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All India Reserve Bank Employees Association Vs. Reserve Bank of India - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtSupreme Court of India
Decided On
Reported inAIR1966SC305; [1966]36CompCas165(SC); [1965(11)FLR137]; (1965)IILLJ175SC; [1966]1SCR25
ActsIndustrial Disputes Act, 1947 - Sections 7B and 10(1); Reserve Bank (Transfer to public Ownership) Act, 1948; Industrial Disputes (Amendment) Act, 1956; Army Act, 1950; Air Force Act, 1950; Navy (Discipline) Act, 1934; National Labour Relations Act, 1947; Wagner Act; Taft-Hartley Act; Minimum Wage Regulations - Regulations 28 and 29; Reserve Bank of India (Staff) Regulations, 1948
AppellantAll India Reserve Bank Employees Association
RespondentReserve Bank of India
Cases Referred and Western India Match Company Ltd. v. Their Workmen
labour and industrial - adjudication of industrial disputes - sections 7b, 10 (1) and 17 a (i) of industrial disputes act, 1947, industrial disputes (amendment) act, 1956, national labour relations act, 1947, regulations 28 and 29 of minimum wage regulations and reserve bank of india (staff) regulations, 1948 - appellant demanded revision of pay scales and allowances - central government took over resolution of disputes between banks and their employees and appointed all india industrial tribunal to codify terms and conditions of service of bank employees - appellant appealed before supreme court by special leave against award made by national industrial tribunal - supreme court directed for creation of new scales of pay for class ii employees - discussed question as to operation of award.....hidayatullah, j.1. this is an appeal by special leave from the award of the nationalindustrial tribunal (bank disputes), bombay, in a dispute between the reservebank of india and its workmen, delivered on 8 september, 1962, and published inthe gazette of india (extraordinary) of 29 september, 1962. the appellants arethe all india reserve bank employees' association, bombay (shortly theassociation), representing class ii and class iii staff and the all indiareserve bank d class employees' union, kanpur (shortly the union), representingclass iv staff, of the reserve bank. 2. by notification no. s.o. 704 dated the 21st march 1960, the centralgovernment, in exercise of its powers under s. 7b of the industrial disputes act,1947, constituted a national industrial tribunal with mr. justice k. t......

Hidayatullah, J.

1. This is an appeal by special leave from the award of the NationalIndustrial Tribunal (Bank Disputes), Bombay, in a dispute between the ReserveBank of India and its workmen, delivered on 8 September, 1962, and published inthe Gazette of India (Extraordinary) of 29 September, 1962. The appellants arethe All India Reserve Bank Employees' Association, Bombay (shortly theassociation), representing Class II and Class III staff and the All IndiaReserve Bank D Class Employees' Union, Kanpur (shortly the union), representingclass IV staff, of the Reserve Bank.

2. By notification No. S.O. 704 dated the 21st March 1960, the CentralGovernment, in exercise of its powers under s. 7B of the Industrial Disputes Act,1947, constituted a National Industrial Tribunal with Mr. Justice K. T. Desai(later Chief Justice of the Gujarat High Court) as the Presiding Officer. By anorder notified under No. S.O. 707 of the same date, Central Government, in theexercise of the powers conferred by sub-s. (1 A) of s. 10 of the IndustrialDisputes Act, referred an industrial dispute, which, in its opinion, existedbetween the Reserve Bank and its workmen of the three classes above-mentioned.The Order of Reference specified the heads of dispute in two schedules, thefirst in respect of Class II and Class III staff and the second in respect ofClass IV staff. The first Schedule consisted of 22 items and the second of 23items. These items (a considerable number of which are common to the twoschedules) bear upon the scales of pay and dearness and other allowances andsundry matters connected with the conditions of service of the three classes.The reference was registered as Reference No. 2 of 1960. During the trial ofthe Reference the Association and the Union severally made applications forinterim relief asking for 25% of the total emoluments to Class IV employeeswith a minimum of Rs. 25 and for 25% of the basic pay to the employees of thetwo higher classes, with effect from July 1959, but this was refused by r,ninterim Award dated December 29, 1960. The final Award was delivered onSeptember 8, 1962 because In the meantime the Tribunal dealt with anotherreference registered as Reference No. 1 of 1960 in a dispute involving 84banking companies and Corporations and their workmen in respect of creationof categories of banks and areas for purposes of adjudication and of scales ofpay, diverse allowances and other conditions of service. The Award in thatReference was delivered on June 7, 1962. The Tribunal was next occupied withthe resolution of yet another dispute over bonus between 73 banking companiesand their workmen which was registered as Reference No. 3 of 1960 and which wasconcluded by an award on July 21, 1962. We shall have occasion to refer tothese awards later. We may now give the facts of the dispute in the Referencefrom which this appeal arises.

3. The Reserve Bank was established on April 1, 1935 as a shareholders' Bankwith a capital of Rs. 5 crores which was mainly subscribed by the public. Itwas taken over in 1948 by the Government of India, when, under the Reserve Bank(Transfer 10 Public Ownership) Act, 1948, the shares were compulsorily acquiredby Government at a premium of Rs. 18.62 over and above the face value of theshare of Rs. 100. Thereafter the Reserve Bank is administered by a CentralBoard of Directors nominated by the Central Government from the civil servicesand public men, There are four local Boards to advise the Central Board and tofunction as its delegates. The Head Office of the Reserve bank is situated atBombay with branches at Calcutta, New Delhi, Kanpur, Madras, Bangalore, Nagpur,Lucknow, Hyderabad, Gauhati, Trivandvum, Patna, Ahmedabad, Ludhiana, Jaipur andIndore. The Reserve Bank acts as Bank to the Central and State Governments andCommercial Banks and controls the issue and circulation of currency. It hasspecial duties to perform under the Banking Companies Act 1949 and supervisesand controls the banking industry in India, It regulates and controls foreignexchange and exchange of currency and remittances to and from India. It ishardly necessary to refer to its multifarious duties and functions as theCentral Bank and as the bankers' bank.

4. The Reserve Bank employs four classes of employees of which the threelower classes are before this Court, the first class being of officers. At thematerial time the total number of employees of all description was about 9,500of which 3,300 were in the head office, 1,800, 1,100 and 1,100 respectively atCalcutta, New Delhi and Madras and the rest were distributed in varying numbersamong the remaining twelve branches. The present dispute has a long historyinto the details of which it is hardly necessary to go but as both sides have madereference to it, some of the leading events connected with bank disputes ingeneral and the present dispute respecting the Reserve Bank, in particular, maybe mentioned.

5. As is well-known there has been a rise in the price of commodities since1939 and workmen earning wages and persons in the fixed income groups arespecially affected. Between the years 1946 and 1949 there were set up numerousCommissions and Tribunals to deal with disputes between the commercial banksand their employees. In 1946 strike notices were served on many banks inBombay, Bengal and the United Provinces. In Bombay Mr. H. V. Divatia dealt witha dispute between the Bank of India and its employees, happily settled byconsent (August 15, 1946) ;md again with a dispute between 30 named Banks inBombay and their employees. The Award was given on April 9, 1947. That awardwas extended to Ahmedabad Bank employees by another award published on April22, 1948. Conciliation proceedings were conducted by Mr. R. Gupta between theImperial Bank of India and its employees in Bengal which concluded on August 4,1947. Other awards and adjudications were made by Mr. S. C. Chakravarti and Mr.S. K. Sen. In the United Provinces first Mr. B. B. Singh, Labour Commissioner,began arbitration in disputes between as many as 40 banks and their employees,which later went before Conciliation Boards headed first by Mr. Nimbkar. and onhis death, by Mr. Bind Basni Prasad and the recommendations were made effectiveby a Government order. On the representation of the Banks an Ordinance waspromulgated (followed by an Act) and the Central Government took over theresolution of disputes between banks and their employees in all cases where thebanks had offices in more than one province. On June 13, 1949 the CentralGovernment appointed an All India Industrial Tribunal (Bank Disputes) with Mr.K. C, Sen and 2 members to codify the terms and conditions of service of bankemployees. The Sen Award (as it is known) was published on August 12, 1950 buton appeal this Court on April 9, 1951 declared it to be void as there was aflaw in the composition of the Tribunal. As a result of this contingency astand-still Act was passed and another Tribunal with Mr. H. V. Divatia and 2members was erected. This Tribunal did not conclude the work and resigned andin 1952 another Tribunal presided over by Mr. S. Panchapagesa Sastry wasappointed which published its award in April 1953. That Award was subjected toan appeal before the Labour Appellate Tribunal and it was much modified. Somebanks represented to Government their' inability to implement the modifiedaward and the Central Government intervened and modified the award of theLabour Appellate Tribunal by an order dated August 24, 1954. We may leave thngeneral narration at this stage to view the disputes between tin-Reserve Bankof India and its employees during the same period.

