1. This petition under Article 226 of the Constitution takes exception to an award of the Industrial Tribunal vis-a-vis demands 1 and 2 incorporated in the charter of demands submitted by the first respondent.

2. Petitioner is a Society registered under the Societies Registration Act, 1860 as also the Bombay Public Trusts Act, 1950. It runs two hospitals viz. the Tilak Hospital at Worli and Dr. Mhaskar Hospital at N.M Joshi Marg, both in the metropolitan centre of Bombay. Each hospital has about 40 beds and apart from the hospitals, the petitioner is carrying on a number of subsidiaiy activities. For the performance of its activities including the running of hospitals, it has a staff numbering about 58. This is over and above the supervisory staff consisting of Doctors, Accountants and Teachers of Montessori classes. From the year 1970 till about July 1977 the petitioner was paying wages and allowances at rates paid to persons working in comparable establishments run by the State Government. Thereafter, it started paying the employees the minimum wages and allowances payable under the Minimum Wages Act, 1948. The employees organised themselves into an Union affiliated to the first respondent and this respondent on 25-11-1978 submitted a charter of demands. This charter contained amongst others two demands set out below:—

“Demand No. 1: All the workmen working in Tilak Hospital, Dr. Mhaskar's Hospital and Bal Mandir ….. should get all the benefits inclusive of Wage Structure, Dearness Allowance and other allowances. Working conditions and facilities prevailing in the Hospitals controlled by the Bombay Municipal Corporation as on 1-6-1978.

Demand No. 2: All the benefits, working conditions and facilities as per Demand No. 1 should be given with retrospective effect from 1st June 1978.”

3. The State Government which had been approached in the matter after receiving a report of failure from the Conciliation Officer made a reference under section 10(1) read with 12(5) of the Industrial Disputes Act, 1947 (I.D Act). The Industrial Tribunal received a statement of claim and written statement from the parties i.e petitioner and respondent No. 1. Certain witnesses were examined before it and thereafter it passed an award acceding to both the demands made by the first respondent. The proceeding before the Tribunal was split into Part I and Part II. The First Part was restricted to the challenge of the petitioner to the maintainability of the reference on the ground that being a Trust it could not be said to be engaged in the running of an industry. This plea was negatived by the Tribunal and the adverse decision was accepted by the petitioner. The reasons given by the Tribunal vis-a-vis the Second Part of the proceeding may be briefly stated thus: The petitioner could not seek immunity from the liability to pay comparable wages to its employees i.e wages paid by similar institutions to their employees, merely because it was a charitable organisation depending upon grants and donations. There had been some erosion in the income accruing to the petitioner. But this was on account of inadequate attention and labour paid by the office-bearers of the petitioner to the collection of donations. Next, the petitioner had also-not taken steps to improve its earnings which it could have done by increasing the charges payable by people coming to it for medical or other aid. The employees working for the petitioner were doing work of the same nature as was being required to be done by the employees of the Bombay Municipal Corporation in hospitals run by the said Corporation. If there was any decrease in the number of people turning to the Society's Hospitals for assistance, it was the Society which had to blame itself. Further no notice as required by section 9a of the i.d act had preceded the sudden change in the emoluments payable to the employees. For this reason, the Tribunal conceded both the demands made by the Union.

4. Having heard Counsel I must express my surprise at the view taken by the Tribunal vis-a-vis the financial position of the petitioner. In the view of the learned Tribunal, the petitioner had been remiss in two ways. First, petitioner should have increased charges payable by those coming to its hospitals and possibly the Montessori. It has come on record that the hospitals were in a bad shape and that on one occasion when an Inspection Team had visited one of the hospitals, the said Team found only three out of forty beds occupied. The hospital was shrouded in an eerie silence, very unusual for a hospital which should have been bustling with activity. Thus if this was the position on the day of an official visit by an Inspection Team, one can well imagine the condition of the hospitals run by the petitioner on normal days. The inevitable inference is that the services provided by the hospitals were so inadequate or so inferior, that patients thought it better to take their custom elsewhere. If added to this poor intake of patients, the Society had enhanced the charges payable, the fall in the number of patients, and consequently the income, would have been far more drastic. Next, the Tribunal comments on the inadequate efforts made by the office bearers of the petitioner Trust to improve their financial position. This was a different way of saying that the office bearers should have been more effective in the act of begging. The office bearers were performing a public service by running institutions which did not yield any, or at least, adequate income. To suggest that they were remiss in not getting a better response from the public was to demand that they take to the begging bowl and go round the city making a great clamour. This cannot be expected from any set of Trustees, and more so ones, like those running the petitioner institutions. The petitioner is engaged in activities which can be broadly described as meant for the benefit of the women and children. People who run such institutions are not to be reduced to the level of beggars and the suggestion made by the Tribunal was perverse. The Tribunal has also remarked about the need of the employees. But this need had to be assessed in the background of the financial position of the petitioner-So-ciety. Ex. L shows that right from 1975-1976 till 1983-1984 the total expenditure was far in excess of income. Year after year the losses were mounting and with a view to foot the bills, the petitioner had been required to liquidate, its capital assets. A reference was made by the Tribunal to Ex. U-26. This exhibit gives nothing more than the income plus the assets of the city section of the institutions run by the Trust. But the assets are only in notional terms for they represent no more than the value of fixed assets and dead stock owned by the petitioner Society. They did not represent money available with the petitioner-Society to conduct its activities. In the matter of fixation of a wage-scale it should never be forgotten that the financial position of the employer is a factor of importance. To cite from a leading authority on the subject Ahmedabad Mill Owners' Association v. The Textile Labour Association, AIR 1966 SC 497:—

