Case: Standard Vacuum Refining Co. Of India Vs. Its Workmen And Another

2. The respondents who have made the present claim include 648 employees; amongst them 524 are operatives and 124 belong to the clerical cadre. Before the tribunal the respondents case was that during the conciliation proceedings the appellant had admitted its capacity to pay and to meet the entire claim of bonus made by them; and so it was urged that it was unnecessary to screen the respondents claim through the Full Bench formula. They further alleged that the appellant was not paying a living wage to the respondents and there still remained a large gap between the wage actually received by them and the living wage to which they would be ultimately entitled. According to the respondents their claim for bonus should be examined solely by reference to the gap which had to be filled up between the two wages; and in determining the amount of bonus all the legitimate requirements of the respondents should be carefully considered.3. This claim was denied by the appellant. It denied the respondents allegation that during conciliation proceedings it had admitted its capacity to pay the entire amount of bonus claimed by the respondents. It then specifically averred that in law the respondents were not entitled to any bonus because the appellant was paying them a living wage, and so one of the essential conditions for the payment of bonus, namely, the need to fill the gap between the actual wage and the living wage was absent in the present case. The appellant then set out its calculations in regard to the average wages paid to the different categories of respondents and supported its plea that they were not entitled to any bonus at all. It may be added then the appellant had already voluntarily paid three months basic wages to the respondents by way of bonus, but since the respondents were making a much larger claim the appellant thought it necessary to raise this general issue of law and to contend that the respondents were not entitled to any bonus at all.4. On these pleadings the tribunal had to consider the said question of law, but it appears that the material produced before it was so limited and meagre that it thought it would not be possible to arrive at any definite opinion on the question of what is the living wage in Bombay apparently the tribunal also throught that it was unnecessary to do so, because it has observed that the present dispute did not relate to wage scales and that the living wage was an illusive concept. Even so, having broadly considered the contentions raised by the appellant it held that "the wages are fair but there is still in a large number of cases a gap between the actual wage and the living wage". On this finding the tribunal proceeded to examine the other contentions raised by the parties in regard to the quantum of bonus which should be awarded and it reached the conclusion that the respondents were entitled to receive five months basic earnings "excluding dearness and other allowances and overtime" as bonus for the relevant year. Accordingly it has made an award to that effect and has issued appropriate directions in that behalf. This award is challenged by the appellant in its Civil Appeal No. 416 of 1958, and it is urged by the learnedon its behalf that the tribunal should have held that the appellant was paying a living wage to the respondents and that there was no case for awarding any bonus to the respondents at all during the relevant year. On the other hand the respondents challenge the award by their Civil Appeal No. 19 of 1959, and it is urged by Mr. Gokhale on their behalf that the tribunal was in error in not awarding the respondents a higher bonus than five months basic wages. That is how the two cross appeals arise from the award under appeal.

Court's reasoning:
We think it would have been better if the tribunal had addressed itself to the question raised before it by the appellant and made a more definite and precise finding. In this connection, it must, however, be added that the oil companies have been raising this plea for some years past and the plea has been consistently rejected by tribunals during all these years. The present tribunal itself has had occasion to deal with this plea raised by the oil distributing companies, and since the plea had never succeeded in the past and no material change had been proved in regard to the relevant year the tribunal was probably disinclined to treat the plea very seriously and that may explain the approach adopted by it in dealing with the said plea in the present proceedings.Besides, the tribunal took the view, and we think rightly, that the material produced by the appellant in support of its plea is wholly insufficient and meagre. The point raised is one of general importance and any positive finding on the content of the concept of a living wage in the context of today would naturally affect industrial adjudication in regard to claims of bonus in all industries. That in way, if the appellant was serious about its contention that the living wage standard had been reached in itsit should have produced more satisfactory evidence which would have enabled the tribunal to attempt the task of concretely defining what the concept of living wage means in the context of today. Absence of sufficient and satisfactory material may also explain the approach adopted by the tribunal in dealing with thishave rejected this request. The appellant knew fully well the implications of the plea raised by it and the very large issue which the tribunal would have to consider in dealing with the merits of the said plea. If the appellant was content to support its plea on certain material and did not attempt to lead more satisfactory evidence it cannot blame the tribunal for dealing with the matter