Appeals Nos 713 to 715 of 1957
Appeals by special leave from the judgment and order dated May 25 1956 of the Labour Appellate Tribunal of India Lucknow Bench in Appeals Nos 111 272 282 and 327 of 1955 arising out of an Award dated August 18 1955 of the Additional Industrial Tribunal Delhi
M C Setalvad Attorney General for India B Sen and section N Mukherjee for the appellants
A V Viswanatha Sastri and Janardan Sharma for the respondents
February 2
The Judgment of the Court was delivered by section K DAS J
These are three appeals by special leave
The appellant in all the three appeals is a company called Messrs Lipton Ltd London having an office at Asaf Ali Road New Delhi hereinafter referred to as the Lipton Ltd
The respondents are the employees of the Delhi office of the said Lipton Ltd represented by the Lipton Employees Union hereinafter referred to as the Union
On April 14 1958 a petition was filed on behalf of the appellant for an amendment of the cause title of the three appeals wherein it was stated that as a matter of internal arrangement the Board of Directors of the 153 Lipton Ltd London decided to separate the export side of its business from its internal trade in respect of its branch in India and on April 4 1957 a separate sterling company called Lipton India Ltd was incorporated in the United Kingdom and this new Company took over the internal side of the business in India on and from January 5 1958 but the export side of the business continued to be a branch of the Lipton Ltd London
Pursuant to the aforesaid arrangement the employees of the Delhi office of the Lipton Ltd were notified of the formation of the new Company and on and from January 5 1958 their services were transferred to Lipton India Ltd on condition that their services would be treated as continuous uninterrupted and on the same terms as before
On the aforesaid statements the appellant made a prayer that the cause title of the three appeals should be amended by substituting Lipton India Ltd in place of Lipton Ltd We directed that Lipton India Ltd be added as one of the appellants without prejudice to either party on the merits of the case
Two of the appeals Civil Appeals Nos 713 and 714 of 1957 were consolidated by an order of this Court and they raise certain common questions with regard to 1 fixation of grades and scales of pay of the respondent employees and 2 bonus for the year 195 1
The third appeal Civil Appeal No 715 of 1957 raises a somewhat different question with regard to overtime payment and is directed against an order of the Additional Industrial Tribunal Delhi dated October 15 1955 by which the Tribunal made a modification in its award dated August 18 1955 in respect of overtime payment
It will be convenient if Civil Appeal No 715 of 1957 is dealt with separately from the other two appeals
It is necessary now to state very briefly some of the facts which have given rise to these three appeals
The Lipton Ltd is a company incorporated in England having its registered office in London
Its business in the United Kingdom consists of stores and groceries including tea which represents only about 20 154 10 of its business there
Its operations in India are carried on by a branch with its head office in Calcutta
This branch which may be conveniently called the Indian branch has been operating in this country for more than 60 years
The company is principally interested in the sale of  packeted  tea throughout India together with small sales of imported tinned milk and also in the export of tea to all parts of the world
The Lipton Ltd does not own any tea gardens in India and has no financial interest in the producing side of the industry
All the teas which are sold in India or which are exported are purchased from producers in India either through public auctions in Calcutta and Cochin or by private contract
It has factories in Calcutta Allahabad and Conoor in which teas are blended and packed into retail packets for sale throughout India
It sells tea direct to retail dealers and with relatively minor exceptions does not operate through wholesalers
Dealers are supplied by the company s own salesmen each of whom has a sales depot at which he maintains stocks of the company s products
The salesman sells these teas at the company s wholesale prices to dealers for cash and remits the cash through banking channels to Calcutta
The sales Organisation is controlled through six offices one of which is located at Delhi
The Delhi office controls the salesmen and other employees employed in the Punjab Delhi State Rajasthan and Uttar Pradesh on its
business but the Delhi office has no connexion with the export side of the business
So far as the export business is concerned it consists of two different types of trade activities
In some foreign countries the Indian branch sells packet tea under the Lipton label on which it is able to make a profit these profits appear in the accounts of the Indian branch which are separately maintained and audited
This type of trade activity is mostly confined to Burma Iraq Iran and certain small Middle East countries
The greater part of the export trade however consists of purchases made at the Calcutta auctions on behalf of overseas buyers who utilise the services of Lipton s expert tea tasting staff in Calcutta 155 to buy tea on their account at the auctions and the Indian branch is remunerated for this service by the payment of a commission of one per cent
The Indian branch has no subscribed capital nor any reserves
A W Samuel Administrator Lipton Ltd thus explained the position with regard to the capital of the Indian branch in his evidence  Our Company has no subscribed capital in India nor any reserves
The capital used in India is money advanced from the company s fund in England and the amount of this advance at the balance sheet date is shown as the balance of the current account with the Liptons Ltd London
We have also to resort to overdraft on the local banks to meet the working capital demand in India 
It appears that an account is maintained which is known as the London General Account and the capital which enables the Indian branch to operate in India is recorded as the balance of the current account in the Indian books and to determine the amount of capital employed in India a daily average of the current account has to be taken and the working capital of the Indian branch is the amount by which the fixed current assets exceed the total liabilities
The Delhi office of the Indian branch employs peons sweepers van workers godown workers village salesmen drivers
junior clerks godown keepers senior clerks stenographers divisional salesmen and other categories of workers details whereof need not be set out in full at this stage
The case of the Union was that as far back as June 1951 the workers of the Delhi office had made a representation for an increase in pay the representation was repeated in April 1952
As the management did not accede to their request a union of Lipton employees was formed in September 1953
This Union framed a charter of demands and submitted it in December 1953
The charter of demands consisted of a large number of items and as the management contended that it as not in a position to meet the demands certain conciliation proceedings followed
