# 46G PRECISION BEARINGS INDIA LTD v. BARODA MAZDOOR SABHA AND ANR

- **Citation:** [1978] 2 S.C.R. 466
- **Court:** Supreme Court of India
- **Decided:** 1977-12-16
- **Case number:** Civil Appeal No. 9 of 1977
- **Bench:** V. R. Krishna Iyer, P. K. Goswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/46g-precision-bearings-india-ltd-v-baroda-mazdoor-sabha-and-anr-7398
- **Pages:** 5

## Headnote

Industrial Dispute-Award not covered by the reference n1ust be quashed--
Rei·ision of dearness alluwunce-Additional financial burden l~·hich revision of
dearness allowance would impose upon the employer and his ability to bear
such burden are relevant considerations.
One of the five principles laid down by this Court, in Bengal Chemical &
Pharn1aceur;cal Works Ltd. v. Its work1nen [1969] 2 S.C.R. 113, for consider~
ing a revision of dearness allowance, is the additional financial burden which
dearness allowance would impose upon the employer and his ability to
bear
such burden.
•
In its charter of demands, the respondent workmen Union made specific
de111ands viz.; (i) that the existing minimum dearness allo\vance of Rs.
146/-
be modified and that all the workers incJuding workers known as staff should
be paid minimum dearness allowance at the rate of full dearness
allowance
that is being paid to textile workers at Ahmedabad i.e. 100% of Ahmedabad
Textile rate and (ii) with the above minimum dearness allowance, they should
be further continued the higher dearness allo\vance of 40o/o plus Ahmedabad
Textile D.A. for those in the pay range of Rs. 100-200 and 20% plus Ahmedabad Textile D.A. for those in the pay- range of above Rs. 200 /-. The dispute was referred by the Government in the form viz. "All workmen should
br paid dearness allowance at the rate of 10090 dearness allo\vance paid to the
workers of the Cotton Textile Mills, at Ahmedabad". The Tribunal, however,
granted over and above· the 100% Ahmedabad Textile D.A., varying percentages fron1 80o/o to 89% phased in a particular way.
,L\llowing in part, the appeal by special leave the Court.
HELD : lt is true that in considering the question of dearness1 allowance the
capacity of the Company to pay is one of the most important considerations.
In the instant case (a) in view of the fact that although a substantial sum
was kept as reserve towards the replacement costs only a fraction of it was
utilised. the company therefore cannot make any grievance about the award
that this could be done in a phased manner. The Tribunal has exhaustively
gone into the n1atter with care and kept in view the five principles in Bengal
Chentical & Pharmaceutical Works Ltd. v. Its Work~nen [19691 2 S.C.R. 113;
(b) The Tribunal in view of the content of the dispute referred to it had no
jurisdiction in this reference to grant anything more than lOOo/o of the Ahmedabad Textiles D.A. on the outside.
Since the Tribunal, after having
given
appropriate con-sideration to a11 aspects of the matter granted
varying
percentages from 80% to 89o/o phased in a particular way, it had virtually reJected
the Union's claim for 100% of the Textile D.A.
Having done so, there was
no scope for allowing to the higher brackets of wage earners in addition 40o/o
and 20% of basic wages, as dearness allowance.
[468C, G-H, 469G-H]
Obiter:
Social justice perspectives being integral to
industrial
jurisprudence
the
high cost allowance as a component of D.A, is not impermissible in principle.
rt is a legitimate item.
Indeed in the instant case, the lowest bracket
upto
Rs. 100/- needed full neutralisation of the rise in the cost of living. Such a
H
dispute may well be referred by Govenment, if it considers fit, and the decision in this case will not bar such a cause.
(470C-D]
Killick Nixon Ltd. v. Killick & Allied Conipanies Employees Union [1Q75]
Supp. S.C.R. 453 refrned to.
/
PRECISION BEARINGS LTD. v. MAZDOOR SABHA (Goswami, J.) 467

## Text

A
B
c
D
E
F
G
46G
PRECISION BEARINGS INDIA LTD.
v.
BARODA MAZDOOR SABHA AND ANR.
December 16, 1977
[V. R. KRISHNA IYER AND P. K. GOSWAMI, JJ.j
Industrial Dispute-Award not covered by the reference n1ust be quashed--
Rei·ision of dearness alluwunce-Additional financial burden l~·hich revision of
dearness allowance would impose upon the employer and his ability to bear
such burden are relevant considerations.
