Unichem Laboratories Ltd. Vs. The Workmen [1972] INSC 62 (24 February 1972)
VAIDYIALINGAM, C.A.
VAIDYIALINGAM, C.A.
DUA, I.D.
MITTER, G.K.
CITATION: 1972 AIR 2332 1972 SCR (3) 567 1972 SCC (3) 552
CITATOR INFO:
R 1974 SC 526 (15) RF 1975 SC1778 (20) R 1978 SC1113 (15,24) E 1980 SC 31 (13,20) RF 1981 SC 599 (4) RF 1981 SC1088 (4) RF 1986 SC1794 (7)
ACT:
Industrial Dispute---Dearness Allowance--Depreciation reserves whether to be deducted from profits--Concerns, with foreign collaboration whether can be compared with purely Indian Companies--Slab system--Classification of grades and fixation of wages--Gratuity--Incentive Bonus Scheme.
HEADNOTE:
The appellant carried on the business of manufacturing and selling pharmaceutical products in Greater Bombay. In disputes arising bet the appellant and the respondents the Industrial Tribunal had to deal with questions relating to dearness allowance, classification of grades and fixation of wages and the incentive bonus scheme as modified 'by the company. In appeal against the award of the Tribunal,
HELD : (i) The decisions of this Court in Gramophone Company Ltd. v. its Workmen and The Indian Link Chain Manufacturers Ltd. v. Their Workmen show that the Tribunal was justified in computing gross profits without deducting taxation, depreciation and development rebate. The latter decision is directly in point to the effect that provision for depreciation cannot be deducted. [582E., 585B-C] Gramophone Company Ltd. v. Its Workmen, [1964] 11 L.L.J. 131 and The Indian Link Chain Manufacturers Ltd. v. Their Workmen, [1971] 2 S.C.R. 759, applied.
Ahmedabad Millowners' Association Etc. v. The Textile Labour Association, [1966] 1 S.C.R. 382, referred to.
(ii)So long and to the extent that concerns having foreign collaboration are doing business in India and in a particular concerned region there is no reason why they should not be taken into account for purposes of being teated as comparable units, provided that the tests for such purposes as laid down by this Court are satisfied. The object of industrial adjudication is to secure as far as possible uniformity of service conditions among industrial units in the same region,. if a concern having foreign collaboration properly satisfies the tests of comparability it would be improper to regard such unit as uncomparable merely on the ground that it is a concern with foreign collaboration or interest and that the unit with which it is sought to be compared is entirely of Indian origin and resources.
[591A-C] Chemical Industries and Pharmaceutical Laboratories Limited (Cipla) Bombay v. Their Workmen, [1957] I.C.R. Bombay 1206 and Alembic Chemical Works Ltd. Baroda v. Its, Workmen [1967] 1 S.C.R. 652, Hindustan Antibiotics Ltd. v. The Workmen and Ors., [1967] 1 S.C.R. 652, relied on.
(iii)On the materials before it the Tribunal was justified in treating M/S. Burroughk Wellcome & Co. as a unit comparable with the appellant.
568 The fact that Burroughs Wellcome employed a lesser labour force did not deserve much importance because the business performance of the two companies was equal. Once Burroughs Wellcome Co. was treated as a comparable unit the wage scales awarded by the Tribunal could not be considered to be unjustified. [598G-599A-D] Workmen of New Egerton Woollen Mills v. New Egerton Woollen Mills and Ors., [1969] 11 L.L.J. 782, applied.
(iv)On the facts of the case it was not possible to disagree with the view of the Tribunal that the impact of the Drugs (Price Control ) Order will not be such as to affect materially the business prospects of the appellant company. If the Order materially affects the prosperity of the appellant's trade it would be open to it to raise a dispute for the reduction in the wage structure and in case they are able to show that in view of the Drugs (Price Control) Order their financial position has weakened to such an extent that they cannot bear the burden of the wage structure fixed by the present award, the matter may have to be examined on its merits. [598B-C] Williamsons (India) Private, Ltd. v. Its Workmen, [1962] 1 L.L.J. 302, referred to.
(v)The Tribunal had acted within its jurisdiction in classifying the workmen and fixing the scales of pay after fitting them in particular categories. The objection based on s. 10(4) of the Industrial Disputes Act. 1947 must be rejected. [599E-600B] (vi)When the Tribunal raised in the gratuity scheme the ceiling limit from 15 months to 17 1/2 months according to the pattern obtaining in Buroughs Welcome Company there was no question of principle involved justifying an objection by the appellant company. [60OC-D] (vii)There were different systems of dearness allowance for the operators and the clerical and subordinate staff in the appellant company. That such a different system of dearness allowance for employees working under the same employer is not warranted is clear from the decisions of this Court in the cases of Greaves Cotton & Co. and Bengal Chemical & Pharmaceutical Works Ltd. Therefore the Tribunal was justified in devising a uniform scale of dearness allowance applicable to all the employees of the appellant.
[600E-F] Greaves Cotton and Co. and Ors. v. Their Workmen, [1964] 5 S.C.R. 362 and Bengal Chemical & Pharmaceutical Works Ltd.
v. Its Workmen, [1969] 2 S.C.R. 113, relied on.
(viii)From the date of the settlement in 1966 the cost of living index had very rapidly gone up by 220 points. At the time when the demand for revision of wages scales and dearness allowance was made by the Unions and when the reference order was made by the Government, the cost of living index had gone up very high. That clearly showed that the workmen bad made out a case for revision of wage scales and dearness allowance. The contention of the appellant that because a system of dearness allowance already existed there should be no revision of the same, could not be accepted. [6O2C; 601A] Co. [1964] 5 S.C.R. 344 and Remington and of India v. Its Workmen, [1962] 1 L.L.J. 287, followed.
569 (ix)When the slab, system of dearness allowance was prevailing in the industry in the region the Tribunal committed no error in introducing a similar pattern in the case of the appellant. [603C-D] Kamani Metals & Alloys Ltd. v. Their Workmen, [1967] 2 S.C.R. 463, referred to.
(x)In regard to the incentive Bonus Scheme the Tribunal had stated that the necessary material for that purpose had not been made available and as such it had not been possible to devise a scheme calculated to afford protection to the incentive earning of a workman at the raised base performance index. This Court could do nothing further,in this 'regard and the result would be that observations made by the Tribunal will have full, effect. [604G-H]
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1091 to 1093 of 1971.
Appeals by special leave from the award dated April 15, 1971 of the Industrial Tribunal, Maharashtra, Bombay in References (IT) Nos. 20 of 1969, 70 of 1970 and 105 of 1969.
