The Judgment of the Court was delivered by
Gajendragadkar, J.—The dispute between the Four Oil Companies at Calcutta, Messrs. Burmah-Shell Oil Storage & Distributing Co. of India Ltd., Indo-Burma Petroleum Co. Ltd., Standard Vacuum Oil Co. Ltd., and Caltex (India) Ltd., and the respondents, their workmen represented by the Bengal Oil and Petrol Workers' Union, was referred for adjudication to the Fifth Industrial Tribunal by the Government of West Bengal under Section 10 of the Industrial Disputes Act 14 of 1947. This dispute was in respect of two claims, (1) a claim for bonus for 1955 payable in 1956 for the Calcutta Industrial Area and (2) a claim for clothing allowance and rate in respect of it. The Industrial Tribunal heard both the parties, considered the evidence led by them, and awarded 4£ months basic salary as bonus for the year 1955 to the clerical staff and the operatives of all the appellant companies. In regard to the second claim the Tribunal held that it could not be entertained because there was a conciliation settlement in force between the parties which governed that claim. According to the Tribunal it was not open to the Union which was a party to the said settlement to raise the dispute of clothing allowance before January 1, 1958. The respondent Union has not challenged this part of the award, whereas the first part of the award in regard to bonus is challenged by both the appellants and the respondent Union in their respective appeals by special leave, Civil Appeals Nos. 171 and 172 of 1960. The Union contends that the bonus awarded is insufficient and that six months basic wages should have been awarded in that behalf, whereas according to the appellants not more than four months basic wages should have been awarded as bonus.
2. The first point which is raised before us by the appellants is that the Tribunal erred in law in making an award in regard to the clerical staff of the appellant companies. The argument is that the reference was confined only to operatives employed by the appellants and the clerical staff was not included in it. The Tribunal has rejected this contention and it has held that the reference covered both the operatives and the clerical staff. The appellants challenge the correctness of this finding. We have already noticed that the reference is between the four appellant companies on the one hand and their workmen represented by the named Workers' Union on the other. It appears from the record that the said Union represents only workmen in the categories of labour, service and security employees in the Calcutta Industrial Area; and so prima facie the two demands made by the Union would cover the claims made by the operatives alone. The statement made by the said Union on September 20,1956, also indicates that the dispute raised by the Union was raised on behalf of the labour, service and security staff working within the Calcutta Industrial Area including their head offices. To the same effect are the statements made by the respondent on previous occasions when bonus dispute was settled as well as a settlement was reached in regard to wages etc. (Exs. B, B-2 and B-4). On all these occasions settlements were entered into in respect of the appellants' labour, service and security workmen in the various establishments of the appellants in the said Calcutta Industrial Area, and it was the respondent Union which entered into the said agreements as the sole representative of the three categories of operatives. Similarly, the charter of demands served by the respondent on the appellants on March 13, 1955, refers to an earlier agreement of June 13, 1953, and it recites that the said agreement having automatically expired on December 31, 1954, a fresh charter of demands which was adopted at the General Meeting of the respondent held on March 4, 1955, was being forwarded to the appellants for their acceptance. Thus the charter of demands is in a sense the result of the expiration of an earlier agreement and must be deemed to have been made on behalf of the parties who were bound by the earlier agreement. When we turn to the said earlier agreement it is clear that it is the operatives who were parties to it and who were represented by the respondent Union. There is another fact which is also significant. A claim for interim award was made by the respondent, and this claim was obviously and expressly limited to the operatives of the appellants. According to this claim then made an interim award was passed by the Tribunal in favour of the operatives alone. This position may be contrasted with the agreement entered into by the appellants with their clerical staff who were represented by the respective Unions known as the Employees' Unions; in other words, the history of the settlement between the appellants and their employees clearly shows that the clerks represented by the union, namely, the Employees' Union, settled their demands, whereas the operatives represented by the respondent Union settled their demands, and the appellants dealt with the two categories of employees distinctly and separately. That being so, it is difficult to accept Mr Sanyal's argument, on behalf of the respondent, that the reference in the present case was intended to cover the clerical staff as well as the operatives. The expression “workmen represented by the respondent Union” must in the context necessarily mean the operatives only and not the clerical staff.
