The Indian Oxygen Limited vs Workmen And Others

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 528 of 1962

Decision Date: 6 December 1962

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

In this case the Supreme Court of India heard a dispute between The Indian Oxygen Limited (the appellant) and its workmen and others (the respondents) concerning the interpretation of the Industrial Dispute Act as it related to wage scales and the classification of employees. The judgment was delivered on 6 December 1962 by a bench consisting of Justices B.P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta and J.C. Shah. The matter arose from an award dated 10 March 1962 issued by the Industrial Tribunal of Maharashtra in Reference No. (IT) 114 of 1961, and was taken on special leave as Civil Appeal No. 528 of 1962. The appellant submitted that the wage scales had originally been fixed in 1949 and that a 1957 tribunal had already considered the question of revision, refusing to modify the scales except for certain categories of workers identified as Mazdoors 1 and 2. Consequently, the appellant argued that the present tribunal should not have revisited the scales, alleging that it had compared the appellant’s wage scales with those of unrelated engineering concerns and had committed obvious errors, some of which were subsequently corrected. Regarding classification, the appellant contended that the tribunal ought to have performed the classification itself rather than leaving that task to the employer, fearing that the latter approach would generate further disputes. The Court held that, based on the facts, a revision of the wage scales was indeed warranted and that the comparison made with engineering concerns was appropriate, as the appellant had relied on that comparison. Although in some instances higher scales were awarded to the workmen, the Court found the tribunal’s determination to be justified. The Court further observed that despite certain slips of detail in the tribunal’s award, which had been rectified except for one remaining obvious error, the award could not be said to be vitiated. In addressing classification, the Court explained that there are two aspects: the classification of jobs, which is within the tribunal’s jurisdiction, and the allocation of existing staff to those classified jobs, which may generally be left to the employer in consultation with the union, with disputes of this nature referable to the tribunal. The Court cited Novex Dry Cleaners v. Its Workmen, [1962] 1 L.L.J. 271 and French Motor Car Co. Ltd. v. Workmen, [1963] Supp. 2 S.C.R. 16 in support of this view, and concluded that the direction for the employer to carry out the second type of classification after consulting the union was not erroneous.

The civil appeal was presented by counsel for the appellant, including the Attorney‑General of India and other representatives, while counsel for respondents 1 and 2 appeared on behalf of the workmen. The judgment, delivered by Justice Wanchoo, affirmed the tribunal’s authority to revise wage scales where justified and clarified the dual nature of classification, assigning the substantive job classification to the tribunal and permitting the employer, in consultation with the union, to place existing staff into the appropriate categories, reserving the tribunal’s intervention for contested matters. The Court thus upheld the award’s validity with respect to wage scales and the procedural direction concerning classification.

The award of the Industrial Tribunal, Maharashtra concerned a dispute between the appellant company and its workmen and referred six distinct questions: wage scales, adjustments, increments, classification, designation of certain workmen, and the merger of dearness allowance. The Tribunal dismissed the workmen’s demands relating to increments and the merger of dearness allowance. For the remaining four matters, the Tribunal fixed revised wage scales and specified the method by which adjustments would be made. Regarding classification, it directed that the employees should be classified by the appellant after consulting both unions in an advisory capacity, and it altered the designation of plant‑attendants to plant‑operators. The present appeal filed by the appellant company challenges only two aspects of the award, namely the wage‑scale determination and the classification directive. The appellant asserts that the Tribunal erred in concluding that the wage scales required reconsideration, pointing out that the same issue had been examined by another Tribunal in 1957, which had decided to retain the existing scales that had been in force since 1949 except for the categories identified as Mazdoor I and Mazdoor II. The appellant further argues that the Tribunal was not justified in comparing the appellant’s wage scales with those of other concerns that were not comparable, and it highlights that the Tribunal made evident mistakes in the award, some of which were later corrected, thereby indicating that the matter had not received the careful consideration it deserved. Concerning classification, the appellant contends that the Tribunal ought not to have left the classification question to the appellant, as doing so would inevitably generate endless disputes between the company and its workmen. The Court, however, found no merit in any of these submissions. It observed that the wage scales revised by the Tribunal were originally fixed as early as 1949, and that a clear case existed for their revision in 1962 because the circumstances had materially changed between 1949 and 1962. The appellant’s further submission that the scales had previously been reviewed in 1957 was noted. The 1957 Tribunal had held that the pay scales for most categories of workmen were satisfactory and had revised only the scales for Mazdoor I and Mazdoor II. The appellant therefore argued that because the scales had been reconsidered in 1957, the fact that they were originally fixed in 1949 lost significance, and that absent any change in circumstances after 1957 there would be no basis for revising the wage scales again. The Court rejected this line of reasoning, emphasizing that subsequent changes in the cost of living and other relevant factors justified a fresh revision in 1962.

