Sri Sita Ram Sugar Mills Ltd. vs Their Workmen

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

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 21 March, 1960

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

The appeal, granted by special leave, arose from an industrial dispute between Sri Sita Ram Sugar Mills Ltd. (the appellant) and its workmen (the respondents). The controversy centred on the payment of a bonus of Rs 1,130‑8‑9 that the appellant had made to employees stationed at its head office in Calcutta. The respondents contended that, according to the Uttar Pradesh Government Order governing bonus payments, those head‑office employees were not entitled to share in the bonus, whereas the appellant argued that the employees were indeed part of its workforce and that the bonus paid to them was therefore fully justified. The dispute concerned the fiscal year 1953‑1954, during which the total bonus distributed by the appellant amounted to Rs 19,985. Of that total, the sum of Rs 1,130‑8‑9 was paid to the Calcutta head‑office staff, and it is this particular payment that gave rise to the present litigation. A similar disagreement had earlier been referred to the Industrial Tribunal with respect to the interim bonus for the year 1954‑1955, but that matter was settled amicably and did not proceed to a tribunal award. The Industrial Tribunal, hearing the present case, accepted the respondents’ claim and directed the appellant to distribute the disputed bonus strictly in accordance with the terms of the Government Order, thereby excluding the head‑office employees. The validity of that tribunal award was challenged before this Court by counsel appearing on behalf of the appellant.

The Court noted that, in Uttar Pradesh, the payment of bonuses in the sugar industry had, over time, acquired the character of a regular annual entitlement. The State Government periodically issued orders specifying the scale on which bonuses were to be paid, and each order was preceded by a tripartite conference intended to secure consensus among the government, employers, and workmen. This system of awarding bonuses under Government Orders had been introduced in 1946 and had continued without interruption. For the fiscal year 1953‑1954, the State Government constituted a committee chaired by the Labour Commissioner of Uttar Pradesh and comprising four members—two representatives of employers and two of workmen in the sugar industry. The committee submitted a report to the Government, based on which the Government issued G.O. No. 7095 (ST)/36‑A‑71(ST)‑54 on 10 January 1955, directing that bonuses be paid in proportion to the actual production of sugar. One of the clauses in that order, which is central to the present appeal, required that “all persons employed in or under” the sugar factories during the crushing season of 1953‑1954 be paid the bonus as specified. The interpretation of this clause formed the crux of the dispute, leading the Tribunal to examine the evidence and ultimately conclude that the 211 employees working at the head office in Calcutta were not “persons employed in or under” the appellant, and therefore were not eligible for the bonus under the Government Order. The appellant’s counsel argued that this finding was erroneous, prompting the Court to scrutinize the construction of the clause and the factual relationship between the head‑office staff and the appellant.

In this matter the Government Order required that the bonus be paid “as specified in the order to all persons employed in or under them and who were so employed in the crushing season 1953‑1954.” The Court noted that interpreting this clause was not difficult, but the dispute centered on whether the staff employed at the appellant’s head office in Calcutta fell within the meaning of “persons employed in or under” the appellant. The industrial tribunal had held that the two hundred and eleven employees at the Calcutta head office were not persons employed in or under Sri Sitaram Sugar Mills Co. Ltd., and consequently they could not claim any bonus under the Government Order from the appellant. Counsel for the workmen, identified only as Mr Veda Vyasa, argued that this finding was erroneous. The Court observed that the question was essentially factual: it required determining if the head‑office staff were, in law and in fact, employees of the appellant. Normally the Court would be reluctant to disturb a tribunal’s factual findings, especially when those findings were based on an assessment of the evidence and did not involve any point of law. Nevertheless, because the matter had been extensively argued, the Court chose to summarise the evidence and the logical inferences that supported the tribunal’s conclusion.

