PETITIONER:
WORKMEN REPRESENTED BY SECRETARY
Vs.
RESPONDENT:
MANAGEMENT OF REPTAKOS BRETT.AND CO. LTD. AND ANR.
DATE OF JUDGMENT31/10/1991
BENCH:
KULDIP SINGH (J)
BENCH:
KULDIP SINGH (J)
MISRA, RANGNATH (CJ)
CITATION:
1992 AIR 504 1991 SCR Supl. (2) 129
1992 SCC (1) 290 JT 1991 (4) 243
1991 SCALE (2)940
ACT:
Labour law:
Industrial dispute--Minimum wages---Determination of
Dearness Allowance scheme--Whether can be altered to the
prejudice of workmen.
Industrial Tribunal--Abolition of existing dearness
allowance scheme--Directions to link dearness allowance with
pre-war cost of living index--Validity of.
Constitution of India:
Art 136.' Industrial Tribunal and High Court acting in
oblivion of legal position causing manifest injustice to
workmen---Supreme Court--Whether can interfere.
HEADNOTE:
The respondent-company, in its factory set up at Madras
1959, introduced slab system of dearness allowance (DA) i.e.
the DA paid to the workmen was linked to the cost of living
index as well as the basic pay. The double linked DA scheme,
being consciously accepted as basic constituent by the
company and its workmen in various settlements between them,
became basic feature of the wagestructure and remained
operative in the company for about 30 years,
In the year 1983, a dispute arose between the company
and its workmen. The matter was referred to the industrial
Tribunal. One of the issues before the Tribunal was based on
the demand of the Management for restructuring of the dear-
ness allowance scheme and to frame a new scheme. The Tribu-
nal abolished the existing slab system of DA and directed
the dearness allowance to be linked only to the cost of
living index at 33 paise per point over 100 points at the
Madras city cost of living index 1936 base.
Before the High Court, both the parties agreed not to
press their respective writ petitions except on the issue of
restructuring of
130
DA. Upholding the findings of the Tribunal on the sole
surviving issue, the Single Judge dismissed the workmen's
writ petition. The intra-Court appeal filed by the workmen
was also dismissed. grieved, the workmen filed the appeal by
special leave to this Court.
It was contended on behalf of the workmen that the
Tribunal and High Court grossly erred in taking Rs. 26 as a
pre-war wage of a worker in Madras region and holding that
the rate of neutralization on the basis of cost of living
index in December, 1984 was 192%; that even assuming that
there was over-neutralization, the existing pay structure/DA
scheme could not be revised to the prejudice of the workmen
unless their pay structure was within the concept of 'living
wage' and, in addition, it was proved that financially the
company was unable to bear the burden; and that the company
could not be permitted to abolish the DA scheme to the
detriment of the workmen much less on the plea that the said
scheme was more beneficial than the DA schemes adopted by
other industries in the region.
The respondent, contended that the company had proved to
the satisfaction of the Tribunal that financially it was not
in a position to bear the burden of existing DA scheme; that
its workmen were in a high-wage island and as such the
revision of DA scheme was justified. It was also contended
that so long as there was some basis and material to vali-
date the award, the jurisdiction under Article 136 of the
Constitution stood repelled.
On the question; whether the Management is entitled to
restructure the DA scheme to the prejudice of the workmen on
the ground that the existing system had resulted in over-
neutralization thereby landing the workmen in the high-wage
island
Allowing the appeal of the workmen, this Court,
HELD: 1.1. The management can revise the wage structure
to the prejudice of the workmen in a case where due to
financial stringency it is unable to bear the burden of the
existing-wage. But in an industry or the employment where
the wage structure is at the level of minimum wage, no such
revision at all, is permissible-not even on the ground of
financial stringency. [p. 142 E]
Monthly-Rated workmen at the Wadala factory of the Indian
Hume
131
Pipe Co. Ltd. v. Indian Hume Pipe Co. Ltd., Bombay, [1986] 2
S.C.R. 484, relied on.
M/s Crown Aluminium Works v. Their Workmen, [1958]
S.C.R. 651 & Ahmedabad Mills Owners' Association etc. v. The
Textiles Labour Assosication, [1966] 1 SCR 382, referred to.
Killick Nixon Ltd. v. Killick & Allied Companies Employ-
ees Union, [1975] Suppl. S.C.R. 453, distinguished.
