Appeals Nos 660 and 811 of 1966
Appeals by special leave from the award dated January 14 1965 of the Industrial Tribunal West Bengal in Case No VIII260 of 1963
HR Gokhale BP Maheshwari and NM Shetye for the appellant in CA No 660 of 1966 and respondent No 1 in CA No 811 of 1966
DL Sen Gupta Janardan Sharma and SK Nandy for the appellants in CA No 811 of 1966 and respondent No 1 in CA No 660 of 1966
A SR Chari and DN Mukherjee for respondent No 2 in both the appeals
The Judgment of the Court was delivered by Vaidialingam J
In these two appeals by special leave the company and the workmen s Union attack the award of the Industrial Tribunal West Bengal dated January 14 1965 in so far as it is against each of them
The Government of West Bengal by its order dated November 5 1963 referred for adjudication six issues viz 1 Revision of dearness allowance
Revision of the scheme of gratuity
Age of superannuation
Leave and holidays
Canteen facilities and 6
Shift allowance for supervisors
In both these appeals we are concerned only with issues nos
1 to 3
With regard to dearness allowance the Tribunal had directed that it should stand revised from November 1963
It provided a sliding scale for an increase or decrease of Re 1 for rise or fall of five points in the cost of living index with retrospective operation from November 1963
It further directed that the dearness allowance payable for each month from November 1963 shall be recalculated on that basis and additional amounts due to workmen should be paid in two monthly instalments after the date of publication of the award
There was a further direction to the effect that the dearness allowance for any particular month shall be calculated on the basis of average cost of living index for three immediately preceding months
Regarding gratuity the Tribunal effected certain modifications to the then existing scheme of gratuity under rules 1 2 and 3
The Tribunal increased the maximum gratuity payable to 15 months 116 salary but deleted the provision contained in the scheme that the maximum should not exceed Rs 4000 
In rule 2 it further directed the deletion of the qualifying period of 10 years continuous and approved service
It also modified the provisions of r 3 by providing for payment of gratuity less any financial loss that has been caused to the employer as a result of misconduct which necessitated the termination of service
It further provided that in case of a workman leaving service without notice or terminating his employment without the permission of the company in order to enable him to get gratuity he should have put in service of ten completed years or more
The Tribunal increased the existing age of superannuation from 55 years to 58 years
The Union in its appeal CA No 811 of 1966 attacks the award in respect of all the above matters but so far as the company s appeal CA No 660 of 1966 is concerned though it has challenged the award again in respect of all the above matters to the extent to which they are against it this Court has granted special leave by its order dated April 28 1965 only on the question of dearness allowance
Before we proceed to deal with the contentions of the parties regarding the award in question we can straight away dispose of two applications filed by the company
CMP No 329 of 1967 has been filed by the company for leave to
urge additional grounds in the appeal
By this application the appellant seeks permission to raise contentions regarding certain modifications effected by the Tribunal in the gratuity scheme
That is substantially the company attempts to reopen the limited leave given by this Court on April 28 1965
The company has also filed CMP 2860 of 1968 referring therein to certain subsequent proceedings and requesting this Court to take them into consideration in considering the question of dearness allowance
Both these applications are opposed by the Union and we see no reason to grant the requests contained in each of them
These two applications are accordingly dismissed
We shall first take up the question of dearness allowance
While on the one hand the appellant wants a substantial reduction in the dearness allowance granted by the Tribunal the Union in its appeal seeks a substantial increase in the dearness allowance granted by the award
We have already indicated the decision of the Tribunal in this regard
Before we actually deal with the contentions of Mr Gokhale learned counsel for the company and Mr Chari and Mr Sen Gupta who followed him for the Union it is necessary to refer to certain previous awards as well as agreements with reference 117 to dearness allowance
Though there have been certain awards prior to 1954 it is enough if we state the history beginning from the agreement between the company and the Union entered into on September 15 1954
Under clause 11 of this agreement it was provided that the then existing rate of dearness allowance would prevail unless there was a substantial change in the working class cost of living index in which case the rate would be suitably adjusted
There is no controversy that the rate of dearness allowance which was continued under this agreement was Rs 30 per month
The issue relating to dearness allowance was referred by the State of West Bengal to Shri G Palit the Fifth Industrial Tribunal West Bengal
