# • • v. ITS WORKMEN

- **Citation:** [1969] 2 S.C.R. 113
- **Court:** Supreme Court of India
- **Decided:** 1968-09-16
- **Case number:** Civil Appeals Nos. 660 and 811 of 1966
- **Bench:** J. M. Shelat, V. Bhargava, C. A. Vaidial!Ngam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/v-its-workmen-4557
- **Pages:** 18

## Headnote

Industrial Dispute-Revision of dearness
allowance-Gratuity-Age
of superannuation-Principle for.
In 1954 the Bengal Chemical and Pharmaceutical Works Ltd. entered
into an agreement with its workmen about dearness allowance.
In 1957
dearness a!lowanee was again fixed by an award of the Fifth Industrial
Tribunal, Bengal on the basis of the cost of living index in May 1957
which stood at 400.6.
The company as well as the workmen ·appealed
against the said award to this Court.
The company's appeal was dismissed and the workmen did not press their appeal.
On January 6,
1962
there was a fresh settlement between the company and the
workmen
whereby dearness allowance was raised by Rs. 3.
On a fresh industrial
dispute arising in May 1962 the State Govermnent made a reference to
the Industrial Tribunal which gave its award on January 14, 1965. In
respect of dearness allowance the award provided a sliding sqale for an
increase or decrease of Re. 11. for rise or fall of five points in the cost
of living index,
with
retrosp::ctive operation from November 5, 1963
i.e. the date when the reference was made.
It further made certain
modifications in the company's gratuity scheme and raised the age of
superannuation from 55 years to 58. The company as well as the workmen appealed to this Court against the Tribunal's award.
HELD: (1) (i) The following broad principles relating to fixation
of dearness allowance emerge from the earlier decisions of this Court : 1 .
Full neutra1isation is not normally given, except to the very lowest class
of employees, 2.
The purpose of dearness allowance being to neutralise
a portion of the increase in the cost of living, it should ordinarily be
on a sliding scale and provide for an increase in the rise in the cost of
living ·and decrease on a fall in the cost of living. 3. The basis of fixation
of wages and dearness allowance is industry-cum-'region. 4. Employees getting the same wages should get the same dearness allowance, irrespective
of whether they arn workin.g as clerks or members of subordinate staff
or factory workmen.
5. The additional financial burden which a revision
of wage structure or dearnes·s allowance would imoose upon an employer,
and his ability to bear such burden, are very material and relevant factors to be taken into account. [123 B-El
Clerks of Calcutta Tramways v. Calcutta Tramways Co. Ltd. [1956]
S.C.R. 772, 779, The Hindustan Times Ltd. New Delhi v. Their Workmen,.
[1964] 1 S.C.R. 234. Greaves Cotton
&
Co.
v.
Their Workmen
[1964] 5 S.C.R. 362,
French
Motor
Car
Co.
Ltd. v.
Workmen,.
[1963] Supp. 2 S.C.R. 16, Ahmedabad Mill Owners' Association v. The
Textile Labour Association, [1966] 1 S.C.R. 382 and Kamani Metals &
Alloys Ltd. v. Their Workmen, [1967] 2. S.C.R. 463, referred to.
Having regard to the above principles, in the present case, the Tribunal had made a substantially correct approach in considering the claim
for revision of dearness allowance. [123 &F]
114
SUPREME COURT REPORTS
[1969] 2 S.C.R.
(ii) The Tribunal rightly held that cl. 10 of the settlement of January
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6, 1962 providing that the un.ion was not entitled to ask for a revision
of dearness allowance before the expiry of three years, \Vas not a bar
for entertainment of the claim.
Its decision that in view of the rise in
the cost of living a revision of the dearness allowance should be made
was perfectly correct. [123 G-Hl
(iii) The Tribunal was also justified in rejecting the contention of the
union that the reiVision of the dearness alJowance must be made de novo,
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ignoring the previous award of the Fifth Industrial Tribunal. It could
not be lost sight of that the said awa'rd had bee11 challenged in this Court
and tho appeals filed by the company ·as well as the workmer, were
dismissed. [124 A-BJ
Remington Rand of India v. Its Workmen, [1962] I L.L.J. 287 distinguished.
(iv) The additional financial burden that would be thrown on the
company by reason of the revision of dearness allo1,vance
was
a
very
material and rel

## Text

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BENGAL CHEMICAL & PHARMACEUTICAL WORKS LTD.
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v.
ITS WORKMEN
September 16, 1968
(J. M. SHELAT, V. BHARGAVA AND C. A. VAIDIAL!NGAM, JJ.J
Industrial Dispute-Revision of dearness
allowance-Gratuity-Age
of superannuation-Principle for.
In 1954 the Bengal Chemical and Pharmaceutical Works Ltd. entered
into an agreement with its workmen about dearness allowance.
