French Motor Car Co., Limited Vs.
Workmen [1962] INSC 311 (13 November 1962)
WANCHOO, K.N.
GAJENDRAGADKAR, P.B.
SARKAR, A.K.
CITATION: 1963 AIR 1327 1963 SCR Supl. (2) 16
CITATOR INFO :
F 1963 SC1332 (16) R 1964 SC 689 (6,15,16) RF
1967 SC 948 (9) R 1967 SC1286 (8) RF 1969 SC 360 (20) R 1969 SC 976 (3,4,5) R
1970 SC 878 (9) R 1972 SC 343 (13) R 1972 SC2273 (20) RF 1973 SC2758 (12) R
1978 SC 828 (21) R 1978 SC1113 (12,14) RF 1984 SC 356 (14,15,16)
ACT:
Industrial Dispute-Fixation of wage
scale-Industry cumregion basis-Application-Large and dissimilar concerns, if
and when can be taken for comparison-Adjustment-Power of Tribunal.
HEADNOTE:
The three matters canvassed in this appeal
from an award of the Industrial Tribunal related to (1) wages and scales of pay
for clerical staff, (2) dearness allowance for clerical staff and (3) provident
fund. ' The Tribunal found; that the business of the appellant company was able
to bear the burden it imposed. The Tribunal also went into the history of the
company and found there had been several revision of wage, scales and dearness
allowance in the recent past, but since there had been a large increase in the
cost of living index for workmen from 1955 17 the dearness allowance had been reduced
in 1954 by agreement, it held that a case of further revision of wagescales had
been made out. It was urged on behalf of the appellant that wages should be
fixed on industry-cumregion basis and the Tribunal was in error in taking for
comparison industrial concerns which were entirely dissimilar to the
appellant's and that since it was paying the highest scale of wages in the
industry concerned, there could be no justification for increasing the wages.
Held, that it is well settled that in considering
questions of wage structure, dearness allowance and similar conditions of
service, an industrial court has to proceed on industrycumregion basis and
compare similar concerns in the region which would be those in the same line of
business as the concern in dispute. But such comparison must not be between a
small struggling concern and a large flourishing one.
Williamsons (India) Private Ltd. v. The
Workmen, (1962) 1 L. L. J. 302 and Novex Dry Cleaners v. Workmen, (1952) 1
L.L.J. 271, referred to.
Since in fixing of wage scales for workshop'
employees, the Tribunal took into consideration concerns much larger than the
appellant's and not in the same line of business, the award to the extent it
was thus affected could not be upheld. Although the appellants were paying the
highest wages in the particular line of business, that could be no ground for
not revising the scales having regard to the economic conditions prevailing at
the time of the dispute ;
in such a case the greater emphasis should be
on the region part of the industry-cum-region principle ; but the industrial
court must see that the industrial concerns taken into account for purposes of
comparison are as nearly similar to the concern before it is possible.
Although the Tribunal was justified in
looking to other concerns in the region for purposes of comparison, it should
not have taken such concerns for comparison as were disproportionately large
and absolutely dissimilar from the appellant's. The wage structure fixed for
the workshop employees must therefore be set aside. The same rule cannot,
however, apply to clerical and subordinate staff who stand on a different
footing from that of the workshop employees who are skilled workers in the
particular line of business.
Messrs. Lipton Limited v. Their Employees,
[1959] Supp. 2 S.C.R. 150, referred to.
There is nothing in law to prevent the
Tribunal from granting adjustment even in cases where previously pay scales 18
were in existence, but this must be done sparingly and on a consideration of
the facts and circumstances in each case.
CIVIL APPELLATE, JURISDICTION: Civil Appeal
No. 391 of 1962.
Appeal by special leave from the award part I
dated December 23, 1961 of the Industrial Tribunal Maharashtra in Reference
(IT) No. 127 of 1960.
C. K. Daphtary, Solicitor General of India,
J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the Appellant.
R. J. Mehta, Secretary, Engineering Mazdoor
Sabha.
1962. November 13. The judgment of the Court
was delivered by WANCHOO, J.-This appeal by special leave arises out of an
industrial dispute between the appellant, Messrs. French Motor Car Co.,
Limited, and their workmen, who are the respondents before us. Four matters
were referred for adjudication by the Government of Maharashtra under s. 10 of
the Industrial Disputes Act, No. XIV of 1947, to the Industrial Tribunal,
Maharashtra, Of these we are concerned in the present appeal with (i) wages and
scales of pay for clerical staff, workshop employees and subordinate staff,
(ii) dearness allowance for clerical staff, and (iii) provident fund.
