# ALEMBIC CHEMICAL WORKS CO., LTD v. THE WORKMEN

- **Citation:** [1961] 3 S.C.R. 297
- **Court:** Supreme Court of India
- **Decided:** 1960-03-31
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/alembic-chemical-works-co-ltd-v-the-workmen-1990
- **Pages:** 11

## Headnote

Industrial Dispute-Award of privilege leave-JurisdictionIndustrial Disputes Act, I947 (I4 of I947), s. IO(I)(d)-Factories
Act, I948 (63 of I948), SS. 79, 78, 84.
It is not correct to say that s. 79 of the Factories Act, 1948,
standardises the grant of annual leave with wages to employees
to whom the Act applies and that neither the employer by
voluntary agreement nor the Industrial Tribunal by its award
can vary that standard. It is well settled that in construing
the provisions of ~welfare legislation, such as the Act in question which has for its object the preservation of the health,
safety and welfare of the workmen, courts should apply the rule
of beneficent construction and moreover, ss. 78 and 84 of the
Act put il beyond doubt thats. 79(1) is not intended to standardise annual leave with wages by providing the maximum.
Rightly construed s. 78(1) of the Act not only protects past
laws, awards, agreements and contracts but also those that are
to come into existence in the future and does not prohibit a
more generous agreement than that prescribed bys. 79(1).
Likewise the scope of s. 84 of the Act which, in empowering
the State to exempt a factory from all or any provisions of
Ch. VIII of the Act, contemplates better amenities than those
guaranteed by the Chapter, cannot be limited to benefits existing
at the date of the Act but must also apply to future benefits
which an employer may grant to his employees.
Consequently, in a case where the Industrial Tribunal, on
a consideration of awards and agreements between employers
and employees in comparable concerns, awarded annual leave in
excoss of what is prescribed bys. 79(1),
Held, that the award was not open to challenge.
Held, further, that the distinction generally made between
operatives doing manual work and clerical and other staff is
perfectly justifiable and so the award of privilege leave to the
clerical staff could not be said to be discriminatory.
Although the Industrial Tribunals in awarding privilege
leave or sick leave must not fail to consider their effect on production and so on the interest of the community in general, this
Court would be reluctant under Art. 136 of the Constitution to
interfere with an award unless its provisions are unsustainable
on any reasonable grounds and make a violent departure from
the practice and trend prevailing in comparable concerns.
38
December Ij.
298
SUPREME COURT REPORTS
[1961]

## Text

3 S.C.R. SUPREME COURT REPORTS
297
ALEMBIC CHEMICAL WORKS CO., LTD.
v.
THE WORKMEN
(P. B. GAJENDRAGADKAR, K. N. WANCHOO and
K. c. DAS GUPTA, JJ.)
Industrial Dispute-Award of privilege leave-JurisdictionIndustrial Disputes Act, I947 (I4 of I947), s. IO(I)(d)-Factories
Act, I948 (63 of I948), SS. 79, 78, 84.
It is not correct to say that s. 79 of the Factories Act, 1948,
standardises the grant of annual leave with wages to employees
to whom the Act applies and that neither the employer by
voluntary agreement nor the Industrial Tribunal by its award
can vary that standard. It is well settled that in construing
the provisions of ~welfare legislation, such as the Act in question which has for its object the preservation of the health,
safety and welfare of the workmen, courts should apply the rule
of beneficent construction and moreover, ss. 78 and 84 of the
Act put il beyond doubt thats. 79(1) is not intended to standardise annual leave with wages by providing the maximum.
Rightly construed s. 78(1) of the Act not only protects past
laws, awards, agreements and contracts but also those that are
to come into existence in the future and does not prohibit a
more generous agreement than that prescribed bys. 79(1).
