1956 Supreme(SC) 77

SUPREME COURT OF INDIA
11th October 1956
BHAGWATI, VENKATARAMA AYYAR, S.K. DAS AND GOVINDA MENON, JJ.
Burn and Co., Appellant
Versus
Their Employees, Respondents.
Workmen of Burn and Co., Appellants
Versus
Burn and Co., Respondent.
Civil Appeals Nos. 325 of 1955 and 174 of 1956.
Civil Appeal No. 323 of 1955.
Civil Appeal No. 174 of 1956.
Advocates Appeared
Mr. M.C. Setalvad, Attorney, General for India, Mr. B. Sen, Senior Advocate, (Mr. S.N.Mukherjee and Mr.B.N.Ghosh, Advocates with them) for Appellant; Mr.N.C. Chattareji, Senior Advocate (Mr. A.K. Dutt and Mr.B. P. Maheshwari, Advocates with him), for Respondents.

Headnote:Industrial Disputes Act, 1947, Section 19-Tribunals award Terms of operation if and when can be re-opened in a subsequent dispute-Principle of res judicata, if applicable.

       Bonus-Claim when maintainable-Bonus to some of the workers. Industrial Disputes (Appellate Tribunal) Act (1950) Section 7 (1) (b) (vii)-Order passed by the Appellate Tribunal-Appealability-Substantial question of law.

       Power of Supreme Court in apppeal-Constitution of India, Article 136. Disputes having arisen between Messrs. Burn and Company, Calcutta and a section of their employees, the same were referred by a notification on 16.12.1952 to the First Industrial Tribunal for adjudication. These disputes included inter alia four items, viz. (1) revision of pay of clerical and sub-staff, (2) grades of sarkars and checkers (3) bonus and (4) reinstatement of four employees S, A, P, and J. The Industrial Tribunal by its award dated 24.6.1953 held (1) that there were no grounds for revising the scale of pay of the clerical and sub-staff; (2) that the pay of checkers. should be increased and that they should be paid according to the scales as set out in his award; (3) that the profits of the Company did not warrant the grant of any bonus in addition to what had been paid by the Company; and (4) that of the four employees, S should be re-employed as a checker on his old pay, that A and P should be "re-employed in posts equivalent to their own posts as new incumbents" and that J was not entitled either to reinstatement or compensation. On appeal the Labour Appellate Tribunal by its decision dated 29.4.1955 held (1) that the minimum pay of the clerical and sub-staff should be raised, and that corresponding changes should be made in the ceiling level, in the increments and in the scales of pay of other grades of the staff; (2) that the scale of pay of the sarkars and checkers should be increased and increments given as laid down in the award; (3) that the employees should be paid a months bonus in addition to what had been given to them; and (4) that of the employees, S, A and P should not merely be re-employed but reinstated with continuity of service, and that further S was entitled to compensation at the rate of 8ix months basic wages with dearness allowance. As for J, the Appellate Tribunal held that though his reinstatement was not desirable, he was entitled to one years basic wages with dearness allowance as compensation. Both the Company and the Union preferred appeals to the Supreme Court.

       Regarding the first item, the position was as follows :-In 1946, the Bengal Chamber of Commerce took up the question of fixing, suitably to the changed conditions brought about by World War II, wages and other terms of service of the employees in industrial concerns, and framed a scheme classifying them under different categories, and fixing scales of pay and dearness allowance for the several categories, and that was brought into force in the Company on 1.10.1946. Disputes then arose between Engineering Firms in the State of West Bengal and their employees as regards fixation of grades, wages and dearness allowance, and by a notification dated 31.10.1957 the Government referred them to the adjudication of the First Engineering Tribunal. The appellant Company and its workmen were parties to the proceedings but not the aforesaid Union, which was composed of the clerical and sub-staff. On 30.6.1948the Tribunal passed an award the terms whereof were, in general, less favourable to the employees than those fixed by the Bengal Chamber of Commerce and adopted by the Company on 1.10.1947.

