Case: Williamsons (India) Private, Limited Vs. Its Workmen

1. This appeal by special leave arises out of an industrial dispute between the appellant, Williamsons (India) Private, Ltd., and the respondents, its workmen. The appellant is a private limited company which has been established and incorporated under the Indian Companies Act in 1947. Its business consists mainly of importing mills stores, such as leather belting, pickers, bobbins and machinery cloths. It no doubt buys and sells similar articles manufactured in India, but this part of its business is insignificant. The secretaries of the appellant are Gillanders Arbuthnot & Co., Ltd. The appellant has entrusted its secretarial and accounts work to the said secretaries who carry out the said work through the staff working directly under them on the remuneration which has been agreed between the appellant and them. The present dispute is concerned with the sales department managed by the appellant company itself. In this sales department, the appellant employees sixteen workmen, two of them are designed ask, oneer, eight unskilled workmen and threedrivers.2. Through their union, the respondents made demands on the appellant on 29 October 1957. These demands related to the wage structure, dearness allowance, washing allowance leave, gratuity scheme, uniforms, medical aid and bonus. These demands could not be settled amicably and so, ultimately they were referred for adjudication to the industrial tribunal by the Government of Bombay on 26 July 1958. The reference included nine demands in all, eight of which have already been specified and the ninth was in respect of the retrospective operation of the benefits of some of the demands made by the respondents. After hearing the parties and considering the evidence led by them, the tribunal made its award on 21 April 1960. It is against this award that the appellant has come to this Court by special leave.

Court's reasoning:
Ex. C3 which has been printed in the paper book before us, clearly shows that the quotation have considerably been reduced in a large number of articles and in some cases, they have been cancelled and the extent of the business of the appellant has naturally been proportionately reduced. Ex. C2 which refers to the financial position of the appellant also tells a similar story. Indeed, the tribunal itself has accepted the appellants case that if business has not so far shown signs of collapse, it is partly because of its old stocks. Thefor the years 1956, 1957 and 1958 show that whereas the appellant had valued its goodwill at a lakh of rupees and has adjusted its profit and loss accounts on that basis, it owes debts to a large extent and its reserve or surplus is very little. Having regard to these facts, it is not easy to appreciate how the tribunal reached the conclusion that the financial position of the appellant was very satisfactory and that it could be compared in that behalf to Gillanders Arbuthnot & Co. It may be that the tribunal happens to know that some other concerns which were dealing in import of foreign goods have turned to trade in indigenous goods or have substituted some other kind of business and have prospered in the new line. But, surely, that cannot be a valid or legitimate basis for assuming by anticipation the appellant would also undertake a new line of business and will prosper in it. It isthat in constructing a wage structure with a scale of increments, industrial adjudication had to take aview and it has to examine very carefully the impact of the wage structure on the financial position of the concern in question. Having found that the business of the appellant was on the decline and that in the light of business in which the appellant was operating so far there was no chance of improvement, the tribunal should have hesitated before imposing additional burden on the appellant by constructing a new wage structure. Therefore, in our opinion, having regard to the findings of fact recorded by the tribunal, the appellant is entitled to contend that the ultimate decision of the tribunal about the financial capacity of the appellant is based purely on speculation and that such speculation cannot supply a proper basis for the decision of the main dispute between the parties.There is another argument which has been strongly pressed before us and that is that the tribunal was in error in treating Gillanders Arbuthnot & Co. as a comparable concern. This Court has repeatedly observed that in considering the question about comparable concerns, tribunals should bear in mind all the relevant facts in relation to the problem. The extent of the business carried by the concern, the capital invested by them, the profits made by them, the nature of the business carried on by them, their standing, the strength of their Labour force, the presence or absence and the extent of reserves, the divides declared by them and the prospects about the future of their businessthese and all other relevant facts have to be born in mind. In the present case, the tribunal itself was conscious that the Gillanders Arbuthnot & Co. was a much bigger concern with a much bigger capital and with a much larger business spread all over India. Even so, the tribunal thought that because the number of employees engaged by Gillanders Arbuthnot was much larger, whereas the employees engaged by the appellant were only sixteen, it would be safe to compare Gillanders Arbuthnot & Co., with the appellant. It our opinion, the approach adopted by the tribunal in dealing with this aspect of the question is open to serious criticism. Therefore, we are satisfied that the criticism, made by Sri Sastri against the