The Hindustan Times Ltd., New Delhi 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: 14 December 1962

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

In this case the matter before the Supreme Court was styled The Hindustan Times Ltd., New Delhi versus Their Workmen, and it was heard on 14 December 1962. The Bench comprised Justice J.C. Shah, Justice K.C. Das Gupta, Justice K.N. Wanchoo and Justice P.B. Gajendragadkar, and the judgment was delivered by Justice Das Gupta. The dispute originated as an industrial conflict that the Chief Commissioner of Delhi ordered to be referred to the Industrial Tribunal, Delhi, on 23 January 1958. The Tribunal rendered its award on 16 March 1959. Although the award contained many issues, the appeals that were filed by special leave were limited to selected points. The employer’s appeal contested the award on six specific heads: the scales of pay, the dearness allowance, the method of adjustments, the leave rules, the gratuity provision and the retrospective effect of the award. The workmen’s appeal also challenged the award on the scales of pay and the dearness allowance, and additionally raised objections to the award’s provisions concerning working hours, leave rules, night‑shift allowance, retirement age and the procedure for taking disciplinary action. At the hearing before the Court, however, the learned Attorney General, who appeared on behalf of the workmen, did not press for any modification of the award with respect to night‑shift allowance, leave rules, the disciplinary‑action procedure or the stipulated working hours.

The factual background revealed that, prior to the Tribunal’s award, the parties had attempted conciliation before the Conciliation Officer in Delhi. On 20 December 1957 they executed an interim agreement in which the management undertook to pay certain interim reliefs ranging from Rs 6 to Rs 10 per month, commencing in November 1957. One of the clauses of that agreement stipulated that the interim payments “will be adjusted against the final outcome of the demands by constitutional means.” In its award the Tribunal directed that the interim reliefs shall remain unaffected, effectively indicating that the adjustment contemplated in the agreement would not be carried out. The employer, relying on that direction, challenged the correctness of the Tribunal’s order in its appeal. The principal issues in dispute concerned the wage scale, the dearness allowance and the manner of adjusting existing employees onto the newly devised scales. Historical evidence showed that, since 1946, the company’s workmen had been placed on a consolidated wage scale in which no distinction was drawn between basic wage and dearness allowance, and that this scale had remained essentially unchanged except for special increments granted in 1948. By contrast, the Tribunal’s award introduced new wage scales for certain categories of workmen and, in several instances, created fresh scales after amalgamating more than one existing category. For example, railway despatchers, advertisers, box‑number sorters, filing clerks and bank clerks who were previously placed on the scale denoted as Rs 50‑4‑9‑EB‑4‑115, as well as junior clerks who were on a different scale, were assigned to a new scale of Rs 70‑5‑100‑EB‑5‑150. Similar amalgamations were effected for other groups of clerks, assistants, cashiers and record‑keepers, resulting in a new uniform scale of Rs 90‑200. The Tribunal also merged supervisors and other senior staff who had previously been on three distinct scales—Rs 125‑350, Rs 125‑300 and Rs 100‑250—into a single scale of Rs 100‑350, thereby altering both the starting salaries and maximum pay thresholds for various categories.

In the award, the employees who had previously been placed on the wage scale of Rs 60‑100‑EB‑4‑115 were transferred to a new scale identified as Rs 70‑5‑100‑EB‑5‑150. In a comparable manner, clerks, assistants, cashiers, record keepers and other staff who had been on either the Rs 80‑175 scale or the Rs 80‑203 scale were all moved to a single new scale of Rs 90‑200. For both of these groups the initial salary component was increased, and in the first group the ceiling of the scale was also raised. Supervisors and other grades who earlier fell under three separate scales—some on Rs 125‑350, some on Rs 125‑300, and some on Rs 100‑250—were combined and placed on a unified scale of Rs 100‑350. This restructuring inevitably resulted in a lower entry‑level salary for some individuals while the maximum salary remained unchanged for others. Employees in the Job Department, some of whom had been on the Rs 70‑115 scale and others on the Rs 100‑155 scale, were all placed on a new range of Rs 80 to Rs 155, which lowered the starting pay for certain workers but raised the upper limit for all. A similar reduction in entry‑level pay occurred for some job‑machinemen who had previously been classified under two scales, one at Rs 100‑175 and the other at Rs 75‑175. Assistant foremen in the Job Department who were formerly on the Rs 125‑175 scale were moved to a scale of Rs 125‑202. Where no amalgamation of categories was effected, the revised scale produced a modest increase in both the entry salary and the maximum amount in some instances, while in a few classifications there was no alteration at all.

