Hindustan Lever Mazdoor Sabha Vs. Hindustan Lever Limited and Others
and the ad hoc allowance granted by the Tribunal and confirmed by the learned Judge. We have already discussed them in the context of the dearness allowance and have pointed out, as indeed the Tribunal has also done, that the workmen were entitled to them even otherwise since they were granted to the subordinate staff under the settlement of December 2, 1983. The service conditions of the subordinate staff and the workmen involved in the reference have always been uniform. The parity between them was disturbed for no reason in 1979 and 1983, and all that the Tribunal has done, by awarding the said allowances is to resote it. The more important aspect of these allowance is that they were granted in lie of the increase in the basic wages to save the financial burden on the Company resulting from the computation of other benefits on the basis of the basic wage, had an equivalent addition been made to the basic wages. The Company could not dispute this position. We are, therefore, unable to appreciate the resistance of the Company to these allowances.46. The next grievance of the Company is against the revision of the wage scales. The contention is that in view of the existing total wage packet, when in fact there was a need for a ceiling on dearness allowance, the revision of the wage structure was unjustified. It was also submitted that the tribunal had not granted the entire demand of the company in respect of the dearness allowance. The Tribunal had conceded the demand only partially. It was further submitted that in any case the tribunal had granted the revision in wages because it had placed the ceiling on the rate of dearness allowance payable to workmen drawing basic salary above Rs. 500/- a month. If the ceiling introduced by the Tribunal is to be done away with at the instance of the workmen, there is no justification for retaining the revised wages. That would place the Company in a double jeopardy in that while it will lose whatever advantage it has gained due to the introduction of the ceiling on dearness allowance, the revised wage structure would entail further burden on it, under the existing system of dearness allowance.47. We have already pointed out earlier the nature of the revision in pay scales granted by the Tribunal. The wage scales were first revised in 1974 by the Chitale Award. They were slightly revised in 1977 by the Bhojwani Award by increasing the maximum of the scale of each of the category. As the Tribunal has itself observed since 1977 the cost of living index had increase more than double from 1400 to 2900 in December, 1985 which is the date of the award. According to the Tribunal, the workmen were, therefore, justified in claiming the revision. The Tribunal has also then added as follows :"Apart from that, I have fixed the ceiling on dearness allowance. As such also it is necessary to revise the basic wages payable to the workmen. The basic wages payable to workmen in TOMCO are more at least at the maximum and, it is, therefore, necessary to increase the maximum basic wage scale in each category of workmen."The Tribunal has given a third reason for increasing the basic wages in the same paragraph 53 of the award, when it has observed that besides the aforesaid two reasons, at least in some categories of hourly rated workmen, the Company had increased their basic wages either at the minimum or at the maximum level. The Tribunal has then gone on to observes as follows:"I therefore, find that it would be just to increase the minimum wages of C-1, C-2 and T-1, T-2 by one increment. As the ceiling on dearness allowance is imposed at the basic salary of Rs. 500/-, any increase in basic wages above Rs. 500/- would not be saddled with a further increase in the dearness allowance. Considering all these facts. I revise the wage scales as follows."We have already held above that there is no case made out for changing the existing system of dearness allowance and if, therefore, the existing system of dearness allowance is to continue then it is not disputed that the revised wage scales would further add proportionately to the wage packets of all the workmen.48. We have commented upon the approach of the Tribunal and the learned Judge by observing that to the extent that they have mixed-up the considerations for increasing the wage scale with those for fixing the dearness allowance, they have committed on error apparent on the face of the record. It cannot also be gainsaid that one of the main considerations, which has weighed with the Tribunal, while introducing the revised pay-scale is that it was introducing the ceiling on dearness allowance, for those earning salary above Rs. 500/- per month. In fact, as pointed out earlier what the Tribunal has done is to give by way of some increase in the maximum of the pay scale, particularly to those in category C-3, C-4 and T-3 and T-4, what it has taken away from them by reduction in dearness allowance. Thus both the revision of salary and introduction of the new dearness allowance system are interlinked. Since we are setting aside the award with regard to the dearness allowance and directing the continuation of the existing dearness allowance system, it is only fair that we remand the matter to the Tribunal to consider the case for revision of wage scales afresh independently and irrespective of the change in the dearness allowance system which was proposed by it. We are aware that this would involve prolongation of the litigation between the parties. But in the circumstance it is unavoidable. We, therefore, set aside the award with regard to the revision of wage scales and remand the demand of the workman for the revision of wage scales to the tribunal for fresh consideration in the light of what we have stated hereinabove.
1[ds]p.m. are disentitled to receive any dearness allowance or that they are disentitled to dearness allowance above a fixed amount. The Award has placed a ceiling on the variable rate at which the dearness allowance was payable under the existing system to those drawing salary above Rs. 500/per month and has made the same variable rate of dearness allowance applicable to them at which it is payable to those who draw basic wage of Rs.In other words, the dearness allowance payable to workmen who draw a basic wage of Rs. 500/and above will be at the same rate which is applicable to those who draw salary of Rs. 500/per month. There is thus a ceiling on the variable rate of dearness allowance payable and not on its quantum. Nor is any workman disentitled to receive the dearnessis necessary to emphasise that the present is not a case where the dearness allowance is being introduced for the first time. The present is a case where the existing dearness allowance system is sought to be replaced by a new one which deprives the workmen of the available benefits. The question to be answered in the present case is not, therefore, whether one rather than the other system is more rational, scientific or realistic and in the general interests, but whether it should be made applicable in the present concern at this stage. Very different considerations apply to twothe present case, it is not the case of the company that it is financially incapable of bearing the burden of dearness allowance and the Tribunal has itself found that the existing system does not result inas admitted by the company in an earlier adjudication proceeding. Yet the Tribunal has chosen to disturb the existing system which has been prevalent in the company for the last more than 32 years on the ground that theindustry formula required that the totalshould be reduced and that the existing system resulted in the subordinates getting totalmore than those of theiris no other establishment which is comparable with the company. Hence the industry part of theformula is admittedly inapplicable to the facts of the present case. As regards the region part of the formula , there are many concerns in the region in which there is no ceiling on the payment of dearness allowance and