Crown Aluminium Works v Workmen

Crown Aluminium Works v. Workmen .1958 SCR 651 : AIR 1958 SC 130

This appeal by special leave arises out of an industrial dispute between the appellant M/s Crown Aluminium Aluminium Works Works and its workmen . The Government of West West Benal referred the matter for ad!udication to "ndustrial Tribunal Tribunal .The Tribunal Tribunal pronounced its award on all matters referred . Both parties were arieved by the award that led to two cross appeals.  The #abour Appellate Tribunal Tribunal disposed of these appeals by a consolidated order. The The workmen appear to be satisfied with this order but the appellant is not and so the present appeal.

The main rievance of the appellant is in respect of the revision made by the Appellate Tribunal Tribunal in the wae structure which was constituted by the oriinal Tribunal. Facs.

 The "ndustrial Tribunal Tribunal considered the financial position of the appellant and revised and reconstituted the wae structure and the dearness allowance.

The Tribunal held that the two hours$ concession% facility facility bonus and the food concession were in the nature of bounty ratuitously paid by the appellant and as such they could co uld be withdrawn by the appellant at its pleasure. The Tribunal also came to the conclusion that since the wae structure had been revised and reconstituted properly% the appellant should be iven liberty to abolish the said three concessional payments.  The Tribunal$s Tribunal$s conclusion in reard to the character of the concessional  payments was based principally on the view that that these payments were purely concessional payments and that the workmen had no riht to claim them as constituents of their wae structure. &. The #abour Appellate Tribunal Tribunal has not areed with this conclusion. The view that the Appellate Appellate Tribunal has taken is that these so'called concessional conce ssional  payments have been en!oyed by the workmen for a pretty lon time as of riht

and as part of their basic waes and dearness allowance and as such they have  become a term of the conditions of their service. Besides% the Appellate Tribunal has observed that it has been the convention with "ndustrial Tribunals not to reduce the e(istin emoluments of the workmen to their pre!udice. "n the result the wae structure constituted by the Tribunal was modified by the award of the Appellate Tribunal in respect of e(istin workmen.  The main conditions introduced by these modifications were three) *+. The total basic waes of a time'rated worker toether with the two hours$ concession immediately be called his e(istin basic wae. ,. The total of the temporary dearness allowance and the facility bonus as was available to a worker and the food concession wherever admissible to a worker under the rules of the company shall hereinafter be called his e(istin dearness allowance% no matter if any portion of these benefits has been curtailed or stopped in the meantime. -. The two hours$ concession% the facility bonus and the food concession shall cease to have any separate e(istence distinct from the basic waes and dearness allowance of the worker on and from the date when this decision comes into force. Both the oriinal and the Appellate Tribunals have areed in providin that the e(istin basic waes and the e(istin total emoluments shall not be reduced.  Conenion o! "e A##ellan.

 That the #abour Appellate Tribunal was in error in assumin that it has been the convention in industrial ad!udications not to reduce the e(istin emoluments of the workmen to their pre!udice in any case.  That !ust as the rise in the cost of livin inde( or similar relevant factors may  !ustify the revision of the wae structure in favour of the workmen% so should the revision of the wae structure be permissible in favour of the employer in case the financial position of the employer has considerably deteriorated or other relevant factors indicate such a revision.

 Fin$in%s ma$e &' &o" "e (ri&unals in re%ar$ o "e !inancial #osiion o! "e a##ellan.

The main business of the appellant is to manufacture household utensils from aluminium circles. These circles were imported until the last war. urin the war% import of these articles became difficult and so a rollin mills department for manufacturin circles from scrap materials was started. The utensils made from such circles were inferior in 0uality% but import difficulties were insurmountable and so even these inferior utensils found a ood market. As soon% however% as better 0uality circles became available the demand for these utensils rapidly decreased and the business bean to incur loss. The manaement was thus compelled to close down the rollin mills  permanently and the workmen employed in the rollin mills were ultimately dischared .  Both the Tribunals came to the conclusion that the economic position of the appellant on the whole was none too briht. 1all in the sale of utensils was noticeable durin these years and if the utensils were not disposed of in the market 0uickly they are likely to lose their lustre and la2e and would be even stained if they were to be stored in the odown for any lenth of time. This in turn would involve e(tra e(penditure and would contribute to further losses. The concurrent findin of both the Tribunals is that the manufacturin cost e(ceeded the sale price and this undoubtedly would be a dis0uietin feature in any industrial concern. The oriinal tribunal did not see any prospect of improvement in the appellant$s financial position3 whereas the Appellate Tribunal was disposed to take the view that as a result of the substantial retrenchment effected by the appellant *financial position of the relevant unit of the aluminium industry appears to have improved.

