# Union of India v. MaharaJa Krishnagarh i-. Mills Ltd

- **Citation:** [1961] 3 S.C.R. 536
- **Court:** Supreme Court of India
- **Decided:** 1958-01-13
- **Case number:** Civil Appeals Nos. 416 of 1!158 an.; 19 of 1959
- **Bench:** P. B. Gajendragadkar, K. N. WANCHoo, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-v-maharaja-krishnagarh-i-mills-ltd-2044
- **Pages:** 28

## Headnote

Industrial dispute-Bonus-Living Wage, determination of.
The workmen claimed bonus for the year 1956 equivalent to
nine months' total earnings on the ground that the employers
had admitted their capacity to pay and that there was a big gap
between the wage actually received and the living wage. The
employers contended that they were paying the workmen a living
wage and they were not entitled to any bonus. The employers
relying mainly on the Report of the Textile Labour Committee,
1940, contended that if the living wage in 1940, i.e., R,s. 55/· was
multiplied by 3·5 (due to rise in prices) it gave Rs. 192·50 as the
living wage in 1956 and they were paying their workmen at a
higher rate. The workmen relied on the recommendations of the
Indian Labour Conference, 1957, to show that Rs. 209·70 approximat.ed to the standard of the need-based minimum wage and that
the average. wag:e paid by the employers was nothing more than
this. The Tribunal held that the wages paid were fair but that
there was still a gap between the actual wage and the living
wage and awarded bonus equivalent to five months' basic wages.
Held, that the employers had failed to establish that they
were paying a living wage to the workmen. In construing wage
structure the considerations of right and wrong, propriety and
impropriety, fairness and unfairness are also taken into account
to some extent. As the social conscience of the general community becomes more alive and active, as the welfare policy of the
State takes a more dynamic form, as the national economy progresses from stage to stage, and as under the growing strength
of the trade union movement collective bargaining enters the field,
wage structure ceases to be a purely arithmetical problem.
Wages are usually divided into three broad categories: the basic
rninin1um wage, the falr wage and the living \vage.
The concept
of these three wages cannot be described in definite words as
their contents are elastic and vary from time to time and fro111
place to place. The concept. of a living wage js not a static concept; it is expanding and the numb·er of its constituents and their
I
3 S.C.R.
SUPREME COURT REPORTS
537
respective contents art bound to expand and widen with the
I96I
development and growth of national economy. In an underdeveloped country no wage structure could be described as Sta•dard Vacuu"'
reaching the ideal of a living wage. It is unreasonable and unsafe
Rejini•g Co. •I
to treat the Report o! the Textile Labour Committee, 1940, as to
India
the monetary value of the Jiving wage in 1940 as sound. The
v.
figure reached.by the committee in 1940 did not represent anyIts Workm1•
thing like a living wage; it really represented the minimum need.
based wage. Besides, the method of multiplying the figure by
3·5 was materially defective;
the proper approach was to
evaluate each constituent of the concept of the living wage iii the
light of the present day prices.
Even the highest average wage
paid by the employers was much below the standard of the living
wage though it was above the need.based minimum.
Express Newspapers (P.) Ltd. 'l· Union of India, [1959] S.C.R.
12, Standard Vacuum Oil Company v. Their Workmen, [1952] 1
L.L.J. 839, Burmah Shell, etc., Oil Companies in Madras v. Their
Employees, [1954J r L.L.J. 782, Workers of S.V.O.C. Ltd. (Standard
Vacuum Employees' Union) v. Standard Vacuum Oil Co. Ltd., (1957]
1 L.L J. 165 and Standard Vacuum Oil Company v. Thtir Employeef, [1954] l L.L.J. 484, referred to.
Burmah-SheU Oil Storage and Distributing Co. of India, Ltd.,
Bombay v. Their Workmen, [1953] 2 L.L.J. 246, approved.
Quaere :-Whether the workmen would be entitled to bonus
ever> if a living wage is paid to them by the employers.
Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur,
[1955] r S.C.R. 991 and Sree Meenakshi Mills Ltd. v. Their Workmen, [1958] S.C.R. 878, referred to.

## Text

_Characters 0–39,794 of 65,063. This is a partial read: ask again with offset=39794 for what follows._

Union of India
v.
MaharaJa
Krishnagarh
i-. Mills Ltd.
Sinha C.J.
January 20.
536
SUPREME COURT REPORTS
[1961]
is that the writ petition filed by the respondent in the
High Court stands dismissed with costs here and in
the High Court.
Appeal allowed.
STANDARD VACUUM REFINING CO. OF INDIA
v.
ITS WORKMEN AND ANOTHER.
(P. B. GAJENDRAGADKAR, K. N. WANCHoo and
K. c. DAS GUPTA, JJ .. )
Industrial dispute-Bonus-Living Wage, determination of.
