# "Vehru Motor TrOtrS• port Co·of1tr•lir1 Socitt) Lid v. SllJU of Raja.""1it - **Citation:** [1964] 1 S.C.R. 234 - **Court:** Supreme Court of India - **Decided:** 1964 - **Bench:** P. B. Gajendraoadka.R, K. N. Wanchoo, K. C. DAS GuPTA, J.C. Shah - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vehru-motor-trotrs-port-co-of1tr-lir1-socitt-lid-v-sllju-of-raja-1it-2894 - **Pages:** 26 ## Headnote Industrial Di~pute--Fi•·atiun of waye structure-Factor.• lo be co11sidered-Fair IVage-Lidng IVagc-l!:xtent of power to interfere under Art. 136 with w~gc •cale fixed by TribunalDearness allowance on basis of ,,/iJiny ocafcs-/nterim agreement rWTION: Civil Appeals Nos. 489 & 490 of 1961. Appeals by special leave from the award dated March lti, 1959, of the Second Industrial Tribunal, Delhi in Reference I. D. No. 20 of 1958. G. S. Pathak, S. T. Desai, M. L. Sethi, B. Dutta and Anand Prakash, for the appellant (in C. A. No. 489/61) and the respondent (in C. A. No. 490/61). lu. C. Setalvad, Attorney-General for fodia, ,lf. K. Rainamurt11i, D. P. SiWJh, R. !(, Garg and S.C. Agarwal, for the respondents (in C.A. No. 48!l/6l) and the appellants (in C. A. No. 490/61 ). 1962. December 14. The Judgment of the Court was delivered by DAS GUPTA, J.-These two appeals by special leave, one by the employer and the other by the workmen, arise out of an industrial dispute that was referred for adjudication to the Industrial Tribunal Delhi, by an order made on January 2:l, 1958 by the Chief Commissioner, Delhi. The Tribunal made its award on March 16, l!l59. Out of the numerous 1 S.C.R. SUPREME COURT REPORTS 237 matters that were included in the terms of reference, we are concerned in these appeals only with a few. The employer challenges the award as regards : (1) Scales of pay, (2) Dearness allowance, (:1) Adjt19tments, (4) Leave Rules, (5) Gratuity and (6) Retrospective effect of the award. The workmen also attacked the award as regards the scales of pay and dearness allowance. In addition, they have attacked the award as regards the working hours, leave rules, night shift allowance, retirement age and procedure for taking disciplinary action. At the time of the hearing before us however the learned Attorney General, appearing for the workmen, did not press their claim for modification of the award as regards, night shift allowance, leave rules and procedure for taking disciplinary action and working hour>. It appears that when the dispute was before the Conciliation Officer, Delhi, for settlement an interim agreement was ·arrived at between the parties on December 20, 1957 by which the management agreed to give certain interim reliefs, ranging between Rs. 6/- to Rs. 10/- per month from the month of November 1957. One of the terms of the agreement was that this payment "will be adjusted against the final outcome of the demands by constitutional means". The Tribunal has in its award given a direction that this interim relief shall remain unaffected. Taking this to be a direction th'lt the adjustment as agreed upon of payments under the interim arrangement shall not be made, the employer has in its appeal challenged the correctness of this direction also. The most important of the matters in dispute are the questions of the wage scale, the dearness allowance and the adjustment of existing employees into the new scales. It appears that from 1946 onwards the Company's workmen have had a consolidated wage scale, no distinction being made between 1961 Thi Hindustan Ttmes ltd., N•w Delhi •. Thlir r¥or~m111. Du Gupta, J. ' '>' 1962 Tl~ Hindustan Tunes Ltd .• New Delhi v. Thier ~Vorkmeit Da.s Gupta, J. ' 238 SUPRE:ME COURT REPORTS [1964] VOL. the basic wage and the de~rness allowance. This wage scale has remained practically unaltered except for some special increments· given in the year 1948. By the award the Tribunal has introduced new wage scale for certain existing categories. of workmen and in some . cases . hits. introduced· ne\v. scales, after amalgamating more than . one· ·category. Thus certain· railway ; dcspatchers~ .. advertisers, Box No. sorters,' filing' clerks and bank,, clerks who were formerly in the ·scale of Rs. 50-4-!JO-EB-4-115 and Junior Clerks etc.; who had a scale of Rs. 60-100EB-4-115 :have an· been ·put ori."a new scale of Rs .. 70-5-loo:EB-5-150 .. There has been a similar ·. amalgamaticin of clerks; 'assistants, cashiers,' record ·.keepers and others some of whom were on Rs. 80-175 arid some on Rs. 80-203 scale, all of them· being now put on a new scale of Rs. !J0-200 .. · In both. cases the starting s'alary has. been· raised;. the.~maximum has been raised. for·· the first category; Supervisors and others who were formerly ori three different scales, some OD Rs. 125·350, some on Rs'. 