They however came to nothing and on October 1 1954 the industrial dispute 156 between the Lipton Ltd and the Union was referred to the Additional Industrial Tribunal Delhi for adjudication
The reference set forth in a sub joined schedule the matters upon which adjudication was necessary and the schedule contained twenty terms of reference out of which the two items with which we are now concerned related to a fixation of grades and scales of pay including the question whether the new scales should be given retrospective effect from January 1 1953 and b bonus for each of the years 1951 1952 and 1953
After hearing the parties the Tribunal made its award on August 18 1955
It disallowed the claim of bonus but as to the fixation of grades and scales of pay it allowed an increase of about 20 per cent
to all workers over their present wages and proportionate increase in the dearness allowance details whereof we shall state at a later stage
As to overtime payment which was item No 8 of the terms of reference the Tribunal said  Since the company is allowed by law to take 48 hours work in a week from its employees it is only fair that if a worker puts in over time work in any week within a total of 48 working hours he should be only paid at the single rate for all over time work that he puts in between 39 and 48 hours in the week
If the over time work done by the worker brings his total working hours during the week to more than 48 hours any excess over time work above 48 hours should be paid at double the rate
I direct accordingly
 It may be stated here that there was a dispute about the working hours also and the Tribunal changed the working hours from 9 30 am 5 pm to 10 am5 pm on week days with half an hour s interval for lunch and 10 am to I pm on Saturdays thus bringing the total to 36 hours in a week
The question of over time arose only if a workman was asked to Work in excess of the working hours fixed by the Tribunal
On October 12 1955 the Union made an application in which it stated that the figure  39  occurring in paragraph 24 of the award relating to over time payment was obviously a mistake for  36  because the 157 learned Tribunal had fixed
in paragraph 23 of the award that the working hours of a workman should be 36 hours a week
The learned Tribunal considered this application without any notice to the present appellant and corrected the error by amending the figure 39 to 36
The Tribunal proceeded on the footing that the mistake was a clerical error due to an accidental slip which could be corrected under r 23 of the Industrial Disputes Central Rules 1947
Against the award of the Industrial Tribunal three appeals were taken to the Labour Appellate Tribunal Lucknow Bench
The two main appeals before the Appellate Tribunal namely No 272 of 1955 and No 282 of 1955 were filed by the Lipton Ltd and the Union respectively and related to the various items of the terms of reference on which the Industrial Tribunal had given its decision
The third appeal No 327 of 1955 related to the subsidiary matter of over time payment regarding which the Industrial Tribunal had amended its award
So far as the two items with which in Civil Appeals Nos 713 and 714 of 1957 we are now concerned the Labour Appellate Tribunal in its decision dated May 25 1956 upheld the decision of the Industrial Tribunal as respects fixation of grades and scales of pay comprised in the term of reference numbered 1 a it also upheld the decision of the Industrial Tribunal to give retrospective effect to the new scales of pay from January 1 1954 which was covered by the term of reference numbered I b
As to bonus which was item 4 of the terms of reference the Appellate Tribunal upheld the decision of the Industrial Tribunal with regard to the years 1952 and 1953 but for 1951 it awarded an extra two months salary as bonus for that year in addition to the bonus of one month s salary which the Lipton Ltd had already granted ex gratia to the workmen
As to the subsidiary appeal relating to the over time payment the Appellate Tribunal agreed with the view of the Industrial Tribunal that there was an error in computing the working hours and the error being of a clerical nature it was open to the Tribunal to correct it
From the decision of the Labour Appellate Tribunal 158 in the three appeals in question the appellant obtained special leave to appeal to this Court on June 27 1956 and in pursuance of the order of this Court granting such special leave the present appeals have been preferred
Civil Appeal No 715 of 1957
It is now convenient to dispose of Civil Appeal No 715 of 1957
We have no doubt in our mind that the error in computing the working hours with regard to over time payment was due to an accidental slip in making the calculation it was nothing but a clerical error which the Industrial Tribunal was entitled to correct even without notice to the appellant
The learned Attorney General who appeared for the appellant in these three appeals has not pressed Appeal No 715 of 1957
This appeal must accordingly be dismissed with costs
Civil Appeals Nos 713 and 714 of 1957
We now turn to the other two appeals namely Civil Appeals 713 and 714 of 1957
We have already stated that the only points which survive for decision are those relating to items 1a 1b and 4 of the terms of reference
These items relate to fixation of grades and scales of pay whether retrospective effect should be given to the new scales of pay and bonus for 1951
The other items of the award relating to City compensatory allowance leave holidays etc have not been challenged before us
We are therefore saying nothing about those items of the award which must necessarily stand
It may be made clear however at this stage that one of the points taken before the Industrial Tribunal on behalf of the Lipton Ltd was that the Industrial Tribunal had no jurisdiction to make an award in respect of employees of the Delhi office who were employed outside the State of Delhi
This point of jurisdiction was decided against the appellant and the Industrial Tribunal pointed out that all the workmen of the Delhi office whether they worked in Delhi or not received their salaries from the Delhi office they were controlled from the Delhi office in the matter of leave transfer supervision etc and therefore the Delhi State Government was the appropriate Government within the meaning of section 2 of the Industrial 159 Disputes Act 1947 relating to the dispute which arose between the Lipton Ltd and the Union and under section 18 of the said Act the award made by the Tribunal was binding on all persons employed in the Delhi office
The Appellate Tribunal upheld the decision of the Industrial Tribunal on this point and though this question of jurisdiction was raised in the appeals before us it was not seriously pressed by the learned AttorneyGeneral
We are of the view that the Industrial Tribunal had jurisdiction to adjudicate on the dispute between the Lipton Ltd and its workmen of the Delhi office
Now we go on to the two main points urged on behalf of the appellant
We take up first the question of bonus
Item 4 of the terms of reference related to bonus and the claim of the Union was made in two parts
