Transport Corporation Of India vs Maharashtra Rajya Mathadi ...
2003 Latest Caselaw 484 Bom

JUDGMENT

A.P. Shah, J.

1. This group of appeals arises out of the award of the Industrial Tribunal delivered on August 29, 1997 in Reference (IT) No. 225 of 1981 under the provisions of the Industrial Disputes Act, 1947, hereinafter referred as 'the Act'.

2. Briefly stated the facts arc that around 1980, the All India Transport Employees Association raised a dispute relating to the general demands, including wage scales, dearness allowance and transfer of employees etc. in relation to the employees employed with various transporters having establishments all over India. This dispute was referred for adjudication by the Appropriate Government on August 12, 1981 under Section 10(1)(d) of the Act. The reference was initially made in respect of Prakash Roadlines Pvt. Ltd. and 258 other employers. By a Corrigendum issued on February 25, 1982, 116 more employers were included in the reference. An award was made by the Industrial Tribunal on November 12, 1986. The award was challenged by 28 transporters as well as the Union representing the workmen by filing writ petitions under Article 226. The writ petitions were disposed of by this Court by a common judgment dated November 11, 1992. The reference was remanded to the Industrial Tribunal as the Tribunal, instead of fixing fair wages, had fixed minimum wages as the wages payable to the workmen employed with the transporters. On remand, all the 28 operators and the workmen who now came to be represented by the respondent Nos. 1 and 2 Unions appeared before the Industrial Tribunal. While remanding the matter, this Court had directed the Tribunal to consider only three demands viz. basic pay, dearness allowance and whether transfers should be effected of the employees with consultation of the Union. The Tribunal carefully considered the material produced before it and has awarded the wage scales and dearness allowance to the workmen after considering the profit and loss accounts and the balance-sheets of the individual transporters which were filed before it. The Tribunal noted that the Index when the reference was made was 459 at the 1960 Series and that while making the award, the index figure had risen to 7206 in the 1934 Series i.e. 1797 of the 1960 Series. The Tribunal considered the minimum wages payable to the motor transport industry as fixed by the State Government. The Tribunal also considered the effect of the settlements filed on record in respect of some of the transporters, which they claim to have arrived at during the pendency of the reference. The Tribunal observed that although the settlements were filed and there is an endorsement made by the then Presiding Officer of the Tribunal on some settlements as 'allowed', it was necessary to consider whether these settlements were fair and just, especially in view of the fact that the settlements were not between the employers and the Unions but with individual workmen. The Tribunal considered these settlements and concluded that they were neither fair nor just. The Tribunal allowed the claims in regard to demand No. 1 regarding wages and also demand No. 4 regarding dearness allowance, however, the demand regarding transfers with consultation of the Union was rejected. Aggrieved by the award, out of 28 transporters, 18 had approached this Court by filing writ petitions under Article 226 of the Constitution of India. All the writ petitions were dismissed by NISHITA MHATRE J. by a common judgment and order dated May 2, 2002.

3. Mr. J.P. Cama, learned counsel appearing for the appellants, raised the following points for our consideration:

i) The Tribunal and the learned single Judge committed an error in rejecting the settlements arrived at between the transporters and the individual workman which were duly signed by the parties and filed in the proceedings.

ii) The Tribunal has exceeded jurisdiction in directing payment to the workers higher than what was demanded by them.

iii) The Tribunal did not consider the fact as to whether individual employer had the financial capacity to bear the burden cast on them by the award.

4. Before the points are dealt with, we may briefly indicate various concepts of wage structure in the industrial field. Broadly, the wage structure can be divided into three categories- (1) minimum wage which provides subsistence and is at poverty line level; (2) little above is the fair wage and finally the living wage which comes at a comfort level. In Express Newspapers (Pvt.) Ltd. and Anr. v. Union of India and Ors., , the Supreme Court has explained these concepts 'living wage', 'fair wage' and 'minimum wage' in following terms at p. 339 of LLJ (Headnote):

"The concepts of living wage held in various parts of the world show a general agreement that the living wage should enable the wage-earner to provide for himself and his family not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for the children, protection against ill-health, requirements of essential social needs and a measure of insurance against the more important misfortunes including old age. (vide Report of the Committee on Fair Wages (1947 to 1949) P.7).