It is necessary to refer in some detail to the award of Shri Palit dated August 26 1957 because the Industrial Tribunal in the present case has not chosen to go behind the said award
Shri Palit found that after the agreement of September 15 1954 there had been a substantial increase in the cost of living index justifying the grant of an increased dearness allowance as contemplated under cl 11 of the agreement
According to him in August 1954 the working class cost of living index stood at 3441 and in August 1955 it came down to 3384 it again went up to 3914 in August 1956
Shri Palit has also stated that in May 1957 the cost of living index reached 4006 points
Accordingly he has noted that there has been a rise of 56 points from 3441 in August 1954 to 4006 in May 1957 and that the said increase justifies a revision of the original rate of dearness allowance
In considering the quantum of increase in dearness allowance that should be awarded Shri Palit has again taken note of the fact that at 344 points in September 1954 at the time when the agreement was entered into the dearness allowance was Rs 30 per month and that there is no dearness allowance up to 180 points of the cost of living index
According to him the dearness allowance of Rs 30 per month in September 1954 represented the dearness allowance for the points in excess of 180 points viz for 164 points and that this roughly worked out at Re 1 dearness allowance for every 512 points
On this basis Shri Palit held that to cover 56 points  rise 400 minus 344 the dearness allowance which could be legitimately claimed by the Union would be Rs 10 odd as it in fact appears to have been claimed
But as normally only 75 neutralisation is granted and in view of the fact that the company which was a chemical industry was also in a tight corner he held that full neutralisation should not be granted
On this reasoning Shri Palit allowed Rs 7 as increase in dearness allowance on the pay scale up to Rs 50 and increased dearness allowance of Rs 5  thereafter for the next Rs 50in the pay scale
In view of the fact that the company had 118 already allowed an increase of dearness allowance of Rs 2  Shri Palit directed that the increase of dearness allowance as ordered by him should be adjusted against the amount already paid by the company
Both the company and the Union appealed to this Court against this award of Shri Palit
The decision of this Court is reported as Bengal Chemical  Pharmaceutical Works Ltd Calcutta vs Their Workmen1
Referring to the agreement dated September 15 1954 this Court
observed that the rate of dearness allowance continued under that agreement was accepted by the parties as reasonable on the date of the agreement till there was a substantial change in the working class cost of living index
This Court further stated that the findings given by Shri Palit were on facts and no permissible ground had been shown for interference with it in an appeal by special leave
The award of Shri Palit was confirmed by this Court and the company s appeal was dismissed with costs
The Union did not press its appeal and that too
was dismissed with costs
On January 6 1962 there was again a memorandum of settlement between the company and the Union and under cl 6 it was provided that the then existing slab of dearness allowance in relation to
the basic pay of the employees would be increased by Rs 3 and that the increase was to have effect from November 1 1961
The Union made a demand on May 21 1962 for revision of the dearness allowance scheme of gratuity and the age of superannuation
It also
presented its demands on September 3 1962 to the Assistant Labour Commissioner West Bengal
With reference to the revision of dearness allowance the
demand of the Union was that there should be hundred percent neutralisation
As conciliation failed a reference was made by the State Government on November 5 1963
We have already indicated the nature of the directions given in the award in respect of dearness allowance
The Tribunal in the award in question has after elaborately referring to the agreement of September 15 1954 as well as the award of Shri Palit and the settlement dated January 6 1962 rejected the contention of the company that no case had been made out for a revision of the dearness allowance
In this connection the Tribunal referred to
the chart filed by the Union regarding the cost of living index during the years 1961 to 1964 and has noted that the correctness of the chart had not been disputed by the company
It is of opinion that in January 1962 when the settlement was arrived at on January 6 1962 the index number was 402 and after referring to the index numbers in the various months between 1962 and 1964 it concluded that there 1 1959 Supp 2 SCR 136 119 had been a substantial increase in the cost of living index and hence a revision of the dearness allowance was necessary
The Tribunal no doubt took the view that the financial ability of the company to bear the additional burden did not come in for consideration because by cl 10 of the settlement dated January 6 1962 the company had agreed to
a modification of the dearness allowance if there was a substantial change in the working class cost of living index
Regarding the rate of variation that had to