the wages paid to the workmen in those concerns are comparable to the wages of the workmen of the company.It is these rival contentions with regard to the proposed change that we have to deal with in the present case. It is unnecessary to emphasise that dearness allowance has been looked upon by the industrial Tribunals, Court and official panels as an indispensible device meantcompensate changes in the cost of living or changes in purchasing power, and(ii) protect to a greater or lesser extent the real income of wage and salaryis also now acknowledged on all hands that the rate at which the rise in the cost of living has to be neutralised may be uniform for all wage groups, but so far as the lowest paid workmen in any establishment is concerned, his wages have to be protected to the full extent if he is not to fall below the subsistence level, although the rates of neutralisation may differ and vary at a sliding scale as the incomes rise above the subsistence level.Before we proceed to comment upon the merits and demerits of the different methods of neutralising the rise in the cost of living, it is necessary to emphasis that we are undertaking this exercise with a good deal of apprehension in our mind since the path in not much lighted by a discussion on the point by many adjudicating authorities or the courts of law or the expert commission or committee. Our search for a guidance on the point did not yield much result since it appears that this question was hardly ever raised and specifically answered. The only exception to our aforesaid observation are the two reports, namely the Report of the Bhoothalingam Committee (1978) andformed by the Employees Federation of India (1978) (supra) and some observations in the decision of the Supreme Court reported in 1986(1) L.L.J. 520 (Monthly Rated Workmen of Indian Hume Pipe Co. Ltd. v. Indian Hume Pipe Co. Ltd.)1, and of the Patna High Court reported in 1987(1) L.L.J. 725 (Chhotanagar Chamber of Commerce, Singhbhum Chamber of Commerce and Industriesanother v. State of Biharanother )2. We are therefore, deeply aware of the limitation, and trade the path with a good deal of caution more so because it may have consequences beyond the parties before us. Our endeavour is to find out a formula which, while conforming to reality will also be consistent with the principles for the grant of dearness allowance to have been accepted over the years by the Courts and the expert Waged Boards. We must once again emphasises at the cost of repetition that the object of the formula that we are trying to evolve is only to find out whether there isunder a given existing system of payment of dearness allowance. The object is not to prescribe the method of neutralization for all purposes. That is beyond our scope. Hence it should not be construed that the method we adopt here has to be followed for other purposes as well, such as when as dearness allowance system is sought to be introduced for the first time, or a system less beneficial to the workmen is sought to be replaced or a separate set of service conditions are sought to be prescribed for new entrants, if permissible in law, etc.17. (i) As regards method A, its attraction to the employers lies undoubtedly in the fact that it is the least burdensome among the four methods. Its logic at first blush, appeals. Since it has all along been held that the purpose of dearness allowance is tothe rise in the cost of living, it is naive to suggest that the variable dearness allowance to be paid to the employees should maintain only the value of dearness allowance paid in the base year. This argument, however, ignores that the dearness allowance is paid in the base year to maintain the value of the basic wage of that year, the object of the dearness allowance being to protect the wage against the rise in the cost of living. The dearness allowance or the rate at which it is paid cannot be fixed and is not fixed independently of the basic wage. It is fixed on the basis of and in relation to it. Hence the dearness allowance cannot be divorced from the basic wage without making it unrealistic and negativing the very object for which it is paid. If, therefore, the dearness allowance is to serve its real purpose, the rate at which it is paid must constantly reflect the basic wage which it seeks to protect. The object is not achieved by this method, since it is designed only to protect the value of the dearness allowance paid in the base year. That is why, as the illustration given shows, as the cost of living index increases, it protects the basic wage in an inverse proportion. The method forgets that it is the basic wage and the dearness allowance taken together which protects the value of the basic wage in a given year.(ii) Method B avoids this error and also fulfils to a great extent the object of the dearness allowance. It constantly protects the value of the basic wage by taking into account not only the dearness allowance paid in the base year but also the basic wage. It has, therefore, the merit of maintaining the value of the total income constant in spite of the changes in the cost ofmust confess that we are unable to appreciate this contention because it presumes that the dearness allowance paid in the base year takes care of the value of the basic wage in that year against all future increase in the cost of living. Thus it ignores that the basic wage has to be protected against all increases in the cost of living and not only against the increase in the base year. The dearness allowance paid at a particular cost of living index protects the value of the basic wage only at that cost of living index. We may illustrate this by pointing out that on the basis of the figures which we have already assumed earlier, if the basket of the goods and services consumed by the worker had cost him Rs. 1100/in the base year, and if the price of that basket doubles, the C.P.I. having risen from 1,000 to 2,000, the worker will have spend Rs. 2,200/to buy it. However, if, according to the contention of the employer, it is not method B, but method A is to be employed, then in spite of the doubling of the price of the basket the worker would get only Rs. 2100/instead of Rs. 2,200/thereby reducing the value of his basic wage by about 4.7 per cent. If, on the other hand the value of the basic wage of Rs. 100/is to be maintained constant, the dearness allowance to be paid must protect the entire wage packet of Rs. 1,100/which has to be taken as the basic emolument of the base year. If this is done, then as shown in the illustration of the second method earlier, Rs. 2,100/will be payable as dearness allowance instead of Rs.which latter amount only tries to protect the value of the dearness allowance, and not of the total wage packet), and the total wage packet will be Rs. 2,200/which will maintain the value of the total wage packet of Rs. 1,100/in the base year. This method, according to us, does not neutralise the rise in the cost of living which is already neutralised but protects the value of the entire wage packet of the base year. The criticism forgets that it is the total wage packet of the base year which needs to be protected and not merely the dearness allowance of thatyear.This method is not flawless. The first defect it suffers from is the same from which method C i.e. the method suggested by the Boothalingam Committee may suffer. It presumes that the lowest wage in every establishment is a subsistence wage. It may or may not be so. It may be lower or higher than that. If it is lower, the payment of dearness allowance at the rate of neutralisation worked out on its basis will do injustice to the workman and if it is higher, the dearness allowance paid may neutralise the rise in prices ofIn the absence of a proper data and also in the absence of an agreed quantum of the subsistence wage, it is not possible to accept any particular quantum as a subsistence wage. The wages fixed under the Minimum Wages Act also cannot furnish us any guide in the matter, firstly, because they relate to the scheduled industries and