Mukand Ltd. vs Mukand Staff And Officers ...
2001 Latest Caselaw 368 Bom

JUDGMENT

D.Y. Chandrachud, J.

1. These proceedings arise in an appeal against the Judgment dated December 1, 1999, of a learned single Judge of this Court in a petition under Article 226 of the Constitution. The Petition was filed by the Appellant in Appeal No. 194 of 2000, Mukand Limited, against an Award of the Industrial Tribunal delivered on March 26, 1998 in Reference (IT) No. 3 of 1993. The Reference before the Industrial Tribunal arose out of the demands of the Union, the First Respondent before the Court in Appeal No. 441 of 2000. The Reference was made by the appropriate Government under Section 10(1)(d) of the Industrial Disputes Act, 1947. The learned single Judge having affirmed the award of the Industrial Tribunal in substantial part, Appeal No. 194 of 2000 has been filed by the employer. The companion Appeal, Appeal No. 441 of 2000 has been filed by the Union for the purpose of impugning a portion of the Judgment of the learned single Judge by which the Award of the issue of Deamess Allowance was modified. The learned single Judge having reduced the extent of the benefit granted under the Award in respect of Dearness Allowance, the Union has also come in appeal.

2. In the Reference which was made by the State Government before the Industrial Tribunal, the following demands of the Union were referred for adjudication:

(i) Basic scale and increments : The existing basic salary scale applicable to the monthly rated staff and officials was sought to be revised after merging the additional basic salary and special allowances with the existing scales of the respective grades. The revised scales which were claimed were as follows:

Grade Scale

340-35-445-40-565-50-715-60-865-75-1120-90-1390-105-1495

370-40-490-50-640-60-820-75-1045-90/1315-105-1630-120-1750

445-45-580-55-745-65-940-80-1180-95-1465-110-1795-125-1920

520-55-685-65-880-80-1120-95-1405-110-1735-125-2110-140-2250

590-60-770-(sic) 980-85-1235-100-1535-115-1880-130-2270-145-2415

690-70-900-86-1155-100-1455-115-1800-130-2190-145--2625-160- 1785

810-80-1050-95-1335-110-1665-125-2040-140-2460-15-2955- 170-3095

935-95-1220-110-1550-125-1925-140-2345-155-2810-170-3320- 185-3505

1520-125-1895-140-2315-155-2780-170-3290-185-3845-200-4645

1820-140-2240-155-2705-170-3215-185-3770-200-5170

One of the claims under this head was for deleting Grade Nos. 11 and 12 and for placement of existing members of the staff in these Grades in Grade 9. Service increments were also sought in the following manner:

Basic salary Neutralisation for variation of 5 points Basic salary Neutralisation for variation of 5 points

Upto Rs. 300 Rs. 3.00 Rs. 301 to 350 Rs. 3.05

Rs. 351 to 400 Rs. 3.10 Rs. 401 to 405 Rs. 3.15

Rs. 451 to 500 Rs. 320 Rs. 501 to 550 Rs. 3.25

Rs. 551 to 600 Rs. 3.30 Rs. 601 to 650 Rs. 3.35

Rs. 651 to 700 Rs. 3.40 Rs. 701 to 750 Rs. 3.45

Rs. 751 to 850 Rs. 3.50 Rs. 851 to 950 Rs. 3.55

Rs. 951 to 1050 Rs. 3.60 Rs. 1051 to 1150 Rs. 3.65

Rs. 1151 to 1250 Rs. 3.70 Rs. 1251 to 1350 Rs. 3.75

Rs. 1351 to 1450 Rs. 3.80 Rs. 1451 to 1550 Rs. 3.85

Rs. 1551 to 1650 Rs. 3.90 Rs. 1651 to 1750 Rs. 3.95

Rs. 1751 to 1900 Rs. 4.00 Rs. 1901 to 2050 Rs. 4.05

Rs. 2051 and above Rs. 4.10

Slab D.A.

Upto basic Rs. 300 : 100% of basic (A)

Rs. 301 to 350 : A + 87.5% of basic above Rs. 300 (B)

Rs. 351 to 400 : B + 75% of basic above Rs. 350 (C)

Rs. 451 to 500 : D + 25% of basic above Rs. 451 (E)

Rs. 501 and above : E + 20% basic above Rs. 500

One increment for service between 3 and 6 years, 2 between 6 and 9 years, 3 between 9 and 12 years, 4 between 12 and 15 years and 5 for service upwards of 15 years.

(ii) The existing scheme of Dearness Allowance was sought to be replaced by the following Dearness Allowance scheme: .

Variable DA:

Base : CPI 1000 (1934) for grades 09 to 02 Rs. 386/-

CPI 1200 (1934) for grades 01 to 00 Nil.

The computation of DA in respect of the grades 01 and 00 shall also be done on monthly basis.

(iii) House Rent Allowance was sought to be revised to 15% of the revised basic and Dearness Allowance

(iv) Leave Travel Allowance was sought to be revised as follows:

(a) Rs. 2500 lump sum together with respective monthly basic salary for Grades 2 to 9.

(b) For Grades 01 and 00, the lump sum payable was claimed at an enhanced amount of Rs. 3500/- together with the respective basic monthly salary.

(v) Gratuity was sought to be revised to 50% of gross salary for 5 years service. For service of 6,7, 8, 9 and 10 years respectively, the claim was for 60%, 70%, 80%, 90% and 100% of gross salary for every completed year of service.

(vi) Education Allowance of Rs. 250/- per month.

(vii) Medical Allowance at 8.33% of the revised basic salary and Dearness Allowance per month.

(viii) Shift Allowance of Rs. 4, 6 and 10 per day for the first, second and third shift respectively.

(ix) Computer Allowance of Rs. 200/- per month to those in the E.D.P. Department, Stenos, Typists, Clerks and other Computer Operators.

(x) Washing Allowance of Rs. 75/- per month.

3. The Industrial Tribunal by its Award dated March 26, 1998, rejected (i) the demand for merging Grades 12 and 11 with Grade 09, (ii) the demand for placing employees in Grade 09 in 5 years experience in Grade 08, (iii) the demand for Shift Allowance and Computer Allowance. The Tribunal granted the demand for the revision of basic scales as prayed for. However, in so far as the claim for service increments was concerned, while allowing the claim, the Tribunal has granted service increments in the following graded scale:

From 8 years upto 12 years ..... 1 increment From 12 years to 18 years ..... 2 increments From 18 years to 24 years ..... 3 increments From 24 years and above ..... 4 increments

In so far as the claim for Dearness Allowance was concerned, the Tribunal also allowed the claim of the Union. The Tribunal thus granted a Variable Dearness Allowance and a Slab based Dearness Allowance which was linked to the Consumer Price Index and to the Basic Salary. The House Rent Allowance was revised to 12.5% of the revised basic pay and Dearness Allowance. The Leave Travel Allowance was granted as prayed for. The claim for gratuity was allowed to the extent of gratuity being calculated at the rate of 21 days for every completed year of service. The Tribunal allowed the claims for Education Allowance to the extent of Rs. 250/- per month, a fixed Medical Allowance of Rs. 300/- per month and Washing Allowance of Rs. 50/- per month. The demands were granted by the Tribunal with effect from the date of the Reference, which was made on February 17, 1993.

4. When the award of the Tribunal was impugned in a Writ Petition under Article 226 of the Constitution of India, the learned single Judge, by a Judgment and Order dated December 1, 1999, affirmed the Award of the Tribunal save and except for the Dearness Allowance which was substituted by the following formulation:

Variable DA

Base:

CPI 1000 (1934) for grades 09-02 = Rs. 356/-

CPI 1200 (1934) for grades 01 - 00 = Nil.

For increase or decrease of 5 points above 1000 points index, the DA increases or decreases by Rs. 3 per 5 points.

Slab D.A.

a) upto basic Rs. 300-100% of basic.

b) Rs. 300 to Rs. 400 - A+ 60 % of basic above Rs. 300/-

a) Rs. 400 to 500 - B - B+ 40% of basic above Rs. 300/-

d) Rs. 500 and above - C + 20% of basic above Rs. 500/-

Thus, while retaining the Slab DA which had been awarded by the Industrial Tribunal, the learned single Judge modified the award of the Tribunal in so far as the Variable DA having a dual linkage with the Consumer Price Index and specified slab salary was concerned.

5. The Appellant in Appeal No. 194 of 2000 is a Public Limited Company incorporated under the Companies Act, 1956, and had factories at Kurla and Kalwe. The Company is engaged in Steel making, Industrial machinery and Engineering products. The Factory at Kurla is basically a foundry which manufactures steel castings. The Company supplies castings to Sugar Mills, Cement Industries and Public Sector Undertakings. The Company supplied bogies and couplers for the Railways from the Kurla Plant. The steel castings have also been exported to the Commonwealth of Independent States and other countries. The Factory at Kalwe has two divisions, the Steel Plant and Machine Building Division. The product range of the steel plant comprises of a variety of products including ball bearing steel, stainless steel, high carbon wire rods, spring steel and forging steel. The Machine Building Division is engaged in the Design, Fabrication, Erection and Commissioning of E.O.T. Cranes, Rolling Mills, Chemical Treatment Plants, Earth Moving Equipment, Mobile Service Structures for ISRO's space programme etc. The Division has also executed turnkey contracts. The Engineering Construction Division of the Company undertakes turnkey projects including feasibility studies, planning, engineering and construction, erection and commissioning of equipment. The Company has launched two subsidiary companies Mukand Dravo Wellman Ltd. and Mukand Soviet Engineering Ltd. with foreign equity participation.

6. The First Respondent is a registered Trade Union representing the interests of the monthly rated staff and officers together numbering about 1200 persons employed by the Company in different grades between Grade 12 at the lowest and Grade 00 at the other end of the spectrum. The Association has entered into a number of settlements regarding wage scales and other service conditions relating to the monthly rated employees of the Company. The last two settlements relating to the salary and service conditions were entered into on June 8, 1982 and February 24, 1989. The Company has also daily rated workmen who are engaged at the Kalwe and Kurla factories and these workmen are represented by two separate Unions. Industrial settlements for the daily rated employees at Kalwe were entered into in May 1989 for the period 1989-1993 and for Kurla in 1991 for the period 1991-1995. There are about 1200 daily rated workmen on the rolls of the Company at Kalwe and 596 at Kurla.

