Management Of May And Baker (India) 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: 13 January, 1961

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

In the matter titled Management of May and Baker (India) Ltd. versus Their Workmen, the Supreme Court of India heard arguments on 13 January 1961. The judgment was authored by Justice K.N. Wanchoo, with the bench comprising Justices P.B. Gajendragadkar, K.N. Wanchoo and K.C. Das Gupta. The two appeals before the Court arose from a single award rendered by the Industrial Tribunal in Delhi, and consequently they were considered together. The dispute concerned several issues between the management of Messrs. May and Baker—hereinafter referred to as “the company”—and its workmen. The matter was referred to the Tribunal for adjudication on 6 January 1956, and the Tribunal issued its award on 19 October 1957. Both the company and the workmen have now challenged that award in separate appeals. While the detailed points of disagreement are numerous, the Court limits its discussion to the specific arguments raised by counsel for each side, and it begins by examining the company’s contentions.

The first question presented concerns the provision of medical facilities. The award directs that the company must supply injections or patent medicines to an employee at half the cost, provided the company’s doctor certifies that such medication is essential for that employee, and the direction expressly covers medicines that are not produced by the company itself. The company argues that this requirement would impose an enormous financial burden on it. However, the award also contains an overarching limitation that the total cost of medical assistance for any workman in a given year shall not exceed one month’s salary, including any allowances. Considering this overall ceiling, the Court finds that the company’s claim of an “enormous burden” is unsupported and therefore rejects the company’s contention.

The second issue relates to leave facilities, specifically the accumulation of privilege leave. The Tribunal had ordered that a workman could accumulate up to twelve weeks of privilege leave. The company contests this direction, asserting that it conflicts with Section 22(1)(b)(i) of the Delhi Shops and Establishments Act, No. VII of 1954, which limits the accumulation of privilege leave to a maximum of thirty days. The Court agrees with the company’s argument, noting that the statutory provision unequivocally caps the accumulation period at thirty days. Consequently, the Tribunal’s award is modified to align with the statutory limit, allowing a maximum accumulation of privilege leave of thirty days only.

The third point raised by the company concerns the provision of maternity leave. The workmen had claimed entitlement to maternity leave, yet the company offered no response to this claim in its reply. In the absence of any objection or argument from the company regarding maternity leave, the Court sees no reason to alter the Tribunal’s order on this matter and thus leaves the original award concerning maternity leave undisturbed.

The final contention advanced by the company concerns the fixation of working hours. The company maintains that determining working hours is a managerial function and that the Tribunal should not have interfered with the schedule already established by the company, especially since the schedule complies with the limits set by the Delhi Shops and Establishments Act. The company’s regular hours are from nine o’clock in the morning to five o’clock in the evening, including a one‑hour lunch break and two fifteen‑minute tea intervals. The Tribunal altered this arrangement by shifting the start time to nine‑thirty and removing the two tea intervals, requiring tea to be served at the workers’ tables instead. Although the total hours on paper remain the same, the practical effect is a reduction in effective working time because workers can no longer take tea while continuing their tasks. The Court therefore examines whether this modification constitutes an improper reduction of working hours.

In this case, the company argued that fixing the daily working hours was a purely managerial function and that the tribunal had no authority to modify the schedule, especially because the schedule already complied with the maximum hours permitted under the Delhi Shops and Establishments Act. The records showed that the company's normal working day started at nine o’clock in the morning and ended at five o’clock in the evening, and that employees were provided with three scheduled rest periods: a one‑hour lunch break, a fifteen‑minute morning tea break, and a fifteen‑minute afternoon tea break. The tribunal, however, altered the timetable by shifting the start time to nine‑thirty a.m., retaining the same finish time of five p.m., and reducing the rest periods to a single one‑hour lunch interval. On its face, the revised timetable did not appear to reduce the total number of hours worked. Nevertheless, the tribunal also ordered that the two fifteen‑minute tea breaks, which had previously been served to workers in a common area, should instead be provided at the workers’ individual desks. This practical change meant that employees could no longer combine work with taking tea, and consequently they would have to pause their duties for the full fifteen minutes of each tea interval. The effect of the two tea breaks, therefore, was to subtract an additional half‑hour from the actual productive time each day. The court found that there was no factual or legal justification for such a reduction in effective working time. The same reasoning applied to a similar reduction imposed on subordinate staff. Because the original schedule already fell within the limits prescribed by the Delhi Shops and Establishments Act, the court restored the original hours and set aside the tribunal’s modification.