125-300, and some ori Rs. 100-250, have allbeen amalgamated and have been put on a new scale'i:>f Rs. 100-350. Obviously, this would mean £lower starting salary for some and maximum for some. Job' Daftries some ofwhom were on Rs. 70-ll5 scale and others on Rs. 100-155 . have .an been put on. a new scale of Rs. 80 to Rs.1f.5, resulting thus in a lowering of starting salary for soine . and a. rise: of a higher maximum for all. A similar . lowering . in· the . starting salary has also occurred in cases : of some of the jobmachinemen. They were . formerly on two scales, one of Rs. 100-175 and the other of Rs. 75-175. The · Assistant Foremen. in the Job DepartmentJformerly on. Rs. 125,175 are put on a scale of Rs.125-202. \Vhere there has . been. no amalgamation the new scale has resulted in a slight increase in some cases · both ·in the starting salary and the maximum. ·In · some catagories, no change has~ bc;en made at all. I S.C.R. SUPREME COURT REPORTS 239 It is unnecessary to give more details of the difference between the old scale and the new scale as what has been mentioned above is sufficient to indicate that there has been some change in favour of the workmen, though this change is not much. The employer's contention before us is that there was no case for any revision whatsoever and the Tribunal acted wrongly in making any change in the old wage scale. The workmen's contention on the contrary is that the changes do not go far enough. The fixation of wage structure is among the mQst difficult tasks that industrial adjudication has to tackle. On the one hand not only the demands of social justice but also the claims of national economy require that attempts should be made to secure to workmen a fair share of the national income which they help to produce, on the other hand, care has to be taken that the attempt at a fair distribution does ·not tend to dry up the source of the national income itself. On the one hand, better living conditions for workmen that can only be possible by giving them a "living wage" will tend to increase the nation's wealth and income on the other hand, unreasonable inroads on the profits of the capitalists might have a tendency to drive capital away from fruitful employment and even to affect prejudicially capital formation itself. The rise in prices that often results from the rise of the workmen's wages may in its turn affect other members of the community and may even affect prejwdicially the living conditions of the workmen themselves. The effect of such a rise in price on the country's international trade cannot also be .tlways ignored. Thus numerous complex factors, some of which are economic and some spring from social philosophy give rise to conflicting considerations that have to be borne in mind. Nor does the process of valuation of the numorous factors remain static. While iuternational movements in the cause of labour bii.ve for many years influenced · thinking-and 1962 The Hindustan Tim11 Ltd., N1w Ddhi v. Thei' Workm1n Das Gupta. J. /J8Z 111 Hirttluslan ·rim1s Ltd., }leco Delhi v. 1Mir Workm111 Da.s C11pla, J. 240 SUPREME COURT REPORTS [1964] VOL. some· times even judicial thinking-in such matters, in this country, the emergence of an independent demo. cratic India has influenced the matter even more profoundly. GajPndragadkar, J. speaking for the Court in Standard Vacuum Refining Co., of India v. ft.9 IVorl~men ('), has observed.:- "In constructing a wage structure in a given case industrial adjudication does take into account to some extent considerations of right and wrong, propriety and improprir.ty, fairness and unfairness. As the social conscience of the general community becomes more alive and active, as the welfare policy of the State takes a more'l:lynamic form, as the national economy progresses from stage to stage, and as under the growing strength of the trade union movement, collective bargaining enters the field, wage structure ceases to be a purely arithmetical problem. Considerations of the financial position of the employer and the state of national economy have their s•.y. and the requirement~ of a workman living in a civilised and progres· sive society also come to be recognised.'' In trying to keep true to the two points of social philosophy and economic necessities which vie for consideration, industrial adjudica1ion has set for itself certain standards in the matter of wage fixati•>n. At the bottom of the ladder, there is the minimum basic wage which the employer of any industrial labour must pay in order to be allowed !o continue an industry. Above this is the fair wage, which may roughly be said to approximate to the need based minimum. in the sense of a wage which is "adequate to cover the normal needs of the average employee regarded as a human being in a civilised society.'' Above the fair wage is the "livin~ wage" -a wage "which will maintain the workman in the highest stale of industrial efficiency, which will enable him to (I) [1961] S.C.R. 536, 54l. 1 S.C.R. SUPREME COURT REPORTS 241 provide his family with all the material things which are needed for their health and physical well-being, enough to enable him to qualify to discharge his duties as a citizen." (Cited with approval by Mr. Justice Gajendragadkar in Standard Vacuum Company's Case (') from "The living Wage" by Philip