-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE SIDE JURISIDICTION WRIT PETITION NO.5933 OF 1996 Goodlass Nerolac Paints Ltd. ] a Company incorporated under ] the Companies Act, 1956, having] its Factory and Registered ] Office at Ganpatrao Kadam Marg,] Lower Parel, Mumbai 400013 and ] its factory at Kavesar village ] Thane ]..Petitioners Versus 1. Paints Employees Union ] a trade union registered ] under the Trade Unions ] Act, 1926, having its ] regsitered office at ] Shri.T.K.Walawalkar, ] B-2/9, Jeevan Beema Nagar] Mithagar Road, Mulund ] (East), Mumbai-400081 ] ] 2. Shri.T.M.Mantri, ] Member, ] Industrial Tribunal ] Maharashtra, Mumbai ] having its office at ] Arun Chambers, 7th floor ] Tardeo, Mumbai-400034 ]..Respondents .... Mr.C.U.Singh with Mr.Noraj Jalota i/b M/s.Sanjay Udeshi for Petitioner Mrs.Meena Doshi for Respondent .... CORAM : B.H.MARLAPALLE,J. CORAM : B.H.MARLAPALLE,J. CORAM : B.H.MARLAPALLE,J. DATE OF RESERVING DATE OF RESERVING DATE OF RESERVING THE JUDGMENT : APRIL 19, 2005 THE JUDGMENT : APRIL 19, 2005 THE JUDGMENT : APRIL 19, 2005 DATE OF PRONOUCING DATE OF PRONOUCING DATE OF PRONOUCING THE JUDGMENT : MAY 06, 2005 THE JUDGMENT : MAY 06, 2005 THE JUDGMENT : MAY 06, 2005 JUDGMENT: JUDGMENT: JUDGMENT: 1. This petition impugns the Award dated 30.9.1996 -2- passed by the learned Member of the Industrial Court at Mumbai in Reference (IT) Nos. 4 of 1987 and 52 of 1989 to the extent of granting the revision of wage scales and extension of staff dearness allowance to the daily rated workmen. While admitting the Writ Petition by an order dated 22.1.1997, the operation of the impugned Award was stayed in so far as it related to the wage scale and dearness allowance only. This Court then referred to the settlement arrived at between the parties on 22.8.1991 and directed the Petitioner-company to pay double the amount every month from 1.4.1991 and to continue to pay accordingly. It appears that this order dated 22.1.1991 was challenged in Letters Patent Appeal but without success and even before the Apex Court the Petitioner-company could not obtain any relief. 2. The Petitioner is a public limited company incorporated under the Companies Act, 1956 with its registered office at G.K.Marg, Lower Parel, Mumbai and one factory at the same place and another factory located at Kavesar village in Thane District. The Company also has a factory at Kanpur but the impugned award concerns the establishments at Mumbai and Thane. The Respondent-Union is a trade union registered under the Trade Unions Act, 1926. The Union has been representing the workers employed by the Petitioner for a long time and it had entered -3- into various settlements with the Company for revision of wages and other service conditions. The last such settlement was arrived at on 1.6.1984 and it was to remain in force upto 31.12.1986. The Union terminated the said settlement by a notice issued in January 1987 and submitted a fresh charter of demands on 26.2.1987, on behalf of the workmen. The charter of demands was admitted in conciliation on 11.12.1987 and on 25.12.1987 the Petitioner-company submitted a counter charter of demand. By an order dated 1.8.1989 passed by the Govt. of Maharashtra, a charter of demand submitted by the Union came to be referred for adjudication to the Industrial Tribunal under Section 10(1)(d) of the Industrial Disputes Act, 1947 and the same reference came to be registered as Reference (IT) No. 52 of 1989. The Union filed its settlement of claim in support of the demands and the Petitioner-Management filed its written statement opposing the demands. The evidence-oral and documentary was adduced by the respective parties before the Tribunal. During the pendency of the reference, an interim settlement was signed on 22.8.1991 and Part-I Award in terms of the same settlement was passed on 26.9.1991. 