1. The Textile Labour Association, Ahmedabad, on 21st April, 1961, gave a notice of change desiring privilege, casual and sick leave with wages for the workers employed in the textile industry. The privilege leave asked for was with pay and allowances at the rate of one month for every month of service with a right to accumulate the same for three months. The sick leave asked for was at the rate of one month for each year of service subject to a maximum period of twelve months during the whole service. The casual leave asked for was 15 days with full pay and allowances in a calendar year. In addition, pay in lieu of privilege leave was also asked for under certain circumstances. As the mills did not agree and as conciliation proceedings failed, the reference, being Reference (IC) No. 103 of 1961, came to be made. In the said Reference the Ahmedabad Mill Owners' Association objected to the demand, amongst others, on certain preliminary legal grounds. Those objections were rejected by an Award of this Court, dated 19th December, 1962. The Ahmedabad Mill Owners' Association there upon filed a writ petition in the Gujarat High Court which was decided against them. They went in appeal by special leave before the Supreme Court of India. As the Supreme Court dismissed the appeal, the matter came up for hearing before a Full Bench consisting of two of us. A large number of contentions were raised by the Textile Labour Association in the said reference in support of the demand. These were replied to by the Ahmedabad Mill Owners' Association. The contentions were considered at some length by us. An award was made by us on 21st August 1967, which is published in Gujarat Government Gazette. Part I-L, dated 28th December 1967, pp. 4244-74. The leave that was being granted to the operatives at the time was (1) privilege leave as per the provisions of the Indian Factories Act, 1984; (2) casual leave, nil; (3) sick leave, as per the Employees' State Insurance Act. The demand for higher leave was sought leave to be justified on (1) grant of such higher leave to technical and clerical staff; (2) provision at least for one month's privilege leave and 10 days' casual leave with or without pay in the standing orders settled in 1939 and recognition thereby of the necessity of such leave and (3) the necessity of such leave as a break in a long period of physical and mental strain and to provide for rest, change and recuperation and to enable them to go to their native place, to attend to their household duties and to fulfill social and moral obligations towards their families.
2. Reliance was also placed on the provisions of the Shops and Establishments Act and other Acts and the award of the Industrial Court, Maharashtra in the year 1963 in Reference (IC) No. 130 of 1961 (reported in 1964 ICR p. 124) as subsequently modified granting 5 days' casual leave and a few days extra privilege leave in addition to that provided for in the Indian Factories Act, 1948, and number of awards and practices prevailing where a few days' casual leave was granted and privilege leave higher than that provided under the Indian Factories Act was granted.
3. The demand was vehemently opposed by the Ahmedabad Mill Owners' Association of the grounds that (1) the existing leave privileges were adequate; (2) compared favourably with those in vogue in various countries; (3) that additional leave provision would affect production; (4) the provision in the standing orders had no bearing on the question on the paid leave but were only introduced to maintain continuity of service; (5) the clerical, supervisory and technical staff were always in receipt of higher leave and the same was, therefore, not material and (6) the incapacity of the industry to bear the financial burden that would be imposed as a result of the enlargement of leave benefits.
4. The Full Bench of the Industrial Court consisting of two of us in Reference (IC) No. 103 of 1961, (reported in Gujarat Government Gazette, Part I-L, dated 28th December, 1967, p. 4244 at p. 27, para 25) observed as follows :
'We have considered the various arguments advanced by both the sides in support of the demand for additional paid leave and against it. We have also considered the various exhibits submitted by the Textile Labour Association, Ahmedabad and the Ahmedabad Mill Owners' Association, which have a bearing on the financial condition of the textile industry in the city. We have also considered the financial implications of conceding the demand in full and in part on the industry as a whole as also no some of the individual units. We have considered the practice in this respect in other centres of the textile industry as also in other industries, both in Gujarat and other parts of the country. Taking an overall picture, it appears to us that there is ample justification for granting some days additional leave than what is enjoyed at present and that it is necessary that the industry should bear this burden in the interest of its workmen and that it is also not beyond its capacity.'
We were of the opinion that in the then existing circumstances it was not necessary to give paid sick leave in addition to the benefits conferred by the Employees' State Insurance Act. As is apparent from para 27 of the said award, we were inclined to grant some additional leave. There was strong opposition from the Textile Labour Association, Ahmedabad, to the grant of additional earned leave on the lines granted in Bombay under the modified award. The Bombay award was also interpreted differently. Unlike major units in Bombay, in almost all major industrial establishments in Gujarat privilege leave was granted under the Indian Factories Act and the grant of the same was not considered by us desirable at that juncture as that would start a chain of reaction. We were, therefore, of the opinion that the few days' additional leave i which we proposed to grant should be granted in the form of casual leave. As in our opinion there was almost an unassailable case for the grant of a few days' casual leave, 7 days' casual leave with wages in a year with effect from 1st January, 1968 was granted to permanent workers and to badlis, temporary and casual workers, at the same rate as permanent workmen provided they had put in 240 days' work in a year. We also directed that unenjoyed days as a casual leave could be tagged on and enjoyed along with earned leave in the subsequent two years with the limitation that not more than 7 days could be so tagged. The present application is an application made by the Textile Labour Association, Ahmedabad, for modification of the aforesaid award.
5. Shri Gandhi, the learned counsel for the Ahmedabad Mill Owners' Association, has submitted that the present application is not legally maintainable inasmuch as in the application no change of circumstances has been alleged nor has any new grounds been made out for enhancement of leave. The points raised in the modification application are already considered by this Court and, therefore, unless new circumstances are proved to have arisen, this Court cannot modify the award so recently made, and that it would otherwise amount to sitting in appeal. In support of his contention, he has relied upon the decision of the Supreme Court in the matter of Burn & Co. Ltd. v. Their Employees, [1957 - I L.L.J. 226]. In that case the demand was for wages-scales fixed in an award by the Mercantile Tribunal, instead of scales in accordance with the scheme of the Bengal Chamber of Commerce. In a dispute previously raised an award was made in 1950 which accepted the wage-scales according to those awarded, by the Mercantile Tribunal which were more favourable. In these circumstances the Supreme Court expressed the view that an award fixing wage-scales should have fairly long operation and should not be reagitated unless a change of circumstances has occurred justifying fresh adjudication. Speaking for the Court Venkatarama Ayyar, J. enunciated the principle that though section 11 of the Code of Civil Procedure enacting the rules of res judicata is in terms inapplicable to the question under consideration, the principle underlying it, expressed in the maxim interest rei publicae ut sit finis litium is founded on sound policy and is of universal application. It was observed :
'And there are good reasons why this principle should be applicable to decisions of Industrial Tribunals also. Legislation regulating the relation between capital and labour has two objects in view. It seeks to ensure to the workmen who have not the capacity to treat with capital on equal terms, fair returns for their labour. It also seeks to prevent disputes between employer and employees, so that production might not be adversely affected and the larger interest of the society might not suffer. Now, if we are to hold that an adjudication loses its force when it is repudiated under S. 19(6) and that the whole controversy is at large, then the result would be that far from reconciling themselves to the award and setting down to work it, either party will treat it as a mere stage in the prosecution of a prolonged struggle and far from bringing industrial peace the awards would turn out to be but truces giving the parties breathing time before resuming hostile action with renewed vigour. On the other hand, if we are to regard them as intended to have long-term operation and at the same time hold that they are liable to be modified be change in the circumstances on which they were based, both the purposes of the Legislature would be served.'
Though it has not been specifically overruled its effect has been considerably whittled down and this decision has lost much of its efficacy. In India General Navigation and Railway Co. Ltd. v. Their Workmen, [1960 - I L.L.J. 56 (562)], speaking for the Court, Wanchoo J. said :
'Apart from the fact that S. 19(6) of the Industrial Disputes Act itself contemplates that the award cannot be binding after it is terminated and, therefore, the principle of res judicata should be applied with caution in industrial dispute which relates to such matters as wages and dearness allowance, there can be no doubt that if circumstances have changed, there is a good case for a change in the award.'
Subsequently in Trichinopoly Mills v. National Cotton Textile Mills Workers Union, [1960 - II L.L.J. 46 (48)], Gajendragadkar, J. dealing with the 'rehabilitation charge' for determining bonus observed :
'It is not denied that the principles of res judicata cannot be strictly invoked in the decision of such points though it is equally true that Industrial Tribunals would not be justified in changing the amounts of rehabilitation from year to year without sufficient cause.'
The ratio of this case is that though the items like rehabilitation charge in calculating bonus should not be changed without sufficient cause on the ground of public policy, the principle of res judicata cannot be strictly applied to industrial adjudication. Later in Remington Rand of India v. Its Workmen, [1962 - I L.L.J. 287], the same Judge specifically glossing on the view in Burn & Co.'s case said :
'Form that judgment itself it follows that the considerations in regard to the fixation of wage-scale by an award would not be relevant in respect of dearness allowance. Indeed, it is hardly necessary to add that the decision of industrial disputes in a large number of matters may not easily admit the application of the doctrine of res judicata.'
