PETITIONER:
NATIONAL IRON AND STEEL CO. LTD. & ORS.
Vs.
RESPONDENT:
THE STATE OF WEST BENGAL & ANR.
DATE OF JUDGMENT:
17/01/1967
BENCH:
MITTER, G.K.
BENCH:
MITTER, G.K.
HIDAYATULLAH, M.
BHARGAVA, VISHISHTHA
CITATION:
1967 AIR 1206 1967 SCR (2) 391
CITATOR INFO :
R 1968 SC1076 (8)
F 1972 SC1942 (25)
ACT:
Industrial disputes--One reference--when can be made in
respect to, several concerns--Gratuity, comprehensive order,
if can be made--Contract labour, abolition, if Tribunal can
order--Industrial Disputes Act,(14 of 1947) S.
25F--Notice--Requirements.
HEADNOTE:
The appellants are four public limited companies, all
separately registered under the Indian Companies Act, and
all producing iron and steel goods though of different type.
They had a common General Manager who later became their
Works Manager; they had a common time office, a common
canteen and a common Labour officer. By one order of
reference, certain industrial disputes between the
appellants (described in the reference as first appellant
and "their allied conerns) and their workmen, were referred
for adjudication. All the companies were not interested in
all the disputes. The Industrial Tribunal gave an award
against the appellants. In appeal to this Court, the
appellants contended that (i) as all,companies were not
concerned in all items of dispute, one order of reference
embracing all of them, should not have been made; (ii) the
comprehensive order of gratuity binding on all the companies
was bad as the Tribunal considered only balance sheets, and
profit and loss accounts and other documents of the first
appellant and did not have before it those of the other
companies; (iii) Tribunal was wrong in holding that the
retrenchment of a workman was illegal as s. 25F of the Act
had not been complied with; and (iv) the award abolishing
contract labour employed by one of the companies was wrong
as it would place the said concern in a very disadvantageous
position compared to other which did similar-kind of work.
HELD: (i) In order to find out whether there was
sufficient functional integrality between the employers and
whether it was proper to have one reference in respect of
the four concerns which were separate entities in the eye of
law, it was necessary to take an overall picture of their
activities and the interest, if any, which they had in
common. [395 G]
The things the appellants had in common were sufficient to
show a community of interest so far as industrial disputes
were concerned. If then wages, the dearness allowance or
benefit of gratuity or leave rules were altered in one
without affecting the others, the industrial peace and
harmony in the other establishments were bound to be
disturbed. All the four concerns filed written statements
which appear to have been drafted by the same draftsman, and
same set of lawyers represented them. At no point of time
was it ever shown to the Tribunal that there was any possi-
bility of conflict of interest between them. Making
separate orders of reference in the cases of the four
establishments would only have multiplied costs enormously
without any corresponding benefit to anybody. It was also
patent from the course of the proceedings that it was only
the first appellant which played a major part in the
adjudication before the Tribunal. The other three concerns
were content to abide by what was done by the first
appellant.. [395 H; 396 A-B, H; 397 B]
Wenger & Co. v. Their Workman, [1963] II L.J. 403 at 308
followed.
392
Workman of Dimakuchi Tea Estate V. The Management of Dima-
kuchi Tea Estate [1958] S.C.R. 1156, referred to.
(ii) The scheme of gratuity as framed was quite a reasonable
one on the facts and figures presented by the first
appellant. The three concerns were content to make the
first appellant their mouthpiece in this respect or they
must have felt that the facts and figures, if disclosed,
would have been such as would go against them and they
deliberately refrained from producing them. [3.99 A]
Burhanpur Tapti Mills Ltd. v. B. T. Mills Mazdoor Sangh,
(1965) L.LJ. 453, followed.
(iii) When a workman is asked to leave forthwith he bar.
to be paid at the time when he is asked to go and cannot be
asked to collect his dues afterwards.
The notice, in this case, bore the date November 15, 1958,
terminating services of the workman from November 17, and
asking him to collect one month's wages in lieu of notice on
November 20, 1958 or thereafter. So S. 25F had not been
complied with [399 E]
Bombay Union of Journalists v. The State of Bombay [1964] 6
S.C.R. 22. followed.
(iv) There was no material before this Court to conclude
that the direction for partial abolition of the employment
of contract labour in one of the companies was wrong. The
abolition of contract system of labour can be ordered by an
Industrial 'Tribunal if the facts justify it. [400 D-E]
Standard Vacuum Refining Co. of India v. Its Workmen,
[1960], 3 S.C.R 466, followed.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 497 of 1965.
Appeal by special leave from the award dated September 14
1963 of the Third Industrial Tribunal, West Bengal in Case
No VIII-151 of 1959.
