Burn & Co., Calcutta vs Their Employees 1957 AIR 38, 1956 SCR 781

Author: T V Aiyyar
Bench: Aiyyar, T.L. Venkatarama
Petitioner: Burn & Co.,Calcutta
Respondent: Their Employees (and connected appeal)
Date of judgment:11/10/1956
Bench: Aiyyar, T.L. Venkatarama Bhagwati, Natwarlal H. Das, S.K. Menon, P. Govinda

This case is surrounded by decision taken by Bengal chamber of commerce regarding wages and other terms of service of the employees and dispute between employees and company regarding fixation of same.

In 1946, the Bengal chamber of Commerce decided to fix, suitably to the changed conditions brought about by World War II, wages and other terms of service of the employees in industrial concerns, and framed a scheme classifying them under different categories, and fixing scales of pay and dearness allowance for the several categories. Disputes then arose between Engineering Firms in the State of West Bengal and their employees regarding fixation of grades, wages and dearness allowance, and by a notification the Government referred them to the adjudication of the First Engineering Tribunal. The appellant Company and its workmen were parties to the proceedings but not the present Union, which was composed of the clerical and sub-staff. The Tribunal decided, the terms less favorable to the employees than those fixed by the Bengal Chamber of Commerce. While the proceedings were, pending before the Engineering Tribunal, disputes arose between-various Mercantile Firms in Calcutta and their employees regarding the same and by notification the Government of West Bengal referred them to the adjudication of Mercantile Tribunal. This Tribunal pronounced its decision but for technical reasons, the Tribunal declined to adjudicate on their disputes. The result was that this decision was no more
binding on the parties than the one passed by the Engineering Tribunal. But the scale fixed by Mercantile Tribunal was decidedly more favorable to the employees than either the scale recommended by the Bengal Chamber of Commerce or that fixed in the decision of the Engineering Tribunal, and it -is therefore not surprising that it should have inspired the Union to present a demand for wages and dearness allowance on the scales provided therein. The Company having declined to accept it, there arose an industrial dispute, and by a notification the Government of West Bengal referred the same for adjudication to one Shri Palit, District Judge.

The Company contended that as the members of the Union were employees in an Engineering concern, the scale of pay applicable to them was that laid down in the award of the Engineering Tribunal, and that as the scale actually in force was more favorable to them than that scale, there was no ground for revision. It is argued for the appellant Company that the Appellate Tribunal was in error in brushing aside the award of Shri Palit and in deciding the matter afresh, as if it arose for the first time for determination, that when once a dispute is referred to a Tribunal and that results in an adjudication, that must be taken as binding on the parties thereto, unless there was a change of circumstances, and as none such had been alleged or proved, the award of shri Palit should, have been accepted, as indeed it was by Shri Banerji, and the decisions in The Army & Navy Stores Ltd., Bombay v. Their Workmen1 and Ford Motor Co. of India, Ltd. v. Their Workmen 1 were cited in support of this contention.

The Union, on the other hand, contended that not having been a party to the proceedings before the Engineering Tribunal, it was not bound by the award therein, and that as its members were clerical staff and not workers, the scales fixed in the award of the Mercantile Tribunal were more appropriate to them.


1 Karam Chand Thappar & Bros.’ Workmen v. The Company ([1953] L.A.C. 152)

2 The Army & Navy Stores Ltd., Bombay v. Their Workmen, ([1951] 2 L.L.J. 31)

3 Ford Motor Co. of India Ltd. v.Their Workmen, ([1951] 2 L.L.J. 231) Sheoparson Singh v. Bamnandan Prasad Singh, ([1916] L.R. 43I.A. 91),

• Section 19(6) of the Industrial Disputes Act 14 of 1947
• Section 19(3) of the Industrial Disputes Act 14 of 1947
• Section 7(1)(a) of the Industrial Disputes (Appellate Tribunal) Act 48 of 1950
• Art. 136 of the Constitution of India
• West Bengal Security Act

• The two basic objects which all industrial legislations have in view, namely, to ensure to the workmen, a fair return for their labour.
• To prevent disputes between the employers and employees, so that production might not be affected and the interests of the society might not suffer.

• Revision of pay of clerical and sub- staff • Grades of sarkars and checkers
• Bonus
• Reinstatement of four employees, S. N. Chatterjee, Ashimananda Banerjee, Panchanan Rana and Joydeb Banerjee and/or payment of compensation-to them.

Shri Palit, District Judge by his award dated 12-6-1950 held that the nature of the work and the qualifications of the clerical staff were not the same in all business establishments, that the clerks in mercantile concerns were better qualified and had to do more onerous work than the members of the Union, that the latter could not be put in the same position as the former, and that the scale of pay fixed in the scheme of the Bengal Chamber of Commerce which was adopted by the Company was fair and required no revision. He, however, made some slight changes in the incremental scales and the maximum limits of the grades.

