Appeal No 634 of 1965
Appeal by special leave from the Award Part 11 dated April 23 1964 of the Industrial Tribunal Maharashtra Bombay in Reference IT No 271 of 1962
H R Gokhale and I N Shroff for the appellant
K K Singhvi R section Kulkarni section C Agarwala and D P Singh for the respondents
The Judgment of the Court was delivered by Hidayatullah J
This is an appeal against the Award April 23 1964 of the Maharashtra Industrial Tribunal Bombay Mr Meher in reference IT 271 of 1962
The Award was given in a dispute between the Kamani Employees Union Bombay and the Kamani Metals  Alloys Ltd The Company is the appellant before us
The reference was occasioned by a demand raised by the Union on February 25 1960 in relation to wage scales and classifications dearness allowance production bonus permanency for daily rated workmen and grades and scales of pay dearness allowance and abolition of marriage clause for monthly paid employees
At first a reference was made to a Conciliation Board by the Government on September 8 1962
The conciliation was frustrated for some reasons and on December 14 1962 the Bombay Government acting under section 101d of the referred the dispute to the Tribunal for adjudication
By the Award now under appeal some points were decided in favour of the Company and some others in favour of the work men
The workmen have not appealed and the Company has also confined this appeal to some of the points decided against it
We are concerned with a Company which is carrying on the business of melting and manufacturing all kinds of rolled products of non ferrous metals and alloys copper and copper based alloys such as sheets strips coils etc
According to the Company the process of manufacture unlike the general engineering industry involves only the melting of the non ferrous metals and casting them into suitable slabs for the subsequent processes of hot and cold rolling to alter their shape size and metallurgical properties
The product so wrought serves as a base raw
material for making products such as automobiles telephones radios and other electrical gadgets etc
The Company claims that it cannot be described as a general engineering industry
The main contentions in this appeal concern the revision of wages and monthly pays and the fixing of wage scales and time scales in respect thereof respectively and the increase in dearness allowance by adopting a new system of calculation
The Company 466 also complains that the Award has been given retrospective operation entailing heavy burden upon it
In support of the above contentions the Company states that its financial capacity does not bear the revision either of the wages and pays on the one hand or the dearness allowance on the other
It submits that the Tribunal in revising the wages pays and  the dearness allowance has followed wrong principles and ignored those laid down by this Court
of the argument in respects of wages to daily rated workmen and pays to monthly rated workmen is common and it will not be necessary to refer to the argument twice over in the course of this judgment
This is the first revision of wages and the dearness allowance in this Company during the last 20 years
The wage scales and the dearness allowance were fixed unilaterally to start with
The minimum basic wage was fixed at Rs 30 per month or Rs 116 per day which was the minimum settled by the Bombay Textile Standardization Award and the First Central Pay Commission for Government servants in or about 1950
The Tribunal has raised the minimum wage to Rs 135 per day which is equivalent to a wage of Rs 35 per month
The maxima have also been raised proportionately
Similarly in the case of monthly rated workmen the minimum monthly  salary which was Rs 60 for the lowest grade clerk has been raised to Rs 85 and the maximum has been increased in almost the same proportion
The Company contends that this increase is based upon wrong principles inasmuch as the wages and pays in this company have been compared not only with the companies operating non ferrous metals in the same way but with general engineering concerns and has taken an irrelevant factor namely the yield from incentive bonus into consideration has made wrong grades and unnecessary adjustment in making fitments without taking into account the financial burden thus involved and the capacity of the Company to bear it
We shall consider these submissions
In dealing with these contentions we shall begin by considering one contention which if accepted will cut at the very toot of the case for revision of wages
It has however no merit
The submission is that there is no change of circumstances justifying a revision of wages and pay scales or dearness allowance
It can hardly be maintained that wages fixed so far back do not need revision when as every one knows commodity prices have soared high the general level of wages has gone up and in some industries there have been two or three revisions already and in some others Wage Boards have been appointed to revise or fix wages
We can take judicial notice of these facts
In this Company no revision has taken place and the demand is therefore
not unjustified
Before we deal with the other contentions it is necessary to make a few preliminary observations about the principles which 467 are to be followed
In questions of this type it is first desirable to consider what amount is necessary to maintain and even improve the workers  standard of living how wages of the workers concerned compare with those paid to workers of similar grade and skill by other employers in similar or other industries in the region and what wages the establishment or industry can afford to pay
