# HINDUSTAN ANTIBIOTICS LID v. THE WORKMEN & ORS

- **Citation:** [1967] 1 S.C.R. 652
- **Court:** Supreme Court of India
- **Decided:** 1966-10-03
- **Bench:** K. Subba Rao, M. Hidayatijllah, S. M. SiKRI, R. S. Bachawat, Raghubar Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hindustan-antibiotics-lid-v-the-workmen-ors-3898
- **Pages:** 27

## Headnote

Industrial Disputes Act, 1947 (14 of 1947), s. 10--Award by Tribunal-Fixation of Wage Scales--Public Sector underf(Jkings whether """
claim special ·treatment-:Dearness allowance, considerations in fixing--
Gratuity scheme-Age of retirement of warkers-Retrospective operation
of award; discretion of Tribunal in fixing dale.
The appellant was a Government undertaking incorporated under the
Indian Companies Act.
Its registered office was in Maharashtra and hi
main business the manufacture of antibiotics. The entire equity capilal
of the company was held by the President of India and his nominees and
the entire Board of Directors was nominated by him. Service conditions
of the workmen and other matters were subject to the approval of lbe
President of India. Though the company was a limited one and ther&-
fore had a distinct corporate existence, it was in effect finaoct.d and
COil·
trolled by the Central Government.
On
dispute arising between the
workmen of the company and the management thereof the Government
of Maharashtra made a reference under
s. IO(l)(d) of the Industrial
Disputes Act, 1947 for its adjudication. The
Industrial Tribunal gave
its award in two parts and gave, inter alia, the following findings :
Rejecting the contention of the company that in flXing the wage scale.•
different considerations and standards should apply to public sector undertakings as distinct from private sector undertakings, the Tribunal fixed the
wage scale on region.cum-industry basis. It
found that
the .company
was a very large and prosperous concern and its wage scales were on the
low side particularly in regard to the lower categories of workers, taking
into consideration the duties and qualification prescribed for them.
The
Tribunal fixed the wage scales having regard to the company's financial
position, its productive. capacity, a comparative study of its wage struc~
ture with that of its neighbouring industries and similar other relevant
faclors.
It retained the existing dearness allowance scheme except for a
small alteration in the slab of dearness allowance
for the pay group
Rs. 301-500; it merged a .proportion of what would normally be paid
in the shape of dearness allowance in the ba.'iic pay in the case of lower
categories of workmen by giving increases wherever
necessary
for the
basic pay only.
It linked the dearness allowance with the cost of living
index for Poona.
It evolved a gratuity scheme for the \\.'Orkmen. It gave
retrospective operation to the award.
There were other findings on the
various demands of the workmen. The company appealed to this Court
under Art. 136.
HELD : (i) In dealing with appeals brought to this Court under Art.
136 of the Constitution against awards which construct wage structures,
this Court would not interfere with
the actual provisions of the wage
structure unless some general principles
were involved.
There was no
Justification for the argument that this
C'.-0urt had by convention
and
practice adopted a more liberal attitude in the case of appeals against
awards than in other appeals.
[658 C..DJ
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ffiNDUSTAN ANTIBIOTICS v. WORKMEN
653
Observations in Bengal Chemical
and
Pharmaceutical Works Ltd.,
Calcutta v. Workmen. [1959) Supp. 2. S.C.R. 136, teaffirmed.
(ii) The object of Industrial law is two-fold namely, (i) to improve
the service conditions of industrial labour so as to provide for them the
ordinary amenities of life, and (ii) by that process to bring about inclmtrial peace which would in its turn accelerate productive activity o~ tho
country resulting in its prospe~ty. The prosperity of ~e country !11 i!"
turn helps to improve the conditions of labour. By this process it is
hoped that the standard of life of labour cal) be progressively raised from
the stage of minimum wage, passing through need found wage, fair wage,
to livins; wage.
The principle of region-cum~industry, the doctrine that
the mimmum wage is to be assured to labour irrespective of the capacity
o

## Text

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HINDUSTAN ANTIBIOTICS LID.
v.
THE WORKMEN & ORS.
October 3, 1966
[K. SUBBA RAO, C. J., M. HIDAYATIJLLAH, S. M. SiKRI,
R. S. BACHAWAT AND RAGHUBAR DAYAL, JJ.j
Industrial Disputes Act, 1947 (14 of 1947), s. 10--Award by Tribunal-Fixation of Wage Scales--Public Sector underf(Jkings whether """
claim special ·treatment-:Dearness allowance, considerations in fixing--
Gratuity scheme-Age of retirement of warkers-Retrospective operation
of award; discretion of Tribunal in fixing dale.