be fixed the company appears to have pressed for the acceptance of the principle laid down by this
Court in The Hindustan Times Ltd New Delhi vs Their Workmen1 providing for the linking of the dearness allowance with the cost of living index
It also appears to have urged that the provision made in the said decision regarding dearness allowance that it should be increased or decreased by Re 1 for a rise or fall in the cost of living index by 10 points should be adopted that is the appellant pressed that the variation should be linked to a variation of 10 points
On the other hand the Union appears to
have pressed for the acceptance of the method adopted by this Court in a case from West Bengal in Workmen of Hindusthan Motors vs Hindusthan Motors viz of providing a sliding scale of an increase or decrease of Re 1 for a rise or fall of every five points in the cost of living index
The Tribunal has after holding that it cannot go behind the award of Shri PaIit as the said award had been confirmed by this Court accepted the Union s contention that there should be an increase or decrease of dearness allowance by Re 1 for an increase or decrease of every 5 points in the cost of living index
It has also held that the cost of living index at the time when the agreement of January 6 1962 was entered into was 402 and the dearness allowance of Rs 3 fixed under the said settlement could be referred only to the said figure of 402
The Tribunal then considered the question as to from what date the revision of dearness allowance should be given effect to
Though the company contended that the award should become operative only from the date when it was given and the Union on the
other hand contended that it should be given effect to from the date when the demand for revision was made by it the Tribunal ultimately held that the increased dearness allowance granted by it should take effect from the month when the reference was made by Government viz November 1963
Mr Gokhale learned counsel for the company has urged that the linking of dearness allowance at the rate provided in the 1964 1 SCR 234
2 1962 II LLJ 352
120 award is not justified as it departs from the past practice evidenced by the various awards as well as the agreements and settlements entered into by the parties
The Tribunal counsel urges has given no special reason to depart from the method adopted on previous occasions According to the learned counsel the dearness allowance if any should have been given on an adhoc or lump sum basis as had been done on prior occasions
Mr Gokhale also urges that the financial position or capacity to bear the additional burden that will be cast on the company by the grant of increased dearness allowance which has been held by decisions of this Court to be a relevant factor to
be taken into account has not been considered at all by the Tribunal
In the alternative counsel urges that even assuming that the method of linking adopted by the Tribunal was correct a very serious mistake has been committed by the Tribunal when it has proceeded on the basis that the increase should be granted on the basis that there has been a rise over the cost of living index of 402
According to Mr Gokhale the evidence clearly shows that on the date of the settlement viz January 6 1962 the cost of living index for January 1962 could not have been available and the parties had before them only the cost of living index for the month of November 1961 which was 421 points and it is on that basis that an increase of Rs 3 was fixed in the settlement of January 6 1962
Therefore any dearness allowance that is granted must have reference to a rise of the cost of living index above 421 points
Counsel also attacks the direction regarding effect being given to the award from November 1963
While contesting the appeal of the company Mr Chaff and Mr Sen Gupta learned counsel for the Unions concerned have urged that at no stage has the dearness allowance been fixed in this company on any scientific basis
According to the learned counsel the agreement entered into between the parties should not be taken as indicative of the fact that complete neutralisation has been effected in the matter of fixing dearness allowance
According to them Shri Palit has committed a fundamental error in assuming that in the 1954 agreement full neutralisation has been given
Counsel also point out that the extent or degree of neutralisation to be granted is not rigid and that though hundred per cent neutralisation is not normally given nevertheless in the case of the lowest paid employees such neutralisation is permissible
Counsel also urged that the Tribunal has committed a mistake in not accepting the claim of the Union that the question of dearness allowance will have to be considered entirely on the materials placed before it
without in any manner being influenced by the award of Shri Palit
It is also pointed out that even the appellant wanted a sliding scale to be attached to the dearness allowance and provision made for the rate of dear 121 ness allowance being liable to be increased or decreased by Re 1 for a rise or fall in the cost of living index by every 10 points as will be seen from the fact that it pressed for the acceptance of the principle laid down by this Court in the Hindustan Times Case1