The tribunal observed that, despite the passage of several years, the overall cost of living in the locality had risen continuously since the year 1957. It further noted that dearness allowance, even when granted at the maximum rate, could fully offset the increase in living expenses only for workmen whose basic wage was Rs.30 per month; for those earning a higher basic wage, the allowance did not completely neutralise the rise in costs. Moreover, as the basic wage increased, the compensatory effect of dearness allowance became progressively smaller. Consequently, the tribunal concluded that the increase in the cost of living after 1957 provided sufficient ground for revising the wage scales in 1962. The tribunal also pointed out that, since 1949, numerous awards and agreements in prosperous enterprises similar to the appellant‑company had resulted in higher wages being fixed. Although the wage scales fixed by the appellant‑company in 1949 might have been comparatively high as against other firms of like standing in that region, the tribunal stressed that the other firms were now offering even higher wages, either through fresh agreements or newer awards. In order to preserve the leading position that the appellant‑company apparently held in 1949, those earlier wage scales should likewise be revised. In this connection, the tribunal examined a series of charts submitted by the appellant that compared the total wage package of the appellant‑company after revision with the packages of other firms deemed comparable. The tribunal found that these charts did not accurately reflect the true situation because the dearness allowance paid by the appellant‑company was calculated on the old textile scale for every day of the month, whereas the other firms included in the comparison paid the revised textile scale, which is apparently higher for each day. Hence, the comparison presented in the charts was not helpful in demonstrating that the revised wage scales had caused the appellant‑company to fall out of line with comparable concerns. In the tribunal’s view, the effect of the revisions was merely to maintain the appellant‑company’s lead in total wage package, just as it had enjoyed in 1949. Accordingly, the tribunal agreed with the earlier finding that a case existed for revising the wage scales, even though the tribunal of 1957 had not deemed it necessary to alter the prevailing scales in the appellant‑company except for the categories of Mazdoor I and Mazdoor II.

The Court observed that the tribunal’s comparison of the appellant‑company with other concerns could not be faulted on the ground that the other concerns were not comparable, because the appellant‑company was the only enterprise of its kind operating in Bombay at that time. Consequently, there was no other firm in the same line of business within the region with which to make a direct comparison. The tribunal therefore was justified in seeking comparable firms that were nearly similar to the appellant‑company. The appellant‑company itself admitted, and the Court agreed, that the engineering industry was the nearest sector for comparison purposes. The workmen, however, insisted that the appellant‑company should be compared with oil refineries as well as with Greaves Cotton and Company Limited, Imperial Tobacco Limited, Associated Cement Companies Limited and several other concerns. The tribunal held that oil refineries formed a class of their own and could not be compared with the appellant‑company. It also held that Greaves Cotton and Company Limited was a managing‑agency concern and therefore not comparable. The tribunal declined to compare the appellant‑company with Associated Cement Companies on the ground that the latter had no manufacturing plant in Bombay, only a head office, and it refused to compare the appellant‑company with Imperial Tobacco because that business was entirely different. The tribunal was prepared to compare the appellant‑company with the engineering firms that the appellant‑company itself relied upon, except for one concern that the tribunal considered too small. Accordingly, the Court found that, for the purpose of comparison, the tribunal had correctly taken into account practically all the companies suggested by the appellant‑company. The tribunal also mentioned other firms proposed by the workmen, such as Indian Cable Company Limited and Automobile Products, which, although not as closely related as the engineering concerns, could not be said to be non‑comparable. In the main, the tribunal relied on the engineering concerns, and it assigned a slightly higher wage scale in some cases to the workmen of the appellant‑company, apparently because the appellant‑company had always been a leading employer in terms of wage scales. The Court therefore concluded that the tribunal had not erred in selecting comparable concerns. Subsequently, the Court’s attention was drawn to a few alleged mistakes in the tribunal’s award, and it was submitted that these mistakes indicated a lack of proper consideration by the tribunal. The Court noted that three of those alleged mistakes had been corrected by the tribunal thereafter. Regarding two of the corrections—one concerning carpenters and the other concerning assistant foremen—the Court observed that there had been a slip, as the tribunal had reduced the maximum wage for these categories, which it was not authorised to do.

