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Management of the Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. Vs. the Industrial Tribunal and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1975)ILLJ64Ker
AppellantManagement of the Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd.
RespondentThe Industrial Tribunal and anr.
Cases ReferredRajkamalKalamandir (p) Ltd. v. Indian Motion Pictures Employees
Excerpt:
.....like eucalyptus, which would, in due course, take the place of the raw materials needed for the pulp division, in pursuance of this, thirty thousand acres of private forests belonging to the nilamboor, kovilakam were purchased by the company at a cost of rupees seventy-five lakhs by agreement, dated 1-6-1965 between the petitioner and the kovilakam receivers with government sanction. sastri, however, contends that functional integrality is a very important test and he went so far as to suggest that if the said test is not satisfied, then the claim that two mills constitute one unit must break down. the fact that the test of functional integrality is not and generally cannot be satisfied by two such concerns run by the same employer in the same line, will not necessarily mean that the..........like eucalyptus, which would, in due course, take the place of the raw materials needed for the pulp division, in pursuance of this, thirty thousand acres of private forests belonging to the nilamboor, kovilakam were purchased by the company at a cost of rupees seventy-five lakhs by agreement, dated 1-6-1965 between the petitioner and the kovilakam receivers with government sanction. the government also entered into a separate agreement with the company on 14-7-1965, proportionately reducing their contractual obligation to supply raw materials to the petitioner. it is the petitioner's case that the plantation division came into existence, at the earliest, only on 19-4-1966 when the working plan was approved by the government. the company would claim that the staff engaged in the.....
Judgment:

V.P. Gopalan Nambiyar, J.

1. Despite the elaborate ground covered by the Tribunal and the elaborate arguments advanced before us, we think the main question for determination in these writ petitions falls in a narrow compass. Two Industrial Disputes, I.D.31 of 1967 and I.D. 1 of 1969 were referred to the Industrial Tribunal, Calicut for adjudication. The Disputes were between the Gwalior Rayons Silk ., Mavoor (referred to, for short as the company) and the Gwalior Rayon Pulp Factory Employees' Union, Mavoor. In I.D. 31 of 1967, the disputes referred, were:

Payment of bonus for the year 1965-66.

2. Payment of D.A, linked with cost of living index.

3. Confirmation of staff:

4. Fixation of pay scales of the following staff:

(a) Plantation Officers

(b) Supervisors

(c) Assistant Supervisors

(d) Watchmen

(e) Drivers

(f) Clerical staff.

5. Other amenities

In I.D. 1 of 1969, the disputes referred, were:

1. Production bonus for 1966-67 and 1967.68 to staff.

2. Reinstatement of Shri K.V. Showkat Ali.

The two references were heard and disposed of together by a common order (copy Ext.P 1). Item 2 in I.D. 1 of 1969 was not pressed and was withdrawn ; so was item 3 in ID. 31 of 1967. The rest of the items in both disputes were pressed and were found against the management. The company has filed O.P. 1957 of 1972 ; and the Employees' Union has filed O.P. 2885 of 1972. We shall first deal with the company's Writ Petition O.P. 1957 of 1972.

2. The company is having a number of undertakings in several States in this country. It established its Rayon-grade Pulp plant which commenced production in the early months of the first half of 1963. The raw material, mainly bamboo, and, to some extent certain other species of wood, were being obtained from Government reserve forests in Kerala, Mysore and Tamil Nadu, and from the private forests of this State as defined in Madras Preservation of Forests Act. This lastframed category has now been brought under State ownership, by the Kerala Act 26 of 1971.Difficulty was experienced by the company in procuring raw materials in sufficient quantity for its pulp industry. The State Government which had covenanted to supply to the company a fixed quantity of bamboo as per agreement, dated 3-5-I958 was also experiencingdifficulty in continuing the supply. The company was, therefore, advised, to acquire its own plantation area for development of a plantation, of fast growing species of pulp wood, like eucalyptus, which would, in due course, take the place of the raw materials needed for the pulp division, In pursuance of this, thirty thousand acres of private forests belonging to the Nilamboor, Kovilakam were purchased by the company at a cost of rupees seventy-five lakhs by agreement, dated 1-6-1965 between the petitioner and the Kovilakam receivers with Government sanction. The Government also entered into a separate agreement with the company on 14-7-1965, proportionately reducing their contractual obligation to supply raw materials to the petitioner. It is the petitioner's case that the Plantation Division came into existence, at the earliest, only on 19-4-1966 when the working plan was approved by the Government. The company would claim that the staff engaged in the Plantation Division were exclusively for the purposes of the plantation and for the silvi cultural operations according to the approved working plan. The employees in the Plantation Division are alleged to have formed themselves into a union and eventually merged in the union, represented by the 2nd respondent. They pressed their demands for payment of bonus under the Bonus Act, at the same rate, at which it was paid to those in Pulp Division, and also for payment of production bonus at the same rate. They demanded also equality of status and of terms and conditions of service with those in the Pulp Division. It was these demands that led to the disputes being referred for adjudication, as noticed earlier.