       While the proceedings were pending before the Engineering Tribunal, disputes arose between various Mercantile Firms in Calcutta and their employees as regards wages, dearness allowance and other terms of service, and by notification dated 17.1.1948 the Government of West Bengal referred them to the adjudication of another tribunal, called the Mercantile Tribunal. This Tribunal pronounced its award on 26.8.1949. The Union aforesaid was party in those proceedings, but for technical reasons, the Tribunal declined to adjudicate on their disputes. The result was that this award was no more binding on the parties than the one passed by the Engineering Tribunal. But the scale fixed in the award of the Mercantile Tribunal was decidedly more favourable to the employees than either the scale recommended by the Bengal Chamber of Commerce and adopted by the Company on 1.10.1946 or that fixed in the award of the Engineering Tribunal. It, therefore naturally inspired the Union to present a demand for wages and dearness allowance on the scales provided therein. The Company having declined to accept it, there arose an industrial dispute, and by a notification dated 18.1 1950 Government referred it to Shri Palit a District Judge. By his award dated 12.6.1950 the District Judge held the nature of the work and the qualifications of the clerical staff were not the same in all business establishments, that the clerks in mercantile concerns. were better qualified and had to do more onerous work than the members of the Union, that the latter could not be put in the same position as the former and that the scale of pay fixed in the scheme of the Bengal Chamber of Commerce which was adopted by the Company was fair and required no revision. He, however, made some slight changes in the incremental scales and the maximum limits of the grades. The Union preferred an appeal against this award, but that was dismissed as barred by limitation.

       Under Section 19 (3) of the Industrial Disputes Act, XIV of 1941 an award is to be in operation for a period of one year and under section 19 (6), it is to continue to be binding on the parties even thereafter, until terminated by either party giving two months notice. Acting on this provision the Union issued a notice to the Company on 12.7.1951 declaring its intention not to be bound by it. This was followed in November by presentation of demands including one for raising the scale of pay to the level adopted in the award of the Mercantile Tribunal, and the result was an Industrial dispute, the subject-matter of the present reference. Shri Banerji, who heard the reference, held that the question as to the seal of pay had been directly adjudicated upon by Shri Palit, that, on principle, the decision of a Tribunal on a matter referred to it should not be disturbed, unless there had been a change of circumstances since the date of the award, and as none such existed, the wage structure as fixed by him should stand. The Appellate Tribunal disagreed with this conclusion and raised the floor level of the wage structure, and correspondingly raised ceiling level and the scales of increment and the like-matters. It was argued for the appellant company that the Appellate Tribunal was in error in brushing aside the Award of Shri Palit and in deciding the matter afresh as if it arose for the first time for determination, that when once a dispute is referred to a Tribunal and that results in an adjudication, that must be taken as binding on the parties thereto, unless there was a change of circumstances, and as none such had been alleged or proved, the award of Shri Palit should have been accepted.

       Held: (1) An award of an Industrial Tribunal can be reopened under S. 19 (6) of the Industrial Disputes Act, 1947, only when there has been a material change in the circumstances on which it was based. To hold otherwise would be to defeat the two basic objects which all industrial legislations have in view, namely, to ensure to the workmen a fair return for their labour and to prevent disputes between the employed, and the employees, so that production might not be affected and the interests of the society might not suffer. Although the rule of res judicata as enacted by Section 11 of the Code of Civil Procedure does not in terms apply to such an award, its underlying principle which is founded on sound public policy and is of universal application must appply.1

       The order of the Appellate Tribunal was, therefore, erroneous in law and could not be upheld on this point.

       (2) So far as the sarkars are concerned, the scale had been fixed by Shri Palit, and Shri Banerje adopted it. As no change in the circumstances was alleged in support of a revision thereof, there was no ground for interfering with it. As for checkers they are hourly-rated workers; and Shri Banerji had revised their pay scale. Apart from stating that the ends of justice required it, the Appellate Tribunal gave no reason for modifying his award. The order of the Appellate Tribunal should, therefore, be set aside both in respect of sarkars and the award of Shri Banerji restored.

       (3) In law, a claim for bonus will be admissible only if the business had resulted during the year in sufficient profits. And as the reasons for the grant of bonus is that workers should share is the prosperity to which they have contributed all of them would have the right to participate in it. Therefore, profits can be said to be sufficient to declare a bonus only if they are sufficient to make a payment to all of them. If the profits are not sufficient for that purpose, then the very condition on which bonus could be declared would be absent and no question of granting any bonus could arise. As it is common ground that the profits of the company are not sufficient to justify the award of bonus if it is to be paid to all the workers of the company in all its units, is follows that there is in law no ground for the grant of bonus. Nor can such a claim be sustained in equity. The entire profits of the Company are the result of the labour of all the workmen and employees in all its units. To grant a bonus to a section of them on the basis of the total profits of the Company will be to give them .a share in profits to which they have not contributed.2