V.M. Tarkunde, R. A. Jahagirdar and I.N. Shroff, for the appellant (in all the appeals).
K.T. Sule. Janardan Sharma and Indira Jaisingh, for respondent No. 1 (in all the appeals).
Urmila Kapoor and Kamlesh Bansal, for respondent No. 2 (in all the appeals).
The Judgment of the Court was delivered by Vaidialingam, J.-These three appeals, by special leave, arise out of the Award, dated April 15, 1971 of the Industrial Tribunal, Maharashtra, Bombay in Reference (I.T. Nos. 20 and 105 of 1969 and 70 of 1970).
The main questions that arise for consideration in these appeals relate to the award of Dearness Allowance, Classification of Grades and Fixation of Wages and a direction given by the Industrial Tribunal regarding the Incentive Bonus Scheme, as modified by the Company. There is also a minor point regarding a particular clause in the Gratuity Scheme as framed by the Tribunal in Reference (I.T.
No. 20 of 1969). Though there are certain other matters dealt with in the Award in Reference (I.T. No. 20 of 1969) they are not the subject of controversy in these appeals.
We will now state the circumstances under Which the References came to be made to the Tribunal.
570 The appellant was started as a proprietary concern in the year 1944 and was later transformed to a public limited Company and registered as such under the Indian Companies Act, 1962. From its inception, the Company has been dealing in the business of manufacturing and selling pharmaceutical products. It had its factory in Jogeshwari in Greater Bombay. At the time of the Reference, the Company was employing about 714 workmen of whom 558 were operatives and 156 were members of the clerical and subordinate staff. All these employees were covered by the demands comprised in all the References. The wage scales of the workmen had been determined originally in Reference (I.T.No. 23 of 1959). The wage scales of the operatives were as follows "Unskilled A Rs. 1 .52-0 .09.2 .23-0 .122 .93 Unskilled B 1.25-0.96 1.85-0.09.-2.30 Semi-skilled A 2 .00 0 .12 2 .72-0 .18-3 .80 Semi-skilled B 1 .76 0 .11--2 .64-0 .153 .39 Skilled 2 59 0 .132 .85-0 -22---3 .950 .30--4 .25".
The wage-scales of the clerical and subordinate staff were as follows .200 -260 "Junior Chemist Rs. 120-10 -12 Manufacturing Assistant140-10-220-15-310 Store-keepers Store-Assistants 180-10-260-15-350 Stenographers Junior Clerk 60-8--90-10-146-E.B.-15-215.
Intermediate Clerks75-8-115-12-175-E.B.-15250.
Senior Clerks 115-10-255-15-315-E.B.-20395." In addition to the basic wages, referred to above, the employees were getting dearness allowance, which in the case of operatives was equal to 80% of the revised textile scale of dearness allowance and in the case of clerical and subordinate staff 100% of the revised textile scale of dearness allowance.
The nomenclature of the grades of the operatives was changed by a consent award in Reference (I.T. No. 170 of 1961). The grades and wages as per this award were as follows "Unskilled Rs. 1 -25-0 -06-1 -85-0 -09-2 -30 Semi-skilled A, 1 -52-0 -02-2 -33 -0 -12-2 -93 Semi-skilled B' 1 -76-0 -11-2 -64-0 -15-3 -39 Skilled 2 -00-0 -12-2 -72-0 -18-3 -39 Highly Skilled 2 -59-0 -13--2 -85--.O -22-.-3 -95.-.-O -30-4 -25." The dearness allowance of the operatives and clerical and subordinate staff underwent a change by the award in Reference (I.T. No.402. of 1963). Under that award the dearness allowance 571 of the operatives was increased to 90% of the revised textile scale of dearness allowance from January 1, 1964 and to 95% of the revised textile scale of dearness allowance from July 1, 1964. The dearness allowance of the clerical and subordinate staff was supplemented at different slabs with effect from January 1, 1964 as follows :
"Basic salary upto Rs. 100 Basic salary of Rs. 101 to 200 Basic salary of Rs. 201 to 300 Basic salary of over Rs. 300 .
Operatives' dearness allowance plus Rs. 7 .50 Operative-,' dearness allowanceplus Rs. 15.
Operatives dearness allowance plus Rs. 22 -50.
Operatives' dearness allowance plus Rs. 25." Though the award prescribed to the clerical and subordinate staff the same rate of dearness allowance of the operatives plus a fixed amount, as referred to above, the Company continued to give them dearness allowance equal to 100% of the revised textile scale of dearness allowance. This was also supplemented with the fixed amount depending upon the slab of the salary.
There was a settlement on June 24, 1966 between the Company and its employees, in and by which the wages of the operatives and the clerical and subordinate staff underwent a final revision. The wages of the operatives were fixed as follows "Unskilled Rs. 1 .25-0 .10-2 .75 Semi-skilled B 1 -60-0 .12-2 -32-0 .153 .67 Semiskilled A 1 .80-0 .15-2-85-0 .204 . 45 Skilled 2 .,10-0 -20.3 .10-0 .255 .10 Highly skilled 2 .750 -20-3 -75-0 .255 -000 .306 .50." Similarly, the wages of the clerical and subordinate staff were as follows :
"Junior Clerk Rs. 75-6-105-10-155-15-260-E. B.17-311.
Intermediate Clerk 90-8-130-12-190-15-295-E.B.18--349.
Senior Clerk 125 -10 -195.-15-270-20-390-E.B25-440.
Steno and Storekeeper180-10-260-15-380--E.B.---20-4460." The above basic scales in respect of all the categories were again supplemented by dearness allowance as provided for in the award passed in Reference (I.T. No. 402 of 1963). The Company had also an Incentive Bonus Scheme, by virtue of which a large number of operatives were getting, on an average an additional sum of Rs. 28/per month. The Company further revised 572 from about November 1, 1969 the wage scales of Drivers and Watchmen as follows :
"Drivers Rs. 70-6-100-9-145-12-205-E. B.-15-250.
Watchmen 45-4-65-6-95-E. B.-8.-135".
The above was the pattern of the wage structure and dearness allowance for the operatives and the clerical and subordinate staff.
The Unions concerned made a demand for -introducing the following scheme of dearness allowance in respect of all the workmen with immediate effect :
Wage slab . When the working classVariation in the cost of living in-dearness allowdex figure is inance for every 10 the group of 401-points rise or 410. fall.
upto 100 100 per cent 5 per cent From Rs. 101 to 200 50 per cent2 1/2 per cent From Rs. 201 and above 25 per centII percent Minimum dearness allowance Rs. 100. Minimum variation Rs.
