Imperial Chemical Industries (India) Private Limited vs The Workmen (And Connected Appeal)

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

Court: Supreme Court of India

Case Number: 471 and 472 of 1960

Decision Date: 14 November 1960

Coram: P.B. Gajendragadkar, A.K. Sarkar, K.N. Wanchoo

In this matter the Supreme Court of India rendered a judgment on 14 November 1960 in the case titled Imperial Chemical Industries (India) Private Limited versus The Workmen (and Connected Appeal). The bench that heard the appeal was composed of Justice P B Gajendragadkar, Justice A K Sarkar and Justice K N Wanchoo, and the decision is reported in 1961 AIR 1175 as well as 1961 SCR (2) 349. The petition was filed by Imperial Chemical Industries (India) Private Limited, herein referred to as the petitioner, and the respondents were the workmen of the company, whose appeal was connected to the original petition.

The workmen asserted two principal demands. First, they sought payment of twice their ordinary rate of wages for work performed on Sundays and public holidays. Second, they contended that no employee of the company should be compulsorily retired before attaining the age of sixty years. The petitioner, Imperial Chemical Industries, opposed these demands on two grounds. It argued that it had already disbursed a Sunday and holiday work allowance in accordance with an earlier industrial award and that no material change in circumstances had occurred since that award, rendering a revision unwarranted. Regarding the retirement age, the company maintained that it had uniformly fixed the retirement age at fifty‑five years for all its employees throughout India, and that any alteration of this provision would have undesirable repercussions for its other branches.

The industrial tribunal that examined the dispute partially sustained the workmen’s claim. It directed the company to pay the employees concerned for work performed on Sundays and holidays an amount equivalent to half a day's total salary together with dearness allowance. For work undertaken on three hundred and fifty festival holidays, the tribunal ordered the payment of a full day's salary and dearness allowance, but it denied the workmen the right to a substituted holiday. By distinguishing between work performed on Sundays and that performed on festival holidays, the tribunal, in effect, placed the workmen in a position inferior to that which existed before the award with respect to festival holiday work. Consequently, the workmen were deprived of their entitlement to a compensatory weekly off or a substituted holiday and lost a portion of the benefits they previously enjoyed under the existing arrangement.

In addition, the tribunal failed to give due consideration to the recent practice in Bombay concerning the age of retirement and to an important document submitted by the workmen, which conclusively demonstrated that, in Bombay, the retirement age was almost invariably fixed at sixty years rather than at fifty‑five. Despite this evidence, the tribunal fixed the retirement age at fifty‑eight years. The Court held that an industrial tribunal, when making an award, cannot strip the workmen of benefits to which they were already entitled under the pre‑existing arrangement, nor can it place them in a worse position than before the award when the employer does not seek any change in its favour. In the instant case the allowance in respect of the

The Court observed that the work performed by employees on festival holidays would continue to be governed by the practice that existed before the dispute arose. It further held that no rigid rule could be prescribed for determining the retirement age; the appropriate decision always required a careful assessment of the relevant factors and could legitimately differ from one case to another. In the context of industrial adjudication, it was recognised that when an employer implements a fair and reasonable pension scheme, that scheme significantly influences the setting of an earlier retirement age. The Court explained that if a retiring employee could reasonably expect to receive a pension, the hardship associated with an early compulsory retirement was substantially reduced. Consequently, cases involving an employer that already maintained a fair and reasonable pension scheme were not comparable, and indeed were not relevant, to cases where no such scheme existed. The Court noted that the prevailing trend in the Bombay region was clearly to fix the retirement age at sixty years. Because the material facts of the present case closely resembled those in the earlier decision of Dunlop Rubber Co. (India) Ltd. v. Workmen, the Court concluded that the retirement age for the workmen in question should be raised from fifty‑five to sixty years. The Court also stated that, as a general principle, the Supreme Court was reluctant to interfere with a Tribunal’s decision when the Tribunal had reached its conclusion after considering the evidence presented before it. However, if the Tribunal, in reaching its conclusion, overlooked an important document or failed to consider evidence that had been adduced, the Supreme Court needed to examine whether it should intervene in the Tribunal’s exercise of discretion. The Court referred to the authority of Dunlop Rubber Co. (India) Ltd. v. Workmen & Ors. [1960] 2 S.C.R. 51 and also mentioned Guest, Keen, Williams Private Ltd. v. P. J. Sterling & Ors., [1960] 1 S.C.R. 348. The judgment was delivered in the Civil Appellate Jurisdiction concerning Civil Appeals Nos. 471 and 472 of 1960, which were appeals by special leave from the award dated 22 December 1959 of the Industrial Tribunal, Bombay, in Reference (I.T. No. 163 of 1959). Counsel for the appellant and for the respondents were listed, and the judgment dated 14 November 1960 was pronounced by Justice Gajendragadkar. The two cross‑appeals were directed against the Tribunal’s decision on two of the industrial demands that had been referred for adjudication by the workmen of Imperial Chemical Industries (India) Private Limited, Bombay.