Item 4 reads thus  Bonus a Whether every workman be paid bonus at the rate of 5 months  salary for each of the years 1951 1952 and 1953 and what other directions are necessary in this respect  b Whether special bonus equivalent to three months salary should be paid to all workmen in honour of the company s Diamond Jubilee celebration for the year 1953   Before the Industrial Tribunal the claim of the Union was that the total global profits of the Lipton Ltd should be the basis for determining the claim to bonus  the contention on behalf of the Lipton Ltd was that the profits of the Indian business only should be taken into account in assessing any available surplus for the payment of bonus
The Industrial Tribunal held that as both labour and capital contributed to the earnings of an industrial concern labour must have its legitimate share of the profits to which it has contributed since however the employees of the Lipton Ltd in India do not by any stretch of reasoning contribute to the profits which accrue to the Lipton Ltd in respect of its trading activities outside India the employees in India cannot claim bonus on account of any profits which the Lipton Ltd derive from its ex India business
On this footing the 160 Industrial Tribunal considered the question of bonus and held that for 1951 there was no available surplus for distribution as bonus to the employees in India in accordance with the formula evolved by the Full Bench of the Labour Appellate Tribunal in Millowner s Association Bombay vs Rashtriya Mill Mazdoor Sangh 1 generally though not completely approved by this Court in Muir Mills Co  Ltd vs Suti Mills Mazdoor Union Kanpur 2
For 1952 and 1953 the claim of the Union for bonus the Industrial Tribunal held was still weaker because in those years there was still less available surplus for distribution as bonus to its workers and so far as the second part of the claim of the Union namely Diamond Jubilee bonus was concerned the Industrial Tribunal rejected it outright
The Labour Appellate Tribunal substantially affirmed the decision of the Industrial Tribunal and gave several reasons why the global profits of the Lipton Ltd could not be taken into account for the payment of bonus to its workers in India
After having given those reasons the Labour Appellate Tribunal referred to the auditors  report dated March 17 1952 with regard to the profit and loss account and balance sheet of the Indian business as on January 5 1952
In that report which related to the year 1951 it was stated that the value of the stocks of tea held at the end of 1951 had been written down below cost by Rs 993824 5 3
The auditors  report then said  We estimate the net realisable value of the total stocks of tea as on January 5 1952 to be in excess of their cost and therefore in our opinion such stocks have been undervalued to the extent of the above reduction below cost
 Relying on this report the Labour Appellate Tribunal added back Rs 993824 to the available surplus of Rs 966654 which the profit and loss account of the Indian business for the year 1951 showed
Adding the two figures the Labour Appellate Tribunal opined that the available surplus at the end of 1951 was Rs 1960478
After deducting therefrom the 1 2  161 legitimate prior charges on account of a rehabilitation b a four per cent
return on capital and c one month s bonus already paid to the workers the Labour Appellate Tribunal came to the conclusion that there was a clear available surplus of Rs 411478 for distribution of extra bonus over and above the bonus of one month s salary
which the Lipton Ltd had already paid to its workers
It has been contended before us and rightly in our opinion that the Labour Appellate Tribunal committed a manifest error with regard to the sum of Rs 993824 and odd
It is true that the auditors in their report referred to the under valuation of the stock of tea available at the end of 1951 by a sum of Rs 993824 and odd
An explanation of such undervaluation was given in the written statement of the Lipton Ltd dated February 8 1955
It was stated therein  It is a well recollected fact and the Court will not need evidence in support of this that the tea market dropped rapidly and in a catastrophic fashion towards the end of 1951
As a result of this the Company apprehended severe losses on the stocks which it was carrying and provision for this loss was made in the 1951 accounts by an adjustment to the value of stocks of tea on hand at the end of December 1951
The amount of this adjustment was Rs 993824
As a result of this the profits made during 1951 were understated in the company s accounts and overstated in the accounts for 1952
It should be noted that the Income tax Department insisted that these profits were made in 1951 and not in 1952 and the Company was taxed accordingly
 What is worthy of note is that when the Income tax Department insisted that the sum of Rs 993824 should be treated as the profits of 1951 the said amount was added back in the summarised profit and loss account of the Indian branch and the available surplus of Rs 966654 was shown therein after having taken into consideration the sum of Rs 993824
This is clear from the summarised profit and loss account 21 162 of the Indian branch
It is clear therefore that the 1951 profit and loss account took into consideration the sum of Rs 993824 and after adding back that sum to the profits of 1951 the available surplus of Rs 966654 was arrived at
The Labour Appellate Tribunal was therefore manifestly in error in adding back the sum of Rs 993824 because that amount had already been added back in arriving at the available surplus of 1951
Thus the main reason which the Labour Appellate Tribunal gave for its decision to award the payment of extra bonus for 1951 disappears and it is not disputed that if the available surplus for 1951 was only Rs 966654 then after making the necessary deduction for prior charges nothing would be left for payment as extra bonus in 1951 to the workers in India
So far as the other two years 1952 and 1953 are concerned it is unnecessary to consider the profits of those two years because there is no appeal before us on behalf of the Union
On behalf of the Union however it has been very strongly contended that the bonus for 1951 as awarded by the Labour Appellate Tribunal can be justified if the global profits of the Lipton Ltd are taken into consideration and it has been argued before us that there is no reason why the Lipton Ltd should not be treated as one integrated industry which has trading activities in various countries and for the purpose of the payment of bonus why the total global profits of the Lipton Ltd should not be taken into consideration
We do not think that the Union is justified in asking for bonus for a particular year on the basis of the world profits of the Lipton Ltd The true nature of a claim for bonus has been the subject of many decisions in Labour Tribunals and Courts
It has been judicially recognised that bonus is not deferred wage and the justification for a demand of bonus as an  industrial claim  arises when wages fall short of the living wage and the industry makes sufficient profits to which both labour and capital have contributed
Substantially the claim for bonus is a claim which is paid out of the available surplus from the profits of an 163 industrial undertaking to which both labour and capital have contributed
This aspect of bonus was considered in
Muir Mills Co Ltd vs Suti Mills Mazdoor Union Kanpur 1