The Court noted that it was unnecessary to provide a more detailed comparison of the old and new scales because the description already demonstrated that the changes generally favoured the workmen, albeit only slightly. The employer argued before the Court that there was no justification for any revision of the wage structure and that the Tribunal had erred in altering the existing scale. Conversely, the workmen contended that the modifications fell short of what was required. The Court further observed that determining an appropriate wage structure represents one of the most challenging functions of industrial adjudication. It explained that, on the one hand, considerations of social justice and the need to allocate a fair portion of national income to workers must be balanced against, on the other hand, the necessity of preserving the economic base that generates that income. The Court emphasized that improving workers’ living standards through a living wage can enhance the nation’s wealth, whereas excessive reduction of capitalist profits might discourage investment, weaken employment creation, and impede capital formation. The Court also remarked on the potential for wage increases to raise prices, which could affect the broader community.

In this case the Court observed that an increase in workmen’s wages often generates a rise in prices, and that such a rise can affect other members of the community and may even prejudice the living conditions of the workmen themselves. The Court added that the effect of higher prices on the country’s international trade could not always be ignored. Consequently the Court explained that numerous complex factors, some economic and some arising from social philosophy, give rise to conflicting considerations that must be kept in mind. The Court also noted that the process of valuing these many factors does not remain static. While international movements in the cause of labour have for many years influenced thinking—and sometimes even judicial thinking—in such matters, the emergence of an independent democratic India has influenced the matter even more profoundly. The Court cited the observations of Gajendragadkar, J., speaking for the Court in Standard Vacuum Refining Co., of India v. Its Workmen [[1961] S.C.R. 536, 543]: “In constructing a wage structure in a given case industrial adjudication does take into account to some extent considerations of right and wrong, propriety and impropriety, fairness and unfairness. As the social conscience of the general community becomes more alive and active, as the welfare policy of the State takes a more dynamic form, as the national economy progresses from stage to stage, and as under the growing strength of the trade union movement, collective bargaining enters the field, wage structure ceases to be a purely arithmetical problem. Considerations of the financial position of the employer and the state of national economy have their say, and the requirements of a workman living in a civilised and progressive society also come to be recognised.” The Court then described the standards that industrial adjudication has set for wage fixation. At the bottom of the ladder there is a minimum basic wage that the employer of any industrial labour must pay in order to be allowed to continue an industry. Above this is the fair wage, which may be roughly said to approximate the need‑based minimum, meaning a wage adequate to cover the normal needs of the average employee regarded as a human being in a civilised society. Above the fair wage is the “living wage”—a wage which will maintain the workman in the highest state of industrial efficiency, which will enable him to provide his family with all the material things needed for their health and physical well‑being, and enough to enable him to discharge his duties as a citizen. This definition was cited with approval by Justice Gajendragadkar in the Standard Vacuum case [[1961] S.C.R. 536, 543], from “The Living Wage” by Philip Snowden. The Court noted that while industrial adjudication would be happy to fix a wage structure that gives workmen a living wage, economic considerations render that goal only a dream for the future. For this reason the industrial tribunals in this country generally confine their horizon to fixing a fair wage, although even in that pursuit the economic factors must be carefully considered.

The Court observed that industrial tribunals in this country usually limit themselves to the objective of fixing a fair wage. However, even in that limited exercise, the tribunals must give careful thought to economic considerations. For this reason, the Court has repeatedly stressed that the wage problem must be examined on the basis of both the industry and the region, and that the ability of the industry to afford higher wages must be taken into account. The Court referred to earlier decisions, namely Crown Aluminium’s Case, Express Newspapers Ltd. Case and Lipton’s Case, as authorities that illustrate this approach.

