The Management Of Chandramalai Estate... vs Its Workmen And Anr.

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

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 4 April 1960

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

In this matter, the Supreme Court of India addressed the dispute identified as The Management of Chandramalai Estate versus Its Workmen and Another, which was decided on 4 April 1960. The judgment was authored by Justice Das Gupta, who was joined on the bench by Justices K.N. Wanchoo and P.B. Gajendragadkar. The factual background commenced on 9 August 1955, when the workmen’s union representing the employees of the Chandramalai Estate presented a memorandum to the Estate’s Manager. The memorandum contained fifteen separate demands concerning the conditions of employment and other matters affecting the workers. While the management consented to satisfy some of the enumerated demands, a number of the principal demands remained unmet, leading to a growing dispute between the two parties.

Subsequently, on 29 August 1955, the Labour Officer of Trichur, who had become aware of the situation through communications from both the Estate’s management and the Labour Union, advised that the parties should attempt to resolve the differences through mutual negotiations. The Officer encouraged the representatives of the management and the workers to meet and discuss the outstanding issues. After the parties engaged in preliminary talks, the Labour Officer recommended that the matter be referred to the Conciliation Officer of Trichur for a formal conciliation process. The Conciliation Officer made attempts to bring the parties together and to facilitate an agreement, but his efforts did not produce a settlement. The final conciliation meeting appears to have taken place on 30 November 1955. The following day, the Union issued a strike notice, and the workmen commenced a strike that became effective on 9 December 1955. The industrial action continued until 5 January 1956, when the strike was formally concluded.

During the period of the strike, on 5 January 1956, the Government intervened by referring five of the disputed demands to the Industrial Tribunal at Trivandrum for adjudication. Later, by an order dated 11 June 1956, the Government withdrew the matters from the Trivandrum Tribunal and directed that they be transferred to the Industrial Tribunal at Ernakulam. The Ernakulam Tribunal rendered its award on 17 October 1957, granting the workmen’s claims on all of the issues that had been referred. Dissatisfied with that award, the management of the Chandramalai Estate filed the present appeal, challenging the Tribunal’s award on three specific points. The three points of contention were stated in the reference as follows: first, whether the price realised by the management for rice sold to the workers after decontrol was excessive, and if so, whether the workers were entitled to a refund of the excess amount; second, whether the workers were entitled to receive cumbly allowance with retrospective effect from the date it had been discontinued, and what the appropriate rate of such allowance should be; and third, whether the workers were entitled to wages for the period of the strike. Regarding 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 employees at a rate of twelve annas per measure for quantities exceeding a quota of one and a half measures per head, which the workmen deemed excessive and unjustified, and they therefore claimed a refund of the surplus paid. The management contended that the workers were not obligated to purchase rice from the Estate’s store and further asserted that only the actual cost price, without any excess, had been charged. The tribunal held on a consideration of oral and documentary evidence that the

The Court noted that the Tribunal had found that the estate’s management had charged the workmen a price for rice that exceeded the actual cost price and consequently ordered that the excess amount be refunded. The second point before the Tribunal concerned the claim for a blanket allowance, commonly referred to as a cumbly allowance, which was intended to enable the labourers to procure blankets suitable for the severe cold prevailing at the high‑altitude location of Chandramalai Tea Estate. The practice of granting such an allowance had become entrenched over many years and was recognized as an integral part of the workers’ terms and conditions of service. Despite this long‑standing custom, the management discontinued the payment of the allowance beginning in 1949 and only reinstated it in 1954. The management defended its action by arguing that, because no grievance had been formally raised before 9 August 1955, the workers could not later demand the arrears. The Tribunal rejected this argument, holding that the failure to raise a dispute within that period did not extinguish the workers’ entitlement. Accordingly, the Tribunal awarded a total of Rs 39 per workman as cumbly allowance, calculated as Rs 7 for each of the years 1949, 1950 and 1951, and Rs 9 for each of the years 1952 and 1953. The third issue involved the legality of a strike undertaken by the workmen. While the workers contended that the strike was justified, the management maintained that it was illegal and unjustified. After examining the circumstances, the Tribunal concluded that responsibility for the strike rested on both parties and directed the management to pay the workers fifty percent of their total emoluments for the period of the strike.

Regarding the allegation that the estate had collected an excess price for rice, the appellant limited its submission before this Court to a factual question: whether the Tribunal was correct in its finding that the price realised by the management was above cost. The Tribunal’s determination was based on entries appearing in the management’s own records. For the months of April, July, August and September, the records clearly indicated the price at which the management had purchased the rice. However, the documents for May and June did not disclose the procurement price. In those two months, the Tribunal accepted the market price of rice, as testified by the workmen’s witness numbered six, and treated that market price as the price actually paid by the estate. The present Court found no reason to disturb these factual findings. It also observed that the documents relied upon by the Tribunal were not included in the official Paper‑Book, making it practically impossible for this Court to re‑examine the evidence independently. Satisfied with the Tribunal’s assessment of both the cost price to the management and the higher price charged to the workmen, the Court affirmed that the management’s contention that only the cost price had been charged was rightly rejected. Moreover, the Court held that the fact that the workmen were not compelled to purchase rice from the estate was of little relevance, especially since the management had opened a shop expressly to facilitate the workers’ access to rice.