3. When the charter of demand was submitted, there were about 430 daily rated workers and 250-300 monthly rated workmen working at Parel factory, head -4- office and the Kavesar factory. On submission of the charter demands on 26.2.1987 there was a lock-out in the factory which was lifted consequent to the settlement dated 17.6.1987 which was met with the Respondent-Union. On account of the said lock-out complaint (ULP) No.648 of 1987 was filed by the Union and the issue regarding wages for the period of lock-out has been settled in terms of the settlement dated 9.8.1989. In terms of the settlement which became part-I Award dated 26.9.1991 the parties were to negotiate and settle the demands under adjudication, but the negotiations failed. It appears that the application for additional interim relief was moved before the Tribunal and some relief was granted by a subsequent Award which was challenged in W.P.No. 1467 of 1995 but the interim Award of the Tribunal was not disturbed by this Court. By the impugned award dated 30th September, 1996, number of demands have been considered favourably i.e. Demand No.2- wage scale and classification, Demand No.6-dearness allowance, leave travel allowance, medical allowance, lunch allowance and the leave revision and the impugned award has been made effective from 1.4.1991. It has been further directed that any amount paid earlier would be adjustable while implementing the impugned award. 4. It was submitted by the learned counsel for the -5- Petitioner-company that the challenge in this petition is limited only to the extent of revision of pay scales and applicability of the dearness allowance formula on monthly rated staff to the daily rated workmen. He also pointed out that during the pendency of this settlement the factory at Kavesar was closed down and the said closure is a subject matter of challenge in a complaint pending before the Industrial Court. Except 20 workmen all others have been paid their legal dues in terms of the impugned settlement as well. Having settled the dues of the workmen on closure, practically nothing would survive in the challenge to the impugned award but the learned counsel pointed out that in view of the pending complaint challenging the legality of the closure there prevails an uncertainty and in the event the action of closure is interferred by the Industrial Court on any count, the future consequences in terms of additional financial burden on the basis of the impugned award would be writ-large and therefore the company is keen to get its challenge on these two issues i.e. revision of pay-scales and applicability of the dearness allowance formula of the monthly rated staff to the daily rated workmen adjudicated through all the benefits flowing from the impugned award have already been extended to almost all the workmen. -6- 5. On behalf of the Union, in all five witnesses were examined viz. Mr.Narayan Salian Shivanand- acting Joint Secretary of the Union, Mr.Ramchandra Gajanan Oak, Mr.Tukaram Dnanoba Walawalkar-General Secretary of the Union, Mr.Dattatram Ganpat Sawant, Mr.Subhash Parab and Mr.Achut Karhadkar. The Petitioner-Management examined as its witnesses Mr.Gangadhar Talashikar, Industrial Relations Manager, Mr.C.R.Patake, Incharge of Production-Planning Department, S.V.Petdar, Deputy Manager (Manufacturing), and Mr.Sham Bhabe, Director came to be examined. 6. As noted earlier, the challenge to the impugned Award in this petition is confined only to two demands allowed by the Tribunal viz. the revision in pay-scale and the dearness allowance. These two demands under adjudication were as under: DEMAND NO.2 DEMAND NO.2 DEMAND NO.2 . All the daily/monthly rated workmen working at Head Office in the factories at G.K.Marg, Parel, village Kavesar Thane and in the godown in Bombay be paid basic wages/salaries at the following scales with effect from 1.1.1987: Daily rated workmen: 1. Unskilled-I Rs.2.00-0.40-3.60-0.50 6.60 - 0.70 -11.50 (17 years) -7- 2. Unskilled-II Rs.2.50-0.50-5.00-0.70 8.50-0.80-12.50-0.00 15.20 (18 years) 3. Skilled Rs.3.60 - 0.80 - 6.80 -1.00 13.80 - 1.20 - 21.00 (16 years) 4. Highly skilled Rs.5.10 - 1.00 - 10.10 - 1.25 -17.60 - 1.50 - 29.60 ( 18 years) Monthly rated workmen: 5. Peons,Watchman Sweepers. a) Rs.50-11-105-14-175-17 260-20-360 (20 years) b) Rs.60-13-125-16-205-19 -300-22-410 (20 years) 6. Lab Attendants and Cooks a) Rs.60-14-130-17-215-20- 315-23-430 (20 years) 7. Driver a) Rs.70-14-140-18-212-22- 322-26-426-30-516 (20 years) 8. Overseers Rs.80-15-110-20-190-25- 315-30-465-35-605 (20 years 9. Clerks, Tel. Opts.