It has also been said in some cases that bonus is a temporary and partial filling up of the gap that exists between a living wage and the actual wage paid where the goal of living wage has been attained bonus is a mere cash incentive to greater efficiency and production but where an industry has not the capacity to pay a living wage or its capacity varies or is expected to vary from year to year so that the industry cannot afford to pay a living wage the payment of bonus may be looked upon as a temporary satisfaction wholly or in part of the needs of the employees
Learned counsel for the Union has emphasised this latter aspect and has contended that there is nothing unfair in considering the global profits of the Lipton Ltd in awarding a temporary satisfaction in part of the needs of its Indian employees
We do not think that it is necessary or advisable to lay down any inflexible general rule as to the basis of a claim for bonus by some of its employees in an industrial undertaking which carries on trade activities in several countries or even in different parts of the same country
So far as foreign countries are concerned many considerations such as restrictions on foreign remittances and other trade restrictions may have to be taken into account in determining the question as in Ganesh Flour Mills vs Employees of Ganesh Flour Mills 2
There are a number of decisions of Labour Tribunals most of which were noticed in Ganesh Flour Mills Co Ltd vs Employees of Ganesh Flour Mills 2 where a distinction has been made between a parent concern and subsidiary concerns or even between different units of the same concern and speaking generally the test laid down for the payment of bonus in such cases is 1 if the different units are so connected together or integrated that the payment of bonus to one section of employees will violate the principle that all workers should share in the prosperity to which they have jointly contributed or 2 the 1  2 AIR 1958 SC 382
164 different units are so separated or unconnected that the trade activity of one and the contribution of labour made in the profits thereof has no necessary connexion with the trade activity and profits of the other units
In the former case the undertaking has been treated as a whole as in Burn and Co Calcutta vs Their Employees 1 and Baroda Borough Municipality vs Its Workmen2  in the latter it has been held that each unit must rest its claim for bonus on the profits made by that unit
Whether a particular case comes under the former category or the latter must depend on its own facts and circumstances and we may readily agree that the more keeping of separate accounts may not in all cases be the proper criterion for determining whether the different units are integrated or not
For the purpose of these appeals it is sufficient however to state that in view of the findings arrived at by the Tribunals below it will be unfair and unjust to grant bonus to the Indian workers on the global profits of the Lipton Ltd The Tribunals below have clearly found that the Indian workmen do not in any way contribute to the profits which the Lipton Ltd derive from its ex India business
As a matter of fact even the nature of the trade activity is not quite the same  tea represents only about 10 per cent
of the trading activities of the Lipton Ltd in the United Kingdom whereas tea is the main commodity of the trading activity of the Indian branch
The Indian branch maintains separate accounts which have been audited and accepted by the Income tax authorities as showing the profit and loss of the Indian branch of the business
The Labour Appellate Tribunal has very clearly found that though at the relevant time the Lipton Ltd was one legal entity and the capital of the Indian branch came from London the Indian branch was treated as a separate entity for all practical purposes
It said  Lipton London never interferes with the trading operations of Lipton India in India
Lipton India buys vast quantity of tea amounting to millions 1  2  165 of tons at auctions in India and sells the same loose or in packets at a profit in the markets of India
Profits thus made go entirely to the credit of the Indian concern
No part of the profits is diverted to England
Lipton India also purchases tea for export
Trading results of Lipton India must be regarded to be restricted to the earning of commission on tea exported and returns on sale of tea loose or in packets in the internal markets in India
Lipton India has got to pay income tax to the Government of India on the basis of its earnings on those two heads
Workmen of the Indian Organisation have to work mainly for purchase of tea at auctions in India for sale of tea at profit in Indian markets and for export of tea on commission to a lesser extent
Therefore the returns on these heads are the only things upon which the staff of the Indian Organisation may depend for bonus
 In the appeals before us the claim for bonus was made really on the basis of an available surplus of profits and we agree with the Labour Appellate Tribunal that the Indian workers can claim bonus if there is an available surplus of profits out of the Indian business
In the circumstances in which the Lipton Ltd operated in India at the relevant time it would be unjust to award bonus to the Indian work men on the basis of the global profits of the Lipton Lid
It is not disputed that the Lipton Ltd is a very big Organisation and has huge reserves which were built up in previous years out of its world profits
There is no evidence to show to what extent if any the Indian business contributed to those profits
On the finding of the Labour Appellate Tribunal that no part of the profits made in India is diverted to England and on the further finding that the Indian business depends on its own trading results we are of the view that the Tribunals below correctly held that the global profits of the Lipton Ltd could not be the basis for awarding bonus to its Indian workmen
There was some argument before us as to whether the 1 commission which the Indian branch earned on the export of tea correctly represented the proper remuneration payable to the Indian business
That 166 however is a question which we do not think is open to enquiry in the present appeals
The Income tax authorities accepted as correct the returns of the Lipton Ltd as to their Indian business
It was not suggested that anything more than 1 was in fact taken as commission by the Indian branch or that the accounts were  cooked  in that respect
Whether the 1 commission was the normal market rate of commission for purchases on behalf of overseas buyers was not investigated  on the contrary the accounts filed by the Lipton Ltd in this respect were accepted as correct
That being the position it is not open to the respondent to contend that the available surplus should be determined on mere speculation as to what the Indian branch should have earned in the export side of its business
On a consideration of all the relevant factors we are of the view that the Labour Appellate Tribunal was in error in awarding an extra two months  bonus for 1951 and the decision of the Industrial Tribunal was correct
Therefore the award in so far as it directs the payment of extra two months  bonus for 1951 must be set aside
We now go to the more difficult question of fixation of grades and wages
