Workmen Employed by Indian Oxygen Ltd
Vs. Indian Oxygen Ltd. [1985] INSC 118 (2 May 1985)
DESAI, D.A.
DESAI, D.A.
ERADI, V. BALAKRISHNA (J) KHALID, V. (J)
CITATION: 1986 AIR 125 1985 SCR Supl. (1) 111
1985 SCC (3) 177 1985 SCALE (1)910
CITATOR INFO :
RF 1986 SC1794 (7)
ACT:
Labour and Services-U.P. Industrial Disputes
Act 1947- Industrial Undertaking an all-India concern-Unit of a multi- national
Company-Dearness allowance-Uniformity in dearness allowances for workmen of
various units based on all-India average consumer price index-Whether
destructive concept of `equality'.
`Dearness allowance-Formula for a fair and
just dearness allowance Principles of-Revision of dearness allowance-When
arises-Industry-cum-region principle- Application of-Adjudication and linking
of conversion factor-emphasised.
Settlement between management and one of the
Unions- Whether could be starting point of revision of dearness
formula-Dearness allowance-Linked to cost of living index in the centre where
the workman is employed-Neutralisation Application of industry-cum-region
principle.
HEADNOTE:
In the respondent-Company there were two
rival Unions of workmen, namely, Karamchari Union and Sharmik Sangh. The
Karamchari Union espoused the demand of the workmen employed by the Company in
its Kanpur unit for upward revision of dearness allowance following an award of
the Industrial Tribunal Delhi by which the dearness allowance of the workmen
employed in the Delhi unit was linked to the consumer price index for Delhi
prepared by Labour Bureau, Simla, which substantially increased the dearness
allowance of workmen posted at Delhi. The Company in its attempt to thwart the
demand being pursued by the Karamchari Union, entered into a settlement with
the Shramik Sangh in respect of dearness allowance and then approached the
Labour Commissioner for registering the settlement Failing to obtain the
registration, the Company utilaterally enforced the new scheme of dearness
allowance linked to all-India average consumer price index prepared by Labour
Bureau, Simla. The Karamchari Union did not accept the revised formula and
pressed its demand. The dispute was referred for adjudication.
Before the Tribunal the Company contended:
(1) that the settlement would be binding on the members of the Karamchari Union
and the dispute does not require adjudication on merits, and (2) that the
Company is desirous of linking dearness allowance to all-India average consumer
price index for 112 working class with base 1960-100 and the Tribunal should
avoid accepting the demand of a few workmen.
The tribunal directed that the workmen of the
Kanpur unit of the Company should be paid dearness allowance linked to the
all-India consumer price index (1960-100) for Kanpur Centre compiled by the
Labour Bureau, Simla. On the question of neutralisation, no change was allowed.
Partly allowing the appeal of the workmen, ^
HELD: 1. The workmen of the Kanpur unit of
the Company should be paid the dearness allowance according to all-India
consumer price index number for Kanpur (1960-100) compiled by Labour Bureau
Simla after applying conversion factor also called the linking factor of 4.83.
Their dearness allowance cannot be linked to all-India average consumer price
index.
[125 B-C]
2. The Tribunal Committed a grave error in
accepting collusive settlement as the starting point of the revision.
[122 H] 3, Uniformity, to an uninformed mind,
appears to be attractive. But, sometimes uniformity amongst dissimilar persons
becomes counter-productive. Uniformity and equality have to be amongst equals
measured by a common denominator.
The implementation of the Constitutional
aspiration of `equal pay for equal work' can be appreciated. In the matter of
basic wages it is a consummation devotedly to be wished.
