Case: Hindustan Antibiotics Ltd Vs. The Workmen &amp; Ors

2. The Hindustan Antibiotics Limited, hereinafter called "the Company", is a Government undertaking and is incorporated under the Indian Companies Act. Its registered office is at Pimpri, Poona District, State of Maharashtra, and its main business is the manufacture and distribution in bulk of antibiotics like penicillin, streptomycin, etc. The entire equity capital of the Company is held by the President of India and his nominees, and the entire Board of Directors of the Company is nominated by him. The conduct of the business of the Company is subject to the directives issued from time to time by the President of India and its accounts are audited by the auditors appointed by the Central Government on the advice of the Comptroller and Auditor-General of India. Service conditions of the workmen and other matters are subject to the approval of the President of India. The annual report of the working of the Company and its affairs along with the Audit Report has to be placed before the Parliament. There are no shareholders other than the Central Government or its nominees, with the result that the dividends declared by the Company entirely go to the coffers of the State, but the profits are ploughed back into the industry or kept as reserve for future requirements. In short, though the Company is a limited one and, therefore, has a distinct corporate existence, it is in effect financed entirely from the funds of the Central Government3. The Company employs about 2,000 workmen. A dispute arose between the workmen of the Company and the management thereof and the workmen presented a charter of fifteen demands to the Company. The Government of Maharashtra referred the said dispute to the Industrial Tribunal, Bombay, for adjudication under S. 10 (1) (d) ofthe Industrial Disputes Act, 1947(XIV of 1947)4. The Industrial Tribunal, after elaborately considering the conflicting contentions of the disputants, gave an award, dated October 8, 1963. In making the said Award the Industrial Tribunal postponed its decision on the question of linking dearness allowance with the cost of living index which had not then been prepared for Poona. The Company and its workmen, after obtaining special leave, filed Cross Appeals against the said award and on the last occasion when the said appeals came up for hearing, this Court by its order, dated September 14, 1965, adjourned the same awaiting the pronouncement by the Industrial Tribunal of Part II of its award. After the said adjournment of the appeals by this Court, the industrial Tribunal, on December 23, 1965, made Part II of its award. These appeals are now before us for disposal5. The Industrial Tribunal made the following findings among others: Rejecting the contention of the Company that in fixing the wage scales different considerations and standards should apply to public sector undertakings as distinct from private sector undertakings, the Tribunal fixed the wage scales on region-cum-industry basis. On a scrutiny of the comparative study of the wage structures of companies in the region, it found that the Company was a very large and prosperous concern and its wage scales were on the low side, particularly in regard to the lower categories of workers, taking into consideration the duties and qualifications prescribed for them. The Tribunal fixed the wage scales, having regard to the Companys financial position, its productive capacity, a comparative study of its wage structure with that in the neighbouring industries, and similar other relevant factorsIt retained the existing dearness allowance scheme except for a small alteration in the slab of dearness allowance for the pay group Rs. 301-500; it merged a proportion of what would normally be paid in the shape of dearness allowance in the basic pay in the case of lower categories of workmen by giving increases wherever necessary in the basic pay only. It linked the dearness allowance with the cost of living index for Poona. It evolved a gratuity scheme for the workmen. It gave retrospective operation to the award. The findings of the Tribunal on other points need not be mentioned here, they will be dealt with in appropriate places. In the result, pursuant to the said directions, the Tribunal had worked out the figures in detail and given its findings on the various demands made by the workmen.

