Appeal No 475 of 1960
Appeal by special leave from the Award dated March 31 1960 of the Industrial Tribunal Bombay in Reference I T No 227 of 1959
M C Setalvad Attorney General for India G B Pal and J B Dadachanji for the appellant
I N Shroff for the respondents
December 15
The Judgment of the Court was delivered by GAJENDRAGADKAR J
This appeal by special leave arises from an industrial dispute between the appellant the Alembic Chemical Works Co Ltd and the respondents its workmen
The said dispute related to a single demand made by the respondents with regard to leave
This demand consisted of three parts a one month s privilege leave with full salary and dearness allowance on completion of eleven months service in a year with a right to accumulate upto six months b one month s sick leave with full salary and dearness allowance for each year of service with right to accumulate for the entire period of service and c every workman should be entitled to take leave in proportion to the number of days he is in service of the company at the time of his application for the same
This dispute was referred by the Government of Bombay for adjudication before the Industrial Tribunal under section 101d of the XIV of 1947
The Tribunal considered the contentions raised by the appellant against the respondents  demands took into account awards or agreements between employers and their employees in comparable concerns and made its award
In regard to privilege leave the Tribunal has ordered that leave should be granted to the staff members covered by the reference as follows Privilege leave upto 3  16 days as at present completed years of service per year
Up to 9 completed years 22 days per year
And thereafter 
One month for every 11 months of service
299 The award allows accumulation of privilege leave upto three years
As regards sick leave the Tribunal has ordered that the appellant should give its staff covered by the present award 15 days sick leave in a year with full pay and dearness allowance with a right to accumulate upto 45 days
It has also directed that no medical certificate should be demanded if sick leave for three days or less is asked for
In regard to the third item of demand concerning leave in proportion the Tribunal has made appropriate direction which it is unnecessary to set out for the purpose of this appeal
Before the Tribunal the main contention raised by the appellant was in regard to the propriety and reasonableness of the demand and in regard to the practice prevailing in comparable concerns
Before this Court however the provision made by the award in regard to privilege leave has been attacked mainly on the ground that the Tribunal had no jurisdiction to make such an award having regard to the provisions of section 79 of the 63 of 1948 hereafter called the Act
It is urged that section 79 of the Act has made exhaustive and self contained provisions with regard to the granting of annual leave with wages to the employees to whom the said Act applies and the effect of section 79 is to introduce standardisation in the matter of leave which means neither the employer voluntarily nor an Industrial Tribunal by its award can add to the leave prescribed by the said section
In the matter of leave section 79 is a complete code and no additions to the said leave can be made either by a contract or by an award
It is common ground that the respondents are governed by the pro visions of the Act
This point was not raised before the Tribunal but since it is a point of law which arises on admitted facts we have permitted the learned Attorney General to argue it before us
The Act was first enacted in 1934 as Act 25 of 1934
Since then it has been amended from time to time
Its main object is to consolidate and amend the law regulating labour in factories
For the purpose of determining which concerns and which employees 300 would be governed by the Act section 2m and 1 define factory and worker respectively
Even a broad view of the scheme of the Act and a perusal of its provisions would clearly indicate that the Act is a beneficent measure and its policy is to make reasonable provisions for the preservation of health of the workmen their safety and their welfare
With that object in view the Act has made provisions for the regulation of working hours of adults has regulated the employment of young persons and has also provided for annual leave with wages to the workmen
The amendments made in the relevant provisions of the Act from time to time indicate that the Act has been pursuing its beneficent policy slowly but steadily and is attempting to provide for the workmen better and larger amenities in their employment
It is in the light of this obvious policy and object of the Act that we have to decide the question raised before us by the appellant
Section 791 occurs in Chapter VIII which deals with annual leave with wages
It provides thus 79
Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed during the subsequent calendar year leave with wages for a number of days calculated at the rate of i if an adult one day for every twenty days of work performed by him during the previous calendar year ii if a child one day for every fifteen days of work performed by him during the previous calendar year
Explanation 1 For the purpose of this sub section a any days of lay off by agreement or contract or as permissible under the standing orders b in the case of a female worker maternity leave for any number of days not exceeding twelve weeks and c the leave earned in the year prior to that in which the leave is enjoyed shall be deemed to be days on which the worker 301 has worked in a factory for the computation of the period of 240 days or more but he shall not earn leave for these days
