Hindustan Lever Limited vs Hindustan Lever Employees' Union ...
2006 Latest Caselaw 1182 Bom

JUDGMENT

D.Y. Chandrachud, J.

1. An award of the Industrial Tribunal in a wage referenceforms the subject matter of the proceedings. Both the employer -Hindustan Lever Limited (HLL) - and the Unions are dissatisfiedwith material segments of the award. The proceedings before theCourt involve a petition under Article 226 of the Constitution by theemployer and two petitions by the Unions. Submissions have beenheard on behalf of the employer and on behalf of the Unions uponthe challenge instituted before the Court in all the petitions togetherand this judgment would accordingly dispose of those petitions.Essentially, the question that arises for determination before theCourt is whether the Industrial Tribunal has failed to exercise itsjurisdiction consistent with the principles of law that must governwage adjudication. This Court, while accepting the gravamen ofthe challenges to the award has arrived at the conclusion that theIndustrial Tribunal has manifestly failed to apply the settledprinciples that govern wage adjudication. A remand of theproceedings shall accordingly follow.

The Reference:

2. Hindustan Lever has a Head Office at Churchgate, aFactory at Sewri and a Research Centre at Andheri in the MumbaiRegion. The Company inter alia has at material times engaged inthe manufacture of soaps, detergents and personal products. Thewage references relate to demands raised by the Union for thehourly rated and subordinate category of workmen engaged in thethree establishments. At the establishment at Churchgate, HLLengages clerical workmen and subordinate staff. The clericalworkmen are classified in categories "C" and "T" depending uponwhether they work for 36 or 48 hours, while the subordinate staffincludes Sepoys, drivers, watchmen, sweepers and coolies whowork for 42 hours. The factory at Sewri engages (i) Hourly Ratedworkmen who are operatives; (ii) Subordinate staff similar to thoseemployed in the Head Office working either 42 or 48 hours a week;and (iii) Clerical workmen as in the Head Office. At the ResearchCentre at Andheri, HLL engages Hourly Rated subordinate andClerical staff as at the Factory and Head Office.

3. The subordinate staff at the Head Office was governedby an Industrial Settlement dated 10th January 1992. Thesettlement was extended to the subordinate and hourly rated staffof the Bombay Factory and of the Research Centre by an award ofthe Industrial Tribunal presided over by Mr. H.L. Mehendale,dated 24th March 1994. The settlement and the award wereterminated and a fresh Charter of Demands was placed on theCompany by the Union. Upon a failure of conciliation proceedings,three References came to be made to adjudication. The Charter ofDemands and the dates on which the orders of reference came tobe made are as follows:

Reference No. Establishment Charter ofDemandsDate ofReference83/97 Head Office 23-2-1996 30-11-199751/98 MumbaiFactory 09/07/9723-6-199856/99 ResearchCentre29-10-1998 23-8-1999

4. The Union filed statements of claim on 24th June 1998,1st September 1998 and 5th November 1998 seeking to justify itsdemands on the basis of the region-cum-industry principle. Themanagement filed its Written Statements in the References. TheUnion inter alia urged before the Industrial Tribunal that theMumbai Establishment of Colgate Palmolive is a comparableconcern. A Union representative from Colgate Palmolive wasexamined in evidence. The Secretary of the claimant Union wasexamined in support of the demands. During the pendency of theReferences several demands came to be dropped by the Union,these being (i) A five day week/HR duty; (ii) Accident benefits; (iii)Housing assistance/loans; (iv) Loans; (v) Gratuity; (vi) Actingallowance; (vii) Recruitment; (viii) General demands and (ix)Dearness allowance.HLL's claim to parity:

5. While the adjudication was pending, HLL entered into asettlement with the Clerical workmen of the Head Office on 20thFebruary 2003. It is also now an admitted position that similarsettlements in respect of the monthly rated staff have been enteredinto by the same Union for the Factory at Sewri and for theResearch Centre. The settlement for the Factory was entered intoon 13th April 2004 and for the Research Centre on 26th August2005. HLL filed an application on 11th July 2003, Exhibit C-61 fordisposing of the References on the basis of parity. In support of itsplea, HLL relied upon what it pleaded was a long standing practiceunder which settlements signed at the Head Office or at any of theestablishments in the Mumbai Region had been extended to theother establishments on the basis of parity. In this regard, insupport of its application, the management pleaded as follows:

...in the past, whenever a settlement was signed eitherat the head office or at any of the establishments in theBombay region, the Unions have sought to claim similarbenefits on the basis of parity and this Hon'ble Court has,by several Awards, extended the benefits given in oneestablishment to another establishment on the basis ofparity and accordingly disposed off the reference. In factHis Honour Judge Shri Mehendale disposed of even thedemands of the Company in Ref (IT) No. 76/92 withoutpermitting the Company to lead evidence by Awarddated 20-03-95. The Company has contested theseAwards in Writ Petition(s) ... along with the Writ Petitionfiled by the Union ... These petitions came up forhearing before His Lordship Justice S. Radhakrishnan.During the course of the hearing, the Union submitted astatement tracing the history of collective bargaining andextension of benefits in the various establishments andcontended that benefits have been extended not on thebasis of region-cum-industry but on the basis of benefitsthat have been given in other establishments of theCompany in the Bombay region.

6. The contention of the management was that the principleof parity between the three establishments at Mumbai has beenaccepted in a judgment of a Learned Single Judge of this Court,Dr.Justice S. Radhakrishnan, in a batch of petitions between thesame parties, which has attained finality. Since the Unions had notmoved the Tribunal for a disposal of the References in terms of theHead Office settlement, the management submitted thus:

In the circumstances, the Company is constrained tomake this application so that an Award can be mademaking the head office settlement as the basis on theprinciple of parity albeit extending the benefits withnecessary changes as may be applicable as it hasalways been the case of the unions as will be seen fromthe extracts of the judgment of Justice S.Radhakrishanan reproduced above as also thecontentions of the unions as submitted before the HighCourt in Annexure 6. The benefits given in oneestablishment ought to be extended to the otherestablishments on the basis of parity.

HLL stated that in the Head Office settlement of 20th February 2003the Union had conceded several demands of the Company andhad given up certain demands including those for revision of basicwages, pension and stagnation increments. While seeking adisposal of the References in terms of the Head Office Settlement,HLL contested the claim of the Union to retrospective extension ofbenefits and for interest.

7. In its reply dated 18th July 2003, the Union submitted thatthe application at Exh.C-61 be heard together with the mainReference on merits. The grievance of the Union was that whileseeking parity HLL was conceding only a small fraction of thebenefit which was given to the Clerical staff at the Head Office andthat in actual fact the principle of parity was not being fully applied.The case of the Union was that while there was an unbrokenhistory of parity in so far as common allowances are concerned asbetween the Clerical staff on the one hand and the subordinate andHourly Rated staff on the other, this parity did not relate to basicwages or to retirement benefits. The Union consequently sought afinal disposal of the References on all facets stating that it foundedits submission both on the basis of region-cum-industry and thesettlement with the Head Office which should be appliedharmoniously.

The Award:

8. The Industrial Tribunal delivered its award on 31stDecember 2003. A summary of the findings is in order.

(i) On the question of parity, the Tribunal while adverting tothe judgment of Dr.Justice Radhakrishnan, noted earlier,formulated the issue as follows:

Whether the principle of industry-cum-region so also theparity should be taken into consideration or only theparity and not the principle of industry-cum-region?

The Tribunal held that while revising the pay scales, it was notonly the principle of parity but the industry-cum-region principlewhich would have to be applied. The application filed by employerat Exh.C-61 was dismissed;

(ii) On the basic wages, the Tribunal noted that the lastwage revision had taken place by the Chitale Award of 20th June1974 and since then increment rates had remained unchanged.The Tribunal held that with the increase in the cost of living, arevision of wage scales was required. The Tribunal noted that bothaccording to HLL and the Union, Colgate Palmolive was acomparable concern. Whereas the working hours for Colgateworkmen were 192 hours per month, the workmen at HLL workedfor 208 hours per month. The Tribunal held that hence, HLLmust pay to its workmen 8.33% more than what was paid byColgate both in terms of basic wages and dearness allowance.The Tribunal noted that the witness from Colgate who deposed insupport of the Union had not provided adequate evidence in regardto actual fixation of salary, the span and total wage packet in eachof the concerned categories of Colgate. The Tribunal whilerejecting the chart for wage fixation proposed by the Union cameout with the following suggestions:

With the conclusion supra, I would like to suggest thateither Court of inquiry, or the Committee comprising theunions' representatives and the representatives ofcompany, headed by independent expert be constitutedto collect all the requisite details from Colgate Palmoliveand for fixation and revision of scales.

