# [1963] Supp. 2 S.C.R. 862

- **Citation:** [1963] Supp. 2 S.C.R. 862
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Bench:** P. B. Gajendragadkab, K. N. Wanchoo, K. C. Dab Gupta, J.C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1963-supp-2-s-c-r-862-2858
- **Pages:** 25

## Headnote

Industrial
Disput,e-H oteZ. and
RestauranlB-Whtther
wine shops are part of the Hotel establiahment-Financial position of employer and wage atructure-Bonus-RemuneratiO'll of
partner.-Bxtent and scope of interference of this Court in
appeal-Firm whether a legal person-Tips-Whether to be excluded in the matter of D.A.-Gratuity scheme-Whether justified
when provident fund scheme available-Miscond11,ct-Involving
moral turpitude-Retrospective operation of award-Nature of th•
Tribunal's power-Oonatitution of India, Art. 136-Industrial
Diaputes Act, 1947 (14 of 1947), s. 19A (4).
An industrial dispute arising out of the demands made by
the employees against 13 Hotel and Restaurant institutions in
Delhi was referred for adjudication to the Industrial Tribunal
and they were heard together with another reference made to it
concerning the disputes in the case of two other hotels. The
award given by the Tribunal in these two references gave rise to
the present four appeals by special leave, two of which had been
filed by the employees and the othet> two by the employers.
The main contentions in the appeals were the following:
It was contended on behalf of the employers that the Tribunal
was in error in dealing with the two hotels and eleven restaurants together inasmuch as they were not similar in character.
Their next contention was that the Tribunal committed another
error in treating the wine shops as part of the restaurant establishment. Thirdly it was contended that in constructing the
wage stmcture the Tribunal did not consider properly the
financial position of the employers. The next contention was
that the Tribunal erred in reducing the amount of remuneration claimed by the employers for the different partners who
b'ok active part in the management of their respective estabJish.
ments. It was further contended on their behalf that since
each one of the workers gpt Rs 50/-to 60/- by way of tips no
\
2 S.C.R.
SUPREME COURT REPORTS
863
D.A. should have bccu awarded tu the waiters.
Another contention was that in view of the fact that Employees Provident
Fund Scheme had already been introrluccd in these establishments the introduction by the award of a gratuity scheme was
not ju-:tified. It was the case of the employers that even if such
a schen1c \vas justiU.ed on principle tlte scheme as contained in
the present award is bad on n1crits. It was further contended
that the directions of the Tribunal regarding the decisions cf
the service charges in the future wa<; outside the jurisdiction of
the Tribunal, because this was not a matter referred to it for
adjudication. They lastly contended that the Tribunal had no
power to give retrospective operation to the a'vard.
The employees contended, among other things, that the
bonus awarded was inadequate on the 1iround that the calculation made by the Tribunal in respect of income.tax claimed by
the enlployees as a prior charge are obviously inconsistent \Vi th
the decisiuns of this Court i·l recent case of T·ulai Das Khinij-i
v. Their Worlcmen, [1963] l S.C.R. 675.
Held, that though the nature of the service rendered in
Hotels is in some p3.rticulars cl ifferent from that of the Restaurants, both the establishments are constituent~ of the f'atering
trade. Taking into consideration that they are situated in
similar localities and carry- on the same business it is desirable
that terms and conditions of service of the employees working in
them should as far as possible he uniform; such unifonnity i~
conducive to industrial peace and harrnony and to better,
efficient and satisfactory management.
The question whether there is functional intregrality
between two units has to be decided according to the facts of
each case. Absence of functional intcgr ..1.lity and the fact that
the two units can exist one without the other do not necessarilv
...._
show that where they exist they are necessarily separate unit~
and do not constitute one establishment.
Associated Cement Co. Ltd. v. Their Workmen, (1960

## Text

_Characters 0–39,997 of 50,969. This is a partial read: ask again with offset=39997 for what follows._

1962
December, 11.
862 SUPREME COURT REPORTS [1963] SUPP.
MANAGEMENT OF WENGER & CO.
"·
THEIR WORKMEN
(And Vice Versa)
(P. B. GAJENDRAGADKAB, K. N. WANCHOO,
K. C. DAB GUPTA and J.C. SHAH, JJ.)
Industrial
Disput,e-H oteZ. and
RestauranlB-Whtther
wine shops are part of the Hotel establiahment-Financial position of employer and wage atructure-Bonus-RemuneratiO'll of
partner.-Bxtent and scope of interference of this Court in
appeal-Firm whether a legal person-Tips-Whether to be excluded in the matter of D.A.-Gratuity scheme-Whether justified
when provident fund scheme available-Miscond11,ct-Involving
moral turpitude-Retrospective operation of award-Nature of th•
Tribunal's power-Oonatitution of India, Art. 136-Industrial
Diaputes Act, 1947 (14 of 1947), s. 19A (4).