There is distinction between a bare subsistence or minimum wage and a statutory minimum wage. The former is a wage which should be sufficient to cover the bare physical needs of a worker and his family and that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to pay. If an industry is unable to pay to its workmen at least a bare minimum wage, it has no right to exist.

The 'fair wage' is thus a mean between the living wage and the minimum wage and even the 'minimum wage' is something more than the bare minimum or subsistence wage which would be sufficient to cover the bare physical needs of the worker and his family, a wage which would provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities.

The content of the expressions of 'minimum wage', 'fair wage' and 'living wage' is not fixed or static. It varies and is bound to vary from time to time. With the growth and development of national economy, living standards would improve and so would our notions about the respective categories of wages expand and be more progressive".

5. The Court also laid down the principles of fixation of rates of wages as under:

"(1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity;

(2) that the capacity of the industry to pay is to be considered on an industry-cum-region basis after taking a fair cross-section of the industry; and

(3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the organization so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product - no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business."

6. In Kamani Metals and Alloys Ltd. v. Their Workmen, reported in 1967 (32) FJR 64, HIDAYATULLAH J., as His Lordship then was, summarised the principles which are to be followed in fixation of wage structure as follows:

"Fixation of a wage structure is always a delicate task because a balance has to be struck between the demands of social justice which requires that the workmen should receive their proper share of the national income which they help to produce with a view to improving their standard of living, and the depletion which every increase in wages makes in the profits as this tends to divert capital from industry into other channels thought to be more profitable. The task is not rendered any the easier because conditions vary from region to region, industry to industry and establishment to establishment. To cope with these differences certain principles on which wages are fixed have been stated from time to time by this Court. Broadly speaking the first principle is that there is a minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen on lower wages. This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which v/ages cannot be allowed to sink in all humanity. The second principle is that wages must be fair, that is to say, sufficiently high to provide a standard family with food, shelter, clothing, medical care and education of children appropriate to the workman but not at a rate exceeding his wage earning capacity in the class of establishment to which he belongs. A fair wage is thus related to the earning capacity and the workload. It must, however, be realised that 'fair wage' is not 'living wage' by which is meant a wage which is sufficient to provide not only the essentials above mentioned but a fair measure of frugal comfort with an ability to provide for old age and evil days. Fair wage lies between the minimum wage, which must be paid in any event, and the living wage, which is the goal. As time passes and prices rise, even the fair wage fixed for the time being tends to sag downwards and then a revision is necessary. To a certain extent the disparity is made up by the additional payment of dearness allowance. This allowance is given to compensate for the rise in the cost of living. But as it is not advisable to have a 100 per cent neutralisation lest it leads to inflation, the dearness allowance is often a little less than 100 per cent neutralisation. In course of time even the addition of the dearness allowance does not sufficiently make up the gap between wages and cost of living and a revision of wages and/or dearness allowance then becomes necessary. This revision is done on certain principles."

7. In the instant case, we are concerned with the workmen working in transport industry. The reference was made in respect of 374 transporters. However, only 28 operators appeared before the Tribunal after the reference was remanded to the Tribunal. Out of 28 only 18 has approached this Court. The reference was made in 1981 and the award came to be passed in 1997 i.e. after 16 years and the Tribunal has granted the relief only prospectively and thus, the workmen have been denied any relief for the period from 1981 till 1997. Before the Tribunal, only 28 employers led evidence and produced their balance-sheets and profit and loss accounts for the relevant years. The Tribunal has painstakingly considered the material produced on record and allowed the reference only with regard to basic pay-scales and dearness allowance. It is an admitted position that the award of the Tribunal has not been implemented till this date and the workmen are receiving only a fraction of the amount as per the interim arrangement arrived by between the employers and the Unions. On this factual background, we now proceed to examine the points raised by the learned counsel Mr. Cama.

