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: Civil Appeals Nos. 489 and 490 of 1961

Decision Date: 14 December 1962

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

In this case the Supreme Court of India considered a petition filed by The Hindustan Times Ltd., New Delhi against its workmen, the petition being heard on 14 December 1962. The bench comprised Justice K.C. Das Gupta, Justice P.B. Gajendragadkar, Justice K.N. Wanchoo and Justice J.C. Shah. The judgment was reported as 1963 AIR 1332 and 1964 SCR (1) 234, and it has been cited in numerous subsequent decisions. The dispute originated when the Chief Commissioner of Delhi referred an industrial dispute to the Industrial Tribunal, Delhi, which rendered its award on 16 March 1959. Both the appellant, The Hindustan Times Ltd., and the respondents, the workmen, expressed dissatisfaction with the award and sought special leave to appeal to this Court. The appellant challenged the award on several grounds, including the scales of pay, the method of calculating dearness allowance, various adjustments, the leave rules, the provision of gratuity and the retrospective operation of the award. The respondents, on the other hand, contested the award concerning the prescribed working hours, the leave rules and the retirement age. The Court observed that while social justice requires that workmen receive a fair share of the national income that they help to generate, this requirement must not be pursued in a manner that exhausts the source of national income itself. Excessive erosion of capitalist profits, it was held, could discourage capital formation and thereby prejudice national economic interests. The Court found that the Tribunal had applied the correct principles in framing its award and accordingly declined to disturb the award on most of the issues raised. However, the Court held that the Tribunal erred in fixing a dearness allowance at a flat rate of Rs 25. Since the purpose of dearness allowance is to neutralise fluctuations in the cost of living, it should ordinarily be linked to a sliding scale rather than a fixed figure. The Court also rejected the appellant’s contention that, because of the provisions of the Employees’ State Insurance Act, 1948, no provision for sickness leave was necessary. It was pointed out that while the Act provides for periodical payments to an insured worker in cases of sickness, medical treatment or attendance, the Legislature did not intend that these benefits replace the workmen’s right to obtain leave on full pay on grounds of sickness.

The Court observed that under the Employees' State Insurance Act of 1948 the legislature did not intend to replace the statutory benefits with a workman's entitlement to full‑pay sick leave. It further held that for those employees to whom the Delhi Shops and Establishments Act, 1954, applied, the Tribunal had acted illegally by fixing the period of sick leave at fifteen days and by permitting its accumulation. Accordingly, the appellant was directed to grant the workmen covered by the 1954 Act a combined entitlement of twelve days of sickness or casual leave, with full pay and allowances, and to prevent any accumulation of such leave. The Court found it undesirable to maintain two different leave regimes for two classes of workmen—those subject to the 1954 Act and those not—so it ordered the same twelve‑day, non‑cumulative rule to apply to all other employees as well. In addition, the Court held that the gratuity scheme formulated by the Tribunal was neither excessively favorable to the workmen nor did it impose an undue burden on the Company’s financial resources. Regarding the clause that dismissed employees for misconduct would receive no gratuity, the Court advised that the appropriate provision should allow gratuity to be paid after deducting any loss caused by the employee’s misconduct. The Tribunal’s award concerning the retirement age was set aside, and the retirement age was fixed at fifty‑eight years, subject to a proviso allowing the Company to retain any employee who had already passed that age. This rule was declared applicable to all employees of the Company without discrimination, and it would govern their service conditions uniformly. The Court noted that no universal formula could be prescribed for the date from which a Tribunal’s award should become effective, as each case required examination of its specific circumstances. Consequently, there was no justification for interfering with the Tribunal’s direction that, in the present case, the reliefs awarded should take effect from the date of the reference. The Court referred to a series of earlier decisions, including Standard Vacuum Refining Co. of India v. Its workmen (1961) S.C.R. 536, Crown Aluminium Works v. Its workmen (1958) S.C.R. 651, Express Newspapers Ltd. v. Union of India (1959) S.C.R. 12, Lipton Ltd. v. Their Workmen (1959) S.C.R. Supp. 2 150, Hindustan Motors v. Hindustan Motors (1962) 2 L.L.J. 352, French Motor Car Co. v. Their Workmen (1962) 2 L.L.J. 744, and Guest Keen Williams (P) Ltd. v. P.J. Sterling (1961) 1 S.C.R. 348. The judgment was recorded as a civil appellate jurisdiction matter, concerning Civil Appeals Nos. 489 and 490 of 1961, which were appeals by special leave from the award dated 16 March 1959.

