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PETITIONER: HINDUSTAN ANTIBIOTICS LTD.

       Vs.

RESPONDENT: THE WORKMEN & ORS.

DATE OF JUDGMENT: 03/10/1966

BENCH: RAO, K. SUBBA (CJ) BENCH: RAO, K. SUBBA (CJ) HIDAYATULLAH, M. SIKRI, S.M. BACHAWAT, R.S. DAYAL, RAGHUBAR

CITATION:  1967 AIR  948            1967 SCR  (1) 652  CITATOR INFO :  APL        1969 SC 513  (16)  R          1970 SC  87  (4,7)  RF         1970 SC 390  (7)  R          1970 SC 426  (11)  E          1970 SC 919  (27)  R          1972 SC 343  (21,24,28)  RF         1972 SC1210  (11,19)  R          1972 SC1552  (9)  R          1972 SC2332  (91)  F          1973 SC2119  (4)  MV         1975 SC1331  (124)  E&R        1977 SC 941  (20)  R          1980 SC  31  (19)  RF         1986 SC1830  (19)  RF         1990 SC1080  (11)  RF         1991 SC 101  (44)

ACT: Industrial  Disputes Act, 1947 (14 of 1947), s. 10-Award  by Tribunal-Fixation of Wage Scales-Public Sector  undertakings whether  can  claim  Special  treatment-Dearness  allowance, considerations  in fixing Gratuity scheme-Age of  retirement of  workers-Retrospective operation of award, discretion  of Tribunal in fixing date.

HEADNOTE: The  appellant  was a  Government  undertaking  incorporated under  the Indian Companies Act.  Its registered office  was in  Maharashtra  and its‘ main business the  manufacture  of antibiotics.   The entire equity capital of the company  was held  by  the President of India and his  nominees  and  the entire  Board  of Directors was nominated by  him.   Service conditions of the workmen and other matters were subject  to the approval of the President of India.  Though the  company was  a  limited one and therefore had a  distinct  corporate existence,  it was in effect financed and controlled by  the Central Government.  On dispute arising between the  workmen of the company and the management thereof the Government  of Maharashtra  made  a  reference under  s.  10(1)(d)  of  the

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Industrial  Disputes  Act, 1947 for its  adjudication.   The Industrial  Tribunal gave its award in two parts  and  gave, inter alia, the following findings Rejecting  the contention of the company that in fixing  the wage scale,-, different considerations and standards  should apply to public sector undertakings as distinct from private sector  undertakings, the Tribunal fixed the wage  scale  on region-cum-industry basis.  It found that the company was  a very  large and prosperous concern and its wage scales  were on  the  low  side  particularly  in  regard  to  the  lower categories of workers, taking into consideration the  duties and  qualification prescribed for them.  The Tribunal  fixed the  wage  scales having regard to the  company’s  financial position,  its productive capacity, a comparative  study  of its wage structure with that of its neighbouring  industries and  similar  other  relevant  factors.   It  retained   the existing  dearness  allowance  scheme  except  for  a  small alteration  in  the slab of dearness allowance for  the  pay group  Rs.  301-500; it merged a proportion  of  what  would normally  be paid in the shape of dearness allowance in  the basic  pay  in the case of lower categories  of  workmen  by giving increases wherever necessary for the basic pay  only. It  linked  the dearness allowance with the cost  of  living index  for  Poona.   It evolved a gratuity  scheme  far  the workmen.   It  gave retrospective operation  to  the  award. There  were  other findings on the various  demands  of  the workmen.  The company appealed to this Court under Art. 136. HELD  :  (i) In dealing with appeals brought to  this  Court under  Art.  136 of the Constitution  against  awards  which construct  wage structures, this Court would, not  interfere with the actual provisions of the wage structure unless some general   principles   were   involved.    ’Mere   was    no justification  for  the  argument that  this  Court  had  by convention  and practice adopted a more liberal attitude  in the  case of appeals against awards than in  other  appeals. [658 C-D] 653 Observations  in  Bengal Chemical and  Pharmaceutical  Works Ltd.,  Calcutta  v.  Workmen. [1959] Supp.  2.  S.C.R.  136, reaffirmed. (ii) lf be object of Industrial law is two-fold namely,  (i) to improve the service conditions of industrial labour so as to provide for them the ordinary amenities of life, and (ii) by that process to bring about industrial peace which  would in  its turn accelerate productive activity of  the  country resulting in its prosperity.  The prosperity of the  country in its condition of labour. By this process it is of  labour can be proiressiviily raised from the stage of minimim wage, passing through need found wage, fair wage, to living  wage. The  principle of region-cum-industry,the rule of  relevancy of comparable concerns, and the recognition of the  totality of  the  basic wage and dearness allowance  that  should  be borne  in  mind in the fixation of wage structure,  are  all well settled.[659 F-H] M/s.  Crown Aluminium Works v. Their Workmen, [1958]  S.C.R. 651,  Express  Newspapers (Private) Ltd. v. Union  of  India [1959]  S.C.R.  12, French Motor Car Co.  Ltd.  v.  Workmen, [1963]  Supp. 2 S.C.R. 16 @d The Hindustan Times  Ltd.,  New Delhi v. Their Workmen, [1964] 1 S.C.R. 234, referred to. (iii)All  the  principles  referred  to  above   though accidentally evolved in industrial adjudication relating  to industries born in the private sector apply equally well  to industries in the public sector.  There is no  justification from  the  standpoint of the employee  that  different  wage structure shall be adopted having regard to the fact that in

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one case the shares of the company are held wholly or partly by  the  Central Government or the State Government  and  in other  cases  by  members  of the  public.   The  worker  is interested  in his pay packet and if he is given  reasonable  it is expected that a satisfied worker will contribute to the growth of the industry@ and ultimately the prosperity of the country.  From this stand consideration, so long as  the capacity of the character of the employer is irrelevant.  In the  r  of the employer or the destination  of  fixation  of wages.   Whoever  may  be  the employer, he  has  to  pay  a reasonable wage to the employees.[660 F.662 B] Constitutional, legislative, executive and opinion trends in that  regard  all go to,show that wages should  normally  be fixed on region-cum-industry basis. [662 C-668 F] The  material  on record further showed that  there  was  no complete  uniformity  in  pay scales in  all  public  sector undertakings.   The service conditions of the  employees  in public sector undertakings were also not similar to those of Government employees; there was no security of service;  the fundamental  rules  did  not apply to  them;  there  was  no constitutional  protection; there was no pension; they  were covered  by standing orders; their service  conditions  were more  similar  to those of employees in the  private  sector than  those in Government departments.  The  Pay  Commission recommendations were not applicable to the employees of  the Government undertakings in the public sector; indeed the Pay Commission Report did not deal with them. [668 G-669 A-B] There  were no grounds for the fear that there would be  any repercussions  on other public sector undertakings  situated in different parts of 654 the  country  because of the said differences  in  the  wage structure  of  the  Government undertakings  in  the  public sector. [669-D] (iv)The doctrine of dearness allowance was only evolved  in India.   Instead of increasing wage as it is done  in  other countries, dearness allowance is paid to neutralist the rise in prices.  This process was adopted in expectation that one day or other we would go back to the original price  levels. But  when it was found, that it was only a vain hope a  part of  the  dearness allowance was added to  the  basic  wages. While  the  Tribunal  increased  the  wages  in  fixing  the dearness  allowance  it  looked  into  the  overall  picture namely,  whether the total wage packet would approximate  to the total packet wages in comparable industries.  There  was no  question  therefore  of  paying  dearness  allowance  on dearness  allowance,  but it was only  payment  of  dearness allowance  in addition to the increased wages.  Even on  the basis of increased wages dearness allowance was necessary to neutratise the rise in prices.  The Tribunal also introduced the slab system so that in the case of employees falling  in the   higher  slabs  the  rise  in  prices  was   adequately neutralised.   The  Tribunal  did not commit  any  error  of principle. [671 - F; 672 D] (v)There was no double provision for house rent.  ’Me fact that in the index for Poona one of the components was  house rent  only  meant that the rise in the house rent  was  also taken into consideration in arriving. at the index.   Unless it  was  established that the house rent was  a  major  item which  went  in inflating the price index, it could  not  be said that the Tribunal by awarding house rent allowance  had given a double advantage to the employees. [672 E] (vi)Gratuity is an additional form of relief for the worker to  fall ’back upon.  If the industry can bear the  burden,, there is no reason why he should not be entitled to both the

