Case: Alembic Chemical Works Co., Ltd Vs. The Workmen

1. This appeal by special leave arises from an industrial dispute between the appellant the Alembic Chemical Works Co. Ltd., and the respondents, its workmen. The said dispute related to a single demand made by the respondents with regard to leave. This demand consisted of three parts, (a) one months privilege leave with full salary and dearness allowance on completion of eleven months service in a year with a right to accumulate upto six months, (b) one months sick leave with full salary and dearness allowance for each year of service with right to accumulate for the entire period of service, and (c) every workman should be entitled to take leave in proportion to the number of days he is in service of the company at the time of his application for the same. This dispute was referred by the Government of Bombay for adjudication before the Industrial Tribunal under S. 10 (1) (d) of the Industrial Disputes Act XIV of 1947.2. The Tribunal considered the contentions raised by the appellant against the respondents demands, took into account awards or agreements between employers and their employees in comparable concerns and made its award. In regard to privilege leave the Tribunal has ordered that leave should be granted to the staff members covered by the reference as follows.Privilege leave upto 3 ..16 days as at completed years of service present per year.Up to 9 completed years ..22 days per year.And thereafter ..one month for every 11 months of service.The award allows accumulation of privilege leave upto three years. As regards sick leave, the Tribunal has ordered that the appellant should give its staff covered by the present award 15 days sick leave in a year with full pay and dearness allowance with a right to accumulate upto 45 days. It has also directed that no medical certificate should be demanded if sick leave for three days or less is asked for. In regard to the third item of demand concerning leave in proportion the Tribunal has made appropriate direction which it is unnecessary to set out for the purpose of this appeal.3. Before the Tribunal the main contention raised by the appellant was in regard to the propriety and reasonableness of the demand and in regard to the practice prevailing in comparable concerns. Before this Court, however, the provision made by the award in regard to privilege leave has been attacked mainly on the ground that the Tribunal had no jurisdiction to make such an award having regard to the provisions of S. 79 of the Factories Act, 1948 (63 of 1948) (hereafter called the Act). It is urged that S. 79 of the Act has made exhaustive and self-contained provisions with regard to the granting of annual leave with wages to the employees to whom the said Act applies, and the effect of S. 79 is to introduce standardisation in the matter of leave; which means neither the employer voluntarily, nor an Industrial Tribunal by its award, can add to the leave prescribed by the said section. In the matter of leave S. 79 is a complete code, and no additions to the said leave can be made either by a contract or by an award. It is common ground that the respondents are governed by the provisions of the Act. This point was not raised before the Tribunal, but since it is a point of law which arises on admitted facts we have permitted the learned Attorney-General to argue it before us.

Court's reasoning:
7. Even on the basis that S. 79(1) is capable of the construction sought to be placed on it by the appellant, the question would still remain whether the said construction should be preferred to the alternative construction which, as we have just indicated is reasonably possible. The answer to this question must be in the negative for two reasons; first, having regard to the obvious policy and object of the Act, if S. 79(1) is capable of two constructions that construction should be preferred which furthers the policy of the Act and is more beneficial to the employees in whose interest the Act has been passed. It is well settled that in construing the provisions of a welfare legislation courts should adopt what is sometimes described as a beneficent rule of construction; but apart from this general consideration about the policy and object of the Act, Ss. 78 and 84 occurring in the same Chapter as S. 79 clearly indicate that S. 79(1) is not intended to standardise leave provisions as contended by the appellant, and that is the second reason why the appellants argument cannot be accepted.Besides, the scope and extent of the exceptions recognised by S. 78(1) are decisively against the appellants construction of S. 79(1). The learned Attorney-General has strenuously contended that the saving provision of S. 78(1) applies only to existing law and existing awards, agreements or contract of service; in other words his argument is that the Legislature has deliberately decided to except pre-existing arrangements and in that sense it is a departure from the usual concept of standardisation. In our opinion the assumption that S. 78(1) is confined to existing arrangements is plainly inconsistent with a fair and reasonable construction of the said provisions. When S. 78(1) refers to any other law it could not have been intended that it is only to existing laws that the reference is made and that the idea underlying the provision was that no law can be passed in future which would grant more generous leave to the employees. Such a restriction on the legislative activities of the appropriate Legislatures cannot obviously have been intended. If the reference to law is not confined only to existing law there is no reason why reference to any award, agreement or contract of service should be similarly circumscribed or limited. We feel no difficulty in holding that what S. 78(1) protects are law, awards, agreements or contracts of service which were then existing or which would come into existence later; that is to say S. 78(1) does not affect pre-existing arrangements and does not also prohibit future arrangements which would be more generous than S. 79(1). A law may be passed making more generous provisions, or agreements or contracts may be entered into or awards made with the same result. If that be the true position S. 78 (1) clearly negatives the theory that S. 79 (1) provides for standardisation of annual leave with wages.10. The provisions of S. 84 would also lead to the same result. Section 84 provides that where the State Government is satisfied that the leave rules applicable to workers in a factory provide benefits which in its opinion are not less favourable than those for which Chapter VIII makes provision it may be written order exempt the factory from all or any of the provisions of Chapter VIII subject to such conditions as may be specified in the order. Now, the power to exempt factories has to be exercised having regard to the effect of the totality of the benefits which may be afforded to the workers by their respective factories. This power to exempt also necessarily postulates the existence of better amenities than those guaranteed by Chapter VIII, and that means that if a factory provides better leave amenities to its employees, the State Government may in the interest of the employees exempt the factory from the operation of this Chapter. The scope of S. 84, like the scope of S. 78, cannot be limited only to the more favourable benefits which may be existing at the date when the Act was passed. What is true about the existing benefits would be equally true about the benefits which may be granted by an employer to the employees in future. Let us illustrate what the consequence would be if the appellants argument is accepted. Take the case of an employer who has been exempted under S. 84 on the ground that the benefits of leave conferred by him on his employees are more favourable to them. In such a case, the employer may make his benefits still more favourable after exemption is accorded to him; but an employer who has already not provided more favourable benefits would be effectively precluded from making any such provisions in future. It is difficult to imagine that such a consequence could have been intended by the provisions of this welfare legislation.It is then argued that making liberal provisions for privilege leave and sick leave are really opposed to the modern trend in industrial thought, and so such liberal awards should be discouraged and corrected. There is no doubt that when industrial adjudication seeks to do social justice it cannot ignore the needs of national economy; and so in considering matters of leave, either in the form of privilege leave or sick leave, the Tribunals should not ignore the consideration that unduly generous or liberal leave provisions would affect production and obviously production of essential commodities is in the interest of not only the employers and the employees but also of the general community; but it is difficult for us to accept the argument that we should make suitable modifications in the provisions made by the award in regard to privilege leave or sick leave. These are matters primarily for the Industrial Tribunal to consider and decide. The Tribunal is more familiar with the trend prevailing in comparable concerns, and unless it appears that the impugned provisions cannot be sustained on any reasonable ground or that they mark a violent departure from the prevailing practice or trend, we would be reluctant to interfere with the decision of the Tribunal. After all, in deciding what would be a reasonable provision for privilege leave or sick leave, the Tribunal has to take into account all relevant factors and come to its own decision. As we have already indicated, in making the present award the Tribunal has considered previous decisions which were relevant and prevailing agreements in comparable concerns. We have carefully considered the criticism made by the learned Attorney-General against the provisions contained in the award, but we are not satisfied that a case has been made out for interference in an appeal under Art. 136.