Mcleod And Company Ltd vs Workmen

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 514 of 1963

Decision Date: 29 November 1963

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

The case was styled Mcleod And Company Ltd versus Workmen and was decided on the twenty‑ninth day of November in the year nineteen sixty‑three by the Supreme Court of India. Justice P B Gajendragadkar authored the judgment and was joined on the bench by Justice K C Das Gupta. The petitioner in the proceedings was identified as Mcleod And Company Ltd, while the respondents were described as the workmen employed by that company. The bench composition is recorded as Justice Gajendragadkar together with Justice Gupta and Justice Das Gupta. The decision appears in the law reports under the citations 1964 AIR 1449 and 1964 SCR (5) 568, and it is also noted in the citator references RF 1972 SC 1967 (3) and RF 1973 SC 1156 (11). The matter arose out of an industrial dispute that was originally referred to the Fourth Industrial Tribunal of West Bengal. The dispute centered on two principal claims made by the workmen: first, a demand that they receive a cash allowance in lieu of the tiffin facilities that the company had been providing, and second, a request that the company cease its practice of re‑employing retired persons in certain grades of clerical work. The case was presented before the Supreme Court on a special leave of appeal pursuant to Civil Appeal No 514 of 1963, seeking to review the award dated twenty‑first August nineteen sixty‑two made by the Tribunal in Case No VIII‑332 of 1961.

The Industrial Tribunal had examined the evidence and issued two principal directions. It ordered that the clerical staff of the company should receive a cash allowance of As ‑/8‑ per day on every working day, and that the subordinate staff should receive a cash allowance of As ‑/6‑ per day on all working days, as a substitute for the tiffin arrangements that had previously been supplied. Regarding the second claim, the Tribunal directed that the company should discontinue the re‑employment of retired workmen who occupied clerk positions above the C grade. The Tribunal found that it was unnecessary to issue any comparable direction concerning subordinate staff or clerks of the lowest grades. Evidence presented before the Tribunal showed that in the relevant region thirty‑one comparable industrial concerns provided free tiffin to their employees, and that Mcleod And Company Ltd had consistently made a provision for tiffin for its own workforce. Further, the Tribunal observed that the company’s policy of re‑employing retired personnel was not motivated solely by humanitarian considerations; retired workers who were re‑engaged received a salary considerably lower than the remuneration they had drawn prior to retirement. The Supreme Court held, first, that although the Factories Act did not impose a statutory duty on the employer to furnish a cash allowance for tiffin, the historical relationship between the parties and the prevailing custom among comparable employers created an implied condition of service. Accordingly, the employees were entitled to the tiffin amenity in addition to wages and dearness allowance, and the Tribunal’s award on this point could not be disturbed. Second, the Court observed that the limited direction issued by the Tribunal concerning the re‑employment of retired persons was neither improper nor unjustified, and therefore it was affirmed.

The appellate proceedings were filed as a civil appeal under special leave against the award rendered by the Fourth Industrial Tribunal of West Bengal on twenty‑first August nineteen sixty‑two. The appeal was designated as Civil Appeal No 514 of 1963. Counsel appearing for the appellant included senior advocates and for the respondents, legal representatives were also present. The judgment of the Supreme Court was delivered on the twenty‑ninth of November nineteen sixty‑three by Justice Gajendragadkar. The Court began its opinion by referring to the industrial dispute between the appellant, Mcleod & Company Ltd, and its workmen, which gave rise to the present appeal, and then proceeded to analyze the claims, the evidence before the Tribunal, and the legal principles applicable to the questions of implied conditions of service and the propriety of the Tribunal’s limited direction on re‑employment of retired workers.

In this appeal the respondents presented two separate demands. First, they asked that a cash allowance be paid instead of the present tiffin provision supplied by the appellant. Second, they requested that the appellant discontinue its practice of re‑employing retired workers. The Tribunal accepted the first demand and ordered that clerical employees receive a cash allowance of As. ‑/8/‑ per day, while subordinate staff were to receive As. ‑/6/‑ per day for each working day, in place of the existing tiffin service. Regarding the second demand, the Tribunal instructed the appellant to cease re‑employment of retired workmen who held clerical positions above the C grade. The Tribunal decided that no such instruction was necessary for subordinate staff or for the lowest grade clerks, thereby allowing that part of the claim only in part. The appellant has challenged this award before this Court by way of special leave. The appellant employs approximately 453 persons, of whom 36 are officers, 90 are junior‑grade assistants, 196 are clerks, and 131 belong to the subordinate staff. The dispute therefore concerns only the last two categories of employees, namely clerks and subordinate staff, which are the subjects of the two claims before the Court.

