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PETITIONER: MANAGEMENT OF THE KIRLAMPUDI SUGAR MILLS LTD.

       Vs.

RESPONDENT: INDUSTRIAL TRIBUNAL, A.P. & ANR.

DATE OF JUDGMENT26/08/1971

BENCH:

ACT: Industrial Dispute-Recommendations of Central Wage Board for sugar  whether  vitiated by fact that it had  fixed  uniform wages region wise without further classification within each region-Tribunal’s  jurisdiction  to  go  into  question   of financial  capacity of company to implement  recommendations of Wage Board--Company whether had financial capacity.

HEADNOTE: The  Kirlampudi  Sugar Mills Ltd. was started in 1951  as  a small  unit  and later was increased to  a  larger  crushing capacity  of  1000  tons.   By 1963  the  factory  got  into financial  embarrassment.  in the middle of that  year  the- present  management  took over the factory on  the  specific assurance of the Government that they would provide for  and give  all  facilities  to enable them to  run  the  factory. After  the  management was taken over  there  were  disputes between the management and workers with the result that they referred  various  matters for  adjudication  including  the claim  for  implementation  of the  recommendations  of  the Central Wage Board for sugar.  The disputed items related to categorisation  of workers their fitments, fixation of  work load, the demand for increase of Rs. 10 to be given to every worker  over  the basic wage implementation of  weight  age, dearness  allowance.  the demand for giving grades  and  for giving  retrospective  effect  etc.  On  issue  No.  IA  the Tribunal  held  that  categorisation of  workers  and  their fitments  and  work load should be in  accordance  with  the recommendations  of the Wage Board; it decided in favour  of the  management in respect of certain categories of  workers but in respect of some others it gave relief to the workers. The  Tribunal  further  held in respect of issue.  2  and  5 before  it that the financial capacity of the Appellant  was not  such  as to justify an increase of Rs.  IO to  all  the workers  over the basic wage and dearness allowance  or  the payment  of  Rs.  5 to workmen  for  implementation  of  the weightage  recommended by the Wage Board.  Appeal No.,  1602 of  1966  was filed in this Court by special  leave  by  the management  against the Award of the Tribunal in respect  of issue IA in so far as it went against them.  Appeal No. 1603 of  1966  was filed by the workers  against  the  Tribunal’s decision  on issues 2 and 5 and that part of issue IA  which went  against them.  The questions that fell for  considera- tion  were  : (i) whether the recommendations  of  the  Wage Board  were  vitiated by the fact that they  had  fixed  the wages  uniformly region-wise without further  classification within  each  region; (ii) If they were valid,  whether  the Tribunal  could  go  into  the  question  of  the  financial capacity of the company to implement them; (iii) whether the company   had  the  financial  capacity  to  implement   the

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recommendations. HELD : The Wage Board following the principles laid down  by this  Court  has  considered the capacity  of  the  industry region-wise  and has also fixed wages different from  region to region having regard to the difference in the capacity of the Industry region wise.  Further it has given good  reason for not furnishing a criteria for further classification  of the  industry  within the region.   In  these  circumstances prescribing  the same wage for all units of industry in  the same region was justified and the fact that the 429 industry  in  the region had not been divided  into  classes could not vitiate he recommendation of the Wage Board.  [441 F-G] Workmen of Shri Bajrang Jute Mills Ltd.   v.  Employers   of Shri Bajrang lute Mills Lid., [1969] 2 S.C.R. 593, explained and distinguished. Express Newspaper (P) Ltd. v. Union of India & Ors.,  [1959] S.C.R.  12 and French Motor Car Co. Ltd. v. Workmen,  [1963] Supp. 2 S.C.R. 16, referred to However, notwithstanding the fact that a fair wage has  been fixed  by  the Board which would be applicable  to  all  the units in the region for which wage has been fixed, it may be open  to  any  particular unit to plead  that  in  fact  its financial  position is not such that it can bear the  burden of  implementing the recommendations.  The justification  of the plea of want of financial capacity will depend upon  the evidence  of its financial position over a period of  years, to show that it cannot bear the burden or that it is only  a temporary or fortuitous situation with every possibility  of financial improvement in the immediate future [442 E; 443 C] Ahmedabad  Mill Owners’ Association etc. v.  Textile  Labour Association, [1966] 1 S.C.R. 382, relied on. The  Appellant’s balance sheets for the years 1960  to  1970 for  a  period of 10 years showed that except for  the  year ending 30-6-69 the company was not in a position to  declare any  dividends.   Though the factory appeared to  have  been expanded  after  1964 to 300 tons capacity it did  not  show uniform  net  profits; on the other hand  losses  continued. The  profits that it made in any year seemed to be  consumed by   losses   of  the  previous  years.    Various   factors contributed to financial unsteadiness. [448 G-H] This  being  the  position the  Tribunal  was  justified  in holding  that  the  Appellant did  not  have  the  financial capacity  to bear the burden of payment of Rs.  10  increase and   Rs.  5  as  weightage  in  accordance  with  the   re- commendations  of  the Wage Board.  On this  conclusion  and also  on  an  examination of the relevant  material  it  was evident that the company was not in a financial position  to meet  the burden of implementing the recommendations of  the Wage  Board.  Despite this the company had  implemented  the award  in  respect of a large number of workers both  as  to categorisation   and  fitment  except  in  regard  to   four categories.   The  claim,  of  the  Respondent  workmen  for categorisation  and fitment in accordance with the Award  in regard  to  these  could  not,  in  the  circumstances,   be accepted.  [448 H-449 G]