Likewise the scope of s. 84 of the Act which, in empowering
the State to exempt a factory from all or any provisions of
Ch. VIII of the Act, contemplates better amenities than those
guaranteed by the Chapter, cannot be limited to benefits existing
at the date of the Act but must also apply to future benefits
which an employer may grant to his employees.
Consequently, in a case where the Industrial Tribunal, on
a consideration of awards and agreements between employers
and employees in comparable concerns, awarded annual leave in
excoss of what is prescribed bys. 79(1),
Held, that the award was not open to challenge.
Held, further, that the distinction generally made between
operatives doing manual work and clerical and other staff is
perfectly justifiable and so the award of privilege leave to the
clerical staff could not be said to be discriminatory.
Although the Industrial Tribunals in awarding privilege
leave or sick leave must not fail to consider their effect on production and so on the interest of the community in general, this
Court would be reluctant under Art. 136 of the Constitution to
interfere with an award unless its provisions are unsustainable
on any reasonable grounds and make a violent departure from
the practice and trend prevailing in comparable concerns.
38
December Ij.
298
SUPREME COURT REPORTS
[1961]
CIVIL APPELLATE JURISDICTION:
475of1960.
Civil Appeal No.
Alembic Chemical
works co., Ltd.
Appeal by special leave from the Award dated
v.
The Workmen March 31, 1960, of the Industrial Tribunal, Bombay,
in Reference (I. T.) No. 227 of 1959.
M. 0. Setalvad, Attorney-Gerieral for India, G. B.
Pai and J.B. Dadachanji, for the appellant.
I. N. Shroff, for the respondents.
1960. December 15. The Judgment of the Court
was delivered by
Gajendragadkar j,
GAJENDRAGADKAR, J.-This appeal by special
leave arises from an industrial dispute between the
appellant, the Alembic Chemical Works Co. Ltd., and
the respondents, its workmen. The said dispute rela.-
ted to a single demand made by the respondents with
regard to leave. This demand consisted of three parts,
(a) one month's privilege leave with full salary and
dearness allowance on completion of eleven months
service in a year with a right to accumulate upto six
months, (b) one month's sick leave with full salary
and dearness allowance for each year of service with
right to accumulate for the entire period of service,
and (c) every workman chould be entitled to take leave
in proportion to the number of days he is in service of
the company at the time of his application for the
same. This dispute was referred by the Government
of Bombay for adjudication before the Industrial
Tribunal under s. IO(l)(d) of the Industrial Disputes
Act XIV of 1947.
The Tribunal considered the contentions raised by
the appellant against the respondents' demands, took
into account awards or agreements between employers
and their employees in comparable concerns and made
its award. In regard to privilege leave the Tribunal
has ordered that leave should be granted to the staff
members covered by the reference as follows:
Privilege leave upto 3
... 16 days as at present
completed years of service
per year.
Up to 9 completed years ... 22 days per year.
And thereafter
. . . One month for every
l l months of service.
'
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3 S.C.R. SUPREME COURT REPORTS
299
The award allows accumulation of privilege leave
1960
up to three years. As regards sick leave, the Tribunal
.
.
has ordered that the appellant should give its staffA~m~ic c Ch•mical
covered. by the present award 15 days sick leave in a
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" Ltd.
year with full pay and dearness allowance with a
Th• Workmen
right to accumulate upto 45 days. It has also direct-
-
ed that no medical certificate should be demanded ifG•jmdragadkar J.
sick leave fo~ three days or less is asked for. In regard
to the third item of demand concerning leave in proportion the Tribunal has made appropriate direction
which it is unnecessary to set out for the purpose of
this appeal.
