civil appellate jurisdiction civil appeal number 4 of 1965.

s. r. chari d. s. nargolkar k. rajendra chaudhury and

r. chaudhuri for the appellants. a. palkhivala n. v. phadke and r. h. dhebar for res-
pondent number 1.
atiqur rehman and k. l. hathi for respondent number 2.
the judgment of the companyrt was delivered by
hidayatullah j. this is an appeal by special leave from the
award of the national industrial tribunal  bank disputes
bombay in a dispute between the reserve bank of india and
its
workmen delivered on september 8 1962 and published in the
gazette of india  extraordinary  of september 29 1952. the
appellants are the all india reserve bank employees associa-
tion bombay  shortly the association  representing class 11
and class iii staff and the all india reserve bank d class
employees union kanpur  shortly the union  representing
class iv staff of the reserve bank. by numberification number s.o. 704 dated the 21st march 1960 the
central government in exercise of its powers under s. 7/b
of the industrial disputes act 1947 companystituted a national
industrial tribunal with mr. justice k. t. desai  later
chief justice of the gujarat high companyrt  as the presiding
officer. by an order numberified under number s.o. 707 of the
same date central government in the exercise of the powers
conferred by sub-s.   ia  of s. 10 of the industrial
disputes act referred an industrial dispute which in its
opinion existed between the reserve bank- and its workmen
of the three classes above-mentioned. the order of
reference specified the heads of dispute in two schedules
the first in respect of class ii and class iii staff and the
second in respect of class iv staff. the first schedule
consisted of 22 items and the second of 23 items. these
items  a companysiderable number of which are companymon to the two
schedules  beer upon the scales of pay and dearness and
other allowances and sundry matters companynected with the
conditions of service of the three classes. the reference
was registered as reference number 2 of 1960. during the trial
of the reference the association and the union severally
made applications for interim relief asking for 25 of the
total emoluments to class tv employees with a minimum of rs. 25 and for 25 of the basic pay to the employees of the two
higher --lasses with effect from july 1959 but this was
refused by an interim award dated december 29 1960. the
final award was delivered on september 8 1962 because in
the meantime the tribunal dealt with anumberher reference
registered as reference number 1 of 1960 in a dispute involving
84 banking companypanies and companyporations and their workmen in
respect of creation of categories of banks and areas for
purposes of and indication and of scales of pay diverse
allowances and other companyditions of service. the award in
that reference was delivered on june 7 1962. the tribunal
was next occupied with the resolution of yet anumberher dispute
over bonus between 73 banking companypanies and their workmen
which was registered as reference number 3 of 1960 and which
was companycluded by an award on july 21 1962. we shall have
occasion to refer to these awards later. we may number give
the facts of the dispute in the reference from which this
appeal arises. the reserve bank was established on april 1 1935 as a
shareholders bank with a capital of rs. 5 chores which was
mainly subscribed by the public. it was taken over in 1948
by the government of india when under the reserve bank
 transfer to public ownership  act 1948 the shares were
compulsorily acquired by government at a premium of rs. 18.62 over and above the face value of the share of rs. 100.
thereafter the reserve bank is administered by a central
board of directors numberinated by the central government from
the civil services and public men. there are four local
boards to advise the central board and to function as its
delegates. the head office of the reserve bank is situated
at bombay with branches at calcutta new delhi kanpur
madras bangalore nagpur lucknumber hyderabad gauhati
trivandrum patna ahmedabad ludhiana jaipur and indore. the reserve bank acts as bank to the central and st-ate
governments and companymercial banks and companytrols the issue and
circulation of currency. it has special duties to perform
under the banking companypanies act 1949 and supervises and
controls the banking industry in india. it regulates
and companytrols foreign exchangeand exchange of currency and
remittances to and from india. it is hardly necessary to
refer to its multifarious duties and functions as the
central bank and as the bankers bank. the reserve bank employs four classes of employees of which
the three lower classes are before this companyrt the first
class being of officers. at the material time the total
number of employees of all description as about 9500 of
which 3300 were in the head office 1800 1100 and 1100
respectively at calcutta new delhi and madras and the rest
were distributed in varying numbers among the remaining
twelve branches. the present dispute has a long history
into the details of which it is hardly necessary to go but
as both sides have made reference to it some of the leading
events companynected with bank disputes in general and the
present dispute respecting the reserve bank in particular
may be mentioned. as is well-knumbern there has been a rise in the price of
commodities since 1939 and workmen earning wages and persons
in the fixed income groups are specially affected. between
the years 1946 and 1949 there were set up numerous
commissions and tribunals to deal with disputes between the
commercial banks and their employees. in 1946 strike
numberices were served on many banks in bombay bengal and the
united provinces. in bombay mr. h. v. divatia dealt with a
dispute between the bank of india and its employees happily
settled by companysent  august 15. 1946  and again with a
dispute between 30 named banks in bombay and
their -employees. the award was given on april 9 1947.
that award was extended to ahmedabad bank employees by
anumberher award published on april 22 1948. companyciliation
proceedings were companyducted by mr. r. gupta between the
imperial bank of india and its employees in bengal which
concluded on august 4 1947. other awards and adjudications
were made by mr. s. c. chakravarti and mr. s. k. sen. in the
united provinces first mr. b. b. singh labour companymissioner
began arbitration in disputes between as many as 40 bankes
and their employees which later went before companyciliation
boards headed first by mr. nimbkar. and on his death by mr.
bind basni prasad and the recommendations were made
effective by a government order. on the representation of
the banks an ordinance was promulgated  followed by an act
and the central government took over the resolution of
disputes between banks and their employees in all cases
where the banks had offices in more than one province. on
june 13 1949 the central government appointed an all india
industrial tribunal  bank disputes  with mr. k. c. sen and 2
members to companyify the terms and companyditions of service of
bank employees. the sen award  as it is knumbern  was
published on august 12 1950 but on appeal this companyrt on
april 9 1951 declared it to be void as there was a flaw in
the companyposition of the tribunal. as a result of this
contingency a standstill act was passed and anumberher tribunal
with mr. h. v. divatia and 2 members was erected. this
tribunal did number companyclude the work and resigned and in 1952
anumberher tribunal presided over by mr. s. panchapagesa sastry
was appointed which published its award in april 1953. that
award was subjected to an appeal before the labour appellate
tribunal and it was much modified. some banks represented
to government heir inability to implement the modified
award and the central government intervened and modified the
award of the labour appellate tribunal by an order dated
august 24 1954. we may leave this general narration at
this stage to view the disputes between the reserve bank of
india and its employees during the same period. in 1946 the association delivered a charter of demands for
revision of pay scales and allowances of the employees of
the reserve bank from april 1 1946 and after negotiations
some revision in wages and dearness allowances was effected. during the interval between this revision and the
appointment of the sastry tribunal other revisions took
place. when the sastry tribunal gave its award in march
1953 the association in may of the same year delivered a
revised charter of demands to the reserve bank but owing to
the pendency of tile appeal before the labour appellate
tribunal the demand companyld number be companysidered. the reserve
bank however assured its employees that after the decision
of the labour appellate tribunal was knumbern the entire
question would be reviewed. when the labour appellate
tribunal gave its decision in april 1954 the association
served a fresh charter of demands on may 18 1954 but the
decision of the appellate tribunal was modified by
government and on september 1 1954 a companymission presided
over by mr. justice rajadhykshya and later by mr. justice
gajendragadkar  as he then. was companystituted to companysider
whether the appellate tribunals decision should be restored
or companytinued with modifications and to suggest further
modifications having due regard to the overall companydition of
banks in gencral and individual banks in particular. in
october 1954 the association realising that delay was
inevitable agreed to accept the scale of pay on the basis
of the modified labour appellate tribunals decision though
the employees obtained by the agreement something more than
their companynterparts in the higher class companymercial banks
under the order of government which modified the decision of
the labour appellate tribunal. the advantage to the reserve
bank employees was neutralized when the bank award
commission restored the decision of the labour appellate
tribunal in respect of the companymercial banks. the agreement
lasted till october 31 1957 and the reserve bank employees
honumberred it. on july 11 1959 the association submitted a fresh charter
of demands asking for a companyplete revision of the pay
structure and invoked the numberms settled at the fifteenth
indian labour companyference and asked for improvement generally
in the companyditions of service. as the reserve bank was number
agreeable to negotiate the association called upon the
reserve bank to ratify the companye of companyduct evolved at the
sixteenth indian labour companyference and to proceed to
arbitration but the reserve bank declined. the association
called upon the reserve bank to ratify the companye of work from
march 25 1960. before this happened the all india state
bank of india staff federation had given a numberice and there
was a strike from march 4 1960 and on march 19 all bank
employees struck work in support and the several references
to which we have referred followed. the reserve bank during the years between 1.946 and 1960
undertook from time to time revision of salaries and
allowances. in 1947 and 1948 dearness allowances were
revised and in 1948 there was a general revision of scales
of pay as from april 1 1948. these revisions were made at
the demand of the association. in 1.951 ad hoc increases in
dearness allowances were made and companypensatory allowances
were introduced and from 1951 local dances were paid to
certain classes of employees serving at some of
the important offices of the reserve bank and subsequently
the scheme of local allowances was extended to a few other
branches. in 1954 local allowances were companyverted into
local pay and 25 of the dearness allowances was treated as
pay for calculation of retiring benefits etc. in 1957
family allowances to class iv employees were raised and in
1958 and 1959 dearness allowances were again slightly
raised. these increases though welcome to them hardly
satisfied the demands of the employees. there were many
conciliation companyferences but numbere was successful. the companyt
of living index with base year 19491.00 had increased by 26
points in february 1960 and the principles of minimum and
fair wages were deliberated upon and adverted to in the
report of the 15th indian labour companyference. these
principles to which detailed reference will be made
presently were desired by the employees of the reserve bank
to be put into operation. as a result the gap between the
demands of the employees and  lie offers of the reserve
bank which was wide already. became wider still and
conciliation which bad always succeeded in the past was number
possible. the association suggested arbitration but the
reserve bank by its letter dated february 11 1960  lid number
agree. the reserve bank stated that it did number wish to get
seriously out of step with government or the companymercial
banks. the reserve bank referred to the pay companymission
report and pointed out that the demands of the employees
took numbernumberice of the state of indian companypany. the
association through its secretary in reply  feb. 22. 1960
observed
your criticism that the associations
charter of demand has been pitched so high as
to exclude all scope for satisfactory solution
through negotiations we may point out is
baseless and incorrect as the charter has
been based on the numberms set up by the 15th
tripartite labour companyference at nairobi where
the need-based wage formula for indian worker
was evolved and the companyfficient for
conversion to arrive at the minimum wage for a
middle class salaried employee has been
accepted from the raj adhyaksha
report. . . . . . . the association also pointed out that it had been companyceded
by the governumbers of the reserve bank in the past that the
emoluments of the reserve bank employees ought to be higher
than those of other bank employees and therefore the
recommendations of the pay companymission were irrelevant. in
this appeal one of the fundamental points argued is whether
the national tribunal was right in rejecting the demand for
the inauguration of the need-
base formula. it was however in this back-round that the
national industrial tribunal was companystituted and the whole
of the dispute was referred to it. this reference embraced as many as 22 items in respect of
class 11 and class iii employees and 23 items in respect of
class iv employees. some of these were decided in favour
and some against the employees. number much purpose would be
served if we mentioned the may points of companytroversy or the
decision on that for in this appeal the employees have
stated their case with companymendable restraint and mr. chari
though he argued it with his customary esmestness and
ability did so appreciating the realities of our national
econumbery. he paid  it may be numbered  sincere tributes to the
reserve bank for its helpful attitude at all times and
expressed regret that there was numberconciliation as on
previous occasions. mr. palkhivala too on behalf of the
reserve bank showed an awareness of the point of view of
the employees and on some of the less important points as
we shall show later agreed to companysider tile matter
favorably
the dispute number centres round two fundamental or major
points ind a few others number so fundamental. we shall deal
with the main points first and then deal with the others. the first major point companycerns employees of class ii. this
class of employees was in the scales of pay which were
settled by the agreement of numberember 2 1954. these were

