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PETITIONER:

ALEMBIC CHEMICAL WORKS CO., LTD.

Vs.

RESPONDENT:

THE WORKMEN

DATE OF JUDGMENT:

15/12/1960

BENCH:

GAJENDRAGADKAR, P.B.

BENCH:

GAJENDRAGADKAR, P.B.

WANCHOO, K.N.

GUPTA, K.C. DAS

CITATION:

1961 AIR 647 1961 SCR (3) 297

CITATOR INFO :

R 1967 SC1286 (24)

RF 1972 SC1967 (2,3)

F 1973 SC1156 (7)

RF 1978 SC 769 (3)

D 1981 SC1685 (9)

ACT:

Industrial Dispute-Award of privilege leave-Jurisdiction-

Industrial Disputes Act, 1947 (14 of 1947), s. 10 (1)(d)-

Factories Act, 1948 (63 of 1948), ss. 79, 78, 84.

HEADNOTE:

It is not correct to say that S. 79 of the Factories Act,

1948, standardises the grant of annual leave with wages to

employees to whom the Act applies and that neither the

employer by voluntary agreement nor the Industrial Tribunal

by its award can vary that standard. It is well settled

that in construing the provisions of a welfare legislation,

such as the Act in question which has for its object the

preservation of the health, safety and welfare of the

workmen, courts should apply the rule of beneficent

construction and moreover, ss. 78 and 84 of the Act put it

beyond doubt that S. 79(1) is not intended to standardise

annual leave with wages by providing the maximum.

Rightly construed S. 78(1) of the Act not only protects past

laws, awards, agreements and contracts but also those that

are to come into existence in the future and does not

prohibit a more generous agreement than that prescribed by

S. 79(1).

Likewise the scope of s. 84 of the Act which, in empowering

the State to exempt a factory from all or any provisions of

Ch. VIII of the Act, contemplates better amenities than

those guaranteed by the Chapter, cannot be limited to

benefits existing at the date of the Act but must also apply

to future benefits which an employer may grant to his

employees.

Consequently, in a case where the Industrial Tribunal, on a

consideration of awards and agreements between employers and

employees in comparable concerns, awarded annual leave in

excess of what is prescribed by S. 79(1),

Held, that the award was not open to challenge.

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Held, further, that the distinction generally made between

operatives doing manual work and clerical and other staff is

perfectly justifiable and so the award of privilege leave to

the clerical staff could not be said to be discriminatory.

Although the Industrial Tribunals in awarding privilege

leave or sick leave must not fail to consider their effect

on production and so on the interest of the community in

general, this Court would be reluctant under Art. 136 of

the Constitution to interfere with an award unless its

provisions are unsustainable on any reasonable grounds and

make a violent departure from the practice and trend

prevailing in comparable concerns.

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298

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 475 of 1960.

Appeal by special leave from the Award dated March 31, 1960,

of the Industrial Tribunal, Bombay, in Reference (I. T.)

No. 227 of 1959.

M....C. Setalvad, Attorney-General for India, G. B. Pal and

J. B. Dadachanji, for the appellant.

I. N. Shroff, for the respondents.

1960. December 15. The Judgment of the Court was delivered

by

GAJENDRAGADKAR, J.-This appeal by special leave arises from

an industrial dispute between the appellant, the Alembic

Chemical Works Co. Ltd., and the respondents, its workmen.

The said dispute related to a single demand made by the

respondents with regard to leave. This demand consisted of

three parts, (a) one month's privilege leave with full

salary and dearness allowance on completion of eleven months

service in a year with a right to accumulate upto six

months, (b) one month's sick leave with full salary and

dearness allowance for each year of service with right to

accumulate for the entire period of service, and (c) every

workman should be entitled to take leave in proportion to

the number of days he is in service of the company at the

time of his application for the same. This dispute was

referred by the Government of Bombay for adjudication before

the Industrial Tribunal under s. 10(1)(d) of the Industrial

Disputes Act XIV of 1947.

The Tribunal considered the contentions raised by the

appellant against the respondents' demands, took into

account awards or agreements between employers and their

employees in comparable concerns and made its award. In

regard to privilege leave the Tribunal has ordered that

leave should be granted to the staff members covered by the

reference as follows:

Privilege leave upto 3 ... 16 days as at present

completed years of service per year.

Up to 9 completed years... 22 days per year.

And thereafter ... One month for every

11 months of service.

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The award allows accumulation of privilege leave upto three

years. As regards sick leave, the Tribunal has ordered that

the appellant should give its staff covered by the present

award 15 days sick leave in a year with full pay and

dearness allowance with a right to accumulate upto 45 days.

It has also directed that no medical certificate should be

demanded if sick leave for three days or less is asked for.