3. The Tribunal, however, took the view that the clerical staff was included in the reference because the definition of workmen prescribed by Section 2(s) of the Act includes both the operatives and the clerks. That no doubt is true; but the jurisdiction of the Tribunal is limited by the terms of reference, and in interpreting the terms of reference it would be unreasonable to rely upon the definition of workmen specified in the Act apart from and independently of the descriptive clause which limits them to the category of workmen represented by the respondent Union. The Tribunal also thought that a large number of employees belonging to the clerical cadre had presented individual applications before it requesting it to allow them to appear through their lawyer Mr Sanyal. These applications were not formally entered in the case diary but were presumably allowed by the Tribunal inasmuch as it is common ground that Mr Sanyal argued the case for his clients; but it is necessary to remember that employees who were not covered by the terms of reference cannot bring their cases within the jurisdiction of the Tribunals merely by presenting individual applications in that behalf. It is true that under Section 36 it is open to the employees whose dispute has been referred for industrial adjudication to appear either individually or through their union, but Section 36 of the Act postulates a valid reference being made on behalf of the employees concerned. If the reference does not include the clerical staff and their grievances it would not be open to the members of the clerical staff to bring their grievances before the Tribunal by their individual applications or for the Tribunal to widen the scope of its enquiry beyond the terms of reference by entertaining such individual applications. Therefore, we are satisfied that the appellants are right in contending that the Tribunal had no authority to include within its award members of the clerical staff employed by the appellants.
4. In this connection we may also refer to the fact that on the record there is evidence to show that conciliation agreements had been made between three appellant companies and their clerical staff, and that these agreements were subsisting at the time when the present reference was made. Before the Tribunal the two agreements made between the Standard Vacuum Oil Company Ltd., and Caltex (India) Ltd., and their clerical staff had been produced to show the trend of agreements entered into by the appellants separately with the two respective categories of employees. A similar agreement between the clerical staff and Messrs. Burma-Shell Oil Storage & Distributing Co. of India Ltd., has been produced before us. The appellants' grievance is that if they had been aware that the Tribunal was going to deal with the case of the clerical staff they would have pleaded that a claim of that character was barred by reason of the fact that a conciliation agreement in respect of the item of bonus was then in operation. However, it is unnecessary to deal with this point because we have reached the conclusion that the clerical staff is outside the reference, and so the award made in respect of the said staff is invalid and must be reversed.
5. Then, as to the bonus awarded it has been urged before us that since there has been no material change in the financial position of the companies no more than four months basic wages should have been awarded by way of bonus for the relevant year. The trend of agreements in Calcutta appears to be four months basic wages to the operatives and 3½ months to the clerical staff, and the argument is there has been no change which justifies the increase of bonus from four months to 4½ months. The Tribunal was not impressed by this argument, and we think rightly. The plea that there should be a change of material circumstances in order to increase the bonus necessarily leads to the enquiry as to the extent of the available surplus in the hands of the employer from year to year. The appellant companies took the stand before the Tribunal that they were able to pay a reasonable amount of bonus which the Tribunal may award; and so they did not produce their balance-sheets and did not want a finding as to the available surplus. That being so it would be difficult to entertain the plea that there has been no change in the financial position of the appellants because the relevant material has not been produced by them. It would be idle to contend that bonus should be awarded at the same rate year after year. It may be less or more according as the available surplus is less or more; and so, in the absence of material which would help to determine the available surplus this plea cannot succeed.
6. Then it was urged that by awarding 4½ months basic wages as bonus the award has upset the pattern of agreements made by the appellants with their employees for several years past; and so it is said we should reduce the bonus awarded to four months basic wages. It is quite true that in the matter of bonus parties should attempt to settle the dispute amicably, for there can be no doubt that amicable settlement offers the best solution to such vexed problems between the employers and the employees; but we do not think the appellants can reasonably contend that the Tribunal is not justified in increasing the amount of bonus merely because it is likely to affect adversely the pattern of their agreements with the staff made in the past with the different categories of employees. After all, the quantum of bonus must be determined on the relevant facts pertaining to the year in question, and unless it is shown that the award suffers from a patent infirmity or is otherwise very unreasonable this Court would be reluctant to interfere with the order made by the Tribunal in that behalf. Whether or not the bonus should cover four months basic wages or 4½ months basic wages is a matter which is primarily in the discretion of the Tribunal, and we see no reason to interfere with the exercise of its discretion in the present case.
7. It was then argued that the cost of living in the relevant year was less in Calcutta than in Bombay, and it was not reasonable to have adopted the Bombay pattern in awarding 4½ months basic wages as bonus. It would be noticed that the dispute raised by the appellant is not that no bonus should have been awarded having regard to the alleged fall in the cost of living. The contention merely is that fifteen days' basic wages should be reduced. That, as we have said, is a matter of detail, the decision of which raises no question of principle or law on which we can reasonably interfere with the award.