(iii) An additional House Rent Allowance was granted by theTribunal at par with the workmen in Colgate overruling theobjection of the management that since such a demand had beengiven up in the wage settlement with the Head Office workmen,the workmen were not entitled to an additional HRA over andabove the HRA that is already being paid;

(iv) The existing Shift Allowance which was being paid at therate of 12% of the basic wage for working in shifts with anadditional amount of Rs. 3 per night shift was revised in line withwhat was being paid in Colgate;

(v) The workmen were granted two additional paid holidaysin line with Colgate so as to provide twelve paid holidays in ayear;

(vi) The demand for revision of the existing pension schemeon the basis of the pension schemes in Life InsuranceCorporation, State Bank of India and Government was notacceptable to the Tribunal and the Tribunal noted that ColgatePalmolive did not have a pension scheme. The Tribunal held thatthe Union had failed to established a region-cum-industry practiceto provide pension as a third benefit in addition to ContributoryProvident Fund. The Tribunal, however, considering the rise inConsumer Price Index allowed a revision of pension to the extentof Rs. 100/- in each of the categories where monthly pensionpayments range between Rs. 100/- to Rs. 250/-. The period ofpension which extends to 120 months from the date of retirementwas not extended;

(vii) The Tribunal granted retrospective effect with regard tobasic wages, adjustments, fitment and allowances from the date ofthe Charter of Demands.

(viii) The Tribunal has granted a revision in respect of certainallowances on the basis of the settlement with the Head Officedated 20th February 2003. These allowances are (i) leave travelallowance; (ii) conveyance allowance; (iii) attendance allowance;(iv) social security allowance; (v) special allowance; (vi) selfdevelopment allowance; and (vii) lunch allowance.

(ix) The Tribunal allowed the demand of the Union for theconferment of permanency upon three workmen holding that theyhad completed 240 days' continuous service as temporaries.The scope of the challenge:

9. HLL has, in the proceedings initiated before the Courtunder Article 226 of the Constitution, confined the challenge to theaward of the Tribunal in respect of the following areas, namely, (i)basic wages; (ii) additional HRA; (iii) shift allowance; (vi) grant oftwo additional paid holidays; (v) pension; (vi) retrospective effectand interest; and (vii) filling up of vacancies. The Unions have inthe two Writ Petitions instituted by them before the Court,challenged the award of the Tribunal on the question of basicwages inasmuch the Tribunal directed that a Committee beconstituted by the management and by the Unions together with anindependent expert for collection of data from Colgate Palmoliveand for fixation and revision of wage scales. The Unions seek thattheir prayer for a fixation of wage scales be allowed or in thealternative, the Tribunal be directed to fix wage scales. In addition,the provisions of the award in regard to (i) adjustment increment;(ii) stagnation increment; (iii) retrospectivity; (iv) interest; (v)pension; and (vi) permanency are sought to be impugned. TheUnions submit that the claim to adjustment and stagnationincrements was erroneously disallowed; that the claim for benefitsshould not have been allowed only from the date of the Charter ofDemands but from 1st January 1996 which was the demand; thatthe claim for interest should be allowed on several other serviceconditions other than those enumerated; that the grant of pensionhas to be revised upwards; and permanency should be granted toothers apart from the three workmen to whom benefits weregranted.

10. For convenience of exposition, it would be appropriatefor the Court to take up seriatim each of the grounds of challengewhich came to be urged on behalf of HLL and the Unions inassailing the award of the Tribunal Parity.

11. On 11th July 2003, HLL moved an application before theTribunal for disposing of the References on the basis of parity.The immediate cause for the application was that on 20th February2003, a settlement was arrived at between the management andthe monthly rated staff of the Head Office. HLL asserted that in thepast whenever a settlement was signed either at the Head Officeor at any of the establishments in the Mumbai Region, the Unionssought to claim similar benefits on the basis of parity for theworkmen at the other establishments. The Industrial Tribunal hadby several awards extended the benefits given in oneestablishment to another establishment on the basis of parity whiledisposing of the reference. As an illustration, reliance was placedon the award of the Industrial Tribunal presided over by ShriMehendale which was affirmed in a judgment of a Learned SingleJudge of this Court, Hon'ble Dr.Justice S.Radhakrishnan. HLL'scase was that the Head Office settlement dated 20th February2003 should be extended mutatis mutandis to the workmengoverned by the references. HLL's case, it may be noted, was thatthose demands which have been given up in the Head Officesettlement should similarly be regarded as having been droppedfrom the pending references. However, in so far as the issue ofretrospectivity was concerned, the Company adopted the positionthat the workmen will not be entitled to arrears or the payment ofinterest. The contention of the Union was that the settlement dated20th February 2003 is for the Clerical category and while there wasan unbroken history of parity in so far as common allowances areconcerned between the clerical staff and subordinate and hourlyrated staff that parity did not extend to basic wages or retiralbenefits.

12. The Tribunal dismissed HLL's application (Exh. C-61)seeking a disposal of the references on the basis of parity holdingthat while revising pay scales, it is not merely the principle of paritybut the industry-cum-region principle that would have to be applied.The Tribunal held that both these principles would have to beapplied "harmoniously".

13. The management has assailed the findings of theTribunal and submitted that: (i) Having accepted the principle ofparity in litigation involving the Company and the Union, theTribunal erred in rejecting the application of HLL and in proceedingto dispose of the references partly on the basis of parity and partlyon the basis of industry-cum-region; (ii) The Tribunal failed toapply the binding judgment of Dr.Justice Radhakrishnan sitting asa Single Judge in this Court and that as a result imbalance wouldbe caused in the service conditions of workmen working in variouscategories; (iii) The judgment of the Learned Single Judge of thisCourt which attained finality was in effect a direction to maintainparity between establishments of the same employer in theMumbai Region by taking into account the total wage packet; (iv)The award of the Tribunal has seriously disturbed the time testeddifferentials between different categories. The adoption of anybenefit from the monthly paid staff settlement would need toimpose all the conditions attendant thereto as specified in thesettlement for the hourly rated and service staff workmen to trulyreflect parity.

14. On the other hand on behalf of the Union, it has beensubmitted that (i) parity regarding wage scales must be as betweenworkmen who belong to the same or similar categories. Parity hasto be horizontal and not vertical: for instance a clerk in the HeadOffice can have parity in wage scales with a clerk in the Factory orResearch Centre, but there cannot be a parity in wage scalesbetween clerks, skilled or semi skilled workmen, peons andwatchmen with regard to wage scales; (ii) Parity can exist betweendifferent categories of workmen with regard to such conditions ofservice which are applicable to all workmen irrespective of thegrades in which they are placed; and (iii) Without prejudice to theearlier submissions, the Union was agreeable to accept thesettlements dated 20th February 2003, 13th April 2004 and 26thAugust 2005 that were arrived at for the clerical staff of the HeadOffice, Factory and Research Centre. The contention of the Union,however, was that the settlements constitute a package deal ofwhich individual terms and clauses are not severable. As a resultthough the demands of the workmen were granted with effect from1st March 2003, arrears and interest came to be allowed from 1987and the grant of these benefits from 1987 constitute an intrinsicpart of the settlement.

15. While considering the question of parity, it would, as amatter of first principle, merit emphasis that the object of theprinciple is to ensure that workmen engaged in similar categories invarious establishments of the same employer in the same regiondo not suffer an imbalance of service conditions. A clerk in theestablishment of HLL at the Head Office at Churchgate must,under the principle of parity, be similarly placed in thedetermination of his service conditions as a clerk at the Factory orthe Research Centre. This equivalence reflects a principle ofhorizontal parity: parity in service conditions as betweencorresponding categories of workmen. Aside from horizontal paritywhich extends similar conditions to workmen falling in similarcategories in different establishments of the same employer in thesame region, the second principle of equivalence is that of verticalparity. Vertical parity applies independent of the categoriesinvolved in respect of those conditions of service or allowanceswhich apply to all workmen irrespective of the categories in whichworkmen may be engaged. Parity in the establishments of oneand the same employer particularly when they fall in the sameregion has a striking appeal in industrial jurisprudence because theraison d'etre is to ensure against an imbalance in wages andservice conditions which will otherwise result in industrial unrest.

The question of parity, however, cannot depend only upon a prioriconsiderations since the overall pattern of industrial relations andthe long standing practice followed in the establishment of theemployer quite often does have a material bearing on the pattern ofwage fixation.

