Case: Hindustan Lever Ltd Vs. B.N. Dongre

the wage scales of comparable concern i. e. TOMCO and in that respect statement furnished by Shri Menon, Advocate for the Union, appear to be correct. Hence, I agree with a modified revision of wage scales, as demanded by the workmen." * 31. The learned counsel for the Company took serious exception to the upward revision of the scales above those recommended by the Dongre Award. His objection runs thus : The workers were not aggrieved by the revised wage-structure granted under the Dongre Award and had stated so in no uncertain terms in their writ petitions in the High Court in the following words : "The petitioner says that the petitioner is not challenging the entirety of the Award, but is limiting the attack on the Award, insofar as it relates to (a) Dearness Allowances, (b) Classification, (c) Automatic Promotion and Stagnation Increment, (d) Housing Loan and (e) Provident Fund." * This averment is not denied. 32. It was the Company which had challenged the revised wage-structure prepared under the Dongre Award. The learned Single Judge spurned the Companys challenge. The Division Bench found it necessary to remit the matter to the Tribunal for reconsidering the question regarding revision of pay scales as in its view the Dongre Award had considered the revision necessary as a package formula since it had placed a control on dearness allowances, which control the Division Bench had lifted. Counsel, therefore, vehemently contended that there was no question of a further upward revision beyond what was allowed under the Dongre Award. Counsel submitted that the Deshpande Award whereunder higher pay scales have been granted is wholly unsustainable. We see merit in this line of reasoning.33. The learned Single Judge in paragraph 8 of his judgment points out that the Tribunal had while making the Award "awarded a package deal to the workers" and had allowed various other benefits since he had placed a ceiling on dearness allowance. He has granted revision of pay scales, special allowances, etc. However, in paragraph 11 there is a mention that counsel for the workers had raised the contention that the salary structure of TOMCO was higher, the entire wage-packet was in fact better, and since it was a comparable industrial unit the workers of the company were entitled to the same. In fact the learned Single Judge notes that he had enquired of the management if it would be willing to grant the entire pay-packet of TOMCO to the workers of the Company and the management after taking time showed its willingness to do so but the workers did not agree. Thus although the learned Single Judge explored the possibility of the management giving the TOMCO pay-packet to the workers of the Company when the workers backed out on second thought he did not interfere with the Dongre Award in that behalf in view of the aforesaid statement.34. The Division Bench noticed the submission made on behalf of the Company in paragraph 46 of its judgment and conceded in paragraph 48 : "It cannot be gainsaid that one of the main considerations, which was weighed with the Tribunal, while introducing the revised pay scales is that it was introducing the ceiling on dearness allowance, for those earning salary above Rs. 500 per month, " which accords with what counsel for the Company has urged. It was on this consideration that the Division Bench concluded that both the revision of salary and introduction of the new dearness allowance system were interlinked and since the ceiling on the latter was lifted, the Division Bench considered it "only fair" to remand the matter to the Tribunal "to consider the case for revision of wage scales afresh independently and irrespective of the change in the dearness allowance system which was proposed by it". The observations of the Division Bench had to be understood in the backdrop of the fact that the workers were content with the revised pay scales worked out under the Dongre Award and had therefore not questioned that part of the award. Since the learned Single Judge had not interfered with it, there was no question of their getting higher pay scales. When the Division Bench remitted the matter in this background the Tribunal should have realised that the remand was necessitated because the factum of imposition of a ceiling on dearness allowance was the reason which had impelled the Tribunal to increase the pay scales and since the ceiling was lifted it was necessary to consider whether upward revision of the pay scales was at all necessary in the changed circumstances and, if yes, whether the revision ordered under the Dongre Award was justified. There was no question of the pay scales being revised above the Dongre Award stipulations. Besides, we are also not happy with the approach of the Tribunal. It is not correct to say that the Division Bench had imposed any limitation of the type read by the Tribunal as evidenced by the recital in paragraph 22 of its order extracted earlier. We also find that the Tribunal has merely set out the rival contentions and the data in support thereof and has, without analysing the same, concluded that the modified revision of pay scales suggested by the workers was justified. This approach is far from satisfactory. The need for stagnation increment would again depend on the time span in each scale in the revised pay-structure. If the length of the pay scale is sufficient not to result in stagnation there would be no need for stagnation increment. We would, therefore, like the Tribunal to consider that question but if it comes to the conclusion that it is necessary to revise the pay scales and that the revised scales may cause some workers to stagnate at the maxima of the scale, it may opt in favour of the retention of the stagnation increase but if it does not see any scope for its retention it may for reasons to be stated to away with it.