In this matter, the workmen of Imperial Chemical Industries (India) Private Limited had presented five industrial demands, all of which were referred to the Industrial Tribunal of Bombay for adjudication by the Government of Bombay under section 10(1) of the Industrial Disputes Act, 1947 (XIV of 1947). The Tribunal examined each demand on the basis of the evidence placed before it by the parties and rendered its decision after considering the merits of each claim. The two demands that formed the subject of the present cross‑appeals were numbered three and five. Under demand No. 3 the workmen sought double pay for work carried out on Sundays and holidays, contending that clerical as well as service staff who performed duties on those days should receive twice their normal rate of remuneration, which they defined to include basic salary, dearness allowance and any other applicable allowances. Demand No. 5, also advanced by the workmen, called for a prohibition on compulsory retirement before the age of 60, except where an employee chose to retire voluntarily.

The company, an All‑India concern with branches in several locations, employed a total of 1,400 persons at its Bombay office. Of these, 800 employees were directly affected by the disputes before the Tribunal; 600 of those belonged to the clerical cadre and the remaining 200 were subordinate staff. Both demand No. 3 and demand No. 5 were contested by the company. Regarding demand No. 3, the company submitted that it already paid a Sunday and holiday work allowance pursuant to an earlier award commonly referred to as the Naik Award. The company argued that no material change in circumstances had occurred since the Naik Award was made, and consequently a revision of the allowance was unwarranted. It further maintained that the allowance it provided was reasonable, fair and adequate. Concerning demand No. 5, the company pleaded that, since 1950, it had uniformly fixed the retirement age for all its employees throughout India at 55 years. The company warned that any alteration of that retirement age for the workers involved in the present dispute would have serious repercussions for its other branches. It asserted that the fixed retirement age was both fair and reasonable, and it highlighted that the company contributed a generous provident‑fund amount equal to ten percent of wages from both employer and employee, a benefit that it claimed was not commonly offered by many other concerns in Bombay.

The Tribunal’s findings on demand No. 3 were partially in favour of the workmen. It directed the company to pay, for work performed on Sundays and holidays, an amount equal to half of a day's total salary and dearness allowance. The calculation was to be made by dividing the sum of basic wage, special allowance and dearness allowance for the month by thirty. Regarding work performed on festival holidays, the Tribunal ordered that the employees should receive an amount equivalent to a full day's salary and dearness allowance, without granting a substituted holiday for such work.

The Tribunal had previously indicated that the payment for work performed on Sundays and holidays should be calculated in the same manner as described earlier, yet it had held that employees would not receive a substituted holiday in such cases. This specific portion of the award was contested by the workmen when they filed their appeal. Regarding demand No 5, the Tribunal found that the workmen had established a sufficient case for revising the retirement age that the company had fixed, and it concluded that raising the retirement age to fifty‑eight years, instead of the existing fifty‑five years, would be reasonable. Both the company and the workmen challenged this direction in their respective appeals. The company argued that no alteration should be made to the retirement age, maintaining that the existing provision should remain unchanged. In contrast, the workmen maintained that the retirement age ought to be increased further, to sixty years rather than fifty‑eight. Consequently, Civil Appeal No 471 of 1960, filed by the company, dealt exclusively with the question of fixing the retirement age. Civil Appeal No 472 of 1960, filed by the workmen, addressed both the retirement‑age issue and the Tribunal’s direction concerning the payment of allowance to workmen for labour performed on festival holidays.

The direction issued by the Tribunal concerning labour on festival holidays was, in the Court’s view, the result of an oversight. It had previously been observed that the workmen sought a revision of the existing practice of paying allowances for work performed on Sundays and holidays, whereas the company preferred that the status quo be maintained. The company’s payments for such work conformed to the Naik Award, and the company asserted that there was no justification for altering that practice. Accordingly, it was clear that the company did not seek any change that would be to its advantage at the expense of the workmen. The Tribunal apparently failed to recognize that by distinguishing between work performed on Sundays and work performed on festival holidays, and by issuing two separate directions for these two categories, its order regarding festival holidays would actually place the workmen in a less favourable position after the award than they had been in before. The specific direction deprived the workmen of their entitlement to a compensatory weekly off or a substituted holiday, and the inevitable result of this deprivation was that the workmen would lose part of the benefits to which they were previously entitled under the existing arrangement. This position had not been seriously disputed. Accordingly, the Court upheld the plea presented on behalf of the workmen and directed that, for work performed on festival holidays, the practice that had prevailed before the dispute should continue. The discussion then proceeded to the matter of the retirement age.