16. In the case of HLL the principle of parity has foundrecognition as a guiding basis for wage fixation for a period inexcess of four decades. The importance of applying the principleof parity in the Mumbai establishments of HLL finds acomprehensive judicial recognition in a judgment of a LearnedSingle Judge of this court which has attained finality and whichhas been accepted y the parties. That judgment was a judgmentrendered by Dr.Justice S. Radhakrishnan on 29th October 2002 inHindustan Lever Ltd. v. Hindustan Lever Employees' Union 1Hindustan Lever Employees' Union, Hindustan Lever MazdoorSabha and the Union at the Research Centre were all parties to theproceedings before this Court. Before the Learned Single Judge,HLL impugned the award of the Industrial Tribunal inter alia on theground that the Tribunal had disposed of the references "merely on1 Writ Petition Nos. 1335/95, 1236/97, 1458, 1459, 1460 & 1478 of 1999 and Writ PetitionNos. 105, 106 and 114 of 2001.the basis of parity" which according to HLL, was not sustainable.The Learned Single Judge, while repelling the submission notedthat a parity had been maintained right from 1952 and that aDivision Bench of the Court had in fact, adverted to the injusticethat would be caused if parity were to be disturbed:

With regard to the above objection, one has to clearlybear in mind that right from 1952 (in) the Thakore Awardwhich was a composite Award dealing with Office Staffas well as Factory Staff the parity was maintained.Subsequent thereto, even in Bhojwani's Award such aparity was maintained. Apart from both the aforesaidAwards, the employer and the employees' Union havearrived at the Settlement in 1979 with regard to SewriFactory and the same parity was adopted in thesettlement with regard to the Head Office. Thereafter ifone were to analyse the Dongare Award, the same paritywas maintained in fixing the pay as well as theallowances. After that in the year 1983 the Settlementwhich was arrived at with regard to the Head Office wasagain followed with regard to the Factory. Under theaforesaid facts and circumstances, specially from 1952to 1983 consistently for the period of almost 30 years,such a parity has been followed. Even the DivisionBench of our High Court while delivering the judgment inWrit Petition No. 864 of 1986 dated 6.9.1989, has heldthat such a parity has always been maintained, and infact, if such a parity was not to be there, it would causeinjustice, and the Industrial Court by maintaining such aparity was held to be proper, as clearly observed inparagraph 45 of the aforesaid judgment.

The Learned Single Judge then held that HLL itself hadconsistently extended settlements entered into with the workmen atthe Head Office to the factory and the Research Centre or viceversafor almost thirty years:

In fact, as indicated hereinabove, the employerthemselves has consistently extended the Settlement,once entered into between the Head Office andthereafter extending it to the Factory and the ResearchCentre or vice-versa. Based on the above, for almost 30years, the same parity was maintained. Even theDivision Bench order has stated that if there is deviationfrom the same, that would cause the injustice. Hence, Iam clearly of the view that there is nothing perverse orillegal in adopting parity principle in the above awards."The objection of HLL that there could be no parity as betweencategories of workmen at the Factory, Head Office and theResearch Centre was overruled with the following observations:"Third main objection of ... the learned Counsel for theemployer company is that the Industrial Tribunal hasblindly granted parity, inasmuch as various categories ofworkers in the Head Office, in the Factory and also in theResearch Centre are different and they cannot betreated on par. In fact, if one were to look at the Awards,the parity awarded is that if two increments are given toHead Office, the same kind of increments are given tothe factory staff. One cannot find fault on the ground thatthere are no similar categories in the Factory, the HeadOffice and the Research Centre.

Finally the Court overruled the objection that there was noevidence to substantiate the grant of parity holding that right from1952 till 1983 a consistent pattern of parity had been followed;such parity, the Court held, extended not merely in the matter ofindustrial awards of the Tribunal, but in the matter of settlementsbetween the employer and the Unions as well.

17. There is material on record to demonstrate the existenceof parity in the service conditions that were applied to the workmenof the Head Office on the one hand, and those at the Factory andthe Research Centre on the other. The consistent practice findsjudicial recognition in the judgment of this Court. It is on the basisof a long standing and consistent practice of parity between theworkmen at the three establishments in Mumbai that HLL movedthe application at Exh. C-61 for the disposal of the references interms of the settlements which were arrived at on 20th February2003 with the clerical staff at the Head Office.

18. Fairly before this Court Learned Counsel appearing onbehalf of the Union accepted the principle of parity but submittedthat the settlement dated 20th February 2003 represents a packagedeal that was arrived at between the Union and the managementand that all the terms and conditions of the settlement must beregarded as a composite whole. The submission of the Union isthat it is not open to the management to deny the benefits ofcertain clauses of the settlement particularly those relating toretrospectivity and interest when the grant of such benefits forms apart of the overall scheme of the industrial settlement.

19. In order to appreciate the submission, it would benecessary for the Court to peruse some of the relevant provisionsof the settlement dated 20th February 2003. The recitals in thesettlement record that the bone of contention between the Unionand the management which had come in the way of a negotiatedsettlement, for nearly forty years, was a high rate of neutralisationgiven by the slab system of dearness allowance. The settlementrecords that the Union had given up its demand in relation to basicwages upon which the management stated that it had agreed toenter into negotiations for a settlement at the Head Officeestablishment. The settlement specifically records that itrepresents a package deal that was arrived at between the parties,no part of which would be severable:

The parties have negotiated with a view to fosterharmonious industrial Relations ... and have finallyarrived at this settlement as a package deal, which is afull and final settlement with respect to all pendingdemands of the Sabha and the Management in theestablishment at Head Office from 1987 till date ofapplicability of this settlement and in which no part of thesettlement is severable from the others. In doing so themanagement and the Sabha have looked at the totalwage packet resulting from this settlement.

Parties agreed that the settlement would be in full and finalsettlement of all demands of the Union and that all demands thatwere not specifically agreed to were dropped. During the period ofits validity, until 20th February 2006, the Union agreed not to raiseany additional demand which would lead to a financial burden onthe management and parties accepted that the package of benefitsprovided thereunder would provide for equitable and sustainedearnings. In the event of there being an arbitration/adjudication,parties were to apply in a joint application for an award in termsthereof. Several provisions of the settlement emphasise that itconstitutes a negotiated package, settling overall the conditions ofservice during the tenure of the settlement. On the part of theUnions several proceedings which were pending in diverse Courtscame to be withdrawn and an assurance of productivity anddiscipline was given to the management together with aconcession in regard to the right of the management to introducerationalisation, standardization and improvement in techniques.The Unions gave up several demands including inter alia demandsfor revision of basic wages, stagnation increments, additional HRAand pension. As an integral part of the settlement, Part-B of thesettlement provided that the management would pay arrears atcertain rates with effect from 1st April 1987 together with interest atthe rate of 10% per annum. The settlement provided that witheffect from 1st March 2003, the benefit of several allowances wouldbe extended including (i) social security allowance; (ii) educationallowance; (iii) conveyance allowance; (iv) house rent allowance;(v) leave travel allowance; (vi) self development allowance; (vii)acting allowance; and (viii) performance bonus. The managementin the present case, while seeking a disposal of the references interms of the settlement dated 20th February 2003 sought on theone hand the concessions that were made by the Union as part ofthe settlement. On the other hand, the contention of themanagement was that the workmen were not entitled to arrearsallowed by Part B of the settlement dated 20th February 2003. Themanagement contends that for the workmen governed by thereference to the Tribunal, an industrial settlement dated 10thJanuary 1992 held the field until 31st December 1995 and Clause15 of the settlement specifically provided thus:

The workmen agree that in consideration of theCompany having agreed to their demands as above,they shall not either independently or jointly raise anyother demand involving any financial burden on theCompany during the period of this settlement and inparticular shall not seek parity in service conditions withemployees in other units of the Company, consequent toterms and conditions of service at such Units beingrevised under a settlement or award.

The term of the settlement expired on 31st December 1995 and theCharter of Demands dated 9th July 1997 was for a revision witheffect from 1st January 1996. In these circumstances, thecontention of the management was that the workmen were notentitled to any retrospective benefits prior to 1st January 1996 onthe basis of the Head Office Settlement.

20. The Tribunal had no justification for the summarymanner in which the application filed by the employer at Exh.C-61was rejected. The principle of parity on which the application ofHLL was founded, is a matter of long standing industrial practice inthe establishments of HLL in the Mumbai Region to which thereferences relate. This long standing practice was consistentlyfollowed by extending industrial settlements entered into at theHead Office to the Factory and the Research Centre and viceversa. The industrial practice was followed in extending industrialawards of the Tribunal as well. Above all, the existence of paritywas judicially recognised by this Court in a judgment whichattained finality and which was duly implemented. In the face ofoverwhelming material before the Tribunal, a careful appreciationof the issues involved was warranted. The Industrial Tribunalinstead proceeded to adopt the principle of parity in certain areasand the industry-cum-region principle in others. The manner inwhich the industry-cum-region principle is applied would beconsidered subsequently.

21. The basic approach of the Tribunal suffers from amanifest error. The Tribunal has applied sporadic elements ofparity (such as when it dealt with the allowances that were grantedby the industrial settlement) and elements of industry-cum-regionwith regard to other elements of the wage package. Both theemployer and the Union having accepted the fundamental preceptof parity, it was for the Tribunal to consider as to whether theemployer was justified in denying the benefits of Part-B of the HeadOffice settlement relating to the settlement of past dues on theground that the demand of the Union was for a revision with effectfrom 1st January 1996 upon the expiry of the earlier settlement andthat during the term of the earlier settlement dated 10th January1992, Clause 15 ruled out such a demand. On the other hand, theplea of the Unions is that the industrial settlement constitutes apackage deal of which portions should not be severed. The Unionscontend that when certain demands were given up in the HeadOffice settlement, such as for revision of basic wages, the benefitsgranted by the settlement including past arrears comprised integralelements of the overall package. An answer to these rivalsubmissions was part of the adjudicatory function of the Tribunalwhich it has manifestly failed to discharge. Instead, the answerwhich the Tribunal has found, does not do justice either to theprinciple of parity or, as this judgment would subsequently explore,to the principle of industry-cum-region. A mismatch of the twoprinciples does not allow for consistency in industrial adjudicationor foster the object of industrial peace. The entire approach of theTribunal to the issue of parity was thus completely unsustainable.