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 1602  and 1603 of 1966. Appeals  by special leave from the Award dated November  19,

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1965  of the Industrial Tribunal, Andhra Pradesh,  Hyderabad in I.D. No. 23 of 1965. K.   Srinivasamurthy, Naunit Lal and Swaranjit Sodhi for the appellant (in C.A. No. 1602 of 1966) and ’the respondent  in C.A. No. 1603 of 1966). M.   K.  Ramamurthi and Vineet Kumar, for respondent  No.  2 (In  C.A. No. 1602 of 1966) and the appellant (in  C.A.  No. 1603, of 1966). 840Sup.CI/71 430 The Judgment of the Court was delivered by P.   Jaganmohan  Reddy, J. These are two appeals by  Special Leave.   Civil Appeal No. 1602 of 1966 is by the  Management against  the  Award passed by the Industrial Tribunal  on  a reference  made  by  the Government  for  categorisation  of workers, ,their fitments, fixation of work load, the  demand for  increase of Rs. 10/- to be given to every  worker  over the  basic  wage,  implementation  of  weightage,   dearness allowance,  the  demand  for giving grades  and  for  giving retrospective effect etc.  Civil Appeal’ No. 1603 of 1966 by the  Workmen is against the same Award for disallowing.  the increase  of  Rs. 10/- and the weightage of Rs.  5/and  also against  the fitment of certain categories of workers.   The Tribunal  held that the financial capacity of the  Appellant was  not such as to justify an increase of Rs. 10/-  to  all the workers over the basic wage and dearness allowance.   On the  same grounds it also disallowed the payment of Rs.  5/- to  workmen for implementation of the weightage  recommended by  the  Wage  Board for Sugar  Industry.   These  were  the subject matter of issue 2 and 5 of the reference made to the Tribunal.   So  far as issue IA is concerned, it  held  that categorisation  of workers and their fitments and work  load should be in accordance with the recommendations of the Wage Board for Sugar and even as to these it decided in favour of the  management in respect of certain categories of  workers but  in  respect  of  some others, it  gave  relief  to  the workers.  The employers appealed against that part of  issue 1A  which  was  decided against them,  while  the  Workmen’s Appeal is against the finding of issues 2, 5 and part of  IA which was against them.  We will first take up the appeal of the Management. It appears that the Kirlampudi Sugar factory was started  in 1951  as  a small unit and later was increased to  a  larger crushing  capacity  of  1,000 tons which  according  to  the Tariff  Commission  would  not  be  considered  economically profitable,  though  according to the Sugar  Wage  Board  it would   be.   By  1963  the  factory  got  into,   financial embarrassment as it had to pay heavy debts to the Government on account of Sugar cess, cane prices payable to the growers and  Income-tax.   These demands it is  alleged  practically brought  the factory to a stop, when in the middle  of  1963 the present management took over the factory on the specific assurance from the Government that they will provide for and give  all  facilities  to enable them to  run  the  factory. After  the  management was taken over  there  were  disputes between the Management and workers with the result that they referred  various  matters for  adjudication  including  the claim for implementation of the wage Board’s  recommendation which  was  alleged to have been implemented by  the  former management  as  early as 1961-62.  It was the  case  of  the workers that  implementa- 431 tion  was not satisfactory and it was their demand that  the sugar  wage board’s recommendations should  be  implemented. The  management  raised  a  specific  objection  before  the

