Management of Churakulam Tea Estate (P) Ltd v Workmen (1968)

Students meet this case for one proposition: workmen are entitled to wages for the period of a strike that is both legal and justified. Here a half-day token strike was held to be both, so the strikers got their wages. The case shows the two separate questions you must always ask about a strike — is it illegal under the Act, and is it justified on the facts — and how each is answered.

It also teaches two further points: that the prohibition in s. 23(a) is tied to conciliation before a Board, not any conciliation; and that an employer cannot dress up a retaliatory lay-off as one under s. 25E(iii). And it restates the law on bonus claimed as an implied condition of service or as customary bonus.

The appellant owned Churakulam Tea Estate in Kottayam, Kerala. It had paid bonus for many years, but not at a uniform rate. For 1957–1959 an industry settlement (Exhibit M-4) fixed bonus for tea estates, but by clause 7 it expressly did not apply to the appellant's estate. Claiming it had made no profits and was not bound by M-4, the appellant refused bonus for those three years.

The workmen agitated; conciliation failed. The Labour Minister called a conference on 23 November 1961; the workmen's representatives attended, but the management boycotted it. In protest, twenty-seven factory workers went on a token strike from 1 p.m. on 30 November 1961. The management refused them wages for that day, and on the same day put up a notice laying off, without compensation, all the workmen of the estate from 1 December under s. 25E(iii). The lay-off was withdrawn from 8 December after the Deputy Labour Officer intervened, but the management refused compensation.

The State Government referred three questions to the Industrial Tribunal: bonus for 1957–1959, wages for the lay-off period, and wages for 30 November 1961 for the factory workers. The Tribunal awarded all three. The management appealed.

1. Could bonus be awarded as an implied condition of service, or as customary bonus, where payments had not been at a uniform rate and were not connected with any festival?
2. Was the half-day strike of 30 November 1961 illegal under s. 23(a) read with s. 24(1)(i)?
3. Was the strike unjustified, so that the strikers lost their wages?
4. Were the workmen entitled to wages for the lay-off of 1–8 December 1961?

The appeal was allowed only on bonus; on the strike and the lay-off it was dismissed.

Bonus

The Tribunal had misread Ispahani Ltd v Ispahani Employees' Union: there a uniform rate was not necessary because the claim related to a festival (Puja bonus). Relying on Graham Trading Co and Management of Bombay Co Ltd v Workmen, the Court held: "In our view, it is impossible to infer an implied condition of service, where payment has not been uniform in the past, unless such payment can be connected with some festival. In this case, admittedly, the payments have neither been uniform, nor were they connected with any festival."

Nor could the claim stand as customary bonus, because "one of the essential ingredients, viz., that the payment should have been at a uniform rate throughout, is also admittedly lacking in this case." The bonus award was set aside.

Was the strike illegal?

Section 23(a) forbids a strike in breach of contract "during the pendency of conciliation proceedings before, a Board and seven days after the conclusion of such proceedings". "Board" is defined in s. 2(c) as a Board of Conciliation constituted under the Act. The Court held: "Admittedly there were no conciliation proceedings pending before such a Board on November 30, 1961, the day on which the factory workers went on strike and hence the strike does not come under Section 23(a)". Therefore: "It follows that the strike, in this case, cannot be considered to be illegal."

Was the strike unjustified?

The management argued that, conciliation having failed and a reference being under the Government's consideration, the workmen should have waited, relying on Management of Chandramalai Estate v Its Workmen. The Court said that decision "does not at all support the appellant". The management's argument rested on "a fundamental fallacy": it assumed the strike was directly about the bonus demand. The evidence showed it was a protest against the management's boycott of the Labour Minister's conference; the Union Secretary's evidence on this point was not cross-examined, and the management led nothing to contradict it.

The conclusion: "Therefore, the strike must be held to be neither illegal nor unjustified and in consequence it must be further held that the factory workers are entitled to wages for that day."

The lay-off

Section 25E(iii) denies lay-off compensation where the lay-off is due to a strike or slowing down of production by workmen in another part of the establishment. The Court declined to apply it. Only twenty-seven factory workers had struck, and the entire body of workmen presented themselves for work on 1 December but were refused. The Court agreed with the Tribunal that the lay-off "was as a retaliatory or vindictive measure against the factory workers", and upheld the award of wages for the lay-off period.

1. A strike is illegal under s. 23(a) read with s. 24(1)(i) only if it is in breach of contract during the pendency of conciliation proceedings before a Board of Conciliation (as defined in s. 2(c)) or within seven days after they end; conciliation that is not before such a Board does not attract s. 23(a).
2. Whether a strike is justified depends on its real cause, found on the evidence. A short token strike in protest against the employer's boycott of a conference called by the Labour Minister was justified.
3. Where a strike is neither illegal nor unjustified, the workmen are entitled to wages for the strike period.
4. A lay-off that is in truth retaliatory is not protected by s. 25E(iii), and the workmen are entitled to wages for it.
5. Bonus cannot be inferred as an implied condition of service where payments were not uniform unless they are connected with a festival; customary bonus additionally requires payment at a uniform rate.

• Strike wages: When are workmen entitled to wages for the period of a strike? Cite Churakulam for the rule that wages are payable where the strike is both legal and justified, and show the two separate inquiries: legality under ss. 23 and 24, justification on the facts.
• Problem question: workmen strike for half a day while conciliation is going on before a Conciliation Officer (not a Board). Apply s. 23(a) as read in Churakulam: that conciliation is not before a Board, so s. 23(a) does not make the strike illegal. Then ask what the strike was really about.
• Lay-off: use the case to show that s. 25E(iii) is not a shield for a retaliatory lay-off of the whole establishment after a small token strike.
• Bonus: Distinguish bonus as an implied condition of service from customary bonus. Give the Ispahani / Graham Trading tests and Churakulam's holding that non-uniform payments unconnected with a festival support neither.