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

1. 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 (herein- after 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 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 appelants without prejudice to either party on the merits of the case2. 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 1951. 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 appeals3. 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 10 per cent 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 mirror exceptions, does not operate through wholesalers. Dealers are supplied by the companys own salesmen each of whom has a sales depot at which he maintains stocks of the companys products. The salesman sells these teas at the companys 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, Rajashan 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 Liptons expert tea tasting staff in Calcutta 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 par cent. 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 companys 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 liabilities4. The Delhi office of the Indian branch employs peons, sweepers, van-workers, godown workers, village salemen, 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 was 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 between the Lipton Ltd., and the Union was referred to the Additional Industrial Tribunal, Delhi for adjudication. The reference set forth in a subjoined schedule the matters upon which adjudication was necessary, an 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 overtime work in any week within a total of 48 working hours, he should be only paid at the single rate for all overtime 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 a.m.-5 p.m. to 10 a.m.-5 p.m. on weekdays with half an hours interlval for lunch, and 10 a.m. to 1 p.m. 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 overtime payment was obviously a mistake for "36"; because the learned Tribunal had fixed in paragraph 23 of the award that the working ours 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 to36. 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, 19475. 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 l955, related to the subsidiary matter of overtime 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 respect 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 1 (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 months salary which the Lipton Ltd., had already granted ex gratia to the workmen. As to the subsidiary appeal relating to the overtime 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 it6. From the decision of the Labour Appellate Tribunal 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.

Reasoning:
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.