1.2 The employees are entitled to the minimum wage at
all times and under all circumstances. An employer who
cannot pay the minimum wage has no right to engage labour
and no justification to
run the industry. [p. 137 C]
1.3 It is for the management, seeking to restructure the
DA scheme to the disadvantage of the workmen, to prove to
the satisfaction of the tribunal that the wage-structure in
the industry concerned is well above minimum level and the
management is financially not in a position to bear the
burden of the existing wagestructure. [p. 142 F]
2.1 'The concept of 'minimum wage' is no longer the same
as it was in 1936. Even 1957 is way-behind. A worker's wage
is no longer a contract between an employer and an employee.
It has the force of collective bargaining under the labour
laws. Each category of the wage structure has to be tested
at the anvil of social justice which is the live-fibre of
our society today. [pp. 136 H, 137 A]
2.2 The Tripartite Committee of the Indian Labour Con-
ference'- 1957 has formulated five norms for the fixation of
'minimum wage' (i) three consumption units for one earner
disregarding earnings of women, children and adolescents;
(ii) minimum food requirement based on net intake calories;
(iii) clothing requirement at 72 yards per annum for an
average working family of four; (iv) house rent correspond-
ing to minimum area provided for under the Government's
Industrial Housing Scheme; (v) 20% of total minimum wage for
fuel, lighting and other miscellaneous items. [p. 136 D-G]
Express Newspapers (P) Ltd. v. Union of India, [1959]
SCR 12, followed.
Standard Vacuum Refining Co. of India v. Its Workmen &
Anr., [1961] 3 SCR 536, relied on.
132
Keeping in view the socio-economic aspect of the wage
structure the following additional component has also to be
taken into account:
"(vi) children education, medical require-
ment, minimum recreation including
festivals/ceremonies and provision for old
age, marriages etc. should further constitute
25% of the total minimum wage,"
The wage structure which approximately answers these six
components is nothing more than a minimum wage at subsist-
ence level. [p. 137 A-C]
2.3 In spite of the promise by the Constitution of a
living wage and a 'socialist' framework to enable the work-
ing people a decent standard of life, industrial wage,
looking as a whole, has not yet risen higher than the level
of minimum wage. [p. 137 D-E]
3.1 Purchasing power of today's wage cannot be judged by
making calculations which are solely based on 30/40 years
old wagestructure. The only reasonable way to determine the
category of wage structure is to evaluate each component of
the category concerned in the light of the prevailing
prices. There has been skyrocking rise in the prices and the
inflation chart is going up so fast that the only way to do
justice to the labour is to determine the money value of
various components of the minimum wage in the context of
today. [p. 140 F-H]
3.2 In the instant case, the Company neither pleaded nor
argued before the Tribunal that its financial position had
so much deteriorated that it was not possible for it to bear
the burden of the slab system of DA; nor did the Tribunal
deal with this aspect of the matter while considering the
demand of the Company for re-structuring the DA scheme. [p.
144 F-G]
3.3 Although the DA paid by the Company was somewhat
higher than what was being paid by the other similar indus-
tries in the region, yet it could not be shown that what was
being paid by the Company was higher than what would be
required by the concept of need based minimum wage. In any
case there is a very long way between the need based wage
and the living wage. [p. 145 AB]
4. The Tribunal and the High Court acted in total
oblivion of the legal position. Consequently, manifest
injustice has been caused
133
to the workmen by the award. It can, therefore, not be said
that jurisdiction under Art. 136 stands repelled. [p. 145
CD]
Shaw Wallace & Co. Ltd. v. Workmen, [1978] 2 SCC 45 &
The Statesman Ltd. v. Workmen, [1976] 3 SCR 228, referred
to.
The Tribunal was not justified in abolishing the slab
system of DA which had stood the test of time for almost 30
years and had been approved by various settlements between
the parties and as such the award of the Tribunal and the
High Court judgments were unsustainable. [pp. 144 AB; 145
DE]
Buckingham and Carnatic Mills Ltd. v. Their Workers,
[1951] 2 L.L,.J. 314 & Good Pastor Press v. Their Workers,
[1951I 2 L.L.J. 718, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4336 (NL)
of 1991,
From the Judgment and Order dated 14.9.1989 of the
Madras High Court in Writ Appeal No. 697 of 1989.