6. In 1946 the Association delivered a charter of demands lot revision ofpay scales and allowances of the employees of the Reserve Bank from April 1,1946 and after negotiation? some revision in wages and dearness allowances waseffected. During the interval between this revision and the appointment of theSastry Tribunal other revisions took place. When the Sastry Tribunal gave itsaward in March 1953, the Association in May of the same year delivered arevised charter of demands to the Reserve Bank but owing to the pendency of theAppeal before the Labour Appellate Tribunal, the demand could not beconsidered. The Reserve Bank, however, assured its employees that after thedecision of the Labour Appellate Tribunal was known, the entire question wouldbe reviewed. When the Labour Appellate Tribunal gave its decision in April1954, the Association served a fresh charter of demands on May IS, 1954 but thedecision of the Appellate Tribunal was modified by Government and on September17, 195-4 .1 commission presided over by Mr. Justice Rujadhykshya anci late: byMr. Justice Gajendragadkar as he then was') was constituted !c considerwhether the Appellate Tribunal's decision should be restored or continued withmodifications and to suggest further modifications having due regard to theoverall condition of banks in general and individual banks in particular. InOctober 1954 the Association, realising that delay was inevitable, agreed toaccept the scale of pay on the basis of the modified Labour AppellateTribunal'-, decision though the employees obtained by the agreement somethingmore than their counterparts in the higher class commercial banks under theorder of Government which modified the decision of the Labour AppellateTribunal. The advantage to (he Reserve Bank employees was neutralized when theBank Award Commission restored the decision of the Labour Appellate Tribunal inrespect of the Commercial Banks. The agreement lasted fill October 31, 1957 and the Reserve Bank employees honoured it.

7. On 11 July, 1959, the association submitted a fresh charter of demandsasking for a complete revision of the pay structure and invoked the normssettled at the Fifteenth Indian Labour Conference and asked for improvementgenerally in the conditions of service. As the Reserve Bank was not agreeableto negotiate, the association called upon the Reserve Bank to ratify the codeof conduct evolved at the Sixteenth Indian Labour Conference and to proceed toarbitration but the Reserve Bank declined. The association served a notice ofstrike and threatened cessation of work from 25 March 1960. Before thishappened the All India State Bank of India Staff Federation had given a noticeand there was a strike from 4 March 1960 and on 19 March all bank employeesstruck work in support and the several references to which we have referredfollowed.

8. The Reserve Bank during the years between 1946 and 1960 undertook fromtime to lime revision of salaries and allowances. In 3947 and 1948 dcarnessallowances were revised and in T948 there was a general revision of scales cfpay as from April 1. 1948. These revisions were made at the demand of theAssociation. In 1951 ad hoc increases in dearness allowances were made andcompensatory allowances were introduced and from 1951 local allowances werepaid to certain classes of employees :-erv;n at some of the important officesof the Reserve Bank and subsequently the scheme of local allowances wasextended to a few other branches. In 1954 local allowances were converted intolocal pay and 25% of the dearness allowances was treated as pay for calculationof retiring benefits etc. In 1957 family allowances to class IV employees wereraised and in 1958 and 1959 clearness allowances were again slightly raised.These increases, though welcome to them, hardly satisfied the demands of theemployees. There were many conciliation conferences but none was successful.The cost of living index with base year 1949---100 had increased by 26 pointsin February 1960 and the principles of minimum and fair wages were deliberatedupon and adverted to in the Report of the 15th Indian Labour Conference. Theseprinciples, to which detailed reference will be made presently, were desired bythe employees of the Reserve Bank to be put into operation. As a result the gapbetween the demands of the employees and the offers of the Reserve Bank, whichwas wide already, became wider still and conciliation which hail alwayssucceeded in the past, was not possible. The Association suggested arbitrationbut the Reserve Bank by its letter dated February 11, I960, did not agree. TheReserve Bank stated that it did not wish to get 'seriously out ofstep' with Government or the Commercial Banks. The Reserve Bank referredto the Pay Commission Report and pointed out that the demands of the employeestook no notice of the state of Indian economy. The Association, through itsSecretary, in icply (Feb. 22, 1960) observed :

'Your criticism, that the association's charter ofdemands has been pitched so high as to exclude all scope for satisfactorysolution through negotiations, we may point out, is baseless and incorrect, asthe charter has been based on the norms set up by the Fifteenth TripartiteLabour Conference at Nainital where the need-based wage formula for Indianworker was evolved, and the coefficient for conversion to arrive at the minimumwage for a middle class salaried employee has been accepted from theRajadhyaksha report...'.

9. The Association also pointed out that it has been conceded by theGovernors of the Reserve Bank in the past that the emoluments of the ReserveBank employees ought to be higher than those of other bank employees and,therefore, the recommendations of the Pay Commission were irrelevant. In thisappeal one of the fundamental points argued is whether the national tribunalwas right in rejecting the demand for the inauguration of the need-baseformula. It was, however, in this background that the national industrialtribunal was constituted and the whole of the dispute was referred to it.

10. This reference embraced as many as 22 items in respect of class II andclass III employees and 23 items in respect of class IV employees. Some ofthese were decided in favour and some against the employees. Not much purposewould be served if we mentioned the many points of controversy or the decisionon them, for in this appeal the employees have stated their case withcommendable restraint and Sri Chari, though he argued it with his customary earnestnessand ability, did so appreciating the realities of our national economy. He paid(it may be noted) sincere tributes to the Reserve Bank for its helpful attitudeat all times, and expressed regret that there was no conciliation as onprevious occasions. Mr. Palkhivala too, on behalf of the Reserve Bank, showedan awareness of the point of view of the employees and on some of the lessimportant points, as we shall show later, agreed to consider the matterfavourably.

11. The dispute now centers round two fundamental or major points and a fewothers not so fundamental. We shall deal with the main points first and thendeal with the others. The first major point concerns employees of class II.This class of employees was in the scales of pay which were settled by theagreement of 2 November 1954. These were :

1. Research superintendents Rs. 300-25-400-E. B.-25-650.

2. Superintendents and Sub-

Accountants Rs. 275-25-375-E. B.-25-500-25-650.

3. Deputy treasurers (Bombay

and Calcutta) Rs. 450-25-650.

4. Deputy treasurer (Gauhati) Rs. 375-25-550.

5. Assistant treasurers Rs. 300-25-450.

6. Personal Assistant to the

Governor Rs. 320-30-650.

7. Personal Assistant Rs. 325-25-550.

8. Caretakers, Grade I (Bombay

and Calcutta) Rs. 275-10-325-E. B.-12 1/2-400.

9. Staff Assistant Rs. 250-25-450-E. B.-25-650.

10. Supervisor, Premises

Section Rs. 250-15-310-E. B.-20-650.

11. Deputy Treasurer (Hyderabad) Rs. 350-25-500.

12. There was in addition local pay for these employees equal to 10 per centof pay, at Bombay, Calcutta, Ahmedabad, New Delhi, Madras and Kanpur. There wasalso a family allowance of Rs. 10 per child subject to a maximum of Rs. 30 foremployees drawing less than Rs. 550 per month with a completed service of 5years.

13. The National Tribunal in considering the demands of Class II staff of(he Reserve Bank came to the conclusion that it could not give any awardregarding these employees who were'employed in a supervisory capacity, In thisconnection the Reserve Bank had pleaded that the Reference concerned only thoseemployees who came within the definition of 'workman' in theIndustrial Disputes Act, 1947, as amended by the amending Act of 1956, and theReserve Bank had contended that it was futile to fix a time scale for Class IIstaff because every incumbent in it was employed in a supervisory capacity andunder the existing scales of pay every incumbent at a local pay center woulddraw wages in excess of Rs. 500 after three years' service and every otherincumbent at the end of 5 years' service and that most of the employees in thatclass had entered it by promotion and even at their entry were drawing wages inexcess of Rs. 500. The Reserve Bank had further contended that a dispute couldonly be raised before the National Tribunal provided a workman continued to bea workman as defined. If the National Tribunal was asked to provide a scale ofpayment which would make the workman cease to be workman by reason of theaward, the Reserve Bank contended, the National Tribunal had no jurisdiction tomake such an award and the Reference itself would become incompetent. Therelationship of employer and workman, so it was contended, must exist (a) atthe time of dispute, (b) at the time of the award, and (c) during the currencyof the award, otherwise the Reference and the consequent award would be withoutjurisdiction.