It is further urged that the Tribunal was justified in granting dearness allowance for an increase over the cost of living index of 402 as that was the price index in the month of January 1962 when the settlement between the parties was effected
In the appeal by the Union regarding dearness allowance Mr Sen Gupta learned counsel urges that there should have been cent per cent neutralisation in the award of dearness allowance and that there should have been a complete de novo examination of the claim made by the Union for revision of dearness allowance without being influenced by the award of Shri Palit
In this connection counsel refers to the decision of this Court in Remington Rand of India vs Its Workmen2 where it has been held that when a rise
in the cost of living index has been established the claim for a revision of dearness allowance cannot be rejected without examining its merits solely on the ground that because a provision has been made for adjustment from time to time by agreement of parties in a scheme that scheme ought to remain in force for all time and cannot be reopened or re examined
Counsel further urges that in any event the Tribunal should have given effect to its award from May 1962 when the Union had made the
demand for revision of dearness allowance
Before we deal with the contentions of the learned counsel it will be desirable to refer to a few decisions of this Court laying down the principles that have to be borne in mind when a claim for dearness allowance or revision of dearness allowance is considered
In Clerks of Calcutta Tramways vs Calcutta Tramways Co Ltd3 it is observed  We can now take it as settled that in matters of the grant of dearness allowance except to the very lowest class of manual labourers whose income is just sufficient to keep body and soul together it is impolitic and unwise to neutralise the entire rise in the cost of living by dearness allowance
More so in the case of the middle classes
 1 1964 1 SCR 234
2 1962 1 LLJ 287
3   779
CI69 9 122 In the Hindustan Times Case1 it is stated at p 247 As was pointed out in Workmen of Hindusthan Motors vs Hindusthan Motors 2 the whole 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 rise in the cost of living and a decrease on a fall in the cost of living In Greaves Cotton  Co vs Their Workmena after referring to the Hindusthan Motors Case2 and French Motor Car Co s Case4 this Court laid down that the basis of fixation of wages and dearness allowance is industry cum region and observed at p 368 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 assumes importance particularly in the case of clerical and subordinate staff for as pointed out in the French Motor Car Co s Case4 there is not much difference in the work of this class of employees in different industries   Again at p 374 it is stated 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
 In Ahmedabad Mill owners Association vs The Textile Labour Association5 it has been emphasised that in trying to recognize and give effect to the demand for a fair wage including the payment of dearness allowance to provide for adequate neutralisation industrial adjudication must always take into account the problem of the additional burden which such wage structure would impose upon the employer and ask itself whether the employer can reasonably be called upon to bear such burden
1 1964 1 SCR 234
2 1962 II LLJ 352
3  4 1963 Supp
5 1966 I SCR 382
123 In Kamani Metals  Alloys Ltd vs Their Workmen1 it has been noted that one hundred per cent neutralisation is not advisable as it will lead to inflation and therefore dearness allowance is often a little less than one hundred per cent neutralisation
The following principles broadly emerge from the above decisions 1
Full neutralisation is not normally given except to the very lowest class of employees
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
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 workman
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
Having due regard to the above principles we are satisfied in the instant case that the Tribunal has made substantially a correct approach in considering the claim for revision of dearness allowance
We are not impressed with the contention of either the company or the Union that the Tribunal has committed an error in the matter of revising the dearness allowance
The company appears to have been more intent upon pressing that there has been no substantial increase in the cost of living since the settlement dated January 6 1962 and that m any event the Union n view of cl 10 of the settlement was not entitled to ask for a division of dearness allowance before the expiry of three years
The Tribunal has referred to the rise in the cost of living index after the date of the settlement of January 6 1962 and it has also in our opinion quite rightly held that cl
10 of the settlement is no bar for entertaining the claim therefore its decision hat a revision of the dearness allowance should be made iS perfectly correct
1  124 The Tribunal is also
justified in rejecting the contention of the Union that the revision of the dearness allowance must be made de novo ignoring the previous award of Shri Palit