The trend in the subsequent decisions of the Supreme Court is that application of technical rules such as res judicata, acquiescence, estoppel, etc., are not appropriate to industrial adjudication. In Workmen of Balmer Lawrie and Co. v. Balmer Lawrie and Co. [1964 - I L.L.J. 380], this question came to be considered, and it was observed :
'Taking the first argument that there has been no change in the circumstances, the tribunal has relied upon two decisions in support of the view that unless a material change in circumstances is proved, there can be no change in the wage-structure. In Burn & Co. Ltd. v. Their Workmen and others, [1959 - I L.L.J. 450], this Court has observed that in the absence of anything to show that between 1950 and 1955 when the present industrial dispute was referred for adjudication, circumstances had so altered as to make the existing scales of pay and grades unreasonable or inadequate to meet the conditions prevailing at the time the industrial dispute had been referred to the Tribunal, it must be held that any revision of the existing wage-scales or grades was unjustified. Similarly, in James Finlay and Co. Ltd. Employees Union, Calcutta v. James Finlay and Co. Ltd., Calcutta, (1957) L.A.C. 154, the Labour Appellate Tribunal observed that though the principles of res judicata had no application to adjudication of industrial disputes, on principle a previous award should not be changed, except on justifiable grounds. The Appellate Tribunal then proceeded to observe that some of the grounds on which the award can be changed are : change circumstances, principle of gradual advance to the living wage, anomaly, mistake or error in the last award involving hardship to either party or both.
'While dealing with the question about the revision of wage-scales, it is necessary to remember that the technical considerations of res judicata should not be allowed to hamper the discretion of industrial adjudication. It is undoubtedly true that wage-scales are devised and wage-structures constructed as matters of long-term policy, and so industrial adjudication would naturally be reluctant to interfere with the wage-structures without justification in a light-hearted manner. When a wage-structure is framed, all relevant factors are taken into account and normally it should remain in operation for a fairly long period; but it would be unreasonable to introduce considerations of res judicata as such, because for various reasons which constitute the special characteristics of industrial adjudication the said technical considerations would be inadmissible. As the Labour Appellate Tribunal itself has observed, the principle of gradual advance towards the living wage, which industrial adjudication can never ignore, itself constitutes such a special feature of industrial adjudication that it renders the application of the technical rule of res judicata singularly inappropriate. If the paying capacity of the employer increases or the cost of living shows an upward trend, or there are other anomalies, mistakes or errors in the award fixing wage-structure, or there has been a rise in the wage-structure in comparable industries in the region, industrial employees would be justified in making a claim for the re-examination of the wage-structure and if such a claim is referred for industrial adjudication the adjudicator would not normally be justified in rejecting it solely on the ground that enough time has not passed after the making of the award, or that material change in relevant circumstances has not been proved. It is, of course, not possible to lay down any hard and fast rule in the matter. The question as to revision must be examined on the merits in each individual case that is brought before an adjudicator for his adjudication'.
Recently in Shahdara (Delhi) Shaharanpur Light Railway Co. Ltd. v. Shahdara (Delhi) Saharanpur Light Railway Workers' Union, [1939 - I L.L.J. 734], speaking for the Supreme Court, Shelat, J., candidly said that with the constant spiralling ofi prices the principle in Burn and Co.'s case would appear to have lost much of its efficacy. From the above decisions to is obvious that the principles analogous to res judicata can hardly be properly applied to industrial adjudication. As observed by Shri Gajendragadkar in the Balmer Lawrie case, the question as to revision of the matters covered by a previous award must be examined on the merits in each individual case that is brought before an adjudicator for his adjudication. In the said decision he has also approved of the principle that industrial adjudication can never ignore the living wage, and the same would, therefore, render the application of technical rule of res judicata singularly inappropriate. What is true in respect of a living wage would equally be true in respect of other demands of labour for greater leisure and rest towards which industrial adjudication can only make a gradual progress. If principles of res judicata applied this question would not have been approached in the cautious manner in which the same was approached in Reference (IC) No. 103 of 1961, but even this apart there is no doubt that there has been a change circumstances since that award came to be made. This will become apparent during our subsequent discussion of this matter. We may here also point out what was pointed out by a single Judge the Calcutta High Court in G. P. Dundedale v. G. P. Mukherjee, [1958 - II L.L.J. 183], wherein he has observed :
(v) The award of an Industrial Tribunal under S. 19 Of the Industrial Dispute Act, unlike the decree or order of a civil Court, is not perpetual and conclusive, as it is limited to the duration for which it remains effective and in force under S. 19 of the Act;
(vi) the effect of applying the principle of res judicata to industrial awards would be to extend the period of their operation beyond the period permitted by the statute under S. 19.'
There are also similar provisions in the Bombay Industrial Relations Act, 1946, which would be rendered ineffective if the principles of res judicata were applied.
6. We shall now deal with the merits of the demand. One of the main grounds advanced in support of the demand is that the clerks and the technicians employed in the textile industry get one month's privilege leave in a year and 10 or 12 days' casual leave plus sick leave; that not only clerks but even semi-clerks now under an agreement get similar leave. This is relied upon from two angles, (1) unfair discrimination between two categories of employees employed by the same employer, and (2) the fact that if it is recognised that certain types of categories, viz., clerks, semi-clerks and technicians, require a certain amount of privilege leave for rest and recuperation and a certain amount of casual leave to attend to certain exigencies of work and a certain number of days of sick leave for sickness, it cannot be denied that operatives would not require an equal amount of leave. Shri Gandhi has submitted that this question was considered by the Industrial Court at some length in the previous award and this ground was not accepted. He has replied upon the fact of the almost universal existence of such distinction and the decision of the supreme Court in the Alembic Chemicals case, [1961 - I L.L.J. 328], wherein this distinction has been taken note of and given effect to. Shri Arvindbhai Buch, Shri Navinchandra Barot and Shri R. M. Shukla, all of whom appeared and supplemented each other's arguments at different times in this matter, have not denied that historically there has been such a difference and that there have been a number of agreements entered into by them also where different leave rules were prescribed for clerks, technicians and operatives. They have, however, submitted that our country has now recognised the principle of egalitarian society; that the working class has now become conscious not of its right but is also extremely sensitive to any kind of unfair treatment; that this discrimination has become a great source of dissatisfaction and a great irritant and the time is now ripe to remove the discrimination. They have also further submitted that in any event it is necessary to recognise the injustice and remedy the same in part if it is not possible to fully remedy the injustice. They have all pointed out a number of new factors that have emerged. Under the agreement in respect of semi-clerks, the semi-clerks get leave on the lines with clerks. Thus, a grey folder or a wireman who earns 50 or 60 rupees would be getting this leave, but a weaver whose earnings would be Rs. 100 and a number of others who would be earning Rs. 200 and more would not be getting this leave. It has also been pointed out that with the introduction of new machinery and automatic looms, a number of operatives earn very much more than not only a semi-clerk but a junior clerk, and whatever justification may have existed once for this difference in leave has now ceased; that it is impossible for them with any semblance of reason to justify this difference in respect of leave to their members. This question of discrimination in matters of leave between operatives on one hand and clerks on the other was considered by this Court in the earlier award. The question has also been considered by the Pay Commission and a number of other bodies and this Court had occasion to refer to the same in the last award. We are convinced that in the present economic conditions of our country and the textile industry, it is not possible for us to abolish the distinction. Whilst this may be true and whilst it may not be possible for us to to do away with the distinction it appears to us that the time is ripe and also justice demands that the injustice is frankly admitted instead of trying to find some reason or other for the same. For historical reasons this distinction or discrimination may have been practised but we owe it to the working class now at least to own it the injustice whether the same is remedied or not. In the Report of the Central Pay Commission presided over by Shri Varadachariar at page 142, it has been observed :
'We appreciate the strength of feeling behind the attack of discrimination .......... but in the endeavour to respect the spirit of equalitarianism we cannot lose sight of certain material considerations ........................ It cannot be disputed leave rules, especially those which impose ........... the burden of paying full salary to an employee when he is on leave, should be framed with regard to his need for rest .......... It also stands to reason that the need for rest and the length of rest needed depend to a large extent on the nature of the employee's occupation, the conditions in which he has to work and the burden of responsibility resting on him. Physical strain, though tiresome at the moment, does not produce the harmful effects on one's health as mental strain. If the remuneration of public servants can be regulated with due regard to considerations like the above, there is nothing unreasonable in regulating their leave also with due regard to the same considerations. This principle of differentiation is also recognised in England. Further, in so far as it happens that public servant when they take leave prefer to utilise the leave period in their home district, a distinction can legitimately be drawn between those who are recruited from the neighborhood of the places where they serve and those who are recruited from greater distances ................ These considerations, in our opinion, require and justify a differentiation between Class IV service and the other services'.