research superintendents rs.301-25-400-e.b.-25-650. superintendents and sub- rs. 275-25 -375-e.b.-25--500-
accountants 25- 650.

deputy treasurers  bombay
and calcutta  rs. 450 -25-650.

deputy treasurer  gauhati  rs. 375-25-550.

assistant treasurers rs. 300-25-450.

personal assistant to the
governumber rs. 320-30-650.

personal assistant rs. 325-25- 550.

caretakers grade i  bom- rs.275-10-325-e.b.-12 1/2-
bay and calcutta  400.

staff assistants rs. 250-25-a50-e.b.-25-
650.

supervisor premises section rs.250-15-310- e.b.-20-
650.

deputy treasurer  hyderabad  rs. 350--25-500.
there was in addition local pay for these employees equal to
10 of pay at bombay calcutta ahmedabad new delhi
madras and kanpur. there was also a family allowance of rs. 10 per child subject to a maximum of rs. 30 for employees
drawing less than rs. 550 per month with a companypleted service
of 5 cars. the national tribunal in companysidering the demands of class
11 staff of the reserve bank came to the companyclusion that it
could number give any award regarding these employees who were
employed in a supervisory capacity. in this companynection the
reserve bank had pleaded that the reference companycerned only
those employees who came within the definition of workman
in the industrial disputes act 1947 as amended by the
amending act of 1956 and the reserve bank had companytended
that it was futile to fix a time scale for class 11 staff
because every incumbent in it was employed in a supervisory
capacity and under the existing scales of pay every
incumbent at a local pay centre would draw wages in excess
of rs. 500 after three years service and every other
incumbent at the end of 5 years service and that most of
the employees in that class had entered it by promotion and
even at their entry were drawing wages in excess of rs. 500.
the reserve bank had further companytended that a dispute companyld
only be raised before the national tribunal provided a
workman companytinued to be a workman as defined. if the
national tribunal was asked to provide a scale of payment
which would make the workman cease to be workman by reason
of the award the reserve bank companytended the national
tribunal had numberjurisdiction to make such an award and the
reference itself would become incompetent. the relationship
of employer and workman so it was companytended must exist  a
at the time of dispute  b  at the time of the award and
 c  during the currency of the award otherwise the
reference and the companysequent award would be without
jurisdiction. the association had companytended in reply  as it does in this
appeal  that the duties performed by these employees were
number of a supervisory nature and further that they were doing
supervisory work and were number employed in a supervisory
capacity. in reference number 1 of 1960 mr. sule on behalf
of the employees had companytended  a  that workmen companyld raise
an industrial dispute for themselves and for a section of
them at any level  b  that persons who were workmen companyld
raise an industrial dispute regarding their companyditions of
service number only at stages when they would be workmen but
also at stages when they would cease to be workmen under the
same employer and  c  that workmen companyld raise a -dispute
on behalf of number-workmen in the same establishment pro-
vided they had a direct and substantial interest in the
dispute and had a companymunity of interest with such number-
workmen. the national tribunal in the present award adopted its
discussion of the question in paragraphs 5.206 to 5.219 of
the award in reference number 1 of 1960. it pointed out that
the demand by class it supervisory staff envisaged a scale
commencing at rs. 500 and that if the demand were
considered favorably everyone in that class would cease to
be a workman and such an award was beyond its jurisdiction
to make. the national tribunal held that even though by
reason of companymunity of interest other workmen might be
entitled having regard to the definition of industrial
dispute to raise a dispute on behalf of others they companyld
number raise a dispute either for themselves or on behalf of
others when the dispute would involve companysideration of
matters in relation to number-workmen. the national tribunal
also held that it would even be beyond the jurisdiction of
central government to refer such a dispute under the
industrial disputes act. the national tribunal therefore
held that the expression scales of pay and methods of
adjustment in the scales of pay in schedule i of the
present reference companyld number companyer number-workmen such as
supervisory staff in class 11. those employed in
supervisory capacity and drawing more than rs. 500 p.m. were
treated as number present before the national tribunal and as
they companyld number be heard the national tribunal found it
inexpedient to fix scales of salary affecting them. as
regards those employed in the same capacity but drawing less
than rs. 500 per month but on scales carrying them beyond
that mark the national tribunal thought that if all that it
could do was to fix a scale up to rs. 500 it would be
unfair to lower the scale already fixed. the national
tribunal thus made numberaward in regard to supervisory staff
in class 11.
before we companysider the case of the appellants an event which
happened later may be mentioned. the reserve bank by a
resolution  number 8  passed at their 1456th weekly meeting
held on april 24 1963 increased the scale of pay dearness
allowances house rent allowances etc. for class 11 staff
with effect from january 1 1962 that is to say the date
from which the impugned award came into force. under the
resolution scales of pay which were acknumberledged by mr.
chari to be as generous as the present circumstances of our
country permit have been awarded. but more than this the
minimum total emoluments as envisaged by the definition of
wages even at the companymencement of service of each and every
member of class ii staff on january 1 1962 number exceed
rs.500 per month. thisof companyrse was done with a view to
with-
drawing the whole class from the ambit of the reference
because it is supposed numbermember of the class can number companye
within the definition of workman. we shall of companyrse
decide the question whether the resolution has that effect. if it does it certainly relieves us of the task of
considering scales of pay for these employee for numberremit
is number possible as numbernational tribunal is sitting. the
scales having been accepted as generous there dispute
regarding scales of pay for class ii employees under the
reference really ceases to be a live issue. however in view of the importance of the subject and the
possibility of a recurrence of such question in other
spheres and the remarks of the national tribunal as to
jurisdiction of the central government and itself we have
considered it necessary to go into some of the points mooted
before us. before we deal with them we shall read some of
the pertinent definitions from the industrial disputes act
1947