22. A remand of the proceedings to the Industrial Tribunalwould be warranted in order to enable the Tribunal to reconsiderthe whole issue of parity afresh having regard to the observationscontained both in the judgment of the Hon'ble Dr.Justice S.Radhakrishnan and in the present judgment. If the Tribunal comesto the conclusion that the observance of parity amongst the threeestablishments of the same employer must continue to bepreserved in order to secure industrial peace, it would be essentialfor the Tribunal to lay down in the course of its adjudication anappropriate package of service conditions and benefits that wouldensure existence of parity. It is for the Tribunal to have regard tothe overall wage packet and to the benefits which the workershave received in the meantime. It is only appropriate and properthat a factual determination should be made by the Tribunal in thefirst instance. Wide as the powers of this Court under Article 226 of the Constitution are, it is necessary that an initial determinationinvolving factual determinations be made by the Tribunal. Theissues, as the previous discussion shows, involve drawing abalance between conflicting claims. The primary determinationmust be made by the Industrial Tribunal in the exercise of thebroad powers which are conferred upon the Tribunal in matters ofindustrial adjudication.

Regioncumindustry

23. HLL has challenged the award of the Tribunal on theground that in any event, if its submissions on parity were not to beaccepted, the principle of industry-cum-region was not properlyapplied by the Tribunal both in the matter of basic wages and indetermining the other allowances.

24. Decided cases have settled the parameters of theprinciple of region-cum-industry which has to be applied byIndustrial Courts when they adjudicate upon wage structures,dearness allowance and other conditions of service. In thepractical application of that principle, the industrial adjudicator hasto consider wage scales which prevail in similar concerns in theregion with which it is dealing. Similar concerns are those in thesame line of business as the concern in respect to which thedispute is being adjudicated. Moreover, even in the same line ofthe business, it is not appropriate to consider "a small strugglingconcern with a large flourishing concern". Among the factors whichthe Industrial Court must consider is the extent of the businesscarried on by the concern, the capital invested, profits made, thenature of the business, strength of the labour force, the nature andextent of reserves, dividend declared, prospects of future businessand other such facets. Where a concern pays the highest wages ina particular line of business, there should be greater emphasis onthe region part of the industry-cum-region principle though thecomparison has to be with similar concerns in the same region.The principles are well settled. A reference may be made to thejudgments of the Supreme Court in French Motor Car Co. v.Their Workmen, 2 Indian Oxygen Ltd. v. Its workmen, 3 NovexDry Cleaners v. Its Workmen, 4 Greaves Cotton and Co. v. TheirWorkmen, 5 Polychem Limited v. R.D. Tulpule6 and RemingtonRand of India Ltd. v. Their Workmen. 7 These cases emphasisethat in applying the industry-cum-region formula the total wagepacket would be required to be considered both in the context ofwages as well as other allowances.

25. In the present case, the submission urged on behalf ofHLL is that the Tribunal granted an increase of 8.33% in basicwages and Dearness Allowance solely on the basis that theworkmen at Colgate work for 192 hours (42 hours per week) asagainst HLL where the workmen work for 208 hours (48 hours perweek). This approach has been critized on the ground that HLLhas different categories of workmen who work for 36, 42 and 48hours weekly. Moreover, the fact that working hours are morewould not be a justification for an 8.33% increase in basic wagesand dearness allowance. Dearness allowance was not a demandreferred for adjudication. The wages of those workmen in "C"Grade who work for 36 hours and those in "T" Grade who work for48 hours, have not been fixed on the basis of the differentials inworking hours in the past, these wages being existent as a result ofawards and settlements. The award of the Tribunal has beenchallenged on the ground that there was in fact, no application bythe Tribunal of the principle of industry-cum-region. There was, ithas been submitted, neither a consideration of the total wagepacket nor a comparison categorywise of the workmen. Above all,it has been submitted that the Tribunal has abdicated its jurisdictionby failing to determine the wages categorywise and the direction ofthe Tribunal to constitute a Committee of the workmen, theemployer and an independent expert to collect data and fix thewages categorywise shows a complete non-application of mindand a failure to exercise adjudicatory jurisdiction.

26. On behalf of the Union, it has been submitted that aconsiderable degree of difficulty that emerges in the application ofthe industry-cum-region formula was obviated in the facts of thepresent case since the establishment of Colgate Palmolive atMumbai was accepted by HLL and by the Union as a comparableconcern. In fairness, it must be stated that even before this CourtLearned Senior Counsel for both the contesting parties acceptedthe factual position that Colgate Palmolive is regarded by theparties as a comparable concern. However, on behalf of HLL it issubmitted that whereas Colgate had three grades, namely, Grades'A', 'B' and 'C'; HLL had more than ten Grades in the monthly ratedand subordinate staff and it was urged that the grievance of themanagement is that there was in fact, no adjudication at all; noconsideration of corresponding categories, no application of theregion-cum-industry formula and an absence of application ofmind to the wage packet.

27. The award of the Industrial Tribunal grants a flatincrease in the basic wages and dearness allowance of 8.33% onthe foundation that while the workmen in Colgate work for 192hours, their counterparts in HLL work for 208 hours. The challengeto the award on the ground that the Tribunal failed to compare thecorresponding categories of workmen in Colgate and in HLL mustexfacie be accepted. In para 53 of its award, the Tribunal reflectedan awareness of the necessity "to know the exact fixation of scalesand the total wage packet of each of the categories of the Colgateworkmen" and to compare them with categories of workmenconcerned with the references before the Tribunal on the basis ofthe nature of their duties. The Union led the evidence of a Colgaterepresentative, S.M. Shetty. The evidence of that witness wasregarded by the Tribunal as deficient. The Tribunal held that it is,therefore, not possible to accept the chart submitted by the Union:

He simply stated that on an average the increase is byRs. 2300/-. He has not stated as to what is actual fixationof salary, the span and total wage packet of each ofconcerned categories of Colgate. Hence, it is notpossible to accept the chart of proposed fixationsubmitted by Party No. 2. As a result, I hold that theworkmen concerned are entitled and First Party companyis liable to revise the wage scales on par with ColgatePalmolive but with 8.33% increase in basic andDearness Allowance.

Having found serious deficiencies in the evidence, the Tribunalnonetheless proceeded to grant a flat increase of 8.33% in thewages and dearness allowance principally if not wholly, on thebasis of a difference in the hours of work between Colgate andHLL. There is absolutely no consideration by the Tribunal of thewage scales prevalent in Colgate and in HLL as betweencorresponding categories of workmen.

28. The Tribunal abdicated its adjudicatory function bydirecting HLL and the Union to constitute a Court of Inquiry or aCommittee consisting of representatives of the parties and anindependent expert . The directions issued by the Tribunal in thatregard are as follows:

With the conclusion supra, I would like to suggest thateither Court of inquiry, or the Committee comprising theunions' representatives and the representatives ofcompany, headed by independent expert be constitutedto collect all the requisite details from Colgate Palmoliveand for fixation and revision of scales.

The Industrial Tribunal which adjudicates upon a wage referenceunder Section 10 of the Industrial Disputes Act, 1947 has toperform the task of adjudication and it does not require anelaborate line of reasoning to establish that the function ofadjudication cannot be abdicated by a judicial body. Parties andtheir experts can and must be allowed to produce evidence beforethe Tribunal but the task of adjudication cannot be delegated to athird party. Adjudication constitutes the core of the judicialprocess. The law casts an obligation upon a judicial body toadjudicate. The institutional framework of the Court impartscredibility and integrity to the process of adjudication. The Tribunalhas in the present case, abdicated that function. There is nodetermination of basic wages by the Tribunal. The award of theTribunal, therefore, suffers from a fundamental error which vitiatesthe exercise. The direction that the wages of each of thecategories of workmen be revised at par with Colgate Palmolive onan increase of 8.33% in basic wages and dearness allowance isindefinite and not capable of implementation. The entire exerciseof determining which are the corresponding categories in Colgateand HLL and of evaluating the total wage packet as well remains tobe done and ought to have been carried out by the Tribunal itself.The Tribunal has evidently failed to do so.On behalf of the Union, it has been submitted that thejudgment of the Supreme Court in Hindustan Lever Ltd. v. B.N.Dongre, 8 demonstrates that a difference in the working hours canprovide a justification for higher pay scales for workmen. Thesubmission was that a workman in Colgate who gets a basic wageof Rs. 100/- would receive an amount of Rs. 6,190/- together withdearness allowance. His counterpart in HLL would get Rs. 6,190/-plus 8.33% which is equivalent to Rs. 6,706/- comprising of basicwages and dearness allowance. To arrive at this wage packet ofRs. 6,706/-, it was submitted that a basic wage of Rs. 116.62should be given to the workmen. On this line of argument, it wassubmitted that a basic wage of the Colgate workmen of Rs. 100/-for 192 hours would be equal to Rs. 116.62 as a basic wage in HLLfor 208 hours of work.

