Case: Messrs Pharmed Private Limited Vs. Workmen

the appellant company have diminished in consequence. There was no material placed before the Tribunal that the agreement has been terminated. On the other hand, the appellants, in C. M. P. 4620 of 1969 referred to earlier, requested this Court to receive as additional evidence, a copy of letter dated October 9, 1969 stated to have been received by them Smith, Kline and French (India) Ltd., regarding the termination of the agreement and certain other matters. We have already rejected that petition, and it follows that the appellant is not entitled to place any reliance on that letter.23. Therefore, the position before the Tribunal was that the appellant did not adduce any evidence to show the volume of business done by it in respect of each of the companies referred to above, as to whether the agreements had been terminated and, if so, the consequent diminution in the profits of the company. Under those circumstances, the Tribunal, in our view, was perfectly justified in holding after having due regard to the profits earned by the company, that its financial condition was quite good. In fact the Tribunal has stated that the working results for the years 1967-68 were filed by the appellant under a confidential cover and those statements do not show any decline in the gross profits earned by the company for that year.24. For these reasons, the second contention also has to be rejected.25. Coming to the last contention of Mr. Gokhale that refers to the actual rate of dearness allowance awarded by the Tribunal. He pointed out that the Tribunal has granted full neutralisation which is not permissible in law. In this connection he referred us to the decision of this Court in Kamani Metals & Alloys Ltd. v. Their Workmen and Bengal Chemical and Pharmaceutical Works Ltd. v. Its Workmen (supra). In fact, in the latter decision, this Court has referred to the earlier decisions on the point and ultimately summarised the position regarding the principles governing the fixation of wages and dearness allowance.26. In Kamani Metals case (supra) it has been stated that as it is not advisable to have a one-hundred per cent. neutralisation lest it lead to inflation, dearness allowance is often a little less than one hundred per cent. neutralisation. In Bengal Chemicals case (supra) after a review of the previous decisions, this Court held that full neutralisation is not normally given except to the very lowest class of employees. Mr. Gokhale pointed out that though the Tribunal had proceeded on the basis that full neutralisation should not be granted, nevertheless, the rate at which neutralisation has been granted by the Tribunal contravenes the principles laid down by this Court. Mr. Chari, on the other hand, no doubt pointed out that if properly worked out, the result would not be, as assumed by the appellant. In any event, he pointed out that no prohibition has been laid down by this Court against the grant of full neutralisation under any circumstance. Without going into this aspect, in our opinion, the matter can be disposed of on a different consideration.27. The Tribunal, we have already pointed out, has rejected the demand of the Union for grant of dearness allowance at the rate of 45% on cost of living index 610, wages being worked out at 500 and a 5% rise or fall for every 10 points. The Tribunal has taken the view that it is more scientific to provide for a sliding scale. We are in agreement with the Tribunal in this regard and it also accords with the principles laid down by this Court in the Bengal Chemicals case (supra).28. The further question is : what should be the rate or variation ? The Industrial Tribunal has taken note of the fact that the company and the Union, by the 1966 settlement, have agreed to 2% rise with every 10 points. It has also adverted to the fact that the rise in variation is to be on consolidated wages and not on basis wages. It took the view that a variation of 2.5% for every rise or fall of 10 points in the price index above 600 is proper. Though normally this Court does not interfere with the percentage of variation fixed by an Industrial Tribunal, unless it is very onerous and not related to the evidence in the case, it must not be missed that, in this case, there is a guidance afforded by the terms of the agreement entered into between the parties on April 6, 1966. We have already referred to the fact that in respect of demand No. 1 relating to dearness allowance, the parties agreed that between the cost of living index figure 581 and 600 arrived at after working at 500 index figure. As an interim measure in the same settlement, there is also provided, by agreement, that the workmen are to be given increased rates of dearness allowance : (a) between the cost of living index figure 601 and 610 at 24% rise, and (b) between the cost of living index figure 611 and 620 at 26% rise. That shows that the parties, by agreement, have provided in respect of variation by 2% by every 10 points. That, in our opinion furnishes a safe guide which should not have been ignored by the Industrial Tribunal.29. Therefore, in view of these circumstances which are available in the agreement of April 6, 1966, we have to effect a slight modification in the variation fixed by the Industrial Tribunal. We are also of the view the grant at the rate of 2.5% rise in dearness allowance, as awarded by the Industrial Tribunal, will involve the company in an annual burden of Rs. 2, 43, 000/ and that imposing such a large burden at once might create hardship on the company.30. In view of these circumstances, we would allow a variation of only 2% on every rise of all of 10 points and in the consumer price index above 600.