The case of the respondents was that the
appellant company was in a very flourishing condition and therefore the wagescales
should be revised. The appellant did not contend that its financial position was
not good enough to bear an increased burden ; it, however, contended that the
wage scales had been revised only a few years before and there was no ground
for further revision so soon thereafter. The 19 tribunal went into the
financial capacity of the appellant to bear an increased burden of wage scales
and found that its finances would be able to bear the burden which it was going
to put on it by revision of wage scales. It also went into the history of the
appellant company to consider whether a case had been made out for further
revision of wages. That history shows that for the first time in 1948 there was
an agreement between the appellant and its workmen by which scales of wages
were fixed. Soon thereafter an award was made by another tribunal in the case
of United Motors (India) Limited, which is a concern carrying on similar
business as the appellant and much higher wage scales were found to exist in
that concern and were confirmed by the award. These higher scales were later
adopted by two other similar concerns in Bombay, namely', Dadajee Dhakjee and
Metro Motors. Then followed another dispute between the appellant and its
workmen in 1953 with respect to wage scales and an award was made by which
practically the same wage scales were prescribed as in the other three
concerns, with respect to workshop employees and subordinate staff. Then in
1954 there was another agreement between the appellant and its workmen for
fixing wage scales for clerical staff., The present dispute started in 1958,
and eventually reference was made by the Government of Maharashtra in 1960, and
the contention of the appellant was that there was no reason to revise so soon
the wage scales, which are expected to be a long term arrangement. The tribunal
has, however, pointed out that there has been a large increase in the cost of
living since 1955 and the cost of living index number for workmen had gone up
from 338 in 1955 to 420 in 1960. It had gone to 428 in 1961 when the award was
made. In view of this change in economic conditions the tribunal was of the
opinion that a case had been made out for, a further revision of wage scales,
particularly as the dearness allowance was also revised in 1954 by agreement
and the effect 20 of that was to reduce the dearness allowance. We see no
reason in these circumstances to disagree with the view of the tribunal that a
case has been made out for revising the wage structure.
The main contention on behalf of the
appellant is that wages are fixed on industry-cum-region basis and the tribunal
went wrong when it took into account for comparison industrial concerns which
were entirely dissimilar to the appellant's. It is now well settled that the
principle of industry-cumregion has to be applied by an industrial court, when
it proceeds to consider questions like wage structure, dearness allowance and
similar conditions of service. In applying that principle industrial courts
have to compare wage scales Prevailing in similar concerns in the region with
which it is dealing, and generally speaking similar concerns would be those in
the same line of business as the concern with respect to which the dispute is
under consideration.
Further, even in the same line of business,
it would not be proper to compare (for example) a small struggling concern with
a large flourishing concern. In Williamsons (India) Private Ltd. v. The Workmen
( 1), this Court had to consider this aspect of the matter, where Williamsons
Private Limited was compared by the tribunal with Messrs. Gillanders Arbuthnot
and Company for purposes of wage fixation, and it was observed that the extent
of the business carried on by the concerns, the capital invested by them, the
profits made by them, the nature of the business carried on by them, their
standing, the strength of their labour force, the presence or absence and the
extent of reserves, the dividends declared by them and the prospects about the
future of their business and other relevant factors have to be borne in mind
for the purpose of comparison.' These observations were made to show how
comparison should be made, even in the same line of business and were intended
to lay down that a small concern cannot be compared even in the same line of
business with a large concern. Thus where there is (1) (1962) 1 L. L. J. 302.
21 a large disparity between the two concerns
in the same business, it would not be safe to fix the same wage structure as:
in the large concern without any other consideration. The question whether
there is large disparity between two concerns is, however, always a question of
fact and it is not necessary for the purposes of comparison that the two
concerns must be exactly equal in all respects. All that the tribunal has to
see is that the disparity is not so large as to make the comparison unreal.
In Novex Dry Cleaners v. Workmen (1) this
Court pointed out that it would not be safe to compare a comparatively small
concern with a large concern in the same line of business and impose a wage
structure prevailing in the large concern as a rule of thumb without considering
the standing, the extent of labour force, the extent of business and the extent
of profits made by the two concerns over a number of years.
