Case: Workmen Of Gujarat Electricity Board,Baroda Vs. The Gujarat Electricity Board, Baroda

The supply of electricity in the State of Saurashtra, prior to the year 1954, was being carried out departmentally by the Government of Saurashtra and the workmen employed in the power houses were consequently Government servants. On 1st July, 1954, a Saurashtra Electricity Board was constituted to run the power houses and the employees of the Electricity Department of the Government were sent to work with the Saurashtra Electricity Board on deputation. On 1st November, 1956, Saurashtra became a part of the Bombay State, whereafter the Saurashtra Electricity Board was dissolved with effect from 1st April 1957 and its assets, liabilities, and employees were taken over by the Bombay State Electricity Board. The employees, who were originally in the service of the Saurashtra State Government were entitled to the pensionary scheme of the Sauarashtra Government, while the Bombay State Electricity Board had a Provident Fund Scheme. The Saurashtra State Government servants, on being taken over by the Bombay State Electricity Board, were given the option of either continuing in their pensionary scheme, or of joining the Provident Fund Scheme of the Bombay State Electricity Board in which case the gratuity already accrued to them and the equivalent of pensionary benefits were credited to their accounts. Some of the employees opted for the Provident Fund Scheme, while others continued under the pensionary scheme. Thereafter, on 1st May, 1960, the State of Bombay was bifurcated and a separate State of Gujarat was constituted; and, with effect from the same date, the Board came into existence. The Board took over all the Electricity, power-houses and electricity schemes in the State of Gujarat from the Bombay State Electricity Board including the workmen who are the appellants in this appeal. The assets and liabilities of the Bombay State Electricity Board were divided between the Board, and the Maharashtra Electricity Board which was constituted for the State of Maharashtra which came into existence on bifurcation of the Bombay State. The Board continued both the Pensionary Scheme as well as the Provident Fund Scheme for the employees in the manner they were in force when the employees were working under the Board State Electricity Board. The employees, who were originally servants of the State Government, had ceased to be government servants with effect from 1st April, 1957 and later on 1st May, 1960, became the employees of the Board so that they were no longer entitled to the rights which the State Government might sub-sequently grant in respect of pension under the rules applicable to the government servants. The result was that even improvements granted in the pensionary scheme by the State Government to its employees did not enure to the benefit of the appellants. In these circumstances the Sangh put forward the claim that the pension of employees, who were governed by the pensionary scheme, should be calculated not on the basis of basic salary, but after adding 50 per cent of the dearness allowance to it. In respect of employees who were governed by the Provident Fund Scheme, a second benefit of gratuity was claimed3. The demand for dearness allowance was that it should be linked with the scale prescribed for the Ahmedabad Mill-owners Association. The workmen demanded that employees, drawing up to Rs. 50 as basic pay, should be given dearness allowance at the scale applicable to Ahmedabad Mill owners Association, those drawing between Rs. 50 to Rs. 100, D. A. at the scale plus Rs. 5, and those drawing above Rs. 100, dearness allowance at that scale plus Rs. 10. This demand was put forward before the Board originally on behalf of all the 9,208 employees of Class III and Class IV and some employees of Class I and Class II whose salary was below Rs. 300 per mensem, who were working either in the Gujarat Region or the Saurashtra Region. These employees were represented by seven different Unions, one of which was the Sangh who represented about 3,000 employees working in the Saurashtra region. The six Unions representing the employees working in the Gujarat region amicably settled these disputes with the Board by entering into agreements. The Board gave some increase in dearness allowance retrospectively with effect from 1st October, 1961, while the second demand relating to gratuity and calculation of pension after adding 50 per cent of the dearness allowance was given up. The Sangh declined to accept this settlement, whereupon the Board offered terms in accordance with the settlement to all the employees in the Saurashtra region individually. Out of the total of 3,042 in the Saurashtra region, 622 signed General Standing Order 56, under which the Board had made its offer to individual employees on the basis of the settlements arrived at before the reference to conciliation. 1152 signed before the date of the failure report by the Conciliation Officer; 2058 signed before the reference and 518 signed after the reference. Thus the dispute, after the reference, became confined to the remaining 466 employees who did not on individual basis, accept the offer made by the Board. The Tribunal considered this dispute relating to the dearness allowance raised by these employees through the Sangh as also the other demand relating to gratuity and calculation of pension, and, by the impugned Award, rejected these demands. Consequently, the workmen have come up in this appeal through the Sangh.