The workmen claimed bonus for the year 1956 equivalent to
nine months' total earnings on the ground that the employers
had admitted their capacity to pay and that there was a big gap
between the wage actually received and the living wage. The
employers contended that they were paying the workmen a living
wage and they were not entitled to any bonus. The employers
relying mainly on the Report of the Textile Labour Committee,
1940, contended that if the living wage in 1940, i.e., R,s. 55/· was
multiplied by 3·5 (due to rise in prices) it gave Rs. 192·50 as the
living wage in 1956 and they were paying their workmen at a
higher rate. The workmen relied on the recommendations of the
Indian Labour Conference, 1957, to show that Rs. 209·70 approximat.ed to the standard of the need-based minimum wage and that
the average. wag:e paid by the employers was nothing more than
this. The Tribunal held that the wages paid were fair but that
there was still a gap between the actual wage and the living
wage and awarded bonus equivalent to five months' basic wages.
Held, that the employers had failed to establish that they
were paying a living wage to the workmen. In construing wage
structure the considerations of right and wrong, propriety and
impropriety, fairness and unfairness are also taken into account
to some extent. As the social conscience of the general community becomes more alive and active, as the welfare policy of the
State takes a more dynamic form, as the national economy progresses from stage to stage, and as under the growing strength
of the trade union movement collective bargaining enters the field,
wage structure ceases to be a purely arithmetical problem.
Wages are usually divided into three broad categories: the basic
rninin1um wage, the falr wage and the living \vage.
The concept
of these three wages cannot be described in definite words as
their contents are elastic and vary from time to time and fro111
place to place. The concept. of a living wage js not a static concept; it is expanding and the numb·er of its constituents and their
I
3 S.C.R.
SUPREME COURT REPORTS
537
respective contents art bound to expand and widen with the
I96I
development and growth of national economy. In an underdeveloped country no wage structure could be described as Sta•dard Vacuu"'
reaching the ideal of a living wage. It is unreasonable and unsafe
Rejini•g Co. •I
to treat the Report o! the Textile Labour Committee, 1940, as to
India
the monetary value of the Jiving wage in 1940 as sound. The
v.
figure reached.by the committee in 1940 did not represent anyIts Workm1•
thing like a living wage; it really represented the minimum need.
based wage. Besides, the method of multiplying the figure by
3·5 was materially defective;
the proper approach was to
evaluate each constituent of the concept of the living wage iii the
light of the present day prices.
Even the highest average wage
paid by the employers was much below the standard of the living
wage though it was above the need.based minimum.
Express Newspapers (P.) Ltd. 'l· Union of India, [1959] S.C.R.
12, Standard Vacuum Oil Company v. Their Workmen, [1952] 1
L.L.J. 839, Burmah Shell, etc., Oil Companies in Madras v. Their
Employees, [1954J r L.L.J. 782, Workers of S.V.O.C. Ltd. (Standard
Vacuum Employees' Union) v. Standard Vacuum Oil Co. Ltd., (1957]
1 L.L J. 165 and Standard Vacuum Oil Company v. Thtir Employeef, [1954] l L.L.J. 484, referred to.
Burmah-SheU Oil Storage and Distributing Co. of India, Ltd.,
Bombay v. Their Workmen, [1953] 2 L.L.J. 246, approved.
Quaere :-Whether the workmen would be entitled to bonus
ever> if a living wage is paid to them by the employers.
Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur,
[1955] r S.C.R. 991 and Sree Meenakshi Mills Ltd. v. Their Workmen, [1958] S.C.R. 878, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.
416 of 1!158 an.; 19 of 1959.
Appeals by special leave from the Award dated
January 13, 1958, of the Industrial Tribunal, Bombay,
in Reference (I. T.) No. 218 of 1957.
M. 0. Seuuvad, Attorney.General, for India, N. A. Pal,.
khivala, G. B. Pai and G. GopalakriBhnan, for the
appellant (Iu C.A. No. 416 of 58) and respondent
No. 1 (In C.A. No. 19 of 1959).
H. R. Gokhal,e, S. B. Naik and K. R. Choudhury, for
the respondent No. 1 (In C.A. No. 416 of 1958) and
appellant (In C.A. No.19 of 1959).
1961. January 20. The Judgment of the Court was
delivered by
GAJENDRAGADKAR, J.-These two
cross-appeals Gaj•ndragadkarJ.
arise from an industrial dispute between the Standard
Vacuum Refining Co. of India Ltd. (hereafter called
538
SUPREME COURT REPORTS
[1961]
r96r
the appellant) antl its workmen (hereafter called the
--
respondents). This dispute related to a claim for
Standa•d Vacuum b
d b
h
d
'
h
JJ
Refining Co. of
onus ma e y t e resp~n ents agamst t e appe ant
India
for the year commencmg on January 1, 1956, and
v.
ending with December 31, 1956. The respondents
I" IVo•kmen
claimed that for the relevant year they were entitled
. --
to receive by way of bonus their nine months' total
Ga;end•agadka• J. earnings inclusive of all allowa.nces and overtime and
extra-time earnings. After this demand was made
the conciliation officer attempted conciliation between
the parties but his efforts failed, and so he submitted a
failure report under s. 12(4) of .the Industrial Disputes
Act, 1947 (XIV of 1947). The Government of Bombay
then considered the said report and was satisfied that
there was a case for reference of the said dispute to
the Tribunal. That is how the present reference carue
to be made under s. 12(5) of the Act.