29. Undoubtedly, the extent of work and the number of hoursthat are put in by workmen is a relevant consideration indetermining wage scales. Those who work more should be paidmore. The error of the Tribunal, however, lies in assuming thatthere is an invariable mathematical co-relation betweendifferentials in the hours of work on the one hand, and wages onthe other. Wage fixation is a far more complex exercise involving a8 1994 II CLR 673 consideration of a host of relevant issues one of which would bethe extent of work required for a job. The conditions of work, thenature of functions and responsibilities, the correspondingcategories which are being compared as between comparableconcerns and the total wage packet cannot be brushed aside orignored in the application of the region-cum-industry formula.There is no comparative evaluation by the Industrial Tribunal onthe basis of the industry-cum-region formula.

30. During the course of the submissions an effort has beenmade on behalf of the Union to demonstrate that material wasproduced before the Tribunal that would have furnished anadequate basis for an adjudication by the Tribunal. For instance, itwas submitted that the conditions of service of the Colgateworkmen were produced on the record of the Tribunal, these beingin the form of settlements that were entered into between the years1962 and 2000. The Union submitted that the correspondingcategories of workmen "are more or less admitted". Reliance wasplaced on a chart produced by the management at Exh.C-20 and itwas submitted that the chart showed how the basic wages of HLLworkmen could be equalised with the workmen in Colgate. TheUnion, it was submitted, had worked out an equivalent of basicwages of HLL after factoring a rise of 8.33%. The Union, it wassubmitted, had produced comparisons with the 1995 and 2000settlements with Colgate. On the other hand, it was urged that itwas the management who had failed to produce a comparison ofthe total wage packet in Colgate and HLL and an adverseinference ought to be drawn. The submission that themanagement's chart, Exh.C-20, showed how the wage scales ofHLL workmen could be equalised with Colgate would not be anappropriate reading. The award of the Tribunal9 as well as thewritten submissions filed by the management10 would clearlydemonstrate that the chart at Exh.C-20 was not an admission onthe part of the management but was filed only to demonstrate whataccording to the management was a misrepresentation that wasmade by the Union. There is no merit in that submission.

31. The submission which has been urged on behalf of theUnion boils down to an argument that while the Tribunal abdicatedits jurisdiction to adjudicate upon the demand of basic wages, suchan exercise could, in fact, have been carried out by the tribunal andthis Court in the exercise of its jurisdiction under Article 226 of the9 Page 114 of the Paper Book10 Compilation page 807Constitution should do so. The jurisdiction of the Court underArticle 226 is undoubtedly wide, and the width of that jurisdictionwas explained by the Supreme Court in Gujarat Steel Tubes Ltd.v. Gujarat Steel Tubes Mazdoor Sabha. 11 The High Court in theexercise of the supervisory jurisdiction is governed by settledparameters. Where the Award of the Industrial Tribunal is basedon evidence produced before the Tribunal, the High Court in itsjurisdiction under Article 226 of the Constitution would be loathe tointerfere. Where the Tribunal carries out the exercise of wagefixation in the first place, based on a consideration of relevantevidence and the underlying principles that emerge from decidedcases, the High Court ordinarily would not interfere. However, thepresent case is one where there has been an abdication on thepart of the Tribunal in adjudicating upon the demand for a revisionof basic wages. The adjudicatory function has been left to a thirdparty. In such a case, it would be wholly inappropriate for the HighCourt in the exercise of its jurisdiction under Article 226 of theConstitution to act as a primary fact finding authority or as aprimary adjudicator. In industrial law, that jurisdiction is vested bythe Industrial Disputes Act, 1947 with the Tribunal to whom a11 1980 I LLJ 137. reference to adjudication is made. The function of the High Courtessentially is to ensure that the Tribunals keep within the bounds oftheir authority in exercising the power of adjudication. The HighCourt would not be justified in substituting itself for the IndustrialTribunal in the delicate and sensitive task of determining wagescales in the first instance. That exercise must be carried out bythe Tribunal and it is that exercise which the Tribunal failed tocarry out in the present case.

Shift Allowance:

32. The Industrial Tribunal has allowed a revision in theshift allowance at par with what is being paid to the workmen atColgate. The submission that has been urged on behalf of HLL isthat the Tribunal has increased the shift allowance withoutconsideration of the total pay packet. Now in so far as the shiftallowance is concerned, it would be material to note that the HeadOffice Clerical staff does not work in shifts and the shift allowanceis, therefore, not an issue material to them. The undisputedposition is that the shift allowance is not a new condition of service.The allowance was being paid even prior to 1952 after which itwas revised. The Tribunal has noted that the shift allowance isbeing paid for work in all three shifts though an additional amountis paid for every night shift of work. The management hadaccepted that Colgate was comparable. The revision in the shiftallowance by the Tribunal so as to be at the same level as whatwas being paid to the Colgate workmen does not in thesecircumstances, warrant any interference of the Court under Article 226 of the Constitution.

Additional House Rent Allowance:

33. The Industrial Tribunal has allowed the demand foradditional House Rent Allowance (HRA) on par with what wasbeing paid to the workmen at Colgate Palmolive. The submissionof HLL is that the Tribunal has not made any comparison of thefigures with the additional HRA that was being paid at Colgate.The second submission is that in the settlement of 20th February2003 which was entered into in respect of the clerical and technicalcategories of workmen at the Head Office' the Unions expresslygave up the demand for any form of HRA over and above whatwas payable under the Maharashtra Workmen Minimum HouseRent Allowance Act with effect from January 1999. The settlementrecords this concession in Clause 4(d) of Part-B and stipulates thatwith effect from 1st March 2003 only the statutorily payable HRAwas admissible to the employees.

34. The submission of the Unions in response is that theawarded HRA is that which is paid to the workmen at Colgate orstatutory HRA, whichever is higher. This service condition has, it issubmitted, been implemented and arrears have been paid. TheUnions urged that from 1991, the clerical staff at the Head Officewas in receipt of additional HRA over and above the statutory HRA.The workmen covered by the award in the present case were,however, not granted that benefit. Hence, there was no parity inregard to HRA between the clerical staff of the Head Office and theworkmen covered by the award from 1991. The Head Officesettlement dated 20th February 2003 discontinued allowancesprospectively from 1st March 2003. Since the Company itselfrefused to grant additional HRA to the workmen covered by theaward since 1991, it is according to the Union, unfair on the part ofHLL to deny HRA at par with Colgate on an argument of parity withthe Head Office clerical staff. Moreover, it has been submittedthat the workmen at the Head Office gave up the demand foradditional HRA on the basis of the total wage packet which is notbeing extended to the workmen covered by the award. Finally, ithas been submitted that the actual amount granted by way of HRAis less than the actual amount received by the workmen under theHead Office Settlement.

35. The rival submissions of the parties reveal that theessential difference between HLL and the Unions turns on thequestion of parity. HLL asserts that the workmen at the HeadOffice gave up the demand for the payment of an additionalcomponent over and above what is payable statutorily towardsHRA. HLL's submission posits that parity must be maintained inregard to this allowance as well. The Unions on their part assertthat the giving up of the demand for an additional componenttowards HRA in the Head Office Settlement was a composite partof an overall settlement which cannot be read in isolation from theother benefits that the settlement allows. The clauses of thesettlement have already been adverted to in the earlier part of thisjudgment and those clauses clearly stipulate that the concessionsgranted by the Unions by dropping certain demands were part ofan overall package. The preamble to the Settlement records thatthe settlement itself is "a package deal" and there is, therefore,merit in the submission urged on behalf of the Unions that thedropping of the demand by the Union in the Head Office Settlementcannot be disassociated from the overall package of benefits thatwas granted by the settlement. Considering one clause of theSettlement in isolation would, therefore, not be a valid interpretativedevice. Nor for that matter would reading a clause of theSettlement in isolation with the others, do justice to the intention ofthe parties or to the process of collective bargaining. Having saidthat, the fact remains that the ultimate view which would be takenin regard to an allowance such as an additional HRA which hasbeen granted on the basis of region-cum-industry (more specificallyon a comparison with Colgate) would depend upon what view theTribunal would take on the issue of parity in the first instance. Ifthe Tribunal were to hold that a parity in regard to conditions ofservice ought to be maintained on the ground that such parityexisted between the three establishments in the Mumbai Region,the grant of an additional HRA only to the workmen covered by theaward would run counter to the principle of parity. This Court in theearlier part of the judgment already having made it clear that areconsideration by the Tribunal of the whole issue of parity waswarranted afresh, it would be necessary to leave the issue of thepayment of additional HRA for reconsideration by the Tribunal inthe light of its determination of the question of parity. The Unionshave submitted that in the meantime, payment has been made ofarrears to the workmen and if this be so, the Tribunal upon remandwill undoubtedly take note of the amount thus paid when itconsiders the overall wage packet as a part of a fair adjudication.