14. The Association had contended in reply (as it does in this appeal) thatthe duties performed by these employees were not of a supervisory nature andfurther that they were doing supervisory work and were not employed in asupervisory capacity. In Reference No. 1 of 1960, Mr. Sule, on behalf of theemployees, had contended (a) that workmen could raise an industrial dispute forthemselves and for a section of them at any level, (b) that persons who wereworkmen could raise an industrial dispute regarding their conditions of servicenot only at stages when they would be workmen but also at stages when theywould cease to be workmen under the same employer, and (c) that workmen couldraise a dispute on behalf of non-workmen in the same establishment providedthey had a direct and substantial interest in the dispute and had a communityof interest with such non-workmen.

15. The National Tribunal in the present award adopted its discussion ofthe question in paragraphs 5.206 to 5.219 of the award in Reference No. 1 of1960. It pointed out that the demand by Class II Supervisory Staff envisaged ascale commencing at Rs. 500 and that if the demand were considered favourablyeveryone in that class would cease to be a workman and such an award was beyondits jurisdiction lo make. The National Tribunal held that even though by reasonof community of interest other workmen might be entitled, having regard to thedefinition of 'industrial dispute', to raise a dispute on behalf ofothers, they could not raise a dispute either for themselves or on behalf of others,when the dispute would involve consideration of matters in relation tonon-workmen. The National Tribunal also held that it would even be beyond thejurisdiction of Central Government to refer such a dispute under the IndustrialDisputes Act. The National Tribunal, therefore, held that the expression'scales of pay and methods of adjustment in the scales of pay' inSchedule I of the present Reference could not cover non-workmen such assupervisory staff in Class II. Those employed in supervisory capacity anddrawing more than Rs. 500 p.m. were treated as not present before the NationalTribunal and as they could not be heard the National Tribunal found itinexpedient to fix scales of salary affecting them. As regards those employedin the same capacity but drawing less than Rs. 500 per month but on scalescarrying them beyond that mark, the National Tribunal thought that if all thatit could do was to fix a scale up to Rs. 500, it would be unfair to lower thescale already fixed. The National Tribunal thus made no award in regard tosupervisory staff in Class II.

16. Before we consider the case of the appellants an event which happenedlater may be mentioned. The Reserve Bank by a Resolution (No. 8) passed attheir 1456th weekly meeting held on April 24, 1963, increased the scale of pay.dearness allowances, house rent allowances etc. for Class II staff with effectfrom January 1, 1962, that is to say, the date from which the impugned awardcame into force. Under the Resolution scales of pay, which were acknowledged byMr. Chari, to be as generous as the present circumstances of our countrypermit, have been awarded. But more than this the minimum total emoluments asenvisaged by the definition of wages, even at the commencement of service ofeach and every member of Class II staff on January 1, 1962 now exceed Rs. 500per month. This, of course, was done with a view to with-drawing the wholeclass from the ambit of the Reference, because, it is supposed, no member ofthe class can now come within the definition of 'workman'. We shall,of course, decide the question whether the Resolution has that effect. If itdoes, it certainly relieves us of the task of considering scales of pay forthese employees for no remit is now possible as no National Tribunal is sitting.The scales having been accepted as generous, the dispute regarding scales ofpay for Class II employees under the Reference, really ceases to be a Hveissue.

17. However, in view of the importance of the subject and the possibility ofa recurrence of such question in other spheres, and the remarks of the nationaltribunal as to jurisdiction of the Central Government and itself, we haveconsidered it necessary to go into some of the points mooted before us. Beforewe deal with them we shall read some of the pertinent definitions from theIndustrial Disputes Act, 1947 :

'2. In this Act, unlessthere is anything repugnant in the subject or context, -

. . . . .

. . . . .

(k) 'industrialdispute' means any dispute or difference between employers and employers,or between employers and workmen, or between workmen and workmen, which isconnected with the employment or nonemployment or the terms of employment orwith the condition of labour, of any person;

. . . . .

. . . . .

(rr) 'wages' means allremuneration capable of being expressed in terms of money, which would, if theterms of employment, expressed or implied, were fulfilled, be payable to aworkman in respect of his employment or of work done in such employment, andincludes -

(i) such allowances (includingdearness allowances) as the workman is for the time being entitled to;

(ii) the value of any houseaccommodation, or of supply of light, water, medical attendance or otheramenity or of any service or of any concessional supply of foodgrains or otherarticles;

(iii) any travellingconcession;

but does not include -

(a) any bonus;

(b) any contribution paid orpayable by the employer to any pension fund or provident fund or for thebenefit of the workman under any law for the time being in force;

(c) any gratuity payable on thetermination of his service.

(s) 'workman' means anyperson (including an apprentice) employed in any industry to do any skilled orunskilled manual, supervisory, technical or clerical work for hire or reward,whether the terms of employment be expressed or implied, and for the purposesof any proceeding under this Act in relation to an industrial dispute, includesany such person who has been dismissed, discharged or retrenched in connexionwith, or as a consequence of, that dispute, or whose dismissal, discharge orretrenchment has led to that dispute, but does not include any such person -

(i) who is subject to the ArmyAct, 1950, or the Air Force Act, 1950, or the Navy (Discipline) Act, 1934, or

(ii) who is employed in thepolice service or as an officer or other employee of a prison; or

(iii) who is employed mainly ina managerial or administrative capacity; or

(iv) who, being employed in asupervisory capacity, draws wages exceeding five hundred rupees per mensem orexercises, either by the nature of the duties attached to the office or byreason of the powers vested in him, functions mainly of a managerialnature.'

18. Mr. Chari contends that the exclusion of Class II staff is based on awrong construction of the above definitions particularly the definition of'workman' and a misunderstanding of the duties of Class II employees who havebeen wrongly classed as supervisors. He contends alternatively that as Class IIis filled by promotion from Class III, the question could and should have beengone into iii view of the principle enunciated in the Dimakuchi TeaEstate([1958] 1 L.L.J. 500) case. Mr. Chari in support of his first argumentpoints to the opening part of s. 2(s) where it speaks of 'any skilled orunskilled manual, supervisory, technical or clerical work' and contrastsit with the words of clause (iv) 'being employed in a supervisorycapacity' and submits that the difference in language is deliberate and isintended to distinguish supervisory work from plain supervision. According tohim 'supervisory work' denotes that the person works and supervises at the sametime, whereas 'supervisory capacity' denotes supervision but not work. Mr.Chari divides supervision into two kinds : (a) supervision which is a part oflabour and (b) supervision which is akin to managerial functions though it isnot actually so. He submits that this division is clearly brought out in thedefinition of 'workman' by the use of different expressions such as 'work'and 'capacity' for that a supervisor doing work enjoys the status oflabour and a supervisor acting only in supervisory capacity enjoys the statusof employer's agent at the lowest level.

19. In support of his contention Mr. Chari has referred to the amendment ofthe National Labour Relations Act of the United States of America [commonlyknown as the Wagner Act([1935] 49 Stat 499) by the Labour Management RelationsAct 1947 [commonly known as the Taft-Hartley Act([1947] 61 Stat 136) and thecase of the Packard Motor Co. v. The National Labour Relations Board(91 L. ed.1040) which preceded the amendment. The Packard Motor Co. case arose under theWagner Act and the question was whether foremen were entitled as a class to therights of self-organisation and collective bargaining under it. The benefits ofthe Wagner Act were conferred on employees which by s. 2(3) included 'anyemployee'. The Company, however, sought to limit this wide definition whichmade foremen employees both at common law and in common acceptance, with theaid of the definition, of 'employer' in s. 2(2) which said that the wordincluded 'any person acting in the interest of an employer directly orindirectly....'. The Supreme Court of the United States in holding thatforemen were entitled to the protection of the Wagner Act held by majority thateven those who acted for the employer in some matters including standingbetween the management and manual labour could have interests of their own whenit came to fixation of wages, hours, seniority rights or working conditions.Mr. Ciiari suggests that the definition in the Industrial Disputes Act servesthe same purpose when it makes a distinction between 'work' and 'capacity'.