That the wae structure constituted by the Appellate Tribunal would work a hardship on the appellant and in reconstitutin the wae structure the Appellate Tribunal was very much influenced by the assumption that the wae structure can never be revised to the pre!udice of workmen. Reasonin% o! "e Cour.

"n dealin with the 0uestion of wae structure % it is essential to bear in mind the main ob!ectives which industrial ad!udication in a modern democratic welfare state inevitably keeps in view in fi(in wae structures.  *"t is well known% observes 4ir 1rank Tillyard% *that 5nlish common law still reards the wae barain as a contract between an individual employer and an individual worker% and that the eneral policy of the law has been and is to leave to the two contractin parties a eneral liberty of barainin% so lon as there are no terms aainst public policy.  "n "ndia as well as in 5nland and other democratic welfare 4tates reat inroad has been made on this view of the common law by labour welfare leislation such as the Minimum Waes$ Act and the "ndustrial isputes Act. With the emerence of the concept of a welfare state% collective barainin  between trade unions and capital has come into its own and has received statutory reconition3 the state is no loner content to play the part of a passive onlooker in an industrial dispute. The old principle of the absolute freedom of contract and the doctrine of laisse2 faire have yielded place to new principles of social welfare and common ood. #abour naturally looks upon the constitution of wae structures as affordin *a  bulwark aainst the daners of a depression% safeuard aainst unfair methods of competition between employers and a uaranty of waes necessary for the minimum re0uirements of employees. There can be no doubt that in fi(in wae structures in different industries% industrial ad!udication attempts% radually and by staes thouh it may be% to attain the principal ob!ective of a welfare state% to secure *to all citi2ens !ustice social and economic. To the attainment of this ideal the "ndian Constitution has iven a place of pride and that is the basis of the new uidin principles of social welfare and common ood to which we have !ust referred. Thouh social and economic !ustice is the ultimate ideal of industrial ad!udication% its immediate ob!ective in an industrial dispute as to the wae structure is to settle the dispute by constitutin such a wae structure as would do !ustice to the interests of both labour and capital% would establish harmony  between them and lead to their enuine and wholehearted

cooperation in the task of production. "t is obvious that cooperation between capital and labour would lead to more production and that naturally helps national economy and% proress.  "n achievin this immediate ob!ective% industrial ad!udication takes into account several principles such as% for instance% the principle of comparable waes% productivity of the trade or industry% cost of livin and ability of the industry to pay. The application of these and other relevant principles leads to the constitution of  different cateories of wae structures. These cateories are sometimes described as livin wae% fair wae and minimum wae. These terms% or their variants% the comfort or decency level% the subsistence level and the poverty or the floor level% cannot and do not mean the same thin in all countries nor even in different industries in the same country.  "t is very difficult to define or even to describe accurately the content of lease different concepts. "n the case of an e(pandin national economy the contents of  these e(pressions are also apt to e(pand and vary.  What may be a fair wae in a particular industry in one country may be a livin wae in the same industry in another country. 4imilarly% what may be a fair wae in a iven industry today may cease to be fair and may border on the minimum wae in future.  "ndustrial ad!udication has naturally to apply carefully the relevant principles of  wae structure and decide every industrial dispute so as to do !ustice to both labour and capital.  "n decidin industrial disputes in reard to wae structure% one of the primary ob!ectives is and has to be the restoration of peace and oodwill in the industry itself on a fair and !ust basis to be determined in the liht of all relevant considerations.

 There is% however% one principle which admits of no e(ceptions. 6o industry

has a riht to e(ist unless it is able to pay its workmen at least a bare minimum wae. "t is 0uite likely that in under'developed countries% where unemployment  prevails on a very lare scale% unoranised labour may be available on starvation waes3 but the employment of labour on starvation waes cannot be encouraed or favoured in a modern democratic welfare state.

"f an employer cannot maintain his enterprise without cuttin down the waes of his employees below even a bare subsistence or minimum wae% he would have no riht to conduct his enterprise on such terms.

