PETITIONER: MANAGEMENT OF THE D.C.M. CHEMICAL WORKS Vs. RESPONDENT: THEIR WORKMEN DATE OF JUDGMENT: 01/03/1962 BENCH: ACT: Industrial Dispute--Company undertaking several concerns If--independent units--Wage structure--Incremental scales-- Minimum wage and fair wage, distinction--Gratuity in addition to Provident Fund--Scheme for--If can be framed. HEADNOTE: The disputes between the appellant, the management of the D.C.M. Chemical Works which was a constituent unit of the Delhi Cloth and General Mills Limited (the Company), and its workmen related, inter alia, to wage scales and gratuity. The workmen claimed that the chemical works was an integral part of the Company and, therefore, the over-all position of the Company should be taken into account in fixing the wage- structure. The Industrial Tribunal to which the matter was referred held that in the circumstances of the case the chemical works should be treated as an independent unit and that the wage-structure etc.. could not be fixed on the basis of the over. all position of the Company. The facts showed that the high the Company was a single limited concern owning and controlling various industrial units of different kinds under it. There were certain features which went to show that the various undertakings carried on by the Company had been treated as independent concerns and could not lead to the conclusion that they were one integrated whole. It was found that (i) each unit had separate books of account and separate profit and loss account, (ii) each unit had separate muster rolls for its employees, and transfers from one unit to the other usually took place with the consent of the employees concerned, (iii) each unit had its own separate wages and dearness allowance and bonus was also paid differently in each concern,(iv) where sales took place from one unit to another they were at market price and not at cost price, and (v) each unit had its own separate management. The evidence showed that throughout the course of its existence since 1942 the chemical works had made profits only in two years and that for the rest of the time it had been making losses which had to be met by the Com- pany out of the profits of other units. Held, that on the facts found in the present case, there was no nexus of integration between different lines of business carried on by the Company and that the Tribunal was right in 517 its conclusion that the chemical works was' an independent unit and that, therefore, in fixing the wage structure etc., one had to look to the position of the chemical works only and could not integrate it with other units. The Associated Cement Companies Limited, Chaibassa Cement Works,Jhinkpani v. Their Workmen, (1960) 1 S.C.R. T, 703, Pratap Press etc. v. Workmen, (1960) 1 L.L.J. 497, Pakshi- raja Studios V. Workmen, (1961) 2 L.L.J. 380 and Hony. Secretary, South India Milloumers'Association v. Secretary, District Coimbatore District Textile Workmen Union, (1962) (2) S.C.R. (Supp.) p. 926 relied on. Fine Knitting Co. Ltd. v. Industrial Court, Bombay, (1962) (3) S.C.R. (Supp.) p. 196, applied. Held, further, that in making a direction for the fixation of an increased fair wage on an incremental scale, the present financial condition of the concern and its stability are both necessary to be considered. There is a difference between a minimum wage and fair wage which is above the bare minimum wage. In the former case the tribunal could insist that the employer paid minimum wages even out of capital. Messrs Crown Aluminium Works v. Their Workmen, (1958) S.C.R. 651, referred to. Held, also, that it is well settled that both gratuity As well as provident fund schemes can be framed in the same concern if its financial position allows it, and that though the financial position of the chemical works had not been found to be good and stable enough to warrant an incremental wage structure, the direction given by the Tribunal for the framing of a gratuity scheme was not erroneous, as it was a long term provision and there was no reason to suppose that in the long run the appellant would not be in a flourishing condition. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 4 and 5 of
1962.
Appeals by special leave from the award dated January 25,
1960, of the Industrial Tribunal, Delhi in I.D. No. 40 of
1957.
A.V. Viswanatha Sastri, A. N. Sinha, and S.
Venkatakri,shnan for the appellant (in C.A. No. 4 of 62) and
the respondent (in C.A. No. 5 of 1962).
518
A.S. B. Chari. R. K. Garg, D. P. Singh, S. C. Agarwala
and M.K. , Ramamurthi for the respondents (in C.A. No. 4 of
62) and the appellants (in C.A. No. 5 of 62).
1962. March 1. The Judgment of the Court was delivered by
WANCHOO, J.-These two appeals by special leave arise out of
the same award-of the Industrial Tribunal, Delhi, and will
be dealt with together. Appeal No. 4 is by the management
of the D.C.M. Chemical Works while appeal No. 5 is by the
workmen. The management hereinafter will be referred to as
the appellant for the purposes of both appeals and the-
workmen will be referred to as respondents. A dispute arose
between the parties with respect to various matters
including wage scales, dearness allowance and gratuity. As
the parties could not come to terms it was referred to the
industrial tribunal for adjudication and there were as many
as eleven issues which were the subject-matter of reference.