-Cum- Recpt.,Typist Punch Operators Co.Operators, Draftsman, Stenographers Comptist,Shop/ Stores/Canteen Asstt. Rs.90-20-150-25-250-30-370- 35-545-40-745-45-835 (23 years) 10. Sectional Heads, Computer Programmers Rs.275-30-425-40-585-50- -8- 785-60-965-70-1105 (18 years) 11. Asstt.Tech. Foreman Jr.Chemist Rs.145-20-185-25-260- 85-435-40-635-45-770 50-870 (20 years) 12. Sr.Chemist/ Foreman Rs.300-45-390-55-610- 1000-75-1150 (14 years) DEMAND NO.6 DEMAND NO.6 DEMAND NO.6 Dearness Allowances: --------------------------------------------- Basic Index Variation of salary slab No.741-750 10 of Index D.A.% of 110. basic wages --------------------------------------------- 1st 100 Rupees 300% 5.00% 2nd 100 Rupees 125% 1.25% 3rd 100 Rupees 61% 1.25% 4th 100 Rupees 56% 1.25% Note: 1) Minimum Dearness Allowance to be paid Rs.325/- Rs.5/- per every ten points variation. 2) In addition to D.A. payable at the above scales workmen whose basic salaries/wages are less than RS.100/- per month shall be paid additional 10% D.A. payable in the above scales. 7. Mr.C.U.Singh, the learned counsel for the Petitioner-Management by referring to the reasoning -9- given in para 11 in support of the demand for revision in wages and paras 24 and 26 in support of the revision in the formula of Dearness Allowance as set out in the impugned Award, submitted that the well established principle of region-cum-industry-cum-capacity to pay, has not been followed by the Tribunal and it has proceeded only on the basis that the Company had the capacity to pay in view of its working results for the period from 1991-92 to 1995-96 as set out in para 7 of the impugned Award. The financial capacity of the employer cannot be considered in isolation when it comes to adjudication for revision in wages and other financial benefits. The first and foremost consideration in such adjudication is region-cum-industry and therefore, the paying capacity of the employer gets a backseat. As per Mr.C.U.Singh, the Tribunal in the instant case, fell in manifest error apparent on the face of the record calling for interference at the hands of this Court in its supervisory jurisdiction. It was submitted that the Petitioner-company and the Respondent-union entered into settlements on 17.8.1974, 7.3.1978, 10.10.1980 and 1.6.1984 and in all these settlements, the demands for revision of wages and other service conditions were settled amicably to the satisfaction of each of the parties. However, the charter of demands submitted in February, 1987 would not be -10- negotiated upon, due to the adamant attitude of the Union and more particularly the insistence of the dearness allowance formula applicable to the monthly rated staff to be made applicable to the daily rated workmen. It was pointed out that in all the earlier four settlements, the demands pertaining to revision in wage structure as well as the payment of dearness allowances were settled by negotiations and to the satisfaction of each of the parties. The contentions of the Union that the Management had agreed to implement the formula for payment of dearness allowance as applicable to the monthly rated staff has no evidence except the oral statements made in the witness box or in the statement of claim and this was conceded to by the witness of the Union i.e. Mr.Walawalkar who stated in his examination-in-chief as under: . "I was also taking part in the talks of the settlement, with the Managing Director of the first party. However, the settlement could not be arrived at. The first party was not ready to give staff Dearness Allowances in full to all daily rated employees, but they were ready to give the said benefit to the employees having basic wages upto Rs.300/- only, without arrears. Hence, the settlement could not be arrived at". In the cross-examination by the Company, Mr.Walawalkar admitted as under: -11- . "It is correct that earlier settlements with the first party were arrived at and signed from time to time. It is correct that the dearness allowance has been revised of daily rated workers, under the settlements. It is not correct that the said increase in D.A. was by way of revision only and not as a staff