7. The last settlement relating to the monthly rated staff and officers which was entered into on February 24, 1989 expired on December 31, 1991. A charter of demands was submitted by the First Respondent-Association on November 4, 1991. The negotiations not having yielded a settlement, the dispute was taken in conciliation before the Assistant Labour Commissioner but ended in a failure report dated October 20, 1992. A Reference was thereafter, made by the Government of Maharashtra for adjudication on February 17, 1993 under Section 10 of the Industrial Disputes Act, 1947, before the Industrial Tribunal. The Reference, as already stated earlier, ultimately came to be adjudicated upon by the Tribunal in its award dated March 26, 1998. The award of the Tribunal having been challenged before the learned single Judge, the challenge came to be disposed of by the impugned Judgment and order dated December 1, 1999.

8. We have heard Shri P.K. Rele, the learned senior counsel appearing on behalf of the Appellant, the employer. Shri K.K. Singhvi, the learned senior counsel has appeared on behalf of the First Respondent-Union, which is also an Appellant in the companion Appeal.

9. In assailing the award of the Industrial Tribunal and the Judgment of the learned single Judge, the learned counsel appearing on behalf of the Appellant made the following submissions:

(i) The Industrial Tribunal had essentially not conducted a due and proper adjudication into the demands which had been raised by the First Respondent. The Industrial Tribunal, it was submitted, had failed to (a) correctly evaluate the financial position of the Appellant, (b) evaluate and assess the financial burden of the revision which had been proposed and (c) Apply the region- cum-industry principle.

(ii) The learned counsel submitted that assuming that the finding with regard to the financial soundness of the appellant was justified, that was not sufficient ground to revise the wages and conditions of service since revision could only be on the basis of the Industry-cum-region principle. In the submission of the learned counsel, the principle of region-cum-industry was not applied by the Tribunal. The Tribunal also failed to consider the total pay packet of the workmen.

(iii) The next submission was that the learned single Judge was not warranted in carrying out an exercise of adjudication by the Court. The learned single Judge, according to the submission, had accepted the contention that the financial capacity and date relating to comparable concerns had not been correctly considered by the Tribunal. The learned Judge had also noticed that the data which had been produced before the Tribunal was sketchy. That being the position, it was submitted that the appropriate course of action for the learned single Judge was to remand back the matter to the Tribunal for reconsideration and by proceeding to adjudicate upon the dispute, the learned single Judge has fallen into the same error as the Tribunal.

(iv) The financial position of the Company, it was submitted, was not sound and for the year ending March 31, 1999, it has made a loss of Rs. 32.71 crores. The finding that the financial condition was sound was consequently improper.

(v) The award of the Industrial Tribunal had granted the revised wage scales and service conditions not merely in respect of the workmen but also certain categories of employees who were not workmen within the meaning of the Industrial Disputes Act, 1947. The First Respondent-Union could not have raised demands for adjudication in respect of categories of persons who are not workmen and the Tribunal had no jurisdiction to consider the demands relating to such persons. There was no community of interest in pursuance of which the demands relating to the non-workmen could have been raised by the First Respondent.

(vi) In granting the revision of basic wages, the Tribunal failed to consider the total pay packet, the wages prevalent in comparable concerns and had merely come to the conclusion that the financial condition was absolutely sound. There was no justification for granting service increments.

(vii) In so far as the revision of the Dearness Allowance was concerned, the learned single Judge has merely pruned down the award of the Tribunal. However, no basis has been indicated by the learned single Judge and here again neither the industry-cum- region basis was adopted, nor was the total wage packet considered.

(viii) The learned counsel also impugned the award of the Tribunal in so far as the grant of a revision in respect of the other allowances was concerned. In particular, in so far as the revision of gratuity was concerned, it was sought to be submitted that the provisions in relation to gratuity which were applicable to the Kalwe Unit were on the basis of attendance -260 days and for a minimum number of years of service. The award of the Tribunal had given a flat rate of 21 days wages for every completed year of service, ignoring the qualifications which have been prescribed for the workmen of the Kalwe Unit.

10. These submissions were sought to be countered on behalf of the First Respondent Union. The learned counsel appearing on behalf of the First Respondent submitted that essentially there was no revision of basic wages from 1972 and only ad hoc increases had been granted from time to time of the special pay and allowances. There was thus an urgent and pressing need for wage revision. The learned counsel made the following submissions:

(i) The finding in regard to the financial position of the Company is one purely on a question of fact and since concurrent findings have been recorded by the Tribunal and by the learned single Judge, there should be no interference in appeal. The award of the Tribunal as delivered on March 26, 1998 on which date the last balance sheet which was to be taken into account was that for the year 1996-97. The balance sheet for the year 1998-99 which showed that the Company had made a loss was subsequent to the award of the Tribunal. The learned counsel submitted that there was sufficient material to sustain the finding of the Tribunal.

(ii) In so far as the question of comparable concerns was concerned, witness summons were issued to different Companies to provide information regarding their governing conditions of service. On the basis of the region-cum-industry principle and the documents which came to be produced in the course of evidence before the Industrial Tribunal, the award of the Industrial Tribunal had defined and elucidated the comparable concerns and had in particular, relied upon the wage pattern prevailing in Special Steels.

(iii) In so far as the basic wages were concerned, all that had taken place under the award of the Tribunal was to merge the basic wages, additional basic wages and special allowances at the minimum of the scale. The Tribunal had granted service increments for which there was sufficient justification, in the submission of the Union.

(iv) In so far as Dearness Allowance is concerned, the other comparable concerns also provided for Dearness Allowance based on double linkage both with the Consumer Price Index as well as the basic wages. The Tribunal was justified in granting the double linkage Dearness Allowance in the circumstances of the case. In fact, in the companion appeal, it was also sought to be submitted on behalf of the Union that the learned single Judge was not justified in pruning down the extent of the benefit which was granted by the Tribunal.

(v) In so far as the question of maintainability of the Reference in relation to the non-workmen was concerned, the test of commonality of interest was liable to be applied. In every grade from Grade 12 to Grade 00, there are persons employed both from the workmen as well as the non-workmen category. Prior settlements had covered every person in the grade. Applying the test which was laid down by the Supreme Court, in various decided cases, there was sufficient commonality of interest to justify the maintainability of the Reference.

11. Maintainability of the reference as the issue of 'workmen':

Both the Industrial Tribunal as well as the learned single Judge have rejected the contention urged on behalf of the employer that the Industrial dispute could not have been espoused by the workmen on behalf of those employees who did not form part of the category of workmen under Section 2(s) of the Industrial Disputes Act, 1947. The objection of the employer was reiterated in the appeal which was argued before us.

The expression "Industrial dispute", it must be noted at the outset, is defined by Section 2(k) of the Industrial Disputes Act, 1947 as follows:

"(k) "industrial dispute" means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person."

The expression "workman" is in turn defined in Section 2(s) of the Act in the following manner:

"(s) "workman" means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person -

(i) who is subject to the Air Force Act 1950 (45 of 1950) or the Army Act, 1950 or the Navy Act, 1957 (62 of 1957) or

(ii) who is employed in the police service or as an officer or other employee of a prison; or

(iii) who is employed mainly in a managerial or administrative capacity; or

(iv) who, being employed in supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature."

The definition of the expression "industrial dispute" shows that it has to be (i) a dispute or difference between employers and employers or between employers and workmen or between workmen and workmen; (ii) the dispute has to be connected with the employment, non-employment, the term of employment or conditions of labour of any person.

The question as to whether and as to under what circumstances the workmen of an undertaking can espouse an Industrial Dispute on behalf of persons who are not workmen within the meaning of Section 2(s) of the Industrial Disputes Act, 1947, has been considered by the Supreme Court in a line of decisions. The questions arose before the Supreme Court in Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate . In the case which was decided by the Supreme Court, the workmen had espoused the cause of an Assistant Medical Officer, Dr. Banerjee, who had been dismissed by the employer from service. The Supreme Court made a reference to the expression "any person" which has been used in Section 2(k) of the Act and held that the said expression means a person in whose employment or non-employment, or terms of employment or conditions of labour the workmen as a class have a direct or substantial interest - with whom they have, under the scheme of the Act, a community of interest. In this connection the Supreme Court held thus:

"If, therefore, the dispute is a collective dispute, the party raising the dispute must have either a direct interest in the subject matter of dispute or a substantial interest therein in the sense that the class to which the aggrieved party belongs is substantially affected thereby. It is the community of interest of the class as a wholeclass of employers or class of workmen which furnishes the real nexus between the dispute and the parties to the dispute. We see no insuperable difficulty in the practical application of this test. In a case where the party to the dispute is composed of aggrieved workmen themselves and the subject matter of dispute relates to them or any of them, they clearly have a direct interest in the dispute. Where, however, the party to the dispute also composed of workmen espouse the cause of another person whose employment, or non-employment, etc., may prejudicially affect their interest, the workmen have a substantial interest in the subject matter of dispute."

Having said this, the Supreme Court summarized the principles to be applied thus:

"To summarize : Having regard to the scheme and objects of the Act and its other provisions, the expression "any person" in Section 2(k) of the Act must be read subject to such limitations and qualifications as arise from the context; the two crucial limitations are:

(1) the dispute must be a real dispute between the parties to the dispute (as indicated in the first two parts of the definition clause) so as to be capable of settlement or adjudication by the party to the dispute giving necessary relief to the other, and

(2) the person regarding whom the dispute is raised must be one in whose employment, non-employment, terms of employment, or conditions of labour(as the case may be) the parties to the dispute have a direct or substantial interest.

In the absence of such interest the dispute cannot be said to be a real dispute between the parties. Where the workmen raise a dispute against their employer, the person regarding whose employment, non-employment, terms of employment or conditions of labour the dispute is raised, need not be strictly speaking, a "workman"

within the meaning of the Act but must be one in whose employment, non-

employment, terms of employment or conditions of labour the workmen as a class have a direct or substantial interest."

The next decision to which it would be appropriate to make a reference is the Judgment in All India Reserve Bank Employees' Association v. Reserve Bank of India, . The Class II and Class III staff of the Reserve Bank through their association and the Class IV Staff through the Union had raised an industrial dispute. The Tribunal in adjudication under the Act held that Class II staff work in a supervisory capacity and their demand for the grant of minimum salary of Rs. 500/- It granted, it would take the said staff out of the category of the "workmen" as defined under Section 2(s) of the Act. The Tribunal held that it was not open to the workmen to raise a dispute relating to non-workmen. In appeal, the Supreme Court held that the National Tribunal was in error in not considering the case of Class II employees at the instance of the members drawing less than Rs. 500/ as wages or at the instance of those lower down in the scale of employment. In this connection, the Court held that a dispute regarding the employment, non-employment, terms of employment or condition of labour of non-workmen in which the workmen are themselves vitally interested can be raised by the workmen as an industrial dispute. What direct interest suffices is a question of fact, but according to the Judgment of the Supreme Court, "it must be a real and positive interest and not fanciful or remote." A similar question arose for consideration before the Supreme Courts in the Greaves Cotton case . In para 18 of the Judgment at p. 489 of LLJ, the Supreme Court held that the "consistent view of this Court is that non-workmen as well as workmen can raise a dispute in respect of matters affecting their employment conditions of service etc., where they have community of interests, provided they are direct and are not remote."

