PETITIONER: THE BURMAH-SHELL REFINERIES LIMITED Vs. RESPONDENT: THEIR WORKMEN. DATE OF JUDGMENT: 01/02/1961 BENCH: GUPTA, K.C. DAS BENCH: GUPTA, K.C. DAS GAJENDRAGADKAR, P.B. WANCHOO, K.N. CITATION: 1961 AIR 917 1961 SCR (3) 669 ACT: Industrial Dispute--Payment of bonus to clerical staff--Practice Prevailing in oil companies--If must be Paid lower rate than tabour staff. HEADNOTE: Payment of bonus being based on the contribution of workmen to the profits of the company, that contribution, it is well settled, has to be taken into consideration as a whole and it is not relevant to enquire which class or section of the workmen contributed how much to the profits. Burn and Co., Calcutta v. Their Employees [1956] S.C.R. 781 and Baroda Borough Municipality v. Its Workmen [1957] S.C.R. 33, referred to. Looked at from that stand-point, it is not fair, in the absence of any overriding consideration, to make a distinction as to the rate of bonus payable to different classes of workmen such as clerks and operatives, for it is ordinarily impossible to say which class contributed more to the prosperity of the industry than another. Nor can it be laid down as an inflexible rule that the clerical and the labour staff must always be paid at the same rate. The Industrial Tribunals must have wide discretion in the matter, which this Court would be reluctant to interfere with unless arbitrarily exercised. Consequently, where the Industrial Tribunal, on a full con- sideration of the difference in the wage scales of labour and the clerical staff, came to the conclusion that it would be improper to award lower rate of bonus to the clerical staff who belonged to the middle class and suffered more than the labour staff from the rise of price, and there was nothing to show that this was not so, the decision of the Tribunal was reasonable and must be upheld. JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 250/1959.
Appeal by special leave from the award dated May 18, 1958,
of the Industrial Tribunal, Bombay, in Reference (I. T.)
No. 106 of 1955.
M. C. Setalvad, Attorney-General for India, S. D.
Vimadalal and 1. N. Shroff, for the appellants.
Janardan Sharma, for respondent No. 1.
1961. February 1. The Judgment of the Court was delivered
by
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DAS GUPTA, J.-This appeal by special leave arises out of an
industrial dispute. between the appellant company, and their
clerical staff on the question of bonus for the year 1956.
The demand of the workmen, was for bonus equivalent to 8
months’ total earnings of the year. The company resisted
this demand mainly on the ground that there was in existence
an agreement between the company and its labour employees-
whereby bonus for the year 1956 had been settled at 4-1/2
months’ basic wages, that the general practice in awards in
the matter of bonus had in the past been to award or grant
lesser amounts to clerical employees than to labour, and
that in any case,, to grant the same rate of bonus to
clerical employees and labour employees would be ” to
encourage or to invite strife and discontent.” The Tribunal
held that such an agreement as regards bonus for 1956 had
been voluntarily entered into on behalf of the workers and
was beneficial to them; and was of opinion that. the bonus
to the clerical staff ought to be on the same scale. On the
one hand, it rejected the clerical staff’s claim for bonus
at a higher rate than what the workmen were entitled to, as
this ” would lead to industrial discontent and strife “, and
on the other held that there was no reason to grant the
clerical staff bonus at a lower rate. Accordingly it
awarded bonus at the rate of 9/24ths of the basic wages, to
the clerical staff, for the year ending December 31, 1956.
Two contentions were raised in appeal. The first is that
the Tribunal erred in awarding bonus without having recorded
a conclusion as regards the existence and extent of the gap
between the actual wages received by these workmen and the
living wage. The second contention urged on behalf of the
appellant is that the Tribunal erred in granting to the
clerical staff bonus at the same rate as was payable to the
labour staff, on the basis of the agreement, and should have
granted bonus to the clerical staff, at a lower rate.
The appellant cannot however be allowed to urge the first
contention in this appeal because such a contention does not
appear to have been seriously
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raised before the Tribunal. It is true that in the first
part of the written statement filed before the Tribunal on
behalf of the company a statement was made that ” the
company, craves leave to refer to and rely on, as if
incorporated herein, its written statement filed before this
Hon’ble Tribunal in Ref. (I.T.) 279 of 1957, and repeats and
adopts all the submissions and averments made therein” and
that in the written statement filed therein a question that
in view of the high wage,% paid by the company no gap
existed between the actual wage and the living wage, was
taken. Not only was no independent statement made in the
separate written statement which was filed in the present
reference, i.e., Ref No. (I.T.) 106 of 1958 on this question
but we find no reference at all in the award made by the
Tribunal which heard both the references together to any
contention of this nature. No ground that the Tribunal had
granted bonus without coming to a conclusion as regards the
existence and extent of a gap between the actual wage
received by the workmen and the living wage was taken in the
petition for special leave to appeal. Even in the statement
of case filed on behalf of the appellant no such question
had been raised. It is not therefore open to the appellant
to urge such a contention now.
