Appeals Nos 272 to 280 of 1962
Appeals by special leave from the Award dated June 3 1960 in reference IT Nos 84 and 251 of 1959 June 15 1960 in References IT Nos 112 and 252 of 1959 June 16 1960 in References IT Nos 121 of 1959 and 7 of 1960 June 15 1960 in References IT Nos 123 180 and 236 of 1959 of the Industrial Tribunal Maharashtra at Bombay
SV Gupte Additional Solicitor General N V Phadke J B Dadachanji O C Mathur and Ravinder Narain for the appellants in all the appeals
MC Setalvad KT Sule Madan G Phadnis Jitendra Sharma and Janardan Sharma for the respondents in CA No 2721962
KT Sule Madan G Phadnis Jitendra Sharma and Janardan Sharma for the respondents in C As
273 28062
November 14 1963
The Judgment of the Court was delivered by WANCHOO J
These nine appeals by special leave arise out of the awards of the Industrial Tribunal Bombay and will be dealt with together
There were disputes between the four appellants companies and the respondents their workmen which were referred for adjudication to the Industrial Tribunal by nine reference orders on various dates between April to December 1959
The main dispute which gave rise to the references was with respect to wages dearness allowance and gratuity
The references included other items also but we are not concerned in the present appeals with those items
Of the four companies who are the appellants before 364 us Greaves Cotton and Co is the first company and its main activity is to invest money in manufacturing concerns
The second company is Greaves Cotton and Crompton Parkinson Private Limited and its main business is distribution of the products of a manufacturing concern known as Crompton Parkinson Works India Limited and service and repair to the said products at its workshop
The third company is Konyon Greaves Private Limited and its main business is to manufacture high grade interstranded ropes for the textile industry
The last company is Ruston and Hornsby India Private Limited and its main business is to manufacture oil engines and pumps
The last three companies are controlled by the first company namely Greaves Cotton and Co in one way or the other and that is how the main dispute relating to wages and dearness allowance was dealt with together by the tribunal
There were two references each with respect to the first three companies and three references with respect to Ruston and Hornsby Private Limited and that is how there are nine appeals before us
There were nine awards though the main award dealing with the main dispute relating to wages and dearness allowance was common
It appears that wages and dearness allowance prevalent in the four companies had been continuing since 1950 when the last award was made between the parties
It may also be stated that there was no serious dispute before the Tribunal as to the financial capacity of the companies and further as the first company controls the other three companies the wages and dearness allowance are the same so far as the clerical and subordinate staff are concerned
The same appears to be the case with respect to factory workmen
The Tribunal dealt with clerical and subordinate staff separately from the factory workmen
So far as the clerical and subordinate staff are concerned the Tribunal after a comparison of wages and dearness allowance prevalent in the four companies with wages 365 and dearness allowance prevalent in comparable concerns revised them
Further it provided bow the clerical and subordinate staff would be fitted in the new scales after making certain adjustments and in that connection it gave one to three extra increments depending upon length of service between 1950 to 1959
Finally it ordered that the award would have effect from April 1 1959 which was a week before the first reference was made with respect to the first company
The Tribunal then dealt with the case of the factory workmen and prescribed certain rates of wages
Further it gave the same dearness allowance to the factory workmen as to the clerical and subordinate staff and directed adjustments also on the same basis
Finally it considered the question of gratuity and the main provision in that respect was that the maximum gratuity allowable would be upto 20 months and a provision
was also made to the effect that if an employee was dismissed or discharged for misconduct which caused financial loss to the employer gratuity to the extent of that loss only will not be paid to the employee concerned
The main attack of the appellants is on the award as regards wages and dearness allowance
It is urged that the industry cum region formula which is the basis for fixation of wages and dearness allowance has not been properly applied by the Tribunal and it had been carried away by the recommendations of the tripartite conference which suggested need based minimum wages
It is also urged that whatever comparison was made was with concerns which were not comparable and the wages awarded were even higher than those prevalent in any comparable concern
It is also urged that the Tribunal did not consider the total effect of the increase it was granting in basic wage and dearness allowance together as it should have done for the purpose of finding out whether the total pay packet in the appellants  concerns can bear comparison with the total pay packet of the concerns with which the Tribunal had compared the appellants  concerns