In 1957
dearness a!lowanee was again fixed by an award of the Fifth Industrial
Tribunal, Bengal on the basis of the cost of living index in May 1957
which stood at 400.6.
The company as well as the workmen ·appealed
against the said award to this Court.
The company's appeal was dismissed and the workmen did not press their appeal.
On January 6,
1962
there was a fresh settlement between the company and the
workmen
whereby dearness allowance was raised by Rs. 3.
On a fresh industrial
dispute arising in May 1962 the State Govermnent made a reference to
the Industrial Tribunal which gave its award on January 14, 1965. In
respect of dearness allowance the award provided a sliding sqale for an
increase or decrease of Re. 11. for rise or fall of five points in the cost
of living index,
with
retrosp::ctive operation from November 5, 1963
i.e. the date when the reference was made.
It further made certain
modifications in the company's gratuity scheme and raised the age of
superannuation from 55 years to 58. The company as well as the workmen appealed to this Court against the Tribunal's award.
HELD: (1) (i) The following broad principles relating to fixation
of dearness allowance emerge from the earlier decisions of this Court : 1 .
Full neutra1isation is not normally given, except to the very lowest class
of employees, 2.
The purpose of dearness allowance being to neutralise
a portion of the increase in the cost of living, it should ordinarily be
on a sliding scale and provide for an increase in the rise in the cost of
living ·and decrease on a fall in the cost of living. 3. The basis of fixation
of wages and dearness allowance is industry-cum-'region. 4. Employees getting the same wages should get the same dearness allowance, irrespective
of whether they arn workin.g as clerks or members of subordinate staff
or factory workmen.
5. The additional financial burden which a revision
of wage structure or dearnes·s allowance would imoose upon an employer,
and his ability to bear such burden, are very material and relevant factors to be taken into account. [123 B-El
Clerks of Calcutta Tramways v. Calcutta Tramways Co. Ltd. [1956]
S.C.R. 772, 779, The Hindustan Times Ltd. New Delhi v. Their Workmen,.
[1964] 1 S.C.R. 234. Greaves Cotton
&
Co.
v.
Their Workmen
[1964] 5 S.C.R. 362,
French
Motor
Car
Co.
Ltd. v.
Workmen,.
[1963] Supp. 2 S.C.R. 16, Ahmedabad Mill Owners' Association v. The
Textile Labour Association, [1966] 1 S.C.R. 382 and Kamani Metals &
Alloys Ltd. v. Their Workmen, [1967] 2. S.C.R. 463, referred to.
Having regard to the above principles, in the present case, the Tribunal had made a substantially correct approach in considering the claim
for revision of dearness allowance. [123 &F]
114
SUPREME COURT REPORTS
[1969] 2 S.C.R.
(ii) The Tribunal rightly held that cl. 10 of the settlement of January
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6, 1962 providing that the un.ion was not entitled to ask for a revision
of dearness allowance before the expiry of three years, \Vas not a bar
for entertainment of the claim.
Its decision that in view of the rise in
the cost of living a revision of the dearness allowance should be made
was perfectly correct. [123 G-Hl
(iii) The Tribunal was also justified in rejecting the contention of the
union that the reiVision of the dearness alJowance must be made de novo,
B
ignoring the previous award of the Fifth Industrial Tribunal. It could
not be lost sight of that the said awa'rd had bee11 challenged in this Court
and tho appeals filed by the company ·as well as the workmer, were
dismissed. [124 A-BJ
Remington Rand of India v. Its Workmen, [1962] I L.L.J. 287 distinguished.
(iv) The additional financial burden that would be thrown on the
company by reason of the revision of dearness allo1,vance
was
a
very
material and relevant factor to be taken into account but the contention
of the company in this respect cpuld not be considered in the absence of
a plea in its written statement to the effect that it would not be able to
bear the burden. [124 F-GJ
(v) In view of the Hindustan A1otors Case it could not be said that
the Tribunal had committed any error in accepting the claim of
the
union for increase or dedrease of Re. l/ -
~or every rise or fall of five
points in the cost of living index. [125 B-C]
Workrnen of Hindusthan 1'1.otors
v.
Hindusthan Motors
[1962]
II
L.L.J. 352, followed.
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(vi) The Tribunal was in error in holding that the cost of living index
for January 1962 which was 402 was the basis of the settlement of January 6, 1962.
On the facts of the case the settlement must be taken to
have been based on the index for November 1961 which was 421. [126
E
A-Cl
(vii) From the decisions of the Cqurt it is seen that this Court has
declined to interfere with an a\Vard having effect from either the date
of demand, or the date of reference. or even a date earlier than the date
of reference but after the date of demand.
The direction given by the
Tribunal in the present case giving effect to its award from the date of
reference, squarely came \Vithin the, decision of this Court in the !lihdustan
F
Times Case. f 127 E-Fl
The Hindustan Times Ltd. New Delhi v. Ti>'ir Workmen [1964J 1
S.C.R.