secondly, they vary with categories of workman and from place to place and industry to industry. Thirdly, and this is the extended aspect of the first flaw, since the nature of the lowest paid wage cannot be so determined, the wages paid to the higher categories also defy description. Fourthly, the quantum of the subsistence wage does not remain static and keeps varying with the passage of time on account of severalthe basic wage nor the dearness allowance alone is capable or maintaining the real value of the basic wage paid to the workmen in the base year or the preceding year, as the case may be . With respect, therefore, we are unable to endorse the method adopted by the High Court in this case.23. It will thus be seen that, in so far as method A does not protect the value of the wage packet of the base year but only tends to protect the dearness allowance paid in that year, it does not fulfil the object for which dearness allowance is paid. What remains, therefore, for consideration are methods B and C. We have discussed the merits and demerits of these two methods earlier. A comparison between the two is now necessary to choose one of the two. Method C, as stated earlier, has the merit of protecting fully the total wage packet of the lowest paid workmen in the establishment. It also ensures the off setting of the rise in the prices of essential goods and services for all income groups, low or high. It further conforms to the other principle of fixation of dearness allowance, namely that the dearness allowance should be paid on a declining scale as the income rises since the amount of dearness allowance paid goes on tapering in terms of its percentage to the wages, as the incomes rise. The only defect pointed out in this method is that since a uniform amount of dearness allowance is paid to all the income groups, as the C.P.I. rises it tends to narrow the wage differentials and such narrowing down of the differential acts as disincentive to improved efforts and affects production and productivity, particularly of the skilled workers. As has been pointed out earlier, the National Labour Commission has countered this criticism by observing that the criticism assumes that the current differentials are justifiable on the grounds of productivity, and that our commitment to socialist pattern of society will not eventually abridge these distances. There is little justification for this assumption.There is no doubt that the system of uniform rate of dearness allowance is in the present circumstances an ideal one and as has been pointed out by Bhoothalingam Committee in paragraph 7.29 of Chapter VII of its report, this system is already prevalent in about 2/3rds of the public enterprises as also in cement and steel industries. However, the expert wage bodies and the courts have also held that if the system of payment of dearness allowance already prevalent in the establishment is more beneficial to the workmen, the same should not be disturbed unless there are compelling reason to do so.The introduction of the uniform rate of dearness allowance worked out on the basis of the total wage packet of the lowest paid workman, that is the unskilled workman in the establishment or on the basis of the lowest paid workman in the categories with which we are concerned namelyis admittedly bound to affect adversely the workmen in the higher wage income groups since under the existing system they get more amount as dearness allowance. There is also, as we will point out a little later, no compelling reason made out by the company for introducing a less beneficial system to the workmen.27. One of the grounds on which the learned Judge has justified the introduction of the new system is that the present systemthe rise in the cost of living. As pointed out earlier, the tribunal on this point has taken a contrary view and has held that on the admission of the Company made in the earlier adjudication proceedings, there was no such over neutralization effected by the existing system. The Companys contention is that admission was made erroneously and they are entitled to show that it was so. We have therefore, gone into the different calculations and tables produced by both the sides on this issue. For compiling the tables, year 1970 is taken as the base year by consent of the parties since the last meaningful revision of the wage structure was made by Chitale Award of 1974 with retrospective effect from 1970. Bhojwani Award which modified the maximum of the pay scales of each category as prescribed by Chitale Award was also made effective from 1979. Hence the following calculations are made with reference to the basic wage and the dearness allowance payable in 1970 and the cost of price index of thatwill thus be clear from the calculations produced by the two sides that whereas the company has calculated the rate of neutralisation by taking into account only the percentage increase in the dearness allowance over that paid in the base year, the Unions have calculated it by taking the percentage increase over the total wage packet paid in the base year. The company has thus used method A, while, the Unions have used method B discussed above. This, therefore, essentially is a difference in the methods of computing the neutralisation rate. Admittedly if method B is adopted, there is noas shown in the Unions calculations.28. For reasons, which we have already already discussed earlier, method A cannot be adopted to find out whether there isor not, since the neutralisation rate worked out by that method is only on the basis of the amount of dearness allowance paid. Method C again gives neutralisation rate only for the lowest wage packet in the establishment and cannot furnish a guideline to find out whether there isof the wage packets of all the grades and categories of the workmen. We are then left with only Method B which can furnish a true picture of neutralization, for this method works out neutralization for all grades and categories and shows us whether the existingunder neutralises the rise in the cost of living for each of them. The Unions calculations which are arrived at by this method give us the wage packets accordingly as compared to the one payable under the existing system and also the comparative neutralization of the cost of living under the existing system.29. It will thus be seen from the above calculations that, according to Method B, wage packets of the workman should be more both at minimum and maximum level of each grade of both the categories with which we are concerned here than what they get under the existing dearness system. Hence there is noof the increase in the cost of living under the existing system.30. It is further to be noted that the demand in the present case is not for replacing the existing dearness allowance system either by an uniform rate of neutralization or by the rate of neutralization worked out by Method B. The original demand is as mentioned in paragraph 7 above. What is now defended by the company is the Uniform rate of neutralization for the workmen drawing a salary of Rs. 500/and above as granted by the Tribunal. We have pointed out earlier that the award would effect in all 500 workmen and those who would be affected immediately would be 115. As against the total work force of 2.500 employees, the company seeks the introduction of the new system of payment of dearness allowance for this small section of its work force, because their basic salary exceeds Rs. 500/per month.31. It is now necessary to deal with the reasons which both the Tribunal and the learned Judge have given for replacing the existing system. As stated earlier, the Tribunal has negatived the contention of the company that the present systemthe cost of living, and in paragraph 33, it has observed that since the company had in its statement filed before the industrial Tribunal presided over by Shri Chitale had itself stated that the percentage of neutralization at the lowest category was 97.4% and at the highest at 86% there was no substance in the companys case ofWe have already pointed out