An industrial dispute arising out of the demands made by
the employees against 13 Hotel and Restaurant institutions in
Delhi was referred for adjudication to the Industrial Tribunal
and they were heard together with another reference made to it
concerning the disputes in the case of two other hotels. The
award given by the Tribunal in these two references gave rise to
the present four appeals by special leave, two of which had been
filed by the employees and the othet> two by the employers.
The main contentions in the appeals were the following:
It was contended on behalf of the employers that the Tribunal
was in error in dealing with the two hotels and eleven restaurants together inasmuch as they were not similar in character.
Their next contention was that the Tribunal committed another
error in treating the wine shops as part of the restaurant establishment. Thirdly it was contended that in constructing the
wage stmcture the Tribunal did not consider properly the
financial position of the employers. The next contention was
that the Tribunal erred in reducing the amount of remuneration claimed by the employers for the different partners who
b'ok active part in the management of their respective estabJish.
ments. It was further contended on their behalf that since
each one of the workers gpt Rs 50/-to 60/- by way of tips no
\
2 S.C.R.
SUPREME COURT REPORTS
863
D.A. should have bccu awarded tu the waiters.
Another contention was that in view of the fact that Employees Provident
Fund Scheme had already been introrluccd in these establishments the introduction by the award of a gratuity scheme was
not ju-:tified. It was the case of the employers that even if such
a schen1c \vas justiU.ed on principle tlte scheme as contained in
the present award is bad on n1crits. It was further contended
that the directions of the Tribunal regarding the decisions cf
the service charges in the future wa<; outside the jurisdiction of
the Tribunal, because this was not a matter referred to it for
adjudication. They lastly contended that the Tribunal had no
power to give retrospective operation to the a'vard.
The employees contended, among other things, that the
bonus awarded was inadequate on the 1iround that the calculation made by the Tribunal in respect of income.tax claimed by
the enlployees as a prior charge are obviously inconsistent \Vi th
the decisiuns of this Court i·l recent case of T·ulai Das Khinij-i
v. Their Worlcmen, [1963] l S.C.R. 675.
Held, that though the nature of the service rendered in
Hotels is in some p3.rticulars cl ifferent from that of the Restaurants, both the establishments are constituent~ of the f'atering
trade. Taking into consideration that they are situated in
similar localities and carry- on the same business it is desirable
that terms and conditions of service of the employees working in
them should as far as possible he uniform; such unifonnity i~
conducive to industrial peace and harrnony and to better,
efficient and satisfactory management.
The question whether there is functional intregrality
between two units has to be decided according to the facts of
each case. Absence of functional intcgr ..1.lity and the fact that
the two units can exist one without the other do not necessarilv
...._
show that where they exist they are necessarily separate unit~
and do not constitute one establishment.
Associated Cement Co. Ltd. v. Their Workmen, (1960)
l L.L.j.,l, Pratapl'res.•v. Their Workmen, (1960)1 L.L.J. 497,
Pak<hhaj Studios v. Its Workmen, (1961) II L.L,J. 380, South
Indian Afillo1oners' .4ssnciation v. OoimlJatore Di8trict Textile
Wor/:m Union, (1962) l L. L. J. 223, Fine KnittinrJ Co. U,Z, v.
Industrial Gonrt, (1962) I L. L.J. 271
and D.C.M. C!icmical
IVnrl.'s v. n, Workmen, (1962) I L.L.J. 388.
Wine shops and Restaurants form part of the same
ec;talilishrncnt because there is unity of ownership, unity of
1969
Managemml of
Wenger & Co.
•.
Workmen
1962
Managlfflenl of
Wmger & Co.
v.
Workmen
864 SUPREME COURT REPORTS [1963] SUPP.
finance, unity of management and unity of labour and they arc
not separately registered.
Where a wage structure is constructed and it provides for
increments the financial position of the employer has to be considered. The hypothetical consideration that total .prohibition
may be introduced in the near future, cannot play any part
in the decision of the wage problem In the present case. It
would be open to the employers to raise a dispute for the reduction in the wage structure in case they arc able to show that as
a result of the introduction of total prohibition their financial
position is weakened to such an extent that they cannot bear
the burden of the wage structure directed by the award.
When this court entertain appeals in industrial matters
under Art. 136 of the Constitution it docs not act as a court of
appeal on facts. It is <>nly where general questions of law arc
raised that this Court feels called upon to pronounce its decision
on them.
A firm is not a legal person within the meaning of the
Industrial Disputes Act. It is the partners of the firm who
are the employers.
Tu1.oida8 Khimji v. Their Workmen, [1963] 1 S.C.R. 675,
referred to.
It would not be right to treat the tip• received by the
waiters as being wholly irrelevant to the decision of the question
about the matter of D.A. But it would not be right to m•ke a
calculation about the tips received and treat the said amount as
a substitute either whole or partial f>r the D.A. itself. What
can be done is to bear in mind the fact that tips are received
and make some suitable adjustment in that behalf.
.