       (4) An order refusing reinstatement would be open to appeal under section 7 (1) of the Industrial Disputes (Appellate Tribunal) Act of 1950 (a) if it involved a substantial question of law and it was not necessary to .decide in the present case whether the decision of the Appellate Tribunal that an appeal lay to it under that section was final and not open to question in a civil court, as the correctness of that decision was challenged not collaterally or in an independent proceeding but in an appeal under Art. 136 of the Constitution and it was open to the Supreme Court in such an appeal to consider the legality or otherwise of the orders passed either by the Tribunal or by the Appellate Tribunal in appeal.3

       1 See also under Code of Civil Procedure at p. 211 ante. The Army & Navy Stres Ltd. Bombay v. Their Workmen. (1951) 2 L.L.J. 31 and Ford Moto r Co. of India Ltd. v. Their Workmen, (1951) 2 L.L.J. 231 approved and applied. Sheoparson Singh v. Ramnandan Prasad Singh (1916) L. R. 43 I., A. 91 referred to.

       2. Karam Chand Thappar and Bros. Workmen v. The Company (1953) L.A. C. 152, 160 referred to.

       3. Pankaj Kumar Ganguli v. The Bank of India (1956) 60 C.W. 602 and Upper Ganges Valley Electric Employees Union v. Upper Ganges Valley Electricity Supply Co. Ltd., and another, A. I. R. 1956 All. 491 distinguished.

       The omission to draw up a formal charge-sheet against a workman could not vitiate an order of dismissal if he was aware of the charge framed against him, and had an opportunity of offering his explanation.

       (5) Under Article 136 of the Constitution it is open to the Supreme Court to consider as a Court of Appeal whether in fact the order of Tribunal modifying it is sound. - Article 136-Industrial dispute-Powers of Supreme Court.

       Held: Under Article 136 it is open to the Supreme Court to consider as a Court of Appeal whether, in fact, the order of the Tribunal was vitiated by an error of law, and whether the order of the Appellate Tribunal modifying it is sound. - Section II-Industrial Disputes Act, 1947, Section 19Tribunals award-If and when can be reopened in a subsequent dispute- Principle of res judicata, if applicable.

       

       Held:1 "Are we to hold that an award given on a matter in controversy between the parties after full hearing ceases to have any force if either of them repudiates it under section 19(6) and that the Tribunal has no option, when the matter is again referred to it for adjudication but to proceed to try it de novo, traverse the entire ground once again, and come to a fresh decision. That would be contrary to the well recognized principle that decision once rendered by competent authority on a matter in issue between the parties after a full enquiry should not be permitted to be re-agitated. It is on this principle that the rule of res judicata enacted in section 11 of the Civil Procedure Code is based. That section is, no doubt, in terms inapplicable to the present matter, but the principle underlying it, expressed in the maxim "interest rei publicae ut sit finis litium", is founded on sound public policy and is of universal application (Vide Brooms Legal Maxims, Tenth Edition, p. 218). The rule of res judicata is dictated observed Sir Lawrence Jenkins C.J. in Sheoparsan Singh v. Ramnandan Prasad Singh2 by a wisdom which is for all time. And there are good reasons why this principle should be applicable to decisions of Industrial Tribunals also. Legislation regarding the relation between Capital and Labour has two objects in view. It seeks to ensure to the workmen who have not the capacity to treat with capital on equal terms, fair returns for their labour. It also seeks to prevent disputes between employer and employee, so that production might not be adversely affected and the larger interests of the society might not suffer. Now, if we are to hold that an adjudication loses its force when it is repudiated under section 19(6) and that the whole controversy is at large, then the result would be that far from reconciling themselves to the award and settling down to work it, either party will treat it as a mere stage in the prosecution of a prolonged struggle, and far from bringing industrial peace, the awards would turn out to be but truces giving the parties breathing time before resuming hostile action with renewed vigour. On the other hand, if we are to regard them as intended to have long term operation and at the same time hold that they are liable to be modified by change in the circumstances on which they were based, both the purposes of the legislature would be served. That is the view taken by the Tribunals themselves in The Army & Navy Stores Lld., Bombay v. Their Workmen3 and Ford Motor Co. of India Ltd., v. Their Workmen4 and we are of opinion that they lay down the correct principle, and that there were no grounds for the appellate Tribunal for not following them."5