Workmen of Balmer Lawrie and Co vs Balmer Lawrie and Co
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 820 of 1962
Decision Date: 7 November 1963
Coram: P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta
In this case the Court recorded that the petition was filed by the workmen of Balmer Lawrie and Co. against their employer, Balmer Lawrie and Co., and that the judgment was delivered on 7 November 1963. The opinion was authored by Justice P. B. Gajendragadkar and the bench was composed of Justices P. B. Gajendragadkar, K. N. Wanchoo and K. C. Das Gupta. The case is reported in the 1964 All India Reporter at page 728 and in the 1964 Supreme Court Reporter (5) at page 344, and it has been cited in subsequent decisions such as R 1967 SC 1286, RF 1969 SC 513, RF 1970 SC 512, RF 1972 SC 1210, R 1972 SC 2332, RF 1973 SC 2758, R 1978 SC 1113 and R 1987 SC 1415. The dispute concerned industrial matters relating to clerical and subordinate staff, specifically the age of retirement, the reduction of grades, the wage structure, privileges, medical leave and the procedure for re‑examination of awards.
The workmen demanded that the existing five grades be consolidated into two grades, that the pay scales be increased, that privileges and medical leave be enhanced and that the statutory retirement age of fifty‑five years be raised. The industrial tribunal rejected all of these demands except for a modest increase of ten rupees in the initial salary of each grade. On appeal by special leave the Court held that the retirement age for the workmen of the respondent should be raised to fifty‑eight years and observed that the time had arrived to extend the retirement age for clerical and subordinate staff generally from fifty‑five to fifty‑eight years. In reaching this conclusion the Court relied on the decisions in Guest, Keen Williams Private Ltd. v. P. J. Sterling (1960) 1 SCR 348 and Workmen of M/s. Jessop & Co. Ltd. v. M/s. Jessop & Co. (1964) ILLJ 451, which were followed. The Court further stated that, given the way the grades had functioned since 1949, there was no necessity to reduce the number of grades. Regarding the revision of wage scales, the Court emphasized that each case must be examined on its own merits and that technical applications of res judicata should not obstruct the discretion of industrial adjudication. The Court noted that the principle of a gradual advance toward a living wage is a special feature of industrial adjudication, making the strict use of res judicata inappropriate. Consequently, if an employer’s capacity to pay increases, if the cost‑of‑living index shows an upward trend, if there are errors or anomalies in the award, or if comparable industries in the region have raised their wage structures, the workers are justified in seeking a re‑examination of the wage structure. An adjudicator, therefore, may not reject such a claim merely because an insufficient period has elapsed since the original award or because a material change in circumstances has not been proved.
The Court observed that the circumstances alleged by the parties had not been proved, and therefore it could not prescribe any rigid rule that would apply in all similar situations. Each question, the Court explained, had to be examined on its own merits. In support of this approach the Court referred to the authorities Burn & Co. Ltd. v. Their Workmen (1959) 1 L.L.J. 450 and James Finley & Co. Ltd. Employees Union, Calcutta v. M/s. James Finley & Co. Ltd. Calcutta, 1957 L.A.C. 154. The Court further stated that, when industrial matters are before an adjudicating Tribunal, technical pleas should not be encouraged, especially because such tribunals are often presided over by persons who are not legal specialists. Consequently, the argument that a specific question had not been put to a particular witness could not be given excessive importance. The Court also noted that in determining whether two industrial undertakings are comparable for the purpose of fixing wages, the Tribunal does not rely solely on oral testimony. Instead, the Tribunal must consider material facts and circumstances that are usually demonstrated by documentary evidence. Relevant factors include the total capital invested by each concern, the profits earned, dividends paid, the number of employees, and the standing of the concern within its industry. These elements must be examined collectively to decide whether one concern can be treated as comparable with another in wage fixation, and such determinations cannot be made merely on the interested testimony of the workmen, the employer, or their respective witnesses.
The judgment concerned Civil Appeal No. 820 of 1962, which was filed by special leave against an award dated 29 June 1961 rendered by the First Industrial Tribunal, West Bengal, in Case No. VIII‑608 of 1960. The appellants were the workmen of M/s Balmer Lawrie & Co., and the respondent was the employer, Balmer Lawrie & Co. Counsel for the appellants included P.K. Sanyal and P.K. Mukherjee, while counsel for the respondent comprised B. Sen, S. Ghosh and B.N. Ghosh. The appeal was heard on 7 November 1963, and the judgment was delivered by Justice Gajendragadkar. The dispute involved four specific demands made by the workmen: the restructuring of grades and scales of pay, the provision of privilege leave, the provision of medical leave, and the determination of the retirement age. Regarding the demand to reduce the existing five pay grades to two grades on a rational and scientific basis, the Tribunal found that, overall, the five grades were functioning satisfactorily and therefore rejected the request for amalgamation. The Tribunal largely dismissed the claim for an increase in the scales of pay, but it granted a modest relief by ordering an increase of ten rupees to the initial salary of each grade. Both the claims for privilege leave and medical leave were rejected; the Tribunal held that the mere fact that two nearby concerns provided more than twenty‑one days of privilege leave did not justify altering the existing rule applicable to the appellants.