3. The contention of the company was that the Plantation Division was a separate and independent entity or establishment by itself, and that the employees in question were not justified in pressing their demands on the basis that the Plantation Division was an integral part of the company. The Tribunal held against the company on this aspect; and that is the main question that has been agitated in this writ petition.

4. For the company, it was argued that whether based on the principles of geographical proximity, or of unity of management, or of functional integrality, the Plantation Division cannot be regarded as integrally linked with the Pulp Division, but was really a separate and independent entity. Reliance was placed on the decisions of the Supreme Court in the Associated Cement Company v. Their Workmen, : (1960)ILLJ1SC , The Managament, Pratap Press v. Their Workmen : (1960)ILLJ497SC , and upon the South India Mill Owners Association's case 1962-I L.L.J. 223 : A.I.R. 1962 S.C. 1221. In the first of these cases, the question arose with respect to Section 25E of the Industrial Disputes Act, as to whether the limestone quarry was part of the cement factory or was 'another part of the establishment'. If the latter, no compensation is payable to the workmen laid off, if the same was due to a strike or slowing down of production on the part of the workmen in any part of the establishment. Examining the question, it was pointed out that the Industrial Disputes Act had not prescribed any specific test as to what is 'one establishment', and, therefore, the same had to be decided on considerations by which the unity of an industrial establishment will be decided in the industrial sense. The Court examined the several tests referred to in the course of the arguments, such as, geographical proximity of the different departments or branches, unity of ownership, management and control, unity of employment and conditions of service, functional integrality, general unity of purpose, etc. It was then observed:

It is, perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units, etc. If in their true relation they constitute one integrated whole, we say that the establishment is one; if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of employment and also prescribes a disqualification. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; and in stillanother case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for consideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation; many enterprises may have functional integrality owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned. In the midst of all these complexities it may be difficult to discover the real thread of unity.

Ultimately, it was ruled that the disqualification under Clause (iii) of Section 25E was attracted, and the workmen in the factory were not entitled to compensation. In the Pratap Press case 1960-I L.L.J. 497 : A.I.R. 1960 S.C. 1213, the question arose with respect to the Pratap Printing Press started in 1951, and two publications started by its proprietor in 1954. The workmen of the press contended that the press and the publications were the industrial ventures of one family, consisiting of the proprietor and his sons, and that the working results of the three concerns should be pooled together in order to decide the question of bonus. The employer's contention was that the daily, 'Pratap' was owned by a partnership firm, while the other two, viz., the Press, and the other publications, 'Veer Arjun' were proprietory concerns owned by him: After referring to the Associated Cement Company's case (supra), it was observed that there is an essential difference between the question whether two units form parts of one establishment, for the purpose of Section 25E(iii), and the question whether they form part of one single industry for calculation of its surplus profits for distribution of bonus. Still it was felt that some assistance can be got from the enumeration of the tests made in the Associated Cement Co.'s case (supra). It was then observed that of all these tests, the most important one was that of functional integrality and the question of unity, of finance and employment of labour. On the facts it was held that the finding of the Tribunal that the Press and the publication 'Veer Arjun', were two independent units was reasonable and beyond challenge. It was, therefore, ruled that in order to determine the bonus payable the working profits of the Press alone and not of the publication 'Veer Arjun' could be taken into account.

