Bijay Cotton Mills Ltd vs Their Workmen and Another

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 355 of 1958

Decision Date: 12 February 1960

Coram: P.B. Gajendragadkar, K.C. Das Gupta

The matter before the Supreme Court was titled Bijay Cotton Mills Ltd. versus Their Workmen and Another and was decided on the twelfth day of February, 1960. The judgment was authored by Justice P. B. Gajendragadkar, who sat on the bench together with Justice K. C. Das Gupta. The petitioner was the company Bijay Cotton Mills Ltd., while the respondents were identified as their workmen and an additional party. The case was recorded under the citation 1960 AIR 692 and also appeared in the Supreme Court Reporter as 1960 SCR (2) 982. Additional citator references included 1960 SC 812, 1962 SC 1263, and they related to the provisions of the Industrial Disputes Act, 1947 (the Fourteenth amendment of 1947), as well as the Industrial (Development and Regulations) Act, 1951 (the Sixty‑fifth amendment of 1951), specifically Section 2(a)(i). The dispute concerned the employer’s refusal to fix minimum wages and rates for contract work, which the workmen alleged were below the bare subsistence level. The issue was initially referred to an Industrial Tribunal for adjudication. The first tribunal was unable to determine any minimum basic wage. A second tribunal thereafter fixed a scale, but its award was set aside on the ground that the tribunal’s appointment had not been published in accordance with the law. Ultimately, a third tribunal fixed the basic minimum wage on an industry‑cum‑region basis after examining prevailing rates in various parts of the country and in a location nearest to the appellant’s premises. The Labour Appellate Tribunal subsequently increased the minimum wage slightly, in line with a statutory notification issued under the Minimum Wages Act, 1948, which became effective two years after the tribunal’s award and established a scale of minimum wage and dearness allowance. On special leave, the appellant company appealed this decision. The Court held that the Labour Appellate Tribunal had not committed any error of law in confirming the minimum basic wage that had been statutorily fixed and came into force only after the original tribunal award. The Court further observed that, in determining the minimum basic wage, the substantial dearness allowance paid to employees in comparable occupations within the same region must not be ignored. The Court clarified that for the Central Government to qualify as the “appropriate Government” under Section 2(a)(i) of the Industrial (Development and Regulation) Act, 1951, it must formally declare that the relevant industry is a controlled industry. Moreover, the Court noted that when the services of a particular tribunal are unavailable to the appropriate Government, that Government is fully competent to appoint a different tribunal to carry out the adjudicative function.

This appeal fell within the civil appellate jurisdiction and was designated Civil Appeal No. 355 of 1958. It was an appeal by special leave from the decision dated the twelfth day of December, 1956, rendered by the Labour Appellate Tribunal of India at Bombay in Appeal (Bombay) Nos. 77 and 103 of 1956. The record also listed the legal representatives who appeared for the parties, indicating counsel for the appellant and counsel for respondent No. 1, though their names were not reproduced in the judgment. The Court’s judgment therefore affirmed the validity of the Labour Appellate Tribunal’s award and provided guidance on the interpretation of the relevant statutory provisions concerning the appointment of tribunals and the role of the appropriate Government in wage fixation matters.

Andley, J. B. Dadachanji and Rameshwar Nath appeared for the appellant, while B. D. Sharma represented respondent No. 1. The judgment was delivered on 12 February 1960. The Court addressed an industrial dispute that had arisen between Bijay Cotton Mills Ltd., referred to as the appellant, and its workmen, referred to as the respondents. The dispute had been the subject of a special leave appeal after a prolonged and complicated history. The respondents argued that the appellant should fix a scale of minimum wages and rates for contract work because they claimed that the payments they received were below the level necessary for bare subsistence. The appellant refused to meet the respondents’ demand, and consequently, on 1 December 1950, the matter was referred to an Industrial Tribunal composed of Mr D. N. Roy, in accordance with section 10(1) read with section 12(5) of the Industrial Disputes Act, 1947. The petition before the Tribunal sought two specific orders: first, that the mill employees be paid minimum wages and rates for contract work as shown in two attached statements; and second, that a dearness allowance of Rs 35 per mensem be paid to all workers, with the amount to be varied in response to changes in prices. The appeal before this Court concerned only the question of the minimum wages. Mr Roy was unable to fix any basic minimum wage. To justify his refusal, he observed that the determination of a basic wage had become extremely difficult because of the under‑development of industry in the State of Ajmer and because of frequent and unpredictable price fluctuations. Nevertheless, Mr Roy considered several of the disputed items and issued his award on 5 October 1951. The respondents challenged that award before the Labour Appellate Tribunal, which remanded the case to Mr Roy on 20 October 1952, directing that the Tribunal specifically determine the issues of the basic wage and the dearness allowance and issue appropriate directions on those two points. By the time the remanded proceedings were to be taken up, Mr Roy was no longer a District Judge in Ajmer and was unavailable. The Tribunal therefore appointed Mr Sharma in his place. Mr Sharma rendered an award on 8 September 1953, fixing a basic wage of Rs 25 per mensem and a minimum dearness allowance of Rs 10 per mensem. That award was later set aside on 25 May 1955 on the ground that Mr Sharma’s appointment had not been duly published as required by the Act. Subsequently, Mr C. Jacob was appointed to the Industrial Tribunal and made an award, the contents of which are described in the following portion of the judgment.