We are not concerned with the question whether in Government service leave rules of Class III employees should be more generous than those of Class IV employees or not. However, we are not convinced that a clerk or a semi-clerk or a technician in textile industry requires more leave than an operative. On the contrary, if at all, the hours of work of an operative as a rule are more and the rest intervals less than those of a clerk and with the gradual introduction of rationalization, modernisation and automaton there is greater tension and monotony in the work of the operative and he requires same or, if at all, greater period of rest than clerks or technicians. This is all the more so if the environment in which he has to work and the environment in which he has to live, has comparatively inferior home surroundings, is taken into consideration. It is also not true that the clerks come from distant places and operatives are locally recruited. In the textile industry, in any event, with which we are concerned if at all, it is the reverse. The clerks as a rule are local people or people from Gujarat. However, the operatives come practically from number of States in India. Persons doing heavy manual work come from Uttar Pradesh, those employed in processing are again from Uttar Pradesh or Madhya Pradesh. A large number of the automatic loom workers have come from the South. The blow-room workers come from Gujarat or Rajasthan and the weavers from Gujarat, Rajasthan or Uttar Pradesh. This is just a rough indication given by the Textile Labour Association, but it shows clearly that operatives do not require less leave but, if at all, more because they from distant places.
7. We are full aware that it is not possible in the economic conditions of our country and in the present financial condition of the textile industry to apply the same leave rules to operatives, but we are convinced that the time has come to recognise the injustice, plead inability and not add insult to injury. We cannot also forget the changed times in which we are living. We cannot also forget that the present worker is no longer the worker of two or three decades before; that the automatic looms are usually worked by an SSC or a non-SSC; that the necessity for employment amongst the middle class and the comparatively more remunerative scales offered to operatives has resulted in a large number of so called middle class having joined the industry as operatives. The old distinction between the middle class and the operatives is fast dying and it is not unusual that one brother is working as a weaver and another as a clerk. This change has been taken note of and drawn pointed attention in the Report of the National Commission on Labour presided over by Dr. P. B. Gajendragadkar wherein at page 33 para 4.22, they have observed :-
'The social composition of labour is undergoing a change. Labour is not restricted to certain castes and communities. Apart from the fact that caste and occupation have always inter-acted and the relation between the two has been 'elastic' in our society, social mobility today accounts for the emergence of a mixed industrial work force. While in traditional industries this change is slow, one cannot escape noticing it in sophisticated employments such as engineering and metal trades; oil refining and distribution; chemicals and petrochemicals; machine tools and machine building; and synthetics and in many white-collar occupations.
The background of the intermediate and lower cadres in the latter industries is overwhelmingly urban; their level of education is higher. They come from middle or lower middle classes comprising small shop-keepers, petty urban landlords' lower echelons of public service and school teachers and professional groups. They have a pronounced polyglot character.
The old social barriers are breaking down. It is now common to find the son/daughter of a spinner or a weaver working side by side in a chemical or a pharmaceutical factory with the son/daughter of a person of an earlier generation for whom factory or mill work except in clerical or supervisory categories was taboo. The old distaste among certain groups for manual work is gradually wearing off, because the groups themselves have not retained their separate identity as of old and because jobs are no longer wholly manual. The impact of this change is seen not only at the place of work, but also in homes where earning members have established parity with seniors in the family and seek and reciprocate social calls from colleagues in the place of work. At one time, income levels divided the working class and the middle class; status consciousness was dominant. The sharp line that used to divide the worker from a clerk is now visible no longer.
Higher skills and educational requirements expected of workers in modern factories and better wage levels consequent on them have tended to blur further the traditional distinctions between manual and non-manual workers. The social and political climate in the country has had its own effect on the process. Against the back-ground of a rising tempo of industrialisation, the society has acquired a better sense of dignity of labour.' ...........
8. Whilst all this is true, we do not think we can grant the demand in view of the burden it will impose on the industry merely on the ground of discrimination. The question will have to be approached more on merits. Shri Shukla, who appeared for the Textile Labour Association, made it clear when the question was put to him, that he is not at all interested in getting the leave provision for clerks and supervisors and technicians reduced on the ground of discrimination and that he was only interested in getting better leave benefits for workers.
9. It was urged before this Court on the last occasion and it has been urged again before us that the standing orders for operatives framed in the year 1939 provide for 30 days privilege leave and 10 days casual leave without pay; that the need for this among of leave, both casual and earned, is thus recognised and the only question is whether the same should be given with or without pay.
10. A member of exhibits have been produced by the Textile Labour Association, Ahmedabad, to show the amount of normal absenteeism amongst workers in various industries together with the causes of absence. Similar exhibits are also produced in respect of textile workers. There is a good deal of overlapping and very definite conclusions cannot be drawn therefrom. Relying on some of these exhibits Shri Shukla has submitted that there is no doubt that the worker has perforce to remain absent for this length of time and the question is whether the worker should lose wages for these days or not. Shri Gandhi, however, has submitted that even if it is conceded from these statements that the general absence amounts to about 13 per cent, the statements themselves reveal that about 4 to 5 per cent of this is on account of sickness; that separate provisions have now been made under the Employees State Insurance Act for sickness and therefore the need of the worker is about 8 per cent or about 25 days; that of this the provision is already made by 5 days paid casual leave and about 14 or 15 days' privilege leave : that workers are also now getting in addition to their normal wages a minimum bonus of 8 per cent. (sic) comes to wages of about 26 days and the necessity to make up for this shortfall or 3 or 4 days does not remain.
11. It is perfectly true, as observed by this Court in the earlier award, that the standing orders were framed for operatives in the year 1939 and these provisions were framed before leave provisions were made in the Factories Act; that as there was no leave provision, paid or unpaid, there was a constant fear amongst workers of losing employment since there was no guarantee of re-employment on return from leave and it was to remedy this that the leave provisions in the standing orders were made. However, Shri Shukla has submitted that whatever may have been the reasons at that time, they, in fact, embody the minimum needs of the workers for rest and recuperation and for causal leave; that this is a minimum requirement of the workers is further established by the statistical data of absence, paid or unpaid, produced by him. There appears some substance in this submission, but it appears to us that there was at the time no special provision for absence on account of sickness and in view of the separate provision for sick leave now under the Employees State Insurance Act the question arises for the provision of 40 days in the standing orders at least requires to be reduced so far as the payment is concerned.
12. Shri Gandhi has relied upon a number of observations of Industrial Tribunals and even of the Supreme Court to suggest that production is the need of the hour and that nothing should be done that would affect production and that any liberal leave rules are bound to affect production which is the crying need of the hour. Shri Gandhi has also stated that our country is passing through an economic crisis; that there is all round inflation and any liberalisation of leave rules at this stage would be affecting production and add to the inflationary trend; that this would be doing not only a disservice to the country but also to the working class whose cause the union claims to champion. He has also pointed out that the textile worker is the highest paid worker in the organised industry; that the minimum basic wage he gets in Ahmedabad is Rs. 38; that the dearness allowance he got in August 1973 was Rs. 252 and with provident fund, gratuity leave, minimum bonus of 8 per cent., Employees State Insurance and other benefits, he gets another 30 per cent., i.e., about Rs. 87; that his monthly income is thus Rs. 377; that even amongst the textile workers inter se in the country the Ahmedabad textile worker is the highest paid; that all his needs are properly looked after; that even if he needs 40 days' leave in all, the same is provided for inasmuch as he gets 15 days' privilege leave with pay, 7 days' causal leave with pay, 56 days' sick leave with half pay under the Employees State Insurance Act, 6 paid holidays and about 26 days bonus. Apart from other decisions he has relied upon a recent decision of the Supreme Court in Westinghouse Saxby Farmer (India) Private Ltd. v. Their Workmen, [1973 - II L.L.J. 126]; 44 F.J.R. 13. It appears that this company was giving 10 paid holidays in a year and there used to be a system of granting 9 days' unpaid festival holidays in addition to the 10 paid holidays. The company gave a notice for curtailing these unpaid holidays. It was urged by the company that the continuance of the said holidays would not only entail loss of wages to the workmen but also loss of production to the company and would prejudicially affect the country's economy. It was also urged that the system of granting unpaid holidays was no longer followed in the engineering industry and that the holidays enjoyed by the workers were in excess of what prevailed in other industries. The union contended that the trend of all awards had always been against the curtailment of existing facilities; that in the interest of industrial peace, production and better management the workmen should be kept content and any attempt to curtail the existing benefits according to the time honoured practice would provoke discontent and labour unrest. The Tribunal was impressed by this argument and rejected the demand of the company for reduction in the number of unpaid holidays. The Supreme Court, however, in an appeal by special leave from the award of the Tribunal, observed :
'It appears that the Tribunal was wholly oblivious of the present day conditions and the necessity for increased production, particularly in the matter of utility companies and the companies that are producing goods for essential services like those carried on by the Indian Railways. Thus Court has observed on more than one occasion that it is generally accepted that there are too many public holidays in our country, and that when the need for industrial production is urgent and paramount, it may be advisable to reduce the number of such holidays in industrial concerns. Indeed, it cannot be disputed that a necessary step in the direction of increasing the country's productivity is the reduction of number of holidays. See Pfizer (P) Ltd. v. Their Workmen, (1962) 24 F.J.R. 283, and Associated Cement Staff Union v. Associated Cement Companies Ltd., (1963) 25 F.J.R. 305. In Pfizer's case, (1962) 24 F.J.R. 283, the holidays which were being granted were reduced to ten from the number which the workers were enjoying previously in accordance with those sanctioned under the Negotiable Instruments Act, i.e., 16 holidays.