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benefits-provident   fund   and  gratuity.    The   Tribunal considered  all the -relevant circumstances : the  stability of  the  concern, the profits made by it in  the  past,  its future prospects and its capacity and came to the conclusion that  in  the  concern  in question  the  labour  should  be provided  with  a  gratuity scheme in addition  to  that  of provident  fund.  There was no justification to disturb  the conclusion. [674 D] In  the nature of things a particular ceiling  for  gratuity cannot be fixed.  If depends on the facts of each case.  The scheme  as prepared by the Tribunal was fair and  equitable. [674 F] (vii)Only such of the item; which go directly to reduce the  expenditure  that would otherwise go  into  the  family budget are relevant in fixing fair wages.  The Tribunal  had taken all the permissible fringe benefits in fixing the wage scales  and dearness allowance.  It could not  therefore  be said that the Tribunal went wrong in omitting any  amenities in fixing the wages. [675 C] (viii)Having taken into account the relevant factors the Tribunal  in its discretion came to the conclusion that  the revised  scales  should coma into effect  from  1st  January 1962.  There was no reason to interfere with its discretion. [675 G] (ix)It  was  common  case that work in  the  ’closed  area’ involved greater physical strain on the workmen.   Therefore when  the Tribunal gave them a reasonable allowance  it  was not  possible for this Court to take a different view.  [675 H] (x)The Tribunal accepted the principles generally  applied in fixing wages.  It had not been shown that any  principles had been violated. it 655 was  true  that  in some cases the  total  emoluments  of  a particular category of employees of the company were  higher than those of the other concerns, but the difference was not such  as  to  be described as a flagrant  violation  of  the :fixation  of  the  wage  structure.   If  no  principle  is violated this Court will not interfere on the ground that it would  have  fixed  the  wages at a  lower  level  than  the Tribunal did. [676 F-D] (xi)  The finding of the  Tribunal that a foreman was not  a workman was on a consideration of his duties which it  found to be of a managerial or administrative nature.  The finding was one of fact and therefore must be accepted. [676 F] (xii)     There was no error of principle in the rates fixed by the Tribunal in thecase of daily-rate workers. [677 A- B] (xiii)    The Tribunal was not right in giving a  discretion to  the employers to continue or not to  continue  employees beyond the age of 58 years.  Following the trend of judicial opinion  the retirement age of the employees of the  company should be raised to 60 years. [677 H] (xiv)The  Tribunal had given linkage with  effect  from April  1, 1965. The employees had not made out any case  for giving  a further retrospective effect to the linkage.  [678 B-C]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals No. 406 and 407 of 1964. Appeals  by  special leave from the award dated  October  8, 1963  of the Industrial Tribunal, Maharashtra, in  Reference

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(IT) No. 147 of 1962. S.D. Vimadalal, B. Dutta, J. B. Dadachanji, 0. C.  Mathur and  Rajinder Narain, for the appellant (in C.A. No. 406  of 1964) and the respondent (in C.A. No. 407 of 1964). M.C. Setalvad, K. T. Sule, Madan G. Phadnis, Jatindra Sharma and Janardan Sharma, for the respondent (in C.A. No. 406  of 1964) and the appellant (in C. A. No. 407 of 1964). M.   K. Ramamurthi, for intervener No. 1. M.   R. K. Pillai, and M. S. K. Iyengar, for intervener  No. 2. The Judgment of the Court was delivered by Subba Rao, C. J. These two Cross Appeals raise the question, among others, whether the wage structure, including dearness allowance, of a Government undertaking in the public  sector should be of a pattern different from that of an undertaking in the private sector. The  Hindustan Antibiotics Limited, hereinafter called  "the Company",  is a Government undertaking and  is  incorporated under the Indian Companies Act.  Its registered office is at Pimpri  Poona District, State of Maharashtra, and  its  main business  is  the manufacture and distribution  in  bulk  of antibiotics like penicillin, streptomycin, etc.  The  entire equity capital of the 656 Company is held by the President of India and his  nominees, -and  the  entire  Board  of Directors  of  the  Company  is nominated  ,by  him.   The conduct of the  business  of  the Company  is  subject to the directives issued from  time  to time by the President of India and its accounts are  audited by  the auditors appointed by the Central Government on  the advice  of  the Comptroller and Auditor  General  of  India. Service  conditions  of the workmen and  other  matters  are subject  to  the approval of the President  of  India.   The annual report of the working of the Company and its  affairs along  with  the Audit Report has to be  placed  before  the Parliament.   There  are  no  shareholders  other  than  the Central  Government ,or its nominees, with the  result  that the  dividends  declared by the Company entirely go  to  the coffers of the State, but the profits are ploughed back into the  industry or kept as reserve for  ,future  requirements. In  short,  though  the  Company  is  a  limited  one   and, therefore,  has  a distinct corporate existence,  it  is  in effect  financed  entirely  from the funds  of  the  Central Government. The  Company employs about 2,000 workmen.  A dispute  -arose between  the  workmen  of the  Company  and  the  management ,thereof  and  the workmen presented a  charter  of  fifteen demands  to  the  Company.  The  Government  of  Maharashtra referred  the  said  dispute  to  the  Industrial  Tribunal, Bombay, for adjudication under s. 10(1)(d) of the Industrial Disputes Act, 1947 (14 of 1947). The  Industrial Tribunal, after elaborately considering  the conflicting  contentions  of the disputants, gave  an  award dated  October  8,  1963.   In making  the  said  Award  the Industrial  Tribunal postponed its decision on the  question of linking dearness allowance with the cost of living  index which had not then been prepared for Poona.  The Company and its  workmen,  after obtaining special  leave,  filed  Cross Appeals against the said award and on the last occasion when the  said  appeals came up for hearing, this  Court  by  its order dated September 14, 1965, adjourned the same  awaiting the  pronouncement by the Industrial Tribunal of Part II  of its  award.   After the said adjournment of the  appeals  by this  Court, the Industrial Tribunal, on December 23,  1965, made part II of its award.  These appeals are now before  us