In regard to the third item of demand concerning leave in

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proportion the Tribunal has made appropriate direction which

it is unnecessary to set out for the purpose of this appeal.

Before the Tribunal the main contention raised by the

appellant was in regard to the propriety and reasonableness

of the demand and in regard to the practice prevailing in

comparable concerns. Before this Court, however, the

provision made by the award in regard to privilege leave has

been attacked mainly on the ground that the Tribunal had no

jurisdiction to make such an award having regard to the

provisions of s. 79 of the Factories Act, 1948 (63 of 1948)

(hereafter called the Act). It is urged that s. 79 of the

Act has made exhaustive and self-contained provisions with

regard to the granting of annual leave with wages to the

employees to whom the said Act applies, and the effect of s.

79 is to introduce standardisation in the matter of leave;

which means neither the employer voluntarily, nor an

Industrial Tribunal by its award, can add to the leave

prescribed by the, said section. In the matter of leave s.

79 is a complete code, and no additions to the said leave

can be made either by a contract or by an award. It is

common ground that the respondents are governed by the pro-

visions of the Act. This point was not raised before the

Tribunal, but since it is a point of law which arises on

admitted facts we have permitted the learned Attorney-

General to argue it before us.

The Act was first enacted in 1934 as Act 25 of 1934. Since

then it has been amended from time to time. Its main object

is to consolidate and amend the law regulating labour in

factories. For the purpose of determining which concerns

and which employees

300

would be governed by the Act s. 2(m) and (1) define

"factory" and "worker" respectively. Even a broad view of

the scheme of the Act and a perusal of its provisions would

clearly indicate that the Act is a beneficent measure and

its policy is to make reasonable provisions for the

preservation of health of the workmen, their safety and

their welfare. With that object in view, the Act has made

provisions for the regulation of working hours of adults,

has regulated the employment of young persons, and has also

provided for annual leave with wages to the workmen. The

amendments made in the relevant provisions of the Act from

time to time indicate that the Act has been pursuing its

beneficent policy slowly but steadily and is attempting to

provide for the workmen better and larger amenities in their

employment. It is in the light of this obvious policy and

object of the Act that we have to decide the question raised

before us by the appellant.

Section 79(1) occurs in Chapter VIII which deals with annual

leave with wages. It provides thus:

"79. (1). Every worker who has worked for a

period of 240 days or more in a factory during

a calendar year shall be allowed during the

subsequent calendar year, leave with wages for

a number of days calculated at the rate of-

(i)...if an adult, one day for every twenty

days of work performed by him during the

previous calendar year;

(ii)..if a child, one day for every fifteen

days of work performed by him during the

previous calendar year.

Explanation 1--For the purpose of this sub-

section-

(a) any days of lay off, by agreement or

contract or as permissible under the standing

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orders;

(b) in the case of a female worker,

maternity leave for any number of days not

exceeding twelve weeks; and

(c)...the leave earned in the year prior to

that in which the leave is enjoyed;

shall be deemed to be days on which the worker

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has worked in a factory for the computation of

the period of 240 days or more, but he shall

not earn, leave for these days."

This section has 11 other sub-sections which deal with

different aspects and make relevant provisions in regard to

annual leave with wages. It is not disputed that the award

purports to make provisions for privilege leave in excess of

the annual leave sanctioned by s. 79. Can the Industrial

Tribunal direct the appellant to provide such additional

privilege leave to its employees?; in other words, does s.

79 purport to standardise annual leave with wages so that no

departure from the said standard is permissible either way?

The appellant's contention is that except for pre-existing

awards, agreements, contracts or except for pre-existing law

no departure from the standardised provision is permissible

after s. 79 was enacted.

This argument raises the question of construing s. 79 in the

light of the other relevant provisions of the Act. It may

be conceded that the provisions made by s. 79 are elaborate,

and in that sense may be treated as self-contained and

exhaustive. It is also clear that s. 79(1) does not use the

expression "not more than or not less than" as it might have

done if the intention of the Legislature was to make its

provisions correspond either to the minimum or the maximum

leave claimable by the employees; but even so, when s. 79(1)

provides that every worker shall be allowed leave as therein

prescribed, the provision prima facie sound,% like a

provision for the minimum rather than for the maximum leave

which may be awarded to the worker. If the intention of the

Legislature was to make the leave permissible under s. 79(1)

the maximum to which a workman would be entitled, it would

have used definite and appropriate language in that behalf.