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

Explanation:
1[ds]13. Before we proceed to deal with the contentions of Mr. Gokhale, it is necessary to state that the claim for revision of dearness allowance has been properly entertained by the Tribunal. The agreement of April 6, 1966 itself states that the cost of living index has gone above 600 and therefore the matter of dearness allowance has to be referred immediately for decision. Over and above this agreement, it is also to be seen that this Court has laid down in Remington Rand of India v. Its Workmen, that when a risethe cost of living index hasbeen established, the claim for a revision of dearness allowance cannot be rejected without examining it onTribunal, counsel pointed out, rejected the Unions plea that the appellant should be compared with the various firms which had entered into settlements with their workmen.The particulars, furnished by the appellant, in the settlements if properly looked into provide adequate information to establish that Chemo Pharma Ltd. and Cipla are concern which could be properly compared with the appellant company. The rejection of these statements, by the Tribunal was not justified. We are not inclined to accept this contention.15. The Tribunal has referred to the various matters contained in the statements furnished by the appellant regarding Chemo Pharma Ltd. and Cipla. But the Tribunal has taken the view that no particulars regarding the standing, the extent of labour force employed, the extent of their respective customers, the profit and loss and such other relevant information have been furnished by the appellant and therefore it took the view that those companies could not be considered for purposes of comparison with the appellant. For similar reasons the statements filed by the Union regarding the settlements stated to have been entered into by certain concerns with their workmen, were also rejected by the Tribunal. We do not find any error committed by the Tribunal in the reasons given by it for rejecting the claim of the management in this regard.16. The appellant has filed an application in this CourtC. M. P. 4620 of 1969praying for permission to file certain additional documents. One of the documents sought to be tendered is additional evidence is stated to contain particulars regarding the years in which the Chemo Pharma and Cipla were established as well as the number of workmen employed by each of those firms and their manufacturing activities. We have already referred to the fact that the Tribunal has declined to reply upon the statements filed by the appellants regarding these two concerns on the ground that they do not contain any information regarding their manufacturing activities, their labour force etc. In view of this we were not inclined to grant the permission asked for by the appellant and, as such, we have already rejectedC. M. P. 4620 of 1969on November 14, 1969.17. It follows that the first contention of Mr. Gokhale has to be rejected.Here again, we do not see any mistake or error committed by the Tribunal. The Tribunal has taken note of the fact that the appellant company manufactures pharmaceuticals on contract for various other concerns and that there is a possibility of those concerns taking up manufacture of such articles themselves. But the Tribunal has referred to the fact that the appellant itself is also a manufacturing concern making good profits and that no evidence to the company has been placed by the management.20.Mr. Gokhale referred us to the notice, dated January 19, 1967 given by Warner Hindustan Ltd., Bombay, to the appellant.It is stated in the said notice that Warner Hindustan Ltd. for whom the appellants are manufacturing certain products have established a pharmaceutical plant and that they expect to go into production from May 1967 onwards. The notice further states that the appellants from June 1967 will cease to manufacture certain types of Warner products and the rest of the products from July, August 1967. No evidence has been brought to our notice by the appellant that the agreement has been actually terminated, nor has any material been placed before us to show the volume of business transacted by the appellant with Warner Hindustan Ltd., before and after the termination of the agreement. Though the notice is of 1967, the management, so far as we could see, have not adduced any evidence before the Tribunal in this regard.21.Mr. Gokhale further referred us to a notice issued by Pfizer Ltd., dated November 26, 1968 to the appellant.That notice also states that the lan manufacturing of Pfizer products by the appellant would stand terminated by the end of March 1968. It is further stated that no more orders will be given to the appellant after March 31, 1968 and that the production in respect of orders already given would be continued until the end of June 1968. The same criticism that we have made regarding the notice issued by Warner Hindustan Ltd., applied to this notice also.22.Mr. Gokhale then referred us to the agreement dated July 22, 1963 entered into between the appellant and Smith, Kline and French (India) Ltd.One of the conditions of the agreement was that the appellants were to act as agents, consultants and advisers to Smith, Kline and French (India) Ltd. There are several other matters referred to in the agreement. Clause 7 of the agreement gives a right to the manufacture to terminate the agreement by three months written notice in the circumstances mentioned therein. According to Mr. Gokhale, the agreement has been terminated and the business profits of the appellant company have diminished in consequence. There was no material placed before the Tribunal that the agreement has been terminated. On the other hand, the appellants, inC. M. P. 4620 of 1969referred to earlier, requested this Court to receive as additional evidence, a copy of letter dated October 9, 1969 stated to have been received by them Smith, Kline and French (India) Ltd., regarding the termination of the agreement and certain other matters. We have already rejected that petition, and it follows that the appellant is not entitled to place any reliance on that letter.23. Therefore, the position before the Tribunal was that the appellant did not adduce any evidence to show the volume of business done by it in respect of each of the companies referred to above, as to whether the agreements had been terminated and, if so, the consequent diminution in the profits of the company. Under those circumstances, the Tribunal, in our view, was perfectly justified in holding after having due regard to the profits earned by the company, that its financial condition was quite good. In fact the Tribunal has stated that the working results for the yearswere filed by the appellant under a confidential cover and those statements do not show any decline in the gross profits earned by the company for that year.24. For these reasons, the second contention also has to beIndustrial Tribunal has taken note of the fact that the company and the Union, by the 1966 settlement, have agreed to 2% rise with every 10 points. It has also adverted to the fact that the rise in variation is to be on consolidated wages and not on basis wages. It took the view that a variation of 2.5% for every rise or fall of 10 points in the price index above 600 is proper. Though normally this Court does not interfere with the percentage of variation fixed by an Industrial Tribunal, unless it is very onerous and not related to the evidence in the case, it must not be missed that, in this case, there is a guidance afforded by the terms of the agreement entered into between the parties on April 6, 1966. We have already referred to the fact that in respect of demand No. 1 relating to dearness allowance, the parties agreed thatthe cost of living index figure581 and 600 arrived atafter working at 500 indexAs an interim measure in the same settlement, there is also provided, by agreement, that the workmen are to be given increased rates of dearness allowance : (a)the cost of living index figure601 and 610at 24% rise, and (b)the cost of living index figure20 at 26% rise. That shows that the parties, by agreement, have provided in respect of variation by 2% by every 10 points. That, in our opinion furnishes a safe guide which should not have been ignored by the Industrial Tribunal.29. Therefore, in view of these circumstances which are available in the agreement of April 6, 1966, we have to effect a slight modification in the variation fixed by the Industrial Tribunal. We are also of the view the grant at the rate of 2.5% rise in dearness allowance, as awarded by the Industrial Tribunal, will involve the company in an annual burden of Rs. 2, 43, 000/ and that imposing such a large burden at once might create hardship on the company.30. In view of these circumstances, we would allow a variation of only 2% on every rise of all of 10 points and in the consumer price index above 600.