MANAGEMENT OF INDIAN OIL CORPORATION LTD. versus ITS WORKMEN

Citation: [1976] 1 S.C.R. 110 · Decided: 24-07-1975 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

l.!C 
110 
MANAGEMENT OF. INDIAN OIL CORPORATION LTD. 
v. 
ITS WORKMEN 
July 24, 1975 
[A. N. RAY, C.J., K. K. MATHEW, V. R. KRISHNA IYER AND 
S. M. FAZAL ALI, JJ.] 
Industrial Disputes Act,' 1947, Section 9-A-Appellant paying con1pe11satory 
,alfowanL'e to workmen voluntarily but lt'ithdrawi11g it later unilaterally wi1!1out 
notice to worknun-Appe!lant, if entitled to withdraw the co11cessio11. 
By virtue of a notification dated September 3, 1957, the Central Government 
granted compensatory allowance according- to certain rates to all Central GoYern-
ment employees posted throughout Assaill. 
The appellant thought it fit in the 
.circumstances to grant compensatory allowance to all its employees in Septem-
ber 19·59. 
It \1ias not made through any standing order or circular. There-
after there was another notification by the Central Governn1ent dated· Decem-
ber 8, 1960 by which it was provided that the en1ployees in receipt of the con1-
pensatory allowance would be giv\!n the option to choose the house rent allo\v-
ance or compensatory allowance but will not be entitled to draw both. This 
was to remain in force for five years. 
In view, however, of the notification 
-<lated December 8, 1960, the management thought that the contents of the 
circular were binding on the company and therefore. they unilaterally, without 
giving any notice to the workers, withdre\v the concession of the compensatory 
allowance which had ~en granted to the workers in September 1959. 
Thi-; 
concession was withdrawn with effect from July 1'960. 
The workers nioved 
··the Government for making a refernce to the Tribunal because a dispute aro::,-c 
betw"\!en the parties regarding the competency of the appella1it to withdraw 
the concession granted by it unilaterally. 
The Gnvernment n1ade a reference 
to the Industrial Tribunal which has held that there was a dispute betweicn the 
·parties and as s.9A of the Industrial Disputes Act, 1947. has not 
been con1-
plied with by the Company the management was not legally entitled to \vith~ 
,draw the concession of the Assam Compensatory Allowance granted to the 
employees. 
This appeal has been preferred by the managen1ent on the basis 
,of the special leave ..granted by this Court. 
A 
B 
c 
D 
E 
It was contended for the appellant (i) that the compensatory allowance was 
given purely on the basis oi' the Central Government circular dated Septen1ber 
3, 1957, on the distinct understanding that it was a temporary measure which_ 
.could be withdrawn at the will of the employer and did not amount tc.Y a condi .. 
tion of service at ail; (ii) that even if the provi:'iions' of· s.9A of the Act <1pplied. 
F 
since the management had substituted the house rent allowance for compensatory 
allowance the workers were not adversely affected and, therefore it \Vas not 
necessary to give any notice to them before withdrawing the concession of the 
compensatory allo\vance. 
Rejecting the contentions and dismissing the appeal, 
HELD·: (i) There is no evidence to show that the management before crant-
G 
ing the concession of th~ compensatory allowance had in any ""'ay indicated 
to the worke1rs that >this w'as :only a stop-gap arrangement \vhich coulc.l 
• 
be withdrawn after the housing subsidy was granted. 
Even before the unilateral 
withdrawal of the concession granted by the appelJant no notice was eiven to 
I 
the workers nor were thev taken into confidence. nor any attempt was ~Hide to 
. 
open a dialogue with them.on thi<;, question. 
So far as the con1pensatory a\!o\\'-. 
ance is concerned it was given in 01'dic'r to enable the worker" to meet the hioh 
cost of living in a far-off and backward 
area 
like 
Assa1n. 
It had 
a'b.:,~-
lutelv no casual connection with the hou"ing subsidy or house rent allowance 
H 
which was a different type of concession. 
Furthern1ore, the grant of compen-
satory allowance by the appellant was indeed a very charitable act which show-
ed that the employers \\'ere extremely sympathetic towards the need of their 
I r 
-
,, 
i 
\ 
A 
B 
c 
MANAGEMENT INDIAN OIL V, WORKMEN (Fazal Ali, J,) 
111 
workers. 
In these circUmstances, the conclusion is irresitible that the grant of 
compensatory allowance was an implied condition of service so as to attract the 
mandatory provisions of s. 9A of the Act. Twenty·one days notice has to be 
g:ven to the workmen. 
This was not done in this cas~. 
[113C-l 14BJ 
Work1ne11 of Hindustan Sllipym-d 
(Private) 
Ltd. 
v. 
Industrial Tribunal

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