Hindustan Hosiery Industries v. F. H. Lala and Another

Judgment

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 548 of 1970. Appeal by Special Leave from the Award dated the 29th Janu· ary, 1970 of the Industrial Court, Maharashtra, Bombay, in rder-. ence (IC) N.o. 2 of J 969. G. B. Pai, Prakash Mehta., 0. C. Mathur an<l P. C. Bhartari. for the appeUant. fl. K. Sowani, P. H. Parekh and S. Bhandare, for the rospondent. The Judgme11t of the Court was delivered by- GoswAMI, J. This appeal by special ]eave is directed against an award of the Industrial Court. Maharashtra (hereinafter referred to for brevity as the Tribunal) of 29th January, 1970. There was a reference by the Mill Mazdoor Sabha, Bombay (briefly the Sabha) under section 73A of the Bombay T ndustrhl Relations Act~ 1946, in SUPRE].!E COURT REPORTS [ 1974-J 3 S.C,R •. pursuance of a notice of change dated 22nd · August, 1968.

The .Sabha. demanded revised, basic wages for the time-rated workme)l of several categories and also a rise of 50% in the wage of th• piccerated workers in the Consumers' Price Index bracket 621--030 (old series).· The Sabha also demanded dearness allowance of iO paise per day for every rise of 10 points or part thereof abov.e the said stab. They also claimed the benefits retrospeetively fr0m· 1st June, 1968. The Sabha submitted its statement of claim on 14th February, 1969. It appears that the appellant is a . partnership firm which was constituted and commenced production in April 1967. Tne lirm manufactures and sells nylon and hosiery goods such as socks, undergarments, and tbe like. It is registered with the Maharashtra State. Directorate of Industries as a small scale industry. Prior to April 1967, .all the partners of .the appellant were partners of a firm knOwn as M/s. Hindustan I:Iosfory Factory.

That firm again was constituted and commenced business on and from 15th December, 1963, after the dissolution of India I:Iosiery Factory on 14th December, 1963, due to . differences amongst the partners. On the same date, some other partners of India I:Iosiery Factory constitu•ed another firm k,nown as Stretchlon Private Ltd. While Stretchlon Private Ltd. continued to function, I:Iindustan I:Iosiery Factory was closed in August 1966 and the appellant constituted and commenced business in the name_ and style of I:Iindustan I:Iosiery Industries with effect from 17th April, 1967, on which date another firm also commenced business. under the name and style of I:Iindustan I:Iosiery Mills. I.t appears that all these three firms, namely, Stretchlon Private Ltd., the appellant and the Hindustan I:Iosiery Mills are off shoots of tbe India I:Iosiery Fac• tory with a complement of 800 workmen which was actually the pioneer in tbe industry.

The Sabha contended before the Tribunal that the consolidated wages paid to the employees were extremely low. According to the Sabha, tbe time-rated workmen got as tow a wage of Rs. 2.50 per day a.nd never higher than Rs. 3.50 per day. The piece-rated wor· ker9, who, according to the Sabha, are skilled workers, earned between Rs. 6J- and Rs. 7fper day. ·The Sabha, therefore, claimed a revision of the wages _of both the categories. The appellant resisted the claim. According to tbe appellant,. it is a new concern and has employed some of the workers of the Hin· dustan Hosiery Factory. The average dat1y wages of the piece-rated .iobs vary from Rs. 6J- to Rs. I 0120 per dav and are adequate. The work involved in the jobs is not of highly skilled nature. The aopeltant further contended that the compaay was only of two years standing and the wages prud by it are higher than those earned bv em· ployees of other concerns in the industry.

Its financial position also cannot be assessed as it is hardly two years old. The demands are excessive and the appellant cannot bear the additional burden· arising -0ut of these demands. 0 n HJNDUSTAN HOSIERY INDUSTRIES v. F. H. LALA (Goswami, J.) ! :ios The appellant has in its employme.nt about 250 workers. . The Tribunal had before it a statement (Ext. C-2) filed by the appellant showing the number of employees receiving wages below Rs" 51- per day, another statement (Ext. C-3) with regard to the o'.her employees and also the books filed by the appellant and observed that many of the piece-rated and time-rated employees got as low a wage as Rs. 4.60 per day and Rs. 2.50 per day respectively. It, therefore, held that "on the face of it the wages provided for the workmen of the factory appear to be inadequate and low and even in a loss·making concern such wages have to be raised". The appellant started its business on 17th April, 1967. The Tribunal found from the sta'.emcnt, Ext.