above that, according to method B, the rate of neutralization in the present case does not exceed 100% for any of the categories. We have also given reasons as to why method B in the proper method to be adopted to find out the rate of neutralization.However, the learned Single Judge has come to the conclusion that there is aneffected by the present dearness allowance system . For this purpose he has relied on the companys statement showing the variations in the salary of the Metharu. That statement which is incorporated in the impugned judgement is, as the note shows, calculated by the method adopted by the Patna High Court in Chotanagpur case (Supra), which is more or less similar to method A discussed above. We have already pointed out the fallacy of the said method since it ignores the value of the basic wage paid in the base year, and determines the neutralization rate only on the basis of the dearness allowance paid in the base year. This is clear from what is stated in the judgement itself. The learned Judge has negatived the contention of the unions that the rate of neutralisation should be calculated on the basis of the total wage packet of the base year and has accepted the companys contention that is should be calculated on the basis only of the dearness allowance paid in the base year. If we are right, then, with respect, this is an error from which the impugned judgment suffers. Hence the learned Judges conclusion that the present system results inof the cost of living is notdoes, therefore, appear that one of the reasons which weighed with the Tribunal to replace the existing system is that it tends to neutralise the increase in the cost of living of the workmen in the pay slabs above Rs. 450/00 by more than 80% and that the said rate ofis considerably higher. The Tribunal has not given any reason why it has chosen to call it higher. There is no dispute that under the existing system the percentage of neutralisation goes on declining with the increase in the salary slabs. The Tribunal itself has accepted this fact in paragraphs 33 and 34 of the award. But the Tribunal has concluded that the tapering is not on a sufficiently declining scale because the percentage of neutralization of the higher income groups in the comparable concerns compared to that in the company has a steeper fall. This is obvious from the Tribunals discussion from paragraph 35 onwards. It is, therefore, necessary to examine the validity of thiscomparison, according to us, is faulty. In the first instance, admittedly neither TOMCO nor GODREJ nor COLGATE are comparable because of their smaller size. COLGATE is admittedly not in the industry, Secondly, there is no ceiling on payment of dearness allowance either in TOMCO or GODREJ and, thirdly, the Tribunal has not compared the other service conditions of the employees in TOMCO, GODREJ and COLGATE with those in the company. It is not rational to pick up only one of the several service conditions to compare it in insolation. Nor is it permissible to compare different concerns for different service conditions. The comparison must be with the total benefits in a comparable concerns. The Tribunal has thus fallen in an obvious error.33. The Tribunal has than relied on the so called trend of placing a ceiling on dearness allowance, and has for this purpose referred to the industrial awards in the case of Indian Huma Pipe Limited, Foto Engineering, Mazgaon Docks Limited, Hind Cycles and Voltas, Suffice it to point out that the Supreme Court has since reversed the award in Indian Huma Pipe Limited (Supra), and has made observations discouraging replacement of the existing system by a new system which deprives the workmen of the existing benefits, unless it is necessitated by compelling reason. The award in Mazgaon Docks Limited is in appeal. This is apart from the fact that neither of the concerns are comparable nor are the service conditions in them.34. The Tribunal has also referred to the repercussions on other industries in region if the companys demand for placing the ceiling on dearness allowance was not conceded. It is difficult to share this concern. In the first instance, there is no material on record to voice such concern. Whether a mere absence of ceiling on dearness allowance paid to the workmen would have an adverse repercussion on other industries is a matter of speculation in which, in the absence of sufficient material on record, no adjudicating body should indulge. Secondly, on the Tribunals own conclusion there was no other concern in the industry, much less comparable with the company. Thirdly, the Tribunal has lost sight of the fact that the existing system has worked in the company smoothly for over 50 years. Theof the company shows that the wage bill of the company does not exceed 5% of its total expenses even with the existing system. The Tribunal was not introducing the dearness allowance for the first time but was replacing the existing system by a new one. Fourthly, we are sure that the Tribunal is not oblivious to the fact that the present company being incomparable, the other concerns cannot be obliged to follow the dearness allowance system in the company irrespective of their financial conditions. Lastly, although the system has been in vogue in the present company for about 50 years no such repercussions as feared by the tribunal have ensued.The Tribunal has then rightly observed that the dearness allowance cannot be increased to approach the ideal of living wage. We are in complete agreement with these observations. The principles on which the wages are fixed are different from those on which dearness allowance is fixed, the purpose of the two beingmaking these observations and justifying the placing of ceiling on the rate of dearness allowance on the ground that it was going to increase the basic wages, the Tribunal has obviously forgotten what it has stated earlier, namely that the principles of fixation of wages should not be mixed up with the principles of fixing the dearness allowance. The Tribunal has thus fallen in an error which is apparent on the face of the record. It has fixed the ceiling on the rate of dearness allowance on a ground impermissible incannot, therefore, be any comparison between the wage packet of a senior workmen and the wage packet of a beginner executive. Unless, therefore, it is shown that a workmen with the same years of service gets salary more than an executive with the same number of years of service, it cannot be said that the case of distortions in wage structure is made out. Lastly, it is not enough that only the wage packets of the two are compared. The comparison has to be between the total service conditions of the two which should include also the value of the perquisites available to the executives. No such material was before the learned Judge, when he arrived at the said conclusion. It may be mentioned in this connection that the Tribunal has neither discussed the said ground nor has it placed the ceiling on dearness allowance on thatwill thus be apparent that the case of the Company before the Tribunal and the learned Judge (and since the same record was also before the learned Judge) was that the workmen and the officers were paid commensurate with their work and responsibility, and there was no question of compassion between the remuneration paid to the two. Hence the attempt now made before us to show that the wages of the clerical staff exceed those of the junior executive without producing the necessary documents to compare the total service conditions of the two, and without giving an opportunity to the workmen to test the said statement byis rightly objected to on behalf of the Unions and we must uphold the said objection.But even on merits we find that the statement produced by the Company compares the salaries of a few of the workmen involved in the present reference with a few of the Junior Departmental Supervisors ("JDS") and Senior Departmental Supervisors ("SDS") only Admittedly these posts were created by the Company only after the Chitale Award of 1974. The