Turning to the award of the Tribunal on the wage scale, the Court held that it was satisfied that all the relevant factors listed above had been considered by the adjudicator. Consequently, the Court found no justification for altering the award either in favor of the employer or in favor of the workmen. The award records that, before the Tribunal, the Company’s representative sought to devise a fair wage level that the Company could afford, while at the same time claiming that the existing wage structure was already quite fair “looking to the Company’s financial position as well as comparative rates prevailing in the other concern.” The Tribunal rejected the Company’s claim that the existing wage structure was fair, yet it also concluded that the wage system did not require the radical change alleged by the Union. The counsel appearing for the Company, Mr. Pathak, did not seriously contend that the present wage structure provided a fair wage to the employees; instead, he argued in general terms that there was no case for any revision of the wage structure. The Court noted that such an extreme proposition needed only to be mentioned in order to be rejected.

The Court further noted that at the time the Tribunal was dealing with the issue, the wage scale of the workers in this concern had remained essentially unchanged for almost twelve years. During those twelve years, the nation experienced profound social change that moved in favor of workers securing a larger share of national income. The period also saw the birth of a new India and the framing of a Constitution for a new democracy, whose purpose was “to secure to all its citizens justice, social and economic and political” and which, in Article 43, obliges the State to strive to secure to all workers, whether agricultural, industrial or otherwise, a living wage and working conditions that ensure a decent standard of life and full enjoyment of leisure and cultural opportunities. The Court held that the mere passage of time and these revolutionary developments would be enough to convince any reasonable person of the need to revise wage scales that, on their face, were far below the living wage and, in many cases, also below the fair wage, provided that the industry could bear the additional burden. The Court added that the case for revision became unavoidable when the further fact of a rise in the cost of living during the same period was taken into account.

During the period under discussion, the cost of living rose sharply. Using 1939 as the base year with an index of one hundred, the index had climbed to two hundred and eighty‑two by 1946, and it had further increased to three hundred and eighty‑nine by 1958. The record also shows that the index continued to rise after that date. It cannot be plausibly argued that the employer is unable to bear the cost of a higher wage scale. The Tribunal, in our view, was correct in holding that the material placed before it demonstrates that the Company is financially sound and profitable. We have examined the balance‑sheets and other financial documents submitted in the case and we concur fully with the Tribunal’s conclusion. The counsel for the petitioner, Mr. Pathak, faced a difficult task in trying to persuade the Tribunal that the Company could not sustain the burden of an increased wage scale; this difficulty was further heightened by the fact that the Company continued to earn substantial profits after the award was implemented, specifically in the financial years 1959‑60, 1960‑61 and 1961‑62.

When the Company obtained special leave to appeal to this Court, the stay of the Tribunal’s award was limited only to the portion that required the management to pay arrears of wages as determined by the award. The stay did not extend to the portion of the award that directed the payment of wages from the date of the award forward. Consequently, the management was ordered to pay the workmen, from the date of the award, wages calculated according to the wage scale fixed by the Tribunal. This meant that the wage scales prescribed by the Tribunal were put into effect from the award’s date, allowing this Court to assess the impact of those additional payments on the Company’s financial condition. The records show that after meeting the extra wage obligations, as well as paying bonuses and allocating amounts to reserves, the Company’s net profit for the year 1959‑60 rose to eight lakhs four thousand five hundred eight rupees. For the year 1960‑61 the net profit was eight lakhs forty‑four thousand six hundred twenty‑seven rupees, and for the year 1961‑62 the balance‑sheet reported a net profit of fifty‑nine thousand nine hundred fifty‑five rupees. These figures plainly indicate that the Company was thriving. Moreover, the Company owns its own aircraft, holds immovable property of considerable value, has built substantial reserves, and continues to generate healthy profits. Given the rising level of education in the country and the increasing awareness among the public, the Company’s future prospects also appear very promising. Taking all these factors into account, we are firmly of the opinion that Mr. Pathak’s contention that the Tribunal‑determined wage scale is excessively heavy for the Company to bear must be dismissed.

Equally untenable is Mr. Pathak’s subsequent argument that the wage scale fixed by the Tribunal places the Company at a disadvantage when compared with two other newspaper concerns operating in the Delhi region, namely the Times of India, Delhi, and the Statesman, Delhi.