Though normally when a claim for revision of dearness allowance is made and a rise in the cost of living index has been established such a claim has to be considered on its merits as held by this Court in the Remington Rand Case1 it cannot be lost sight of in this case that the decision of Shri Palit was affirmed by this Court and the appeals filed by the company and the Union were dismissed on the ground that the agreement of 1954 was reasonable and the findings of Shri Palit were all on facts
In view of this the Tribunal in our view was perfectly justified in proceeding on the basis that the award of Shri Palit should form the basis for considering the nature of the revision of dearness allowance that would be permissible
We have already referred to the various matters adverted to by Shri Palit in his award
If really the case of the Union was as is now sought to be put before us that the dearness allowance on prior occasions had not been fixed on any scientific basis and that Shri Palit erred in proceeding on such an assumption with reference to previous agreements the proper stage when these questions should have been canvassed was in the Union s appeal before this Court against the award of Shri Palit
Having allowed that appeal to be dismissed as not pressed it is no longer open to the Union to raise those contentions now
We are therefore satisfied that the Tribunal s view that Shri Palit s award should form the basis for further reconsideration of the claim for revision of dearness allowance is correct
The Tribunal has no doubt stated that the financial ability of the company does not come in for consideration as the company agreed by the settlement of January 6 1962 to pay increased dearness allowance if there was a substantial change in the cost of living index
It is true that the additional financial burden that will be thrown on the company by reason of the revision of dearness allowance is a very material and relevant factor to be taken into account in such circumstances but in this case we do
not find in the written statement filed by the company am plea taken that if the claim of the Union as made in its charte of demands in respect of dearness allowance is accepted it will cast a very
heavy financial burden on the resources
of the corn pany
In the absence of any such plea having been taken w consider it unnecessary to pursue this contention of the appellan any further
There is the additional circumstance of the provision for modification as contained in the settlement of January 1962 1 1962 IILJ 287
125 The appellant so far as we can see has not placed any material before the Tribunal regarding the comparable industries in the region
As pointed out by the Union the company seems to have pressed for the grant of dearness allowance being liable to be increased or decreased by Re 1  as was done by this
Court in the Hindusthan Times Case  1 
The Union appears to have pressed for an increase or decrease of Re 1 in dearness allowance with a rise or fall of every 5 points in the cost of living index
It is therefore obvious that the appellant also wanted linking of Re 1 for every 10 points
It must also be borne in mind that the alternative way propounded by the Union for grant of dearness allowance has been rejected by the Tribunal
Under these circumstances it cannot be stated that the Tribunal has committed any error in accepting the claim of the Union supported as it was by the decision of this Court in the Hindusthan Motors Case2
Mr Gokhale next urged that the view of the Tribunal that the increase of Rs 3 as
dearness allowance given in the settlement dated January 6 1962 must have been on the basis that the index number was 402 was erroneous
The settlement was made on January 6 1962 on which date the index number for January 1962 could not have been available to the parties
The last month for which the index number was available was for the month of November 1961 and it was 421
The index number at the time when the award was given by Shri Palit was about 400 and it was really for an increase of 21 points that Rs 3 as increment was provided in the settlement
Though when the Tribunal gave the present award the index number for January 1962 was already available that figure could not have formed the basis of the settlement and it is inconceivable that for a rise of only 2 points ie from 400 in 1957 to 402 in 1962 a rise of Rs 3 in the dearness allowance would have been provided for
Therefore the increase or decrease provided for by the Tribunal must really relate to the cost of living index of 421 points and not to 402 points
Mr Sen Gupta learned counsel for the Union found considerable difficulty in supporting that reasoning in the award on this matter
We are in agreement with the contentions of Mr Gokhale in this regard
Chart Exhibit 4 furnished by the Union clearly shows that the index number in November 1961 was 421 points
It also shows that the index for January 1962 was 402 points but the index for that month was not available till the end of January 1962 and it could not have been before the parties when the settlement was made on January 6 1962
Therefore the index number of 421 must have been taken into 1 1964 I SCR 234
2 1962 II ILJ 352
126 account on the date of the settlement and it must have been really for the increase of 21 points after the date of Shri Palit section award that the additional sum of Rs 3 was fixed as dearness allowance