The appellant was a Government undertaking incorporated under the
Indian Companies Act.
Its registered office was in Maharashtra and hi
main business the manufacture of antibiotics. The entire equity capilal
of the company was held by the President of India and his nominees and
the entire Board of Directors was nominated by him. Service conditions
of the workmen and other matters were subject to the approval of lbe
President of India. Though the company was a limited one and ther&-
fore had a distinct corporate existence, it was in effect finaoct.d and
COil·
trolled by the Central Government.
On
dispute arising between the
workmen of the company and the management thereof the Government
of Maharashtra made a reference under
s. IO(l)(d) of the Industrial
Disputes Act, 1947 for its adjudication. The
Industrial Tribunal gave
its award in two parts and gave, inter alia, the following findings :
Rejecting the contention of the company that in flXing the wage scale.•
different considerations and standards should apply to public sector undertakings as distinct from private sector undertakings, the Tribunal fixed the
wage scale on region.cum-industry basis. It
found that
the .company
was a very large and prosperous concern and its wage scales were on the
low side particularly in regard to the lower categories of workers, taking
into consideration the duties and qualification prescribed for them.
The
Tribunal fixed the wage scales having regard to the company's financial
position, its productive. capacity, a comparative study of its wage struc~
ture with that of its neighbouring industries and similar other relevant
faclors.
It retained the existing dearness allowance scheme except for a
small alteration in the slab of dearness allowance
for the pay group
Rs. 301-500; it merged a .proportion of what would normally be paid
in the shape of dearness allowance in the ba.'iic pay in the case of lower
categories of workmen by giving increases wherever
necessary
for the
basic pay only.
It linked the dearness allowance with the cost of living
index for Poona.
It evolved a gratuity scheme for the \\.'Orkmen. It gave
retrospective operation to the award.
There were other findings on the
various demands of the workmen. The company appealed to this Court
under Art. 136.
HELD : (i) In dealing with appeals brought to this Court under Art.
136 of the Constitution against awards which construct wage structures,
this Court would not interfere with
the actual provisions of the wage
structure unless some general principles
were involved.
There was no
Justification for the argument that this
C'.-0urt had by convention
and
practice adopted a more liberal attitude in the case of appeals against
awards than in other appeals.
[658 C..DJ
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ffiNDUSTAN ANTIBIOTICS v. WORKMEN
653
Observations in Bengal Chemical
and
Pharmaceutical Works Ltd.,
Calcutta v. Workmen. [1959) Supp. 2. S.C.R. 136, teaffirmed.
(ii) The object of Industrial law is two-fold namely, (i) to improve
the service conditions of industrial labour so as to provide for them the
ordinary amenities of life, and (ii) by that process to bring about inclmtrial peace which would in its turn accelerate productive activity o~ tho
country resulting in its prospe~ty. The prosperity of ~e country !11 i!"
turn helps to improve the conditions of labour. By this process it is
hoped that the standard of life of labour cal) be progressively raised from
the stage of minimum wage, passing through need found wage, fair wage,
to livins; wage.
The principle of region-cum~industry, the doctrine that
the mimmum wage is to be assured to labour irrespective of the capacity
of the industry to bear the expenditure in that regard, the concept that
fair wage is linked with the capacity of the indmtry, the rule of relevancy of comparable concerns, and the recognition of the totality of the
basic wage and dearness allowance that should be borne in mind ;n the
fixation of wage structure, are all well settled. [659 F-H]
Mis. Crown Aluminium Works .v. Their
Workmen,
[1958] S.C.R.
651, Express Newspapers (Private) Ltd. v. Union of India [1959] S.c.R.
12, French Motor Car Co. Ltd. v. Workmen, [1963] Supp. 2 S.C.R. 16 lind
TM Hi"ndiJstan Times Ltd., New Delhi v. Their Workmen, [1964) 1 S.C.R.
234, referred to.
(iii) All the principles referred to above though accidentally evolved
in industrial adjudication relating to industries born in the private sector
apply equally well to industries in the public sector. There is no justillcation from the standpoint of the employee that different wage structure
shall be adopted having regard to the fact that in one case the shares or
the company are held wholly or partly by the Central Government er
the State Government and in other cases by members of the public. The
worker is interested in his pay packet and if he is given reasonable wages,
it is expected that a satisfied worker will contribute to the growth of the
industry and ultimately the prosperity of the country.
From this standpoint, which is a paramount consideration, so long as the capacity of the
industry is assured, the character of the employer is irrelevant.
Jn the
ultimate analysis,
the character of the employer or the destination or
profits has no relevance in the fixation
of wages. Whoever may be the
employer, he has to pay a reasonable wage to the employees. [660 F.