The Tribunal rejected any alteration to the existing rule governing privilege leave for the appellants and also dismissed the respondent’s interpretation of the medical leave provision contained in Exhibit F, holding that such a construction was inadmissible. Consequently, the Tribunal found no justification for introducing a rule that a medical certificate issued by any medical practitioner would be sufficient proof for medical leave. Turning to the appellants’ request concerning the retirement age, the Tribunal concluded that the prevailing retirement age of fifty‑five years required no modification. Based on these findings regarding the four demands raised by the appellants, the Tribunal issued an award. The appellants have now challenged that award before this Court. Regarding the retirement‑age issue, the Court observed that the Tribunal’s approach was unsatisfactory. The question of an appropriate superannuation age in industrial employment has been examined by this Court on multiple occasions. In Guest, Keen, Williams Private Ltd. v. P.J. Sterling & Ors., the Court discussed, in general terms, the considerations that are relevant and material to fixing a proper retirement age. More recently, in Workmen of M/s Jessop & Co. Ltd. v. M/s Jessop & Co. & Ors., the Court expressed the view that the time had arrived to raise the retirement age for clerical and subordinate staff from fifty‑five to fifty‑eight years. It appears that the Tribunal was not made aware of these precedents; had it considered them, it might not have dismissed the appellants’ claim. In the present appeal, counsel for the respondent, Mr Sen, even concurred that the retirement age should be increased from fifty‑five to fifty‑eight. Accordingly, the Court set aside the Tribunal’s order on this point and directed that, effective from the date of this judgment, the retirement age for the respondent’s workmen shall be fifty‑eight years. The discussion then shifted to the issue of reducing the number of grades from five to two. Counsel for the appellants, Mr Sanyal, argued that industrial establishments typically employ only two grades and that maintaining five grades was both unscientific and impractical. While it may be acknowledged that many firms operate with two or three grades, the Court emphasized that, in this case, the historical development of the grades and their overall satisfactory functioning within the respondent’s organization must be considered. The award dated 1949 had established these five grades. The “Floormen” mentioned in that award correspond to Grade I, which the respondent describes as the Sub‑grade. The remaining four grades are identified as Junior Grade, Senior Grade, Section Head, and Supervisor Grade, reflecting the structure that has been retained by the respondent since 1949.
In the respondent’s organization the five grades that have existed since 1949 consist of Grade I, which is identified in the award as the Sub‑grade, and the four subsequent grades known as Junior Grade, Senior Grade, Grade II and Grade III. These latter grades correspond to the grade numbers eleven, twelve, thirteen, fourteen and fifteen in the respondent’s internal classification. The award of 1949 created these five grades and the respondent has maintained them continuously from that date. It is an established fact that employees placed in the Sub‑grade or Grade I perform work that is distinctly inferior in character and responsibility to the work performed by employees in Grades II or III, and therefore they cannot be merged with those higher grades.
Regarding Grades II and III, the records (see Annexure D) show that an automatic promotion operates from Grade II to Grade III. This promotion is conditional on the clerk having a satisfactory service record and is granted on the clear understanding that the clerk will continue to perform the duties of Grade II after promotion. The rule also provides that a clerk who joined the company in Grade I and was placed in Grade II before the abolition of Grade I, or at the moment Grade I was abolished, is automatically promoted to the next higher grade, subject again to the satisfaction of the aforementioned conditions. Consequently, even if Grades II and III were to be combined into a single grade, the mechanism of automatic promotion would still exist, allowing the employer to recognize outstanding merit by moving a clerk directly from the lower grade to the higher one. The appellants have not asserted that such merit‑based promotions have never been given, nor have they alleged that any promotion was made for improper reasons.
Grades IV and V are regarded as selection grades. The duties assigned to employees in these two grades are of a distinctive nature, making it unreasonable to contemplate their amalgamation into a single grade. Accordingly, the Court is satisfied that, considering the origin of the five‑grade structure and the way it has functioned since 1949, there is no justification for reducing the number of grades. The Tribunal’s refusal to accept the appellants’ demand to cut the grades from five to two is therefore upheld.