On giving the matter careful consideration, we find no reason or justification for unpaid holidays not being curtailed in the present case. All the conditions which are necessary have been satisfied and the appellant is carrying on the kind of work which requires efficacy and increased production. There should be more concentration on increase of production and efficiency than on enjoying the holidays if this country is to march ahead on the road to prosperity. We would accordingly allow this appeal and set aside the award. In other words, the system of unpaid holidays will not continue with effect from the 1st January, 1973.'
We do not think this decision has any relevance to the matter of leave before us. It appears from certain observations that this concern was observing all the Sundays and in addition 19 festival holidays, 10 of which were paid and 9 of which were unpaid. There were thus a loss of production on 19 festival holidays in addition to 52 weekly offs. There was no proposal made by either side to convert a few Sundays into working days instead. In view of the fact that there was a loss of production of 52 plus 19 days, the demand for reducing 9 days was made by the company and granted ultimately by the Supreme Court for the reasons given by them. So far as the textile industry is concerned, although it is observing a large number of festival holidays whenever it is possible to substitute Sunday working the same is done and the production it lost only on either 4 or 5 and in extreme cases on 6 days. The observations of the Supreme Court in the context of the facts of that case, therefore, have no bearing on the question before us. So far as production is concerned, any increase in the number of earned or casual or sick leave is not likely to adversely affect production. As pointed out in para 15 of this Court's award the textile industry has evolved for itself a system of badli work as a result of which a number of experienced workers are as a rule available to fill in the gap caused by the permanent workers being absent. As a result of this system, grant of the demand in respect of leave may not affect production. It is perfectly true that the grant of demand is bound to inflate the cost of production at a time when the costs of other materials that go into the manufacture of cloth are also rising and add to the spiral of rising prices and wages. This particular aspect cannot be ignored entirely and will be kept in view in arriving at our conclusions.
13. Shri Gandhi has again drawn our attention to a large number of notices of change given by the Textile Labour Association, Ahmedabad. The notices relate to (1) reduction in working hours to 40 from 48 : (2) abolition of badli system of work and replacing the same by appointing leave reserves. He has pointed out that there is likelihood of a demand for revision of wages after the five year period expires on 31st December, 1973. He has further pointed out the agreement recently arrived at between the Rashtriya Mill Mazdoor Sangh, Bombay and the Bombay Millowners' Association, under which all the mills in Bombay will be gradually shifting over to 7 day week. Shri Gandhi has submitted that similar notice has been given by the Ahmedabad Millowners' Association, Ahmedabad and what the outcome thereof would be is not known; that if the demand for 7 day week is not conceded ultimately it will adversely affect the competitive capacity of the Ahmedabad mills qua Bombay mills. He has also submitted that the question of leave is intimately connected with the question of working hours; that a notice of change has been given by the Ahmedabad Mill Owners' Association also for reduction of festival holidays; that in part of 1972 and 1973 there were staggering of weekly off on account of shortage of electricity as a result of which there has been loss of production on a large number of days and the question of payment of wages for some of these days is also still pending; that whether there will be further staggering of weekly offs in the near future is still not known. That all these disputes must be decided together and the demand for additional leave should not be considered in isolation.
14. It is perfectly true that there is a certain amount of interconnection between many of these demands, but the question is : Can we postpone the adjudication of this dispute indefinitely till all those disputes can be disposed of The question of revision of wages is still far off and no notice of change even so far has been given. The question of working 7-day week for Ahmedabad cannot be immediately dealt with till it is known whether a 7-day week in Bombay is in fact introduced in view of the opposition to the same by a number of unions other than Rashtriya Mill Mazdoor Sangh. How keen the Textile Labour Association is on 40 hour week can be anybody's guess as demands are made occasionally only as a counter blast or sometimes to create an atmosphere in the country for realising the same in future. Whilst theoretically it would be desirable to deal with all demands of this nature simultaneously and declare a couple of years' truce thereafter, this does not appear to us to be practicable. The application for modification was made some time in the year 1972. It is more than 16 months now. Under the scheme of the Act we are bound to adjudicate upon the matter referred to us for adjudication. We cannot indefinitely postpone the same. This is, however, comparatively a minor demand and in arriving at our conclusion we shall keep in mind the fact that other demands are also pending or likely to be raised in the near future.
15. A large number of submissions have been made in this matter by both the sides. In fact, this matter has been argued very exhaustively both by Shri Shukla, and Shri D. C. Gandhi, with a good deal of ability and conviction.
16. It was urged by Shri Gandhi that the privilege leave granted to the operatives is as provided under S. 79 of the Factories Act; that together with the causal leave now awarded and the additional paid holidays every year, the workers are getting substantial benefits in a year and a revision is unjustified; that the leave at present in vogue compares favourably with the leave granted in other centres of the textile industry and also with what is being, by and large, given in other large establishments in the country; that it also compares favourably with the leave entitlements in foreign countries; that it is opposed to the modern trend in industrial thought. A number of awards are relied upon and a number of settlements produced in justification of this. A similar argument was advanced before this Court on the last occasion also and dealt with. What we propose to say herein will be in addition to what has been stated in the said award.
17. It is true that in a number of centres of the cotton textile industry in this country privilege leave is granted as per the Factories Act and there is no provision even for casual leave. However, in Madhya Pradesh and Rajasthan, the leave provisions are identical with those at present in vogue in Ahmedabad. The major centre of textile industry, apart from Ahmedabad, is Bombay. There has been substantial improvement in leave provision in Bombay. The workers there get 5 days' casual leave. At the time of our last award, the quantum of earned leave enjoyed by them was not very clear. However, the same has now ultimately been clarified and revised by an agreement arrived at in 1970. Under the said agreement, permanent operatives who have been in continuous service for 3 years of more enjoy earned leave as follows : For the first 240 days 12 days and thereafter as the rate of 1 day for 7 days upto 254 days and at the rate of one day for 5 days thereafter. A worker thus would get leave as follows :
12 days for 240 days worked
14 days for 254 days worked 15 days for 259 days worked 16 days for 264 days worked 17 days for 269 days worked 18 days for 274 days worked 19 days for 279 days worked
20 days for 284 days worked
18. The maximum leave that he would enjoy if he was present for all the 309 working days would be 24, though in subsequent years once he enjoyed privilege leave what he would get would be much less. The leave provisions of permanent operatives of three years standing, therefore, in Bombay are more generous than those existing at Ahmedabad. It is true that in a number of industrial concerns the more particularly in Gujarat, but this is not a universal rule and in quite a number of concerns the privilege leave enjoyed today is already in excess of 15 days. This is clear from certain exhibits produced by Shri Shukla called from Maharashtra Norma Committee report as also leave provisions in Ahmedabad Electricity Co., Larsen and Toubro etc. produced in this respect. This is particularly so in Bombay and a number of other places. The Norma Committee appointed by the Government of Maharashtra in its Report Part I, has recommended that there should be some liberalisation in respect of annual leave with wages so as to provide more leave to those workers who are regular in attendance and employed in factories having a standing of 5 years or more and recommended leave for 540 days worked according to the provisions of the Factories Act and thereafter at the rate of 1 day for every 12 days of work. A glance at the Report shows that in a number of concerns there are more favourable leave rules than this. It, therefore, appears that not only in the textile industry in Bombay but in a number of industrial concerns the leave rules are more favourable than those in the Factories Act. This is apart from more liberal terms in all Government and Semi-Government bodies for non-industrial staff, Banks and other commercial establishments (sic) Government while industrial staff get leave only at the rate of one day for every 20 days worked, Railway employees who constitute a substantial part of industrial staff get 30-31 days in alternate years of service, i.e., 1/11th of duty performed approximately.
19. At the time of the last adjudication the Ahmedabad Mill Owners' Association, in order to show that the worker was fairly treated in the matter of paid leave and holidays, had produced a table of annual leave with wages and paid holidays to individual workers in various countries. This Court had, therefore, in its award reproduced a table from a publication of the International Labour Office entitled 'Holidays with Pay' giving some examples of provisions regarding increased holidays with length of service and concluded that in quite a number of countries, in any event, senior workers do get larger leave than the textile operatives at Ahmedabad and emphasised a point which was very material while dealing with the textile industry, that it employed a very large number of senior workers. Thereafter, there has been another publication of the International Labour Office, Geneva, VI(1)(1968) which deals with recent trends in annual holidays. In order to consider the question of revision of holidays with pay a committee of experts was appointed to prepare comprehensive survey covering the situation both in ratifying and non-ratifying countries, which would provide full and specific data on the basis of which the question of revision might be considered. Such a survey was prepared by the Committee of Experts and included in its report to the 48th (1964) Session of the Conference. However, since then important changes had taken place in a number of countries and it was, therefore, considered necessary to add a brief supplement giving an account of development since 1962, which is published in Part Two, Chapter I of the publication wherein it is, inter alia, stated as follows :
'The two-week standard itself has been widely exceeded; some 35 countries have laws of general scope granting a minimum basic holidays longer than two weeks, several of them providing for a minimum of longer than three weeks. The progress made in the last few years is apparent from the following examples : Belgium, where legislation increased the minimum from two to three weeks in 1966; Congo (Brazzaville), where in 1964 the minimum was increased from 18 to 21 working days; the Federal Republic of Germany, where the first federal legislation on annual holidays, enacted in 1963, prescribed 15 working days; Luxembourg, as already mentioned above; Norway, where a law passed in 1964 increased the minimum from 18 to 24 working days; Sweden; where a 1963 law provides for 24 days; and the U.S.S.R., where the five-day week was introduced in 1967 and where, as from 1st January 1968, the minimum for workers still receiving 12 working days was raised to 15. The total number of countries providing a general legislative or statutory minimum of three weeks or more has now passed 30.