The company also contested the tribunal’s directive that employees who were issued a uniform should be permitted to take the garment home. The evidence indicated that, at present, the company’s policy prohibited workers from removing uniforms from the workplace, although the practice varied among different establishments. The court observed that there was no substantive reason to overturn the tribunal’s order on this point and therefore left the directive intact. The next grievance raised by the company concerned the tribunal’s decision to raise the minimum dearness allowance from Rs. 55 to Rs. 60 per mensem. The workmen had originally sought a higher rate of dearness allowance and had prayed that the minimum should be fixed at Rs. 75 per mensem. While the tribunal declined to alter the overall dearness‑allowance rates, it did grant a minimum of Rs. 60, a benefit that would mainly accrue to subordinate staff. The tribunal justified this figure by stating that, in its opinion, the minimum should be set at Rs. 60 when the cost‑of‑living index lies between 331 and 340, but it provided no further rationale. The court examined the company’s argument that the award should be set aside because no specific claim for a Rs. 60 increase had been made. The court rejected this contention, noting that the workmen’s claim had indeed sought a minimum amount, and that the tribunal’s determination fell within the scope of that claim. Consequently, the court found no ground to disturb the tribunal’s order regarding the dearness allowance.

The Court observed that the workmen had claimed that the minimum dearness allowance should be fixed at Rs. 75, presumably when the index figure lay between 331 and 340. The Court found no basis for altering the tribunal’s order and therefore rejected that contention. The next point raised by the company concerned a direction in the award that related to graduates. After examining the award, the Court saw no reason to intervene and dismissed the company’s submission. The remaining major submission of the company dealt with the order that required the reinstatement of Mukherjee. The company argued that Mukherjee had been terminated effective 1 April 1954 and that, at that date, the definition of “workman” in Section 2(s) of the Industrial Disputes Act did not encompass a representative such as Mukherjee. At that time the statute described a workman as any person employed in an industry to perform any skilled or unskilled manual or clerical work for wages or other reward. Consequently, the performance of manual or clerical work was a necessary condition for a person to be classified as a workman. The Court noted that industrial tribunals had repeatedly examined this definition and had consistently held that the label applied to an employee was of little importance; the decisive factor was the nature of the duties performed. If the employee’s duties were essentially manual or clerical, the employee was to be treated as a workman. Conversely, if manual or clerical tasks formed only a minor, incidental part of a job whose principal function was non‑manual and non‑clerical, the employee would not be regarded as a workman. Accordingly, each case required a factual inquiry into the actual nature of the work carried out, applying the definition that existed before the 1956 amendment. In the present matter, the Court found that there was no dispute about what Mukherjee’s duties entailed. His principal function was canvassing, and any clerical or manual work he performed was merely incidental and consumed only a small fraction of his working time. The tribunal, however, had concluded that Mukherjee qualified as a workman. The Court considered that conclusion erroneous. The tribunal appeared to have been persuaded by the fact that Mukherjee did not hold supervisory authority and performed his tasks under the direction of superiors. The Court held that the absence of supervisory responsibilities did not automatically convert his duties into manual or clerical work. The record demonstrated that Mukherjee’s duties were principally neither manual nor clerical. Therefore, the Court concluded that Mukherjee could not be classified as a workman within the meaning of Section 2(s) as it stood on the relevant date. Consequently, his claim fell outside the scope of the Industrial Disputes Act and the tribunal lacked jurisdiction to order his reinstatement.

The Court observed that because Mukerjee was not a workman within the meaning of the relevant provision, the tribunal possessed no authority to order his reinstatement. Consequently, the Court set aside the tribunal’s order that had directed Mukerjee’s reinstatement together with the other reliefs that had been granted by the tribunal.

