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Prabhulal Patiram and Co. Vs. Industrial Tribunal - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMadhya Pradesh High Court
Decided On
Judge
Reported in(1966)IILLJ206MP; 1965MPLJ781
AppellantPrabhulal Patiram and Co.
Respondentindustrial Tribunal
Cases ReferredLtd. v. Union of India
Excerpt:
.....to pay the proposed burden the tribunal observed at one place in the impugned award that the minimum wage has got to be paid to the lowest category worker irrespective of the capacity to pay 'and that assuming that capacity to pay is to be considered in a case like this, then i have shown above that these employers have capacity to pay the increased wages. in this connexion the tribunal drew an adverse inference against the petitioners from the fact that they had failed to produce their account books and balance sheets to show their position in regard to the profit they may have earned or the loss they may have sustained for some years. they failed to do so. on account of their failure, clearly the tribunal was not justified in fixing the wage-scale in comparison with those..........1961; that the dispute referred to it concerned an increase in wages, that is to say, fixation of fair wages or an approximation to it; that the tribunal should have, therefore, approached the question of increase in wages on the basis of industry-aim-region and should have taken into consideration the capacity of the employers to bear the burden proposed to be imposed ; and that the tribunal failed to do so and instead increased the wages from rs. 1.62 to rs. 1.81 after holding that the present earnings of the bidi-workers in the petitioners' factories were not sufficient even to meet their bare necessities of life; that the wages of workers in bidl industry at khargone, sana wad, khandwa and burhan-pur were higher than rs, 1.62 and that the prices of essential commodities at ralpur.....
Judgment:
ORDER

P.V. Dixit, C.J.

1. The four petitioners In this case, who carry on the business of manufacture and sale of bidis, seek a writ of certiorari for quashing the award made by the industrial tribunal on 3 July 1963 in an industrial dispute between them and their workmen which was referred to the tribunal for adjudication under Section 10 (1)(d) of the Industrial Disputes Act, 1947.

2. The material facts are that by a notification issued on 30 December 1958 under the Minimum Wages Act, 1948, the Government fixed the minimum rates of wages in bid industry in Raipur division at the rate of Rs. 1.62 per 1,000 bidis rolled. Before the issue of this notification a bidi-worker used to get only Rs. 1,37 for 1,000 bidis rolled. The notification issued in 1958 was struck down by this Court as invalid and inoperative in Narottamdas v. P.B. Gowarikar 1961-I L.L.J. 4421. Thereafter, the bid manufacturers again started making payment to their workers at the rate of Rs. 1.37. The State then enacted the Minimum Wages (Madhya Pradesh Amendment and Validation) Act, 1961, to validate the rate of minimum wages fixed or revised by the various notifications issued on 30 December 1958. It was held by this Court in Dayalal v. State of Madhya Pradesh 1962 J.L.J, 987, which was decided on 2 May 1962, that Section 31A of the Validation Act of 1961 was totally ineffective for validating the rates of minimum wages fixed or revised under the several notifications issued on 30 December 1958. Subsequently, the Madhya Pradesh Minimum Wages Fixation Ordinance, 1962, was promulgated fixing the minimum rates of wages in bidi industry for various workers in different areas of the State. This Ordinance was replaced later by the Madhya Pradesh Minimum Wages Fixation Act, 1962, which came into force on 5 August 1962. In the meantime, on 24 July 1961, that is, after the Minimum Wages (Madhya Pradesh Amendment and Validation) Act, 1961, was enacted and before Section 31A of that Act was held to be invalid by this Court, the Government under Section 10 (1) of the Industrial Disputes Act, 1947, referred to the industrial tribunal for adjudication the dispute between the petitioners and one more concern of Raipur and their workmen. In the notification making the reference to the tribunal the dispute was formulated thus:

(1) Whether the workmen of the bidi industry referred to above have a case for increase in wages If so, what should be the quantum thereof ?

(2) Whether termination of services of workmen employed at Ganjpara branch of Prabhulal Patiram establishment is justified? If not, whether they should be reinstated ?