662 BJ
Constitutional, legislative, executive and opinion trends in that regard.
all go to show that wages should normally be fixed on region-cum-industry basis. [662 C-668 Fl
. The . ma~erial on recor? further s~owed that
the-re was no complete
un1form1ty ID pay scales m all public sector undertakings. The service
":"n.ditions of the employees in public sector undertakings were also not
similar to those of Government employees; there was no security of ser ...
vice; the fundamental rules did not apply to them; there was no constitutional prcrtection; there was no pension; they were covered by standing
orders; their service conditions were more similar to those of employees
in the private sector than those in Government departments.
The Pay
Commission recommendations were not applicable to the employees of
th.e Government .unde·rtakings in the public sector; indeed the Pay ComausSion Report did not deal with them. [668 G-669 A-BJ
There were no grounds for the fear that there would be any ri:percussions on other public sector undertakings situated in different parts of
654
SUPREME COURT REPORTS
(1967) I S.C.R.
the country because of the said ditferences in the wage structure of the
Oovemment undertakings in the public sector.
[669-DJ
(iv) The doctrine of dearness allowance was only evolved in India.
lmtcad of increasing W38" as it is done in other countries, dearness allow-
&DCe is paid to neutralise the rise in prices.
This process was adopted
in cxpectation that one day or other we would go back to the original
price levels. But when it was found that it was only a vain hope a part
of the dearness allowance was added
to the basic
wages.
While the
Tribunal increased the wagea in fixing the dearness allowance
it looked
into the overall picture namely,
whether the total wage packet would
approximate to the total packet wages in comparable -industries.
There
was no question therefore of paying
dearness allowance
on dearness
allowance, but it was only paymept of dearness allowance in addition to
tho increased wages. Even on the
basis of increased
wages dearness
ailowance was necessary to neutralise
the rise in prlcea. The Tribunal
lll&o introduced the slab system so that in the case of employees falling
in the higher slabs the rise in prices
was adequately neutralised. The
Tribunal did not commit any error of principle. [671 F; 672 DJ
(v) There was no double provision for house rent. The fact that in
the index . for_ Poona one of the components ~as house. rent. only m~t
that the nse Ill the house rent was also taken mto consideration 10 amving at the index.
Unless it was established thal the house rent
was a
major item which went in in11ating the price Index, it could not be said
that the Tribunal by awarding house rent allowance had given a double
adnntage to the employees. [672 El
(vi) Gratuity is an additional form of relief for the worker to fall
baclr. upon. U the industry can bear the burden, there is no reason why
he should not be entitled to both the benefits-provident fund
and
gratuity. The Tribunal considerP.d
all
the relevant circumstances : the
stability of the concern. the profits made by it in the past, its future prospccl5 and its capacity and came to the conclusion that in the concern in
question the labour should be provided with a gratuity scheme in addition to that of provident fund.
There was no justification to disturb the
conclusion.
[674 DJ
In the nature of things a particular ceiling for gratuity cannot be
fixed. If depends on the facts of each case. The scheme as prepared
by the Tribunal was fair and equitable. [674 F]
(vii) Only such of the item; which go directly to reduce the expenditure that wowd otherwise go into the family budget are relevant m fixing fair wages.
The Tribunal had taken all the permis<ible fringe benefits in fixing the wage scales and dearness allowance.
It could not !her""
fare be said that the Tribunal went wrong in omitting any amenities in
fixing the wages. [ 675 C]
(viii) Having taken into account the relevant factors the Tribunal in
its discretion came to the conclusion that the revised scales should come
into elfect from !st January
1962. There was no reBlion to interfere
with its discretion. [675 GI
(ix) It was common case
that work in the 'closed area' involved
greater physical strain on the workmen. Therefore when
the Tribunal
gave them a reasonable allowance it was not possible for this Court to
take a different view. [675 HJ
(x) The Tribunal accepted the principles generally applied in fixing
wages.
It had not been shown that any principlu had been violated. rt
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IHNDUSTAN ANTIBIOTICS v. WORKMEN (Subba Rao, C./~) 655
was true that in some cases. the total emoluments of a particular ·category
of employees of the company were higher than those of the other concerns, but the difference was not such as to be described as a flagrant
violation of the fixation of the wage structure. If no principle is violated
this Court will not interfere on the ground that it would have fixed the
wages at a. lower level than the Tribunal did.
(676 F-DJ
(xi) The finding of the Tribunal that a foreman. was not a workman
was on a consideration of bis duties which it found to be of a managerial
or administrative nature. The finding was one of fact and therefore must
be accePted.