In this case the parties were before the Second Industrial Tribunal, Delhi, in Reference I.D. No. 20 of 1958. Counsel for the appellant in Civil Appeal No. 489 of 1961 and counsel for the respondent in Civil Appeal No. 490 of 1961 were G.S. Pathak, S.T. Desai, M.L. Sethi, B. Dutta and Anand Prakash. Counsel for the respondents in Civil Appeal No. 489 of 1961 and counsel for the appellants in Civil Appeal No. 490 of 1961 were represented by the Attorney‑General for India together with other counsel. The judgment was delivered on 14 December 1962 by Justice D.A. Gupta. The two appeals, granted by special leave, were filed respectively by the employer and by the workmen. Both appeals arose from an industrial dispute that had been referred to the Industrial Tribunal, Delhi, by an order dated 23 January 1958 issued by the Chief Commissioner of Delhi. The Tribunal rendered its award on 16 March 1959. Although the reference contained many matters, the Court limited its consideration to a select number of issues. The employer contested the award on six points: the scales of pay, the dearness allowance, the method of adjustments, the leave rules, the gratuity provision, and the retrospective operation of the award. The workmen also challenged the award with respect to the scales of pay and the dearness allowance, and additionally raised objections concerning working hours, leave rules, night‑shift allowance, retirement age, and the procedure for disciplinary action. At the stage of the hearing before this Court, however, the Attorney‑General, appearing on behalf of the workmen, did not press the claims for modification of the award relating to night‑shift allowance, leave rules, the disciplinary procedure, or working hours. The record shows that, when the dispute was before the Conciliation Officer, Delhi, the parties reached an interim agreement on 20 December 1957. Under that agreement the management undertook to pay certain interim reliefs ranging from six rupees to ten rupees per month, commencing in November 1957. One term of the agreement stipulated that these payments would be adjusted against the final outcome of the demands by constitutional means. The Tribunal, in its award, directed that the interim relief would remain unaffected. Interpreting that direction as a prohibition on adjusting the interim payments as originally agreed, the employer challenged the correctness of the Tribunal’s direction. The principal matters in dispute were the determination of the proper wage scale, the calculation of the dearness allowance, and the manner of adjusting existing employees into the new scales. Historical evidence indicated that from 1946 onward 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 scale had remained essentially unchanged except for special increments granted in 1948. By the award the Tribunal introduced new wage scales for certain existing categories of workmen and, in some instances, created entirely new scales, after

In the award the Tribunal combined more than one existing category of employees and placed the resulting group on a new wage scale. Thus railway despatchers, advertisers, box‑number sorters, filing clerks and bank clerks who previously were on the scale of Rs 50‑4‑90‑EB‑4‑115, together with junior clerks who had been on Rs 60‑100‑EB‑4‑115, were all placed on a new scale of Rs 70‑5‑100‑EB‑5‑150. A similar amalgamation was made for clerks, assistants, cashiers, record keepers and other staff, some of whom had been on the Rs 80‑175 scale and some on the Rs 80‑203 scale; all of these employees were now placed on a new scale of Rs 90‑200. In each of these two instances the starting salary was increased, and for the first group the maximum salary was also raised. Supervisors and other personnel who had previously been on three separate scales – Rs 125‑350, Rs 125‑300 and Rs 100‑250 – were merged into a single group that now draws a salary on the Rs 100‑350 scale. This change results in a lower starting salary for some individuals while preserving the higher maximum for others. In the department of job IDaftries, workers who were on Rs 70‑115 and others on Rs 100‑155 were placed on a new scale ranging from Rs 80 to Rs 115, which lowers the starting salary for some employees but raises the maximum for all. A comparable reduction in starting salary occurred for certain machinemen who had been on two scales, Rs 125‑175 and Rs 75‑175 respectively. Assistant foremen in the same department who were on Rs 125‑175 were moved to a scale of Rs 125‑202. Where no amalgamation was required, the new scale produced a modest increase in both the entry‑level and the ceiling salary in a few cases, while in some categories the wage structure remained unchanged. The Court considered that a detailed tabulation of every difference between the old and new scales was unnecessary, because the description already indicated that the Tribunal’s changes generally favoured the workmen, albeit only slightly. The employer argued before the Court that there was no justification for any revision and that the Tribunal erred in altering the existing wage scales. Conversely, the workmen contended that the modifications did not go far enough. The Court observed that fixing a wage structure is one of the most difficult tasks industrial adjudication must confront, since it must balance the demands of social justice and the need to secure a fair share of national income for workers with the necessity of preserving the source of that income. The Court further noted that better living conditions for workers, achievable only through a “living wage,” can enhance the nation’s wealth, whereas excessive curtailment of capitalist profits might deter investment, impair capital formation, and ultimately harm both the broader community and the workers themselves.