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Industrial   Tribunal  that  the  reference  relates  to   a wholesale  promotion of workers from one grade to the  other under   the  guise  of  fitment  under  the   Wage   Board’s recommendations  which is illegal and without  jurisdiction; and  in any case the question of  promotion,  categorisation and  fitment is a managerial function in which the  Tribunal cannot  interfere  unless  it can be  established  that  the management  acted  mala  fide  or  it  resorted  to   unfair practices.  It was further pleaded that the factory had  not the financial capacity to implement the demand.  One of  the grievance  of the Appellant was that though  the  Tribunal found  that  it had not the financial capacity to  meet  the additional  burden  of the demands made by  the  workmen  it granted large scale promotions which it had no  jurisdiction to  grant.  Despite this the management states that  it  had implemented the Award in most of the cases and challenged it in respect of some only. It  may be mentioned that the Central Wage Board  for  Sugar was  appointed in terms of paragraph 25 of Chapter XXVII  of the Second Five Year Plan.  This Wage Board for Sugar Indus- try  divided India into 4 regions and each  region  included every  State  containing  even a  single  unit  unlike  that adopted by the Tariff Commission which in its Report on  the cost  structure  left  out some of the  States  from  the  4 divisions.    It   then  considered  the   wage   structure, categorisation  etc.  for  each  of  the  said  regions,  in relation to a fair cross-section of the Industry in each  of the regions.  In comparison with this method, the Jute  Wage Board  had taken India as a whole and fixed a  uniform  rate for the Jute industry.  The first contention which has  been urged is that the recommendations of the Wage Board were not binding  in  view of the fact that it was  not  a  statutory board  but  was only a recommendatory one and  the  Tribunal could  not  implement  them  as  a  whole  because  it   had recommended  that  fitments  and  categorisation  should  be affected  by recourse to Tripartite machinery.  The case  of Workmen  of  Shri Bajrang Jute Mills Ltd., v.  Employees  of Shri  Bajrang Jute Mills Ltd.(1), is cited as  an  authority for the proposition that as the procedure prescribed therein was  not valid, the recommendations of the Wage  Board  were declared  to  be  invalid  and  inapplicable  to  the   Jute Industry.  The learned Advocate on behalf of the Respondents raised  a  preliminary objection to the  maintainability  of this  contention as this issue had neither been referred  to the  Tribunal,  nor has it been urged before it  nor  had  a ground  been taken in the Special Leave Petition.  He  seeks to distinguish the case of the Bajrang  (1) [1969] 2 S.C.R. 593. 432 Mills,  as  in that case there was a  specific  issue  while there  is  none in this case.  In answer it is  pointed  out that  the contention raised on behalf of the Respondents  is implicit in issue 1 (a) which is as follows :               1(a) "Whether the demand for categorisation of               workers and their fitment and work load should               be  in accordance with the recommendations  of               the   Wage   Board  for  Sugar   industry   is               justified". The  Appellant had in its statement before the  Tribunal  in para  9 categorically challenged the recommendations of  the Wage  Board in these words : "It may be noticed even  though the Wage Board recommendations are not binding, in spite  of huge  losses  the  management  went  out  of  the  way   and implemented  the same".  In the Special Leave Petition  also in paragraph 2 the Appellant had challenged the jurisdiction