The final point raised by the company concerned the awards made to Iqbal Singh, specifically the grant of retrenchment compensation and gratuity. The tribunal had concluded that Iqbal Singh was entitled to retrenchment compensation under Section 25‑F of the Industrial Disputes Act. The Court found this conclusion to be erroneous. Section 25‑F had become operative on 24 October 1953, whereas Iqbal Singh’s services were terminated on 30 September 1953. He had been informed that his employment would cease after that date and that he would receive one month’s salary in lieu of notice because he was surplus to requirements. The tribunal was therefore incorrect in holding that the termination effectively continued until 30 October 1953, thereby bringing the employee within the ambit of Section 25‑F. In the present case the termination took effect on 30 September 1953, with the payment of one month’s salary in lieu of notice; the employee did not work during the notice period because notice was not actually given. The Court noted that if a full month’s notice had been served and the employment terminated at the end of that period, the employee would have remained in service during the notice month and Section 25‑F could have applied. Nevertheless, although the tribunal erred in applying Section 25‑F, the Court saw no reason to disturb the order that awarded Iqbal Singh one month’s average pay as retrenchment compensation. The Court recognized that industrial tribunals had historically awarded retrenchment compensation even before the enactment of Section 25‑F and that the statute merely codified an existing practice. Accordingly, the order directing payment of one month’s average salary as retrenchment compensation to Iqbal Singh was left undisturbed. By contrast, the Court held that the portion of the tribunal’s order granting gratuity was untenable. Under the company’s gratuity scheme applicable at the relevant time, gratuity could be paid only to employees who had completed five years of service. Iqbal Singh had not satisfied this service requirement, and therefore no gratuity could be awarded under the scheme. While the tribunal observed that the company had, on a voluntary basis, granted gratuity to certain workmen with less than five years of service, the Court emphasized that the tribunal could not compel the company to breach its own gratuity scheme. In view of these considerations, the Court concluded that the order allowing one month’s

In this stage of the proceedings the Court first set aside the order that granted a basic‑salary amount as gratuity to Iqbal Singh. The Court then turned to the appeal filed by the workmen and examined each of the points raised by them individually. The first point concerned the operation of the pay‑scales. The workmen argued that the scales should have been applied retrospectively from June 1953 or August 1954 and that a point‑to‑point or otherwise principled adjustment should have been made, contending that the company had fixed the scales without any guiding principle. The tribunal examined these contentions and found that the new pay‑scales had been introduced in November 1954, that the demand for such scales was first made in August 1954, that in Bombay the new scales had been introduced in June 1953 and that a reference to the scales was made in January 1956. After considering all these factors, the tribunal concluded that there was no basis for altering the date of introduction of the new scales and allowed the date fixed by the company to stand. The Court saw no reason to disturb this tribunal order nor to interfere with the fixation of the scales, noting that the tribunal had examined the matter at length and its order was not unjustified. Consequently, the Court declined to interfere with the tribunal’s decision on this issue. The second contention raised by the workmen related to medical facilities. They maintained that no ceiling should have been placed on medical expenses and that a provision for dependants should have been included. The tribunal had fixed a ceiling on medical expenses, and the Court found no ground to disagree with that finding. Regarding the issue of dependants, the Court observed that although the demand had been raised and referred, both parties as well as the tribunal had overlooked it, and therefore the question had not been examined. The Court therefore held that it could not now address a matter that the tribunal should have considered, and that the question of dependants must await a future agreement between the parties or a subsequent award. The third point concerned the travelling allowance payable on transfer. The tribunal had carefully considered this matter, and the Court found no reason to differ with the tribunal’s conclusion. The fourth contention dealt with the bonus for the financial year 1954‑55. The workmen’s claim related to that year, and the company’s rules provided for a bonus as a condition of service. The only dispute was the appropriate date and salary to be used for calculating the bonus under those rules. The tribunal held that, for the year in dispute, the gross salary payable to an employee as of 1 April 1954 should be taken as the basis for the calculation. The Court affirmed that there was no basis to interfere with this tribunal order. We

In this case the Court indicated that it found no reason to disturb the tribunal’s order that prescribed the method for computing the bonus for the fiscal year 1954‑55. The workmen, however, argued that the tribunal had gone beyond the matter referred to it by stating that, for the purpose of calculating any bonus for the period after 31 March 1955, the existing rules set out in the management’s written statement would continue to apply. They maintained that the sole question placed before the tribunal concerned the bonus for the year 1954‑55 and that the tribunal therefore lacked authority to issue any directive concerning bonuses for later periods. The Court agreed with this submission and consequently set aside the portion of the award that dealt with the period after 31 March 1955. At the same time the Court clarified that it was not expressing any view on the substantive correctness of that direction for the subsequent period, merely that the tribunal had exceeded its jurisdiction. The workmen’s next grievance related to increments that had been withheld. The tribunal had examined this issue in detail, and the Court again found no basis to disturb the tribunal’s findings on that point. The following contention concerned the calculation of gratuity. The workmen contended that the gratuity should be computed on the basis of gross salary, whereas the company’s gratuity scheme used basic salary as its base. The tribunal observed that the employees were already receiving a double retiring benefit under the existing scheme. In light of this observation, the Court saw no reason to intervene and upheld the company’s gratuity scheme as it stood. Having considered each of the workmen’s contentions, the Court disposed of both appeals in the manner described and, in the circumstances, chose not to make any order regarding costs.