U-1, filed by the Sabha regarding its financial position that the appellant "earned substantial profits in the period of 8 months in 1967 and in 1968". The Tribunal found that during' the period of 20 months since April, 1967, the appellant has earned a profit of Rs. 1,51,000jin eight months of 1967 and Rs. 1,88,000jin 1968. These profits are after deduction of depreciation, interest and .bonus. The Tribunal observed that the appellant having a capital of Rs. 2,28,000I- in 1967 and Rs. 3,42,0001- .in '1968 was prosperous and. i's financial position was sound. Tne Tribunal also observed that "the wages paid to the employees on the piece-rate and the time. rate are very low and require revision". The appellant wanted the Tribunal to follow the wage scale of William Industries submitted by the appellant as per Ext.C-1.

But the Tribuual in the absence of any details with regard to the fina11cial p0sition of ti1at company or its profit making capacity, did not consider it appropriate to consider that as a comparable unit. The Sabha, on the ·other hand, contended that the appellant was more prosperous than Stretchlon Private Ltd. and produced an award of the Industrial Court in the case of Stretchlon Private Ltd. dated 10th April, 1967, published in the Maharashtra Gazette of 11th May, 1967. It appears that the demand for increase of wages in the case of Stretchlon Private Ltd. was mnde in 1966 within three years of its functioning from 15th December, 1963, and before the Industrial Court in that case profit and loss accounts for the years 1963-64 and 1964-65 were made available.

It further appears that in the said award the Industrial Court took nole of the position of three other smaller concerns, some of which were even running at a loss and still were paying wages higher than the Stretchlon Private Ltd. The Industrial Court. therefore. awarded Rs. 5/- per day "as a reasonable and fair minimum wage to the Stretch- Jon employees of the lowest category in the Consumers' Price Index bracket 621-630". Although the Sabha in this case has asked for different rates of basic wages for employees in five categories the Tribunal directed that the first 13 categories being the lowest potld workers should receive Rs. 51- per day in the Index bracket 621-630. The nel;t group serial Nos. 14 to 19 were given Rs. 5.50 per day in the same l>ra~ket, serial Nos. 20-21 were given Rs. 7/- per day, serial No. 22 Rs. 7.50 per day and serial No. 23 Rs. 8.50 per day in the af'?resaid bracket.

The Tribun.al also. granted for every rise of 10 pomts or part thereof, abo~e the mdex bracket 621-630, dearness allowance at the rate of 10 paise per .day. Wi!h regard IQ the claim for SUPR~ME COURT 11.EPORTS [ 1974] 3 S.C.R. 5()% rise in piece-rates, the Tribunal only granted 30% in the Index bracket 621-630 and the same dearness allowance as above. The Tribunal also granted the benefits retorspectively with effect from I st February, 1969. It is contended on behalf of the appellant that the Tribunal erred in ignoring the difference between minimum wage and fair wage. It is submitted that tlie Tribunal was in fact granting fair wage and did not take into account the well-settled relevant factors into consideration in making the award. The appellant emphasises that the Tribunal absolutely ignored the aspect of the capacity of the appellant to bear the burden of the additional rise in wages on account of this award.

The appellant also submitted that the Tribunal ought not to have ignored the settlement with regard to wage arrived at by the Hindustan Hosiery Mills with the Sabha. lly that settlement, the said partnership firm constituted by the other group of partners of Hindustan Hosiery Factory agreed with the Sabha to give an increase of Re. 1 /" per day in the wages of the workers getting Rs. 5/- per day or less and an increase of 50 paise pe~ day in the wages of the workers getting more than Rs. 51- per clay. The appellant was prepared to allow this increase which would have imposed an additional burden of Rs. 56,022/- pcr year The respondent, on the other hand, submits that the Tribunal has awarded only minimum wage. Even if it is '15Sumed' that the wage awarded is a little higher than the minimum wage, it is certainly lower than the lowest level 'of the fair wage.

The learned counsel submits that in order to allow. the wage increase the Tribunal had before it materials from _the evitlence furnished in the Stretchlon award as well as the trend of wage rates with which the Tribunal must be expected to be familiar in the region.and in the industry. It is well seJtled that no industry can be allowed to carry on its business if itis unable to pay the minimum wage to its employees. The iiluustry with which we are concerned is, however, not a scheduled industry in Which the State Government has fixed any minimum wage under the Minimum Wages Act. The appellant submitted from certain GaZ.elte Notifications the minimum rates of wages prescribed by the· State Government fu case of some eight different industries between the years 1969 and 1972 where the monthly wages have been fixed between Rs. 90/- and Rs. 128/- per month.

