PETITIONER:
PRECISION BEARINGS INDIA LTD.
Vs.
RESPONDENT:
BARODA MAZDOOR SABHA AND ANR.
DATE OF JUDGMENT16/12/1977
BENCH:
GOSWAMI, P.K.
BENCH:
GOSWAMI, P.K.
KRISHNAIYER, V.R.
CITATION:
1978 AIR 419 1978 SCR (2) 400
1978 SCC (1) 235
ACT:
Industrial Dispute-Award not covered by the reference must
be quashed–Revision of dearness allowance-Additional
financial burden which revision of dearness allowance would
impose upon the employer and his ability to bear such burden
are relevant considerations.
HEADNOTE:
One of the five principles laid down by this Court, in
Bengal Chemical & Pharmaceutical Works Ltd. v. Its workmen
[1969] 2 S.C.R. 113, for considering a revision of dearness
allowance, is the additional financial burden which dearness
allowance would impose upon the employer and his ability to
bear such burden.
In its charter of demands, the respondent workmen Union made
specific demands viz.; (i) that the existing minimum
dearness allowance of RS. 146/be modified and that all the
workers including workers known as staff should be paid
minimum dearness allowance at the rate of full dearness
allowance that is being paid to textile workers at Ahmedabad
i.e. 100% of Ahmedabad Textile, rate and (ii) with the above
minimum dearness allowance, they should be further continued
the higher dearness allowance of 40% plus Ahmedabad Textile
D.A. for those in the pay range of Rs. 100-200 and 20% plus
Ahmedabad Textile D.A. for those in the pay range of above
Rs. 200/-. The dispute was referred by the Government in
the form viz. “All workmen should be paid dearness
allowance at the rate of 100% dearness-allowance paid to the
workers of the Cotton Textile Mills, at Ahmedabad”. The
Tribunal, however, ranted over and above the 100% Ahmedabad
Textile D.A., varying percentages from 80% to 89% phased in
a particular way.
Allowing in part, the appeal by special leave the Court.
HELD : It is true that in considering the question of
dearness allowance the capacity of the Company to pay is one
of the most important considerations.
In the instant case (a) in view of the fact that although a
substantial sum was kept as reserve towards the replacement
costs only a fraction of it was utilised, the company
therefore cannot make any grievance about the award that
this could be done in a phased manner. The Tribunal has
exhaustively gone into the matter with care and kept in view
the five principles in Bengal Chemical & Pharmaceutical
Works Ltd. v. Its- Workmen [1969] 2 S.C.R. 113; (b) The
Tribunal in view of the content of the dispute referred to
it had no jurisdiction in this reference to grant anything
more than 100% of the Ahmedabad Textiles D.A. on the
outside. Since the Tribunal, after having given appropriate
consideration to all aspects of the matter granted varying
percentages from 80% to 89% phased in a particular way, it
bad virtually rejected the Union’s claim for 100% of the
Textile D.A. Having done so,. the was no scope for allowing
to the higher brackets of wage earners in addition 40% and
20% of basic wages as dearness allowance. [468C, G-H, 469G-
H]
Obiter
Social justice perspectives being integral to industrial
jurisprudence the high cost allowance as a component of D.A.
is not impermissible in principle. It is a legitimate item.
Indeed in the instant case, the lowest bracket upto Rs.
100/- needed full neutralisation of the rise in the cost of
living. Such a dispute may well be referred by Government,
if it considers fit, and the decision in this case will not
bar such a cause. [470C-D]
Killick Nixon Ltd. v. Killick & Allied Companies Employees
Union [1975] Supp. S.C.R. 453 referred to.
467
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9 of 1977.
Appeal by Special Leave from the Award of the Industrial
Tribunal, Gujarat dated 8th October, 1976 in Reference No.
11 of 1975., published in the Gazette Part I-L dated
November 11, 1976.
H. R. Gokhale, A. P. Hathi and Ashok Grover for the
Appellant.
R. K. Garg, P. H. Parekh, Miss Manju Jetley and K.
Vasudev for Respondent No. 1.
The Judgment of the Court was delivered by
GOWSAMI, J.-This appeal by special leave is directed against
the award of the Industrial Tribunal, Gujarat, of October 8,
1976. Although it is a composite award disposing of two
references by the :State Government, we are concerned in
this appeal with Reference (IT) No. 11 of 1975 as per the
State Government notification of January 21, 1975 and even
out of the two questions referred to therein only with
regard to one of these regarding dearness allowance.
