Case: Bengal Chemical &amp; Pharmaceutical Works Ltd Vs. Its Workmen

The Government of West Bengal, by its order dated November 5, 1963, referred for adjudication six issues,Revision of dearness allowance;2. Revision of the scheme of gratuity;3. Age of superannuation;4. Leave and holidays;5. Canteen facilities; and6. Shift allowance for supervisors.In both these appeals we are concerned only with issues Nos. 1 to 3. With regard to dearness allowance, the Tribunal had directed that it should stand revised from November 1963. It provide a sliding scale for an increase or decrease of Re.1 for rise or fall of five points in the cost of living index, with retrospective operation from November, 1963. It further directed that the dearness allowance payable for each month from November 1963 shall be recalculated on that basis and additional amount due to workmen should be paid in two monthly instalments after the date of publication of the award. There was a further direction to the effect that the dearness allowance for any particular month shall be calculated on the basis of average cost of living index for three immediately preceding months. Regarding gratuity, the Tribunal effected certain modifications to the then existing scheme of gratuity, under Rules 1, 2 and 3. The Tribunal increased the maximum gratuity payable to 15 months salary, but deleted the provision contained in the scheme that the maximum should not exceed Rs. 4,000. In Rule 2, it further directed the deletion of the qualifying period of 10 years continuous and approved service. It also modified the provisions of Rule 3 by providing for payment of gratuity less any financial loss that has been caused to the employer as a result of misconduct which necessitated the termination of service. It further provided that in case of a workman leaving service without notice or terminating his employment without the permission of the company, in and order to enable him to get gratuity he should have put in service of ten completed years or more. The Tribunal increased the existing age of superannuation from 55 years to 58 years.3. The Union, in its appeal C. A. No. 811 of 1966, attacks the award in respect of all the above matters; but so far as the companys appeal C. A. No. 660 of 1966 is concerned, though it has challenged the award, again, in respect of all the above matters to the extent to which they are against it, this Court has granted special leave, by its order dated April 28, 1965, only on the question of dearness allowance.4. Before we proceed to deal with the contentions of the parties regarding the award in question, we can straightway dispose of two applications filed by the company. C.M.P. No. 329 of 1967 has been filed by the company for leave to urge additional grounds in the appeal. By this application the appellant seeks permission to raise contentions regarding certain modifications effected by the Tribunal in the gratuity scheme. That is, substantially, the company attempts to reopen the limited leave given by this Court on April 28, 1965. The company has also filed C. M. P. 2860 of 1968 referring therein to certain subsequent proceedings and requesting this Court to take them into consideration in considering the question of dearness allowance. Both these applications are opposed by the Union and we see no reason to grant the requests contained in each of them. These two applications are accordingly dismissed.5. We shall first take up the question of dearness allowance. While, on the one hand, the appellant wants a substantial reduction in the dearness allowance granted by the Tribunal, the Union, in its appeal, seeks a substantial increase in the dearness allowance granted by the award. We have already indicated the decision of the Tribunal in the regard.

Court's reasoning:
Though there have been certain awards prior to 1954 it is enough if we state the history, beginning from the agreement between the company and the Union, entered into on September 15, 1954. Under Clause 11 of this agreement it was provided that the then existing rate of dearness allowance would prevail, unless there was a substantial change in the working class cost of living index in which case the rate would be suitably adjusted. There is no controversy that the rate of dearness allowance, which was continued under this agreement was Rs. 30 peris necessary to refer in some detail to the award of Shri Palit, dated August 26, 1957, because the Industrial Tribunal, in the present case, has not chosen to go behind the said award. Shri Palit found that after the agreement of September 15, 1954, there had been a substantial increase in the cost of living index justifying the grant of an increased dearness allowance, as contemplated under Clause 11 of the agreement According to him, in August 1954 the working class cost of living index stood at 344.1 and in August 1955 it came down to 338.4; it again went up to 391.4 in August 1956. Shri Palit has also stated that in May 1957 the cost of living index reached 400.6 points. Accordingly he has noted that there has been a rise of 56 point, from 344.1 in August 1954 to 400.6 in May1957 and that the said increase justifies a revision of the original rate of dearness allowance. In considering the quantum of increase in dearness allowance that should be awarded, Shri Palit has again taken note of the fact that at 344 points in September 1954, at the time when the agreement was entered into, the dearness allowance was Rs. 80 per month, and that there is no dearness allowance