on the material such as it was. In such a case it would be futile for the appellant to ask for indulgence from this Court at this late stage. It is admitted that the appellant has paid three months basic wages as bonus to the respondent voluntarily for the relevant year, and we are told that an agreement has been reached between the parties in respect of bonus for subsequent years until 1963. They have agreed that for the two succeeding years the decision of this Court will apply and for five years thereafter a specific agreement has been reached for raising theand providing for the payment of bonus at agreedso, the question raised by the appellant sounds academic and unrealistic, and that is another reason why it is not entitled to the indulgence for which the learnedhas pressed before us. We would, therefore, deal with the point seriously urged before us on behalf of the appellant on the material produced before the tribunal and such additional material as was brought to our notice.7. At the outset it is necessary to state that the plea raised by the appellant assumes that as soon as a living wage standard has been reached by any employer it would be unnecessary for him to pay any bonus to his employees. The learnedhas naturally relied on the decisions of this Court as well as the decisions of industrial tribunals in support of his argument that the Full Bench formula which governs the decision of bonus disputes postulates that a claim for bonus can be entertained if two conditions are satisfied; the employer must have made, profit in the relevant year, which after the deduction of prior charges leaves sufficient available surplus; and there must be a gap between the wages actually paid to the employees and the living wage standard which they hope to reach in due course. In dealing with bonus claims industrial adjudication has so far proceeded on the assumption that in the making of profits labour makes its contribution, and that since it is not receiving a living wage it is entitled to claim that the gap between the actual and the living wages should be filled by the payment of bonus for each relevant year; that no doubt appears to be the result of the relevant decisions on thes argument that we should first determine independently what amount in terms of rupees, annas and pies would be treated as a living wage today obviously ignores the complexity of the problem and the poverty of the material adduced by the appellant in the presentdealing with this contention there would be no justification for ignoring the idealistic character of the living wage as specified in Art. 43 of the Constitution; and so, it would be necessary to enquire whether the wage question satisfies the test laid down by the Royal Commission on the basic wage for the Commonwealth of Australia which has been endorsed by the Fair Wages Committees Report and broadly approved by this Court in the Express Newspapers case, 1959 SCR 12  : (AIR 1959 SC 578).In our opinion it would be unreasonable and unsafe to treat the conclusions of this Committee as to the monetary value of the living wage in 1940 as sound and to make it the basis of our calculations today. Incidentally the method of multiplying the figure deduced by the Committee by 3.5 is materially defective. The proper approach to adopt would be to evaluate each constituent of the concept of the living wage in the light of the prices prevailing today and thus reach a proper conclusion; but apart from it, the main objection against adopting the figure reached by the Committee is that even in 1940 the said figure could not be properly regarded as representing anything like a living wage standard. The object with which the Committee proceeded to hold its enquiry was in a sense negative; it was to determine the question as to how far the prevailing wages were deficient having regard to some reasonable concept of a living wage standard. The material before it was insufficient to determine satisfactorily theof the said concept and the Committee itself was conscious that its calculations were bound to be broad and general and conditioned by the date available to it, and what is more important conditioned by the notions of social justice then prevailing. Since 1940 the concept of social justice has made very great progress and the Constitution of the country has now put a seal of approval on the ideal of a welfare State. Besides, it may seem entirely unrealistic to talk of a living wage in the light of our national economy in 1940 and to evaluate its content at Rs. 50 to Rs. 55 per month. It is obvious that the Committee was really thinking of what is today described as the minimumwage, and it found that judged by the said standard the current wages were deficient. In its report the Committee has used the word "minimum" in regard to some of the constituents of the concept of living wage, and its calculations show that it did not proceed beyond the minimum level in respect of any of the said constituents. Therefore, though the expression "living wage standard has been used by the Committee in its report we are satisfied that Rs. 50 to Rs. 55 cannot be regarded as anything higher than theminimum wage at that time. If that be the true position the whole basis adopted by the appellant in making its calculations turns out to be illusory. All that the calculations made by the appellant would show is that the wages paid to the respondents are somewhat higher than what would be required by the concept of thewage. It is obvious that between thewage and the living wage there is a very long distance.24. This conclusion is strengthened by some of the observations made by the Commission of Enquiry on "the Emoluments and Conditions of Service of Central Government Employees" . In its report the Commission has referred to the Tripartite