The respondents who have made the present claim
include 648 employees; amongst them 524 are operatives and 124 belong to the clerical cadre. Before the
Tribunal the respondents' case was tha.t during the
conciliation proceedings tho appellant had admitted
its capacity to pay and to meet the entire c\a.im ·of
bonus made by them; and so it was urged that it was
unnecessary to screen the respondents' claim through
the Full Bench formula. They further alleged that
the appellant. was not paying a living wage to the
respondents and there still remained a large g&p between the wage actually received by them and the
living wage to which they would be ultimately entitled. According to the respondents t.heir claim for
bonus should be examined solely by reference to the
gap which had to be filled up between the two wages ;
and in determining the amount of bonus all the legitimate requirements of the respondents should be
carefully considered.
This claim was denied by the appellant. It denied
the respondents' 11.Jlegation that during conciliation
proceedings it had admitted its capacity to pay the
entire amount of bonus claimed by the respondents.
It then specifically averred that in law the respondents were uot entitled to any bonus bemwse the
f
I
••,
3 S.C.R.
SUPREME COURT REPORTS
539
appellant was paying them a living wage and so one
1961
of the essential conditions for the payment of bonus, Standard vacuum
namely, the need to fill the gap bet.ween the actual Refining Co, of
wage and the living wage was absent in the present
India
case. The appellant then set out its calculations in
v.
d
h d
'.tr
!Is Workmen
regard to the average wages pai
to t e 1uerent
categories of respondents and supported its plea that Gajendragadka. J
they were not entitled to any bonus at all. It may
be added that the appellant had already voluntarily
paid three months' basic wages to the respondents by
way of bonus, but since the respondents were making
a much larger claim the appellant thought it necessary to raise this general iisue of law and to contend
that the respondents were not entitled to any bonus
at all.
On these pleadings the Tribunal had to consider the
said question of law, but it appears that the material
produced before it was so limited and meagre that it
thought it would not be possible to arrive at any defi.
nite opinion on the question of what is the living
wage in Bombay; apparently the Tribunal also
thought that it was unnecessary to do so, because it
has observed that the present dispute did not relate
to wage scales and that the living wage was an, illusive
concept. Even so, having broadly considered the
contentions raised by the appellant it held that "the
wages are fair but there is still in a large number of
cases a gap between the actual wage and the living
wage."
On this finding the Tribunal proceeded to
examine the other contentions raised by the parties
in regard to the quantum of bonus which should be
awarded o,nd it reached the conclusion that the respondents were entitled to receive five months' basic
earnings " excluding dearness and other allowances
and overtime" as bonus for the relevant year.
Accordingly it has made an award to that effect and
has issued appropriate directionsl.n that behalf. This
award is challenged by the appellant in its Civil Appeal
No. 416 of 1958, and it is urged by the leamed
Attorney-General on its behalft.hat the tribunal should
have held that the appellant was paying a living wage
to the respondents and that there was no case for
540
SUPREME COURT REPORTS
[1961]
x96x
awarding any bonus to the respondents at all during
--
the relevant year. On the other hand the respondents
Sta•dard v-um h II
b
.
. .
Refining Co. of c a enge the award y their C1v1l Appeal No. 19 of
India
1959, and it is urged by Mr. Gokhale on their behalf
v.
that the tribunal was in error in not awarding the resIts Workmen
pondents a higher bonus than five months' basic wages.
-
. That is how the two cross-appeals arise from the
Gajendragankar ]. award under appeal.
The learned Attornev-General bas criticised the
approach adopted by the tribunal in dealing with the
question of living wage. He contends that it was
necessary that the tribunal should have carefully examined the material produced before it and should
have made a definite finding one way or the other.
He commented on the fact that the finding is vague
and indefinite, and he has contended that the tribunal
should have made it clear as to what it exactly meant
when it observed that in a large number of cases a gap
between the actual wage and the living wage subsisted.
This criticism is partly justified. We think it would
have been better if the tribuna.l had addressed itself
to the question raised before it by the appellant and
made a more definite and precise finding. In this
connection, it must, however, be added that the oil
companies have been raising this plea for some years
past and the plea has been consistently rejected by
tribunals during all these years. The present tribunal
itself has had occasion to deal with this plea raised
by the oil distributing companies, and since the plea
had never succeeded in the past and no material
change had been proved in regard to the relevant
t
year the tribunal was probably disinclined to treat the
J •
plea very seriously and that m1>y explain the approach
,,
adopted by it in dealing with the said plea in the
'Ii
present proceedings.
Besides, the tribunal took the view, and we think
rightly, that the material produced by the appellant
in support of its plea is wholly insufficient and meagre.