On January 25, 1956, Mr. C. Jacob made an award in the dispute. By this award he essentially adopted the position previously taken by Mr. Sharma, fixing the basic wage at twenty‑five rupees per mensem and the minimum dearness allowance at ten rupees per mensem. The award expressly stipulated that it should become operative from December 1, 1950. The award was subsequently challenged before the Labour Appellate Tribunal. The tribunal partly allowed the respondents’ appeal, raising the basic wage from twenty‑five rupees per mensem to thirty rupees per mensem, while it left the minimum dearness allowance unchanged at ten rupees per mensem. This decision of the appellate tribunal was announced on December 12, 1956, and it is that decision which gave rise to the present appeal sought by special leave. It is common ground that a Statutory Committee had been appointed under the Minimum Wages Act, 1948 (Act XI of 1948) for the Ajmer region on January 17, 1952. The committee submitted its report on October 4, 1952, and a notification based on that report was issued on October 7, 1952. The notification came into force on January 8, 1953, thereby fixing the statutory basic minimum wage at thirty rupees per mensem and the statutory dearness allowance at twenty‑six rupees per mensem. Consequently, there is no dispute between the parties about the amount of the basic wage or the minimum dearness allowance for any period after January 8, 1953. Mr. Jacob, in fixing the basic minimum wage at twenty‑five rupees per mensem, relied on the observation that this rate represented the basic minimum wage on an industry‑and‑region basis. He noted that the basic minimum wage for an unskilled worker in textile mills in Bombay was thirty rupees per mensem, while in other locations it varied between twenty‑two and thirty rupees per mensem. He further referred to two charts, Exhibits 4‑A and 4‑B, produced by the respondents, which showed that in Rajasthan the minimum basic wages ranged from twenty‑one to thirty rupees per mensem. According to his submission, the overall minimum basic wage in Rajasthan was twenty‑six rupees per mensem, and in Beawar, the centre nearest to Bijaynagar, the minimum wage for an unskilled textile worker in 1950 was twenty‑five rupees per mensem. This was one factual basis on which the tribunal relied. Another fact relied upon was the existence of an agreement dated December 1949 under which the respondents had expressed willingness to work for a minimum wage of twenty‑seven rupees. It appears that both the appellant and the respondents had approached this Court seeking to have the notification issued by the Government of Ajmer, which fixed the basic wage at thirty rupees from January 8, 1953, set aside. In the earlier case of Bijay Cotton Mills Ltd. v. The State of Ajmer, it was jointly urged on their behalf that the relevant provisions of the Minimum Wages Act were ultra vires.

In the earlier proceedings, the parties argued that the provisions of the Minimum Wages Act were beyond the authority of the government and that it would benefit both the employer and the workers to set aside the challenged notification. The Supreme Court rejected that argument and affirmed both the validity of the Act and the correctness of the notification. After that decision, the appellant relied on an agreement that the respondents had signed in December 1949, in which they consented to work for a minimum wage of Rs 27. The appellant presented that agreement before the tribunal, and the tribunal, as recorded in the citation [1955] 1 S.C.R. 752, allowed the existence of that agreement to influence its final determination of the basic wage. In addition to the agreement, the tribunal considered two further circumstances. First, the appellant’s textile enterprise had been established in 1940 and had suffered a severe disaster in 1943, which caused losses amounting to nearly thirty lakh rupees. Second, the tribunal was informed that a large proportion of the respondents belonged to the agricultural class and could therefore augment their income from agricultural activities. On the basis of these considerations, the tribunal’s member, Mr Jacob, fixed the basic wage at Rs 25 per mensem.

The Labour Appellate Tribunal subsequently held that, because the record did not contain satisfactory evidence, the statutory notification issued under the Minimum Wages Act represented “the best and safest guide in the matter of fixation of minimum wage.” The tribunal observed that, although the notification could not be applied before 8 January 1953, it was of the opinion that the wage scales fixed therein should not be departed from even for the period now in question, especially since the record offered little useful material for fixing the wage. Accordingly, the appellate tribunal raised the basic wage from Rs 25 to Rs 30, as prescribed by the notification. This upward modification was contested before this Court by counsel for the appellant, Mr A. V. Viswanatha Sastri, who argued that the tribunal’s method was scientific, having taken account of a basic wage derived on an industry‑and‑region basis, and that such a method should not have been reversed. However, the Court observed that in assessing the wages earned by labour in comparable trades within the relevant region, the tribunal had failed to consider that, in addition to a basic wage of Rs 26, the average minimum dearness allowance paid to workers was Rs 43, which substantially increased total earnings. The Court noted that the tribunal should not have ignored the magnitude of the dearness allowance paid in comparable occupations in the same region, and that this omission constituted an infirmity on which the appellate tribunal was entitled to comment. Moreover, if the appellate tribunal believed that further useful assistance could be obtained from the statutory fixation of the minimum wage in Ajmer under the Minimum Wages Act, the present Court found no basis to interfere with that view.