Can "e wa%e srucure !i)e$ in a %iven in$usr' &e never revise$ o "e #re*u$ice o! is workmen+

"t would not be correct to say that in no conceivable circumstances can the wae structure be revised to the pre!udice of workmen.  But even theoretically no wae structure can or should be revised to the  pre!udice of workmen if the structure in 0uestion falls in the cateory of the  bare subsistence or the minimum wae.  "f the wae structure in 0uestion falls in a hiher cateory% then it would be open to the employer to claim its revision even to the pre!udice of the workmen  provided a case for such revision is made out on the merits to the satisfaction of the Tribunal.

 "n dealin with a claim for such revision% the Tribunal may have to consider% whether the employer$s financial difficulties could not be ade0uately met by retrenchment in personnel already effected by the employer and sanctioned by the Tribunal. The Tribunal may also en0uire whether the financial difficulties facin the employer are likely to be of a short duration or are oin to face the employer for a fairly lon time.

 "t is not necessary% and would indeed be very difficult% to state e(haustively all considerations which may be relevant in a iven case.  "t would% however% be enouh to observe that% after considerin all the relevant facts% if the Tribunal is satisfied that a case for reduction in the wae structure has been established then it would be open to the Tribunal to accede to the re0uest of the employer to make appropriate reduction in the wae structure% sub!ect to such conditions as to time or otherwise that the tribunal may deem fit or e(pedient to impose. The Tribunal must also keep in mind some important practical considerations. 4ubstantial reduction in the wae structure is likely to lead to discontent amon workmen and may result in disharmony between the employer and his employees3 and that would never% be for the benefit of the industry as a whole. 7n the other hand% in assessin the value or importance of possible discontent amonst workmen resultin from the reduction of waes% "ndustrial Tribunals will also have to take into account the fact that if any industry is burdened with a wae structure beyond its financial capacity% its very e(istence may be in  !eopardy and that would ultimately lead to unemployment.  "t is thus clear that in all such cases all relevant considerations have to be carefully weihed and an attempt has to be made in each case to reach a conclusion which would be reasonable on the merits and would be fair and !ust to both the parties.

"n the present dispute all the Tribunals have consistently directed that e(istin waes should not be reduced to the pre!udice of the workmen. "n other words% thouh each Tribunal attempted to constitute a wae structure in the liht of materials furnished to it% a savin clause has been added every time protectin the interests of such workmen as were drawin hiher waes before.  5ven so% it would not be riht to hold that there is a riid and ine(orable convention that the wae structure once fi(ed by "ndustrial Tribunals can never  be chaned to the pre!udice of workmen.

 Therefore% the waes can be reduced by the Tribunals sub!ect to relevant considerations and limitations . The decision of the Tribunal should not be based solely or even chiefly on the alleed convention that waes can never be reduced

("e c"aracer o! "e concessional #a'mens.

The Appellate Tribunal has taken the view that these concessional payments really amounted to payments made to the workmen as a matter of riht.  The enesis of these concessional payments lies in the enactment 1actories Act. 8rior to the new 1actories Act% the appellant$s workmen worked on an averae for &9 hours of work made up of the usual &: hours of work and overtime. After the 1actories Act came into force% the workin hours had to be reduced  but in order to compensate the time'rate workers for reduction in their waes% the manaement added to the daily earnins of such workers the waes for two hours. The additional two hours$ waes thus awarded to the workers came to be known as two hours$ concession or special bonus. The bonus was revised from time to time in the upward direction at a raduated scale linked to the basic waes in slabs . Besides% the appellant introduced food concession to workers . Thus the constitution of the wae structure in the appellant$s concern included dearness allowance% facility bonus and food concession.

Accordin to appellant the bonus was an additional allowance for the hih cost of livin very much on the same footin as dearness allowance. "t was paid because the workers demanded and it was possible to pay it at that time.

Therefore statements lend considerable support to the workmen$s case that the  payments in 0uestion constituted a part of the wae structure of the appellant. "ndeed% even in the statement of the appellant before the "ndustrial Tribunal in the present proceedins% it is specifically averred that prior the company$s pay structure consisted of five items% vi2 ;+< basic wae% ;,< dearness allowance% ;-< special bonus or e(tra bonus% ;:< facility bonus or special allowance% and ;&< food concession.

"n this connection% it would also be material to point out that it was because these additional payments were made by the appellant to its workmen that the workmen did not raise any dispute .  Besides% these payments have been made for some years and that also is a relevant factor to consider in dealin with the true character of these payments. "f the #abour Appellate Tribunal took into account all these facts and held that the payments in 0uestion are not matters of bounty but that% in essence and in substance% they form part of the basic wae and dearness allowance payable to the workmen% there is no reason to interfere with its conclusion. Therefore appeal is dismissed.