These are the fundamental principles which have to be borne in mind
The first however is a general inquiry into the structure of wages which it may not be necessary to examine elaborately each time because that inquiry is generally made independently of  individual cases
The data is usually compiled by labour conferences and experts
The other two matters of course require attention
Fixation of a wage structure is always a delicate task because a balance has to be struck between the demands of social justice which requires that the workmen should receive their proper share of the national income which they help to produce with a view to improving their standard of living and the depletion which every increase in wages makes in the profits as this tends to divert capital from industry into other channels thought to be more profitable
The task is not rendered any the easier because conditions vary from region to region industry to industry and establishment to establishment
To cope with these differences certain principles on which wages are fixed have been stated from time to time by this Court
Broadly speaking the first principle is that there is a minimum wage which in any event must be paid irrespective of the tent of profits the financial condition of the establishment or the availability of workmen on lower wages
 This minimum wage is independent of the kind of industry and applies to all alike big or small
It sets the lowest limit below which wages cannot be allowed to sink in all humanity
The second principle is that wages must be fair that is to say sufficiently high to provide a standard family with food shelter clothing medical care and education of children appropriate to the workman but not at a rate exceeding his wage earning capacity in the class of establishment to which he belongs
A fair wage is thus related to the earning capacity and the workload
It  must however be realised that fair wage  is not living wage  by which is meant a wage which is sufficient to provide not only the essentials above mentioned but a fair measure of frugal comfort with an ability to provide for old age and evil days
Fair wage lies between the minimum wagewhich must be paid in any event and the living wage which is the goal
As time passes and prices rise even the fair wage fixed for the time being tends to sag downwards and then a revision is necessary
To a certain extent the disparity is made up by the additional payment of dearness allowance
This allowance is given to compensate for the rise in the cost of living
But as it is 468 not advisable to have a 100
neutralisation test it lead to inflation the dearness allowance is often a little less than 100 neutralisation
In course of time even the addition of the dearness allowance does not sufficiently make up the gap between wages and cost of living and a revision of wages andor dearness allowance then becomes necessary
This revision is done on certain principles
These principles have been stated in more than one case of this Court
The Company however relies upon Novex Dry Cleaners vs Its Workmen1
The principles laid down in that case have been accurately summarized in the head note thus  industry to bear the burden of the said wage scale is a very relevant and very important factor
Before comparing the establishment in question with other establishments engaged in the same trade in the region it would be obviously necessary for the industrial tribunal to compare the establishments in respect of their standing the extent of the labour force employed by them the extent of their respective customers and what is more important a comparative study should be made of the profits and losses incurred by them for some years before the date of the award
It is well known that in fixing the wage structure on a fair basis  an attempt is generally made in assessing the additional liability imposed on the employer by the new wage structure and trying to anticipate whether the employer would be able to meet it for a reasonably long period in future
Where the award simply fixed the wage scales on the assumption that the establishment in question was comparable to the other two establishments in the same region without considering the aspects mentioned above it must be set aside
In the consequence the industrial tribunal was directed to reconsider the question of fixation of wage scales in the light of the principles mentioned supra
The Company contends that many of the matters here stated have not been considered and the Award being defective for that reason deserves to be set aside
This is not a proper approach
The observations no doubt lay down the principal guide lines but they are not intended to operate with the rigidity of a statutory enactment
The Court has indicated what lines of inquiry are likely to lead to the discovery of correct data for the fixation of fair wages in the sense explained above
In this task all the relevant consi derations must enter but fruitless inquiries into matters of no parti 1 469 cular importance to a case are hardly to be insisted upon because rather than prove of assistance they might well frustrate the very object in view
Each case requires to be considered on its own facts
In the case before us all relevant circumstances have in our opinion entered the determination and it has not been shown to us that any other circumstance could or should have been considered