JDS and SDS earlier belonged tocategory involved in the present reference. They are, therefore, in fact workmen though the Company has chosen to classify them as supervisors to take them out of the Industrial Disputes Act. They admittedly belong tostaff. They are, therefore, not synonymous with junior and senior Executives. There are no SDS and JDS in the Head Office of the Company. They are only in the factory. Further, the employees incategory who are in the Andheri Establishment and to which the present Award is applicable consist also of scientists who cannot be said to be of a lower level than JDS and SDS. This is why the contention of the Unions that the Company has tried to compare the salaries of the workmen involved in the present reference with those only of the JDS and SDS and not of the other executives, assumes, importance. A legitimate inference can, therefore, be drawn that the wage packets of the workmen involved in the present reference do not exceed those of the executives properly so called in any case.38. The third reason given by the learned Judge for upholding the ceiling on the rate of dearness allowance is that the Tribunal has granted other benefits while placing the ceiling. The other benefits to which the learned Judge has made reference are the revision ofspecial allowance, social security allowance and ad hoc allowance, classification of workmen fromcategory, the extra wages for work on weekly or public holidays, meal allowance and dinner allowance etc. The learned Judge has also emphasised that tribunal has specifically mentioned that he had awarded these additional benefits keeping in view the fact that the he had put a ceiling on the dearness allowance.With respect to the learned Judge and the Tribunal we must point out that the considerations on which these benefits are granted, have nothing to do with the principles on which the dearness allowance is fixed and to the extent that both the Tribunal and the learned Judge have mixed up the two, both have fallen in the same error. It is also necessary to analyse the nature of these benefits to find out if they have any relevance to the ceiling on dearnesswill be seen that as far as Categorieswhich are going to be affected immediately by the ceiling on dearness allowance, the Tribunal has revised only the maximum of the scale keeping the initial salary and the increments in tact. It has to be remembered in this connection that the ceiling on the rate of dearness allowance is to operate on salaries above Rs. 500/and the revision of their maximum salary will give workmen benefit only when they reach the maximum at theof their service. But at that stage, they will also suffer a reduction in the dearness allowance which would have been available to them under the existing system. Thus what the Tribunal had done is to take away from one hand what it has given by the other and what is worse, what it has given is less than what the workmen would have got under the existing system with the existing pay scale. The benefits sought to be conferred on these workmen by the revised wage scale are thus not only illusory allowance viz. special allowance, social security allowance andalready given to the subordinate staff in the head office and branch office under the settlement dated December 2, 1983. The service conditions of the subordinate staff and the service conditions of the workmen involved in the present reference, namely those belonging to C and T categories of monthly rated staff were always uniform and the parity between the service conditions of the two which was maintained throughout, was first disturbed by settlement effected in 1979 between the Company and the hourly rated subordinate staff working in the Sewree Factory of the Company. The second occasion on which it was disturbed was in 1983 by the Settlement referred to above. There was no good reason to deny the same to the present workmen. What is more interesting to note is that the Tribunal itself has observed in paragraph 115 of the impugned Award that all these allowances were granted in lieu of the increase in the basic wages to avoid proportionate rise in bonus and retirement benefits of the workmen. Thus the allowance are nothing but contrivances to avoid an increase in basic salary to which the workmen were entitled. The Company has in fact saved the burden of the other benefits which would otherwise be calculated on the basis of the increased basic wages. To the extent, therefore, that both the Tribunal and the learned Judge have taken these allowance also into consideration for imposing the ceiling on dearness allowance, they have indeed committed anotherare afraid that it is not possible to support this reasoning. We have already pointed out above that there is nounder the existing system. We have also shown that the additional benefits granted to the workmen by way of revision of pay scales are illusory and the allowance concerned have in fact denied the workmen their legitimate dues. There is further no material to show that the workmen are earning more than the junior executives. What remains to be considering is whether the basic wages paid to the workmen are "much higher" than the subsistence wage. In the first instance, no such contention seems to have been raised before the Tribunal. There is also no material on record to support this observation. In fact, with the material at our command it is difficult to hold that the basic wage paid to the workmen is so above the minimum or subsistence level as to deny the protection of its entire value against the rise in the cost ofhave requoted these observations in this context to point out that assuming that there is material to show that the wages paid are much higher than the subsistence level, the are admittedly nowhere near the living wage. Hence all the reasons given by the learned Judge to justify the ceiling on the dearness allowance are insupportable both in law and on facts.40. What is, with respect further forgotten both by the Tribunal and the learned Judge is that the existing system of dearness allowance was introduced by the Thakore Award on 1952 as a package deal. This is clear from paragraphs 62 to 64 of that award. The Company had offered new grades on the basis of the revised scale of dearness which it had offered, continuing. The Union had made counter proposals for basic wages also on the basis of the said scale of dearness allowance offered by the Company. The Tribunal accepted the Companys offer of wage scales since it came to the conclusion that if the scales were to be accepted they should be adopted as a whole. Thus the present dearness allowance system was the one which was offered by the Company as far back as in 1952 and was accepted by the Tribunal as a part of the package. Since then as pointed out elsewhere there has been little change in wage scales except the one introduced in 1974 by Chitale Award which was slightly modified in 1977 by the Bhojwani Award. This, therefore, is also a strong circumstance against replacingare also vast disparities in the incomes of the workmen in the organised sector itself depending upon the concerns they work in. The incomes of the workmen in concerns such as the present one are described as high island groups and it was urged that in view of the low average earnings of the workmen all over the country high incomes to workmen of one or the other unit were not justified. This consideration should also weigh with the Court in upholding the ceiling on dearness allowance. The arguments ignores certain primary facts. In the first instance we are dealing here not with the basic wages but the dearness allowance which is meant to protect the basic wages. Even assuming that the basic wages paid are above the subsistence level, there is no data to show how much above they are and whether they are at the lower, middle or the higher level of the fair wage. The level of the basic wage at which the ceiling is sought to be fixed, viz. Rs. 500/can hardly be described as high. The consideration may become relevant while revising the basic