Slate Bank of India v. Their Workmen, (1959) 2 L.LJ. 205
and Morthaclav v. Regent Street Florida Restaurant, (1951) 2
K.B. 277, distinguished.
Workmen of M/a. A. Fingo'• Lid. v . • 'If/a. A. Fingo's Ltd.,
(1953) L.A.C. 480, referred to.
The object intended to be achieved by the Provident Fund
Scheme is not the same as the object of the gratuity scheme and
in any case, where the financial position of the employer justifies the introduction of both benefits, there is no reason why the
employers should not get the benefits of both the schemes.
2 S.C.R. SUPREME COURT REPORTS
865
Bharatkhand Textile Mfg. Go. Ltd. v. Textile Labour
Association, Ahmedabad, (1960) 2 L.L.J. 21 and Garment Gleaning Worh v. Its Workmen, [1962] 1 S.C.R. l7l, followed.
For the termination of service caused by the employer the
minimum period of service for payment of gratuity should be
five years and if the employee resi~ns he would be entitled to
get gratuity only if he has completed ten years service or more.
If the termination is the result of misconduct which has caused
financial loss to the employer that loss should be first compensated from the gratuity payable to the employee.
Since the direction of the Tribunal for the decision of the
service charges in future is not C')Vered by the terms of ~ference
that direction is invalid.
Under s. l 7A (4) of the IndustJial Disputes Act, 1947, it
is open to the Industrial Tribunal to name the date from which
it should come into operation.
Crv!L APPELLATE JuarsnrcTroN: Civil Appeals
Nos. 609 and 610 of 1962.
AND
Civil Appeals Nos. 622 and 623 of 1962.
Appeals by special leave from the award
dated March 16. 1962, of the Industrial Tribunal,
Delhi, in I. D. Nos. 581 and 620of1959.
G. S. Pathak, Veda Vyasa, B. Datta, J.B.
Dadach'lnji, 0. 0. Mathur and Ravinder Narain, for
the appellants (in C. A. Nos. 609 and 610 of 1962)
and the respondents (in C.A. Nos. fi22 and fi23 of
1962).
A-I. 0. Setalvad, Attorney·General for India and
JanardiJn Sharma, for the respondents (in C. A.
Nos. 609 and 610 of 1962) and for the appellants
(in C.A. Nos. 622 and 623 of 1962).
1962. December 11. The Judgment of the
Court was delivered by
1962
Manaz1ment of
W1n11r ~ Co .
••
Workm"'
1962
Management of
Wenger & Co.
v.
Workmen
tljendragadkar1 J.
866 SUPREME COURT REPORTS [1963] SUPP.
GAJENDRAGADKAR, J.-An industrial dispute
arising out of ten demands made by the employees
against 13 Hotel and Restaurant institutions in New
Delhi, was referred by the Chief Commissioner, Delhi
to the Industrial Tribunal for a•ijudication.
Reference in I. D. No. 581 of 1959 which was made on
September 9, 1959,
included two Hotels-Claridge's Hotel and Nirula Hotel-, whereas reference in
I. D. No. 620/1959 which related to United Coffee
House was made on December 12, 1959. These
two references were consolidated by the Tribunal and
were heard together. Out of the demands made by
the employees,
three demands were rejected by the
Tribunal ; they were demands Nos. 4, 9 and
IO.
Demand No. 4 was in regard to medical treatment,
No. {J was in regard to the revision of the hours of
work of Chowkidars and No. IO was in regard to the
recognition or appointment of Central Negotiating
Committee on Association or Union level.
The
other demands have been partially allowed.
The
principal amongst these demands were a claim for a
wage structure with adequate provision for increment
in scales, provision for Pr )Vident Fund and Gratuity
and Bonus for the years 1956-57, '57-58 and 58-59.
There wen: other subsidiary demands to which reference would be made later: The award pronounced
by the Tribunal in these two references has given
rise to four appeals by special leave before this
Court.
Appeals Nos.
609-610/1962 have been
preferred by the employers, whereas appeals Nos. 622
and 623/1902 have be~n filed by the employees.
It would be convenient to set out briefly the
broad features of the directions issued by the TribuI
nal in respect of the employees' claims.
The Tribu-
'
nal has examined the employees' claim with regard
to bonus for the three years in question. It took the
claim for bonus in respect of each one of the employers, it examined the
financial position of the
employer for the respective years and determined the
2 S.C.R.
SUPREME COURT REPORTS
867
question as to the available surplus by the application of the Full Bench Formula in each individual
case. Claims made by the employers for deduction
of certain items were examined in the light of the
comments made by the employees in respect of them.
The mual prior ch,irges were taken into account, and
on determining the available surplus, directions were
issued for the payment of bonus for the three respective years. In some cases, the employer has been
asked to pay bonus for all the three years, while in
some others the
employ~r has been asked to pay
bonus for one or two years according as the available surplus justified or did not justify the award
of bonus for the particular year.