The main point however on which the parties differed was
whether in determining the wage-structure etc. of the
chemical works which is a constituent unit of the Delhi
Cloth and General Mills Limited (hereinafter called the
Company), the over-all position of the Company should be
taken into account or only the position of this one unit,
namely, the chemical works. The respondents contended that
the chemical works was an integral part of the Company and
therefore the over-all position of the Company should be
taken into account and the wage-structure etc. fixed
accordingly; in particular it was pointed out that there
were differences in wage-structure etc. between the various
units which were controlled and owned by the Company and
which were all situate in the same area in Delhi and that
those differences should be eliminated and all the
enterprises in Delhi controlled by the Company should be
treated on the same footing. On the other band the
contention of the
519
appellant was that though the chemical works was one unit of
a large number of industries controlled by the Company, some
of which were situate in the same area in Delhi, the various
units were independent industries and each unit had to be
considered on its own, and the wage-structure etc. fixed on
the basis of the financial position of each unit ;in
particular, it was urged that two of the main units in Delhi
were the textile mills run by the Company and the claim of
the respondents that the chemical works should in all
matters be treated on a par with the textile units was
untenable, on the ground, among others, that it would be
against the principle of industry-cum-region. Before there-
fore we take up the particular matters raised in the two
appeals before us, we shall first have to consider whether
the claim of the respondents that the overall position of
the Company should be taken into account in fixing the wage-
structure etc. of the chemical works is sound ; for if that
position is accepted, the award may have to be set aside as
the tribunal has held that in the circumstances of this case
the chemical works should be treated as an independent unit
and that the wage-structure etc. therein cannot be fixed on
the basis of the over-all position of the Company.
In order to appreciate the various contentions put forward
by the parties on this question it may be useful to look
into the history of the Company and how it has grown. The
Company came into existence in 1889 with a modest capital of
about Rs. 10 lacs. It seems that the policy of those in
control of the Company was to slough back a substantial part
of the profits into the industry itself and to create a
reserve for that purpose. Originally the Company started
with a textile mill but in course of time with the help of
sloughed back profits and also with the aid of further
capital, the Com. pany set up a large number of other
industrial
520
concerns in Delhi and elsewhere. In Delhi itself, the
Company now has the Delhi Cloth Mills, the Swatantra Bharat
Mills which are both textile concerns, the D.C.M. Tent
Factory established in 1940, and the chemical works with
which we are concerned in the present appeals. Besides,
there are other industrial concerns owned and controlled by
the Company outside Delhi, as for example, the Daurala Sugar
Works established in 1932, the Lyallpur Cotton Mills in’
1934 and the Mawans Sugar Works in 1940.
The chemical works were started in 1942 and the only line of
production at that time was sulphuric acid. In 1943, an
alum plant was set up, in 1944 a soap plant, in 1945 a
superphosphate plant and in 1946 a contact sulphuric acid
plant. In 1. 947 a vanaspati plant was established and also
a power house was erected in order to meet the requirements
of the vanaspati plant. In 1948-49 a caustic soda plant was
added so that what began as modest subsidiary to the textile
mills has now expanded into a full fledged unit for
production of chemicals and vanaspati. The total capital
which was originally about Rs. 10 lacs when the Company
started in 1889 has now grown to Rs. 4 crores. Even. so the
capital employed in the chemical works has always been found
from the reserves of the Company and is now of the order of
over a crore. It is also not in dispute that very little
out of the production of the chemical works is used in the
textile mills of the Company and that by far most of the
production is sold in the open market. Further even the
small part of the production that is used by other units is
charged at market rates and not at cost price, so that for
all practical purposes the chemical works is being run as an
independent unit.
Certain features have however been pointed out by the
respondents to show that the over-all
521
position of the Company should be taken into account in
determining the wage-structure etc. of the chemical works
which should be treated as an integral part of the entire
industry of all kinds carried on by the Company. These
features are : no unit has any separate paid up capital and
there is no separate depreciation fund or reserve fund for
each unit ; the Company publishes one balance-sheet showing
the total profits of all the undertakings after taking into
account losses incurred in any undertaking ; the
shareholders of the Company are the shareholders in all the
unit,% ; the Company has got one board of directors and a
common managing agency and the policy of the various units
is determine on the basis of the Company as one integrated
unit; the profits of the Company are all pooled together and
the profits in any undertaking are not earmarked for
expenditure in that undertaking; the dividends are paid from
to profits of the Company as a whole; the Company has a
single provident fund for all its employees in all its units
and the Company has established various units from the
profits earned by the Company as a whole in the past and
incometax is paid on the entire profits of the Company made
by all the units after taking into account the losses, if
any, incurred by a particular unit. It is urged therefore
on behalf of the respondents that these features are
sufficient to establish that all the different industries
carried on by the Company are one integrated whole and
therefore in fixing the wage-structure etc. for the chemical
works this overall position should be taken into account.