The point raised is one of general importance and any
positive finding on the content of the concept of a
living wage in the context of today would naturally
affect industrial adjudication in regard to claims of
3 S.C.R.
SUPREME COURT REPORTS
541
bonus in all industries. That is why, if the appellant
~
6
'
was serious about its contention that the living wage Standard vacuum
standard had been reached in its wage structure it
Refining Co. of
should ha.ve produced more satisfactory evidence
India
which would have enabled the tribunal to attempt the
v.
Its Workmen
task of concretely defining what the concept of living
_
wage means in the context of today. Absence of Gajendyagadhar J.
sufficient and satisfactory material may also explain
the approach adopted by the tribunal in dee.ling with
this issue.
At the hearing before us the learned AttorneyGeneral suggested that we should remand the case to
enable his client to lead further and more satisfactory
evidence. We have rejected this request. The appellant knew fully well the implications of the plea. raised
by it and the very large issue which the tribunal
would have to consider in dee.ling with the merits of
the said plea. If the appellant was content to support
its plea. on certain material and did not attempt to
lead more satisfactory evidence it cannot blame the
tribune.I for dee.Jing with the matter on the material
such as it was. In such a case it would be futile for
the appellant to ask for indulgence from this Court at
this late stage. It is admitted that the appellant has
pa.id three months' basic wages as bonus to the respondents voluntarily for the relevant year, and we
were told that an agreement has been reached
between the parties in respect of bonus for subsequent
years until 1963. They have agreed that for the
two succeeding years the decision of this Court will
apply and for five years thereafter a specific agreement
has been reached for raising the wage-structure and
providing for the payment of bonus at the agreed rate.
The learned Attorney-General faintly suggested that
the appellant has agreed to pay bonus voluntarily in
this manner but the payment is gratuitous and should
not affect the main plea raised by it in the present
proceedings.
Even so, the question· raised by the
appellant sounds academic and unrealistic, and that is
another reason why it is not entitled to the indulgence
for which the learned Attorney-General has pressed
before us.
We would, therefore, deal with the point
542
SUPREME COURT REPORTS
(1961]
1961
seriously urged before us on behalf of the appellant on
Standard vacuum the material produced before the tribuna,J and such
Refining Co. of additional material as was brought to our notice.
India
At the outset it is necessary to state that the plea
v.
raised by the appellant assumes that as soon as a
Its ;VorkNien
__
living wage standard has been reached by any employGajendragadkar J. er it would be unnecessary for him to pay any bonus
to his employees. The learned Attorney-General has
naturally relied on the decisions of this Court as well
as the decisions of industrial tribunals in support of
his argument that the Full Bench formula which
governs the decision of bonus disputes postulates that
a claim for bonus can be entertained if two conditions
are satisfied; the employer must have made profit in
the relevant year, which after the deduction of prior
charges leaves sufficient available surplus; and there
must be a gap between the wages actually paid to the
employees and the living wage standard which they
hope to reach in due course. In dealing with bonus
claims industrial adjudication has so far proceeded
on the aSBumption that in t.he making of profits labour
makes its cont\!ibution, and that since it is not receiving a living wage it is entitled to claim that the gap
between the actual and the living wages should be
filled by the payment of bonus for each relevant year;
that no doubt appears to be the result of the relevant
decisions on the point (Vide: Muir Mills Co. Ltd. v.
Suti Mills Mazdoor Union, Kanpur('); The Sree
Meenakahi Mills LuJ,. v. Their Workmen('). We will
revert to this point later. Meanwhile let us proceed
to examine the merits of the contention that the appellant is paying the respondents a living wage.
It is well known that the problem of wage structure
with which industrial adjudication is concerned in a
modern democratic State involves on the ultimate
analysis to some extent ethical and social considerations. The advent of the doctrine of a welfare State
is based on notions of progressive social philosophy
which have rendered the old doctrine of laissez-faire
obsolete. In the nineteenth century the relation between employers and employees were usually governed
(I) [1955) I $.C.R. 991.
(•l [1958] $.C.R. 878, 88 ...
r
,·, -, ;.
3 S.C.R.
SUPREME COURT REPORTS
543
r
~ -- - .
·by the_ economic principle of supply and deD;iLiiJ;-~~d-· . z96z
the employers thought that they were entitled to hire
.-.
• b
th • t
d t d"
•
h ·
h .. - Standard Va<••"'
,a ~ur on . e1r erms an. o 1sm1ss t e same ·at t e1r
Refining co~ of
ch01ce subject to the specific terms of contract between
India
·
them, if any. The theory of " hire· and fire "·as well
v. _
.
as the _theory of." supply and demand" which were
/Is WorAmtn
allowed free scope under the doctrine of laissez-faire
. -,. ·1
l
h Id th fi Id . I
. ·
Ga;end1•&•••••
•
no onger . o
e
e .
n eonstructmg ·a. . wage
.