Before the Tribunal the main contention ra.ised by
the appellant was in regar~ to the propriety and
reasonableness of the demand and in regard to the
practice prevailing in comparable concerns. Before
this Court, however, the provision made by the award
in regard to privilege leave has been attacked mainly
on the ground that the Tribunal had no jurisdiction
to make such an award having regard to the provisions of s. 79 of the Factories Act, 1948 63 of 1948)
(hereafter called the Act). It is urged that s. 79 of the
Act has made exhaustive and self-contained provisions
with regard to the granting of annual leave with
wages to the employees to whom the said Act applies,
and the effect of s. 79 is to introduce standardisation
in the matter of leave; which means neither the employer voluntarily, nor an Industrial Tribunal by its
a ward, can add to the leave prescribed by the said
section. In the matter of leave s. 79 is a complete
code, .and no additions to the said leave can be made
either by a contract or by an award. It is common
ground that the respondents are governed by the provisions of the Act. This point was not raised before
the Tribunal, but since it is a point of law which
arises on admitted facts we have permitted the learned
Attorney-General to argue it before us.
The Act was first enacted in 1934 as Act 25 of 1934.
Since then it has been amended from time to time.
Its main object is to consolidate and amend the law
regulating labour in factories. For the purpose of
determining which concerns and which employees
300
SUPREME COURT REPORTS
[1961]
1960
would be governed by the Act s. 2(m) and (1) define
-
"factory" and "worker" respectively. Even a broad
Alembic Chemical
•
f h
h
f th A t
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l f 't
w k c
Ltd view o t e sc eme o
e
c an
a perusa o i s
or ' v.
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• provisions would clearly indicate that the Act is a
The Workmen beneficent measure and its policy is to make reasonable provisions for the preservation of health of the
Gajendragadkar J. workmen, their safety and their welfare. With that
object in view, the Act has made provisions for the
regulation of working hours of adults, has regulated
the employment of young persons, and has also provided for annual leave with wages to the workmen.
The amendments made in the relevant provisions of
'the Act from time to time indicate that the Act has
been pursuing its beneficent policy slowly but steadily
and is attempting to provide for the workmen better
and larger amenities in their employment. It is in
the light of this obvious policy and object of the Act
r
that we have to decide the question raised before us
by the appellant.
Section 79(1) occurs in Chapter VIII which deals
with annual leave with wages. It provides thus:
"79. (1). Every worker who has worked for a
period of 240 days or more in a factory during a
calendar year shall be allowed during the su bsequent calendar year, leave with wages for a number
of days calculated at the rate of-
(i) if an adult, one day for every twenty days of
work performed by him during the previous calendar year;
(ii) if a child, one day for every fifteen days of
work performed by him during the previous calendar year.
Explanation 1.-For the purpose of this sub.
section-
( a) any days of lay off, by agreement or contract
or as permissible under the standing orders;
.
· (b) in the case of a female worker, maternity
leave for any number of days not exceeding twelve
weeks; and
(c) the leave earned in the year prior to that in
which the leave is enjoyed;
shall be deemed to be days on which the worker
3 S.C,R. SUPREME COURT REPORTS
301
has worked in a factory for the computation of the
'960
period of 240 days or more, but he shall not earn A1'mb;;chemica1
leave for these days."
Works Co., Lid.
This section has II other sub-sections which deal n ;· k
with different aspects and make relevant provisions
' _".:_ men
in regard to annual leave with wages. It is not dis- Gajendragadkar J.
puted that the award purports to make provisions for
privilege leave in excess of the annual leave sanctioned by s. 79.
Can the Industrial Tribunal direct
the appellant to provide such additional privilege
leave to its employees?; in other words, does s. 79
purport to standardise annual leave with wages so
that no departure from the said standard is permissible either way? The appellant's contention is that
except for pre-existing awards, agreements, contracts
or except for pre-existing law no departure from the
standardised provision is permissible after s. 79 was
enacted.
This argument raises the question of construing
s. 79 in the light of the other relevant provisions of
the Act. It may be conceded that the provisions
made by s. 79 are elaborate, and in that sense may be
treated as self-contained and exhaustive.
