Case: West Coast Paper Mills Limited Vs. West Coast Paper Mills Limited Employees' Union &amp; Another

the merits of the dearness allowance scheme submitted by the Union, we consider that the proposed dearness allowance scheme as submitted by the Union was the most reasonable one and was most satisfactory. The said dearness allowance scheme at C.L.I. 1296 is as follows:"Basic Salary Fixed D.A. Variable D.A. Variable D.A.for every or every 10 points 10 pointsrise or fall rise or fall upto CLI 3300 aboveCLI 3301Rs. 1 to 100 160% (Plus) 5% (plus) 4% (plus)Rs. 101 to 200 80% (Plus) 2% (plus) 1.5% (plus)Rs. 201 and above 40% 0.75% 0.75%"On the basis of this, the Union prepared a detailed Chart showing the total wages that may be calculated. We have seen the said Chart at pages 242 to 249 in the paper book at Vol. IV. In fact, the said Chart shows that though at the initial stage at CLI 1296 in the case of certain categories of workmen the Company may have to pay a slightly higher amount than M/s. Hindustan Ferodo Ltd. But at later stage as the CLI increases from time to time, the Company pays much less than what M/s. Hindustan Ferodo Ltd. would pay to such workmen. One fails to understand as to why this cannot be accepted by the Company. This has the advantage of not interfering with the span of service and also the minimum and maximum payable with regard to basic wages in the case of each category of workmen.22. The respondent-Union had submitted that for the purpose of equating the two wages packets, it is necessary to take into account the fact that the workmen of the Appellant company work 19 hours per month more than the number of hours put in by the workmen of M/s. Hindustan Ferodo Ltd. Mr. Vaze rejected this submission on an erroneous ground that both the workmen are paid monthly rated wages and not hourly rates wages. Mr. Vaze ought to have known that there can be no wages packet without any relation to the working hours. In a year, the workmen of the Appellant-Company put in approximately 37 more than the number of days/hours put in by the workmen of M/s. Hindustan Ferodo Ltd. For the purpose of comparing the two wage structures, that was a very relevant component which could not have been ignored at all. It is not that such a factor is unknown to such a Tribunal in any fixation of wage structure. If this component is taken into account, on the scheme proposed by the Union as set out above, it is the workmen who suffer greater loss than the management. A look at the chart would clearly show that by and large the workmen would get less than the workmen in M/s. Hindustan Ferodo Ltd. would get throughout. But since the Union is prepared to accept this, we cannot appreciate why the management wants to reject unless their object is to defeat the legitimate claim of the workmen.23. Mr. Srikrishna pointed out that this proposed dearness allowance scheme does not take into account the personal pay, production bonus and medical reimbursement. His submission is that if those three items are taken into account, the total pay-packet would exceed than that of M/s. Hindustan Ferodo Ltd. in the case of each of the category of workmen. As against this, Mr. Menon pointed out that as far as personal pay was concerned, when the dispute was referred to the Industrial Tribunal initially, there was no personal pay as such. He submitted that it was payable only to those workmen who were on the pay-roll of the Company as on October 31, 1979, and the same was fixed at 16.5% of the then existing basic salary upto Rs. 750/- and for the basic salary of Rs. 751/- and above the percentage was 10.095. From January 1, 1980 the personal pay was constant at that rate and at that amount. Mr. Menon also pointed out as to how the statement filed by the Company in this behalf is misleading, as if all the categories of workmen get such personal pay, though, in fact, all the workmen appointed on or after November 1, 1979 are not eligible to get any personal pay. We are, therefore, not inclined to attach any importance to this item. Even otherwise, we are of the opinion that even if this item is included in the pay-packet it would not make any great difference, as far as the total pay-packet is concerned, inasmuch as under the proposed scheme the workers get much less than what their counterpart would get in M/s. Hindustan Ferodo Ltd. The personal pay would not even off-set the loss they are willing to bear.24. The second item relates to production bonus. Mr. Srikrishna pointed out that production bonus is being calculated on the basis of basis wages plus dearness allowance. Mr. Menon had made a categorical statement, and repeats now, that the workmen would not insist upon the production bonus being calculated on the basis of the basic wages plus dearness allowance. In other words, he stated that the workers would restrict their claim of production bonus at the rate of 6% only on the basic wages and personal pay. This would, in effect answer grievance of Mr. Srikrishna. Mr. Menon submitted that, in fact, production bonus is a fluctuating figure and it depends upon the agreements between the workmen and the Company, from time to time.25. The third objection relates to the medical reimbursement. In fact this is no allowance, forming part of the pay-packet of the workmen. It is not an amount uniformly paid as a part of the pay-packet month after month. It is a contingent payment. This is only a reimbursement of actual medical expenses incurred during the sickness and the same is paid against the medical certificates, bills etc. but subject to 4 per cent of the basic wages. We cannot understand as to how the Company says that this should be included in the basic wages as such.