There is however in our opinion a’very cogent reply to these
features pointed out on behalf of the respondents, and that
is that the Company is a single limited concern owning and
controlling various industrial units of different kinds
under it and therefore under the Company Law as the Company
is on* legal entity these features are bound to be common
and may not to enough to lead to the conclusion ,that
522
the various undertakings carried on by the Company are one
integrated whole and therefore when wagestructure etc. has
to be fixed in any particular. unit the over-all position
of’ the Company as a whole must be taken into account.
On the other hand there are certain features which have been
pointed, out by the tribunal and which are not in dispute
which go to show that the Company has been treating its
various units as independent concerns in actual practice.
Each unit has separate books of account and separate profit
and loss account showing how each particular business is
faring. Each unit has separate muster-rolls for its
employees and transfers from one unit to the other, even
where such transfers are possible considering the utterly
different kinds of business that the Company is carrying on,
usually take place with the consent of the employees
concerned. Further each unit has got its own separate wages
and separate dearness allowance and other different
allowances and bonus is also paid differently in each
concern. Further even where sales take place from one unit
to another they take place at market rate and not at cost
price and are adjusted on this basis in the books of
account. Lastly though there is a common board of directors
and a common managing agency of the Company. each unit has
its own separate management as it is bound to be for the
business carried on by different units is in many cases
utterly different.
It is on these facts that we have to see whether the
chemical works can be said to be so integrated with the
other units of the Company as to justify the conclusion that
it is part of the same business, and the entire business
carried on the Company is one establishment, and therefore
it would not be right to have different wage-structure,
dear_ ness allowance, etc., in the same establishment.
523
This matter was considered by this Court in connection with
Jay-off in The Associated Cement Companies Limited, Chaibasa
Cement Works, Jhinkpani v. Their Workmen(1), where tests
were laid down for determining whether a particular unit is
part of a bigger establishment. These tests included
geographical proximity, unity of ownership,. management and
control, unity of employment and conditions of service,
functional integrality and general unity of purpose. But it
was pointed out that it is was impossible to lay down any
one test as an absolute and invariable test for all cases
and the real purpose of these tests was to find out the true
relation between the parts, branches, units. If in their
true relation they constitute one integrated whole, then the
establishment is one ; if on the contrary they do not
constitute one integrated whole, each unit is then a
separate unit. How the relation between the units will be
judged must depend on the facts proved. Thus in one case
the unity of ownership, management and control may be the
important test, in another case, functional integrality, or
general unity may be the important test; and in still
another case, the important test may be the unity of
employment. It was pointed out that in a large number of
cases several tests may fall for consideration atthe same
time and the difficulty of applying these tests arises
because of the complexities of modern industrial
organization. The matter was considered again by this Court
in Pratap Press etc. v. Workmen (2), Pakshiraj Studios v.
Workmen(3) Hony. Secretary, South India Millowners’
Association’ v. Secretary, District Coimbatore District
Textile Workmen Union (4) and Fine Knitting Co. Ltd. v.
Industrial Court, Bombay(4). In the case of Fine Knitting
Co., this Court was considering one limited company but it
was held in the circumstances that even though there was
unity of ownership, management and control the two parts of
the same concern
(1) [1960] 1 S.C.R. 703.
(3) [1961] 2 L. L. J. 380.
(2) [1960] 1 L.L. J. 497
(4) C. A. 4 IQ of 1960, decided on 1-2-62.
(5) C.A. 306 of 1961. decided on 15-2-1962.
524
different units as there was no functional integrality
between them. It is on the basis of these tests that we
have to consider whether the tribunal was right in its
conclusion that the chemical works has to be treated as an
independent unit.
The common features which have been emphasized on behalf of
the respondents are in our opinion clearly capable of
explanation on the ground that the Company is a limited
concern and carries on different kinds of business. But as
in law under the Companies Act, the Company being a limited
concern is one legal entity, the Common features on which
the respondents rely follow from that one single
circumstance, namely, that the Company is a limited concern
governed by the Company Law. It would therefore in our
opinion be not right to emphasis these common features and
to hold on their basis only that the various businesses
carried on by the Company have to be treated as one
integrated whole for the purposes of wage-structure etc.’
The outstanding fact in the present case is that though a
large number of businesses is being carried on by the
Company their nature in many cases is utterly different and
one has generally speaking nothing to do with the other.