The next issue concerns the claim for an increase in the scales of pay. The Tribunal dismissed this claim on the ground that no material change in circumstances had been demonstrated since the scales were fixed. The historical record shows that when the grades were first fixed by the award in 1949 they operated for three years, after which a revision occurred in 1952 and another in 1955. Those revisions altered the maximum salary payable in each grade, while the minimum salary remained unchanged. Consequently, the Tribunal made a modest addition of ten rupees to the minimum salary in each grade, believing that this adjustment would satisfy the ends of justice.
The Tribunal decided to increase the minimum salary of each of the respective grades by a fixed amount of ten rupees, expressing the view that such a modification would satisfy the demands of justice in the matter. In addition to this adjustment, the Tribunal gave another reason for dismissing the appellants’ request for a larger increase, namely that the appellants’ argument that a sharp rise in the cost of living justified a higher wage was not accepted. The Tribunal observed that the appellants already received a dearness allowance that was calculated in accordance with the formula prescribed by the Bengal Chambers of Commerce, and it held that the payment of that allowance effectively responded to the appellants’ concern about the increase in living expenses. Furthermore, the appellants placed reliance on a contractual agreement that had been executed between the employer and the workers, contending that the agreement created a right to obtain a revision of the wage scale because four comparable establishments in the same geographical region had, in the intervening period, revised their own wage scales. The Tribunal examined this contention and concluded that it was not persuasive, rejecting the plea on the basis that the cited revisions in other concerns did not automatically create an entitlement for the appellants. The Tribunal therefore recorded these conclusions – the addition of ten rupees to the minimum pay, the rejection of the cost‑of‑living argument, and the dismissal of the agreement‑based claim – and these recorded findings are now before the appellate authority for a fresh examination in the present appeal.
The appellate authority turned first to the argument raised by the Tribunal that there had been no material change in circumstances, and noted that the Tribunal supported this position by citing two earlier decisions. The first citation was Burn and Co. Ltd. v. Their Workmen and Ors., in which the Supreme Court observed that unless it can be shown that, between 1950 and 1955 – the period during which the industrial dispute in the present case was referred for adjudication – the surrounding circumstances had altered to an extent that the existing pay scales and grade structures became unreasonable or inadequate, any request for revision of those scales must be held unjustified. The second citation was James Finlay and Co. Ltd. Employees’ Union, Calcutta v. M/s. James, reported in the 1959 volume of the Labour Law Journal. In that case the Labour Appellate Tribunal affirmed that, although the technical rule of res judicata does not normally apply to industrial dispute adjudication, a prior award should not be altered except on the basis of justifiable grounds. The Tribunal listed several permissible grounds for altering an award, including a genuine change in circumstances, the principle of a gradual advance toward a living wage, and the presence of anomalies, mistakes or errors in the previous award that cause hardship to one or both parties. While considering the question of revising wage scales, the appellate authority emphasized that strict adherence to the doctrine of res judicata should not be allowed to obstruct the discretionary power that industrial adjudication enjoys. It recognized that wage scales and wage structures are generally formulated as long‑term policy measures, and consequently adjudicatory bodies are naturally cautious about interfering with them without a sound justification. The authority further explained that when a wage structure is created, all relevant factors are taken into account and the structure is intended to remain in force for a considerable period; however, it would be unreasonable to invoke the technical rule of res judicata in a manner that ignores the distinctive features of industrial adjudication, which require flexibility to address changes in employer capacity, cost‑of‑living trends, errors in the award, or revisions in comparable industries.
The Court observed that, in industrial adjudication, the technical considerations of res judicata are inadmissible because the labour arena possesses a special feature: the principle of a gradual advance toward a living wage. This principle, as noted by the Labour Appellate Tribunal, makes the application of the strict rule of res judicata singularly inappropriate in wage‑related matters. Consequently, if an employer’s capacity to pay increases, if the cost of living rises, or if there are anomalies, mistakes, or errors in the award that fixes the wage structure, or if comparable industries in the region have raised their wage structures, industrial employees are justified in seeking a re‑examination of the wage structure. When such a claim is referred to an adjudicator, the adjudicator should not normally reject it merely because insufficient time has elapsed since the award or because a material change in circumstances has not been proven. The Court cautioned that no hard and fast rule can be laid down in this regard; each request for revision must be examined on its own merits before an adjudicator. Therefore, the question of whether a wage structure should be revised requires a case‑by‑case assessment, taking into account the specific facts and evidence presented before the industrial adjudicator.
