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STANDARD VACUUM REFINING CO. OF INDIA V. THEIR WORKMEN

Standard Vacuum Refining Co. of India v. Their Workmen AIR 1961 SC 895

ISSUE:

  • Whether the workers were paid a ‘living wage’ which would disqualify them from claiming a bonus?

RULE:

  • Constructing a wage structure involves ethical and social considerations, addressing workers’ needs in a progressive society.
  • The impact of award of bonus in an industrial dispute on other establishments in the region must be given due importance while fixing the amount.
  • The distribution of available surplus in the form of bonus depends on the facts and circumstances of each case.
  • The concept of living wage is not a static concept – it expands with the growth of the national economy.

FACTS:

  • The dispute between Standard Vacuum Refining Co. of India, Ltd. (the Appellant), and its employees (the Respondents) concerns a claim for bonus for the year 1956.
  • The Respondents claimed they were entitled to a bonus equal to nine months’ total earnings, including allowances, overtime, and extra-time earnings.
  • The Appellant argued that it was already paying the employees a living wage, which, in its view, eliminated any obligation to pay additional bonus.
  • A conciliation officer attempted to mediate the dispute, but these efforts failed.
  • The Industrial Tribunal observed that while the wages were fair, there was still a gap between the actual wages paid and the living wage for many employees.
  • Based on this gap, the tribunal awarded the respondents a bonus equivalent to five months’ basic earnings, excluding allowances and overtime, for the year 1956.
  • Dissatisfied with the tribunal’s award, both parties filed cross-appeals to the Supreme Court.
  • The Appellant contested the award, arguing it should not be required to pay any bonus given that the employees are being paid a living wage.
  • The Respondents, on the other hand, sought a higher bonus than the five months awarded, arguing that it was inadequate.

HELD:

  • The Supreme Court rejected the Appellant’s request to remand the case to allow the company to lead further evidence, stating that the company should have produced more satisfactory evidence at an earlier stage.
  • The Supreme Court upheld the Tribunal’s award of five months’ bonus as just in the circumstances of the case.
  • The apex Court held that the workmen were not being paid a living wage.
  • While dismissing both appeals, the Supreme Court noted that the payment of bonus is intended to fill the gap between actual wages and the living wage.