In support of the other contention that the Tribunal was in
error in granting to the clerical staff bonus at the same
rate as was payable to the labour staff, on the basis of the
agreement, and that bonus should have been granted to the
clerical staff at a lower rate, it is urged that for many
years now, the practice in the petroleum industry has been
to make a distinction between the clerical employees and the
operatives, giving a lower rate of bonus to the former, than
what is given to the latter. It is unnecessary in the
present case, to consider, whether, if the premise that
there had for many years been such a practice of paying a
lesser rate of bonus to clerical staff than to the labour
staff, that itself would preclude industrial adjudicators
from awarding bonus to both classes of employees at the same
rate. For, we find that the above premise has not been
established, While it is true that in some
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years, either by award of Industrial Tribunal or by
agreement, clerical staff of petroleum concerns has got
bonus at a lower rate, than the labour employees, it is
equally true that in some years at least, clerical staff and
operatives have been given bonus at the same rate. Thus for
the year 1951, we find that in disputes between the three
oil companies-The Burmah Shell, the Caltex and the Standard
Vacuum, and their employees in their Calcutta office the
Labour Appellate Tribunal discussed the matter in Burmah-
Shell Oil Co. Ltd. v. Their Workmen (1) thus :-
” In the matter for payment of bonus for 1950,
both the clerical staff and the working people
got bonus at the rate of 3 months’ wages,
though there was an observation that the
working class were on calculation entitled to
4 months. The effect-, was, however, that
both the groups got bonus at the rate of 3
months’ basic wages. During the pendency of
the Tribunal proceedings, all the companies
made agreements with the Union of the workers
that bonus would be granted on the basis of 3-
1/2 months’ wages for the year 1951. We feel
that there; would be a serious repercussion if
we allow to the clerical staff anything in
excess of that amount. On the other hand, as
the effect of the previous decision had been
that both groups got equally, paying to the
clerks less than that what has been paid to
the working class would give rise to a real
discontent.
” We find also that when the same question, viz., whether
the same rate of bonus should be paid to clerical staff and
operatives, was raised before the Industrial Tribunal,
Ernakulam, in a dispute between the Burmah-Shell Co. v.
Their Workmen (2), learned counsel on behalf of the company
conceded that he would not press the point for making a
distinction in the matter of payment of bonus. We find
therefore that there is no basis for the assumption’ that
‘the uniform or nearly uniform practice in the oil companies
has been to pay bonus at a lesser rate to clerical staff
than to operatives. There is no substance. therefore in the
argument that the award of bonus at
(1) (1955) L.A.C. 787, 794.
(2) (1959) (1) L.L.J. 198,
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9/24ths of basic wages, to the clerical staff, is likely to
cause discontent among the labour staff, which has entered
into an agreement to receive bonus at the same rate.
The second argument is that as the pay scale of the clerical
staff is higher than what the labour staff receive as wages,
the gap between the living wage and wage actually received,
is less for the clerical staff, and so, it would be wrong to
pay bonus, which is primarily intended to bridge this gap,
at the same rate to these two classes of workmen. This
argument overlooks the important principle that the payment
of bonus is based on the fact of contribution by labour to
the profits of the industry, and that it has been held more
than once by the court that the contribution to be taken
into consideration is the contribution made by the workmen
taken together as a class, and that it would not be relevant
to enquire which section of the workmen has contributed to
what share of profits. It was observed by this Court in
Burn & Co., Calcutta v. Their Employees (1), in setting
aside an award of the Appellate Tribunal of an additional
one month’s basic wages:-
” The entire profits of the company are the
result of the labour of all the workmen and
employees in all its units. To grant a bonus
to a section of them on the basis of the total
profits of the company will give them a share
in profits to which they have not
contributed…… If the order of the
Appellate Tribunal is to be given effect to,
some of the employees of the company would get
a bonus while, others not and as observed in
Karam Chand Thaper & Bros.’ Workmen v. The
Company (1953 L.A.C. 152), that must lead to
disaffection among the workers, and to further
industrial disputes. ”
A similar view was expressed by this Court in Baroda Borough
Municipality v. Its Workmen (2).