It is also
clear that s. 79(1) does not use the expression "not
more than or not less than" as it might have done if
the intention of the Legislature was to make its provisions correspond either to the minimum or the maximum leave claimable by the employees; but even so,
when s. 79(1) provides that every worker shall be
allowed leave as therein prescribed, the provision
prima facie sounds like a provision for the minimum
rather than for the maximum leave which may be
awarded to the worker. If the intention of the Legislature was to make the leave permissible under s79( l) the maximum to which a workman would be
entitled, it would have used definite and appropriate
language in that behalf. We are, therefore, inclined
.to think that even on a plain construction of s. 79(1)
it would be difficult to accede to the argument that it
prescribes standardised leave which inevitably would
mean the maximum permissible until s. 79(1) itself is
changed.
302
SUPREME COURT REPORTS
(1961]
196o
"Even on the basis that s. 79(1) is capable of the
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. 1 construction sought to be placed on it by the appel-
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works co., Ltd. !ant, the quest10n wou
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remam w et er t e said
v.
construction should be preferred to the alternative
The Workmen construction which, as we have just indicated, is rea-
.
-
sonably possible. The answer to this question must
GaJ'ndragadkar J. be in the negative for .two reasons; first, having regard to the obvious policy and object of the Act, ifs.
79(1) is capable of two constructions that construction
should be preferred which furthers the policy of the
Act and is more beneficial to the employees in whose
interest the Act has been passed. It is well settled
that in construing the provisions of a welfare legislation courts should adopt what is sometimes described as a beneficent rule of construction; but, apart
from this general consideration about the policy and
object of the Act, ss. 78 and 84 occurring in the same
Chapter as s. 79 clearly indicate that s. 79(1) is not
intended to standardise leave provisions as contended
by the appellant, and that is the second reason why
the appellant's argument cannot be accepted.
Let us then consider the provisions of ss. 78 and 84.
Section 78(1) provides that the provisions of Chapter
VIII shall not operate to the prejudice of any right
to which a worker may be entitled under any other
law, or under the terms of any award, agreement
or cont.ract of service.
There is a proviso to
this sub-section which lays down that when such
award, agreement or contract of service provides
for longer annual leave with wages than provided in
this Chapter the worker shall be entitled only to such
longer annual leave.
Section 78(2) exempts specified
workers from the operation of Chapter VIII. The
first difficulty which this section raises against appellant's argument is that it undoubtedly recognises
exceptions to the leave prescribed bys. 79(1). It is
well-known that standardisation of conditions of service in industrial adjudication generally does not recognise or permit exceptions; if the hours of work are
standardised, for instance, or the wage-structure is
standardised, it is intended to make hours of work
and wages uniform in the whole industry brought
.-
\
I
3 S.C.R. SUPREME COURT REPORTS
303
under the working of standardisation. Standardisai96o
tion thus inevitably means levelling up of those
--ch . 1
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d
d. .
f
.
l
,_.
Alembic
emico
w ose terms an
con 1t10n~ o servwe were .ess 1aWorks Co., Ltd.
vourable than the standardised ones, and levelling
v.
down those of such others whose terms and conditions
Thu Workmen
were more favourable than the standardised ones.
That being so, ifs. 79(1) intended to standardise an- Gajendrngadkar J.
nual leave with wages it would normally not have
made provisions in regard to exceptions as s. 78(1)
obviously does.
Besides, the scope and extent of the exceptions recognised by s. 78(1) are decisively against the appellant's construction of s. 79(1). The learned AttorneyGeneral has strenuously contended that the saving
provision of s. 78(1) applies only to existing law and
existing awards, agreements or contracts of service;
in other words, his argument is that the Legislature
has deliberately decided to except pre-existing arrangements and in that sense it is a departure from the
usual concept of standardisation. In our opinion, the
assumption that s. 78(1) is confined to existing arrangements is plainly inconsistent with a fair and
reasonable construction of the said provision.