234,
Kamani
Metals
&
Alloys Ltd.
v.
Their
Workmen,
[1967] 2 S.C.R. 463 and Hydro (Engineers) Pvt. Ltd. v. The Workmen,
[19691 I S.C.R. 156 referred to.
(2) There was
no
improper
exercise of
discretion by the Tri·
bunal in making modifications in the company's gratuity scheme, ·and
G
there was. no ground for interfering with its directions in this regard.
[128 Gl
Management of Wenger & Co. v. Workmen, [1963] Supp. 2 S.C.R.
862, applied.
(3) Jn, fixing the age of superannuation the most important factor
that has to be taken into consideration is the trerid in a particuiar case.
Applying this test the fixation of the age of superannuation of 58 years
was justified. [129 Gl
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Jessop's case, [1964] I L.L.J. 451 and Management of Mis. Bum1ah
Shell Oil Storage and Distributing Co. Ltd. v. Its Workmen, C.A. No.
44/68 dated 1-5-68, applied.
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BENGAL CHEMICAL v. WORKMEN (Vaidialingam, J.)
115
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 660 and
811 of 1966.
Appeals by special leave from the award dated January 14,
1965 of the Industrial Tribunal, West Bengal in Case No. VIII260 of 1963.
H. R. Gokhale, B. P. Maheshwari and N. M. Shetye, for t~e
appellant (in C.A. No. 660 of 1966) and respondent No. 1 (m
C.A. No. 811of1966).
D. L. Sen Gupta, Janardan Sharma and S. K. Nandy, for the
appellants in (C.A. No. 811 of 1966) and respondent No. 1 (in
C.A. No. 660 of 1966).
A. S. R. Chari and D. N. Mukherjee, for respondent No. 2
(in both the appeals).
The Judgment of the Court was delivered by
Vaidialingam, J.
In these two appeals, by special leave,
the company and the workmen's Union attack the award of the
Industrial Tribunal, West Bengal, dated January 14, 1965, in
w far as it is against each of them.
The Government of West
Bengal, by its order dated November 5, 1963, referred for adjudication six issues, viz. :
" I . Revision of dearness allowance.
2. Revision of the scheme of gratuity.
3. Age of superannuation.
4. Leave and holidays .
5. Canteen facilities; and
6. Shift allowance for supervisors.
In both these appeals we are concerned only with issues nos. 1 to
3.
With regard to dearness allowance, the Tribunal had directed that it should stand revised from November 1963. It provided a sliding scale for an increase or decrease of Re. 1 I - for
rise or fall of five points in the cost of living index, with retrospective operation from November 1963. It further directed that
the dearness allowance payable for each month from November
1963 shall be recalculated on that basis and additional amounts
due to workmen should be paid in two monthly instalments
after the date of publication of the award.
There was a further
direction to the effect that the dearness allowance for any particular month shall be calculated on the basis of average cost of
living index for three immediately preceding months.
Regarding gratuity, the Tribunal effected certain modifications to the
then existing scheme of gratuity, under rules 1, 2 and 3.
The
Tribunal increased the maximum gratuity payable to 15 months'
116
S.UPREME COURT REPORTS
(1969] 2 S.C.R.
salary, but deleted the provision contained in the scheme that the
maximum should not exceed Rs. 4,000/-.
In rule 2, it further
directed the deletion of the qualifying period of 10 years' continuous and approved service.
It also modified the provisions
of r. 3 by providing for payment of gratuity less any financial
loss that has been caused to the employer as a result of misconduct which necessitated the termination of service.
It further
provided that in case of a workman leaving service without
notice or terminating his employment without the permission of
the company, in order to enable him to get gratuity he should
have put in service of ten completed years or more.
The Tribunal increased the existing age of superannuation from 55 years
to 58 years.
The Union, in its appeal C.A. No. 811 of 1966, attacks the
award in respect of all the above matters; but so far as the company's appeal C.A. No. 660 of 1966 is concerned, though it has
challenged the award, again, in respect of all the above matters
to the extent to which they are against it, this Court has granted
special leave, by its order dated April 28, 1965, only on the
question of dearness allowance.
Before we proceed to deal with the contentions of the parties
regarding the award in question, we can straight away dispose
of two applications filed by the company.
C.M.P. No. 329 of
1967 has been filed by the company for leave to urge additional
grounds in the appeal.
By this application the appellant seeks
permission to raise contentions regarding certain modifications
effected by the Tribunal in the gratuity scheme.
That is, substantially, the company attempts to reopen the limited leave given
by this Court on April 28, 1965. The company has also filed
C.M.P. 2860 of 1968 referring therein to certain subsequent proceedings and requesting this Court to take them into consideration in considering the question of dearness allowance.
Both
these applications are opposed by the Union and we see no reason to grant the requests contained in each of them.