The Court observed that excessive reduction of the profits of capital owners could encourage the withdrawal of capital from productive employment and could also adversely affect the formation of capital. It further noted that an increase in the wages of workmen often leads to a rise in prices, which may in turn impact other members of the community and may even harm the living standards of the workmen themselves. The Court added that such a price increase can also influence the nation’s international trade and therefore cannot be ignored. It explained that many complex factors—some economic and some arising from social philosophy—create conflicting considerations that must be kept in mind. The Court said that the assessment of these numerous factors does not remain fixed but changes over time. It remarked that international labour movements have, for many years, influenced thinking, and at times even judicial thinking, on such matters, and that in this country the emergence of an independent democratic India has profoundly deepened this influence. The Court quoted the observation of Gajendragadkar, J., speaking for the Court in Standard Vacuum Refining Co. of India v. Its Workmen (1), that in constructing a wage structure a tribunal takes into account considerations of right and wrong, propriety and impropriety, fairness and unfairness. He explained that as the social conscience of the community becomes more active, as the State’s welfare policy becomes more dynamic, as the national economy advances, and as the trade‑union movement grows stronger, collective bargaining enters the field and wage structure ceases to be a purely arithmetic problem. He added that the financial position of the employer, the state of the national economy, and the requirements of a workman living in a civilised and progressive society all have a say. In attempting to honour both social philosophy and economic necessity, the Court said industrial adjudication has set certain standards for wage fixation. At the lowest level it identified a minimum basic wage that any industrial employer must pay in order to continue the industry. Above that level it placed a fair wage, which it described as roughly equivalent to a need‑based minimum, meaning a wage adequate to meet the normal needs of the average employee regarded as a human being in a civilised society. Above the fair wage it identified a “living wage,” which it defined as a wage that will maintain the workman in the highest state of industrial efficiency, enabling him to provide his family with all material things required for health and physical well‑being, and sufficient to allow him to fulfill his duties as a citizen. The Court cited this definition with approval by Justice Gajendragadkar in the Standard Vacuum Company case (1), referencing “The Living Wage” by Philip Snowden and the passage from [1961] S.C.R. 536, 543. While industrial adjudication will be

The Court noted that tribunals would be pleased to create a wage structure that would give workmen a living wage, but economic realities made such a goal merely a future aspiration. Consequently, industrial tribunals in the country generally limited themselves to the objective of fixing a fair wage, while still being required to examine economic factors carefully. For this reason, the Court had repeatedly emphasized that the wage problem must be assessed on the basis of both industry and region, and that the paying capacity of the industry must be given serious consideration, as earlier decisions such as Crown Aluminium’s Case, the Express Newspapers Ltd. case, and the Lipton’s case had directed. After reviewing the Tribunal’s award concerning the wage scale, the Court was satisfied that the adjudicator had taken into account all of the relevant considerations, and therefore found no justification for altering the award either in favor of the employer or in favor of the workmen.

The award recorded that, before the Tribunal, the Company’s representative had sought to evolve a fair wage level that lay within the Company’s paying capacity, yet at that time he contended that the existing wage structure was already quite fair, observing the Company’s financial position and the comparative rates prevailing in other concerns. The Tribunal, however, rejected the Company’s claim that the existing wage structure was fair, while simultaneously holding that the wage system did not require the radical change alleged by the Union, citing authorities from 1961, 1939, 1958 and 1959. The counsel appearing for the Company did not seriously argue that the present wage structure provided a fair wage; instead, he broadly asserted that no case existed for any revision of the wage structure, a proposition the Court deemed extreme and worthy of dismissal.