M.K. Ramamurthy, Mrs. Chandan Ramamurthy and M.A.Krish-
namurthy for the Appellants.
F.S.Nariman, R.F.Nariman, T.S.Gopalan, Raian Karanjiwa-
la, Mrs. Manik Karanjiwala, Mrs. V.S.Rekha and Sajai Singh
for the Respondents.
The Judgment of the Court was delivered by
KULDIP SINGH, J. Special leave granted.
The Reptakos Brett & Co. Ltd. (hereinafter called the
‘Company’) is engaged in the manufacture of pharmaceutical
and dietetic speciality products and is having three units,
two at Bombay and one at Madras. The Madras factory. with
which we are concerned, was set-up in the year 1959. The
Company on its own provided slab system of Dearness Allow-
ance (DA) which means the DA paid to the workmen was linked
to cost of living index as well as the basic wage. The said
double-linked DA Scheme was included in various settlements
between the Company and the workmen and remained operative
for about thirty years. The question for our consideration
is whether the Company is entitled to re-structure the DA
scheme by abolishing the slab system and substituting the
same by the Scheme–prejudicial to the workmen–on the
ground that the slab system
134
has resulted in over-neutralisation thereby landing the
workmen in the high-wage island.
The first settlement between the Company and the workmen
was entered into on August 11, 1964. While accepting the
double-linked DA it further provided variable DA limited to
the cost of living index up to 5.41-5.50. Further relief was
given to the workmen in the settlement dated July 18, 1969
when the limit on the variable DA was removed. The Company
revised the rates of DA on August 7, 1971. Thereafter, two
more settlements were entered into on July 4, 1974, and
January 4, 1979, respectively. Slab system with variable DA
continued to be the basic constituent of the wage-structure
in the company from its inception.
The position which emerges is that in the year 1959 the
Company on its own introduced slab system of DA. In 1964 in
addition, variable DA to the limited extent was introduced
but the said limit was removed in the 1969 settlement. The
said DA scheme was reiterated in the 1979 settlement. It is
thus obvious that the slab system of DA introduced by the
Company in the year 1959 and its progressive modifications
by various settlements over a period of almost thirty years,
has been consciously accepted by the parties and it has
become a basic feature of the wage structure in the Company.
The workmen raised several demands in the year 1983
which were referred for adjudication to the Industrial
Tribunal, Madras. The Company in turn made counter demands
which were also referred to the said Tribunal. One of the
issues before the Tribunal was as under:–
“Whether the demand of the Management for re-structuring of
the dearness allowance scheme is justified, if so, to frame
a scheme?”
The Tribunal decided the above issue in favour of the
Company and by its award dated October 14, 1987 abolished
the existing slab system of DA and directed that in future
dearness allowance in the Company, be linked only to the
cost of living index at 33 paise per point over 100 points
of the Madras City Cost of living Index 1936 base. The
Tribunal disposed of the two References by a common award.
The Company as well as the workmen filed separate writ
petitions before the Madras High Court challenging the award
of the Tribunal. While the two writ petitions were pending
the parties filed a joint memorandum dated June 13, 1988,
before the High Court in the following terms:
135
“In view of the settlement dated 13.5.1988
entered into between the parties, a copy of
which is enclosed, both the parties are not
pressing theft respective writ petitions
except with regard to the issue relating to
re-structuring of dearness allow-
The learned Single Judge of High Court upheld the find-ings of the Tribunal on the sole surviving issue and dis-
missed the writ petition of the workmen. The writ appeal
filed by the workmen was also dismissed by the High Court by
its judgment dated September 14, 1989. The present appeal by
special leave is against the award of the Tribunal as upheld
by the High Court.Mr..M.K. Ramamurthy, learned counsel for the appel-
lants has raised following points for our cosideration:–(i) The Tribunal and the High Court grossly
erred in taking Rs. 26 as a per-war wage of a
worker in Madras region and, on that arith-
metic, reaching a conclusion that the rate of
neutralisation on the basis of cost of living
index in December 1984 was 192
per cent.(ii) Even if it is assumed that there was
over-neutralisation unless the pay structure
of the workmen is within the concept of a
‘living wage’ and in addition it is proved
that financially the Company is unable to bear
the burden–the existing pay structure/DA
scheme cannot be revised to the prejudice of
the work-men.(iii) In any case the DA scheme–which was
voluntarily introduced by the Company and
reiterated in various settlements cannot be
altered to the determent of the workmen.”