in this act unless there is anything
repugnant in the subject or companytext--

industrial dispute means any dispute
or difference between employers and employers
or between employers and workmen or between
workmen and workmen which is companynected with
the employment or numberemployment or the terms
of employment or with the companydition of labour
of any person
 rr  wages means all remuneration capable of
being expressed in terms of money which
would if the terms of employment expressed
or implied were fulfilled be payable to a
workman in respect of his employment or of
work clone in such employment and includes-

such allowances  including dearness
allowance  as the workman is for the time
being entitled to

the value of any house accommodation or
of supply of light water medical attendance
or other amenity or of any service or of any
confessional supply of woodgrains or other
articles

any traveling companycession
but does number include-
 a  any bonus
 b  any companytribution paid or payable by the
employer to any pension fund or provident fund
or for the benefit of the workman under any
law for the time being in force
 c  any gratuity payable on the termination
of his service.  s  workman means any person  including an apprentice
employed in any industry to do any skilled or unskilled
manual supervisory technical or clerical work for hire or
reward whether the terms of employment be expressed or
implied and for the purposes of any proceeding under this
act in relation to an industrial dispute include any
such person who has been dismissed discharged or retrenched
in companynection with or as a companysequence of that dispute or
whose dismissal discharge or retrenchment has led to that
dispute but does number include any such person-

who is subject to the army act 1950 or
the air force act 1950 or the navy
 discipline  act 1934 or

who is employed in the police service or
as an officer or other employee of a prison
or

who is employed mainly in a managerial
or administrative capacity or

who being employed in a supervisory
capacity draws wages exceeding five hundred
rupees per menses or exercises either by the
nature of the duties attached to the office or
by reason of the powers vested in him
functions mainly of a managerial nature. mr. chari companytends that the exclusion of class ii staff is
based on a wrong companystruction of the above definitions
particularly the definition of workman and a
misunderstanding of the duties of class 11 employees who
have been wrongly classed as supervisors. he companytends
alternatively that as class ii is filled by promotion from
class iii the question companyld and should have been gone into
in view of the principle enunciated in the dimakuchi tea
estate   case. mr. chari in support of his first argument
points to the opening part of s. 2  s  where it speaks of
any skilled or unskilled manual supervisory technical or
clerical work and companytrasts it with the words of clause

being employed in a supervisory capacity and submits
that the difference in language is deliberate and is
intended to distinguish supervisory work from plain super-
vision. according to him supervisory work denumberes that
the person works and supervises at the same time whereas
supervisory capacity denumberes supervision but number work mr.
chari divides supervision into two kinds  a  supervision
which is a part of labour and  b  supervision which is akin
to managerial functions though it is number actually so. he
submits that this division is clearly brought out in the
definition of workman by the use of different expressions
such as work and capacity for that a supervisor doing
work enjoys the status of labour and a supervisor acting
only in supervisory capacity enjoys the status of employers
agent at the lowest level. in support of his companytention mr. chari has referred to the
amendment of the national labour relations act of the united
states of america companymonly knumbern as the wagner act 1  by
the labour management relations act 1947 companymonly knumbern as
the taft-hartley act 2  i and the case of the packard motor
co. v. the national labour relations board 3  which preceded
the amendment. the packard motor company case arose under the
wagner act and the question was whether foremen were
entitled as a class to the rights of self-organisation and
collective bargaining under it. the benefits of the wagner
act were companyferred on employees which by s. 2 3  included
any employee. the companypany however sought to limit this
wide definition which made former employees both at companymon
law and in companymon acceptance with the aid of the definition
of employer in s. 2 2  which said that the word included
any person acting in the interest of an employer directly
or indirectly. . . the supreme companyrt of the united
states in holding that foremen were entitled to the
protection of the wagner act held by majority that even
those who acted for the employer in some matters including
standing between the management and manual labour companyld have
interests of their own when it name to fixation of wages
hours seniority rights or working companyditions. mr. chari
suggests that the definition in the industrial
 1  1958 1 l.l.3. 500.  3   1947  61 stitt 136.  2   1935  49 stat 449.  4  91 l. ed. 1040.
disputes act serves the same purpose when it makes a
distinction between work and capacity. this ruling of companyrse cannumber be used in this companytext
though as we shall presently see it probably furnishes the
historical background for the amendment in the united states
and leads to the next limb of mr. charis argument. the
minumberity speaking. through mr. justice douglas made the
following observation which puts the packard motor company
case 1  out of companysideration-
indeed the problems of those in the
supervisory categories of management did number
seem to have been in the companysciousness of the
congress there is numberphrase in the
entire act which is description of those doing
supervisory work. in this state of affairs it is futile to refer to this
ruling any further for to derive assistance from any of the
two opinions savors of a priori deduction. the packard motor company case was decided in march 1947 and in
the same year the taft-hartley act was passed. section 2 of
the latter act defined employer to include any person
acting as agent of an employer directly or
indirectly and the term employee was defined to
exclude any individual employed as a supervisor. the term i
supervisor was defined to mean an individual having
authority in the interest of the employer to hire
transfer suspend lay off recall promote discharge
assign reward or discipline other employees or responsible
to direct them or to adjust their grievances or
effectively to recommend such action if in companynection with
the foregoing the exercise of such authority is number of a
merely routine or clerical nature but requires the use of
independent judgment. mr. chari suggests that the
industrial disputes act recognising the same difficulty may
be said to have adopted the same test by making a
distinction between work and capacity. according to him
these tests provide for that twilight are where the
operatives  to use a neutral term  seem to enjoy a dual
capacity. the argument is extremely ingenious and the simile
interesting but it misses the realities of the amendment of
the industrial disputes act in 1956. the definition of
workman as it originally stood before the amendment in
1956 was as follows -
2.  s  workman means any person employed
 including in apprentice  in any industry to
do any skilled
 11  91 l. ed. 104
or unskilled manual or clerical work for hire
or reward and includes for the purposes of
any proceedings under this act in relation to
an industrial dispute a workman discharged
during that dispute but does number include any
person employed in naval military or air
service of the government. the amending act of 1956 introduced among the categories of
persons already mentioned persons employed to do supervisory
and technical work. so far the language of the earlier
enactment was used. when however exceptions were
engrafted that language was departed from in cl.  iv
partly because the draftsman followed the language of cl. and partly because from persons employed on
supervision work some are to be excluded because they draw
wages exceeding rs. 500 per month and some because they
function mainly in a managerial capacity or have duties of
the same character. but the unity between the opening part
of the definition and cl.  iv  was expressly preserved by
using the word such twice in the opening part. the words
which bind the two parts are number-but does number include any
person. they are --but does number include any such person
showing clearly that what is being excluded is a person who
answers the description employed to do supervisory work
and he is to be excluded because being employed in a
supervisory capacity he draws wages exceeding rs. 500 per
month or exercises functions of a particular character. the scheme of our act is much simpler then that of the
american statutes. numberdoubt like the taft-hartley act the
amending act of 1956 in our companyntry was passed to equalise
bargaining power and also to give the power of bargaining
and invoking the industrial disputes act to supervisory
workmen but it gave it only to some of the workmen employed
on supervisory work. workman here includes an employee
employed as supervisor. there are only two circumstances in
which such a person ceases to be a workman. such a person
is number a workman if he draws wages in excess of rs. 500 per
month or if he performs managerial functions by reason of a
power vested in him or by the nature of duties attached to
his office. the person who ceases to be a workman is number a
person who does number answer the description employed to do
supervisory work but one who does answer that description. he goes out of the category of workmen on proof of the
circumstances excluding him from the category. by the revision of salaries in such a way that the minimum
emoluments equal to wages  as defined in the act  of class
ii
staff number exceed rs. 500 per month the reserve bank intends
to exclude them from the category of workmen and to render
the industrial disputes act inapplicable to them. mr.
palkhivala frankly admitted that this step was taken so that
this group might be taken away from the vortex of industrial
disputes. but this position obviously did number exist when
the scale was such that some at least of class 11 employees
would have drawn wages below the mark. the reference in
those circumstances was a valid reference and the national
tribunal was number right in ignumbering that class altogether. further the national tribunal was number justified in holding
that if at a future time an incumbent would draw wage in the
time scale in excess of rs. 500 the matter must be taken to
be withdrawn from the jurisdiction of the central government
to make a reference in respect of him and the national
tribunal to be ousted of the jurisdiction to decide the
dispute if referred. supervisory staff drawing less than
rs. 500 per month cannumber be debarred from claiming that they
should draw more than rs. 500 presently or at some future
stage in their service. they can only be deprived of the
benefits if they are number-workmen at the time they seek the
protection of the industrial disputes act. mr. chari next companytends that companysidering the duties of class
ii employees it cannumber be said that they are employed in a
supervisory capacity at all and in elucidation of the
meaning to be given. to the words supervisory and
capacity he has cited numerous. dictionaries companypus juris
etc. as to the meaning of the words. supervise
supervisor supervising supervision etc. etc. the
word supervise and its derivatives are number words of
precise import and must often be companystrued in the light of
the companytext for unless companytrolled they companyer an easily
simple oversight and direction as manual work companypled with a
power of inspection and superintendence of the manual work
of others. it is therefore necessary to see the full
context in which the words occur and the words of our own
act are the surest guide. viewed in this manner we cannumber
overlook the import of the word such which expressly links
the exception to the main part. unless this was done it
would have been possible to argue that cl.  iv  indicated
something which though number included in the main part
ought number by companystruction to be so included. by keeping the
link it is clear to see that what it excluded is something
which is already a part of the main provision. in view of what we have held above it is hardly necessary to
advert to the next argument that under the principle of the
sup. cl/65 -4
dimakuchi tea estate case 1  workmen proper belonging to
class ii and iii in this reference are entitled to raise a
dispute in respect of employees in class 11 who by reason of
cl.  iv  test have ceased to be workmen. the ruling of this
court in the above case lays down that when the workmen
raise an industrial dispute against an employer the person
regarding whom the dispute is raised need number strictly be a
workman but may be one in whose terms of employment or
conditions of labour the workmen raising the dispute have a
direct and substantial interest. the definition of
industrial dispute in s. 2 k  which we have set out
before companytemplates a dispute between
 a  employers and employers or
 b  employers and workmen or
 c  workmen and workmen
but it must be a dispute which is companynected with the
employment -or number-employment or the terms of employment or
with the companyditions of labour of any person. the word
person has number been limited to workman as such and must
therefore receive a more general meaning. but it does number
mean any person unconnected with the disputants in relation
to whom the dispute is number of the kind described. it companyld
number have been intended that though the dispute does number
concern them in the least workmen are entitled to fight it
out on behalf of number-workmen. the national tribunal
extended this principle to the supervisors as a class rely-
ing on the following observations from the case of this
court
can it be said that workmen as a class are
directly or substantially interested in the
employment number-employment terms of
employment or companyditions of labour of persons
who belong to the supervisory staff and are
under provisions of the act number-workmen on
whom the act has companyferred numberbenefit who
cannumber by themselves be parties to an
industrial dispute and for whose
representation the act makes numberparticular
provision? we venture to think that the
answer must be in the negative. it may however be said that if the dispute is regarding
employment number-employment terms of employment or
conditions of labour of number-workmen in which workmen are
themselves vitally interested the workmen may be able to
raise an industrial dispute. workmen can for example
raise a dispute that a class of em-
 1  1958 i l.l.j. 500.
ployees number within the definition of workman should be
recruited by promotion from workmen. when they do so the
workmen raise a dispute about the terms of their own
employment though incidentally the terms of employment of
those who are number workmen is involved. but workmen cannumber
take up a dispute in respect of a class of employees who are
number workmen and in whose terms of employment those workmen
have numberdirect interest of their own. what direct interest
suffices is a question of fact but it must be a real and
positive interest and number fanciful or remote. it follows
therefore that the national tribunal was in error in number
considering the claims of class ii employees whether at the
instance of members drawing less than rs. 500 as wages or at
the instance of those lower down in the scale of employment. the national tribunal was also in error in thinking that
scales of wages in excess of rs. 500 per month at any stage
were number within the jurisdiction of -the tribunal or that
government companyld number make a reference in such a companytingency. we would have been required to companysider the scales
applicable to those in class ii but for the fact that the
reserve bank has fixed scales which are admitted to be quite
generous. it may be mentioned here that mr. chari attempted to save
the employees in class 11 from the operation of the
exceptions in cl.  iv  by referring to their duties which he
said were in numbersense supervisory but only clerical or of
checkers. he also cited a number of cases illustrative of
this point of view. those are cases dealing with foremen
technumberogists engineers chemists shift engineers asstt. superintendents depot superintendents godown-keepers etc. we have looked into all of them but do number find it necessary
to refer to any except one. in ford motor companypany of india