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

Explanation:
0[ds]It must be remembered that the jurisdiction of the Industrial Tribunal under the I. D. Act was invoked both by the management as well as the workers. It is well settled that the decision of the Tribunal rendered under the I. D. Act would be subject to review by the High Court under Articles 226/227 of the Constitution. Since against the decision of the Industrial Tribunal no remedy was available under the provisions of the I. D. Act, the aggrieved party could only invoke the jurisdiction of the High Court under the aforesaid articles. Since both the Company and the workers were aggrieved by the award, to the extent it went against them, they preferred writ petitions challenging the award. All the three writ petitions, two on behalf of the workers by the Sabha and the Union, the third by the Company, were heard together and disposed of by a common judgment. Against the decision of the learned Single Judge, appeals under the Letters Patent were preferred once again by the said three parties. The Company never questioned the jurisdiction of the High Court to hear and decide the writ petitions nor did it question the jurisdiction of the Division Bench under the Letters Patent. Even the Company had appealed against the learned Single Judges decision to the extent it was against it. No contention regarding the scope and ambit of the jurisdiction of the Division Bench was raised in the appeal. If the jurisdiction of the learned Single Judge was not challenged by the Company, the Company itself had invoked it, it is difficult to comprehend how the Company can challenge the jurisdiction of the appellate court. If the learned Single Judge had jurisdiction to hear the writ petitions against the decision of the Industrial Tribunal, at any rate if his jurisdiction was not questioned by the Company, it cannot lie in the mouth of the Company to challenge the appellate jurisdiction of the Division Bench since that jurisdiction is conferred by the Letters Patent. We are, therefore, of the view that this contention belatedly raised before us cannot and should not be entertained. We reject it.20. We now come to the main issue. We have indicated in detail the nature, scope and ambit of the controversy. The contesting parties have updated the tables on which they relied before the Tribunal and the High Court and have also presented fresh calculationsthe Company endeavouring to show that the percentage of neutralisation soars above 100% and hence the need to impose a ceiling so that the existing differentials between the emoluments drawn by the workers in the higherdo not exceed those drawn by the junior executives immediately above them; the workers on the other hand refuting the contention that there isand the need to impose a ceiling. In fact an attempt has been made to point out that those in the higherare scientists anddoing highly skilled work and it is wrong to think that they are in any manner inferior to junior executives. The workers have tried to emphasise that as the record stands it is not possible to say whether theis at the subsistence level,ge level orlevel to enable this Court to decide whether or not a case for imposition of ceiling is made out. It is also contended that the Company has tried, time and again, to cloud the facts and has falsely alleged that the 1970 base was not adopted by consent. Since that was the year in which the last revision had taken place under the Chitale/Bhojwani Awards, 1970 was taken as the base year by consent. It is, therefore, contended by the workers that the Company has tried to shift its stand from stage to stage of the litigation to suit its purpose in the fond hope that it may be able to persuade this court to its point of view. The respondents, therefore, have requested us not to look into these revised and misleading statements.21. We have, however, carefully examined the various statements placed on record to prove the rival points of view. The principal question is whether the Companys case ofed and, if yes, whether there is need to impose a ceiling on dearness allowance as advocated by the Tribunal and affirmed by the learned Single Judge. Now it is established that the present dearness allowance formula has been in vogue since long. It is also not in dispute that after the Chitale/Bhojwani Awards the Company had entered into settlements in 1979 and 1983 with theed employees in the Sewree factory and continued the existing formula. Before the Tribunal the Company produced statements to show that the neutralisation was as high as 204% at the minimum ofgrade tapering to 132.4% at the maximum ofgrade. As against that the workers contended that the percentage of neutralisation was 80% and 46%, respectively. The Tribunal held that the calculations made by both sides were incorrect. Referring to the Chitale Award the Tribunal points out that the Companys own statement showed that the neutralisation was 97.4% at the lowest and tapered to 86% at the highest. It, however, felt that 86% neutralisation was on the higher side. It was for this reason that the Tribunal opted for placement of a ceiling. However, the Tribunal did not determine the percentage of neutralisation on the basis of calculations submitted to it.The second ground on which the Company sought imposition of control or ceiling on dearness allowance is that it distorts the vertical relativity, in that, clerks receive emoluments exceeding what is paid to junior executives and are, therefore, disinclined to accept promotion. Since the basic pay of the workers belonging to theC1 to C4T1 to T4 categoriesis low they continue to be governed by the provisions of the I. D. Act whereas the junior executives are not governed by the said statute. The wages of the former would be determined either by settlements or by award made on reference under the said statute. These workers, therefore, constitute a class by themselves and their wage determination is under the provisions of the I. D. Act. But the junior executives do not belong to that class and their salaries are differently determined. The process of determination of their salary plan has nothing to do with the workers governed by the I. D. Act. How to make the promotional post attractive is for the company to decide but it may not be by denying the workers of a part of their dearness allowance for pegging down their emoluments. Besides it is well known that executives enjoy a certain status and perquisites which the workers do not receive. We think the better way to overcome the difficulty is make the junior executive grade more attractive rather than deny to the workers what they are receiving since long.24. Next, we have pointed out earlier the relation between wages and prices of food, clothing and other necessities of life which even the lowest wage earner purchases month after month. If the prices of these commodities rise and the basic wage remains constant, real wage actually falls