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of the Tribunal "to go into the question of the capacity  to pay  of  an  individual  unit  in  respect  of  one  of  the recommendations  of the Wage Board for Sugar  industry  when such  recommendations  had been made for the industry  as  a whole and agreed to by the Management itself". It is therefore contended that if the financial capacity  is taken  into  account for placing fitments on  the  basis  of Bajrang  Jute  Mills,  no other  question  arises.   In  the Bajrang Mills case(1) it was held that fixation of fair wage depends on the financial capacity but once when the Tribunal had  held  that  the Appellant did not  have  the  financial capacity  the categorisation and fitments directed by it  in its  Award are invalid.  The Tribunal is concerned with  the implementation  of the Wage Board recommendation  forgetting that  it  cannot  do so when  the  implementation  of  those recommendations  relating  to  categorisation  and   fitment cannot  be  effected  without  recourse  to  the  Tripartite machinery.   It  is also contended that  categorisation  and fitment  is  a managerial function  and  requires  technical knowledge of the various duties ,and functions which each of the  category of workmen have to discharge.   The  following contentions have been urged, namely : (1) The Wage Board recommendations having regard to the case of  Bajrang Jute Mills are invalid and cannot  be  enforced, inasmuch  as  it  has fixed a uniform wage  for  the  entire region  without further dividing the industry in the  region into  classes  of units according to their  capacity  namely region-cumindustry  for fixation of the wage  structure  for those  classes  of  units.   At  any  rate  since  what   is prescribed  in  the report is ,only  recommendatory,  unless there  is  a  capacity  to  pay,  no  one can  claim   its implementation as of right.  (1) [1969] 2 S.C.R. 593. 433 (2)  The Appellant has not the financial capacity to  imple- ment  the Award which has been held by the Tribunal to be  a fact.  On this score itself it cannot implement the Award. (3)  In  para 263 of the Wage Board recommendation  of  1960 that  when  there  is a difference  between  management  and labour regarding fitment the Tripartite machinery should  be brought into existence.  The Tribunal was wrong in  thinking that  the Wage Board was giving an example  of  border-lines cases  where there may be a difference of opinion and it  is only  in  those cases that the Tripartite machinery  in  the case of fitment is to be resorted to. (4)  Fitment  is  a  managerial  function  and  unless   the Tribunal  finds that the Act of the management is mala  fide or  it has resorted to unfair practices it is not  justified in interfering with the fitments effected by the management. (5)  In any case in respect of certain specific fitments the Tribunal was in error and acted without evidence. Before  dealing  with these contentions it is  necessary  to consider  the preliminary objection raised on behalf of  the Respondents  that before the Tribunal the Appellant did  not object to the implementation of the Wage Board on the ground that  its recommendations were not industry-cum-region  wise or that it had not divided the industry into various classes and  fixed a wage for those classes in that region,  and  in any  case no such issue was referred to the Tribunal  unlike in  the Bajrang Jute Mills case(1).  In that case  what  was referred  to  the  Tribunal was whether the  demand  of  the workmen  in Shree Bajrang Mills Ltd., for implementation  of the  recommendations  of  the Central Wage  Board  for  Jute Industry  is justified, and if so, to what extent.  In  this case issue IA did not specifically raise an objection to the