[676 FJ
(xii) There was no error of principle in the rates fixed by the Tribunal in the case of daily-rate workers. (677 A-BJ
(xiii) The Tribunal was not right in giving a discretion to the employers to continue or not to continue employees beyond the age of 58
years. Following the trend of judicial opinion . the retirement age of the
employees of the company should be raised to 60 years. (677 HJ
(xiv) The Tribunal bad given linkage with effect from April 1, 1965.
The employees bad not made out any case for giving a further retrospective effect to the linkage. (678 B.CJ
CML APPELLATE!JuRISDICTION : Civil Appeals No. 406 and
407 of 1964.
Appeals by special leave from the award dated October
8, 1963 of the Industrial Tribunal, Maharashtra, in Reference (IT)
No. 147 of 1962.
S. D. Vimadalal, ·B. Dutta, J. B. Dadachanji, 0. C. Mathur
and Ravinder Narain, for the appellant (in C.A. No. 406 of 1964)
and the respondent (in C.A. No. 407 of 1964).
M. C. Setalvad, K. T. Sule, Madan G. Phadnis, Jatindra Sharma
and Janardan Sharma, for the respondent (in C.A. No. 406 of 1964)
and the appellant (in C. A. No. 407 of 1964).
F
M. K. Ramamurthi, for intervener No. 1.
G
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M. R. K. Pillai, and M. S. K. Iyengar, for intervener No. 2.
The Judgment of the Court was delivered by
Subba Rao, C. J. These two Cross Appeals raise the question, among others, whether the wage structure, including dearness
allowance, of a Government undertaking in the public sector
sltould be of a pattern different from that of an undertaking in the
private sector.
The Hindustan Antibiotics Limited, hereinafter called "the
Company", is a Government undertaking and is incorporated
under the Indian Companies Act. Its registered office is· at Pimpri, Poona District, State of Maharashtra, and its main business
is the manufacture and distribution in bulk of antibiotics like
penicillin,
streptomycin, etc. The entire equity capital of the
65.6
SUPREME COURT RBPORTS
(1967] l S.C.R.
Company is held by the President of India and his
nominees,
and the entire Board of Directors of the Company is nominated
by him. The conduct of the business of the Company is subject
to the directives issued from time to time by the President of India
and its accounts are audited by tbe auditors appointed
by the
Central Government on the advice of the Comptroller and Auditor
General of India. Service conditions of the workmen and other
matters are subject to the approval of the President of India. The
annual report of the working of the Company and its affairs along
with the Audit Report has to be placed before the
Parliament.
There are no shareholders other than the Central Government
or its nominees, with the result that the dividends declared by
the Company entirely go to the coffers of the State, but the profits are ploughed back into the industry or kept as reserve for
future requirements. Jn short, though the Company is a limited
one and, therefore, has a distinct
corporate
existence, it is in
effect financed entirely from the funds of the Central Government.
The Company employs
about 2,000 workmen. A
dispute
arose between the workmen of the Company and the management
thereof and the workmen presented a charter of fifteen demands
to the Company. The Government of Maharashtra referred the
said dispute to the Industrial Tribunal, Bombay, for adjudication
under s. lO(l)(d) of the
Industrial Disputes Act,
1947
(14 of 1947).
The Industrial Tribunal, after elaborately considering the
conflicting contentions of the disputants,
gave an award dated
October 8, 1963.
Jn making tbe said Award the Industrial Tribunal postponed its decision on the question of linking dearness allowance with the cost of living iudex which had not then
been prepared for Poona. The Company and its workmen, after
obtaining special leave, filed Cross Appeals against the said award
and on the last occasion when the said appeals came up for hearing, this Court by its order dated September I 4, 1965, adjourned
the same awaiting
the pronouncement by the Industrial Tribunal of Part JI of its award. After the said
adjournment of
the appeals by this
Court, the Industrial Tribunal. on December 23, 1965, made part II of its award. These appeals arc now
before us for disposal.
The Industrial Tribunal made the following findings among
others : Rejecting the contention of the Company that in fixing
the wage scales different
considerations and standards should
apply to public
sector undertakings as distinct from private
sector undertakings, the Tribunal fixed the wage scales on rcgioncum-industry basis. On a scrutiny of the comparative study
of the wage structures of companies in the region, it found that
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lfl:NDUSTAN ANTIBIOTICS v. WOllKMI!N (Stlbba Rao, C./,) 657
the Company was a very large and prosperous concern and its
wage scales were on the low side, particularly in regard to .the
lower· categories of workers, taking into consideration the duties
and qualifications prescribed for them.