20. This ruling, of course, cannot be used in this context, though as weshall presently see, it probably furnishes the historical background for theamendment in the United States and leads to the next limb of Sri Chari'sargument. The minority, speaking through Justice Mr. Douglas, made thefollowing observation which puts the Packard Motor Company case(91 L. ed. 1040)out of consideration -

'Indeed, the problems of those in the supervisorycategories of management did not seem to have been in the consciousness of theCongress... There is no phrase in the entire Act which is description of thosedoing supervisory work.'

21. In this state of affairs it is futile to refer to this ruling anyfurther, for to derive assistance from any of the two opinions savours of apriori deduction.

22. The Packard Motor Co, case was decided in March 1947 and in the sameyear the Taft-Hartley Act was passed. Section 2 of the latter Act definedemployer to include 'any person acting as agent of an employer, directlyor indirectly. .....' and the term 'employee' was defined to exclude anyindividual employed as a supervisor. The term 'supervisor' was defined to meanan individual 'having authority, in the interest of the employer to hire,transfer, suspend, lay off, recall, promote, discharge, assign, reward, ordiscipline other employees or responsible to direct them, or to adjust theirgrievances, or effectively to recommend such action, if in connection with theforegoing the exercise of such authority is not of a merely routine or clericalnature, but requires the use of independent judgment'. Mr. Chari suggeststhat the Industrial Disputes Act recognising the same difficulty, may be saidto have adopted the same tests by making a distinction between 'work' and'capacity'. According to him, these tests provide for that twilight area wherethe operatives (to use a neutral term) seem to enjoy a dual capacity.

23. The argument is extremely ingenious and the simile interesting, but itmisses the realities of the amendment of the Industrial Disputes Act in 1956.The definition of 'workman' as it originally stood before the amendment in 1956was as follows :-

'2.(s) 'workman' means any person employed(including an apprentice) in any industry to do any skilled or unskilled manualor clerical work for hire or reward and includes, for the purposes of anyproceedings under this Act in relation to an industrial dispute, a workmandischarged during that dispute, but does not include any person employed innaval, military or air service of the Government.'

24. The amending Act of 1956 introduced among the categories of personsalready mentioned persons employed lo do supervisory and technical work. So farthe language of the earlier enactment was used. When, however, exceptions wereengrafted, that language was departed from in Clause (iv) partly because thedraftsman followed the language of Clause (iii) and partly because from personsemployed on supervision work some are to be excluded because they draw wagesexceeding Rs. 500 per month and some because they function mainly in amanagerial capacity or have duties of the same character. But the unity betweenthe opening part of the definition and Clause (iv) was expressly preserved byusing the word 'such' twice in the opening part. The words, which bind the twoparts, are not-'but does not include any person'. They are -'butdoes not include any such person' showing clearly that what is beingexcluded is a person who answers the description 'employed to dosupervisory work' and he is to be excluded because being employed in a'supervisory capacity' he draws wages exceeding Rs. 500 per month or exercisesfunctions of a particular character.

25. The scheme of our Act is much simpler than that of the Americanstatutes. No doubt like the Taft-Hartley Act the amending Act of 1956 in ourcountry was passed to equalize bargaining power and also to give the power ofbargaining and invoking the Industrial Disputes Act to supervisory workmen, butit gave it only to some of the workmen employed on supervisory work. 'Workman'here includes an employee employed as supervisor. There are only twocircumstances in which such a person ceases to be a workman. Such a person isnot a workman if he draws wages in excess of Rs. 500 per month or if heperforms managerial functions by reason of a power vested in him or by thenature of duties attached to his office. The person who ceases to be a workmanis not a person who does not answer the description 'employed to dosupervisory work' but one who does answer that description. He goes out ofthe category of 'workmen' on proof of the circumstances excluding himfrom the category.

26. By the revision of salaries in such a way that the minimum emolumentsequal to wages (as defined in the Act) of Class II staff now exceed Rs. 500 permonth, the Reserve Bank intends to exclude them from the category of workmenand to render the Industrial Disputes Act inapplicable to them. Mr. Palkhivalafrankly admitted that this step was taken so that this group might be takenaway from the vortex of industrial disputes. But this position obviously did notexist when the scale was such that some at least of Class II employees wouldhave drawn wages below the mark. The Reference in those circumstances was avalid reference and the National Tribunal was not right in ignoring that classaltogether. Further, the National Tribunal was not justified in holding that ifat a future time an incumbent would draw wage in the time scale in excess ofRs. 500, the matter must be taken to be withdrawn from the jurisdiction of theCentral Government to make a reference in respect of him and the NationalTribunal to be ousted of the jurisdiction to decide the dispute if referred.Supervisory staff drawing less than Rs. 500 per month cannot be debarred fromclaiming that they should draw more than Rs. 500 presently or at some futurestage in their service. They can only be deprived of the benefits if they arenon-workmen at the time they seek the protection of the Industrial DisputesAct.

27. Mr. Chari next contends that considering the duties of Class IIemployees, it cannot be said that they are employed in a supervisory capacityat all and in elucidation of the meaning to be given to the words 'supervisory'and 'capacity' he has cited numerous dictionaries, Corpus Juris etc. as to themeaning of the words 'supervise', 'supervisor','supervising', 'supervision' etc. etc. The word'supervise' and its derivatives are not words of precise import andmust often be construed in the light of the context, for unless controlled,they cover an easily simple oversight and direction as manual work coupled witha power of inspection and superintendence of the manual work of others. It is,therefore, necessary to see the full context in which the words occur and thewords of our own Act are the surest guide. Viewed' in this manner we cannot overlookthe import of the word 'such' which expressly links the exception tothe main part. Unless this was done it would have been possible to argue thatcl. (iv) indicated something, which, though not included in the main part,ought not by construction to be so included. By keeping the link it is clear tosee that what it excluded is something which is already a part of the mainprovision.

28. In view of what we have held above, it is hardly necessary to advert tothe next argument that under the principle of the Dimakuchi Tea Estate case[1958] 1 L.L.J. 500 workmen proper belonging to classes II and III in thisreference are entitled to raise a dispute in respect of employees in class IIwho by reason of Clause (iv) test have ceased to be workmen. The ruling of thisCourt in the above case lays down that when the workmen raise an industrialdispute against an employer, the person regarding whom the dispute is raisedneed not strictly be a 'workman' but may be one in whose terms of employment orconditions of labour the workmen raising the dispute have a direct andsubstantial interest. The definition of 'industrial dispute' in Section 2(k).Which we have set out before, contemplates a dispute between :

(a) employers and employers; or

(b) employers and workmen; or

(c) workmen and workmen;

29. but it must be a dispute which is connected with the employment ornon-employment or the terms of employment or with the conditions of labour ofany person. The word 'person' has not been limited to 'workman' as such andmust, therefore, receive a more general meaning. But it does not mean anyperson unconnected with the disputants in relation to whom the dispute is notof the kind described. It could not have been intended that though the disputedoes not concern them in the least, workmen are entitled to fight it out onbehalf of nonworkmen. The national tribunal extended this principle to thesupervisors as a class relying on the following observations from the case ofthis Court :

'Can it be said that workmen as a class aredirectly or substantially interested in the employment, non-employment, termsof employment or conditions of labour of persons who belong to the supervisorystaff and are, under provisions of the Act, non-workmen on whom the Act hasconferred no benefit, who cannot by themselves be parties to an industrialdispute and for whose representation the Act makes no particular provision Weventure to think that the answer must be in the negative.'

30. It may, however, be said that if the dispute is regarding employment,non-employment, terms of employment or conditions of labour of non-workmen inwhich workmen are themselves vitally interested, the workmen may be able toraise an industrial dispute. Workmen can, for example, raise a dispute that aclass of employees not within the definition of workman should be recruited bypromotion from workmen. When they do so the workmen raise a dispute about theterms of their own employment though incidentally the terms of employment ofthose who are not workmen is involved. But workmen cannot take up a dispute inrespect of a class of employees who are not workmen and in whose terms ofemployment those workmen have no direct interest of their own. What directinterest suffices is a question of fact but it must be a real and positiveinterest and not fanciful or remote. It follows, therefore, that the NationalTribunal was in error in not considering the claims of Class II employeeswhether at the instance of members drawing less than Rs. 500 as wages or at theinstance of those lower down in the scale of employment. The National Tribunalwas also in error in thinking that scales of wages in excess of Rs. 500 permonth, at any stage were not within the jurisdiction of the Tribunal or that Governmentcould not make a reference in such a contingency. We would have been requiredto consider the scales applicable to those in Class II but for the fact thatthe Reserve Bank has fixed scales which are admitted to be quite generous.