The relevant, issue which arises for consideration in this
appeal may be quoted below:
“All workmen should be paid dearness allowance
at the rate of 100% dearness allowance paid to
the workers of the Cotton Textile Mills at
Ahmedabad”.
Before we advert to the submission of Mr. H.R. Gokhale,
appearing on behalf of the appellant, it will be appropriate
to indicate that there is no dispute about granting of
dearness allowance of the pattern ,of what is known as the
Ahmedabad Textile D.A. The question to ‘be determined by the
Tribunal was only with regard to the percentage ,of the
Textile D.A. to be paid to the employees of the company.
The Tribunal has noticed that-
“the recent trend in the several industries-
textile, engineering and others, in Ahmedabad,
Baroda and in some other parts of the State of
Gujarat, is to make a demand for dearness
allowance on the lines of the dearness
allowance paid to the workers of the cotton
textile mills at Ahmedabad, with a varying
percentage”.
The Tribunal describes this as what in ordinary parlance is
called ’the “Textile D.A.” and reckons it “as before the
revision of the basic wage in the mills prior to 1-1-1974″.
The company is manufacturing high precision ball and roller
bearings in collaboration with a West German company. It
has its plant in the district of Baroda with a manufacturing
capacity of 24 lakh pieces of bearings per annum upto 1973
and 28.82 lakh pieces per annum from 1974. The company was
incorporated in April, 1962 and went into commercial
production from June 1965. Its registered office is in
Bombay and has its sales offices in Bombay, Calcutta, Delhi.
,and Madras. The plant is being operated almost to full
capacity from June 1965 onwards. The production has also
increased progressively.
468
The number of workers on 31-8-1974 was about 630. The
company’ is said to be the third largest unit in the ball
bearing industry in the-country-the other two concerns being
Antifriction Bearings and the Associated Bearings, the next
one to the company being Shriram Bearings.
Two questions are raised before us by Mr. Gokhale. Counsel
is, conscious of his limitations in an appeal by special
leave under Article 136 of the Constitution and has,
therefore, fairly enough confined his, submissions within
narrow bounds and we fully appreciate this stand. The first
submission of Mr. Gokhale in the forefront of his argument
is that the Industrial Tribunal has failed to consider the
impact of the rise in dearness allowance granted by it on
the financial capacity of the appellant to bear the burden.
It is true that in considering the question of dearness
allowance, the capacity to pay of the company is one of the
most important considerations. Mr. Gokhale has pointed out
that the additional liability as a result of the award would
be Rs. 8,29,312 in 1975, Rs. 7,42,563′ in 1976, and Rs.
12,42,395 in 1977 and the percentage increase over the
annual wage bill will respectively be 3 6.76 %, 32.91 % and
5 5.07 % for the said three years. He has also pointed out
that the company was able to declare 8% dividend for the
first time in the year 1970-71 and had been incurring loss
for the earlier years from 1962-63. He: also points out
that although dividends have been progressively increasing
from 8% to 12%, from 1970-71 to 1974-75, only 8% dividend
was declared in the year 1975-76. Besides, the, company has
to, spend huge sums for replacement costs which, according
to counsel, the Tribunal has not properly taken into
account. It is true that the Tribunal has mentioned in the
award that this could be done in a; phased manner. Mr.
Gokhale submits with some justification that this was purely
a management function and the Tribunal should have taken the
figures as furnished by the management in making reserve&
for replacement costs. We have, however, seen that although
a substantial sum was kept as reserve towards the
replacement costs, only a fraction of it was actually
utilised. The company, therefore, can-not make any
grievance about the manner in which the Tribunal has, dealt
with this aspect. Mr. Garg, on behalf of the respondents,
also drew our attention to paragraph 4 of the company’s
written statement (page 62, Volume 1) where after having
referred to certain offers made by it the company was
prepared to the “increase of about Rs. 15 lacs in the
employee cost in the very first year. . . . . .
We find that the Tribunal has exhaustively gone into the
wholes matter with care and kept in view the five principles
laid down by this Court in the Bengal Chemical &
Pharmaceutical Works Ltd. v. Its Workmen(l), the 5th one
being additional financial burden which dearness allowance
would impose upon the employer and his ability for bear such
burden. We are unable to find any infirmity in the Tribunal
dealing with the point of the financial capacity of the
employer to bear the burden. The Tribunal finally observed
as follows
(1) [1969] 2 S.C.R. 113.