5." They also demanded that the above scheme of dearness allowance was to have retrospective effect from August 1, 1967.
In the same demand the Unions required that the workmen should be granted one month's wages for every year of service as gratuity in case of resignation, dismissal, discharge, death or termination of service for any reason.
By this demand the Unions required modification of the then existing pattern of payment of dearness allowance at 95% of revised textile scale of dearness allowance to operatives and 100% of revised textile scale of dearness allowance plus Rs. 7.50 to Rs. 25/paid to the clerical and other staff.
The Company did -not agree to the demand and in consequence by order dated January 14, 1969 the Government of Maharashtra referred for adjudication to the Industrial Tribunal the demands. This Reference was registered as Reference (I.T. No. 20 of 1969).
The Unions again made a demand for revision of scales of pay as well as the classification of employees, their grades and their fitment in the revised scales of pay. As against the then existing six categories of workmen and their wage scales of the operatives the Unions demanded new classification and gradation into eight grades with new wage scales. Similarly, as against the then existing five grades of the clerical and subordinate staff, the Unions demanded the creation of six categories with enhanced wage scales.
These demands again were not accepted by the Company which led to the State Government making a reference Oil January 9, 1970, which reference was registered as Reference (I.T.
No. 70 of 1970).
573 The Company sometime in the year 1959 had introduced an Incentive Bonus Scheme. This was introduced, according to the appellant, because of the fact that the workmen were not giving a substantial production. The basis of the scheme, introduced by the appellant, was that if the workmen gave only 30% of the 100% production expected of them, their performance would be considered zero. On the other hand, if they gave production above 30% and up to 100%, they would be eligible for payment of Incentive Bonus which would be from 31 to 100 points. In other words, for the 70 points above the first 30 points, the workmen would get Rs. 501as Incentive Bonus which would work out approximately to about Rs. 71.43 per point. The appellant desired that the then existing floor limit of 30% ought to be raised to 75% without varying the quantum of Rs. 501that was originally payable on achievement of 100% production. What was intended was that the 25 points between 75 and 100 points Were to be made eligible for payment of Incentive Bonus of Rs. 2/-for each point.
The 'Company served a notice of change on the workmen under s. 9A of the Industrial Disputes Act, 1947. As the workmen protested against this change, this led the Government to make a Reference to the Industrial Tribnual for adjudication. This was numbered as Reference, (I.T. No. 105 of 1969).
The appellant resisted the claims made for revision of dearness allowance and wage scales as well as the modification sought for in the gratuity scheme. The appellant also wanted the Tribunal to uphold the notice of change given by it under s. 9A of the Industrial Disputes Act in respect of the Incentive Bonus Scheme. In particular the appellant contended that it was not a comparable concern with the units referred to by the Unions and that any modification in the scale of dearness allowance and wages would be beyond its financial capacity. The appellant also relied oil the coming into force of the Drugs (Price Control) Order, 1970 with effect from May 16, 1970.
According to the appellant the wages and dearness allowance paid by it to the workmen were far higher than what were paid by other units in the region. The Company also referred to the various awards wherein it had been held that it could not be compared with an International Company having branches in Bombay or with foreign concern though incorporated in India. The wage scales had been fixed by Settlement dated June, 24, 1966 and that nothing has happened since the date of Settlement to justify a revision of wage scales 'and dearness allowance. The appellant further urged before the Tribunal that the double linking of dearness allowance, as required by the Unions had never been adopted for the Pharmaceutical units in the Bombay region.
According to the appellant, the revision 574 effected regarding the Incentive Bonus Scheme was justified and the amount of 2/offered per point was much more than the prevailing rate of Rs. 71.43p. per point. It also opposed the revision of the then existing gratuity scheme as demanded by the Unions. According to the appellant the gratuity scheme which was in force had been introduced by a consent award in 1963.
The appellant filed copies of balance sheets and profit and loss accounts from 1962-63 to 1969-70 and various other charts in support of its plea that it will not be able to bear the additional financial burden that would result if the wage scales and dearness allowance are revised as per the demands made by the Unions.
It will be seen from the facts mentioned above that the main controversy between the parties related to the revision of wage structure and dearness allowance. As the demands of the workmen related to regrouping, in different grades, the operatives and the clerical and subordinate staff and as this involved a very radical change in the existing pattern of grades, the Tribunal felt that the opinion of an expert should be obtained on the advisibility of the reclassification. In this regard both the Unions and the against filed a joint application on December 22, 1970 requesting the Tribunal to appoint Sri N. L. Gadkari, retired Chief Inspector of Factories, Maharashtra State as an assessor. They also prayed that the points mentioned in the application be referred for the opinion of the assessor.
The Assessor submitted his report on February 22, 1971, in which he recommended the continuance of the then existing grades.
The Unions, while demurring to the report of the Assessor, requested the Tribunal, by their application dated March 25, 1971 to fix for the then existing five grades the following wage scales "Unskilled....... Rs. 85-8-125-10-225 Semi-skilled B... 100-10-150-12-210-15--285.
Semi-skilled A 120-12-180-15-255-18-345.
Skilled 140-15-215-18-305-20-405.
Highly skilled 225-25-350--30-500-35-675." The appellant, when the Reference came up for hearing, raised an objection to the selection of wage scale by the Unions for the existing grades of the operatives on the ground that such a selection was not permissible, being contrary to the provisions of s.10(4) of the Industrial Disputes Act. The Unions, ultimately, made it clear to the Tribunal that their demand for revision of wage scales of the existing five grades of operatives is to be as follows :
"Unskilled Rs. 60-5-85-7-155.
Semi-skilled B 70-6-100-8-180.
Semi-skilled A 85-8 -125-10-225.
Skilled 100-10-150-12-210-15-285.
Highly skilled 120 --12-180-15-255--18-345." 575 It is on the basis of this claim that the question of revision has been dealt with by the Tribunal.
Regarding the financial incapacity pleaded by the appellant, the Tribunal after an analysis of the balance sheets and profit and loss accounts, held that the average net profit of the Company duringthe years 1965-66 to 1969-70 works out to about Rs. 1384691/-. It is also of the, view that the apprehensions of the appellant/regarding the possible impact of the Drugs (Price Control) Order, 1970 are not justified. It is the view of the Tribunal that in spite of the price freeze effected in 1963, the appellant has been doing very good business from 1962-63 to 1969-70.
Ultimately, the Tribunal found that the financial condition of the appellant is quite sound.
Regarding the comparable concerns in the region, the Unions referred to as many as twenty units. One of the units relied on as comparable with the appellant was M/s.
Burroughs Wellcome & Co. (India) Private Ltd., Bombay.