Snowden). While industrial adjudication will .be happy to fix a wage structure which would give the workmen generally a living wage economic considerations make that only a dream for the future. That is why the industrial tribunals in this country generally confine their horizon to the target of fixing a fair wage. But there again, the economic factors have to be carefully considered. For these reasons, this Court has repeatedly cmpha,ised the need of considering the problem on an industry-cum-region basis. and of giving careful consideration to the ability of the industry to pay. (Vide Crown Aluminium's Gase ('); the E.rpress Newsp11pers Ltd., Gase (') and the Lipton's C1~se {'). On an examination of the Tribunal's award as regards the wage scale, we are satisfied that all the considerations mentioned above were present in the mind of the adjudicator and we are of opinion that there is nothing that would justify us in modifying the award either in favour of the employer or in favour of the workmen. lt is stated in the award that before the Tribunal the Company's representative desired that a fair wage level within its paying capacity should be evolved though at the time he argued that existing wage structure is quite fair "looking to the Company's financial position as well as the comparative rates prevailing in the other concern." The Tribunal has not accepted 'the Company's contention that the existing wage structure is fair, though at the same time it has held that the wage system needs no such radical change as -alleged by the Union. (I) [1961] S.C.R. 535, .513. (3) [191ql S.C.R. 12. (21 [1958] S.C.R. 651. (4) [1959] Supp. 2 S.C.R. 150. Jg62 Tlr1 Hindustan T m1t Ltd., New Dalhi •• Thlfr Workm,r. DOI 01/114, J. 1161 - n. H"""""" r..,,, IM., N111J Dt/Ai •• 71.v Wor'""" Dwl Gwplo, 1. 242 SUPREME COURT REPORTS [1964] VOL. Mr. Pathak, who appeared before us for the Company, did not seriously suggest that the present wage structure gives the employees "a fair wage." He argued generally that no case was made out for any revision of the wage structure. Such an extreme proposition has only to be mentioned to deserve rejection. At the time the Tribunal was dealing with this question the wage scale of the workmen in this concern had remained practically unaltered for almost 12 years-12 years of momentous change through which social ideas have moved forward in favour of workmen getting a better share of the national income; 12 years during which the new India was born and a Constitution was framed for this new democracy "to secure to all its citizens, justice, social and economic and political" and enshrining in its 43rd Article the principle that "the State shall endeavour to secure by suitable legislation or economic organisation or in any other way to all workers agricultural, industrial or otherwise" among other things "a living wage and conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities ............ _ ..... ". The mere passage of time and these revolutionary changes would be sufficient to convince any right thinking man of the need for revision of wage scales which, on the face of it, were far below the "living wage" and mostly also be low the "fair wage", provided the industry could bear the additional burden. The case for revision becomes irresistible when one takes into consideratim1 the further fact that the cost of living rose steeply during this period. On the basis of 1939 cost as 100, the index for 1946 was 282. By I 958 it had risen to 389. It may be mentioned that since then· there has be~n a further rise. Nor can it be seriously suggested that this concern cannot bear the burden of an incrca~ed wage scale. The Tribunal was, in our opinion, right in its conclusion that the material on record shows that the Company has been prospering and has financial 1 S.C.R. SUPREME COURT REPORTS 243 stability. We have for ourselves examined the balance-sheets and the c>ther materials on the record and have no hesitation in agreeing with that conclusion. Mr. Pathak's uphill task in the face of these balance-sheets already on the record to show that the Company would not be able to bear the burden of an increased wage scale has been made more difficult by the discovery that even after the implementation of the award the Company has made large profits during the years 1959-60, 1960-61 and 1961-62. It appears that when the Company was given special leave to appeal to this Court the operation of the Tribunal's award was stayed only in so far as it directed the management to pay a_rrears of the wages determined thereby but the operation of the award in so far as it related to the payment of wages from the date of the award was not stayed; and the management was directed to pay to the workmen from that date wageq in accordance with the wage scale fixed by the Tribunal by its award under appeal. The result of this has been that the Tribunal's award as regards the wage scales has been implemented with effect from the date of the award and it is possible for this Court to know how