These tests have been applied in the facts and circumstances of the present case and both the Industrial Tribunal as well as the learned single Judge have concurrently held that there was a community interest and the workmen in the present case had a direct and substantial interest in espousing the conditions of service of the non-workmen. In the present case, the most significant aspect of the wage scales and service conditions is that both the workmen as well as the non-workmen whose interests were sought to be espoused work as function in the same grades, Grades 12 to 00. The Company has entered into various settlements in the past with the Association regarding the service conditions of the monthly rated workmen. The settlement covered issues such as wage scales, D.A., leave, bonus, and ex-gratia. The Company has also entered into a settlement relating to the welfare fund which was signed in conciliation. These settlements were duly exhibited in evidence before the Industrial Tribunal. The association has submitted that the existing service conditions of all the employees covered by the Reference before the impugned award were governed by these settlements as well as by Part I and Part II awards. The 1989 settlement, it must be noted, contained a recital that it was without prejudice to the rights and contentions of both the parties with regard to the applicability of the provisions of the Act. We have been informed that there was no such reservation in the earlier settlements and the employees in Grade 00 and 01 were covered by settlement of 1982 which still continues to govern the service conditions. The Association, is the sole bargaining agency for the employees from Grade 12 to 00 and this as observed by the learned single Judge was admitted by the Company in its written statement. In our view, the facts and circumstances of the present case were sufficient for both the Industrial Tribunal as well as the learned single Judge to conclude that there was a community of interest and that the workmen had a direct and substantial interest in the service conditions of non-workmen who work in the same grades as the workmen. Coupled with the fact that both the workmen as well as the non-workmen belong to the same grades, are the settlements which were entered into in the past. The material circumstances which have been adverted to in the award of the Tribunal and in the Judgment of the learned single Judge, are sufficient to sustain the finding. We do not find any reason to interfere with the finding in the present case.

12. The submissions which have been, urged on behalf of the contesting parties may now be considered.

13. Before dealing with the circumstances of the present case, it would be necessary to have regard to the principles which have been settled by the Supreme Court regarding the parameters of and the underlying consideration which must govern industrial adjudication. The Industrial Tribunal which has to adjudicate upon a Reference made under Section 10 of the Industrial Disputes Act, 1947 has to perform a function and duty which is both delicate and complex. On the one hand is often times a pressing need to revise the wages and the service conditions of workmen so as to protect their livelihood from an erosion in the real value of the pay packet. Inflation and increase in the cost of living in metropolitan areas spare no one, including the workers. The law has to protect the just aspirations of the working class and, the function of the industrial adjudicator has to necessarily go beyond protecting a minimum or subsistence level of wages. A realistic assessment has to be made of the basket of commodities and services which the worker, like any other human being is entitled to aspire for as a part of a decent and dignified standard of life. With the spread of education, the growth of technology with the attendant access to information and the impact of the media, workers and their families cannot be deprived of just expectations for an improvement in the standard of living. Equally, the Industrial adjudicator has to take due note of the position of the employer per se and in relation to other comparable concerns, the nature of the business of the employer, the financial capacity of the employer, the financial and economic conditions in which the business is operating and its future prospects. The extent of capital employed, the turnover, sales, reserves and profits must all weigh in the balance. The position of the employer, however, cannot be considered in isolation because if that were done, there would be a distortion in the wage structure prevalent in the region and in the industry. Therefore, our law embodies principle of region-cum-industry. The Industrial adjudicator has to assess the pattern of conditions prevalent in comparable concerns in the region and the industry. Where the number of concerns in the industry in the region is large, the industry aspect of the formula has to be emphasized. Contrary-wise where the number of concerns in the industry is relatively few in number, the region aspect of the formula has to be emphasized.

14. The principles which govern the field have been laid down in several judgments of the Supreme Court. One of the early decision was a decision of the Supreme Court in French Motor Car Company Ltd. v. Their Workmen, , in which it is held that it was "now well settled that the principle of industry-cum-region has to be applied by an Industrial Tribunal when it proceeds to consider questions like wage structure, dearness allowance and similar conditions of service." The Supreme Court held that the Industrial adjudicator has to consider wage-scales prevailing in similar concerns and "similar concerns would be those in the same line of business as the concern with respect to which the dispute is under consideration." Amongst the factors which must be considered for the purposes of wage fixation are (i) the extent of business carried on by the concern, (ii) the capital invested by therein, (iii) the profits made, (iv) the nature of the business carried on, (v) the standing of the business, (vi) the strength of the labour force, (vii) the presence or absence and the extent of the reserves, (viii) the dividend declared and (ix) the prospects of the future of the business and other relevant circumstances. Comparability would also postulate that there must be comparability of size.

15. The Supreme Court in Greaves Cotton & Co. Ltd. v. Their Workmen held that where there are large number of industrial concerns of the same kind in the same region, it would be proper to put greater emphasis on the industry part of the industry-cum-region principle as this would place all concerns on an equal footing in the matter of production cost and in the matter of competition in the market. On the other hand, where the number of comparable concerns were small in a particular region and the aspect of competition is not of the same importance, the region part of the industry-cum-region formula assumes greater importance. The Judgment of the Supreme Court in the Greaves Cotton case is also an authority for proposition that the Industrial Tribunal while making a comparison must take into account the total wage packet that is, the basic wages, and dearness allowance fixed by it and then compare it with the total wage packet of comparable concerns so as to arrive at a just figure for basic wage for each category of factory workmen. The Supreme Court held that the entire matter is left to the Tribunal and it may follow such method as it thinks best so long as it arrives at a fair conclusion after making a necessary comparison. The general principles relating to considerations which must guide the Industrial adjudicator in determining the conditions of service were formulated thus by the Supreme Court in Polychem Ltd. v. R.D. Tulpule :

"8. Wage policy relating to workmen appears to be a complex and sensitive area of public policy. The reason is plain. The relative status of workmen in the society, their commitment to industry and their attitude towards the management, their motivation towards productivity and their standard and way of life, are all conditioned by wages. It is accordingly not a purely economic policy in which the employer and the employee alone are interested. Besides the worker and the management, the consumer and the society at large, and a fortiori the State, are also vitally interested, and no wage policy can ever be applied in vacuum in disregard of the realities of the social and economic conditions in our country. Considering the question of wages in the background of the Directive Principles enshrined in our Constitution a wage structure should serve to promote a fair remuneration to labour ensuring due social dignity, and strengthen incentives to efficiency, without being unmindful of the legitimate interest and expectation of the consumer in the matter of prices. Guided by this principle, if the financial capacity of the industry permits, the workers should broadly speaking, be allowed their due share in the prosperity of the industry, to which they have contributed by their labour, so as to enable them, within reasonable limits, to improve their standard of living."

The Supreme Court held that it would not be open to the Industrial Tribunal to determine the question of wage revision merely on the basis that the employer has financial capacity to stand the burden of a particular allowance or revision without reference to the total wage packet of the workmen in the same and comparable establishments.

16. The Judgment of the Supreme Court in Ahmedabad Millowners' Association v. Textile Labour Association, enunciates the considerations which must inter alia guide the Industrial Tribunal in dealing with the financial capacity of the employer to meet an additional burden occasioned by a revision of the wage structure. In this regard the Supreme Court held as follows at page 28 of LLJ:

"On the other hand, in trying to recognize and give effect to the demand for a fair wage, including the payment of dearness allowance to provide for adequate neutralization against the ever-increasing rise in the cost of living, industrial adjudication must always take into account the problem of the additional burden which such wage-structure would impose upon the employer and ask itself whether the employer can reasonably be called upon to bear such burden. ... What has been the progress of the industry in question; what are the prospects of the industry in future; has the industry been making profits; and if yes, what is the extent of profits; what is the nature of demand which the industry expects to secure; what would be the extent of the burden and its gradual increase which the employer may have to face? These are similar other considerations that have to be carefully weighed before a proper wage-structure can be reasonably constructed by industrial adjudication vide Express Newspapers (Private) Ltd. and Anr. v. Union of India and Ors. . Unusual profit made by the industry for a single year as a result of adventitious circumstances, or unusual loss incurred by it for similar reasons, should not be allowed to play a major role in the calculations which industrial adjudication would make in regard to the construction of a wage structure. A broad and overall view of the financial position of the employer must be taken into account and attempt should always be made to reconcile the natural and just claims of the employees for a fair and higher wage with the capacity of the employer to pay it and in determining such capacity, allowance must be made for a legitimate desire of the employer to make a reasonable profit."

17. In Unichem Laboratories Ltd. v. Their Workmen, , a Bench of three Learned Judges of the Supreme Court referred to the earlier Judgment in Gramophone Company Ltd. v. Its Workmen, reported in 1964-II-LLJ-131(SC), where the Court has held that the Industrial Tribunal when considering the question of wage revision must look at the profits made by the employer without considering the provision for taxation in the shape of Income Tax and for the reserves. The Supreme Court held that the provision for Income Tax and for reserves must take second place as compared to provisions for wage structure and gratuity. This principle was reiterated by the Supreme Court in Unichem Laboratories where the Supreme Court has held that the provisions for taxation and for reserves (which expression should also take into account the depreciation reserve) cannot be deducted for the purposes of computing the profits of the employer.

18. On the basis of these well settled principles, it would be necessary to approach now the facts and circumstances of the present case.