Pension:

36. On the issue of pension, both HLL and the Unions areaggrieved by the award. Pension is an existing condition of servicefor the workmen who are covered by the references to adjudicationin this case. The workmen had been drawing pensionary benefitsranging from Rs. 100/- to Rs. 250/- per month for a period of 120months after retirement under the terms of a Settlement of 1983.The claim for revision was to enhance pensionary payments to50% of the last drawn basic pay with the existing scheme ofdearness allowance for a minimum period of fifteen years. Theworkmen had sought to place reliance on the pensionary benefitsavailable in the State Bank of India. The Tribunal held that sincethe case of the workmen themselves was that Colgate Palmolivewas a comparable concern and there are other industries whichcarry on business similar to that of HLL, it was not advisable to relyon the scheme for pension available to State Bank of Indiaemployees. The Tribunal, also held that the pension scheme inLife Insurance Corporation and the Government were on acompletely different footing. The Tribunal noted that admittedlyColgate Palmolive did not have any pension scheme. Theworkmen at the Head Office of HLL were, according to theTribunal, granted a Social Security Allowance. Colgate Palmolivehad a Joint Saving Scheme. The Tribunal found that the demandfor pension had not been duly justified on the basis of region-cumindustryor by demonstrating the total cost of pensionary paymentsas part of the overall wage packet:

On merits, the demands for pension ought to have beenjustified by the unions on the basis of region-cumindustryand having done so it ought to have factored thecost of providing pension as a part of total packet. TheSecond Party Unions failed to show that there is anyregion-cum-industry practice to provide pension as athird benefit in addition to contributory fund.

The Tribunal was of the view that such pensionary paymentsshould not create an imbalance in the total wage packet and anincrease in the monetary burden on HLL would reflect on theproduction cost. The actuary who gave evidence on behalf of themanagement stated that the cost of providing pension would beRs. 78.88 crores for the Factory, Rs. 5.96 crores for the ResearchCentre and Rs. 2.3 crores for the Head Office. D.W. 5 who wasexamined by the Unions stated that no evidence of an actuary wasgoing to be produced on behalf of the workmen. In the settlementthat was arrived at with the Head Office, the demand in regard topensionary payments was withdrawn in view of the increase theSocial Security Allowance and the increase in the total wagepacket. The Social Security Allowance was increased fromRs. 485/- per month to Rs. 785/- per month from 1st March 2003.The Tribunal held that the existing pension scheme and its corelationto the demand for gratuity was pending in two otherreferences with regard to the hourly rated and monthly paidworkmen at the Research Centre and the hourly rated and monthlyrated subordinate staff of the Factory. Ultimately, after adiscussion along the aforesaid lines, the Tribunal held that the onlyconsideration for granting an increase in pension is the steep risein the Consumer Price Index which "may be sufficient reason forincreasing present amount of pension to some extent". TheTribunal proceeded to grant an increase in pension of Rs. 100/-each in all the categories for which present pensionary paymentsrange between Rs. 100/- to Rs. 250/- per month. The existingperiod of 120 months after retirement for providing pensionarypayments has not been increased.

37. On behalf of HLL , it has been submitted that the serviceconditions in HLL contemplate four retiral benefits: (i) ProvidentFund; (ii) Family Pension under the Provident Fund Scheme; (iii)Gratuity; and (iv) Pension. HLL submitted that in the Head OfficeSettlement, the demand for pension was withdrawn and the SocialSecurity Allowance was increased from Rs. 485/- to Rs. 785/- permonth. The award of the Industrial Tribunal, it was submitted, hasgranted Social Security Allowance as payable under Clause 4(a) ofPart-B of the Head Office Settlement and it was submitted thathence in these circumstances, there was no basis either for thepayment of or for the enhancement of pensionary payments. Insum and substance, therefore, the submission was that (i) Thefactum of four retiral benefits being available; and (ii) The grant ofthe Social Security Allowance at par with the Head OfficeSettlement has not been considered by the Tribunal in its award.

38. On the part of the Unions, it has been submitted that tworetiral benefits, namely, Provident Fund and Gratuity were uniformfor all categories of workmen. The parity in regard to gratuity wasbroken when the Rane Award dated 17th September 1983 grantedto the clerical staff of the Head Office a higher rate of gratuity -75% of the last drawn salary for every completed year of service, inthe case of workmen who had completed fifteen years of service.Moreover, the monetary ceiling was replaced by a variable ceiling.Hence, it has been submitted that as a result, the gratuity forclerical staff works out to approximately 75% of the last drawnsalary. The Company declined to extend the Rane Award to theworkmen covered by the three references in question. By aSettlement of 17th September 1983 as applicable only to the hourlyrated and subordinate staff, pension was introduced as a conditionof service, valid for ten years after retirement at monthly paymentsranging from Rs. 100/- to Rs. 150/-. The Unions have, therefore,submitted that the principle of parity did not extend to clerical staffwith regard to pension and when the demand for pension wasdropped in the Settlement dated 20th February 2003, pension wasnot an existing service condition for them. It is also submitted thatthe mere fact that the service condition of pension did not exist in acomparable Company in the industry does not disentitle theworkmen from justifying such a claim otherwise no new condition ofservice would ever be established. The Employees PensionScheme in HLL is not in addition to Provident Fund. The pensionof the Head Office service staff was revised in 1992 when theyreceived Rs. 250/- as monthly pension. The amounts payable tothe Factory and Research Centre workmen, however, remained atRs. 100/-, Rs. 125/- and Rs. 150/-. The Tribunal granted an ad-hocincrease of Rs. 100/- which was unrelated to the object sought to beachieved, namely, the protection of the value of pension from beingeroded by a rise in the cost of living. The Unions, therefore, ontheir part are aggrieved by the award of pensionary payments, inso far as it only granted an ad-hoc increase of Rs. 100/- per month.

39. In dealing with the issue of pensionary payments, itwould, at the outset, be material to deal with the submission of themanagement that the demand for pensionary payments was givenup by the Unions in the Head Office Settlement. Clause 4(i) inPart-B of the Head Office Settlement is to the following effect:

4.i. PENSION

The Sabha agrees to withdraw their demand withreference to Pension in view of the increase in the SocialSecurity Allowance and the increase in the total wagepacket.

Clause 4(i) would, therefore, show that the demand for pensionarypayments was withdrawn by the Union when the Head OfficeSettlement was negotiated not only on the basis of the increase inthe Social Security Allowance, but in view of the increase in thetotal wage packet as well. The Social Security Allowance wasincreased from Rs. 485/- per month to Rs. 785/- per month witheffect from 1st March 2003 and the benefit of this increase whichwas granted by the Head Office Settlement was extended by theaward to the workmen covered by the references. The error in theline of reasoning in the submission of HLL lies in equating thewithdrawal of the demand for pension in the Head OfficeSettlement with an increase simplicitor in the Social SecurityAllowance. Apart from the increase in the Social SecurityAllowance, there are two additional factors which cannot beignored. The first is the fact that the increase in the total wagepacket that was granted by the terms of the settlement was statedby the settlement itself to be a reason for the withdrawal of thedemand. The Union has drawn the attention of the Court to thefact that the arrears which were granted to the clerical staff by wayof the settlement work out to about Rs. 2, 69,815/- over and abovewhat they would have been entitled to had the benefits granted tothem, been confined to what they had demanded and were entitledto by way of parity. The second circumstance is that the parity inthe matter of gratuity was broken consequent upon the RaneAward of 20th February 1983 when the clerical staff at the HeadOffice was granted a higher rate of gratuity. The settlement dated17th September 1983 introduced pension as a condition of serviceto the hourly rated and the subordinate staff valid for a period of tenyears after retirement at rates between Rs. 100/- to Rs. 250/- permonth. When the pensions of the Head Office service staff wererevised in 1992, those of the Factory and Research Centreremained the same. The submission of HLL that the workmenhave an Employee Pension Scheme in addition to Provident Fundmay not be entirely accurate as it has not been disputed before theCourt that the scheme has been created by diversion of theemployer's contribution to the Provident Fund, thus reducing theProvident Fund to that extent.

40. There is merit in the submission which has been urgedon behalf of the Union that the approach of the Tribunal to theentire issue of pensionary payments is perfunctory. The Tribunalhas in the ultimate analysis granted an ad-hoc increase of Rs. 100/-per month based upon the increase in the Consumer Price Index.Undoubtedly a revision of the pensionary payments cannot beconsidered in isolation from the over all wage packet and theconsequential burden that would be placed on the employer. Thecircumstance in which pensionary benefits came to be introducedby the settlement of 17th September 1983 constitutes importantbackground material as does the object and purpose of theprovision. Protecting pensionary payments from erosionconsequential to the increase in the cost of living, is an importantaspect of the adjudicatory function. The ad-hoc increase grantedby the Tribunal was not part of an interim but a final award. A finalaward of adjudication has to be based upon a careful evaluation ofall the circumstances. An order of remand would be warranted soas to enable the Tribunal to consider afresh the demand forrevision in pensionary benefits.