3. The tribunal after taking oral and documentary evidence produced by 4he parties and hearing them passed an award on 3 July 1963. By the award it held, inter alia, that the wages of persons working in the premises at the petitioners' factories at Raipur should be increased from Rs. 1.62 per 1,000 bidis rolled to Rs. 1.81 and that these workers would be entitled to get wages at these rates retrospectively from 24 July 1961, the date of reference. In this petition we are only concerned with the dispute relating to the increase in wages. The claim of workmen employed at Ganjpara branch of the petitioners, Prabhulal Patiram & Co., for reinstatement was rejected by the tribunal on the ground that it had not been established that this branch belonged to the firm, Prabhulal Patiram & Co.

4. In support of the objections taken in the petition impugning the validity of the award Sri Phadke, learned Counsel appearing for the petitioners, argued that the tribunal altogether misunderstood the nature and scope of the dispute referred to it for adjudication, namely, ' whether the workmen of the bidi industry...have a case for Increase in wages ' ; that the tribunal erred in thinking that the dispute concerned the fixation of the minimum rate of wages or a revision of the minimum rate of wages fixed by the notification Issued on 30 December 1958 and validated by the Minimum Wages (Madhya Pradesh Amendment and Validation) Act, 1961; that the dispute referred to it concerned an increase in wages, that is to say, fixation of fair wages or an approximation to it; that the tribunal should have, therefore, approached the question of Increase In wages on the basis of industry-aim-region and should have taken into consideration the capacity of the employers to bear the burden proposed to be imposed ; and that the tribunal failed to do so and instead increased the wages from Rs. 1.62 to Rs. 1.81 after holding that the present earnings of the bidi-workers in the petitioners' factories were not sufficient even to meet their bare necessities of life; that the wages of workers in bidl industry at Khargone, Sana wad, Khandwa and Burhan-pur were higher than Rs, 1.62 and that the prices of essential commodities at Ralpur were very high due to the proximity of the Bhilai Steel Works and ignoring totally the capacity of the employers to pay the increased wages. It was also urged that the tribunal completely abdicated its function of adjudication when it fixed the new rate of wages at Rs. 1.81 as a half-way measure between the minimum wages fixed under the Minimum Wages Act and the rate of Rs. 2.61 demanded by the workers; and that the tribunal did not at all pay any regard to the capacity of the petitioners to bear the burden of retrospective payment at the increased rates of wages. On these grounds it was urged that the tribunal had In effect fixed a new rate of minimum wages or revised the rates of wages fixed by the notification Issued in 1958 and validated by the Minimum Wages (Madhya Pradesh Amendment and Validation) Act, 1961. and not considered the question of Increase in wages so as to bring the statutory prescribed minimum wages near the level of fair wage; and that thus the award rendered by the tribunal was contrary to the terms of the dispute referred to it for adjudication.

5. In our judgment, the contentions advanced on behalf of the petitioners must be given effect to. The reference that was made to the tribunal was under Section 10 (1)(d) of the Industrial Disputes Act, 1947, and under the terms of the reference the tribunal was required to adjudicate upon the question whether the workmen employed by the petitioners had a case for Increase in wages. The minimum wages in the bid industry for Raipur division had already been fixed in 1958 by a notification issued under the Minimum Wages Act, 1948, when the reference was made. The minimum wages fixed under the Minimum Wages Act, 1948, could only be revised or enhanced in accordance with the provisions of that Act. The Industrial Disputes Act and the Minimum Wages Act vitally differ both as regards their purpose and their scope. Under the Industrial Disputes Act when a dispute regarding wages is referred to the adjudication of a tribunal, the question that has to be decided is as regards the fair wage to be determined on the facts and circumstances of the particular case and not the minimum wage to be awarded. As observed by Venkatarama Ayyar, J., In South India Estate Labour Relations Organisation v. State of Madras and Ors. 1954-1 L.L. J. 8:

The minimum wage is not, as such, the basis of the decision, though it might in the actual Investigation turn out to be a fair wage.... The differences noted above are substantial In character ... Act 11 of 1948 was not Intended co extanti to repeal Act 14 of 1947 and to take its place as a substitute.