What the Union demanded in the matter of fixation of grades and scales of pay will appear from the terms of reference
These terms were  Fixation of grades and scales of pay 1a Whether the following pay scales should be adopted and what directions are necessary in this respect Peon Sweeper Van Mazdurs and God 
60 3 90 4 130 5 155
own Mazdurs
Village salesmen
70 5 120 7 12 195 10 245
Drivers  Rs
90 712 150 10 250 15 325
Junior Clerks Typ ists Salesmen and Assistant Godown
90 712 150 10 250 15 325
Keepers
Godown Keepers
120 10 200 12 320 20 460
167 Senior Clerks Steno graphers Compto 
150 10 250 15 400 20 500
meter operator and Div
Salesmen
b Whether pay scales as stated in a  above should come into effect retrospectively from 1 1 53 and what should be the method of adjustments while fixing the actual pay in the revised scale  The Industrial Tribunal gave an increase of 20 to all workers and set out in tabular form the category of workers their present grades and the revised grades which the Tribunal was allowing on the basis of a 20 increase
It is necessary to set out the tabular form here CATEGORY PRESENT REVISED GRADE GRADE Peons Sweepers Van Mazdoors and Godown Mazdoors
27 2 45 35 2 55 Village Salesman
40 0 50 50 2 60 Drivers
65 3 95 78 3 114 Junior Clerks and Typists
70 5 125 84 6 150 Salesman
50 0 75 60 5 90 Godown Keepers Gr
1 70 5 130 84 6 150 2 125 8 200 150 9 240 3 195 10 235 230 10 280 Senior Clerks and Comptometer Operators
120 8 200 140 10 240 Stenographers
125 8 205 150 10 240 Divisional Salesman 80 0 125 100 10 150
 As to the date from which the revised grades were to take effect the Tribunal directed that they should have retrospective effect from January 1 1954 instead of January 1 1953 as claimed by the Union
This direction the Tribunal gave because the Union had presented its demands to the Lipton Ltd for the first time towards the end of December 1953
The Tribunal also gave certain directions as to how the present employees should be brought into the 168 new scales and what adjustments should be made therefor
The Tribunal proceeded on the footing that the existing wage structure though not far below what it called the minimum fair wage was far below the standard of a living wage the progressive attainment of which the Tribunal said is the aim of all labour laws
The Tribunal then considered the question of financial capacity of the Lipton Ltd to bear a higher wage structure and expressed itself as follows   Since as remarked before the existing wage level of the company s employees cannot be said to be far below the minimum fair wage level obtaining in this country this wage level can be increased only if it can be found that the company is in a financially sound position to bear the additional burden
This again brings us face to face with the question whether it is the company s capacity to pay on an all world basis that should be considered for this purpose or only the prosperity of its Indian branch
So far as bonus is concerned since bonus according to the latest theory represents a due share of the labour in the profits of business so largely contributed to by it profit accruing from foreign business does not come into the picture in distributing bonus
The same principle cannot be extended to the fixing of the wage level of the workers for all the employees in India are of course employees of the parent company    
The company s global resources cannot therefore be disregarded in determining its capacity to pay
At the same time the company s overall balance sheet and state of business cannot furnish the sole criterion for the fixing of the upper limit of the fair wage in India for if a burden is imposed upon the company which is out of all proportion to the income that it derives from the business in India the company may very well be tempted to close down its business in India and employ the capital thus released elsewhere
No one can be happy over a situation like this the company s employees least of all
While therefore the company s global capacity to pay cannot be kept 169 out of consideration in fixing the wage level of its Indian employees any increase in the wages cannot be granted on a level that would not leave it worth while for the company to continue its business in India
In other words while the company s overall prosperity may be considered in fixing the wage level in India I should see to it that the increase should not be such that it drives the company out of India altogether
 The Tribunal pointed out that according to the last balance sheet filed in the case the share capital of the Lipton Ltd amounted in 1954 to pound 275000 but the balance sheet however shows pound 2500000 while the reserve capital stood at pound 360417
The Tribunal expressed the view that having regard to its global resources the Lipton Ltd was financially able to bear a slightly higher wage structure in order to bridge the gap in part at least between the existing wage structure and the living wage standard
The Tribunal also referred to the circumstance that though the Lipton Ltd had incurred losses in 1949 and 1950 it bad turned the corner in 1951 and the Company having overhauled its system of sales there was a rea sonable expectation of larger profits in future years
The Tribunal said that in the course of arguments before it it put to the parties whether an overall increase of five lakhs of rupees in the wage structure on an all India basis could be borne by the company
The Tribunal then said  Mr Samuel was prepared to accept this additional burden on the condition that in future there will be no liability on the Company to pay bonus to their workers on an ex gratia basis which they have been paying so far to their workers every year at the rate of one month s basic salary On the aforesaid grounds the Tribunal came to the conclusion that the Lipton Ltd could easily stand an additional burden to the tune of five or six lakhs of rupees over the wages and dearness allowance at present paid to its employees all over India and as the total annual wage bill of the Indian workmen was 22 170 in the neighbourhood of about twenty lakhs an increase of 20 allowed to all workers over their present wages and proportionate increase in the dearness allowance would not exceed six lakhs
On this basis the Industrial Tribunal gave its award
The Labour Appellate Tribunal substantially affirmed the reasons given by the Industrial Tribunal and said that the two questions which arose for determination were 1 whether the existing scales of pay required revision and 2 whether the revised scales as fixed by the Industrial Tribunal were unwarranted and beyond the financial capacity of the Lipton Ltd Both these questions the Appellate Tribunal answered in favour of the respondent workmen
In the appeals before us the learned AttorneyGeneral appearing for the Lipton Ltd has very strongly contended that the reasons given by the Tribunals below for a revision of the wage structure are unsound in principle and unjustified on facts  he has particularly laid stress on the contradiction involved in taking the global financial resources of the Lipton Ltd in support of an increase in wages while holding that the Indian branch is a separate entity dependent on its own profits for the payment of bonus