Reasoning: 11. A combined reading of these provisions indicates-indeed it is not disputed that the Act regulates the relationship of employer and employee irrespective of the fact that the employer is the State Government or not. But what is stated is that though the said Act governs the relationship between the employers and workmen irrespective of the fact whether the employer is Government or Government-aided corporation, the pattern of wage structure need not necessarily be the same; but the fact that the disputes between the employers and employees, irrespective of the character of the employer are made the subject of industrial adjudication is indicative, though not decisive of the legislative intention to treat workmen similarly situated alike in the matter of wage structure and other conditions of service. Section 20 of the Payment of Bonus Act of 1965 directs the application of the Act to establishments in pubic sector in certain cases21. Nor the service conditions of the employees in public sector undertakings are analogous to those of the Government employees. There is no security of service; the fundamental rules do not apply to them, there is no constitutional protection; there is no pension; they are covered by service standing orders; their service conditions are more similar to those employees in the private sector than those in Government departments22. In Ex. U-13, a letter dated May 31, 1961 from the Financial Adviser of the Company to Shri R. P. Sharma the Financial Adviser, informed Shri Sharma, who was an U. D. C., Internal Audit Section of the Company, that the Pay Commission recommendations were not applicable to the employees of the Company. Indeed, the Pay Commission Report does not deal at all with Government undertakings in the public sector23. Nor can we appreciate how there would be any repercussions on other public sector undertakings situated in different parts of the country because of the said differential in the wage structure of the Government undertakings in the public sector. The labour who have by now accepted the region-cum-industry principle, will not raise any dispute if their wages are similar to those obtaining in comparable concerns in the region. On the other hand, in a vast country like India, the labour cannot appreciate the uniform structure of wages on an All-India basis, if they find that in the region where they are working, employees similarly situated are getting higher wages than theirs. So too, in a particular region, the pay structure of a Government industry may happen to be better than that obtaining in comparable concerns in the same locality. This will lead to industrial unrest, for the labour force in the comparable concerns may demand that their wages should be equalised with those obtaining in Government concerns. By and large, therefore, the acceptance of the principle of region-cum-industry will be more conducive to industrial relations than that of the governmental wage structure framed on an All India basis. Nor can we appreciate the argument that the principle of region-cum-industry will dead to discrimination. But, if the expression "labour force" is understood to mean the labour force employed in both the sectors, the alleged discrimination between different parts of the public sector will disappear, for, as far as possible, the labour to whichever sector it may belong in a particular region and in a particular industry, will be treated on equal basis27. The first argument is based upon a fallacy. The doctrine of dearness allowance was only evolved in India. Instead of increasing wages as it is done in other countries, dearness allowance is paid to neutralise the rise in prices.This process was adopted in expectation that one day or other we would go back to the original price levels. But, when it was found that it was only a vain hope or at any rate, it could not be expected to fall below a particular mark, a part of the dearness allowance was added to the basic wages, that is to say, the wages, to that extent, were increased. While the Tribunal increased the wages, in fixing the dearness allowance, it looked into the overall picture, namely, whether the total wage packet would approximate to the total packet wages in comparable industries. There is no question, therefore, of paying dearness allowance on dearness allowance, but it was only a payment of dearness allowance in addition to the increased wages. Even on the basis of the increased wages, dearness allowance was necessary to neutralise the rise in prices. That is exactly what the Tribunal has done. The Tribunal adverting to this argument stated:"I am, however, of opinion that in linking the dearness allowance a portion of which has been merged in the basic wage, the totality of emoluments should not be ignored, otherwise in the case of a market increase in the cost of living, if the linkage is done without bearing in mind the total emoluments, the total emoluments would not be satisfactory and may even become out of line with those in other large concerns in the region. Again the linkage need not be done so as to provide increase in dearness allowance at a uniform rate. Otherwise increase in dearness allowance on account of rise in the cost of living for employees drawing wages and salaries above certain ranges of basic wage or pay as would vary inadequately neutralise the rise in cost of living."28. Nor can we accede to the argument that there was a double provision for house rent. The fact that in the Index for Poona one of the components is house rent only means that the rise in the house rent wag also taken into consideration in arriving at the Index. Unless it is established that the house rent was a major item which went in inflating the price index, it cannot be said that the Tribunal by awarding house rent allowance has given a double advantage to the employees in question. It has not been established before us that the Index for Poona was inflated because of its rent component. Indeed, this argument does not appear to have been raised before the Tribunal. We cannot, therefore, accept this argument29. In the result, the contentions raised in respect of dearness allowance are rejectedThat apart, from the standpoint of the employee the said two schemes give him something to fall back upon after his retirement. It is commonplace that industrial adjudication under the present circumstances is not able to provide the labour a living wage. At the best, they