It is true that in the cases mentioned above, the Court was
considering the question whether one class of employees
could be granted bonus, while another class was being
granted none at all; and was not
(1) [1956] S.C.R. 781. 795.
(2) [1957] S.C.R. 33.
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considering the question of propriety of different rates of
bonus being paid to different classes. But the basis of the
decision that all the workmen, taken as a whole contribute
to the profits, is relevant also for the consideration of
the question whether different rates of bonus between two
different classes of workmen are fair; and it is necessary
to remember that it is ordinarily not possible to say that
one class or workmen, say clerks, contribute more to the
prosperity of the industry than another class like
operatives. In the absence of some overriding consideration
it would not be fair to make a distinction in the rate of
bonus between different classes of workmen.
We do not wish however to lay down an inflexible rule that
clerical staff and labour staff must always be paid the same
rate of bonus. It may happen in a particular industry that
wages of labour staff are extremely low, while the pay scale
of the clerical staff is many times higher. If a Tribunal
in a case like this, being of opinion, that payment of bonus
at the same rate will not be fair, and may cause discontent
amongst the workers awards bonus at a lower rate to the
clerical staff, than to the labour staff, there would be no
reason for disturbing the award. The industrial tribunals
must have very wide discretion in deciding matters like
this; and it is not for this Court to interfere with their
exercise of discretion, unless it is plainly arbitrary.
In the present case, the Tribunal fully conscious of the
difference in the wage scales of labour and clerical staff
has pointed out that the clerical staff came from the middle
class whose standard of living is higher, and has stated
that this class has suffered perhaps more than the operative
class from rise in prices, and has in consideration of these
factors, concluded that it would be appropriate not to award
a lower rate of bonus to them. Nothing has been shown to us
to justify any doubt about the correctness of the premises
mentioned by the learned Tribunal; and the conclusion seems
eminenty reasonable.
It was urged by the learned Attorney-General who appeared on
behalf of the appellant company that
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even though it be true that the standard of living of the
middle class from which the clerical staff comes is higher
than that of the operatives the difference between the
higher average wage received by the clerical staff and that
received by the operatives is much more than the difference
in monetary terms between the living wage of the clerical
staff and that of the operatives. From the statements
furnished before us it was attempted to be shown that the
starting rate of remuneration of the middle grade for
operatives together with what is received in shapes other
than the wages was on January 1, 1958, Rs. 188-94 while
similar receipts by the middle grade for clerks is Rs.
404.45, that is, the starting remuneration of clerks taking
the middle grade as the type is 113.91% more than the
starting remuneration for middle grade for labour. As
against this it is suggested, the living wage for clerical
staff should be taken only 80% more than that for the
operatives. We may assume without further investigation the
correctness of the statement as regards the comparative
remuneration received by middle grade of operatives and
middle grade of clerical staff as submitted on behalf of the
company. We find no basis however for the assumption that
the living wage of clerical staff is only 80% more than that
of operatives. It is true that in connection with the
determination of wages a formula which appears to have been
initiated first by Mr. Justice Rajadhyaksha when he was
enquiring into the cost of living of the non-gazetted
employees in the Post and Telegraph Department of
multiplying the figures reached on the basis of the
requirements of the lower class employees by 180% has often
been accepted by the industrial tribunals. Assuming however
without deciding that this coefficient of 180 % may be
properly adopted for arriving at the fair wage requirements
of clerical staff from the fair wage requirements of
operatives it does not by any means follow that the same
coefficient can be usefully ,applied in calculating the
living wage of the clerical staff from the living wage of
the operatives. As has been clearly pointed out by this
Court in a recent
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judgment in C. A. No. 416 of 1958 (Standard Vacuum Refining
Co., Ltd. versus Its Workmen) the components of a living
wage are largely different from those of a fair wage. The
difference in the living wage standards of the class to
which operatives generally belong and the class to which the
clerical staff belongs may produce much greater differences
in the money value in the components of the requirement of
living wage as between the two classes than the difference
in the money value of the components of fair wage of the two
classes.
There is no justification therefore for thinking that the
living wage of the clerical staff is only 80% more than the
living wage of the operatives and so ..no conclusion that
the gap between the living wage and the actual wage is less
in the case of clerks than in the case of operatives can be
drawn from a consideration of the comparative wage,%
received by them.
We find nothing that would justify us in interfering with
the conclusion of the Tribunal that the clerical staff
should be awarded bonus at the same rate, as the operatives.
The appeal is accordingly dismissed with costs.
Appeal dismissed.