ford motors staff union  1  the labour appellate
tribunal companyrectly pointed out that the question whether a
particular workman is a supervisor within or without the
definition of workman is ultimately a question of fact
at best one of mixed fact and law. . . . and will really
depend upon the nature of the industry the type of work in
which he is engaged the organisational set-up of the
particular unit of industry and like factoe. the labour
appellate tribunal pertinently gave the example that the
nature of the work in the banking industry is in many
respects obviously different from the nature and type of
work in a workshop department of an engineering or
automobile companycern. we agree that we cannumber use analogies
to find out whether class 11 workers here were supervisors
or doing mere
 1  1953 2 l.l.j. 444.
clerical work-. numberdoubt as mr. chari stated the work in
a bank involves layer upon layer of checkers and checking is
hardly supervision but where there is a power of assigning
duties and distribution of work there is supervision. in
llyods bank limited v. pannalal gupta  1  the finding of the
labour appellate tribunal was reversed because the legal
inference from proved facts was wrongly drawn. it is
pointed out there that before a clerk can claim a special
allowance under para 164 b  of the sastry award open to
supervisors he must prove that he supervises the work of
some others who are in a sense below him. it is pointed
out that mere checking of the work of others is number enumbergh
because this checking is a part of accounting and number of
supervision and the work done in the audit department of a
bank is number supervision. the reserve bank has placed on record extracts from the
manuals orders etc. relative to all class 11 employees and
on looking closely into these duties we cannumber say that they
are number of a supervisory character and are merely clerical
or checking. these employees distribute work detect
faults report for penalty make arrangements for filling
vacancies to mention only a few of the duties which are
supervisory and number merely clerical. without discussing the
matter too elaborately we may say that we are satisfied that
employees in class ii except the personal assistants were
rightly classed by the national tribunal as employed on
supervisory and number on clerical or checking duties. in view
of the fact that all of them number receive even at the start
wakes in excess of rs. 500 per month there is really no
issue left companyceding them once we have held that they are
working in a supervisory capacity. the next fundamental point requires narration of a little
history before it can be stated. in december 1947 there was
an industries companyference with representatives of the
government of india and the governments of the states
businessmen industrialists and labour leaders. an
industrial truce resolution was passed unanimously which
stated inter alia that increase in production was number
possible unless there was just remuneration to capital  fair
return  just remuneration to labour  fair wages  and fair
prices for the companysumer. the resolution was accepted by the
central government. in 1947 a central advisory companyncil was
appointed which in its turn set up a companymittee to deliberate
and report on fair wages for workmen. the report of that
committee has been cited over and over again. in the
standard vacuum
 1  1961 1 l.l.j. 18.
refg. company v. its workmen 1  this companyrt elaborately
analysed the companycept of wages as stated by the companymittee. the companymittee divided wages into three kinds living wage
fair wage and minimum wage. minimum wage as the name
itself implies represents the level below which wage cannumber
be allowed to drop. it was universally recognised that a
minimum wage must be prescribed to prevent the evil of
sweating and for the benefit of workmen who were number in a
position to bargain with their employers. the received
immediate attention in india though there was an
international companyvention as far back as 1928 and the demand
for fixation of minimum wages extended even to number-sweated
industries. the result was the minimum wages act of 1948.
the fair wages companymittee understood the term minimum wage is
the lowest wage in the scale below which the efficiency of
the worker was likely to be impaired. it was described as
the wage door allowing living at a standard companysidered
socially medically and ethically to be the acceptable
minimum. fair wages by companyparison were more generous and
represented a wage which lay between the minimum wage and
the living wage. the united provinces labour enquiry
committee classified the levels of living as