31. It may be mentioned here that Mr. Chari attempted to save the employeesin Class II from the operation of the exceptions in Clause (iv) by referring totheir duties which he said were in no sense 'supervisory' but only clerical orof checkers. He also cited a number of cases, illustrative of this point ofview. Those arc cases dealing with foremen, technologists, engineers, chemists,shift engineers, Asstt. Superintendents, Depot Superintendents, godown-keepersetc, We have looked into all of them but do not find it necessary to refer toany except one. In Ford Motor Com pany of India v. Ford Motors Staff Union,[1953] 2 L.L.J. 444 the Labour Appellate Tribunal correctly pointed out thatthe question whether a particular workman is a supervisor within or without thedefinition of 'workman' is 'ultimately a question of fact, at best one ofmixed fact and law. ...' and 'will really depend upon the nature ofthe industry, the type of work in which he is engaged, the organisationalset-up of the particular unit of industry and like factor'. The LabourAppellate Tribunal pertinently gave the example that 'the nature of thework in the banking industry is in many respects obviously different from thenature and type of work in a workshop department of an engineering or automobileconcern.' We agree that we cannot use analogies to find out whether ClassII workers here were supervisors or doing mere clerical work. No doubt, as Mr.Chart stated, the work in a Bank involves layer upon layer of checkers andchecking is hardly supervision but where there is a power of assigning dutiesand distribution of work there is supervision. In Llyods Bank Ltd. V. PannalalGupta [1961] 1 L.L.J. 18, the finding of the Labour Appellate Tribunal wasreversed because the legal inference from proved facts was wrongly drawn. It ispointed out there that before a clerk can claim a special allowance under para164(b) of the Sastry Award open to Supervisors, he must prove that hesupervises the work of some others who are in a sense below him. It is pointedout that mere checking of the work of others is not enough because thischecking is a part of accounting and not of supervision and the work done inthe audit department of a bank is not supervision.

32. The Reserve Bank has placed on record extract from the manuals, orders,etc., relative to all class II employees and on looking closely into theseduties we cannot say that they are not of a supervisory character and aremerely clerical or checking. These employees distribute work, detect faults,report for penalty, make arrangements for filling vacancies, to mention only afew of the duties which are supervisory and not merely clerical. Withoutdiscussing the matter too elaborately we may say that we are satisfied thatemployees in class II except the personal assistants, were rightly classed bythe national tribunal as employed on supervisory and not on clerical orchecking duties. In view of the fact that all of them now receive even at thestart 'wakes' in excess of Rs. 500 per month, there is really noissue left concerning them, once we have held that they are working in asupervisory capacity.

33. The next fundamental point requires narration of a little history beforeit can be stated. In December 1947 there was an Industries Conference with representativesof the Government of India and the Governments of the States, businessmen,industrialists and labour leaders. An Industrial Truce Resolution was passedunanimously which stated inter alia that increase in production was notpossible unless there was just remuneration to capital (fair return), justremuneration to labour (fair wages) and fair prices for the consumer. TheResolution was accepted by the Central Government. In 1947 a Central AdvisoryCouncil was appointed which in its turn set up a Committee to deliberate andreport on fair wages for workmen. The Report of (hat Committee has been citedover and over again. In the Standard Vacuum Refg. Co. v. Its Workmen[1961] 1L.L.J. 227, this Court elaborately analysed the concept of wages as stated bythe Committee. The Committee divided wages into three kinds: Living wage, fairwage and minimum wage. Minimum wage, as the name itself implies represents thelevel below which wage cannot be allowed to drop. It was universally recognisedthat a minimum wage must be prescribed to prevent the evil of sweating and forthe benefit of workmen who were not in a position to bargain with theiremployers. This received immediate attention in India, though there was anInternational Convention as far back as 1928 and the demand for fixation ofminimum wages extended even to non-sweated industries. The result was theMinimum Wages Act of 1948. The Fair Wages Committee understood the term minimumwage as the lowest wage in the scale below which the efficiency of the workerwas likely to be impaired. It was described as the 'wage tloor'allowing living at a standard considered socially, medically and ethically tobe the acceptable minimum. Fair wages by comparison were more generous andrepresented a wage which lay between the minimum wage and the living wage. TheUnited Provinces Labour Enquiry Committee classified the levels or living as :

(i) Poverty level,

(ii) minimum subsistence level;

(iii) subsistence plus level, and

(iv) comfort level.

34. The concept of fair wages involves a rate sufficiently high to enablethe worker to provide 'a standard family with food, shelter, clothing,medical care and family education of children appropriate to his status in lifebut not at a rate exceeding the wage earning capacity of the class ofestablishment concerned.' A fair wage thus is related to a fair workloadand the earning capacity. The living wage concept is one or more steps higherthan fair wage. It is customary to quote Mr. Justice Higgins o! Australia whodefined it as one appropriate for 'the normal needs of average employee,regarded as a human being living in a civilized community.' He explainedhimself by saying that the living wage must provide not merely for absoluteessentials such as food, shelter and clothing but for 'a condition offrugal comfort estimated by current human standards' including'provision for evil days etc. with due regard for the special skill of theworkman'. It has now been generally accepted that living wage means thatevery male earner should be able to provide for his family not only theessentials but a fair measure of frugal comfort and an ability to provide forold age or evil days. Fair wage lies between the concept of minimum wage andthe concept of living wage.

35. During the years wage determination has been done on industry-cum-region-basis and by comparing, where possible, the wage scales prevailing inother comparable concerns. The Constitution by Article 43 laid down a directiveprinciple :

'The State shall endeavour to secure, by suitablelegislation or economic organization or in any other way, to all workers,agricultural, industrial or otherwise, work, a living wage, conditions of wordensuring a decent standard of life and full enjoyment of leisure and social andcultural opportunity...'

36. It may thus be taken that our political aim is 'living wage' though inactual practice living wage has been an ideal which has eluded our efforts likean ever-receding horizon and will so remain for some time to come. Our generalwage structure has at best reached the lower levels of fair wage though someemployers are paying much higher wages than the general average.

37. In July 1957 the Fifteenth Indian Labour Conference met as a tripartiteconference and one of the resolutions adopted was :

'The recommendations of thecommittee as adopted with certain modifications, are given below :-

(1) . . . .

(2) With regard to the minimumwage fixation it was agreed that the minimum wage was 'need-based' and shouldensure the minimum human needs of the industrial worker, irrespective of anyother considerations. To calculate the minimum wage, the committee accepted thefollowing norms and recommended that they should guide all wage fixingauthorities, including minimum wage committees, wage boards, adjudicators, etc;

(i) In calculating the minimumwage, the standard working class family should be taken to consist of 3consumption units for one earner; the earnings of women, children andadolescents should be disregarded.

(ii) Minimum food requirementsshould be calculated on the basis of a net intake of 2,700 calories, asrecommended by Dr. Aykryod for an average Indian adult of moderate activity.

(iii) Clothing requirementsshould be estimated at a per capita consumption of 18 yards per annum whichwould give for the average worker's family of four, a total of 72 yards.

(iv) In respect of housing, thenorm should be the minimum rent charged by Government in any area for housesprovided under the Subsidised Industrial Housing Scheme for low income groups.

(v) Fuel, lighting and other'miscellaneous' items of expenditure should constitute 20 per cent of the totalminimum wage.

(3) While agreeing to these guidelines for fixation of the minimum wage for industrial workers throughout thecountry, the committee recognized the existence of instances where difficultiesmight be experienced in implementing these recommendations. Wherever theminimum wage fixed went below the recommendations, it would be incumbent on theauthorities concerned to justify the circumstances which prevented them fromthe adherence to the norms laid down.

. . . . .

. . . . .