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for disposal. The  Industrial Tribunal made the following  findings  among ,others  : Rejecting the contention of the Company  that  in fixing   the  wage  scales  different   considerations   and standards  should  apply to public  sector  undertakings  as distinct  from  private sector  undertakings,  the  Tribunal fixed  the wage scales on region-cum-industry basis.   On  a scrutiny of the comparative study ,of the wage structures of companies in the region, it found that  657 the Company was a very large and prosperous concern and  its wage scales were on the low side, particularly in regard  to the  lower categories of workers, taking into  consideration the  duties  and qualifications prescribed  for  them.   The Tribunal  fixed  the  wage  scales,  having  regard  to  the Company’s  financial  position, its productive  capacity,  a comparative  study  of its wage structure with that  in  the neighbouring industries, and similar other relevant factors. It  retained the existing dearness allowance  scheme  except for a small alteration in the slab of dearness allowance for the  pay group Rs. 301-500; it merged a proportion  of  what would normally be paid in the shape of dearness allowance in the basic pay in the case of lower categories of workmen  by giving  increases wherever necessary in the basic pay  only. It  linked  the dearness allowance with the cost  of  living index for Poona.  It evolved a gratuity scheme for the work- men.   It gave retrospective operation to the  -award.   The findings  of  the  Tribunal  on other  points  need  not  be mentioned  here  they  will be  dealt  with  in  appropriate places.  In the result, pursuant to the said directions, the Tribunal had worked out the figures in detail and given  its findings on the various demands made by the workmen. At the outset it may usefully be reiterated that this  Court is  not  a  regular  court  of  appeal  against  orders   of tribunals.   The  scope of its power under Art. 136  of  the Constitution  vis-a-vis  awards of tribunals  is  stated  in Bengal  Chemical and Pharmaceutical Works Ltd., Calcutta  v. Their Workmen().  Therein this Court observed: "Article 136 of the Constitution does not confer a right  of appeal  to any party from the decision of any tribunal,  but it  confers  a discretionary power on the Supreme  Court  to grant special leave to appeal from the order of any tribunal in   the  territory  of  India.   It  is  implicit  in   the discretionary  reserve power that it cannot be  exhaustively defined.  It cannot obviously be so construed as to confer a right  to  a  party where he has none under  the  law.   The Industrial  Disputes Act is intended to be a  self-contained one  and it seeks to achieve social justice on the basis  of collective bargaining, conciliation and arbitration.  Awards are given on circumstances peculiar to each dispute and  the tribunals are, to a large extent, free from the restrictions of  technical considerations imposed on courts.  A free  and liberal exercise of the power under Art. 136 may  materially affect  the  fundamental basis of  such  decisions,  namely, quick solution to such disputes to achieve (1)  [1959] Supp. 2 S.C.R. 136,140. 658 industrial  peace.   Though Art. 136 is  couched  in  widest terms,  it  is  necessary for this  Court  to  exercise  its discretionary  jurisdiction only in cases where  awards  are made  in  violation of the principles  of  natural  justice, causing  substantial  and  grave  injustice  to  parties  or raising  an important principle of industrial law  requiring elucidation  and final decision by this Court or  disclosing such other exceptional or special circumstances which  merit

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the consideration of this Court." We  have cited the passage in extenso, as during the  course of  arguments, stress was laid on the fact that  this  Court has,  by  convention  and practice adopted  a  more  liberal attitude in the case of appeals against awards than in other appeals.   We  do  not  find  any  justification  for   this argument.   Indeed,  in this very case, this Court,  on  the last  occasion  adjourning  the  same,  made  the  following observations: "Normally,  in  dealing with appeals brought to  this  Court under  Article 136 of the Constitution against Awards  which construct  wage structures, ’this Court does  not  interfere with the actual provisions of the wage structure unless some general  principles  are  involved.  This  position  is  not disputed by the learned Attorney General." No case has been cited before us where a conscious departure has been made, from the said observations in Bengal Chemical and Pharmaceutical Works Ltd., Calcutta v. Their  Workmen(). It  may be that if the facts of some of the appeals  decided by  this  Court  were analysed, a liberal  attitude  may  be discovered but the judgments therein would be found to  have turned  upon  the peculiar facts of those appeals.   In  the absence of any definite pronouncements accepting a deviation from  the  said  principle,  we  cannot  adopt  a  principle different from that recorded in the aforesaid decision.  We, therefore,  re-affirm  the  observations made  in  the  said judgment  as  laying down the correct  approach  to  appeals under  Art.  136  of  the  Constitution  against  awards  of tribunals. The main contention of Mr. S. D. Vimadalal, learned  counsel for the Company, may be put thus : The pattern of wage fixa- tion in the case of Government companies born in the  public sector   should  necessarily  be  different  from  that   of companies  born  in  the private  sector.   Elaborating  the argument,  he  relied upon the  following  circumstances  to sustain  the said distinction : (i) nexus with  the  Central Government;  (ii)  need  to  keep  parity  or  at  least  no disparity  between  different public  sector  industries  in different  parts  of  the country;  (iii)  the  concepts  of capacity (1)  [1959] Supp. 2 S.C.R. 136,140.  659 profits  and  surplus  have  a  new  connotation  which   is different  from  that  they bear  in  their  application  to industries  in the private sector; (iv) pay scales  are  the same  in  all the industries throughout India  born  in  the public  sector; (v) amenities and fringe benefits in  public sector  industries  are  incomparably greater  than  in  the private sector industries; (vi) the employees of the  public sector  industries have greater security than those  of  the private   sector  industries;  (vii)  the  fact   that   the Government,  instead of running the business  departmentally formed  a company for the same purpose cannot possibly  make any  difference  in  the wage  structures;  and  (viii)  the undertaking   in  question  is  entirely  financed  by   the Government.  He would also say that the appropriate  pattern to a Government company was that laid down by the Second Pay Commission  as applicable to departmentally  run  industrial units of the Central Government. Mr.  M. C. Setalvad, appearing for the workmen of  the  Com- pany, countered this argument by stating that in fixing  the wage  structure, including dearness allowance, the  question who  is  the  employer is irrelevant and the  needs  of  the employee are only paramount and that from the perspective of an employee there cannot possibly be any difference  between

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companies  born in the public sector and those born  in  the private  sector.  The apprehension, the argument  proceeded, that  there  may be discrimination if  this  distinction  is adopted between different industries has no real bearing, as it  is  impossible  to eliminate completely  all  traces  of discrimination  between  employees of  different  industries whatever principle is adopted. At  the  outset,  it  will in  convenient  to  consider  the question of principle.  The object of the industrial law  is two-fold,  namely, (i) to improve the service conditions  of industrial  labour  so as to provide for them  the  ordinary amenities of life, and (ii) by that process, to bring  about industrial   peace  which  would  in  its  turn   accelerate productive   activity  of  the  country  resulting  in   its prosperity.   The  prosperity of the country, in  its  turn, helps to improve the conditions of labour.  By this process, it  is hoped that the standard of life of the labour can  be progressively raised from the stage of minimum wage, passing through  need  found  wage,  fair  wage,  to  living   wage. Industrial  adjudication  reflected  in  the  judgments   of tribunals  and  the  courts  have  evolved  some  principles governing  wage  fixation though accidentally  they  related only  to  industries  born  in  the  private  sector.    The principle  of  region-cum-industry, the  doctrine  that  the minimum wage is to be assured to the labour irrespective  of the capacity of the industry to bear the expenditure in that regard,  the  concept  that fair wage  is  linked  with  the capacity   of  the  industry,  the  rule  of  relevancy   of comparable concerns, and the recognition of the 660 totality  of  the  basic wage and  dearness  allowance  that should  be borne in mind in the fixation of wage  structure, are  all  so  well  settled  and  recognised  by  industrial adjudication  that further elaboration is  unnecessary.   In this context, a reference to the decisions in Messrs.  Crown Aluminium  Works,  v. Their  Workmen(),  Express  Newspapers (Private)  Ltd., v. The Union of India(2), French Motor  Car Co.  Ltd.  v. Workmen () and The Hindustan Times  Ltd.,  New Delhi v. Their Workmen(4) will be useful.  There is no,  and there  cannot  be  any,  dispute on  the  laudable  aims  of industrial  policy  of  our country in the  matter  of  wage fixation.   Das Gupta, J., in The Hindustan Times Ltd.,  New Delhi. v. Their Work-, men(4) said at page 240 : "In  trying  to  keep  true to  the  two  points  of  social philosophy  and  economic  necessities which  vie  for  con- sideration, industrial adjudication has set for itself  cer- tain  standards  in  the matter of wage  fixation.   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 to 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 "living wage"-a wage "which will maintain the workman in the  highest  state  of industrial  efficiency,  which  will enable  him  to  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"." This  passage briefly and neatly defines the three  concepts of  minimum  wage,  fair  wage  and  living  wage.   In  the application of the said principles doubtless evolved in  the industrial  disputes  in  the private sector,  what  is  the difference between industries in the two sectors to  justify