These two
applications are accordingly dismissed.
We shall first take up the question of dearness
allowance.
While, on the one hand, the appellant wants a substantial reduction in the dearness allowance granted by the Tribunal, the
Union, in its appeal, seeks a substantial increase in the dearness
allowance granted by the award.
We have already indicated the
decision of the Tribunal in this regard.
Before we actually deal with the contentions of Mr. Gokhale,
learned counsel for the company, and Mr. Chari and Mr. Sen
Gupta, who followed him, for the Union, it is necessary to refer
to certain previous awards, as well as agreements, with reference
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BENGAL CHEMICAL v. WORKMEN ( Vaidialingam, J.)
117
to dearness allowance.
Though there have been certain awards
prior to 1954, it is enough if we state the history, beginning
from the agreement between the company and the Union, entered into on September 15, 1954.
Under clause 11 of this agreement it was provided that the then existing rate of dearness allowance would prevail, unless there was a substantial change in the
working class cost of living index, in which case the rate would
be suitably adjusted.
There is no controversy that the rate of
dearness allowance, which was continued under this agreement,
was Rs. 30 / - per month.
The issue relating to dearness allowance was referred, by the
State of West Bengal, to Shri G. Palit, the Fifth Industrial Tribunal, West Bengal. It is necessary to refer in some detail to the
award of Shri Palit, dated August 26, 1957, because the Industrial Tribunal, in the present case, has not chosen to go behind
the said award.
Shri Palit found that after the agreement of
September 15,. 1954, there had been a substantial increase in the
cost of living index justifying the grant of an increased dearness
allowance, as contemplated under cl. 11 of the agreement.
According to him, in August 1954 the working class cost of
living index stood at 344.1 and in August 1955 it came down to
338.4; it.again went up to 391.4 in August 1956. Shri Palit
has also stated that in May 1957 the cost of Jiving index reached
400.6 points.
Accordingly he has noted that there has been a
rise of 56 points, from 344.1 in August 1954 to 400.6 in May
1957 and that the said increase justifies a revision of the original
rate of dearness allowance.
In considering the quantum of increase in dearness allowance that should be awarded, Shri Palit
has again taken note of the fact that at 344 points in September
1954, at the time when the agreement was entered into, the
dearness allowance was Rs. 30 per month, and that there is no
dearness allowance up to 180 points of the cost of living index.
According to him, the dearness allowance of Rs. 30 per month,
in September 1954, represented the dearness allowance for the
points in excess of 180 points, viz., for 164 points and that this
roughly worked out at Re. 1 /- dearness allowance for every 5-!
points.
On this basis Shri Palit held that to cover 56 points'
rise ( 400 minus 344), the dearness allowance, which could be
legitimately claimed by the Union, would be Rs. 10 / - odd, as it
in fact appears to have been claimed.
But, as normally only
75% neutralisation is granted and in view of the fact that the
company, which was a chemical industry, was also in a tight
corner, he held that full neutralisation should not be granted.
On this reasoning Shri Palit allowed Rs. 7 /- as increase in dearness allowance on the pay scale up to Rs. 50 /- and increased
dearness allowance of Rs. 5/-, thereafter, for the next Rs. 50/-
in the pay scale. In view of the fact that the company had
118
SUPREME COURT REPORTS
[1969] 2 S.C.R.
already allowed an increase of dearness allowance of Rs. 2/-, Shri
Palit directed that the increase of dearness allowance, as ordered
by him, should be adjusted against the amonnt already paid by
the company.
Both the company and the Union appealed to this Court against
this award of Shri Palit.
The decision of this Court is reported
as Bengal Chemical & Pharmaceutical Works Ltd., Calcutta v.
Their Workmen(').
Referring to the agreement dated September 15, 1954, this Court. observed that the rate of dearness allowance, continued under that agreement, was accepted by the
parties as reasonable on the date of the agreement till there was
a substantial change in the working class cost of living index.
This Court further stated that the findings given by Shri Palit
were on facts and no permissible ground had been shown for
interference with it in an appeal by special leave.
The award of
Shri Palit was confinned by this Court and the company's appeal
was dismissed with costs.
The Union did not press its appeal
and that too was dismissed with costs.
On January 6, 1962 there was again a memorandum of
settlement between the company and the Union, and under cl. 6
it was provided that the then existing slab of dearness allowance
in relation to the basic pay of the employees would be increased
by Rs. 3/- and that the increase was to have effect from November 1, 1961. The Union made a demand, on May 21, 1962,
for revision of the dearness allowance, scheme of gratnity and the
age of superannuation. It also presented its demands, on
September 3, 1962, to the Assistant Labour Commissioner, West
Bengal.
With reference to the revision of dearness allowance,
the demand of the Union was that there should be hundred percent neutralisation.
As conciliation failed, a reference was
made, by the State Government, on November 5, 1963. We have
already indicated the nature of the directions given in the award,
in respect of dearness allowance.