But when it comes to dearness allowance any
attempt at uniformity between workmen in metropolitan areas and in smaller
centres would be destructive of the concept of dearness allowance. [116 G-H]
Dearness allowance is directly related to the erosion of real wages by constant
upward spiraling of the prices of basic necessities and as a sequal to the
inflationary input, the fall in the purchasing power of the rupee. It is a
notorious phenomenon hitherto unquestioned that price rise variee from centre
to centre, [117 A] Dearness allowance is inextricably intertwined with price
rise, it being an attempt to compensate loss in real wages on account of price
rise considered as a passing phenomenon by compensation. That is why it is
called variable dearness allowance. Any uniformity in the matter of dearness
allowance may confer a boon on persons employed in smaller centres and those in
bigger metropolitan areas would be hard hit. Dearness allowance by its very form
and name has an intimate relation to the prevailing price structure of basic
necessities at the centre in which the workman is employed. [117 B-C] Dearness
allowance to workmen at a particular place should therefore depend upon the
place where the workman is working irrespective of the fact that the industrial
undertaking in which the workman is employed is a unit of an industrial
enterprises having an all-India or inter-State operations. [117 E] 113
4. In the matter of dearness allowance the
Court should lean in favour of adjudication of dispute on the principle of
industry-cum-region because dearness allowance is linked to cost of living
index of a particular centre which has a local flavour. A workman is exposed to
the vagaries of the market where he resides and works, even though he may be an
employee of a national, multi-national or transnational industrial empire.
Therefore. the region-cum-industry principle must inform industrial
adjudication in the matter of dearness allowance. In the instant case the
Tribunal has overlooked this important principle of industrial adjudication.
[117 G; 120 H; 121 A; 121 C] Dunlop Rubber Co. (India) Ltd. v. Workmen &
Ors., [1960] 2 S.C.R. 51, referred to.
Remington Rand of India Ltd. v. The Workmen
[1968] 1 S.C.R. 164, woolcombers of India Ltd. v. Woolcombers Workers Union
& Anr. [1974] S C.R. 504 and Greaves Cotton & Co. and Ors. v. Their
Workmen [1964] 5 S.C.R. 362 and Bengal Chemical and Pharmaceutical Works Ltd.
v. Its Workmen [1969] 2 S.C.R. 113, followed.
5. Any attempt of a company introducing
uniformity in the matter of dearness allowance linked to the all-India average
consumer price index prepared by Labour Bureau, Simla would be destructive of
the concept of dearness allowance. Not only unequals will be treated as equals
but the former would suffer irreparable harm. Such an approach would deal a
fatal blow to the well-recognised principle of industrial adjudication based on
region-cum-industry because there cannot be any uniformity in the dearness
allowance of the workmen working in metropolitan areas and the workmen working
in smaller areas. [118 A-C]
6. Where for a certain industrial centre a
dearness allowance formula is in vogue and it is linked to some consumer price
index number, whenever the base year for consumer price index number is
changed, a fresh linkage requires a conversion ratio. In the absence of a
conversion ratio, the whole scheme falls out of gear and becomes unworkable,
ineffective and in fact unjust. In the instant case the conversion ratio of
4.83 in valid and correct and the Tribunal ought to have accepted the same.
[123 D; 124 F] Ahmedabad Mill Owners' Association etc. v. The Textile Labour
Association, [1966) 1 S.C.R. 382, followed.
7. In the matter of dearness allowance
usually the paying capacity of the employer is examined. In the instant case,
it has not at all been contended that the respondent company cannot bear the
additional burden. [124 G]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 806 of 1982.
From the Judgment and order dated 27-7-1981
of the Industrial Tribunal (III) U.P. in Adjudication Case No. 15 of 1977.
114 M. K. Ramamurthy, Jitendra Sharma and P.
Gaur for the Appellants- G.B. Pai, H. K. Puri and J. K. Mehra for the
Respondent.
The Judgment of the Court was delivered by
DESAI, J. In exercise of the power conferred by Sec. 4 (K) of the U.P
Industrial Disputes Act, 1947 (`Act' for short) the Government of Uttar Pradesh
by its order dated May 23, 1975 referred the following dispute to the
Industrial Tribunal for adjudication. The reference is in Hindi. Agreed
translation of the industrial dispute referred for adjudication reads as under:
"Whether the variable dearness allowance
payable by the employers to their workmen should be revised and it should be
linked with the consumer price index for industrial workers at Kanpur computed
by Labour Bureau Simla ? If yes, then from what rate (sic) and with what other
details." There are two rival unions of the workmen employed by the Indian
Oxygen Ltd. (`Company' for short) in its Industrial under taking at Kanpur.
They are the Indian Oxygen Karamchari Union (Karamchari Union' for short) and
the Indian Oxygen Sharamik Sangh (`Sharamik Sangh' for short). There is a
federation of trade-unions formed at various centres where the Company has its
industrial undertaking. Sharamik Sangh is affiliated to the federation.