of to 180 points of the cost of living index. According to him, the dearness allowance of Rs. 30 for month, in September 1954, represented the dearness allowance for the points in excess of 180 points viz, for164 points and that this roughly worked out at Rs. 1 dearness allowance for every 5 1/2 points. On this basis Shri Palit held that to cover 56 points, rise (400 minus 344), the dearness allowance, which could be legitimately claimed by the Union, would be Rs. 10 odd, as it in fact appears to have been claimed. But, as normally only 75 percent neutralisation is granted and in view of the fact that the company, which was a chemical industry, was also in a tight corner, be held that full neutralisation should not be granted. On this reasoning Shri Palit allowed Rs. 7 as increase in dearness allowance on the pay scale up to Rs. 50 and increased dearness allowance of Rs. 5 thereafter, for the next Rs. 50 in the pay scale. In view of the fact that the company had already allowed an increase of dearness allowance of Rs. 2, Shri Palit directed that the increase of dearness allowance, as ordered by him, should be adjusted against the amount already paid by theis of opinion that in January 1962, when the settlement was arrived at on January 6, 1962, the index number was 402 and, after referring to the index numbers in the various months between 1962 and 1964, it concluded that there had been a substantial increase in the cost of living index and hence a revision of the dearness allowance was necessary. The Tribunal no doubt took the view that the financial ability of the company to bear the additional burden, did not come in for consideration because by Clause 10 of the settlement dated January 6, 1962, the company had agreed to a modification of the dearness allowance if there was a substantial change in the working class cost of living index.Having due regard to the above principles, we are satisfied, in the instant case, that the Tribunal has made substantially a correct approach in considering the claim for revision of dearness allowance.g due regard to the above principles, we are satisfied, in the instant case, that the Tribunal has made substantially a correct approach in considering the claim for revision of dearness allowance.To conclude, on this aspect of dearness allowance, excepting for the direction that the rate of increase or decrease awarded by the Tribunal should be related to the cost of living index of 421 and not 402 (as directed by the Tribunal), in all other respects the decision of the Tribunal on this point will stand. This closes the discussion on the appeal of the company and the appeal of the Union, in so far as they relate to dearness allowance.37. There are two further points, taken by the Union, in its appeal, one relating to the modifications effected to the gratuity scheme, and the other relating to the age of superannuation. The provisions in the gratuity scheme, which came up for consideration before the Tribunal, were usOn the death of an employee while in the service of the company one months salary for each completed year of service subject to a maximum of 12 months salary not exceeding Rs. 4,000 on the average of the last three years salary to be paid to his heirs or dependants as the Board may in their discretion decide.2. On voluntary retirement due to illness or termination of service by the company after 10 years continuous and approved service one months pay for each year of service subject to a maximum of 12 months pay not exceeding Rs. 4,000.3. No employee shall be entitled to claim any gratuity if he is dismissed for dishonesty or misconduct or if he would have left service without notice or terminated his employment without the permission of the Company.So far as Rr. 1 and 2 are concerned, the Tribunal modified them by increasing the ceiling from 12 months salary to 15 months salary and deleted the pecuniary limit of Rs. 4,000. In R. 2, the Tribunal further directed the deletion of 10 years continuous and approved service to enable a workman to get gratuity in the circumstances mentioned therein. Mr. Sen Gupta, learned counsel for the Union, urged that the Tribunal committed an error in prescribing the ceiling of 15 months basic wages and that the Tribunal should have modified R. 1 by providing that the average last one years salary should be taken into account for the purpose of calculating gratuity, instead of the three years period provided in the rule. Mr. Gokhale, learned counsel for the company, pointed out that his client has been prejudiced by the modifications effected by the Tribunal, but the company had now been precluded from raising these objections because of the limited leave given by this Court. Nevertheless, the counsel pointed out, inasmuch as the Tribunal was increasing the ceiling from 12 months to 15 months and deleting the further pecuniary limit of Rs. 4,000/-, as well as the qualifying period to enable a worker to earn gratuity, the Tribunal must have felt that no further modifications were necessary. In our opinion, no case has been made out by the Union for interfering with the directions given by the Tribunal and we are also satisfied that there has been no improper exercise of discretion by the Tribunal in this regard. It has effected certain modifications in favour of the workmen and obviously it did not think it necessary to make any further modifications as pressed by the Union. Therefore, the objections to the modifications, raised on behalf of the Union, have to be rejected.