“The problem of constructing a wage structure must be tackled on the basis that it should not be changed from time to time. It is a long-range plan; and so, in dealing with this problem, the financial position of the employer has to be carefully examined. What has been the progress of the industry in question; what are the prospects of the industry in future; has the industry been making profits; and if yes, what is the extent of profits; what is the nature of demand which the industry expects to secure, what would be the extent of the burden and its gradual increase which the employer may have to face? These and similar other considerations have to be carefully weighed before proper wage structure can be reasonably constructed by industrial adjudication. Unusual profit made by the industry for a single year as a result of adventitious, or unusual loss incurred by it for similar reasons, should not be allowed to play a major role in the calculations which industrial adjudication would make in regard to the construction of a wage structure. A broad and overall view of the financial position of the employer must be taken into account and attempt should always be made to reconcile the natural and just claims of the employees for a fair and higher wage with the capacity of the employer to pay it; and in determining such capacity, allowance must be made for a legitimate desire of the employer to make a reasonable profit. In this connection, it may also be permissible to take into consideration the extent of the rise in price structure which may result from the fixation of a wage structure, and the reasonableness of the additional burden which may thereby be imposed upon the consumer. This is one aspect of the matter which is relevant. The other aspect of the matter which cannot be ignored is that if a fair wage structure is constructed by industrial adjudication, and in course of time, experience shows that the employer cannot bear the burden of such wage structure, industrial adjudication can, and in a proper case should revise the wage structure, though such revision may result ??? the reduction of the wages paid to the employees. Though normally once a wage structure is fixed, employees are reluctant to face a reduction in the content of their wage packet, the decision of this problem, like all major problems associated with industrial adjudication, must also be based on the major consideration that the conflicting claims of labour and capital must be harmonised on a reasonable basis; and so, if it appears that the employer cannot really bear the burden of increasing wage bill, industrial adjudication, on principle, cannot refuse to examine the employer's case and should not hesitate to give him relief if it is satisfied that if such relief is not given, the employer may have to close down his business. It is unlikely that such situation would frequantly arise; but, on principle, if such situation arises, a claim by the employer for the reduction of the wage structure cannot be rejected summarily.”

5. Considered in this background there is no gain-saying the fact that the petitioner just did not have the financial capability to pay the wages and allowances at the scale demanded by respondent No. 1. Considerations which would be more relevant in the matter of fixation of minimum wage seem to have influenced the Tribunal to some extent. This I deduce from the observations made by it that the employees of petitioner were human beings having human needs which required to be satisfied as those of any other human being. Good as this argument may be in the matter of fixation of minimum wages, it was not relevant for a determination of the question the Tribunal had to decide.

6. But the Tribunal was on good ground in relying upon section 9a of the i.d act. The position emerging from the record is that since 1970 and upto May 1977 employees of the petitioner Trust were being paid wages at rates at which employees of the State Government hospitals had been paid. This was in pursuance of a resolution adopted by the Trust. A change was effected. But no notice of change as required by section 9a of the i.d act was given. The change brought about by the petitioner was in respect of the wages and allowances payable to its employees. No notice as required by section 9a of the i.d act was given. Mr. Talsania for the petitioner submits that reliance placed upon section 9A by the Tribunal was totally unwarranted. No reference had been made to this section either in the charter of demands or the reference made by the Government to the Tribunal. Consequently, it was not open to the Tribunal to take section 9A into consideration in ruling upon the demands referred to it. It is not possible to accept this submission. The strict rules of pleadings which govern proceedings before a Civil Court, do not govern pleadings in relation to disputes before Labour and Industrial Courts. Broadly speaking, the first respondent was asking for a direction to the petitioner that it pay its employees at rates at which employees of comparable institutions being run by the BMC were being paid. The material brought on record showed that till May 1977 petitioner's employees were getting wages and allowances paid to those similarly situated and working for the State Government hospitals. Therefore, the legality and validity of the change effected by the petitioner was in question. Irrespective of whether or not section 9A was pleaded by either party, the Tribunal had to consider the said provision. The mere fact that the parties were oblivious of section 9A did not confer upon the Tribunal the power to ignore a vital provision which had a bearing on the subject before it. Mr. Talsania contends that if section 9A had been specifically pleaded by respondent No. 1 or if the Tribunal had drawn his client's attention to section 9A, it i.e petitioner, may have taken remedial measures like giving a notice of change in time. The section was not brought to the notice of the petitioner, with the result that something in the nature of a surprise has been sprung upon it and to its great financial disadvantage. I agree that great hardship will be caused to the petitioner because of having to pay wages and allowances far beyond its means. But the law is what it is and cannot be bent to serve hard cases. The only slight change that can be made in the award, is that the petitioner shall pay its employees wages and allowances at rates paid to employees of comparable institutions being run by the State Government, and this, from 1-6-1978. At the interim stage it was decided that petitioners would pay the arrears with such interest as may be fixed by this Court. Having regard to the financial condition of the petitioner I do not think any interest should be made payable by it. Rule in these terms made partially absolute with parties being left to bear their own costs. The order passed shall come into operation eight weeks as from today.

Order accordingly.