Karamachari Union claims to represent the
workmen employed by the Company at Kanpur. The demand and the consequent
industrial dispute which led to the reference was espoused by Karamchari Union.
The Karamchari Union in its statement of
claim stated that the Company is a unit of the multi-national British Oxygen
Company. The Indian Unit of the multi-national corporation operates under the
name and style of M/s Indian Oxygen Ltd. The industrial activities of the
Company comprises manufacture and sale of industrial and medical gases etc. It
was stated that while the wage structure is uniform in respect of workmen
employed by the Company all over the country the dearness allowance formula
varies from centre to centre. Briefly it was stated that the workmen of the
Company employed at Bombay, Madras, Hyderabad, Bangalore and 115 Delhi are in
receipt of higher dearness allowance compared to the workmen employed in Kanpur
Unit. The immediate provocation for raising the demand was an award by the
Industrial Tribunal Delhi by which the dearness allowance of the workmen
employed in Delhi unit was linked to consumer price index for Delhi prepared by
the Labour Bureau Simla which resulted in a substantial increase in the
dearness allowance available to the workmen posted at Delhi. Soon after the
award was published, the Karamahcari Union submitted a demand on January 7,
1975 for revising the rate of dearness allowance for workmen employed in Kanpur
unit and as there was no adequate response from the employer, the matter was
taken into conciliation. The Company in its attempt to thwart the demand being
pursued entered into a settlement with the Sharamik Sangh in respect of the
dearness allowance and then approached the Labour Commissioner Kanpur for
registering the settlement. Failing to obtain the registration, the Company
unilaterally enforced the new scheme of dearness allowance linked to the
all-India average consumer price index prepared by Labour Bureau Simla. The
Karamchari Union did not accept the revised formula, and pressed its demand
that the dearness allowance should be linked to all-India consumer price index
number prepared by Labour Bureau, Simla for Kanpur centre, after adopting the
linking factor as has been done in the award by the Industrial Tribunal at
Delhi. The conversion ratio was suggested at 4.83 linked to January 1970 index
number.
The Company consistent with the employer
culture put forth number of preliminary objections so as to delay the
adjudication of the demand. All the preliminary objections failed as per the
decision of this Court in Indian Oxygen Ltd. v. The Workmen as represented by
Indian Oxygen Karamachari Union.(1) After the matter went back for adjudication
on merits it was contended on behalf of the Company that the settlement arrived
at between the Sharamik Sangh and the Company would be binding on the members
of the Karamachari Union and the Tribunal should not adjudicate the dispute on
merits. This settlement has been stigmatized by this Court to be a collusive
one. (See page 920). It was further contended that the Company is desirous of
linking dearness allowance to all-India average consumer price index for
working class with base 1960=100 and that the Tribunal should avoid accepting a
demand of a few workmen where a majority of the workmen have accepted and are
satisfied with the revised formula introduced by the Company.
116 The Company employs 5,400 workmen in all
its establishments all over the country. Out of total strength of 5,400
workmen, 3030 are employed in gas manufacturing unit. The employment strength
in Kanpur unit is roughly about 200. It is not in dispute that the basic wages
of all workmen employed all over the country by this Company are occupation
wise uniform but the dearness allowance paid to workmen differs or varies from
place to place. This ought to be so as will be presently pointed out.
Prior to 1975 dearness allowance to the
workmen employed in the units of the Company in North-Eastern Zone i.e. in the
States of West Bengal, Bihar, Orissa, U.P., Delhi and Punjab was linked to the
consumer price index number (middle-class) prepared by the Bengal Chamber of
Commerce for Calcutta. It may be mentioned that the Bengal index has been
discontinued since 1975. It is important to note that by the two awards of the
Industrial Tribunal, the office staff and the workmen employed the Company at
Delhi are being paid dearness allowance linked to consumer price index compiled
by Labour Bureau Simla for Delhi.
Subsequently by a decision of this Court in
Govardhan Prasad and others v. The Management of M/s Indian Oxygen Ltd.(1) 10
workmen employed by the Company stationed at Ghaziabad were required to be paid
dearness allowance to the same extent and in the same manner as was being paid
under the awards of the Industrial Tribunal to the workmen of the Company at
Delhi.