The appellant opposed its being compared with the concerns relied on by the Unions on the ground that those units were either foreign concerns doing business in India or Indian units working, in collaboration with foreign concerns. The appellant in turn relied on several other concerns as being comparable with it. The appellant very strongly relied on certain previous awards in support of its contention that it has been held in those awards that the appellant cannot be compared with foreign concerns or with the concerns working in collaboration with foreign concerns.
The Tribunal, after a consideration of the materials placed' before it, in this regard, ultimately, held that M/s.
Burroughs Welcome & Co. (India) Private Ltd., was a unit which could be considered as a comparable concern with the appellant. The Tribunal having regard to the grades and scales of pay obtaining in M/s. Burroughs Welcome & Co.
(India) Private Ltd., held that the wage scales for the five grades for the operatives of the appellant should be as follows :
"Unskilled . . . . Rs. 42-3-71-4-112 Semi-skilled B 47-3-50-82-4-122 Semi-skilled A 50--4-90-5 -50-134 Skilled 55-5 -50-110-6 -50-155 -50 High skilled 72-7--142-8-182-9 -5C-220." The Tribunal fixed the following grades and scales of pay for the clerical and subordinate staff "Junior Clerks and Laboratory Assistants Rs. 85-7 -50-145-10-195-12259-17 323 Intermediate Clerks 120-10-200-12-260-15-335-18 353 Senior Clerks 185-15-305-20-365-25465" 576 The Tribunal did not accept the large demand made by the Unions for a general adjustment in increments of the employees. Nevertheless, in view of the revision of the scales of wages, it gave certain directions so that the employees may be fitted in the appropriate revised wage scales.
The parties very hotly contested the question of dearness allowance as well as the pattern to be adopted. As there were different systems of dearness allowance for the operatives and the clerical and subordinate staff, the Unions desired that a common scheme of dearness allowance on a slab system should be adopted. The Tribunal having regard to the decisions of this Court in Greaves Cotton and Co. and others v. Their Workmen(1) and Bengal Chemical & Pharmaceutical Works Ltd. v. Its Workmen(2) held that there was no justification for having two systems of dearness allowance-one for the operatives and the other for the members of the clerical and subordinate staff. Accordingly, the Tribunal held that all the employees should get the same dearness allowance irrespective of the fact whether they were operatives ,or members of the clerical and subordinate staff.
As the dearness allowance has to be fixed on industry-cum region basis, the Tribunal examined the system of dearness allowance followed in the region by the industries belonging to the pharmaceutical units. The Unions had submitted statements Exs. DU-1and MU.-1 containing a list of pharmaceutical units, in support of their contention that such units were adopting a slab system of dearness allowance. The Company, on the other hand, referred to certain awards of the Industrial Tribunals in support of its stand that slab system of dearness allowance is not considered as an appropriate mode of providing neutralization. The Unions also relied on certain awards wherein the slab system of dearness allowance had been introduced by the Industrial Tribunals. Though the Tribunal had held that most of the units referred to in Exs. DU-1 and MU-1, cannot be, considered for the purpose of being treated as units comparable with the appellant, nevertheless it held that the practice adopted by those units regarding the grant of dearness allowance can be taken into account as providing a guide regarding the system of dearness allowance adopted in the region. On this basis the Tribunal accepted the statements in Exs. DU-1 and MU-1 and held that the slab system of dearness allowance was prevalent in a large number of units belonging to pharmaceutical industry. In this view, the Tribunal further held that slab system of dearness allowance can be adopted, if the financial burden consequent on the adoption of the said system, can be safely borne by the Company.
(1) [1964] 5 S.C.R. 352.
(2) [1969] 3 S.C.R. 113.
577 The Tribunal then proceeded to consider the system obtaining in Burrough Welcome Company regarding the payment of dearness allowance. The system in the said Company, which was common for operatives as well as the clerical and subordinate staff, was as follows Basic Salary Dearness allowance per Variation for month at the Bompoints.
bay working class cost of living index 491-500.
Rs. 1-100. 150 percent 5 Per cent Rs. 101--200 1 50 Per cent on the 1st 21 Per cent Rs. 100.
71 Per cent on the balance.
Rs. 201-300 150 per cent on the 1st 11/4 per cent.
Rs. 100.
721 Per cent on the 2nd Rs. 100, and 36 1/4 per cent on the balance.
Minimum Dearness allowance Rs. 4 Rs. 101.
In the said Company the above scale of dearness allowance was however limited only to employees drawing a basic salary upto Rs. 360/per month. The appellant accepted before the Tribunal that the scheme of dearness allowance obtaining, in Burroughs wellcome Company would cast a lesser financial burden than the scale of dearness allowance as demanded by the Unions. In fact, the Company had filed two charts Exs. C-12 and C-13, showing the burden which it will have to bear if the scheme of dearness allowance as demanded by the Unions was introduced., The Company had worked out the demands in different ways and that is why it filed two statements. According to the appellant the additional financial burden will be about Rs. 878125.00 as per Ex. C12 and Rs. 1252693.00 as per Ex. C-13. The Tribunal is of the view that under Ex. C-13, the Company had taken into account a sum of Rs. 186293.00 payable to some members of the staff drawing a salary of over Rs. 200/per month and amongst whom were also included 52 chemists. According to the Tribunal the 52 chemists are not covered by the Reference and therefore the burden will have to be calculated only in respect of the workmen covered by the Reference and to, whom dearness allowance is being fixed.
On calculation the Tribunal found that about a lakh of rupees payable to 52 chemists and included in Ex. C-13 by the appellant will have to be deducted from Rs. 1252693.00 Accordingly, it held that as per the calculation of the appellant under Ex. C-13, leaving out the 52 chemists, the total burden will only be Rs. 1152693-.00. Taking 578 into account the tax relief that the Company will get, the Tribunal ultimately held that the additional financial burden that the appellant will have to bear will only be Rs.
555000.00. As it had already held that the average annual gross-profits of the Company are over Rs. 40,00,000.00, the Tribunal held that the Company can easily bear this additional burden. The Tribunal is further of the view that though the financial impact of the Drugs (Price Control) Order, on the business activities of the Company has had to be seen, the impact will not be such as to make the appellant's financial position difficult. For all these reasons, the Tribunal fixed for the operatives and the clerical and subordinate staff of the appellant dearness allowance on a system prevalent in Burroughs Welcome Company. The system of dearness allowance fixed by the Tribunal is as follows :
Basic salary Dearness allowance per Variation month at the Bombay working class cost of living index 521 -530.
Rs. 1-100 150 per cent Rs. 101-200 150 per cent on the 1st Rs. 100.