5. In the Southern India Mill Owner's case 1962-Suppl. (2) S.C.R. 926, the question arose whether the two mills run by the appellant, one at Coimbatore and the other at Madurai, were to be treated as separate units or as one for the purpose of payment of bonus. It was noticed that in deciding the question, several factors are relevant such as, unity of ownership and management and control, unity of finance and geographical location and functional integrality. The Court observed:

Mr. Sastri, however, contends that functional integrality is a very important test and he went so far as to suggest that if the said test is not satisfied, then the claim that two mills constitute one unit must break down. We are not prepared to accept this argument. In the complex and complicated forms which modern industrial enterprise assumes it would be unreasonable to suggest that any one of the relevant tests is decisive; the importance and significance of the tests would vary according to the facts in each case and so, the question must always be determined bearing in mind all the relevant tests and co-relating them to the nature of the enterprise with which the Court is concerned. It would be seen that the test of functional integrality would be relevant and very significant when the Court is dealing with different kinds of business run by the same industrial establishment or employer. Where an employer runs two different kinds of business which are allied to each other, it is pertinent to enquire whether the two lines of business are functionally integrated or are mutually interdependent. If they are, that would, no doubt, be a very important factor in favour of the plea that the two lines of business constitute one unit. But the test of functional integrality would not be as important when we are dealing with the case of an employer who runs the same business in two different places. The fact that the test of functional integrality is not and generally cannot be satisfied by two such concerns run by the same employer in the same line, will not necessarily mean that the two concerns do not constitute one unit. Therefore, in our opinion, Mr. Sastri is not justified in elevating the test of functional integrality to the position of a decisive test in every case. If the said test is treated as decisive, an industrial establishment which runs different factories in the same line and in the same place may be able to claim that the different factorties are different units for the purpose of bonus. Besides, the context in which the plea of the unity of two establishments is raised cannot be ignored. If the context is one of the claim for bonus, then it may be relevant to remember that generally a claim for bonus is allowed to be made by all the employees together when they happen to be the employees employed by the same employer. We have carefully considered the contentions raised by the parties before us and we are unable to come to the conclusion that the finding of the Tribunal that the two mills run by the Saroja Mills Ltd., constitute one unit, is erroneous in law.

6. In the light of the above principles, we think the Tribunal has correctly concluded that on the facts the Plantation Division was not a separate or an independent undertaking. The object and the purpose with which it came into being, was to supply raw materials for the Pulp Division. That constituted the integral link between the two. There was unity of management and control. The fact that the Pulp Division was located in Mavoor and the Plantation Division in Nilamboor nearly sixty miles away, is not in the circumstances, relevant. Counsel stressed that the resolutions of the Board of Directors filed before the Tribunal as Exts.M95 and M96 were for ratification of the acts of the Officers of the Pulp Division for purposes of the Plantation Division, and that Ext. M4 power of attorney had been granted by the company to Sri Sabu and Goyal of the Pulp Division to act as authorized representatives of the company and carry on the affairs regarding the Plantation Division. These are not necessarily inconsistent with the Plantation Division being an integral part of the company. The Tribunal has pointed out in paragraph 32 of Ext. P1 that the earliest resolution of the Board of Directors regarding the Plantation Division is dated 2-12-1965 and the same described the plantation as a section of the Pulp Division. Ext. M3 was produced before the Tribunal as containing two resolutions both dated 27-4-67. There was no resolutions of the Board to treat the Plantation Division as a separate division. The Tribunal has referred to the fact that the appointments were issued in the name of the Plantation Division prior to 27-4-1965 as evidenced by Exts. M18 to M26 produced before it. The Tribunal in paragraph 33 has referred to this aspect and found that the appointments are to be regarded as appointments made to the Pulp Division. We think that the Tribunal has correctly kept in mind the principles in the light of which it had to decide whether the Plantation Division was a separate and independent entity or not. Its conclusion on this account, is not vitiated by any jurisdictional error, nor does it disclose any patent error of law.

7. It was then contended that the award of bonus under the payment of Bonus Act, was unjustified and illegal having regard to the provisions of the statute. Section 3 of the Payment ofBonus Act, reads.

3. Establishment to include departments, undertakings and branches.- Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establisment for the purpose of computation of bonus under this Act:

Provided that where for any accounting year a separate balance-sheet and profit and loss account are prepared and maintained in respect of any department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus.