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a different treatment of the industries in the public sector ?  There is socioeconomic justification for the  said  prin- ciples.  The social and economic upliftment of the labour is important  for securing industrial peace which is  essential to  increase the national productivity.  It is  an  accident that  industrial  adjudication  in the  private  sector  has thrown out the said principles.  All the said considerations equally  apply to industries in the public sector.   We  are excluding, for the present, industries run by the Government departmentally,  for, in one sense they are also  industries in  the public sector.  We are referring only to  industries run  by limited  companies wherein the Government  owns  the entire  share  capital  or  a  part  of  it.   Now,  take  a particular region, say (1) [1958] S.C.R. 651.                           (2)  [1959] S.C.R. 12. (3) [1963] Supp. 2 S.C.R. 16.                   (4) [1964] 1 S.C.R. 234. 661 Bombay.  In that region-We are only taking a  hypothetical." case-there  may be four companies owning factories  manufac- turing  antibiotics, namely, a limited company in which  the Government  does not own any shares and all the  shares  are owned  by the members of the public, a company in which  all the  shares  are held by the Central Government,  a  company whose share capital is owned by the Government as well as by the public and a company which is a proprietary  undertaking owned  by  a single individual or a number  of  individuals. All  the factories are making appreciable profits  and  have capacity  to pay the employees.  What is  the  justification from  the  standpoint of the employees that  different  wage structure shall be adopted having regard to the fact that in one case the shares are held wholly or partly by the Central Government or the State Government and in other cases by the members of the public ? The worker is interested in his  pay packet  and if he is given reasonable wages, it is  expected that a satisfied worker will contribute to the growth of the industry and ultimately the prosperity of the country.  From his standpoint, which is a paramount consideration, so  long as the capacity of the industry is assured, the character of the  employer  is irrelevant.  Now, I let us  look  at  the. problem  from  the standpoint of the employer.  It  is  said that  a  company  born in the private sector  works  with  a profit motive and exploits the workmen for its private ends, whereas  a company born in the public sector, though  it  is expected  to make profits, really contributes to the  wealth of  the whole country.  This argument poses the question  of the  comparative  merits of different  ideologies,  such  as price  economy,  mixed economy, socialism etc.   We  do  not propose to go into these complicated economic problems;  but it  cannot  be  posited  that  necessarily  and   inevitably companies  born in the private sector only care for  profits by  exploiting workers and those born in the  public  sector always work for public good.  Different countries  following different  ideologies have reached prosperity or are on  the way  of  prosperity.  It cannot be said  that  a  particular ideology  only  will lead to that result : it  depends  upon many other factors.  That apart, whatever may be said  about proprietary firms, it cannot be asserted that every  company born  in  the  private  sector  only  functions  on  private motives;  it may earn profits, pay reasonable dividends  and plough back the balance of the profits into the industry for its  further  growth.  So too, it cannot  be  asserted  that always a State will utilise the profits earned for the  good of the country.  There are many instances in the world where

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the national resources were frittered away.  In the ultimate analysis,  the character of the employer or the  destination of  profits  has  no relevance in  the  fixation  of  wages. Whoever may be the employer, he has to pay a reasonable wage to   the   employees.   The  incongruity  of   the   alleged distinction in the matter of wages is further exemplified if we  compare similar industries in the same region  owned  by the  State  and  by  the Union.  Now,  if  the  argument  be accepted, the 662 pattern  of wage structure between these also  must  differ, for,  the pay scales now obtaining in the State  Governments and  the Central Government radically differ.  On the  other hand,  if the doctrine of region-cum-industry  is  accepted, all   the  employees  of  industries  of   similar   nature, irrespective  of the character of the employers, win  get  a fair deal without any discrimination which will certainly be conducive to the industrial development of our country. Let   us  now  consider  the  constitutional,   legislative, executive and opinion trends in that regard.  Art. 39 of the Directive  Principles  of State Policy says that  the  State shall direct its policy towards securing equal pay for equal work for the both men and women and Art. 43 thereof  enjoins on the State to endeavour to secure, by suitable legislation or  economic  organisation  or  in any  other  way,  to  all workers,  agricultural,  industrial or  otherwise,  work,  a living  wage, conditions of work ensuring a decent  standard of  life  and  full  enjoyment of  leisure  and  social  and cultural opportunities.  This constitutional directive  will certainly  be  disobeyed  if the State attempts  to  make  a distinction  between  the  same class of  labourers  on  the ground that some of them are employed by a company  financed by  it  and  the  others by  companies  floated  by  private enterprise.  These Articles do not countenance the invidious distinction  which is now sought to be made on the basis  of the  character of the employer.  The Legislatures  in  India even before the coming into force of the Constitution passed Acts  regulating industries such as the Industrial  Disputes Act, 1938, Industrial Employment (Standing Orders) Act, 1946 and  Industrial  Disputes  Act,  1947.   In  these  Acts  no distinction is made between industries in public and private sectors  vis-a-vis  the service conditions  of  the  labour. Under  s.  2(g) of the Industrial Disputes  Act,  ’employer’ means in relation to an industry carried on by or under  the authority  of any department of the Central Government or  a State  Government the authority prescribed in  this  behalf, the  head  of the department, and under cl.  (j)  ’industry’ means  any  business,  trade,  undertaking,  manufacture  or calling  of  employers and includes  any  calling,  service, employment, handicrafts etc.  S. 2cl. (s) defines workman to mean  any person employed in any industry to  do......  work for hire or reward. A  combined reading of these provisions indicates-indeed  it is  not disputed-that the Act regulates the relationship  of employer  and  employee irrespective of the  fact  that  the employer is the State Government or not.  But what is stated is that though the said Act governs the relationship between the  employers and workmen irrespective of the fact  whether the employer is Government or Government-aided  corporation, the  pattern of wage structure, need not necessarily be  the same;  but the fact that the disputes between the  employers and employees, irrespective of the character of the em-  663 ployer  are made the subject of industrial  adjudication  is indicative, though not decisive of the legislative intention

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to  treat workmen similarly situated alike in the matter  of wage  structure and other conditions of service.  S.  20  of the Payment of Bonus Act of 1965 directs the application  of the Act to establishments in public sector in certain cases. Industrial  adjudication also adopted the same  pattern  for both   the  categories  of  industries.   Awards  given   by tribunals  in industrial disputes raised by the  workmen  of Air  India,  State Bank of  India,  municipal  undertakings, collieries,   Bombay   Electricity  Supply   and   Transport Undertaking,  and Life Insurance Corporation of India,  show that  the  tribunals  applied  the  principles  evolved   by industrial  adjudication  in  regard to  industries  in  the private sector to the said public undertakings.  The comment that  some  of  them had a private  sector  background  and, therefore,  the  tribunals  treated them  on  par  with  the industries  in the private sector has no force,  and  indeed the   fact   that   the   same   principles   were   applied notwithstanding   the  conversion  of  the  private   sector industries  into  public  sector  industries  shows  that  a different treatment was not thought necessary.  So too,  the wage  boards  constituted  by the Government  of  India  for different  industries, such as steel,  engineering,  cement, hotel  etc.  made enquiries into  their  service  conditions without making any distinction between the industries in the two sectors. The  pronouncements made by the Government or  its  official agencies  do not also support any such distinction.  In  the 15th  session  of the Indian Labour Conference held  in  New Delhi  on  July  I  I and July 12,  1957,  the  labour,  the employees,  the  employers, the State  Governments  and  the Central   Government   were   represented.    One   of   the recommendations  made by that Conference in regard  to  fair wages is found in para 5 of its report.  It reads As  regards fair wages, it was agreed that the  Wage  Boards should  go into the details in respect of each  industry  on the basis of the recommendations contained in the report  of the  Committee on Fair Wages.  These recommendations of  the Fair  Wages  Committee  should also be  made  applicable  to employees in the public sector." Another  recommendation  was  that  the  study  groups   may assemble materials for rationalisation of the management  in industries, including those in the public sector.   Pointing out  the  difference between the two sectors,  the  Planning Commission observed : "Public  undertakings  differ in an important  respect  from private   undertakings.    The  ’profit’  motive   and   the exploitation   of   workers  for  private   gain   have   no significance   in   the  State   owned   enterprises.    The undertakings have no doubt to show the same, if not  greater efficiency of working 16Sup.CI/66-14 664 as  private  owned  undertakings.  They have  also  to  show profits.  But the nature of these profits is different.  The profits  which these undertakings make are not  profits  in- tended  for any individual or group of individuals  but  are extra wealth for the whole country." In  the  First Five Year Plan the Planning  Commission  laid down the policy in respect of different undertakings thus : "The  aim  should be to have a  co-operative  and  contented labour force.  The ways by which this can be achieved  while maintaining   peace  in  the  undertakings  and   increasing production are : (a)  Wages  in  public  undertakings  should  not  be   less favourable than those prevailing in the neighbouring private