'When
s. 78(1) refers to any other law it could not have been
intended that it is only to existing laws that the
reference is made and that the idea underlying the
provision was that no law can be passed in future
which would grant more generous leave to the employees. Such a restriction on the legislative activities
of the appropriate Legislatures cannot obviously have
been intended. If the reference to law is not confined
only to existing law there is no reason why reference
to any award, agreement or contract of service should
!Je similarly circumscribed or limited.
We feel no
difficulty in holding that whats. 78(1) protects are
laws, awards, agreements or contracts of service which
were then existing or which would come into existence later; that is to say s. 78(1) does not affect 'preexisting arrangements and does not also prohibit future. arrangements which would be more generous
than s. 79(1).
A law may be passed making more
generous provisions, or agreements or contracts may
304
SUPREME COURT REPORTS
[1961]
'960
be entered into or awards made with the same result.
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. 1Ifthatbe the true positions. 78(1) clearly negatives
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.
.
works co .• Ltd. the theory that s. 79(1) provides for standard1sat10n
v.
of annual leave with wages.
J'he Workmen
The provisions of s. 84 would also lead to the same
-
result.
Section 84 provides that where the State
Gojendrogadkar J. Government is satisfied that the leave rules applicable to workers in a factory provide benefits which in
its opinion are not less favourable than those for
which Chapter VIII makes provision it may by written order exempt the factory from all or any of the
provisions of Chapter VIII subject to such conditions
as may be specified in the order. Now, the power to
exempt factories has to be exercised having regard
to the effect of the totality of the benefits which may
be afforded to the workers by their respective factories. This power to exempt also necessarily postulates the existence of better amenities than those
guaranteed by Chapter VIII, and that means that if
a factory provides better leave amenities to its employees, the State Government may in the interest of the employees exempt the factory from .
the operation of this Chapter. The scope of s. 84,
like the scope of s. 78, cannot be limited only to the
more favourable benefits which may be existing at the
date when the Act was pa8sed. What is true about
the existing benefits would be equally true about the
benefits which may be granted by an employer to the
employees in future. Let us illustrate what the consequence would be if the appellant's argument is
accepted. Take the case of an employer who has been
exempted under s. 84 on the ground that the benefits
of leave conferred by him on his employees are more
favourable to them. In such a case, the employer
may make his benefits still more favourable after
exemption is accorded to him; but an employer who
has already not provided more. favourable benefits
woul\l be effectively precluded from making any such
provisions in future. It is difficult to imagine that
such a consequence could have been intended by the
provisions of this welfare legislation.
3 S.C.R. SUPREME COURT REPORTS
305
The history of the amendments made in the rele.
r96o
vant provisions of the Act also indicates that the Act
. --
.
has been gradually making more liberal provisions in A~m~·~ c C/"~·~•I
the interest of workmen to whom it applies. In the
0
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1
•
original Act as it was passed (25 of 1934) s. 34 pro.
The workmen
vided for weekly holiday but no provision was made
-
for holidays with pay. When the said Act was amend. Gajendrngadkar]
ed by Act 3 of 1945, s. 49A which is equivalent to
present s. 78(1) without the proviso was inserted;
ands. 49B provided, inter alia, that every worker who
has completed a period of twelve months continuous
service in a factory shall be allowed during the subsequent period of twelve months holidays for a period
of ten days. That is how provision for holidays came
to be made.
By the ·amending Act 63 of 1948, s. 78
with the present proviso was enacted; and s. 79 made
a provision for annual leave with wages. While mak.
ing provision for annual leave with wages the section
then prescribed a minimum of ten days; subsequently,
by amending Act 25 of 1954, s. 79 as it stands at pre.
sent was enacted; and in s. 78 the word "annual" has
been added to qualify leave in the proviso. We have
thus briefly referred to some changes made in the
Act from time to time in order to show that subsequent amendments have sought to make the provisions more liberal.