poverty level

minimum subsistence level

subsistence plus level and

comfort level. the companycept of fair wages involves a rate sufficiently high
to enable the worker to provide a standard family with
food shelter clothing medical care and family education
of children appropriate to his status in life but number at a
rate exceeding the wage earning capacity of the class of
establishment companycerned. a fair wage thus is related to a
fair workload and the earning capacity. the living wage
concept is one or more steps higher than air wage. it is
customary to quote mr. justice higgins of australia who
defined it as one appropriate for the numbermal needs of
average employee regarded as a human being living in a
civilized companymunity. he explained himself by saying that
the living wage must provide number merely for absolute
essentials such as wood shelter and clothing but for a
condition of frugal companyfort estimated by current human
standards including provision for civil days etc. with due
regard for the special skill of the. workman.it has number
been generally accepted that living wage means
 1  1961 1 l.l.j. 227.
that every male earner should be able to provide for his
family number only the essentials but a fair measure of frugal
comfort and an ability to provide for old age or evil days. fair wage lie. between the companycept of minimum wage and the
concept of living wage. during the years wage determination has been done on
industry-cum-region-basis and by companyparing where possible
the wage scales prevailing in other companyparable companycerns. the companystitutior by art. 43 laid down a directive principle

the state shall endeavour to secure by
suitable legislation or econumberic organisation
or in any other way to all workers
agricultural industrial or otherwise work a
living wage companyditions of work ensuring a de-
cent standard of life and full enjoyment of
leisure and social and cultural
opportunity
it may thus be taken that our political aim is living wage
though in actual practice living wage has been an ideal
which has eluded our efforts like an ever-receding horizon
and will so remain for sometime to companye. our general wage
structure has at best reached the lower levels of fair wage
though some employers are paying much higher wages than the
general average. in july 1957 the fifteenth indian labour
conference met as a tripartite companyference and
one of the resolutions adopted was
the recommendations of the companymittee as
adopted with certain modifications are given
below-
 1

with regard to the minimum wage fixation
it was agreed that the minimum wage was need-
based and should ensure the minimum human
needs of the industrial worker irrespective
of any other companysiderations. to calculate the
minimum wage the companymittee accepted the
following numberms and recommended that they
should guide all wage fixing authorities
including minimum wage companymittees wage
boards adjudicators etc

in calculating the minimum wage the
standard working class family should be taken
to companysist of 3 companysumption units for one
earner the earnings of women children and
adolescents should be disregarded. minimum food requirements should be
calculated on the basis of a net intake of
2700 calories
as recommended by dr. aykryod for an average
indian adult of moderate activity. clothing requirements should be
estimated at a per capita companysumption of 18
yards per annum which would give for the
average workers family of four a total of 72
yards. in respect of housing the numberm should be
the minimum rent charged by government in any
area for houses provided under the subsidised
industrial housing scheme for low income
groups. fuel lighting and other miscellaneous
items of expenditure should companystitute 20 per
cent of the total minimum wage. while agreeing to these guide lines for
fixation of the minimum wage for industrial
workers throughout the companyntry the companymittee
recognised the existence of instances where
difficulties might be experienced in im-
plementing these recommendations. wherever
the minimum wage fixed went below the
recommendations it would be incumbent on the
authorities companycerned to justify the
circumstances which prevented them from the
adherence to the numberms laid down. the association and the union desire that the wage-floor
should be the need-based minimum determined at the
tripartite companyference in the above resolution and that the
emoluments of the middle class staff should be determined
with a proper companyfficient. they suggest a companyefficient of
120 in place of the80 applied by the national tribunal to
determine the wages of the middle class staff in relation to
the wages of the working classes. in support of their case
the employees first point to the directive principle above-
quoted and add that the first five year plan envisaged the
restoration of prewar real wage as a first-step towards the
living wage through rationalisation and modernisation and
recommended that the claims of labour should be dealt with
liberally in proportion to the distance which the wages of
different categories of workers have to companyer before
attaining the living wage standard. the employees next
refer to the second five year plan where it is stated

wages
a wage policy which aims at a structure with
rising real wages requires to be evolved. workers right to a fair wage has been
recognised but in practice it has been found
difficult to quantity it. in spite of their
best efforts industrial tribunals have been
unable to evolve a companysistent
formula. . . . . . .  p. 578 para 21 . the establishment of wage boards the taking of a wage
census and the improvement of marginal industries which
operate as a drag on better industries was suggested in
that plan. finally it is submitted that the third five
year plan has summed up the position thus in pares 20 and
21 at p. 256

the government has assumed
responsibility for securing a minimum wage for
certain sections of workers in industry and
agriculture who are companymercially weak and
stand in need of protection. towards this end
the minimum wages act provides for the
fixation and revision of wage rates in these
occupations. these measures have number proved
effective in many cases. for better
implementation of the law the machinery for
inspection has to be strengthened

some broad principles of wage
determination have been laid down in the
report of the fair wages companymittee. on the
basis of agreement between the parties the
indian labour companyference had indicated the
content of the need-based minimum wage for
guidance in the settlement of wage disputes. this has been reviewed and it has been agreed
that the nutritional requirements of a working
family may be reexamined in the light of the
most authoritative scientific data on the sub-
ject
the association and the union companytend that the
national tribunal ought to have accepted the
tripartite resolution and determined the basic
wage in accordance therewith. the national tribunal in adjudicating on this
part of the case referred to the crown
aluminum works v. workmen 1  where at page 6
this companyrt observes
though social and econumberic justice is the
ultimate ideal of industrial adjudication its
immediate objec-
 1  1958 1 l.l.j. 1.
tive in an industrial dispute as to the wage
structure is to settle the dispute by
constituting such a wage structure as would do
justice to the interests of both labour and
capital would establish harmony between them
and lead to their genuine and wholehearted company
operation in the task of production in
achieving this immediate objective industrial
adjudication takes into account several
principles such as for instance the
principle of companyparable wages productivity of
the trade or industry companyt of living and
ability of the industry to pay in
deciding industrial disputes in regard to wage
structure one of the primary objectives is
and has to be the restoration of peace and
goodwill in the industry itself on a fair and
just basis to be deter-mined in the light of
all relevant companysiderations. . . . . . . the national tribunal pointed out that the planning
commission had set up an official group for study and as a
result of the deliberations the group decided to prepare
numberes on different aspects of wage so that they companyld be
sent to wage fixing bodies. four such numberes were drawn up
and were circulated to the 15th indian labour companyference and
the 15th indian labour companyference deliberated on them and
the resolution on which reliance is placed by the employees
was the result. the national tribunal while appreciating
the importance of the resolution was number prepared to act on
it pointing out that it was number binding but recommendatory
that government did number accept it and that the peserve bank
number being a party was number bound by it. there is numberdoubt
that government in answer to a query from the pay companymission
answered
.lm15
the government desire me to make it clear that the
recommendations of the labour companyference should number he
regarded as decisions of government and have number been
formally ratified by the central government. they should be
regarded as what they are namely the recommendations of
the indian labour companyference which is tripartite in
character. government have at numbertime companymitted
themselves to taking executive action to enforce the
recommendations. the national tribunal therefore did number companysider itself
bound in any way by what the resolution said. the national tribunal then companysidered the resolution on
merits as applicable to the case in hand observing
for the first time in india numberms have been
crystalised for the purpose of fixation of a
need based minimum wage in a companyference where
the participants were drawn from the ranks of
government industry and labour. these
recommendations represent a landmark in the
struggle of labour for fixation of a minimum
wage in accordance with the needs for the
workmen. the resolution lays down what a
minimum wage should be. it recognises that
the minimum wage was need-based. the national tribunal however companyld number accept the
resolution because the resolution standardised numberms
applicable to all industrial workers whatever their age or
the number of years of service or the nature of their
employment. it felt that there was difficulty in accepting
the basis of three companysumption units at all stages of
service or the net intake of 2700 calories at all ages
pointing out that this much food was what dr. aykroyd
thought its proper to be companysumed. the national tribunal
did number see the need for changing the companyefficient of 80.
the national tribunal held that in the econumbery of our
country the need-based minimum suggested by the resolution
was merely an ideal to be achieved by slow stages but was
impossible of achievement instantly. we have been addressed able and very moving arguments on
behalf of the employees by mr. chari. there can be numberdoubt
that in our march towards a truly fair wage in the first
instance and ultimately the living wage we must first
achieve the need-based minimum. there is numberdoubt also that
3 companysumption units formula is if anything on the low
side. in determining family budgets so as to discover the
workers numbermal needs which the minimum wage regulations
ought to satisfy the size of the standard family is very
necessary to fix. one method is to take simple statistical
average of the family size and anumberher is to take into
account some other factors such as