At the time the Tribunal examined the issue, the wage scale for the workmen in this concern had remained practically unchanged for almost twelve years. During those twelve years, the nation experienced momentous social change that advanced the idea that workmen should obtain a larger share of national income. The period also saw the birth of a new India and the framing of a Constitution intended to secure justice, social, economic and political rights for all citizens, with Article 43 directing the State to endeavour, by suitable legislation or economic organization, to secure a living wage and decent conditions of work for all workers, ensuring a respectable standard of life and the full enjoyment of leisure, social and cultural opportunities. The Court observed that the mere passage of time and these revolutionary changes should convince any reasonable person of the necessity to revise wage scales that, on their face, remained far

In this case the Court observed that the wage scale fixed by the Tribunal was lower than the “living wage” and, in many instances, also lower than the “fair wage,” assuming that the industry could accommodate the additional cost. The Court noted that the argument for revision became unavoidable when the steep rise in the cost of living during the relevant period was taken into account. Using 1939 as the base year with an index of one hundred, the index had climbed to two hundred eighty‑two by 1946 and further to three hundred eighty‑nine by 1958, with further increases thereafter. The Court rejected any suggestion that the concern could not bear the burden of a higher wage scale, agreeing with the Tribunal’s finding that the material on record demonstrated the Company’s prosperity and financial stability. After examining the balance sheets and other documents, the Court affirmed that conclusion without hesitation. It observed that Mr. Pathak’s attempt to demonstrate the Company’s inability to shoulder the increased wage burden was rendered more difficult by the discovery that, even after the award’s implementation, the Company posted substantial profits in the years 1959‑60, 1960‑61 and 1961‑62. Moreover, when the Company obtained special leave to appeal, the Tribunal’s award was stayed only concerning the payment of arrears, while the direction to pay wages from the award date remained effective, allowing the Court to assess the impact of the additional payments on the Company’s finances.

The Court then detailed how the implementation of the wage scales affected the Company’s earnings. After meeting the extra charges, paying bonuses and making appropriations to reserves, the net profit for the financial year 1959‑60 amounted to Rs 8,04,508. For the year 1960‑61 the profit rose to Rs 8,44,627, and for 1961‑62 the balance sheet showed a profit of Rs 59,955. These figures, together with the Company’s ownership of its own aeroplanes, possession of valuable immovable property, and the accumulation of substantial reserves, clearly indicated that the Company was prospering. The Court further noted that, despite these assets and profits, the Company continued to generate good earnings. It added that, given the progress of education in the country and the increasing awareness among the public, the Company’s future prospects appeared equally bright. Considering all these circumstances, the Court was of the clear opinion that Mr. Pathak’s contention that the Tribunal‑fixed wage scale was too heavy a burden for the Company to bear could not be sustained.

In this case the Court rejected Mr Pathak’s argument that the wage scale fixed by the Tribunal was too burdensome for the Hindustan Times Company to bear. The Court also found the subsequent contention of Mr Pathak – that the Tribunal‑determined wage scale operated disadvantageously for the Company when compared with two other newspaper concerns in the Delhi region, namely the Times of India, Delhi and the Statesman, Delhi – to be untenable. To evaluate the latter claim the Court compared the wage scales of the two smaller concerns with the wage scale imposed by the award, taking into account the dearness allowance as fixed by the Tribunal. The comparison revealed that, although in certain instances the Hindustan Times would have to pay its workmen more than the corresponding workmen of the Times of India, Delhi and the Statesman, Delhi, in many other instances the payment would be lower. The Court further noted that the Times of India, Delhi and the Statesman, Delhi are considerably smaller newspaper units than the Hindustan Times and function essentially as extensions of the Times of India, Bombay and the Statesman, Calcutta respectively; therefore any disparity in favour of the smaller concerns could not justify altering the award for the larger Company. Consequently the Court concluded that no basis existed for modifying the wage scale fixed by the award in favour of the Hindustan Times. On the other side, the workmen’s representatives argued vigorously that the increase granted by the award over the previous scale fell far short of justice. They pointed out that even the smaller and financially weaker concerns, the Times of India, Delhi and the Statesman, Delhi, paid higher wages to certain categories of workmen than those stipulated by the award. For example, the rate for Assistants at the Times of India, Delhi was Rs 241‑402, while at the Statesman, Delhi it ranged from Rs 190‑297 to Rs 264‑463, whereas the award fixed a scale of Rs 125‑375. Several other categories showed similar discrepancies with the award’s rates being lower than those paid by the two Delhi newspapers. The learned Attorney‑General further urged that, because the Hindustan Times’ wage scale had remained virtually unchanged for twelve years and was indisputably below a fair wage, and because even smaller regional concerns paid more to some workmen, the Tribunal’s wage scale should be raised at least for certain categories. The Court acknowledged that there was some merit in this contention, noting that the Tribunal had exercised caution in revising wage scales. However, the Court emphasized that when the Tribunal applied the proper principles, this Court ordinarily refrained from interfering with such detailed determinations under its special jurisdiction, and therefore it declined to modify the wage scales in favour of the workmen.