D.A. It is not correct that at no point of time assurance was given about applicability of staff D.A. to the daily rated workers. There is no documentary evidence to show that such assurance was given, apart from the agreements of 1980 and 1984, except charter of demands, no other written communication was made with the first party of implementing the so called assurance of applicability of staff D.A." 8. As per the Company, the Industrial Tribunal was perhaps swayed by the evidence that the salaries of the officers and managerial staff had undergone revision. The 1984 settlement contained the following clause regarding reduction in dearness allowance payable to the monthly rated staff as and when circumstances warranted in future: . "The company will be at liberty to give notice of change on the scheme of D.A. with Bombay Consumer Price Index Rates (old) 2050. In such an event, the parties will negotiate and settle this within a period of one month of giving such notice failing which, the parties shall make joint application to Industrial Tribunal in the prescribed manner under Section 10(2) of the I.D.Act, 1947 for adjudication. The Management’s demand dated 29.11.1983 under Section 9A of the I.D.Act, is enclosed herewith as Annexure to the -12- settlement which is not pressed". . Pursuant to the said clause, notice of change dated 6.8.1985 was issued by the Management for the intended reduction in dearness allowance as payable to the monthly rated staff and the same demand was the subject matter of adjudication in Reference (IT) No. 4 of 1987 and by the impugned common Award the same was disallowed. The Union insisted for the monthly rated dearness allowance formula for the daily rated workmen as a counterblast of the notice of change dated 6.8.1985 and more so because the issue of dearness allowance was settled in all the four earlier settlements to the satisfaction of the Union. Therefore, there was no reason for the Tribunal to accept the sole foundation of revision in dearness allowance that the Management had agreed to implement or make applicable the monthly rated dearness allowance formula to the daily rated workers as well on expiry of the settlement of 1.6.1984. It was also submitted that the evidence placed on record by the Management regarding the monthly emoluments payable in other comparable industries in the same business viz. paint manufacturers like Asian Paints Berger Paints, Johnson and Nicolson Paints, Bombay Paints, Garware Paints and Noble Paints etc. Lastly, it has been emphasised by Mr.C.U.Singh that the Industrial Tribunal failed to give any plausible -13- reasons leave alone satisfactory reasons in support of allowing these two demands in toto and if the adjudicator fails to give reasons in support of the award, such an award cannot be sustained. 9. Mrs.Meena Doshi, the learned counsel for the Respondent-Union on the other hand, submitted that the Union on its part had adduced the necessary oral and documentary evidence to support these two demands along with other demands and the Management on the other hand failed to bring the satisfactory evidence in support of its case that the said two demands could not be granted. Even in support of its case to follow the industry-cum-region formula or region-cum-industry, the Management failed to adduce required evidence and merely the insistence to follow such formula, would not support the challenge to the impugned Award. The additional financial burden as imposed on the Management by allowing these two demands, cannot be considered unreasonable, in view of the sound financial condition of the Petitioner-Company as was brought on record before the Tribunal and the Management failed to prove by imperical data that there was no justification in revision of pay-scales and implementation of the dearness allowance formula applicable to the monthly rated staff for the daily rated workmen as well. Mrs.Doshi also filed synopsis of written arguments -14- and the charts showing the difference in payment of wages and the dearness allowance consequent to the impugned settlement. 