In regard to the question of retirement age, the learned Attorney‑General, appearing for the company, argued vigorously that the Tribunal had erred by altering the statutory retirement age from fifty‑five years to fifty‑eight years. He emphasized that two salient facts must be kept in mind when assessing this issue. First, the company operates as an All‑India concern, and it is of paramount importance that the terms and conditions of service applicable in its numerous branches across the country remain stable and as uniform as is reasonably feasible; to that end, the employer has maintained a consistent retirement age of fifty‑five years since nineteen‑fifty. He submitted that disturbing this long‑standing arrangement would inevitably upset the retirement age uniformly applied in all other branches. Second, the Attorney‑General pointed out that the general conditions of service offered by the company are notably liberal, specifically highlighting the Provident Fund scheme that the employer has instituted for the benefit of its employees, and he argued that, on this basis, fixing the retirement age at fifty‑five cannot be deemed unreasonable. To bolster these submissions, he relied upon the Supreme Court’s decision in The Dunlop Rubber Co. (India) Ltd. v. Workmen, reported in [1960] 2 S.C.R. 51.Conversely, Mr Dudhia, representing the workmen, contended that the same Supreme Court decision in the Dunlop case actually favoured the workers’ demand that the Tribunal should have fixed the retirement age at sixty years, applying the principles articulated by the Court in that precedent. He further asserted that the Tribunal, in addressing the merits, had overlooked an important document filed by the workmen together with their statement of claim (Ex. B), a document that, he claimed, would conclusively demonstrate that in Bombay the retirement age is almost invariably fixed at sixty years rather than fifty‑five. Mr Dudhia also referred to the Court’s earlier judgment in Guest, Keen, Williams Private Ltd. v. P. J. Sterling, reported in [1960] 1 S.C.R. 348, where certain general considerations relevant to determining retirement age were dismissed. He noted that the Dunlop decision reiterated those same considerations and upheld the Tribunal’s fixing of the retirement age at sixty, holding that such a decision should not be interfered with. Moreover, the considerations on which the Attorney‑General relied were present in that case: the employer was likewise an All‑India concern, and the Court had examined the argument that altering retirement age in one location might disturb uniformity and have serious repercussions in other branches. It was observed in the Dunlop judgment that, although the employer’s concern was relevant, the effect of that consideration had to be weighed against other material circumstances, including the industry‑and‑region practice of setting retirement age at sixty in Bombay, which the Court had taken into account when affirming the Tribunal’s decision.

In this case the Court observed that although the employer’s consideration was relevant and material, its effect had to be judged in the light of other material and relevant circumstances. The Court added that an important material consideration was that the age of retirement could be and often was determined on an industry‑cum‑region basis. Accordingly, the Court noted that in Bombay there had been a progressive tendency for some time to fix the age of retirement at sixty, and that, being consistent with that tendency, the Tribunal had fixed the retirement age at sixty in the Dunlop Company case. Because of this consistency, the Court saw no reason to adopt a different view. In the Court’s opinion, insofar as the considerations on which the company relied in the present appeal were common to those urged in the Dunlop Company case, the decision in the latter case was more favorable to the workmen than to the company.

The Court further explained that it generally does not like to interfere with Tribunal decisions when it is satisfied that the Tribunal reached its conclusions after considering the relevant evidence placed before it. The Court recognised that no hard and fast rule could be laid down for fixing the age of retirement; the decision would always depend on a proper assessment of the relevant factors and could vary from case to case. Nevertheless, the Court found that Mr. Dudhia was correct in contending that the Tribunal had somehow lost sight of an important document filed by the workmen with their claim. That document (Exhibit B) listed thirteen industrial concerns and showed that in ten of them the age of retirement had been fixed at sixty either by an award or by agreement, while in the remaining three there was no prescribed retirement age. The record indicated that these facts were not disputed before the Tribunal. In most of the cases reference was made to an award, and it was presumably realised by the company that those awards had indeed fixed the retirement age at sixty. This document was not considered at all by the Tribunal in dealing with the question of the retirement age, and that omission gave strength to Mr. Dudhia’s argument that the Court ought to reconsider the merits of the dispute for itself. It appears that the company filed a list (Exhibit C‑1) claiming that the age of retirement had been fixed at fifty‑five in fourteen industrial concerns; in reply the workmen filed their own explanation (Exhibit U‑1). This explanation shows that in some