Re Point (i):-

8. It appears that during the pendency of the reference around 10 transporters have filed settlements before the Tribunal. These settlements were not with the Union but with the individual workmen. The settlements are not arrived at in accordance with the provisions of Section 2(p) read with Section 18 of the Act. The Tribunal has considered these settlements and recorded that they were not fair and just. In respect of Jaihind Roadways, the Tribunal has observed that when the order was passed on October 5, 1995 allowing the parties to file their settlement, the wages granted under this settlement are on the basis of 1994 Notification for minimum wages for motor transport industries and therefore, the Tribunal has rightly concluded that this would not be sufficient to comply with the directions of this Court while remanding the matter. In respect of Savani Transports, the Tribunal has observed that although the settlement had been filed on April 1, 1997, the Court had passed an order 'other side to say'. While considering this settlement, the Tribunal has found that the balance-sheets and profit and loss accounts have not been produced by the employer and has therefore drawn an adverse inference against the employer. As regards the settlement between Associated Road Carriers, the Tribunal has observed that it deprived the workmen of fair wages and therefore rejected the settlement in respect of the said employer. In the case of settlement with Patel Roadways, the Tribunal has rejected this settlement as the settlement only mentioned that an ex gratia amount of Rs. 5,00,500/- would be disbursed amongst the workmen without any reference to the increase in wages or dearness allowance. It appears that the Tribunal had initially allowed the settlements in respect of Jaihind Roadways and Associated Road Carriers. As regards Savani Transports, Deluxe Roadlincs and Transport Corporation of India, the Tribunal had endorsed "other party to say" and in respect of Patel Roadways, by an order dated October 24, 1996, the Tribunal had made the endorsement "reference disposed off". Merely, making such endorsements would not amount to making of award. While making an award in terms of the settlements, the Tribunal is expected to consider whether the settlements filed are fair and just. The Tribunal has given cogent reasons for holding the settlements to be contrary to the directions of this Court that the award should grant fair wages to the workmen and not merely minimum wages as done by the employers.

9. Mr. Cama strenuously contended that settlements of labour disputes by direct negotiations is always to be preferred for as it is the best guarantee of industrial peace, which is the aim of all legislations for the settlement of labour disputes. He heavily relied upon the decisions of the Supreme Court in Herbertsons Ltd. v. Workmen of Herbertsons Ltd. and Ors., and New Standard Engg. Co. Ltd. v. N. L. Abhyankar, . He submitted that Court must take into consideration all the factors which were likely to prevail with the workmen in accepting terms of the settlements including prospects of protracted litigation, the risk of adverse decisions and other relevant circumstances as prevailing on the date of the settlements. According to Mr. Cama, the Tribunal committed obvious error in brushing aside the settlements which were arrived at between the management of the transporters and the workmen. There cannot be any dispute that settlements arrived through negotiations should be, as far as possible, upheld by the Court. However the question of justness and fairness of the settlement is also required to be examined. The Tribunal has exhaustively dealt with each of the settlements and has come to the conclusion that the settlements are not just and fair. In any event, most of these settlements are not more than the minimum wages barring few cases where only marginal rise above the minimum wages and, therefore, it will not be proper to accept the settlements which do not give anything more than the minimum wages even after remand. In the above circumstances, the finding of the Tribunal that settlements were not fair and just cannot be said to be arbitrary or irrational or perverse. The submission of Mr. Cama based on the settlements is therefore liable to be rejected.