award in so far as it assumes thai Gillanders Arbuthnot was a comparable concern, is also not withoutfact, having come to the conclusion that the reasons given by the tribunal in support of its finding that the appellant should bear the financial burden of the wage structure devised by the award are not satisfactory, we tried to see if we could settle the dispute ourselves in appeal, but that turned out to be very difficult; and so, we have decided to set aside the award and send the case back for disposal in accordance with law in the light of this judgment.5. Of the demands referred to the industrial tribunal for adjudication, no grievance has been made before us in reject of demand 3 in regard to washing allowance; demand 5 in regard to leave with pay and allowance and demand 7 in regard to uniforms. In respect of demand 5 as to leave with pay and allowances, Sri Sastri had first attempted to argue that the provisions made by the award under this demand were unreasonable, but Sri Dudhia pointed out that the material provisions in that behalf are consistent with the statutory provisions which have now been included in the Bombay Shops and Establishments Act (79 of 1948) by the Amending Act 26 of 1961. Therefore there is no grievance about the relief granted by the award in respect of leave with pay and allowances.Just as the wage structure with scales of increments cannot reasonably be constructed unless the financial position of the appellant is properly ascertained and the result of the impact of the wage structure in future is judged, so adequate dearness allowance provision also cannot be made unless the said facts are ascertained. That is why the award in regard to wage structure and the dearness allowance must be set aside. For the same reasons, the award in respect of the gratuity must also be set aside. The demand in respect of retrospective operation of these provisions must, as a consequence, be set aside.6. That takes us to the demand for medical aid. The tribunal has ordered that medical relief should be given by the appellant to its employees on the same lines as Gillanders Arbuthnot & Co. The direction issued by the tribunal requires that the company should bear the cost of simple prescriptions and also pay Rs. 3 on any patent or proprietary medicine included in any single prescription by the companys doctor. No ceiling has been placed in respect of medical aid and the fact that the company has no doctor of its own has not been taken into account. Besides, the main basis of the relief granted by the tribunal under this demand appears to be that the tribunal was inclined to treat the appellant as comparable to Gillanders Arbuthnot & Co. We would, therefore, set aside this part of the award asappears that in the statement filed by the appellant, it had claimed deduction of Rs. 43, 449 by way of tax and this claim was made on this specific ground that the said amount of tax had in fact, been paid for the yearwhich is relevant. There is no doubt that what the tribunal has to find in working out the formula is not the amount of tax actually paid but the amount of tax which under the relevant rates would be payable notionally on the profits determined under the formula. There is no dispute about the amount of profits; the dispute is about the rate. The tribunal has calculatedat seven annas in a rupee, whereas Sri Sastri contends that the proper rate is 61.5 nP in a rupee and in support of his argument he has referred us to the relevant provisions of the Finance Act (18 ofno doubt, appears to be so; but the rate at which tax has to be levied has to be governed by the relevant provision of the statute and if Sri Sastri can show that the rate prescribed by the statute is 61.5 nP then the affidavit on which Sri Dudhia relies cannot go against the appellant. It must be held to be a mistake committed by the person who made mistake committed by the person who made the affidavit. We would have ourselves decided this question in appeal, but Sri Dudhia has argued that before determining the rate which was applicable, considerations of rebate will have to be borne in mind and he, therefore, contends that he should be given a chance to justify the finding of the tribunal that the rate was seven annas in a rupee and nowe are remanding the matter for the consideration of the major items of dispute between the parties, we have decided to set aside that portion of the award which deals with bonus and send this dispute for the consideration of the tribunal on the narrow point as to the relevant rate at which the calculation of theshould be governed. If the rate turns out to be 61.5 nP. as alleged by Sri Sastri, then, of course, there would be no scope for making any payment of bonus. If the rate turns out to be seven annas in a rupee as at present assumed by the tribunal, then the only point which the tribunal may consider is whether three months total wages should be awarded as bonus or three months basic wages, or any thing less.Since we are setting aside the award in regard to demands 1, 2, 4, 6, 8 and 9, it follows that the terms of employment between the appellant and the respondents would be governed by the existing conditions until a fresh award is made by the tribunal. It appears that pending the appeal in this Court, the appellant has paid dearness allowance at the increased rate awarded by the tribunal to the respondents. But the payment of the said dearness allowance will now have to be stopped until a new award is made. It would be open to the respondents to apply to the tribunal for any interim order in that behalf and if such an application is made, the tribunal may deal with it in accordance with law.