structure in a. given case industrial adjudication does
e
take into account to some extent "'Considerations of
righf and wrong, propriety and impropriety, fairness
and unfairness. As the social conscience of the genera.I
community becomes more a.live· and· active; as the
welfare policy of the State takes a. more dynamic form,
as the national economy progresses from stage to
stage, and as under the growing strength of the trade
union movement collective bargaining enters the field,
wage structure ceases to be a pu:ely · arithmetical ·
problem. Considerations of the· financial position of
the employer and the state of national economy have
their say, and the requirements of a wcirkt:nan living
in a civilised and progressive society also ccime. to be
recognised. It is in that sense', and rio 'doubt to a:
limited extent, that the social. philosophy of the age
supplies the background for the decision of industrial
disputes · as ·· to wage structure. As 1\lrs. Barbara
Wootton has pointed out,'the social and ethical impli,
cations of the arithmetic and the economics of wages
· cannot be ignored in the present age ('). · ·
·
·It is because of this· socio-economic ·aspect of . the
wage structure that industrial adjudication postulates
that no employer can engage industrial labour unless
he pays it what may be regarded as the minimum basic
wage. If he cannot pay such a wage he has no l'ight
to engage labour, and no justification for· carrying on
his industry; in other words, tho · employment of
sweated labour which would be easily available to the
employer in all undeveloped and even under-developed
countries is ruled out on the ground that the principle
of supply and demand has lost its validity in the
(1) ••The Social Found~tlons of W~e Policy'" b7 BarbO:i Wootton-
- Allen &: Unwin. -19-'.5·
' 1
•
10
SUPREME COURT REPORTS
[1961)
I96I
matter of employment of human labour, and that it
-
is the duty of the society and the welfare State to
Slafldard V aeuum
t
k
d ' · d
' 1
R•fi•i•g co. of a.ssure ho every wor fmahn e~gatghe m m ut stfr1tah o~eraItldi•
t1ons t e payment o w at m
e contex o
e times
v.
appears to be the be.sic minimum wage. This position
· Ii. Work"''"
is now universally recognised.
In dealing with wage structure it is usual to divide
Gaj.,.dr•gadk•r J. wages into three broad categories: the basic minimum
wage is the be.re subsistence wage; above it is the fair
wage, and beyond the fair wage is the living wage. It
would be obvious that the concepts of these three
wages cannot be described in definite words because
their contents are elastic and they are bound to vary
from time to time and from country to country.
Sometimes the said three categories of wages are
described as the poverty level, the subsistence level
and the comfort or the decency level. It would be
difficult and also inexpedient to attempt the task of
giving an adequate precision to these concepts. What
is a subsistence wage in one country may appear to be
much below the subsistence level in another; the same
is true about a fair wage and a living wage; what is a
fair wage in one country may be treated as a living
wage in another, whereas what may be regarded as a
living wage in one country may be no more than a
fair wage in another. Several attempts have nevertheless been made to describe generally the contents of
these respective concepts from time to time. · The
most celebrated of these attempts was me.de by
Mr. Justice Higgins in his judgment in 1907 in a proceeding usually referred to as the Harvester Case.
Sitting as President of the Commonwealth Court of
Conciliation and Arbitration, the learned Judge posed
the question as to what is the model or criterion by
which fairness or reasonableness is to be determined,
and he answered it by saying that " a fair and reasonable wage in the case of an unskilled labourer must be
an amount adequate to cover the normal needs of the
average employee regarded as a human being living
in a civilised community." (1)
(1) Cited by Foend0< in ,"Bettor Employment Relations", •95i·
PP· 177, 178,
3 S.C.R.
SUPREME COURT REPORTS
545
In their work "Industrial Democracy " published in
z96z
1920 Sidney and Beatrice Webb observed that "there 51
~-;.
is a growing feeling not confined to trade unionists
;~ning :!.."~,,.
that the best interests in the community can only be
Irui•a
attained by deliberately securing to each section of
v.
the workers those conditions which are necessary for
Its w .. hnu•
the continuous and efficient fulfilment of its particular G . ,-dA J
function in the social machine " (p. 590).
•1•• '"'" "'
In 1919 the Commissioner of the Bureau of Labour
Statistics conducted a tentative budget enquiry in
the United States of America, and analysed the
objects with reference to three concepts, namely, the
pauper and poverty level, the minimum of subsistence
level and the minimum of health and comfort level;
the last was taken for determining the standard of a
living wage. This classification was approved by the
Royal Commission on the Basic Wage for the Common·
wealth of Australia, and it proceeded through norms
and budget enquiries to ascertain what the minimum
of comfort level should be. The Commission quoted
with approval the description of minimum health &nd
comfort level in the following terms :
"This represents a slightly higher level than that
of subsistence, providing not only for the material
needs of food, shelter and body covering, but also
for certain comforts such as clothing sufficient for
bodily comfort, and to maintain the wearer's
instinct of self-respect and decency, some insurance
against the more important misfortunes--death,
disability and fire-good education for the children,
some amusement, and some expenditure for self.
development " (1 ).
According to the United Provinces Labour Enquiry
Committee wages were classified into four categories.
poverty level, minimum subsistence level, the subsistence plus level, and the comfort level(•). The third
category would approximate to the fair wage, and the
fourth to the living wage.