Re Point (ii):-

10. Mr. Cama, learned counsel strenuously urged that the Tribunal had erred by fixing wages at rates which are higher than the demand. The pay-scales demanded and awarded by the Tribunal are as follows:

Grade Demand linked to CPI 200 (1960 series) Award linked to CPI 7206 (1934 series)

Grade I Rs. 800-50-1200-75-1500 Account, Booking Incharge, Delivery Incharge, Head Cashier, Stenographer, Secretaries Rs. 2878-100-3378-120-3978-140-4678-160-5478 Accountant, Booking Incharge, Delivery Incharge, Head Cashier, Stenographer, Secretaries

Grade II Rs. 600-40-760-60-100 Accounts Clerks, Cashiers, Office Clerks, Typists Clerks, Typist, Filing Clerks, Booking Clerks, Loading Clerks, Unloading Clerks, Delivery Clerks Rs. 2616-80-3016-100-3516-120-4116-140-4816 Accounts Clerks, Cashiers, Office Clerks, Typists Clerks, Loading Clerks, Unloading Clerks, Delivery Clerks.

Grade III Rs. 450-30-570-55-790 Markers, Office Attendants Rs. 2378-60-2678-3078-100-3578-120-4178 Markers, Office Attendants

Grade IV Rs. 325-25-425-35-565 Peons, Watchment, Mazdoors, Loaders, Unloaders and Cleaners Rs. 2162-40-2362-60-2662-80-3062-100-3562 Peons, Watchment, Mazdoors, Loaders, Unloaders

11. The learned single Judge has compared two wage scales and come to the conclusion that the amount awarded is in fact less than the amount demanded in respect of Grade IV. The relevant observations of the learned single Judge are reproduced hereunder:

"Now, if one compares the two wage scales, i.e. the demanded wages and what has been awarded at first blush, it may seem that the submissions made by the learned counsel for the petitioners are correct. However, the grades as demanded were on the basis of the index in 1980, When the reference was made on August 12, 1981 the CPI was 459 (1960 series). This is equivalent to 2038 in the 1934 series. The Tribunal has merely computed the wages that would have been payable at that index had the demand been granted in toto and has awarded those wage scales on the basis of the prevailing index. What was demanded by the workmen in the fourth grade was Rs. 325-25-425-35-565. Had this demand been granted from the date of the reference when the CPI was 459 (1960 series) which would be equivalent to 2038 (1934 series) taking 4.44 as the linkage factor a workman would have been entitled to Rs. 661.70 as his total wage packet i.e. Rs. 325 as basic plus Rs. 336.75 as D. A. While making the award the Tribunal has pegged the above scales to CPI 7206 which was the index at the time of making the award (old series). After the addition of the dearness allowance, which has been awarded at Rs. 3/- per 10 points rise in the index over 7206 to the basic wage of Rs. 2162, in January, 1995 a workman would be entitled to Rs. 2180. However, if what had been demanded had been accepted by the Tribunal the same workman would have been entitled to a basic wage of Rs. 775 (assuming the yearly increment given to him would remain static at Rs. 35 after he reached the maximum in the scale) together with D.A. of Rs. 1914. Therefore, the total amount that he would have received is Rs. 2689. Thus the amount awarded is less than the amount demanded by approximately Rs. 500. Similarly, in respect of the other grades, the wages which have been awarded are less than what has been demanded. Moreover, what is required to be considered during wage adjudication is not merely the basic wage, but the total pay packet. If the total pay packet is not more than what was demanded, then it is open for the Tribunal to grant such wages. The Industrial Court, as is well-settled, can create contracts and therefore, if the circumstances warrant, can also grant a higher wage scale than demanded, provided the total wage pocket is not more than the demand. In the instant case, the demands were raised in 1980 and the reference was made in the year 1981. Taking into consideration the situation prevailing at that point of time, the workers had demanded the above wage scales. However, while making the Award, it was necessary for the Tribunal to take into consideration the prevailing circumstances and make an Award accordingly. This is what the Tribunal has done and, therefore, I see no reason to interfere with the same.