Before we delve into the narrow contentions
raised in this behalf we would remove the gloss over the submission that the attempt
of the company, having all-India operation, is to introduce uniformity in the
matter of dearness allowance payable to its workmen all over the country.
Uniformity, to an uninformed mind, appears to
be very attractive. But let it not be forgotten that sometimes this uniformity
amongst dissimilar persons becomes counter- productive. Uniformity and equality
have to be amongst equals measured by a common denominator. One can appreciate
the implementation of the constitutional aspiration of `equal pay for equal
work.' In the matter of basic wages it is a consummation devotedly to be
wished. But when it comes to dearness allowance any attempt at uniformity
between workmen in such metropolitan areas like Delhi, Bombay, Madras, Calcutta
and in smaller centres 117 would be destructive of the concept of dearness
allowance.
Dearness allowance is directly related to the
erosion of real wages by constant upward spiraling of the prices of basic
necessities and as a sequel to the inflationary input, the fall in purchasing
power of the rupee. It is a notorious phenomenon hitherto unquestioned that
price rise varies from centre to centre. Dearness allowance is inextricably
intertwined with price rise, it being an attempt to compensate loss in real
wages on account of price rise considered as a passing phenomenon by
compensation. That is why it is called variable dearness allowance. Any
uniformity in the matter of dearness allowance may confer a boon on persons
employed in smaller centres and those in big metropolitan areas would be hard
hit. Dearness allowance by its very form and name has an intimate relation to
the prevailing price structure of basic necessities at the centre in which the
workman is employed. Therefore, the claim in the written statement on behalf of
the company that imbued with the equitable principle of introducing uniformity
in the matter of dearness allowance, the Company with the easy availability of
consent of its protege union Sharamik Sangh introduced a new scheme of dearness
allowance linked to the all-India average consumer price index prepared by
Labour Bureau, Simla is misleading. The Tribunal rightly observed that it is by
now well-settled that dearness allowance to workmen at a particular place
should depend upon the place where the workman is working irrespective of the
fact that the industrial undertaking in which the workman is employed is a unit
of an industrial enterprise having an all-India or inter-State operations. In
Dunlop Rubber Co. (India) Ltd v. Workmen & Ors.,(1) a contention on behalf
of the employer that in the case of an all-India concern, it would be advisable
to have uniform conditions of service throughout India was repelled observing
that `however desirable uniformity may be in the case of all-India concerns,
the tribunal cannot abstain from seeing that fair conditions of service prevail
in the industry with which it is concerned.' This view to some extent was
affirmed in the Remington Rand of India Ltd v. The Workmen(2). Leaving aside
basic wages in the matter of dearness allowance specially the Court should lean
in favour of adjudication of dispute on the principle of industry cum- region
because dearness allowance is linked to cost of living index of a particular
centre which has a local flavour. If the concept of uniformity on an all-India
basis is introduced in the matter of dearness allowance, it would work havoc,
because the price structure 118 in a market economy at places like Bombay,
Madras, Calcutta, Delhi, Ahmedabad has little or no relation to smaller centres
like Kanpur, Varanasi etc. If workmen working in such disparate centres are put
on par in the matter of dearness allowance in the name of proclaimed all-India
uniformity, not only unequals will be treated as equals but the former would
suffer irreparable harm. Such an approach would deal a fatal blow to the
well-recognised principle of industrial adjudication based on
region-cum-industry developed by courts by a catena of decisions. Realising
this situation courts have learned in favour of determination of dearness
allowance linked to cost of living index, if available for the centre where the
workman employed and in the matter of neutralisation on the industry-cum-region
principle. The Tribunal having rejected this approach committed an error
apparent on the record.
At this stage, it is necessary to have some
idea of what is consumer price index number, how it is being complied and what
is its relevance in the matter of dearness allowance ? Pursuant to the
recommendations of the Planning Commission for the Second Five Year Plan the
Labour Bureau, Simla and the Industrial Statistical Organisation of the
Government of India took steps to conduct fresh family living surveys among
working class and middle class population respectively with a view to
constructing the new series of consumer price index numbers. The working class
surveys were conducted at 50 selected centres and the middle class surveys at
45 centres, 18 centres being common to both. The work of this survey was
commenced in the second half of 1958 and was concluded by September, 1959. One
of the centres selected for survey was Kanpur (See Ahmedabad Mill Owners'
Association etc. v. The Textile Labour Association(1) What materials and
statistical information enter into the compilation of consumer price index
number may be briefly noticed.