469
.lm15
“On a careful consideration of all the relevant factors, in
my opinion, the dearness allowance paid to the PBI (Pre-
cision Bearings India) workmen at the minimum level of basic
pay from Rs. 26-upto Rs. 100-should be from 80 per cent, of
the textile D.A. to 89 per cent, of the textile D.A. phased
over a period of three years, The dearness allowance in the
higher pay scale of Rs. 101-to Rs. 200should be 40 per cent
and. in the still higher slab of Rs. 201 and above, should
be 20 per cent, the percentage for the higher two slabs
remaining the same”.
The 40 per cent and 20 per cent of the basic wages in the
higher slabs were in addition to the Ahmedabad Textile
Dearness Allowance granted in the award. This takes us to
the second objection of Mr. Gokhale.
It is submitted that in the charter of demands of the union
there were two specific demands with regard to dearness
allowance. These were as follows :-
1 : 1. It is demanded that the existing
minimum dearness allowance of Rs. 146/- should
be modified and that all the workers including
workers known as staff should be paid minimum
dearness allowance at the rate of full
dearness allowance that is being paid to
Textile workers at Ahmedabad, i.e. 100% of
Ahmedabad Textile rate.
1 : 2 With the above minimum dearness
allowance the workers and workers known as
staff should be further continued the higher
dearness allowance as under-
Below Rs. 100 pay-100% Ahmedabad Textile
Dearness Allowance.
Pay range between Rs. 100 to Rs. 200-100%
Ahmedabad Textile DA+40% of basic
Pay above Rs. 200/-100% Ahmedabad Textile DA+
20% + of basic.”
Even though the demand for dearness allowance was as above,
the State Government referred the dispute only in the form
set out at the outset. The Government did not entertain the
claim of dearness allowance in addition to the 100% D.A.
paid to the workers of the cotton textile mills at
Ahmedabad. In other words, while the claim of the union was
Ahmedabad Textile D.A. plus, the Government did not entertain the
dispute between the parties in that form. We
find great force in the above submission of Mr. Gokhale.
The Tribunal in view of the content of the dispute referred
to it had no jurisdiction in this reference to grant
anything more then 100% of the Ahmedabad Textile D.A. on the
outside. Since, the Tribunal after having given appropriate
consideration to all aspects of the matter granted varying
percentage from 80% to 89% phased in a particular way, it
had virtually rejected the union’s claim for 100% of the
Textile D.A. Having done so, there was no scope for allowing
to the higher brackets of wage earners in addition 40% and
20% of basic wages as dearness
470
allowance. This part of the award is, therefore, beyond the
scope, of the reference and must be quashed which we hereby
do. If the Government at a future time intends to entertain
a dispute of this nature with regard to higher brackets of
wage earners that will be a different dispute but such a
claim could not be entertained by the
Tribunal in the present reference.
We may observe that during the course of the proceedings
before the Tribunal the clerical and the supervisory staff
seem to have withdrawn from the reference and even an
application was filed by some of them before the Tribunal to
confine the dispute as pertaining to the, manual and
technical workers. The Tribunal however, did not accede to
this request and proceeded on the footing that all the
members of the-staff were included in the reference.
We should not be taken to suggest that the 40% and 20% plus
is either wrong or excessive by way of high cost allowance.
Indeed, we even felt that the lowest bracket upto Rs. 100/-
needed full neutralisation of the rise in the cost of living
as has been held in Killick Nixon Limited v. Killick &
Allied Companies Employees Union.(1) Nor do we fail to see
the force of Shri Garg’s submission that social justice
perspectives being integral to industrial jurisprudence. the
high cost allowance as a component of D.A. is not
impermissible in principle. It is a legitimate item. But
we disallow because there is I deliberate omission to make a
reference, of that item and so, falls outside the
jurisdiction of the tribunal. That is why we have expressly
observed that such a dispute may well be referred by
Government, if it considers fit, and this decision will not
bar such a course.
In the result the appeal is partly allowed. The award of
the Tribunal with regard to the 40% and 20% for the higher
two slabs is set aside In all other aspects the award of the
Tribunal stands. The appellant will pay the costs (one set)
of the respondents as ordered at the time of granting the
special leave and will also pay interest as ordered therein.
The arrears calculated in terms of the Award now upheld will
be paid to the respondents in two equal instalments, the
first instalment within three months from today and final
instalment within three months thereafter.
Appeal partly allowed.
S. R.
47 1