RETROSPECTIVITY:

41. The Industrial Tribunal granted retrospective effect to itsaward of basic wages, adjustments, fitments and allowances fromthe respective dates of the Charters of demand. In the threereferences,the Charters of demand were submitted on 23rdFebruary 1996, 9th July 1997 and 29th October 1998. In paragraph111 of the Award, the Tribunal allowed the demand for allowanceson the basis of the Head Office Settlement dated 20th February2003. The Head Office Settlement provides that the allowances assettled would be given effect to from 1st March 2003. Thesubmission of HLL is that since the allowances that have beengranted in paragraph 111 of the Award have specifically beengranted with reference to the Head Office Settlement and thesettlement provided that the allowances would be with effect from1st March 2003, the Tribunal should not have disturbed parity byallowing the demand with effect from the date of the Charters ofDemand.

42. The Unions have drawn the attention of the Court to thefact that in the Charters of Demand, there was a separate demandin regard to retrospectivity and interest. The Unions made thatdemand for retrospectivity with effect from 1st January 1996. Thescheme of the demands was that individual allowances wereclaimed together with a particular quantum whereas the grant ofretrospective revision was dealt with separately. In the applicationat Exh. C-61 that was filed by the management, HLL submitted thatthe demand for retrospective effect should be rejected since in anyevent the workmen were receiving an additional quantum ofRs. 1500/- with effect from 23rd June 1998. In respect of certaindemands, basically consisting of those allowances to which allworkmen were entitled irrespective of category and grade, apurshis came to be filed by consent before the Tribunal by whichbenefit was granted on the basis of the settlement entered into atthe Head Office with clerical staff. The Union stated while filingthe Purshis that the demand in respect of allowances may begranted in terms of the Head Office Settlement without prejudice tothe contentions of the parties including retrospective effect. By anendorsement on the Purshis, the representative of the Companyrecorded that HLL had already furnished its view in Exh. C-61 and itstood by that position in respect of allowances, basic wages,retrospective effect and pension as more particularly statedtherein. The sequence of events supports the submission of theUnions that the demand for retrospective operation was kept openwhen parties agreed that some of the allowances which weregranted under the settlement at the Head Office should also begiven to the workmen covered by the award. In paragraph 8 of theaward, the Tribunal also observed that the allowances covered bythe Purshis were disposed of by consent in terms thereof.Paragraph 10 of the award of the Tribunal contains a tabularstatement of the demands that remained for adjudication and theseincluded the question of retrospective effect. From the materialplaced on record, it is clear that the demand of the Unions for thegrant of the benefits with retrospective effect was open foradjudication.

43. An Industrial Tribunal adjudicating upon a wagereference has, in view of the well settled principle of Industrial Law,the jurisdiction to determine the date with effect from which thedemands should be allowed. The presentation of the Charter ofDemands or, for that matter, the date of the reference are validparameters for the grant of retrospectivity and it is for the IndustrialTribunal in each case to determine what should be the date witheffect from which revision should take place. The earliersettlement dated 10th January 1992 with the subordinate staff cameto an end on 31st December 1995. The Charter of Demands dated9th July 1997 provided that it was with effect from 1st January 1996that the demands were raised. Clause 15 of the settlement of 10thJanuary 1992 had provided that the workmen shall not raise anyother demand involving a financial burden on the Company duringthe period of the settlement and shall not in particular, seek parityin the service conditions with employees in other Units of theCompany, consequent to terms and conditions of service at suchUnits being revised under a settlement or award.

44. As an abstract principle of law, therefore, the Tribunallike any other Industrial Tribunal adjudicating upon a wagereference had the jurisdiction to hold that the benefit of the wagerevision should be with effect from the date of the Charter ofDemands. The workmen are aggrieved because the Tribunal didnot grant a wage revision with effect from 1st January 1996 whichis the date with reference to which the Charters of demand claimeda revision. The management has a more fundamental grievance onthe ground that even if the question of retrospectivity was open foradjudication, the Tribunal was not justified in granting retrospectiveeffect to those allowances which were granted on the basis of theHead Office Settlement. The Tribunal allowed the benefit of theallowances in paragraph 111 of the Award of the Tribunalspecifically on the basis that those allowances were granted in theHead Office Settlement. That Settlement specifically prescribesthe date for the grant of allowances as 1st March 2003. However,the settlement gave a package of benefits to the workers, amongthem being arrears as provided in Part-B of the Settlement towards'settlement of past dues'. Since the wider issue of parity is beingleft open for a fresh decision by the Tribunal, it would consequentlybe appropriate and proper if the question of retrospectivity is left tobe determined afresh by the Tribunal having due regard inter aliato its finding on the issue of parity. If parity is to be maintained, theoutcome of the consequential issue must follow. Contrariwise, ifthe Tribunal comes to the conclusion that for cogent and validreason the principle of parity has to be departed from, that in turnwill affect the nature and extent of retrospectivity to the demandswhich are allowed by the Tribunal. In these circumstances, theissue of retrospectivity shall be considered afresh by the Tribunal inthe course of the adjudication upon remand.

INTEREST:

45. The award of the Tribunal granted interest at the rate of10% p.a. with respect to HRA, LTA and the self developmentallowance. On this aspect, the Unions have submitted that whilethe Tribunal in the course of the discussion held that the workmenwere otherwise entitled to the allowances and to the othermonetary benefits of which they were deprived, there was noreason for the Tribunal to grant interest on arrears only on thethree allowances spelt out in the Award of the Tribunal. The issueof interest being consequential in nature, it would be appropriateand proper that the Tribunal is directed to reconsider the entireissue upon remand. There shall be an order accordingly.

ADJUSTMENT INCREMENT AND STAGNATION INCREMENT:

46. The finding that has been arrived at by the Tribunal is asfollows:

In view of the direction for wage scales revision, it is notnecessary to record the findings on the issues ofincrement, fitment, adjustment, stagnation and span.Since increase by 8.33% in basic and DearnessAllowance is granted, I see no justification in grantingadjustment and stagnation increment. The prayer istherefore rejected.

47. The Unions have challenged the award on this aspect onthe ground that the Tribunal has not recorded any finding on meritsand the demand was rejected only on the ground that a revision ofwage scales has been granted. The Unions contend that in everysettlement the workmen at Colgate have been granted adjustmentand stagnation increments apart from wage revision. The demandfor stagnation increment is only for the workmen at the Head Officeand the demand has been made on the prevailing pattern inColgate.

48. The Tribunal has declined to consider the demand onlyon the ground that an increase of 8.33% has been granted in thebasic wage and dearness allowance. Since this Court has setaside the finding of the Tribunal in regard to the 8.33% increase, itwould be appropriate to keep the issue of adjustment andstagnation increments open for reconsideration by the Tribunal onremand. There shall be an order accordingly.

LEAVE FACILITY:

49. The Tribunal granted two additional paid holidays on thebasis that this would be at par with Colgate. HLL's submission isthat this increase has been granted without considering the totalleave facilities available to the workmen. Moreover, it has beensubmitted that there is a valid distinction between operatives whoperform manual work and clerical staff: Under the Bombay Shopsand Establishments Act, 1948, which applies to commercialestablishments, the annual leave provisions are provided for inSection 32 (21 days per annum) while in Section 79 of theFactories Act, 1948, leave provided is of one day for every 20days of work (amounting to 15 days in a year). In thecircumstances, it has been urged on behalf of the managementthat a difference in paid holidays between employees ofcommercial establishments such as the Head Office andoperatives employed in Factory establishments such as those atSewri and the Research Centre is valid.

50. In Alembic Chemical Works Co. v. Its Workmen, 12Justice P.B. Gajendragadkar (as the Learned Chief Justice thenwas) while speaking for a Bench of three Learned Judges of theSupreme Court, noted that it is not seriously disputed that adistinction has generally been made between operatives who domanual work and clerical and other staff. The Court noted that it isalso not disputed that in practice such a distinction is made bycomparable concerns. A distinction between the two categories of12 1961 I LLJ 328 employees was held to perfectly justifiable so that no question ofdiscrimination would arise. Equally significant is the observation ofthe Supreme Court to the effect that while industrial adjudicationseeks to achieve social justice, unduly liberal provisions in thematter of leave may affect production and, therefore, the interestof the general community:

There is no doubt that when industrial adjudicationseeks to do social justice, it cannot ignore the needs ofnational economy; and so in considering matters ofleave, either in the form of privilege leave or sick leave,the tribunals should not ignore the consideration thatunduly generous or liberal leave provisions would affectproduction and obviously production of essentialcommodities is in the interest of not only the employersand the employees but also of the general community.