Before the points are dealt with, we may
have a fresh-look into various concepts of
wage structure in the industry. Broadly, the
wage structure can be divided into three
categories the basic “minimum wage” which
provides bare subsistence and is at poverty-
line level, a little above is the “fair wage”
and finally the “living wage” which comes at a
comfort level. It is not possible to demarcate
these levels of wage structure with any preci-
sion. There are, however, well accepted norms
which broadly distinguish one category of pay
structure from another. The Fair Wages Commit-
tee, in its report published by the Government
of India, Ministry of Labour, in 1949, defined
the “living wage” as under:“the living wage should enable the male earner
to provide for himself and his family not
merely the bare essentials of food,
136
clothing and shelter but a measure of frugal
comfort including education for the the chil-
dren, protection against illhealth, require-
ments of essential social needs, and a measure
of insurance against the more important mis-
fortunes including old age.”“The Committee’s view regarding “minimum wage was as under:
“the minimum wage must provide not merely for the bare
sustenance of life but for the preservation of the efficien-
cy of the worker. For this purpose the minimum wage must
also provide for some measure of education. medical require-
ments and amenities.”The Fair Wages Committee’s Report has been
broadly approved by this Court in Express
Newspapers (P) Ltd. v. Union of India, [1959]
SCR 12 and Standard Vacuum Refining Co. of
India v. Its Workmen and Anr., [1961] 3 SCR536.
The Tripartite Committee of the Indian
Labour Conference held in New Delhi in 1957
declared the wage policy which was to be
followed during the Second Five Year Plan. The
Committee accepted the following five norms
for the fixation of ‘minimum wage’:
“(i) In calculating the minimum wage, the
standard working class family should be taken
to consist of 3 consumption units for one
earner; the earnings of women, children and
adolescents should be disregarded.(ii) Minimum food requirement should be
calculated on the basis of a net intake of
calories, as recommended by Dr. Aykroyd for an
average Indian adult of moderate activity.(iii) Clothing requirements should be esti-
mated at per capita consumption of 18 yards
per annum which would give for the average
workers’ family of four, a total of 72 yards.(iv) In respect of housing, the rent corre-
sponding to the minimum area provided for
under Government’s Industrial Housing Scheme
should be taken into consideration in fixing
the minimum wage.
(v) Fuel, lighting and other ‘miscellaneous’
items of expenditure should constitute 20% of
the total minimum wage.”
This Court in Standard Vacuum Refining Compa-
ny’s case (supra) has referred to the above
norms with approval.
The concept of ‘minimum wage’ is no longer the
same as it was in
137
1936. Even 1957 is way-behind. A worker’s wage is no longer
a contract between an employer and an employee. It has the
force of collective bargaining under the labour laws. Each
category of the wage structure has to be tested at the anvil
of social justice which is the live-fibre of our society
today. Keeping in view the socio-economic aspect of the wage
structure, we are of the view that it is necessary to add
the following additional component as a guide for fixing the
minimum wage in the industry:–
“(vi) children education, medical require-
ment, minimum recreation including
festivals/ceremonies and provision for old
age, marriages etc. should further constitute
25% of the total minimum wage.
The wage structure which approximately answers the above six
components is nothing more than a minimum wage at subsist-
ence level. The employees are entitled to the minimum wage
at all times and under all circumstances. An employer who
cannot pay the minimum wage has no right to engage labour
and no justification to run the industry.
A living wage has been promised to the workers under the
constitution. A ‘socialist’ framework to enable the working
people a decent standard of life, has further been promised
by the 42nd Amendment. The workers are hopefully looking
forward to achieve the said ideal. The promises are
pilling-up but the day of fulfilment is nowhere in sight.
Industrial wage looking as a whole–has not yet risen
higher than the level of minimum wage.