We are, therefore, inclined to think that even on a plain

construction of s. 79(1) it would be difficult to accede to

the argument that it prescribes standardised leave which

inevitably would mean the maximum permissible until s. 79(1)

itself is

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Even on the basis that s. 79(1) is capable of the

construction sought to be placed on it by the appellant, the

question would still remain whether the Raid construction

should be preferred to the alternative construction which,

as we have just indicated, is reasonably possible. The

answer to this question must be in the negative for two

reasons; first, having regard,to the obvious policy and

object of the Act, if s. 79(1) is capable of two

constructions that construction should be preferred which

furthers the policy of the Act and is more beneficial to the

employees in whose interest the Act has been passed. It is

well settled that in construing the provisions of a welfare

legislation courts should adopt what is sometimes described

as a beneficent rule of construction; but, apart from this

general consideration about the policy and object of the

Act, ss. 78 and 84 occurring in the same Chapter as s. 79

clearly indicate that s. 79(1) is not intended to

standardise leave provisions as contended by the appellant,

and that is the second reason why the appellant's argument

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cannot be accepted.

Let us then consider the provisions of Bs. 78 and 84.

Section 78(1) provides that the provisions of Chapter VIII

shall not operate to the prejudice of any right to which a

worker may be entitled under any other law, or under the

terms of any award, agreement or contract of service. There

is a proviso to this sub-section which lays down that when

such award, agreement or contract of service provides for

longer annual leave with wages than provided in this Chapter

the worker shall be entitled only to such longer annual

leave. Section 78(2) exempts specified workers from the

operation of Chapter VIII. The first difficulty which this

section raises against appellant's argument is that it

undoubtedly recognises exceptions to the leave prescribed by

s. 79(1). It is well-known that standardisation of

conditions of service in industrial adjudication generally

does not recognise or permit exceptions; if the hours of

work are standardised, for instance, or the wage-structure

is standardised, it is intended to make hours of work and

wages uniform in the whose industry brought

303

under the working of standardisation Standardisation thus

inevitably means levelling up of those whose terms and

conditions of service were less favourable than the

standardised ones, and levelling down those of such others

whose terms and conditions were more favourable than the

standardised ones. That being so, if s. 79(1) intended to

standardise annual leave with wages it would normally not

have made provisions in regard to exceptions as s. 78(1)

obviously does.

Besides, the scope and extent of the exceptions recognised

by s. 78(1) are decisively against the appellant's

construction of s. 79(1). The learned Attorney-General has

strenuously contended that the saving provision of s. 78(1)

applies only to existing law and existing awards,

agreements or contracts of service; in other words, his

argument is that the Legislature has deliberately decided to

except pre-existing arrangements and in that sense it is a

departure from the usual concept of standardisation. In our

opinion, the assumption that s. 78(1) is confined to

existing arrangements is plainly inconsistent with a fair

and reasonable construction of the said provision. When

s.78(1) refers to any other law it could not have been

intended that it is only to existing laws that the

reference is made and that the idea underlying the provision

was that no law can be passed in future which would grant

more generous leave to the employees. Such a restriction on

the legislative activities of the appropriate Legislatures

cannot obviously have been intended. If the reference to

law is not confined only to existing law there is no reason

why reference to any award, agreement or contract of service

should be similarly circumscribed or limited. We feel no

difficulty in holding that what s. 78(1) protects are laws,

awards, agreements or contracts of service which were then

existing or which would come into existence later; that is

to say s. 78(1) does not affect preexisting arrangements and

does not also prohibit future arrangements which would be

more generous than s. 79(1). A law may be passed making

more generous provisions, or agreements or contracts may

304

be entered into or awards made with the same result. If

that be the true position s. 78(1) clearly negatives the

theory that s. 79(1) provides for standardisation of annual

leave with wages.

The provisions of s. 84 would also lead to the same result.

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Section 84 provides that where the State Government is

satisfied that the leave rules applicable to workers in a

factory provide benefits which in its opinion are not less

favourable than those for which Chapter VIII makes provision

it may by written order exempt the factory from all or any

of the provisions of Chapter VIII subject to such conditions

as may be specified in the order. Now, the power to exempt

factories has to be exercised having regard to the effect of

the totality of the benefits which may be afforded to the

workers by their respective factories. This power to exempt

also necessarily postulates the existence of better

amenities than those guaranteed by Chapter VIII, and that

means that if a factory provides better leave amenities to

its employees, the State Government may in the interest of

the employees exempt the factory from the operation of this

Chapter. The scope of s. 84, like the scope of s. 78,

cannot be limited only to the more favourable benefits which

may be existing at the date when the Act was passed. What

is true about the existing benefits would be equally true

about the benefits which may be granted by an employer to

the employees in future. Let us illustrate what the con-

sequence would be if the appellant's argument is accepted.

Take the case of an employer who has been exempted under s.

84 on the ground that the benefits of leave conferred by him

on his employees are more favourable to them. In such a

case, the employer may make his benefits still more

favourable after exemption is accorded to him; but an

employer who has already not provided more favourable

benefits would be effectively precluded from making any such

provisions in future. It is difficult to imagine that such

a consequence could have been intended by the provisions of

this welfare legislation.