The vehemence with which the transporters have pleaded that the Tribunal has erred while granting these wage-scales and dearness allowance on the ground that the demand was less than the award is surprising as the contention is wholly unfounded. The Tribunal has rightly considered the fact that a person in Grade IV in the lowest scale at the initial stage of the scale would get Rs. 325/- had the demand been granted from the date of the reference. This person in 1995, when the award was made, would have put in at least 15 years of service and would, therefore, be entitled to a higher basic wage calculated on the basis of the demand made in 1980 converting this into 1934 series on the basis of which the Tribunal has made this award, the workman would be entitled to a higher salary than what has been awarded by the Tribunal."

12. We see no reason to interfere with the well-considered findings recorded by the learned single Judge. That apart, even assuming that what has been awarded is marginally higher than what was originally demanded by the workmen, still the order of the Tribunal cannot be faulted with in view of the long time gap between the making of the reference and passing of the award. In Kamani Metals and Alloys Ltd. v. Their Workmen, (supra), the Supreme Court, while rejecting the submission of the employer that there was no change in circumstances justifying a revision of pay-scales, dearness allowance etc., observed that judicial notice must be taken of the fact that commodity prices have gone high, general level of wages has gone up and in some industries, there have been two or three revisions already and in some others, Wage Boards have been appointed while adjudicating a wage reference. It is further observed that if inspite of these factors there has been no upward revision in the company, the demand would be justified. Therefore, it is obvious that while adjudicating the reference, the Tribunal was required to keep certain principles which the Supreme Court has laid down in the forefront and to consider whether upward revision in wages must be given if the circumstances so warrant. The Supreme Court has held in a number of cases that the Industrial Tribunal must strive to see that workers are paid fair wages and not merely the minimum wages. An industrial adjudication by an award cannot be assailed because some other person would have given a different award or that elaborate reasons have not been given. We have considered the comparative charts furnished by both the parties carefully and on the whole, we are satisfied that the scales of wages as fixed by these awards are not so high, as to merit interference.

Re Point (iii):-

13. In the present case, reference has been made in respect of 374 transporters, out of those, 36 appeared before the Tribunal initially and on remand, only 28 appeared. In deciding the financial capacity of an industry, the Supreme Court has laid down in the case Ahmedabad Mill Owners' Association v. Textile Labour Association, that "the industrial adjudication must take into account the problem of additional burden which such wage structure would impose upon the employer and whether the employer can reasonably be called upon to bear such burden...... It is a long range plan and in dealing with the problem which is difficult and delicate, the financial position of the employer and the future prospects of the industry and the additional burden which may be imposed on the consumer must be carefully examined." The Supreme Court, after referring to Reserve Bank Bulletin about the financial position of the industry and about cotton textile industry and other authorities on determining the financial capacity of an industry, observed that:

"The industrial adjudication should not lean too heavily on such single purpose statements or adopt anyone of the tests evolved from such statements whilst it is attempting the task of deciding the financial capacity of the employer in the context of the wage problem."

Thus, in determining the financial capacity of an industry, all relevant factors will have to be taken into account.

14. In Management of Shri Chalthan Vibhag Khand Udyog Sahakari Mandli Ltd. G. S. Barot, Member, Indl. Court, Gujarat v. Workmen employed under Shri Mandli Vibhag Khand Udyog Sahakari Mandli Ltd. etc. Court and Ors., , the Supreme Court has observed as under at p. 389 of LLJ:

