Back
SUPREME COURT OF INDIA
2nd February, 1959
J. IMAM, S.K. DAS AND J.L. KAPUR JJ.
M/s. Lipton Ltd., and another, Appellants
Versus
Their Employees, Respondents.
Civil Appeals Nos. 713 to 715 of 1957.
Advocates appeared
Mr. M. C.Setalvad, Attorney-General for India and Mr. B. Sen, Senior Advocate (Mr. S. N. Mukherjee, Advocate, with them), for Appellants; Mr. A. V. Viswanatha Sastri, Senior Advocate (Mr. Janardan Sharma, Advocate, with him), for Respondents. ;
Industrial Disputes Act, 1947 - Ss. 2, 18 - Industrial Tribunal - Jurisdiction - Delhi State Government - Appropriate Government - Bonus - Global profits of the company - Whether can be taken into account for payment of bonus to its workers in India - Fixation of grades and scales of pay - Whether the existing wage structure required revision - Financial capacity of the industry to pay a fair wage - Industry-cum-region basis - Overtime payment - Clerical error in computation - Correction of error under R. 23 of the Industrial Disputes (Central) Rules, 1947.
Fact of the Case:
The Lipton Employees Union (the Union) raised a dispute with Lipton Ltd. (the Company) regarding fixation of grades and scales of pay, bonus for the year 1951, and overtime payment. The dispute was referred to the Additional Industrial Tribunal, Delhi for adjudication. The Tribunal awarded an increase of about 20% to all workers over their present wages and proportionate increase in the dearness allowance. It also allowed bonus for the year 1951. The Company challenged the award before the Labour Appellate Tribunal (LAT), which upheld the decision of the Tribunal. The Company then filed appeals to the Supreme Court.
Finding of the Court:
The Supreme Court held that: 1. The Industrial Tribunal had jurisdiction to adjudicate on the dispute between the Company and its workmen of the Delhi office. 2. The LAT committed a manifest error in adding back the sum of Rs. 9,93,824 to the available surplus of Rs. 9,66,654 for the year 1951, as that amount had already been added back in arriving at the available surplus. 3. The global profits of the Company could not be taken into account for the purpose of payment of bonus to its workers in India, as the Indian workmen did not contribute to the profits which the Company derived from its ex-India business. 4. The existing wage structure required revision, as the evidence showed that the wages in comparable industries in the same region were higher. 5. The Company had the financial capacity to bear the burden of the wage increase, as the trading results of the Indian business over a period of years showed that the net profits were substantial. 6. The clerical error in the computation of overtime payment could be corrected under R. 23 of the Industrial Disputes (Central) Rules, 1947.
Issues: 1. Whether the Industrial Tribunal had jurisdiction to adjudicate on the dispute between the Company and its workmen of the Delhi office. 2. Whether the global profits of the Company could be taken into account for the purpose of payment of bonus to its workers in India. 3. Whether the existing wage structure required revision. 4. Whether the Company had the financial capacity to bear the burden of the wage increase. 5. Whether the clerical error in the computation of overtime payment could be corrected under R. 23 of the Industrial Disputes (Central) Rules, 1947.
Ratio Decidendi: 1. The Industrial Tribunal had jurisdiction to adjudicate on the dispute between the Company and its workmen of the Delhi office, as all the workmen of the Delhi office, whether they worked in Delhi or not, received their salaries from the Delhi office and were controlled from the Delhi office in the matter of leave, transfer, supervision, etc. 2. The global profits of the Company could not be taken into account for the purpose of payment of bonus to its workers in India, as the Indian workmen did not contribute to the profits which the Company derived from its ex-India business. 3. The existing wage structure required revision, as the evidence showed that the wages in comparable industries in the same region were higher. 4. The Company had the financial capacity to bear the burden of the wage increase, as the trading results of the Indian business over a period of years showed that the net profits were substantial. 5. The clerical error in the computation of overtime payment could be corrected under R. 23 of the Industrial Disputes (Central) Rules, 1947, as the error was a mere clerical error which the Industrial Tribunal was entitled to correct even without notice to the Company.
Final Decision: The Supreme Court dismissed Appeal No. 715 of 1957 and allowed Appeals 713 and 714 of 1957 to the extent indicated. The order for the grant of bonus for 1951 was set aside and the new scales of pay were to take effect from November 1, 1955 instead of from January 1, 1954.
Judgment
S. K. DAS J.: These are three appeals by special leave. The appellant in all the three appeals is a company called Messrs. Lipton Ltd., London, having an office at Asaf Ali Road, New Delhi (hereinafter referred to as the Lipton, Ltd.,) The respondents are the employees of the Delhi office of the said Lipton, Ltd., represented by the Lipton Employees Union (herein- after referred to as the Union). On April 14, 1958, a petition was filed on behalf of the appellant for an amendment of the cause title of the three appeals, wherein it was stated that as a matter of internal arrangement the Board of Directors of the Lipton Ltd., London decided to separate the export side of its business from its internal trade in respect of its branch in India and on April 4, 1957, a separate sterling company called Lipton (India) Ltd., was incorporated in the United Kingdom and this new Company took over the internal side of the business in India on and from January 5,,1958, but the export side of the business continued to be a branch of the Lipton Ltd., London. Pursuant to the aforesaid arrangement, the employees of the Delhi office of the Lipton Ltd., were notified of the formation of the new Company and on and from January 5, 1958, their services were transferred to Lipton (India) Ltd., on condition that their services would be treated as continuous, uninterrupted and on the same terms as before. On the aforesaid statements, the appellant made a prayer that the cause title of the three appeals should be amended by substituting Lipton (India) Ltd., in place of Lipton, Ltd . We directed that Lipton (India) Ltd., be added as one of the appelants without prejudice to either party on the merits of the case.
2. Two of the appeals (Civil Appeals Nos. 713 and 714 of 1957) were consolidated by an order of this Court, and they raise certain common questions with regard to (1) fixation of grades and scales of pay of the respondent-employees and (2) bonus for the year 1951. The third appeal (Civil Appeal No. 715 of 1957) raises a somewhat different question with regard to overtime payment and is directed against an order of the Additional Industrial Tribunal, Delhi, dated October 15, 1955, by which the Tribunal made a modification in its award dated August 18, 1955, in respect of overtime payment. It will be convenient if Civil Appeal No. 715 of 1957 is dealt with separately from the other two appeals.
3. It is necessary now to state very briefly some of the facts which have given rise to these three appeals. The Lipton Ltd., is a company incorporated in England having its registered office in London. Its business in the United Kingdom consists of stores and groceries, including tea which represents only about 10 per cent of its business there.Its operations in India are carried on by a branch with its head office in Calcutta. This branch, which may be conveniently called the Indian branch, has been operating in this country for more than 60 years. The company is principally interested in the sale of "packeted" tea throughout India together with small sales of imported tinned milk and also in the export of tea to all parts of the world. The Lipton Ltd., does not own any tea gardens in India and has no financial interest in the producing side of the industry. All the teas which are sold in India or which are exported are purchased from producers in India, either through public auctions in Calcutta and Cochin or by private contract. It has factories in Calcutta, Allahabad and Conoor in which teas are blended and packed into retail packets for sale throughout India. It sells tea direct to retail dealers and, with relatively mirror exceptions, does not operate through wholesalers. Dealers are supplied by the company s own salesmen each of whom has a sales depot at which he maintains stocks of the company s products. The salesman sells these teas at the company s wholesale prices to dealers for cash and remits the cash through banking channels to Calcutt
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