The Court examined the wage scales of the two other newspaper concerns, namely the Times of India, Delhi and the Statesman, Delhi, and compared them with the wage scale fixed by the award for the Hindustan Times. In making the comparison the Court also took into account the dearness allowance that had been fixed by the Tribunal. The comparison revealed that, in certain categories, the Hindustan Times would have to pay its workmen a higher amount than the workmen in the same category at the Times of India, Delhi or the Statesman, Delhi, whereas in many other categories the Hindustan Times would pay a lower amount. The Court noted that the Times of India, Delhi and the Statesman, Delhi are much smaller units in the newspaper business than the Hindustan Times, as they operate essentially as extensions of the Times of India, Bombay and the Statesman, Calcutta respectively. Consequently, even where the award‑determined wage scale exceeded the rates paid by those smaller concerns, the Court held that this circumstance could not constitute a reason to alter the award in the Hindustan Times’ favour. After considering these matters the Court concluded that there was no basis at all for modifying the wage scale fixed by the award in favour of the Hindustan Times.

The workmen, through their representatives, argued vehemently that the increase granted by the award over the previous wage scale was insufficient to achieve justice. They pointed out that, despite being smaller concerns with weaker financial stability, the Times of India, Delhi and the Statesman, Delhi pay higher wages to certain categories of their workmen than those prescribed by the award. The Court observed the specific examples raised: for the category of Assistants the Times of India, Delhi pays a rate ranging from Rs 241 to Rs 402, while the Statesman, Delhi pays rates of Rs 190 to Rs 297 for some assistants and Rs 264 to Rs 463 for others, whereas the award scale for the same category is Rs 125 to Rs 375. The Court also noted that there were several additional instances in which the award’s wage scale was lower than the wages paid by the two Delhi concerns. The learned Attorney‑General further submitted that, because the Hindustan Times’ wage scale had remained essentially unchanged for twelve years and was clearly below a fair wage, and because even the smaller Delhi newspapers were paying higher rates to some workmen, the Tribunal should raise the scale for at least some categories. The Court acknowledged that there was some merit in this submission and remarked that the Tribunal had exercised caution in revising wage scales. Nonetheless, the Court emphasized that where the Tribunal had correctly applied the appropriate principles, as it had in the present case, the Court could not interfere with the award’s determinations.

In this case the Court observed that it customarily refrains from intervening in detailed matters of wage‑scale adjustments when it exercises the special jurisdiction conferred by Article 136 of the Constitution. The Court also noted that the Tribunal’s cautious approach to increasing the wage scales appeared to have shaped the directions it issued regarding the placement of the existing employees onto the new scale. By doing so, the Tribunal provided a measure of relief to the current employees that might otherwise have been achieved only through a broader increase in the wage scales. After weighing all of these considerations, the Court concluded that it would not be appropriate to alter the wage scales that the Tribunal had fixed in favour of the workmen. Regarding the issue of dearness allowance, the Court found that there was no dispute that the Tribunal had correctly awarded a uniform dearness allowance for all categories of workmen in the circumstances of the case. The Company, however, contended that the Tribunal had erred in setting the dearness allowance at twenty‑five rupees. The Tribunal’s reasoning for fixing the allowance at that amount was quoted as follows: “In view of the revised scales as now laid down, I think the same should further be supplemented in the circumstances stated above by a flat rate of dearness allowance in all cases, viz., Rs 25 with retrospective effect from the date of reference so that the lowest paid worker will start not less than Rs 75. I direct accordingly.” Counsel for the Company pointed out that, under the award, the lowest‑paid worker would receive a basic wage of at least sixty rupees, which, when combined with a twenty‑five‑rupee dearness allowance, would result in a total of eighty‑five rupees rather than the seventy‑five rupees mentioned by the Tribunal. The counsel argued that the Tribunal had miscalculated and that, having decided that the lowest paid worker should start at not less than seventy‑five rupees, the appropriate dearness allowance should have been fifteen rupees instead of twenty‑five. The Court observed that this argument overlooked the fact that the dearness‑allowance reference applied to all categories of workmen, whereas the reference to the wage scales excluded certain categories, such as mazdoors and canteen boys, who remained on the old scale of fifty‑three‑eighty‑five. Consequently, when the Tribunal considered the starting pay of the lowest paid worker for the purpose of fixing the dearness allowance, it necessarily took these excluded categories into account. Having determined that the lowest paid worker should receive a total of seventy‑five rupees comprising basic pay and dearness allowance, the Tribunal logically fixed the dearness allowance at twenty‑five rupees. The Court expressed the opinion that, while the Tribunal’s determination was proper, it would be desirable for the dearness allowance not to remain fixed at that single figure but to be adjusted in line with future considerations.