In fact the argument was that the tribunal considered some irrelevant things and this has vitiated the finding
We shall
now consider the specific objections
The Company has a capital of Rs 4000000
Its sales in 1957 58 to 1961 62 increased from Rs 18118873 to Rs 23150485 and its profits in 1962 63 were of the order of Rs 28 lakhs excluding Rs 51 lakhs for depreciation and Rs 2 lakhs for managing agency commission
The burden of the increased wage bill will not be more than 110th of its net profits to say nothing of some other savings by way of reduction of income tax
The tribunal held that the burden could be borne and we agree
One part of the inquiry namely the capacity to pay the increased wage bill was satisfied
The next part of the inquiry involved the application of the principle of industry cum region
This principle is that fixation or revision of scales of wages pays or dearness allowance must not be out of tune with the wages etc prevalent in the industry or the region
This is always desirable so that unfair competition may not result between an establishment and another and diversity in wages in the region may not lead to industrial unrest
In attempting to compare one unit with another care must be taken that units differently placed or circumstanced are not considered as guides without making adequate allowance for the differences
The same is true when the regional level of wages are considered and compared
In general words comparable units may be compared but not units which are dissimilar
While disparity in wages in industrial concerns similarly placed leads to discontent attempting to level up wages without making sufficient allowances for differences leads to hardships
It is complained that the Tribunal has done exactly the op posite namely that it has compared dissimilar concerns and not compared similar ones
What the Tribunal has done is to compare the Kamani Metals  Alloys appellant Company with the Indian Smelting and Refining Co Ltd and the Kamani Engineering Corporation Ltd The appellant Company does not object to the first but to the second as it deals with non ferrous metals and alloys and does not require engineering process in its manufacture
For the same reason a comparison with Alcock Ashdown an Co and Richardson and Cruddas  Co is objected to
On the other hand it is submitted that another company Devidayal Metals Industries Ltd Bombay was a comparable concern
470 Both sides agree that a comparison with the Indian Smelting and Refining Co Ltd was proper
As regards Devidayal it is clear from the records that it is a much smaller concern and does not furnish a just basis for comparison The scales of pay existing in it are considerably lower than the existing scales in many instances
As regards Kamani Engineering Corporation it is necessary to consider a few facts
In 1951 a common award was given in respect of Kamani Engineering Corporation and the Kamani
Metals and Alloys
In 1958 the demand for revision of dearness allowance was rejected by a common award
This time too the charter of demands in respect of the Kamani Engineering and Kamani Metals  Alloys was the same and given within a few days of each other
These references were first pending before Mr T Bilgrani but as he had 551 references pending before him five references in respect of the Kamani group of industries were withdrawn from him and made over to Mr Meher
The references were heard together
The award in the Kamani Engineering was rendered on 27th February 1964 and that in Kamani Metals  Alloys on 23rd April 1964
Many of the exhibits were common and the two awards refer to these common exhibits
In these circumstances the comparison was not inadmissible
The principle of fixation of wages and dearness allowance was stated by this Court in these words 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  1
In dealing therefore with only one comparable concern it was open to take into consideration the conditions existing in engineering concerns particularly those in Kamani Engineering Corporation which belongs to the same group and there is thus affinity between them
We were taken through the comparative charts showing the scales of wages in these concerns and pointed out the differences particularly those operating to the disadvantage of the appellant Company
That some differences are bound to be there because 1 Greaves Cotton  Co vs Their Workmen 1964 5 SCR 362  346
471 of many imponderables that go into the fixation of wages goes without saying
We are of course not expected to go into the matter over again in the appeal
An appeal against an award brought by special leave is not an appeal as of right
It is not intended to be an appeal on every ground of fact and of law unless this Court considers it fit to examine the matter from any special angle Before a party can claim redress it must show that the award is defective by reason of an excess of jurisdiction or of a substantial error in applying the law or some settled principle or of some gross and palpable error occasioning substantial injustice
An industrial adjudication by reason that it is an award cannot be assailed because some other person would have given a different award or that elaborate reasons have not been given
We considered the comparative charts carefully and on the whole we are satisfied that the scales of wages as fixed by this Award when compared with those existing in Indian Smelting when they are high are not so high as to merit special comment or interference