The background of the controversy dates back to an industrial dispute that arose in 1956, in which the respondents’ claim for tiffin on working days formed one of the contested issues. During those earlier proceedings the claim was not pressed and was left to the discretion of the appellant. After the award was issued, the parties entered into direct negotiations concerning the tiffin allowance. According to the testimony of the respondents’ union secretary, Mr. Mazumdar, management assured the workers that it would consider the amount and value of the free tiffin, and a settlement was subsequently reached. Under that settlement the appellant supplied two cups of tea and two biscuits to each clerical employee and one cup of tea with one biscuit to each member of the subordinate staff on ordinary working days; on Saturdays the same quantities were provided to both clerks and subordinate staff. In the present dispute the respondents argued that these tiffin arrangements were inadequate and that a cash allowance should replace them. The Tribunal accepted this argument and granted the cash allowance. The appellant, represented by counsel, contended that the Tribunal’s award was contrary to law because there is no statutory or contractual duty on the appellant to provide any tiffin facility, and therefore no basis for awarding a cash allowance. The appellant further maintained that the existing wage structure, including dearness allowance calculated according to the Bengal Chamber of Commerce formula, already accounted for the cost of living, rendering the additional cash allowance unnecessary.

In the matter before the Court, it was observed that the appellant had set up a canteen for its workers, but there was no statutory or contractual duty imposing on the appellant any additional responsibility to provide a cash allowance for tiffin. The counsel for the appellant further pointed out that the wage structure prevailing in the company was a fair one, and that a dearness allowance was being paid to the employees in accordance with the Bengal Chamber of Commerce Formula. This formula, according to the appellant, sufficiently accommodated the periodic rise in the cost of living. The appellant relied on these facts to argue that the claim for a cash allowance in place of the free tiffin should be rejected. The Court noted that, at first glance, these arguments possessed a degree of merit. However, the Court also considered the evidence showing that, in the same geographical area, as many as thirty‑one other comparable establishments supplied free tiffin to their employees. Moreover, the record demonstrated that the appellant had, from the beginning, consistently provided tiffin facilities to its staff. After the award rendered in the 1956 proceedings, the parties had entered direct negotiations, during which the appellant had expressed a willingness to consider the employees’ request for a cash allowance sympathetically and to make an appropriate arrangement. This discussion led to the introduction of the prevailing tiffin arrangement that later became the subject of the dispute.

Considering these circumstances, the Court held that if the Tribunal had concluded that the appellant was obligated to supply a cash allowance for tiffin, such a conclusion could not be disturbed on the basis that it was legally erroneous. The long‑standing relationship between the parties, together with the common practice of supplying free tiffin among the comparable concerns, strongly supported the Tribunal’s view that, in the appellant’s establishment, an implied term of service existed which entitled employees, in addition to their wages and dearness allowance, to the amenity of free tiffin. Consequently, the Court found no merit in the appellant’s objection to the award directing that a daily allowance of As. ‑/8‑/ be paid to clerical staff and As. ‑/6‑/ to sub‑staff on all working days. Turning to the respondents’ demand that the employment of retired men be discontinued, the appellant’s counsel argued that the Tribunal had neglected the humanitarian basis of re‑employment. The appellant had, out of sympathy, rehired certain retired workers who were unable to support themselves and their families, and this humanitarian motive could not be faulted. While the Court acknowledged that such humanitarian considerations played a role, it also recognized that other factors concerning the re‑employment practice required examination, a matter that would be addressed separately.

There were also other factors relating to the problem of re‑employment that could not be ignored, and the record showed that as many as six persons had been re‑employed. The correspondence between the parties indicated that the respondents believed the appellant’s policy of re‑employing retired personnel was not based solely on humanitarian considerations. When the respondents raised a dispute on this point in 1960, the State Government refused to refer the matter because only four cases of re‑employment had been brought to its notice, and consequently the problem was not considered at that stage. Later the respondents informed the State Government that, although the company had given assurances that re‑employment would not be resorted to on a liberal scale, those assurances had been disregarded and the practice was being followed in many instances, creating a serious problem for the respondents. In addition, it appeared that retired persons who were re‑employed received a much smaller salary for performing the same work than they had drawn before retirement. For example, the case of Chandi Charan Banerjee demonstrated that before retirement he earned a basic salary of Rs 380 together with dearness allowance, whereas on re‑employment he received a consolidated salary of Rs 250 without any dearness allowance, meaning that the re‑appointed employee earned roughly half of his former wages for identical work. This aspect introduced a serious infirmity in the appellant’s case as presented by counsel for the petitioner. If re‑employment is made on the basis of reduced salary, the appellant is effectively creating a wage structure for re‑employed personnel that is inferior to the wage structure established for its other employees by the award, and such a structure cannot be permitted under industrial law. Moreover, re‑employing senior persons after retirement is likely to retard or hamper the promotion prospects that junior employees are entitled to anticipate. In view of these facts, the question raised by the respondents’ demand required careful consideration. Accordingly, the Court found no justification for the petitioner’s grievance that the limited direction issued by the award was improper or unjustified. The fact that the re‑employed persons had executed affidavits supporting the appellant’s practice was held to have no material bearing, since by their very nature they were bound to support the appellant. Consequently, the appeal was dismissed with costs, and the appeal was consequently dismissed.