The Tribunal then proceeded to deal witli. the
other demands made by the employees. The claim
made by the employees for suitable uniforms and
other apparel according to the nature of the duties
of individual workman was, in substance, rejected by
the Tribunal. It has, however, ordered that all the
managements, with the exception of Delhi Restaurant,
should give winter uniforms consisting of a woollen
coat and a pair of woollen trousers to Waiters, Bearers, Page Boys, Lift Boys, Peons and Chowkidars
and Butlers once in three years. Similarly, the managements have been asked to give to ]\ lasalchis,
Sweepers and l\1alis a woollen jfrsy once in three
years.
The Tribunal then examined the claim for
additional leave facilities and held that there was no
jmtification for granting separately sick leave as such.
Three national holidays were allowed by the employers
on the
January
26,
August 15,
and
October 2.
The Tribunal has hl'ltl that three more
holidays shoukl be allowed, one for Holi, one for
Dussehra and one for Diwa Ii.
On the question of the introduction of Provident Fund Scheme n ml the Cra tu ity Scheme, the
1962
Managtmtnt of
Wenger & Co.
v.
Workmm
Uajendragadkor, 1.
1962
Managemtnt ef
Wtnger & Co.
••
Workmen
868 SUPREME COURT REPORTS [1963] SUPP.
Tribunal noticed the fact that the P. F. Scheme had
been introduced by the employers in accordance with
the requirements of the relevant statute. The employers' case that in view of the fact that a P.F. Scheme
had been introduced, no Gratuity Scheme should be
framed, was rrjected and a provision has been made
for the introduction of the Gratuity Scheme.
The Tribunal then proceeded to consider the
vexed question about the construction of a suitable
wage structure, and in dealing with this problem,
the Tribunal first examined the point as to what
should be the minimum wage in those concerns. It
appears that before the Tribunal it was conceded by
the managements that the total pay packet in the
case of Hotels should be Rs. 70/- p.m. inclusive of service charges and in respect of F estaurants Rs. 60/-
p.m. The Tribunal came to the conclusion that, on
the whole, it would be fair and reasonable if the
minimum total wage packet includes Rs. 65/- p.m.
Rs. 30/- being the minimum basic wage and Rs. 35/-
being a flat dearness allowance payable to each one
of the employees. Having thus determined the minimum content of the total wage packet, the Tribunal . took into account the fact that several establishments gave food and accommodation to some of their
employees and it has accordingly directed that for
food Rs. 15/- should be deducted from the D. A. for
accommodation
Rs. 5/- should be deducted and
Rs. 7/- or Rs. 3/50 nP. should be deducted for tea
according as tea was given twice or once. In other
words, having fixed the flat rate of Rs. 35/ · for the
payment of D.A. the Tribunal provided for appropriate deductions for amenities which the employers
gave to their employees in this trade.
The Tribunal then classified the workmen into .
unskilled, semi-skilled and skilled, and in the last category it provided for two grades Grade II and Grade
I. Having thus classified the employees in three
I
'
2 S.C.R.
SUPREME COURT REPORTS
869
categories, the Tribunal prescribed a wage scale for
each one of them. In respect of this wage scale, the
Tribunal has given certain appropriate directions as
to the adjustment of the employees in tl.e new wage
scale. One of the important directions given in that
behalf is on the usual lines that no workman should
be prejudicially affected by this process of adjustment
and that if he was getting higher emoluments than he
would be entitled to by virtue of the adjustment in
the new wage scale, he would continue to get the
higher emoluments.
Then the Tribunal considered the question as
to whether the award should be given retrospective
effect and it held that it should come into effect as
from January 1, 1961, the
award
having been
pronounced on March 16, 1962;
The employees in the Claridge's Hotel had
made a demand for a share in the service charges
collected by the employer. The Tribunal held that
for the period prior to the reference, the employer had
paid to the employees about 3 months' wages out of
the service charges and so, it took the view that no
further direction was required in respect of the said
period. It however, proceeded to issue a direction
to the management of the Claridge's Hotel that from
April 1, 1962, it should distribute 85 per cent of the
service charges collected by it among the
workmen rateably according to and on the basis of the
basic wage drawn by each one of them during the
relevant year. That, in brief, is the nature of the
directions issued by the Tribunal in respect of the
demands which have been partially allowed.
The first point which Mr. Pathak for the
employers has urged before us is that the Tribunal
was in error in dealing with the two Hotels and
eleven Restaurants together. The argument is that
the Hotels and Restaurants are not similar in character
1962
Management of
Wenger & Co.
v.
Ylorkmen
Gajend,a1adkar, I.
1962
Management of
Weng1r & Co,
••
Workmen
Ga}endragadkar, J.
870 SUPREME COURT REPORTS [1963) SUPP.
so as to justify the employees' claims made against the two sets of establishments to be tried together.
Service in Hotels is usually non-stop 24 hours' service:
in regard to hotels, residence is provided for a
number of employees, the nature of the business is
different and the nature and extent of the expenses
incurred are not also the same.