In Indian Oxygen Ltd. v. Its Workmen (supra), the SupremeCourt while setting aside an award of the Tribunal which hadincreased the number of paid holidays, again emphasised that theneed for maintaining productivity meant that absence from workshould not be unduly encouraged. The Court observed as follows:

In the appellant company, the office staff was getting 21days as annual leave and 17 days on account of festivaland national holidays, that is, 38 days of paid absences;other factory staff was getting 21 days as annual leaveand 10 days on account of festival and national holidays,that is, a total of 31 days of paid absences. As a resultof the award, the office staff in the appellant companywould be getting 47 days of paid absences on full payand the factory staff 40 days of such absences. We cansee no reason for this increase of paid absences whichis clearly and distinctly above the pattern in thecomparable concerns in that region. It is hardlynecessary to say that, especially at the present time,emphasis in the country should be more on increasedproduction, and absence from work should not be undulyencouraged.

In the present case there is merit in the submission urged on behalfof the management that the Tribunal was completely in error inproceeding to grant an increase in the leave facilities merely on theground that such facilities were available in Colgate and that at theHead Office 15 days' paid holidays were available. The HeadOffice is a commercial establishment. Statutory provisions such asthose in the Bombay Shops and Establishments Act, 1948, on theone hand and the Factories Act, 1948, on the other demonstratethat a valid legislative classification has been made betweencommercial establishments on the one hand and production unitson the other. That such a distinction is valid and intelligible is alsoclear from the law laid down by the Supreme Court. In thejudgment in Alembic which is of 1961 and the subsequentjudgment in Indian Oxygen which is of 1963 the Supreme Courtemphasised the importance of maintaining production levels. Theobservations of the Supreme Court apply with as much force todaywhen the needs of a competitive business environment cannot beignored. Industrial adjudicators must be conscious of the need forindustrial organisation to be efficient, flexible and productive.Granting additional paid holidays is not a matter of largesse to bedoled out at the arbitrary discretion of the industrial adjudicator.The Industrial Tribunal did not find that the existing provisions inregard to leave were inadequate. That is not in fact the contentionof the Unions even in the arguments before this Court. Thequestion is not merely of the grant of two additional holidays, but ofa fundamental fallacy in the approach which the decision of theTribunal discloses. The award of the Tribunal in this regard is,therefore, completely without basis and foundation and isaccordingly quashed and set aside.

VACANCIES:

51. The Tribunal has directed the grant of permanency tothree workers on the ground that they were entitled to the benefitby virtue of having continuous service of 240 days. Learned SeniorCounsel appearing on behalf of the Management stated before theCourt that the Management does not press the challenge in regardto the conferment of permanency on the three workmen viz;Sarvashri Lobo, Jitendra Dulera and S.S. Mirkar; without prejudiceto the submissions of HLL on other aspects under this head.

52. The Unions have challenged the Award on the groundthat relief was not granted by the Tribunal of permanency to alltemporary workmen working on rotation and that similar reliefshould be granted to four temporary peons and six temporarySweepers.

53. On behalf of the management, it was urged that (i) Therewas no evidence to show that the persons had put in 240 days ofservice; (ii) None of the workmen concerned had stepped into thewitness box to give evidence and the two witnesses who deposedon behalf of the Unions did not depose in respect of any particulartemporary workman; and (iii) In view of the settled principles oflaw, mere affidavits and self serving statements made by workmenwere not sufficient.

54. Now it is a well settled principle of law, following thejudgment of the Supreme Court in Range Forest Officer v. S.T.Hadimani, 13 that it is for the claimant to lead evidence to show thathe has worked for 240 days in a year preceding his termination andthat the filing of an affidavit is only a statement of a claimant whichcannot be regarded as sufficient evidence for the Court or theTribunal to come to the conclusion that the workman had workedfor 240 days in a year. The decision in Hadimani, has since beenfollowed in several judgments of the Supreme Court which havebeen elaborately considered in R.M. Yellatti v. AssistantExecutive Engineer. 14 Mr. Justice S.H. Kapadia speaking for aBench of three Learned Judges held as follows:

This Court has repeatedly taken the view that theburden of proof is on the claimant to show that hehad worked for 240 days in a given year. This burdenis discharged only upon the workman stepping in thewitness box. This burden is discharged upon theworkman adducing cogent evidence, both oral anddocumentary. In cases of termination of services ofdaily-waged earners, there will be no letter ofappointment or termination. There will also be noreceipt or proof of payment. Thus in most cases, theworkman (the claimant)can only call upon the employerto produce before the court the nominal muster roll forthe given period, the letter of appointment or termination,if any, the wage register, the attendance register, etc.Drawing of adverse inference ultimately would dependthereafter on the facts of each case. The abovedecisions however make it clear that mere affidavits orself-serving statements made by the claim workman willnot suffice in the mater of discharge of the burden placedby law on the workman to prove that he had worked for240 days in a given year. The above judgments furtherlay down that mere non-production of muster rolls per sewithout any plea of suppression by the claimantworkman will not be the ground for the Tribunal to drawan adverse inference against the management.

Neither of the workmen in respect of whom the Unions seek thebenefit of permanency stepped into the witness box in support oftheir respective cases. The burden of establishing the length ofservice cannot be cast upon the management since that would becontrary to the position in law laid down by the Supreme Court.

The burden had to be discharged by the Workmen concernedstepping into the witness box and adducing cogent evidence, oraland documentary. The burden has not been discharged.

55. Item 11 of Schedule IV of the Industrial Disputes Act,1947 refers to any increases or reduction in the number of personsemployed or to be employed in any occupation or process ordepartment or shift, not occasioned by circumstances over whichthe employer has no control. Under Item 10 of Schedule V anunfair labour practice consists in employment of workmen as badli,casuals or temporaries and to continue them as such for years withthe object of depriving them of the status and privileges ofpermanent workmen. On behalf of the Unions, UW2 deposed thatthere was a reduction in the strength of permanent peons whileUW3 deposed in regard to Sweepers and Coolies.

56. In Hindustan Lever Ltd. v. R.M. Ray, 15 The SupremeCourt held that workers were not entitled to make a grievance onthe ground that while there had been a number of voluntarilyinduced retirements, many of the posts were not filled after theholders of those posts had retired or left. In so far as Item 11 wasconcerned, the Supreme Court held that it was necessary toestablish that the workers were adversely affected. In the presentcase, the evidence on the record clearly fell short of establishingthat the management had employed casuals or temporaries foryears with the object of depriving them of the status of permanentworkmen. The award on this count consequently cannot besustained and will have to be quashed and set aside.

CONCLUSION:

57. For all these reasons, I am of the view that there is aconsiderable degree of merit in the challenge preferred by themanagement to the legality and validity of the award of theTribunal. The management has challenged the award, as notedearlier, in respect of (i) Basic wages; (ii) Additional HRA; (iii)Retrospective effect and interest; (iv) Filling up of vacancies; (v)Pension; (vi) Grant of two days additional paid holidays; and (vii)Shift allowance. HLL has stated before the Court that it hasaccepted the award in so far as it relates to the conferment ofpermanency on three workmen. Save and except in regard to thegrant of shift allowance, and permanency to three workmen whosenames are noted above, I am of the view that rule will have to bemade absolute in terms of prayer (a) of the petition filed by HLL.The proceedings shall stand remitted back to the Industrial Tribunalfor reconsideration in the light of the observations contained in thisjudgment. Upon remand, the Tribunal shall endeavour anexpeditious disposal, preferably within a period of six months fromthe date on which a certified copy of this order is produced beforeit.

58. In so far as Writ Petition 1003 of 2004 filed by theUnions is concerned, there is a challenge to the award of theIndustrial Tribunal in regard to (i) The directions to constitute aCommittee in the matter of collecting data and revising the basicwage scales; (ii) Adjustment increment; (iii) Stagnation increment;(iv) Retrospectivity; (v) Interest; (vi) Pension; and (vii) Permanency.In so far as prayers (a-i) to (a-vi) are concerned, the petition shallstand disposed of in terms of the directions already issued in thebody of the judgment. Prayer Clause (a-vii) is rejected.

59. In so far as Writ Petition 1004 of 2004 is concerned,prayers (a-i) to (a-v) shall be governed by the directions containedin the body of this judgment.

60. Learned Counsel appearing on behalf of the Unionshas submitted that an appropriate direction may be issued by theCourt to (i) protect the workmen in respect of payments which havealready been made under the Part-I and Part-II Awards so that norecoveries are made pending the proceedings on remand; and (ii)the allowances referred to in the Head Office Settlement are paid.Learned Counsel appearing on behalf of HLL has stated oninstructions that (i) Payments which have been made shall besubject to such adjustment as may be warranted upon the Awardof the Tribunal on remand and no recoveries will be made from theworkmen in the meantime; and (ii) The allowances covered by theHead Office Settlement and specified in Para 111 of the Award ofthe Tribunal shall continue to be paid. The statement which hasbeen made on behalf of HLL will sufficiently protect the workmenuntil the Tribunal disposes of the proceedings upon remand.

61. Rule is made absolute to the aforesaid extent. In thefacts and circumstances, parties shall bear their own costs.