38. The Association and the Union desire that the wage-floor should be theneed-based minimum determined at the tripartite conference in the aboveresolution and that the emoluments of the middle class staff should bedetermined with a proper coefficient. They suggest a coefficient of 120 percent in place of the 80 per cent applied by the national tribunal, to determinethe wages of the middle class staff in relation to the wages of the workingclasses. In support of their case the employees first point to the directiveprinciple above-quoted and add that the First Five Year Plan envisaged therestoration of 'pre- war real wage as a first-step towards the livingwages' through rationalization and modernization and recommended that'the claims of labour should be dealt with liberally in proportion to thedistance which the wages of different categories of workers have to coverbefore attaining the living wage standard.' The employees next refer tothe Second Five Years Plan where it is stated :

'21. Wages

A wage policy which aims at a structurewith rising real wages requires to be evolved. Worker's right to a fair wagehas been recognized but in practice it has been found difficult to quantify it.In spite of their best efforts. industrial tribunals have been unable to evolvea consistent formula...'. (p. 578 para. 21).

39. The establishment of wage boards, the taking of a wage census and theimprovement of marginal industries which operate as a 'drag' on betterindustries was suggested in that plan. Finally, it is submitted that the ThirdFive Year Plan has summed up the position thus; in paras 20 and 21 at p. 256 :

'20. 'The Governmenthas assumed responsibility for securing a minimum wage for certain sections ofworkers, in industry and agriculture, who are commercially weak and stand inneed of protection. Towards this end the Minimum Wages Act provides for thefixation and revision of wage rates in these occupations. These measures havenot proved effective in many cases. For better implementation of the law, themachinery for inspection has to be strengthened...'.

'21. Some broad principlesof wage determination have been laid down in the report of the Fair WagesCommittee. On the basis of agreement between the parties, the Indian LabourConference had Indicated the content of the need-based minimum wage forguidance in the settlement of wage disputes. this has been reviewed and it hasbeen agreed that the nutritional requirements of a working class family may bereexamined in the light of the most authoritative scientific data on thesubject...'.

40. The Association and the union contend that the national tribunal oughtto have accepted the tripartite resolution and determined the basic wage inaccordance therewith.

41. The National Tribunal in adjudicating on this part of the case referredto the Crown Aluminium Works v. Workmen 1958.1 L.L.J. 6 thisCourt observes :

'Though social and economic justice is the ultimateideal of industrial adjudication, its immediate objective in an industrialdispute as to the wage structure is to settle the dispute by constituting sucha wage structure as would do justice to the interests of both labour andcapital, would establish harmony between them and lead to their genuine andwholehearted co-operation in the task of production... in achieving thisimmediate objective, industrial adjudication takes into account severalprinciples, such as, for instance, the principle of comparable wages,productivity of the trade or industry, cost of living and ability of theindustry to pay...... In deciding industrial disputes in regard to wagestructure, one of the primary objectives is and has to be the restoration ofpeace and goodwill in the industry itself on a fair and just basis to bedetermined in the light of all relevant consideration...'.

42. The national tribunal pointed out that the Planning Commission had setup an official group for study and as a result of the deliberations, the groupdecided to prepare notes on different aspects of wage so that they could besent to wage fixing bodies. Four such notes were drawn up and were circulatedto the Fifteenth Indian Labour conference and the Fifteenth Indian Labourconference deliberated on them and the resolution on which reliance is placedby the employees was the result. The national tribunal, while appreciating theimportance of the resolution, was not prepared to act on it pointing out thatit was not binding but recommendatory, that Government did not accept it andthat the Reserve Bank not being a party was not bound by it. There is no doubtthat Government in answer to a query from the Pay Commission answered :

'... The Government desire me to make it clear thatthe recommendations of the Labour Conference should not be regarded asdecisions of Government and have not been formally ratified by the CentralGovernment. They should be regarded as what they are, namely, therecommendations of the Indian Labour conference which is tripartite incharacter. Government have, at no time, committed themselves to takingexecutive action to enforce the recommendations'.

43. The National Tribunal, therefore, did not consider itself bound in anyway by what the resolution said.

44. The National Tribunal then considered the resolution on merits asapplicable to the case in hand, observing :

'For the first time in India, norms have beencrystallized for the purpose of fixation of need based minimum wage in aconference where the participants were drawn from the ranks of Government,industry and labour. These recommendations represent a landmark in the struggleof labour for fixation of minimum wage in accordance with the needs, for theworkmen. The resolution lays down what a minimum wage should be. It recognizesthat the minimum wage was 'need-based'.

45. The National Tribunal, however, could not accept the resolution becausethe resolution standardised norms applicable to all industrial workers whatevertheir age or the number of years of service or the nature of their employment.It felt that there was difficulty in accepting the basis of 3 consumption unitsat all stages of service or the net intake of 2700 calories at all agespointing out that this much food was what Dr. Aykryod thought as proper to beconsumed. The national tribunal did not see the need for changing thecoefficient of 80 per cent. The national tribunal held that in the economy ofour country the need-based minimum suggested by the resolution was merely anideal to be achieved by slow stages but was impossible of achievementinstantly.

46. We have been addressed able and very moving arguments on behalf of theemployees by Sri Chari. There can be no doubt that in our march towards a trulyfair wage in the first instance and ultimately the living wage we must firstachieve the need-based minimum. There is no doubt also that 3 consumption unitsformula is, if anything, on the low side. In determining family budgets so asto discover the workers' normal needs which the minimum wage regulations oughtto satisfy, the size of the standard family is very necessary to fix. Onemethod is to take simple statistical average of the family size and another isto take into account some other factors, such as,

(i) the frequency of variation infamily sizes in certain regions and employments;

(ii) the number of wage earnersavailable at different stages;

(iii) the increase or decrease inconsumption at different stages in employment, that is the wage structure andits bearing on consumption.

47. The plain averages laid down in the Resolution may have to be weightedin different regions and in different industries and reduced in others. It isfrom this point of view that the Reserve Bank has pointed out that though theconsumption units are taken to be 2.25, the earning capacity after eight years'service is sufficient to provide for 3 consumption units as required by theneed-base formula. The question thus is whether the National Tribunal is inerror in accepting 2.25 consumption units instead of 3 as suggested in theResolution.

48. In our judgment, the Tribunal was not wrong in accepting 2.25consumption units. But it seems to us that if at the start the family isassumed to be 2.25, it is somewhat difficult to appreciate that the familywould take 8 years to grow to 3 consumption units. We are aware that the Sastritribunal thought of 3 consumption units at the tenth year and the Sen tribunalat the eighth year but we think these miss the realities of our national life.In our country it would not be wrong to assume that on an average 3 consumptionunits must be provided for by the end of five years' service. The consumptionunits in the first five years should be graduated. As things stand today, it isreasonable to think that 3 consumption units must be provided for by the end offive years' service, if not earlier.

49. The difficulty in this case in accepting the need-base formula is veryreal. The Reserve Bank is quite right in pointing out that the minimum wage sofixed would be above per capita income in our country and that it is notpossible to arrive at a constant figure in terms of money. According to theAssociation and the Union, the working class family wage works out to Rs. 165.9(though the demand is reduced to Rs. 145 by the Association and Rs. 140 by theUnion) while according to the Reserve Bank to Rs. 107.75. The middle classwage, according to the Association, will be Rs. 332.75 while, according to theBank, Rs. 202. This is because emphasis is placed on different dietarycomponents in the first case and the increased differential in the second case.Further the food requirement of 2700 calories was considered by the PayCommission to be too high and by the Planning Commission (Third Plan) to be amatter for re-examination. It will have to be examined what type of food shouldmake up the necessary calories and how many calories are the minimum. Furtherthe amount of minimum wage calculated on the need-base formula was said by thePay Commission to be extraordinarily high. This was also the view of the LabourAppellate Tribunal in East Asiatic Co. v. Workmen [1962] 1 L.L.J. 610 Boththese documents contain valuable calculations and they show the enormousincrease per saltum which would certainly cause enormous unrest among workmenin general in the country. It is also to be noticed that the Reserve Bank,which Mr. Chari claims is the best employer, to apply the formula, is notreally the right place for the experiment, If the experiment has to beperformed it must have a beginning in a commercial concern after thoroughexamination and a very careful appraisal of the effect on the resources of theemployer and on production. The Reserve Bank is not a profit-making commercialundertaking. Its surplus income is handed over to Government and becomesnational income. Its main sources of income are discounting Treasury Bills andinterests on sterling securities and rupee securities held against the noteissue. Income from exchange on remittances, commission on the management ofPublic Debt and interest on loans and advances to Banks and Governments issmall. It would, therefore, appear that the Reserve Bank is not a proper placeto determine what the need-based minimum wage should be and for initiating it.It cannot also be over looked that even without the formula it pays betterwages than elsewhere.

