Management of Chandramalai Estate vs Its 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. 347/1959

Decision Date: 4 April 1960

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

In this matter the Court recorded that the management of the Chandramalai Estate, located in Ernakulam, filed an appeal on 4 April 1960 against an award issued by the Industrial Tribunal No. 11, Ernakulam, dated 17 October 1957. The appeal, numbered Civil Appeal No. 347/1959, was taken by special leave from the award that resolved Industrial Dispute No. 63 of 1956. The bench hearing the appeal consisted of Justices K.C. Das Gupta, P.B. Gajendragadkar and K.N. Wanchoo. The judgment was authored by Justice Das Gupta. Counsel for the appellant, the management, were S. Govind Swaminadhan and P. Ram Reddy; counsel for the first respondent, the workmen, were Jacob A. Chakramakal and K. Sundararajan; and counsel for the second respondent was K.R. Choudhry.

The Court detailed that on 9 August 1955 the workmen’s union representing the Chandramalai Estate submitted a memorandum containing fifteen specific demands to the estate manager. Although the management consented to fulfil certain minor demands, the principal demands remained unsatisfied. On 29 August 1955 the Labour Officer of Trichur, having been informed of the stalemate by both parties, recommended that the management and the union engage in mutual negotiations. The matter was subsequently referred by the Labour Officer to the Conciliation Officer of Trichur for formal conciliation. The conciliation process continued but ultimately proved futile, with the last conciliation meeting occurring on 30 November 1955. The following day the union issued a strike notice and the workmen commenced a strike effective from 9 December 1955. The Government intervened on 3 January 1956 by referring the dispute concerning five of the demands to the Industrial Tribunal, and the strike was called off on 5 January 1956.

The Tribunal, after hearing the matter, held that both the management and the workmen bore responsibility for the strike and awarded the workmen fifty percent of their emoluments for the period of the strike. Upon review, the Supreme Court held that, on the facts, the strike was unjustified and the workmen were not entitled to any wages for the strike period. The Court explained that once conciliation attempts had failed, the union was obligated to seek a reference to the Industrial Tribunal before resorting to a strike. A strike, while a legitimate tool for workers, is not ordinarily justified if it is undertaken hastily without exhausting reasonable peaceful avenues. Accordingly, the Court set aside the Tribunal’s award on the wage issue and affirmed that the workmen could not claim remuneration for the strike period.

Negotiations were held between representatives of the management of Chandramalai Estate and the workmen’s union, but they did not produce a settlement. The Labour Officer, after being informed of the situation by both the management and the union, recommended that the matter be referred to the Conciliation Officer in Trichur for conciliation. The Conciliation Officer made attempts to bring the parties together, but these attempts were unsuccessful. The final conciliation meeting appears to have taken place on 30 November 1955. On the following day the union issued a strike notice, and the workmen commenced a strike that became effective on 9 December 1955. The strike continued until 5 January 1956, when it was brought to an end.

Before the strike concluded, on 5 January 1956 the Government referred the dispute, concerning five of the union’s demands, to the Industrial Tribunal at Trivandrum for adjudication. Subsequently, by an order dated 11 June 1956, the dispute was withdrawn from the Trivandrum Tribunal and re‑referred to the Industrial Tribunal at Ernakulam. The Ernakulam Tribunal issued its award on 17 October 1957, granting the workmen’s demands on all of the issues before it. The management of Chandramalai Estate has filed the present appeal against that award, challenging three of the matters decided by the Tribunal. The three contested issues are set out in the reference as follows: (1) whether the price realized by the management for rice sold to the workmen after the removal of price control was excessive, and if so, whether the workmen are entitled to a refund of the excess amount; (2) whether the workmen are entitled to a “cumbly” allowance with retrospective effect from the date it was discontinued, and what rate should apply to that allowance; and (3) whether the workmen are entitled to wages for the period of the strike.

On the first issue, the workmen argued that after the Travancore‑Cochin Government lifted the control on rice in April 1954, the management continued to sell rice to the workmen at an excessive rate of twelve annas per measure for quantities exceeding a quota of one and a half measures per head. The workmen contended that this rate was improper and unjustified, and they sought a refund of the excess amount they had paid. The management responded that the workmen were not obligated to purchase rice from the estate’s stores, and that only the actual cost price of the rice, without any excess, had been charged. After examining oral testimony and documentary evidence, the Tribunal concluded that the management had indeed charged more than the cost price and ordered a refund of the excess to the workmen.

The second issue concerned a claim for a “cumbly” allowance. Chandramalai Tea Estate is located at a high altitude, and it was an acknowledged custom for estates in that region to provide a blanket allowance to workmen so that they could obtain blankets to cope with the severe weather. Over time, this allowance had become an integral part of the workmen’s terms and conditions of service. Nevertheless, the management of the estate stopped paying the allowance beginning in 1949 and only resumed the payments in 1954. The management’s defence was that no dispute regarding the allowance had been raised until after 9 August 1955, and therefore there was no reason for the workmen to bring the matter before the Tribunal at such a late stage.

