Case: Rajendra Mills, Limited Vs. Its Workmen

Das Gupta, J.1. Of the several matters earlier in controversy between the parties only one remains now for consideration in this appeal by the employer against an order of the Labour Appellate Tribunal of India, Bombay. By this order the Labour Appellate Tribunal decided in confirmation of the award of the industrial tribunal that dearness; allowance for reelers shall not be linked with Production by them and shall be independent thereof. As regards the reelers the industrial tribunal had held that neither basic wages nor dearness allowance should be linked with production but that in case the workload applicable to these workmen was not reached by any individual reeler, it was open to the employer to take appropriate disciplinary action. On appeal by the employer the Appellate Tribunal set aside the above direction of the first tribunal as regards the basic wages, but as indicated above confirmed its award as regards dearness allowance. The employer now contends that even as regards dearness allowance, reason and justice require that it should be linked with production and that if the appropriate workload is not reached by an individual workman the dearness allowance would be payable at a proportionately reduced rate.2. It is important to mention at the outset that this question as to whether the dearnees allowance would be subject to such reduction if the appropriate workload is not reached no longer arises after 25 May 1956, as for the subsequent period the management has agreed that dearness allowance would be independent of production. The decision of the question will affect the quantum of dearnees allowance payable to reelers only after the period 26 August 1954, on which date the reference was made, to 23 May 1956. Even so, we are informed that a considerable sum is involved in the dispute so that from the point of view of both employer and labour the matter is certainly of real importance.On behalf of the appellant, Sri Viswatha Sastri contended that as soon as a piece-rate system is introduced in place of a time-rate, it becomes necessary for the system to be really effective that all wages should be linked with production, for without risk of a diminution of remuneration if a certain amount of product is not reached the piece-rate worker becomes lazy. If this is so even as regards the basic portion of the wages, it is even more so, it is urged, in respect of dearness allowance, for if dearness allowance does not depend on production a curious position may be reached that even when not a single unit is produced, the workman gets some payment in the shape of dearness allowance. We are not prepared to say that there is not any force in this argument. It has to be remembered however that this very employer has even before the dispute arose been working a system of piece-rate wage where dearness allowance was not linked with production. It is admitted thus that in the bundling department of this very company dearness allowance for piece-rate workers is independent of production. The argument that a piece-rate system becomes unworkable if dearness allowance is made independent of production is therefore belied by the appellants own conduct and experience.3. As we have already pointed out the dearness allowance has subsequent to 23 May 1956, been made independent of production in this very factory. This also shows that however beneficial to production it might be to link dearness allowance with production in a piece-rate system, a piece-rate system does not necessarily become unworkable if dearness allowance is payable independent of production.4. It is worth noticing in this connexion that this argument that if dearness allowance is payable independent of production, piece-rate system becomes unworkable does not appear to have been seriously pressed before the Appellate Tribunal. There the appellants contention that dearness allowance should be linked with production appears to have been almost wholly based on an agreement reached on 3 June 1951. This agreement embodied in document marked Ex. M. 14 was in these words :-"We shall agree to work subject to the under mentioned conditions.(1) We agree to work on less wages, if the reelers who are junior to us are not retrenched.(2) We also agree that the workers who give less number of doffs than that fixed by the standardization committee, may be paid wages, inclusive of dearness allowance, in proportion to the number of doffs given by each worker."5. As pointed out by the Appellate Tribunal this agreement was reached when management wanted to retrench 19 reelers and workmen in order to avoid the retrenchment agreed to the terms mentioned in Ex. M. 14. The fact that such a term was introduced in its agreement strongly supports the view that even in the reeling department inspite of what the managements witness No. 1 has said dearness allowance was independent of production. If that were not so it is difficult to understand why such a stipulation as in Cl. 2 of the agreement (Ex. M. 14) should be considered by the management as a good consideration in view of which the proposal to retrench was dropped.Even apart, however, from the question whether in the reeling department itself dearness allowance had before the date of agreement in June 1951 been linked with production or independent of production the undoubted and admitted position is that in other departments of this very company dearness allowance to piece-rate workers was independent of production. As we have mentioned earlier, this fact was (sic) taken with the further fact that dearness allowance in all the departments where piece-rate system is in vogue will remain independent of production, practically neutralizes in the present case and for the present employer the argument that logic requires that on a piece-rate system dearness allowance must be linked with production.Learned counsel for the appellant drew our attention to the provisions of S.25C of the industrial disputes Act and some provisions of the Payment of Wages Act and argued that these show the view of the legislature that dearness allowance should be linked with the amount of work done. We think it unnecessary in the present case to express any opinion whether there is any force in this contention; for in the peculiar circumstances of this case where the employer himself appears to have based his case wholly on the agreement which is no longer in force and his conduct has shown that there is no real difficulty in working on a piece-rate system when dearness allowance is being linked with production, we are of opinion that we shall not be justified in interfering with the decision of the tribunals below that the dearness allowance should remain independent of production.6.

Decision reasoning: 0[ds]Even apart, however, from the question whether in the reeling department itself dearness allowance had before the date of agreement in June 1951 been linked with production or independent of production the undoubted and admitted position is that in other departments of this very company dearness allowance toworkers was independent of production. As we have mentioned earlier, this fact was (sic) taken with the further fact that dearness allowance in all the departments wheresystem is in vogue will remain independent of production, practically neutralizes in the present case and for the present employer the argument that logic requires that on asystem dearness allowance must be linked with production.Learned counsel for the appellant drew our attention to the provisions of S.25C of the industrial disputes Act and some provisions of the Payment of Wages Act and argued that these show the view of the legislature that dearness allowance should be linked with the amount of work done. We think it unnecessary in the present case to express any opinion whether there is any force in this contention; for in the peculiar circumstances of this case where the employer himself appears to have based his case wholly on the agreement which is no longer in force and his conduct has shown that there is no real difficulty in working on asystem when dearness allowance is being linked with production, we are of opinion that we shall not be justified in interfering with the decision of the tribunals below that the dearness allowance should remain independent of production.