resolution on theminimum wage, and in the light of the exhaustive material produced before it, and after consulting experts and specialists whose advice was available to it, it has reached the conclusion that (a) the minimum remuneration worked out according to the recommended formula may be of the order of Rs. 125 as compared to Rs. 52.50 which with some exceptions is the upper limit of minimum wages fixed under the law. (b) that it would be about 70 to 80% higher than the rates generally prevailing in the organised sectors of industry where wages are fixed either by collective bargaining or through conciliation and adjudication proceedings, and (c) that it would be well above the highest wages, i.e., Rs. 112 (in cotton textiles industry infor 1958) which any considerable number of unskilled workers are at present getting in the country (p. 65). It would thus be seen that the figures thus worked out by the commission in the light of the Tripartite resolution support the inference that the corresponding figure specified by the Textile Report in 1940 approximates to the concept of theminimum wage and no more. We may incidentally add that having regard to its terms of reference the Commission did not feel it advisable to recommend the increase of the Central employees wages to the level of theminimum for reasons set out by it in its report. That is why it thought it reasonable to recommend that "the minimum remuneration payable to a Central employee which at present is Rs. 75 per mensem should be increased to Rs. 80 per mensem" (p.there can be no doubt that in dealing with the monetary value of the content of the concept of the living wage it would not be enough to evaluate the diet requirement with reference to the improved or even the balance diet. The improved vegetarian diet which was generally been taken into account in making the relevant calculations would be wholly inappropriate in making calculations with regard to a living wage. Under the living wage a workman would be entitled to claim an optimum diet as prescribed by Dr. Aykroyd. Similarly the requirements as to clothing and residence which have been recognised in the Tripartite resolution, though appropriate in reference to aminimum wage, would have to be widened in relation to a living wage. Besides, in determining the money value of the living wage it would be necessary to take into account the requirements of" good education for children, some amusement, and some expenditure forand it is hardly necessary to emphasise that the content of these requirements cannot be easily converted into terms of money and they would obviously vary from time to time and would show an expansive tendency with the growth of national economy and with the advent of increasing prosperity for the nation as a whole and for any given industry in particular. Therefore, in our opinion, on the material available in the present proceedings it is impossible to resist the conclusion that even the highest average of Rs. 370.11 nP shown by the appellant by calculating wages paid to the clerical staff is much below the standard of the living wage. In this connection it may be pertinent to observe that in deciding the question as to whether the living wage has been introduced by any employer normally it would be necessary to examine thepaid to the relevant working class as a whole. It isthat the claim for bonus is recognised on the basis of the contribution made by the working class as a whole to the profits of the employer, and we think it would be invidious, and on principle unreasonable, to isolate a few cases where higher wages may be paid and to claim immunity from the payment of bonus in respect of such cases. In the absence of special circumstances prima facie the most expedient method to adopt would be to take the average of the wagespaid to the relevant working class as a whole. Ithowever, unnecessary to pursue this matter further and no pronounce a definite decision on it because, as we have just indicated, even taking the clerical category where the average works highest at Rs. 370/11 nP we feel no hesitation in holding that the said average is much below the standard living wage. The said average is much above theminimum and may fall in the medium level of a fair wage; but that itself would show that it is much below the standard of the living wage. Similarly, Rs. 273.65 nP which is the average of the operatives as well as Rs. 301.16 nP which is the average of the operatives and the clerical staff taken together may be regarded as constitutingwhich is above theminimum structure and may be treated as approximating to the lower level of the fair wage. One has merely to take into account the various constituent elements of the living wage to realise that these averages fall far short of the standard of the living wage. In reaching such a conclusion it is hardly necessary first to arrive at a concrete determination as to the money value of the living wage.In our opinion, taking the broad aspect of the concept of the living wage into consideration, and bearing in mind its idealistic and expanding character, it would be possible, and not very difficult either, to say about a given wage such as the one with which we are concerned in the present appeal that it does not reach the standard of a living wage. We must accordingly hold that the claim made by the appellant that it is paying a living wage to its employees cannot bethe reasons which we have already indicated we must hold that the tribunal was in error in treating Rs.as the money value of the living wage even insame comment falls to be made about the calculations made by the Labour Appellate Tribunal inetc. Oil Companies in Madras v. Their Employees,Lab LJ 782. In that case the Appellate Tribunal thought that if 50% be added to the minimum wage