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implementation of the Sugar Wage Board’s recommendations  in general  terms  but  issues 1, 2, 4, 5 &  6  did  raise  the question   whether   the   Board  was   justified   in   its recommendations   regarding   categorisation   of   workers, fitment, increase of Rs. 10/- to every worker over the basic wage,  dearness allowance, the minimum wage, the demand  for fixation  of work-load and the demand for implementation  of weightage.   Apart from this a question seems to  have  been raised that the Tribunal could not implement the Wage  Board recommendations because it had envisaged the  implementation of the categorisation etc. through the Tripartite machinery, as such as Tribunal had no jurisdiction to implement it.  It would  appear from the Award that the learned  Advocate  for the  Appellant  had  challenged  the  jurisdiction  of   the Tribunal  to fix the workload or undertake the  fitments  in view  of  the recommendations in paragraph 263 of  the  Wage Board’s report (1)  [1969] 2 S.C.R. 593. 434 that  fitments  have  to  be  effected  by  the   Tripartite machinery  to be appointed by the Government.  Even  in  the statement of claim filed on behalf of the management it  was said  that though the Wage Board’s recommendations  are  not binding in spite of the huge losses the management went  out of  the way and implemented the same.  The fact that it  was said that the Wage Board recommendations are not binding  is pressed  into service to- support the contentions  that  the validity  of  the  recommendations of  the  Wage  Board  was challenged.   While  we  are  inclined  to  agree  with  the submission of the learned Advocate for the Respondents  that no  where  except in the statement of the case  before  this Court  has a specific plea that the recommendations  of  the Wage  Board not being in accordance with the  well  accepted principles  laid down by this Court in the several cases  to which  reference has been made cannot be implemented and  on that  account the Tribunal has no jurisdiction to  implement those recommendations it may nonetheless be pointed out that issue   1A   and  other  issues  in  terms   challenge   the implementation  of the recommendations.  Even if  we  permit the learned Advocate for the Appellant-and we think there is justification   for   it-to  challenge  the   Wage   Board’s recommendations   generally,  for  reasons  which  we   will presently give, those recommendations do not suffer from any vice  but on the other hand the Board has fixed a fair  wage for the industry in accordance with the principles laid down by this Court. Since  a good deal of argument is based on  the  recommenda- tions  of  the Wage Board it may be  profitable  to  examine generally the factors which were taken into consideration in fixing the wage structure for the industry.  The Wage  Board as  has already been noticed adopted the method employed  by the  Tariff  Commission by dividing the  country  into  four zones or regions but unlike it included every State in  each region  which  had  even one unit.  It  further  took  these regions   which  were  considered  for  fixation  of   price structure of sugar also for wage structure in this industry. In   adopting   this  course  the  Wage  Board   took   into consideration  the  seasonal nature and  the  duration,  the sucrose  content  of sugar cane and its yield  which  varies from region to region.  It was noticed that the duration  of seasons vary somewhat widely from area to area depending  on the availability of cane and the year to year variation.  As a  consequence of some of the factories in the South  owning their  own  sugar-cane  farms while this is not  so  in  the North,  the  Southern  factories  do  not  suffer  from  the

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handicap of Northern factories which have to get sugar  cane from nearby growers depending on the conditions of the  crop in  the  vicinity  which  is not destroyed  by  pest  or  is unsuitable  for any other reason, for otherwise to  get  the sugar-cane  from  growers from long distance  would  involve transport 435 costs.   This  disadvantage the Southern  factories  do  not have.   The  quality of cane as determined  by  the  sucrose content  varies  from  area to area  depending  on  climatic conditions,  irrigation  facilities  and  cane   development activities.   Factories  in Maharashtra and to  some  extent those  in the North enjoy these advantages.  Their  recovery percentage  is higher than in the North.  Thus  the  average percentage of recovery of sugar in Maharashtra was noted  to be  the highest as against those in U.P. and Bihar and  also as  compared with the All India average.  The  variation  in the   yield   of  cane  per  acre  was   also   taken   into consideration; for instance in Bombay it is much higher than in  the  North.   The  Board  indicated  the  main   factors responsible  for  variation in the yield of  sugar  cane  in different regions due to : (1) Improved variety of cane; (2) irrigation  facilities;  (3)  ecological  factors;  and  (4) improved methods of cultivation.  The difference in the case of  yield in ,the various areas has been one of the  factors which the Board said had persuaded it to divide the  country into four regions. Though the industry is rural based, it was stated the  price of essential commodities in townships where sugar  factories are located, did not vary appreciably from the urban  areas. In spite of the urban amenities not being available in these factory areas, the Board noted that while the impact of  the wages it worked out, on the economy of the country has  been taken  into account, it was not proper to take  agricultural wages  as  the  prevailing rate  of  wages  for  comparison. Further it appeared to the Board that the Sugar industry was a highly regulated industry where the minimum cane price  is fixed  by  the  State and higher price  depending  upon  the quality  of  the cane is to be paid according to  the  price linking formula laid down by the State and that even    the ex-factory  price for the finished product is fixed  by  the State  in the North and some other States have fixed  prices at least for one of its by-products and molasses.  The price ’fixation in the North it is observed has its effect on  the price  of sugar in the South where normally sugar cannot  be sold  for  a price higher than fixed in the North  plus  the freight. The  Board also set out the procedure followed by it in  as- certaining  the financial capacity and profitability of  the industry  region-wise by calling for the  balance-sheets  of all  the  factories for a period of 10 years  and  undertook detailed  studies  for  8 years beginning  from  1951  which corresponds  to the beginning of the First Five  Year  Plan. However,  out  of  the balance-sheets    of  118  Companies, balance-sheets for 8 years were available in respect of  87, 8 Companies supplied balance-sheets for 7 out of 8 years and among the rest balance-sheets were available for one or more years.  The Board thought that this data is fairly 436 well,  if  not  absolutely, comparable from  year  to  year. Where  a  Company owned two or more factories  in  the  same State or region it was decided to consider only the combined balance sheets for the number of factories covered,  because splitting  the  combined balance-sheets over the  number  of factories  did not serve the end in view.  However, where  a