72 1/2 per cent on the balance.
Rs. 201-300 150 Per cent on the 1st 100 Rs.72 1/2 Percenton the 2. Rs. 100.
36 1/4 per cent. on the balance.
Minimum dearness allowance Rs. 101 _ percent _ 1/2 per cent Rs. 4.
The Tribunal has further directed that dearness allowance in accordance with the above scheme will be payable only to employees drawing a basic salary upto Rs. 300/per month.
It will be seen that the Tribunal while adopting the scale of dearness allowance obtaining in Burroughs Wellcome Company, has made a departure in fixing the scale of dearness allowance on the basis of the Bombay Working Class Cost of Living Index 521 to, 530. The dearness allowance scheme obtaining in Burroughs Welcome Company was on the Bombay Working Class Cost of Living Index 491 to 500. The dis-rent cost of living index was adopted by the Tribunal in view of the fact that the appellant was Paying incentive wages to its operatives and with a view to lessen the financial burden on the Company.
Another feature of the scheme adopted by the Tribunal is that it puts a ceiling on the employees drawing basic wages upto 579 Rs. 300/per month alone being eligible for dearness allowance, whereas under the practice originally obtaining in the Company there was no such limit. The Tribunal held that the revised wage scales and dearness allowance would be effective from October 1, 1969 and directed the Company to pay the arrears within three months from the date of the Award becoming enforceable. At this stage it may be mentioned that the appellant is not challenging this direction regarding the date from which the wage scales and dearness allowance are to take effect, though it very vehemently attacks the fixation of the scale of revised wage scales and dearness allowance by the Tribunal.
Regarding gratuity, the Company had already a scheme which had been introduced under the Settlement Award in Reference (IT) No. 141 of 1962. It is not necessary to set out the scheme that was prevalent in the Company because the only.
objection of the appellant to the revised scheme evolved by the Tribunal is in respect of raising the ceiling from 15 months to 17 1/2 months. The demand in this regard by the Unions was that the ceiling should be raised from 15 months basic wages to 20 months basic wages. However, the Tribunal did not accept the claim of the Unions in too. On the other hand, it adopted the practice obtaining in the Burroughs Wellcome Company and accordingly fixed the ceiling at 17 1/2 months basic wages.
Regarding the notice of change issued to the workmen by the appellant under s.9A of the Industrial Disputes Act proposing to alter the existing floor limit of 30% to 75% in the Incentive Bonus Scheme, the Tribunal on the joint application of the parties dated April 10 , 1970 appointed on April 28, 1970 Sri B. Tulpule, as Assessor to examine the question of revising the existing scheme of Incentive Bonus.
The Assessor submitted his report on August 27, 1970 making the following recommendations :
"(1) The base performance index for all sections /in the Company's factory should be revised and raised to 60 per cent.
(2) Consequent upon the revision of the base index as above, an amount of Rs. 100 per day should be added to the basic wages of the workers, this addition being independent of any other revision of the-wage structure that the Tribunal may decide upon.
(3) The revised rates of incentive should continue beyond 100 pet cent performance." Though the Unions generally accepted the recommendations, the appellant was opposed, particularly to the second and third 580 recommendations. The Tribunal, after a consideration of the objection, is, of the view that recommendations Nos. 2 and 3 were beyond the scope of the terms of reference made to him.
Therefore, those two recommendations were negatived.
Regarding the first recommendation, it is stated by the Tribunal that the Unions accepted the same and that the Company also was not opposed to that suggestion made by the Assessor regarding the raising of the base performance index to 60%. In dealing with this aspect the Assessor in his report had stated as follows "If the base index of any incentive scheme is raised from X to Y, the workers will stop getting the incentive earnings which they used to get for the performance range from X to Y.
This is also the main anxiety expressed by both the Unions in the present case. At the outset I asked the management whether the implication of their proposed change was such a reduction in the workers' total pay packet, at any given level of performance. The management categorically assured me that that is not their intention. Their purpose in proposing the change is stated by them to induce workers to raise their performance above the prevailing level." The Tribunal in its Award had stated that the matters mentioned in the above paragraph including the assurance stated to have been given by the appellant were not denied.
Therefore, the Tribunal, in view of the common measure of agreement between both the parties regarding the first recommendation is of the view that if the pay packet of the workman is to be protected at the wage raise base index performance of 60%, some scheme may have to be worked out.
But as the necessary materials for the purpose of evolving a scheme were not available, the Tribunal has thrown out a suggestion that the said question should be dealt with by the appellant in consultation with the Unions and frame a scheme by common consent, if possible. Accordingly, the Tribunal left the matter to the parties to deal with the matter with the observation that if it is found that no scheme could be framed by consent, the Unions will be free to raise any dispute that may be available to them in that regard.
We have. exhaustively referred to the questions referred to the Tribunal as well as the decision of the, Tribunal on those points. In these appeals, as mentioned earlier, the controversy relate to (1) Scale of Dearness Allowance; (2) Fixation of Wage Scales, Classification and Grades; (3) Raising of the ceiling to 17'2 months basic wages in..the gratuity scheme.; and (4) the direction given by the Tribunal. regarding the Incentive Bonus Scheme.
581 As the main points in great controversy between the parties before us relate to the pattern of dearness allowance and the classification and grades of employees and the fixation of the revised wage scales, we will take up for consideration those matters.
The very _first objection of Mr. Tarkunde, learned counsel for the appellant is regarding the manner of ascertaining grosser of its when revising the wage scales and awarding dearness allowance. We have already pointed out that theTribunal has proceeded on the basis that the average annual gross-profits of the Company are over Rs. 40,00,000.00. The appellant had submitted balance sheets and profit and loss accounts for the year 1962-63 to 1969-70. It is enough to refer to the particulars that could be gathered for the five preceding years, namely, 1965-00 to 1969-70. For those years the figures are as follows -Particulars 1965-66 1966-67 1967-68 1968-69 1969-70 Paid-up capital 4500000 4-50-000-0 4500000 54-00-00-0 Reserves and Surplus 2152186 2925376442151547856975714988 Sales 21997640 23866647 303593803299445637152031 Depreciation 5449195 55035784 8241111775916719 Development rebate 972426 8266105840110858144511 Provision for taxation 1915000 1590300185050016985001639000 Net Block 4601566 4905509 545821257459977375386 Net Profit 954591 1443489 159709416045011323779 From the above statement it will be seen that the average net profits work out to Rs. 1384691.00 The net profits have been arrived at, by the Company after deducting taxation, depreciation and development rebate. It is on the basis of the net profits, so arrived at that the appellant appears to have urged before the Tribunal that the wage scales and dearness allowance are to (1),fixed. The Tribunal rejected this contentions. On the, other hand, the Tribunal has held that when considering a revision of wage structure what is to betaken into account is not the net profit.-; but gross profits without any deductions having been made for taxation, depreciation and development rebate. It is on that basis. that the Tribunal held that the average grossprofits' of the Company exceed Rs. 40,00,000.00.