The Tribunal fixed the
wage scale8, having regard to the Company's financial position,
its productive capacity, a comparative study of its wage strl.lcture with that in the neighbouring industries, and sinillar other
relevant factors. It retained the -existing dearness
allowance
scheme except for a small alteration ·in the slab of. dearness
allowance for the pay group Rs. 301-500; it merged a J)roportion of what would normally be paid in the shape of ~arness
allowance in the basic pay in the case
of lower categories
of workmen by giving .increases wherever necessary in the basic
pay only. It linked the dearness allowance ·with the cost of living index for Poona. It evolved a gratuity scheme for the workmen. It gave retrospective operation to the award. The findings of the Tribunal on other points need not be mentioned here
they will be dealt with in appropriate places. In the result, pursmint to the said directions, the Tribunal had worked out the
figures in detail and giveq its findings on the various demands
made by the workmen.
·
At the outset it may usefully be reiterated that this Court
is not a regular court of appeal against orders of tribunals. The
scope of its power under Art. 136 of the Constitution vis-a-vis
awards of tribunals is stated in Bengal Chemical and Pharmaceutical Works Ltd., Calcutta v. Their Workmen('). Therein this
Court observed:
·
"Article 136 of the Constitution does not confer
a right of appeal to any party from the decision of any
tribunal, but it confers a discretionary power on the Supreme Court to grant special leave to appeal from the
order of any tribunal in the territory of India. It is
implicit in the discretionary reserve power that it cannot be exhaustively defined. It cannot obviously be
so construed as to confer a right to a party where he
has none under the law. The Industrial Disputes Act
is intended to be a self-contained one and it seeks to
achieve social justice on the basis of collective bargaining, conciliation and arbitration. Awards are given
on circumstances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions
of technical considerations imposed on courts. A free
and liberal exercise of the power under Art. 136 may
materially affect the fundamental basis of such decisions,
namely, quick solution to such disputes
to
achieve
(I} (1959] Supp, 2 S.C.R. 136, 140.
658
SUPUMB COURT UPO&TS
(1967] I S.C.Ro
industrial peace. Though Art. 136 is couched in widest
terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made
in violation of the principles of natural justice, causing
substantial and grave injustice to parties or raising an
important principle of industrial law requiring elucidation and final decision by this Court or disclosing such
other exceptional or special circumstances which merit
the consideration of this Court."
We have cited the passage in sxtenso, as during the course of arguments, stress was laid on the fact that this Court has, by convention and practice adopted a more liberal attitude in the case of
appeals agaipst awards than in other appeals. We do not find any
justification for this argument.
Indeed, in this very case, this
Court, on the last occasion adjourning the same, made the following observations:
"Normally, in dealing with appeals brought to this
Court under Art:cle 136 of the Constitution against
Awards which construct wage structures, this Court
does not interfere with the actual provisions of the wage
structure unless some general principles are involved.
This position is not disputed by the learned AttorneyGeneral."
No case has been cited before us where a conscious departure
has been made from the said observations in Be~gal Chemical
and Pharmaceutical Works Ltd., Calcutta v. Their Workmen(').
It may be that if the facts of some of the appeals decided by this
Court were analysed, a liberal attitude may be discovered but the
judgments therein would be found to have turned upon the peculiar facts of those appeals. In the absence of any definite pronouncements accepting a deviation from the said principle, we cannot
adopt a principle different from that recorded in the aforesaid
decision.
We,
therefore, re-affirm the observations made in
the said judgment as laying down the correct approach to appeals
under Art. 136 of the Constitution against awards of tribunals.
The main contention of Mr. S. D. Vimadalal, learned counsel for the Company, may be put thus : The pattern of wage fixation in the case of Government companies born in the
public
sector should necessarily be different
from that of companies
born in the private sector. Elaborating the argument, he relied
upon the following circumstances to sustain the said distinction :
(i) nexus with the Central Government; (ii) need to keep parity
or at least no disparity between different public sector industries
in different parts of the country; (iii) the concepts of capacity
(I) [19S9J Supp. 2 S.C.R. 136, 140.
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lilNDUSTAN ANTIBIOTICS v. WORKMEN (Subba Rao, C.J.) 659
profitS and surplus have a new connotation which is
different
from that they bear in their application to industries in the private
sector; (iv) pay scales are the same in all the industries throughout India born in the public sector; (v) amenities and fringe
benefits in public sector industries are incomparably greater
than in the private sector industries; (vi) the employees of the
public sector industries have greater security than those of the
private sector industries; (vii) the fact that the Government, instead of running the business departmentally formed a company
for the same purpose cannot possibly make any difference in the
wage structures; and (viii) the undertaking in question is entirely
financed by the Government. He would also say that _the appropriate pattern to a Government company was that laid down
by· the Second Pay Commission as applicable to departmentally
run industrial units of the Central Government.