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enterprises.   In so far as working conditions  and  welfare amenities  are concerned, undertakings in the public  sector should set the pace and serve as models. (b) (c)  The benefits of all labour laws which are applicable to similar  private undertakings should also be made  available to the workers of these undertakings (d) The  atmosphere should be such that the workers be  made  to feel  that  in  practice, as well as  in  theory,  they  are partners in the undertaking. (e) (f)  Collective bargaining between workers and management should  be  encouraged.   Such collective bargaining  should               embrace   both   economic   and   non-economic               demands. Government conciliation and arbitration machinery should  be made  available to the workers of these  undertakings.   The existing right of Government to accept, reject or modify  an award should be restricted to period of emergency." It  is true that the said extracts have no  statutory  force but  only represent the opinion of the Planning  Commission. But  both  the  parties  only relied upon  it  to  show  the thinking  of the policy-making bodies and the trends in  the matter  of industrial adjudication.  While  recognising  the differences  that  existed  between industries  in  the  two sectors, the Planning Commission expressed the view that the object  was to have a co-operative and contented labour  and that  therefore, the employees of -the public sector  should also have the benefit of industrial adjudication.  Both  the sides relied upon the 665 passage which said that wages in public undertakings  should not  be  less  favourable  than  those  prevailing  in   the neighbouring  private enterprises.  We do not see  how  this passage  helps the Company.  Indeed, in a way,  it  supports the  respondents for it seeks to put the wages in  both  the sectors on the same level. The  Planning  Commission in its report on the  Second  Five Year  Plan  not  only reiterated  but  also  emphasised  its earlier view.  Therein it observed. "Any  attempt, therefore, on the part of public employer  to avoid  the responsibility of an employer on the ground  that he    is    not    working   for   profit    has    to    be discouraged. ............ In the last analysis employees  in the  public sector should, on the whole, be at least on  par with  their  counterparts in private employment  and  should feel  a legitimate pride in what they produce and  in  their position as employees in the public sector." So  too, the report on the Third Five Year Plan,  though  it brought  the distinction between the two sectors,  it  again stated  that  similar  scales  of pay  should  be  given  to employees in both the sectors.  The relevant passage thereof runs thus "Increased profits, which in the private sector would create inequalities,   (and  possible  conspicuous   and   wasteful consumption), in the public sector can be directly used  for capital  accumulation.  By efficient conduct of  enterprises and following a rational and economically sound price policy for  its  products and services, the  public  sector  under- takings ought to secure adequate return on capital  employed and  contribute  their  full share to the  increase  in  the portion of national resources devoted to investment." This  passage  only  says  that  the  public  sector  should function   efficiently   so  that  there  may   be   capital

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accumulation.    But,  at  the  same  time,   the   Planning Commission proceeded to observe : "However,  to avoid the risk of migration of personnel  from one public sector undertaking to another if different scales of  pay are adopted by them for posts of similar nature,  it may be necessary to indicate to the Board broadly the  basic scales of pay for different categories of posts.  It should, however,  be  open  to the Board to fix  specific  pays  for specific jobs." The Planning Commission’s report on the Third Five Year Plan also did not make any departure from its earlier policy  and did  not suggest that the two sectors vis-a-vis  the  labour should be put in different compartments. 666 Estimate Committees which are constituted by Parliament  had also to make certain observations in regard to the  subject. During  1960-61 the Estimates Committee in its 120th  Report suggested that the Government might review the scales of pay obtaining  in all its undertakings and revise them with  the object  of  introducing uniformity wherever  possible.   The Government turned down the suggestion on the ground that  it was not possible to suggest concrete scales of pay which can be  applicable to all industries, because conditions  differ from  region to region and from industry to  industry.   For 1963-64 the Estimates Committee expressed the view that  all wholly Government-owned public undertakings should generally be  in the form of statutory corporations and  the  company- form  should be an exception to be resorted to only  for  an organisation of a specific nature.  To that, the  Government replied that the company-form had the advantage of  allowing the  necessary  flexibility  and  autonomy  needed  for  the successful  operation of commercial enterprises,.  The  Com- mittee  also suggested that there should be some  uniformity in  the classification of staff in all public  undertakings. The Estimates Committee also in para 142 of the Report  made the following observations : "The Committee feel that varying practices in these  matters are  likely to lead to repercussions in other public  under- takings  and it may be difficult to resist a similar  demand made  by  their employees.  It is therefore  desirable  that public  undertakings follow a common pattern in this  regard as far as possible." The Government rejected it on the ground that the nature and responsibilities  of  staffs  differ  from  undertaking   to undertaking depending upon the size, line of production etc. and the pay scales of posts also varied from undertaking  to undertaking.   It  also pointed out  that  while  uniformity might  be desirable, a measure. of flexibility and  autonomy was  necessarily  to  be  allowed  for  varying  nature  and activities  of  the  undertakings  and,  therefore,  uniform classification  of  staff whose  nature  and  responsibility varied from undertaking to undertaking was not possible.  It will be seen that though the Estimates Committee suggested a common   pattern   of   wage  structure   for   all   public undertakings,   the  Government,  for  the  reasons   given, rejected the said proposals. The  opinions of the experts on the subject who had  made  a special  study  thereof were relied upon.  We are not  in  a position to evaluate the said opinions cited at the Bar, for the  learned  counsel  on both sides did not  agree  on  the credentials of the experts.  In the book on "Cross  Purposes in  Wage  Policy" by R. G. Hawtrey,  the  following  passage appears in Chapter VII : "When  an  industry producing a freely  marketable  produce, like coal, is nationalised, it can proceed like a private

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667 enterprise,  paying wages at rates prevailing in the  labour market  for  similar  grades, and  fixing  prices  to  cover costs." It  is  said that this passage is based  upon  the  exploded doctrine  of laissez-faire.  But, in our view,  the  learned author  was not referring to any such theory, but  was  only expressing  his opinion that in a nationalised industry  the rates  of  wages  prevailing in  the  private  sector  could profitably be adopted. In his book on "Public Enterprise and Economic  Development" though  the  author expressed the view that the  duties  and attitudes  of  the personnel of a  public  corporation  must differ from those of civil servants, he pointed out that  in many  countries there was a strong resistance  against  this policy  either  because  they  knew  no  better  or  because powerful pressures virtually compel them to do so.   Dealing with India, he observed : "The issue of ’Parity’ with the civil services becomes  most acute  when  Government decides to  convert  a  departmental enterprise into a public company or corporation." William  A.  Robson in his book "Nationalised  Industry  and Public  Ownership’  brought  out  the  differences   between nationalised    industry   and   a    private    enterprise. Incidentally  he  cited  a passage from  a  White  Paper  on broadcasting policy in respect of the level of  remuneration for the employees of the B.B.C. wherein it was stated: relate  the  salaries and conditions of  employment  of  its permanent  staff  to those ruling in the Civil  Service,  it should  in fixing such salaries and conditions,  pay  proper regard  to  those of the Civil Service and  to  the  greater security  offered by employment in a public corporation,  as compared with employment in most business concerns." This  does  not mean that the wage structure of  the  public corporation  should  be  of the same  pattern  obtaining  in departments  of  Government.  It was only an advice  to  the effect  that in fixing the pay structure, due regard  should be  had  to that in the civil service.  We do not  know  the comparative merits of the pay structure obtaining in the two sectors in England. "In  Collective Bargaining" by International Labour  Office, Geneva, the following article appears: "One  main  difference from private industry is  that  in  a nationalised industry no profits go to private shareholders. Any  surplus, after setting aside funds needed for  the  de- velopment  of the industry, is used for the benefit  of  the whole  community.   Surpluses are not used to  give  special advantages to the workers in nationalised industries.  There is no reason why such workers should be better off 668 in  some  industries  than in others  merely  because  their industries  have been nationalised.  On the other  hand,they should not be worse off either.  Their wages and  conditions should be determined as in other industries by the nature of the work they do, and should be related to the training  and skill required.  Thus there should be similarity between the wages   and   conditions  of.  employment  of   workers   in nationalised and private industries.  Labour can move freely from  one  to  the other, and workers  in  nationalised  in- dustries  have no  justification  for  claiming  preferential               treatment.   The  State  as  the  employer  of               workers in nationalised industries should be a               good employer, but its labour conditions  will               be  very much like those established  by  good               employers in private industry."