S. 16 in so far as it is relevant reads:

16. Special provisions with respect to certain establishments.-(1) Where an establishment is newly set up, whether before or after the commencement of this Act, the employee of such establishment shall be entitled to be paid bonus under this Act only-

(a) from the accounting year in which the employer derives profits from such establishment; or

(b) from the sixth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, whichever is earlier.

Provided that in the case of any such establishment the employees there shall not, save as otherwise provided in Section 33, be entitled to be paid bonus under this Act in respect of any accounting year prior to the accounting year Commencing on any day in the year 1964.

Explanation 1.-For the purpose of this section, an establishment shall not be deemed to be newly set up merely fry reason of a change in its location, managements, name or ownership'.

8. In the light of the above provisions, counsel for the company argued that Exts. M50 and M51 filed before the Tribunal, are the annual reports and accounts for the year 1967 and 1968 which show that separate accounts had been kept for the Plantation Division, and, therefore, it had to be treated as a separate establishment for computation of bonus, under the proviso to Section 3 of the Act. But it will be noticed that the proviso itself is qualified by a provision to the effect that if immediately before the commencement of the accounting year, the undertaking was treated as part of the establishment, the proviso shall not apply. The Tribunal dealt with the matter in paragraph 46 of its award. It noticed that it was admitted that the management paid bonus to their workers in the Pulp Division. In view of this admission the proviso to Section 3 will not apply and the Tribunal was right in holding against the management on issue 1 in I.D. No. 31 of 1967. In the face of the provisions of the statute, and the findings of the Tribunal, we do not think the decisions cited by counsel for the company, are of any assistance. He relied on the Alloy Steel Project's case 1971-I L.L.J. 217, the Delhi Cloth Mills. case A.I.R. 1972 S.C. 293, and the H.M.T. case A.I.R. 1973 S.C. 2300. The discussion of the Tribunal has kept in mind the principle of these decisions. There is no scope for challenge.

9. Some objection was taken to the award of bonus for the three years 1965-66 1967-68. Although issue (1) in I.D. 31 of 1967 related only to payment of Bonus for 1965-66, production bonus for the next two years was the subject-matter of issue 1 in I.D. 1 of 1969. In the circumstances, when the two disputes were tried together and disposed of by a common award, there is nothing wrong in the Tribunal having granted bonus for all the three years.

10. The award of Production Bonus was objected to, on the ground that the Plantation itself was purchased only on 9-6-1965 that there were no profits, and, therefore, no computation of bonus. It was argued for the petitioner that Ext. P2 produced in the writ petition, will show that production bonus was started only in 1969 and the Tribunal was wrong in awarding it for an anterior period. But, as pointed out by counsel for the respondent, Ext. P2 filed in this writ petition, was not produced before the Tribunal. In the circumstances, we see no ground for interference.

11. We dismiss this writ petition, but with no order as to costs.

O.P. No. 2885 of 1972

12. In this writ petition filed by the union of workmen, the principal claim made is that the benefits granted by the Tribunal, should have been made retrospective from the date of starting of the Plantation Division. But as recognised in RajkamalKalamandir (p) Ltd. v. Indian Motion Pictures Employees' Union and Ors. 1963-I L.L.J. 318, the Tribunal has discretion in deciding the date from which the benefits granted by it, are to take effect. We see no ground to interfere with the Tribunal's discretion on this account.

13. It was complained that the dearness allowance, wages of clerical staff, drivers and watchmen, are all to take effect only from the date of the award. This may be so. But the matter was essentially in the Tribunal's discretion, and we are unable to see any ground to hold that the discretion exercised, warrants interference.

14. It was then complained that regarding Protection Officers, Supervisors and Overseers, no date had been fixed from which they are to get the benefits of the award of the Tribunal. This will only mean that the benefits would accrue from the date when the award becomes effective under the provisions of the Act.

15. Counsel for the respondent pointed out that in paragraph 45 of Ext. P1 it has generally been observed that employees in the Plantation Division are on a par with those from the Pulp Division, and that the same is also the result of the discussion of paragraph 47 of Ext. P 1. We see no merit in this writ petition. The same is dismissed, but we make no order as to costs.


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