According to the South
Australian Act of 1912 the living wage means "a sum
(1) Cited in the Report of the Committee on Fair Wagea published b7
the Govemment of Iuclia, lllniatcy of Labour-pp. 5 and 6.
(2) Ibid. p. 6.
546
SUPREME COURT REPORTS
[1961]
I96'
sufficient for the normal and reasonable needs of the
SI
d -d
v
average emplovee living in a locality where work
•• ar
acuum
d
'd
" .
. d
. t b d
"
0 th
Refining co. of un er cons1 erat10n 1s one or 1s o e one .
n
e
India
other hand, the Queensland Industrial Conciliation
v.
and Arbitration Act provides that the basic wage
Its Workmen
paid to an adult male employee shall not be less than
is "sufficient to maintain a well-conducted employee
'Jajindragadkar f. of average health, strength and competence, and his
wife and a family of three children in a fair and
average standard of comfort, having regard to the
conditions of living prevailing among employees in the
calling in respect of which such basic wage is fixed,
and provided that in fixing such basic wage the earnings of the children or wife of such employee shall not
be taken into account "(' ).
The Fair Wages Committee which made its Report
in 1949 broadly accepted the view expressed by the
Royal Commission on the basic wage for the Commonwealth of Australia which we have already cited.
According to the Committee, " the living wage should
enable the male earner to provide for himself and his
family not merely the bare essentials of food, clothing
and shelter but a measure of frugal comfort including
education for the children, protection against illhealth, requirements of essential social needs, and a
measure of insurance against the more important
misfortunes including old age(')." The Committee
emphasised that "the minimum wage must provide
not merely for the bare sustenance of life but for
the preservation of the efficiency of the worker. For
this purpose the minimum wage must also provide for
some measure of education, medical requirements and
amenities"(').
In this connection it would be useful to refer to
the observations made by Philip Snowden in regard
to the concept of living wage. These observations
a.re generally cited with approval by industrial tribunals. Sa.id Snowden, "it may be possible to give
(1) Cited in the Report of the Committee on Fair Wages published by
the Government of India, Ministry of Labour-p . .5·
(2) Ibid. p. 7.
(3) Cited in the Report of the Committee on Fair Wages published by
the Government of India, Ministry of Labour-p. s.
I
3 S.C.R.
SUPREME COURT REPORTS
547
a. precise or satisfactory definition of a. living wage,
,95,
but it expresses a.n idea., a. belief, a. conviction, a.
demand. The idea of a living wage seems to come Standa>d Vacuum
from the fountain of justice which no man has ever
Reft~i•8 Co. of
seen, which no man has ever explained, but which we
1
~:i•
a.U know is an instinct divinely implanted in the
Tis w 07;,.,.
human heart. A living wage is something far greater
than the figures of a wage schedule. It is at the Gajendragadkur ].
same time a. condemnation of unmerited and unneces.
sary poverty and a. demand for some measure of
justice (1 )." On the problem of converting the concept of living wage into monetary terms this iA • hat
Snowden had said: "The amount of the living wage
in money terms will vary as between trade and trade,
between locality and locality. But the idea is that
every workman shall have a wage which will maintain
him in the highest state of industrial efficiency, which
will enable him to provide his family with all the
material things which are needed for their health and
physical well-being, enough to enable him to qualify
to discharge his duties as a citizen"('). It is in
this broad and idealistic sense that Art. 43 of the
Constitution has referred to the Jiving wage when it
enunciates the Directive Principle that the State
shall endeavour, inter alia, to secure by suitable legislatiou, 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 Court has
recognised this idealistic position of the concept of
living wage in the case of Express Newspapers (Private)
Ltd. v. The Union of India(').
It would thus be obvious that the concept of a
living wage is not a static concept ; it is expanding
and the number of its constituents and their respective contents are bound to expand and widen· with
the development and growth of national economy.
That is why it would be impossible to attempt the
{I) Philip Snowden "The Living Wage", p. 1.
(>) Ibid. p. 6,
(3) [1959) S.C.R. n, 7g-82.
548
SUPREME COURT REPORTS
[1961)
I96I
task of determining the extent of the requirement of
-
the said concept in the context of today in terms of
Slandard Vacuum
d ·
h
· 1 1
d
Refining Co. af rupees, a~nas an pies on t e sc~nty matena p ace
India
before us m the present proceedmgs. We apprehend
v.
that it would be inexpedient and unwise to make an
Its Workmen
effort to concretise the said concept in monetary terms
;ajendragadkar 1 with any degree of definiteness or precision even if a
"fuller enquiry is held. Indeed, it may be true to say
that in an under-developed country it would be idle
to describe any wage structure as containing the ideal
of the living wage, though in some cases wages paid by
certain employers may appear to be higher than those
paid by others. As observed in its Report by the
Commission of Enquiry on "Emoluments and Conditions of Service of Central Government Employees,
1957-59 ", "taking a standard family as consisting of
four members of whom only one is an earner, the
average income of a family at the highest figure during
the nine years ending in 1957·58 would work out at
Rs. l,166/- per annum or about.· Rs. 97/- per mensem.
