Case: Tata Consulting Engineers Vs. Workmen Employed and Vice-Versa

Tata Consultant Engineers, at its inception, was a partnership firm but subsequently the partnership was dissolved and in 1974 the undertaking became one of the divisions of Tata Sons Limited. It functions as a consulting organisation and a service industry, and does not manufacture any product or carry on trade. Its work force consists of engineers and supervisors and different categories of workmen. Out of 665 employees at Bombay, the draftsmen and the administrative staff number 306. These workmen are members of the Tata Consultant Employees Union. They served a Charter of Demands in July, 1974, on the appellant, and as their demands were not accepted and conciliation proceedings proved fruitless, the State Government made a reference of the dispute under s. 10(1) (d), Industrial Tribunal, Maharashtra for adjudication. The Reference was numbered I. T. No. 292 ofUnion filed a statement before the Tribunal claiming an upward revision of the wage scales and dearness allowance and an increase from fifteen years to twenty years in the span for earning annual increments. It was urged that the Efficiency Bar, as a feature of the wage scales, should be removed. The dearness allowance, it was claimed, should be granted on a slab system. The claim of the Union was resisted by the appellant, who maintained that the existing wage scales were fair and reasonable on a region-cum- industry basis and that it would not be possible for the appellant to bear the additional financial burden if the demands of the Union were accepted. Reference was made to the political uncertainty in Iran which had placed an appreciable part of the appellants business in jeopardy and to various other factors, peculiar to an engineering consultancy business, beyond the appellants control. There was fierce competition also, it was asserted, from other similar organisations.The appellant had introduced various pay scales in 1973 and some time later they were revised. There was no separate dearness allowance until January, 1977 when it was introduced for the first time. House rent allowance was also paid. Dearness allowance became payable at 10% of the ba sic wage subject to a minimum of Rs. 50/ and house rent allowance at 30% of the basic salary. Nothing those facts, the Tribunal observed that compared with the increased paying capacity of the appellant, an inference drawn from the prosperity enjoyed by the appellant over the years, there was definite need for revising the wage scales. It was pointed out that the dearness allowance and house rent allowance granted by the appellant made little impact in neutralising the cost of living. The need for revising the wage scales was not disputed by the appellant. In proceeding to revise the wage structure the Tribunal took into account the two principles involved in the process, the financial capacity of the industry to bear the burden of an increased wage bill, and the prevailing wage structure on an industry- cum-region basis. Wage scale statements were filed by the parties before the Tribunal pertaining to several engineering consultancy organisations but i n the absence of pertinent information concerning the strength of their labour force, the extent of their business, the financial position for some years, the capital invested, the precise nature of the business, the position regarding reserves, dividends declared and future prospects of the company, the Tribunal found that it was unable to rely on them as comparable concerns. Holding it impossible in the circumstances to apply the principle of industry-cum-region basis, the Tribunal turned to a consideration of the financial capacity of the company to bear an additional burden in this connection, it proceeded on the footing that the appellant was a separate and independent division of Tata Sons Limited and had no "functional integrality" with the other divisions. Having regard to the net profits earned by the appellant from 1968 to 1977 it found that the acceptance of the demands of the Union would result in an increased burden of Rs. 7 crores, a burden which would dry up the appellants resources and would be impossible for it to bear. The Union modified its demands but even the modified terms, according to the Tribunal, appeared to be on the high side inasmuch as the resulting total burden of Rs. 1.70 crores was much higher than the average profits could sustain. The particular character of the appellant, that it was a service industry and not a manufacturing concern, was taken into account and it was observed that unlike a manufacturing business there was little scope for diversification in the case of an engineering consultancy. Nonetheless, the Tribunal observed, there was every reason to expect that the appellant would be able to earn sound profits in the future, and the instability in its business activities occasioned by the turbulent political situation in Iran, would be, it was expected, compensated by contracts secured in different developing countries. For the purpose of determining the financial capacity of the appellant, the Tribunal followed Unichem Laboratories v. Their Workmen(1) where it was held that the gross profits should be computed without making deductions on account of taxation, development rebate and depreciation. It decided also that there was no ground for deducting the notional value of gratuity. Revising the figures on that basis, it computed the annual gross profits for the years 1968 to 1977 and determined the annual average at Rs. 26.69 lakhs.The Tribunal took note of the elaborate scales of wages already existing in the wage structure of the