19. Financial Capacity of the Employer:

In assessing the financial capacity of the Appellant in the present case, it would be necessary to advert to the submission which was urged on behalf of the employer that the Company had in the present case, made a loss of Rs. 32.71 crores for the year ending March 31, 1999. The learned counsel appearing on behalf of the employer referred to the 61st Annual Report of the Company for the year 1998-99. The learned counsel also placed reliance upon a chart filed on behalf of the employer in an affidavit dated June 24, 1999 of Shri Krishnan Nair, Vice President, Personnel and Corporate Development, before the learned single Judge. A copy of the chart is annexed at Exhibit B to the aforesaid affidavit (Volume IV page 683). The chart would reveal that the Company made a gross profit of Rs. 33 crores in 1991-92, Rs. 30.71 crores in 1992-93, Rs. 20.67 crores in 1993-94, Rs. 48.54 crores in 1994-95, Rs. 41.57 crores in 1995-96, Rs. 30.77 crores in 1996-97 and Rs. 8.14 crores in 1997-98. The Company made a loss of Rs. 19.10 crores in 1998-99. The net profit/loss has also been indicated in the chart as aforesaid including the net loss for 1998-99. In the figures which have been computed by the Company, to the profit before tax, an addition is made of the depreciation investment allowance, and bad debts amongst other items. The company has made a deduction therefrom inter alia of the profits earned on the sale of investments and on the sale of land. After taking into account this deduction the total gross profit which has been made by the Company between 1991-92 and 1998-99 is in the amount of Rs. 194.3 crores. The average gross profit per year works out to Rs. 24.29 crores.

The figures which have been appended in the chart relied upon by the Company would reveal that the share capital has gone up from Rs. 14.74 crores in 1991-92 to Rs. 30.47 crores in 1998- 99. The reserves have increased from Rs. 105 crores in 1991-92 to Rs. 357.6 crores in 1998-99. The sales and other income of the Company increased from Rs. 647.9 crores to Rs. 706.2 crores, while the gross block increased from Rs. 239 crores to Rs. 738 crores during the same period. The Company paid a dividend of 32.5% in 1991-92, 1992-93 and 1993-94; 35% in 1994-95 and 1995- 96; 25% in 1996-97 and 12.5% in 1997-98.

As stated earlier, in its computation, the Company has excluded in calculating the gross profits earned between 1991-92 and 1998-99, the profits on investments and the profits on the sale of land. The total amount earned from the two heads as aforesaid works out to Rs. 77.4 crores. If this is added to the gross profit, the total gross profit of the Company for the period 1991-92 to 1998-99 would work out to Rs. 271.7 crores instead of Rs. 194,3 crores as computed by the Company. The average gross profit per year would then be Rs. 33.9 crores or Rs. 34 crores approximately as against Rs. 24.29 crores as computed by the Company.

The learned counsel appearing on behalf of the Company referred to the down turn in the financial performance of the Company for the year 1998-99. The learned counsel inter alia referred to the unaudited financial results for the 9 months ended on December 31, 1998. (Part IV page 612) in which the Company is shown to have made a loss of Rs. 19.77 crores. Reliance was also placed on the Balance Sheet for 1998-99 together with the Annual Report. A reference was also made to the affidavit filed on behalf of the Company by Shri S. B. Jhaveri, Vice President (Finance) before the learned single Judge recording that the credit rating of the Company has been reduced by Crisil from AA in 1995 to BBB+ in 1998.

On the other hand, the learned counsel appearing on behalf of the Union drew the attention of the Court to the fact that the award of the Industrial Tribunal was delivered on March 26, 1998. On the date on which the award came to be declared, the financial year 1998-99 was still to commence and the balance sheet of the Company for the Financial Year 1998-99 had not been prepared or published. In the submission of the counsel, the validity and correctness of the award cannot be judged with reference to subsequent circumstances relating to the financial circumstances for 1998-99. The learned counsel further placed reliance on the following admissions contained in the cross-examination of the Company's witness Shri Vas-ant Ramchandra Dalvi, who deposed thus in relation to the financial position:

"Financial Position: I agree that sales of the Company have increased to Rs. 1092 crores in 1995-96 from Rs. 528 crores in 1989-90. It is true that the operating profits have increased from 1989-90 to 1995-96 by their absolute value. I do not remember whether it has so increased from 50.2 crores to 125.75 crores. Net profit has also increased in absolute value. It is true that during this period net worth has also increased. I cannot say the figures about it. Total assets have also increased. Upto 1995-96 net profit has also increased in absolute value. But I cannot say about such growth in terms of figures."

The Industrial Tribunal in paras 63 and 64 of its Judgment came to the conclusion that the financial condition of the Company was sound. In arriving at this conclusion, the Tribunal relied upon the balance sheet and the charts submitted by the Union. The Tribunal also relied upon the fact that the Company was in a core industry and upon the evidence of Shri Dalvi in relation to the business of the Company, the Tribunal noted that the Company has set up a new plant at Hospet which would supply Billets to the extent of 150,000 tons per year to the Company on which the Company would be saving almost Rs. 2,000/- per ton. The Tribunal noted that the Company holds a substantially large share in the stainless steel market and that the Company possesses a flexibility in terms of product and size. In these circumstances, the Tribunal held that the Company had a sound financial condition.

The learned single Judge has dealt with the financial condition of the Company in para 24 of his Judgment. The learned single Judge had due regard to the fact that the Company had made a loss during the financial year 1998-99. In paras 27 and 28 of the Judgment the learned single Judge held thus:

"In the instant case the petitioner company is a core industry in steel. It had a modest beginning 50 years back when the Kurla plant was started. The factory at Kurla makes steel castings, major products for Railway bogies, chassis or undercarriages to the railway wagons. During the course of time, the company started its unit at Kalwe. At the Kalwe plant the company has heavy steel casting foundry to make castings upto 100 Mt a piece. Steel castings are exported to CIS (erstwhile USSR) and other countries. Apart from this the company supplies castings to sugar mills, cement industries, and public sector undertakings such as BHEL, BEML, BSP etc. The alloy steel foundry manufactures and supplies a variety of allied steel castings for oil refineries, petrochemical units, diesel, mining and construction and defence. The company has also been exporting its product to USA, Canada, Germany, Finland, United Kingdom. The export performances during the financial year 1988-89 was Rs. 2.76 crores, in 1989-90 Rs. 3.40 crores and in 1990-91 Rs. 5.01 crores. The company has declared 30% dividend for the years 1989-90, 1990-91 and 32.5% in 1991-92 on the enhanced capital for the bonus issue in 1988-89 @ 1:2 ratio. The company has launched two subsidiary companies recently i.e. Mukand Dravo Wellman Ltd. and Mukand Soviet Engineering Limited in Association and equity participation with the Americans and the Russians.

During the year 1989-90 to 1996-97 the sales turnover has grown from 528 crores to 868.49 crores. The paid up capital of the company in 1991-92 was 14.73 crores. It has increased to 27.09 crores. The reserves were 105.13 crores. It has increased to 379.01 crores in 1996-97. The gross block including WIP was 239.43 crores in 1991-92 and has increased to 445.13 crores. The net worth of the company grew from Rs. 107.49 crores to Rs. 408.02 crores. The total assets have grown from Rs. 262.04 crores to Rs. 990.67 crores. Gross profit of the company for the period 1990-91 and 1996-97 is 34.22 crores. It is true that the company has been registering losses in the last year but that may be particularly due to the factor of recession which has affected the industries in general. If we examine the material on record it is seen that the company's business is consistently growing. Indeed the company is considered to be the biggest foundry in the private sector and it figures in the list of super 100 companies in India. The company has floated several subsidiary companies. It has also taken over certain other units through its wholly owned subsidiaries."

As stated earlier, reliance is placed by the learned counsel appearing on behalf of the employer upon the decline in the financial performance of the Company during 1998-99 as reflected in the balance sheet and audited accounts for that year. The Company has sustained a loss reflective in a large measure of the recessionary cycle which affected industry in general, and the steel industry in particular. Economic cycles do affect the fortune of Industry. The performance of the employer as gauged by prominent economic and financial indicators must be taken into consideration in the course of industrial adjudication. Equally, what has to be taken note of is the performance of the Industry over a period of time. In the present case, these economic and financial indicators reflective of the performance and financial health of the employer establish beyond doubt that this is a company which is financially sound. Indeed, all the indicators including capital, reserves, sales, turnover, exports, assets, net worth and profits have consistently shown an upward increase save and except for an occasional aberration as in the year 1998- 99. The fact that the financial performance of 1998-99 was an exception to an exceptionally notable performance by the Company over the years is reflected by the subsequent balance sheet for the year 1999-2000. The 62nd Annual Report for the year 1999-2000 is appropriately entitled "The Turnaround". Making due allowance for some hyperbole which Companies are known to adopt in order to present a picture of optimism for the shareholders. It would be well to look at the figures reflected in the Annual Report for 1999-2000. The financial highlights of the Company show that the income from operations has increased from Rs. 706 crores to Rs. 844 crores and the Gross Profit of the Company was Rs. 23.97 crores, up from the loss of Rs. 14.5 crores sustained in 1998-99. The net profits were Rs. 5.85 crores as opposed to the loss of Rs. 32 crores sustained in 1998-99. The net fixed assets of the Company have increased from Rs. 526.9 crores to Rs. 604.6 crores. The net worth of the Company has increased from Rs. 388 crores to Rs. 403 crores. Though exports for the year 1999-2000 at Rs. 67.8 crores are still lower than the figures for 1996-97 and 1997-98, they have exceeded the export performance in 1998-99.

The Annual Report for 1998-99 sets out that the Company "countered the industry downtrend and posted a financial turnaround reflected in a profit after tax of Rs. 5.85 crores. Steel production increased by 21%, turnover increased by 20%, the value added figures for quality steels and special steel wire rod segments increased by 48% and 55% respectively. The Company has commissioned a 22 MW power plant at Kalwe with potential of saving Rs. 5 crores per annum. The Company has received an order of Rs. 55 crores from National Aluminium Company Limited for the supply of equipment. The Company has supplied four port cranes to the Kandla port and has received an order from General Electric, USA, and had sold certain land at Powai for Rs. 33.50 crores. The Company commissioned a plant at Ginigera and the Machine Building Division had an order book of Rs. 95 crores. The sales of value- added steel being increased, the variable cost per tonne of steel has been reduced and it is anticipated that the total steel availability is expected to increase by 25%. The figures contained in the annual accounts relating to the share capital, reserves and surplus, fixed assets, investments, net worth and profits among other economic indicators are, in my view, sufficient to indicate the financial health and standing of the Company.