If on the other hand the Tribunal s view is correct there would have been only an increase of 2 points from 400 to 402 and for that increase of 2 points the sum of Rs 3 was fixed as dearness allowance
In our opinion that reasoning of the Tribunal cannot be accepted
Therefore the award of the Tribunal will have to be modified in this regard by directing that the sliding scale providing for an increase or decrease of Re lfor a rise or fall of every 5 points must be related to the cost of living index of the base of 421 that being the cost of living index for November 1961  and not of the base of 402 as
directed by the Tribunal
The last contention of Mr Gokhale bearing upon dearness allowance is that the direction that the award will have retrospective effect from November 1963 is erroneous
In this connection Mr Gokhale referred us to el
10 of the settlement of January 6 1962 stating that the settlement was to remain operative for three years
According to learned counsel any rise in dearness allowance should have effect only after the expiry of three years from January 6 1962 or at any rate from the expiry of three years from November 1 1961 the date on which the increase in the settlement had been given effect to
Mr Sen Gupta in the Unions appeal pressed for the award being given effect to from May 1962 when the Union had made a demand on the company for revision of dearness allowance especially when the Tribunal had itself found that there had been a substantial rise in the price index after the date of the settlemeat
It will be seen that both the parties have a grievance regarding the date from which the revision of dearness allowance should be given effect to We are not impressed with the contentions of both the parties in this regard
The Tribunal has taken note of the rise in the cost of living index as well as the demand having been made by the workmen as early as May 21
It has also adverted to the fact that the reference by the State Government was made on November 5 1963
It has further adverted to
the fact that though  the cost of living index had increased considerably the company did not choose to adjust the dearness allowance suitably
It was after having regard to all the circumstances that the Tribunal felt that the workmen should get dearness allowance commensurate with the cost of living index at least from the month of reference viz November 1963
As laid down by this Court in the Hindusthan Times Case1 no general formula can be laid down as to the date from which a 1 1964 1 SCR 234 127 Tribunal should make its award effective and that that question has to be decided by the Tribunal On a consideration of the circumstances of each case
In the said decision this Court declined to interfere with the Tribunal s direction that reliefs given by it would become effective from the date of reference
In Kamani Metals Ltd Case1 the workmen had made demands on July 1 1961
The Conciliation Board was moved on September 8 1962 and when conciliation failed a reference was made on December 14 1962
The Tribunal made an award retrospective from October 1 1962 a date between the reference to conciliation and the reference to the Tribunal
That decision of the Tribunal was accepted by this Court
Recently in Hydro Engineers Pvt Ltd vs The Workmen2 this Court declined to interfere with the direction given by a Tribunal that its award should take effect from the date of demand made by the workmen
It has also been pointed out in the said decision that it is a matter of discretion for the Tribunal to decide from the circumstances of each case from which date its award should come into operation and no general rule can be laid down as to the date from  which a Tribunal should bring its award into force
Therefore it will be seen that when a Tribunal gives a direction regarding the date from which it has to become effective no question of principle as such is involved
From the above decisions of this Court it will also be seen that this Court has declined to interfere with an award having effect from either the date of demand or the date
of reference or even a date earlier than the date of reference but after the date of demand
In fact the direction given by the Tribunal in the case before us giving effect to its award from the date of reference squarely comes within the decision of this Court in the Hindusthan Times Case3 and as such that direction is correct
To conclude on this aspect of dearness allowance excepting for the direction that the rate of increase or decrease awarded by the Tribunal should be related to the cost of living index of 421 and not 402 as directed by the Tribunal in all other respects the decision of the Tribunal on this point will stand
This closes  the discussion on the appeal of the company and the appeal of the Union in so far as they relate to dearness allowance
There are two further points taken by the Union in its appeal one relating to the modifications effected to the gratuity scheme and the other relating to the age of superannuation
The provisions in the gratuity scheme which came up for consideration before the Tribunal were as follows 1  2 1969 1 S CR 156
3 1964 1 SCR 234 128 1