appellant and decided "to modify the existing structure of the scales with flat increases in each category." It also observed t hat the category of Draughtsmen needed a special increase. But it rejected the demand of the Union for dearness allowance on the basis of a slab system, because that would have imposed an unacceptable burden on the appellants financial capacity and there was no reason why the existing scheme of dearness allowance should be disturbed when a substantial increase was being made in the level of the basic wage. Taking into account the circumstance that besides the staff of 306 workmen represented by the Union there were several other employees who would also have to be paid, the Tribunal considered it fair, in paragraph 23 of the award, to give a flat increase of Rs. 150/- in the category of Draughtsmen and Rs. 100/- in the case of other categories. It rejected the demand of the Union for abolishing the Efficiency Bar, but the span of 15 years for earning increment was expanded in some grades to 20 years and some adjustments were also made in specific grades. The Tribunal also noted that after the salaries of the employees had been fixed in the respective scales, senior employees would have to be given some more increments in the new scales according to their completed years of service. Taking all the se factors into consideration, it made an award dated 20th December, 1978 prescribing the following revision in the existing scales of&Category Existing Grade/ Rev ised Grade/Scale Scale------------------------------------------------------------I Peon/Helper/ Rs. 250-10-300-EB- Rs. 350-10-450-15-Sweeper 10-400. 600.II Driver/Asstt. R s. 300-10-420-EB- Rs. 400-15-520-20-House-keeper/ 15-540. 660-EB-25-785.Caretaker.III Jr. Clerk-cum- Rs. 350-15-425-EB- Rs. 450-20-550-25-Typist/Jr. Steno 20-625-EB-25-725. 800-EB-30-950.Tel. Optr./Recep-ti onist/Assist.Record Keeper/Veh. Mechanic/Jr. Librarian.IV Sr. Clerk/Steno/ Rs. 450-20-530-EB- Rs. 550-25-675-30-Record Keeper/ 30-860-EB-35-1000. 975-EB-40-1175.Tlx. Operator/Xerox OperatorV Office Asstt./ Rs. 590 -30-740-EB- Rs. 690-35-865-40-Lib. Asstt./ 35-1020-EB-40-1300 1265-EB-45-1490.Cost. Assist./AdministrativeAssist./PersonnelAsstt./Comm. Asstt./Canteen Asstt.VI Draughtsman/Site Rs. 380-30-620-40- Rs. 530-40-730-50-Supervisor/ 1020-EB-50-1320. 1230-EB-60-1530.Surveyor/(DiplomaHolder).VII Junior Architect Rs. 760-40-1000-50- Rs. 860-50-1160-(Engineering 1300. -60-1700.Graduate)VIII Sr. Draughtsman Rs. 1000-50-130 0- Rs. 1100-60-1340-(Diploma Holder) 60-1600-75-1750.Tribunal maintained the existing schemes of dearness allowance and house rent allowance, and observed that in view of the revised basic wages there wo uld be a resultant increase in the dearness allowance and house rentrevised wage scales, the Tribunal directed, should take effect retrospectively from 1st January, 1976. It also laid down the principle enabling the actual fitment of the workmen in their respective wage scales as on that date and also provided for the number of increments to which they would be entitled having regard to the period of completed service.Two days after the award was made, an application was made by the Union stating:"In the said award, your Honour has observed, at the end of para 22, "In view of the increase that is being allowed in the basic pay, I do not propose to revise the existing scheme of Dearness Allowance." Further, it appears that the Tribunal intended to grant the increase of Rs. 150/- to each draughtsman and Rs. 100/- to all other workmen in their basic pay. However, this is not clearly mentioned anywhere in the award due to accidental slip orUnion prayed that the position may be clarified and the award corrected accordingly. On the same date, the Tribunal disposed of the application by the followingcan be no doubt that a flat increase of Rs. 150/- to each of the employees in the category of Draftsmen and of Rs. 100/- to each employee in the other categories has been granted under my award. The same has been made clear in paragraph No. 23, but it appears that the words "to each employee" after the figure "Rs. 150/-" were omitted. Similarly, the same words "to each employee" after the figure "100" were omitted. When the award is sent for publication , a necessary corrigendum be made in the award and the aforesaid words after the figures Rs. 150/- and Rs. 100/- be added. It may be mentioned that only from that point of view viz. to grant flat increase of Rs. 150/- an d of Rs. 100/- to the employees in the category of Draftsmen and the other categories respectively that a burden statement was called for from the company and the same was submitted (vide Ex. C-51). The fitment has also to be do ne only after the flat increase is added to the present basic salary of each employee. I do not think that any problem would arise for interpretation of the award. Since the award has been already signed, I do not think anything further can be added to this award.sd/- K. N. WaniINDUSTRIALthis appeal, the learned counsel for the appellant had covered a wide field, but in the end he states that the appellant is aggrieved by two matters only. One is the retrospectivity attached to the revised wage scales, and the other is the flat increase given to each employee of Rs. 150/- in the category of Draughtsmen and Rs . 100/- in other categories resulting from the order dated 22nd December,workmen have filed an appeal by special leave, Civil Appeal No. 2300 of 1979, in which they have challenged the rejection by the Tribunal of their claim in respect of dearness allowance which, they contend, should be pegged to the cost of living index and should not be a fixed amount.