The contention on behalf of the appellant is
that in fixing the wage structure for workshop employees in particular, the
tribunal has taken into account for purposes of comparison concerns which are
in a different line of business altogether and which are also very much bigger
concerns than the appellant company. There is in our opinion force in this
contention. In dealing with the workshop employees, the tribunal has taken into
account wages prevalent in concerns like Greaves Cotton and Dumex, which are
very much larger concerns than the appellant company and which are also not in
the same line of business. It is obvious that the fixing of wage scales for
workshop employees made by the tribunal has been affected by taking into
account these concerns, and to that extent the award cannot be upheld. At the
same time it appears that the appellant company is practically paying the
highest wage scales in the particular line of business in which it is engaged,
and it is urged on its behalf that if it is compared with concerns in its own
line of business, there would (1) (1962) 1 I. L. J. 271.
22 be no justification for increasing the
wage scales for it is already paying the highest scales in that line of
business.
We are of opinion that this argument cannot
be accepted, for it would then mean that if a concern is paying the highest
wages in a particular line of business, there can be no increase in wages in
that concern whatever may be the economic conditions prevailing at the time of
dispute. It seems to us, therefore, that where a concern is paying the highest
wages in a particular line of business, there should be greater.emphasis on the
region part of the industry-cumregion principle, though it would be the duty of
the industrial court to see that for purposes of comparison such other
industries in the region are taken into account as are as nearly similar to the
concern before it as possible.
Though, therefore, in a case where a
particular concern is already paying the highest wages in its own line of
business, the industrial courts would be justified in looking at wages paid in
that region in other lines of business, it should take care to see that the
concerns from other lines of business taken into account are such as are as
nearly similar as possible, to the line of business carried on by the concern
before it. It should also take care to see that such concerns are not so
disproportionately large as to afford no proper basis for comparison. In the
present case even though the tribunal had justification to go beyond the
concerns in the particular industry in which the appellant company is engaged
for purposes of comparison, because the appellant is already practically paying
the highest wages in that line of business, it was not right for the tribunal
to take for comparison concerns like Dumex and Greaves Cotton which are in
completely different and dissimilar lines of business and also so
disproportionately larger than the appellant company as not to afford a proper
basis of comparison. We are therefore of opinion that, the wage structure fixed
by the tribunal so far as workshop employees are concerned cannot be upheld and
must be set aside. In the circumstances 23 the award with respect to the
workshop employees is set aside and the matter remanded to the tribunal to fix
proper wage scales in the light of the observations made by us.
It appears that evidence was given before the
tribunal for purposes of comparison of concerns which were in the fine of
business nearly similar to the business carried on by the appellant company.
Consequently, it would not be necessary to take fresh evidence on the point and
the tribunal should proceed to fix the wage structure afresh after excluding
for purposes of camparison concerns in absolutely different lines of business
and also concerns which are disproportionately larger than the appellant
company.
Turning now to the wage scales for clerical
and subordinate staff, the argument on behalf of the appellant. is the same
viz., that the tribunal has taken for comparison concerns which were really not
comparable. There is however, difference between workshop employees on the one hand
and clerical and subordinate staff on the other, for workshop employees
generally require a particular skill which is peculiar to the particular
industry, while the same cannot be said to a great extent with respect to the
clerical and subordinate staff. A somewhat similar question was considered by
this Court in Messrs. Lipton Limited v. Their employees(1). In that case the
tribunal was considering the question of wage fixation for clerical and
subordinate staff, and the argument on behalf of the employer was that there
was no reliable evidence to show that in any comparable industry in the same
region the wages were higher and therefore the wage structure in the particular
case required revision. The employer concerned in that case was Messrs. Lipton Limited,
carrying on tea business as merchants in Delhi. Evidence was given by the
workmen in that case about the scales of pay of employees in the Delhi office
of a (1) [1959] Supp. 2 S. C. R. 150.
24 number of other concerns like the Standard
Vacuum Oil Company, Thomas Cook (Continental) Overseas, Burmah Shell, Lever
Brothers (India) Limited, and Associated Companies and Marshall Sons and
Company (India) Limited. But it was contended on behalf of the employer that
these were not comparable concerns. Some were oil concerns and some engineering
and some manufacturing concerns. The workmen, however, contended that so far as
drivers, sweepers, peons, clerks, godown keepers, typists, stenographers, and
the like were concerned, the nature of their work was the same in all the
aforesaid concerns which were relied on for comparison, and therefore it could
not be said, as urged by the employer, that there was no evidence of comparable
concerns.