The three main lines of business which the Company is
carrying on are sugar, textiles and chemicals. It .is
obvious that there is nothing common between these three
different lines of business and there can be no question of
one depending upon the other and there cannot be functional
integrality generally speaking between these three lines of
business. There might be some connection speaking between
the chemical works and the textile mills of the Company
inasmuch as some of the chemicals might be used in the
textile mills; but the evidence shows that a very small
proportion of the chemicals produced in the chemical works
is used in the textile mills and that most of the production
is sold in the open market. It cannot’ therefore be said
that the chemical works as it now
525
exists is therefor the purposes of the textile mills and is
thus integrated with the textile- mills. Even in the matter
of employment the evidence is that there is separate
recruitment of labour for the different units and each unit
has separate muster rolls of employees and this is quite
natural considering that different skill is required for the
three lines of business carried on by the Company. It
cannot also be said that there is any essential dependence
of the chemical works on the textile units or that one
cannot be operated without the other. Further the way in
which the Company has been dealing with different units in
the past also shows that they have been treated as
independent units. Each unit has its own separate labour
union and separate agreements are entered into between the
Company and its unions with respect to the conditions of
service which are also different for different Units. Even
in the matter of bonus there are differences between the
different units and these differences sometimes arose out of
different agreements between the various units and their
unions. It appears that even in the case of units carrying
on the same business, as for example, textile, the workmen
themselves contended in an earlier adjudication that the
Delhi Cloth Mills and the Swats Bharat Mills were two
distinct and separate units of the Company. In any case
whatever may be said as to the units in the same line of
business it is in our opinion perfectly clear that there is
no nexus of integration between different lines of business
carried on by the Company on the facts which have been
proved in this case. We are of opinion therefore that the
ratio of the decision in the Fine Knitting Co.’s case(5)
applies to the facts of this case and it must be held that
the chemical works is an independent unit and therefore in
fixing the wage structure etc. we have to look to the
position of the chemical works only and cannot
(5) C.A. 306 of 1961, decided on 15-2-1962.
526
integrate it with other units and consider its wage
structure etc. on the basis of such integration.
It is in the background of the above finding, namely, that
the chemical works is an independent unit that we now come
to the specific points raised in the two appeals. We shall
first take the appeal by the workmen. The following four
contentions only were pressed before us on their behalf :-
(i)Even considering the chemical works as an
independent unit, the tribunal should have
fixed a wage structure including incremental
scales ;
(ii)The tribunal should have given the same
minimum scales to the workmen employed in the
canteen as are being given to the other
workmen in this concern;
(iii)The tribunal should have made those
members of the civil engineering ‘department
who had been working for more than one year
permanent and should have given them the same
terms and conditions of service as are enjoyed
by other workmen of the concern ;
(iv)The tribunal should have awarded further
bonus to the workmen.
Re. (i)
The contention on behalf of this respect is that there are
no incremental scales in this concern and the tribunal,
should have at any rate made a beginning by fixing some
incremental scales for the workmen. The tribunal however
has refused to fix incremental scales on the ground that the
concern has neither financial ability nor stability to
justify the fixing of incremental scales at the present
time. It is not in dispute that throughout
527
the course of its existence the chemical works has made
profits only in two years and that for the rest of the time
it has been making losses which had to be met by the Company
out of the profits of other units. Reliance in this
connection has been placed on behalf of the respondents on
certain observations in the Tariff Commission Report and on
a book called “Fertilizers Statistics in India” to show that
the chemical industry has a very prosperous future in front
of it. Reliance has also been placed on a communication
addressed by the appellant to the respondents in which it
has been said that judging from sound business principles
the chemical works had not yet turned the corner of losses,
but the position appeared brighter, and it was hoped that
with the co-operation of labour the chemical works would be
an asset to the D. C. M. family. Our attention has also
been drawn to various annual reports in which an optimistic
picture has been painted by the directors for the benefit
of the shareholders. We agree however with the tribunal
that in spite of the possibility that in time to come the
chemical works might acquire stability and prove a source of
increasing profit to the Company, the fact remains that upto
now the. chemical works has been running at a loss except
for two years and one cannot be certain that it will start
earning profits soon. In these circumstances it seems to us
that the tribunal was justified in not framing an
incremental scale of wages at the present juncture as that
would put a heavy strain on the finances on the chemical
works which has yet to attain financial stability. At the
present moment the losses incurred in this unit have to be
met froth the profits earned in other units of the Company
and in this situation we do not think that the tribunal was
wrong in refusing, to frame incremental scales.