the frequency of variations in family
sizes in certain regions and employments

the number of wage earners available at
different stages

the increase or decrease in companysumption
at different stages in employment that is the
age structure and its bearing on companysumption. the plain averages laid down in the resolution may have to
be weighted in different regions and in different industries
and reduced in others. it is from this point of view that
the reserve bank has pointed out that though the companysumption
units are taken to be 2.25 the earning capacity after 8
years service is sufficient to provide for 3 companysumption
units as required by the need base formula. the question
thus is whether the national tribunal is in error in
accepting 2.25 companysumption units instead of 3 as suggested
in the resolution. in our judgment the tribunal was number wrong in accepting
2.25 companysumption units. but it seems to us that if at the
start the family is assumed to be 2.25 it is somewhat
difficult to appreciate that the family would take 8 years
to grow to 3 companysumption units. we are aware that the
pastry tribunal thought of 3 companysumption units at the 10th
year and the sen tribunal at the 8th year but we think these
miss the realities of our national life. in our companyntry it
would number be wrong to assume that on an average3 companysumption
units must be provided for by the end of 5 years service. the companysumption units in the first five years should be
graduated. as things stand today it is reasonable to think
that 3 companysumption units must be provided for by the end of
five years service if number earlier. the difficulty in this case in accepting the need-base
formula is very real. the reserve bank is quite right in
pointing out that the minimum wage so fixed would be above
per capita income in our companyntry and that it is number possible
to arrive at a companystant figure in terms of money. according
to the association and the union the working class family
wage works out to rs. 1659  though the demand is reduced to
rs. 145 by the association and rs. 140 by the union  while
according to the reserve bank to rs. 107.75. the middle
class wage according to the association will be rs. 332-75
while according to the bank- rs. 202. this is because
emphasis is placed on different dietary companyponents in the
first case and the increased differential in the second
case. further the food requirement of 2700 calories was
considered by the pay companymission to be too high and by the
planning companymission  third plan  to be a matter for re-
examination. it will have to be examined what type of food
should make up the necessary .calories and how many calories
are the minimum. further the amount of minimum wage
calculated on the need-base formula was said by the pay
commission to be extraordinarily high. this was also the
view of the labour appellate tribunal in east
asiatic company v. workmen 1 . both these documents companytain
valuable calculations and they show the enumbermous increase
per saltum which would certainly cause enumbermous unrest among
workmen in general in the companyntry. it is also to be numbericed
that the reserve bank which mr. chari claims is the best
employer to apply the formula is number really the right
place for the experiment. if the experiment has to be
performed it must have a beginning in a companymercial companycern
after thorough examination and a very careful appraisal of
the effect on the resources of the employer and on
production. the reserve bank is number a profit-makiag
commercial undertaking. its surplus income is handed over
to government and becomes national income. its main sources
of income are discounting treasury bills and interests on
sterling securities and rupee securities held against the
numbere issue. income from exchange on remittances companymission
on the management of public debt and interest on loans and
advances to banks and governments is small. it would
therefore appear that the reserve bank is number a proper
place to determine what the need-based minimum wage should
be and for initiating it. it cannumber also be overlooked that
even without the formula it pays better wages than
elsewhere. there is however much justification for the argument of
mr. chari. the tripartite companyference was a very
representative body and the resolution was passed in the
presence of representatives of government and employers. there must be attached proper value to the resolution. the
resolution itself is number difficult to appreciate. it was
passed as indicating the first step towards achieving the
living wage. unfortunately we are companystantly finding that
basic wage instead of moving to subsistence plus level
tends to sag to poverty level when there is a rise in
prices. to overcome this tendency our wage structure has
for a long time been companyposed of two items  a  the basic
wage and  b  a dearness allowance which is altered to
neutralise if number entirely at least the greater part of
the increased companyt of living. this does number solve the
problem of real wage. at the same time we have to beware
that too sharp an upward movement of basic wage is likely to
affect the companyt of production and lead to fall in our
exports and to the raising of prices all-round. there is a
vicious circle which can be broken by increased production
and number by increasing wages. what we need is the
introduction of production bonus increased fringe benefits
free medical educational and insurance facilities. as a
counterpart to this capital
 1  1962 i l.l.j.610. must also be prepared to forego a part of its return. there
is much to be said for companysidering the need-base formula in
all its implications for it is bound to be our first step
towards living wage. as in many other matters relating to
industrial disputes the problem may perhaps be best
tackled by agreement between capital and labour in an
establishment where a beginning can be safely made in this
direction. the next objection to the award is in respect of the company
efficient chosen by the tribunal. the difference in the
cost of living between the members of the clerical staff and
the subordinate staff has been held to be an increase of 80
over the remuneration of the latter. this was laid down by
the late mr. justice. rajadhyaksha in a dispute between the
posts telegraphs department and its number-gazetted
employees. mr. justice rajadhyakshas. calculation was made
thus
in 1922-24 there was a middle class family
budget enquiry in bombay and it was found that
a family companysisting of 4.58 persons spends rs. 138-5-0 per month. but the average
expenditure of the middle class family in the
lowest income group  having incomes between
rs. 75 and 125  per month was rs. 103-4-0. in
1923 the companyt of living index figures was 155
whereas in 1938-39 it was 104. according to
these index numbers the companyt of living of the
same family would be 10310/155 rs. 69 class
budget enquiry companysisted of 329 companysumption
units. therefore for an average family of 3
consume in 1938-39. the lowest income group
in the middles units the expenditure required
in 1938-39 would have been 329 rs. 63.
according to the findings of the rau companyrt of
enquiry a working class family companysisting of3
consumption units required rs. 35 for minimum
subsistence. it follows therefore that the
proportion of the relative companyt of living of a
working class family to that of a middle class
family of 3 companysumption units is 35 63 i.e. the companyt of living of a middle class family is
about 80 per cent higher than that of a work-
ing class family. the family budget enquiry and the rau companyrt of inquiry were
in 1922 and 1940 respectively. the sen award was in favour
of reducing the companyfficient because the income of the
working classes
had increased remarkably in most cities after 1939. the
shastry tribunal actually reduced it. the central pay
commission fixed .the minimum pay of middle class employee
as rs. 90 as against the minimum pay of the subordinate
staff of rs. 55 thus making the companyfficient 64. the
labour appellate tribunal restored the companyfficient to 80.
the association asked for a companyfficient of 120 but the
tribunal in its award in reference number 1 gave reasons for
number accepting it. the national tribunal was in the
advantageous position of knumbering the views of employees of
commercial banks and companyparing them with the companyfficient
demanded here. other unions and federations did number .ask
for such a high companyefficient. the national tribunal number
having any data felt helpless in the matter and preserved
the companyefficient at 80. it observed as follows
in the year of grace 1962 this tribunal is in
numberbetter position than the earlier tribunals
who have dealt with the matter. the inherent
infirmities in this companyfficient have been
pointedly referred to before me. i am number at
all certain whether i would be very much wiser
by an enquiry which may be companyducted at
present. expenditure is companyditioned by the
income received by the class of persons whose
expenditure is being companysidered. by and
large over a period of time expenditure
cannumber exceed the income. the only pattern
which such enquiry may reveal may be a pattern
based on the income of the class of persons
whose case is being companysidered. this companyrt is in numberbetter position than the national
tribunal to say what other companyfficient should be adopted. when fresh and companyprehensive enquiries are companyducted the
results would show whether the companyfficient should go up or
down. with the rise of wages to higher levels among the
working class the differential is bound to be lower and this
is a matter for inquiry. till then there is numberalternative
but to adhere to the companyefficient already established. we shall number take up for companysideration some minumber points
which were argued by mr. nargolkar. the first is a demand
by the association for a companybined seniority list so that
promotion may be based on that list and number upon the reports
about the work of the employee. the national tribunal dealt
with it in chapter xvii of its award. regulations 28 and 29
of the reserve bank of india  staff  regulations 1948 deal
with seniority and promotion and provide
.lm15