The Tribunal, in the award in question, has, after elaborately
referring to the agreement of September 15, 1954 as well as the
award of Shri l'alit and the settlement dated January 6, 1962,
rejected the contention of the company that no case had been
made out for a revision of the dearness allowance.
In this connection the Tribunal referred to the chart, filed by the Union.
regarding the cost of living index durin):( the years 1961 to 1964
and has noted that the correctness of the chart had not been
disputed by the company. It is of opinion that in January 1962,
when the settlement was arrived at on January 6, 1962, the index
number was 402 and, after referring to the index numbers in the
various months between 1962 and 1964, it concluded that there
(!) [1959] Supp. 2 S.C.R. 136.
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BENGAL CHEMICAL v. WORKMEN (Vaidialingam, J.)
119
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had been a snbstantial increase in the cost of living index and
hence a revision of the dearness allowance was necessary.
The
Tribunal no doubt took the view that the financial ability of the
company to bear the additional burden, did not come in for consideration because by cl. 10 of the settlement dated January 6,
1962, the company had agreed to a modification of the dearness
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allowance if there was a substantial change in the working class
cost of living index.
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Regarding .the rate of variation that had to be fixed, the
company appears to have pressed for the acceptance of the principle laid down by this Court in The Hindustan Times Ltd., New
Delhi v. Their Workmen(') providing for the linking of the
dearness allowance with the cost of living index.
It also appears
to have urged that the provision made in the said decision regarding dearness allowance that it should be increased. or decreased by Re. 1 / - for a rise or fall in the cost of living index by 10
points should be adopted; that is, the appellant pressed that the
variation should be linked to a variation of 10 points.
On the
other hand, the lJ nion appears to have pressed for the acceptance
of the method adopted by this Court in a case from West Bengal
in Workmen of Hindusthan Motors v.
Hindusthan
Motors(')
viz., of providing a sliding scale of an increase or decrease of
Re. 1 / - for a rise or fall of every five points in the cost of living
index.
The Tribunal has, after holding that it cannot go behind the
award of Shri Palit as the said award had been confirmed by this
Court, accepted the Union's contention that there should be an
increase or decrease of dearness allowance
by Re. 1/- for an
increase or decrease of every 5 points in the cost of living index.
It has also held that the cost of living index at the time when the
agreement of January 6, 1962 was entered into was 402 and the
dearness allowance of Rs. 3 /- fixed under the said settlement
could be referred only to the said figure of 402 .
The Tribunal then considered the question as to from what
date the revision of dearness allowance should be given effect to.
Though the company contended that the award should become
operative only from the date when it was given and the Union,
on the other hand, contended that it should be given effect to
from the date when the demand for revision was made by it, the
Tribunal ultimately held that the increased dearness allowance
granted by it should take effect from the month when the reference was made by Government, viz., November 1963.
Mr. Gokhale, learned counsel for the company, has urged
that the linking of dearness allowance at the rate provided in the
(I) [1964] I S.C.R. 234.
(2) [1962] IT L.L.J. 352.
120
SUPREME COURT REPORTS
[ 1969) 2 S.C.R.
award is not justified as it departs from the past practice evidenced by the various awards, as well as the agreements and settlements, entered into by the parties.
The Tribunal, counsel urges,
has given no special reason to depart from the method adopted
on previous occasions According to the learned counsel, the
dearness allowance, if any, should have been given on an ad hoc
or lump sum basis as had been done on prior occasions. Mr.
Gokhale also urges that the financial position, or capacity to
bear the additional burden, that will be cast on the company by
the grant of increased dearness allowance, which has been held
by decisions of this Court to be a relevant factor to be taken into
account, has not been considered at all by the Tribunal.
In the
alternative, counsel urges that even assuming that the method of
linking, adopted by the Tribunal, was correct, a very serious mistake has been committed by the Tribunal when it has proceeded
on the basis that the increase should be granted on the basis that
there has been a rise over the cost of living index of 402.
According to Mr. Gokhale, the evidence clearly shows that on
the date of the settlement, viz., January 6, 1962, the cost of
living index for January 1962 could not have been available and
the parties ha.d before them only the cost of living index for the
month of November 1961, which was 421 points and it is on
that basis that an increase of Rs. 3/- was fixed in the settlement
of January 6, 1962. Therefore any dearness allowance that is
granted must have reference to a rise of the cost of living index
above 421 points.
Counsel also attacks the direction regarding
effect being given to the award from November 1963.
While contesting the appeal of the company, Mr. Chari, and
Mr. Sen Gupta, learned counsel for the Unions concerned, have
urged that at no stage has the dearness allowance been fixed, in
this company, on any scientific basis.
According to the learned
counsel, the agreement, entered into between the parties, should
not be taken as indicative of the fact that complete neutralisation
has been effected in the matter of fixing dearness allowance.