creating a problem for survival for the lowest wage earner. And it is common knowledge that this frequently happens during period of inflation as is reflected from how rapidly the index rose from 313 points in 1950 to 6229 points by August 1993. To prevent the real wages from falling with the rise in CPI, some allowance had to be paid to the workers which gave rise to the introduction of the dearness allowances scheme. Besides, it must be realised that the protection against price rise is limited to only those items included in the basket and not to all items which a wage earner at the lowest level consumes. For those items not included in the basket, the wage earner at every level has to bear the brunt of inflation. It must also be remembered that while dietary habits change, the food items in the basket remain constant for want of periodical revision with the result that the new items of food which are highly price do not count for neutralisation. Again wage revisions do not take place for long spells. In certain wage plans upward revision of wages take place by the merger of a portion of the dearness allowance in the basic wage plus an addition thereto to take care of the inflationary dents in thein respect of other items outside the basket. Under certain dearness allowance schemes, neutralisation is allowed on tapering percentages on the assumption that those in the higher wage groups have a certain cushion to bear a part of the inflation. Such a scheme is in vogue in Central and State Government servants salary plans. That cushion does not remain static and gets depleted as the prices rise and there comes a time when it becomes necessary to inflate it once again by an upward revision of the salary structure. But in certain industries merger of dearness allowance in the basic wage does not take place at all as in the present case and instead periodically increases are allowed in the basic wage to nullify the adverse effect of inflation on items outside the basket. It must, however, be remembered that in the case of employees belonging to high wage islands, theirshrink on account of the deduction of2. It was the Company which had challenged the revisedprepared under the Dongre Award. The learned Single Judge spurned the Companys challenge. The Division Bench found it necessary to remit the matter to the Tribunal for reconsidering the question regarding revision of pay scales as in its view the Dongre Award had considered the revision necessary as a package formula since it had placed a control on dearness allowances, which control the Division Bench had lifted. Counsel, therefore, vehemently contended that there was no question of a further upward revision beyond what was allowed under the Dongre Award. Counsel submitted that the Deshpande Award whereunder higher pay scales have been granted is wholly unsustainable. We see merit in this line of reasoning.33. The learned Single Judge in paragraph 8 of his judgment points out that the Tribunal had while making the Award "awarded a package deal to the workers" and had allowed various other benefits since he had placed a ceiling on dearness allowance. He has granted revision of pay scales, special allowances, etc. However, in paragraph 11 there is a mention that counsel for the workers had raised the contention that the salary structure of TOMCO was higher, the entirewas in fact better, and since it was a comparable industrial unit the workers of the company were entitled to the same. In fact the learned Single Judge notes that he had enquired of the management if it would be willing to grant the entireof TOMCO to the workers of the Company and the management after taking time showed its willingness to do so but the workers did not agree. Thus although the learned Single Judge explored the possibility of the management giving the TOMCOto the workers of the Company when the workers backed out on second thought he did not interfere with the Dongre Award in that behalf in view of the aforesaid statement.34. The Division Bench noticed the submission made on behalf of the Company in paragraph 46 of its judgment and conceded in paragraph 48 : "It cannot be gainsaid that one of the main considerations, which was weighed with the Tribunal, while introducing the revised pay scales is that it was introducing the ceiling on dearness allowance, for those earning salary above Rs. 500 per month, " which accords with what counsel for the Company has urged. It was on this consideration that the Division Bench concluded that both the revision of salary and introduction of the new dearness allowance system were interlinked and since the ceiling on the latter was lifted, the Division Bench considered it "only fair" to remand the matter to the Tribunal "to consider the case for revision of wage scales afresh independently and irrespective of the change in the dearness allowance system which was proposed by it". The observations of the Division Bench had to be understood in the backdrop of the fact that the workers were content with the revised pay scales worked out under the Dongre Award and had therefore not questioned that part of the award. Since the learned Single Judge had not interfered with it, there was no question of their getting higher pay scales. When the Division Bench remitted the matter in this background the Tribunal should have realised that the remand was necessitated because the factum of imposition of a ceiling on dearness allowance was the reason which had impelled the Tribunal to increase the pay scales and since the ceiling was lifted it was necessary to consider whether upward revision of the pay scales was at all necessary in the changed circumstances and, if yes, whether the revision ordered under the Dongre Award was justified. There was no question of the pay scales being revised above the Dongre Award stipulations. Besides, we are also not happy with the approach of the Tribunal. It is not correct to say that the Division Bench had imposed any limitation of the type read by the Tribunal as evidenced by the recital in paragraph 22 of its order extracted earlier. We also find that the Tribunal has merely set out the rival contentions and the data in support thereof and has, without analysing the same, concluded that the modified revision of pay scales suggested by the workers was justified. This approach is far from satisfactory. The need for stagnation increment would again depend on the time span in each scale in the revisedIf the length of the pay scale is sufficient not to result in stagnation there would be no need for stagnation increment. We would, therefore, like the Tribunal to consider that question but if it comes to the conclusion that it is necessary to revise the pay scales and that the revised scales may cause some workers to stagnate at the maxima of the scale, it may opt in favour of the retention of the stagnation increase but if it does not see any scope for its retention it may for reasons to be stated to away with it.