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This passage gives the modern trend of opinion in respect of wage structure in a succinct form.  It shows that the labour of  a  nationalised industry should get a fair deal  in  the same manner as their counter-part get in private industries. In a paper submitted by Dr. H. K. Paranjape of the Institute of Public Administration, New Delhi to Seminar on Management of Public Industrial Enterprises sponsored by the Government of India and the United Nations, it is stated: "As  regards the condition about wages and  allowances,  one cannot  say  that the situation of the  employees  in  State enterprises  is  in a way specially different from  that  in private  industry.   Rates  of  wages  and  allowances  have naturally  to  be  related to the rates  prevalent  for  the particular  type of workers in a given area.  Of  course  in some  regions Government  enterprises have created a  demand               for skilled labour which did not exist  before               and this had had an upward effect on the  wage               level in these regions." We have referred to these books and papers not because  they have any binding effect, but only to gauge the correct trend in  regard to the wage structure.  They show that the  wages should normally be fixed on region-cum-industry basis. There is also some material to prove that there is a no uni- formity of scale pattern in the public sector.  In the  54th report of the Estimates Committee it is suggested that there should be some uniformity in the classification of staff  in all  public undertakings.  But the Government  replied  that the  nature  and  responsibility  of  staff  differed   from undertaking to undertaking depending upon the size and  line of  production etc., and that the pay scales  also  differed from undertaking to undertaking and that complete uniformity in  pay scales was not practicable.  The same variations  in different public sector undertakings are pointed out in  the 52nd and 135th reports of the Estimates Committee. 669 Nor the service conditions of the employees in public sector undertakings  are  analogous  to  those  of  the  Government employees.  There is no security of service; the fundamental rules  do  not  apply to them; there  is  no  constitutional protection; there is no pension; they are covered by service standing  orders; their service conditions are more  similar to  those of employees in the private sector than  those  in Government departments. In Ex.  U-13, a letter dated May 31, 1961 from the Financial Advisor  of the Company to Shri R. P. Sharma, the  Financial Advisor,  informed Shri Sharma, who was a  U.D.C.’  Internal Audit  Section  of  the Company,  that  the  Pay  Commission recommendations were not applicable to the employees of  the Company.  Indeed, the Pay Commission Report does not deal at all with Government undertakings in the public sector. Nor  can we appreciate how there would be any  repercussions on  other public sector undertakings situated  in  different parts of the country because of the said differential in the wage structure of the Government undertakings in the  public sector.  The labour who have by now accepted the region-cum- industry’  principle,  will not raise any dispute  if  their wages are similar to those obtaining in comparable  concerns in  the region.  On the other hand, in a vast  country  like India, the labour cannot appreciate the uniform structure of wages on an All-India basis, if they find that in the region where  they  are working, employees similarly  situated  are getting  higher wages than theirs.  So too, in a  particular region,  the  pay  structure of a  Government  industry  may happen  to  be  better than  that  obtaining  in  comparable concerns in the same locality.  This will lead to industrial

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unrest, for the labour force in the comparable concerns  may demand  that  their  wages should be  equalised  with  those obtaining in Government concerns.  By and large,  therefore, the acceptance of the principle of region-cum-industry  will be  more conducive to industrial relations than that of  the Governmental  wage structure framed on an All  India  basis. Nor  can  we appreciate the argument that the  principle  of region-cum-industry  will lead to discrimination.   But,  if the  expression  "labour force" is understood  to  mean  the labour  force  employed  in both the  sectors,  the  alleged discrimination between different parts of the public  sector will  disappear,  for,  as far as possible,  the  labour  to whichever sector it may belong in a particular region and in a particular industry, will be treated on equal basis. On  a consideration of the relevant material  placed  before us, we have come to the conclusion that the same  principles evolved by the industrial adjudication in regard to  private sector  undertakings will govern those in the public  sector undertakings having a distinct corporate existence. 670 On the question of dearness allowance, the Tribunal in  para 36  of  its  award said that dearness  allowance  should  be altered as under                                           Dearness allowance                                       (including the present      Basic Pay                                 components of                                         additional dearness,                                           allowance and com-                                         pensatory allowance)      Rs.                                                 Rs.      51-75                                               65      76-100                                              67      101-112                                             77      113-150                                             80      151-200                                             85      201 and over                                        90 In  addition, the Tribunal gave house rent  allowance  where the  workman  is not given a house to continue on  the  same basis as existed earlier.  In arriving at these figures, the Tribunal observed : "Having considered the viewpoints of both sides I have  come to  the conclusion that there should be some merger of  part of the dearness allowance with the basic pay in the case  of the  lower categories.  I have in revising the wage  scales, kept  this in view and whenever an increase in the  totality of  emoluments has been considered by me to be  necessary  I have  given the additions in the basic pay.  In  respect  of the  higher  categories,  there is already  some  degree  of merger,  I  would maintain the present  scheme  of  dearness allowance with a slight modification." But,  as  the  Tribunal was of  the  opinion  that  dearness allowance had to be linked with the cost of living index for Poona  and as the said index was not prepared by that  time, it adjourned the consideration of that part of the award and it  dealt  with it in its subsequent award, Part 11  of  the award.   Having considered the arguments on both  sides,  it directed  that with effect from April 1, 1965, the  dearness allowance  awarded  under Part I of the Award be  varied  as follows:- "For  a  variation (rise or fall) of every 5 points  in  the Poona  Index over the base 1961 there should be a  variation of  Rs.  3.50  per  month  in  the  dearness  allowance  for employees drawing basic wage/salary up to Rs. 75 ...... 671 For  employees drawing basic wages/salary above Rs.  75  the

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variation will be, instead of Rs. 3.50, as follows:      Rs.                                                 Rs.      76-112                                                4      113-150                                               5      151-200                                               6      201 and over                                          7 The  effect  of this award was that dearness  allowance  was linked  both with wages as well as with the cost  of  living index  for Poona.  To put it differently, the Tribunal  gave dearness allowance varying with different slabs of wages and linked the same with the said Index. Learned counsel for the Company raised before us two points: (1)  The  Tribunal,  having  merged  part  of  the  dearness allowance  with the basic wages and having  linked  dearness allowance  both with wages and with the Index for Poona,  in effect  gave dearness allowance on dearness  allowance.   To put it in other words, it was argued: by the said merger the wages were raised with the result, that by the operation  of the  linking with the Index for Poona, the rate of  dearness allowance was also raised. (2) One of the components of  the Index for Poona was the house rent, and the Tribunal  having linked  dearness  allowance with the said  Index,  erred  in again giving house rent allowance. The first argument is based upon a fallacy.  The doctrine of dearness  allowance was only evolved in India.   Instead  of increasing wages as it is done in other countries,  dearness allowance  is paid to neutralise the rise in  prices.   This process was adopted in expectation that one day or other  we would  go back to the original price levels.  But,  when  it was  found that it was only a vain hope or at any  rate,  it could  not  be expected to fall below a particular  mark,  a part of the dearness allowance was added to the basic wages, that  is to say, the wages, to that extent, were  increased. We the Tribunal increased the wages, in fixing the  dearness allowance,  it  looked  into the  overall  picture,  namely, whether the total wage packet would approximate to the total packet   wages  in  comparable  industries.   There  is   no question,   therefore,  of  paying  dearness  allowance   on dearness  allowance, but it was only a payment  of  dearness allowance  in addition to the increased wages.  Even on  the basis  of  the  increased  wages,  dearness  allowance   was necessary to neutralise the rise in prices.  That is exactly what the Tribunal has done.  The Tribunal adverting to  this argument stated: "I  am,  however, of opinion that in  linking  the  dearness allowance, a portion of which has been merged 672 in the basic wage, the totality of emoluments should not  be ignored,  otherwise in the case of a market increase in  the cost  of living, if the linkage is done without  bearing  in mind the total emoluments, the total emoluments would not be satisfactory  and may even become out of line with those  in other large concerns in the region.  Again the linkage  need not be done so as to provide increase in dearness  allowance at a uniform rate.  Otherwise increase in dearness allowance on  account  of  rise in the cost of  living  for  employees drawing  wages  and salaries above certain ranges  of  basic wage  or pay as would vary inadequately neutralise the  rise in cost of living-" It  is,  therefore, clear that the  Tribunal  increased  the wages  of the lower category of employees by adding part  of the dearness allowance to their original basic wages, at the same time bearing in mind that the total packet of wages and dearness allowance compared favourably with those in similar concerns.  It has introduced the slab system so that in  the