The appellant submits that there is no justification whatsoever for allowing the present increase of wages without following any principle and even higher than the statutory minimum wage fixed in respect of other industries in the Statec In the written statement filed before the Court the Sabha·stated in paragraphs 5 and 6 .s· follows :- "5. The present wages of botli the piece-rated and timerated workers are excessively low and are much lower thali those considered to be the absolute minimum payable by any employer to his workers in the Bombay Region. These wages are also much lower than those paid by comparable concerns in the Industry. HINDUSTAN HOSIERY INDUSTlllES v. F: H. LA'LA {Goswami, J.) 6. The Second Party Concern is well in a position to bear the additional burden that may be placed upon it by the revision of the wages and the grant of dearness allowance as demanded by the Sabha".

The appellant, however, in para 5 of their written statement before the Tribunal stated that it could not "bear the additional burden which may arise on account of the revision of wages and D.A. as demanded by the first party and submits that for awarding wages and also D.A. it is not only the. ability but also the stability of the concern which shpuld be considered by this Honourable Court".These being the rival contentions of the parties before the Tribunal, it was required to consider whether it was a ease of bare minimum wage or some thing higher than it. From a perusal of the award, we are clearly of opinion that the Tribunal 'was considering the Gase from the point of view of grant- ; ng something higher than the subsistence or bare minimum wage bordering on fair wage.

We have reached this conclusion since the yardstick of the present award is the Stretchlon Award which was obviously seeking to determin.e rather some kind of fair wage as will be clear from the following extract from that Award :- "It (the company) can, therefore offer to pay higher minimum wages to lowest category of employees. On due consideration of all the relevant facts and circumstances I find that Rs. 51- per day should be the reasonable and fair minimum wage to the lowest category of employees ·of the company". Coming to the· piece;ates also the Tribunal di.d not give any specific reasons for awarding 30% increase as against the demand of the Sabha. fru: 50% rise in addition to Dearness Allowance. The Tribunal, however, observed that "this increase would give adequate average daily earnings to the piece-rated employees. This increase would bring the emoluments near the level of minimum '\"age payable in the region and it would not place a very heavy burden on the employer~'.

We will now consider the principles settled by this Court in the matter of wage fixation. In Express Newspapers (Private) Ltd., and Ant>!IU!r v. TM Union of India and 0tMrs(1 ), this Court was considering in an exhaustive judgment, inter alia, the concept of minimum wage, fair wage and living wage and approvingly quoted from page 9, para 10, of the Report of the Committee on Fair Wages, to the following effect: "We consider that a 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, riiedical· requirements ·and amenities". This Court further observed : ''There is also a distinction between a bare subsistence or toinimum wage .and a statutory minimum wage. The (I) [1959] S.C.R. 12. 83-86.

[ J 974] } S.C.R. former is a wage which would be sufficient to cover the bare physicai needs of a worker and his family, that.is a rate which hasgot to be paid to the worker irrespective of the capacity of the industry to pay. If an industry is unable to pay to its workmen at least a bare minimum wage it has no right to exist". (See Messrs Crown Aluminium Works. v. Their Workmen('). It was further observed : "The statutory minimu,m wage however is the minimu1n which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as contemplated above. . . . . . . . . . While · the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally .. set by what may _broadly be called the capacity of industry to pay. 'fhis will pepend not only on the present economic position of the industry but on its future prospects ........

It will be noticed that the "fair wage" is thus a mean between the living wage and the minimum wage and even the minimum wage contemplated above is something more than the bare minimum or subsistence wage which would. be sufficient to cover the bare physical needs of the worker and his family, a wage which woul<) provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities" .............. This concept of minimum wage is in harmony with the advance of thought in all civilised countries and approximates to the statutory minimum wage whkb the State should strive to achieve having regard to the Directive Principle of State Policy mentioned above". ft was further observed : "It will also he noticed that the content of the expression "minimum wage", *fair wage' and 'living wage' is not fixed and static. It varies and is bound to vary from time to time.