Mr. M. C. Setalvad, appearing for the workmen of the Company, countered this argument by stating that in fixing the wage
structure, including dearness allowance, the question who is the
employer is irrelevant and the needs of the employee are only
paramount and that from the perspective of an employee there
cannot possibly be any difference between companies born in
the public sector and those born in the private sector. The apprehension, the argument proceeded, that there may be discrimination if this distinction is adopted between different industries has no real bearing, as it is impossible to eliminate completely all traces of discrimination between employees of different
industries whatever principle is adopted.
At the outset, it will in convenient to consider the question
of principle. The object of the industrial law is two-fold, namely;
(i) to improve_ the service conditions of industrial labour so as
to provide for them the ordinary amenities of life, and (il) by
that process, to bring ~bout industrial peace which would in its
tum accelerate productive activity of the country resulting
in its prosperity. The prosperity of the country, in it11 tum, helps
to improve the conditions of labour. By this process, it is hoped
that the standard of life of the labour can _be progressively raised
from the stage of minimum wage, passing through need found wage,
fair wage, to living wage. Industrial adjudication reflected in
the judgments of tribunals and the courts have evolved some principles governing wage fixation though accidentally they related
only to industries born in the private sector. The principle of ·
region-cum-industcy, the doctrine that the
minimum wage
is
to be assured to the labour irrespective of the capacity of the
industcy to bear the expenditure in that regard, the eonceP.t that
fair wage is linked with the capacity of the industry, the rule of
relevancy
of comparable concerns, and the recognition of the
660
SUPRBMB COURT REPORTS
(1967) I S.C.R.
totality of the basic wage and dearness allowance that should be
borne in mind in the fixation of wage structure, are all so well
settled and recognised by industrial adjudication that further
elaboration i~ unnecessary. In this context, a reference
to the
decisions in Messrs. Crown.Aluminium Works, v. Their Workmen(•),
Express Newspapers (Private) Ltd., v. The Union of lndia(2), French
Motor Car Co. Ltd. v. Workmen() and The
Hindustan Times
Ltd., New Delhi v. Their Workmen(4) will be useful. There is
no, and there cannot be any, dispute on the laudable aims of
industrial policy of our country in the matter of wage fixation.
Das
Gupta, J., in The Hindustan Times ltd., New Delhi. v. Their Workmen(•) said at page 240 :
"In trying to keep true to the two points of social
philosophy and economic necessiti~s which vie for consideration, industrial adjudication has set for itself certain standards in the matter of wage fixation. At the
bottom of the ladder, there is the minimum basic wage
which the employer of any industrial labour must pay in
order to be allowed to continue an industry. Above tbis
is the fair wage, which may roughly be said to apprmtimate to the need based minimum, in the sense of a wage
which is "adequate to cover the normal needs of the average
employee regarded as a human being in a civilised society".
Above the fair wage is the "living wage"-a wage "which
will maintain the workman in the highest state of industrial
efficiency, which will enable him to provide his family with
all the material things which afe needed for their health
and physical well-being, enough to enable him to qualify
to discharge his duties as a citizen"."
This passage briefly and neatly defines the three concepts of minimum wage, fair wage and living wage.
In the application of the
said principles doubtless evolved in the industrial disputes in the
private sector, what is the difference between industries in the two
sectors to justify a different treatment of the industries in the public
sector ? There is socio-economic justification for the said principles. The social and economic upliftment of the labour is important for securing industrial peace which is essential to increase
the national productivity. It is an accident that industrial adjudication in the private sector has thrown out the said principles.
All the said considerations equally apply to industries in ·the public
sector: We are excluding, for the present, industries run by the
Government departmentally, for, in one sense they are also industries in the public sector. We are referring only to industries
run by limited companies wherein the Government owns the entire
share capital or a part of it.
Now, take a particular region, say
(I) (19S8] s.c.R. 6SI.
(2) 11959! S.C.R. 12.
(3) (1963] Supp. 2 S.C.R. 16.
(4) [1964] I S.C.R. 234.