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case  of employees falling in the higher slabs, the rise  in prices  is  adequately neutralised.  The  Tribunal  did  not commit any error of principle. Nor  can we accede to the argument that there was  a  double provision  for house rent.  The fact that in the  Index  for Poona  one of the components is house rent only  means  that the rise in the house rent was also taken into consideration in arriving at the Index.  Unless it is established that the house  rent  was a major item which went  in  inflating  the price index, it cannot be said that the Tribunal by awarding house  rent  allowance has given a double advantage  to  the employees  in question.  It has not been established  before us that the Index for Poona was inflated because of its rent component.   Indeed, this argument does not appear  to  have been  raised  before the Tribunal.   We  cannot,  therefore, accept this argument. In the result, the contentions raised in respect of dearness allowance are rejected. The  next  question relates to demand 6-A i.e.,  demand  for gratuity.   The  Tribunal  directed  the  Company  to   give gratuity according to the following scheme: "(a) On the death of an employee while in the service of the Company or his becoming physically or mentally incapable for further  service-one  half  of a  month’s  wages  (including dearness  allowance but excluding house rent  allowance  and all  other allowances), for each completed year of  service, subject  to  a maximum of 10 months’ wages, payable  to  the workman or to his heirs or executors, as the case may be. 673 .lm15 (b)On voluntary retirement or resignation after 15  years’ continuous service on the same basis as above. (c)On  termination  of  service by the  Company  after  10 years’  continuous service but less than 15  years’  service one half of a month’s wages, as defined in clause (a) above, for each completed year. Gratuity  will  not be payable to a  workman  discharged  or dismissed  for  misconduct  causing financial  loss  to  the Company, to the extent of the loss so caused. Wages for the purpose of the scheme shall be computed at the average  of  the wages for the year preceding the  event  of death, retirement, resignation, or termination of I service, as the case may be. The Scheme shall come into force from the date on which this Award becomes enforceable." Learned  counsel  for the Company argued that  it  had  been contributing to the employees’ provident fund from 1st April 1960  at  the rate of 8 1/8 per cent on the basic  wage  and dearness  allowance  though  the rate laid  down  under  the Employees’ Provident Funds Act was only 61 per cent and that the  Government  of India came to a decision  that  gratuity scheme  should  not be introduced in an industry  where  the rate   of  employer’s  contribution  for  the   contributory provident  fund  was 8 1/3 per cent.  He  further  contended that  no case had been made out on the facts of the  present case  for  giving  the worker both the pension  as  well  as gratuity. The  law  on the subject is fairly well  settled.   In  B.T. Mills  v.  B.  T. Mills Mazdoor  Sangh(1)  Hidayatullah,  J. speaking for this Court brought out clearly the  distinction between  a scheme of gratuity and a scheme of pension.   The learned Judge said: "A scheme of gratuity and a scheme of pensions have much  in common.  Gratuity is, a lump sum payment while pension is  a periodic payment of a stated sum.  They are both "efficiency

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devices"  and are considered necessary for an  "orderly  and humane  elimination"  from  industry  of  superannuated   or disabled employees who but for such retiring benefits  would continue   in   employment   even   though   they   function inefficiently." Gajendragadkar, J. in Indian Hume Pipe Co. v. Its Workmen(2) also gave a workable expression of gratuity.  He stated: "Gratuity is a kind of retirement benefit like the provident fund or pension...... Gratuity paid to work- (1) A.I.R. 1965 S.C. 839.                      (2) [1965]  2 L.L.J. 830 674 men  is intended to help them after retirement, whether  the retirement  is the result of the rules of superannuation  or physical disability.  The general principle underlying  such gratuity schemes is that by their length of service  workmen are  entitled to  claim  a  certain  amount  as  a   retrial               benefit." That apart, from the standpoint of the employee the said two schemes  give  him  something to fall back  upon  after  his retirement.  It is commonplace that industrial  adjudication under  the present circumstances is not able to provide  the labour  a living wage.  At the best, they get only a  little more  than the necessities of life.  ’If the industry  is  a flourishing  one,  we do not see any reason why  the  labour shall not have the benefit of both the schemes.   Doubtless, the  provident  fund gives him relief, but to  earn  it,  he contributes a part of his wages.  But that in itself may not be sufficient to meet the requirements of his old age or  to provide for his dependents during his life-time or after his death.  Gratuity ;is an additional form of relief for him to fall back upon.  If the industry can bear the burden,  there is  no  reason  why he shall not be  entitled  to  both  the retirement  benefits.   The  Tribunal  considered  all   the relevant  circumstances:  the  stability  of  the   concern, the  .profits made by it in the past, its  future  prospects and  its  capacity and came to the conclusion  that  in  the concern  in question, the labour should be provided  with  a gratuity  scheme  in addition to that of  a  provident  fund scheme.    We   see  no  justification  to   ,disturb   this conclusion. Nor can we agree with the argument of Mr. Setalvad that  the Tribunal  should have given twenty months’ basic  salary  as gratuity.   ’In the nature of things, a  particular  ceiling for gratuity-cannot be fixed.  It depends upon the facts  of each  case.   The  Tribunal  has  taken  all  the   relevant circumstances  including  the  fact  that  the  Company  was contributing to the employees’ provident fund at the rate of 8 1/3 per cent instead of 6 1/4% and also the fact that part of  the dearness allowance was included in the  basic  wage. We  do not see any error of law or anything contrary to  the practice  obtaining in industrial adjudication to compel  us to interfere with the details of the said scheme.  They  are quite  fair and equitable in the circumstances of the  case. We  therefore reject the contention of ,the Company as  well as the employees in this regard. It  was then contended for the Company that it has  provided amenities to the employees which no other comparable concern has provided and therefore they should have been taken  into consideration in fixing the wage structure.  The Company has shown in -Ex.C-12 the various amenities it has provided  for the  labour.  The relevant principle has been fairly  stated by  the Fair Wages Committee in para 28 of its report  which reads: 675