The consumer price index number for
industrial workers (base 1960=100) are being compiled and published by the
Labour Bureau, Simla every month in respect of 50 industrial centres scattered
all over the country. Amongst them is Kanpur. The material collected is through
the family surveys of working class families. There are six main groups for
which indices for each centre are being compiled besides the general index.
They are:
119 (i) Food (ii) Pan, Supari, Tobacco and
intoxicants (iii) Fuel and light (iv) Housing (v) Clothing, bedding and
footwear, and (vi) Miscellaneous Consumer price index numbers are intended to
measure relative temporal (overtime) changes in the price of a fixed basket of
goods and services consumed by the index population in a current period in
relation to the base period. The index numbers are compiled by using Laspeyers'
Formula. The Broadly stated this formula takes note of base and current prices
for a particular item, quantity consumed of that item during the base period.
It would appear that for the compilation of an index, there are three essential
requirements namely: (1) weighting diagram which is the relative percentage
share of the total consumption expenditure as revealed by the basic family
budget enquiry in respect of different items, (2) Base prices of the different
items which go into the index basket and (3) current prices in respect of each
one of the items featuring in the index basket. The weighting diagram for a
centre is derived on the basis of the data collected through family budget
enquiries which were conducted in the 1958-59 at each one of the 50 centres.
The survey was conducted by taking all samples of working class families in
each of the 50 centres and the data was collected by interviewing these
families. Based on the results of the family budget enquiries, the average
expenditure of a family per month on different items of consumption was arrived
at. All-India average consumer price index number is a weighted average of the
50 centres' indices. This is compiled and published alongwith the index number
for each centre (Source: Consumer Price Index: An anatomy published by Labour
Bureau, Simla).
It would appear at a glance that there would
be a noticeable difference between the consumer price index number for a centre
and its weighted average for 50 centres which would be the all-India average
consumer price index number, the latter would generally be lower than the
former in some cases.
120 Reverting to the demand in this case, the
Karamchari Union raised a demand that the variable dearness allowance payable
to the workmen should not only be revised but it should be linked with the
consumer price index for industrial workers at Kanpur. The Tribunal by its
award directed the employer to pay dearness allowance linked to the all-India
consumer price index (1960= 100) for the Kanpur Centre compiled by Labour
Bureau, Simla. On the question of neuturalisation, the Tribunal directed that
the calculation in the rate of dearness allowance will remain the same as
presently operative and no change is required therein. In reaching this
conclusion, the Tribunal committed two manifest errors apparent on the record.
The company introduced as stated in its
written statement, a new scheme of dearness allowance linked to the all-India
consumer price index prepared by Labour Bureau, Simla. That was a very recent
innovation introduced by way of a counter blast to the demand raised by the
Karamchari Union. Prior thereto, it is an admitted position that the workmen at
Kanpur were being paid dearness allowance linked to Bengal Chamber of Commerce
Index Number. That was unilaterally given up by the Company. There appeared to
be at least two valid reasons for scrapping that scheme: one is that since 1975
Bengal Chamber of Commerce Index which was compiled for middle class families
and was being artificially applied to industrial workers has been scrapped. In
other words, the index is no more being compiled. Secondly, the constituent
members of the Bengal Chamber of Commerce had started their business in India
long before the present century and most of them were incorporated in England
or other Western countries while the Company in the present case has been
started a few decades back and therefore, re-induction of the Bengal Chamber
Index Number would not be relevant.
On behalf of the Karamchari Union, it was
contended that in devising a dearness allowance formula, the region-
cum-industry principle should ordinarily be accepted. As pointed out earlier,
dearness allowance generally has a local flavour. A man is exposed to the
vagaries of the market where he resides and works, even though he may be an
employee of a national, multinational or trans-national industrial empire. The
workman is concerned with the vagaries of price fluctuation in the area in
which he resides and works for gain and to which he is exposed.
