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1960 Supreme(SC) 40
SUPREME COURT OF INDIA
JUSTICE SRI P. B. GAJENDRAGADKAR
JUSTICE SRI K. C. DAS GUPTA
Civil Appeal Nos. 88 of 1958 and 40 of 1959, dated 15 February 1960
Jhagrakhand Collieries (Private), Ltd., and another
Versus
Central Government Industrial Tribunal, Dhanbad, and others
The word "may" in a notification confers discretion that must be exercised reasonably and not arbitrarily. Industrial tribunals maintain jurisdiction to adjudicate referred disputes on merits, regardless of whether the underlying provision is discretionary or the notification is invalid.
Headnote:(A) Industrial Disputes Act, 1947 - Section 10(1)(c) - Interpretation of discretionary terms - Use of the word "may" in a notification regarding wage increases - Where a notification provides that certain employees "may" be granted an increase in basic pay, the word "may" is intended to leave the matter to the discretion of the employer and does not introduce a compulsive element or mean "shall" - However, such discretion must be exercised in a fair and reasonable manner, and not arbitrarily or capriciously. (Paras 21-23)
(B) Industrial Tribunal - Jurisdiction - Even if a notification is found to be invalid or the provision in question is discretionary, an industrial tribunal has jurisdiction to deal with a dispute on its merits if the dispute has been validly referred to it by the government. (Paras 15, 24)
(C) Wage Structure - Retrospective effect - In determining the retrospective operation of a wage increase, the tribunal must consider the date on which the demand was expressly made and whether any prior increments had been granted to the employees. It is not fair or just to allow benefits prior to the date of a specific demand if no reliable evidence exists of an earlier claim. (Paras 26-28)
(D) Social Justice - Extension of benefits - If a tribunal finds that wages require an increment based on principles of social justice, such benefits can be reasonably extended to employees who entered service after the effective date of the original notification. (Para 29)
Facts of the case:
An industrial dispute arose regarding whether employees not entitled to wage increases under the first paragraph of a state notification were entitled to a 12.5% increase under the second paragraph, which stated such employees "may" be granted an increase. The employer denied liability, claiming the provision was purely discretionary and that previous increments had already been given. The industrial tribunal granted increments, and the appellate tribunal further modified the award to make the increases retrospective from the notification date for all employees and extended the benefit to those who joined the service after the notification date.
Findings of Court:
The court found that while "may" denotes discretion, the employer is obligated to consider the matter fairly. The appellate tribunal erred in granting full retrospectivity for employees earning above a certain threshold because the demand was made years later and previous increments had been granted. However, the extension of benefits to employees joining after the notification date was upheld on the grounds of social justice.
Issues: 1. Whether the word "may" in the notification imposed a mandatory obligation or a discretionary power. 2. Whether the industrial tribunal had jurisdiction to adjudicate a dispute based on a discretionary provision. 3. Whether the award should be retrospective from the date of the notification for all employees. 4. Whether employees joining after the notification date were entitled to the wage increase.
Ratio Decidendi: The court ruled that "may" confers discretion which must be exercised reasonably. The validity of the underlying notification does not impair the tribunal's jurisdiction to resolve a validly referred industrial dispute on its merits. Retrospective wage benefits must be balanced against the date of demand and prior increments, while social justice justifies extending fair wage structures to subsequent employees.
Result: Civil Appeal No. 40 of 1959 partly succeeds and Civil Appeal No. 88 of 1958 is dismissed.
Legal Category Hierarchy
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labour law
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industrial disputes
- wage structure
- tribunal jurisdiction
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industrial disputes
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administrative law
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statutory interpretation
- discretionary powers
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statutory interpretation
JUDGMENT
Per Gajendragadkar, J.:-These two appeals arise from an industrial dispute which was referred by the Central Government for adjudication between the Jagrakhand Collieries Ltd., (hereinafter called the appellant) and its workmen (hereinafter called the respondents) under Cl. (c) of Sub-sec. (1) of S. 10 of the Industrial Disputes Act 14 of 1947. The reference in question was made in these words:
Are the workmen of the Jagrakhand Collieries who were not entitled to any increase in wages under Para. 1 of the notification issued by the Korea State Government dated 15 November 1947, entitled to any Increase in wages in accordance with Para. 2 thereof, and if so, to what extent and from which date such increase should be allowed?
This order of reference was passed on 6 June 1955.
The appellant is the owner of three coal mines, viz., The North Jagrakhand Colliery, the South Jagrakhand Colliery and the West Jagrakhand Colliery. All the said coal mines are situated in an area that once formed part of the Indian State of Korea. On 15 November 1947, Mr. Sohan Lal Srivastava, the Chief Minister of Korea State issued a notification for the purpose of assuring minimum wages to colliery workers.
The notification began with the recital that there has been a general rise in the prices of essential commodities which necessitated a positive policy to bring about an improvement in the conditions of workers in the coal mining industry. It also referred to the fact that wages of colliery workers had been increased in the coal fields of Bengal. Bihar, Orissa, the Central Provinces and Berar, and that the said increase was bound to have repercussions on the coal fields of Korea State. That is why the notification in question was issued. Clause (1) of the notification prescribed minimum basic wages which had to be Paid to workers for an eight-hour shift. These workers were classified under four categories which were sub-divided into several other categories and a minimum basic wage was prescribed in respect of each one of the sub-categories. Clause (2) with which we are directly concerned provides:
"any class of employees not entitled for any increase in wages under the provisions given above may be granted an increase of 121/2 per cent in their basic pay."
Clauses (3) and (4) deal with dearness allowance and prescribe a minimum payable in that behalf. Clauses (5), (6) and (7) deal with lead and lift, explosives, shovels and the like and the foodstuffs. Clause (8) deals with the payment of bonus; Cl. (9) with compulsory contributory provident fund, and Cl. 10 provides for the liability of the employers for disbursement of wages. The last clause lays down that this order shall apply retrospectively with effect from 1 November 1947.
It appears that for some time before the present reference was made, the respondents had been claiming increase as indicated in Cl. (2) in respect of workmen covered by the said clause. The appellant, however, denied its liability to make any such increase mainly on two grounds; it urged that the clause in question left it entirely to the discretion of the appellant to grant or to refuse to grant any increases and it was also alleged that subsequent to 1947 the appellant in fact had granted increases in wages to the persons falling under Cl. (2) on several occasions, and that these increases ranged between 10 to 25 per cent of their basic wages. Since the demand made by the respondents was not met by the appellant and it gave rise to an industrial dispute, the Central Government thought it fit to refer the said dispute to the industrial tribunal for adjudication. The tribunal considered the rival contentions raised before it by the parties and made its award on 14 February 1947.
The tribunal has held that the use of the word " may " no doubt gave discretion to the appellant but said discretion had to be exercised by the appellant not arbitrarily or capriciously but in a just and equitable manner. It also held that if the app
