Case: M/S. Lipton Limited And Another Vs. Their Employees

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 Industrial Disputes Act, 1947. We have pointed out, however, in the Express Newspapers. Ltd., AIR 1958 SC 578 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-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. 29. 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. 49,721 per year; on an all-India basis it would be in the neighbourhood of Rs. 2,71,000 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 Lipton, 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. 1,15,000 and on an all-India basis Rs. 6,34,000. 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. 30. 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 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. 31. 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. 32. 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 per cent. 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 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]24. 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 wage-structure; 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 may result in disparity of wages in different regions giving rise to industrial unrest and it may so have the effect of stoping 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 of the Lipton, Ltd32. 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 per cent. 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 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.