One of the five principles laid down by this Court, in Bengal Chemical &
Pharn1aceur;cal Works Ltd. v. Its work1nen [1969] 2 S.C.R. 113, for consider~
ing a revision of dearness allowance, is the additional financial burden which
dearness allowance would impose upon the employer and his ability to
bear
such burden.
•
In its charter of demands, the respondent workmen Union made specific
de111ands viz.; (i) that the existing minimum dearness allo\vance of Rs.
146/-
be modified and that all the workers incJuding workers known as staff should
be paid minimum dearness allowance at the rate of full dearness
allowance
that is being paid to textile workers at Ahmedabad i.e. 100% of Ahmedabad
Textile rate and (ii) with the above minimum dearness allowance, they should
be further continued the higher dearness allo\vance of 40o/o plus Ahmedabad
Textile D.A. for those in the pay range of Rs. 100-200 and 20% plus Ahmedabad Textile D.A. for those in the pay- range of above Rs. 200 /-. The dispute was referred by the Government in the form viz. "All workmen should
br paid dearness allowance at the rate of 10090 dearness allo\vance paid to the
workers of the Cotton Textile Mills, at Ahmedabad". The Tribunal, however,
granted over and above· the 100% Ahmedabad Textile D.A., varying percentages fron1 80o/o to 89% phased in a particular way.
,L\llowing in part, the appeal by special leave the Court.
HELD : lt is true that in considering the question of dearness1 allowance the
capacity of the Company to pay is one of the most important considerations.
In the instant case (a) in view of the fact that although a substantial sum
was kept as reserve towards the replacement costs only a fraction of it was
utilised. the company therefore cannot make any grievance about the award
that this could be done in a phased manner. The Tribunal has exhaustively
gone into the n1atter with care and kept in view the five principles in Bengal
Chentical & Pharmaceutical Works Ltd. v. Its Work~nen [19691 2 S.C.R. 113;
(b) The Tribunal in view of the content of the dispute referred to it had no
jurisdiction in this reference to grant anything more than lOOo/o of the Ahmedabad Textiles D.A. on the outside.
Since the Tribunal, after having
given
appropriate con-sideration to a11 aspects of the matter granted
varying
percentages from 80% to 89o/o phased in a particular way, it had virtually reJected
the Union's claim for 100% of the Textile D.A.
Having done so, there was
no scope for allowing to the higher brackets of wage earners in addition 40o/o
and 20% of basic wages, as dearness allowance.
[468C, G-H, 469G-H]
Obiter:
Social justice perspectives being integral to
industrial
jurisprudence
the
high cost allowance as a component of D.A, is not impermissible in principle.
rt is a legitimate item.
Indeed in the instant case, the lowest bracket
upto
Rs. 100/- needed full neutralisation of the rise in the cost of living. Such a
H
dispute may well be referred by Govenment, if it considers fit, and the decision in this case will not bar such a cause.
(470C-D]
Killick Nixon Ltd. v. Killick & Allied Conipanies Employees Union [1Q75]
Supp. S.C.R. 453 refrned to.
/
PRECISION BEARINGS LTD. v. MAZDOOR SABHA (Goswami, J.) 467
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9 of 1977.
Appeal by Special Leave from the Award of the Industrial Tribunal,
Gujarat dated 8th October, 1976 in Reference No. 11 of_ 1975., published in the Gazette Part 1-L dated November 11, 1976.
H. R. Gokhale, A. P. Hathi and As/wk Grover for the Appellant.
R. K. Garg, P. H. Parekh, Miss Manju Jetley aoo K. Vasudev for
Respondent No. 1.
The Judgment of the Court was delivered by
A
B
Gosw4MI, J.-This appeal by special leave is directed against the
award of the Industrial Tribunal, Gujarat, of October 8, 1976.
Although it is a composite award disposing of two references by the
State Government we are concerned in this appeal with Reference
C
(IT) No. 11 of. l975 as per the State Government notification of
January 21, 1975 and even out of the two questions referred to therein only with regard to one of these regarding dearness allowance.
"·
The relevant issue which arises for consideration in this appeal
may be quoted below :
"All workmen should be paid dearness allowance at the
rate of 100% dearness allowance paid to the workers of the
Cotton Textile Mills at Ahmedabad".
Before we advert to the submission of Mr. H.R. Gokhale, appearing on behalf of the appellant, it will be appropriate to indicate that
there is no dispute about granting of dearness allowance of the pattern
of what is known as the Ahmedabad Textile D.A.