Adverting to the first point raised by Mr. Ramamurthy
it would be convenient to quote–from the award–the conten-
tions of the Company and the findings reached by the Tribu-
nal. The Company’s case as noticed by the tribunal is as
under:–
“It is stated that the pre-war wage of a
worker in the Madras Region was Rs.26. It is
evidenced by the decision of the Labour Appel-
late Tribunal reported in 1951 1I L.L.J. page
314 (Buckingham and Carnatic Mills v. Their
workers) and 1951 II L.L.J. page 718 (Good
Pastor Press v. Their workers). It is contend-
ed that taking the pre-war minimum wage of
worker at Madr,ks being R:,. 26 per month
equivalent to 100 per cent neutralization the
rate of Dearness Allowance at 26 paisa for
every point above 100 points of cost of living
index would work out to 100 per cent neutrali-
sation. On the above basis at
138
2780 points of cost of living index in Decem-
ber 1984, the 100 per cent neutralised wage
should be Rs. 722.80 (basic wage of Rs. 26
plus dearness allowance of Rs. 696.80). As
against the above wage a workman of lower
grade in the Petitioner’Company in December
1984 was getting a total wage of Rs.
1,`394/comprising of basic plus dearness
allowance plus house rent allowance and the
rate of neutralisation of dearness allowance
correspondingly works out to 192 per cent.”
The Tribunal accepted the above contentions of the
Company. The evidence produced by the Company, regarding
prevailing DA schemes in the comparable industries in the
region, was also taken into consideration. The Tribunal
finally decided as under:
“Taking an overall view of the rate of dear-
ness allowance paid by these comparable con-
cerns in the region and the higher total
emoluments received by the workmen in this
establishment, the slab system of dearness
allowance now in existence shall stand abol-
ished and in future, dearness allowance in the
Petitioner-Management would be linked only to
the cost of living index at 33 paise per point
over 100 points of the Madras City Cost of
Living Index 1936 base and it shall be effec-
tive from the month in which the award is
published in the Tamil Nadu Gazette.”
The learned Single Judge of the High Court
upheld the above findings of the Tribunal. The
Division Bench of the High Court, in writ
appeal, approved the award and the judgment of
the learned Single Judge in the following
words–
“The learned judge has observed that the counsel for the
Management had taken him through all the relevant materials
which were filed in the form of Exhibits before the Tribunal
in order to show that the matter of over neutralisation
cannot be in dispute. Thus the learned Judge proceeded on
the basis that there is over neutralisation which called for
devising a scheme for restructuring the wage scale. This
finding cannot be interfered with as no materials have been
placed before us by the learned counsel for the appellant to
show that the exhibits which were perused by the learned
Judge do not support his conclusion. Hence, we hold that the
contention that there are no compelling circumstances in
this case to revise the pattern of dearness allowance is
unsustainable.”
139
According to the Company the only purpose of DA is to
enable a worker-in the event of a rise in cost of living–to
purchase the same amount of goods of basic necessity as
before. In other words the DA is to neutralise the rise in
prices. the said purpose can be achieved by providing maxi-
mum of 100 per cent neutralisation. Accepting the calcula-
tions of the Company based on Rs. 26 being the pre-war
(1936) minimum wage in Madras region the Tribunal came to
the finding that there was 192 per cent neutralisation.
The Tribunal accepted Rs. 26 as the pre-war minimum wage
in Madras region on the basis of the decisions of Labour
Appellate Tribunal of India in Buckingham and Carnatic Mills
Ltd. v. Their workers, [1951] 2 L.L.J. 314 and Good Pastor
Press v. Their workers, [1951] 2 L.L.J. 718.
In Buckingham case the appellate tribunal came to the
conclusion that the basic wage of the lowest category of
operatives on the living cost of index of the year 1936 was
Rs. 28. The said wage included Rs.16-1/2 as expenses on
diet. The workers relied upon the Textile Enquiry Commit-
tee’s report to claim 25% addition to the diet-expenses. The
Appellate Tribunal rejected the report on the ground that
the recommendations in the said report were for the purpose
of attaining the standard of “living wage” and not of ‘min-
imum wage’. The Appellate Tribunal stated as under:
“The Union however, contends that Dr. Akroyd revised his
opinion when submitting a specially prepared note to assist
the Textile Enquiry Committee, Bombay of which Mr. Justice
Divatia was the Chairman, where he is said to have stated
that 25 per cent more will have to be added for obtaining a
balanced diet for a minimum wage earner. The report of that
Enquiry Committee, which was published in 1940, however,
shows that Dr. Akroyd added 25 per cent as the costs of the
extra items to his standard menu such as sugar etc., for the
purpose of attaining the standard menu of ‘living wages’
(final report of the Textile Labour Enquiry Committee 1940,
Vol.II, pages 70 to 71). Therefore, for the purpose of
fixing ‘minimum wages’ that 25 per cent is not to be added.”