Niren De, Additional Solicitor-General, Arun Bahadur and
Sardar Bahadur, for the appellants
Janardan Sharma and P. K. Ghosh, for” respondent No. 2(1).
The Judgment of the Court was delivered by
Mitter, J. This is an appeal by special leave from an award
of the Third Industrial Tribunal, West Bengal dated
September 14, G 1963. The appellants are four public
limited companies all separately registered under the Indian
Companies Act and all carrying on business in the same
premises at Belur in the district of Howrah, the respondents
being two unions, viz., NISCO Karmachari Sangha, Belur and
Howrah and Belur Iron and Steel Workers’ Union,Howrah.
National Iron and Steel Co. Ltd was engaged in the H
business of steel rolling and steel casting. Britannia
Building & Iron Co. Ltd. was, engaged in steel fabrication
work while National Screw and Wire Products was engaged in
the manufacture of wires
393
and nails. Tatanagar Foundry Co. Ltd. carried on the
business of manufacturing cast-iron sleepers for railways.
By an order dated August 25, 1959, the Government of West
Bengal made a reference under s. 10 of the Industrial
Disputes Act, 1947-of what was described as an industrial
dispute between “Messrs National Iron & Steel Co. Ltd., and
their allied concerns, viz., Tatanagar Foundry Co. Ltd.,
Britannia Building & Iron Co. Ltd., and National Screw and
Wire Products Ltd., all of P.O. Belur, District Howrah”, on
the one part and their workmen represented by the two unions
on the other regarding the matters specified in the schedule
for adjudication. Nine issues were set forth in the
schedule. Issue No. 9 was abandoned at the hearing before
the Tribunal and need
not be considered at all. The other issues were as
follows
1. Gratuity.
2 . Sickness benefit.
3. Leave Rules.
4. Abolition of contract labour.
5. Whether termination of service of Shri
Bhadreswar Ghose is justified ?
6. Whether the durwans and other members of
the Watch & Ward staff are entitled to weekly
rest ?
7. Whether retirement of Shri Gopal Das and
Shri Ramjatin Pandit at the age 55 years is
justified ? To what relief, if any, are they
entitled ?
8. Whether the action of the Company in
retrenching the following masons is justified
? To what relief, if any, are they entitled ?
(i) Shri Sushil, (ii) Shri Sarojit, (iii) Shri
Sukdeo, (iv) Shri Khalil.
Issue No. 8 referred to the retrenchment of four workmen.
Of the four, the case of the first workman, viz., Sushil,
alone was pressed at the hearing before the Tribunal. There
is no dispute that all the four companies were not concerned
with all the issues. Messrs National Iron and Steel Co.,
Ltd. was primarily concerned with almost all of them.
Britannia Building & Iron Co., Ltd. was not concerned with
issues 7 and 8 while National Screw & Wire Products Ltd.,
was not interested in issues 4, 5, 7 and 8. Tatangar Foundry
Co. Ltd. was not interested in issues 5, 7 and 8. All the
the companies were interested in the first three issues.
The award went against the companies and they have come up
in appeal. Appearing on behalf of the appellants, the
learned Additional Solicitor-General raised four points.
First, he challenged the validity of the order of reference
and contended that as all the companies were not concerned
in all the items of dispute, one order of reference
embracing all of them in some of which some
394
of the appellants were interested while in others they were
not, should not have been made. His next contention was
that the award a,; regards gratuity was bad inasmuch as the
Tribunal considered only the balance sheets and profit and
loss accounts and other documents of National Iron and Steel
Co. Ltd. The Tribunal did not have before it similar
accounts of the other companies and therefore a
comprehensive order of gratuity purporting to be binding on
all the companies was bad. The third point raised by the
learned counsel was that the award on the question of
retrenchment of the workman Sushil was not justified for
grounds which will be discussed hereafter. His last
contention was that the abolition of contract labour
employed by Tatanagar Foundry Co. Ltd. ordered by the
Tribunal was wrong inasmuch as it would place the said
concern in a very disadvantageous position compared to other
concerns which did similar kind of work, namely, producing
iron sleepers for use in railways.
Before considering the points separately, it will be
necessary to refer to certain general aspects and the
position of the four appellants vis-a-vis their workmen.