The evidence established that the firm M/s Karam Chand Thapar and Bros Private Ltd., acting as the managing agents of Sri Sitaram Sugar Mills during the relevant period, also served as managing agents for two other sugar mills—Deoria Sugar Mills Ltd. of Uttar Pradesh and Mohini Sugar Mills Ltd. of Bihar—and acted as secretaries and treasurers of Siwan Sugar Mills in Bihar. The assistant chief accountant of the appellant, identified as Mr Verma, produced earnings sheets for the head‑office establishment for the 1953‑1954 season and affirmed that the employees in question were employees of the appellant rather than of the managing agents. However, he also admitted that those employees performed work for the other concerns in which the managing agents had an interest and that their salaries were contributed jointly by the appellant and the other concerns. Further, the manager of the appellant, identified as Mr Thapar, testified that all personnel, whether stationed at the mills or at the registered head office in Calcutta, were employees of the appellant. He nonetheless acknowledged that the head‑office staff were not listed on the payroll of the Betalpur factory, which was the subject of the dispute lodged by the workmen at that factory. Based on this evidentiary record, the tribunal concluded that the head‑office employees were not the appellant’s employees for the purposes of the bonus entitlement.

In its examination, the tribunal concluded that the workers under dispute had been employed by all four sugar factories that were linked to the Managing Agents of the appellant, and that the salaries of those workers were paid by those four factories. The tribunal further observed that for many years the factory workers had repeatedly protested, and had succeeded, in opposing any portion of the bonus being paid to staff situated at the head office. The tribunal also noted that the contract establishing the Managing Agency, which the appellant had executed in favor of its Managing Agents, had not been produced before it, and it inferred that, in substance, the workers were employees of the Managing Agents, whose respective concerns were actually bearing the salary obligations for the workers. The only documentary evidence offered by the appellant consisted of earning sheets, which merely demonstrated the fraction of salaries that the appellant had paid to the individual workers. On the basis of those facts, the tribunal reached the conclusion that the appellant had failed to demonstrate that the workers in question were its own employees, and the Court saw no reason to disturb that finding. The Court observed that it would have been straightforward for the appellant to provide the appointment letters issued to the head‑office staff, or to produce the payroll register of the employees engaged by its Managing Agents. While counsel for the respondent, Mr Veda Vyasa, argued that the burden of proof lay with the appellant to show that the bonus paid to head‑office staff had been wrongful, the Court considered it unreasonable to rely on technical or academic rules of burden in the industrial context. Moreover, the relevant facts were within the knowledge of the appellant and could not reasonably be expected to be known by the respondents. Mr Vyasa also suggested that the respondents could have compelled the appellant to produce the necessary documents, a point the Court regarded as a technical plea of great importance in industrial proceedings. The appellant was aware that its factory workers had consistently objected to any bonus being paid to head‑office personnel, and therefore it was clearly incumbent upon the appellant to produce all material evidence in its possession. Consequently, the Court concluded that the appellant could not successfully challenge the tribunal’s factual finding that the individuals concerned were not employed by, or under, the appellant’s concern. The tribunal additionally held that the Government Order at issue applied only to the state of Uttar Pradesh, and therefore the head‑office staff could not lay claim to a share of the bonus. According to the tribunal, only the employees of the factories were entitled to the bonus as stipulated in the agreement embodied in the Government Notification.

In this matter, the Court noted that the tribunal had already identified a separate ground on which the head‑office staff should be excluded from any entitlement to the bonus and that, having found no reason to disturb the tribunal’s initial finding, the Court chose not to examine any of the tribunal’s remaining conclusions. The Court further explained that, although the appellant had challenged the validity of the Government Order before the tribunal, during the hearing of the present appeal before this Court the counsel for the appellant expressly declared that he did not intend to raise the issue of the Order’s validity in the current proceedings. Consequently, the appeal was dismissed and no order regarding costs was made. The Court also acknowledged that the decision rendered in this appeal would have a binding effect on Civil Appeal No 182 of 1959; accordingly, that related appeal was likewise dismissed, and, similarly, no order as to costs was issued in that matter.