such additional payment has affected the financial position of the Company. It appears that after meeting the additional charges and also after payment of bonus and appropriation to reserves the net profits for the year 1959-60 rose to Rs. 8,0i,508/-. For the year 1960-61 these profits were Rs. 8,44,627/-. For the year 1961-62 the profits are shown in the balance-sheet as Rs. 59,955/-. That the Company has been prospering is clear. It has its own aeroplanes and possesses immovable properties of considerable value. It has built up good reserves and inspite of that it has been making good profits. It is reasonable to think that with the progress of education in the country and the increasing news mindedness of the people the future prospects of the Company are no less bright. On a consideration 1962 The Hindustan Times Lid., New D1/hi •• Their Workmtn D., Gupto, /. 1962 !ht HindtJs/IJn Tim~J Ltd., .1\'tw Dtlhi v. TMir JVorkmtn l'c; :.:}ta, J, 244 SUPREME COURT REPORTS [1964] VOL. of all this, we are clearly of opinion that .~fr. Pathak's contention that the wage scale fixeome categories the wage sea le under t be award is hig-ht~r than that in the Times of India, Delhi and the Statesman, Delhi, that \\'Ou!d be 110 groun::I for modifying the award in fa\'our of the Company. We have therefore come to cltr. cunclusion that there is no ground whatsoever. for murlifying the wage scale fixetatesman, Delhi, have been paying more to some categories of its workmen, the wage scale as fixed by the Tribunal should be raised at least for some of the categories. There is undoubtedly some force in the contention a'.ld it may be said that the Tribunal has been rather cautious in the matter of revision of wage scales. Even so, it has to be remembered that where, as in the present case, the proper principles have been applied by the Tribunal, it is not the practice of this Court to interfere, ordinarily, with details of this nature whcu exercising its special jurisdiction under Art. 136 of the Constitution. It also appears to us that the very fact that the Tribunal has been cautious in the matter of raising the wage scales has influenced it in the directions it has given on the question of adjustment of the present employees into the wage scale. In this way some relief has been given to the present employees which might otherwise have been given by raising the wage scale. On a consideration of all these facts we have reached the conclusion that it will not be 1962 The Hindustan Tim1s Ltd., A'ew Delhi v. 1'heir ~Vorkmtn Du G1uita, J. 246 SUPREME COURT REPORTS [1964] VOL. ', -- -'1962 proper for us to modify - the wage scales fixed by the Tribunal in favour of the workmen also. 'Thi Hilultatan Tim1s ~ - Lld., N1w Del/U •• Thir Workmm DtU Gupta, J. On the question of dearness allowance it is not disputed before us that in the Circumstances of the present case the Tribunal .icted rightly in awarding dearness allowance at a flat rate for all categories of -c-. workmen. On behalf of the Company it was however urged that the Tribunal has made an obvious -mistake_ in_ fixing the amount of dearness allowance at Rs. 25/-. · -For fixing the rate at Rs. 25/- the Tribunal has said :- \· - \ "In view of the revised scales as now laid down, I think the same should further be supplemented in the circumstances stated above by a flat rate -()f dearness allowance. in all cases: viz., -Rs. 25/- with. retrospective_ effect from the date - of reference so that the-lowest paidworker will start -not less than Rs. 75/-. I direct accordingly." - Mr. Pathak points_ out that the _lowest paid worker _for whom wage scales have been fixed will be getting under the award a minimum of Rs. 60/- so that with --the dearness allowance of Rs. 25/- "the lowest paid - worker" will start at RS .. 85/- and not Rs. 75/-. - Mr. Pathak.' suggests that the Tribunal has made a mistake in its calculation's and that having decided · that the lowest paid worker will start at not less than Rs .. 75/-, it should have fixed Rs. 15/- and not Rs. 25/- - as the dearness allowance. . This argument however overlooks the _fact that the reference as regards the dearness allowance was in respect of all categories ·or- - workmen, though the -reference as regards scales-of pay did not cover some categories, i·iz., mazdoors and canteen boys. They therefore continue to remaln on their old scale of Rs. 50-3-!'5. When the Tribunal - -in considering' the question of dearness allowance was -_ -thinking of the starting pay of the lowest paid worker - I S.C.R. SUPREME COURT REPORTS 247 it had obviously these categories in mind. Having concluded that the lowest paid worker should start at Rs. 75/· as the total amount of basic pay and dearness allowance the necessary conclusion reached by the Tribunal was that Rs. 25/- should be fixed as the dearness allowance. It is, in our opinion, proper and desiiabre-that the dearness allowance sheu!EI noc remain fixed at this figure but should be on a sliding scale. As was pointed out in Workmen of Hindusthan llfotors