In more than 15 other countries large categories of workers receive three weeks or more either through statutory action of limited scope or through collective agreements. Austrian legislation, for example, provides for 18 working days for building and construction workers. The Swiss cantons of Geneva and Vaud provide for three weeks. In Chief workers in six provinces receive 25 working days, whereas the general minimum is 15. In the Soviet Union and several other countries many categories of workers, e.g., professional and technical workers, receive a basis holiday of 18, 24, or even more working days. Many collective agreements in Austria, the Federal Republic of Germany and the United Kingdom provide for three weeks and in France for four weeks.
It should be emphasised that the legislation and examples mentioned above refer only to the basic holiday. The practice of granting longer holidays to workers who fulfill certain conditions is widespread, both in countries with long basic holidays and in those with short ones. The circumstances justifying longer holidays include dangerous or exacting work, family reasons, unfavourable climate, unusually long hours of work, education, and high output. The most common practices, however, are to grant longer holidays to workers with long service and to young workers.
Provisions for longer holidays based on length of service are found both in legislation and in collective agreements. The service requirement for the first increase ranges from one and-a-half to 20 years and for the last increase from five to 30 years. In most cases the service must be continuous with the same employer, but in several cases, the laws contain no continuity requirement. The extent of the increase also varies. Where the service requirement is low, the increases high, and the number of workers affected large, such increases form an essential part of the workers' holiday rights. Where, on the other hand, the service requirement is high the increase low and the number of workers affect small, such increase represent, in effect, a reward for long service. The latter type of provision is more common in countries where the basic entitlement is substantial.
Provisions of both types are to be found in recent legislation. Ethiopia provides for 14 days after one year, 16 after three, 20 after five and 25 after ten years. The 1965 Labour Code in Czechoslovakia, which prescribes a basic holiday of two weeks, provides of three weeks if the employment relationship has lasted for five years since the workers reached the age 18 years, and four weeks if it has lasted 15 years since the worker reached 18. The Tunisian Labour Code (1966), which prescribes a basic holiday of one day per month of actual service upto a maximum of 15 days, including 12 working days, provides for an increase of one working day after each period of five years' service whether continuous or not, with same employer, upto a maximum total of 18 working days. The Ivory Coast Labour Code (1964) provides for an increase from a basic holiday of 18 working days to 20 after 20 years, 22 after 25 years and 24 after 30 years.
Several other recent laws, including those of Chad (1966), the Congo (Brazzaville) and Mauritania (1963), contain a general provision calling upon collective agreements or regulations to prescribe increases for length of service.
In countries where collective agreements are the principal means of providing workers with annual holidays, increases with length of service are a common feature.
For example, in the United Kingdom, where the most common basic vacation is two weeks, it is estimated that of all manual worker some 27 per cent are employed in industries and services in which such increases are provided for. The maximum is often three weeks after periods of service ranging from five to 25 years.
In Canada a survey made by the Department of Labour in 1966 showed that increases in respect of service were applicable to 89 per cent of the workers in the sample of non-office workers and to 95 per cent of those in the sample of office workers (approximately half of the former and most of the latter have a basic holiday of two weeks). Of the non-office workers surveyed 80 per cent would become entitled to three weeks, with some 58 per cent. being eventually entitled to four weeks; of the office workers, 92 per cent would become entitled to three weeks (52 per cent. after less than ten years) with 75 per cent being eventually entitled to four weeks.
A similar pattern, i.e., a basic holiday of one week rising by stages to three or four weeks and in some distances to five, six or even seven weeks, is common in the United States. There, the trend towards increases with length of service, taking the form of both of higher maxima and shorter qualifying periods, has been exceptionally pronounced. Long holidays have often been regarded not only as beneficial for the workers receiving them but also as useful in creating employment opportunities and promoting job security, a consideration which was also one of the reasons underlying the striking new development generally known as 'sabbatical' leave. The first important agreement to contain such a scheme, the 1962 agreement between United Steel workers of America and the two major can making companies, entitled workers with at least 15 years service to a 13 weeks vacation every five years. A similar scheme was included in the 1965 agreement in the basic Steel Industry (which provides for a basic holiday of one week, increasing to two weeks after three years, three weeks after ten years, and four weeks after 25 years). This provides for a 13 week vacation every five years for the senior half of the work-force in order of seniority, subject to the resources available in a company financed vacation fund.
Another significant new development in a few countries is the practice of granting longer holidays for reasons of age rather than of length of service. In the Federal Republic of Germany the holiday legislation entitled workers aged over 35 years to three extra working days, and many collective agreements provide for further increases on the basis of age. In Luxembourg workers aged over 30 years receive three and those over 38 six extra working days. In Czechoslovakia the systems are combined; workers receive an extra week after reaching the age of 50 years, or on completion of five years of service after reaching the age 18 years and another week after completion of 15 years of service since reaching the age 18.'
20. Shri Shukla has produced the reports prepared in October, 1972, of International Textile Garment and Leather Workers Federation in respect of three leading Multinational Companies in the Textile, Garments and Leather Industries. It inter alia includes the leave facilities granted by the Bata Organization in various countries where it has branches. Not only in Europe, but also in Africa, Asia and Middle East the leave entitlement varies from place to place but it is obvious that they are three weeks and more. There are also leave entitlement given to garment workers and textile worker in different countries and from the same also it appears that the annual leave with pay granted is three weeks and more in a number of places.
21. It may further be pointed out that the above provisions do not give a full picture as one cannot also ignore the fact that in many of these countries the weekly hours of work are not 48 but considerably less and that in a number of countries there are five working days and not six. The actual daily and weekly hours of work, the duration of the weekly rest period, the total number of hours worked in the year and their distribution has a great bearing on the question of any earned leave. It is thus clear that it is not correct to say in any event so far as industrial workers are concerned that the leave entitlements enjoyed by them in this country are more favourable than in foreign countries. This may be to some extent true of clerical and other staff but in any event not of operatives. The leave entitlements in a large number of other countries are more generous than in our country.
22. The movement in favour of granting annual holiday with pay is characterised by a very slow initial period starting some 60 or 70 years ago, followed by a period of rapidly spreading recognition of the right of workers to get paid holidays. Following the First World War came the first text entitling the workers in general to an annual holiday with pay. Yet, by 1934 there were only some 12 countries with holiday legislation applying to wage and salary earners in general and in countries where these matters were regulated by collective agreements. However, from 1936 on the date of adoption of the first trial-blazing Convention on the subject there was a pronounced impetus in the movements favouring entitlement to holidays. The right to annual vacations has come to be recognised by law or has become part of the normal practice in practically all countries and is recorded in other international instruments such a Universal Declaration of Human Rights adopted on 10th December, 1948 which specifies in Art. 24 that every one shall have the right to periodical holidays with pay. In 1936 the international Labour Conference decide that the minimum duration of annual holidays with pay should be six working days. In 1954 it advocated a minimum holidays of two working weeks for 12 months of service. In 1961 the Conference invited the governing body of I.L.O. to consider the desirability of placing the question of revision of annual holidays. After receiving reports from a number of Expert Committees the Conference ultimately at the 54th Session of the International Labour Conference held in Geneva from 3rd to 25th June, 1970, adopted a convention concerning annual holiday with pay. We do not want to go herein into all the Articles of the said Convention but Art. 3 thereof inter alia is as follows :
1. Every person to whom this Convention applies shall be entitled to an annual paid holiday of a specified minimum length.
* * * 3. The holiday shall in no case be less than three working weeks for one year of service.
Article 6 inter alia is as follows :
1. Public and customary holidays, whether or not they fall during the annual holiday, shall not be counted as part of the minimum annual holiday with pay prescribed in Art. 3 of this Convention.