20. Region-cum-Industry Formula:

Industrial adjudication, in matter where the question of wage revision or revision of service conditions is involved, has to have regard to the region-cum-industry principle. The underlying principles have been elaborated by the Supreme Court in several judgments which have already been noted earlier including French Motor Car Company and Greeves Cotton. In the present case, there was, in our view, sufficient material on the record relating to the region-cum-industry in question, so as to enable the Industrial Court to adjudicate upon the dispute. It would be necessary to advert to the fact that a witness summons came to be issued to various Companies by the Industrial Tribunal calling for information, inter alia, on the Industrial settlements, balance sheets and service conditions. The witness summons was issued in pursuance of an application dated April 18, 1996 submitted on behalf of the Union (Exh. U-46). Documentary evidence was introduced by several Companies in the region-cum- industry. The Associational so adduced the evidence of Shn V.C. Kochale. The Tribunal had before it, data which was duly produced relating to 15 companies, these being, Special Steels Ltd., Siemens Ltd., Larsen & Toubro Ltd., Mahindra & Mahindra Ltd., Voltas Ltd., Kamani Engg. Corpn. Ltd., Godrej & Boyce Co. Ltd., Greaves Ltd., Crompton Greaves Ltd., Philips Ltd., Good-lass Nerolac Paints Ltd., NOCIL, Parke Davis, Ingersoll Rand (I) Ltd. and Hindustan Lever Ltd. It may be noted that based on the data which was produced before the Industrial Tribunal, charts were prepared on behalf of the Union providing a comparison of all service conditions which were prevalent in the region-cum- industry. The Company objected to the production of the charts to which the Association duly replied, stating that the charts were based on documents which had been produced in evidence before the Industrial Tribunal. The Tribunal has in its award expressly held that the charts which have been produced on behalf of the Union, have been prepared on the basis of the documentary evidence produced and would, therefore, have to be believed and considered. The Industrial Tribunal, having regard to the economic and financial indicators relating to the Companies in relation to which documents have been produced, as well as providing service conditions was of the view that among the comparable companies was Special Steels Ltd., which had establishments at Tarapur and Borivili, Mumbai. The Industrial Tribunal was of the view that the wage scale prevailing at the Borivili Unit would have to be considered for the purposes of considering the wage scales and service conditions and other service conditions. The Industrial Tribunal has had regard to the share capital, sales, reserves, gross profit and dividend in relation to these two Companies. The Industrial Tribunal has also had regard to the basic wages, the scheme for dearness allowance, and the rate of neutralization amongst the data that was submitted before it. The industrial settlement relating to Special Steels has expired and the Tribunal noticed that a new settlement will give rise to a further revision of the service conditions. The Tribunal has also duly considered the data relating to Siemens, Voltas Ltd., Greaves Cotton Ltd., Parke Davis and Ingersoll Rand (I) Ltd. In so far as Hindustan Lever Ltd. was concerned, the Tribunal observed that it is a much larger company than the employer in the present case.

The region-cum-industry principle has been duly taken note of in the judgment delivered by the learned single Judge. Of the 14 Companies in relation to which material was produced by the Association, representing the employees, the learned single Judge was of the view that Hindustan Lever Ltd. was a giant company with a diversified business and, therefore, could not be considered to be a comparable concern. Similarly the learned single Judge was of the view that Larsen & Toubro and Mahindra & Mahindra were far bigger concerns and could not be regarded as being similar. Referring to the test which was laid down in the French Motor Car Company, case (supra), the learned Judge held that in the present case, Mukand Limited, the employer, is the biggest of the foundries in the region and was paying the highest wages in its own line of business. In the circumstances, the region part of the industry-cum-region formula would assume importance in the facts of the present case. Having scrutinized the data which had been produced on behalf of the Union, the learned single Judge sounded note of caution by recording that the data was "not complete in many respects". Moreover, the data which had been furnished mainly related to the posts of Peons, Clerks, Telephone Operators, Watchmen and Supervisors and data relating to the staff and officers working in Grades Nos. 00 to 05 was "rather incomplete and sketchy." Having said this, the learned single Judge held that the "Claim of the workers will have to be examined keeping in mind this aspect of the matter."

The learned counsel appearing on behalf of the employer submitted before the Court that since the learned Judge had come to the conclusion that at least 3 of the 14 concerns for which data had been submitted, were not comparable and that the data in regard to stall and officers working in Grades 00 to 05 was incomplete, the award of the Industrial Tribunal ought to have been set aside by the learned single Judge and by going into the merits of the case, the learned single Judge has committed an error of the same nature as was committed by the Tribunal. Having given our anxious consideration to this submission and upon duly perusing the material which was produced before the Tribunal and in these proceedings with the assistance of the learned counsel, we are of the view that the submission which had been made on behalf of the employer is not justified. At the outset, it would be well to have regard to the fact, that industrial adjudication is not an exercise involving a pure mathematical computation. Statistics and figures are undoubtedly important facets of the process of wage fixation but, in the practical application of the region-cum-industry formula, difficulties do arise before the industrial adjudicator. The circumstances relating to two industries within the same region or two establishments within the same industry in the same region, can rarely, if ever, be identical. Each establishment in the industry is bound to have its own peculiar characteristics relating to not merely to the nature of its business but, also those relating to its own peculiar industrial relations scenario. The industrial adjudicator cannot throw up his hands in despair when confronted with the problems of adjudication. In making comparisons under the region-cum-industry formula, the adjudicator has to assess the data which has been produced before him. Extrapolation of data is not a mechanical process and any exercise involving the application of data or of making statistical comparisons has to be conscious of the limitations of the process. Practical experience in these matters would show that there would be some deficiencies in the data and some limitations on applying the norms of comparability, in such a case, it is the Sound and robust common sense of the expert adjudicator which must guide the determination. In that determination, the Industrial Tribunal has the benefit of rival submissions which have to be duly considered. The learned single Judge was in the present case duly conscious of the fact that the data which had been produced was not complete in all respects and that at least 3 of the 14 concerns were not comparable. The limitation of data was, therefore, a circumstance which was required to be borne in mind and was in fact, taken into consideration by the learned single Judge.

The last settlement in the present case was of the year 1989 and had expired in 1991. The Charter of demands was referred to adjudication in 1993 after a line of conciliation meetings ended in the report of failure. The Industrial Tribunal delivered its award in 1998 and the Writ Petition filed, challenging the award was heard towards the end of 1999. The Industrial Tribunal and the Court cannot ignore the social justice aspect involved in the adjudication. The revision of wages and of the service conditions has a vital bearing on the source of livelihood of the workmen. But, apart from the question of time which was involved, we have given our anxious consideration to the material which was available on record and we have come to the conclusion that the material was indeed sufficient for the purposes of concluding an industrial adjudication in accordance with settled legal principle.

Indeed even before this Court in appeal, a reference was made to the detailed comparisons which were adduced on behalf of the Union in relation to the service conditions prevalent in other Companies in the region-cum-industry.

Apart from the documentary material which was produced before the Industrial Tribunal, a comprehensive compilation collating the material was filed in the proceedings before it. This collation of material included a chart showing whether the demands of the Association which I had been referred to adjudication in the Reference before the Tribunal were paid in comparable Companies. This included the claim for service increments, Dearness Allowance, House Rent Allowance, Leave Travel Allowance, Gratuity, Education Allowance, Medical Allowance, Shift Allowance, Computer Allowance and Washing Allowance. Out of 16 companies, it was stated that the wage settlements of 11 companies had already expired and were due for revision. The conditions of service in respect of the remaining companies were also due for revision in 1997. The consolidated chart which had been furnished before the Tribunal (Vol. V page 207) contained a statement of whether such service benefits and allowances were available. The details relating to each category of service conditions were provided in a separate chart. Another comparison which had been done was of the basic pay and dearness allowance, together with all other allowances in comparable companies at Consumer Price Index No. 9005. The Dearness Allowance which was paid under the service conditions of various companies was also provided in a statement filed before the Industrial Tribunal (Vol. V page 209). The rate of neutralization of Variable Dearness Allowance for variation of 10 points in the Consumer Price Index in comparable Companies was placed before the Tribunal. Similarly, data relating to the rate of neutralization of the Variable Dearness Allowance at the minimum and maximum of the lowest Grade and the highest Grade in comparable Companies was sought to be produced and placed before the Industrial Tribunal. A comparison of the Scheme of Dearness Allowance of various companies was also placed on the record of the Tribunal in the form of a chart (Vol. V pages 213 and 214). The Tribunal was also apprised of data relating to the rate of neutralization of the basic scale at base Index C.P.I. 1000 and 1200 respectively. The gradewise rate of neutralization at the base C.P.I. Index 1989 was also placed before the Tribunal. Data relating to basic scales in comparable Companies was also placed before the Industrial Tribunal (Vol. V pages 220 to 223). A comparison of the total emoluments payable to Peons, Watchmen, Clerks, Typists, Computer Operators, Telephone Operators, Stenographers and Quality Control Inspectors was produced before the Tribunal (Vol. V pages 224 to 235).

In relying upon the data of comparable concerns under the region-cum-industry formula. the Tribunal was provided with a statement relating to gross profits of various Companies. The data which was provided was for varying periods between 1991-92 to 1996-97. According to the data, thus made available, the average gross profit per year of Special Steel Ltd. was Rs. 29.6 crores, of Voltas Ltd. was Rs. 39.9 crores, of Greaves Ltd. was Rs. 34.74 crores, of Parke Davis Ltd. was Rs. 14.6 crores, of Ingersoll Rand Ltd. was Rs. 37.8 crores and Mukand Ltd. at Rs. 56.2 crores. The calculations relating to the financial burden were also submitted before the Industrial Tribunal. It has become necessary to advert to the material which was produced before the Industrial Tribunal because the material which was on record before the Tribunal would clearly show that the justification for the demands of the Union was made in terms of the industry-cum-region formula. Reliance was placed upon service conditions prevailing in comparable concerns with reference to different components of service conditions including basic scales, service increments, Dearness Allowance, House Rent Allowance and Leave Travel Allowance to name some of our components. Therefore, in our view, it would not be correct to criticize or impugn the award of the Industrial Tribunal on the ground that there has been a non-observance of well settled legal precepts relating to wage setting. Once again it would need emphasis that the data relating to 3 large Companies-Hindustan Lever, Mahindra & Mahindra and Larsen & Toubro were kept aside by the learned single Judge on the ground that these were much larger in size than the employer in the present case. The limitations of the data were also duly taken into account by the learned single Judge while considering the matter. Ultimately an objective assessment" of the case has been made, upon which the demands which have been granted by the Industrial Tribunal have been pruned down by the order passed by the learned single Judge.

21. Financial Burden:

An important issue which has to be considered in these proceedings is as regards the inancial impact of the service conditions under the award of the Industrial Tribunal as modified by the learned single Judge. The learned single Judge found substance in the criticism by the learned counsel appearing on behalf of the employer of the award of the Industrial Tribunal on the ground that the total financial burden had not been evaluated correctly. The learned single Judge has observed that even according to the Employees' Association, the total burden on account of the award works out to Rs. 35.20 crores and the net burden for the year 1999 for the monthly rated employees and daily rated workmen at Kurla would be around Rs. 10 crores.