get only a little more than the necessities of life. If the industry is a flourishing one, we do not see any reason why the labour shall not have the benefit of both the schemes. Doubtless, the provident fund gives him relief, but to earn it, he contributes a part of his wages. But that in itself may not be sufficient to meet the requirements of his old age or to provide for his dependants during his lifetime or after his death. Gratuity is an additional form of relief for him to fall back upon. If the industry can bear the burden, there is no reason why he shall not be entitled to both the retirement benefits. The Tribunal considered all the relevant circumstances: the stability of the concern, the profits made by it in the past, its future prospects and its capacity and came to the conclusion that in the concern in question, the labour should be provided with a gratuity scheme in addition to that of a provident fund scheme. We see no justification to disturb this conclusion34. The learned counsel took objection to the part of the award where the Tribunal gave retrospective operation to it from 1st January,1962. Thereference of the dispute to the Tribunal was made on 11th August, 1962.The first award was made on 8th October. 1963. A Tribunal ordinarily makes its award operative from the date of reference; but, in exceptional circumstances it gives retroactive operation to some of its proposals. It will be seen from the record that the original demand emanated as early as 6th February, 1957, but because of some technical difficulties, namely, whether the Central Government Authorities or the State Government Authorities were the appropriate authorities for entertaining the dispute in conciliation proceedings, the said proceedings took a long time for reaching the stage of reference. Having regard to that fact and also to the fact that the totality of the emoluments, particularly, in the case of lower categories of manual, technical and clerical staff were on the lower side in the company, the Tribunal in its discretion came to the conclusion that the revised scales should come into effect from 1st January, 1962. We do not see any reason to interfere with its discretionThe Tribunal gave the workmen an allowance of Rs. 5 per month from the date the award became enforceable. While the workers say that to work in the sections of closed area is a health hazard and reduces the life-span, the Company admits that the workers functioning therein are easily fatigued but states they are given the necessary safety equipment, food and rest. It is therefore common case that the work in the closed area involves a great physical strain on the workmen. In the circumstances, when the Tribunal gave them a reasonable allowance, it is not possible for this court to take a different viewThe award discloses that the Tribunal accepted the principles generally applied in fixing wages. It has not been brought to our notice that any principle has been violated. We have also scrutinised, with some care, the tabular statements placed before us. It is true in some cases the total emoluments of a particular category of employees of the Company is higher than those of the other concerns, but the difference is not such as to be described as a flagrant violation of the fixation of the wage structure. Almost always no Tribunal fixes nor can fix the wage structure to reach the perfection point. If no principle is violated, this Court will no interfere on the ground that it would have fixed the wages at a lower level than the Tribunal did. We do not find any such abnormal variation of wages from those obtaining in other companies. We do not, therefore think that this is such an exceptional case as to call for a departure from our usual practice of not interfering with the award of the Tribunal in the fixation of wage structureThe definition of workman in S. 2 (s) of the Industrial Disputes Act excludes therefrom any person who is employed mainly in a managerial or administrative capacity or who being employed in a supervisory capacity draws wages exceeding Rs. 500 per mensem. It was contended that a foreman was a supervisor within the meaning of the said definition and as, in the instant case, he was drawing less than Rs. 500 per mensem, he would be a workman within the meaning of the definition. The Tribunal held that he was not a workman on the ground that his work was predominantly managerial and administrative in nature. It has come to that conclusion on a consideration of the various duties allotted to the foreman. The finding is one of fact and therefore must be acceptedBut it is said that the Scope of the judgment was confined only to the Bombay region and it should not be extended to the Poona region. A perusal of the Tribunals Award shows that it followed the decision given by it in the dispute of Shaw Wallace and Co. Ltd., which was reversed by this Court. That apart, the Tribunal also recognized that the retirement age should be raised from 55 years to 58 years and that even thereafter discretion should he given to the employers to continue the employees or not to do so. This indicates that in the view of the Tribunal, the retirement age in the case of the employees of the industry in question could reasonably be raised beyond, 58 years. We do not think it is proper to give a discretion to the Company to raise the age of retirement or not to do so, for, the vesting of such uncontrolled discretion in the employer might lead to manipulation and victimisation. We would, therefore, following the trend of judicial opinion, hold that the retirement age of the employees of the Company should be raised to 60 years40. On behalf of the workmen it was contended that the linkage should be done with effect from January 1,1962. TheTribunal pointed out that it had no intention of giving retrospective effect to the linkage for the following reasons: (1) It had substantially increased the wages: (2) a long retrospective effect would unduly increase the burden on the Company; and (3) the workmen had been getting handsome bonuses. But, having regard to the fact that the Poona index figures had been published from April 1964 it held that the linkage should he from April 1, 1965 and not from the earlier date; that is to say, it had given, having regard to the aforesaid circumstances, a limited retrospective operation to the linkage. The employees have not made out any case for giving a further retrospective effect to the linkage.