The minimum wage cannot be of the order of Rs. 125/-
when on the b<tsis of the national income the average
for a family works out only to Rs. 97/- per mensem."
Therefore, looking at the problem of industrial wages
as a whole it would not be possible to predicate that
our wage structure has reached even the level of a fair
wage. It is.possible that even so some employers may
be paying a very high wage to their workmen, and in
such a case it would be necessary to examine whether
the wages paid approximate to the standard of the
living wage; but in deciding this question the proper
approach to adopt would be to consider whether the
wage structure in question even approximately meets
the legitimate requirements of the components constituting the concept of a living wage. For that purpose
it may not be essential, and on the material produced
before us it is not even possible, first to determine
what in terms of money those constituents would
denote in the context of today. The learned Attorney.
General's argument that we should first determine
independently what amount in terms of rupees, annas
a.nd pies would be treated as a living wage today
I
3 S.C.R.
SUPREME COURT REPORTS
549
obviously ignores the complexity of the problem and
1961
the poverty of the material adduced by the appellant Standard va,uum
in the present proceedings.
Refining Co. of
There i8 another aspect of this question to which
Indio
we must incidentally refe1. We are dealing with the .
v.
contents of the living wage in the present appeal not
Its Workmen
for ~he pu;po,seb ofhfixing a
11
wa~e tshtrtuc~ure ;ththe con- Gajendragadkar J.
tent10n rarneu y t e appe ant is
a smce
e wages
paid to the respondents have reached the stage of a
living wage there is no gap between the actual wage
and the living wage, and so there is no occasion to
make a claim for bonus. While dealing with this
contention there would be no justification for ignoring
the idealistic character of the living wage as specified
in Art. 43 of the Constitution ; and so, it would be
necessary to enquire whether the wage in question
satisfies the tests laid down by the Royal Commission
on the basic wage for the Commonwealth of Australia
which has been endorsed by the Fair Wages Committee's Report and broadly approved by this Court in
the Express Newspapers' case (1).
The question which
we must now consider is whether the appellant has
succeeded in showing that its wage structure has
reached the standard of the living wage which has
been specified as one of the ultimate objectives by
Art. 43 and which is the ideal that the working
population of the country hopefully looks forward to
achieve. It is no doubt a bold and tall claim but the
learned Attorney-General contends that the appellant
has succeeded in substantiating the said claim.
Before the tribunal the Union filed statements to
show that the wage structure prevailing amongst the
respondents is no more than the need-based minimum
wage. In support of this plea they referred to the
resolution which has been unanimously passed at the
15th Session of the Indian Labour Conference held in
New Delhi on July 11 and 12, 1957. This resolution
makes a declaration about the wage policy which
should be followed during the Second Five Year Plan.
The Tripartite Committee which passed the resolution
considered the relevant notes placed before it, and held
that they would be useful a.s background material for
(1) [1959] S.C.R. 12.
550
SUPREME COURT REPORTS
[1961]
'96'
wage fixation. It theu took note of the difficulties in
Standard vac .. um ass~ssing quantitativ~ly the indivi~ual importance of
Refining co. of var10us factors affectmg wage fixat10nsuch as product.
India
ivity, cost of living, the relation of wages to national
v.
income and so on, and proceeded to discuss the wage
Ils Wor.W.on
policy with specific reference to minimum wages and
Gajmdragadkar 1 fair wages. With regard to the minimum wage fixa-
. tion it was agreed that the minimum wage was need.
based to ensure the minimum human needs of the
industrial worker irrespective of any other considera.
tions. To calculate the minimum wage the Committee
accepted the following norms and recommended that
r
they should guide all wage fixing authorities including
Minimum Wage Committees, Wage Boards, adjudicators,etc. The five norms accepted by the Committee
were stated by it in these terms :
"(i) In calculating the minimum wage, the
standard working class family should be taken to
consist of 3 consumption units for one earner; the
earnings of women, children and adolescents should
be disregarded.
{ii) Minimum food requirement should be calculated on the basis of a net intake of calories, as
recommended by Dr. Aykroyd for an average Indian
adult of moderate activity.
(iii) Clothing requireme.nts should be estimated at
a per capita consumption of 18 yards per annum
which would give for the average workers' family of
four, a total of 72 yards.
(iv) In respect of housing, the rent corresponding
to the minimum area provided for under Government's Industrial Housing Scheme should be taken
into consideration in fixing the minimum wage.