The learned single Judge held that the Tribunal was obviously in error in holding that the yearly burden under the award would be Rs. 3.3 crores to Rs. 3.7 crores and would work out to 6% to 7% of the total profits of the Company. As a matter of fact, according to the learned single Judge, the burden on account of the award works out to about 25% of the gross profits and this factor would have to be borne in mind in fixing the wage structure for the concerned employees. The learned counsel appearing on behalf of the employer has submitted that the figure of 25% as a proportion of gross profits is for 1260 employees covered by the present proceedings. Thus, according to the learned counsel, the burden of 25% is in (relation to 34% of the 3000 employees who are engaged by the employer. The learned counsel submitted that the overall financial burden on a pro rata basis for all the workmen would amount to 76% of the Gross profit. The learned counsel appearing on behalf of the employer has submitted a computation of the arrears which would be required to be paid for the period February 1993 to March 2000 under the order passed by the learned single Judge. According to this computation, as against the total salary which has been paid under the head of basic pay and Dearness Allowance in the amount of Rs. 44.65 crores the employer would have to pay an amount of Rs. 71.36 crores involving an outlay of Rs. 26.70 crores. The total salary inclusive of basic, D.A. and other allowances would increase from Rs. 57.78 crores which has already been paid to Rs. 99.11 crores thereby requiring the payment of an additional amount of Rs. 41.32 crores. The increase in the indirect burden concerning Provident Fund, Gratuity and superannuation will according to the employer increase from Rs. 8.04 crores which has already been paid to a total of Rs. 15.71 crores registering an increase of Rs. 8.83 crores. The sum total of all these figures according to the employer is that as against the total outgoing of Rs. 65.83 crores which has already been paid by the employer between February 1993 and March 2000 the outlay of the employer would increase to Rs. 114.83 crores registering an increase of 76.20% in respect of all the workmen.

Figures in relation to the financial burden have been placed before the Court both on behalf of the employer and on behalf of the workmen. According to the Association, the total gross profit excluding capital profit over a period of 6 years works out to Rs. 3374 million, whereas according to the employer, the correct figure is Rs. 2054 million. The difference between the two figures which works out to Rs. 1320 million i.e. Rs. 132 crores is sought to be explained by the employer by contending that the investment allowance and certain other figures including the net profit for 1992-93 on account of write back of an excess provision for taxation have been wrongly calculated. Reliance has been placed on behalf of the employer on figures relating to gross profit of various comparable concerns as a percentage of sales (Vol. II page 367) and of the percentage of capital employed.

On the other hand, it has been sought to be submitted on behalf of the Association that an exaggerated and misleading picture of monthly emoluments payable to the employees before and after the award has been given on behalf of the employer. The Association representing the employees contends that the computations made on behalf of the Company are based on abstract assumption and that these computations were neither produced before the Industrial Tribunal in the form of documentary or oral evidence. In considering as to whether the revision of wage scale and other service conditions is justified, we have duly considered the financial position of the Company, the total pay packet that would be allowed to the employees as a result of the revision, the financial burden and the impact of the wage revision upon the financial health of the Company. It would now be appropriate to deal with each one of the heads under which wage revision has been granted.

22. The learned counsel appearing on behalf of the Association has on the other hand submitted that the net burden of the award of the Industrial Tribunal after taking into account the average rate of corporate tax of 45.58% for 1991-92 to 1996-97 would be much lower than what is sought to be portrayed on behalf of the employer. The following chart has been submitted to the Court to demonstrate the net impact. We would be revisiting the question of financial burden at the latter stage of the Judgment once again in considering the appropriate relief, if any, that should be granted in these proceedings:

FINANCIAL CAPACITY

(Based on Company's own calculations and approach)

GROSS PROFIT Rs. in Crores

On a prima facie consideration based on Company's calculations:

a) Gross profit for six (6) years (1991-92 to 1996-97)   (Ref: Exh -B to Mr. Krishnan Nair's Affidavit dated 4-6-1999) Rs. 250.418

Therefore Average Gross Profit per year.

Rs. 41.736

b) Financial burden - Retrospective   (Ref. Page 547 of Company's Write Petition No. 1705 of 1998)

i) Kurla workers (for 39 months) Rs. 14.67

  Therefore, Average per year Rs. 4.51

ii) Staff (for 65 months) Rs. 43.55

  Therefore Average per year Rs. 8.04

Therefore total financial burden per year for both the workers and staff = (4.51 + 8.04) Rs. 12.55

c) Average Corporate Tax rate for 6 years from 91-92 45.58%

Therefore net burden after the tax rebate is (100-45.58% - 54.42%) 54.42%

Thus the actual burden to the company for both the workers and the staff 12.55 x 54.42% = Rs. 6.83

d) Therefore the burden for workers and staff as percentage (%) of gross profit 6.83-41,736 x 100 = 16.36%

We would be revisiting the question of financial burden at a latter stage of the Judgment once again in considering the appropriate relief, if any, that should be granted in these proceedings:

23. Revision of Basic Scales and Service Increments:

The first demand of the employees related to basic wages and the service increments. As already noticed earlier, the monthly rated employees are placed in 12 Grades from Grade 12 to Grade 00. The Association proposed that Grades 11 and 12 shall be deleted and those staff members who are in these Grades shall be placed in Grade 9. This demand was rejected by the Industrial Tribunal. The association has sought a merger of the existing scales of basic salary applicable to the monthly rated staff with the additional basic salary and special allowances. In justification of its demand, the association relied upon the fact that the Bombay Consumer Price Index which was 892 in June 1972 had gone upto 5435 in December 1991, The year 1972 was referred to because the basic scales were formulated much prior to 1972 and thereafter no revision in the basic scales had taken place apart from giving a fixed additional basic salary. The Association has sought to rationalize the basic scales, the additional basic salary and special allowances by merging all these three components and converting them into one basic salary thereby lifting the starting point of the basic scale. Apart from the rationalization, the Association has sought service increments. The service increments which were sought by the Association were as follows :

Service of

3 years to 6 years .. .. 1 increment.

6 years to 9 years .. .. 2 increment.

9 years to 12 years .. .. 3 increment.

12 years to 15 years .. .. 4 increment.

15 years and above .. .. 5 increment.

The justification which was advanced in so far as the grant of increments was concerned, is that the Cost of Living Index has gone up by more than 600% since 1972 resulting in a substantial depreciation in the value of the rupee. Moreover, in so far as service increments were concerned, it was sought to be contended that those who have put in long years of service should be given higher benefits. There was large number of employees who had stagnated because of their long length of service and while all cases could not be fully taken care of, problem could be resolved in part by the grant of service increments.

The Industrial Tribunal accepted the demand for a revision of basic scales. The learned single Judge was of the view that the Tribunal had after a careful analysis of the material produced before it, granted the demand for revision of basic scales and service increments. The learned single Judge also observed that the Tribunal had referred to wage paid in similarly situated concerns and had also taken into account the fact that a number of settlements and awards had been arrived at. The learned single Judge in this view of the matter declined to interfere with the revision of basic scales. In so far as the service increments were concerned, the Tribunal by its Award had restricted the grant of relief to an extent lesser than what was claimed. The award of the Industrial Tribunal in so far as service increments were concerned was as follows:

1 increment between 8 to 12 years of service.

2 increments between 12 to 18 years.

3 increments between 18 to 24 years.

4 increments between 24 years and upwards.

The learned single Judge has affirmed the award.

The learned counsel appearing on behalf of the employer has laid a considerable degree of emphasis on the impact of the grant of service increments in his challenge to the award of the Tribunal and the Judgment of the learned single Judge. The learned counsel submitted that the assumption by the Tribunal and by the learned single Judge that the demand for the revision of basic scales constituted only a merger of the prevailing basic pay with the additional basic pay and special allowances is erroneous. The learned counsel submitted that coupled with a merger of these allowances, the grant of service increments will result in a substantial burden upon the employer and this ought to have been taken note of by the Tribunal and the learned single Judge. The learned Counsel further submitted that the issue relating to service increments would assume significance because ultimately all allowances are linked to the basic pay and dearness allowance.

In order to highlight the increase in the basic wage that would be paid progressively to employees in different grades, the learned counsel appearing on behalf of the employer has submitted a computation in the form of a chart. The chart has been submitted for demonstrating that as a result of the service increments, there would be an increase in the basic wage progressively and at the maximum of the grade, the increase will range between 70% and 155%. This chart is being reproduced hereunder:

MINIMUM (In Rupees)

Grade   Basic   Additional Basic Special Allowance Total   Proposed by IT/HC Difference %   

-10

-0.55

-10

-0.65

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.29

1.69

9.31

MAXIMUM (In Rupees)

Grade   Basic   Additional Basic Special Allowance

Total   Proposed by IT/HC Difference %    

70.63

74.14

89.97

95.27

111.79

112.78

126.13

127.22

155.47

145.08

119.73

122.22

Excess in Basic pay over existing Basic pay + Special Allowance granted by Tribunal and confirmed by the learned single Judge, grade wise, at Minimum and Maximum of each grade.

Grade   Excess at the minimium per month Rs. Excess at the maximum Rs. per month Service No of employees

5 yrs.

10yrs.

15yrs..

20 yrs.

25 yrs.

30 yrs.

Total

-10

-10

Having regard to the submission which has been urged on behalf of the employer, we consider it appropriate to re- structure the increments which have been granted by the learned single Judge. We are of the view that the following pattern for the grant of service increment should be substituted in place and instead of what has been directed by the learned single Judge and in the award of the Tribunal:

1 increment between 10 to 18 years' service.

2 increments between 18 to 25 years' service.

3 increments above 25 years' service.

This reduction in the frequency and quantum of service increments has been granted by us having due regard to the submissions made in regard to the financial impact of the wage revision. The essential challenge of the learned counsel for the employer has been to the grant of service increments and the cascading effect which this would have upon the overall financial burden. While recognizing the need to grant increments in order to reduce stagnation in service, it is necessary to restrict the financial impact of the increments particularly at the upper echelons. Consequently, we have revised the increment structure as indicated above.

In so far as the basic scales which have been fixed by the Tribunal are concerned, we are of the view that no interference is called for in appeal against the decision of the learned single Judge and the Tribunal. The rationalization of basic scales was entirely justified especially having regard to the long period of time that had elapsed since the basic scales were revised. The Tribunal had before it, all the relevant data relating to the wage scales in comparable concerns in the region-cum-industry. Much of the data has already been adverted to by us earlier. In making a comparison between the basic scales in comparable Companies, we have due regard to this data including the chart annexed at page 220 of Vol. V. In considering the chart, due notice has also been taken of the fact that in many of the comparable Companies, the earlier settlements had expired and the wage revision was due. Having considered the facts end circumstances of the present case, we do not find any reason to interfere with the fixation of the basic pay.