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HINDUSTAN ANTIBIOTICS v. WORKMEN (Subba Rao, C.l.)661
Bombay. In that region-we are only takin11 a hypothetical
case-there may be four companies owning factories manufacturing antibiotics, namely, a limited company in ·which the Government does not own any shares and all the shares are owned by the
members of the public, a company in which all the shares are held
by the Central Government, a company whose share capital is
owned by the Government as well as by the public and a company
which is a proprietary undertaking owned by a single individual
or a number of individuals. All the factories are making appreciable
profits and have capacity to pay the employees. What is the justification from the standpoint of the employees that different wage
structure shall be adopted having regard to the fact that in one case
the shares are held wholly or partly by the Central Government or
the State Government and in other cases by the members of the
public ? The worker is int_erested in his pay- packet and if he is
given reasonable wages, it is expected that a satisfied worker will
contribute to the growth of the industry and ultimately the prosperity of the country. From his standpoint, which is a paramount
consideration, so long as the capacity of the industry is assured, the
character of the employer is irrelevant. Now, let us look at the
problem from the standpoint of the employer. It is said that
a company born in the private sector works with a profit motive
and exploits the workmen for its private ends, whereas a company
born in the public sector, though it is expected to make profits, really
contributes to the wealth of the whole country. This argument
poses the question of the comparative merits of different ideologies
such as price economy, mixed economy, socialism etc.
We- do not
propose to go into these complicated economic problems; but it
cannot be posited that necessarily and inevitably companies born in
the private sector only care for profits by exploiting workers and
those born in the public sector always work for public good.
Different countries following different ideologies have reached prosperity or are on the way of prosperity. It cannot be said that a
particular ideology only will lead to that result : it depends upon
many other factors. That apart, whatever may be said about proprietary firms, it cannot be asserted that every company born in the
private sector only functions on private motives; it may earn profits,
pay reasonable dividends and plough back the balance of the profits
into the industry for its further growth. So too, it cannot be asserted
that always a State will utilise the profits earned for the good of the
country. There are many instances in the world where the national
resources were frittered away. In the ultimate analysis, the character of the e_mployer or the destination of profits has no relevance
in the fixation of wages. Whoever may be the employer, he has to
pay a reasonable wage to the employees. The incongruity of the
alleged distinction in the matter of wages is further exemplified
if we compare similar industries in the same region owned ·by the
State and by the Union. Now, if the argument be acoepted, the
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SUPllBMB OOUll.T Jll!l'Olt.TS
[1967) I S.C.R.
pattern of wage structure between these also must differ, for, the
pay scales Ji.ow obtaining in the State Governments and the Central
Government radically differ. On the other hand, if the doctrine of
region-cum-industry is accepted, all the employees of industries of
similar nature, irrespective of the character of the employers, will
get a fair deal without any discrimination which will certainly be
conducive to the industrial development of our country.
Let us now consider the constitutional, legislative, executive
and opinion trends in that regard. Art. 39 of the Directive Principles of State Policy says that the State shall direct its policy towards securing equal pay for equal work for the both men and
women and Art. 43 thereof enjoins on the State to endeavour
to secure, by suitable legislation or economic organisation or in
any other way, to all workers, agricultural, industrial or otherwise,
work, a living wage, conditions of work ensuring a decent standard
of life and full enjoyment of leisure and social and cultural opportunities. This constitutional directive will certainly be disobeyed
if the State· attempts to make a distinction between the same class
of labourers on the ground that some of them are employed by a
company financed by it and the others by companies floated by private enterprise.
Th~ Articles do not countenance the invidious
distinction which is now sought to be made on the basis of the
character of the employer. The Legislatures in India even before
the coming into force of the Constitution passed Acts regulating
industries such as the Industrial Disputes Act, 1938, Industrial
Employment (Standing Orders) Act, 1946 and Industrial Disputes
Act, 1947. In these Acts no distinction is made between industries
in public and private sectors vis-a-vis the service conditions of the
labour. Under s. 2(g) of the Industrial Disputes Act, 'employer'
means in relation to an industry carried on by or under the authority
of any department of the Central Government or a State Government the authority prescribed in this behalf, the head of the department; and un'.ier cl. (j) 'industry' means any business, trade, undertaking, manufacture or calling of employers and includes any calling,
service, employment, handicrafts etc. S. 2cl. (s) defines workman to
mean any person employed in any industry to do ...... work for
hire or reward.
A combined reading of these provisions indicates-indeed it is
not disputed-that the Act regulates the relationship of employer
and employee irrespective of the fact that the employer is the State
Government or not. But what is stated is that though the said Act
governs the relationship between the employers and workmen irrespective of the fact whether the employer is Government or Government-aided corporation, the pattern cf wage structure need not
necessarily be the same; but the fact that the disputes between tile
employers and employees, irrespective of the character of the emA
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ployer are made the subject of industrial adjudication is indicative,
though not decisive of the legislative intention to treat workmen
similarly situated alike in the matter of wage structure and other
conditions of service.
S. 20 of the Payment of Bonus Act of
1965 directs the application of the Act to establishments in public
sector in certain cases.