This Court observed in that connection that
it was impossible to say that there was no evidence on which the tribunal could
proceed, to revise the wage structure and that on the contrary there was
evidence which justified a revision of the wage structure. In effect this
decision means that in case of employees of the class mentioned therein it may
be possible to take into account even those concerns which are engaged in
'entirely different lines of business for the work of employees of this class
is more or less similar in all concerns. We are in agreement with this view and
the argument therefore urged on behalf of the appellant company cannot prevail
so far as clerical and subordinate staff are concerned:
It appears however that a mistake has been
made by the tribunal in respect of subordinate staff. The subordinate staff in
the appellant company consists of drivers, watchmen, peons, cleaners and,
sweepers. According to the system prevailing in the company.. drivers and
watchmen stood by themselves and had separate scales. Peons, cleaners and
sweepers were however in the same scale and were treated similarly in this
company. What the tribunal has done is to prescribe one scale for drivers
another for 25 watchmen, peons and cleaners and a third for sweepers, thus
distributing the system prevailing in the appellant company without any reason
given for it. It appears that the tribunal made a mistake inadvertently when it
said that in this company the scales of watchmen, peons and cleaners had been
uniform. That was in fact not so and the respondents' counsel also fairly admits
it. In the circumstances we direct that the order of the tribunal fixing the
scale of 50-3-77-4-85 for watchmen, peons and cleaners will only apply to
watchmen and not to peons and cleaners. We also order that the scale of
40-2-58-373 will apply not only to sweepers but also to peons and cleaners. The
appeal therefore with respect to clerical staff and subordinate staff must fail
except as to the modification pointed out above.
We now come to dearness allowance for
clerical staff. We have already indicated that dearness allowance was revised
by agreement in 1954 with respect to clerical staff, and the revision resulted
in reduction. What the tribunal has done is to set aside the agreement of' 1954
and to bring back the system of dearness allowance prevailing before that
agreement. In the circumstances we cannot see how the system now introduced by
the tribunal which is also more in consonance with the pattern of dearness
allowance prevailing in Bombay and which was in force in the appellant company
itself before 1954 can be successfully challenged. We therefore reject the
contention of the appellant in this behalf We now come to provident fund. It
appears that in this company there is a scheme of gratuity as well as provident
fund. Originally, the rate of provident fund contribution in this company was 8
1/3 per centum of the basic pay but from July 1, 1960, the rate has been
changed to 6 1/4 per centum of the gross earning i. e. basic pay plus dearness
allowance, on the application of the. Employees Provident Funds Act, (No. XIX
of 1952) and the Employees Provident Funds 26 Scheme, 1952, to this industry.
What the tribunal has done is to fix the contribution at 8 per centum of the
gross earnings (i. e. basic pay plus dearness allowance) instead of the present
rate of 6 1/4 per centum. This has been done on the sole ground that a
technical committee had reported some time before the tribunal made its award
that the rate should be raised to eight per centum of the gross earnings (i.e.
basic pay plus dearness allowance). The Tribunal therefore increased the
provident fund contribution to eight per centum on the ground that that
percentage was recommended by the technical committee after a thorough study of
the problem from all points of view and it should be adopted by
well-established and prosperous concerns like the appellant, though the
tribunal was not unaware of the fact that this was not the rate generally
prevalent in that region. It is urged on behalf of the respondents that
legislation is under contemplation in this respect; but the fact remains that
no law has so far been made making any change in the rate of contribution. We
see no reason why simply because some recommendation, which is still to be
implemented, has been made by a Committee, that the contribution should be
increased to eight per centum in the case of the appellant company only, when
the general rate is only 6 1/4 per centum. In the circumstances, this part of
the award must be set aside and the rate of provident fund contribution so far
as the appellant company is concerned should remain at 6 1/4 per centum of the
gross earnings (i. e. basic pay plus dearness allowance) as at present.
We now come to the question of adjustment.
The contention on behalf of 'the appellant is that when wage scales were
introduced in the appellant company, they were granted on a generous scale and
there was therefore no reason for adjustment in the manner in which the
tribunal has done in this case, for it is not usual to grant adjustment where
wage scales already existed, though adjustment is granted 27 when wage scales
are fixed for the first time by tribunals.