10. Both the parties have relied upon the following decisions referred to by the Tribunal: 1) French Motor Car Company Vs. Their 1) French Motor Car Company Vs. Their 1) French Motor Car Company Vs. Their Workmen [1962 II LLJ 744]; Workmen [1962 II LLJ 744]; Workmen [1962 II LLJ 744]; 2) Greaves Cotton and Company Ltd. Vs. 2) Greaves Cotton and Company Ltd. Vs. 2) Greaves Cotton and Company Ltd. Vs. Their Workmen [1964 I LLJ 342]; Their Workmen [1964 I LLJ 342]; Their Workmen [1964 I LLJ 342]; 3) M/s.Polychem Ltd. Vs. R.D. Tulpule 3) M/s.Polychem Ltd. Vs. R.D. Tulpule 3) M/s.Polychem Ltd. Vs. R.D. Tulpule [1972 II LLJ 29]; [1972 II LLJ 29]; [1972 II LLJ 29]; 4) Workmen of Blamer Lawrie and Company 4) Workmen of Blamer Lawrie and Company 4) Workmen of Blamer Lawrie and Company Ltd. Vs. Blamer Lawrie and Co. Ltd. Ltd. Vs. Blamer Lawrie and Co. Ltd. Ltd. Vs. Blamer Lawrie and Co. Ltd. [1964 LLJ [1964 LLJ [1964 LLJ 380]; 380]; 380]; 5) Hindustan Lever Ltd. Vs. D.N.Dongre and 5) Hindustan Lever Ltd. Vs. D.N.Dongre and 5) Hindustan Lever Ltd. Vs. D.N.Dongre and others [1994 II CLR 673]. others [1994 II CLR 673]. others [1994 II CLR 673]. 11. So far as the challenge to the first demand i.e. revision in pay-scales is concerned, the Tribunal -15- noted that there was no revision in the basic wages for the daily rated workmen and monthly rated staff after 1974 settlement had expired. Resultantly, some workers had reached the stage of stagnation in the respective pay-scales and the statement of financial burden placed on record by the Union indicated that by way of annual increment, the total burden would be about Rs.2,31,000/- in respect of all the workmen. There was nothing to contradict these statements. Under these circumstances, the Industrial Tribunal allowed this demand in toto with the following reasonings: . "Considering the financial position of the Company, the first party company can bear this burden and will grant these workers after a long lapse of time. Hence, the demand is granted." 12. It is true that the Tribunal has not entered into examining the financial implications of revision in wages as claimed by the Union. It also did not note that the existing payscales were comparable or less than the wage structure prevailing in comparable industries and more particularly the Paint Manufacturing Industries in or around Mumbai and Thane industrial belt. It also failed to consider that the increase in basic would consequently result into further increase in dearness allowance when the -16- existing mode of payment of dearness allowance itself had a component of linkage with the basic salary. However, these lapses by the Tribunal themselves do not make out a case for interference in the decision of the Tribunal to allow the said demand and it would be necessary to consider the prevailing wage scales and the reasons given by the Tribunal in support of allowing the demand. 13. The Management has placed on record the copies of the settlements till the year 1984 and the last settlement. The first settlement is dated 19.3.1971 and it was made into award by the Industrial Tribunal in Reference (IT) No. 119 of 1968. The basic wage scales were only agreed in the said settlement with effect from 1.1.1971, which are as under: A. Daily Rated Workmen: Unskilled : Rs.1.37-0.10-2-, 37-0, 12.37.0, 12-2-.61-0,13-3,39 Semi- skilled Rs.1.90-0, 15-2, 80-0.20-4, 20-0.22-4.42 Skilled Rs.2.60-0, 20-4.00-0-25-6.50 Highly skilled Rs.3.75-0.25-5.25-0.30-7.65.0. 35-8-.00 B. Monthly Salaried Workmen: a) Non-Technical : i) Rs.25-15-330-E.B-20-550. -17- ii) Senior Clerks, Stenographers, Assistant Stores Supervisor, and administration Assistant: Rs.145-10-195-12.50-245-E.B.-15 -320-20-460. iii) Junior Clerks, Telephone Operator/ Receptionist, Senior Overseers, Jr. Draughtsman/Junior Clerk: Rs.85-7-120-10-160.12.50-210-15- 225-E.B. 15-345 (Graduates Jr.Clerk to start with one increment) iv) Overseers: Rs.75-5-90-8-114-E.B.-10-144-12 -240 b) Technical : i) Junior Chemist/Assistant Technical Foreman Rs.125-10-175-E.B.