There can, therefore, be no room for doubt that what the tribunal had to fix was not the minimum rate of wage but a fair wage or a wage near the level of a fair wage.

6. Now, the concept of ' minimum wage,' ' fair wage ' and ' living wage ' have been explained by the Supreme Court in Express Newspapers, Ltd. v. Union of India 1961-I L.L.J. 339; Lipton, Ltd. v. their employees 1959-I L.L.J. 431; Standard Vacuum Refining Co. v. its workmen 1961-I L.L.J. 227; and Hindustan Times, Ltd. v. their workmen 1963-I L.L.J. 108. According to these decisions in dealing with wage-structure it is usual to divide wages into three broad categories: a basic minimum wage or the bare subsistence wage; above it is the fair wage and beyond the fair wage is the living wage. In Hindustan Times, Ltd. v. their workmen 1963-I L.L.J. 108 (vide supra) It has been said:

At the bottom of the ladder, there is the minimum basic wage which the employer of any Industrial labour must pay in order to be allowed to continue an Industry. Above this is the fair wage, which may roughly be said to approximate to the need-based minimum, in the sense of wage which is ' adequate to cover the normal needs of the average employee regarded as a human being in a civilized society.

On the concept of 'living wage' the Supreme Court noted with approval in Standard Vacuum Refining Co. v. its workmen 1961-I L.L.J. 227 (vide supra) and Hindustan Times, Ltd. v. their workmen 1963-I L.L.J. 108 (vide supra), the following passage from Phillip Snowden's ' The Living Wage ':

The amount of the living wage in money terms will vary as between trade and trade, between locality and locality. But the idea is that every workman shall have a wage which will maintain him in the highest state of industrial efficiency, which will enable him to provide his family with all the material things which are needed for their health and physical well-being, enough to enable him to qualify to discharge his duties as a citizen.

7. The principles which must be borne in mind while considering the demand for an increase in wages in an industrial dispute referred to the tribunal for adjudication have been pointed out by the Supreme Court in Express Newspapers, Ltd. v. Union of India 1961-1 L.L.J. 339 (vide supra) at p. 367. They are:

(1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity;

(2) that the capacity of the industry to pay is to be considered on an industry-cum-region basis after taking a fair cross section of the industry; and

(3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the organization so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product-no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business.

In that case the Supreme Court adopted the opinion expressed in the Report of the Committee on Fair Wages that in determining the capacity of an industry to pay it would be wrong to take the capacity of a particular unit or the capacity of all industries in the country. The relevant criterion should be the capacity of a particular Industry in a specified region and, as far as possible, the same wages should be prescribed for all units of that industry in that region. It will obviously not be possible for the wage-fixing board to measure the capacity of each of the units of an industry in a region and the only practicable method is to take a fair cross-section of that industry.

8. In determining the wage-scale the tribunal must also take note of the wages prevailing in comparable concerns in the region, The Supreme Court has stated in Williamsons (India)(Private), Ltd. v. its workmen 1962-I L.L.J. 302, that in considering the question of comparable concerns the tribunal should bear in mind all the relevant factors in relation to the problem. The relevant facts are, the extent of the business carried on by the concerns, the capital invested by them, the profits made by them, the nature of the business carried on by them, their standing, the strength of their labour force, the presence or absence and the extent of their reserves, and the prospects about the future business.

9. It is plain from these decisions of the Supreme Court that while fixing the fair wage or increasing the wages of a labourer be as to bring them near the level of a fair wage, the industry-cum-region basis has to be followed and the capacity of the employer to pay the increase in wages must also be considered.