8. Then it was faintly attempted to be argued that having regard to the wages which the appellants paid to their operatives there is hardly any scope for granting bonus because the wage structure has reached the level of a living wage. The Tribunal has rejected this contention, and it has held that the wage structure cannot be said to have reached the level of a living wage, and so bonus can be legitimately claimed by the respondent Union. In this connection reliance has been placed by the appellants on two decisions of the Labour Appellate Tribunal, both of which are between three of the appellant companies and their employees. In the first of these decisions, in Burma-Shell Oil Storage and Distributing Co. of India, Ltd., Bombay, Caltex (India) Ltd., Bombay, and Standard Vacuum Oil Company, Ltd., Bombay v. Workmen (1953) II LLJ 246 it has been held that bonus must have some relation to wages and not to double or multiply it for wages are not fixed solely on the capacity of the company to pay. Care must also be taken to see that the bonus which is given is not so excessive as to create fresh problems in the vicinity that upset emoluments all round or that it creates industrial discontent and the possible emergence of a privileged class. In the second decision in the case of Standard Vacuum Oil Company, Burmah-Shell Oil Storage and Distributing Co., and Caltex (India) Ltd. v. Employees (1954) I LLJ 484 it has been held that the stage of a living wage had not been reached by the wage structure of the appellant companies, and so bonus was claimable and had been rightly allowed to the extent of 11th of the total basic earnings in the relevant year. In that case the Labour Appellate Tribunal considered the concept of living wages and observed that “it meant wages which would enable the employee to obtain better standard of food, clothing and residence with a surplus for education of children, protection against ill-health, requirements of essential social needs and a source of insurance against misfortunes including old age. In the present case it is not necessary for us to pursue this question any further because the Tribunal thought that “there is still a gap between the wages actually paid by the appellants and the living wage” and the same has not been seriously challenged before us. The only argument which has been urged is that it would not be reasonable to increase the amount of bonus from year to year solely because the appellants can afford to pay it. We are prepared to accede to the argument that merely because the appellants are able to pay a very high bonus it does not necessarily follow that extravagant bonus claims should be entertained, but we have no doubt whatever that, in the circumstances of the present case, 4½ months basic wages which is allowed is by no means extravagant. The result is that we see no reason to reduce the bonus awarded by the Tribunal. In the result Civil Appeal No. 171 of 1960 preferred by the appellant companies partly succeeds arid the award is modified accordingly.
9. That leaves the Union's Civil Appeal No. 172 of 1960 to be considered. Mr Sanyal has contended that since the profits made by the appellants are enormous there is no reason why six months bonus should not be awarded to the workmen. In this connection Mr Sanyal sought to rely upon the observations made by the Tribunal is regard to the non-production of the balance-sheets by the appellants. The award shows that the Tribunal has made strong criticism against the non-production of the balance-sheets by the appellants, and Mr Sanyal contends on the strength of the said observation that the object of keeping back the relevant documents was to conceal from the Tribunal the enormous profits which the oil companies have made during the relevant year. We are constrained to observe that the criticism made by the Tribunal against the appellants on this ground is not justified. The appellants never pleaded inability to pay any bonus that the Tribunal may reasonably award. In fact, in the large majority of cases where oil companies are concerned, to meet their employees' claim for bonus the usual plea that is put forward is that the wages paid are near the level of living wage and so there is no room for awarding high or heavy bonus. It is difficult to see why the Tribunal should have thought that this attitude was not genuine or honest. The appellants do not deny that they have made large profits, but on the other hand it does not follow that because very large profits are made very large bonus should be allowed without considering the level of the wagestructure and other relevant factors. As we have already mentioned, the question as to whether a living wage is paid by the appellants to their employees need not be considered in the present appeal. Having regard to all the facts to which our attention was drawn, we do not see any justification for increasing the amount of bonus awarded by the Tribunal. In the result Civil Appeal No. 172 of 1960 preferred by the respondent Union also fails. There will be no order as to costs in both the appeals.
10. The appellants apprehend that the terms in the award directing the payment of bonus may create some doubt as to its meaning. So we would like to make it clear that what is awarded by way of bonus for the relevant year is 9/24ths of the total basic wage of each one of the employees covered by the reference excluding allowances.