1. Dispute over proposed changes to employment terms — reduction of paid holidays and introduction of three-shift working system — referred under Industrial Disputes Act, 1947. (Para 1 )
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1962 Supreme(SC) 402
SUPREME COURT OF INDIA
30th November, 1962.
B.P. SINHA, C.J.I., P.B. GAJENDRAGADKAR, K.N. WANCHOO, K.C. DAS GUPTA AND J.C. SHAH, JJ.
Pfizer Private Ltd., Bombay, Appellant,
Versus
The Workmen, Respondent.
Civil Appeals Nos. 625 and 626 of 1962.
advocates appeared
Mr. M. C. Setalved, Attorney General for India, and C.K. Daphtary, Solicitor-General of India (M/s. J. B. Dadachanji, O. C. Mathur and Ravinder Narain, Advocates of M/s. J. B. Dadachanji and Co., with them), for Appellant (In C. A. No. 625 of 1962) and Respondent No. 1 (In C.A. No. 626 of 1962); M/s K. T. Sule, Madan G. Phadnis and Janardan Sharma, Advocates for Respondent (In C.A. No. 625 of 1952) and Appellant (In C.A. No. 626 of 1962)
Reference (IT) NO. 16 of 1962, D/-9-6-1962, Industrial Tribunal, Maharashtra.
Advocates:
C.K.DAFTARY, J.B.DADACHAN, JANARDAN SHARMA, K.T.SULE, M.C.SETALVAD, MADAM PHADNIS, O.C.MATHUR, Ravindra Narayan
C.K.DAFTARY, J.B.DADACHAN, JANARDAN SHARMA, K.T.SULE, M.C.SETALVAD, MADAM PHADNIS, O.C.MATHUR, Ravindra Narayan
In times of national necessity, the need for increased industrial production outweighs theoretical objections to night work or the loss of a five-day week, provided the changes are reasonable, within statutory hour limits, and employees are adequately compensated.
Headnote:(A) Industrial Disputes Act, 1947 - Sections 10(1)(d), 12(5) and 9A - Factories Act - Sections 51, 59 and 66(1)(b) - Industrial Employment (Standing Orders) Act, 1946 - Negotiable Instruments Act - Introduction of three-shift system and reduction of paid holidays - In the face of national emergency and the need to gear up industrial production, legitimate efforts by the employer to increase production of essential goods must receive cooperation from employees on reasonable terms (Para 13) - Technical necessity for a continuous process to ensure product quality justifies the introduction of multiple shifts (Paras 16-18) - Working hours within the statutory limit of 48 hours per week and the existence of Standing Orders contemplating multiple shifts support the reasonableness of the change (Paras 14, 27).
(B) Night Work - Theoretical objections to night work or the loss of a five-day week cannot override the paramount requirement of the community for increased production in a developing economy, provided employees are reasonably compensated (Paras 21, 24).
(C) Paid Holidays - Commercial establishments and factories are not bound to grant all public holidays sanctioned under the Negotiable Instruments Act, which are primarily applicable to government institutions - The number of holidays should be determined on an ad hoc basis considering the need for industrial production (Para 30).
Facts of the case:
The employer proposed to introduce a three-shift system to fully utilize machinery, meet market demand, and improve the quality of a drug requiring a continuous production process. The employees resisted, arguing it would abolish the five-day week and compel night work. Additionally, a dispute arose regarding the reduction of paid holidays from 27 (as per the Negotiable Instruments Act) to 8. The Tribunal rejected the three-shift proposal but reduced the holidays to 10. Both parties appealed to the Supreme Court.
Findings of Court:
The court found that technical evidence established the necessity of a continuous process for the specific drug. The proposed working hours remained within the legal limit of 48 hours per week. The court also found that 10 holidays were too few, while 27 were unreasonably high for a commercial factory.
Issues: Whether the introduction of a three-shift system was reasonable given the technical requirements and national need for production, and whether the reduction of paid holidays was justified.
Ratio Decidendi: The court ruled that industrial adjudication must be responsive to the paramount requirements of the nation, especially during emergencies. Technical necessity for continuous production and the provisions of the Standing Orders justify the introduction of shifts. While employees' preferences for day work and five-day weeks are valid goals, they cannot be pursued in a doctrinaire spirit at the expense of essential production. Regarding holidays, commercial factories are not mandated to follow the Negotiable Instruments Act's holiday schedule, and the number of holidays should be balanced against production needs.
Result: Appeals allowed.