The gross-profits without deducting taxation, depreciation and development rebate for the years 1965-66 to 1969-70 will be. proximately as follows -----------------------------------------------------------Year Gross-profits ------------------------------------------------------------Rs.
"1965-66. 35,11,752 1966-6736 ' 57,000 1961-6843, 37,698 1968-6945, 25,134 1969-7040, 24,009" -------------------------------------------------------------9--L1031 Sup.Cf/72 582 From the above it will be seen that the figure of Rs.
40,00,000.00 arrived at by the Tribunal as average annual grossprofits appears to be prima facie correct.
Mr. Tarkunde, learned counsel for the appellant found considerable difficulty in challenging the view of the Tribunal that gross-profits are to be arrived at without decucting taxation and development rebate. He rather strenuously urged that there is absolutely no warrant for arriving at gross-profits without deducting depreciation.
On the other hand, Mr. K. T. Sule, learned counsel for the respondent No. 1, whose, contentions have been adopted by Mrs. Urmila Kapoor, learned counsel for the second respondent, pointed out that the approach made by the, Tribunal is correct and is also supported by the decisions of this Court.
Mr. Tarkunde referred us to sections 205 and 211 of the Companies Act, 1956, as well as Part 1, Schedule VI therein.
We do not think it necessary to% refer to those provisions as, in ouropinion, they have no relevance or bearing when considering a revision of wages and award of dearness allowance under industrial adjudication. Those provisions are intended for' a totally different purpose.
We will presently show, by reference to the decisions of this Court that the Tribunal was justified in computing gross-profits without deducting taxation, depreciation and development rebate. In view of the decisions, to which we will immediately refer to, Mr. Tarkunde was prepared to accept the position that, at any rate, taxation and development rebate cannot be deducted, but he still maintained that depreciation has to be deducted.
In Gramophone Company Ltd. v. Its Workmen(1), this Court, in dealing with a gratuity scheme, had to consider the principles applicable for ascertaining the financial capacity of an employer. In that decision the employer contended that before the real profit for each year can be4 arrived at, the provisions made for taxation and for development reserves should be deducted. On this basis, it was further contended that if these deductions are made, there will not be any profit left which will enable the Company concerned to frame a gratuity scheme. This claim for deducting taxation and development rebate reserves was negatived by this Court as follows :
"When an industrial tribunal is considering the question of wage structure and gratuity which in our opinion stands more or less on the same footing as wage-structure (1)[1964] 2 L.L.J. 131.
583, it has to look at the profits made without considering provision for taxation in the shape of income-tax and for reserves. The provision for income-tax and for reserves must in our opinion take second place as compared to provision for wage structure and gratuity, which stands on the same footing as provident fund which is also a retrial benefit." It was further observed that if an industry is in a stable condition and the burden of provident fund and gratuity does not result in loss to the employer, that burden will have to be borne by the employer, like the burden of wage-structure in the interest of social justice. It was finally held that the contention on behalf of the Company therein that provision for taxation and provision for reserves should take precedence over provision for gratuity cannot be accented.
From the above decision it is clear that Fixation of wage structure stands more or less on the same footing as framing of a gratuity scheme and the principles applicable for ascertaining the profits are the same : (2) Provision for taxation and provision for reserves cannot take precedence over for gratuity and fixation of wages; and (3) The provision for income-tax and for reserves must take second place as compared to provision for wage-structure and gratuity.
The above decision categorically rules out any deduction of taxation. It also excludes from deduction all provision for reserves which will take in depreciation reserve also.
But, Mr. Tarkunde contended that the above decision is an authority for the proposition that the only two items that could be deducted are provision for taxation and provision for development rebate reserve. If so, the counsel urges that the deduction of depreciation reserve as claimed by the appellant is justified and, that the Tribunal erred in declining that item to be deducted.
We are not inclined to accept this contention of Mr.Tarkunde. The above decision is, in our opinion, an authority for the proposition that the provision for taxation and provision for reserves, which expression will take in depreciation reserve also, cannot be deducted for the purpose of computing the profits. At 'any rate the, said decision had no occasion to consider whether depreciation reserve can be deducted or not. We have already pointed out that the only claim made by the appellant therein was for deducting provision for taxation and for development rebate reserve and that claim was rejected. Therefore, looked at from any point of view, the above decision is certainly not in favour of the contention of Mr.584 Tarkunde that depreciation reserve has to be deducted before arriving at profits.
In The Indian Link Chain Manufacturers Ltd. v. Their Work-men(1), this Court had occasion to consider the principles applicable to ascertain the financial capacity of a company in fixing wage scales and dearness allowance and framing of a gratuity scheme. The Principle applicable was stated as follows "It is pertinent to notice that gratuity and wages in industrial adjudication are placed on the same footing and have priority over Income-tax and other reserves, as such in considering the financial soundness of an undertaking for the purposes of introduction of a gratuity scheme the profits )that must be taken into account are those computed prior to the deduction of depreciation and other reserves." The decision in Gramophone Company v. Its Workmen 2 was quoted with approval in this decision. The Company in that case had calculated profits after deducting depreciation. This method was deprecated by this Court as follows :
"All these profits it may be mentioned are computed after deducting depreciation and this should betoken into account in considering the desirability of formulating a gratuity scheme forthe Appellant." In the end the provision made for depreciation and which had been deducted by the Company for calculation of profits was added back.
From the above decision it is clear that profits are to be computed prior to the 'deduction of depreciation and other reserves. The said decision directly holds that provision for depreciation and other reserves cannot be deducted in computing profits be ascertained for framing a gratuity scheme. This decision again reiterates the legal position that gratuity and wages in industrial adjudication and placed on the same footing and have priority over Income-tax and other reserves. In fact, as pointed out by us earlier, provision made for depreciation and which had been deducted by the Company for arriving at profits was added back. by this Court.
Mr. Tarkunde urged that this Court in The Indian Link Chain Manufacturers Ltd. v. Their Workmen(1) has misunderstood and misinterpreted the earlier decision in Gramophone Company Ltd. v. Its Workmen (2 ) . According to the counsel the error committed by this Court was on proceeding on the basis that the decision in (1) [1971] 2 S.C.C. 759.
