Case: Filmistan Private, Limited Vs. Its Workmen and Another

Gajendragadkar, C.J.1. The industrial dispute between the appellant, the Filmistan (Private), Ltd., and the respondents, it workmen, which has given rise to the present appeal by special leave, consisted of eight demands made by the respondents against the appellant. Demand 1 was in regard to the classification of the appellants employees. Demand 2 was in regard to the adjustment of wage-scales point to point. Demand 3 was in regard to the payment of higher wages to an employee who is assigned to do work of a category higher than his own. Demand 4 was in regard to the increment in the wage-scales with retrospective effect from 1 January, 1958; demand 5 had reference to dearness allowance; demand 6 to gratuity; and demands 7 and 8 related to bonus for the years 1955-56 and 1956-57 respectively.2. The tribunal has rejected demands 5 and 6 and it has reserved the consideration of demands 7 and 8. In regard to the claim for classification, it has taken into account the report submitted by the assessors and evolved a scheme for classification. The appellant does not object to this classification. The claim of the respondents for a revision of the wage-structure has also been upheld by the tribunal. Having done so, the tribunal has refused to accede to the respondents demand that the said wage-structure should have retrospective operation. The present appeal is confined to that part of the award which has revised the wage-structure prevailing in the establishment of the appellant.3. Sri Aggarwal for the appellant contends that in revising the wage-structure on a very liberal scale, the tribunal does not appear to have applied its mind to the relevant evidence adduced before it by the appellant in support of its case that the appellant would not be able to bear the additional burden imposed by the revised wage-structure. In our opinion, Sri Aggarwals contention is well-founded and must be upheld.In considering the problem of the revision of the wage-structure, the tribunal has no doubt referred to the true legal position which governs the decision of such questions. It has observed that the financial position of the employer is one of the relevant factors which has to be properly considered before an appreciable revision in the wage-structure can be ordered. It, however, proceeded to revise the wage-structure mainly by reference to Sawarkar award in an industrial dispute between Rajkamal Kala Mandir and its employees. The basis for adopting the said award as a guide obviously appears to be that Rajkamal Kala Mandir is a comparable concern, and so, the award recently pronounced in an industrial dispute of the said concern can be safely taken into account as a guide. It is plain that this assumption is not well-founded. As the award pronounced by the tribunal itself points out, there are several material particulars in which the Rajkamal Kala Mandir is in a much better position than the appellant. That is one infirmity in the approach adopted by the tribunal.4. It appears that before the tribunal it was urged that the balance sheets produced by the appellant were not reliable and in support of this plea, the respondent referred to the criticism made by the auditors in respect of the balance sheets submitted to them by the appellant for auditing. The respondents also relied upon some comments made by Sri Meher, the industrial tribunal, when he was dealing with a claim for bonus made by the respondents against the appellant for an earlier year. It is, however, clear that too much importance cannot be attached to the criticism made by the auditors, because in so far as one can judge, these comments appear to have been made by the auditors from the point of view of correct account-keeping. It is not easy to see how these comments can be pressed into service for the general and broad contention that the appellants balance sheets are unreliable.In regard to the comments made by Sri Meher, the position is exactly the same. It appears that when Sri Meher was dealing with the respondents claim for bonus, some relevant evidence had been withheld by the appellant from Sri Meher, and Sri Meher came to the conclusion that the payments in respect of which material evidence had not been produced, could not be deemed to have been made. This limited criticism cannot support the general contention that the balance sheets produced for subsequent years are untrustworthy. It may, in this connexion, be relevant to point out that the award pronounced by Sri Meher in the said bonus dispute was challenged before this Court by special leave, and the appeal pending in this Court was ultimately compromised by the parties, the respondents agreeing to take one months bonus instead of two months which had been awarded by Sri Meher.5. The finding which the tribunal appears to have made in the present proceedings in regard to the character of the balance sheets is very vague and gives us no indication as to what extent the tribunal was prepared to accept the balance sheets as reliable :"For reasons already discussed, " says the tribunal, "implicit trust cannot be placed on some figures of profit and loss submitted and the balance sheets produced for judging its true financial position."Now, it is clear that in concrete terms, this