of the employees that may assist them to attain the goal of the living wage, and this conclusion was based on the Textile Committees report. Similarly, the calculations made by the Industrial Tribunal, Madras, in Workers of S. V. O. C. Ltd. (Standard Vacuum Employees Union) v. Standard Vacuum, Oil Co. Ltd.,Lab LJ 165 suffers from the same infirmity Therefore, the three industrial decisions on which the appellant relied cannot assist it in establishing its contention that a living wage is paid to the respondents.27. InOil Storage and Distributing Co. of India, Ltd., Bombay v. Their Workmen,Lab LJ 246 the Labour Appellate Tribunal had occasion to consider the content of the living wage. In that connection it referred to the Report of the Fair Wages Committee, and observed that the level of national income in India is so low that the country is unable to afford to prescribe by law a minimum wage which would correspond to the concept of a living wage. "The rudder is set in the direction of a living wage", observed the Appellate Tribunal, "but the destination is not yet within sight; the gradual emergence of a welfare State will naturally help but even here progress is necessarily slow". In our opinion, this statement shows that correct approach to the problem of determining the content of the concept of the livingwe have already pointed out it may partly be because of this trend of industrial decisions that in the present proceedings the tribunal did not think it necessary to deal with the point elaborately or to make a definite finding.29. Before we part with this appeal we ought to add that if we had upheld the appellants claim it would have been necessary for us to consider the relevance and validity of the respondents alternative claim that in case living wage is paid by the appellant to them they should be allowed a share in the profits made by the appellant during the relevant year on the basis ofIt is true that industrial adjudication so far has consistently emphasised the fact that the payment of bonus is intended to fill the gap between actual wages and the living wage. Obviously no occasion has so far arisen to consider whether a claim for bonus can be made even after the standard of living wage has been attained because no employer has so far succeeded in showing that a living wage standard has been reached. We are making these observations because we wish to make it clear that our decision in the present appeal should not be taken to mean that as soon as a living wage standard is reached no claim for bonus can be made by the workmen; that is a question which may have to be considered on its merits if and when it arises. Until the stage is reached where a plea that living wage is paid can be reasonably made and proved it is desirable that industrial adjudication in regard to the payment of bonus should not be unnecessarily complicated by raising such a plea from year to year.30. That takes us to the appeal preferred by the respondents. The tribunal did not think it necessary to work out calculations because, according to the bonus formula, it was conceded that the available surplus in the hands of the appellant was very large. It, however, took into account the wage scales and salaries in the appellants concerns and other relevant factors and concluded that awarding five months bonus "strikes a fair balance between the conflicting standards of the workmen and theIn our opinion it would be inadvisable and inexpedient to put such a ceiling in the matter of awarding bonus. It is now well established that in awarding bonus industrial adjudication has to take into account the legitimate claims of the industry, its shareholders who are entitled to claim a return on the investment made by them and the workmen. This Court has consistently refused to lay down any rigid rule or formula which would govern the distribution of the available surplus between the three claimants. The decision of this question must inevitably depend on a proper assessment of all the relevant facts. If wages are small and the profits are high then the workmen would be entitled to have a high rate of bonus. Indeed, if an employer makes consistently high profits and the wages continue to be low it may justify the increase in theitself; in other words, the award of bonus would have some relation to the wages paid to the employes. It is also true that unreasonably high or extravagant claims for bonus cannot be entertained just because the available surplus would justify such a claim. As has been observed by the Labour Appellate Tribunal inLab LJ 246 care must be taken to see that the bonus which is given is not so excessive as to create fresh problems in the vicinity that upset emoluments all round or that it creates industrial discontent or the possible emergence of a privileged class. The impact of the award of bonus in an industrial dispute of comparable employments or on other employments in the region cannot be altogether ignored, though its effect should not be overestimated either. Having regard to the fact that the distribution of available surplus must inevitably depend in each case on its own facts this Court has generally refused to interfere with the decision of the tribunal on the ground that any decision on the question of distribution should be left to its discretion. It is only where the award passed by the tribunal appears to this Court to be wholly unreasonable and to be the result of the failure of the tribunal to take into account the necessary relevant facts that the jurisdiction of this Court under Art. 136 can be successfully invoked. In the present case the tribunal has considered all the relevant factors and has come to the conclusion that five months bonus would meet the ends of justice. We do not see any reason to interfere with this award.