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The history of the amendments made in the relevant

provisions of the Act also indicates that the Act has been

gradually making more liberal provisions in' the interest of

workmen to whom it applies. In the original Act as it was

passed (25 of 1934) s. 34 provided for weekly holiday but no

provision was made for holidays with pay. When the said Act

was amended by Act 3 of 1945, s. 49A which is equivalent to

present s. 78(1) without the proviso was inserted; and s.

49B provided, inter alia, that every worker who has

completed a period of twelve months continuous service in a

factory shall be allowed during the subsequent period of

twelve months holidays for a period of ten days. That is

how provision for holidays came to be made. By the

;'amending Act 63 of 1948, s. 78 with the present proviso

was enacted; and s. 79 made a provision for annual leave

with wages. While making provision for annual leave with

wages the section then prescribed a minimum of ten days;

subsequently, by amending Act 25 of 1954, s. 79 as it stands

at present was enacted; and in s. 78 the word "annual" has

been added to qualify leave in the proviso. We have thus

briefly referred to some changes made in the Act from time

to time in order to show that subsequent amendments have

sought to make the provisions more liberal.

There is one more point which may incidentally be mentioned

whilst we are considering the amendments made in the Act

from time to time. Section 49A which broadly corresponds to

s. 78 of the present Act saved other laws and terms of any

award, agreement or contract of service just as s. 78(1)

does. Now, if the said section is construed on the lines

which the appellant wants us to construe s. 78(1) it would

only be arrangements existing at the date when the said

amending Act came into force on January 1, 1946, that would

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be protected and saved, and nothing that happened either by

way of legislation or by way of awards or contracts

subsequent to the said date would attract the provisions of

the said s. 49A or s. 78 which subsequently took its place.

This obviously is not

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intended by the Legislature which incidentally shows that

s. 78(1) cannot be confined to existing arrangements or

laws, but takes within its sweep future laws, agreements,

contracts or awards. Therefore, the challenge to the

validity of the award based on the assumption that s. 79(1)

provides for standardised award of annual leave with wages

fails.

Then it is urged that the provision made by the award for

privilege leave introduces discrimination between the

clerical staff covered by the present reference and

operatives covered by the earlier awards made by the same

Tribunal. We were told that operatives had made a similar

claim for privilege leave before the same Tribunal, and the

said claim had been rejected. The argument is that the

provision for privilege leave made by the present award

would create discontent amongst the operatives to whom

similar leave has been denied, and that would disturb

industrial peace. We are not impressed by this argument.

It is not seriously disputed that a distinction has

generally been made between operatives who do manual work

and clerical and other staff; in fact the appellant's

standing orders themselves make different relevant

provisions for the two categories of its employees. It is

also not disputed that in practice such distinction is made

by comparable concerns, and awards based on the same

distinction are generally made in respect of the two

separate categories of employees. We are, therefore, unable

to appreciate the argument that in granting privilege leave

to the present staff the Tribunal has either overlooked its

earlier award or has made a decision which suffers from the

vice of discrimination. The practice prevailing in

comparable concerns and the trend of awards both seem to

show that a distinction is generally made between the two

categories of employees, and since the said distinction is

perfectly justifiable no question of discrimination can

arise.

It is then argued that making liberal provisions for

privilege leave and sick leave are really opposed to the

modern trend in industrial thought, and so such liberal

awards should be discouraged and corrected.

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There is no doubt that when industrial adjudication seeks to

do social justice it cannot ignore the needs of national

economy; and so in considering matters of leave, either in

the form of privilege leave or sick leave, the Tribunals

should not ignore the consideration that unduly generous or

liberal leave provisions would affect production and

obviously production of essential commodities is in the

interest of not only the employers and the employees but

also of the general community; but it is difficult for us to

accept the argument that we should make suitable

modifications in the provisions made by the award in regard

to privilege leave or sick leave. These are matters

primarily for the Industrial Tribunal to consider and

decide. The Tribunal is more familiar with the trend

prevailing in comparable concerns, and unless it appears

that the impugned provisions cannot be sustained on any

reasonable ground or that they mark a violent departure from

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the prevailing practice or trend, we would be reluctant to

interfere with the decision of the Tribunal. After all, in

deciding what ,would be a reasonable provision for privilege

leave or sick leave, the Tribunal has to take into account

all relevant factors and come to its own decision. As we

have already indicated, in making the present award the

Tribunal has considered previous decisions which were

relevant and prevailing agreements in comparable concerns.

We have carefully considered the criticism made by the

learned Attorney-General against the provisions contained in

the award, but we are not satisfied that a case has been

made out for interference in an appeal under Art. 136.

The result is the appeal fails and is dismissed with costs.

Appeal dismissed.

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