In this connection it is urged that in flying 366 scales of wages the Tribunal increased the maximum and the minimum and the annual rate of increment and decreased the span of years in which the maximum would be reached
Adjustments made by the Tribunal are also attacked and so is the order making the award enforceable from April 1 1959
As to the factory workmen it is urged that the Tribunal made no attempt to make a comparison with wages prevalent even in what it considered to be comparable concerns
Lastly it is urged that the Tribunal created a new category of factory workmen called higher unskilled which was not demanded and which in any case did not exist in any comparable concern
The first question therefore which falls for decision is whether the Tribunal went wrong in not following the industry cum region principle and in leaning on the recommendations of the Tripartite Conference
It is true that the Tribunal begins its award with a reference to the recommendations of the Tripartite Conference wherein the need based minimum wage was evolved
It is urged that this disposed the Tribunal to pitch wage scales too high
It is however clear from the award that though the Tribunal discussed the recommendations of the Tripartite Conference at some length when it actually came to make the award it did not follow those recommendations
The reason why it referred to those recommendations was that the respondents workmen based their claim on them and wanted that the Tribunal should fix wagescales accordingly
But the Tribunal s conclusion was that it was not feasible to do so though looking at the financial stability of the appellants emoluments needed upgrading
It then went on to consider the wages prevalent in comparable concerns and finally fixed wages for the appellants on the basis of wages prevalent in such concerns
Though therefore the recommendations of the Tripartite Conference are referred to in the Tribunal s award its final decision is not based on them and what the Tribunal has done is to make comparisons with what it considered comparable concerns so far as clerical and subordi 367 nate staff are concerned
We are therefore not prepared to say that reference to the recommendations of the Tripartite Conference in the opening part of the award was irrelevant and therefore the rest of the award must be held to be vitiated on that ground alone
The main contention of the appellants however is that the tribunal has gone wrong in applying the industry cum region formula which is the basis for fixing wages and dearness and has made comparison with concerns which are not comparable
It is also urged that the Tribunal has relied more on the region aspect of the industry cum region formula and not on the industry aspect when dealing with clerical and subordinate staff and in this it went wrong
Reference in this connection is made to two decisions of this Court namely Workmen of Hindusthan Motors vs Hindusthan Motors  and French Motor Car Company vs Their Workman 2  and it is emphasis that the principles laid down in Hindusthan Motors  case were more applicable to the present case than the principles laid down in the French Motor Car Co s case2
In the Hindusthan Motors case1 this Court observed that it was ordinarily desirable to have as much uniformity as possible in the wage scales of different concerns of the same industry working in the same region as this puts similar industries more or less on an equal footing in their production struggle
This Court therefore applied the wage scales awarded by the Third Major Engineering Tribunal in Bengal in the case of Hindusthan Motors also
It is urged that the Tribunal should have taken into account comparable concerns in the same industry and provided wage scales on the same lines so that so far as manufacturing concerns in the present appeals are concerned there will be equality in the matter of competition
In the French Motor Car Co s case2 however this Court held so far as clerical staff and subordinate staff are concerned that it may be possible to take into account 1 2 1963 Supp 368 even those concerns which are engaged in different lines of business for the work of clerical and subordinate staff is more or less the same in all kinds of concerns
We are of opinion that there is no inconsistency as urged in the principles laid down in these two cases
As we have already said the basis of fixation of wages and dearness allowance is industry cum region
Where there are a large number of industrial concerns of the same kind in the same region it would be proper to put greater emphasis on the industry part of the industry cum region principle as that would put all concerns on a more or less equal footing in the matter of production costs and therefore in the matter of competition in the market and this will equally apply to clerical and subordinate staff whose wages and dearness allowance also go into calculation of production costs
But where the number of comparable concerns is small in a particular region and therefore the competition aspect is not of the same importance the region part of the industry cum region formula assumes greater importance particularly with reference to clerical and subordinate staff and this was what was emphasised in the French Motor Car Co s case where that company was already paying the highest wages in the particular line of business and therefore comparison had to be made with as similar concerns as possible in different lines of business for the purpose of fixing wage scales and dearness allowance