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.lm15 "Where  a benefit goes directly to reduce the expenses of  a worker on items of expenditure which are taken into  account for the calculation of the fair wage, it must necessarily be taken  into account in fixing the actual fair wage  payable. Where  however the benefit has no connection with the  items of  expenditure  on  which the fair wage  is  calculated  it cannot naturally be taken into account." To  state  it differently, only such of the items  which  go directlyto reduce the expenditure that would otherwise  go into  the family budget are relevant in fixing  fair  wages. The  Tribunal has taken all the permissible fringe  benefits in fixing the wage scales and dearness allowances. It cannot therefore  be said that the Tribunal went wrong in  omitting any amenities in fixing the wages. The learned counsel took objection to the part of the  award where  the Tribunal gave retrospective operation to it  from 1st  January,  1962.  The reference of the  dispute  to  the Tribunal was made on 11-8-1962. The first- award was made on 8th  October  1963. A Tribunal ordinarily  makes  its  award operative  from the date of reference; but,  in  exceptional circumstances it gives retroactive operation to some of  its proposals. It will be seen from the record that the original demand  emanated as early as 6-2-1957, but because  of  some technical   difficulties,   namely,  whether   the   Central Government  Authorities or the State Government  Authorities were  the  appropriate  authorities  for  entertaining   the disputein conciliation proceedings, the said  proceedings took a long time for reaching the stage of reference. Having regard to that factand  also to the fact that the  totality of the emoluments, particularly,in  the  case  of   lower categories of manual, technical and clericalstaff  were  on the  lower  side  in  the  company,  the  Tribunal  in   its discretion  came to the conclusion that the  revised  scales should, come into effect from 1 st January, 1962. We do  not see any reason to interfere with its discretion. The next contention of the learned counsel  for  the Company relates  to the workmen in the "closed area".  The  Tribunal gavethe  workmen an allowance of Rs. 5 per month  from  the date the award  became enforceable. While the  workers  say that  to  work in the sections of closed area  is  a  health hazard and reduces the lifespan, the Company admits  that the  workers  functioning therein are  easily  fatigued  but states  they are given the necessary safety equipment,  food and  rest. It is therefore common case that the work in  the ’closed  area’  involves  a great  physical  strain  on  the workmen.In the circumstances, when the Tribunal gave  them a reasonableallowance, it is not possible for this  court to take a different view.. The  learned counsel for the Company then argued that  there is a flagrant violation or departure from the accepted norms in fixing the wage structure and the dearness allowance  and therefore, as an 676 exceptional  case,  we  should set aside the  award  of  the Tribunal  and  direct it to re-fix the wages.  He  has  also taken us through ,comparative tables to satisfy us that  the wages  and the dearness allowances fixed for the  labour  in the  instant Company are abnormally high compared  with  the other  companies like Ruston and Hornsby and Mahindra.   The award  discloses that the Tribunal accepted  the  principles generally applied in fixing wages.  It has not been  brought to our notice that any principle has been violated.  We have also  scrutinised,  with some care, the  tabular  statements placed  before  us.   It is true in  some  cases  the  total

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emoluments  of  a particular category of  employees  of  the Company is higher than those of the other concerns, but  the difference  is  not such as to be described  as  a  flagrant violation  of  the fixation of the wage  structure.   Almost always  no Tribunal fixes nor can fix the wage structure  to reach  the perfection point.  If no principle  is  violated, this  Court will not interfere on the ground that  it  would have  fixed  the wages ,at a lower level than  the  Tribunal did.   We do not find any such abnormal variation  of  wages from  those  obtaining  in  other  companies.   We  do  not, therefore, think that this is such an exceptional case as to call  for a departure from our usual practice of not  inter- fering  with  the award of the Tribunal in the  fixation  of wage structure. Now, coming to the Cross Appeal, the first question is, what is the status of a foreman in the industry in question.  The definition  of  ’workman’  in  s.  2(s)  of  the  Industrial Disputes  Act excludes therefrom any person who is  employed mainly  in  a managerial or administrative capacity  or  who being  employed  in  a  supervisory  capacity,  draws  wages exceeding  Rs.  500  per mensem.  It was  contended  that  a foreman  was  a supervisor within the meaning  of  the  said definition and as, in the instant case, he was drawing  less than  Rs. 500 per mensem, he would be a workman  within  the meaning  of the definition.  The Tribunal held that  he  was not a workman on the ground that his work was  predominantly managerial  and  administrative in nature.  It has  come  to that  conclusion  on a consideration of the  various  duties allotted  to  the foreman.  The finding is one of  fact  and therefore must be accepted. The next question raised on behalf of the workmen relates to the  daily-rate workers.  The Union demanded  the  following scales of pay for daily-rate workmen: "Unskilled  Rs.  3 .00--0 .75-4.50  Skilled  Rs.  4.50-1.00- 6.50." The  Company claimed that the existing rates  were  adequate but  the  Tribunal having regard to the rates of  wages  for casual  workmen  in  the  concerns  in  the   neighbourhood, increased the rates of male casual labour to Rs. 2 . 75  and the female casual labour to Rs. 2.25.  677 It also directed that if any semi-skilled or skilled  person was employed as casual worker he should be paid at the  rate of  the monthly ’wage and dearness allowance fixed  for  the particular  category  divided by 26.   The  Tribunal  having regard to the relevant circumstances, fixed the rates and we do  not  see  any error or principle ,in  arriving  at  that figure.  We accept the findings. The  next question is the fixation of the age of  retirement for  the  employees.  The existing age of retirement  is  55 extendible  to 60 years at the discretion of the  management if  the  workmen  are considered suitable and  if  they  are medically  fit and mentally alert.  The Tribunal raised  the age  of  retirement  from 55 years to 58 years  but  gave  a discretion to the Company to continue an employee after that age.  The learned counsel for the workmen contended that the superannuation  age fixed by the Tribunal does  not  reflect the social changes that have taken place in the country  and has  also  ignored  the  judicial  trend  in  that   regard. Reliance is placed upon the decision of this Court in G.  M. Talang  v. Shaw Wallace and Co.(’). Therein this Court  held that  the  opinion  furnished by the  several  documents  on record  clearly  showed  a consistent trend  in  the  Bombay region to fix the retirement age of clerical and subordinate staff  at  60 years.  In the course of  the  judgment,  this

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Court noticed the Report of the Norms Committee in which the following opinion was expressed: "After  taking into consideration the views of  the  earlier Committees and Commissions including those of the Second Pay Commission the report of which has been released recently we feel  that the retirement age for workmen in all  industries should be fixed at 60.  Accordingly the norm for  retirement age is fixed at 60." But  it is said that the scope of the judgment was  confined only  to the Bombay region and it should-not be extended  to the  Poona region.  A perusal of the Tribunal’s Award  shows that it followed the decision given by it in the dispute  of Shaw Wallace & Co. Ltd.(’) which was reversed by this Court. That apart, the Tribunal also recognised that the retirement age should be raised from 55 years to 58 years and that even thereafter  discretion should be given to the  employers  to continue the employees or not to do so.  This indicates that in the view of the Tribunal, the retirement age in the  case of   the  employees  of  the  industry  in  question   could reasonably be raised beyond 58 years.  We do not think it is proper to give a discretion to the Company to raise the  age of  retirement  or not to do so, for, the  vesting  of  such uncontrolled  discretion  in  the  employer  might  lead  to manipulation   and  victimisation.   We  would,   therefore, following  the  trend  of judicial opinion,  hold  that  the retirement  age  of the employees of the Company  should  be raised to 60 years. (1)  [1964] 7 S C R. 424. 678 On  behalf of the workmen it was contended that the  linkage should  be  done  with effect from  January  1,  1962.   The Tribunal  pointed  out that it had no  intention  of  giving retrospective  effect  to  the  linkage  for  the  following reasons: (1) it had substantially increased the wages; (2) a long  retrospective effect would unduly increase the  burden on  the  Company;  and  (3) the  workmen  had  been  getting handsome  bonuses.  But, having regard to the fact that  the Poona index figures- had been published from April 1964,  it held  that the linkage should be from April 1, 1965 and  not from the earlier date; that is to say, it had given,  having regard   to   the   aforesaid   circumstances,   a   limited retrospective operation to the linkage.  The employees  have not  made  out any case for giving a  further  retrospective effect to the linkage. In the result, Civil Appeal No. 406 of 1964 preferred by the Company is dismissed with costs; and Civil Appeal No. 407 of 1964  preferred  by  the Workmen is  dismissed  with  costs, except  that the Award is modified in regard to the  age  of retirement. G.C.                           Appeals dismissed  and  award modified.