In this case, the Court observed that the Tribunal had been rather cautious in revising the wage scales. Nevertheless, the Court noted that where the Tribunal had applied the proper principles, as it had done here, the Court’s usual practice is not to interfere with such detailed matters while exercising its special jurisdiction under Article 136 of the Constitution. The Court also found that the Tribunal’s caution in raising the wage scales appeared to have shaped the directions it gave concerning the adjustment of the present employees into the wage scale. By doing so, the Tribunal had provided some relief to the existing employees that might otherwise have been achieved by an outright increase in the wage scale. After considering all these facts, the Court concluded that it would not be appropriate to modify the wage scales fixed by the Tribunal in favour of the workmen.

Regarding the question of dearness allowance, the Court noted that there was no dispute that, under the circumstances of the present case, the Tribunal had correctly awarded a flat-rate dearness allowance to all categories of workmen. However, the Company contended that the Tribunal had made an obvious error by fixing the dearness allowance at Rs. 25/-. The Tribunal’s reasoning for fixing 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/-. 1 direct accordingly.” Counsel for the Company, Mr. Pathak, pointed out that the lowest‑paid worker for whom the wage scales had been fixed would receive a minimum of Rs. 6l0/- under the award, which, when combined with the Rs. 25/- dearness allowance, would result in a starting total of Rs. 85/-, not Rs. 75/-. Mr. Pathak argued that the Tribunal had miscalculated and that, having decided that the lowest paid worker should start at no less than Rs. 75/-, the dearness allowance should have been set at Rs. 15/- instead of Rs. 25/-. The Court noted, however, that this argument overlooked the fact that the reference to dearness allowance covered all categories of workmen, whereas the reference to scales of pay excluded certain categories, namely mazdoors and canteen boys, who remained on the older scale of Rs. 50-3-85. Consequently, when the Tribunal considered the question of dearness allowance, it was clearly thinking of the starting pay of the lowest paid worker within those excluded categories. Having concluded that the lowest paid worker should start at Rs. 75/- as the combined amount of basic pay and dearness allowance, the Tribunal’s necessary conclusion was to fix the dearness allowance at Rs. 25/-.

The Tribunal had fixed a dearness allowance of Rs 25 per month. The Court considered that leaving the allowance at a fixed amount was inappropriate and that it should instead operate on a sliding scale. As observed in the earlier case of Workmen of Hindusthan Motors v. Hindusthan Motors, the object of a dearness allowance is to neutralise the effect of changes in the cost of living; consequently it is normally expected to vary with the rise and fall of living expenses. After examining all the facts of the present matter, the Court directed that a sliding scale be attached to the Rs 25 allowance. Accordingly, the allowance would be adjusted upward or downward by Rs 1 for every ten‑point change in the cost‑of‑living index, using 400 as the base and treating the 1939 index as 100. This sliding scale was ordered to take effect from 1 April 1959. The Court then turned to the issue of how the existing employees should be incorporated into the newly fixed scale. The Tribunal had already stated that the adjustment to the new scales would be retrospective to the date of the reference, that is, 23 January 1958, and that no employee should be placed at a disadvantage. It further directed that the adjustment follow the principles set out in the Caltex India Ltd. case and the Labour Appellate Tribunal decision cited in paragraph 23 of that judgment. In the Caltex India Ltd. case, the Industrial Tribunal of West Bengal had laid down the following method for moving employees onto a new wage scale: first, every employee whose current pay fell within the scale should be moved up to the next higher step of that scale; second, a special increment equal to one step of the new scale should be granted for every three completed years of service; third, any employee whose salary was below the minimum prescribed by the new scale should be raised to that minimum; fourth, if an employee’s existing salary exceeded the amount he would be entitled to under the new scale, his salary would not be reduced but he would be moved up to the nearest higher step with the applicable increments; fifth, after these adjustments, no employee’s salary should be staggered and all should continue to receive future increments; finally, any employee already drawing a salary higher than the maximum prescribed by the award would not suffer any reduction. The Court affirmed that these directions should be applied in the present case.