statement means nothing at all. The failure of the tribunal to consider the balance sheets and arrive at its own decision as to the financial position of the appellant in fairly precise terms is another infirmity from which the award suffers.6. The tribunal has no doubt taken note of the fact that the appellant was not in a very flourishing condition but it thought that it was"a part of larger organization and group of industries; its directors are also the directors of Bharat Barrel and Drum Manufacturing Company (Private), Ltd., Bombay, and Prakash Cotton Mills, (Private), Ltd., Bombay."7. It is surprising that the tribunal should have made such a sweeping observation without any evidence on the record. Besides, we do not see the relevance or materiality of the consideration that the directors of the appellant are also the directors of other concerns. When industrial adjudication refers to an establishment as a part of a larger organization, it generally means that the establishment is a part of a larger organization carrying on the same or similar industry, and that the establishment concerned is an integral part of the said larger organization. In the present case, the mills of which some of the directors of the appellant happened to be the directors, are not and cannot be integrally connected with the appellants concern, and so, it seems to us unreasonable to treat that as a factor against the appellant in considering the financial position of the appellant. Sri Aggarwal contends that the finding thus recorded by the tribunal has vitiated its ultimate decision; and we are not prepared to hold that criticism made by Sri Aggarwal is without any substance.The tribunal did realize that the appellant is not as prosperous as Rajkamal Kala Mandir, but took the view that"so long as the increased burden that would be entailed by its paying the same wages as are paid by Rajkamal Kala Mandir can be safely borne by it, it must pay them."8. It is to be regretted that the tribunal made this finding without examining the relevant figures which had been produced before it. It is hardly necessary to emphasize that in dealing with a claim for revision of wages which is generally complex and complicated, having regard to the categories of employees engaged in an industrial undertaking, industrial adjudication should not be content with making general observations only. It must examine the facts and figures relating to the financial position of the establishment concerned, compare the said position with the financial position of comparable concerns, enquire what would be the total impact of the additional burden of the revised wage structure. The failure of the tribunal to adopt such a course constitutes yet another serious infirmity in its approach.The record shows that several statements were produced by the appellant in respect of the losses incurred by it and the resulting unsatisfactory financial position in which it was placed. The tribunal has, no doubt, just referred to one of these statements, Ex. C. 3. It has also referred to Ex. C. 1, on which the respondents relied. But no attempt appears to have been made by the tribunal to asses the extent of the losses and determine the true financial position of the appellant at the time of the award.Exhibit L. 1 collectively gives details about the financial position of the appellant from 1951 onwards. If these statements are true and correct, it would tend to support the appellants case that financially it is not a prosperous concern. Exhibit 1 gives details of pictures which failed and thereby caused loss to the appellant. Exhibits G and H give details about the extra financial load which would be imposed upon the appellant if Rajkamal Kala Mandir wage-structure was applied to its employees. It would have been much better if the tribunal had indicated in its ward that it applied its mind to these figures and had recorded its conclusions more concretely in regard to the financial ability of the appellant to race the additional burden.9. In this connection, it may not be irrelevant to refer to two awards recently pronounced by the tribunal to which Sri Aggarwal invited our attention. It is true that we do not generally permit the appellant to produce additional evidence in appeal; but since we are remanding this case, we thought it would be relevant to indicate the point made by Sri Aggarwal by reference to the two recent awards. In Reference I.T. No. 272 of 1964, the present tribunal has pronounced an award in the case of Filmalaya (Private), Ltd. Similarly in Reference I.T. No. 150 of 1962, the present tribunal itself has pronounced its award in the Famous Cine Laboratories and Studios. According to the appellant, these concerns can well be regarded as comparable concerns; and Sri Aggarwals contention is that the wage-structure prescribed by these two awards is much lower than the wage structure which has been prescribed for the appellant by the award under appeal.Having regard to the infirmities in the award to which we have just referred, and having regard to the fact that the award is open to the criticism that the tribunal has not applied its mind to the evidence adduced by the appellant and has not made any concrete, definite and material findings, we think it is necessary to set aside the order under appeal.