It is however urged on behalf of the respondents that if in
the course of the last twenty years the capital invested in
the chemical works has increased
528
tremendously as compared to the modest amount with which it
was started in 1942 and if the Company can find capital for
the purpose of expansion, it should be able to pay
incremental scales of wages by dipping into the same source
from which it has been able to find capital. In effect this
argument means that even though the concern may be making
losses year after year it should find money for paying the
labour force higher wages in spite of the circumstance that
that may lead it into incurring further losses. The
argument seems to be that even though there may be losses
the concern must pay higher wages to the workmen and if
necessary pay them out of what may be called capital. Now
this argument would in our opinion be unanswerable if the
claim was for what is called minimum wage: (See Messrs Crown
Aluminium Works v. Their Workmen (1). If the wages paid by
the appellant in the present case were below the minimum
wage that the tribunal would certainly be justified in
ordering it to pay the minimum wage, for no industry can
have a right to exist if it cannot pay wages at the bare
subsistence level. Where it is a case of payment of minimum
wage, the tribunal can insist on the same being found, if
necessary, even out of capital. But this is not a case of
bare minimum wage and we are dealing with a case of fair
wage which is above the bare minimum wage. It is not even
the case of the respondents that they are not getting the
bare minimum wage. Their case is that they should be given
a fair wage, and that the present wages, though above the
bare minimum wage, are still not fair enough and therefore
should be increased and an incremental scale should be
fixed. In such a situation we are of opinion that the
present financial condition of the concern and its stability
are both necessary to be considered before an increased fair
wage can be given. Both the present capacity of
(1) [1958] S.C.R. 651.
529
of the employer to pay the increased rates of incremental
wages and its future capacity have to be taken into account
in determining an increased level of fair wages based on an
incremental scale. Thus both financial ability at present
and financial stability in the near future must be there to
justify fixation of an increased fair wage on an incremental
scale. We do not think it will be right to insist on an
increased fair wage on an incremental scale in a case where
the financial capacity and the financial stability as judged
by business principles are both lacking. Nor would it in
our opinion be right to compel the employer to bear the
burden of an increased fair wage on an incremental scale and
tell him to find money from what may in effect be capital,
for such a ‘situation in ordinary cases can lead only to one
result, namely, the closure of the business concern, which
may be more detrimental to the workmen. Therefore carrying
on with the present scale of fair wages and hoping that the
financial ability and stability of the concern will improve,
with the result that increased fair wage on an incremental
basis may be fixed in future is the only alternative at
present even in the interest of the workmen employed in
this’ concern. We therefore agree with the tribunal that in
the circum,stances no case has been made for fixing an
incremental scale of wages at the present juncture. The
contention this head must therefore be rejected. Re. (ii).
As to the canteen workmen, it appears that the canteen is
run by the appellant departmentally on a no-profit-no-loss
basis. The workmen employed in the canteen are the workmen
of the appellant and their number is sixteen or seventeen.
The minimum basic wage for unskilled workmen in this concern
at the relevant time was Rs. 38 plus Rs. 55 i. e. Rs. 93 ;
but the workmen in the canteen get consolidated wages and
all of them (except one) get
530
much less than the minimum, the figures varying from Rs. 50
to Rs. 78. The tribunal has held that there is no reason
why the conditions of service of the workmen in the canteen
should not be brought on a par with the conditions of
service of the rest of the workmen. It therefore ordered
that the workmen in the canteen would be entitled to the
same facilities relating to leave, provident fund, bonus,
and gratuity etc. as are available to the other workmen in
the chemical works ; but so far as wages and dearness
allowance are concerned, it has not given them even the
minimum as indicated above. The case of the the appellant
was that even if’ the minimum was paid to the workmen in the
canteen the price of the various food-stuffs supplied by the
canteen to the workmen would go up substantially and it was
on that ground that the appellant resisted the increase in
the wages of those workmen in the canteen who are getting
less than the minimum of Rs. 93. The tribunal has held-and
we think rightly-that the fact that the bettering of the
conditions of service of the workmen in the canteen may lead
to a rise in the price of things sold’ there is no reason
for refusing the demand of the workmen ; but it has not
carried into effect fully the implications of this
observation. It has ordered that same conditions as to
leave facilities etc. should be extended to the canteen
workmen but has stopped short of giving them the same wages
and dearness allowance. The reason why the tribunal did not
give the workmen the same wages and dearness allowance is
that there was no satisfactory material before it to permit
it to fix wages and dearness allowance for the workmen in
the canteen. We are of opinion that there is no reason why
the tribunal should not have at least granted the minimum
which is paid to the other workmen in the concern to those
workmen in the canteen who are getting less than the
minimum. We can see no reason for not giving them also the
531
minimum wages as indicated above. This will certainly
result in bringing the fifteen workmen who are getting
between Its. 50 and Rs. 78 per mensem as consolidated wages
into an equal position, for each will then get the minimum,
namely,. Rs. 38 plus Rs. 55 and may remove part of the
discontent. In the circumstances that is all that can be
done in the absence of the material to which the tribunal
has referred. Therefore the wages of those fifteen workmen
who are getting less than the minimum should be brought to
the same level. There is no reason why they should not get
such benefits as may be due to them, by their wages being
brought to the same minimum as the wages of the other
workmen in the concern. We therefore disagree with the
tribunal with respect to the workmen employed in the canteen
and order that the wages of those workmen who are getting
less than the minimum paid to the other workmen in the
concern should be brought to the same minimum level. The
rest of the award on this head will stand. The minimum
wages as above will be paid from the date the tribunal has
ordered its award to come into force.