In several of the cases listed, an industrial dispute was still pending adjudication or the employees had made demands to raise the statutory age of retirement. Regarding the four oil companies mentioned by the employer in its list (Ex. C‑1), the record shows that each of those companies operated a pension scheme, a circumstance that creates a material distinction. It is a well‑established principle in industrial adjudication that when an employer provides a fair and reasonable pension arrangement, that scheme significantly influences the determination of the retirement age, often allowing it to be set at an earlier point. When a retired worker can legitimately expect to receive a pension, the hardship associated with premature compulsory retirement is considerably lessened; consequently, cases that involve an existing, equitable pension plan cannot be treated as comparable or even relevant to situations where no such scheme exists. In the matter of Godrej and Boyce there was a dispute between the parties concerning the actual retirement age fixed by the employer, and a similar dispute arose in the case of Brooke Bond (India) Private Limited. The Tribunal examined the evidence presented in the two documents Ex. C‑1 and Ex. U‑1 and concluded that, after considering all relevant circumstances, fixing the retirement age at fifty‑eight years was not unreasonable in the present case. The Tribunal’s discussion began by observing that in a number of industrial establishments the retirement age stood at sixty years and that there had been a trend for some time to raise the retirement age from fifty‑five upwards. However, the overall tone and trajectory of that discussion leave no doubt that the Tribunal omitted consideration of the evidence submitted by the workmen in their document Ex. B, which accompanied their claim. The material placed in Ex. B strongly indicates an almost uniform tendency in the Bombay area to set the retirement age at sixty rather than fifty‑five. Had the Tribunal taken this evidence into account and explained why it did not support the workmen’s request for a retirement age of sixty, the situation would have been different. Because the award makes no reference to Ex. B and offers no reasons for rejecting the trend identified in that document, the Court finds it necessary to examine the question independently. The learned Attorney‑General argued that the industrial concerns referred to in Ex. B are not comparable with the present company and therefore the trend shown in that document should be disregarded. The Court is not persuaded by that submission. A simple review of the industrial concerns listed in the employer’s submission shows that, if those concerns are deemed comparable for the purposes of these proceedings, there is no justification for rejecting the trend demonstrated in Ex. B. Therefore, the Court considered that the uniform practice in the region bears on the appropriate retirement age and cannot be ignored without specific justification. Accordingly, the Court decided to address the retirement‑age issue afresh.

The Court observed that there was no valid reason to reject the concerns listed in Exhibit B as being incomparable to the present dispute. Moreover, the situation in the present case closely mirrors the circumstances that arose in the earlier judgment involving the Dunlop Company (1). In both matters the conflict was between clerical and subordinate employees on the one hand and their respective employer on the other. Consequently, certain factors that are normally relevant when determining the retirement age for factory workers may not be applicable here. As the Court highlighted in the Dunlop Company (1) decision, the prevailing practice in the Bombay region has shifted toward fixing the retirement age at sixty years. In view of that clear trend, the Court found no justification for maintaining a retirement age of fifty‑five years for the workmen in the present appeal. The Court further noted that, had the Tribunal examined the uniform trend disclosed by Exhibit B and explained why it chose not to follow it, a different analysis would have been required. In that hypothetical scenario, the Court would have had to decide whether to interfere with the Tribunal’s discretionary judgment. However, the Tribunal’s record shows that it did not consider the evidence contained in Exhibit B at all. On the basis of the foregoing, the Court was convinced that Mr. Dudhia’s contention that the material facts of this case are substantially the same as those in the Dunlop Company (1) case is correct. Accordingly, the Court directed that the retirement age for the workmen involved in the present appeal be increased from fifty‑five to sixty years. The Court dismissed Civil Appeal No. 471 of 1960 filed by the company, allowed Civil Appeal No. 472 of 1960 filed by the workmen, modified the award, and ordered that the workmen recover costs from the company. The decision also clarifies that the Tribunal’s failure to address the comparative evidence deprives the parties of a fair opportunity to argue the appropriate retirement age. By aligning the retirement policy with the established regional practice, the Court aimed to promote uniformity and equity among workers in similar industries.