50. There is, however, much justification for the argument of Mr. Chad. TheTripartite Conference was a very representative body and the Resolution waspassed in the presence of representatives of Government and employers. Theremust be attached proper value to the Resolution. The Resolution itself is notdifficult to appreciate. It was passed as indicating the first step towardsachieving the living wage. Unfortunately, we are constantly finding that basicwage, instead of moving to subsistence plus level, tends to sag to povertylevel when there is a rise in prices. To overcome this tendency our wagestructure has for a long time been composed of two items, (a) the basic wage,and (b) a dearness allowance which is altered to neutralise, if not entirely,at least the greater part of the increased cost of living This docs not solvethe problem of real wage. At the same time we have to beware that too sharp anupward movement of basic-wage is likely to affect the cost of production andlead to fall in our exports and to the raising of prices all-round. There is avicious circle which can be broken by increased production and not byincreasing wages. What we need is the introduction of production bonus,increased fringe benefits, free medical, educational and insurance facilities.As a counterpart to this capital must also be prepared to forego a part of itsreturn. There is much to be said for considering the need-base formula in allits-implications for it is bound to be our first step towards living wage. Asin many other matters relating to industrial disputes the problem may, perhaps,be best tackled by agreement between Capital and Labour in an establishmentwhere a beginning can be safely made in this direction.

51. The next objection to the Award is in respect of the coefficient chosenby the Tribunal. The difference in the cost of living between the members ofthe clerical staff and the subordinate staff has been held to be an increase of80 per cent over the remuneration of the latter. This was laid down by the latejustice Sri Rajadhyaksha in a dispute between the Posts and TelegraphsDepartment and its non gazetted employees. Sri Justice Rajadhyaksha'scalculation was made thus :

52. 'In 1922-24 there was a middle class family budget enquiry inBombay and it was found that a family consisting of 4.58 persons spends Rs.138-5-0 per month. But the average expenditure of the middle class family inthe lowest income group (having incomes between Rs. 75 and 125) per month wasRs. 103-4-0. In 1923 the cost of living Index figures was 155 whereas in1938-39 it was 104. According to these index numbers the cost of living of thesame family would be 103*10 /155- Rs. 69 class budget enquiry consisted of 3.29consumption units. Therefore for an average family of 3 consumption 1938-39. Thelowest income group in the middle tion units, the expenditure required in1938-39 would have been ,39 = Rs. 63. According to the findings of the RanCourt of Enquiry a working class family consisting of 3 consumption unitsrequired Rs. 35 for minimum subsistence. It follows therefore that theproportion of the relative cost of living of a working class family to that ofa middle class family of 3 consumption units is 35 : 63, i.e. the cost ofliving of a middle class family is about 80 per cent higher than that of aworking class family.'

53. The family budget enquiry and the Rau Court of Enquiry were in 1922 and1940 respectively. The Sen award was in favour of reducing the coefficient,because the income of the working classes had increased remarkably in mostcities after 1939. The Sastri tribunal actually reduced it. The Central PayCommission fixed the minimum pay of middle class employee as Rs. 90 as againstthe minimum pay of the subordinate staff of Rs. 55, thus making the coefficient64 per cent. The Labour Appellate Tribunal restored the coefficient to 80 percent. The association asked for a coefficient of 120 per cent but the tribunalin its award in Reference No. 1 gave reasons for not accepting it. the nationaltribunal was in the advantageous position of knowing the views of employees ofcommercial banks and comparing them with the coefficient demanded here. Otherunions and federations did not ask for such a high coefficient. The nationaltribunal not having any date felt helpless in the matter and preserved thecoefficient at 80% It observed as follows :

'In the year of grace 1962 this tribunal is in nobetter position than the earlier tribunals who have dealt with the matter. Theinherent infirmities in this coefficient have been pointedly referred to beforeme. I am not at all certain whether I would be very much wiser by an enquirywhich may be conducted at present. Expenditure is conditioned by the incomereceived by the class of persons whose expenditure is being considered. By andlarge, over a period of time expenditure cannot exceed the income. The onlypattern which such inquiry may reveal may be a pattern based on the income ofthe class of persons whose case is being considered.'

54. This Court is in no better position than the National Tribunal to saywhat other coefficient should be adopted. When fresh and comprehensiveinquiries are conducted, the results would show whether the coefficient shouldgo up or down. With the rise of wages to higher levels among the working classthe differential is bound to be lower and this is a matter for inquiry. Tillthen there is no alternative but to adhere to the coefficient alreadyestablished.

55. We shall now take up for consideration some minor points which wereargued by Sri Nargolkar. The first is a demand by the association for acombined seniority list so that promotion may be based on that list and notupon the reports about the work of the employee. The national tribunal dealtwith it in Chap. XVII of its award. Regulations 28 and 29 of the Reserve Bankof India (Staff) Regulations, 1948, deal with seniority and promotion andprovide :

'28. An employee confirmedin the bank's service shall ordinarily rank for seniority in his gradeaccording to his date of confirmation in the grade and an employee onprobation, according to the length of his probationary service.'

' 29All appointments andpromotions shall be made at the discretion of the bank and notwithstanding hisseniority in a grade no employee shall have a right to be appointed or promotedto any particular post or grade.'

55. Promotion, it will therefore appear, is a matter of some discretion andseniority plays only a small part in it. This seniority is concerned with theinternal management of the bank and the national tribunal was right in thinkingthat the item of the reference under which it arose gave little scope forgiving directions to the bank to change its regulations. The national tribunal,however, considered the question and made an observation which we reproducehere because we agree with it :

'... I can only generally observe that it isdesirable that wherever it is possible, without detriment to the interests ofthe bank and without affecting Efficiency, to group employees in a particularcategory serving in different departments at one center together for thepurpose of being considered for promotion, a common seniority list of suchemployees should be maintained. The same would result in opening up equalavenues of promotion for a large number of employees and there would be lessersense of frustration and greater peace of mind among the employees.'

56. Seniority and merit should ordinarily both have a part in promotion tohigher ranks and seniority and merit should temper each other. We do not thinkthat seniority is likely to be completely lost sight of under the regulationsand Mr. Palkhivala assured us that this is not the case.

57. Mr. Hathi next raised the question of seniority between clerks andtypists but we did not allow him to argue this point as no question of principleof a general nature was involved. The duties of clerks and typists have beenconsidered by the national tribunal and its decision must be taken as final.

58. The next point urged was about gratuity. In the statement of the casethe association and the union had made numerous demands in regard to gratuitybut it appears from paragraph 7, 10 of the award that the dispute was confinedto the power to withhold payment of gratuity on dismissal. Rule 5(1) of theReserve Bank of India (Payment of Gratuity to Employees) Rules, 1947, providesas follows :-

'5. (1) No gratuity will begranted to or in the case of an employee -

(a) if he has not completedservice in the bank for a minimum period of ten years, or

(b) if he is or has beendismissed from service in the bank for any misconduct.'

59.The Association and the Union demanded modification of sub-rule (b)quoted above. The Sastry Tribunal had recommended that there should be noforfeiture of gratuity on dismissal except to the extent to which the mis-conductof the worker had caused Joss to the establishment. The Labour AppellateTribunal modified the Sastry Award and decided in favour of full forfeiture oEgratuity on dismissal. The Reserve Bank relied on the Express Newspapers(Private') Ltd, and another v. Union of India and others [1961] 1 L.L.J. 339in support of the sub-rule and also contended that there was no jurisdiction inthe National Tribunal to consider this subject under item 20 of Schedule I oritem 21 of Schedule II. The Reserve Bank relied upon item 7 of Schedule I anditem 6 of Schedule II. The demand of the Association and the Union was rejectedby the National Tribunal. It had earlier rejected a similar demand inconnection with the commercial banks. The Reserve Bank did not, however, pursuethe argument before us perhaps in view of the later decisions of this Courtreported in the Garment Cleaning Works v. Its Workmen : (1961)ILLJ513SC Greaves Cotton Co. Ltd. and others v. Their Workmen [1964] 1 L.L.J. 342 andBurhanpur Tapti Mills Ltd. v. Burhanpur Tapti Mills Mazdoor Sangh : (1965)ILLJ453SC . In these cases it was held by this Court that gratuity is not a giftbut is earned and forfeiture, except to recoup a loss occasioned to theestablishment, is not justified. Mr. Palkhivala undertook to get the rulesbrought in line with the decisions of this Court.