He has also submitted that the financial resources of the Indian branch do not show any capacity to pay higher wages nor was there according to him any reliable evidence to show that the existing wage structure required revision if it was compared to the wage structure in similar industries in the Delhi region
He pointed out that the Tribunal was wrong in thinking that the Lipton Ltd turned the corner in 1951 and that there was a reasonable expectation of larger profits in future years and in support of his contention he referred to the appellant s statement of the case wherein the appellant stated in the following chart from the profit and loss figures of
the Indian branch from 1949 to 1957 in the context of its average capital 171 1949 1950 1951 1952 1953 1954 1955 1956 1957 in lakhs of rupees 1 2 year
Average Capital re presenting 162 158 167 209 195 235 245 193 165 Head office Current Ac count
Net Profit after taxa 82 36 24 63 7082 28 106 66 tion lossloss loss loss Percen tage of Net ProfitLoss 51 23 14 30 36 35 10 55 36 to the Aver loss loss loss loss age Capital The learned Attorney General then referred to the alleged admission of Samuel as to the capacity of the Lipton Ltd to bear an additional burden of about five lakhs and drew our attention to the affidavit of section K Choudhury personnel officer of the Lipton Ltd made before the Appellate Tribunal in which it was stated that Samuel never agreed that the appellant was able to bear an additional burden of five lakhs in the wage structure
On these submissions the learned Attorney General has very strongly contended that the Tribunals below were wrong in principle as well as on facts in disturbing the present wage structure
We think that in the main three questions arise for consideration 1 were the Tribunals below wrong in having regard to the global financial resources of the Lipton Ltd in fixing the wage structure whereas for the payment of bonus the profits of the Indian branch only were taken into consideration 2 did the existing wage structure require revision and was there any reliable evidence to show the wage structure of any comparable industry in the same region on the assumption that the capacity to pay should be gauged on the industry cum region basis and 3 has Lipton Ltd financial capacity to bear the additional burden on its Indian resources  172 It is necessary first to state that there is a distinction between bonus and wage a distinction to which we had earlier adverted in this judgment
Bonus comes out of profits and can claim no priority over dividend or other prior charges bonus is paid if after meeting prior charges there is an available surplus
Wages stand on a somewhat different footing wages primarily rest on contract and are determined on a long term basis and are not necessarily dependent on profits made in a particular year
The distinction between the two has been adverted to in two recent decisions of this Court Messrs Crown Aluminium Works vs Their Workmen 1 and Express Newspapers Private Ltd vs The Union of India 2
In the Crown Aluminium Works 1 this Court has observed  The old principle of the absolute freedom of contract and the doctrine of laissez faire have yielded place to new principles of social welfare and common good
Labour naturally looks upon the constitution of wage structures as affording  a bulwark against the dangers of a depression safeguard against unfair methods of competition between employers and a guarantee of wages necessary for the minimum requirements of employees 
There can be no doubt that in fixing wage structures in different industries industrial adjudication attempts
gradually and by stages though it may be to attain the principal objective of a welfare state to secure to all citizens justice social and economic To the attainment of this ideal the Indian Constitution has given a place of pride and that is the basis of the new guiding principles of social welfare and common good to which we have just referred
 In so far as bare minimum wage is concerned it has been held that no industry has the right to exist unless it is able to pay its workmen at least a bare minimum wage in other words minimum wage is the first charge on an industry
In the later decision of the Express NewsPapers Private Ltd 2 the three concepts of the minimum wage fair wage and living wage have been examined and it has been pointed out that 1   660
2 173 the content of the expressions  minimum wage   fair wage  and  living wage  is not fixed and static it varies and is bound to vary from time to time
The present case is not one of payment of the minimum wage it is a case of payment of a fair wage which still falls short of a living wage
For the payment of a fair wage as for a living wage the financial capacity of the industry is undoubtedly a relevant consideration
The question before us is how is the financial capacity of the Lipton Ltd to be judged The question of the capacity of the industry to pay a fair wage has been considered in the Express Newspapers Private Ltd 1 at p 89 and the following observations are apposite  The capacity of industry to pay can mean one of three things viz i the capacity of a particular unit marginal representative or average to pay ii the capacity of a particular industry as a whole to pay or iii the capacity of all industries in the country to pay
The Committee on Fair Wages had said pp 13 15 of the report   In determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all industries in the country
The relevant criterion should be the capacity of a particular industry in a specified region and as far as possible the same wages should be prescribed for all units of that industry in that region
 This is known as the industry cum region basis for the fixation of wages
In the Express Newspapers Private Ltd 1 this Court has laid down the following principles for the fixation of wages at p 92  The principles which emerge from the above discussion are 1 that in the fixation of rates of wages which include within its compass the fixation of scales of wages also the capacity of the industry to pay is one 1 174 of the essential circumstances to be taken into con sideration except in cases of bare subsistence or mini
mum wage where the employer is bound to pay the same irrespective of such capacity 2 that the capacity of the industry to pay is to be considered on an industry cum region basis after taking a fair cross section of the industry and 3 that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product the possibility of tightening up the Organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business
 We do not think that it is necessary to decide in the present case whether the Tribunals below were right in having regard to the global resources of the Lipton Ltd in the matter of the revision of the wagestructure because we consider that on an application of the principle of industry cum region the revision of the wage structure made by the Tribunals below cannot be said to be unjustified on the financial resources of the Lipton Ltd as disclosed by its trading results in India
The learned Attorney General has referred to certain larger considerations he has suggested that if the global resources of a company like the Lipton Ltd which operates in several countries are taken into consideration in determining the wage structure it way result in disparity of wages in different regions giving rise to industrial unrest and it may also have the effect of stopping new industries in this country and thereby increase unemployment