Therefore, it is
urged that the Tribunal committed a basic error in
dealing with the two 1ets of establishments together.
We are not impressed by this argument. It is
significant that the history of industrial adjudication
in respect of catering establishments in New Delhi
shows that restaurants and hotels have been grouped
together for· the purpose of one adjudication in the
past. It appears that in 1950, a similar industrial
dispute in respect of 14 catering establishments was
referred to Mr. Dulat; amongst them were 3 Hotels
and II Restaurants. In fact, some of the Restaurants in the present proceedings were included in
that reference.
Besides, there is no doubt that
though the nature of the service rendered by Hotels
is in some particulars different from that of the
Restaurants, both the establishments are constituents
of a catering trade. In fact, Mr Nirula is the
Secretary of the Association whose membership is
open to both Hotels and Restaurants.
It will be
noticed that all the Restaurants included in the reference, except the Delhi Restaurant which is situated
at Karolbagh, work
in Connaught Plac<', and
Claridge's Hotel is situated in Auran5zeb Road
which is also an important locality. 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 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
I
-
2 s.c.R.
SUPREME COURT REPORtS
871
helpful to the managements themselves because it
would tend to avoid migration of labour from one
establishment to another. It is true that it might
have been possible to classify these restaurants according to the extent of their custom and their general
financial position and standing in the trade : but no
material has been produced before the Tribunal in
that behalf and no attempt appears to have been made
to suggest to the Tribunal that it would either be possible or appropriate to make any such classification.
That is why we think Mr. Pathak is not justified in
attacking the award on the ground that in approaching the problem, it has considered all the establishments together.
·
The next point which has been strenuously
pressed before us by Mr. Pathak on behalf of the
employers is that in dealing with
the financial
position of the managements, the Tribunal has committed an error inasmuch as it has assumed that the
wine shops and the restaurants form part of the same
establishment. It appears that in several cases the
same employer conducts a restaurant and a wine
shop; and the argument is that in determining the
terms and conditions of service in these establishments, wine shops should
have been treated as
separate units, distinct from the restaurants.
The question as to whether industrial establishments owned by the same managements constitute
separate units or one establishment has been considered by this Court on $everal occasions.
Several
factors are relevant in deciding this question. But it
is important to bear in mind that the significance or
importance of these relevant factors would not be the
same in each case; whether or not the two units
constitute one establishme~t or are really two separate
and independent units, must be decided on the facts
of each case. Mr. Pathak contends that the Tribunal
was in error in holding that the restaurants cannot
1962
MtJMgtm1ttl o/
Wmger & Co.
v.
Workmen
Ga}tndraiadkar, J.
1962
Management of
Wenger & Co •
••
Workmen
Gajendragadkar, /,
872 SUPREME COURT REPORTS [1963] SUPP.
exi~t without the wine shops and that there is
functional integrality between them.
It may be
conceded that the observation of the Tribunal that
there is functional intcgrality between a restaurant
and a wine shop and that the restaurants cannot exist
without wine shops is not strictly accurate or correct.
But the test of functional integrality or the test
whether one unit can exist without the other, though
important in some cases, cannot be stressed in every
case without having re~ard to the relevant facts of
that case, and so, we are not prepared to accede to
the argument that the absence of functional integrality and the fact that the two units can exist one
without the other necessarily show that where they
exist they are necessarily separate units and do not
amount to one establishment.
It is hardly necessary
to deal with this point elaborately because this Court
had occasion to examine this problem in several
decisions in the past, vide Associated Cement
Companies Ltd. v. Their J)7 orkmen (1); Pratap Press,
etc. v. Their Wo1'1cmen('J; Pakshimja St·udios v. Its
Workmen (8); SO'ltth India Millowners' As.sociation
v. Coimbatore
D-istrict
Textile Workers Union(');
Pine Knitting Co. Ltd. v. lndustr-ial Court (5) and
D.G.M. ChemiC11l Works v. Its Workmen(').
Let us then consider the relevant facts in the
present dispute. It is common ground that wherever
the employer runs a restaurant and a wine shop, the
persons interested in the trade are the same partners.
The capital supplied to both the units is the same.
Prior to 1956, wine shops and restaurants were not
conducted separately, but after 1956 when partial
prohibition was introduced in New Delhi, wine shops
had to be separated because wine cannot be sold in
I
resta~ranths.
~ut iht is ~i~nificdant thhat the licehncef fhor
f_
runnmg t e wine s op 1s issue on t e strengt o t e
fact that the management was running a wine shop
before the introduction of prohibitiori. In fact, LII
licence to run wine shops has been given in many
(I) (1960) I L.L.J. I.
(2J (196011L.L.J.497.
(Si (19611 JI L.L.J. 380.
(4) (1962) I L.L.L.J. 223.
\5) (1962) I L.L.J. 275.
(6) (1962) I L.LJ. 388.