The finding of the Tribunal is to the effect that there was
sufficient functional integrality between the four concerns
which would justify one order of reference. According to
the Tribunal, there was sufficient evidence to show that the
last three named concerns were allied concerns of the first
(National Iron & Steel Co. Ltd.) having common
administrative heads and being located in the same premises
at Belur. They had one General Manager, one common Labour
Officer and common Time Office. They also had a common cash
office, a common shipping department and a common canteen
for all the workmen. The workmen of all the concerns were
guided by common Standing Orders. The Tribunal relied on
Ex. 14 being an office order dated March 19,1957 issued
under the signature of the Works Manager of the National
Iron and Steel Co. Ltd. which shows that the workmen of all
the four concerns had consecutive check numbers. By this
office order, check numbers of different departments were
revised in the table contained therein. Reference was also
made to Ex. F. which contains a list of masons on roll on
November 16, 1958. According to the evidence of the
Companies’ witness, Milan Kumar Dey, Ex. F. contained a list
of masons on the rolls of the four concerns.
We may here refer, in brief, to the evidence of two
witnesses who were examined by the employers. The evidence
of Tarini Prosad Jha, the Labour Officer of the National
Iron and Steel Co. Ltd. at the time of adjudication before
the Tribunal went to show that there was one common General
Manager for all the four concerns which had one common
canteen, that one Mr. E. C. Watson was the General Manager
of all the concerns and that the witness
395
himself was the common Labour Welfare Officer of all the
fourconcerns. According to Bireshwar Banerjee, the head
time keeper in the National Iron and Steel Co. Ltd., in
1962, E. C, Watson was at first the General Mahager of all
the four concerns and he later became the Works Manager of
all of them. The witness had been in charge of the common
time office of all the four concerns. The learned
Additional Solicitor General did not seek to show that the
Tribunal had gone wrong in appreciating the evidence placed
before it. But according to him, the evidence did not
justify coming to the conclusion that there was sufficient
functional integrality between the different concerns to
make their disputes with their workmen the subject matter of
one reference but that there should have been four separate
references. According to him, although the four concerns
were located in the same premises nevertheless they were
separate and independent entities and could not be described
as one establishment. All the four concerns could not give
relief in respect of all the issues. If, for instance, a
dispute arose in one of the concerns as to retrenchment of a
particular worker in which the other concerns were not
interested, the dispute could not be made the subject matter
of a reference to which all the four concerns were parties.
He referred us to several sections. of the Industrial
Disputes Act including ss. IS (1), 18(3) and 33. According
to him, s. 18(1) went to show that it was possible for the
workmen of one concern to arrive at a settlement between
themselves and their employer and if such a settlement was
arrived it, would not necessarily bind the other
establishments. Further, s. 33 went to show that if there
was a dispute in one concern, it would not have any
application to the case of workmen in another establishment.
He also relied on the case of Workmen of Dimakuchi Tea
Estate v. The Management of Dimakuchi Tea Estate(1) and to
certain observations therein in support of his contention
that the dispute must be one in respect of which the
employer was in a position to give relief.
In order to find out whether there was sufficient functional
integrality between the employers and whether it would be
proper to have one reference in respect of the four concerns
which are separate entities in the eye of law, it is
necessary to take an overall picture of their activities and
the interest, if any, which they had in common. In this
case, we find that all the four establishments were
engineering concerns producing iron and steel goods though
of different types. They had a common General Manager who
later on became their Works Manager; they had a common time
office, a common canteen and a common Labour Officer’ That
their Standing Orders were the same may be due to the fact
that they were all members of the Engineering Association.
But the things they had in common are sufficient to show a
community
(1) [1958] S.C.R. 1156.
396
of interest so far as industrial disputes are concerned. If
the wages, the dearness allowance or benefit of gratuity or
leave rules were altered in one without affecting the
others, the industrial peace and harmony in the other
establishments were bound to be disturbed.The workmen of all
the four concerns were so closely associated that it would
be asking for trouble if the conditions of employment in one
concern were varied to the benefit of the workmen of that
particular establishment, leaving the conditions of service
in the other three concerns undisturbed. In our opinion,
the observations of this Court in Wenger and Co. v. Their
Workmen apply with equal force to the facts of the case
before us. In that case, there were two orders of reference
of industrial dispute in regard to service conditions of the
employees in a number of hotels and restaurants in the city
of New Delhi. The Tribunal heard both the references
together and did not make any classification between
restaurants and hotels for the purpose of fixing the service
conditions. Negativing the contention of the employers, it
was observed by this Court
“Thus, the situation of the restaurants and
the hotels which have been included in the
present reference shows that they are carrying
on the same business in about the same
locality and it is desirable that the terms
and conditions of service of the employees
working in them should, as far as possible, be
uniform. Such uniformity is not only
conducive to peace and harmony amongst the
employees and their employers, but would be
helpful to the managements themselves because
it would tend to avoid migration of labour
from one establishment to another.”