Therefore, the region 121 cum-industry
principle must inform industrial adjudication in the matter of dearness
allowance. In Woolcombers of India Ltd. v. Woolcombers Workers Union & Anr.
(1) this Court following its earlier decision in Greaves Cotton & Co. and
Ors v. Their Workmen (2) held that in devising basic wages and dearness
allowance structure, industrial adjudication sometimes leans on the industry
part of the industry-cum- region formula and at other times, on the region part
of the formula as the situation demands. This well-recognised principle of
industrial adjudication cannot be given a go-by on the specious plea that the
workmen are employed by an industrial undertaking which has an all-India
operation. In this case, the Tribunal has overlooked this important principle
of industrial adjudication.
Before we examine the second manifest error
committed by the Tribunal in narrowly construing the terms of reference, it
would be advantageous to briefly recapitulate what relevant considerations have
to be kept in view in devising dearness allowance formula. This aspect is no
more res integra. In Bengal Chemical and Pharmaceutical Works Ltd. v. Its
workmen (3), after reviewing all the earlier decisions, the court restated the
principles on which a fair and just dearness allowance formula must be devised.
They are:
"1. Full neutralisation is not normally
given, except to the very lowest class of employees.
2. The purpose of dearness allowance being to
neutralise a portion of the increase in the cost of living, it should
ordinarily be on a sliding scale and provide for an increase on the rise in the
cost of living and a decrease on a fall in the cost of living.
3. The basis of fixation of wages and
dearness allowance is industry-cum-region.
4. Employees getting the same wages should
get the same dearness allowance, irrespective of whether they are working as
clerks or members of subordinate staff or factory workmen.
122
5. The additional financial burden which a
revision of the wage structure or dearness allowance would impose upon an
employer, and his ability to bear such burden, are very material and relevant
factors to be taken into account." We need not examine whether the
dearness allowance formula as at present existing is valid according to the
principles herein extracted because we are not devising a dearness formula for
the workmen working in the industrial undertaking of the company at Kanpur for
the first time. The demand is for upward revision of the dearness allowance
formula and its linkage.
The terms of reference extracted hereinbefore
unmistakable show that the workmen sought upward revision of the variable
dearness allowance by linking it to the consumer price index number for
industrial workers at Kanpur computed by Labour Bureau, Simla. If the demand is
to be granted, the Tribunal was requested to specify the rate and other
details. Interpreting this reference the Tribunal observed that the new
dearness allowance formula which was in vogue at the time of the reference as
being related to all-India average consumer price index number for industrial
workers in accordance with the settlement with the Shramik Sangh which settlement
was found to be collusive by this Court yet the Tribunal must proceed on the
basis that dearness allowance was being paid to the workmen at Kanpur as per
the settlement and that cannot be wished away. This approach overlooks a vital
fact that the introduction of the new formula under a collusive settlement led
to the demand for revision. The Tribunal rejected the submission that it must
examine and devise a new formula in relation to the Bengal Chamber of Commerce
Index Scheme which was in vogue before the formula as per the collusive
settlement was introduced. If the settlement between the company which is found
to be collusive by this Court is to be the starting point of revision of the
dearness allowance formula as has been done by the Tribunal, the conclusion is
inescapable that the Tribunal started from a wrong premise and landed itself
into an utterly unsustainable conclusion. This is the second apparent error in
the face of the record which would impoll us to interfere. Mere so because the
genesis of the demand for a revision of the dearness allowance was the
collusive settlement. The Tribunal committed a grave error in accepting the
settlement as the starting point of the revision.
123 The demand of the Karamchari Union was
that the Tribunal should first take into account, relevant to a certain date,
the all-India consumer price index number for Kanpur centre (1960=100) and then
the index figure should be multiplied by the conversion factor of 4.83 and then
dearness allowance should be linked to the figure so worked out. The Tribunal
rejected this demand on the ground that in the statement of claim, the
Karamchari Union demanded payment of dearness allowance according to Simla
Index Number for Kanpur. The Tribunal took note of the fact of the linking
factor but observed that as the same has been discontinued by the Labour
Commissioner, U.P., the demand has been essentially for dearness allowance
according to the Simla Index for Kanpur. This reasoning manifests an error in
approaching, appreciating and evaluating the demand for revision of dearness
allowance.