24. Dearness Allowance :

In so far as the revision of Dearness Allowance is concerned, the award of the Industrial Tribunal and the manner in which it has been modified by the learned single Judge, have already been referred to in the earlier part of this Judgment. The Industrial Tribunal had granted a Variable Dearness Allowance computed at Rs. 386 for Grades 12 to 02 on the basis of Consumer Price Index 1000 (1934). For grades 01 to 00 base was taken as C.P.I. 1200 (1934) and a Nil Dearness Allowance was payable at that cut off point. For variation above the base C. P. I., a neutralization rate was prescribed by the Industrial Tribunal which was linked to the basic salary. The rate of neutralization was between Rs. 3 for every variation of 5 points upto a basic salary of Rs. 300/- and went up to Rs. 4.05 for even such variation for a basic salary between Rs. 1901/- to Rs. 2050/- The learned single Judge has deleted this part of the award of the Tribunal in so far as the double linkage of D. A. with reference to basic salary and the Consumer Price Index. Apart from the Variable Dearness Allowance with double linkage as aforesaid, the Tribunal had also granted a Slab Dearness Allowance. Upto a basic salary of Rs. 300/-, Dearness Allowance of 100% of the basic salary was granted. Thereafter, for every progressive slab of basic pay, the percentage payable in respect of the basic salary above Rs. 300/- was reduced in stages. As granted by the Industrial Tribunal, the Slab Dearness Allowance is as follows :

     SLAB D. A.

Upto Basic Rs. 300 ...100% of basic (A)

Rs. 301 to Rs. 350 ...A + 87.5% of basic above Rs. 300 (B)

Rs. 351 to Rs. 400 ...B + 75% of basic above Rs. 350 (C)

Rs. 401 to Rs. 450 ...C + 50% of basic above Rs. 400 (D)

Rs. 451 to Rs. 500 ...D + 25% of basic above Rs. 451 (E)

Rs. 501 and above ...E + 20% of basic above Rs. 500

The learned single Judge has modified this part of the award of the Industrial Tribunal. The slabs and percentages laid down by the learned single Judge have already been extracted in paragraph 4 of the judgment and need not be extracted again.

In justifying the award of the Industrial Tribunal in respect of Dearness Allowance, it has been sought to be submitted on behalf of the Association that the existing scheme of Dearness Allowance did not protect even the need based minimum wage of the pre-award period. According to the Association, the pre-award of the Tribunal only enhanced Dearness Allowance to bring it near 100% neutralization of the earlier basic wage. Before the award, the least basic wage (including the additional basic salary) was around Rs. 200/-. Besides this, at C.P.I. 100 (1934 - 100) the workers would get a fixed Dearness Allowance of Rs. 376/- at the basic pay of Rs. 200/-. Hence the wage required to be protected at the basic pay of Rs. 200/- was Rs. 576 of C.P.I. 1000(1934 = 100). This means that Rs. 5.76 per 10 points was required to be given as Dearness Allowance of the pre-award lowest wage. This, according to the Association was rounded off to Rs. 6 per 10 points since the basic pay itself has been enhanced after merging the Special Allowance. Rs. 6 per 10 points was the rate of Dearness Allowance prevalent in Special Steels which was a comparable concern. According to the Association, the rate of Dearness Allowance in other concerns was even higher. The Tribunal's award, in the submission of the Association, was based on the evidence on record after the application of the industry-cum-region principle. The Association also drew the attention of the Court to the fact that the enhanced Dearness Allowance was for the first time linked both to the basic wages and to the Consumer Price Index. This was the method that was followed in almost all the other concerns which were held to be comparable. The Dearness Allowance Scheme provided according to the Association, a neutralization of the effect of the rise in price index upon the basic wage to the extent of 94% at the lowest level of wage and which was gradually reduced to around 85% for the higher levels of wages. The Association has challenged the decision of the learned single Judge in so far as it denied a dual linkage with the basic pay and Consumer Price Index granted by the Tribunal in relation to the Variable Dearness Allowance.

On behalf of the Association, a chart has been submitted to demonstrate the manner in which the scheme of Dearness Allowance for the workmen at Kalwe has been progressing. This chart has been submitted for demonstrating that in the Kalwe Unit also there has been a scheme of Dearness Allowance linked to the basic pay and to the Consumer Price Index.

1994 SETTLEMENT:

1. Basic linked DA

               Basic wages

    Basic-linked dearness allowance

Upto basic wages of Rs. 10 per day

100% of the basic wage

From Rs. 10.01 to Rs. 15.00 per day

Rs. 10 + 75% of basic wages above Rs. 10

From Rs. 15.01 to Rs. 20.00 per day

Rs. 13.75 + 50% of basic wages above Rs. 15

From Rs. 20.01 and above.

Rs. 16.25+ 25% of basic wages above Rs. 20 Upto a maximum of Rs. 20 per day.

2. DA linked with consumer price index-1934 (CPI)

For CPI at 5500:

Grade

Rs/Day

Grade

Rs/Day

83.69

87.67

84.04

87.81

84.85

93.08

86.68

93.10

For variation above CPI 5500:

Re. 0. 15 day for full 10 points of variation in the monthly CPI over or under the CPI of 5500 (i.e. Rs. 3.90 per 10 points on the monthly, based on 26 days).

1984 SETTLEMENT:

1. Basic linked DA

               Basic wages

    Basic-linked dearness allowance

Upto basic wages of Rs. 10 perday

70% of the basic wage

From Rs. 10.01 to Rs. 15.00 per day

Rs. 7.00 + 60% of basic wages above Rs. 10

From Rs. 15.01 to Rs. 20.00 per day

Rs. 10.00 + 50% of basic wages above Rs. 15

From Rs. 20.01 and above.

Rs. 12.50 + 25% of basic wages above Rs. 20 Upto a maximum of Rs. 16.25 per day.

2. DA linked with consumer price index-1934 (CPI)

For every 10 full points above CPI of 105 :

Grade

Rs/Day

Grade

Rs./Day

0. 1775 (Rs. 4.615)

0. 1950 (Rs. 5.070)

0. 1800 (Rs. 4.680)

0. 1975 (Rs. 5. 135)

0. 1850 (Rs. 4.810)

0.2075 (Rs. 5.395)

0. 1875 (Rs. 4.875)

0.2100 (Rs. 5.460)

(The figures in brackets are the rates on monthly basis, based on 26 days)

On the other hand, the Learned Counsel appearing on behalf of the employer sought to contend that the learned single Judge had not indicated as to which were the comparable concerns on record which were duly taken into account. The learned counsel submitted that the learned single Judge had pruned down the Dearness Allowance awarded by the Tribunal without indicating any bias. The industry-cum-region basis, it was submitted, was not adopted and the total wage packet had not been considered. The learned counsel further submitted that the neutralization which had been granted by the award of the Tribunal was the highest amongst the Companies referred to for comparison and there was no justification for the Tribunal adopting the pattern of Dearness Allowance linked to slab of basic salary.

In justifying the claim for revision in the Dearness Allowance, the Association has also contended that the present rate of neutralization works out to hardly 122% of the revised textile D.A. The Textile rate of Dearness Allowance protects only the starvation wage. The concept of wages has progressively changed and, therefore, it is the living wage that has to be protected in so far as the workmen are concerned. Reliance was also placed on the fact that in many comparable concerns, the Dearness Allowance which is being paid is far better for the same or similar type of work. Dearness Allowance was introduced after the commencement of the Second World War in 1939 in the Textile Industry which was then the most organized and the oldest of Industries. When the question of protecting of wages of workers arose subsequently, the basic wages of Rs. 30/- of Textile workers in Bombay and Rs. 28/- of the Textile workers in Ahmedabad were sought to be protected. To protect these wages, in 1940, the formula suggested by Rangnekar Committee was accepted, which came to be known as the Revised Textile Scale of Dearness Allowance. Upon revision in 1954, this came to be known as the Revised Textile Scale of Dearness Allowance. By introducing the Revised Textile Scale of Dearness Allowance, the basic wage of Rs. 30/- of the year 1939 was sought to be protected. The basic wage of Rs. 30/- which was protected by the revised Textile Scale of Dearness Allowance was basically what has been described as a starvation wage.

The learned single Judge while affirming the decision of the Industrial Tribunal took note of the fact that the existing Dearness Allowance Scheme worked out hardly to 122% of revised Textile D.A. There was a need to revise the existing Dearness Allowance based on what is being paid in comparable concerns, having due regard to the financial impact on the employer. In modifying the award of the Industrial Tribunal, the learned single Judge has duly taken note of (i) the rate of neutralization under the existing scheme which was being followed by the Company (ii) the Dearness Allowance which the Company has itself introduced in the Kalwe Unit for daily rated workmen under a recent settlement, where the rate of neutralization varied between 172% and 208% and in Kurla, where it varied between 180% and 250%, (iii) the Dearness Allowance which had been paid to the workmen in comparable concerns, (iv) the financial burden which would be placed upon the Company and the figures which had been made available by the employer in this regard and (v) the impact of the revision which had already been granted of the basis wage and the incremental benefits. Having regard to the fact that the revised basic wage and the incremental structure which had been granted in the case of the Company was comparatively higher than what was now prevalent in the comparable concerns and the financial burden which was being placed on the Company, the learned single Judge held that there was no need to link the Variable Dearness Allowance with the specified slab of salary. Accordingly the dual linkage of the Variable Dearness Allowance to the basic pay and price index has been modified and deleted by the order of the learned single Judge, Having considered the award of the Tribunal, the Judgment of the learned single Judge and the material on record, we are of the view that a case for the revision of Dearness Allowance had been made out and the Dearness Allowance was required to be revised. First and foremost, in dealing with the question of Dearness Allowance regard must be duly had to the fact that in comparable concerns, a slab system of Dearness Allowance linking the allowance both with the basic salary as well as the Consumer Price Index, is a matter of prevalent practice. A comparison of the Schemes of Dearness Allowance of concerns in the region-cum-industry was placed on record before the Tribunal apart from the primary material. (Vol. V page 213-214). Statistics are on the record as regards the Dearness Allowance which is paid in comparable concerns at the minimum and the maximum of the basic scales of pay (Vol. V page 208-209). The rate of neutralization which has been granted in comparable Companies was also available on the record before the Tribunal (Vol. V page 210). There is thus, ample data to substantiate the justification for the introduction of the slab system of Dearness Allowance in accordance with conditions of service prevalent in the industry-cum-region.