These are matters which may require serious consideration in a more appropriate case but in the present case we may examine the problem from the narrower point of view namely the trading results in India if the Lipton Ltd We may first
dispose of a subsidiary but connected 175 point
In the Industrial Tribunal the case proceeded on the footing that the Lipton Ltd had a uniform system of wages in India and if the wage structure of the Delhi employees was revised it would mean revising the wage structure of the employees in other Indian offices as well
It was further suggested that if the wage structure was uniformly revised at all other places then the cost of the increase in wages taken along with the cost of other reliefs granted by the Industrial Tribunal would be much more than five or six lakhs
We do not think that this would be a good ground for setting aside the award
The Industrial Tribunal Delhi had jurisdiction to make an award in respect of the employees of the Delhi office only  it had no jurisdiction to make an all India award
Moreover if the true principle for fixation of wages is region cum industry then there is no reason why the Delhi award should automatically apply to all the other regions
It has not been disputed before us that the existing wage of the Delhi employees is far below the living wage
The first question is was there any reliable evidence to show that in comparable industries in the same region the wages were higher and therefore the wage structure required revision to the extent allowed by the Industrial Tribunal
On behalf of the Union evidence was given about the scales of pay of employees in the Delhi office of a number of industrial undertakings such as the Standard Vacuum Oil Company Thomas Cook Continental Overseas Burma Shell Lever Brothers India Ltd and Associated Companies and Marshall Sons and Co India Ltd
On behalf of the appellant it has been contended that none of the above are comparable industries some are oil companies some engineering concerns and some manufacturing concerns
On behalf of the Union it has been pointed out that so far as the drivers sweepers peons clerks godown keepers typists stenogra phers and the like are concerned and these form the bulk of the employees their nature of work is about the same in all the aforesaid industries and therefore there was a basis for comparison on which the 176 Tribunals below could proceed
We are of the view that it is impossible to say in this case that there was no evidence on which the Tribunals could proceed to revise the wage structure on the contrary there was evidence accepted by the Tribunals below which justified a revision of the wage structure
The Appellate Tribunal also referred to the scales of pay obtaining in Brooke Bond India and opined that the appellant s scales of pay were lower than the Brooke Bond scales
This opinion of the Appellate Tribunal has been challenged before us firstly it has been contended that though Brooke Bond has a similar trading activity in tea it is not a comparable industry because it owns tea gardens in India secondly it has been pointed out that no evidence of the Brooke Bond s scales of pay was given and the opinion of the Appellate Tribunal was a mere surmise
It appears that no evidence was given before the Industrial Tribunal about the Brooke Bond s scales of pay but some additional evidence was offered at the appellate stage this was not however accepted
In the circumstances we do not think that the Brooke Bond s scales of pay can be taken into consideration
But as we have earlier said there was other evidence on which a comparison could be and was made by the Tribunals below
That comparison justified an increase in the The next question is do the trading results in India of the Lipton Ltd show that it has the financial capacity to bear the burden of the wave increase The statement in chart form of the profit and loss figures from 1949 1957 to which we have earlier referred shows that net profits in 1952 exceeded six lakhs in 1953 seven lakhs in 1954 eight lakhs and in 1956 ten lakhs
We have said earlier that wages do not necessarily come out of the net profits of a particular year and it cannot be said that a fair wage must inevitably be postponed till a fair return on capital is obtained
Wages are fixed on a long term basis and depend also on the cost of living and the needs of workmen
Judging the trading results of the Indian business of the Lipton Ltd over a period of years 177 we cannot say that the Tribunals below committed any error in revising the wage structure
It is germane to point out here that Samuel s evidence showed that the managerial staff of the Indian business recruited in England receive very high salaries
Samuel said that the General Manager who is the Chief Executive Officer of the Indian branch of the Lipton Ltd gets a salary of Rs 5000 per month
The next officer is the Administrator whose pay is Rs 4250 per month
The third man who is the Manager of the Tea Depart ment gets the same pay as the Administrator
The fourth is the Accountant of the company and his pay is Rs 3800 per month
The fifth is the Marketing Controller whose pay is Rs 3650 per month
The Factory Manager gets Rs 3350 per month
There are several other officers who also get a very high salary and the total number of covenated Executive Officers consists of 32 Europeans and 17 Indians
Now the point taken on behalf of the Union is that the wage structure of the Indian branch is top heavy in the sense that the higher administrative officers get a salary which is out of all proportion to the wage scale of the employees with whom we are now concerned
It is further contended that the high salaries paid to the superior Executive show 1 that the wage structure of the lower employees requires revision and 2 that the financial capacity of the Indian branch is not as negligible as the appellant wants to make out
We think however that it is not the duty of a Labour Tribunal or Court to dictate to an industrial concern what salaries should be paid to superior executive officers who are not workmen within the meaning of the IndustrialDisputes Act 1947
We have pointed out however in the Express Newspapers Private Ltd 1 that  the possibility of tightening up the organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production must be considered in conjunction with the elasticity of demand for the product 1 23 178 no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business 
This is an aspect of the matter which the Tribunals below had considered and the Industrial Tribunal had particularly said that the increase in the wage structure was not such as would drive the Lipton Ltd out of its Indian business
Our attention has been drawn to the financial implications of the award and it has been pointed out that the total annual cost to the company of the increase in the wage structure of the employees in the Delhi office would be in the neighbourhood of Rs 49721 per year on an all India basis it would be in the neighbourhood of Rs 271000 and odd
Having regard to the evidence which Samuel gave it cannot be said that the burden of the increased rate was such as would be beyond the financial resources of the Lip ton Ltd on its trading results in India or was such as would drive the Lipton Ltd out of India