" 16. The wages due to a worker are in the nature of expenses just like payment for raw materials. In this sense the wages are expenses which have to be met whether the company works, makes profit or not. So far as the minimum wages due to a worker are concerned, the law requires that they should be paid first and if the industry cannot pay them it may as well close. The payment of dearness allowance as prescribed under the Minimum Wages Act should also be provided for in any event. It is settled law that in fixing fair wages or dearness allowance or for making contribution to provident fund or providing for gratuity the financial capacity of the industry to bear the additional burden will have to be taken into account. On principle of social justice with the development of industrial law it has now been accepted that when the industry can bear the burden provision should be made for provident fund and gratuity scheme. In determining the financial capacity of an industry, all relevant facts will have to be taken into account. The principles followed in arriving at the profit and loss account for income tax and other purposes may not be conclusive. The claim of the employer to a reasonable profit, that of the shareholders for a fair dividend and the interest of consumer and other relevant facts and circumstances will have to be taken into account. It is necessary to take into account all the facts and circumstances relating to the industry for determining the financial capacity of the industry to pay."

15. In a case of this nature, it would be virtually impossible to examine the financial capacity of each and every employer. In Express Newspapers v. Union of India (supra), the Court observed that if the industry is divided into different classes, it may not be necessary to consider the capacity of each individual unit to pay. It would certainly be necessary to consider the capacity of the respective classes to bear the burden imposed on them. A cross section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what burden the class considered as a whole can bear. If possible, an attempt can also be made, and is often made, to project burden of wage structure into two or three successive years and determine how it affects the financial position of the employer. In the light of these established principles, the Tribunal has considered the grievances as also financial capacity of the employers. It has also considered the fact that there is an elasticity for the demand of the product i.e. transportation of goods and the possibility of tightening up of the organizations when in difficulty so that the workmen would be able to enjoy the benefits of the award. Further, balance-sheets and profit and loss accounts which are necessary to show the financial capacity of an employer are maintained by the employer and the workman would not be able to throw any light on these aspects as the financial capacity is to be assessed by the Tribunal from the record made available to it. The Tribunal has considered and assessed the financial capacity of the transporters to bear the burden by taking into account the balance-sheets and the profit and loss accounts of those who had produced them on record. The Tribunal has rightly drawn adverse inference against those employers who had not cared to produce those documents or to substantiate their claim that they have the capacity to withstand financial burden which would be imposed upon them due to the demands. The Tribunal has considered the fact that most of the employers neither appeared nor filed their balance-sheets and profit and loss accounts or the statements of salaries. The statements recording the strengths of the employees also were not produced and since all these factors were within the knowledge of the transporters, the Tribunal has drawn an adverse inference and held that the transporters were able to bear the burden. The Tribunal has also considered the fact that over the last 15 years i. e. from the date when the reference was made till the time of making an award, the fixed assets of the companies have risen from year to year and therefore, it cannot be said that the financial stability and capacity of the transporters was not good. Further, while raising the basic wages, the Tribunal has pegged the wages at Index 7206. The Tribunal has given a 10% rise in every grade in accordance with the skill necessary for each grade. While linking the wage scales to the Consumer Price Index 7206, the Tribunal has awarded an increase in the dearness allowance at the rate of Rs. 2 per 10 point rise in the index. Considering these facts, we do not find any substance in the grievance of the transporters that their financial capacity was not considered. It has been pointed out by the Unions that even the statements of financial burden, etc. were not filed before the learned single Judge till the arguments were heard and the case was closed for judgment and the statements which were filed thereafter are seriously disputed by the Unions. It is seen that there is no evidence placed by the appellants that their financial position was such that they will not be able to bear the burden of paying revised wages at the rate fixed by the Tribunal. If the appellants' plea was that they could not pay wages as per the awards, they should have placed material before the Tribunal. In the absence of such material, it will not be proper to interfere with the award of the Tribunal.

16. In the result, in view of the foregoing discussion, all the appeals are dismissed with costs. The transporters are directed to pay the arrears of wages as per the award within a period of two months from today. Needless, to say that all the transporters shall pay the current wages as per the award of the Tribunal.

17. Parties to act on the copy of this order duly authenticated by the Associate/Personal Secretary as true copy.

18. Certified copy expedited.