23. The other articles deal with the question of the remuneration to be received, the minimum period of service required for entitlement and a number of other questions, but it is obvious from this that International Labour Conference now has instead of a minimum holiday with pay of two working weeks recommended annual paid holiday which shall in no case be less than three working weeks for the one year of service. There is thus not only since out last award in 1967 a marked change all over the world for larger holidays with pay but the International Labour Conference has passed a Convention of a minimum holiday with pay of three weeks. This is a very important change in circumstance which we cannot ignore. The provisions of the Indian Factories Act, 1948, providing annual leave of one day for every 20 days worked which came to 14 or 15 days in a year were ahead of the minimum international standard prescribed in 1954 in recommendation No. 98. The recent Convention passed in 1970 makes the provisions of the Indian Factories Act, 1948, outdated. It is true as pointed out by Shri Gandhi that this new Convention is to serve as a standard for some time thereafter and that in order that it may be a dynamic and influential instrument it must set a standard high enough to remain valid in the years following its adoption. It is also true that although this Convention was passed by the International body in 1970 there is no move on the part of the Government of India so far to amend the Indian Factories Act. But such Conventions are not only to be followed by legislation at the National level but also by collective agreements and by orders of proper authorities. The Factories Act applies to a very large number of concerns, large and small. In the present economic conditions of our country it may not be advisable or possible immediately to apply the minimum international standards laid down to all such factories. But the question may be posed whether should it or should it not be applied in any event to the textile industry which is one of the oldest and best organised industries in this country. The standard laid down is already reached and perhaps exceeded by the agreement arrived at in Bombay Millowners' Association. Should that standard now not be adopted another textile industry in Ahmedabad another equally important textile centre
24. That poses another question. What would be the burden of the grant of additional leave
25. The Millowners' Association have produced an exhibit being exhibit C/4 purporting to show the financial burden as per the revised demand if the whole of the additional privilege leave, sick leave and casual leave asked for was to be granted. According to the said exhibit as per the demand what is asked for is additional 15 days earned leave, 5 days casual leave and 15 days sick leave in a year, i.e., 35 days additional leave, and the burden of granting the same after including burden in respect of fringe benefits like Provident Fund, E.S.I. and Bonus would be Rs. 812.41 lakhs. Extra burden for granting one day's extra leave would be Rs. 23.21 lakhs. For the purpose of calculation they have taken the number of workers as 1,50,000 consisting of 1,30,000 permanent workers and 20,000 badli workers. They have taken Rs. 89.28 as average basic wage and Rs. 244.98 the dearness allowance for the month of July, 1973, a total of Rs. 334.26 for 26 working days or Rs. 12.86 per worker per day.
26. The Textile Labour Association have also given calculation at exhibit U/38. According to the said exhibit the average wage for 26 working days is Rs. 80, the average D.A. for 8 month of 1973 upto August is Rs. 235. The total monthly wage comes to Rs. 315 and the daily earning would be Rs. 12. The total employees in the industry are taken at 1,30,000 consisting of 1,10,000 permanent workers and 20,000 badli workers. The total wages of 15 additional days of privilege leave would come to 234 lakhs. The union has produced a number of exhibit to show that in view of the eligibility qualifications only 2/3rd of the operatives become entitled to earned leave benefits. They have taken 20 per cent as additional fringe benefits for Provident Fund, Bonus and E.S.I. and, as per the said exhibit, the total liability for additional 15 days' earned leave would be Rs. 187 lakhs. In respect of casual leave of 5 additional days asked for they have calculated the full amount for 1,10,000 permanent workers and 2/3rd for the remaining 20,000 badli operatives and the total liability, therefore, for casual leave calculated is Rs. 89 lakhs. Since as per the demand sick leave is to be commenced only after the benefits of the E.S.I. scheme is exhausted it is pointed out that such instances would be rare and there would be no regular liability. The union in its exhibit has also taken into consideration the saving as a result of tax at 55 per cent. According to this exhibit of the union the per day liability for one additional day of privilege leave would be Rs. 12.46 lakhs and for one additional day of casual leave would be Rs. 17.08 lakhs. There is a good deal of difference in the calculations of the liability per day. Whilst according to the Millowners' Association one day's additional burden would come to Rs. 23.21 lakhs in respect of earned leave, the per day liability according to the Textile Labour Association would only be Rs. 12.46 lakhs. It is, however, not necessary for us to make very detailed calculation. There can hardly be any doubt that if whole of the additional leave asked for is granted, it would be very much beyond the capacity of the industry to pay whether we accept the figures of the Millowners' Association or of the Textile Labour Association. We say this in particular because whilst annual and other types of paid leave have their value, there are a number of things which necessarily would have priority over it like wages and we cannot ignore the possibility of a demand for wage revision being made in the near future as the period of five years in respect of the recommendations of the Wage Board will be over on 31st December, 1973. Notice of change in respect of badli workers is already given. Even if we are of the opinion that there is some extra money with the industry which could be spared for the workers, we have to keep the relative claims of different demands in view in dealing with a demand of this nature. We also have to keep in mind the possible repercussions of any increase in leave entitlement in Ahmedabad on other textile centres in Gujarat and other non-textile establishments in Gujarat and other textile and non-textile industries in other parts of India. A cautious approach is, therefore, necessarily called for.
27. This brings us to the question of the capacity of the industry to bear the burden imposed as a result of the grant of any additional leave as asked for or some part thereof. A large number of exhibits have been produced by both the sides. The Millowners' Association have produced statement showing increase in gross and net fixed assets of the Ahmedabad Cotton Mills Industries during the years 1966-71, statement showing the ratio of capital formation for the years 1966-71, statement showing net indebtedness for the years 1966-71, statement showing the ratio of net worth to net indebtedness for the years 1966-71, statement showing internal resources for working capital for the years 1966-71, statement showing increase in various elements of cost of manufacture during the years 1966-71, statement showing the percentages of various elements of cost to the total cost of the years 1966-71, statement showing the profitability ratios for the years 1966-71, i.e., the percentage gross profits to sales and percentages of gross profits to capital employed, statement showing retained profits as percentage profit before tax for the year 1966-71. It has also produced a few exhibits in respect of the year 1956-65 to show that the condition of the industry has deteriorated in the last six years as compared to the earlier period.
28. Report of the Textile Reorganisation Committee appointed by the Government of Gujarat presided over by Shri Manubhai Shah has also been extensively relied upon to support its contention that the industry has no capacity to bear any further burden. Exhibit C/42 has been produced to show that the percentage of profit before tax compared to net worth and the percentage of gross profit to sales for the period of 1967-71 does not show an improved position but even a deterioration over the position envisaged by the Textile Reorganisation Committee. Reliance has been placed on the report of the Manubhai Shah Committee in support of the claim that industry badly requires a very large amount for rehabilitation and modernisation in the next few years and the amount available with the industry is entirely inadequate. Recent rise in prices of cotton, recent notifications of the Government of India in respect of the controlled cloth and other varieties of cloth are also relied upon to show that the industry is sandwiched between high cost of production on one hand and rigid control both compulsory and voluntary on the other.
29. The Textile Labour Association has vehemently opposed these contentions. It has produced a number of exhibits to show how in the last few years the paid up capital by issue of cash and bonus shares has increased (exhibit U/7), how the depreciation fund, the development rebate and reserves increased in the last few years (exhibit U/16). It has produced exhibit U/37 to show picture of gross profits of the Ahmedabad Mills from the year 1967-72. It has also produced (exhibit U/32) to show that if the prices of raw materials have increased there has been also considerable increased in the price of intermediate products like cotton yarn and finished product like cloth. The statement showing the value of gross block at the end of 1966 and net addition from year to year with number of looms an per loom net increase Industry has also been produced (exhibit U/27). A statement has been produced to show the percentage from year to year of items of cost to total sales and miscellaneous income for the years 1967-71. This exhibit has been produced to show that whilst the cost of raw material, i.e., cotton, was 37 per cent in 1967, it increased to 44 per cent in 1971, whereas the cost of labour which was 24 per cent in 1967 has gone down to 19 per cent in the year 1971. Exhibit U/10 and U/11 are produced to show the relation of wages of sales. This exhibit shows that whereas the wages were 24.4 per cent of the value of sales in 1968, they were only 22.6 in 1969, 21.9 per cent in 1970, 20.00 per cent in 1971 and 19.7 per cent in 1972. It has submitted that the textile industry of Ahmedabad has at the time of every adjudication or at the time of hearing of Wage Board always contended that it is passing through some crises and is unable to bear any further financial burden and notwithstanding it has been able to absorb considerable additional burden and flourish notwithstanding. Exhibit U/9 shows how fresh burdens have been imposed on the industry by revision of wage, introduction of Provident Fund, First Wage Board rise, bonus, commencement of E.S.I. scheme, causal leave, etc. That although the wage bill has risen from 1269 lakhs in 1946 to 3209 lakhs in 1960 and to Rs. 5,062 lakhs in 1968. It has been able to absorb the same. That, therefore, the plea of its inability to pay should be ignored. The Textile Labour Association has also given figures of the comparative dearness allowance paid in Bombay and Ahmedabad to show the large savings made by the Ahmedabad mills as compared to Bombay (Exhibits U/13 and U/14). It has also submitted that by reason of delay deliberately caused by the Millowners' Association by taking preliminary contentions in the earlier dispute of leave, it has from the years 1961 to 1967 saved a huge amount (Exhibit U/15). Great emphasis has been laid on the attitude of the workers and the union in co-operating with the management to reduce cost and it has been pointed out that it is extremely unfair on the part of the Millowners' Association to deny the benefits of modern progressive trends in leave matters when the workers have offered full co-operation in the past. It is pointed out that in the year 1967 the industry was engaging 54 workers per 1,000 spindles. That this has in 1971 been gradually reduced to 47 workers per 1,000 spindles. Again in the year 1967 the industry was employing 2.9 workers per loom and it has been in 1971 engaging only 2.5 workers per loom. That as against that in Bombay the industry was employing 49 workers per 1,000 spindles and 2.7 workers per loom in 1971. That such great advance has been possible only because of the willing co-operation of the workers. That the need for longer leave increases with technological progress and, therefore, the demand should be granted.