 This section has 11 other sub sections which deal with different aspects and make relevant provisions in regard to annual leave with wages
It is not disputed that the award purports to make provisions for privilege leave in excess of the annual leave sanctioned by section 79
Can the Industrial Tribunal direct the appellant to provide such additional privilege leave to its employees in other words does section 79 purport to standardise annual leave with wages so that no departure from the said standard is permissible either way The appellant s contention is that except for pre existing awards agreements contracts or except for pre existing law no departure from the standardised provision is permissible after section 79 was enacted
This argument raises the question of construing section 79 in the light of the other relevant provisions of the Act
It may be conceded that the provisions made by section 79 are elaborate and in that sense may be treated as self contained and exhaustive
It is also clear that section 791 does not use the expression not more than or not less than as it might have done if the intention of the Legislature was to make its provisions correspond either to the minimum or the maximum leave claimable by the employees but even so when section 791 provides that every worker shall be allowed leave as therein prescribed the provision prima facie sound like a provision for the minimum rather than for the maximum leave which may be awarded to the worker
If the intention of the Legislature was to make the leave permissible under section 791 the maximum to which a workman would be entitled it would have used definite and appropriate language in that behalf
We are therefore inclined to think that even on a plain construction of section 791 it would be difficult to accede to the argument that it prescribes standardised leave which inevitably would mean the maximum permissible until section 791 itself is 302 Even on the basis that section 791 is capable of the construction sought to be placed on it by the appellant the question would still remain whether the Raid construction should be preferred to the alternative construction which as we have just indicated is reasonably possible
The answer to this question must be in the negative for two reasons first having regardto the obvious policy and object of the Act if section 791 is capable of two constructions that construction should be preferred which furthers the policy of the Act and is more beneficial to the employees in whose interest the Act has been passed
It is well settled that in construing the provisions of a welfare legislation courts should adopt what is sometimes described as a beneficent rule of construction but apart from this general consideration about the policy and object of the Act sections 78 and 84 occurring in the same Chapter as section 79 clearly indicate that section 791 is not intended to standardise leave provisions as contended by the appellant and that is the second reason why the appellant s argument cannot be accepted
Let us then consider the provisions of Bs
78 and 84
Section 781 provides that the provisions of Chapter VIII shall not operate to the prejudice of any right to which a worker may be entitled under any other law or under the terms of any award agreement or contract of service
There is a proviso to this sub section which lays down that when such award agreement or contract of service provides for longer annual leave with wages than provided in this Chapter the worker shall be entitled only to such longer annual leave
Section 782 exempts specified workers from the operation of Chapter VIII
The first difficulty which this section raises against appellant s argument is that it undoubtedly recognises exceptions to the leave prescribed by section 791
It is well known that standardisation of conditions of service in industrial adjudication generally does not recognise or permit exceptions if the hours of work are standardised for instance or the wage structure is standardised it is intended to make hours of work and wages uniform in the whose industry brought 303 under the working of standardisation Standardisation thus inevitably means levelling up of those whose terms and conditions of service were less favourable than the standardised ones and levelling down those of such others whose terms and conditions were more favourable than the standardised ones
That being so if section 791 intended to standardise annual leave with wages it would normally not have made provisions in regard to exceptions as section 781 obviously does
Besides the scope and extent of the exceptions recognised by section 781 are decisively against the appellant s construction of section 791
The learned Attorney General has strenuously contended that the saving provision of section 781 applies only to existing law and existing awards agreements or contracts of service in other words his argument is that the Legislature has deliberately decided to except pre existing arrangements and in that sense it is a departure from the usual concept of standardisation
In our opinion the assumption that section 781 is confined to existing arrangements is plainly inconsistent with a fair and reasonable construction of the said provision