With the growth and development of national economy, living standards would improve and so would our notions about the respective categories of wages expend and be more progressive". In Kwnani Metals & AJloys Ltd. v. Their Workmeri( 2 ), this - Court observed as follows :- . "Fixation of a wage-structure is always a delicate task because a balance has to be struck between the demand of social justice which requires that the workmen should receive their proper share of the national income which they help to produce with a view to improving their standard of living, and the depletion which every increase in wages makes. in the profits as this· tends to drivert 'capital from industry into other channels thought to be more profitable. The task ·-(I) [t95B] S.C.R. 651 quoted in [t959] S.c.R. !2. (2) 11958] 2 S.C.R. i63, 467. I HINDUSTAN HOSIERY INDUSTRIES v. P. H. LALA (Goswami, /.) is not rendered any the easier because conditions vary from region to region, industry to industry and establishment to establishment.

To cope with these differences certain principles on which wages are fixed· have been stated from time to time by this Court. Broadly speaking the first principle is lhat there is minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availaliility of workmen on lower wages. This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity. The •econd principle is that wages must be fair, that is to say, suflicient!Y high t? provide a standard family wi~h food, sheJte:, clothmg, medical care and educal!On of children appropriate to the work- 1nan but not at a rate exceeding his wage earning capacit.Y in the class of establishment to which he belongs. A fair wage is thus related to the earning capaci;y .and th~ :ivorkload.

It must, however, be realised that _fair. wa~e .ts not 'iiving wage' by which is meant a wage which ts sufficient ~o provide not only the essentials abov~-:nentioned . but a fatr measure of frugal comfort with an ab1hty to provide .f'!r old age and evil days. Fair wage lies between the. ;nm1mum wage, which must be paid in any event, and the hvmg wage, which is the goal" In Hydro (Engineers) (Private) Ltd. v. Their Workmen,(') this Court obser.ved as follows : - "lt is thus clear that the concept of minimum wages does take in the factor of the prevailing cost of essential commodities whenever such minimum wage is to be fixed. The idea of fixing such wage in the light of cost of living at a particular juncture of time and of neulralizing the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index cannot, therefore, be said to be alien to the concept of a minimum wage". In M /s. Jaydip Industries, rhana v. The Workmen,(') this Court rctcrred to the observation in an earlier decision of this Court in U. Unichoyi v. State of Kera/a, (3 ) as follows :- "Sometimes the minimum wage is described as a bare minimum wage in order to distinguish it from the wage structure which is 'subsistence plus' or fair wage, but too much emphasis on the adjective 'bare' in relation to the minimum wage is apt to lead to the erronous assumption that the maintenance wage is a wage which enables the worker to cover his bare physical needs and keep himself just above starvation.

That clearly is not intended by the concept of minimum wage. On the ·other hand, since the capacity of the employer to pay is treated as irrelevant, it is but right il)[T969]1T. i..-J:-713; 716.. (2) [[19721 IL. L. J. 244, 217. (J) [1902] [ S. C.R. 957 quoted in [1972] IL. L. J. 244, 247. [ 1974 l 3 S.C.R. that. no addition should be made to the components of the minimum wage near the lower level of the fair wage but the conten~s of this concept must ensure for the cmpl~yec not only his susten~nce and that of his family but must also preserve his efficiency as a worker". Jn M/s Unichem Laboratories Ltd. v The Workmen(') this Gourt further observed as follows :- ."In the fixation of wages and dearness allowance the legal position JS well established that it has to be done on an 1~dust_ry-cum-region. basis having due regard to the financial capacity of the umt under consideration. . . . . .

Industrial adjudication should always take into account, when revising the wage structure and granting dearness allowance the problem of the additional burden to be imposed o~ the employer and ascertain whether the employer can reasonably be called upon to bear such burden ...... As pointed out in Greaves Cotton and Co. and others v. Their Workmen (') . One of .. tbo principles to be adopted in fiixing wages and dearness allowance is that the Tribunal should take into account the wage scale and dearness allowance -prevailing in comparable concerns carrying on the same industry in the region". From an examination of the aecisionS of this Court, it is clear that the floor level is the bare mir)imum wage or subsistence wage. Jn lixing this wage, Industrial Tribunals will have to consider the position from the point of view of the worker; the capacity of the employer to pay such a wage being irrelevant.

The fair wage also most take note of the economic reality of the situation and the minimum needs of the worker having a fair-sized family with an eye to the pre~ scrvation of his. efficiency as a worker. Wage fi0ation is an important subject in ·,ny social welfare progrc,mme. Wage cannot be fixed in a vacuum and has necessarily to take note of so many factors from real life a worker lives, or is reaso· nably expected to live or to look forward to with hope and fervency ir..the entire social context. It is obvious that some principles have to be evolved from the conditions and circumstances of actual life. Piece rate is what is paid of results or outturn of \VOrk which is nften described as a "task". There is greater consideration to quantity in fixin·g piece rates in some particular types of work in some indus:\rics with a guaranteed minimum.