-15-250-20-390. ii) Lab.Assistant Rs.85-7-120-10-160-12.50-247.50 c) Menial Staff: i) Sepoys/Watchmen/Sweepers/Hamals Rs.37-2-47-2.50-62-3-92. ii) Cook: Rs.48-3-60-5-80-6-110 iii) Lab.Attendant Rs.44-4-80-5-125. . Then came the settlement dated 27.8.1974. The basic wage scales were revised as under: -18- 1. Basic wage scales: a) Daily Rated Workmen: . After considering the nature of work, work-load involved etc. it is agreed that the daily rated workmen will be classified into three categories, namely unskilled, skilled and highly skilled as opposed to the four categories obtaining heretofore. The wage scales for these categories would be as under:- Unskilled - Rs.1.55 - 0.15 -2.45 -0.20 - 3.85 - 0.25 -5.10 (18 years) Skilled - Rs.2.70 - 0.25 -3.95 0.35 -0.35 - 8.15 (17 years) Highly skilled - Rs.4.00 -0.40 - 5.60 - 0.50 - 8.10 - 0.60 - 10.50 (18 years) . All the temporary workers who have put in more than 2 years of continuous service and those who have been made permanent during the 12 calender months presiding the date of settlement shall be given one additional increment in their revised scale of pay after adjustment as mentioned in Clause 3 herein below. b) Monthly Salaried - Non-Technical . Both the parties after considering the nature of work and some over-lapping duties of the clerical staff considered that these should be only two grades of clerical staff viz. Clerks and Sectional Heads. . The following scales have been agreed upon - Clerks, Typists, Tele.] Rs.90-10-120- Operator/Receiptionist,] 12.5-170-15-260- Draughtsman, Stenos, ] E.B.-20-400-22.50 Comptists, Shop/Store/ ] -467.50-32.50 - (500 Canteen Assistants ] (24 years) -19- . Note : Graduates in the above will start at Rs.100/- per month and Comptists at Rs.145/- per month and Stenos at Rs.170/- per month. . Sectional Heads : Rs.240-15-255-20-375-22.50- 420-E.B.-25-520-30-610 ( 16 years ) . Sepoys, Watchmen, ] Rs.40-4-56-5-81-6-117- Sweepers. ] 7-124- (16 years) . Laboratory Attendant - . Rs.48-4-64-5-104-7.50-141.50 (17 years) . Cook Rs.48-4-64-5-104-7.50-141.50 (17 years) . Driver Rs.65-5-90-7.50-135-10-175- -12.50-200 (21 years) . Punch Operators ] In the clerical Grade cum-Verifier ] abovementioend. The Console Operator] scale for Console Programmer ] Operators and Programmers will be determined after detailed study of the work and in consultation with Mr.R.Radhakrishnan. Technical Staff: Asstt.Foreman/Jr. Chemist Rs.125-12.50-175-E.B.-17.50- 245-25-445 ( 16 years ) Foreman/Sr.Chemist Rs.275-30-335-35-475-40-715 ( 12 years ) Lab.Assistants Rs.85-7-120-10-160-12-50-247.50 Daftari Clerk Rs.75-5-90-8-114-E.B.-10-144- 12-240. . The third settlement signed on 7.3.1978 did not -20- revise the basic wage scales and the same was the case in the subsequent two settlements dated 10-10-1980 and 1-6-1984. The Tribunal thus rightly observed that after the expiry of 1974 Settlement, there was no revision in basic wage rates. 14. If we consider the wage scales granted by the Industrial Tribunal, it would be seen that the minimum daily rate from 1.55 has been changed to Rs.2, thus an increase of 45 ps. per day, for the unskilled category. In the skilled grade, the starting daily wage was enhanced from Rs.3.2 to 3.60 ps. i.e. a daily rise of 40 ps. In the highly skilled grade, the starting daily wage was enhanced from Rs.4.80 to Rs.5.10, thus a daily rise of 30 ps. The unskilled category grade was given a daily rise of 45 ps. and for the skilled grade, a daily rise of 30 ps. The annual increment varied from 20 to 30 ps. whereas in the same new grade, the annual increment varied from 40, 50 and 70 ps. The annual increment amount was thus doubled and the same is with the skilled and highly skilled grades in the revised wage scales. . The starting salary in the menial category at Rs.48 has been increased to Rs.50 per month whereas, in the skilled category, there is no change. In both these grades because of the concerned employees had -21- stagnated on reaching the highest stage, the Tribunal opened the gates so as to remove the stagnation. 15. The Company examined in all four witnesses but hardly brought any imperical data regarding the payscales of daily rated/monthly rated workmen prevailing in comparable industries in the region. Only in the oral depositions of Mr.S.T.Bhabe-Director, the statement below Exh.C-24 was shown to him and he deposed that the personnel department had prepared the said statement showing the wage structures of the employees