Legal Category Hierarchy
Table of Contents
2. Employer seeks increased production via three shifts and reduced holidays; employees oppose shift changes as prejudicial to health and a violation of five-day week terms. (Para 2 , 3 )
3. National emergency necessitates increased industrial production; technical evidence supports continuous process requirements; theoretical objections to night work yield to paramount community needs. (Para 13 , 15 , 18 , 21 , 24 )
4. Management's discretion to introduce shifts under Standing Orders is subject to reasonableness, which must be evaluated against technical necessity and national production requirements. (Para 27 )
5. Introduction of three shifts allowed subject to wage compensation; paid holidays reduced to sixteen per year. (Para 28 , 31 )
6. Can an employer introduce three shifts if it alters the existing five-day week?
Yes, if the change is reasonable, supported by technical necessity such as continuous processes, and aligned with national production requirements, especially during emergencies, regardless of theoretical objections to night work. (Para 13 , 18 , 21 , 24 , 27 )
7. What is the legal status of Standing Orders regarding shift changes?
Standing Orders constitute statutory terms of service. While they may grant management discretion to introduce shifts, such changes may still be subject to industrial adjudication to ensure reasonableness. (Para 27 )
8. Are commercial factories bound to grant holidays declared under the Negotiable Instruments Act?
No, such holidays are typically applicable to government institutions. Commercial establishments are not generally bound by them, and holidays may be reduced to meet urgent industrial production needs. (Para 30 )
Judgment
GAJENDRAGADKAR, J. : Two items of dispute between the appellant Pfizer Private Ltd., and the respondents, its employees, were referred for adjudication to the Industrial Tribunal, Bombay, by the Government of Maharashtra under Ss. 10(1)(d) and 12(5) of the Industrial Disputes Act, 1947 on January 22, 1962. Both these items arose out of the proposed changes which the appellant wanted to make in the terms of employment governing the service of the respondents-. The appellant proposed to reduce the existing paid holidays to 8 instead of 27 to which respondents were entitled because so long, the appellant has been giving to its employees the benefit of public holidays as declared under the Negotiable Instruments Act.
This was the first item of dispute between the parties. The second item of dispute was in regard to refixation of the hours of work. The appellant desired to introduce three shifts in most of its departments and accordingly it had given a notice of change under S.9A of the Industrial Disputes Act. Both these proposed changes were resisted by the respondents. The Tribunal has rejected the appellant s case for the introduction of three shifts in its factory and this part of the award is challenged by the appellant by its appeal No. 625 of 1962. In regard to the appellant s claim for reducing the paid holidays, the Tribunal has substantially accepted the appellant s case and has directed that the holidays should be reduced to 10 every year. It has directed the appellant to fix these holidays in consultation with the respondents. It has also added that in view of the fact that a substantial reduction was being made in the number of paid holidays, the appellant should give the respondents an additional increment in their grade with effect from August 1,1962. This increment would be in addition to the normal increment which may become due or after August, 1962. This part of the award reducing the number of holidays is challenged by the respondents by their appeal No. 626 of 1962. Both the appeals have been brought before this Court by special leave.
2. The appellant is a Company incorporated under the Indian Companies Act,1913. It has its registered office at Bombay and it runs a factory in which it manufactures life saving drugs, such as antibiotics and antitubercular drugs, and vitamin products. The appellant s factory was working a multiplicity of shifts with different times. It, however, found that this working did not fully utilise the machinery installed in the factory. The utilisation of the raw product received by the appellant s factory in Bombay from its factory at Chandigarh was also not satisfactory and as a result of inadequate production, the appellant was not able to meet adequately the demand for its products from the market. That is why the appellant came to the conclusion that there was need to introduce three shifts in order to have extensive production of better quality products. The appellant felt that if it was able to produce its products on a much large scale, it would be able to undertake export of the said products, and in any event, larger production would enable the appellant to meet its competitors in the trade. Besides, the preparation of the well-known antitubercular drug Para Amino Salicylic Acid (P.A.S.) which the appellant had developed in its research laboratory after carrying out laboratory and pilot plant experiments in 1960-61, needed the working of the relevant section on a three-shift basis because its production was a continuous process and as a result of the investigation made by its expert, the appellant came to the conclusion that the quality of the product would be very much improved if the section working in the production of the said drug was to work continuously. That was an additional reason why the appellant wanted to introduce 3 shifts in its factory. It thought that if the chemical and pharmaceutical departments were to work in three shifts the other subsidiary sect