According to them, Shri Pali! has committed a fundamental error
in assuming that in the 1954 agreement full neutralisation has
been given.
Counsel also point out that the extent or degree
of neutralisation to be granted is not rigid and that though
hundred per cent neutralisation is not normally given, nevertheless in the case of the lowest paid employees such neutralisation
is permissible. Counsel also urged that the Tribunal has committed a mistake in not accepting the claim of the Union t]lat the
question of dearness allowance will have to be considered entirely
on the materials placed before it, without in any manner being
influenced by the award of Shri Palit.
It is also pointed out
that even the appellant wanted a sliding scale to be attached to
the dearness allowance and provision made for the rate of dearA
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BENGAL CHEMICAL v. WORKMEN (Vaidialingam, J.)
121
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ness allowance being liable to be increased or decreased by
Re. 1/- for a rise or fall in the cost of living index by every 10
points, as will be seen from the fact that it pressed for the acceptance of the principle laid down by this Court in the Hindustan
Times Case (1).
It is further urged that the Tribunal was justified in gr~nting dearness allowance for an increase over the cost
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of living index of 402, as that was the price index in the month
of January 1962 when the. settlement between the parties was
effected.
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In the appeal, by the Union, r~arding dearness allowance,
Mr. Sen Gupta, learned counsel, urges that there should have
been cent per cent neutralisation in the award of dearness allowance and that there should have been a complete de nova examination of the claim made by the Union for revision of dearness
allowance, without being influenced by the award of Shri Palit.
In this connection counsel refers to the decision of this Court
in Remington Rand of India v. Its Workmen(') where it has
been held that when a rise in the cost of Jiving index has been
established, the claim for a revision of dearness allowance cannot be rejected without exan1ining its merits solely on the ground
that because a provision has been made for adjustment from
time to time, by agreement of parties in a scheme, that scheme
ought to remain in force for all time and cannot be reopened or
re-examined.
Counsel further urges that in any event, the
Tribunal should have given effect to its award from May 1962,
when the Union had made the demand for revision of dearness
allowance.
Before we deal with the contentions of the learned counsel,
it will be desirable to refer to a few decisions of this Court laying
down the principles that have to be borne in mind when a claim
for dearness allowance or revision· of dearness allowance is considered.
I
in Clerks of Calcutta Tramways v. Calcutta Tramways Co .
Ltd., (3 ) it is observed :
"'We can now take it as settled that in matters of
the grant of dearness allowance except to the very
lowest class of manual labourers whose income is just
sufficient to keep body and soul together, it is impolitic
an1 unwise to neutralise the entire rise in the cost of
living by dearness allowance.
More so in the case of
the middle classes."
(1) [1964] 1 S.C.R. 234.
(2) [1962] l L.L.J. 287.
(3) [1956] S.C.R. 772, 779.
2Sup. C.1./69-9,
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SUPREME COURT REPORTS
[1969] 2 S.C.R.
In the Hindustan Times Case (1) it is stated at p.
24 7: "As was pointed out in Workmen of Hindusthan
M.otors v. Hindusthan M.otors('), the whole purpose of
dearness allowance being to neutralise a portion of the
increase in the cost of living, it should ordinarily be on
a sliding scale and provide for an increase on rise in the
cost of living and a decrease on a fall in the cost of
living."
In Greaves Cotton & Co. v. Their Workmen('), after referring
to the Hindusthan M.otors Case(') and French M.otor Car Co.'s
Case ('), this Court laid down that the basis of fixation of wages
and dearness allowance is industry-cum-region and observed, at
p. 368:
"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 particularly in the case of clerical
and subordinate staff, for, as pointed out in the French
M.otor Car Co's Case('), there is not much difference
in the work of this class of employees in different industries."
Again, at p. 374, it is stated:
"Time has now come when employees getting same
wages should get the same dearnes
allowance irrespective of whether they are working as clerks, or members of subordinate staff or factory-workmen."
In Ahmedabad Millowners'
Association
v.
The
Textile
Labour Association(') it has been emphasised that in trying to
recognize and give effect to the demand for a fair wage, including
the payment of dearness allowance to provide for adequate neutralisation, industrial adjudication must always take into account the
problem of the additional burden which snch wage
structure
would impose upon the employer and ask itself whether the employer can reasonably be called upon to bear such burden.
(I) [196!] 1 S.C.R. 234.
(2) [1962] ll L..L.J. 352.
(3) [1964] 5 S.C.R. 362.
(4) [1963] Supp. 2 S.C.R. 16.
(5) [1966]
1 S.C.R. 382.
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BENGAL CHEMICAL v. WORKMEN (Vaidia/ingam, J.)
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In Kamani Metals & Alloys Ltd. v. Their Workmen( 1 ) it has
been noted that one-hundred per cent neutralisation is not advisable as it will lead to inflation and therefore dearness allowance
is often a little less than one-hundred per cent neutralisation.