wage structure, if it is shown that the proposed structure is quite out of proportion with the general level of income. Secondly, in the absence of a national income policy, it is neither proper nor practicable for the Courts to curb incomes only in one or the other establishment. It should not be forgotten that wage and salary earners do not form a major section of the society nor do wages and salaries form a major portion of the national income. So long as therefore the other incomes are not controlled or disciplined there is no justification for controlling only the wages and salaries. Thirdly, the moneys saved by a concern on account of the denial to its workmen the higher wage packet due to him, do not flow to any national fund for levelling up the incomes of the lower income groups elsewhere. They only add up to the coffers of the employer. The acceptance of the contention therefore does not serve its underlying purpose, assuming that is its purpose.In this connection it is necessary to remind that the Forth Pay Commission has accepted the need to protect the real incomes of the employees and has recommended 100% neutralization upto the basic pay of as high as Rs. 3,500/per month, 75% neutralization to those between Rs. 3,501/and Rs. 6000/and 65% to those drawing salaries above Rs.This was in June, 1986 and these recommendations have been implemented as pointed out earlier. The High Power Pay Committee, as stated earlier, has endorsed the said recommendations and has in terms observed that there is no justification for asking only the wage and salary earners to make sacrifices and that if equality of sacrifice is to be enforced for larger society purpose, there are other more rational ways of enforcing it than through the medium of inflation.42. To sum up the present dearness allowance system, as shown above, does not result inof the cost of living index at any level of the income group. It maintains a taperings scale though not a steeply declining one. The system also does not result in distortion of total incomes either of the workmen inter se or between the workmen and their superiors, namely, the executive staff. The Company does not plead any financial inability. Theformula does not warrant its replacement. There are no other compelling reasons why the existing system which is beneficial to the workmen should be replaced by the new one which is less beneficial to the them and which would result in steep decline in their incomes they would otherwise gain. It is well recognised principle of industrial adjudication that the Courts, Wage Bodies and the Industrial Adjudicators should not tinker with the existing benefit available to the workmen unless it becomes unavoidable and obligatory to do so. The Company has failed to make out any suchTribunal has granted automatic promotion on the ground that this benefit existed in the Company in the past but it was done away with at the time of the settlement in 1961 whereunder the scales of pay were merged and extended. The Tribunal has further held that a long time had elapsed since then and since in some other companies such as PHILIPS, JOHN WYETH, there was a practice of giving automatic promotions, the demand was justified in the present case also. The Tribunal has further held that the span of wage scales revised by the impugned Award was about 22 years and many employees would get at least one promotion in the course of their services. There would thus be very few employees who would reach the maximum of the pay scale and yet would not get any promotion. Hence such employees deserved one automatic promotion in the higher grade. The Tribunal has, therefore, granted the demand for one automatic promotion on reaching the maximum of scale only if the employee has not received any promotion in the course of his service. The Tribunal has further held that since the demand for automatic promotion was accepted by it, there was no justification for a demand for stagnation increment, the supporting reasons for which were the same.The learned Judge has reserved the finding of the Tribunal and has held that the automatic promotion was not justified since it would undermine merit and lead to frustration amongst the meritorious workers. The learned Judge has, however, held that instead of automatic promotion what was justified was the stagnation increment, since grant of such increment did not suffer from the vice suffered by automatic promotion. Since the demand was made only on behalf of these from the head office specifically, by consent of the Company, the learned Judge has granted stagnation increment both to the workers from the head office as well as from the factory as per the demand quoted above.While the Unions have made a grievance against the setting aside of the Tribunals Award granted automatic promotion, the Company has made a grievance against the grant of stagnation increment. We are not inclined to interfere with the order of the learned Single Judge in that behalf for the following reasons. It is true that the practice of granting automatic promotion was prevalent in the Company prior to 1961 and it is also prevalent in some other concerns at present. We do not have enough material before is to know in what circumstances such promotion is granted in the other concerns. Besides, the practice was stopped under a settlement in 1961 because the pay scales were merged and also extended. It therefore appears to be a package deal. Secondly, on principle we can hardly find fault with the reasoning of the learned Judge. Promotions are normally granted on the basis of the performance. Automatic promotion would therefore undermine the very raison deter of promotion. There will be hardly any incentive left to put in good performance if the promotion are taken for granted, whatever the nature of the performance. Instead, what was in the circumstance necessary was a monetary compensation in the nature of increments which the learned Judge has rightly granted. The Company has made a grievance against it only because the workmen have challenged the rejection of their demand for automatic promotion. Even new pay scale which are granted by the Tribunal do not cover more than 22 years of the employees service. Unless therefore, a workman is promoted to a higher grade in the meanwhile he is bound to stagnate for a number of years after reaching the maximum. This will undoubtedly have an unhealthy effect on his further performance. To remain at the same salary packet for a number of years, particularly at the advanced stage in life, when family commitments also increase, is not conducive to the good performance of the workman. It is, therefore, both in the interests of the welfare of the workmen as well as in the larger interests of the Company that some additional incentive in the form of stagnation increments is granted to the workmen. We, therefore, find no justification in the grievance of the Company in that behalf. Hence we maintain the order of the learned Single Judge rejecting the demand for automatic promotion and granting the demand of stagnationdemand is sought to be justified on the ground that there was a paucity of housing accommodation and the prices of accommodation have been soaring out of proportion and that the loan facility was available to the management personal. The company opposed this demand on the ground that the service conditions of management personal cannot be taken into consideration while fixing the service conditions of the workmen. The Company also pointed out that even for the workmen involved in the reference, at present there is a facility of housing loan equal to the amount of gratuity of their credit.Before us the workers have modified their demand. They state that they would be satisfied if the loan advanced to them for the purpose is equal to the gratuity on the modified scale which is admittedly more than the gratuity which was available to them when the earlier agreement with the Sabha, (i.e. one of the Unions involved), was entered into with regard to the housing loan. The Company tried