30. As we have stated earlier, this is a comparatively minor dispute. There are number of other more important questions than the present one which may arise in the near future, one of them being revision of wages. Even if there was available surplus, this in not one of the demands on which the whole of it could be distributed to the workers. One has to keep in mind the different claims of the workers which are likely to arise in the future. We do not think it advisable, therefore, in this adjudication to go into a detailed consideration of the economics of the industry and its capacity to pay. We would indicate only a few reasons why we are conceding some part of the demand and reflecting the major part thereof. There is no doubt that the textile industry is one of the leading industries in our country and it has a history of more than 100 years. There is also no doubt that the need of cotton cloth is bound to exist and continue to grow with the rise in our population and with the progressive rise in the purchasing power and standard of living of our masses. The man-made-fibres have entered the market but there is hardly any doubt that for many years to come, they cannot pose serious threat to the cotton textile industry and the cotton textile industry has also shown its capacity to absorb in part some of the man-made-fibres. What is true of the industry in India as a whole is equally true and even more so of the industry in Ahmedabad. The Industrial Court had occasion in the past to consider the capacity of the textile industry and some of the decisions of the Industrial Court were reviewed and approved by the Supreme Court. This Court had also considered broadly the capacity of the industry in the year 1967. The paid up capital of the industry in 1967 was Rs. 2,301 lakhs. This consisted of only Rs. 730 lakhs issued by cash and Rs. 1,571 lakhs issued by bonus shares. The paid up capital has even then consisted of less than 30 per cent issued by cash and 70 per cent. issued by bonus shares. The paid up capital has grown from 2,301 in 1967 to 3,001 at the end of the year 1971. It has grown by Rs. 700 lakhs. The paid up capital issued by cash being Rs. 829 lakhs and issued by bonus shares being Rs. 2,172 lakhs. Thus during the years 1967-71 there has been a issue of bonus shares of about 601 lakhs and a further cash issue of Rs. 99 lakhs (exhibit U/7). Notwithstanding the capitalisation of reserves to the tune of Rs. 601 lakhs during this period, the reserves have not decreased but have considerably increased. Thus the reserves which were Rs. 2,700 lakhs at the end of 1967 have gone upto Rs. 4,435 lakhs (U/16). The gross fixed assets of the industry which were Rs. 136.69 crores in 1966 and Rs. 146.67 crores in 1967 has increased to Rs. 179.87 crores in the year 1971. There has thus been average increase of Rs. 9.35 crores every year. The net fixed assets have also increased from Rs. 63.98 crores in 1966 and Rs. 68.30 crores in the year 1967 to Rs. 80.45 crores in the year 1971. There has been thus an average increase of Rs. 4.10 crores over previous years (exhibit C/3). The gross profits before tax and before providing for depreciation and development rebate which was Rs. 16.97 crores in 1966 and Rs. 12.27 crores in 1967, increased to Rs. 21.48 crores in 1969, Rs. 21.96 crores in 1970 and was Rs. 18.96 crores in 1971. The total sales in 1969 were Rs. 245 crores, Rs. 265.14 crores in 1970 and Rs. 293.71 crores in the year 1971. Looked at from this point of view there has been steady progress in the industry. However, there is no doubt that the profitability ratio both to net worth and to sales in the textile industry has not been very satisfactory and does not compare favourably with a number of other industries like pharmaceuticals. There is also no doubt that whilst the industry as a whole does not present a bad picture, the size of all the units are not equal, nor the capacity nor the profitability ratio, and that of the total gross profits of Rs. 18.96 crores made in 1971, 9 mills between them made a total profit of Rs. 12.31 crores and other 10 Rs. 3.17 crores and the remaining 33 mills between them made a profit of Rs. 3.48 crores only. Similarly in the year 1971 of the total sales of Rs. 293.71 crores 9 mills had sales of Rs. 115.14 crores, 10 mills of Rs. 47.03 crores and the remaining 33 mills of Rs. 131.54 crores. Thus whilst the average sale by 9 mills comes to little less than Rs. 13 crores each, that of 33 mills comes to Rs. 4 each only. This is, however, partially also due to the fact that the number of looms and spindles in a few mills are several times those in the other mills. There is no doubt also that this being an old industry there are a large number of units whose machinery is old and requires rehabilitation. In view of this being a comparatively old industry, in the last few years about 103 mills closed down out of about 600 mills in the country and quite a number of this also in Gujarat. A number of these have been started again not as an economic proposition but as a welfare measure. It also appears to us that the profit in a particular year depends more on the price of cotton and its availability than most other factors and so long as there is no way of making it available at a certain price freezing wages or fringe benefits to labour has not much meaning. But as pointed out by us earlier we do not think it advisable in this adjudication to go into a detailed analysis of the capacity of this industry beyond the few general observations which we have already made. The demand for 30 days earned leave and 10 days casual leave in the abstract may not be entirely unjustified (a) in view of the fact that clerks and technicians are in receipt of this in the textile industry, (b) such leave entitlements are given in a large number of commercial establishments, and (c) from the point of view of an ideal for rest and recuperation and to meet the worker's need to go to his village and discharge his social obligations. But such leave even if granted to a small section of the employees can hardly be thought of as practical proposition in the case of operatives who form the bulk of the persons employed. It is unthinkable in the present economic conditions of our country and with our present need to conserve all resources for rapid development. Such leave is undoubtedly beyond the capacity of the textile industry at present and even if a particular industry was capable thereof, it would not be desirable to grant the same in view of the repercussions on the other industries and its effect upon our economy. It would also be in excess of what is enjoyed by the majority of industrial workers all over the world. The limited question, therefore, before us is whether some further advancement on the lines recommended by the International Labour Conference is possible at this stage not.
31. Under the Indian Factories Act today the minimum leave which a person would get who fulfills the eligibility qualification of 240 days is 12 days and the maximum would ordinarily come to 14 and if no leave is enjoyed at all in previous year to 15. The recommendations of the International Labour Conference is three weeks which in other words would come to 18 working days. We have considered the question from this aspect and we are of the opinion that for a number of reasons which we shall detail later the industry is in a position to bear the burden of 3 to 4 extra days. According to the Millowners' Association calculations the burden would come to Rs. 23.21 lakhs per day. The number of 1,50,000 workers taken does not appear to us to be correct for the strength described everywhere of the number of workers in the textile industry at Ahmedabad is 1.30 lakhs and not 1.50 lakhs. Of this again a number of workers would be badli workers who would not be entitled to leave as they would not be able to put in 240 days work in the previous year. Even quite a number of permanent workers may not do so. We think that the calculation of the liability given by the Textile Labour Association is nearer the truth or the burden may be only a little higher than that. Again in the manner in which we propose to give even those who get lit may not get 4 days more but some 3 days. We have roughly calculated the burden and we are of the opinion that the industry is in a position to bear it. The industry has absorbed many burdens in the past and for reasons which we shall indicated immediately it must absorb this limited burden.
32. The International Labour Conference at its 54th Session in 1970 has passed the convention on 24th June, 1970 which inter alia states that every person shall be entitled to an annual paid holiday and the holiday in no case shall be less than three working weeks for one year of service. The annual holiday with pay under the Indian Factories Act has been in vogue for a long time and there has been no improvement therein. It may not be possible immediately to amend the same as the same is applicable to all concerns engaged in manufacturing process employing 20 or more persons and those using power employing 10 persons but there is no reason why it should not be applied to the workers of the textile industry which is one of the oldest and best organised industry in the country and particularly in Ahmedabad which is one of its major centres.
(2) The technical and clerical staff and the semi-clerks are already in enjoyment for a number of years of 30 days earned leave in a year. The distinction or discrimination may exist for historical reasons and it may not be possible to extend such large benefits to all operatives but in view of the strength of feeling in this respect amongst them and even some justification for the same it is necessary that one step forward be taken to reduce the gap.
(3) The textile industry in Bombay has under an agreement in 1970 increased the number of earned leave already and since Bombay and Ahmedabad are the two important centres of the textile industry in the country, it is but desirable that some part of the aspiration for higher leave of the Ahmedabad textile workers should be satisfied.
(4) A number of establishments like the Ahmedabad Electricity Company in Gujarat and quite a number of establishments in the State of Maharashtra and a few establishments all over the country are already giving leave more than that provided for in the Factories Act.
(5) Rationalisation and technological progress effected in Ahmedabad increases the need for leave and also the capacity to give it.