In this case the Court noted that the Labour Appellate Tribunal had set a deadline for making the wage‑adjustment and had altered the original directions by adding two specific provisions. The first added provision required that no employee’s grade should be raised above the maximum grade stipulated in the award. The second provision protected the basic wage that an employee was receiving on the date the Tribunal rendered its award, ensuring that this basic wage would not be diminished to the employee’s prejudice. The employer challenged the part of the Tribunal’s scheme that prescribed a special increment of one increment in the new scale for every three completed years of service. The employer argued that such a provision would be suitable only where a wage scale was being fixed for the first time, or where the new scale’s rate of increment was substantially higher than that of the old scale, but not where the increments under the new and old scales were essentially the same. The Court was not persuaded by this argument. Referring to a recent decision in French Motor Car Co., Ltd. v. Its Workmen, the Court reiterated that the question of what adjustment is appropriate—whether the scale is being fixed for the first time or is replacing an existing scale—must be decided by industrial adjudication after a full consideration of all the circumstances of the case. While it may be true that, in the absence of any special circumstances, an adjustment of the type allowed here—granting a special increment based on service already rendered—might not be appropriate, the Tribunal had, in reaching its decision, taken into account its own cautious approach to raising the old wage scales. The Tribunal evidently concluded that it would be equitable to provide some relief to the existing employees through such an increase as part of the adjustment, while at the same time avoiding the imposition of higher wage rates on new hires. In view of these considerations the Court saw no justification for interfering with the Tribunal’s directions on adjustment. The Court then turned to the objection raised by the Company in its appeal to the Tribunal’s direction concerning the interim agreement. The Court recalled that this agreement had been reached between the parties while the dispute was before the Conciliation Officer. The relevant portion of the agreement was quoted as follows: “It is hereby agreed between the parties that: 1. The Management agrees to make interim relief on the following terms to every employee, excluding working journalists, drawing salary up to Rs. 400 per month (i) Advance payment ranging between Rs. 6/- to Rs. 10/- per month beginning from the month of November, 1957 in the following manner: (a) Those…”

In the agreement that had been reached between the parties while the dispute was before the Conciliation Officer, the management promised to make interim payments to each employee, except working journalists, whose salary was up to Rs 400 per month. The amount of the interim payment depended on the employee’s annual wage increment. Employees whose annual increment fell between Rs 3 and Rs 4 received an advance of Rs 6 per month; those whose increment was between Rs 4 and Rs 5 received Rs 6; those whose increment was between Rs 5 and Rs 6 received Rs 6; those whose increment was between Rs 6 and Rs 7 received Rs 7; those whose increment was between Rs 7 and Rs 8 received Rs 8; and those whose increment was between Rs 10 and Rs 10 received Rs 10 per month. The agreement also contained two important notes. First, even if an employee had already reached the ceiling of his grade, he remained entitled to receive the same interim payment. Second, the agreement stipulated that the advance payment would be set off against the final outcome of the present demands by “constitutional means,” which the Court identified as the award of the Tribunal. Consequently, any amount that the workmen had received as an advance of Rs 6, Rs 7, Rs 8 or Rs 10 per month should be deducted from the sum that the award required the company to pay them. The Tribunal, however, had directed that the interim relief should remain unaffected, effectively ordering that the second note of the agreement need not be complied with. The Court found no justification for such an order. While it acknowledged that industrial adjudication sometimes modifies existing contracts, it held that there was no ground to alter an agreement of this nature before the final settlement of the dispute. The Court explained that refusing to enforce the workmen’s representatives’ solemn promise that interim relief would be adjusted against the final award would be unfair to the employer and would not serve the best interests of the workmen. An order of this kind, the Court warned, could discourage the use of interim settlements and might encourage parties to treat their undertakings as having no value, thereby fostering bad‑faith behavior. Accordingly, the Court set aside the Tribunal’s direction that the interim relief would remain untouched and directed that the adjustments prescribed in the interim arrangement must be made. The discussion then turned to the matter of leave rules. The company objected to the award’s provision that it should grant fifteen days of sick leave with full pay and allowances, accumulating up to six months on the basis of a medical certificate from a registered medical practitioner. The company also contested the direction that the existing practice of requiring a prior application for casual leave should not be relaxed in emergencies, and that up to three days of leave should be allowed without a medical certificate.