v. Hindusthan Motors (1), 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. On a copsideration of all the circumstances of this case, we direct that a sliding scale be attached to the dearness allowance of Rs. 25/- per month as awarded by the Tribunal on the lines that it will be liable to be increased or decreased on the basis of Re. 1/- for every ten points in case of rise and fall in the cost ofli ving from the base of 400, the 1939 index being taken to be 100 the sliding scale to take effect from April I, 1959. This brings us to the question of adjustment of 1he existing employees into the new scalr. The Tribunal has dealt with this matter thus :- " .. _ ... the adjustment in the new scales shall be made with retrospective effect from the date of the reference, viz., 23rd January, 1958. In making adjustment in the new scales no one shall be adversely affected and it shall be on the line laid down by the Industrial Tribunal in the case of Caltex India Ltd., 1951 LLJ. 654 at p. 659 read with para. 23 of the decision of the Labour Appellate Tribunal, reported in 1952 LLJ. 183 at page 188." It appears that in the case of Caltex India Ltd., (Supra) the Industrial Tribunal, West Bengal, gave (IJ (1962) 2 L.L.J. 352. 1962 Tiu Hindustan 1 imtJ Ltd., JW1 w Delhi v. Their Workmen Dc.s Gupta, J. 1~62 1111 llinfu.ilan 11mts Lttl., .Altw Dtllii v. 7fitir U'orAmtn 248 SUPREME COURT REPORTS [1964] VOL. the following directions for adjustment of employers into the wage scale fixed by it. "I. All employees for whom the scale has been stated above should be stepped up in the stage next above which the present pay is drawn. A specia 1 increment at the rate of one increment in the new scale for every three completed years of service should be given. 2. The employees whose salaries are less than the minimum prescribed will be pulled up to the minimum of the prescribed 5cale. 3. If the existing salary of an employee is higher than the salary he will be entitled to under the prcscr!!.Jed scale, there will be no cut and he will be stepped up to the nearest increase with the increments given above. 4. After the salaries are adjusted, no employee should be staggered and he will continue to get future increments. 5. If an employee be already drawing a salary which is higher than the maximum prescribed by the award, he will be subject· ed to no cut in his salary." This was fo:lowed by a direction as regards the date by which the adjustment was to be made. The Labour Appellate Tribunal modified these directions by introducing two provisions : (I) that the maximum of the grade should not be exceeded and (2) that the basic wage that was being paid to an ~mployee at the date of the award of the Tribunal is not to be affected to the employees' prejudice The employer's objection is to the provision that a special increment at the rate of one increment in the new scale for every l S.C.R. SUPREME COURT REPORTS 249 three completed years of service should be given. It is argued that such a provision may well be appropriate in a case where wage scale is being fixed for the first time or where even if there was already a wage scale in force the rate of increment in the new scale is much higher than that in the old wage scale, but not where, as in the present case, the increments under the new scale and the old scale are practically the same. We are not impressed by this argument. As was pointed out by this Court in a recent judgment in French lliotor Oar Co., Ltd. v. I ts Workmen (1), what adjustment should be given is to be decided when fixing wage scales whether for the first time or in place of an old existing scale has to be decided by industrial adjudication after consideration of all the circumstances of the case. It may well be true that in the absence of any special circumstances and adjustment of the nature as allowed in this case by allowing special increment in the new scale on the basis of service already rendered may not be appropriate. Clearly, however, in the present case the Tribunal took into consideration in deciding this question of adjustment the fact that it had been extremely cautious as regards increasing the old wage scales. Apparently, it thought that it would be fair to give some relief to the existing employees by means of such increase by way of adjustme11t while at the same time not burdening the employer with higher rates of wages for new incumbents. In these circumstances, we do not see any justification for interfering with the directions given by the Tribunal in the matter of adjustment. It will be convenient to consider at this stage the objection raised in the Company's appeal to the Tribunal's direction in connection with the interim agreement. As has been stated earlier, this agreement was arrived at between the parties when the dispute was before the Conciliation Officer. The (I) (1962) 2 L.L.J. 744. 1962 Thi I!induj/tJn Times Ltd., New Delhi v. Their Jt'orhmen Das Gupta, J, -- 250 SUPREME COURT REP(lRTS (1964] VOL. 1962 relevant portion of the agreement is m Thi Hilld.u