"
I
2 S.C.R.
SUPREME COURT REPORTS
873
cases to previous restaurants on condition that the
wine shops are run
separately according to the
prohibition rules. It is true that many establishments
keep separate accounts and independant balance·
sheets for wine shops and restaurants ; but that clear·
.!
•
'J
ly is not decisive because it may be that the establishments want to determine from stage to stage which
line of business is yielding more profit. Ultimately,
the profits and losses are usually pooled, together.
Thus, generally stated, there is unity of ownership,
unity of finances, unity of management and unity of
labour; employees from . the restaurant can be transferred to the wine shop and vice versa. Besides, it is
significant that in no ca5e has the establishment
registered the wine shops and the restaurant, sepa·
rately under ~. 5 of the Delhi Shops and Establishments Act, 1954 (No. VII of 1954). In fact when
Mr. Nirula, the Secretary of the Employers' Association, was called upon to register his wine shop sepa·.
ratcly, he protested and urged that separate registra·
tion of the several departments was unnecessary; and
that clearly indicated that wine shop was treated by
the establishment as one of its departments and
nothing more.. The failure to register a wine shop
as a separate establishment is, in our opinion, not
consistent with the employers' case that wine shops
are separate and independent units. Having regard
to all the facts to which we have just referred, we do
not think it would be possible to accept Mr. Pathak's
argument that the Tribunal was in error in holding
that the wine shops and restaurants form part of the
same industrial establishments.
That takes us to the question about the financial position of the different establishments. The
Tribunal has carefully examined the relevant balancesheets and considered the profit and loss position of
each establishment- for the three years in respect of
which bonus was claimed; they are 1966-57, 57-58
and 58-59. In constructing a wage structure, industrial
1'J62
Manag1m1nt oj
Wenger& Co.
v.
Workmen
Gajendragadkar, J.
1962
MaMgtment of
W111g1r & c,,,
••
Workmtn
Gajtndragadkar, J.
874 SUPREME COURT REPORTS [1963] SUPP.
adjudication has undoubtedly
to
take
into
account the overall financial position of the employer
because a scheme of wage structure including scales
of increment is a long-tenn scheme and before it is
framed, the Tribunal must be satisfied that the
burden imposed by the scheme would not be beyond
the means of the employer. In regard to the minimum
wage, no such consideration arises because it is the
duty of an industrial employer to pay the basic
minimum to his employees. But when a wage structure is constructed and it provides for increments,
the financial position of the employer has to be home
in mind. The Tribunal has recognised this principle and on examining the accounts produced before
it, it has come to the conclusion that the establishments in question have shown uniform prosperity and
all of them, except the Delhi Restaurant, can be
properly
characterised
as
established concerns.
Besides, it has referred to the fact that in the Delhi
region, there are various establishments which have
pay scales for workmen, though, except for the award
made by Mr. Dulat, there were no previous instances
of pay scales having been introduced in restaurants
in the awards or settlements cited before the Tribunal.
It was, however, urged before the Tribunal and the
same plea has been repeated before us that the
possibility of the introduction of total prohibition in
New Delhi should have been borne in mind in
considering the problem of wage structure in the
present proceedings. We do not think that the
award made by the Tribunal in this case can be
validly attached on the ground that the Tribunal
refused to attach due importance to the apprehension
expressed before it by the employers that total prohibition may soon be introduced in New Delhi and
that may impair the prosperity of the trade. The
Tribunal has noticed that even after the partial
introduction of prohibition, the profits of the trade
have not shown any adverse effect. On the contrary
they show an upward tendency, and the Tribunal
2 s.c.R,
SUPREME COURT REPORTS
875
was not satisfied that there was any evidence adduced
before it to justify the contention that in the very
near future total prohibition would be introduced in
New Delhi. It was urged by the employees that all
indications pointed to the fact that total prohibition
may not be introduced in New Delhi and the Tribunal thought, and we think rightly, that it would be
idle to speculate in this matter; if in course of time,
total prohibition is introduced and it materially
affects the prosperity of the trade, it would be open
to the employers to raise a dispute for the reduction
in the wage structure and in case they are able to
show that as a result of the introduction of total
prohibition their financial position is weakened to
such an extent that they cannot bear the burden of
the wage structure directed by the present award, the
matter may have to be examined on the merits.
Therefore, we do not think that the hypothetical
consideration that total prohibition may be introduced in the near future, can play any part in the
decision of the wage problem in the present proceedings.
That takes us to the question about bonus. The
main point which Mr. Pathak rahed in regard to
bonus was that the Tribunal was in error in reducing
the amount of remuneration claimed by the employers for the different partners who took active part
in running and supervising the management of their
respective establishments. It appears that whereas
each
partner claimed
a thousand rupees per
month, the Tribunal has reduced it to Rs. 500/-,
and in one case it has ordered th.at Rs. 500/-
p. m. should be paid to three partners together.