Sometimes they are lower
It remains however to consider the case from the angle of the scales of wages existing in Kamani Engineering Corporation
In dealing with the scales of pay in comparison with those existing in Kamani Engineering Corporation the Tribunal observed that higher wages were being fixed in the Kamani Metals  Alloys because the yield from incentive bonus in the Kamani Engineering Corporation was between 20 to 30 of the wages and the dearness allowance whereas in this Company it was abnormally low
Mr Gokhale contended that the yield from incentive bonus is an irrelevant factor to take into account and observed that if persons could get higher wages by not earning incentive bonus the result might be a disincentive to work at all
Speaking generally his objection is Tight to a certain extent
But it is not right in the circumstances of this case
The Company has since 1949 introduced a scheme of wage incentive
There is no straight piece rate system under which the worker is paid a fixed amount for each unit of out put
There is a fixation of average production for a whole group and not for the individual worker
The target in the melting section is fixed at 5000 cwt
and 15  on every additional 300 cwt
is fixed as bonus
Other sections have different targets and different percentages
A similar scheme also exists in the Kamani Engineering Corporation
What has happened is that the Tribunal in fixing scales of wages in the reference from Kamani Engineering fixed lower rates because it was of the opinion that quite a substantial sum was earned in that establishment by way of incentive bonus
When the Tribunal came to decide the present reference it recalled that lower wages were fixed in the Kamani Engineering Corporation case because of the yield from incentive bonus
It therefore ascertained the yield in the Kamani 472 Metals  Alloys and finding it low fixed the wages at the proper level unaffected by consideration of incentive bonus
This really means that proper wages were fixed in the Kamani Metals  Alloys with out being influenced in any way by the yield from incentive bonus although in the case of Kamani Engineering Corporation lower wages were fixed because the yield from incentive bonus was very high
In these circumstances we are of the opinion that the wages in the present case have not really been influenced by considerations of yield from incentive bonus whatever may be said of Kamani Engineering Corporation
It was next contended that there is no case made out for ad justment of the workmen in the new time scale after granting them one additional increment after every three years  service and two additional increments after five years  service
The principle on which a point to point adjustment is sometimes departed from and increments are granted was stated in some cases of this Court
It is sufficient to refer to only one of them
In Hindustan Times Ltd vs Their Workmen1 the  question of adjustment of existing employees into new scales was considered
It was observed as follows  It may
well be true that in the absence of any special circumstances an adjustment of the nature as allowed in this case by allowing special increment in the new scale on the basis of service already rendered may not be appropriate
Clearly however in the present case the
tribunal took into consideration in deciding this question of adjustment the fact that it had been extremely cautious as regards increasing the old wage scales
Apparently it thought that it would be fair to give some relief to the existing employees by means of such increase by way of adjustment while at the same time not burdening the employer with higher rates of wages for new incumbents
In these circumstances we do not see any justification for interfering with the directions given by the tribunal in the matter of adjustments
 In this case also the fixation of scales has been very cautious
The increase from Rs 116 to Rs 135 in the lowest category is not very high considering that these wages had existed for 12 years before they were so adjusted
Similarly the starting wage in all the other three categories cannot be considered to be very high
The same is the case with monthly rated workmen
The annual increment is not unduly high and in these circumstances it cannot be said that the Tribunal was in error in departing from a point to point adjustment
to grant one or two increments based on the 1 1964 1 SCR 234 249 115
473 length of service
The discretion was exercised on sound judicial lines
It was finally contended that the Tribunal was in error in making the Award retrospective from October 1 1962 when the reference was made on December 14 1962
This objection has no force
In the charter of demands the workmen had claimed retrospective revision from July 1 1961
The matter was referred to the Board of Conciliation on September 8 1962
When conciliation was frustrated because of the arrest of some of the workers of the Union under the Defence of India Rules the present reference was made to the Tribunal
The Tribunal could have easily chosen September 8 1962 but chose an intermediate date to be fair to both sides
In our judgment the choice of October 1 1962 by the Tribunal cannot be characterised as either illegal or unfair
The question of incentive bonus revision was not mooted before us and the direction that incentive bonus should be calculated on the new scale from 1st January 1964 is more in favour of the employers than the workmen and no grievance can be made about it