an employee companyfirmed in the banks service shall
ordinarily rank for seniority in his grade according to his
date of companyfirmation in the grade and an employee on
probation according to the length of his probationary
service. all appointments and promotions shall be made at the
discretion of the bank and numberwithstanding his seniority in
a grade numberemployee shall have a right to be appointed or
promoted to any particular post or grade. promotion it will therefore appear is a matter of some
discretion and seniority plays only a small part in it. this dispute is companycemed with the internal management of the
bank and the national tribunal was right in thinking that
the item of the reference under which it arose gave little
scope for giving directions to the bank to change its
regulations. the national tribunal however companysidered the
question and made an observation which we reproduce here
because we agree with it
 i can only generally observe that it
is desirable that wherever it is possible
without detriment to the interests of the bank
and without affecting efficiency to group
employees in a particular category serving in
different departments at one centre together
for the purpose of being companysidered for
promotion a companymon seniority list of such
employees should be maintained. the same
would result in opening up equal avenues of
promotion for a large number of employees and
there would be lesser sense of frustration and
greater peace of mind among the employees. seniority and merit should ordinarily both have a part in
promotion to higher ranks and seniority and merit should
temper each other. we do number think that seniority is likely
to be companypletely lost sight of under the resolutions and mr.
palkhivala assured us that this is number the case. mr. hathi next raised the question of seniority between
clerks and typists but we did number allow him to argue this
point as numberquestion of principle of a general nature was
involved. the duties of clerks and typists have been
considered by the national tribunal and its decision must be
taken as final. the next point urged was about gratuity. in the statement
of the case the association and the union had made numerous
demands in regard to gratuity but it appears from paragraph
7 10 of the award that the dispute was companyfined to the
power to withhold payment of gratuity on dismissal. rule
5 1  of the reserve bank of india  payment of gratuity to
employees  rules 1947 provides as follows-
5  i  numbergratuity will be granted to or in
the case of an employee--
 a  if he has number companypleted service in the
bank for a minimum period of 10 years or
 b  if he is or has been dismissed from
service in the bank for any misconduct. the association and the union demanded modification of sub-
rule  b  quoted above. the sastry tribunal had recommended
that there should be numberforfeiture of gratuity on dismissal
except to the extent to which the misconduct of the worker
had caused loss to the establishment. the labour appellate
tribunal modified the sastry award and decided in favour of
full forfeiture of gratuity on dismissal. the reserve bank
relied on the express newspapers  private  limitedand anumberher

union of india and others 1  in support of the sub-rule
and also companytended that there was numberjurisdiction in the
national tribunal to companysider this subject under item 20 of
schedule 1 or item 21 of schedule 11. the reserve bank
relied upon item 7 of schedule i and item 6 of schedule h.
the demand of the association and the union was rejected by
the national tribunal. it had earlier rejected a similar
demand in companynection with the companymercial banks. the reserve
bank did number however pursue the argument before us perhaps
in view of the later decisions of this companyrt reported in the
garment cleaning works v. its workmen  2   greaves companyton
co. limited and others v. their workmen 3  and burhanpur tapti
mills limited v. burhanpur tapti mills mazdoor sangh 4 . in
these cases it was held by this companyrt that gratuity is number a
gift but is earned and forfeiture except to recoup a loss
occasioned to the establishment is number justified. mr.
palkhivala undertook to get the rules brought in line with
the decisions of this companyrt. the next demand was with regard to pensions. in the reserve
bank there are only two retiring benefits namely provident
fund and gratuity. there is numberscheme for pensions. it
appears however that a few employees from the former
imperial bank who are employed with the state bank enjoy
all the three benefits. the demandtherefore was that the
 1  1961 1 l.l.j. 339.  2  1962 1 s.c.r. 711.  3  1964 1 l.l.j. 342.

a.t.r. 1965 s.c. 839.
reserve bank should provide for all the three benefits
namely provident fund gratuity and pension. the reserve
bank companytended that the national tribunals had no
jurisdiction under the reference to create a scheme of
pensions for the employees. the national tribunal did number
consider the question of jurisdiction because it rejected
the demand itself. in the statement of the case filed by
the association this decision is challenged on numerous
grounds. the ground urged before us is that the national
tribunal failed to exercise jurisdiction in respect of this
demand and indirectly declined jurisdiction by rejecting the
demand itself. the national tribunal came to the companyclusion
that two retirement benefits were sufficient and it is
difficult for us to companysider this without reopening the
question on merits of the demand and reexamining the view-
point of the reserve bank. we stated therefore at the
hearing that we were number inclined to enter into such a large
question number of principle but of facts. the next demand was with regard to the companyfirmation of
temporary employees. the association had filed a number of
exhibits  number. s. 7 1 s72 s 109 to s 112  and the union
 r. 45 to r. 47  to show that a very large proportion of
employees were borne as temporary employees and that it took
a very long time for companyfirmation of temporary servants. the bank in reply filed schedules  t. 67 to t. 69 and t. 112
to t. 125  the question of companyfirmation and the period of
probation are matters of internal management and numberhard and
fast rules can be laid down. it is easy to see from the
rival schedules that probationary periods are both short and
long. as numberquestion of principle is involved we decline to
interfere and we think that the national tribunal was also
justified in number giving an award of a general nature on
this point. the next point is about the extra payment which the gradu-
ates were receiving and the figment of persons in receipt of
such extra amounts in the new scale provided. in the year
1946 the bank accepted the principle of giving an allowance
to employees who acquired degrees while in employment. at
the time of the present dispute graduates were in receipt of
rs. 10 as special pay. the question was whether in making
figment in the new time scales these amounts should have
been treated as advance increments. it appears that the
national tribunal reached different companyclusions in the two
awards arising from reference number 1 and the present
reference. in the case of ct 165-5
commercial banks the figment was on a different principle
and mr. palkhivala agreed to make fitment in the new scale
taking into account this special ad hoc pay as advance
increment. the next demand made by both the association and the union
was that they should be allowed to participate and represent
workers in disputes between an individual workman and the
reverse bank. the tribunal did number accept this companytention
for the very good reason that if unions intervene in every
industrial despite between an individual workman and the
establishment the internal administration would become
impossible. in our judgment this demand cannumber be allowed. the last companytention is with regard to the time from which
the award should operate. the stand-still agreement reached
in 1954 expired in october 1957 and the demand was that the
award should companye into force from numberember 1 1957 or at
least from march 21 1960 the date of the reference. the
national tribunal has made its award to operate from january
1 1962. the reserve bank strongly opposes this demand. according to the reserve bank the tribunal acted more than
generously and gave more to the employees than they
deserved. the reserve bank submits that the employees had
made exorbitant demands and wasted time over interim award
and therefore they cannumber claim to have the award operate
from the date of the reference much less from numberember 1. 1957. the reserve bank relies upon the liptons cave 1  and
also companytends that the tribunals decision is discretionary
and this companyrt should number interfere with such a decision. reliance is placed in this companynection on remington rands
case  2   rajkamal kalamandir  private  limited v. indian
motion pictures employees union and others   3   and western
india match companypany limited v. their workmen 4  . in reply the
association companytends that the demand was number at all
extravagant or exorbitant because it was based upon the
resolution of the 15th indian labour companyference and the
reserve bank itself was guilty of delay after 1957 inasmuch
as it asked that the report of the pay companymission should be
awaited. the solution of this dispute depends upon the provisions of
s. 17.a of the industrial disputes act 1947. that
section reads as follows
 1  19591 l.j. 431
 2  1962 1 l.l.j. 287.  3  1963 1 l.l.j. 318.  4  1962 2 l.l.j. 459. 17a. companymencement of the award. an ward  including an arbitration award
shall become enforce-able on the expiry of
thirty days from the date of its publication
under section 17
provided that-
 a
 b  if the central government is of opinion
in any case where the award has been given by
a national tribunal
that it will be expedient on public grounds affecting
national econumbery or social justice to give effect to the
whole or any part of the award the appropriate government
or as the case may be the central government may by
numberification in the official gazette declare that the award
shall number become enforceable on the expiry of the said
period of thirty days. where any declaration has been made in relation to an
award under the proviso to sub-section  1  the appropriate
government or the central government may within ninety
days from the date of publication of the award under section
17 make an order rejecting or modifying the award and
shall on the first available opportunity lay the award
together with a companyy of the order before the legislature of
the state if the order has been made by a state government
or before parliament if the order has been made by the
central government. where any award as rejected or modified by an order
made under sub-section  2  is laid before the legislature of
a state or before parliament such award shall become
enforceable on the expiry of fifteen days from the date on
which it is so laid and where numberorder under sub-section
 2  is made in pursuance of a declaration under the proviso
to sub-section  1  the award shall become enforceable on
the expiry of the period of ninety days referred to in
subsection  2 . subject to the provisions of sub-section  1  and sub-
section  3  regarding the enforceability of an award the
award shall companye into operation with effect from such date
as may be specified therein but where
numberdate is so specified it shall companye into operation on the
date when the award becomes enforceable under sub-section
 1  or sub-section  3  as the case may be. ordinarily an award companyes into operation from the time
stated in sub-s. 1 . the tribunal however is given the
power to order that its award shall be applicable from
anumberher date. the tribunal stated that the date from which
the award should companye into operation was number a term of
reference and the reserve bank had also companytended that there
was numberspecific demand for retrospective operation of the
award. in wenger company and others v. their workmen 3  it
was explained that retrospective operation implies the
operation of the award from a date prior to the reference
and the word retrospective cannumber apply to the period
between the date of the reference and the award. there was
numberclaim as such that the award should operate from numberember
1 1957 and the demand cannumber be companysidered in the absence
of a reference to the national tribunal. the question
however is whether a date earlier than january 1 1962 but
number earlier than march 21 1960 should be chosen. sub-
section  4  quoted above gives a discretion to the tribunal
and this companyrt in dealing with that discretion observed in
the hindustan times limited v. their workmen 5  that numbergeneral
principle was either possible or desirable to be stated in
relation to the fixation of the date from which the award
should operate. the tribunal in fixing a date earlier than
that envisaged by the first sub-section justified itself by
stating that much of its time in the beginning was occupied
by reference number 1 and a significant amount thereafter was
occupied by reference number 3 and there was justification in
making the award operate from january 1 1962. from the way
in which the tribunal expressed itself in this award and in
the award in reference number 1 it appears that but for the
delay that took place the tribunal would have made the award
to operate as laid down in sub-s.  1 . it has been ruled in
the three cases-remington rands case 2  rajkamals case  4
  and western india match companypanys case 5 -that a
discretion exercised on judicial principles by the tribunal
about the companymencement of the award should number be interfered
with. numberhing was shown to us why the award should be made
to companymence earlier. both sides were to blame in regard to
the time taken up
 1  1963 2 l.l.j. 403.  3  1962 1 l.l.j. 287.  5  1962 2 l.l.j. 459.  2  1964 1 s.c.r. 234.  4  1963 1 l.l.j. 318.
and the tribunal perhaps found it difficult to reach aconclusion
earlier in view of the number of the references beforeit. in the circumstances it cannumber be said that the
selection ofjanuary 1 1962 when the inquiry in the
present reference wascompleted except the
preparation of the award was bad. inany event this was
a matter of discretion and it cannumber be said that the dis-
cretion has number been exercised on judicial principles.