The
argument
is
that
this
interference is
wholly unjustified. In dealing with this contention
it is necessary to emphasise that
when this
Court entertains
appeals in industrial
matters
under Art. 136 of the Constitution, it does not
act as a Court of Appeal on facts; It is only where
1962
Management of
Wenger & Co.
••
Workmen
Gajendragadkor, J.
1962
Munagtmml of
Wtnger & Co.
v.
Workmen
Gqjendragatlkar, J.
876 SUPREME COURT REPORTS [1963] SUPP.
general questions of law are raised that this Court
feels called upon to pronounce its decisions on them
for the guidance of industrial adjudication in this
country. The decisions of Industrial Tribunals on
questions of fact and their conclusions in matters
within their discretion are not usually revised by
this Court under Art. 136. Besides, the claim made
by the employers by way of remuneration to the
partners has not been properly established by adequate evidence.
That is the conclusion of the Tribunal, and on the record it seems to be well founded.
It also appears that in some cases, the amounts of
remuneration claimed are not debited in the books
of account; but the present claim is made for the
purpose of working the Full Bench Formula. Therefore, on a question of this kind, we do not think
Mr. Pathak is justified in making a grievance before
us under Art. 136.
-
The learned Attorney-General for the employees characterises the award in respect of bonus as
inadequate and contends that larger amounts should
have been allowed, and he argues that the calculations made by the Tribunal in respect of income-tax
claimed by the employers as a prior charge are obviously inconsistent with the recent decision of this
Court in the case of Tulsidas Khimji v. Their
Workmen. (') In that case, the majority decision
was that a firm is not a legal person within the meaning of Industrial Disputes Act. It is the partners
of the firm who are the employers. It is that fact
that has to be taken into account in considering the
question of income-tax, even in other matters like
remuneration, etc., that is to say, the amount of tax
payable by each partner, qua the business of the
firm, irrespective of their other sources of income or
L
loss, because notional is quite different from the
actual, though not wholly dissociated from it. Mr.
Pathak has conceded that the calculations made by
(I) (1962) I L.L.J. 435, 441.
2 S.C.R.
SUPREME COURT REPORTS
877
the Tribunal in dealing with the question of incometax in the working of the formula must now be regarded as erroneous and that would clearly negative his
plea that the bonus should not have been awarded or
the amount awarded should have been less. It is
true that the employees claim additional bonus on
this ground; but we are not satisfied that the differ·
ence made by a fresh calculation of the income· tax
according to the decision of this Court would justify
any addition to the amount already awarded by the
Tribunal by way of bonus for the respective years in
question.
The next question to consider is about the wage
structure.
As we have already pointed out, the employers conceded that the wage packet in the case of
Hotels should be Rs. 70/- .p.m.
including service
charges and in the case of Restaurants should be Rs.
60/., and the Tribunal has fixed the minimum content of the wage packet at Rs. 65/- p.m. We see
no reason to interfere with this decision. The Tribunal has fixed Rs. 35/- as a flat rate for dearness allowance and has provided for appropriate deductions
from the said amount for amenities like food, residence and tea which the employers provide to some
of their employees. We see no reason to interfere
with this part of the award as well. The categories
of workers . into unskilled, semi-skilled and skilled
also appear to us to be fully justified, and on the
material adduced on the record, no c?se has been
made out against the said categories either.
The main controversy in respect of the wage
structure has centered round the problem of Dearness
Allowance qua the waiters.
Mr. Pathak has strenomly contended that no D.A. should be paid to the
waiters at all, because, he argues, each one of them
gets Rs. 50/- to Rs. 60/- p.m. by way of tips in
each one of these establishments.
The Tribunal has
taken the view that the tips earned by the waiters
1162
Management of
Wenger & Co,
v.
Worknltn
1962
Management of
Wenger& Co.
v.
Workmen
Gajendragadkar, J.
878 SUPREME COURT REPORTS [1963] SUPP.
must be excluded from consideration in dealing with
the question of D.A., and in support of this view it
has referred to a decision of this Court in the case of
State Bank of India v. Their Worknun ('). Mr.
Pathak contends that the Tribunal was
obviously in error in relying upon this decision in support
of its conclusion on the question of tips.
This contention is well-founded. In the case of State Bank
of India
this
Court
was
considering
the
question as to whether bonus could be said to be a
part of remuneration within the meaning of that
term under ss. 2 and I 0 ( l) (b) ( 2) of the Banking
Companies Act, 1949 (unamended by Act XCV of
1956), and the decision was that ins. 10 the word
"remuneration" has been used in its widest sense,
and in that sense, it would undoubtedly include the
profit bonus. It appears that in the course of discussion of the bar, the decision in the case of Mrottaslav
v. Regent Street Florida Restaurant (') was cited,
and so, it had to be incidentally considered.