The principle therefore which emerges from these two decisions is that in applying the industry cum region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry in such a case in order that production cost may not be unequal and there may be equal competition wages should generally be fixed on the basis of the comparable industries namely industries of the same kind
But where the number of industries of the same kind in a particular region is small it is the region part of the industry cum region formula which 1 1963 Supp 369 assumes importance particularly in the case of clerical and subordinate staff for as pointed out in the French Motor Car Co s case there is not much difference in the work of this class of employees in different industries
In the present cases it does appear that the Tribunal has leaned more on the region part of the industry cum region formula and less on the industry part
But we think that it cannot be said that the Tribunal was wrong in doing so for two reasons
In the first place these four companies are not engaged in the same line of industry but on account of certain circumstances namely that Greaves Cotton and Co is the controlling company of the other three it has been usual to keep the same scales for clerical and subordinate staff in all these concerns
In the second place it is not clear as was clear in the Hindusthan Motors case that there are a large number of comparable concerns in the same region
As a matter of fact the main company out of these four is Greaves Cotton and Co Limited which is in the main an investment and financial company and the Tribunal was therefore right in taking for comparison such companies as would stand comparison with the main company in the present appeals namely Greaves Cotton  Co
Both parties filed scales of wages prevalent in what they considered to be comparable concerns and it is clear from the documents filed that some of the comparable concerns were the same in the documents filed by the two parties
On the whole therefore we do not think the Tribunal was wrong in putting emphasis on the region aspect of the industry cum region formula in the present case insofar as clerical and subordinate staff was concerned
 for the four companies before us do not belong to the same industry and Greaves Cotton and Co controls the other three
Considering therefore the standing of the main company namely Greaves Cotton and Co Ltd it was not improper for the Tribunal in the present cases to rely on the comparable concerns 1 1963 Supp 1SCI64 24 2 370 which were cited on behalf of the respondents some of which were common with the comparable concerns cited on behalf of the appellants
What the Tribunal lid thereafter was to consider the minimum for various categories of clerical and subordinate staff prevalent in these comparable concerns and the maximum prevalent therein at id also the annual increments and the span of years in which
the maximum would be reached
The Tribunal then went on to fix scales for various categories of clerical and subordinate staff of the appellants which were in between the scales found in various concerns
Further as the financial capacity of the appellants was not disputed the Tribunal pitched these scales nearer the highest scales taking into account the fact that for nine years after 1950 there had been no increase in wage scales
We do not think therefore that the wage sales fixed by the Tribunal learning as it did on the region aspect of the industry cum region formula for the clerical and subordinate staff can be successfully assailed by the appellants
It has however been urged that the Tribunal overlooked considering what would be the total wage packet including basic wages and dearness allowance and that has made the total wages ie basic wage and dearness allowance fixed by the Tribunal much higher in the case of the appellants than in comparable concerns which it took into account
It is true that the Tribunal has not specifically considered what the total wage packet would be on the basis of the scales of wages and dearness allowance fixed by it as it should have done but considering that wage scales fixed are less than the highest in the comparable concerns though more than the lowest it cannot be said that the total wage packet in the case of the appellants would be necessarily higher than in the case of the other comparable concerns
This will be clear when we deal with the dearness allowance which has been fixed by the Tribunal for it will appear that the dearness allowance fixed is more or less on the same lines ie less than 371 the highest but more than the lowest in other comparable concerns
On this basis it cannot be said that the total wage packet fixed in these concerns would be the highest in the region
Though therefore the Tribunal has not specifically considered this aspect of the matter which it should have done its decision cannot be successfully assailed on the ground that the total wage packet fixed is the highest in the region
This brings us to the case of factory workmen
We are of opinion that there is force in the contention of the appellants insofar as the fixation of wagescales for factory workmen is concerned
The respondents wanted that separate wages should be fixed for each category of workmen
The Tribunal however rejected this contention and held that the usual pattern of  having unskilled semi skilled and skilled grades should be followed and the various workmen though they should be known by their designation and not by the class in which they were being placed should be fitted in these categories