On the death of an employee while in the service of the company one month s salary for each completed year of service subject to a maximum of 12 months salary not exceeding Rs 4000 on the average of the last three years salary to be paid to his heirs or dependants as the Board may in their discretion decide
On voluntary retirement due to illness or termination of service by the company after 10 years continuous and approved service one month s pay for each year of service subject to a maximum of 12 months pay not exceeding Rs 4000
No employee shall be entitled to claim any gratuity if he is dismissed for dishonesty or misconduct or if he will have left service without notice or terminated his employment without the permission of the Company
 The Tribunal has effected certain modifications
to r 3 which in our opinion are quite consistent with the decision of this Court in Management of Wenger  Co vs Workmen1
Therefore the Union cannot have any grievance regarding the Tribunal s directions in this regard
So far as rr 1 and 2 are concerned the Tribunal modified them by increasing the ceiling from 12 months  salary to 15 months  salary and deleted the pecuniary limit of Rs 4000
In r 2 the Tribunal further directed the deletion of 10 years  continuous and approved service to enable a workman to get gratuity in the circumstances mentioned therein
Mr Sen Gupta learned counsel for the Union urged that the Tribunal committed an error in prescribing the ceiling of 15 months  basic wages and that the Tribunal should have modified r 1 by providing that the average last one year s salary should be taken into account for the purpose of calculating gratuity instead of the three years  period provided in the rule
Mr Gokhale learned counsel for the company pointed out that his client has been prejudiced by the modifications effected by the Tribunal but the company had now been precluded from raising these objections because of the limited leave given by this Court
Nevertheless the counsel pointed out inasmuch as the Tribunal was increasing the ceiling from 12 months to
15 months and deleting the further pecuniary limit of Rs 4000  as well as the qualifying period to enable a worker to earn gratuity the Tribunal must have felt that no further modifications were necessary
In our opinion no case has been made out by the Union for interfering with the directions given by the Tribunal and we are also satisfied that there has been no improper exercise of discretion by the Tribunal in this regard
It has effected certain modifications in favour of the 1 1953 supp
2 SCR 862
129 workmen and obviously it did not think it necessary to make any further modifications as pressed by the Union
Therefore the objections to the modifications raised on behalf of the Union have to be rejected
The last point that has been agitated by the Union in its appeal is regarding the age of
superannuation
The provision regarding age of superannuation as obtaining then in the company was as follows  The age of retirement as mentioned in the Company s Standing Orders under r 9 will henceforth be strictly followed in case of all employees
The employees
henceforth shall retire at the age of 55
Extension if any will depend on Company s discretion
 The Tribunal increased the age of superannuation to 58 years from 55 years
It has relied upon two circumstances in coming to this conclusion a that this Court has raised the age of retirement from 55 to 58 years in Jessop s Case1 which was a case from West Bengal with regard to clerical and subordinate staff other than those who
were workers under the Factories Act
The appellant s industry which is of a different nature being a chemical and pharmaceutical industry all the workmen of such a company factory workers or non factory workers should have the same age of superannuation
b The fixation of the age of retirement for its employees by the Government of West Bengal at 58 years
Mr Sen Gupta urged that the age of superannuation should have been raised to 60 years
It is not necessary to refer to the earlier decisions of this Court on this point
Recently in The Management of Messrs Burmah Shell Oil Storage and Distributing Co Ltd vs Its Workmen2 this Court after a review of the prior decisions held that in fixing the age of superannuation the most important factor that has to be taken into consideration is the trend in a particular area
Applying this test we are satisfied that the Tribunal s fixing of the age of retirement at 58 years is justified
As already noted it has relied upon Jessop s Case1 which related to West Bengal and the age of retirement fixed by the State Government
Therefore the Tribunal has taken note of the trend in the particular area viz West Bengal when it increased the age of superannuation from 55 to 58 years
Therefore the Union s claim that it should be further increased to 60 years cannot be sustained
1 1964 I LLJ 451
2 Civil Appeal No 44 of 1968 decided on May 1 1968
130 In the result excepting for the modification indicated by us with regard to the cost of living index in respect of dearness allowance in all other respects we confirm the award
The appeal by the company is therefore partly allowed to the extent of the modification noted above
The appeal of the Union is dismissed
Parties will bear their own costs
GC CA No 66066 partly allowed