(6) As observed by the Textile Reorganisation Committee presided over by Shri Manubhai Shah in para 34 while in some parts of the country the pace of rationalisation is not very satisfactory resulting in strained labour relations, the industry in Gujarat is fortunate to have carried out rationalisation to a reasonable extent, with the co-operation of labour and goodwill of others concerned. First rationalisation agreement was reached in Ahmedabad as early as 1935. As compared to any other part of the country, number of man days lost in textile industry in Gujarat is the lowest and industrial peace is a creed and not a dogma. The said Committee has come to the conclusion that whilst in 1952 for a unit consisting of 50 spindles and one loom there were 5 persons employed in three shifts, in the year 1967 there were 4 persons employed for a unit consisting of 60 spindles and one loom and if this was not viewed in isolation and other like multiplicity of chemical processes, etc., were taken into consideration, it would mean that in 1967 actual number of persons employed per unit of 60 spindles and one loom are in fact about 3.8 only. From exhibit U/35 produced by the union it also appears that whereas the number of workers per 1000 spindles in the year 1967 was 54 in Ahmedabad, the number has gone down to 47 in 1971 and the number of workers per loom which was 2.9 in 1967 has gone down to 2.5 in 1971. This compares favourably with figures in Bombay.
(7) There has been comparatively very little loss of production in the textile industry at Ahmedabad on account of strikes. It appears to us necessary if industrial peace is to be maintained that the legitimate aspirations of workers are progressively satisfied for it is only then that industrial peace can be maintained with dignity.
33. We shall now deal with the details of the demands.
34. At the time of the last award in 1967 this Court rejected the demand for paid sick leave for reasons stated in paragraph 26. We do not think it is necessary to modify that part of the award. The textile operatives were at that time not receiving any casual leave and the Court was of the opinion that there was almost an unanswerable case for the grant of a few days casual leave. That aspect was considered in paragraphs 28 and 29 of the award. Since there was no casual leave enjoyed by the workers at all this Court was of the opinion that the few days additional leave which it was inclined to grant should be granted in the form of casual leave. The same was granted both to permanent workers and to badli workers. In a large number of manufacturing and other establishments, seven days casual leave is granted. It is true that in a few concerns it does amount to 10 days and even more but by and large seven days' casual leave is given. That was so in 1967 and is still so. The casual leave given in Ahmedabad compares favourably with that granted to the textile operative in Bombay where only 5 days causal leave is granted and is similar to that granted in Rajasthan and Madhya Pradesh. It appears to us that it would be better on this occasion that we increased earned leave on the lines of the Convention of International Labour Conference rather than increase casual leave and reject the demand for greater earned leave. In the circumstances, the award in respect of casual leave is not modified.
35. We shall now deal with the question of earned leave. The standard laid down by the International Labour Conference is three weeks, i.e., 18 days exclusive of holidays and we think we should adopt that standard in toto. We are also of the opinion that it should be granted in such a manner that the majority of the workmen who are present on most of the days at least get 18 days, we are also of the opinion that we should increase it in such a manner that the majority of the workers should get a few days more though those whose attendance is regular may have a little larger benefit.
36. There are 365 days in a year. Exclusive of Sundays this would come to 313. The Ahmedabad workers in addition get about 4 to 6 days of paid holidays. The working days, therefore, would come to about 307. Under the last award this Court has already granted seven days' paid casual leave and since the workers are expected to avail of this leave ordinarily the total working days would come to 300. We propose to give to the majority of workers 18 days leave and since under our scheme the leave enjoyed does not entitle the workers to earned leave these days also have to be excluded. If these days are excluded, the maximum working days would come to 282. A worker is bound to have to remain absent for a few days by reason of sickness in addition. It appears to us, therefore, that if it is desired by us to give 18 days' leave in a year should be so given that a worker who is present for about 275 to 280 days gets 18 days leave. Unless this is done the period of 18 days leave would be illusory.
37. Shri Gandhi has submitted that we have no jurisdiction to modify the provisions of the Indian Factories Act. That in any event even if under the Supreme Court decision we could increase the number of days of leave, we could not change the other conditions laid down in the Factories Act. The Supreme Court has already held in Alembic Chemicals' case that the provisions laid down by the Indian Factories Act are only the minimum and a Tribunal could award higher leave than that provided in the Act. We fail to see the logic of the argument that if we could increase the number of annual leave with wages, i.e., if we could grant one day for every 18 or 19 days of work, why we could not reduce the period of 240 days referred to therein or liberalise other conditions mentioned therein. The demand as framed by the Textile Labour Association is not a limited demand to give one day for every 10 days work but it is a broad general demand for one month in a year. We are, therefore, of the opinion that there is nothing in the submission of Mr. Gandhi and that we have jurisdiction not only to grant more leave but to liberalise other conditions laid down in the Factories Act if we are so inclined. Shri Shukla has submitted that the Factories Act was passed in 1948 and many of the conditions laid therein have become entirely out dated. He has pointed out that under the explanation to section 79 in the case of female worker if she is on maternity leave for a period not exceeding 12 weeks, this shall be deemed to be days on which she has worked in the factory for the purpose of computation of 240 days or more. But if a person is sick and is absent, those days are not deemed to be days on which she worker has worked for the purpose of computation of the period of 240 days. He has again submitted that even if a person is absent on account of injury received in the course of employment, those days are not deemed to be days on which the worker has worked for the purpose of computation of the period of 240 days. He has further pointed out that under S. 79 Explanation 1(c) the leave earned in the year which he is allowed to in which the leave to be enjoyed shall be deemed to be days on which the worker has worked but not leave earned during the earlier year which he is allowed to accumulate. He has further submitted that the Industrial Court has now granted paid causal leave. There is no reason why the days on which a person is on paid casual leave should not be deemed to be days on which he has worked. Shri Shukla has drawn our pointed attention to certain provision in the Convention in this respect. He has in particular referred to Art. 5 (1) and (4) which are as follows :
'(1) A minimum period of service may be required for entitlement to any annual holiday with pay.
(4) Under conditions to be determined by the competent authority or through the appropriate machinery in each country, absence from work for such reasons beyond the control of the employed person concerned as illness, injury or maternity shall be counted as part of the period of service.'
He has also submitted that there is no reason why a person should not get holiday with pay proportionate to his length of service, if his length of service is less than that required for the full entitlement period. He has drawn our pointed attention to provisions in this respect in the Shops and Establishments Act. We have given this matter our earnest consideration. We are of the view that whilst we may enlarge the period of leave under the Factories Act, we should change the other conditions as little as possible and only where we consider it absolutely necessary. Those things may be done in future when the Legislature thinks fit to amend the Factories Act, Annual leave with pay is granted to a person for rest and recuperation after service of one year. We do not think it necessary to give proportionate leave on the lines of the Shops and Establishments Act beyond what is provided in the Factories Act. We would like to introduce only two minor changes, one to give some relief in respect of days on which a person is absent on account of injury received during the course of employment and to include in Explanation 1(c) of section 79 of the Factories Act all days of earned leave enjoyed in the previous year.That appears to us to be more logical than including the leave earned in the previous year. If a person has not enjoyed the leave earned in the year prior to that in which the leave is enjoyed his presence would be automatically counted for the purpose of computation of period of 240 days. However, if he has accumulated leave, and enjoyed more than the leave earned by him in the previous year, he would lose a number of days. We, therefore, modify our earlier award in respect of the earned leave as follows :
'Annual leave with wages :
(1) Every worker who has worked for a period of 240 days or more in the mill during a calendar year shall be allowed during the subsequent calendar year leave with wages for a number of days calculated at the rate of -
(i) if an adult, one day for every 16 days of work performed by him upto 240 days during the previous calendar year; and at the rate of one days for every twelve days of work performed thereafter.
(ii) if a child, one day for every fifteen days of work performed by him during the previous calendar year.
Explanation 1. - For the purpose of this direction -
(a) any days of lay off, by agreement or contract or as permissible under the standing orders;
(b) in the case of female worker, maternity leave for any number of days not exceeding twelve weeks; and
(c) the days on which the worker is absent due to temporary disablement caused by accident arising out of and in the course of employment;
(d) the leave enjoyed by him in the year prior to that in which leave is enjoyed, shall be deemed to be days on which the worker has worked in the mill for the purpose of computation of the period of 240 days or more but he shall not earn leave for these days.
Explanation 2. - The leave admissible under this direction shall be exclusive of all holidays whether occurring during or at either end of the period of leave.
(2) A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages at the rate laid down in (i) or, as the case may be clause (ii) of direction (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year.
(3) If a worker is discharged or dismissed from service during the course of the year, he shall be entitled to leave with wages at the rates laid down in direction (1) even if he has not worked for the entire period specified in direction (1) or (2) entitling him to earn leave.
(4) In calculating leave under this direction, fraction of leave of half a day or more shall be treated as one full day's leave and fraction of less than half a day shall be omitted.
(5) If a worker does not in any one calendar year take the whole of the leave allowed to him under direction (1) or direction (2) as the case may be, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year;
Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed 40 in the case of an adult or child exclusive of the days of paid casual leave that can be tacked on to earned leave.
38. All other provisions of the Factories Act in respect of annual leave with wages shall apply except to the extent to which they are modified herein.
39. The above modification shall be effective from the calendar year, 1973, i.e., the workers shall enjoy the benefit of this additional leave from 1st January, 1974 in respect of the days worked in the calendar year 1973.
40. No orders as to costs.