingly, the Court held that the company's appeal must be allowed with respect to the other eleven workmen whose reinstatement had been ordered by the Appellate Tribunal. With respect to the four named workmen, the order of the Appellate Tribunal was left undisturbed because the company has expressed willingness to take them back. The workmen's appeal challenging their reinstatement was therefore dismissed as it failed to succeed on the merits. The Court further clarified that any payment made under its own order will neither be refundable nor be set off against future wages of the workmen who are reinstated by the company. Both the company and the workmen had raised additional points in their respective grounds of appeal, but since those issues were not pressed before the Court, no further comment was made on them. In view of these circumstances, the Court directed that each party shall bear its own costs of these proceedings. Consequently, each side will be responsible for its own legal expenses incurred during the pendency of these appeals. Accordingly, Appeal No. 317 was allowed, while Appeal No. 318 was dismissed.