In regard to the claim that the demand for cumbly allowance should not have been raised after August 9 1955, the Tribunal rejected the management’s argument that the lateness of the claim provided a reason to dismiss it. Consequently, the Tribunal ordered payment of a cumbly allowance amounting to Rs 39 per workman, a sum that was composed of Rs 7 per year for the years 1949, 1950 and 1951 and Rs 9 per year for the years 1952 and 1953. Turning to the third dispute, the workmen asserted that the strike they had undertaken was justified, whereas the management maintained that the strike was illegal and unjustified. After considering the submissions, the Tribunal concluded that responsibility for the strike rested with both parties and directed the management to pay the workmen fifty percent of their total emoluments for the period of the strike. Concerning the allegation that the estate had collected an excess price for rice, the appellant’s contention before this Court was confined to the factual question of whether the Tribunal’s finding that the estate had realised a price above cost was correct. The Tribunal had based its determination of the price realised by the management on entries recorded in the management’s own documents. Regarding the cost of the rice to the management, the Tribunal found that the management’s records disclosed the price for the months of April, July, August and September, but that the documents did not show a price for May and June. For those two months, the Tribunal accepted the market price of rice established by the workmen’s witness No 6 as the price at which the estate’s management had procured the rice. The Court sees no justification for interfering with those factual findings. Moreover, the documents on which the Tribunal relied were not included in the official Paper‑Book, making it impossible for this Court to re‑examine the matter independently. Accordingly, the Court is satisfied that the Tribunal was correct in its conclusions concerning both the cost price of rice to the management and the price actually realised from the workmen. The management’s assertion that the workmen had been charged only the cost price of rice has therefore been rightly rejected. The fact that the workmen were not compelled to purchase rice from the estate is of little relevance; the estate had opened its shop to assist the workmen, and if it is found that an excessive rate was charged, equity demands that the workmen be reimbursed. Consequently, the award directing the refund of the excess amount collected, based on the Tribunal’s figures, cannot be successfully challenged. Regarding the cumbly allowance, it is notable that the sole defence raised by the management was that the demand had been made too late. The admitted fact that the allowance had been paid regularly year after year for many years until it was discontinued in 1949 is sufficient to establish that payment of a proper cumbly allowance had become an integral part of the workmen’s conditions of service. The Court does not consider the mere fact that the workmen had not previously raised a dispute over the management’s failure to pay this allowance to be a sufficient reason to deny them their rightful claim.

The Court observed that the workmen’s failure to object to the management’s refusal to honour the cumbly allowance until 9 August 1955 did not constitute a valid reason for denying the payment. The Court held that the management had acted arbitrarily and illegally by halting the allowance from 1949 to 1954, and that the lapse of time could not be used to excuse the management from its liability. It was reasonable to conclude that, because the allowance was not paid, the workmen were forced to purchase blankets at their own cost. Accordingly, the Tribunal’s direction that the allowance be paid for the years 1949 to 1953 was deemed just. The rates fixed by the Tribunal were not contested before the Court, and therefore the Court affirmed the Tribunal’s award on this point.

The Court then examined whether the Tribunal was correct in granting the workmen fifty per cent of their emoluments for the period of strike. It noted that on 30 November 1955 the Union was aware that conciliation efforts had failed. The proper next step would have been for the Conciliation Officer to report the failure to the Government, after which the Union should have appealed to the Government for a reference to the Industrial Tribunal under the Industrial Disputes Act. Instead, the Union gave notice to the management on 1 December 1955 that it intended to strike from 9 December 1955, and the strike actually began on that date. The appellant argued that there was no urgent demand justifying such a rapid strike and that the Union should have followed the statutory procedure by seeking a Government reference before striking. The Union’s principal demands concerned the cumbly allowance and the price of rice. The cumbly allowance had not been raised since its stoppage in 1949 until the Union raised it on 9 August 1955, and the grievance over rice price, though more recent, was not so urgent that the interests of labour would have suffered irreparably if the dispute had been referred to an Industrial Tribunal. The Court emphasized that while a strike is a legitimate, sometimes unavoidable tool for labour, its indiscriminate and hasty use should not be encouraged. Labour should not assume that any demand permits an immediate strike without first exhausting reasonable peaceful avenues for resolution.

In this case the Court noted that there could be situations where a labour demand is so urgent and serious that it would be unreasonable to require the workers to wait for a government reference before striking, and in such exceptional circumstances a strike might be justified even before any formal request was made. The Court, however, held that the present dispute did not fall within that category, and therefore the workmen should have exercised patience after the failure of conciliation before commencing a strike, and they could have meanwhile asked the Government to refer the matter. The factual record showed that the conciliation process collapsed on 30 November 1955, and on the very next day the Union resolved to strike, issuing a notice that the strike would begin on 9 December 1955; the workmen actually stopped work on that date. The Government responded promptly by referring the dispute on 3 January 1956, and it was only after this referral that the strike was withdrawn. The Court could not conceive how a strike carried out under those circumstances could be regarded as justified. The Tribunal that had earlier examined the case appeared conflicted, arriving at a conclusion that the strike was “half justified and half unjustified,” a formulation that the Court found difficult to accept. The Court stressed that the circumstances of the present case did not support any finding of justification for the strike. Consequently, the Court concluded that the Tribunal had erred in holding that the strike was at least partially justified, and that such an error was serious enough to require reversal in the interest of justice. The Court determined that the strike was unequivocally unjustified and therefore the workmen were not entitled to any wages for the period of the strike. Accordingly, the Court allowed the appeal in part, set aside the portion of the award that directed payment of fifty percent of the total emoluments for the strike period, and upheld the remainder of the award. No order as to costs was made, and the appeal was allowed.