When s781 refers to any other law it could not have been intended that it is only to existing laws that the reference is made and that the idea underlying the provision was that no law can be passed in future which would grant more generous leave to the employees
Such a restriction on the legislative activities of the appropriate Legislatures cannot obviously have been intended
If the reference to law is not confined only to existing law there is no reason why reference to any award agreement or contract of service should be similarly circumscribed or limited
We feel no difficulty in holding that what section 781 protects are laws awards agreements or contracts of service which were then existing or which would come into existence later that is to say section 781 does not affect preexisting arrangements and does not also prohibit future arrangements which would be more generous than section 791
A law may be passed making more generous provisions or agreements or contracts may 304 be entered into or awards made with the same result
If that be the true position section 781 clearly negatives the theory that section 791 provides for standardisation of annual leave with wages
The provisions of section 84 would also lead to the same result
Section 84 provides that where the State Government is satisfied that the leave rules applicable to workers in a factory provide benefits which in its opinion are not less favourable than those for which Chapter VIII makes provision it may by written order exempt the factory from all or any of the provisions of Chapter VIII subject to such conditions as may be specified in the order
Now the power to exempt factories has to be exercised having regard to the effect of the totality of the benefits which may be afforded to the workers by their respective factories
This power to exempt also necessarily postulates the existence of better amenities than those guaranteed by Chapter VIII and that means that if a factory provides better leave amenities to its employees the State Government may in the interest of the employees exempt the factory from the operation of this Chapter
The scope of section 84 like the scope of section 78 cannot be limited only to the more favourable benefits which may be existing at the date when the Act was passed
What is true about the existing benefits would be equally true about the benefits which may be granted by an employer to the employees in future
Let us illustrate what the con sequence would be if the appellant s argument is accepted
Take the case of an employer who has been exempted under section 84 on the ground that the benefits of leave conferred by him on his employees are more favourable to them
In such a case the employer may make his benefits still more favourable after exemption is accorded to him but an employer who has already not provided more favourable benefits would be effectively precluded from making any such provisions in future
It is difficult to imagine that such a consequence could have been intended by the provisions of this welfare legislation
305 The history of the amendments made in the relevant provisions of the Act also indicates that the Act has been gradually making more liberal provisions in  the interest of workmen to whom it applies
In the original Act as it was passed 25 of 1934 section 34 provided for weekly holiday but no provision was made for holidays with pay
When the said Act was amended by Act 3 of 1945 section 49A which is equivalent to present section 781 without the proviso was inserted and section 49B provided inter alia that every worker who has completed a period of twelve months continuous service in a factory shall be allowed during the subsequent period of twelve months holidays for a period of ten days
That is how provision for holidays came to be made
By the  amending Act 63 of 1948 section 78 with the present proviso was enacted and section 79 made a provision for annual leave with wages
While making provision for annual leave with wages the section then prescribed a minimum of ten days subsequently by amending Act 25 of 1954 section 79 as it stands at present was enacted and in section 78 the word annual has been added to qualify leave in the proviso
We have thus briefly referred to some changes made in the Act from time to time in order to show that subsequent amendments have sought to make the provisions more liberal
There is one more point which may incidentally be mentioned whilst we are considering the amendments made in the Act from time to time
Section 49A which broadly corresponds to section 78 of the present Act saved other laws and terms of any award agreement or contract of service just as section 781 does
Now if the said section is construed on the lines which the appellant wants us to construe section 781 it would only be arrangements existing at the date when the said amending Act came into force on January 1 1946 that would be protected and saved and nothing that happened either by way of legislation or by way of awards or contracts subsequent to the said date would attract the provisions of the said section 49A or section 78 which subsequently took its place
This obviously is not 39 306 intended by the Legislature which incidentally shows that section 781 cannot be confined to existing arrangements or laws but takes within its sweep future laws agreements contracts or awards
Therefore the challenge to the validity of the award based on the assumption that section 791 provides for standardised award of annual leave with wages fails
Then it is urged that the provision made by the award for privilege leave introduces discrimination between the clerical staff covered by the present reference and operatives covered by the earlier awards made by the same Tribunal