The Court observed that the purpose of a dearness allowance is to neutralise a portion of the increase in the cost of living. Consequently, the allowance should normally be fixed on a sliding scale so that it rises when the cost of living rises and falls when the cost of living falls. The Court referred to the decision in Workmen of Hindusthan Motors v. Hindusthan Motors ((1962) 2 L.L.J. 352) which makes the same observation. After considering all the circumstances of the present case, the Court directed that a sliding scale be attached to the dearness allowance of Rs 25 per month that was awarded by the Tribunal. The sliding scale was to operate on the basis that the allowance would be increased or decreased by Re 1 for every ten‑point change in the cost‑of‑living index from the base level of 400, with the 1939 index regarded as 100. The Court further ordered that this sliding scale should take effect from 1 April 1959.

The Court then turned to the question of adjusting the existing employees into the new wage scale. The Tribunal had previously stated that the adjustment in the new scales would be made with retrospective effect from the date of the reference, namely 23 January 1958, and that no employee should be adversely affected by the adjustment. The Tribunal also directed that the adjustment should follow the principles laid down by the Industrial Tribunal in the case of Caltex India Ltd., 1951 L.L.J. 654 at p. 659, read with paragraph 23 of the decision of the Labour Appellate Tribunal reported in 1952 L.L.J. 183 at p. 188. The Court noted that the Caltex India Ltd. case, decided by the Industrial Tribunal, West Bengal, provided the following detailed directions for the adjustment of employees into the wage scale fixed by the Tribunal: (1) all employees whose scale had been specified should be stepped up to the next stage above the present pay; a special increment equal to one increment in the new scale should be given for every three completed years of service; (2) employees whose salaries were below the minimum prescribed by the new scale would be pulled up to that minimum; (3) where an employee’s existing salary was higher than the amount he would be entitled to under the prescribed scale, the employee would not suffer any cut but would be stepped up to the nearest higher increment in accordance with the special increment provision; (4) after salaries were adjusted, no employee should be staggered and each employee would continue to receive future increments; and (5) if an employee was already drawing a salary higher than the maximum prescribed by the award, no reduction would be made to his salary. The Tribunal’s directions also included a deadline for making the adjustments. The Labour Appellate Tribunal later modified these directions by introducing two additional provisions, the first of which was that the maximum grade should not be exceeded.

The Tribunal’s modified directions required that (1) the wage ceiling for any grade must not be surpassed and (2) the basic wage that was actually being paid to an employee on the date the Tribunal rendered its award should remain untouched so as not to prejudice the employee. The employer challenged the clause that mandated a special increment equal to one increment in the new wage scale for every three years of completed service. The employer contended that such a provision might be sensible when a wage scale is being established for the first time, or when an existing scale is being replaced by a new scale whose increment rates are materially higher than those of the old scale. In contrast, the employer argued that where, as in the present case, the increments under the new scale are essentially the same as those under the old scale, the provision serves no purpose. The Court rejected this line of reasoning. It observed that, as earlier noted in the decision of French Motor Car Co., Ltd. v. Its Workmen ((1962) 2 L.L.J. 744), the appropriate adjustment to be made when setting wage scales—whether for a fresh scale or as a replacement for an existing one—must be determined by industrial adjudication after a full consideration of the surrounding circumstances. While it is conceivable that, in the absence of special circumstances, permitting a special increment based on service already rendered might appear unnecessary, the Tribunal, in the present matter, had carefully examined the situation before arriving at its decision. The Tribunal was aware that it had exercised great caution in raising the old wage scales and, in its view, it would be equitable to grant some relief to the employees already on the rolls by allowing an adjustment through the special increment, while simultaneously avoiding the imposition of higher wage rates on newly appointed staff. Given these considerations, the Court found no reason to disturb the Tribunal’s directions concerning the wage adjustment. The Court then turned to the objection raised by the Company in its appeal to the Tribunal’s order relating to the interim agreement. It recalled that the interim agreement had been negotiated between the parties while the dispute was before the Conciliation Officer. The agreement contained the following terms: the Management would provide interim relief to every employee, except working journalists, whose salary did not exceed four hundred rupees per month. The relief would consist of an advance payment ranging from six rupees to ten rupees per month, commencing in November 1957, and would be allocated according to the employee’s existing annual increment—for example, those receiving annual increments of three, four or five rupees would obtain six rupees, those receiving six rupees would obtain seven rupees, and so forth. The Court noted that this clause formed the basis for evaluating the Company’s subsequent challenge to the Tribunal’s direction on the interim relief.