In the present concerns there were six categories from before namely i unskilled ii semiskilled 1 iii semiskilled If iv skilled 1 V skilled 11 and vi skilled 111
The Tribunal kept these categories though it introduced a seventh category called the higher unskilled
It is not seriously disputed that this category of higher unskilled does not exist in comparable concerns nor have we been able to understand how the unskilled category can be sub divided into two namely lower and higher unskilled though we can understand the semi skilled and skilled categories being sub divided depending upon the amount of  skill
But there cannot be degrees of want of skill among the unskilled class
The Tribunal therefore was not justified in creating the class of higher unskilled
It is neither necessary nor desirable to create a higher unskilled category and only the six categories which were prevalent from before should continue
The main attack of the appellants on the wages fixed for these six categories is that in doing so the 372 Tribunal completely overlooked the wages prevalent for these categories in concerns which it had considered comparable
A look at the award shows that it is so
The Tribunal has no where considered what the wages for these categories in comparable concerns are though it appears that some exemplars were filed before it but the way in which the Tribunal has dealt with the matter shows that it paid scant regard to the exemplars filed before it and did not care to make the comparison for factory workmen in the same way in which it had made comparison for clerical and subordinate staff
In these circumstances wage scales fixed for factory workmen must be set aside and the matter remanded to the Tribunal to fix wage scales for factory workmen dividing them into six categories as at present and then fixing wage after taking into account wages prevalent in comparable concerns
The parties will be at liberty to lead further evidence in this connection
Then we come to the question of dearness allowance
So far as clerical staff is concerned dearness allowance prevalent in the appellants  concerns was as follows on the cost of living index of 411 420 Basic salary DA at cost of Verification for in Rs living index every 10 point group 411 420 movement 1 to 100 115 of basic salary 5 or the textile scale on 30 day month which ever is higher 101 to 200 35 1 12 201 to 300 25 1 301 and above 17 12 34 373 The Tribunal fixed the dearness allowance as follows When the consu Variation for Salary slab mer price index each 10 point rise is between 411
or fall in the 420 index On 1st Rs 100 115 5 On 2nd Rs 100 50 2 On 3rd Rs 100 25 1
Balance upto 20 1 Rs 600 A comparison of these figures will show that on the first hundred and the third hundred there is no difference in the scale fixed by the Tribunal but there is a slight improvement on the second hundred and a very slight one above three hundred
This scale fixed by the Tribunal is in line with some scales of dearness allowance recently fixed by Tribunals in that region
The main improvement is on the second hundred and it cannot really be said that employees in that wage range do not require the higher relief granted to them by tribunals in view of the rise in prices
We do not think therefore that the dearness allowance fixed by the Tribunal taking into account what was already prevalent in these concerns and also taking into account the trend in that region can be successfully assailed so far as clerical staff  is concerned
This brings us to the case of subordinate staff
It appears that in these concerns subordinate staff was getting dearness allowance on different scales based on the old textile scale of dearness allowance
The Tribunal has put the subordinate staff in the same scale of dearness allowance as clerical staff
The reason given by it for doing so is that incongruity in the payment of dearness allowance between clerical and subordinate staff should be removed
It appears that on account of different scales of 374 dearness allowance for subordinate and clerical staff a member of the subordinate staff drawing the same wages would get less dearness allowance than a member of the clerical staff
The discrepancy is very glaring as between clerical staff and factory workmen who also have different scales of dearness allowance
The Tribunal therefore thought that dearness allowance which is meant to neutralise the rise in cost of living should be paid to clerical staff subordinate staff as well as factory workmen on the same scale for the need for neutralisation was uniformly felt by all kinds of employees
It also pointed that there was a trend towards uniformity in the matter of scales of dearness allowance as between clerical staff and other staff and factory workmen and referred to a number of firms where same scales prevailed for all the staff
It has however been urged on behalf of the appellants that the pattern in the region is that there are different scales of dearness allowance for clerical staff and other staff including factory workmen and the Tribunal therefore should have followed this pattern
The reasons given by the Tribunal for giving the same scales of dearness allowance to all the categories of staff including the factory workmen appear to us to be sound