The question to
be detennined by the Tribunal was only with regard to the percentage·
.of the Textile D.A. to be paid to the employees of the company.
The Tribunal has noticed that-
"the recent trend in the several industries-textile,
engineering and others, in Ahmedabad, Baroda and in some
other parts of-the State of Gujarat, is to make a demand for
dearness allowance on the lines of the dearness allowance
paid to the workers of the cotton textile mills at Ahmedabad,
with a varying percentage".
The Tribunal describes this as what in ordinary parlance is calbl
the "Textile D.A." and reckons it "as before the revision of
lhe
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basic wage in the mills prior to 1-1-1974".
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The company is manufacturing high precision ball and roller bearings in collaboration with a West German company.
It has its plant
in the district of Baroda with a manufacturing capacity of 24 lakb
pieces of bearings per annum upto 1973 and 28.82 lakh pieces p~r
annum from 1974.
The company was incorporated in April, 1962
and went into commercial production from June 1965.
Its registered
{)f!i.ce is in Bombay and has its sales offices in Bombay, Calcutta, Delli,
-and Madras.
The plant is being operated almost to full capacity from
June 1965 onwards.
The production has also increased progressively.
H
468
SUPREME COURT REPORTS
(1978] 2 S.C.R.
A
The number of workers on 31-8-1974 was about 630.
The company
is said to be the third largest unit in the ball bearing industry in the
country-the other two concerns being Antifriction Bearings and the
Associated Bearings, the next one to the company being Shriram Bearmgs.
Two questions are raised before us by Mr. Gokhale.
Counsel is
B
conscious of his limitations in an appeal by special leave under Article
c
D
E
F
G
H
13 6 of the Constitution and has, therefore, fairly enough confined hi>
!-
submissions within narrow bounds and we fully appreciate this stand.
The first submission of Mr. Gokhale in the forefront of his argument
is that the Industrial Tribunal has failed to consider the impact of the
rise in dearness allowance granted by it on the financial capacity of
the appellant to bear the burden.
It is true that in considering the question of dearness allowance
the capacity to pay of the company is one of the most important considerations.
Mr. Gokhale has pointed out that the additional liability
as a result of the award! would be Rs. 8,29,312 in 1975, Rs. 7,42,563
in 1976 and Rs. 12,42,395 in 1977 and the percentage increase over
the annual wage biH will respectively be 36.76%, 32.91 % and 55.07%
for the said three years.
He bas also pointed out that tke company
was able to declare 8% dividend for the first time in the year 1970-71
and had been incurring loss for the earlier years from 1962-63. He
also points out that although dividends
have been
progressively
increasing from 8% to 12%, from 1970-71 to 1974-75, only 8%
dividend was deolared in the year 1975-76. Besides, the company has to
spend huge sums for replacement costs which, according to counsel, the
Tribunal has not properly taken into account. It is true that the
Tribunal has mentioned in the award that this could be done in a
phased manner.
Mr. Gokhale submits with some justification
that
this was purely a manageme.nt function and the Tribunal should have
taken the figures as furnished by the management in making reserves
for replacement costs.
We have, however, seen that although a subs-
. tantial sum was kept as reserve towards the replacement costs, only
a fraction of it was actually utilised.
The company, therefore, cannot make any grievance about the manner in which the Tribunal has
dealt with this aspect.
Mr. Garg, on behalf of the respondents, also
drew our attention to paragraph 4 of the company's written statement
{page 62, Volume 1) where after having referred to certain offers
made by it the company was prepared to the "increase of about Rs. 15
lacs in the employee cost in the very first year ...... ".
We find that th·' Tribunal has exhaustively gone into the whole
matter with care and kept in view th~ five principles laid down by this
Court in the Bengal Chemical & Pharmaceutical Works Ltd. v.
Its
Workmen('), the 5th one being additional financial burden which
dearness allowance would impose upon the employer and his ability to
bear such ~urden. We are nnable to find any infirmity in the Tribunal dealing with the point of the financial capacity of the employer
to bear the burden. Tue, Tribunal finally observed as follows :- ·
(I) [1969] 2 S.C.R. 113.
_, ..
PRECISION BEARINGS LTD. v. MAZDOOR SABHA (Goswami, 1.)469
"On a careful consideration of all the relevant factors,
in my opnion, the dearness allowance paid to the PB! (Precision Bearings India) workmen at the minimum level of
basic pay from Rs. 26-upto Rs. 100-should be from 80
per cent, of the textile D.A. to 89 per cent, of the textile
D.A.
phased over a period of three years.
