Case: Western India Match Co. Ltd Vs. Their Workmen

1. The Western India Match Company, the Bareilly Branch of which is the appellant in the first of the two appeals before us is engaged in the manufacture and sale of matches in India. The manufacture of matches is carried on by the company at its four factories at Ambernath, Madras, Calcutta and Clutterbuckgunj in Bareilly. At these four places the company has also four sales offices catering to the needs of the regions assigned to them. The sales office at Clutterbuckganj with which we are concerned in this appeal carries on its sales activities in the States of U. P., Punjab, Delhi, Himachal Pradesh, a part of Rajasthan and a part of Madhya Pradesh. According to the appellant each of these sales offices is independent of the factories of their respective regions and so the Bareilly Sales Office is quite independent of the factory at Bareilly. As an incentive to larger production of matches the Company introduced in 1946 a Production Bonus Scheme the details of which will be mentioned later. The scheme was applied at the beginning not only to the 1500 workmen engaged in the factory in making matches but also to the workmen working in the factory office, who numbered about 100. In 1947, the production bonus was withdrawn from the office staff of the factory, though it continued to operate as regards the other workmen. The factory office staff raised a dispute on this question in 1957 and ultimately as a result of a decision of the Adjudicator given on March 13, 1958, the factory office staff also became entitled to the benefits of the production bonus scheme on the same terms as the other workmen in the factory. The workmen of the sales office consisting of the clerical staff as also salesmen and inspectors of salesmen were however denied the benefits of the scheme, though it does appear that for a very short period of 1946 the sales office staff also received payments purporting to be production bonus. The Adjudicators decision extending the production bonus scheme to the factory staff was confirmed by this Court on March 17, 1961. It appears that during the pendency in this Court of the appeal against the Adjudicators order there was some discussion between the Union of which the sales office staff became member in 1957 or thereabout-and the sales manager at Bareilly, in regard to extending the Production Bonus Scheme to the members of the sales staff, if the appeal in this Court was decided in favour of the factory staff. On March 13, 1961, the Union wrote to the sales manager reiterating the claim to Production bonus and pointing out that discrimination between the employees of the same company in the matter of admissibility of item of wage was bound to lead to heart burning. The manager replied on May 22, 1961 characterizing this demand of the sale office staff as unreasonable to which the management could not agree. Ultimately, on August 18, 1961 the dispute which thus arose between the employers and the workmen was referred by the Government of U. P. to the Third Industrial Tribunal at Allahabad for adjudication. The dispute referred was described in these words:-Should the employers be required to pay production bonus to the workmen employed in their sales office? If so, with effect from what date and with what other details?2. By a later amendment on December 4, 1961, the word in was substituted by the word by3. Though a number of matter were raised in issue, both the parties rightly concentrated at the hearing on the question whether the sales office and the factory were independent units of production or formed integral parts of one and the same unit of industrial production. Whether or not an incentive scheme for better production should be introduced in any industry is essentially a matter for the management to decide. This position has been recognised by this Court in Titaghur Paper Mills Co., Ltd. v. Their Workmen, 1959 Supp (2) SCR 1012: (AIR 1959 SC 1095  ) and again in Burn and Co. v. Their Employees, 1960-3 SCR 423  : (AIR 1960 SC 896  ). While in view of the importance of industrial adjudication not interfering with what is purely management functions, the Court felt that industrial adjudication should not impose an incentive bonus on the management for the first time, the court pointed out that the position would be different where an incentive bonus is already in force for the majority of the workmen. We can see no reason, we said in Burn Companys case, 1960-3 SCR 423  : (AIR 1960 SC 896  ) why where an incentive bonus scheme is in force in a concern for the majority of its workmen, the Tribunal should not be able to extend the same to the remainder of the workmen. In view of this the appellant in this case tried to establish the fact that the sales office was entirely independent of the factory while the workmen, on the other hand, directed their efforts to showing that these are only two departments of the one and the same unit of production4. Another question on which the parties joined issue was whether Inspectors, Salesmen and Retail Salesmen out of the sales office staff were workmen or not within the meaning of the U. P. Industrial Disputes Act. The management contended that they were not workmen and so were not within the terms of reference: the respondents claimed that they were workmen within the meaning of the Act5. Applying the principles laid down by this Court in several cases where the question whether two or more units of business under the same ownership form one industrial unit or more of the facts and circumstances of this case as disclosed by the oral and documentary evidence, the Tribunal came to the conclusion that the sales office and the factory form one single unit of industry and there being no reason for making any discrimination against the sales office staff on the question of production bonus held that the employers should be required to pay production bonus to the workmen employed by their sales office also. The tribunal directed that the sales office also. The tribunal directed that the sales office staff should be paid production bonus at the same rate at which it was given to the workmen of the factory office. The question whether inspectors, salesmen and retail salesmen employed by the sales office were workmen was also answered by the Tribunal in the affirmative, so that they also became entitled to the benefit of the award. Being of opinion that the dispute should have been raised earlier by the workmen of the sales office, the Tribunal directed that the payment of production bonus to the sales office staff would start from the date the award became enforceable in law. Against this decision the employers, the Western Indian Match Co., Ltd. Bareilly, has appealed by special leave granted by this Court. The workmen have also appealed against the direction that the payment of production bonus should start from the date the award became enforceable in law.

Court's reasoning:
18. There remains for consideration Mr. Pais contention that Tribunal was not justified in extending to the sales office staff the production bonus for the factory and the factory office without any modification. Mr. Pai complains that having come to the conclusion that production bonus should be extended to the sales office staff the Tribunal did not apply its mind to the further question that was referred to it viz., with what details the production bonus scheme should be applied to the sales office staff. According to Mr. Pai the sales office staff, speaking generally, enjoys much higher rates of pay than the corresponding categories in the factory office and that this was a factor which ought to be taken into consideration in deciding whether the production bonus scheme in force in the factory for the factory staff should be applied to the sales office staff without any modification. If it were clear that the Tribunal had applied its mind to this aspect of the problem we would not have felt justified in upholding Mr. Pais complaint. As it appears however that this aspect was not considered, we think it will be in the best interests of industrial peace and of social justice that the Tribunal applies its mind to the question and then comes to a decision19. We express no opinion whether Mr. Pais contention that the sales office staff enjoys higher pay scale than the factory staff is correct in fact or not, nor on the question whether if this assertion be found to be correct any modification in the production bonus scheme would be called for20. We confirm the Tribunals decision that the production bonus scheme should be extended to the sales office staff and remand the case to the Tribunal for decision after taking note of all relevant facts whether the production bonus scheme in force in the factory and the factory staff should be extended to the sales office staff with or without modification. This disposes of the managements appeal, viz., Civil Appeal No. 300 of 196321. The workmens appeal which is numbered Civil Appeal No. 301 of 1963 challenges the correctness of the Tribunals direction that the payment of production bonus should start from the date the award became enforceable in law. According to the workmen the payment of production bonus should have been directed to be made with effect from the date of reference, if not from the date of the demand22. The question as to the date from which the benefit granted by an award should take effect must generally be left to the discretion of the Tribunal making the award and this Court ordinarily refuses to interfere with the exercise of that discretion. We are unable to find any special circumstances in this case that would justify any departure from our established practice.