The question as to whether the recommendations of
Textile Enquiry Committee were in relation to ‘living wage’
or ‘minimum wage’ came for consideration before this Court
in Standard Vacuum case (supra). This Court held as under:
“It is obvious that the Committee was really thinking of
what
140
is today described as the minimum need-based
wage, and it found that judged by the said
standard the current wages were deficient. In
its report the Committee has used the word
‘minimum’ in regard to some of the constitu-
ents of the concept of living wage, and its
calculations show that it did not proceed
beyond the minimum level in respect of any of
the said constituents. Therefore, though the
expression ‘living wage standard’ has been
used by the Committee in its report we are
satisfied that Rs. 50 to Rs. 55 cannot be
regarded as anything higher than the need
based minimum wage at that time. If that be
the true position the whole basis adopted by
the appellant in making its calculations turns
out to be illusory.”
This Court, therefore, in Standard Vacuum case came to
the conclusion that the Textile Labour Committee Report in
the year 1940 in its calculations did not proceed beyond the
minimum level of the wage structure. It was further held
that Rs. 50 to Rs. 55 was the need-based minimum wage in the
year 1940.
The Appellate Tribunal in Buckingham case, therefore
misread the Textile Committee Report and was not justified
in rejecting the same on the ground that it related to the
category of ‘living wage’
We are of the view that it would not be safe to accept
the findings of the Appellate Tribunal in Buckingham case as
the basis for fixing the wage structure to the prejudice of
the workmen. This court in Standard Vacuum case (supra) has
further held that in Bombay the minimum wage in the year
1940 was Rs.50 to Rs.55. On that finding it is not possible
to accept that the minimum wage in the year 1936 in Madras
region was Rs.26/28. So far as the Good Pastor Press case is
concerned the question of determining the minimum wage in
per-war 1936 was not before the Appellate Tribunal. It only
mentioned the fact that Rs.26 was held to be so by some of
the subordinate tribunals. There was no discussion at all on
this point. The Tribunal’s reliance on this case was wholly
misplaced.
In any cause we are of the opinion that purchasing power
of today’s wage cannot be judged by making calculations
which are solely based on 30/40 years old wage structure.
The only reasonable way to determine the category of wage
structure is to evaluate each component of the category
concerned in the light of the prevailing prices. There has
been sky-rocking rise in the prices and the inflation chart
is going up so fast that the only way to do justice to the
labour is to determine the money value of various components
of the minimum wage in the context of today.
141
We may now move on to the second and third point raised
by Mr. Ramamurthy. We take up these points together. Mr.
F.S. Nariman, learned counsel appearing for the Company,
contended that the existing DA scheme can be revised even to
the prejudice of the workmen and for that proposition he
relied upon the judgment of this Court in M/s. Crown Alumin-
ium works v. Their Workmen, [1958] S.C.R. 651. Mr. Rama-
murthy has, however, argued that even if the contention of
Mr. Nariman is accepted in principle, the Company has not
been able to make-out a case for such a revision. In M/s.
Crown Aluminium Works case this Court speaking through
Gajendragadkar, J.(as he then was) held as under:–
“The question posed before us by Mr. Sen is:
Can the wage structure fixed in a given indus-
try be never revised to the prejudice of its
workmen? Considered as a general question in
the abstract it must be answered in favour of
Mr. Sen. We do not think it would be correct
to say that in no conceivable circumstances
can the wage structure be revised to the
prejudice of workmen. When we make this obser-
vation, we must add that even theoretically no
wage structure can or should be revised to the
prejudice of workmen if the structure in
question falls in the category of the bare
subsistence or the minimum wage. If the wage
structure in question falls in a higher cate-
gory, then it would be open to the employer to
claim its revision even to the prejudice of
the workmen provided a case for such revision
is made out on the merits to the satisfaction
of the tribunal. In dealing with a claim for
such revision, the tribunal may have to con-
sider, as in the present case whether the
employer’s financial difficulties could not be
adequately met by retrechment in personnel
already effected by the employer and sanc-
tioned by the tribunal. The tribunal may also
enquire whether the financial difficulties
facing the employer are likely to be of a
short duration or are going to face the em-
ployer for a fairly long time. It is not
necessary, and would indeed be very difficult,
to state exhaustively all considerations which
may be relevant in a given case. It would,
however, be enough to observe that, after
considering all the relevant facts, if the
tribunal is satisfied that a case for reduc-
tion in the wage structure has been estab-
lished then it would be open to the tribunal
to accede to the request of the employer to
make appropriate reduction in the wage struc-
ture, subject to such conditions as to time or
otherwise that the tribunal may deem fit or
expedient to impose.”