Court's reasoning:
5. So far as the question of capacity of the Board to pay is concerned, there is a clear finding by the Tribunal that the Board is running at heavy losses, so that it is not in a position to meet the extra expenditure of about Rs. 49 lakhs a year which will be involved if the dearness allowance is fixed as claimed by the Sangh. The Tribunal has found that the Board, when constituted on 1st may, 1960, inherited an accumulated deficit of over Rs. 2 crores from the Bombay State Electricity Board. In its own working, the Board sustained a loss of over Rs. 29 lakhs between 1st May 1960 and 31st March, 1961, and in the two succeeding years 1961-62 and 1962-63, the losses incurred were in the region of Rs. 39 lakhs and Rs. 41 lakhs. The Tribunal, thus, held that the total loss was to the tune of Rs. 31 millions; and since the Board had undertaken a further liability of over Rs. 6.75 lakhs a year under the settlements and the offer to individual workman, it could not possibly undertake the further burden of paying about Rs. 49 lakhs per year as increased dearness allowance. The Tribunal was also of the opinion that, considering this financial condition of the Board, there was no justification for introducing a Gratuity Scheme for workmen governed by the Provident Fund Rules, nor was there any justification for calculation of pension on the basis of adding 50 per cent of the dearness allowance to the basic pay6. So far as the first point is concerned, we think that there is some force in the submission made by learned counsel. The deficit inherited by the Board from it predecessor cannot be treated as a revenue loss which will have bearing on its paying capacity. Such inherited deficit should really have been treated as capital loss; but even this loss cannot be completely ignored, because the paying capacity of an employer has to take into account even capital losses. However, even if this accumulated deficit of over Rs. 2 corers is ignored, it is clear that, during the three years after its formation, the Board itself incurred heavy losses which totalled to about Rs. 110 lakhs.Consequently, even if that accumulated deficit is not taken into account it cannot be held that the Board will have the capacity of bearing the additional financial burden to the tune of Rs. 49 lakhs a year, if required to pay dearness allowance at the rates claimed by the Sangh7. On the second point, we are unable to accept the submission made by learned counsel. The Board was constituted under the Electricity (Supply) Act No. 534 of 1948 and Section 18 of that Act lays down the duties of the Board.By its very constitution, the Board is charged with the general duty of promoting the co-ordinated development of the generation, supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by any licensee. In particular, the duty of the Board is to prepare and carry out schemes with the objects mentioned above; to supply electricity to owners of controlled stations and to licensees whose stations are closed down under this Act; and to supply electricity as soon as practicable to any other licensees or persons requiring such supply and whom the Board may be competent under this Act so to supply. When the Board was constituted to carry out these duties, its capacity to bear the burden of paying wages to its employees has to be worked out after taking into account all the activities which the statute requires it to carry on.The running of Power House is only one of the branch of those activities. The profit that the Board can be held to have earned can only be worked out after including in the accounts all the expenditure incurred by it on all its scheme for distribution of electricity to licensees or to consumers, whether in urban areas or in rural areas. In fact, there is not even an assertion on behalf of the appellants-workmen that they were employed solely in connection with a profitable undertaking of the Board and had nothing to do at with the other activities which the Board is actually carrying onIn the present case, it is clear that if these various factors are taken into account, neither the Ahmedabad Electricity Co. Ltd., nor the Viramgam Electric Supply Co., can be held to be a concern comparable with the Board. As we have indicated earlier, the activities carried on by the Board are not only production of electricity and direct distribution in some areas; but also includes preparation of schemes for development of supply of electricity in areas not served so far and for supply of electricity to licensees. The two concerns at Ahmedabad and Viramgam merely generate and supply electricity to consumers in the cities or towns served by them. The Board, according to the Act constituting it, has primarily to supply electricity to licensees, and not confine its supply to direct consumers like these two concerns. The supply to consumers is only undertaken where there are no licensees to undertake the distribution of electricity generated by the Board, and this activity of direct supply to consumers is primarily carried on in rural areas where the population is sparsely distributed as compared to the cities or towns served by the other two concerns. Then, there is the important factor that the Board is running at the huge loss every year. The workmen did not provide figures to show that was the profitability of the other two concerns, though the Awards in their cases seem to indicate that both of them are running at a profit. In these circumstances, we cannot hold that the Tribunal committed any error in ignoring the wages being paid by these two concerns when dealing with the question of payment of dearness allowance by the Board. In this connection, a request was made by learned counsel that we may remand the case to the Tribunal in order to enable the Sangh to produce evidence to the satisfaction of the Tribunal that these two concerns are comparable, or to cite examples of other undertakings in the same industry in the Saurashtra region, or, if there be no such undertakings available, of undertaking in other industries in the Saurashtra region so as to enable the Sangh to claim wages on parity with those undertakings. We do not think that there is any justification for remanding the case for such a purpose at this stage. It was open to the Sangh to produce material before the Tribunal when the dispute was first investigated by it, and no reason is shown why the Sangh did not do so. Further, as we have indicated earlier, the very circumstance that the Board does not have the financial capacity to meet the additional burden of the demands made by the workmen justifies the order made by the Tribunal. The further requests that the remand would enable the Sangh to show whether the losses brought to the notice of the Tribunal by the Board were, in fact, not losses has also no force, because when the losses were proved before the Tribunal by production of an affidavit on behalf of the Board and the deponent appeared in the witness-box,no attempt was made on behalf of the Sangh to cross-examine the deponent in order to establish that the losses had not been correctly represented. We do not think that, in these circumstances, any remand of this case is called for. It does appear that the Tribunal in its award committed the error of comparing the Board with the Maharashtra Electricity Board and similar Electricity Boards in other States and thus acted against the principle that wages should be compared on industry-cum-region basis;but that mistake does not justify any interference with the award which is otherwise correct and justified. The Tribunal was quite right in rejecting the demands made by the Sangh, particularly in the light of the further fact relied upon by the Tribunal that all the employees of the Board in the Gujarat Region as well as a large majority of over 2500 employees even in the Saurashtra Region had accepted the existing rates based on the settlements and only 466 employees had come forward with this demand without establishing that the demand was restricted to bringing up their wages to the level of minimum wages.