Decision reasoning: 1[ds]In our opinion, Sri Aggarwals contention isand must be upheld.In considering the problem of the revision of thethe tribunal has no doubt referred to the true legal position which governs the decision of such questions. It has observed that the financial position of the employer is one of the relevant factors which has to be properly considered before an appreciable revision in thecan be ordered. It, however, proceeded to revise themainly by reference to Sawarkar award in an industrial dispute between Rajkamal Kala Mandir and its employees. The basis for adopting the said award as a guide obviously appears to be that Rajkamal Kala Mandir is a comparable concern, and so, the award recently pronounced in an industrial dispute of the said concern can be safely taken into account as a guide. It is plain that this assumption is notAs the award pronounced by the tribunal itself points out, there are several material particulars in which the Rajkamal Kala Mandir is in a much better position than the appellant. That is one infirmity in the approach adopted by theis, however, clear that too much importance cannot be attached to the criticism made by the auditors, because in so far as one can judge, these comments appear to have been made by the auditors from the point of view of correctIt is not easy to see how these comments can be pressed into service for the general and broad contention that the appellants balance sheets are unreliable.In regard to the comments made by Sri Meher, the position is exactly the same. It appears that when Sri Meher was dealing with the respondents claim for bonus, some relevant evidence had been withheld by the appellant from Sri Meher, and Sri Meher came to the conclusion that the payments in respect of which material evidence had not been produced, could not be deemed to have been made. This limited criticism cannot support the general contention that the balance sheets produced for subsequent years are untrustworthy. It may, in this connexion, be relevant to point out that the award pronounced by Sri Meher in the said bonus dispute was challenged before this Court by special leave, and the appeal pending in this Court was ultimately compromised by the parties, the respondents agreeing to take one months bonus instead of two months which had been awarded by Sri Meher.5. The finding which the tribunal appears to have made in the present proceedings in regard to the character of the balance sheets is very vague and gives us no indication as to what extent the tribunal was prepared to accept the balance sheets as reliableNow, it is clear that in concrete terms, this statement means nothing at all. The failure of the tribunal to consider the balance sheets and arrive at its own decision as to the financial position of the appellant in fairly precise terms is another infirmity from which the award suffers.6. The tribunal has no doubt taken note of the fact that the appellant was not in a very flourishing condition but it thought that it was"a part of larger organization and group of industries; its directors are also the directors of Bharat Barrel and Drum Manufacturing Company (Private), Ltd., Bombay, and Prakash Cotton Mills, (Private), Ltd., Bombay."7. It is surprising that the tribunal should have made such a sweeping observation without any evidence on the record. Besides, we do not see the relevance or materiality of the consideration that the directors of the appellant are also the directors of other concerns. When industrial adjudication refers to an establishment as a part of a larger organization, it generally means that the establishment is a part of a larger organization carrying on the same or similar industry, and that the establishment concerned is an integral part of the said larger organization. In the present case, the mills of which some of the directors of the appellant happened to be the directors, are not and cannot be integrally connected with the appellants concern, and so, it seems to us unreasonable to treat that as a factor against the appellant in considering the financial position of the appellant. Sri Aggarwal contends that the finding thus recorded by the tribunal has vitiated its ultimate decision; and we are not prepared to hold that criticism made by Sri Aggarwal is without any substance.It is to be regretted that the tribunal made this finding without examining the relevant figures which had been produced before it. It is hardly necessary to emphasize that in dealing with a claim for revision of wages which is generally complex and complicated, having regard to the categories of employees engaged in an industrial undertaking, industrial adjudication should not be content with making general observations only. It must examine the facts and figures relating to the financial position of the establishment concerned, compare the said position with the financial position of comparable concerns, enquire what would be the total impact of the additional burden of the revised wage structure. The failure of the tribunal to adopt such a course constitutes yet another serious infirmity in its approach.The record shows that several statements were produced by the appellant in respect of the losses incurred by it and the resulting unsatisfactory financial position in which it was placed. The tribunal has, no doubt, just referred to one of these statements, Ex. C. 3. It has also referred to Ex. C. 1, on which the respondents relied. But no attempt appears to have been made by the tribunal to asses the extent of the losses and determine the true financial position of the appellant at the time of the award.Exhibit L. 1 collectively gives details about the financial position of the appellant from 1951 onwards. If these statements are true and correct, it would tend to support the appellants case that financially it is not a prosperous concern. Exhibit 1 gives details of pictures which failed and thereby caused loss to the appellant. Exhibits G and H give details about the extra financial load which would be imposed upon the appellant if Rajkamal Kala Mandirwas applied to its employees. It would have been much better if the tribunal had indicated in its ward that it applied its mind to these figures and had recorded its conclusions more concretely in regard to the financial ability of the appellant to race the additional burden.It is true that we do not generally permit the appellant to produce additional evidence in appeal; but since we are remanding this case, we thought it would be relevant to indicate the point made by Sri Aggarwal by reference to the two recent awards. In Reference I.T. No. 272 of 1964, the present tribunal has pronounced an award in the case of Filmalaya (Private), Ltd. Similarly in Reference I.T. No. 150 of 1962, the present tribunal itself has pronounced its award in the Famous Cine Laboratories and Studios.regard to the infirmities in the award to which we have just referred, and having regard to the fact that the award is open to the criticism that the tribunal has not applied its mind to the evidence adduced by the appellant and has not made any concrete, definite and material findings, we think it is necessary to set aside the order under appeal.