The agreement contained a clause stating that, irrespective of an employee’s grade ceiling, each worker was entitled to receive an advance payment of either Rs 6, Rs 7, Rs 8 or Rs 10 per month as interim relief, depending upon his annual increment. The clause further specified that such advance payments would be adjusted against the final outcome of the present demands by “constitutional means”, meaning the Tribunal’s award. Consequently, any amount that the workmen had already received as an advance was required to be set off against the amount that the award later obliged the Company to pay to those same employees. The Tribunal, however, issued a direction holding that the interim relief would remain unaffected, effectively stating that the second part of the agreement – the obligation to adjust the advance against the final award – need not be complied with. The Court found no justification for such a direction. While it recognised that industrial adjudication may at times modify existing contracts between an employer and its workmen, it held that there was no authority to alter an agreement of this nature while the dispute remained unresolved. The Court observed that disregarding the clear promise made by the workmen’s representatives, that interim relief would be adjusted against the final settlement, was unfair to the Company and did not serve the workmen’s best interests. Moreover, allowing a Tribunal to disregard such an undertaking could undermine future interim settlements and might encourage parties to treat their commitments as non‑binding. The Court therefore set aside the Tribunal’s direction that the interim relief would remain unaffected and ordered that the adjustments stipulated in the agreement be carried out.

The discussion then turned to the issue of leave rules. The Company challenged the award provisions that required it to grant fifteen days of sick leave with full pay and allowances, with the possibility of accumulating up to six months, provided that a medical certificate from a registered practitioner was produced. The Company also opposed the award’s instruction that the existing practice of insisting on a prior application for casual leave should not be relaxed in situations where such a requirement could not be fulfilled due to emergent or unforeseen circumstances, and the direction allowing up to three days without a medical certificate. These objections formed the basis of the Company’s resistance to the specific leave‑related directives contained in the award.

In this matter, the Court observed that the management of the Company presently grants ten days of casual leave to employees classified as business staff and seven days of casual leave to employees in all other categories, while the Company provides no sick‑leave facility at all. The Court noted that counsel for the Company, Mr. Pathak, attempted to persuade the Court that, because the Employees’ State Insurance Act of 1948 applies to the Company and its workmen enjoy the benefits conferred by that statute, there was no need to make any specific provision for sickness leave. The Court accepted that the Act is indeed applicable and that the workmen receive its benefits, but it found that the existence of those benefits does not settle the question of whether a separate right to sick leave with full pay must be granted. The Court pointed out that the Act contains no provision granting leave on the ground of sickness; rather, section 46(1)(a) authorises periodical medical treatment for an insured person when certified by a duly appointed medical practitioner. The Court also referred to sections 47, 48 and 49, which deal with eligibility for sickness benefit and the extent of that benefit, and to section 56, which provides medical benefits to the insured workman or, in certain circumstances, to members of his family. It was therefore clear to the Court that, while the legislature intended to provide periodic sickness benefit and medical treatment, it did not intend to replace those benefits with a right to full‑pay sick leave.

The Court further considered the contention that the Tribunal’s direction concerning sick leave violated the Delhi Shops and Establishments Act of 1954. The Court acknowledged that a large number of the workmen covered by the reference are governed by the leave provisions of that Act. Section 22 of the Act limits the total of sick or casual leave with wages to twelve days in a year and expressly prohibits the accumulation of such leave. Consequently, the Court held that the Tribunal had acted beyond its authority when it fixed the period of sick leave at fifteen days and allowed those days to be accumulated for the workmen to whom the Delhi Shops and Establishments Act applies. The Court therefore set aside that part of the award and directed that the Company must grant, to those workmen, a combined entitlement of twelve days of sick or casual leave per year with full pay and allowances, and that this entitlement may not be accumulated. Additionally, the Court expressed the view that it would be inappropriate to maintain two different leave regimes—one for workmen covered by the Delhi Shops and Establishments Act and another for those who are not—because such a distinction would likely cause discord. Accordingly, the Court indicated that the same twelve‑day, non‑accumulative leave provision should apply uniformly to all categories of workmen.