Be,. (iii)
The claim of the workmen in this connection was that there
were 300 workmen employed in the civil engineering
department and that they should be made permanent. The’
tribunal however rejected this contention and pointed out
that most of the workmen were temporarily engaged to carry
on construction work which was of a temporary nature and
therefore. they could not be made permanent simply because
the construction had lasted for more than a year. This view
of the tribunal is in our view correct in so far as the
claim put forward with respect to all the three hundred
workmen was concerned. It appears however that at the time
when the tribunal recorded
532
evidence the large majority of these 300 workmen had been
discharged because they were no longer required and only
about 65 remained in service. It appears from the evidence
‘of the Joint Works Manager that a skeleton staff on the
civil engineering side is kept for maintenance of buildings
and this skeleton staff is of a more or less permanent
nature. The argument therefore before us is that at any
rate this skeleton staff should be made permanent. It was
however urged on behalf of the appellant that this was not
the way in which the matter was put before the tribunal.
The position now is however clear that a skeleton staff is
kept on a permanent basis for the civil engineering
department and it seems to us fair that the appellant should
be directed to make this skeleton staff permanent and give
them the same facilities and wages etc., as are given to the
other workmen. We therefore direct that the appellant shall
make such of the skeleton staff as is maintained for civil
engineering purpose permanent and give them the same
conditions of service including the same minimum wages etc.
as to the rest of the workmen. It is however left to the
discretion of the appellant to determine what should be the
strength of this staff and which persons should be retained
as permanent employees. We say this because the matter was
not gone into from this point of view before the tribunal
and we have no material on which we ourselves can determine
the strength of the skeleton staff and the persons who
should’ be made permanent on that account. The direction
will be given effect to within three months of this
judgement.
Re. (iv).
The workmen have been given 2 1/2 months basic wages as
bonus for the years in dispute, namely, 1953-54 and 1954-55.
They have claimed additional bonus. It is however conceded
fairly
533
on behalf of the respondent that if the chemical works is
treated as an independent unit their case for additional
bonus on the basis of the Full-Bench formula cannot succeed.
The demand for additional bonus was rightly rejected by the
tribunal, considering the chemical works as an independent
unit. We may add that this case is distinguishable from the
case of Hony. Secretary, South India Mill-owners
Association, (1) for here the two lines of business are
distinct and have nothing to do with each other.
This brings us to the appeal by the appellant. Five points
have been urged on behalf of the appellant. They are: (i)
dearness allowance; (ii) uniforms, (iii) acid and gas
allowance. (iv) leave facilities, and (v) gratuity. We
shall deal with them one by one.
Re. (i).
So fag as dearness allowance is concerned, the tribunal has
ordered that the dearness allowance in the chemical works
shall be fixed at the same rate as it is in the power house
which is a part of the chemical works. It may be mentioned
that dearness allowance at the relevant time in the chemical
works was Rs. 55 per mensem while in the power house it was
Rs. 66 per mensem. The contention on behalf of the
appellant in this connection is that the reason why there
was this difference ‘between the dearness allowance in the
power house and in the rest of the chemical works is
historical. It is further pointed out that though the
difference in the two dearness allowances is Rs. 11 the
actual difference in the total wage packet was only Rs. 3
inasmuch as the minimum basic wage in the power house was
Rs. 30 while in the chemical works it was Rs. 38 at the
relevant time. Thus the minimum that an employee was
getting in the power house was Rs. 96 while the minimum for
the rest of the workmen was Rs. 93, and it is
(1) C.A. 419 of 1960. decided on 1-2-1962.
534
urged that the difference is not serious. The reason that
the tribunal gave for increasing the dearness allowance for
the other workmen in the concern was that there was no
ground for discriminating between the workmen in the power
house and the rest of the workmen. In increasing the
dearness allowance on this sole ground the tribunal ignored
firstly the historical reason why there was this difference
between the dearness allowance for the power house staff and
for the rest of the workmen and also ignored the difference
in the basic minimum wages in the power house and for the
rest of the workmen. It further seems to have ignored its
own earlier finding that the chemical works was running at a
loss and did not have the financial capacity to bear further
burden. As a matter of fact it appears that but for this
discrimination which the tribunal found between the rate of
dearness allowance for the power house employees and the
rest of the workmen it may not have made any change in the
dearness allowance payable to the rest of the workmen. It
may be mentioned that the system of dearness allowance in
the concern is to allow neutralization at the rate of 2-1/2
annas (now 17 nP.) for each point rise over the working
class cost of living index treating the base as 100 for the
year 1939. It may also be mentioned that since the
reference was made there has been a voluntary increase in
the dearness allowance for the rest of the workmen at the
rate of Rs. 6 per mensem.
