M/S. LIPTON LIMITED AND ANOTHER versus THEIR EMPLOYEES

Citation: [1959] SUPP. 2 S.C.R. 150 · Decided: 02-02-1959 · Supreme Court of India · Bench: SYED JAFFER IMAM · Disposal: Case Partly allowed

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Judgment (excerpt)

I959 
February 2. 
150 
SUPREME COURT REPORTS [1959] Supp. 
M/S. LIPTON LIMITED AND ANOTHER 
v. 
THEIR EMPLOYEES 
(SYED JAFER IMAM, S. K. DAS and J. L. KAPUR, JJ.) 
Industrial Dispute-Bonus-Fixation of grades and scales of 
pay-Co1npany with head office in England and branch in India-
Employces in the Delhi Office-Claim to bonus on the basis of global 
profits-Revision of wage str·ucture-Principle-Bonus and Wage, 
distinction-Jurisdiction of the Tribunal to make an award in 
respect of employees of Delhi office employed outside State of 
Delhi. 
, 
The appellant company was incorporated in the United' 
Kingdom, with its registered office in London and its business in 
the United Kingdom consisted of stores and groceries, including 
tea which represented only about ro% of its business there. Its 
operations in India were carried on by a branch with its head 
office in Calcutta, and the business there consisted mainly in the 
sale of "packeted" tea throughout India. The Delhi office of its 
Indian branch controlled the salesmen and other employees 
employed in the Punjab, Delhi State, Rajasthan and. Uttar 
Pradesh, but had no connexion with the export side of the busi-
ness. 
The Indian Branch had no subscribed capital nor any 
reserves, and the capital used in India was money advanced from 
the company's fund in England. 
The dispute 
between the 
respondents who were the 
employees of the Delhi office and the company related, inter 
alia, to (1) fixation of grades and scales of pay; (2) whether 
retrospective effect should be given to the new scales of pay ; 
and (3) bonus for the year r95r. The respondents contended 
that the total global profits of the appellant company should 
form the ba3is for determining the claim to bonus on the ground 
that it was an integrated industry which had trading activities in 
various countries. The Tribunal found that the Indian workmen 
did not in any way contribute to the profits which the appellant 
•company derived from its ex-India business, that the Indian 
branch rnaintain,ed separate accounts which had been audited and 
accepted by the Income-tax authorities as showing the profit anil 
loss of the Indian branch of the business, and"that though, at the 
relevant time, the appellant company was one legal entity and 
the capital of the Indian branch came from London, the Indian 
branch was treated as a separate entity for all practical purposes. 
The Tribunal also found that for 1951 there was no available sur-
plus for distribution as bonus to the employees in India. In the 
matter of fixation of grades and scales of pay, the Tribunal found 
that the existing scale of wages of the Delhi employees was far 
below the standard of a living wage, and for fixing the wage level 
it took into consideration the company's global capacity to pay 
and came to the conclusion that having regard to its global 
(2) S.C.R. SUPREME COURT REPORTS 
151 
resources the company was financially able to bear a slightly 
z959 
higher wage structure. 
Accordingly, the Tribunal revised the 
grades by giving. an increase of 20% to all workers. 
As to the 
Lipton Ltd. 
date from which the revised grades were to take effect, the 
v. 
Tribunal directed that they should have retrospective effect Their Employees 
from January r, 1954, instead of January l, 1953, as claimed by 
the Union. 
The appellant contended that the Tribunal erred in taking 
into consideration the global financial resources of the company 
in support of an increase in wages while holding that the Indian 
branch was a separate entity for the payment of bonus, that the 
financial resources of the Indian branch did not show any capa-
city to pay higher wages, and that. in any case, there was no 
reliable evidence to show that the existing wage structure requir-
ed revision if it was compared to the wage structure in similar 
industries in the Delhi region. 
A question was also raised as to 
whether the Industrial Tribunal, Delhi, had jurisdiction to make 
an award in respect of employees of the Delhi office who were 
employed outside the State of Delhi. 
Held: (1) that on the finding that the Delhi office controlled 
all its employees in the matter of appointment, leave, transfer, 
supervision, etc., whether employed in Delhi State or outside 
it, the Industrial Tribunal, Delhi, had jurisdiction to adjudi-
cate on the dispute between the appellant company and its 
workmen of the Delhi office, as the Delhi State Government was 
the appropriat

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