10. These principles were not folios by the tribunal in making the impugned award. What the tribunal did wan first to hold on the evidence of certain workers employed in the petitioner's factories that the minimum and maximum earnings of a bidi-worker ranged between Its. 25 and Rs. 48 per month on the basis of minimum rate of wage of Rs. 1.62 per 1,000 bidis rolled; that these wages earned by the workers were insufficient to meet the bare necessities of the daily life of the workers; and that most of them were indebted. The tribunal did not at all take into consideration the level of wages prevailing in the neighbouring districts of Raipur as, for example, Bilaspur, Durg and Rajnandgaon, and the capacity of the bidi industry in that region to pay the same wages which were intended to be fixed for the petitioners' workers. It casually referred to the fact that the rates of wages in Khargone, Sanwad, Khandwa and Burhanpur were higher. It drew an adverse inference against the petitioners from the circumstance that they had failed to file the price-index for Durg and Raipur and held that the prices of essential commodities at Raipur were higher than at other places.

11. On the question of the capacity of the industry to pay the proposed burden the tribunal observed at one place In the Impugned award that

the minimum wage has got to be paid to the lowest category worker irrespective of the capacity to pay ' and

that. Assuming that capacity to pay is to be considered in a case like this, then I have shown above that these employers have capacity to pay the increased wages.

It is thus clear that the tribunal did not at all regard the capacity of the employers to bear the burden intended to be put by the increase in wages as material. The enquiry it made into the financial capacity of the employers to pay for the purpose of the ' assumption ' that tribunal made, namely, that the capacity to pay was relevant, was only an enquiry Into the cost of manufacture of bidis and the sale price of the bidis manufactured. In this connexion the tribunal drew an adverse inference against the petitioners from the fact that they had failed to produce their account books and balance sheets to show their position in regard to the profit they may have earned or the loss they may have sustained for some years.

12. It is manifest from what has been stated above that the industrial tribunal's approach to the dispute referred to It for adjudication was altogether erroneous. It regarded the dispute as one of payment of the minimum wage, whereas the dispute referred to It was really one concerning the fixation of fair wage or an approximation to it. In fixing the rate of wage at Rs. 1.81 the tribunal did not adopt the industry-cum-region basis; and It did not decide the financial capacity of the employers to bear the proposed wage increase and also took no account whatsoever of the wages prevailing in comparable concern in the region. It was for the respondents 2 and 3, namely, the bidi Mazdoor Union, Raipur, and the Raipur Bidi Mazdoor Sangh, to place material before the tribunal with regard to the scale of wages prevailing in comparable concerns in the region. They failed to do so. On account of their failure, clearly the tribunal was not Justified in fixing the wage-scale in comparison with those prevailing in bidi industries located In towns far away from Raipur. The tribunal's award is clearly based on irrelevant and invalid conaiderations. That being so, it cannot be sustained.

13. It must also be noted that the tribunal gave retrospective effect to the wage-rate fixed by It from 24 July 1961 merely on the ground that the reference was made on that date. No doubt, an adjudicator has the power to give retrospective effect to the award made by him. But, as observed in Hindustan Times, Ltd. v. their workmen 1963-I L.L.J. 108 (vide supra), the question as to the date from which the award should be made effective has to be decided by the tribunal on a consideration of the circum-stances of each case, and no general formula can be laid down as to the date from which a tribunal should make its award effective. But the mere circumstance that the reference was made on 24 July 1961 cannot by itself constitute a good ground for giving retrospective effect to the new rate of wage. In Lipton, Ltd. v. their workmen 1959-I L.L.J. 431 (vide supra), the Supreme Court did cot regard the fact that the labour union presented its charter of demands to Lipton, Ltd., for the first time towards the end of December 1953 as sufficient in itself for giving retrcspsctive effect to the new scales of pay from that point of time. The matter as regards the date from which the award should be made effective is one which the tribunal must decide in the exercise of its discretion on a careful consideration of the peculiar circumstances of each case. Those circumstances would obviously include the financial capacity of the employer to bear the burden of the retrospective fixation of the new scale of wage.

14. For the foregoing reasons we are of the opinion that the award rendered by the tribunal is Invalid and must be quashed. The result is that this petition is allowed. The award made by the industrial tribunal on 3 July 1963 is quashed. The tribunal must now give a fresh adjudication on the dispute in the light of the decisions of the Supreme Court referred to above and in the light of this decision. In the circumstances of the case, we leave the parties to bear their own costs. The outstanding amount of the security deposit shall be refunded to the petitioners.


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