Associated Cement Staff Union vs Associated Cement Co. Ltd.

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

Court: Supreme Court of India

Case Number: C. A. No. 1 of 1963, C. A. Nos. 4 and 5 of 1963

Decision Date: 3 December 1963

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

In this case the Supreme Court of India recorded a judgment authored by Justice Das Gupta, with the bench consisting of Justices Gajendragadkar, Wanchoo and Das Gupta. The matter before the Court comprised five separate appeals arising from two distinct disputes between the Associated Cement Company Ltd. and its workmen. The first set of appeals, identified as Civil Appeal No. 1 of 1963 and Civil Appeals Nos. 4 and 5 of 1963, concerned the question of the appropriate number of working hours for the employees; the former was filed by the workmen while the latter two were filed by the Company. The second set, Civil Appeals Nos. 2 and 3 of 1963, dealt with the question of holidays; one of those appeals was presented by the workmen and the other by the Company.

Historically the Company had organized its workday so that employees worked from ten a.m. to one‑thirty p.m. and from two‑thirty p.m. to five‑forty‑five p.m. on weekdays, and from ten‑thirty a.m. to one‑thirty p.m. on Saturdays, resulting in a total weekly working time of thirty‑four and one‑quarter hours. In 1950 the workmen raised a dispute demanding that the weekday schedule be reduced by fifteen minutes each day, proposing a continuous period from ten a.m. to five‑thirty p.m. with a one‑hour recess, but the tribunal that heard that dispute rejected the workmen’s demand.

Subsequently, Reference No. 111 of 1959 was instituted to address several claims made by the workmen, including demands for revision of wages, dearness allowance and other matters. Although the revision of working hours was not part of that reference, the Company, in its written statement to the tribunal, argued that the employees’ hours of work should be rationalised by increasing them so that they would be comparable with those prevailing in other establishments. The Company further contended that the tribunal might be justified in granting an award that increased the hours of work under subsection (4) of Section 10 of the Industrial Disputes Act.

Following that submission, the Company issued a formal notice on twenty‑third November 1959 proposing to raise the weekly working time from thirty‑four and one‑quarter hours to thirty‑seven and one‑quarter hours. The proposed amendment also sought to modify the office timings on weekdays to the same intervals previously observed, namely ten a.m. to one‑thirty p.m. and two‑thirty p.m. to five‑forty‑five p.m., while retaining the Saturday schedule of ten a.m. to one‑thirty p.m. This proposed change in the working hours was then referred for adjudication in Reference No. 247 of 1959.

Later, the Government initiated another reference, numbered 97 of 1961, responding to a fresh demand by the workmen for a reduction in the working hours and days. The workmen’s demand sought a uniform schedule of ten‑thirty a.m. to five‑thirty p.m. on weekdays, with a one‑hour recess, and a Saturday schedule of ten‑thirty a.m. to one‑thirty p.m. The award of the

The Tribunal ordered that the weekly working hours of the employees be increased to thirty‑six hours, while leaving it to the Company, after consulting the Union, to determine the specific daily hours for weekdays and Saturdays. In addition, the Tribunal directed that, should the Company and the Union mutually agree at any time, the Company could adopt a five‑day work week, in which event the total weekly hours might be set at thirty‑six and one‑quarter hours. The workmen, by filing an appeal, contested the increase of the weekly hours to thirty‑six, whereas the Company, in its own appeal, argued that the Tribunal erred in dismissing its request for a greater increase in the working hours as it had originally sought. The first argument presented by counsel on behalf of the workmen asserted that because the Tribunal had fixed the workers’ wages based on the existing weekly hours of thirty‑four and one‑quarter hours in its award in Reference No. 111, it was not justified in later altering the working hours without also adjusting the wage rates. The workmen’s counsel further contended that raising the weekly hours without a corresponding rise in wages effectively granted a substantial monetary benefit to the Company, since, absent the increase, the employees would have been entitled to overtime pay for the additional hours required under the existing award. The Court found this contention to be misconceived. It explained that the purpose of industrial adjudication is not to set working hours so that employees can accrue overtime wages. Rather, the determination of working hours must consider a range of factors, including the potential for fatigue and its impact on the health of the workmen, the effect of longer hours on efficiency, the physical discomfort that may arise from prolonged continuous strain, the necessity for leisure time in the workers’ lives, the prevailing hours of work for comparable activities in the same geographical area and in similar establishments, and any other relevant considerations. Once the Tribunal arrives at a conclusion regarding normal working hours after weighing all these pertinent factors, it may not refrain from implementing that conclusion merely because the workers would have earned higher overtime wages had the hours been set lower. While acknowledging that, in fixing an appropriate wage scale, the question of workload and consequently the matter of working hours cannot be entirely ignored, the Court emphasized that many additional elements must also be taken into account. These include the needs of the workers, the financial capacity of the employer, and the prevailing wage rates in other industries within the region. To adopt wage rates that vary on a sliding scale according to the number of hours worked would be detrimental to the interests of the workmen, the employers, and the nation as a whole. The appropriate resolution of this difficulty, the Court observed, lies in fixing