The following principles broadly emerge from the above
decisions :
1. Full neutralisation is not normally given, except
.to the very lowest class of employees.
2. The purpose of dearness allowance being to neutralise a portion of the increase in the cost of Jiving, it
should ordinarily be on a sliding scale and provide for
an increase on the rise in the cost of living and a
decrease on a fall in the cost of living.
3. The basis of fixation of wages and dearness
allowance is industry-cum-region.
4. Employees getting the same wages should get
the same dearness allowance, irrespective of whether
they are working as clerks or members of subordinate
staff or factory workmen.
5. The additional financial burden which a revision
of the wage structure or dearness allowance would
impose upon an employer, and his ability to bear such
burden, are very material and relevant factors to be
taken into account.
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Having due regard to the above principles, we are satisfied, in
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the instant case, that the Tribunal has made substantially a correct approach in considering the claim for revision of dearness
allowaince.
We are not impressed with the contention of either the company or the Union that the Tribunal has committed an error in
the matter of revising the dearne>s allowance.
'The company
appears to have been more intent upon pressing that there has
been no substantial increase in the cost of living since the settlement, dated January 6, 1962 and that, in any event, the Union,
in view of cl. 10 of the settlement, was not entitled to ask for a
revision of dearness allowance before the expiry of three years.
The Tribunal has referred to the rise in the cost of living index
after the date of the settlement of January 6, 1962, and it has
also, in our opinion, quite rightly held that cl. 10 of the settlement is no bar for entertaining the claim; tl1erefore, its decision
that a revision of the dearness allowance should be made is perfectly correct.
(I) [1967]
2 S.C.R. 463.
124
SUPREME COU!tT REPORTS
(1969] 2 S.C.R.
The Tribunal is also justified in rejecting the contention of the
Union that the revision of the dearness allowance must be made
de novo, ignoring the previous award of Shri Palit. Though,
normally, when a claim for revision of dearness allowance is
made and a rise in the cost of Jiving index has been established,
such a claim has to be considered on its tnerits, as held by this
Court in the Remington Rand Case('), it cannot be lost sight of,
in this case, that the decision of Shri Palit was affirmed by this
Court and the appeals, filed by the company and the Union, were
dismissed on the ground that the agreement of 1954 was reasonable and the fijllodings of Shri Palit were all on facts.
In view
of this, the Tribunal, in our view, was
perfectly justified in
proceeding on the basis that the award of Shri Palit should form
the basis for considering the nature of the revision of dearness
allowance that would be pennissible.
We have already referred
to the various matters, adverted to by Shri Palit in his award.
If really the case of the Union was, as is now sought to be put
before us, that the dearness allowance on prior occasions had not
been fixed on any scientific basis and that Shri Palit erred in
proceeding on such an assumption with reference to previous
agreements, the proper stage when these questions should have
been canvassed was in the Union's appeal, before this Court,
against the award of Shri Palit.
Having allowed that appeal to
be dismissed as not pressed, it is no longer open to the Union to
raise those contentions now.
We are therefore satisfied that the
Tribunal's view that Shri Palit's award should fonn the basis for
further reconsideration of the claim for revision of dearness
allowance is correct.
The Tribunal has no doubt stated that the financial ability of
the company does not come in for consideration, as the company
agreed, by the settlement of January 6, 1962, to pay increased
dearness allowance if there was a substantial change in the cost
of living index. It is true that the additional financial burden
that will be thrown on the company by reason of the revision of
dearness allowance is a very material and relevant factor to be
taken into account in such circumstances; but, in this case, we
do not find in the written statement, filed by the company, any
plea taken that if the claim of the Union, as made in its charter
of demands in respect of dearness allowance is accepted, it will
cast a very heavy financial burden on the resources of the company.
In the absence of any such plea having been taken, we
consider it unnecessary to pursue this contention of the appellant
any further.
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There is the additional circumstance of the provision for
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modification, as contained in the settlement of January 1962.
(I) [1962] I T.L.J. 287.
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BENGAL CHEMICAL v. WORKMEN (Vaitiialingam, J.)
125
The appellant, so far as we can see, has not placed any material
before the Tribunal regarding the comparable industries in the
region.
As pointed out by the Union, the company seems to have
pressed for the grant of dearness allowance being liable to be
increased or decreased by Re. 1/-, as was done by this Court in
the Hindusthan Times Case(').
The Union appears to have
pressed for an increase or decrease of Re. 1 /- in dearness allowance
with a rise or fall of every 5 points in the cost of living index .
It is therefore obvious that the appellant also wanted linking of
Re. 1/- for every 10 points. It must also be borne in mind
that the alternative way, propounded by the Union, for grant of
dearness allowance has been rejected by the Tribunal.
Under
these circumstances, it cannot be stated that the Tribunal has
committed any error in accepting the claim of the Union, supported as it was by the decision of this Court in the Hindusthan
Motors Case(').