(2) [1964]2 L.L.J. 131.
585 Gramophone Company Ltd. v. Its Workmen(1) has laid down that depreciation reserve should not be deducted in computing the profits available for framing a gratuity scheme or when fixing a wage scale, We have no hesitation in rejecting this contention of Mr.Tarkunde. We have already expressed our views regarding the scope of the decision in Gramophone Company Ltd. v. Its Workmen(1) and no error has been committed by this Court in The Indian Link Chain Manufactures Ltd. v. Their Workmen(2).
On the other hand, the latter decision is directly in point to the effect that provision for depreciation cannot be deducted.
We may also refer to the observation of this Court in Ahmedabad Millowners' Association Etc. v. The Textile Labour Association(3) that.......... it is the figure of gross profit which is more important, because it is not disputed that wages payable to the employees are a first charge,, and. all other liabilities take their place after the wages." Mr. Tarkunde referred us to, the statements contained in certain leading text books on principles of Accounting, Book Keeping and Accounts and Accountancy regarding the nature of depreciation reserve. In "Principles of Auditing by F. R.
M. De Paula, 8th Edition," it is stated that the main object of providing for depreciation of wasting assets is to keep the original capital intact. In "Balance Sheets, how to read and understand them, by Philip Tovey,3rd Edition" the distinction between a "Reserve" and "Depreciation" has been stated. The author says that depreciation should be written of before arriving at the year's profit and that reserve is built up, by setting aside portions of the profits itself.
The author proceeds to state that depreciation represents the estimated wear and tear which will ultimately reduce the property and plant to scrap value. In "Book-Keeping and Accounts" 'by Cropper, Morr's and Fison, 19th Edition, when dealing with the Trial Balance, Trading and Profit and Loss Accounts, it is mentioned that depreciation is the term employed by the Accountants to indicate the gradual deterioration both in the value and the usefulness of those assets which, by reason of their nature and uses, steadily decline in value.
Again in "Accountancy" by William Pickles, 3rd Edition the author has defined "Depreciation" as the permanent and continuing diminution in the. quality, quantity or value of an asset. it Is further stated that the provision for depreciation does not depend upon what the business can afford, as the debit therefore is an (1) [1964] 2 L.L.J.131, (2) [1971] 2 S.C.C. 759.
(3) [1966] 1 S.C.R. 382.
586 essential one, constituting not an appropriation of, but a charge against, profits for the period in question.
Based upon the above statements contained in the text books, referred to above, Mr. Tarkunde urged that the principle in Accountancy is that depreciation must be deducted before ascertaining the profits.
In our opinion, the above statements may have considerable bearing in the preparation of profit and loss accounts having due regard to the provisions of the Companies Act and Mercantile usage; but they have no bearing on the question of fixation of wage structure and dearness allowance in an industrial adjudication. From what is stated above, it follows that the Tribunal was justified in arriving at gross-profits without deducting the provision for Depreciation. As already mentioned by us, Mr. Tarkunde has accepted that the Tribunal was justified in not deducting the Provision made for taxation and development rebate. The result is that the average grossprofits of the appellant being about Rs. 40,00,000,00, as held by the Tribunal, is correct.
In the fixation of wages and dearness allowance the legal position is well-established that it has to be done on an industry-cumregion basis having due regard to the financial capacity of the unit under consideration-vide Express Newspapers (Private) Ltd., and Another v. The Union of India and others(1), Greaves Cotton and Co. and others v. Their Workmen (2) , and Bengal Chemical & Pharmaceutical Works Ltd. v. Its Workmen(3).
It has been further stated in Greaves Cotton add Co. and others v. Their Workmen (2 ) as follows :
"The principle therefore which emerges from these two decisions is that in applying the industry-cum-region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind. But where the number of industries of the same kind in a particular region is small it is the region part of the industry-cum-region formula which assumes importance..........
(1) [1959] S.C.R. 12. (2) [1964] 5 S.C.R. 362.
(3) [1969] 2 S.C.R. 113.
587 It has been further emphasized in Ahmedabad Millowners' Association etc. v. The Textile Labour Association(1) that industrial adjudication should always take into account, when revising the wage structure and granting dearness allowance, the problem of the additional burden to be imposed on the employer and ascertain whether the employer can reasonably be called upon to bear such burden. The principles to be borne in mind have been stated in the said decision as follows :
" It is a long-range, plan; and so, in dealing with this problem, the financial position of the employer must be carefully examined. What has been the progress of the industry in question; what are the prospects of the industry in future; has the industry been making profits; and if yes, what is the extent of profits; what is the nature of demand which the industry expects to secure; what would be the extent of the burden and its gradual increase which the employer may have to face ? These and similar other considerations have to be carefully weighed before a proper wage structure can be reasonably constructed by industrial adjudication..........
As pointed out in Greaves Cotton and Co. and others v. Their Workmen (2) , one of the principles to be adopted in fixing wages and dearness allowance is that the Tribunal should take into account the, wage scale and dearness allowance prevailing in' comparable concerns carrying on the same industry in the region., The factors which have to be taken into account for ascertaining comparable concerns have also been laid down by this Court.
In Workmen of Balmer Lawrie and Co. v. Balmer Lawrie and those principles have been stated as follows "Besides, it is necessary to emphasise that in dealing with the comparable character of industrial undertakings, industrial adjudication does not usually rely on oral evidence alone. This question is considered in the light of material fact and circumstances which are generally proved by documentary evidence. What is the total capital invested by the concern, what is the extent of its business, what is the order of the profits made by the concern, what are the, dividends paid, how many employees are employed by the concern, what is its standing in the industry to which it belongs, these and other matters have to be examined by industrial adjudication in determining the question as to whether one concern is comparable with another in the matter of fixing wages. Now, (1) [1966] 1 S.C.R. 382.
(2) [1964] 5 S.C.R. 362.
(3) [1964] 5 S.C.R. 344.
588 it is obvious that these questions cannot be decided merely on the interested testimony either of the workmen, or of the employer and his witnesses'" In Workmen of New Egerton Woollen Mills v. New Egerton Woollen Mills and others(1) , the above principles have again been reiterated.
From the decisions, referred to above, it follows that two principal factors which must weigh while fixing or revising wage scales and grades are: (1) How the wages prevailing in the establishment in question compare with those given to the workmen of similar grade and scale by similar establishments in the same industry or in their absence in similar establishments in other industries in the region;
and (2) What wage scales the establishment in question can pay without any undue strain on its financial resources.
The same principles substantially apply when fixing or revising the dearness allowance.
The question is whether the Tribunal has adopted the above principles when revising the wage scales and dearness allowance in the case of the appellant.