In this case the Court observed that the purpose of the shop that the management had opened was to assist the workmen, and that if the management were found to have charged rates that exceeded the actual cost, equity required that the workmen be repaid the excess amount. Consequently, the award that ordered the refund of the surplus charges on the basis of the figures established by the Tribunal could not be successfully contested. Turning to the matter of the cumbly allowance, the Court noted that the sole defence put forward by the management was that the demand for the allowance had been raised too late. The Court accepted the admitted fact that the allowance had been regularly paid to the workmen year after year for many years until it was discontinued in 1949, and held that this regular payment made the allowance an integral part of the workmen’s conditions of service. The Court further held that the mere fact that the workmen had not objected to the management’s refusal to honour this condition of service until 9 August 1955 did not constitute a valid reason to deny them the allowance. The Court found that the management had acted arbitrarily and illegally by halting the payment of the allowance from 1949 to 1954, and rejected any argument that the lapse of time barred payment. It was reasonable to conclude that, because the allowance was not paid, the workmen had been forced to provide blankets for themselves at their own expense. Accordingly, the Court affirmed that the Tribunal had acted justly in directing that the allowance be paid for the years 1949 to 1953, and observed that the rates awarded by the Tribunal were not challenged. The Court therefore upheld the Tribunal’s award on the cumbly allowance issue.

The Court then examined whether the Tribunal was correct in granting the workmen fifty percent of their emoluments for the period of the strike. The Court observed that on 30 November 1955 the Union was aware that attempts at conciliation had failed. The proper next step, according to the Court, would have been for the Conciliation Officer to report the failure to the Government, and for the Union to address the Government simultaneously, requesting that a reference be made to the Industrial Tribunal. Instead, the Union chose not to wait; after issuing a notice on 1 December 1955 informing the management of its intention to strike from 9 December 1955, the Union commenced the strike on that very date. The appellant argued that the nature of the demands did not justify such a hurried action and that, in fairness, the Union should have followed the normal legal procedure by asking the Government to refer the dispute under the Industrial Disputes Act before striking. The Court noted that the Union’s principal demands concerned the cumbly allowance and the price of rice. Regarding the cumbly allowance, the Union had made no claim from the time it was first stopped in 1949 until it raised the issue on 9 August 1955. The grievance concerning the collection of excess rice price, although more recent, was also presented without having exhausted the prescribed statutory avenues for dispute resolution.

In this case the Court observed that the grievance concerning the excess price of rice, although more recent than the dispute over the cumbly allowance, was not of such urgency that labour interests would have been irreparably harmed if the dispute had been resolved through the procedure prescribed by law for industrial tribunals. The Court noted that a strike does not affect only the employer; while a strike may be a legitimate and sometimes unavoidable tool for labour, the indiscriminate or hasty use of that tool should not be encouraged. Labour should not assume that any demand can be pursued by striking with impunity without first exhausting reasonable peaceful avenues. The Court recognized that in rare cases where a demand is extremely urgent and serious, it may be unreasonable to require labour to wait for a government reference before striking, and a pre‑reference strike could be justified. However, the Court held that the present circumstances did not fall within that exception. The workmen could have waited for a period after the failure of conciliation efforts before initiating a strike and could have asked the Government to refer the dispute during that interval. In fact, the conciliation process failed on 30 November 1955, yet on the very next day the Union decided to strike, issued a notice that the strike would begin on 9 December 1955, and on that date the workmen actually ceased work. The Government responded promptly by referring the dispute on 3 January 1956, after which the strike was called off. The Court could not see how a strike under these circumstances could be regarded as justified. The Tribunal, the Court noted, appeared conflicted on the issue, characterising the strike as “half justified and half unjustified,” a notion the Court found difficult to accept. Given the facts, the Court concluded that the Tribunal’s view that the strike was at least partially justified was erroneous. The error was considered serious enough that, in the interests of justice, the Court was bound to set aside that part of the Tribunal’s decision. Consequently, the Court held that the strike was wholly unjustified and that the workmen were not entitled to any wages for the strike period. Accordingly, the Court allowed the appeal in part, overturning the award that had directed payment of fifty percent of the total emoluments for the strike period, while leaving the remainder of the award intact. No order as to costs was made.

The Court expressly stated that it would make no order directing either party to pay costs in this matter, indicating that the court found no necessity to impose a costs burden on any side. Following this determination, the Court concluded that the appeal was allowed, meaning that the relief sought by the appellant was granted and the decision under review was set aside to the extent necessary to give effect to the appellant’s claim. By allowing the appeal, the court confirmed that the earlier award, particularly the portion that had directed payment of a proportion of the emoluments for the strike period, could not stand. The allowance of the appeal thereby reinstated the position that the strike was unjustified and that the workmen were not entitled to wages for that period, as reflected in the earlier reasoning. No further directions regarding costs were issued, and the judgment was concluded on the basis that the appeal succeeded.