On the other hand, it is contended on behalf
of the respondents that industrial tribunals have been granting, adjustments
even where wage scales existed formerly and that the grant of adjustment is not
limited to those cases where wage scales are being, introduced for the first
time. In this connection, reliance was placed on behalf of the respondents on a
number of awards which were listed in Ex. U-15. We asked parties to give an
agreed statement as to what these awards provided in the matter of adjustment
and whether they showed that adjustment had been granted by industrial
tribunals even where there were wage scales from before. Such an agreed statement
has been filed. The large majority of the awards listed in Ex. U-15 show that
they are cases where wage scales were being fixed for the first time and
adjustment was therefore granted whether point to point or in such other manner
as the tribunals considered just on the facts and circumstances of each case.
In some of the cases, however, it appears that adjustment was granted even
though there were previous scales of pay in existence. The ground for such
grant of adjustment seems to have been that the previous scales were found to
be low and the increments prescribed there under 'were particularly low.
In the circumstances, the tribunal was of the
view that adjustment should be granted even though there had been previous
scales of pay.
A review therefore of the cases cited on
behalf of the respondents shows that generally adjustments are granted when
scales of wages are fixed for the first time. But there is nothing in law to
prevent the tribunal from granting adjustment even in cases where previously pay
scales were in existence; but that has to be done sparingly taking into
consideration the facts and circumstances of each case. The usual reason for
granting adjustment even where 28 wage scales were formerly in existence is
that the increments provided in the former wage scales were particularly low
and therefore justice required that adjustment should be granted a second time.
In the present case, however, grades of pay for clerical staff which were
existing previously provided increments from Rs. 5/to Rs. 10/per year, which
was in accordance with the rate of increments prevailing generally in the
region for such staff. Further in the case of unskilled workshop employees and
subordinate staff the previous rate of increment in the appellant company was
comparatively on a generous scale as compared to even such companies as Dumex
Private Limited and Greaves Cotton Company. The same could be said of the semiskilled
grade and even of the skilled grade previously in force in. this company. In
the circumstances, it seems to us that there is no justification for adjustment
in the manner provided by the tribunal when new scales are fixed in the present
case, and all that should be reasonably provided in the matter of adjustment is
that when an employee is brought on to the new scale his pay should be stepped
up to the next step in the new scale in case there is no such pay in the new
scale. We ought to add that in making the order of adjustment the tribunal did
not consider the merits of the rival contentions from this aspect. In a case of
this kind we do not think that adjustment should have been ordered almost as a
matter of course. Nor have the respondents satisfied us that a case has been
made out for granting adjustments even when a comparatively generous rate of
increment was in force in this company previously and the company was paying
the highest wages in its own line of business. We are therefore of opinion that
the order as to adjustment should be modified as above.
The last point is with respect to
clarification. So far as that is concerned, the parties agreed that after the
publication of Part I of the award the 29 company will classify its employees
and send its classification to the sabha (i. e. the union). The sabha will then
file its objection if any and finally the disputed cases will be decided by the
tribunal. The tribunal therefore did not go into the question of classification
when it gave the award under appeal, though there are some observations in the
award which appear to have some bearing on the question of classification.
However, in view of the fact that the tribunal has not gone into the question
of classification at this stage any tentative observations made by it would not
affect the agreement between the parties, viz,. that the employees will in the
first instance be classified by the appellant company and the classification
will be sent to the union which will have the right to object and thereafter
the disputed cases will be decided by the tribunal. ln view of this agreement no
question of classification arises at the present stage.
We therefore partly allow the appeal and set
aside the order of the tribunal with respect to workshop employees and remand
the case for fixing their wages in the light of the observations made by us in
this judgment. We also set aside the order with respect to provident fund and
reduce the contribution to 61 per centum. We also set aside the order as to
adjustment which shall be carried out hereafter in the manner provided in this
judgment. The appeal as regards salary in the case of clerical staff and
subordinate staff (except for the modifications: subordinate staff), and
dearness allowance to the clerical staff fails and. is hereby dismissed. We may
add that the new scales of pay to be fixed on remand shall take effect from
July 1, 1960, as already ordered in the present award. In the circumstances the
parties will bear their own costs.
Appeal allowed in part.
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