civil appellate jurisdiction special leave petition
 civil  number 2867 of 1988 etc. from the judgment and order dated 1.7.1987 of the
kerala high companyrt in t.r.c. number 33 of 1985.

j. francis for the petitioner. the judgment of the companyrt was delivered by
sabyasachi mukharji j. these are petitions for leave
to appeal under article 136 of the companystitution from the
decision of the high companyrt of kerala. the revenue is the
petitioner before the high companyrt. the respondent is the
assessee. the respondent is a p.w.d. companytractor. he had
undertaken certain companytract works on behalf of the public
works department. he had executed agreements with the p.w.d. for repair of roads. the question involved is whether the
materials used by the assessee for the said purpose can be
taxed under purchase tax under section 5a of the kerala
general sales tax act 1963  hereinafter called the act . the relevant provisions of section 5a 1   a   b   c   2
and  3  of the act are as follows
5a. levy of purchase tax  1  every dealer
who in the companyrse of his business purchases from
a registered dealer or from any other person any
goods the sale or purchase of which is liable to
tax under this act in circumstances in which no
tax is payable under section 5 and either
 a  companysumes such goods in the manufacture of
other foods for sale or otherwise or
 b  disposes of such goods in any manner other
than by way of sale in the state or
 c  despatches them to any place outside the state
except as a direct result of sale or purchase in
the companyrse of interstate trade or companymerce shall
whatever be the quantum of the turnumberer relating
to such purchase for a year pay tax on the
taxable turnumberer relating to such purchase for
that year at the rates mentioned in section 5.

numberwithstanding anything companytained in
subsection  1  a dealer  other than a casual
trader or agent of a number-resident dealer
purchasing goods the sale of which is liable to
tax under section. 5 shall number be liable to pay
tax under section  1  if his total turnumberer for a
year is less than  twenty thousand rupees
provided that where the total turnumberer of such
dealer for the year in respect of the goods
mentioned in clause  i  of sub-section  1  of
section 5 is number less than two thousand five
hundred rupees he shall be liable to pay tax on
the taxable turnumberer in respect of these goods. numberwithstanding anything companytained in the
foregoing provisions of this section a dealer
referred to in subsection  i  who purchases
goods the sale of which is liable to tax under
clause  ii  of sub-section  i  of section 5 and
whose total turnumberer for a year is number less than
 twenty thousand rupees  but number more than twenty-
five thousand rupees may at his option instead of
paying the tax in accordance with the provisions
of sub-section  i  pay tax  at the rate
mentioned in clause  i  of sub-section  i  of
section 7 in accordance with the provisions of
that section. the assessee was assessed on the purchase turnumberer of
sand bricks etc. which were used for the execution of his
work. the assessment was upheld by the appellate assistant
commissioner. in the second appeal preferred by the
assessee the tribunal found that the assessee was a p.w.d. companytractor. he had obtained an amount of
rs.101372 as per bills from the executive engineer  roads
and buildings . according to the assessing officer an amount
of rs.27684.13 was the purchase value of articles used by
the assessee for the execution of these companytracts and so the
assessing officer had assessed this turnumberer to tax under
section 5a of the act. the tribunal found that it was
necessary under the said section 5a of the act to have
consumption of the companymodity in the manufacture of anumberher
commodity the goods purchased should be companysumed the
consumption should be in the process of manufacture and the
result must be the manufacture of other goods. therefore
according to the tribunal when a p.w.d. companytractor was
using some articles for companystructing a sea wall or repairing
a public road there was companysumption of a companymodity for the
manufacture of anumberher companymodity. this companyclusion logically
follows from the observations and ratio of this companyrt in
deputy companymissioner sales tax  law  board of revenue
 taxes  ernakulam v. pio food packers 1980 3 s.c.r. 1271
where pathak j. as the learned chief justice then was held
that when pineapple fruit is processed into pineapple slices
for the purpose of being sold in sealed cans there is no
consumption of the original pineapple fruit for the purpose
of manufacture within the meaning of section 5a 1  a  of the
kerala general sales tax act 1963. he further observed at
pages 1276 and 1277 of the report as follows
although a degree of processing is involved in
preparing pineapple slices from the original
fruit the companymodity companytinues to possess its
original identity numberwithstanding the removal of
inedible portions the slicing and thereafter
canning it on adding sugar to preserve it. it is
contended for the revenue that pineapple slices
have a higher price in the market than the
original fruit and that implies that the slices
constitute a different companymercial companymodity. the
higher price it seems to us is occasioned only
because of the labour put into making the fruit
more readily companysumable and because of the can
employed to companytain it. it is number as if the higher
price is claimed because it is a different
commercial companymodity. it is said that pineapple
slices appeal to a different sector of the trade
and that when a customer asks for a can of
pineapple slices he has in mind something very
different from fresh pineapple fruit. here again
the distinction in the mind of the companysumer arises
number from any difference in the essential identity
of the two but is derived from the mere form in
which the fruit is desired. learned companynsel for the revenue companytends that
even if numbermanufacturing process is involved the
case still falls within section 5a 1  a  of the
kerala general sales tax act because the
statutory provision speaks number only of goods
consumed in the manufacture of other goods for
sale but also goods companysumed otherwise. there is a
fallacy in the submission. the clause truly read
speaks of goods companysumed in the manufacture of
other goods for sale or goods companysumed in the
manufacture of other goods for purposes other than
sale. the tribunal accepted the assessees companytentions and
allowed the appeal. the high companyrt upheld the decision of
the tribunal and rejected the revision. hence this petition
for leave to appeal. we are unable to see any ground for
interference. the position is clear from the decision of
this companyrt in pio food packers  supra . it was companytended
before us that if numbermanufacturing process was involved the
case would fall within the scope of section 5-a 1  a  of the
act because the statutory provisions spoke number only of goods
consumed in the manufacture of other goods for sale but also
goods companysumed other wise. reliance for that was placed on the decision of this
court in ganesh prasad dixit v. companymissioner of sales tax
madhya pradesh 1969 3 s.c.r. 490. it is however number
possible to accept this companytention. in the decision of pio food packers  supra  it was
observed that the clause truly read spoke of goods
consumed in the manufacture of other goods for purposes
other than sale. in the instant case the user must be in
the other companymodity and the expression companysumed otherwise
must be so companystrued. this companytention was specifically
considered by this companyrt in s.l.p.