In this matter the Court examined the direction concerning casual leave, noting that the Tribunal had ordered that the requirement for casual leave should not be relaxed in situations where relaxation is impossible due to emergent or unforeseen circumstances, and that no medical certificate should be required for up to three days of such leave. The Court observed that, at present, the Management of the company provides ten days of casual leave to business‑staff employees and seven days of casual leave to employees in all other categories, while there is no separate sick‑leave facility. Counsel for the employer argued that, because the Employees’ State Insurance Act, 1948 applies to the company and its workmen receive the benefits under that Act, there is no need to make any additional provision for sickness leave. The Court accepted that the Act is indeed applicable and that the workmen are entitled to its benefits, but it was unable to see how the benefits under the Act could replace the need for a statutory entitlement to paid sick leave. The Court pointed out that the Employees’ State Insurance Act does not create a right to leave on the grounds of sickness. Rather, Section 46(1)(a) authorises periodic treatment of an insured person when sick, provided the illness is certified by a duly appointed medical practitioner. The Court noted that it was unnecessary to recite the other relevant provisions of the Act, namely Sections 47, 48 and 49, which deal with eligibility for sickness benefit and the extent of such benefit, and Section 56, which provides medical benefits to the insured workman or, in certain cases, to members of his family. The Court concluded that, although the Act provides periodic sickness benefits and medical treatment, Parliament did not intend these benefits to supplant the workmen’s right to full‑pay leave when they are ill. The Court then turned to the contention that the Tribunal’s direction on sick leave violated the Delhi Shops and Establishments Act, 1954. It was acknowledged that many of the workmen concerned fall within the ambit of that Act, which in Section 22 limits the maximum combined period of paid sickness or casual leave to twelve days in a year and expressly prohibits the accumulation of such leave. Accordingly, the Court found that the Tribunal’s order granting fifteen days of sick leave and permitting its accumulation was illegal as to those workmen to whom the Delhi Shops and Establishments Act applies. Consequently, the Court set aside that portion of the award and directed that the company must grant, to the workmen covered by the Delhi Shops and Establishments Act, a total of twelve days of either sickness or casual leave in a year, with full pay and allowances, and that such leave must not be accumulated.

The Court held that it would be improper to maintain two different leave regimes—one applicable to workmen who fall under the Delhi Shops and Establishments Act, 1954 and another for those who are not covered by that legislation—because such a bifurcated approach would likely generate considerable discord and resentment among the workforce. Accordingly, the Court directed that even the workmen who are not subject to the Act should be granted the same entitlement of twelve days per year of sickness or casual leave with full pay and allowances, and that no accumulation of such leave should be permitted. The Court further examined the Tribunal’s order that relaxed the requirement of prior permission for casual leave in emergency situations and permitted up to three days of casual leave without demanding a medical certificate. The Court found no justification for that direction. It noted that the Company’s existing leave rules already require employees to obtain prior approval from the head of the department and the Establishment Manager before taking casual leave, but also provide that, in cases of sudden illness, the employee must, as soon as practicable, inform the head of the department or the manager in writing of the absence and the expected duration. The Court considered this provision reasonable and sufficient to address emergencies, and therefore set aside the Tribunal’s additional instructions on the matter. Turning to the gratuity issue, the only substantial argument presented by counsel was that the gratuity scheme devised by the Tribunal would place an undue burden on the Company’s financial resources. The Court reiterated its concurrence with the Tribunal’s earlier finding that the Company’s finances are strong, stable, and have been prospering in recent years, with promising future prospects. Consequently, the Court concluded that the gratuity scheme does not unduly favor the workmen nor does it impose an excessive strain on the Company. The Court did, however, note a specific clause in the gratuity scheme stating that an employee dismissed for misconduct is not entitled to any gratuity. It observed that precedent from this Court has consistently held that, given the nature of gratuity, an employee should not be deprived of gratuity earned solely because of dismissal for misconduct; rather, the appropriate measure is to deduct from the gratuity the amount of loss actually suffered by the employer as a result of the employee’s misconduct.

The Court observed that any loss incurred by the employer because of an employee’s misconduct should be deducted from the gratuity amount that is payable. However, in the present matter the workmen had not challenged the award concerning the gratuity scheme that the Tribunal had formulated. Consequently, the Court held that it would be inappropriate to alter the gratuity provision in the manner suggested, since no appeal had been filed on that issue.

The discussion then turned to the question of the retirement age, which was the subject of the workmen’s appeal. The Court found that there was a dispute regarding the existing practice. In the workmen’s written statement to the Tribunal they claimed that, at that time, the Company did not have any fixed rule concerning retirement and that the retirement age should be set at sixty years for all employees. By contrast, the Management’s written statement asserted that the current superannuation system fixed the retirement age at fifty‑five years and that this age was appropriate and should not be raised. The Court noted that the record contained very little material to resolve this controversy. Appointment letters of certain employees showed that for appointments made in 1955 the retirement age was specified as fifty‑five, whereas letters issued before that year omitted any reference to a retirement age. Because of this gap, the Court could not determine how the Tribunal concluded that the “existing retirement age” was fifty‑five. Acting on that assumption, the Tribunal ordered that the retirement age of fifty‑five should remain in force, but that workers could be permitted to continue in service up to sixty years if they were found medically fit, with any further extension left to the Management’s discretion. Representing the workmen, the learned Attorney‑General argued that the assumption of a universal fifty‑five retirement age was incorrect for most workmen, noting that, except for a few individuals appointed after 1955, no retirement age was fixed either in appointment letters or in the Company’s standing orders. For those employees lacking a prescribed retirement age, the Attorney‑General relied on the Court’s decision in Guest Keen, Williams Private Ltd. v. P. J. Sterling, which held that it would be unfair to impose a superannuation age on earlier employees by a later standing order. The Labour Appellate Tribunal had previously ruled that introducing a mandatory retirement at fifty‑five for prior employees would be unreasonable and unfair because no such limitation existed when they were hired. The Court affirmed that it would not be proper to overturn the Labour Appellate Tribunal’s finding, and then proceeded to consider the next question.