The Unions had relied on as many as twenty one concerns located in the region of Greater Bombay and belonging to the same pharmaceutical units of industry as, units comparable with the appellant.
The appellant opposed its being compared with those concern,, on the ground that the units relied on by the Unions were companies haying foreign collaborations or connections, and as such possessing several advantages. The appellant in turn relied on several concerns in the region as comparable units.
Before we refer to the concerns relied on by the Unions and the appellant as comparable concerns, it is necessary to deal with an objection raised by Mr. Tarkunde that no foreign unit doing business in India or no unit in India doing business in collaboration with a foreign concern, can ever be considered for purposes of comparison. According to the appellant such concerns have distinct advantages of international research facilities, reputation in business which enables such concerns to market their products more easily and thus enable them to pay higher wages to their employees. In view of the special technical facilities, that may be available to them, their output will be far higher though the number of employees will be much less, and as such they will be able to pay to their lesser number of employees higher wages. In this connection Mr. Tarkunde relied on certain awards of the Industrial Tribunal (1)[1969] 2 L.L. J. 782.
589 wherein it is held that the companies having foreign collaboration though in the same region and in the same industry, cannot be considered for the purposes of comparison with purely localOn the other hand Mr. Sule, has opposed the above position and urged that the question as to who is the employers is absolutely immaterial so long as the tests for the purposes of comparability as laid down 'by this Court, are satisfied and the capacity to bear the financial burden is established. We will deal with aspects in the first instance.
It must be stated at the outset that the Unions placed reliance on certain information contained in the prospectus of the Company and certain statements contained in the book "Indian, Pharmaceutical Industry" published in 1963 and 1969, to show that the appellant concern is also one which has foreign collaboration and as such it is to be ranked as a concern with foreign attachment. has recorded a finding in favour of the appellant that it is not a unit having foreign collaboration. Therefore, this finding is III favour of the appellant.
The question that now arises for consideration is whether in law there is any objection or prohibition in an industrial tribunal, when dealing with comparable units in a region from taking into account concerns having foreign collaboration. It is no doubt true that some of the concerns relied on by the Unions are concerns working in collaboration with foreign firms.
In Chemical Industries and Pharmaceutical Laboratories Limited (Cipla) Bombay v. Their Workmen(1), it was held by the Industrial Tribunal that the Cipla cannot be compared to Glaxo Laboratories, Raptakos Brett and other pharmaceutical concerns which are either subsidiaries of foreign concerns or are closely linked with them. It was further held that if any comparis on could be made,in can only be with concerns like Kemp & Company. Sandu Pharmaceutical, Fair Deal Corporation, Edison Continental Laboratories, Bengal 'Chemicals and such other indigenous concerns.
Again in Alembic Chemical Works Ltd. Baroda v. Its Workmen (2) , the Tribunal held that Alembic cannot be compared to concerns like the Glaxo Laboratories and others who have associations in different degrees and forms with certain foreign concern, of international repute.
On this reasoning the Tribunal relied more on the scales wages prevailing in concerns like the Jhandu Pharmaceutical, Cipla. Kemp & Co., and such similar concerns although it held that (2) [1958] I.C.R. Bombay, 1305.
(1) [1957] I.C.R Bombay, 1206.
590 Alembic is a much bigger concern, than the said units. It must be stated that in-both these awards concerns with foreign collaboration have been eliminated from consideration on the ground that they cannot be regarded as comparable concerns and to that extent they support Mr.
Tarkunde's contention.
In Reference (IT) No. 223 of 1959, which related to the appellant Company, the workmen placed reliance on Indian units of foreign concerns for being treated as comparable units. ,The appellant, however, pointed out that those units which have international fame and repute in world market were in a position to sell their products more easily and profitably and hence they cannot be treated as comparable units. The Tribunal, no doubt, accepted the contention of the appellant that the Unions had selected some of the bigger concerns for comparison and held that it would be more appropriate if the appellant is placed somewhere in between the bigger and smaller concerns. In this view the Tribunal took to the financial capacity of the appellant.
Again in Reference, (IT) No. 402 of 1963, relating to the appellant, wherein the dearness allowance was revised, the appellant had contended that it should not be compared with the units like Ciba, Dumex, Glaxo, Sandoz and the like. The Tribunal held that the appellant cannot be compared with international pharmaceutical units having branches in Bombay or with foreign concerns like Glaxo, Ciba, Sandoz etc., which though incorporated in India are subsidiaries of foreign companies having all the advantages of connection with respect of home companies in Europe and America. The Tribunal referred to the award in Reference (IT) No. 223 of 1,959 and held 'that a fair cross-section of the industry has to be taken into account for fixing a scale of dearness allowance, which will be within the financial capacity of the appellant. But, how-ever, the Tribunal held that the appellant is a firm of good reputeand standing and that it has very fair prospects. Though in Reference (IT) No. 223 of 1959, the Tribunal did not specifically eliminate from consideration units having foreign collaboration as such, nevertheless, in Reference (IT) No. 402 of 1963, the Tribunal has held that the appellant cannot be compared with international pharmaceutical companies having branches in Bombay or with concerns, though, incorporated in India, are subsidiaries of foreign, companies.
From what is stated above, it is no doubt true that in the three awards, one of which specifically relates to the appellant, concerns having foreign collaboration have been eliminated for purposes of comparison. But no legal principle on the basis of which such a decision has been arrived at has been stated in any of these awards.
591 In our opinion, so long and to the extent that concerns having-foreign collaboration are doing business in India and in a particular concerned region, we do not see any reason why they should not be taken into account for purposes of being treated as comparable units, provided the tests for such purposes as laid down by this,, Court are satisfied.
No doubt some of those concerns may be having an advantage in various matters. But merely because that they possess such advantage in the field of business is not a circumstance for eliminating such concerns for purposes of comparability. The object of industrial adjudication is, as far as possible, to secure uniformity of service conditions amongst the industrial units in the same region. If a concern having foreign collaboration properly satisfies the tests of comparability, it would be improper to regard' such unit as incomparable merely on the ground that it is a concern with foreign collaboration or interest and that 'the unit with which it is sought to be compared is entirely of Indian origin and resources.
The object of Industrial. Law is to improve the service conditions of industrial labour so as to provide for them the ordinary amenities of life with a view to bring about industrial peace which would in 'turn accelerate productivity of the country resulting in its prosperity.
The prosperity of the country, in its turn will help to improve the condition of labour. The principles regarding fixation of wage scales and dearness allowance have been laid down in several decisions, by this Court and they apply equally to all industries irrespective of the character of