The dearness
allowance in the higher pay scale of Rs. 101-to Rs. 200--
should be 40 per cent and in the still higher slab of Rs. 201
and above, should be 20 per cent, the percentage for the
higher two slabs remaining the same".
The 40 per cent and 20 per cent of the basic wages in the higher
slabs were in addition to the Ahmedabad Textile Dearness Allowance. granted in the award.
This takes us to the second objection of
Mr. Gokhale.
It is submitted that in the charter of demands of the union there
were two specific demands with regard to dearness allowance. These
were as follows :-
1 : 1. It is demanded that ·the existing minimum dearness
allowance of Rs. 146/- should be modified and that all the
workers including workers known as staff should be paid
minimum dearness allowance at the rate of full dearness
allowance that is being paid to Textile workers at Ahmedabad, i.e. 100% of Ahmedabad Textile rate.
1 : 2 With the above minimum dearness allowance the
workers and workers known as staff should be further continued the higher dearness allowance as underBelow Rs. 100 pay-100% Ahmedabad Textile Dearness
Allowance.
Pay range between Rs. 100 to Rs .. 200-100% Ahmedabad
Textile DA+40 % of basic
Pay above Its. 2001--100% Ahmedabad Textile
DA+
20%+ of basic."
Even though the demand for dearness allowance was as above, the
State Government referred the dispute only in the form set out at the
outset.
The Government did not entertain the claim of dearness allowance in addition lo the 100% D.A. paid to the workers of the
cotton textile mills at Ahmedabad.
In other words, while the claim
Of th_e union was Ahmedabad Textile D.A. plus, the Government did
not entertain the dispute between the parties in that form.
We find
great force in the above submission of Mr. Gokhale.
The Tribunal
in view of the content of the dispute referred to it had no jurisdiction
in this reference to grant anything more then 100% of the Ahmedabad Textile D.A. on the outside.
Since the Tribunal after having
given appropriate ccmsideration to all aspects of the matter granted
varying percentage from 80% to 89% phased in a particular way, it
had virtually rejected. the union's claim for 100% of the Textile D.A.
Having done so, there was no scope for allowing to the higher brackets
of wage earners in add;tion 40% and 20% df basic wages as dearness
A\
F
Hl
.A
B
. c
.D
E
470
SUPREME COURT REPORTS
(1978] 2 S.C.R.
allowance.
This part of the award is, therefore, beyond the scope of
the reference and must be quashed which we hereby do.
H the
Government at a future time intends to entertain a dispute of this
nature with regard to higher brackets of wage earners that will be a
different dispute but such a claim could not be entertained by
the
Tribunal in the present reference ..
We may observe that during the course of the proceedings before
the Tribunal the clerical and the supervisory staff seem to have withdrawn from the reference and even an application was filed by some
of them before the Tribunal te confine the dispute as pertaining to the
manual and technical workers.
The Tribunal, however, did not accede
to this request and proceeded on the footing that all the members of
the staff were included in the reference .
We should not be taken to suggest that the 40'7<: and 20~[ plus is
either wrong or excessive by way of high cost allowance.
Indeed.
we even felt that the lowest bracket upto Rs. 1001- needed full neutralisation of the rise in the cost of living as has been held in
Killick
Nixon Limited v. Killick & Allied Companies Employees c;,,hn. C')
Nor do we fail to see the force of Shri Garg's submission that social
justice perspectives being integral to industrial jurisprudence, the high
cost allowance as a component of D.A. is not impermissible in principle.
It is a legitimate item.
But we disallow because there is
a ·
deliberate omission to make a reference of that item and so falls outside the jurisdiction of the tribunal.
That is why we have expressly
observed that such a dispute may well be referred by Government,
if it considers fit, and this decision will not bar such a course.
In the result the appeal is partly allowed.
The award of the Tribunal with regard to the 40% and 20% for the higher two slabs is set
aside.
In all otper aspects the award .of the Tribunal stands.
The
appeliant will pay the costs (one set) of the respondents as ordered
at the time of granting the special leave and will also pay interest as
ordered therein.
The arrears calculated in terms of the Award now upheld will be
paid to the respondents in two equal instalments, the first instalment
within three months from today and final instalment within three
months thereafter.
S. R.
Appeal partly allo1ved.
ti) ['9751 Supp. S.C.R. 453.
" •