to contend that when that agreement was entered into, it was so done because the gratuity amount at that time was less than what is payable today. We are unable to understand this argument, which can only be described as cussed. The loan amount is linked to the gratuity for an obvious reason. In any case, a workman would be entitled to gratuity on his retirement as a matter of right if he is otherwise not disqualified. The disqualification further extends only upto the amount of the loss caused to the employer. Hence what would be payable to him at the end of his service can be paid to the workman in advance as a loan with interest. If this facility is available today upto the amount equivalent to the gratuity on the old scale there is no reason why it should not be extended to cover the increased amount. Hence we set aside the Award as well as the order of the learned Judge, in so far as they have rejected the said demand and direct the Company to give housing loan to the workmen (in the head office whose behalf alone the demand is raised) equivalent to the gratuity payable to the workmen on the present scale or on he scale on which it may become payable from time to time on the same conditions on which it is given under the existinghave already discussed them in the context of the dearness allowance and have pointed out, as indeed the Tribunal has also done, that the workmen were entitled to them even otherwise since they were granted to the subordinate staff under the settlement of December 2, 1983. The service conditions of the subordinate staff and the workmen involved in the reference have always been uniform. The parity between them was disturbed for no reason in 1979 and 1983, and all that the Tribunal has done, by awarding the said allowances is to resote it. The more important aspect of these allowance is that they were granted in lie of the increase in the basic wages to save the financial burden on the Company resulting from the computation of other benefits on the basis of the basic wage, had an equivalent addition been made to the basic wages. The Company could not dispute this position. We are, therefore, unable to appreciate the resistance of the Company to these allowances.We have already pointed out earlier the nature of the revision in pay scales granted by the Tribunal. The wage scales were first revised in 1974 by the Chitale Award. They were slightly revised in 1977 by the Bhojwani Award by increasing the maximum of the scale of each of the category. As the Tribunal has itself observed since 1977 the cost of living index had increase more than double from 1400 to 2900 in December, 1985 which is the date of thehave already held above that there is no case made out for changing the existing system of dearness allowance and if, therefore, the existing system of dearness allowance is to continue then it is not disputed that the revised wage scales would further add proportionately to the wage packets of all the workmen.48. We have commented upon the approach of the Tribunal and the learned Judge by observing that to the extent that they havethe considerations for increasing the wage scale with those for fixing the dearness allowance, they have committed on error apparent on the face of the record. It cannot also be gainsaid that one of the main considerations, which has weighed with the Tribunal, while introducing the revisedis that it was introducing the ceiling on dearness allowance, for those earning salary above Rs. 500/per month. In fact, as pointed out earlier what the Tribunal has done is to give by way of some increase in the maximum of the pay scale, particularly to those in category4, what it has taken away from them by reduction in dearness allowance. Thus both the revision of salary and introduction of the new dearness allowance system are interlinked. Since we are setting aside the award with regard to the dearness allowance and directing the continuation of the existing dearness allowance system, it is only fair that we remand the matter to the Tribunal to consider the case for revision of wage scales afresh independently and irrespective of the change in the dearness allowance system which was proposed by it. We are aware that this would involve prolongation of the litigation between the parties. But in the circumstance it is unavoidable. We, therefore, set aside the award with regard to the revision of wage scales and remand the demand of the workman for the revision of wage scales to the tribunal for fresh consideration in the light of what we have stated hereinabove.
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and the ad hoc allowance granted by the Tribunal and confirmed by the learned Judge. We have already discussed them in the context of the dearness allowance and have pointed out, as indeed the Tribunal has also done, that the workmen were entitled to them even otherwise since they were granted to the subordinate staff under the settlement of December 2, 1983. The service conditions of the subordinate staff and the workmen involved in the reference have always been uniform. The parity between them was disturbed for no reason in 1979 and 1983, and all that the Tribunal has done, by awarding the said allowances is to resote it. The more important aspect of these allowance is that they were granted in lie of the increase in the basic wages to save the financial burden on the Company resulting from the computation of other benefits on the basis of the basic wage, had an equivalent addition been made to the basic wages. The Company could not dispute this position. We are, therefore, unable to appreciate the resistance of the Company to these allowances.46. The next grievance of the Company is against the revision of the wage scales. The contention is that in view of the existing total wage packet, when in fact there was a need for a ceiling on dearness allowance, the revision of the wage structure was unjustified. It was also submitted that the tribunal had not granted the entire demand of the company in respect of the dearness allowance. The Tribunal had conceded the demand only partially. It was further submitted that in any case the tribunal had granted the revision in wages because it had placed the ceiling on the rate of dearness allowance payable to workmen drawing basic salary above Rs. 500/- a month. If the ceiling introduced by the Tribunal is to be done away with at the instance of the workmen, there is no justification for retaining the revised wages. That would place the Company in a double jeopardy in that while it will lose whatever advantage it has gained due to the introduction of the ceiling on dearness allowance, the revised wage structure would entail further burden on it, under the existing system of dearness allowance.47. We have already pointed out earlier the nature of the revision in pay scales granted by the Tribunal. The wage scales were first revised in 1974 by the Chitale Award. They were slightly revised in 1977 by the Bhojwani Award by increasing the maximum of the scale of each of the category. As the Tribunal has itself observed since 1977 the cost of living index had increase more than double from 1400 to 2900 in December, 1985 which is the date of the award. According to the Tribunal, the workmen were, therefore, justified in claiming the revision. The Tribunal has also then added as follows :"Apart from that, I have fixed the ceiling on dearness allowance. As such also it is necessary to revise the basic wages payable to the workmen. The basic wages payable to workmen in TOMCO are more at least at the maximum and, it is, therefore, necessary to increase the maximum basic wage scale in each category of workmen."The Tribunal has given a third reason for increasing the basic wages in the same paragraph 53 of the award, when it has observed that besides the aforesaid two reasons, at least in some categories of hourly rated workmen, the Company had increased their basic wages either at the minimum or at the maximum level. The Tribunal has then gone on to observes as follows:"I therefore, find that it