Having said this, it would be necessary to have regard to the fact that as far back as in 1961 in Standard Vacuum Refining Company of India Ltd. v. Its Workmen , the Supreme Court laid down that in dealing with the wage-structure it is usual to divide wages into three broad categories; the basic minimum wage which is the bare subsistence wage, above which is the fair wage, and beyond the fair wage is the living wage. The Supreme Court held that the meaning of this concept was elastic and was bound to vary from time to time and from country to country. The distinction between the concept was also described as reflecting the poverty level, the subsistence level, the comfort level or the decency level of wages. The Supreme Court held that the concept of living wage which was enshrined in Article 43 of the Constitution was not a static concept, but "it is expanding and the number of its constituents and their respective contents are bound to expand and widen with the development and growth of national economy." The wage structure in our society has yet to reach the level of a fair wage. The Supreme Court held that the proper approach to adopt would be to consider whether the wage structure in question even approximately meets the legitimate requirements of the components constituting the concept of a living wage. Four decades have since elapsed after the judgment was delivered and the principles which were laid down in that judgment have been subsequently considered and affirmed.

In its judgment in Monthly Rated Workmen of Indian Hume Pipe Co. Ltd. v. Indian Hume Pipe Company Ltd., , the Supreme Court held that the Court had often times that emphasized the need for a living wage to workmen instead of a subsistence wage. The Supreme Court held that "it is indeed a matter of concern and mortification that even today the aspirations of a living wage for workmen remain a mirage and a distant dream." The Supreme Court laid down that nothing short of a living wage can be a fair wage and the Courts are duty bound to ensure to the workmen a living wage which would keep them to some extent at least free from want. Thereafter, in the Workmen v. Management of Raptakos Brett & Co. Ltd. , while considering the validity of the decision by the Management to abolish the slab system of Dearness Allowance, the Supreme Court referred to the fact that the concept of minimum wage in 1992 was no longer the same as it was in 1936. The wage of a workman was no longer a matter of contract simpliciter but has the force of collective bargaining authorized by labour legislation. Keeping in view the socio-economic aspect of the wage structure, the Supreme Court held that in determining what should be the minimum wage in an industry, an additional component to provide for children's education, medical requirements, minimum recreation including festivals, ceremonies and provision for old age should constitute a further 25% of the total minimum wage. Finally it may be noted that the concept of Dearness Allowance linked to the basic pay as well as Consumer Price Index has been judicially affirmed by the Supreme Court in various situations. This includes the Judgment in Unichem Limited v. Workmen, (supra) and Hindustan Lever 1994 II CLR 673. In the Hindustan Lever case, the Supreme Court observed thus:

"Workers and their families depend almost entirely on wages to provide themselves with the three basic requirements of food, clothing and shelter. The other necessities of life like children's education, medical expenses, etc., must also come out of the emoluments earned by the bread-winner. Workers are therefore concerned with the purchasing power of the pay-packet he receives for his toil. If the rise in the pay-packet does not keep pace with the rise in prices of essentials the purchasing power of the pay-packet falls reducing the real wages leaving the workers and their families worse off. Therefore, if on account of inflation prices rise while the pay-packet remains frozen, real wages will fall sharply."

In the present case the erstwhile scheme which was prevalent in the Company was divided into 3 parts, (i) A slab D.A. at C.P.L 1000 in which specified amounts of D.A. ranging from Rs. 376/- and Rs. 406/- was provided for various scales of basic pay upto Rs. 200/- and thereafter Nil D.A. was, however, provided upto C.P.I. 1200 for Grades 01 and 00; (ii) Variable D. A. at the rate of Rs. 1.72 for variation of 5 points for C.P.I. above 1000 for Grades upto 02 and in the case of Grades 01 and 00 at the rate of Rs. 10 for variation of 25 points for C.P.I. above 1200 and (iii) a fixed additional Dearness Allowance gradewise. The award of the Tribunal provides a Variable Dearness Allowance as well as the Slab Dearness Allowance linked to basic pay and to the Consumer Price Index. The Variable Dearness Allowance in turn had a linkage to the Consumer Price Index as well as the basic pay as already noted earlier. The learned single Judge has pruned down the Dearness Allowance formula by excluding the linkage of Variable Dearness Allowance with the basic pay. The Variable Dearness Allowance is now payable for Grades 09 to 02 of Rs. 386 at C.P.I. 1000 (1934). For Grades 01 and 00 there is no Dearness Allowance upto C.P.I. 1200 (1934). However, for an increase or decrease of 5 points above 1000 points on the Consumer Price Index, Dearness Allowance is to increase or decrease, as the case may be, by Rs. 3 per 5 points. The decision of the learned single Judge in this regard has reduced the financial burden which is cast upon the employer as a result of the award of the Industrial Tribunal. The separation of the Variable Dearness Allowance from the dual linkage formula provides some relief to the employer. However, having regard particularly to the financial difficulties which the employer has faced in the recent past attendant upon the recession during the financial year 1989-99, we are of the view that the Award of the Industrial Tribunal should be modified to a certain extent. The Slab Dearness Allowance which has been granted by the Award of the Tribunal, as affirmed by the judgment of the learned single Judge is as follows:

a) upto basic Rs. 300-100% of basic.

b) Rs. 300 to Rs. 400 - A+ 60 % of basic above Rs. 300/-

a) Rs. 400 to 500 - B - B+ 40% of basic above Rs. 300/-

d) Rs. 500 and above - C + 20% of basic above Rs. 500/-

In our view, the modification should be in the following terms:

a) upto basic Rs. 300-100% of basic.

b) Rs. 300 to Rs. 400 - A+ 60 % of basic above Rs. 300/-

a) Rs. 400 to 500 - B - B+ 40% of basic above Rs. 300/-

d) Rs. 500 and above - B + 20% of basic above Rs. 500/-

In our view this modification is necessitated in order to reduce the financial impact of the grant of Dearness Allowance as aforesaid. Therefore, while we are of the view that the introduction of the slab system of the Dearness Allowance is entirely justified, the rates which have been granted should be substituted by a direction as hereinabove.

25. Leave Travel Allowance:

We are of the view that the revision of L.T.A. is entirely justified, having regard to the increased cost of all modes of transport, travel and other attendant expenses related thereto. The Tribunal has granted an amount of Rs. 2,500/- lump sum plus the respective monthly basic salary as the annual leave travel allowance for Grades 12 to 02. For Grades 01 and 00, the Tribunal has granted a lump sum of Rs. 3,500/- plus the respective monthly salary. We affirm the decision and the reasoning of the Tribunal and the learned single Judge in this regard.

26. Gratuity:

In so far as gratuity is concerned, the Tribunal has allowed the claim of the workmen for gratuity calculated at the rate of 21 days for every completed year of service. The learned single Judge has noted that the daily rated workmen at Kalwe are paid gratuity at the rate of 21 days of their basic wages plus Dearness Allowance under an agreement dated February 15, 1994. The employees covered by in this case reference were entitled to gratuity of 15 days' of their basic wages and dearness allowance under the existing scheme. In this regard, we find a considerable degree of substance in the contention urged by the learned counsel appearing on behalf of the employer that the gratuity scheme at Kalwe is on the basis of a minimum attendance (the requirement is stated to be of 260 days) and of 20 years of service. The award gives a flat rate of gratuity of 21 days to all the employees. The learned counsel submitted that the Tribunal in para 72 in its judgment has ignored the qualification which were prescribed for the Kalwe Unit. Having regard to the aforesaid circumstances and particularly to the statutory provision relating to the payment of gratuity, we are of the view that at the present stage, the gratuity should be maintained as under the existing scheme of 15 days for every completed year of service.

27. House Rent Allowance; Education Allowance; Fixed Medical Allowance; Washing Allowance:

In so far as House Rent Allowance is concerned, the demand of the Union was for payment of 15% of the basic pay and dearness allowance. At present, House Rent Allowance was being paid at varying rates between 7% and 12%. The Tribunal has fixed a flat rate of 12.5% of the revised basic scale plus dearness allowance. The learned single Judge has found that there was no reason to interfere with the award of the Tribunal. We do not find any infirmity in the award. Similarly, we are of the view that the grant of Education Allowance at the rate of Rs. 250/- per month, of the fixed Medical Allowance at the rate of Rs. 300/- per month and washing allowance of Rs. 50/- per month to those employees who are given Uniform and whose uniform is not washed at the Company's cost does not call for interference in appeal.

28. The Industrial Tribunal has granted a revision of the conditions of service from the date of the Reference which is February 17, 1993. We have duly considered the question of the burden which would be imposed on the employer by the award of the Industrial Tribunal as modified in these proceedings.

29. According to the Association representing the workmen, the financial burden occasioned by the award of the Industrial Tribunal would be no more than 16.36% of the gross profits, based on the average gross profit made between 1991-92 and 1996-97. The assumption which the Association has made is that the average rate of corporate tax for the six years from 1991-92 until 1996-97 was 45.58% and the net tax burden after making due allowance for the rate of tax would come to Rs. 6.83 crores per year. These figures have been seriously disputed on the part of the appellant-employer. The learned counsel appearing on behalf of the employer has submitted that according to the Judgment of the learned single Judge, the average gross profits for the period 1991-92 to 1996-97 were Rs. 34.22 crores and the annual burden is stated to be 25% of the average gross profits. (According to the employer, the correct percentage is 28% and not 24%.) The learned counsel appearing on behalf of the employer submitted that this burden was only in respect of 37% of the total strength of employees of the Company and if the burden is projected on a pro rata basis in respect of all employees 76% of the average gross profit will have to be distributed amongst Company's employees. We have duly taken into account the rival submissions and have carefully considered the figures which have been submitted before us by both the sides. The Court will have also necessarily to have regard to the impact of the financial performance of the Company over a period of time. This includes the financial difficulties faced by the Company in 1998-99. Having regard to the financial burden under the award of the Tribunal as modified by us, we are of the considered view that the award of the Tribunal as modified should be made operative not from February 17, 1993 as directed by the Industrial Tribunal but, with effect from January 1, 1996.

30. In these circumstances, we affirm the decision of the learned single Judge subject to the aforesaid modification in respect of the payment of service increments, the scheme for Dearness Allowance and the payment of gratuity. The date from which the Award of the Tribunal shall operate shall be January 1, 1996.

31. In the circumstances, we affirm the decision of the learned single Judge subject to the aforesaid modifications. Appeal No. 194 of 2000 is allowed to the aforesaid extent, Appeal No. 441 of 2000 is rejected. There shall, in the circumstances of the case, be no order as to costs.