The Court observed that the appellant’s reliance on the statutory fixation of the minimum wage in Ajmer, made under the Minimum Wages Act, could not be disturbed by the present appeal. It was reasonable for the appellate tribunal to assume that, when fixing the minimum wage for the area, the Statutory Committee had taken into account all material factors and had arrived at a fair minimum rate. The Court further noted that the tribunal before it had not been presented with any relevant or useful evidence that could have altered that conclusion. Consequently, the appellate tribunal had not erred in preferring the statutory notification over the unsatisfactory evidence that had been produced. Since the minimum basic wage had been fixed by law from 8 January 1953, the fact that the same basic wage had been awarded by the appellate tribunal for a few years prior to that date did not constitute an error of law warranting correction under Article 136 of the Constitution. Accordingly, the Court was not persuaded that any ground for interference existed on this point.

The Court then turned to the second contention raised by the appellant, namely that the appointment of Mr Jacob, who rendered his award on 25 January 1956, was invalid and that both his award and the decision of the appellate tribunal should be set aside, with the matter remitted to Mr Sharma for disposal. The appellant argued that Mr Sharma’s appointment as Industrial Tribunal on 31 December 1954 remained in force when Mr Jacob was appointed on 17 June 1955, and therefore it was improper for the appropriate authority to refer the same industrial dispute to Mr Jacob after it had already been referred to Mr Sharma. The appellant relied on the decision of this Court in The State of Bihar v. D. N. Ganguly & Ors (1) in support of this argument. The Court found no substance in this submission. The notification dated 31 December 1954, which formed the basis of the argument, had been issued solely to correct the defect in Mr Sharma’s earlier appointment dated 4 May 1953, which had not been lawfully published and notified as required by the Act. That defect had led to the quashing of Mr Sharma’s award of 8 September 1953 on 25 May 1955. The later notification, while appearing to refer the matter back to Mr Sharma for adjudication on remand by the Labour Appellate Tribunal, was rendered ineffective because, as the appellate tribunal correctly observed, Mr Sharma’s services were not available at the time the remand proceedings commenced; he was no longer in State service. Consequently, it was entirely proper for the Government to fill the vacancy by appointing Mr Jacob to carry out the adjudication. The Court therefore concluded that the award of Mr Jacob was not invalid in law. The appellant’s final contention—that the reference was invalid because the Chief Commissioner of Ajmer lacked competence to refer the dispute for adjudication under section 10(1) read with section 12(5) of the Act, on the ground that the textile industry was listed as serial number 23 in the First Schedule to the Industrial (Development and Regulation) Act, 1951 (Act 65 of 1951)—was noted, but the Court did not find merit in that argument based on the foregoing analysis.

In the case, the appellate tribunal observed that when the proceedings after the remand began, Mr. Sharma was no longer in the service of the State, and therefore his services could not be called upon for adjudication. The tribunal’s finding was that it was impossible to refer the matter to Mr. Sharma, and the tribunal considered this observation to be fully justified. Consequently, because Mr. Sharma’s services were unavailable to the appropriate Government, the Government was fully competent to fill the vacancy by appointing Mr. Jacob to perform the adjudicatory function. The Court held that this appointment gave Mr. Jacob lawful authority, and therefore the contention that Mr. Jacob’s decision was legally invalid had no substance. The remaining argument advanced by the petitioner was that the reference of the dispute to an adjudicator was itself invalid because the Chief Commissioner of Ajmer did not have the authority to make such a reference under section 10(1) read with section 12(5) of the Industrial Disputes Act. The petitioner relied on the fact that the textile industry is listed as serial number 23 in the First Schedule to the Industrial (Development and Regulation) Act, 1951 (Act 65 of 1951). On that basis, it was submitted that the Chief Commissioner of Ajmer was not the “appropriate Government” within the meaning of section 2(a)(i) of the Act, and that only the Central Government could validly refer the dispute to an industrial tribunal. Section 2(a)(i) defines “appropriate Government” as the Central Government in relation to any industrial dispute concerning an industry carried on by or under the authority of the Central Government, a railway company, or any such controlled industry that the Central Government has specifically designated as a controlled industry for the purposes of the Act. The Court considered whether the textile industry had been so designated. While it is true that the textile industry is governed by provisions of Act 65 of 1951, the Court found that mere inclusion in the Act does not satisfy the requirement that the Central Government expressly specify the industry as a controlled industry “in this behalf.” The Court noted that no such specification had been made by the Central Government, a point conceded by counsel for the petitioner, who did not vigorously pursue the argument. Having examined the submissions, the Court concluded that the appeal could not succeed. Accordingly, the appeal was dismissed with costs.