In this case the Court observed that maintaining two separate sets of leave rules—one for workmen governed by the Delhi Shops and Establishments Act, 1954 and another for those who were not—was likely to create considerable discord and dissatisfaction among the workforce. Consequently, the Court directed that the same entitlement of twelve days of sick or casual leave per year, with full pay and allowances, should apply to all categories of workmen, and that such leave should not be allowed to accumulate. Regarding the Tribunal’s direction that the requirement for prior permission to take casual leave should be relaxed in unforeseen emergencies and that no medical certificate should be demanded for up to three days, the Court found no justification for that alteration. The Court noted that the Company’s existing leave policy required employees to obtain prior permission from the head of the department and the Establishment Manager before taking casual leave, but also provided that in cases of sudden illness the employee should inform the department head or manager in writing as soon as practicable, stating the expected duration of absence. The Court considered this provision reasonable because it balanced the need for managerial control with the employee’s right to take emergency leave without prior approval. Therefore, the Court set aside the Tribunal’s additional directions concerning the relaxation of prior permission and the exemption from medical certification, holding that the Company’s rule was sufficient. On the issue of gratuity, the only substantive argument presented by counsel for the workmen was that the gratuity scheme devised by the Tribunal would place an undue burden on the Company’s finances. The Court reiterated its earlier finding that the Company’s financial position was strong, stable, and prosperous, with favorable future prospects. Accordingly, the Court concluded that the Tribunal’s gratuity scheme was neither excessively favorable to the workmen nor an unreasonable strain on the Company’s resources. The Court also addressed a specific provision of the gratuity scheme that denied any gratuity entitlement to an employee dismissed for misconduct. Citing its own prior decisions, the Court affirmed that it is inappropriate to completely deprive an employee of accrued gratuity solely because of dismissal for misconduct. Instead, the proper approach is to deduct from the gratuity amount any financial loss caused to the employer by the misconduct. However, because the workmen had not appealed the Tribunal’s gratuity scheme, the Court refrained from modifying that particular provision in the present order.

The Court observed that the workmen had not appealed against the award concerning the gratuity scheme prepared by the Tribunal; consequently, the Court considered it inappropriate to alter that part of the award in the manner previously suggested. Turning to the matter of the retirement age, which formed the subject of the workmen’s appeal, the Court noted that there existed a dispute over what the prevailing rule actually was. The workmen, in their written statement to the Tribunal, asserted that no formal rule governing retirement age existed within the Company at the time of the dispute. They therefore urged that a uniform retirement age of sixty years be fixed for all employees. By contrast, the Management, through its written statement, contended that the current super‑annuation arrangement stipulated a retirement age of fifty‑five years and that this fixed age was appropriate and should not be altered. The Court found that the record contained very little material to resolve this factual controversy. Examination of appointment letters on file showed that for certain appointments made in the year 1955 the retirement age of fifty‑five was expressly mentioned. However, appointment letters issued prior to 1955 did not contain any reference to a retirement age. Because of this gap, the Court could not discern how the Tribunal had concluded that the “existing retirement age” was fifty‑five years. Acting on that assumption, the Tribunal directed that the retirement age of fifty‑five should remain in force but that workers might be permitted to continue in service up to sixty years of age if they were found fit, leaving any further extensions to the discretion of the Management.

The workmen’s counsel, identified as the learned Attorney‑General, contested the Tribunal’s assumption that a universal retirement age of fifty‑five applied to the majority of the workmen. He argued that, except for a limited number of employees appointed after 1955, no retirement age was specified either in the individual appointment letters or in the Company’s standing orders. For those employees for whom no retirement age had been fixed, the Attorney‑General relied upon the Supreme Court’s decision in Guest Keen, Williams Private Ltd. v. P. J. Sterling. In that precedent, the Court held that it would be unfair to impose a super‑annuation age on earlier employees by means of a later standing order. The Labour Appellate Tribunal in that case had described it as unreasonable and inequitable to introduce a retirement age of fifty‑five for prior employees when, at the time of their recruitment, no such limitation existed. The Supreme Court, in turn, declined to overturn the Labour Appellate Tribunal’s finding. The present Court therefore proceeded to consider the next issue, namely whether the legal position required that no super‑annuation rule be imposed on those previous employees who had been hired without a stipulated retirement age.