142
The above dicta was reiterated by this Court in Ahmeda-
bad Mills Owners, Association etc. v. The Textiles Labour
Association, [1961] 1 SCR 382 wherein this Court through
Gajendragadkar, CJ, laid down as under:–
“The other aspect of the matter which cannot
be ignored is that if a fair wage structure is
constructed by industrial adjudication and in
course of time, experience shows that the
employer cannot bear the burden of such wage
structure, industrial adjudication can, and in
a proper case should revise the wage struc-
ture, though such revision may result in the
reduction of the wages paid to the
employees……………….. if it appears
that the employer cannot really bear the
burden of the increasing wages bill industrial
adjudication, on principle, cannot refuse to
examine the employer’s case and should not
hesitate to give him relief if it is satisfied
that if such relief is not given, the employer
may have to close down his
business……………. This principle,
however, does not apply to cases where the
wages paid to the employees are no better than
the basic minimum wage. If, what the employer
pays to his employees is just the basic sub-
sistence wage, then it would not be open to
the employer to contend that even such a wage
is beyond his paying capacity.”
The ratio which emerges from the judgments of this Court
is that the management can revise the wage structure to the
prejudice of the workmen in a case where due to financial
stringency it is unable to bear the burden of the existing-
wage. But in an industry or employment where the wage struc-
ture is at the level of minimum wage, no such revision at
all, is permissible – not even on the ground of financial
stringency. It is, therefore, for the management, which is
seeking restructuring of DA scheme to the disadvantage of
the workmen to prove to the satisfaction of the tribunal
that the wage-structure in the industry concerned is well
above minimum level and the management is financially not in
a position to bear the burden of the existing wage struc-
ture.
Mr. Ramamurthy further relied upon this Court’s judgment
in MonthlyRated workmen at the Wadala factory of the Indian
Hume Pipe Co. Ltd. v. Indian Hume Pipe Co. Ltd., Bombay,
[1986] 2 S.C.R. 484 and contended that an employer cannot be
permitted to abolish the DA scheme which has worked smoothly
for almost thirty years on the plea that the said scheme is
more beneficial than the DA schemes adopted by other indus-
tries in the region. In the Indian Hume Pipe Co. Ltd case
the management pleaded
that the dearness allowance enjoyed by the workmen was so
high in certain cases that neutralisation was at rates much
higher than 100%. It was further contended that the manage-
ment did not have the capacity to pay the slab system of DA
and in the event of a claim for similar DA by other workmen
the management might have to close down the factories.
Khalid, J. spoke for the court as under:–
“We thought it necessary to refer to the
various awards read by Mr.Pai only for the
completeness of the judgment. It has to be
borne in mind that in most of these cases,
awards were passed at the instance of the
employees when demands were made for raising
the dearness allowance paid to them. Here, we
have the case of the employer trying to get
over a system of dearness allowance which had
worked smoothly for 18 years, on the specious
plea that at the time the slab system was
introduced, it was not in the expectation of
anyone that the cost of price index would
spiral up so much as to make it impossible for
the company to pay according to this scheme.
From the materials available we do not find
that this plea can be accepted. The records
produced show that despite this system of
dearness allowance the Company has been making
profits and has been improving its position
year by year…………. we do not think it
necessary to deal at length about the evolu-
tion of the concept of dearness allowance.