The reason why this difference is existing between the rate
of dearness allowance for the power house employees and rest
of the workmen is that for sometime the power house was
integrated with the Swatantra Bharat Mills. Therefore as an
integral part of the cotton textile industry the rates of
basic wages and dearness allowance
535
in the power house were the same as in the cotton textile
business of the company. Thus the rates there at the
relevant time were, as we have already said, Rs. 30 basic
wage and Rs. 66 dearness allowance. At that time the
minimum wage in the chemical works was Rs. 38 basic plus
Its. 55 dearness allowance i.e. Rs. 93 in all. It appears
however that there was some objection by the Excise
Department of the Government as there was a gate between the
Swatantra Mills and the chemical works. The Excise
Department wanted this gate to be blocked in order to have
better control over the excisable articles produced in the
chemical works. The appellant therefore had to block up
this gate in 1950 and therefore the power house which
existed on the chemical works side of this gate was
transferred from the Swatantra This to the chemical works.
However as the power house workmen were getting the textile
rates, the Company assured them that trough they would
thereafter be under the control of the chemical works they
will be governed for the purposes of pay scales and dearness
allowance of I c. by the rule of the Swatantra Mills. It is
this circumstance which has resulted in different scales for
the power house staff and the rest of the workmen of the
chemical works. It further appears that there was some
retrenchment in the power in 1957 and the retrenched workmen
were absorbed as far as possible in others units. At that
time there was an agreement between the Company and the
power house workmen and it was agreed that these workmen
would be absorbed in other units but they would accept the
conditions of service etc. of those units where they were
absorbed, with the result that only those who are left in
the power house continue on the textile scales of the
Swatantra Bharat Mills. These circumstances however were
not taken into account by the tribunal at all when it
ordered that the power house scale of
536
dearness allowance should be introduced for the rest of the
workmen also. The power house scale is really the textile
scale and the appellant contended that it would lead to a
good deal of complication if the textile scale of dearness
allowance is ordered to be introduced for the chemical
works. We are of opinion that there is force in this
contention raised on behalf of the appellant and the
tribunal was not justified in increasing the dearness
allowance for the chemical works merely because of this
fortuitous circumstance arising out of historical reasons.
In any case the number of the power house workmen is very
small, say about 30140, who who are getting a different rate
of dearness allowance: Further it appears that there was not
much difference between the total wage packet for the power
house workmen and for the rest and that was another reason
why the tribunal should not have introduced the power house
scale for the rest of the workmen. It has however been
urged on behalf of the respondents that the difference in
the basic minimum wages between the power house workmen and
the rest of the workmen in the chemical works has
disappeared after the recommendations of the Textile Wage
Board by which the minimum basic wage for textile workers
has been increased by Rs. 8 and it became Rs. 38 from
January 1, 1960. Therefore, it is urged that there .is no
reason why the tribunal’s award with respect to making the
dearness allowance for the rest of the workmen the same as
the workmen of the power .house should not be allowed to
stand. Superficially, this argument looks attractive ; but
if one examines it in the light of the Textile Wage Board’s
recommendations it will be found that the linking of the
dearness allowance. for the chemical work’s workmen with the
power house workmen would lead to endless complications, for
the power house workmen would be entitled to the same
dearness allowance etc, as would govern the textile workmen
in the
537
Swatantra Bharat Mills. The Textile Wage Board report shows
that it recommended not only that the basic wage should be
increased but also that a large part of the dearness
allowance should be merged with basic wage, the remainder
alone remaining as dearness allowance. It is submitted on
behalf of the appellant that it has carried out the
recommendations of the Textile Wage Board and the result of
the same has been that the basic wages of the textile
workmen which would apply to the power house workmen would
be fixed at about Rs. 88 or Rs. 89 and the dearness
allowance would be reduced to about Rs. 15. It is urged
that the practical linking of the dearness allowance for the
rest of the workmen with the dearness allowance in the power
house which has been ordered by the tribunal on the ground
that there should be no discrimination., would result in
endless trouble, apart from the question whether in view of
the earlier finding of the tribunal as to the financial.
capacity of the appellant it would be possible for the
appellant to bear the extra burden of the increased dearness
allowance. The operative order of the tribunal is that the
workmen of the chemical works, excluding the workmen who are
governed by Ex. W/2, should be paid dearness allowance at
the rate at which it is being given to the workmen of the
power house, and this undoubtedly in our opinion would lead
to endless trouble now that the recommendations of the
Textile Wage Board will for historical reasons apply to the
workmen in the power house.
Which are therefore of opinion that the ground on which the
tribunal ordered the rate of dearness allowance for the
other workmen of the chemical works to be paid on a par with
the rate for the power house is not sustainable and the
tribunal went wrong in not giving due weight to the histori-
cal reasons for the rates prevailing in the power house.