This brings us to the question of the monthly rated workers
Most of the points which we have discussed in relation to the daily rated workmen are common
We have seen the scales which have been fixed and compared them with the rates obtaining in Indian Smelting and the Kamani Engineering and other concerns and are satisfied that they have not been put so high as to merit interference at our hands
It is however contended that the Tribunal has gone beyond the Reference inasmuch as the Reference was in respect of special categories of monthly rated employees by designation but the Tribunal has fixed the new scales not only for those workmen but for all clerical and other workmen which were classified as Grades A B C and D in 1950
It is true that the Tribunal has not only fixed the new scales for those categories of monthly paid employees who were named in the order of reference but has also provided that those scales shall apply to clerks in the A B C and D Grades
It is however clear that even the monthly paid employees mentioned by name belong to one category or another
in the Grades A to D It would have been highly invidious if some persons in the Grades were to receive more pay than the others in the same Grade
The Award therefore treats the Reference as referring to the 4 Grades although only some of the class who go by special designations in each Grade have been mentioned
The intention however was to have a general revision of the scales of payment to all workers paid monthly and the Tribunal was therefore right in not reading the Reference as restricted to only a few classes
By doing so the Tribunal has avoided further industrial unrest and disputes and has really given effect to the underlying object of the reference
474 This brings us to the last question which is related to the dearness allowance payable to the monthly rated workmen
Previous to the present Award the dearness allowance was payable in this company in the following manner  On the 1st Rs 100 upto Rs 100 60 per cent with a minimum of the DApaid to the Textile Operatives by the Bombay Mill owners Association
On the 2nd Rs 100 upto Rs 200 20 per cent of the 2nd hundred rupees
On the 3rd Rs 100 upto Rs 300 15 per cent of the 3rd hundred rupees
On the 4th Rs 100 upto Rs 400 10 per cent of the 4th hundred rupees
On the 5th Rs 100 upto Rs 500 10 per cent of the 5th hundred rupees
On every hundred above Rs 500 of 5 percent of basic every hundred rupees
The above percentage of dearness allowance is applicable when the Bombay Cost of Living Index rests between 311 to 320
Variation in the above percentage to be allowed per 10 point movement in the index
First slab 3 per cent of dearness allowance  2nd slab 1 12 per cent of dearness allowance 3rd slab 1 per cent of dearness allowance  4th slab 34 per cent of dearness allowance and the last slab 12 per cent of the dearness allowance In the Award this has been altered to a scheme which is as follows On the first Rs 100 basic pay upto Rs 100 60 On the second Rs 100 basic pay upto35 of the 2nd 100 Rs 200 rupees
On the third Rs 100 basic pay upto15  of the 3rd 100 Rs 300 rupees
On the Rs 301 basic and above10  of the balance
NOTE The minimum dearness allowance will be the revised textile scale
The above percentage of dearness allowance is applicable when the Bombay Consumer Price Index is between 311 and 320
Variation per 10 point movement in the index should be as follows 475 First slab of Rs 100 basic pay 5  eg dearness allowance will be 65  of basic pay when index is between 321 and 330
Second slab of 100 basic pay 1 12 Subsequent slabs 1 
It is contended that linking the dearness allowance after the consumer price index 321 to wages has made a departure from the fixation of dearness allowance fixed in tie Kamani Engineering Corporation in which under the same circumstances the percentage after the consumer price in 0 321 is that of the dearness allowance and not of the basic salary
On the other side we were shown a number of awards in which dearness allowance has been fixed in the same manner as by this Award
It appears that the case of Kamani Engineering was treated as a special case because the incentive bonus there was yielding a third of the total earnings of the workmen and it was considered that if the dearness allowance was also raised then a very great burden would be thrown upon the employer by reason of the incentive bonus
We cannot therefore use the precedent of the award in the Kamani Engineering Corporation because of these special facts
We are satisfied that in many other companies dearness allowance has been ordered to be calculated in the same manner as has been done by this Award and we see no reason therefore to interfere
For these reasons we find no force in this appeal
It fails and will be dismissed with costs
VPS Appeal dismissed


Summary:
The award of the Industrial Tribunal in an industrial dispute between the appellant company manufacturing products of non ferrous metals and alloys and its workmen was challenged in appeal to this Court on the following grounds 1 There was no change of circumstances justifying a revision of Wages pay scales and dearness allowance 2 while making such revision by its award many of the matters stated in the judgment of this Court in Novex Dry Cleaners vs Its Workmen were not considered by the Tribunal  3 the Tribunal had com
