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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,

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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

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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

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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

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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.

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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

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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

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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

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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

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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).

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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

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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

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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

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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

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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.