In this case the Court observed that it was necessary to fix a superannuation age even for the employees who were hired before any retirement provision existed. The Court quoted its own reasoning: “In our opinion it is necessary to fix the age of superannuation even with regard to the prior employees, and we feel no difficulty in holding that it would not be unfair or unreasonable to direct that these employees should retire on attaining the age of 60. An option to continue in service even thereafter which the respondent claimed is wholly unreasonable and is entirely inconsistent with the notion of fixing the age of superannuation itself. Once the age of superannuation is fixed it may be open to the employer for special reasons to continue in its employment a workman who has passed that age: but it is inconceivable that when the age of superannuation is fixed it should be in the option of the employee to continue in service thereafter.” The Court further explained that, once a superannuation age is set, the employer alone may, for exceptional reasons, retain a worker who has reached that age, but the employee cannot claim a right to remain in service after the prescribed age. Accordingly, the Court held that the appropriate retirement age for the earlier employees should be sixty years rather than fifty‑five years, while the rule of fifty‑five years would apply to all employees who joined after the relevant standing orders came into force.

The Court noted that, assuming most employees currently lacked any prescribed retirement age, the Tribunal was empowered by the earlier authority to determine a superannuation age for them as well. However, the Tribunal’s decision that the retirement age should be fifty‑five years was defective because it rested on the mistaken premise that a retirement age of fifty‑five already existed. The Court therefore examined the matter itself. It observed that the Union’s representative had suggested a retirement age of fifty‑eight years, which could be extended to sixty years in appropriate cases, and that the Company’s counsel did not seriously contest the fairness of fixing the retirement age at fifty‑eight years in light of contemporary circumstances. Consequently, the Court set aside the Tribunal’s award on the retirement‑age issue and fixed the retirement age at fifty‑eight years, subject to the condition that the Company could, for special reasons, continue employing a workman who had passed that age. This rule was directed to apply to all employees of the Company. The Court then turned to the question of the award’s retrospective effect. Under section 17A of the Industrial Disputes Act, 1947, an award takes effect on the date specified in it, and if no date is specified, it becomes effective on the date it becomes enforceable. The Court affirmed that, even without a specific date being mentioned, an industrial tribunal may, at its discretion, fix a commencement date. In the present case, the parties had disputed whether the award should operate retrospectively from April 1, 1956, and the Court recorded that the Tribunal had indeed considered this issue as part of the reference.

The Court examined the question whether all of the reliefs claimed by the workmen should be applied retrospectively from 1 April 1956 and what directions were necessary to give effect to such a retrospective operation. The Tribunal had rejected the workmen’s request that its award be made effective from April 1956. Instead, wherever the Tribunal granted relief, it directed that the award should become operative from the date on which the reference was made, namely 23 January 1958. Counsel for the Company argued that there was no reason for the award to be given effect to any date earlier than the date of its pronouncement. The Court was not persuaded by that submission. It held that no single formula could be prescribed for the date from which a Tribunal’s award should take effect. The appropriate date must be decided by the Tribunal after considering the specific facts and circumstances of each case. The Court noted that in some earlier decisions it had allowed an award to take effect from the date when the demand was first made, while in other cases it had left undisturbed Tribunal orders that made the award effective from the date of the award itself. The Court also observed that on a few occasions it had modified a Tribunal’s award, but it could not discern any settled general principle governing the choice of an effective date. Moreover, the Court considered it neither feasible nor desirable to lay down sweeping principles for matters that require a careful appraisal of the peculiar facts of each case. Consequently, the Court found no justification to interfere with the Tribunal’s direction that all reliefs granted in the present case should become effective from the date of the reference, that is, 23 January 1958.

Accordingly, the Court allowed both appeals in part. It modified the Tribunal’s award with respect to the dearness allowance, the leave rules and the retirement age, and it also adjusted the interim relief as previously mentioned. In all other respects the award was confirmed. The modification concerning the dearness allowance was ordered to take effect from 1 April 1959, and the modifications affecting the leave rules and the retirement age were also stipulated to become effective from that same date. Each party was directed to bear its own costs in both appeals. The final order therefore read that the appeals were allowed in part, with the specific modifications and cost directions as set out above.