Before we examine the error, let it be made
clear that where for a certain industrial centre, a dearness allowance formula
is in vogue and it is linked to some consumer price index number, whenever the
base year for consumer price index number is changed, a fresh linkage requires
a conversion ratio. In the absence of a conversion ratio, the whole scheme
falls out of gear and becomes unworkable. To illustrate, in the textile
industry, the consumer price index number was compiled on the basis of base
year 1939=100. The year 1939 was chosen as the year in which the second world
was engulfed the world which completely overhauled the consumer pattern and the
prices of essential articles. Over years the price spiral relentlessly moved
upward and that too so rapidly that in most of the industries where even though
100% neutralisation was not given by devising a dearness allowance yet the
dearness allowance for a given month was occasionally double or triable of the
basis wage. This was unjust, unfair and from an economist's point of view,
imprudent. Therefore, as pointed out earlier, a fresh survey was undertaken in
1958 with the base year 1960=100. A fresh index was compiled and continues to
be compiled with 1960=100 as base year. In fact the 1960=100 base year is being
replaced. We will however, confine ourselves in this appeal to the base year of
1960=100. Now if those industrial undertakings in which dearness allowance
formula was linked to the base year 1939=100 are to be delinked and relinked to
the index number compiled on the base year 1960=100, before the fresh number is
adopted, a linking or a conversion ratio between 1939-100 and 1960=100 will
have to be computed. Only then a fresh linkage 124 can be devised. This very
obvious fact has been wholly overlooked by the Tribunal when it merely awarded
that the workmen of the company at Kanpur should be paid dearness allowance
linked to the all-India consumer price index number (1960=100) for Kanpur Centre
compiled by Labour Bureau, Simla. This approach overlooks the linking factor.
The rejection of the linking or conversion
factor makes the scheme devised by the award unworkable, ineffective and in
fact unjust. In this connection, we may refer to the Ahmedabad Mill Owner's
Association case in which this Court after noting the fact that the base year
having changed, pointed out that the question of linking factor loomed large
and assumed importance. The court had before it the admitted position that there
was only one index existing in Ahmedabad which was based on the new series
(1960=100) and the old series (1939=100) has rightly gone out of existence
since it had become antiquated. Two alternatives were submitted to the court
for its consideration. It was submitted that an entirely new scheme of basic
wages based not on the pre-war level of 1939, but based on the cost of living
of 1960 as the base year be devised and then award dearness allowance in
relation thereto. In the alternative, it was submitted that an arithmetical
method of linking the old and the new series be devised. The Tribunal had
accepted the conversion ratio at 3.17. This was attacked on diverse grounds.
After examining the whole gamut of arguments, this Court held that the linking
factor of 3.17 was valid and correct Approaching the matter from the same
angle, and avoiding the arguments which have been rejected by this Court in the
aforementioned judgment, we are of the opinion that the conversion ratio of
4.83 is valid and correct and the Tribunal ought to have accepted the same.
It is usual in the matter of dearness
allowance to examine the paying capacity of the employer. Rightly Mr. Pai did
not at all contend that this employer can not bear the additional burden. We
therefore, need not stray into this aspect at all.
On behalf of the Karamchari Union, it was
seriously contended that the award of the Industrial Tribunal at Delhi between
this very Company and its Workmen at Delhi be accepted. We need not examine the
same as the comparison between Delhi and Kanpur is ill-conceived and untenable.
Delhi is the capital of the sub-continent and
it is fast growing. Kanpur is at best a district town though 125 undoubtedly an
important industrial centre in U.P. But the comparison would be invidious.
Accordingly, this appeal partly succeeds and
is allowed. The award of the Industrial Tribunal that the workmen of the Kanpur
unit of the Indian Oxygen Ltd. should be paid dearness allowance linked to
all-India consumer price index (1960=100) for Kanpur centre compiled by the
Labour Bureau, Simla is modified to read that 'the dearness allowance should be
paid according to all-India consumer price index number for Kanpur (1960=100)
compiled by Labour Bureau, Simla after applying conversion factor also called
linking factor of 4.83.' In all other respects i.e. the date of enforceability
etc. the award remains unaltered except for the modification herein granted.
The appeal is allowed to this extent with costs quantified at Rs. 3,000.
A.P.J. Appeal partly allowed.
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