There is one more point which may incidentally be
mentioned whilst we are considering the amendments
made in the Act from time to time. Section 49A
which broadly corresponds to s. 78 of the present Act
saved other laws and terms of any award, agreement
or contract of service just as s. 78( 1) does. Now, if the
said section is construed on the lines which the appellant wants us to construe s. 78(1) it would only be
arrangements existing at the date when the said
amending Act came into force on January l, 1946,
that would be protected and saved, and nothing that
happened either by way of legislation or by way of
awards or contracts subsequent to the said date would
attract the provisions of the said s. 49A or s. 78 which
subsequently took its place. This obviously is not
39
306
SUPREME COURT REPORTS
(1961]
I96o
intended by the Legislature which incidentally shows
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. 1 that s. 78( 1) cannot be confined to existing arrangeem "
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Works co .. Ltd. ments or aws, u
a es WI m its sweep uture aws,
v.
agreements, contracts or awards. Therefore, the chain, Workmen lenge to the validity of the award based on the
. -
assumption that s. 79(1) provides for standardised
~a;endragadkar J. award of annual leav(l with wages fails.
Then it is urged that the provision made by the
award for privilege leave introduces discrimination
between the clerical staff covered by the present reference and operatives covered by the earlier awards
made by the same Tribunal. We were told that operatives had made a similar claim for privilege leave before the same Tribunal, and the said claim had been
rejected. The argument is that the provision for
privilege leave made by the present award would
create discontent amongst the operatives to whom
similar leave has been denied, and that would disturb
industrial peace.
We are not impressed by this argument. It is not seriously disputed that a distinction
has generally been made between operatives who do
manual work and clerical and other staff; in fact the
appellant's standing orders themselves make different
relevant provisions for the two categories of its employees. lt is also not disputed that in practice such
distinction is made by comparable concerns, and
a wards based on the same distinction are generally
made in· respect of the two separate categories of
employees. We are, therefore, unable to appreciate
the argument that in granting privilege leave to the
present staff the Tribunal has either overlooked its
earlier a ward or has μiade a decision which suffers
from the vice of discrimination. The practice prevailing in comparable concerns and the trend of awards
both seem to show that a distinction is generally
made between the two categories of employees, and
since the said distinction is perfectly iustif).able no
question of discrimination can arise.
It is then argued that making liberal provisions for
privilege leave and sick leave are really opposed to
the modern trend in industrial thought, and so such
libeml awards should be discouraged and corrected.
3 S.C.R. SUPREME COURT REPORTS
307
There is no doubt that when industrial adjudication
i96o
seeks to do social justice it cannot ignore the needs of Alembi:-Chemical
national economy; and so in considering matters of works co., Ltd.
leave, either in the form of privilege leave or sick
v.
leave, the Tribunals should not ignore the considera.
The Workmen
tion that unduly generous or liberal leave provisions Gajend;:-,;;;dkar 1
would affect production and obviously production of
·
essential commodities is in the interest of not only
the employers and the employees but also of the
general community; but it is difficult for us to
accept the argument that we should make suitable
modifications in the provisions made by the award in
regard to privilege leave or sick leave. These are
matters primarily for the Industrial Tribunal to consi.
der and decide. The Tribunal is more familiar with
the trend prevailing in comparable concerns, and un.
less it appears that the impugned provisions cannot
be sustained on any reasonable ground or that they
mark a violent departure from the prevailing practice
or trend, we would be reluctant to interfere with the
decision of the Tribunal. After all, in deciding what
would be a reasonable provision for privilege leave or
sick leave, the Tribunal has to take into account all
relevant factors and come to its own decision.
As we
have already indicated, in making the present award
the Tribunal has considered previous decisions which
were relevant and prevailing agreements in compara.
ble concerns. We have carefully considered the criticism made by the learned Attorney-General against
the provisions contained in the award, but we are
not satisfied that a case has been made out for interference in an appeal under Art. 136.
The result is the appeal fails and is dismissed with
costs.
Appeal dismissed.