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]9. The matter on the question of fixation of dearness allowance thus went back to the Tribunal presided over by Mr. S.V. Vaze. Mr. Vaze by his order dated January 9, 1989 made an award which in his own words was not a "valid proposition" but was only made as "unavoidable solution". What he did was something, as described by Mr. Menon, Advocate for thein the nature of an application of procrustean table. He confessed that he was unable to accept the challenge that was offered to him. Perhaps, he thought that he was required to perform mathematical jugglery whereby the total(consisting of basic pay, dearness allowance, production bonus and all allowances) of the workmen at every given point of time should be the same as the(consisting of basic pay, dearness allowance, production bonus and all allowances) of the workmen having put in the same number of years of service in M/s. Hindustan Ferodo Ltd. He ignored the fact that the span of service of each of the category of the workmen in the present Company was not comparable to that of M/s. Hindustan Ferodo Ltd. He also ignored the fact that in the present Company, the basic wages at the commencement were at the higher level than that of the workmen of M/s. Hindustan Ferodo Ltd. So also at the maximum level. He rejected the contention of the Union that the workmen in thehours more than Hindustan Ferodo workers per month. He rightly did not take into account superannuation contribution as also considerations pertaining to gratuity. But he included the personal pay and medical benefit of 4 per cent which were being paid since 1980.Here again, we find that the appellants have not assisted the Tribunal in any manner by suggesting a rational basis either for fixation of the slabs or for the fixation of dearness allowance on equitable basis. In fact, the Union had provided and furnished to the Tribunal with a formula which would have met the requirements of the reference. But, surprisingly the Tribunal did not even refer to it, nor did it care to consider the same. In our opinion, Mr. Vazes award is no award. In fact, to say the least, it discloses a total lack of perspective and rational approach in the matter. If the same is given effect to, it leads to a wholly perverse situation, if not disastrous to the interests of the workmen. The learned member misunderstood the reference when he thought that the sole object of the reference was to give the same basic wages and other terms and conditions as in the case of M/s. Hindustan Ferodo. That was not the case.It is true that the concerned workmen of the Appellant Company must get an equivalentwhich a similarly situated work men in M/s. Hindustan Ferodo Ltd. would get. What is the meaning of the words "similarly situated workmen" How would onea scale of dearness allowance in comparison to the scale of another concern which is accepted as the criteria applicable to the case. There cannot be a mathematical equation unless in both the concerns the basic wages and all other conditions of service are identical. Therefore, what was expected of Mr. Vaze was rationalisation and fixation of scale of dearness allowance on the basis of a similar scale as found in M/s. Hindustan Ferodo Ltd. In that he had to take into account the span of service of each category of workmen and the slab system, in both the concerns. How would one equate the dearness allowance at the minimum and at the maximum levels, the two extreme points, is the crucial point. Parity as to be achieved within these two limits and in that it should be more or less similar to one another. Mr. Vaze missed this approach altogether.Mr. Menon has demonstrated how this mathematical equation based on the common condition/rider has resulted in such apparent distortions is the wage packets between two employees both getting the same basic wages. It is elementary that workmen drawing the same basic wages should get the same dearness allowance. But if Mr. Vazes formula is accepted, in number of case where the basic wages is the same, the dearness allowance differs. For example in number of cases where the basic wage of the workmen is Rs. 1,155/per month, if Mr. Vazes formula is applied, the totaldiffer, varying to the extent of over Rs. 1,000/per