In considering whether a rule of superannuation should be absent for the employees who were already in service before the standing orders were amended, the Court observed that it was necessary to establish a retirement age even for those prior employees and that doing so would not be unfair or unreasonable. The Court articulated that the employees should be required to retire upon attaining the age of sixty and rejected the respondent’s claim that they could continue in service beyond that age, describing such a claim as wholly unreasonable and incompatible with the very concept of fixing a superannuation age. The Court noted that once a retirement age is fixed, an employer may, for special reasons, retain a workman who has passed that age, but it is inconceivable that the employee should have the option to remain in service after the age has been set. Accordingly, the Court held that, in the facts of this case, the appropriate retirement rule for the earlier employees should be sixty years rather than fifty‑five years, while the rule of fifty‑five years should apply to all persons who joined the appellant’s service after the relevant standing orders became effective. Assuming that the majority of the workmen presently have no stipulated retirement age, the Court relied on the authority cited above to confirm that a tribunal is empowered to fix a superannuation age for them as well. Because the Tribunal’s determination that the retirement age should be fifty‑five was based on the mistaken premise that a retirement age of fifty‑five already existed, the Court found it necessary to examine the question independently. The Court recorded that, before the Tribunal, the Union’s representative had proposed fixing the retirement age at fifty‑eight years, with a possible extension up to sixty years in appropriate cases. The Court further noted that counsel for the Company did not seriously dispute the proposition that, in view of present‑day circumstances in the country, fixing the retirement age at fifty‑eight would be equitable. 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 a proviso that the Company may, at its discretion, continue employing any workman who has exceeded that age. This rule was declared to apply to all employees of the Company. The Court then turned to the remaining question of the retrospective operation of the award. Under section seventeen‑A of the Industrial Disputes Act, 1947, an award comes into force on the date specified in the award; if no date is specified, it comes into force on the date it becomes enforceable. The Court affirmed that, even in the absence of an explicit date, an industrial tribunal has the discretion to fix a date from which the award shall operate.

In the reference before the tribunal, the parties expressly disputed whether the relief sought should operate retrospectively, asking the tribunal to consider the question: “Whether all the above demands should be made applicable retrospectively with effect from April 1, 1956 and what directions are necessary in this respect?” The tribunal rejected the workmen’s request that the award be given effect from April 1956. Instead, wherever the tribunal granted relief, it directed that the award should become effective from the date of reference, that is, January 23, 1958. The company, through its counsel, argued that there was no reason for the award to be given effect to any date prior to the date on which the award was pronounced. The Court was not impressed by that argument. It observed that no universal rule exists to determine the date from which a tribunal’s award should take effect; the appropriate date must be decided by the tribunal after examining the circumstances of each individual case. The Court noted that there have been cases in which it made an award effective from the date when the demand was first made, and other cases where it did not interfere with a tribunal’s direction that the award should become effective from the date of the award itself. Although on some occasions the Court has modified a tribunal’s award, it found that no general principles governing the choice of an effective date have been laid down. Moreover, the Court considered it difficult and undesirable to impose a blanket formula, because each situation requires a careful assessment of its peculiar facts for the exercise of discretion. Consequently, the Court found no reason to disturb the tribunal’s direction that, in the present case, the reliefs would become effective from the date of reference.

The Court therefore allowed both appeals in part, modifying the tribunal’s award as regards dearness allowance, leave rules and retirement age, and also adjusting the interim relief as previously mentioned. All other matters raised in the appeals were confirmed and the award was left undisturbed. The modification of the dearness allowance was ordered to take effect from April 1, 1959, while the changes to the leave rules and the retirement age were ordered to take effect from the same date. Each party was directed to bear its own costs. The appeals were thus allowed in part.