Even on the basis of all the reliefs granted by the award the total cost to the company for the Delhi office would be in the neighbourhood of Rs 115000 and on an all India basis Rs 634000
We have said earlier that the award was not an all India award and so far as the fixation of wages is concerned it must be judged on the principle of industry cum region
So judged we do not think that the increase is beyond the financial resources of the Lipton Ltd as disclosed by its trading results in India
On behalf of the appellant it has been submitted that one of the tests for measuring the capacity of the industry to pay the increased wage is amongst others the selling price of the product and it has been pointed out that by reason of the imposition in 1953 of an excise duty of three annas per pound of packet tea there is serious competition from those who sell tea in loose form and any further increase in price will give rise to consumers  resistance and ultimately result in lesser sale and lesser profits
In our opinion the industrial Tribunal rightly pointed out that the moderate increase in the wage scale proposed by it would only 179 be a very small fraction of the overall cost of production of a packet of tea and would have very little repercussion in its price
Lastly our attention was drawn to an award of the Special Industrial Tribunal Madras dated October 15 1956 between the management of the Lipton Ltd Madras and its workers employed in Madras where on more or less similar facts the Industrial Tribunal repelled the argument on behalf of the workmen that the global financial position of the Lipton Ltd should be taken into account in considering the capacity of the company to pay higher salaries and dearness allowance and it was held that the Lipton Ltd could not be burdened with any additional liability and the employees must wait for better days
That award is not the subject of the present appeals and we consider it unnecessary and indeed inadvisable to make any pronouncement as to the correctness or otherwise of that award
The only other point which requires consideration is the question of the date from which the new scales of pay should come into effect
The Industrial Tribunal fixed January 1 1954 on the ground that the Union had presented its charter of demands to the appellant for the first time towards the end of December 1953
We are unable to agree with the Tribunals below that the circumstance that a charter of demands was presented in December 1953 is a good ground for giving retrospective effect to the new scales of pay
The charter of demands presented by the Union consisted of 20 items and in the matter of the wage scale what the Union demanded was in some cases more than 50 to 75 increase on the existing scales of pay
Obviously the demands were exorbitant and the management was justified in refusing to accept the demands in toto
We are therefore unable to agree that retrospective effect should be given to the new scales of pay from January 1 1954
The award was made on August 18 1955 and it was published on October 6 1955
We think that it will be more just to bring the new scales of pay with effect from November 1 1955 and we direct accordingly  The other directions given 180 by the Industrial Tribunal to bring the present employees into the new scales of pay will stand subject to the necessary modification that instead of January 1 1954 the relevant date should be November 1 1955
The result therefore is as follows Appeal No 715 of 1957 is dismissed with costs
Appeals Nos 713 and 714 of 1957 are allowed to the extent indicated above
The order for the grant of bonus for 1951 is set aside and the new scales of pay will take effect from November 1 1955 instead of from January 1 1954
There will be no order for costs in these two appeals
Appeals Nos 713 and 714 allowed in part
Appeal No 715 dismissed


Summary:
The appellant a Stage Carriage Operator filed an appli cation for renewal of his permit under section 582 of the and his application was notified
However before the renewal could be granted the came into force
The respondent had also applied for a fresh permit on the same route on which the appellant was operating his carriage
The Regional Transport Authority allowed renewal of the appellant s permit and rejected the respondent s application
On respondent s appeal the State Transport Appellate Tribunal held that no appeal against renewal was maintainable
The respondent filed a writ petition and the High Court allowed it by holding that right to seek renewal of a permit was not a vested right but was merely an incohate right which ripened into a right only on being granted with the coming into force of 1988 Act the 1939 Act was repealed as a result of which the appellant s application for renewal ceased to exist and consequently the Regional Transport Authority was not empowered to grant a renewal of permit
Against the decision of the High Court an appeal was filed in this Court
Allowing the appeal and setting aside the order of the High Court this Court 306 HELD 1
The High Court committed a manifest error of law in rejecting the appellant s application of renewal on the ground that the new Act had come into force
310 H 11 Although section 582 of the uses the word may  but read with proviso it creates a preference in favour of a permit holder to claim renewal if other conditions were equal
A holder of a permit thus stands on a better footing
The preference created by sub section 2 of Section 58 for consideration of the permit and its grant cannot be said to be a mere incohate right or a right which does not exist in law
It may not be a vested right or a fundamental right but it certainly is civil right which could be enforced in a court of law and any authority acting in contravention of it can be forced to act in ac cordance with it
310 B C 12 The right accrued to appellant as he had already applied for renewal and his application had been notified
The legal machinery was set in motion by him
He therefore had a right to get his application for renewal processed and considered in accordance with 1939 Act
It would be too technical to say that no right had accrued to him under 1939 Act
By virtue of Section 6c of the the right of the appellant to get his application considered and decided in accordance with law was saved by subsection 4 of Section 217 of 
310 D E The Brihan Maharashtra Sugar Syndicate Ltd vs Janardan Ramchandra Kulkarni  Ors 1960 3 SCR85 followed
Cheran Transport Co Ltd vs Kanan Lorry Service  Anr   D Nataraja Mudsliar vs State Transport Authority Madras  referred to 2
The objective of Section 6c of the is to ensure protection of any right or privilage ac quired under the repealed Act
The only exception to it is legislative intention to the contrary
That is the repeal ing Act may expressly provide or it may impliedly provide against continuance of such right obligation or liability
309 E 3
The new Act is a legislation on the same subject and Section 81 of the said Act specifically provides for renewal of permits
The scheme of renewal having been continued even under new Act mere absence of preference clause in Section 81 of the new Act 307 could not be construed as destroying the claim for renewal set in motion under the old Act
311 B C