month. For example, in the case of one G.L. Bang, whose basic salary is Rs.he is equated with a person drawing basic wages at Rs. 513/in M/s. Hindustan Ferodo Ltd. and if dearness allowance is calculated at that rate, his total emoluments come to Rs. 2,960.80. But in the case of another employee by name L.N. Daga, his basic wages again is Rs.but he is equated with a person drawing Rs. 160/in M/s. Hindustan Ferodo Ltd. and dearness allowance, if calculated on that rate, his total emoluments come to Rs. 1,778.50. Similarly, in the case of a person by name S. Raman, whose basic wages is Rs.he is equated with a person drawing Rs. 496/in M/s. Hindustan Ferodo Ltd. and the total emoluments of his come to Rs. 2,760.20. But in the case of another employee by name S. Ramalingam, whose basic wages is the same as that of S. Raman, he is equated with the person drawing a sum of Rs. 96/in M/s. Hindustan Ferodo Ltd. and on that basis hiswould come to Rs. 3,367.The Union has, in fact, cited the case of about 36 employees and how in the case of each of them who are drawing the same basic wages would get different dearness allowance if Mr. Vazes scheme is to be applied.14. Since the reference to Mr. Vaze was by virtue of a consent order dated July 29, 1988, we have made it clear to both the parties that it is not possible for them tothe earlier awards. Similarly it is also not open to the parties to contend that M/s. Hindustan Ferodo Ltd. was not a concern comparable to the appellants. In fact, both theand also theand thereafter the learned Single Judge, all had come to the conclusion that in 1976 M/s. Hindustan Ferodo Ltd. was a concern comparable to the appellants. Similarly, the Industrial Tribunal was required tothe scale of dearness allowance and in fixing the pay scale, the Industrial Tribunal was required to ensurethat the totalof the Appellants workmen (consisting of basic pay, D.A. plus production bonus plus all allowances should be more or) less similar to the total(consisting of basic pay + D.A. + Production Bonus + all other allowances) of workmen in the equivalent category of M/s. Hindustan Ferodo Ltd. from time to time. It envisages neither refixation of basic wages, nor did it envisage alteration of any of the service conditions of the workmen of the Appellant Company.When the Tambe Award was before the learned Single Judge, he had only set aside that part of the award which related to fixation of dearness allowance. Otherwise, all other findings recorded in the award passed by M/s. Tambe had been confirmed by the learned Judge and there is no appeal against the same. Thereafter when Mr. Rane accepted the broad approach of Mr. Tambe and fixed the dearness allowance, the learned Single Judge confirmed the said approach and dismissed the writ petition. But, it is significant to note if Mr. Rane could not think of any other solution than confirming theit as done mainly because the Company had failed to assist the Tribunal. That position continues even in the present case, and there has been no assistance from the Company as far as Mr. Vaze was concerned. Though, the appellants had filed a formal objection to Mr. Vazes award the same has not been pressed before us and Mr. Srikrishna has categorically stated that the appellant Company would accept Mr. Vazes recommendation whether it is satisfactory or not. On the other hand, the Union has rightly objected to this award as the same is wholly unsustainable.16. During the course of the hearing before the earlier Bench to which one of us (Suresh, J.) was a party, efforts were made to work out an amicable solution and in that process Mr. menon and Mr. Srikrishna sat together, tried their best to resolve the matter on an agreed formula. In fact, some of those formulas were handed over to the Court and by and large the reaction of the Bench was that the Union was more than charitable in its approach. But the appellant Company was not willing to accept any such solution. The continuance of the dispute was obviously more in the interests of the Company than that of the workmen. During all these fourteen years of litigation, the Company took shelter under various interim orders passed from time to time. They paid the basic wages and half the dearness allowance on anbasis. They could withhold contributions of provident fund and other superannuation benefits on the unpaid dearness allowance. They would not declare production bonus, all on the basic that the matter is pending in the Court. In fact, Mr. Srikrishna submitted that if Mr. Vazes award was not satisfactory, the matter again be remanded back, a submission which we will have no hesitation to reject. It is neither fair nor proper that this litigation should be allowed to continue any further. Mr. Menon points out that during all these years, the total number of workmen has come down from 75 to 20. Today there are 12 peons, one sweeper, 6 clerks and 1 tale operator. Some are dead and some are retrenched. The Companys insistence on not agreeing to any