(v) Fuel, lighting and other ' miscellaneou~' items
of expenditure should constitute 20% of the total
minimum wage. "
Having set forth these norms the Committee recognised the existence of instances where difficulties may
be experienced in implementing its recommendations,
and so it added that wherever the minimum wage fixed
went below its recommendations it would be ·incumbent on the authorities concerned to justify the
3 S.C.R.
SUPREME COURT REPORTS
551
circumstances which prevented them from adherence
1961
to the norms prescribed by the Committee. Having 5
--
.
d
h
f' h
d
tandard Vacuum
thus unammously agree
on t e content o t e nee -
R ,, . c "
,
eJ'ning o. oJ
based minimum wage the Committee proceeded to
India
observe that as regards fair wages it was agreed that
v.
the vVage Board should go into the details in respect
,,, Workmen
of each industry on the ha.sis of the recommendations
--
t · d ·
th R
t
f th
C
'tt
F • Gajendragadkar J
con ame
m
e
epor o
e
omm1 ee on
air
·
Wages. It also placed on record its opinion that the
said recommendations should be made applicable to
employees in the public sector (Ex. U-3).
The respondents treated this unanimous resolution
as the basis for their claim that the wages paid to them
by the appellant were no better than the need-based
minimum contemplated by the said resolution. Accordingly they set out the diet requirements extracted from
Health Bulletin No. 23, and converted the said requirements into monetary terms at Rs. 123·75 nP. Having
thus arrived at the calculation of the value of the
diet requirements of workmen (Exs. U-4and U-5) they
proceeded to make calculations about the money content of the need-based minimum wage at Rs. 209·70
(Ex. U-6). This conclusion has been reached on the
basis that the minimum diet requirements would be
Rs. 123·75 nP., clothing requirements would be Rs. 9/-,
rent would be Rs. 42/- and miscellaneous expenditure
at 20% of the total of the three preceding items would
be Rs. 34·95 nP. Their case was that in view of the fact
that Rs. 209·70 nP. approximates to the standard of
the need-based minimum wage the claim that the wage
structure of the appellant has reached the living wage
standard cannot be sustained.
On the other hand the appellant sought to justify
its claim principally on the calculations made by the
Textile Labour Committee which had made its report
in lll40. It may be pointed out that in its statement
(Ex. C-6) the appellant has used the expressious " fair
wage" and" living wage" somewhat indiscriminately,
and seems to have assumed that the norms prescribed
by the Tripartite resolution had relation to a fair wage
and not the need-based minimum wage. That, however, does not appear to be accurate, According to
71
552
SUPREME COURT REPORTS
[1961)
r96r
the Textile Committee's report the money-content of
--
the living wage in 1940 was Rs. 50/· to Rs. 55/- per
5R
1·~.d•~d vcacuufm month. This total was reached on tree.ting Rs. 23/-
'''"'"K o. 0
c d
.
R 1 I
h
.
Inaia
a.s 100
requirements,
s.
21- a.s ouse-rent reqmrev.
ments and Rs. 20/- a.s miscellaneous requirements. This
Its WOt'kmen
total is taken a.s the ha.sis by the appellant in making
--
its relevant calculations.
The appellant has then
;ajendragadkar J. referred to the norms prescribed by the Tripartite
resolution and has assumed that the total of the needhased minimum wage would be Rs. 40-14-0, and since
there had been a rise in the cost of living after 1940
the appellant has multiplied Rs. 41/- by 3·5 which gave
the amount of Rs. 143·50 nP. Thus, according to the
appellant the need-based minimum would not be the
said a.mount of Rs. 209/- as calculated by the respondents. Then the appellant added ti.tat even if Rs. 55/-
was taken as the equivalent of the living wage in 1940
and the same is multiplied by 3·5 one gets Rs. 192·50
nP. and that should represent the living wage in. the
relevant year.
Having thus reached the figure of Rs. 192·50 nP. as
the monetary value of the living wage in the relevant
year, the appellant purported to support its plea that
its wage-structure had reached the status of a living
wage by relying on the average wages paid by it to
the respective categories of its employees. Taking the
class of oper~tives which comprises 524 workmen the
average wage· packet consisting of the basic salary,
the dearness allowance and the value of the amenities
supplied by the appellant to them equals Rs. 273·65 nP.
The average wages in regard to the 124 clerks reach
tbe figure of Rs. 370·11 nP., and the average wages
for the total employees taken together reach the figure
of Rs. 301·16 nP. According to the appellant whichever figure is taken it is much above Rs. 192·50 nP.,
and that must lead to the inference that the living
wage standard has been reached by the appellant.
That is how both the parties presented their respective
contentions before the tribunal and before us.
We have already indicated that the appellant's
calculations are made on the assumption that tho
figure of Rs. 50/- to Rs. 55/- per month can be taken
-I
3 S.C.R.
SUPREME COURT REPORTS
553
to be the monetary cqntent of the living wage in 1940.
z96z
In _support of this. assumpti?n t~e appellant· s_trongly S1.andard vacuum
rehes on the Textile Committee s report, . This Com, 1 Reftning co. of
mittee was appointed in 1940. and was charged with;
India
the duty of conducting an investigation into the.
v.
question of adequacy of wages in cotton _textile, Itdf{orkm••
industry of the Province of Bombay and to kindred. G . d--d. 1
·
,
·
.
-· a;en raga ~ar .
matters relating to the industry.