The same standatd mav not b, appropriate in all types of piece work With reference to particular work the importance of man rather than the machine enwloyed may have to be dealt with differently. Even in piece rates it will be necessary to look aroll!ld to find some correlation with time rates of the same or similar class. of workers, for example, the contribution of the worker to the job, the nature of tile work. the part (Ii [1972] 1 L L. J. 57~, 590, 591. m [19641 S S. C.R. 362 quoted in [1972] I L. L. J. 576. HINDUSTAN HOSIERY INDUSTRIES v. F. H. LALA (Goswami, /:) 311 pla)ed by the machine, the incentive Io work and above all protection against any creation of industrial unrest bec.ause of the existence side by sid' o[ two categories of workers, particularly if there is no pbssibility ol transfer of labour from one type of work to the other from time to time.

Again tliere may be some work where special skill of the worker with or without machine may be necessary and that factor will have to be then considered. It will vary from indus-· try to industry and from the process to another. No hard and fast rule can be laid down nor is it possible or helpful. The Tribunal, in "" industri:il adjudication. will have to see that piece-rates do not drive workers to fatigue to the limit· o! exhaustion and hence will keep an eye on the time factor in work. Then again a guaranteed minimum mav also have to be provided so that for no fault of a diligent worker he docs not stand to lose on any account. There may be a misty penumbra which has got to be pierced through uponal! available materials on record and also on what the Tribunal, in fairness. can lav its hands pn, with notice to the parties, for the pur- P<l!>e of fixing the piece-rates balancing all aspects.

We have only indicated broadlv the bare outlines o! approach in a inatter so involved and sensitive as wage fixation particularly when no one at the orcscnt time can shut one's eyes to the rising spiral of prices of essential c-0mmodities. The central figure in the adjudication, how-· ever. is the wage-earner who should have a fair deal in the bargain in a real sense as far as can be without at the same time ignoring the vital interests of the iiidustrv whose viability and prosperity are also the mainstay of labour. How the various competing claims have· to be balanced in a given case should mainly be the function of an imoortia! adjudicator in an industrial proceeding unless the legislature chooses to adopt other appropriate means and methods. Article 136 of the Constitutiord!oes not create a right of appeal in favour of anv person. It conf'ers power on the Court which should not he so exe1cised as to convert the Court into a Court of appeal.

"Industrial Disputes Act is intended to be a seif-contained one and· it seeks to achieve special justice on the basis o! collective bargaining. conciliation and arbitration'.. Awards are _given on circumstances occuliar 10 each dispute and th.e tribunals are, to a large extent, free· from the restrictions of technical consitlerations imposed on courts. A free and liberal exercise of the power under Article 136 may mate• riallv affect the fundamental basis of such decisiors. namely. quick solution to such disputes to . achieve industrial peace.

Though Article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionat'V jurisdiction only in cases where awards arc made in violation of the principles of natural justice, causing substantial and iuave injustice to oarties or raises an imoortant princiole of industrial law requiring elucidation and final decision by this Court or disclosure~ such other exceptional or special circwnstances which merit the CC!Usideration of this Court". per Subba Rao. J. in IBeneal Chemical and Pharmaceutical Works Ltd. v. Thrir WorkmPn(I). None of the_ arj!11ments raised by the appellant sllould· br ~ufficient to persuade the Court to inteqlOse relief in its fnvour· (I) (1959] Supp. 2·s: c. R: t36 at 140. .312 [ 1974 J 3 S.C.R. '°n. the facts and circumstances_ of this case. It is not quiic correct to say that the Industrial Court bas not followed the principles of wage-revision expounded by this Court.

The lndustrial Court ha;; ·taken into account the prevailin_g minimum wa_ge rates in the region, .and the. capacity of the appellant lo bear the burden of th~ increased wages. Counsel for the appellant could not show to us that the ·wall" rates fixed by the lndustri_al Court arc unfair for the appellant . or thrit it cannot bear the load of increased wa.ges. -The wages of the piece rated workmen had to be increased in line with the in- .creased wages of the time-rated workmen with· the object of avoiding .discrimination and heart-burning among workers and maintenance of industrial peace among them. Taking a comprehensive view of the facts and circumstances of the case, we are satisfied that no intervention is called for 'Yith the award. In the result, the appeal is dismissed. We will. however, make no order as to costs in thio .appeal. :S.B.W. Appeal llis111isfed.