Time has now come when employees getting same wages should get the same dearness allowance irrespective of whether they are working as clerks or members of subordinate staff or factory workmen
The pressure of high prices is the same on these various kinds of employees
Further subordinate staff and factory workmen these days are as keen to educate their children as clerical staff and in the circumstances there should be no difference in the amount of dearness allowance between employees of different kinds getting same wages
Further an employee whether he is of one kind or another getting the same wage hopes for the same amenities of the and there is no reason why he should not get them simply because he is for example a factory workman though he may be coming from the same class of people as a member of clerical staff
On the whole therefore the Tribunal was in 375 our opinion right in following the trend that has begun in this region and in fixing the same scale of dearness allowance for subordinate staff and factory workmen as in the case of clerical staff
So far therefore as subordinate and clerical staff are concerned we see no reason to disagree with the rate of dearness allowance fixed by the Tribunal
This brings us to the case of the dearness allowance for factory workmen
In their case we have set aside the award relating to wage scales
It follows that we must also set aside the award relating to dearness allowance as we have already indicated that the Tribunal has to take into consideration the total pay packet in fixing wages and dearness allowance
When therefore the case goes back to the Tribunal for fixing wages and dearness allowance for factory workmen it will be open to the Tribunal to fix the same rates of dearness allowance for factory workmen as for clerical staff but in doing so the Tribunal must when making comparisons take into account the total wage packet ie basic wages fixed by it as well as dearness allowance and then compare it with the total wage packet of comparable concerns and thus arrive at a just figure for basic wage for each category of factory workmen
But the entire matter is left to the Tribunal and it may follow such method as it thinks best so long as it arrives at a fair conclusion after making the necessary comparison
This brings us to the question of adjustment
We have already said that the Tribunal allowed one to three increments depending upon the length of service between 1950 and 1959
It has been urged that no adjustment should have been allowed taking into account the fact that incremental scales were in force previously also in these concerns and the Tribunal has increased both the minimum and the maximum in its award and has granted generous annual increments reducing the total span within which a particular employee belonging to clerical and subordinate staff will reach the maximum
Reliance in this connection has been placed on the 376 French Motor Car Co s case 
It is true that the Tribunal has given larger increments thus reducing the span of years for reaching the maximum
That alone however is no reason for not granting adjustment
But it is said that in the French Motor Co case   this Court held that where scales of pay were existing from before no adjustment should be granted by giving extra increments and that case applies with full force to the facts of the present case
Now in that case this Court pointed out on a review of a large number of awards dealing with adjustments that generally adjustments are granted when scales of wages are fixed for the first time
But there is nothing in law to prevent the industrial tribunal from granting adjustments to the employees in the revised wage scales even in a case where previously pay scales were in existence but this has to be done sparingly taking into consideration the facts and circumstances of each case
The usual reason for granting adjustment even where 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 Another reason for the same was that the scales of pay were also low
In those circumstances adjustments have been granted by tribunals a second time
This Court then pointed out in that case that the incremental scales prevalent in that company were the highest for that kind of industry and therefore struck down the adjustments granted and ordered that clerical staff should be fixed on the next higher step in the new scales if there was no step corresponding to the salary drawn by a clerk in the new scale
The question therefore whether adjustment should be granted or not is always a question depending upon the facts and circumstances of each case
Let us therefore see what the circumstances in the present cases are
Tables of comparative rates of increments were filed before the Tribunal 1 1963 Supp 377 for various grades of clerks
It is clear from the examination of these tables and pay scales prevalent in the appellants  concerns from 1950 that pay scales were not high as compared to pay scales in comparable concerns
If anything they were on the low side
Further as an example in the case of junior clerks the first rate of increment was Rs 5 in the appellants  concerns and this rate went on for 13 years in other concerns where the first rate of increment was Rs 5 it lasted for a much shorter period which in no case exceeded eight years and was in many cases three or four years
In some concerns the first rate of increment was higher than Rs 5
Almost similar was the case with senior clerks
So it appears that in the appellants  concerns the first rate of increment was generally on the low side and lasted for a longer period than in the case of comparable concerns