Further we are of opinion that the increase is not
sustainable on its own merits on the ground
538
of the financial capacity of the concern, which the tribunal
itself found was not sound, as the concern bad been running
at loss practically since it came into existence except for
two years. The contention therefore on behalf of the
appellant on this head must be accepted and the order of the
tribunal increasing the dearness allowance set aside.
Re. (ii).
As to uniforms, we see Do reason to differ from the view
taken by the tribunal. The reasons given by the tribunal
for ordering that uniforms should be given to certain
category of workmen Are in our opinion sound. But the
tribunal bat; trade a mistake when it went on to order that
protective equipment should also be given in addition to
uniforms, to the persons found entitled to uniforms
according to the directions of the tribunal. The tribunal
seems to have overlooked the difference between uniforms and
protective equipment; which is provided in the Delhi Factory
Rules. So far as protective equipment is concerned, it is
given for certain specific purposes to be found in the Rules
and has no connection with uniforms which employers are
ordered to supply to their workmen, for reasons entirely
different. We are therefore of opinion that the direction
of the tribunal that protective equipment should also be
supplied to persons found entitled to uniforms under its
order, is not correct and should be set aside. So far as
protective equipment is concerned, it will only be supplied
to those who are entitled to it under the Delhi Factory
Rules and not necessarily to all to whom uniforms may have
to resupplied under the orders of the tribunal. We order
accordingly.
Re. (iii).
At; to acid and gas allowance, the tribunal has ordered the
payment of Rs. 3 per month to certain categories of workmen.
It appears that originally
539
the appellant used to pay Rs. 5 as acid and gas allowance in
the Nitric acid gas plant and Rs. 3 in the contact plant.
Later, however, this gas allowance was merged in pay. But
it appears that gas allowance, is still being paid to the
workmen in the pity trie acid gas plant. It’is contended on
behalf of the appellant that this was because the gas allow-
ance in the case of these workman was not merged in pay.
There is, however, nothing on the record to prove this. As
the record’stands we have no reason to hold that the gas
allowance which was originally paid to the workmen of the
nitric acid gas plant was riot merged in their pay. On the
whole therefore the reasons given by the tribunal for making
the allowance (1) Rs. 3 to those workmen who are engaged in
the manufacture of chlorine, sulphuric acid, caustic soda
and hydrochloric acid Appear to us to be sound and we see no
reason to interfere with that part of the award.
Re. (iv).
So far as leave facilities are concerned, the tribunal has
awarded that privilege should be granted as provided under
the Factories Act. It has further provided that casual-cum-
sick leave should be granted,for twelve days in the year.
We do not think that this award is in any way, unreasonable.
The”tribunal has however gone on to deal with festival
holidays, and that in our opinion the tribunal had no
jurisdiction to do. The reference was in these terms :
“Whether leave facilities should be increased and if so, to
what extent”.There was no with respect, to holidays. The
tribunal has however taken the view that holidays are
covered within the words “leave facilities” used in the
order of reference. We are of opinion that this view is
incorrect. Holidays are entirely different in leave
facilities. On a,
540
holiday the entire business is closed and no one works while
leave facilities deal with leave for individual workers
while the business as a whole is running. We may in this
connection refer to item 4 of the Third Schedule to the
Industrial Disputes Act (No. 14 of 1947), which is in these
terms : “”Leave with wages and holidays”. This shows that
holidays stand on a different footing altogether from leave
with wages and a reference with respect to leave facilities
cannot include a consideration of holidays. The tribunal’s
order with respect to holidays is set aside.
Re. (v).
Lastly we come to the gratuity scheme sanctioned by the
tribunal. It is true that in this concern there is already
a provident fund scheme in force. But it is now well
settled that both gratuity as well as provident fund schemes
can be framed in the same concern if its financial position
allows it. It is true that the financial position of the
chemical works has not been found to be good and stable
enough to warrant an incremental wage-structure ; but
gratuity is a long term provision and there is no reason to
suppose that in the long, run the appellant will not be in a
flourishing condition. As to the burden of the scheme, we
do not think that, looking at it from a practical point of
view and taking into account the fact that there are about
800 work-men in all in the concern, the burden per year
would be very high, considering that the number of
retirements is between three to four per centum of the total
strength. Further we find that in this very concern there
is a gratuity scheme for clerks who number between 100 and
200 and are part of the labour force. We can see under the
circumstances no reason why a similar gratuity scheme should
not be framed for the rest of the
541
workmen. We therefore see no reason to interfere with the
order of the tribunal in this respect.
We therefore allow the appeals in part and dismiss them in
part in the manner indicated in the course of this judgment.
In the circumstances parties will bear their own costs in
both the appeals.
Appeals allowed in part.