The Court further noted that the Tribunal had observed, with reference to the dearness allowance paid to the appellants under the Bengal Chambers of Commerce formula, that the appellants’ plea was not valid. However, the Court pointed out that the Tribunal did not appear to have examined whether the formula actually provides complete neutralisation for employees against the rise in the cost of living. The Court refrained from expressing an opinion on that point but emphasized that, unless the Tribunal had carefully examined the formula and reached a definite conclusion that it affords nearly complete neutralisation, it would be unreasonable to conclude that the mere adoption of the Chamber formula by the respondent extinguishes the appellants’ complaint of a cost‑of‑living increase requiring a revision of their wage structures. This matter, the Court said, must be carefully examined before any satisfactory conclusion can be reached. The Court then turned to another issue concerning the 1955 agreement on wage scales. That agreement stipulated that the revised pay scales would remain unchallenged unless they were amended by any Mercantile Omnibus Tribunal, altered by legislation prescribing higher rates of pay, or modified because of a substantial enhancement of pay scales generally in other Mercantile Firms of Balmer Lawrie & Co. Ltd.’s standing, or due to any extraneous circumstances.
In the agreement dated 1955, the parties stipulated that the wage scales introduced at that time would remain unchanged unless altered by a Mercantile Omnibus Tribunal, by legislation providing higher rates of pay, by a substantial enhancement of scales of pay generally adopted by other Mercantile Firms of comparable standing, or by any other extraneous circumstances arising that would create a general demand for further enhancement of the scales of pay. Relying on this clause, the appellants argued that wage scales had recently been revised by four specific concerns—Imperial Tobacco Co. Ltd., Shaw Wallace Co., Voltas Co. and Tata Iron & Steel Co.—and they called four witnesses to prove the existence of those revised scales. Their contention was that those concerns were comparable with the respondent’s concern and, therefore, the appellants were entitled to a revision of their own wage scales in accordance with the terms of the agreement. After establishing the fact that the four concerns had revised their pay scales, the respondent examined its own witnesses. Among them was Mr. Kamal Prasad Sircar, who, in his testimony, named six firms that he considered comparable with the respondent’s firm, but he did not mention any of the four firms cited by the appellants. The Tribunal concluded that, because Sircar had not been cross‑examined on whether any of the four firms were comparable, the appellants’ claim that those firms were comparable must be rejected.
The Court found the Tribunal’s reasoning for rejecting the appellants’ claim to be wholly unsatisfactory and its approach inappropriate. It observed that, in industrial matters, adjudication should not be dominated by technical pleas, especially when the proceedings are often conducted by laypersons before the Tribunal; consequently, the significance of a particular question not being put to a specific witness should not be exaggerated. Moreover, the Tribunal overlooked the fact that the appellants had produced evidence concerning the four concerns on the ground of comparability, and Sircar had not sworn an oath that those concerns were not comparable; therefore, it was unreasonable to decide against the appellants merely because Sircar was not questioned on that point. The Court emphasized that determining whether industrial undertakings are comparable is not normally based solely on oral testimony. Instead, the adjudicator must consider material facts and circumstances proved by documentary evidence, such as the total capital invested, the extent of business operations, the order of profits, dividends paid, the number of employees, and the standing of the concern within its industry. These factors, taken together, guide the Tribunal in deciding whether one concern is comparable with another for purposes of fixing wages. Now, it is obvious that
In this case, the Court observed that the questions concerning comparability could not be resolved merely on the interested testimony of either the workmen or the employer’s witnesses. The Court noted that the Tribunal had lost sight of this essential principle, thereby overlooking the necessity of examining objective material rather than relying solely on partisan evidence. Consequently, the Court was persuaded that the Tribunal erred when it refused to evaluate the merits of the appellants’ claim for modification and increase of the wage scales. Regarding the appellants’ grievance concerning privilege leave and medical leave, the Court found no substantive basis to support the relief sought. Accordingly, the award that rejected the appellants’ request for modification and revision of the wage scales was set aside. The matter was remitted to the Tribunal for reconsideration of this issue in accordance with the applicable law. Both parties were granted liberty to adduce further evidence in support of their respective positions, should they deem additional proof necessary for their arguments. The Court confirmed the Tribunal’s interim order that provided an ad hoc increase of ten rupees in the initial salaries fixed for the various grades. It also affirmed the remaining directions contained in the award relating to the other claims advanced by the appellants. Having regard to the fact that the appellants had succeeded on the issue of retirement age and that the Court had previously ordered a remand in their favour for reconsideration of the wage‑scale revision claim, the Court directed that the respondent should bear the costs incurred by the appellants in these proceedings before this Court. In sum, the award was partially set aside and the case was remanded to the Tribunal for further determination.