60. The next demand was with regard to pensions. In the Reserve Bank thereare only two retiring benefits, namely, provident fund and gratuity. There isno scheme for pensions. It appears, however, that a few employees from theformer Imperial Bank, who are employed with the State Bank, enjoy all the threebenefits. The demand, therefore, was that the Reserve Bank should provide forall the three benefits, namely, provident fund, gratuity and pension. TheReserve Bank contended that the National Tribunals had no jurisdiction underthe Reference to create a scheme of pensions for the employees. The NationalTribunal did not consider the question of jurisdiction because it rejected thedemand itself. In the statement of the case filed by the Association thisdecision is challenged on numerous grounds. The ground urged before us is thatthe National Tribunal failed to exercise jurisdiction in respect of this demandand indirectly declined jurisdiction by rejecting the demand itself. TheNational Tribunal came to the conclusion that two retirement benefits weresufficient and it is difficult for us to consider this without re-opening thequestion on merits of the demand and re-examining the view-point of the ReserveBank. We stated, therefore, at the hearing that we were not inclined to enterinto such a large question not of principle but of facts.

61. The next demand was with regard to the confirmation of temporaryemployees. The association had filed a number of exhibits (S. 71, S72, S109 toS112) and the union (R. 45 to R. 47) to show that a very large proportion ofemployees were borne as temporary employees and that it took a very long timefor confirmation of temporary servants. The bank in reply filed schedules. (T.67 to T. 69 and T. 112 to T. 125). The question of confirmation and the periodof probation are matters of internal management and no hard and] fast rules canbe laid down. It is easy to see from the rival schedules that probationaryperiods are both short and long. As no question of principle is involved, wedecline to interfere and we think that the national tribunal was also justifiedin not giving an award of a general nature on this point.

62. The next point is about the extra payment which the graduates werereceiving and the fitment of persons in receipt of such extra amounts, in thenew scale provided, In the year 1946 the bank accepted the principle of givingan allowance to employees who acquired degrees while in employment. At the timeof the present dispute graduates were in receipt of Rs. 10 as special pay. Thequestion was whether in making fitment in the new time scales these amountsshould have been treated as advance increment It appears that the nationaltribunal] reached different conclusions in the two awards arising fromReference No. 1 and the present reference. In the case of commercial bank thefitment was on a different principle and Mr. Palkhivala agreed to make fitmentin the new scale taking into account this special ad hoc pay as a advanceincrement.

63. The next demand by both the association and the union was that theyshould be allowed to participate and represent workers in disputes between anindividual workman and the Reserve Bank. The tribunal did not accept thiscontention for the very good reason that if unions intervene in everyindustrial dispute between an individual workman and the establishment theinternal administration would become impossible. In our judgment, this demandcannot be allowed.

64. The last contention is with regard to the time from which the awardshould operate. The stand-still agreement reached in 1954 expired in October1957 and the demand was that the Award should come into force from November 1,1957 or at least from March 21, 1960, the date of the reference. The NationalTribunal has made its award to operate from January 1, 1962. The Reserve Bankstrongly opposes this demand. According to the Reserve Bank the Tribunal actedmore than generously and gave more to the employees than they deserved. TheReserve Bank submits that the employees had made exorbitant demands and wastedtime over interim award and, therefore, they cannot claim to have the awardoperate from the date of the reference much less from November 1. 1957. TheReserve Bank relies upon the Lipton's case [1959] 1 L.L.J. 431 and alsocontends that the Tribunal's decision is discretionary and this Court shouldnot interfere with such a decision. Reliance is placed in this connection onRemington Rand's case [1962] 1 L.L.J. 287 Rajkamal Kalamand'r (Private) Ltd.v. fndian Motion Pictures Employee-? Unio' find others [1963] 1 L.L.J.318 and Western India Match Company Ltd. v. Their Workmen [1962] 2 L.L.J. 459, In reply the Association contends that the demand was not at all extravagantor exorbitant because it was based upon the Resolution of the 15th IndianLabour Conference and the Reserve Bank itself was guilty of delay after 1957inasmuch as it asked that the report of the Pay Commission should be awaited.

65. The solution of this dispute depends upon the provisions of Section 17Aof the Industrial Disputes Act, 1947. That section reads as follows :

'17A. Commencement of theaward

(1) An award (including anarbitration award) shall become enforceable on the expiry of thirty days fromthe date of its publication under Section 17 :

Provided that -

(a) . . . . .

(b) if the Central Governmentis of opinion, in any case where the award has been given by a NationalTribunal,

that it will be expedient onpublic grounds affecting national economy social justice to give effect to thewhole or any part of the award, the appropriate Government or as the case maybe the Central Government, may, by notification in the official Gazette,declare that the award shall not become enforceable on the expiry of the saidperiod of thirty days.

(2) Where any declaration hasbeen made in relation to an award under the proviso to Sub-section (1), theappropriate Government or of Central Government may, within ninety days fromthe date of publication of the award under Section 17 make an order rejectingor modifying the award, and shall, on the first available opportunity, lay theaward together with a copy of the order before the legislature of the State, ifthe order has been made by a State Government, or before Parliament if theorder has been made by the Central Government.

(3) Where any award as rejectedor modified by an order made under Sub-section (2) is laid before thelegislature of a State of before Parliament, such award shall becomeenforceable on the expiry of fifteen days from the date on which it is so laid;and where no order under Sub-section (2) is made in pursuance of a declarationunder the proviso to Sub-section (1), the award shall become enforceable on theexpiry of the period of ninety days referred to in Sub-section (2).

(4) Subject to the provisionsof Sub-section (1) and Sub-section (3) regarding the enforceability of anaward, the award shall come into operation with effect from such date may bespecified therein, but where no date is so specified, it shall come intooperation on the date when the award becomes enforceable under Sub-section (1)or Subsection (3) as the case may be.'

66. Ordinarily, an award comes into operation from the time stated insub-s.(l)- The Tribunal, however, is given the power to order that its awardshall be applicable from another date. The Tribunal stated that the date fromwhich the award should come into operation was not a term of reference and theReserve Bank had also contended that there was no specific demand forretrospective operation of the award. In Wenger & Co., and others v. TheirWorkmen [1963] 2 L.L.J. 403 it was explained that retrospective operationimplies the operation of the award from a date prior to the reference and theword 'retrospective' cannot apply to the period between the date of thereference and the award. There was no claim as such that the award shouldoperate from November 1, 1957 and the demand cannot be considered in theabsence of a reference to the National Tribunal. The question, however, iswhether a date earlier than January 1, 1962 but not earlier than March 21, 1960should be chosen. Sub-section (4) quoted above gives a discretion to theTribunal and this Court in dealing with that discretion observed in TheHindustan Times Ltd. . Their Workmen : (1963)ILLJ108SC that no generalprinciple was either possible or desirable to be stated in relation to the fixationof the date from which the award should operate. The Tribunal in fixing a dateearlier than that envisaged by the first sub-section justified itself bystating that much of its time in the beginning was occupied by Reference No. 1and a significant amount thereafter was occupied by Reference No. 3 and therewas justification in making the award operate from January 1, 1962. From theway in which the Tribunal expressed itself in this award and in the award inReference No. 1 it appears that but for the delay that took place the Tribunalwould have made the award to operate as laid down in sub-s. (1). It has beenruled in the three cases-Remington Rand's case [1962] 1 L.L.J. 287 Rajkamal'scase [1963] 1 L.L.J. 318 and Western India Match company's case [1962] 2 L.L.J. 459-that a discretion exercised on judicial principles by the Tribunalabout the commencement of the award should not be interfered with. Nothing wasshown to us why the award should be made to commence earlier. Both sides wereto blame in regard to the time taken up and the Tribunal perhaps found itdifficult to reach a conclusion earlier in view of the number of the referencesbefore it. In the circumstances, it cannot be said that the selection ofJanuary I, 1962, when the inquiry in the present reference was completed,except the preparation of the Award, was bad. In any event this was a matter ofdiscretion and it cannot be said that the discretion ha1; not been exercised onjudicial principles. We decline to interfere.

67. In the result the appeal fails and it will be dismissed. it may however,be said that the appeal would have partly succeeded that for the creation ofnew scales of pay for class II employees and acceptance of some the minorpoints by the Reserve Bank. In this view of the matter we make no order aboutcosts.

68. Appeal dismissed

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