The Court observed that wage scales must be fixed after examining all relevant factors, including the working hours, and that working hours must likewise be determined after considering all relevant factors, without focusing solely on the effect such determination might have on overtime payment to workmen. Consequently, the Court found no merit in the workmen’s allegation that the Industrial Tribunal was not justified in altering the working hours after it had already fixed the wage rates for the workmen in Reference No 111 of 1959 on the basis of the existing working hours. The Court further noted that, at the time the Tribunal was deciding the wage dispute in Reference No 111, the question of working hours was also pending in Reference No 242 of 1959. However, that matter could not be heard then because its hearing had been stayed by the High Court in response to an application made under Article 226 of the Constitution. The Court clarified that the decision on wages had been made on the assumption that the working hours would be set at a reasonable figure, and not on any premise that the then‑existing working hours were proper and reasonable. Accordingly, the first contention raised by the workmen failed. The Court then turned to the second argument raised by the workmen, which claimed that because the Industrial Tribunal had found the existing working hours reasonable in 1950, there was no sufficient justification for altering them in the present Reference. The Court dismissed this argument as unsubstantial. While acknowledging that frequent changes to conditions of service by industrial adjudication are generally discouraged because they may disturb industrial peace, the Court emphasized that the dynamic nature of industrial relations required flexibility. The Court recalled that it had previously refrained from applying the doctrine of res judicata, which is appropriate for ordinary civil litigation, to industrial adjudications. Even where conditions of service had been altered only a few years earlier, the Tribunal had permitted further changes when convinced of their necessity and justification based on current circumstances. In the present case, the Tribunal’s earlier refusal to change the working hours actually reduced any claim that such refusal should bind later decisions. The Court also highlighted that the working hours had remained unchanged for many years, during which the country’s economic position and expectations had evolved considerably. With a growing recognition of the need for a more equitable distribution of national wealth, there was an increasing understanding that higher production was essential, and that such production required greater effort from the labour force. This development, the Court concluded, provided sufficient reason to reject the argument against changing the working hours when the change was justified by the relevant considerations previously identified.

The Court was satisfied that, in arriving at a weekly working time of thirty‑six hours, the Tribunal had given proper weight to every relevant consideration that concerned production requirements, employee health, and the prevailing industrial conditions. It was further noted that, while recognising the importance of leisure for the workmen, the Tribunal deliberately left open the possibility for the Company and its employees to agree on a five‑day workweek whose total hours would amount to thirty‑six and one quarter hours, allowing a modest increase if mutually consented. The Court saw no reason to disturb the Tribunal’s award on this point because the Tribunal’s decision already provided a balanced framework. The Company had not pressed any appeal before the Court seeking an increase in working hours beyond what the Tribunal had already awarded, and therefore no further argument on that issue was presented. As a result, Civil Appeal No. 1 of 1963 together with Civil Appeals Nos. 4 and 5 of 1963 were dismissed, and the Court made no order as to costs. The dismissal meant that the Tribunal’s determination remained the final authority on the question of weekly working time for the parties.

The dispute concerning holidays arose after the Company issued, on 31 January 1961, a notice of change pursuant to Section 9(a) of the Industrial Disputes Act, proposing to reduce the number of holidays it observed. Historically, a holiday dispute had been examined in 1950 by the Industrial Tribunal, which had awarded that the Company should observe bank holidays except those required for the settlement of six‑monthly accounts. In the present reference, the Company argued that, given the overall economic situation of the country and the specific needs of the cement industry, it was necessary to cut the annual holidays to sixteen, which it deemed proper and sufficient. The workmen, however, opposed any reduction in the number of holidays. After considering the submissions, the Tribunal awarded that the number of holidays should be twenty‑one per year, although it recorded its own view that twenty‑one was an excessive figure. The workmen‑appellants contended before the Court that the Tribunal was not justified in altering the previous practice whereby the Company observed all public holidays declared by the Government. The Company, in turn, argued that the Tribunal was wrong in fixing the holiday count at twenty‑one, even while acknowledging that the figure was too large. While addressing the other appeals dealing with the justification for increasing working hours, the Court reiterated the growing national recognition of the need to raise productivity and to distribute the wealth generated more equitably. It could not be denied that a necessary component of this objective was a reduction in the number of holidays. Accordingly, the Court agreed with the Tribunal that the extensive list of public holidays announced by the Government of Maharashtra need not be strictly followed by industrial enterprises. The Tribunal’s evidence showed that, in other states, the number of public holidays varied: fourteen in Madras, seventeen in Andhra Pradesh, fifteen in Mysore, and eighteen in Uttar Pradesh. The Court therefore affirmed the Tribunal’s approach, while noting that the figure of twenty‑one holidays remained higher than desirable.

In the present case the Court observed that the smaller number of holidays determined by the earlier stages of the proceedings appeared to be more appropriate for industrial enterprises than the larger count of public holidays favored by the Governments of Maharashtra, West Bengal, Bihar, Rajasthan and Gujarat. The Court expressed no difficulty in agreeing with the Tribunal that the figure of twenty‑one holidays fixed by the Tribunal was excessive. Nevertheless, the Court could not understand the rationale that had led the Tribunal to award twenty‑one holidays even though the Tribunal itself was convinced that the figure was too high. The Tribunal had justified the figure of twenty‑one holidays by stating that many large commercial establishments customarily observe all public holidays and that it would not be prudent for the Tribunal to implement a sudden, drastic reduction for a single company. The Court was not persuaded by that justification. The Court also referred to the earlier decision in Pfizer (Private) Ltd. Bombay v. Its Workmen, in which this Court had fixed sixteen holidays for workmen, and noted that there was no reason why the same standard should not be applied in the present matter. Accordingly, in the portion labelled ten, the Court concluded that sixteen holidays should be the fixed number. Consequently, the Court allowed the appeal filed by the Company, identified as Civil Appeal No. 3 of 1963, with respect to the question of holidays, and fixed the number of holidays at sixteen instead of the twenty‑one previously awarded. At the same time, the Court dismissed the appeal filed by the workmen, identified as Civil Appeal No. 2 of 1963, on the holiday issue. The award of sixteen holidays per year was ordered to take effect from the year 1964, and no order as to costs was made.