In these circumstances if the Tribunal decided to give increments by way of adjustments it cannot be said that the Tribunal went wrong
The facts in these cases are different from the facts in the case of the French Motor Car Co s case2 and therefore 1 we see no reason for interfering with the order of adjustment
After the change in wage scales dear ness allowance and adjustment the employees of the appellants  concerns will stand comparison with some of the best concerns in that region
But considering that there is no question of want of financial capacity and that Greaves Cotton  Co which is the main company concerned in these appeals has a high standing in that region we do not think that the total wage packet fixed is abnormal or so disproportionate as compared to the total wage packet in other comparable concerns as to call for any interference with adjustments
The next question is about the so called retrospective effect of the award
The first reference was made to the Tribunal on April 8 1959 while the last was in December 1959
What the Tribunal has done is to grant wage scales etc from April 1 1959
This cannot in our opinion be said to be really 11963 Supp
378 retrospective because it is practically from the date of the first reference in the case of the main company
On the whole therefore we see no reason to interfere with the order of the Tribunal fixing the date from which the award would come into force
Lastly we come to the question of gratuity
The attack in this connection is on two aspects of the gratuity scheme
The first is about the fixation of 20 months as the maximum instead of  15 months which was usual so far The second is with respect to deduction from gratuity only to the extent of the financial loss occasioned by misconduct in case of dismissal for misconduct
So far as the second provision is concerned it cannot be disputed that this is the usual provision that is being made in that region
So ear as the increase in the maximum from 15 months to 20 months is concerned it appears that the Tribunal has relied on a number of cases in which the maximum is higher than fifteen months wages
In these circumstances considering that tri bunals have now begun to give a higher ceiling and in one concern namely Mackinnon Mackenzie the ceiling has been fixed even so high as thirty moths by agreement we do not think that any interference is called for in the present case
We therefore dismiss the appeals so far as retrospective effect and adjustments as also fixation of wages and dearness allowance with respect to clerical and subordinate staff are concerned
We allow the appeal with respect to factory workmen and send the cases back to the Tribunal for fixing the wage structure including basic wage and dearness allowance and for granting adjustments in the light of the observations made by us
The new award pursuant to this remand will also come into force from the same date namely April 1 1959
The appeals with respect to gratuity are dismissed
In the circumstances we order parties to bear their own costs
Two months from today is allowed to pay up the arrears
Appeal partly allowed and remanded


Summary:
The disputes between the appellant companies and the workmen which were referred to the Industrial Tribunal for adjudication related to wages dearness allowance and gratuity
The companies raised objections to the award of the Tribunal on various grounds
Heldi The reference in the award to the recommendations of the Tripartite Conference wherein the need based minimum wage was evolved did not vitiate the award as the final decision was based not on them but on a consideration of the wages prevalent incomparable concerns so far as clerical and subordinate staff were considered
ii In applying the industry cum region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there were large number of concerns in the same region carrying on the same industry but where the number of industries of the same kind in a particular region was small it was the region part of the formula which assumed importance particularly in the case of clerical and subordinate staff
In the present case the Tribunal was right in leaning more on the region part of the industry cum region formula and less on the Industry part
Workman of Hindustan Motors vs Hindustan Motors 1962 2
J352 and French Motor Car Company vs Their Workman 1963 Supp
considered
iiiThe Tribunal was not justified in creating two classes of higher unskilled and lower unskilled in the category of unskilled factory workmen in the matter of fixation of wage scales
ivEmployees getting same wages should get the same scales of dearness allowance irrespective of whether they were working as clerks or members of subordinate staff or factory workmen
vIn fixing the same rates of dearness allowance for factory workmen as for clerical staff it was necessary for the Tribunal when making comparisons to take into account the total wage packet and then compare it with the total wage packet of comparable 363 concerns and thus arrive at a just figure for basic wage for each category of factory workmen
viThere is nothing in law to prevent an industrial tribunal from granting adjustments to the employees in the revised wage scales even in a case where previously pay scales were in existence but this has to be done sparingly taking into consideration the facts and circumstances of each case