The Indian Bank Ltd., Madras vs The Indian Bank Employees' Union

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Not extracted

Decision Date: 20 October, 1959

Coram: B.P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo

The case titled The Indian Bank Ltd., Madras versus The Indian Bank Employees’ Union was listed before the Supreme Court of India on 20 October 1959. The bench hearing the matter comprised Justices B P Sinha, P B Gajendragadkar and K N Wanchoo, and the judgment was delivered by Justice Gajendragadkar. The two appeals under consideration were filed against the decision of the Labour Appellate Tribunal dated 20 April 1954, which itself dealt with an industrial dispute that had arisen between various banks and their employees. The dispute had originally been referred by the Central Government to the Sastri Tribunal on 1 January 1952. After examining the matters raised, the Sastri Tribunal issued an award that addressed a large number of the points presented before it. Both the banks and the employees challenged that award before the Labour Appellate Tribunal, which rendered its own decision on 20 April 1954. The present appeal was filed by the Indian Bank Ltd., hereinafter referred to as the appellant, by way of special leave, and it raised only two specific points on behalf of the appellant, as presented by counsel identified as Mr Sastri.

The first point concerned a direction originally given by the Sastri Tribunal regarding the stoppage of annual salary increments for a particular year at the discretion of the bank. The Tribunal had stipulated that such increments could be halted if, in the preceding year, the ratio of the bank’s gross profits to its working fund fell below seventy-five per cent of the average of the comparable ratios for the four years immediately preceding that year, subject to the two provisos set out in paragraph 86 of the award. The respondents challenged the propriety of this direction before the Labour Appellate Tribunal, and to some extent their plea succeeded. The appellate tribunal agreed that a provision for suspension of increments was appropriate, but it modified the original direction by reducing the required ratio from seventy-five per cent to fifty per cent of the average of the four preceding years, as reflected in paragraph 183 of its decision. The appellant now contended before this Court that the appellate tribunal erred in lowering the ratio from seventy-five per cent to fifty per cent. The Court observed that it could not entertain this contention under Article 136 because the determination of the appropriate ratio for justifying a stoppage of increments does not rest upon any established principle or rule that can be objectively measured. The appropriate conclusion must necessarily be based on empirical considerations of justice and fairness. Consequently, if the appellate tribunal, after such consideration, deemed a fifty-per-cent threshold to be more appropriate and reasonable, the Court could not interfere with that judgment, leading to the dismissal of the appellant’s first contention.

In this case, the Court noted that the appellate tribunal had concluded that a ratio of fifty percent was more appropriate and reasonable for determining the stoppage or suspension of increments, and therefore the Court could not interfere with that decision; as a result, the first contention raised by the appellant was dismissed. The second contention advanced by the appellant asserted that the tribunal lacked jurisdiction to entertain the respondents’ claim for a gratuity scheme because Section 25F of the Industrial Disputes Act now entitled the respondents to claim retrenchment compensation. The Court had previously examined this question and had decided in favour of the employees in the matter of Indian Hume Pipe Co., Ltd. v. Their Workmen, Civil Appeal No. 169 of 1958, Dated 16-10-1959. Relying on that earlier determination, the Court rejected the appellant’s second contention as well. Before issuing the final orders, the Court considered an additional point that the appeals had raised and that had already been addressed by this Court in the decisions of State Bank of India v. Their Employees and Punjab National Bank v. Its Employees, Civil Appeals Nos. 56 to 61 of 1957 and Civil Appeal No. 62 of 1957. Those earlier appeals, together with the two present appeals, involved a common question concerning the payment of bonus and had been heard collectively by the Constitution Bench. The Court’s judgment dated 12 May 1959 in the State Bank of India and Punjab National Bank cases had allowed the bonus claim raised by the banks. Although the two present appeals were heard alongside those earlier appeals, no order had been rendered on them at that time because two subsidiary questions remained unresolved and were slated for determination by a Division Bench. Consequently, the present appeals returned to the Court for final disposal. The Court rejected the subsidiary points raised by the appellant, but it accepted that the point concerning bonus must be allowed in accordance with the earlier decision of this Court in the State Bank of India and Punjab National Bank cases. In the final result, the Court partially allowed the appeals with respect to the bonus issue, while confirming the remainder of the award that was under appeal. Given the circumstances of the case, the Court stipulated that no order as to costs would be made.