pared dissimilar concerns and not compared similar ones 4 the Tribunal took into account an irrelevant factor namely the yield from incentive bonus 51 no case was made out for adjustment of the workmen in the new time scale after granting them one additional increment after every 3 years service and two additional increments after 5 years  service 6 the Tribunal was in error in making the award retrospective from 1st October 1962 when the reference was made to it only on 14th December 1962 7 the Tribunal had gone beyond the reference inasmuch as the reference was in respect of special categories of monthly rated employees by designation whereas the Tribunal had fixed the new scales of pay not only for those workmen but for all clerical and other workmen who were classified as Grades A B C and D and 8 the linking of dearness allowance after the consumer price index 321 to wages has made a departure from the fixation of dearness allowance fixed in another concern where the percentage was that of the dearness allowance and not of the basic salary
HELD  In an appeal brought by special leave against the award before a party can claim redress it must be shown that the award was defective by reason of an excess of jurisdiction or of a substantial error in applying the law or some settled principle or of some gross and palpable error occasioning substantial injustice
471 A C 1 There was no revision of wages or dearness allowance in the last 20 years even though commodity prices level of wages had gone up and there had in some industries while in some revise or fix wages
There a revision was justified
466 F 14 2 In order to make the fair wage meet the increase in the cost of living dearness allowance is paid to make up the disparity to a certain extent
When in course of time it is found that it is not sufficient because of a further increase in the cost of living a revision of wages and dearness allowance becomes necessary
This Court in its decisions has merely laid down the principal guide lines to be followed in industrial adjudica 464 tion
The various observations are not intended to operate with the rigidity of a statutory enactment
Each case must be considered on its own facts and only relevant circumstances should enter into the determination of the wage structure
The fundamental principles to be considered are a how the wages of the workers concerned compare with those paid to workers of similar grade an skill by other employers in similar or other industries in the region and b what wages the establishment or industry can afford to pay
In the present case taking into account the increase in its net profits and the fact that the burden of the increased wage bill would not be more than 110th of the net profits the Tribunal was right in holding that the appellant had the capacity to pay the increased wage bill
467 B C H 468 A B G H 469 A D 3 The Tribunal compared the appellant company with four engineering concerns
One of them belonged to the same group of industries as the appellant
There were common awards in respect of both of them
Further there was an award given at the same time by the same Tribunal in the connected concern also the charter of demands being the same as in the appellant company and based on several common exhibits
Since the number of industries in the region was small it was open to the Tribunal to take into consideration the conditions existing in the engineering concerns in the region particularly those in a concern where there is affinity even though the appellant company could not be described as a general engineering industry
Smaller concerns
where the scale of pay is considerably lower do not furnish a just basis for comparison
470 A B D F G Greaves Colton  Co vs The Workmen   followed
4 The Tribunal fixed lower wages in the reference relating to the connected concern because a substantial ment by way of incentive bonus
But in the case of the appellant company finding the yield from incentive bonus low the Tribunal fixed the wages at the proper level without considering the yield from incentive bonus that is without being influenced by it in any way
471 E G H 472 A B 5 In the present case the fixation of scales of pay has been very cautious the starting wage and the annual increment were not high and therefore it cannot be said that the Tribunal was in error in departing from point to point adjustment in granting increments based on the length of service
472 G H Observations in Hindustan Times V Their Workmen 1964 1 SCR 234 at p 249 followed
6 In view of the facts that the workmen demanded retrospective revision from 1st July 1961 and that the matter was referred to the Conciliation Board in September 1962 the choice of 1st October 1962 by the Tribunal cannot be characterised as either illegal or unfair
473 C 7The monthly paid employees mentioned by name in the order of reference belong to one category or another in the Grades A to D
The intention was to have a general revision of the scale of payment to all workers paid monthly otherwise it would have been invidious for some persons in the same Grade to receive more pay than others
The Tribunal was therefore right in treating the reference as referring to all the four Grades and not reading it as restricted only to a few classes
473 F H 8 There have been a number of awards in which dearness allowance was fixed in the same manner as by the present award
The award in the connected concern could not be used as a precedent
 because of the special facts  obtaining in that concern
475 C E 465