would be just to increase the minimum wages of C-1, C-2 and T-1, T-2 by one increment. As the ceiling on dearness allowance is imposed at the basic salary of Rs. 500/-, any increase in basic wages above Rs. 500/- would not be saddled with a further increase in the dearness allowance. Considering all these facts. I revise the wage scales as follows."We have already held above that there is no case made out for changing the existing system of dearness allowance and if, therefore, the existing system of dearness allowance is to continue then it is not disputed that the revised wage scales would further add proportionately to the wage packets of all the workmen.48. We have commented upon the approach of the Tribunal and the learned Judge by observing that to the extent that they have mixed-up the considerations for increasing the wage scale with those for fixing the dearness allowance, they have committed on error apparent on the face of the record. It cannot also be gainsaid that one of the main considerations, which has weighed with the Tribunal, while introducing the revised pay-scale is that it was introducing the ceiling on dearness allowance, for those earning salary above Rs. 500/- per month. In fact, as pointed out earlier what the Tribunal has done is to give by way of some increase in the maximum of the pay scale, particularly to those in category C-3, C-4 and T-3 and T-4, what it has taken away from them by reduction in dearness allowance. Thus both the revision of salary and introduction of the new dearness allowance system are interlinked. Since we are setting aside the award with regard to the dearness allowance and directing the continuation of the existing dearness allowance system, it is only fair that we remand the matter to the Tribunal to consider the case for revision of wage scales afresh independently and irrespective of the change in the dearness allowance system which was proposed by it. We are aware that this would involve prolongation of the litigation between the parties. But in the circumstance it is unavoidable. We, therefore, set aside the award with regard to the revision of wage scales and remand the demand of the workman for the revision of wage scales to the tribunal for fresh consideration in the light of what we have stated hereinabove.

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the grievance of the Company in that behalf. Hence we maintain the order of the learned Single Judge rejecting the demand for automatic promotion and granting the demand of stagnationdemand is sought to be justified on the ground that there was a paucity of housing accommodation and the prices of accommodation have been soaring out of proportion and that the loan facility was available to the management personal. The company opposed this demand on the ground that the service conditions of management personal cannot be taken into consideration while fixing the service conditions of the workmen. The Company also pointed out that even for the workmen involved in the reference, at present there is a facility of housing loan equal to the amount of gratuity of their credit.Before us the workers have modified their demand. They state that they would be satisfied if the loan advanced to them for the purpose is equal to the gratuity on the modified scale which is admittedly more than the gratuity which was available to them when the earlier agreement with the Sabha, (i.e. one of the Unions involved), was entered into with regard to the housing loan. The Company tried to contend that when that agreement was entered into, it was so done because the gratuity amount at that time was less than what is payable today. We are unable to understand this argument, which can only be described as cussed. The loan amount is linked to the gratuity for an obvious reason. In any case, a workman would be entitled to gratuity on his retirement as a matter of right if he is otherwise not disqualified. The disqualification further extends only upto the amount of the loss caused to the employer. Hence what would be payable to him at the end of his service can be paid to the workman in advance as a loan with interest. If this facility is available today upto the amount equivalent to the gratuity on the old scale there is no reason why it should not be extended to cover the increased amount. Hence we set aside the Award as well as the order of the learned Judge, in so far as they have rejected the said demand and direct the Company to give housing loan to the workmen (in the head office whose behalf alone the demand is raised) equivalent to the gratuity payable to the workmen on the present scale or on he scale on which it may become payable from time to time on the same conditions on which it is given under the existinghave already discussed them in the context of the dearness allowance and have pointed out, as indeed the Tribunal has also done, that the workmen were entitled to them even otherwise since they were granted to the subordinate staff under the settlement of December 2, 1983. The service conditions of the subordinate staff and the workmen involved in the reference have always been uniform. The parity between them was disturbed for no reason in 1979 and 1983, and all that the Tribunal has done, by awarding the said allowances is to resote it. The more important aspect of these allowance is that they were granted in lie of the increase in the basic wages to save the financial burden on the Company resulting from the computation of other benefits on the basis of the basic wage, had an equivalent addition been made to the basic wages. The Company could not dispute this position. We are, therefore, unable to appreciate the resistance of the Company to these allowances.We have already pointed out earlier the nature of the revision in pay scales granted by the Tribunal. The wage scales were first revised in 1974 by the Chitale Award. They were slightly revised in 1977 by the Bhojwani Award by increasing the maximum of the scale of each of the category. As the Tribunal has itself observed since 1977 the cost of living index had increase more than double from 1400 to 2900 in December, 1985 which is the date of thehave already held above that there is no case made out for changing the existing system of dearness allowance and if, therefore, the existing system of dearness allowance is to continue then it is not disputed that the revised wage scales would further add proportionately to the wage packets of all the workmen.48. We have commented upon the approach of the Tribunal and the learned Judge by observing that to the extent that they havethe considerations for increasing the wage scale with those for fixing the dearness allowance, they have committed on error apparent on the face of the record. It cannot also be gainsaid that one of the main considerations, which has weighed with the Tribunal, while introducing the revisedis that it was introducing the ceiling on dearness allowance, for those earning salary above Rs. 500/per month. In fact, as pointed out earlier what the Tribunal has done is to give by way of some increase in the maximum of the pay scale, particularly to those in category4, what it has taken away from them by reduction in dearness allowance. Thus both the revision of salary and introduction of the new dearness allowance system are interlinked. Since we are setting aside the award with regard to the dearness allowance and directing the continuation of the existing dearness allowance system, it is only fair that we remand the matter to the Tribunal to consider the case for revision of wage scales afresh independently and irrespective of the change in the dearness allowance system which was proposed by it. We are aware that this would involve prolongation of the litigation between the parties. But in the circumstance it is unavoidable. We, therefore, set aside the award with regard to the revision of wage scales and remand the demand of the workman for the revision of wage scales to the tribunal for fresh consideration in the light of what we have stated hereinabove.