Reasoning:
In its order of 22nd December, 1978, the Tribunal has referred to the statement (Exhibit C-51) filed by the appellant when called upon to indicate the increased financial burden apprehended by it. The Tribunal has relied on this statement as evidence showing that the appellant knew that a flat increase of Rs. 150/- and Rs. 100/-was intended to each of the employees in the category of Draughtsmen and the other categories. In so construing the statement, Exhibit C- 51, the Tribunal has grievously erred. It seems from a perusal of the document, Exhibit C-51, that it is a statement giving trial figures of the increased financial load on different bases. On the basis that a sum of Rs. 150/- per month was add ed to the pay of each Draughtsman and a sum of Rs. 100/- was added to the pay of every other workman, who belonged to the Union staff, the financial load would increase to Rs. 9, 22, 032/-. Likewise, if a flat increase of Rs. 100/- was given to individual workmen of all categories, including Draughtsmen, the increased financial load would total Rs. 7, 64, 256/-. The statement then goes on to indicate that if a flat increase of Rs. 75/-per month were given to individual workmen of a ll categories the total increase would be Rs. 5, 78, 220/-. Again, if the flat increase is Rs. 65/- per month to the individual workmen of all categories, the additional load would total Rs. 4, 97, 772/-. Finally, on the basis that the individual Draughtsman would be given an increase of Rs. 75/- per month and the individual workmen of other categories Rs. 50/- per month, the additional load was calculated at Rs. 4, 63, 092/-. It will be noted that the statement, Exhibit C -51, was prepared on the basis of the employees strength as in December, 1971. A similar statement was prepared on the basis of the employees strength as in September, 1978. These statements cannot be regarded as evidence that the appellant was cognizant of the intention of the Tribunal to provide a flat increase to the pay of each workman. The statement afforded an indication merely of what the additional financial load would be if a flat increase was given to the individual workman on the alternative basis set forth therein. None of the alternatives was actually adopted by the Tribunal, because when the award was made the Tribunal proceeded instead to restructure the wage scales by the addition of Rs. 150/- in the case of the category of Draughtsmen and Rs. 100/- in the case of other categories to the initial pay in the wage scales pertaining to those categories. The addition was integrated as a feature of the wage scales; it was not regarded as an add ition to the pay of each individual workman.It seems that the Tribunal was betrayed by a curious confusion in accepting the plea of the Union that a flat increase to the pay of each workman was intended in the original wage and, consequently, it fell into the error of amending the award. The evidence contained in the award throughout provides incontrovertible proof that this flat increase was never originally intended in the award. The amendment has resulted in the Tribunal m aking, as it were, a supplementary award, whereby a further relief is being granted beyond that granted in the original award. The original award was completed and signed by the Tribunal, and it cannot be reopened now except for the limited pu rpose of Rule 31. In travelling outside and beyond the terms of the original award, the Tribunal has committed a jurisdictional error. Our attention has been drawn to what purports to be an endorsement by counsel for the appellant on the application dated 22nd December, 1978 filed by the Union before the Tribunal to the effect that the appellant would submit to whatever the Tribunal decided, and it is urged that the appellant is bound by the order made on the application. It is an accepted principle that consent by a party cannot confer jurisdiction on a court. What is without jurisdiction will remain so. In the circumstances the order of 22nd December, 1978 is invalid so far as it amends paragraph 23 of the original award. The corrigendum amending the award in consequence is liable to be quashed. The second contention of the appellant is entitled toTribunal, in the present case, considered the matter and found it sufficient and in accord with justice that the wage scales should be restructured with suitable increments provided therein. It noted that dearness allowance was being granted by the appellant at 10% of the salary sub ject to a minimum of Rs. 50/- and house rent allowance at 30% of the basic salary. Having regard to the not inconsiderable improvement in the level of the basic wage, it observed that there would be a consequent increase in the dearness al lowance and house rent allowance. In view of the increase so secured, the Tribunal rejected the suggestion that a slab system should be introduced in the dearness allowance or that there should be any other modification of the principle on which dear ness allowance was being presently granted. It declared that the cumulative effect of an improved wage structure together with dearness allowance operating on a slab system would throw an impossible burden of about Rs. 1 crore on the financial capacity of the appellant. It was open to the Tribunal to adopt the position which it did. If the dearness allowance is linked with the cost of living index the whole award will have to be reopened and the entire basis on which it has been m ade will have to be reconsidered. The award is a composite document in which the several elements of increased wage scales, larger increments, longer span of 20 years for earning increments, dearness allowance at 10% of the basic wage, besid es several other benefits, have been integrated into a balanced arrangement in keeping with what the Tribunal has found to be the financial capacity of the appellant. It is not possible to maintain one part of the award and supersede another.Accordingly, the appeal filed by the workmen must fail.