reasonable formula in patently unjust. Despite the fact that the Company had not genuinely assisted any of the Tribunals, in this behalf we are of the opinion that we can ourselves arrive at a reasonableargument is wholly untenable. This would at once exclude all dearness allowance paid by M/s. Hindustan Ferodo Ltd. over and above basic wages of Rs.paid at the end of the eight year for a cashier who has to wait for another fourteen years to get the maximum salary, while in thethat maximum is reached in the eight year itself. To deprive him to his maximum dearness allowance merely because in M/s. Hindustan Ferodo Ltd. at the eight year of service, a Cashier is paid much less, is highly irrational, if not patently unjust. So also in the case of all other categories of workmen. Thus, if Mr. Vazes award is to be accepted, it will materially alter the service conditions of the workmen of thefor which there can be no justification whatsoever.In this connection, it must be appreciated that the respondent Union, in fact, submitted a revised dearness allowance scheme which would retain the slab system and at the same time would make the total pay packet of a workman of thecomparable to the workman of M/s. Hindustan Ferodo Ltd. in equivalent categories as nearest as possible. The Industrial Tribunal unreasonably declined to take that into account. After hearing the advocates on either side and taking into account the merits of the dearness allowance scheme submitted by the Union, we consider that the proposed dearness allowance scheme as submitted by the Union was the most reasonable one and was most satisfactory. The said dearness allowance scheme at C.L.I. 1296 is as follows:"Basic Salary Fixed D.A. Variable D.A. Variable D.A.for every orpoints 10 pointsrise or fall rise or fall upto CLI 3300 aboveCLI 3301Rs. 1 to 100 160% (Plus) 5% (plus) 4% (plus)Rs. 101 to 200 80% (Plus) 2% (plus) 1.5% (plus)Rs. 201 and above 40% 0.75% 0.75%"On the basis of this, the Union prepared a detailed Chart showing the total wages that may be calculated. We have seen the said Chart at pages 242 to 249 in the paper book at Vol. IV. In fact, the said Chart shows that though at the initial stage at CLI 1296 in the case of certain categories of workmen the Company may have to pay a slightly higher amount than M/s. Hindustan Ferodo Ltd. But at later stage as the CLI increases from time to time, the Company pays much less than what M/s. Hindustan Ferodo Ltd. would pay to such workmen. One fails to understand as to why this cannot be accepted by the Company. This has the advantage of not interfering with the span of serviceand also theminimum and maximum payable with regard to basic wages in the case of each category of workmen.22. Thehad submitted that for the purpose of equating the two wages packets, it is necessary to take into account the fact that the workmen of the Appellant company workhours per month more than the number of hours put in by the workmen of M/s. Hindustan Ferodo Ltd. Mr. Vaze rejected this submission on an erroneous ground that both the workmen are paid monthly rated wages and not hourly rates wages. Mr. Vaze ought to have known that there can be no wages packet without any relation to the working hours. In a year, the workmen of theput in approximately 37 more than the number of days/hours put in by the workmen of M/s. Hindustan Ferodo Ltd. For the purpose of comparing the two wage structures, that was a very relevant component which could not have been ignored at all. It is not that such a factor is unknown to such a Tribunal in any fixation of wage structure. If this component is taken into account, on the scheme proposed by the Union as set out above, it is the workmen who suffer greater loss than the management. A look at the chart would clearly show that by and large the workmen would get less than the workmen in M/s. Hindustan Ferodo Ltd. would get throughout. But since the Union is prepared to accept this, we cannot appreciate why the management wants to reject unless their object is to defeat the legitimate claim of theare, therefore, not inclined to attach any importance to this item. Even otherwise, we are of the opinion that even if this item is included in theit would not make any great difference, as far as the totalis concerned, inasmuch as under the proposed scheme the workers get much less than what their counterpart would get in M/s. Hindustan Ferodo Ltd. The personal pay would not eventhe loss they are willing to bear.The third objection relates to the medical reimbursement. In fact this is no allowance, forming part of theof the workmen. It is not an amount uniformly paid as a part of themonth after month. It is a contingent payment. This is only a reimbursement of actual medical expenses incurred during the sickness and the same is paid against the medical certificates, bills etc. but subject to 4 per cent of the basic wages. We cannot understand as to how the Company says that this should be included in the basic wages as such.