That
decision was in regard to tips and it held that when a
customer gives a tip to a waiter, the money becomes
the property of the latter. It was observed by this
Court that the English decision itself showed that the
word "remuneration ' must be given its meaning with
reference to the context in which the word occurs in
the statute and that the said ?ecision would not justify cutting down the amplitude of the expression used
by the relevant provision of the Banking statute with
which the Court was cont"erned. It is hardly necessary to point out that this decision cannot be cited as
relevant in determining the question as to whether
tips paid to waiters in hotels and restaurants should
not be taken into account in dealing with the problem
of D.A. On the other hand, it does appear that in
Workmen of M/s. A. Fingo's Ltd. v. M/s. A. Fingo's
Ltd., (8) the Labour Appellate Tribunal confirmed
the award passed by the original Tribunal by which
Rs. 15/- had been orderd to be deducted from the
D.A. payable to boys and butlers. It was found in
(I) (1959) II L.L.J. 205.
(2) (1951) 2 K.B. 277.
(3) (1953) L.A,C. 480.
1
28.C.R.
~SUPREME COUR'EREPORTS
879
that case on. uncontradicted evidence that the value
of the tips received by the boys and butlers would be
about Rs. 15/- or so per head per month. Mr. Pathak
contends that in the light of this precedent, the
Tribunal should have considered the amount of tips
which waiters receive in hotels and restaurants and
should not have directed D.A. to be paid to them at
the flat rate of Rs. 35/- p.m.
The learned Attorney-General has supported
the finding of the _Tribunal and has referred- to an
earlier award passed by the same Tribunal in an
industrial dispute between the Management of the
Marina Hotel and its workmen in 1958 where the
Tribunal refused to consider the tips in dealing with
the problem of wage structure including D.A. The said
Tribunal took the same view when it pronounced its
award in an industrial dispute between the manage·
ment of the Hotel Ambassador and its employees
in 1960.
The learned Attorney-General also suggested that the compromise award between the Swiss
Hotel and its employees reached
on December 31, 1959, would tend to support his case that tips
may not be taken into account in dealing with the
question of D. A.
The question thus raised before us needs to be
carefully examined.
The employees contend that the
basis of D.A. is that the employer should ·make a
sui1 able addition to the amount of basic wage in
order to neutralise the rise in the cost of. living and
it is not open to him to contend that he is absolved
from his liability to provide for either partial or
complete neutralisation of. the rise in the cost of
living because his customers pay tips to his employees. Tips are paid not by the employer but by
the customers and they are paid not only for the
service received in the restaurant or the hotel, but
for the promptness shown by the waiter and his
smartness and efficiency. Besides it is urged that the
1962
Management of
Wenger & Co.
v.
Workmen
Gajendragadkar, J,
MaMgtment of
Wenger & Co.
••
JforAm1n
Gqj1ndragadkar, J,
880 SUPREME COURT REPORTS [1963] SUPP.
amount of tips is variable and uncertain and so, it
would be unreasonable to take such an uncertain and
indefinite factor into account in fixing the amount
ofD. A.
On the other hand, the employers contend
that tips are paid as a matter of conventional requirement in all restaurants and hotels and thr.y are paid
not so much to the waiters as individuals but as
waiters working in a particular establishment.
The
tips thus received by the employees are incidental to
their work as waiters and cannot be completely dissociated from it. In theory and in law, it may be
true that the tips received by the waiters become
their property, but they are received by them as an
incident of their employment and so, it would be
unreasonable not to take them into account in fixing
the D. A.
I
In our opinion, in dealing with this question,
it would not be appropriate to adopt an academic or
a doctrinaire approach. In considering the problem
of wage structure in regard to hotels and restaurants,
industrial adjudication has necessarily to adopt a
pragmatic approach and in fixing the wage structure
and the D. A., it has to ·take care to see that the
legitimate demand of the employees is met without
doing injustice to the employer and without acting
unfairly by him.
If the object of D. A. is to
neutrali~e the rise in the cost of living, it would be
purely doctrinaire to ignore altogether the fact that
as waiters working in their respective establishments
they invariably get some amount of tips from the
customers, and so, we think it would not be right to
treat the tips received by the waiters as being wholly
~
irrelevant to the decision of the question about the
matter of D. A. Similarly, it would not be right to
make a calculation about the tips received and treat
the said amount as a substitute, either whole or
partial, for the D. A. itself. All that we can do is
2 S.C.R.
SUPREME COURT REPORTS
881
to bear in mind the fact that tips are received and
make some suitable adjustment in that behalf.
It
wouU, of course, not be right to treat these tips as
substantially amounting to payments made by or on
behalf of the employers for if that were so, logically,
it may be open to the employers to say that the said
tips may be taken into account evrn while fixing a
basic wage. That clearly is not and cannot be the
employers case. It is true that the amount of tips
may vary and in that sense be uncertain.
But if
evidence adduced by the parties satisfactorily proves
that each waiter would invariably receive a certain
amount of tips in the minimum, it would not be
unfair or unjust to take such a minimum amount
into account in determining the quantum of D. A.