Industrial adjudication also adopted the same pattern for both
the categories of industries. Awards given by tnlmnals in industrial
disputes raised by the workmen of Air India, State Bank of India,
municipal undertakings, collieries, Bombay Electricity Supply and
Transport Undertaking, and Life Insurance Corporatio~ of India,
show that the tribunals applied the principles evolved by industrial
adjudication in regard to industries in the private sector to the said
public undertakings. The comment that some of them had a
private sector background and, therefore, the tribunals treated them
on par with the industries in the private sector has no force, and
indeed the fact that the same principles were applied notwithstanding
the conversion of the private sector industries into public sector
industries shows that a different treatment was not thought necessary.
So too, the wage. boards constituted by the Government of India
for different indu8tries, such as steel, engineering, cement, hotel etc.
made enquiries into their service conditions without making any
distinction between the industries in the two sectors.
The pronouncements made by the Government or its official
agencies do not also support any such distinction. In the 15th session of the Indian Labour Conference held in New Delhi on July 11
and July 12, 1957, the labour, the employees, the employers, the
State Governments and the Central Government were represented.
One of the recommendations made by that Conference in regard to
fair wages is found in para 5 of its report. It reads :
"As regards faif wages, itwas agreed that the Wage
Boards should go into the details in respect of each indnstry
on the basis of the recommendations contained in the report
of the Committee on Fair Wages. These recommendations of the Fair Wages Committee should also be made
applicable to employees in the public sector."
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Another recommendation was that the study groups inay assemble
materials for rationalisation of the management in industries, includinll those in the public sector.
Pointing out the difference
between ·the two sectors, the Planning Commission observed :
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'"l>nblic undertakings differ in an important respect
from tfrivate undertakings. The 'profit' motive and the
exploitation of workers for private 'gain have no significance
in the State owned enterprises. The undertakings have no
doubt to show the same, if not greater efficiency of working
M16llup.CJ/66-14
664
SUPRBJa COURT Rl!POll.TS
(1967] I S.C.R.
as private owned undertakings. They have also to show
profits. But the nature of these profits is different. The
profits which these undertakings make are not profits intended for any individual or group of individuals but are
extra wealth for the whole country."
In the First Five Year Plan the· Planning Commission laid down
the policy in respect of different undertakings thus :
"The aim should be to have a co-operative and contented labour force. The ways by which this can be achieved
while maintaining peace in the undertakings and increasing
production are :
(a) Wages in public undertakings should not be less
favourable than those prevailing in the neighbouring
private enterprises. In so far as working conditions
and welfare amenities are concerned, undertakings in
the public sector should set the pace and serve as
models.
(b)
(c) The benefits of all labour laws which arc applicable to
similar private undertakings should also be made
available to fhe workers of these undertakings ..... .
(d)
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The atmosphere should be such that the workers be
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made to feel that in practice, as well as in theory,
they are partners in the undertaking.
(e)
(f) Collective bargaining between workers and management
should be encouraged. Such collective bargaining should
embrace both economic and non-economic demands ..
Government conciliation and arbitration machinery
should be made available to the workers of these undertakings. The existing right of Government to accept,
reject or modify an award should be restricted to
period of emergency."
It is true that the said extracts have no statutory force but only represent the opinion of the Planning Commission. But both the
parties only relied upon it to show the thinking of the policy-making
bodies and the trends in the matter of industrial adjudication.
While recognising the differences that existed between industries
in the two sectors, the Planning Commission expressed the view that
the object was to have a co-operative and contented labour and that
therefore, the employees of the public sector should also have the
benefit of industrial adjudication.
Both the sides relied upon the
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HINDUSTAN ANTIBIOTICS v. WORKMEN (Subba Rao, C.l.)665
passage which said that wages in public undertakings should not be
less favourable than those prevailing in the neighbouring private
enterprises. Wo do not see how this passage helps the Company.
Indeed, in a way, it supports the respondents for it seeks to put
the wages in both the sectors on the same level.
The Planning Commission in its report on the Second Five Year
Plan not only reiterated but also emphasised its earlier view.
Therein it observed.
"Any attempt, therefore, on the part of public employer
to avoid the responsibility of an employer on the ground
that he is not working for profit has to be discouraged.
............ In the last analysis employees in the public
sector should, on the whole, be at least on par with their
counterparts in private employment and should feel a legitimate pride in what they produce and in their position as
employees in the public sector."
So too, the report on the Third Five Year Plan, though it brought the
distinction between the two sectors, it again stated that similar
scales of pay should be given to employees in both the sectors.
The relevant passage thereof runs thus :
"Increased profits, which in the private sector would create inequalities, {and possible conspicuous and wasteful
consumption), in the public sector can be directly used for
capital accumulation.