In that case, some of the hotels and restaurants were
situated in Connaught Place while one restaurant was
situated in Karolbagh and another hotel was situated in
Aurangzeb Road at some distance from Connaught Place. In
the case before us, all the concerns are housed in the same
premises and the workmen of the different establishments
have ample opportunity of getting together during the day
and discussing things which are to their common interest.
The contention that all the employers were not interested in
all the reliefs claimed is not a matter of any moment in the
circumstances of the case. All the four concerns filed
written statements which appear to have been drafted by the
same draftsman’ They were represented by the same set of
lawyers. At no point of time was it ever shown to the
Tribunal that there was any possibility
(1) [1963] II L. L.J. 403 at 498.
397
of conflict of interest between them. It is admitted that
some of the issues were common to all the establishments.
The fact that some of the establishments were not interested
in some of the other issues did not cause any prejudice to
any body. After all, when all the facts were placed before
the Tribunal by the same set of lawyers, the Tribunal had no
difficulty in appreciating the different points of view and
granting appropriate reliefs. In our opinion, making
separate orders of reference in the cases of the four
establishments would only have multiplied costs enormously
without any corresponding benefit to anybody. It is also
patent from the course of the proceedings that it was only
National Iron and Steel Co. Ltd. which played a major part
in the adjudication before the Tribunal. The other three
concerns were content to abide by what was done by the first
named concern.
In our opinion, there is no substance in the first point..
With regard to the second point, it was urged before us
that’ the Tribunal went wrong in laying down a scheme for
gratuity which would bind all the four concerns without
considering the. financial position and other factors which
have to be considered before a scheme for gratuity could be
formulated. Reference. was made by counsel for the
appellants to the case of BurhanpurTapti Mills Ltd. v. B. T.
Mills Mazdoor Sangh(1) and to the principles therein laid
down for fixing the terms of gratuity scheme. It was there
said (at p. 456) :
.. ….. there are two general methods of
fixing the terms of a gratuity scheme. It may
be fixed on the basis of industry-cum-region
or on the basis of units.. Both systems are
admissible but regard must be had to the
surrounding circumstances to select the right
basis.. Emphasis must always be laid upon the
financial position, of the employer and his
profit-making capacity whichever method is
selected.”
The Court went on to add
…….. We have next to see whether the
industrial court was right in appraising the
financial condition and the profit-making
capacity of the company. A scheme, for
gratuity no doubt imposes a burden on the
finances of the concern but the pressure is ex
facie distributed over the years for it is
limited to the number of retirements each
year. The employer is not required to provide
the whole amount at once. He maycre ate a
fund, if he likes and pay from the interest
which accrues on a capitalised sum determined
actuarially. This is one way of providing the
money. Ordinarily the payment is. made.
(1) [1965]1 L. L. J. 453.
398
each year to those who retire. To judge
whether the financial position would bear the
strain the average number of retirements per
year must be found out. This is one part of
the inquiry. The next part of the inquiry is
to see whether the employer can be expected to
bear the burden from year to year. The
present condition of his finances, the past
history and the future prospects all enter
into the appraisal of his ability.”
In the light of the above observations and on the materials
placed before the Tribunal, it is not possible to hold that
a wrong conclusion had been arrived at. The Tribunal
scrutinised the balance sheets of the National
Iron and Steel Co. Ltd., for the years 1953 to
1960 and found that excepting in the solitary
case of the year 1960, the company had been
making substantial amounts of profit every
year. The company’s balance sheets further
show that it had substantial reserves. The
Tribunal found that the number of workmen who
retired during the 11 years under
consideration was only 77, that is to say, 7
workmen per year. According to the scheme
framed, the company’s liability would be only
Rs. 7,500 per year and this amount could
easily be provided out .of the funds of the
company. The learned Additional Solictor
,General referred to a statement of th
e number
of wrokmen who would be due to retire during
the years to come and according to this
statement, the financial burden would be much
heavier than that found by the Tribunal.
Unfortunately, we cannot take this statement
into account which was not before the
Tribunal. Again, we are not impressed by the
argument of the learned counsel that if a
scheme for gratuity could, on the materials
before the Tribunal, be introduced in National
Iron and Steel Co. Ltd., the Tribunal had no
material whereby it could introduce the same
scheme with regard to the other three
companies. It was further argued that the
Tribunal should have compelled the other three
companies to produce the relevant documents in
this connection. We are not impressed by this
argument. No doubt it was open to the
Tribunal to call upon a particular employer to
produce any document which was within its
possession or power. Balance sheets and
profit and loss accounts have to be maintained
by all the companies and it goes without
saying that the other three concerns could, if
they were so minded, have produced these
documents before the Tribunal. They could
also have prepared statements to show the
number .of workmen who had retired during
several years past and who were due to retire
in the years to come. It seems to us that the
the three concerns were content to make the
National Iron and ‘Steel Co. Ltd. their mouth-
piece in this respect, or they must have felt
that the facts and figures, if disclosed,
would have been such ,as would go against them
and they deliberately refrained from producing
them. On the materials placed before us, we
hold
399
that the scheme of gratuity as framed is quite a reasonable
one on the facts and figures presented by the National Iron
and Steel Co., Ltd. We have no material to hold that the
scheme would work hardship on the other companies and the
findings of the Tribunal cannot therefore be disturbed.