Mr. Gokhale next urged that the view of the Tribunal that the
increase of Rs. 3/- as dearness allowance, given in the settlement
dated January 6, 1962, must have been on the basis that the index
number was 402, was erroneous.
The settlement was made on
January 6, 1962, on which d.ate the index number for January
1962 could not have been available to the parties.
The last
month for which the index number was available was for the
month of November 1961 and it was 421.
The index number at
the time when the award was given by Shri Palit was about 400
and it was really for an increase of 21 points that Rs. 3/- as
increment was provided in the settlement.
Though when the
Tribunal gave the present award the index number for January
1962 was already available; that figure could not have formed the
basis of the settlement, and it is inconceivable that for a rise of
only 2 points, i.e., from 400 .in 1957 to 402 in 1962, a rise of
Rs. 3/- in the dearness allowance would have been provided for.
Therefore the increase or decrease provided for by the Tribunal
must really relate to the cost of living index of 421 points, and
not to 402 points.
Mr. Sen Gupta, learned counsel for the Union, found considerable difficulty in supporting that reasoning in the awa.rd on this
matter.
We are in agreement with the contentions of Mr.
Gokhale in this regard. Chart,
Exhibit 4,
furnished
by the
Union clearlv shows that the index number in November 1961
was 421 points. It also shows that the index for January 1962
was 402 points, but the index for that month was not available
till the end of January 1962 and it could not have been before the
parties when the settlement was made on January 6, 1962.
Therefore, the index number of 421 must have been taken into
(!) [19641 I S.C.R. 234.
(2)
[19621 JI 1.1.J. 352.
126
SUPREME COURT REPORTS
[1969] 2 S.C.R.
account on the date of the settlement and it must have been really
for the increase of 21 points, after the date of Shri Palit's award,
that the additional sum of Rs. 3 / - was fixed as dearness allowance.
If, on the other hand, the Tribunal's view is correct,
there would have been only an increase of 2 points, from 400 to
402, and for that increase of 2 points, the sum of Rs. 3 /- was
fixed, as dearness allowance.
In our opinion, that reasoning of
the Tribunal cannot be accepted.
Therefore the award of the
Tribunal will have to be modified, in this regard, by directing that
the sliding scale providing for an increase or decrease of Re. 1/-
for a rise or fall of every 5 points, must be related to the cost of
living index of the base of 421 (that being the cost of living
index for November 1961) and not of the base of 402, as directed
by the Tribunal.
The last contention of Mr. Gokhale, bearing upon dearness
allowance, is that the direction that the award will have retrospective effect from November 1963 is erroneous. In this connection Mr. Gokhale referred us to cl. 10 of the settlement of
January 6, 1962 stating that the settlement was to remain operative for three years.
According to learned counsel, any rise in
dearness allowance should have effect only after the expiry of
three years from January 6, 1962, or, at any rate, from the expiry
of three years from November 1, 1961, the date on which the
increase in the settlement had been given effect to.
Mr. Sen Gupta, in the Union's appeal, pressed for the award
being given effect to from May 1962 when the Union had made a
demand on the company for revision of dearness allowance,
especially when the Tribunal had itself found that there had been
a substantial nse in the price index after the date of the settlement.
It will be seen that both the parties have a grievance
regarding the date from which the revision of dearness allowance
should be given effect to.
We are not impressed with the contentions of both the parties, in this regard.
The Tribunal has
taken note of the rise in the cost of living index, as well as the
demand having been made by the workmen, as early as May 21;
1962. It has also adverted to the fact that the reference, by the
State Government. was made on November 5, 1963. It has further adverted to the fact that though the cost of living index had
increased considerably, the company did not choose to adjust the
dearness allowance suitably. It was. after having regard to all
the circumstances that the Tribunal felt that the workmen should
get dearness allowance commensurate with the cost of living
index. at least from the month of reference. viz., November 1963.
As laid down bv this Court in the Hindusthan Times Case('),
no general formula can be laid down as to the date from which a
(!) [1964] I S.C.R. '234.
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BENGAL CHEMICAL v. WORKMEN ( Vaidialingam, J.)
12 7
Tribunal should make its award effective and that that question
has to be decided by the Tribunal on a consideration of the circumstances of each case.
In the said decision this Court declined to interfere with the Tribunal's direction that reliefs given by it
would become effective from the date of reference.
In Kamani Metals Ltd. Case(') the workmen had made
demands on July 1, 1961.
The Conciliation Board was moved
on September 8, 1962 and, when conciliation failed, a reference
was made on December 14, 1962.
The Tribunal made an award,
retrospective from October 1, 1962, a date between the reference
to conciliation and the reference to the Tribunal. That decision
of the Tribunal was accepted by this Court.
Recently, in Hydro (Engineers) Pvt. Ltd. v.