We were told that operatives had made a similar claim for privilege leave before the same Tribunal and the said claim had been rejected
The argument is that the provision for privilege leave made by the present award would create discontent amongst the operatives to whom similar leave has been denied and that would disturb industrial peace
We are not impressed by this argument
It is not seriously disputed that a distinction has generally been made between operatives who do manual work and clerical and other staff in fact the appellant s standing orders themselves make different relevant provisions for the two categories of its employees
It is also not disputed that in practice such distinction is made by comparable concerns and awards based on the same distinction are generally made in respect of the two separate categories of employees
We are therefore unable to appreciate the argument that in granting privilege leave to the present staff the Tribunal has either overlooked its earlier award or has made a decision which suffers from the vice of discrimination
The practice prevailing in comparable concerns and the trend of awards both seem to show that a distinction is generally made between the two categories of employees and since the said distinction is perfectly justifiable no question of discrimination can arise
It is then argued that making liberal provisions for privilege leave and sick leave are really opposed to the modern trend in industrial thought and so such liberal awards should be discouraged and corrected
307 There is no doubt that when industrial adjudication seeks to do social justice it cannot ignore the needs of national economy and so in considering matters of leave either in the form of privilege leave or sick leave the Tribunals should not ignore the consideration that unduly generous or liberal leave provisions would affect production and obviously production of essential commodities is in the interest of not only the employers and the employees but also of the general community but it is difficult for us to accept the argument that we should make suitable modifications in the provisions made by the award in regard to privilege leave or sick leave
These are matters primarily for the Industrial Tribunal to consider and decide
The Tribunal is more familiar with the trend prevailing in comparable concerns and unless it appears that the impugned provisions cannot be sustained on any reasonable ground or that they mark a violent departure from the prevailing practice or trend we would be reluctant to interfere with the decision of the Tribunal
After all in deciding what would be a reasonable provision for privilege leave or sick leave the Tribunal has to take into account all relevant factors and come to its own decision
As we have already indicated in making the present award the Tribunal has considered previous decisions which were relevant and prevailing agreements in comparable concerns
We have carefully considered the criticism made by the learned Attorney General against the provisions contained in the award but we are not satisfied that a case has been made out for interference in an appeal under article 136
The result is the appeal fails and is dismissed with costs
Appeal dismissed


Summary:
It is not correct to say that section 79 of the  standardises the grant of annual leave with wages to employees to whom the Act applies and that neither the employer by voluntary agreement nor the Industrial Tribunal by its award can vary that standard
It is well settled that in construing the provisions of a welfare legislation such as the Act in question which has for its object the preservation of the health safety and welfare of the workmen courts should apply the rule of beneficent construction and moreover sections 78 and 84 of the Act put it beyond doubt that section 791 is not intended to standardise annual leave with wages by providing the maximum
Rightly construed section 781 of the Act not only protects past laws awards agreements and contracts but also those that are to come into existence in the future and does not prohibit a more generous agreement than that prescribed by section 791
Likewise the scope of section 84 of the Act which in empowering the State to exempt a factory from all or any provisions of Ch
VIII of the Act contemplates better amenities than those guaranteed by the Chapter cannot be limited to benefits existing at the date of the Act but must also apply to future benefits which an employer may grant to his employees
Consequently in a case where the Industrial Tribunal on a consideration of awards and agreements between employers and employees in comparable concerns awarded annual leave in excess of what is prescribed by section 791 Held that the award was not open to challenge
Held further that the distinction generally made between operatives doing manual work and clerical and other staff is perfectly justifiable and so the award of privilege leave to the clerical staff could not be said to be discriminatory
Although the Industrial Tribunals in awarding privilege leave or sick leave must not fail to consider their effect on production and so on the interest of the community in general this Court would be reluctant under article 136 of the Constitution to interfere with an award unless its provisions are unsustainable on any reasonable grounds and make a violent departure from the practice and trend prevailing in comparable concerns
38 298