Suffice it to say that this Court has, often
times, emphasised the need for a living wage
to workmen instead of a subsisting wage. It is
indeed a matter of concern and mortification
that even today the aspirations of a living
wage for workmen remain a mirage and a
distant dream. Nothing short of a living wage
can be a fair wage. It should be the combined
effort of all concerned including the Courts
to extend to workmen a helping hand so that
they get a living wage which would keep them
to some extent at least free from want. It is
against this background that a claim by em-
ployers to change the conditions of service of
workmen to their detriment has to be consid-
ered and it is against this background that we
have considered the award review. We are not
satisfied that a case has been made out on the
facts available for a
change………………. The question is
often asked as to whether it would be advisa-
ble for Tribunals and Courts to revise the
wage structure of workmen to their prejudice
when a dispute arises. Normally the answer
would be in the negative. Tribunals and Courts
can take judicial notice of one fact; and that
is that the wages of workmen, except inexcep-
tionally rare cases,
144
fail within the category of mere “sub-
sisting wages”. That being so, it would be
inadvisable to tinker with the wage structure
of workmen except under compelling circum-
stances.”
We agree with Mr. Ramamurthy that the DA scheme–which
had stood the test of time for almost thirty years and had
been approved by various settlements between the
parties–has been unjustificably abolished by the Courts
below and as such the award of the Tribunal and the High
Court Judgments are unsustainable.
Mr. Nariman has also relied on the judgment of this
Court in Killick Nixon Ltd. v. Killick & Allied Companies
Employees’ Union, [1975] Suppl. S.C.R. 453 to support the
findings of the Tribunal and the High Court. The said case
does not lay down that in all cases the slab system of DA
should be abolished to the prejudice of the workers. In the
said case this Court on the facts of the case came to the
conclusion that the employer had made out a case for putting
a ceiling on the dearness allowance. The ratio of that case
cannot be extended to interfere with the existing DA schemes
in every case where such schemes are beneficial to the
workmen.
Mr. Nariman has invited our attention to para 20 of the
Award wherein the tribunal has held as under:
“These figures as detailed in Ex.M-13 would
establish that the company is not in a finan-
cial position to bear the additional burden on
account of increased wages.”
From the above finding it was sought to be shown that
the Company has proved to the satisfaction of the Tribunal
that financially it was not in a position to bear the burden
of the existing DA scheme. We do not agree with the learned
counsel. The Tribunal gave the above finding in the refer-
ence made on behalf of the workmen asking for bonus increase
and various other monetary benefits. While rejecting the
demands of the workmen the Tribunal gave the above finding
which related to the additional burden accruing in the event
of acceptance of the workers’ demands. The Tribunal nowhere
considered the financial position of the company vis-avis
the existing DA scheme. The Company neither pleaded nor
argued before the Tribunal that its financial position had
so much deteriorated that it was not possible for it to bear
the burden of the slab system of DA. The Tribunal has not
dealt with this aspect of the matter while considering the
demand of the Company for re-structuring the DA scheme.
It has been pleaded by the company that its workmen are
in a high wage island and as such the revision of DA scheme
was justified. The
145
Company also produced evidence before the Tribunal to show
that comparable concerns in the region were paying lesser DA
to its workmen. On the basis of the material produced before
the Tribunal all that the Company has been able to show is
that the DA paid by the Company is somewhat higher than what
is being paid by the other similar industries in the region.
There is, however, no material on the record to show that
what is being paid by the company is higher than what would
be required by the concept of need based minimum wage. In
any case there is a very long way between the need based
wage and the living wage.
Mr. Nariman reminded us of the limits on our jurisdic-
tion under Article 136 of the Constitution of India and
relying upon Shaw Wallace & Co. Ltd. v. Workmen, [1978] 2
SCC 45 and The Statesman Ltd. v. Workmen, [1976] 3 SCR 228
contended that so long as there is “some basis, some materi-
al to validate the award” the “jurisdiction under Article
136 stands repelled”. The Tribunal and the High Court, in
this case, has acted in total oblivion of the legal position
as propounded by this court in various judgments referred to
by us. Manifest injustice has been caused to the workmen by
the award under appeal. We see no force in the contention of
the learned counsel.
In view of the above discussion we are of the view that
the Tribunal was not justified m abolishing the slab system
of DA which was operating in the Company for almost thirty
years. We allow the appeal and set aside the award of the
Tribunal and the judgment of the learned Single Judge in the
writ petition and of the Division Bench in the Writ Appeal.
The reference of the Company on the issue of re-structuring
of the dearness allowance is declined and rejected. The
Appellant-workmen shall be entitled to their costs through-
out which we assess at Rs. 25,000.
R.P. Appeal
allowed:
146