Shri Banerji, The Industrial Tribunal on 24-6-1953 , held (1) that there were no grounds for revising the scale of pay of the clerical and sub-staff; (2) that the pay of checkers should be increased and that they should be paid according to the scale as set out in his award; (3) that the profits of the Company did not warrant the grant of any bonus in addition to what had been paid by the Company; and (4) that of the four employees, Shambunath Chatterjee should be re- employed as a checker on his old pay, that Ashimananda Banerjee and Panchanan Rana should be “re-employed in posts equivalent to their own posts as new incumbents” and that Joydeb Banerjee was not entitled either to reinstatement or compensation.

Against this award, the Union preferred an appeal to the Labour Appellate Tribunal. By its decision dated 29-4-1955 the Appellate Tribunal substantially modified the award of Shri Banerji in favour of the Union it held (1) that the minimum pay of the clerical and sub-staff should be raised, and that corresponding changes should be made in the ceiling level, in the increments and in the scales of pay of other grades of the staff; (2) that the scale of pay of the sarkars and checkers should be increased and increments given as laid down in the award; (3) that the employees should be paid a month’s bonus in addition to what had been given to them; and (4) that of the employees, Shambunath Chatterjee, Ashimananda Banerjee and Panchanan Rana should not merely be reemployed but reinstated with continuity of service, and that further Shambunath Chatterjee was entitled to compensation at the rate of six months’ basic wages with dearness allowance. As for Joydeb Banerjee, the Appellate Tribunal held that though his reinstatement was not desirable, he was entitled to one year’s basic wages with dearness allowance as compensation.

Against this decision, the Company has preferred Civil Appeal No. 325 of 1955 by special leave, and the Union has likewise preferred Civil Appeal No. 174 of 1956, the leave being limited in the latter to the four points raised by the Company in its appeal.

Shri Banerji, who heard the, reference, held that the wage structure as fixed by Shri Palit should stand.
The Appellate Tribunal disagreed with this conclusion. It held that the award of Shri Palit, which Shri Banerji accepted, was bad for the reason that it had failed to examine “the question as to whether the minimum salary fixed by the Managing Agents was adequate to cover the cost of a balanced diet and provide frugal comforts which a workman of the clerical staff must have to maintain the efficiency of his work”. It then referred to the opinion of Dr. Akroyd that an intake of 2,600 calories of food was necessary for efficiency of work, quoted some decisions of the Labour Tribunal in which the minimum pay of the clerical staff had been fixed at Rs. 70 and even more, and decided that the minimum pay should be fixed at Rs. 65 per mensem for the clerical and sub-staff of the Company. Having raised the floor level of the wage structure as aforesaid, it correspondingly raised the ceiling level and the scales of increment, and further with a view to maintain the differential scales as between the different categories, it raised the minimum pay in scales where it stood at Rs. 65 and more, with “consequential change in their incremental scales and the maximum grades”.
In the instant case, the Labour Appellate Tribunal dismissed the argument with the observation that was “a rule of prudence and not of law”. If the Tribunal meant by this observation that the statute does not enact that an award ‘should not be re-opened except on the ground of change of circumstances, that would be quite correct. But that is not decisive of the question’, because there is no provision in the statute prescribing when and under what circumstances an award could be re-opened. Section 19(4) authorises the Government to move the Tribunal for shortening the period during which the award would operate, if “there has been a material change in the circumstances on which it was based”. But this has reference to the period- of one year fixed
under section 19(3) and if that indicates anything, it is that would be the proper ground on which the award could be reopened under section 19(6).

On 1956, October 11. The Judgment of the Court was delivered by VENKATARAMA AYYAR J.-
Civil Appeal No. 325 of 1955 is allowed, the order of the Appellate Tribunal set aside and that of Shri Banerji restored, except that (1) the minimum pay of the clerical staff will be Rs. 65 per mensem with modifications as to the ceiling level and increments as set out supra and (2) that S. N. Chatterjee will be reinstated with compensation as provided in the order of the Appellate Tribunal. The Union will pay half the costs of the appellant throughout. Civil Appeal No. 174 of 1956 is dis- missed, but there will be no order as to costs.2

The Industrial Disputes Act ,1947 has been enacted for the investigation and settlement of industrial disputes in any industrial establishment. As there were no changes in the circumstances in which the wages and other terms of service which were decided by the Bengal chamber of commerce, the decision taken by Shri Banerji was taken into consideration and this decision is very accurate in my opinion too. It is on this principle that the rule of res judicata enacted in section 11 of the Civil Procedure Code is based. That section is, no doubt, in terms inapplicable to the present matter, but the principle underlying it, expressed in the maxim “interest rei publicae ut sit finis litium”, is founded on sound public policy and is of universal application.

• “De novo”-To make something new
• “Interest rei publicae ut sit finis litium”- In the interest of society as a whole, litigation must come to an end.



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