The third point raised by the Additional Solicitor General
is also not one of substance. According to him,
retrenchment could only be struck down if it was mala fide
or if it was shown that there was victimisation of the
workman etc. Learned counsel further argued that the
Tribunal had gone wrong in holding that the retrenchment was
illegal as s. 25 F of the Industrial Disputes Act had not
been complied with. Under that section, a workman employed
in any industry should not be retrenched until he had been
given one month’s notice in writing indicating the reasons
for retrenchment and the period of notice had expired, or
the workman had been paid in lieu of such notice, wages for
the period of the notice. The notice in this case bears the
date November 15, 1958. It is to the effect that the
addressee’s services were terminated with effect from the
17th November and that he would get one month’s wages in
lieu of notice of termination of his service. The workman
was further asked to collect his dues from the cash office
on November 20, 1958 or thereafter during the working hours.
Manifestly, s. 25F had not been complied with under which it
was incumbent on the employer to pay the workman, the wages
for the period of the notice in lieu of the notice. That,
is to say, if he was asked to go forthwith he had to be paid
at the time when he was asked to go and could not be asked
to collect his dues afterwards. As there was no compliance
with s. 25F we need not consider the other points raised by
the learned counsel. This conclusion receives support from
the observations of this Court in Bombay Union of
Journalists v. The State of Bombay(1).
Incidentally it may. also be pointed out that
the retrenchment of Sushil does not seem to be
otherwise justified in that following the
principle of ‘last come first to go’, Sushil
could not be called upon to leave the
company’s service. Another employee by name
Joy Kishen, junior to Sushil, was retained in
service. No doubt, the Labour Officer, Jha,
tried to make out a case in his oral evidence
that Joy Kishen was retained in service
because he was doing a special job at the time
while Sushil was not The Tribunal rejected
this contention on the ground that this plea
had not been put forward in the written
statements of the company and we do not see
any reason why we should take a different
view.
The last point urged was that the Tribunal had gone wrong in
ordering the abolition of contract labour employed by
Tatanagar Foundry Co. Ltd. There is no doubt that the other
three con-
(1) [1964] 6 S.C.R. 22 at 31-32.
400
cerns did not employ such labour. It was argued that
railways gave contracts for supply of sleepers to a number
of concerns including Tatanagar Foundry Co. Ltd. The
employment of contract labour served to keep down’ the costs
as there would not. be sufficient work for all the workmen
if permanent labour were employed. It was on this ground
that Tatanagar Foundry Co. Ltd. had made an application at
the early stages of the enquiry and pressed for a number of
engineering concerns to be made parties to the dispute but
the Tribunal had not acceded to this prayer. After dealing
with the point in some detail, the Tribunal directed
Tatanagar Foundry Co. Ltd. to abolish the system of contract
labour excepting for the purpose of loading, unloading and
for removing slags, ashes burnt sand etc. and waste
products. It was not argued before us that the Tribunal’s
appraisal of the evidence. and the direction to abolish
contract labour were fundamentally wrong. What was urged
before us was that such a direction would be discriminatory
as between concerns engaged in the manufacture of railway
sleepers and the abolition of contract labour in Tatanagar
Foundry Co. Ltd. would mean an increase in its working
expenses while the other concerns similarly engaged would be
free to employ contract labour and thus oust Tatanagar
Foundry Co. Ltd. from competition. As we have not the
material before us to come to such a conclusion, we do not
feel competent to express any opinion on this point and can
only add that abolition of contract system of labour can be
ordered by an Industrial Tribunal if the facts justify it.
Industrial adjudication should not encourage the employment
of contract labour is a principle which was laid down by
this Court as far back as 1960 in Standard Vacuum Refining
Co. of India Ltd. v.Its Workmen(1).
In the result, the points urged by the learned Additional
Solicitor General all fail and the appeal is dismissed with
costs.
Y.P. Appeal dismissed.
(1) [1960] 3 S.C.R. 466 at 473.
401