No 811  66 dismissed


Summary:
In 1954 the Bengal Chemical and Pharmaceutical Works Ltd entered into an agreement with its workmen about dearness allowance
In 1957 dearness allowance was again fixed by an award of the Fifth Industrial Tribunal Bengal on the basis of the cost of living index in May 1957 which stood at 4006
The company as well as the workmen appealed against the said award to this Court
The company s appeal was dismissed and the workmen did not press their appeal
On January 6 1962 there was a fresh settlement between the company and the workmen whereby dearness allowance was raised by Rs 3
On a fresh industrial dispute arising in May 1962 the State Government made a reference to the Industrial Tribunal which gave its award on January 14 1965
In respect of dearness allowance the award provided a sliding sale for an increase or decrease of Re 1 for rise or fall of five points in the cost of living index with retrospective operation from November 5 1963 ie the date when the reference was made
It further made certain modifications in the company s gratuity scheme and raised the age of superannuation from 55 years to 58
The company as well as the workmen appealed to
this Court against the Tribunal s award
HELD 1 i The following broad principles relating to fixation of dearness allowance emerge from the earlier decisions of this Court 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 in the rise in the cost of living and decrease on a fall in the cost of living
The basis of fixation of wages and dearness allowance is industry cum region
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
The additional financial burden which a revision of 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
123 B E Clerks of Calcutta Tramways vs Calcutta Tramways Co Ltd   779 The Hindustan Times Ltd New Delhi vs Their Workmen 1964 1 SCR 234 Greaves Cotton  Co vs Their Workmen   French Motor Car Co Ltd vs Workmen
1963 Supp  Ahmedabad Mill Owners  Association v The Textile Labour Association  and Kamani Metals  Alloys Ltd vs Their Workmen   referred to
Having regard to the above principles in the present case the Tribunal had made a substantially correct approach in considering the claim for revision of dearness allowance
123 E F 114 ii The Tribunal rightly held that cl 10 of the settlement of January 6 1962 providing that the union was not entitled to ask for a revision of dearness allowance before the expiry of three years was not a bar for entertainment of the claim
Its decision that in view of the rise in the cost of living a revision of the dearness allowance should be made was perfectly correct
123 G H iii The Tribunal was also justified in rejecting the contention of the  union that the revision of the dearness allowance must be made de novo ignoring the previous award of the Fifth Industrial Tribunal
It could not be lost sight of that the said award had been challenged in this Court and the appeals filed by the company as well as the workmen were dismissed
124 A B Remington Rand of India vs Its Workmen 1962 I LLJ 287 distinguished
iv The additional financial burden that would be thrown on the company by reason of the revision of dearness allowance was a very material and relevant factor to be taken into account but the contention of the company in this respect could not be considered in the absence of a plea in its written statement to the effect that it would not be able to bear the burden
124 F G v In view of the Hindustan Motors Case it could not be said that the Tribunal had committed any error in accepting the claim of the union for increase or decrease of Re 1 for every rise or fail of five points in the cost of living index
125 B C Workmen of Hindusthan Motors vs Hindusthan Motors  followed
vi The Tribunal was in error in holding that the cost of living index for January 1962 which was 402 was the basis of the settlement of January 6 1962
On the facts of the case the settlement must be taken to have been based on the index for November 1961 which was 421
126 A C vii From the decisions of the Court it is seen that this Court has declined to interfere with an award having effect from either the date of demand or the date of reference or even a date earlier than the date of reference but after the date of demand
The direction given by the Tribunal in the present ease giving effect to its award from the date of reference squarely came within the decision of this Court in the Hindustan Times Case
1127 E F The Hindustan Times Ltd New Delhi vs Their Workmen 1964 1 SCR 234 Karoant Metals  Alloys Ltd vs Their Workmen  and Hydro Engineers Pvt Ltd vs The Workmen  referred to
2 There was no improper exercise of discretion by the
Tribunal in making modifications in the company s gratuity scheme and there was no ground for interfering with its directions in this regard
128 G Management of Wenger  Co vs Workmen 1963 Supp
2 SCR 862 applied
3 In fixing the age of superannuation the most important factor that has to be taken into consideration is the trend in a particular case
Applying this test the fixation of the age of superannuation of 58 years was justified
129 G Jessop s case and Management of MS Burmah Shell Oil Storage and Distributing Co Ltd vs Its Workmen CA No 4468 dated 1 5 68 applied 115