In the matter of cylinder weighers, the Court observed that the tribunal had initially made an error by fixing wages for cylinder weighers at a level that was even lower than the wage for the category known as Mazdoor I, despite the fact that cylinder weighers historically received higher pay than Mazdoor I. The tribunal recognised this mistake and subsequently corrected the wage scale for cylinder weighers. A further error was identified with respect to the wage scale for masons. The workmen had demanded a grade of 60‑5‑110‑7‑1/2‑140, while the existing scale at the time was 60‑4‑100. The tribunal had revised the scale to 64‑4‑100‑5‑110, which resulted in a minimum wage that was higher than the minimum demanded by the masons. The Court considered that this discrepancy arose from a slip, and the counsel representing the respondents admitted that the appropriate starting pay should be Rs 60. Accordingly, the Court corrected the mistake and fixed the mason grade at 60‑4‑100‑5‑110. The Court noted that, in total, there were three slips identified in the tribunal’s award, with only one mistake related to cylinder weighers. Nevertheless, the Court emphasized that these slips did not demonstrate a lack of due attention by the tribunal to the matters before it. On the contrary, the award was described as careful overall and could not be entirely set aside because of these isolated errors. Consequently, the Court found no merit in the appellant’s challenge to the wage scales and held that the revised grades introduced by the tribunal were fair and appropriate.

The discussion then turned to the issue of classification. The appellant contended that the tribunal should have performed the classification itself rather than directing the appellant to carry out the classification after consulting the unions in an advisory capacity. The Court referred to the decision in Novex Dry Cleaners v. Its Workmen, where it was observed that leaving the question of classification to management in consultation with the workmen was not a satisfactory method of resolution. The Court clarified that classification can be divided into two distinct aspects: (i) the classification of jobs, and (ii) the allocation of existing staff to the various classified jobs. When the classification of jobs is disputed between management and workmen, the tribunal is the appropriate forum to resolve that dispute. The case relied upon by the appellant primarily concerned the first aspect, although it also touched upon the allocation of individual workmen to classified categories. In that precedent, six categories were delineated, yet the tribunal did not define the functional responsibilities of each category. The Court therefore observed that the tribunal should have described the functions of the different categories and provided guidance in the award on how employees should be placed within those categories. However, the precedent did not establish a requirement that the tribunal must assign each individual worker to a specific classified job, and it was held that if the tribunal leaves the second aspect—allocating individual workmen—to management in consultation with the unions, the award would not be invalidated. This principle was later affirmed in French Motor Car Co. Ltd. v. Workmen, where the Court upheld a tribunal’s decision to delegate the allocation of workers to management after consultation with the unions.

The Court observed that when the responsibility for classifying workmen was assigned to the management in consultation with the workmen, the award could not stand and therefore had to be set aside. In support of this view, the Court referred to the decision in French Motor Car Co. Ltd. v. Workmen (1), where the tribunal had delegated the task of placing individual workmen into particular classified jobs to the management after consulting the workmen, and this delegation was upheld by the Court. The Court explained that, as a general rule, the management, in consultation with the trade union, could most effectively determine the placement of individual workmen in the appropriate classified positions. Only those cases in which a genuine dispute arose over the classification needed to be referred, if necessary, to the tribunal for determination.

Applying this principle to the present matter, the Court noted that the tribunal had directed the appellant to allocate individual workmen to the various classified jobs after consulting the unions. The tribunal had observed that certain employees designated as Mazdoor I and Mazdoor II appeared to be performing tasks of a higher category, but the Court characterized this observation as a general comment rather than a binding determination. Consequently, it was for the appellant, together with the unions, to classify each workman in the existing job categories of the company, a matter on which there was no substantive dispute. The Court therefore held that the tribunal’s direction concerning this second type of classification was free from any defect. As a result, the appeal was dismissed, except for a slight modification concerning masons, and no order as to costs was made. (1) [1963] Supp. 2 S.C.R. 16.