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Company  had under its management two or more  factories  in different States but in ,the same region, it was decided  to exclude  it  from  State-wise study and include  it  in  the regional total.  It also took into consideration some of the Companies  which  along with the sugar  manufacture  carried other  manufacturing activities.  Then it also applied  ’the dividend   tests,  examined  the  main   profitable   ratio, considered  the  total  dividend  as  coverage  by  paid  up capital,  compared gross profits and total capital  employed and  profits  and  profitability  in  relation  to  per  day crushing  capacity from 1955-58.  A region-wise analysis  of financial data was made and the same was also distributed in different  ranges of daily crushing capacity.  In so far  as South  region is concerned in which the Appellant’s unit  is located  it  was observed that "the factories seem  to  have been more or less evenly distributed among all the regions". Analysis  of  financial  data  region-wise  was  also   made according to different crushing capacity ranges for each  of the  years 1955 to 1958 under different heads namely,  gross profits,  sales, total capital employed, profits after  tax, ordinary dividend, ordinary paid up capital total dividends, total   paid  up  capital,  profits  before  tax,   taxation provision, retained profits and net worth. After  taking  into  consideration the  several  factors  in detail  the  conclusions of the Tribunal are  summed  up  as under :               (a)   "the profit margin whether on  sales  or               on total capital     employed,  or on the  net               worth does not appear to bear  any         set               relationship     increase     or      decrease               consistently-with  the  size of  the  Company.               The  trends  are mixed  and  irregular.   This               observation  is equally applicable  ’to  other               ratios and also to the allocation of  profits.               It  does not seem possible from these  studies               to  locate any optimum size of the factory  in               respect of any region.  The reason probably is               that  profits depend not only on the  size  of               the factory but on various other factors  e.g.                             efficiency   of   management,   condit ion    of               machinery,  availability of raw materials  and               efficiency of workers;               (b) However, considering the overall  position               it is evident that with no outside  competitor               in   the  field,  with  a   consuming   public               increasing  and with national income which  is               rising, the industry has a good future.,               437               In  spite_of  high taxation,  high  Government               imposts  ’by way of cess rise in price of  raw               material  rise in freight charges and in  some               regions higher labour charges owing to  recent               revision  of wages the demand for white  sugar               has  been increasing and most of the  existing               sugar  mills have been fairing well.  Many  of               them  have  expanded their  capacity  and  new               units   are   fast  coming   into   operation.               Progress  of the industry has  been  rapid....               but the increase in taxes has hit the retained               earnings particularly in the case of North and               Central region companies.               (c)   Taken   region-wise,   the’    financial               position  of Maharashtra is the best.  It  has               natural  advantages.   The yield of  cane  per

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             acre  is  higher.  Its quality is  better.   A               large  number of the factories have their  own               farms.   The  cooperative  have  also  assured               supply  of  cane.  The cane  growers  are  the               share-holders.   Then comes the South  region.               North  region occupies the third position  and               Central  region  the last.  In  cess:  Punjab,               West Bengal, Madhya Pradesh, Rajasthan, Madras               and  Kerala  enjoy some advantage with  no  or               lower  rates per maund of cane.... It  may  be               added  here  that recovery in  some  of  these               States  is  lower  than  the  average  of  the               country’. It   would  appear  therefore  that  the  Board  took   into consideration the special features of the sugar industry and all the relevant factors with great care and perspicuity and fixed  a fair wage for the industry in each of the  regions. What  is was called on to, assess is the fair wage which  as it  may be noticed according to the Report of the fair  wage Committee was that which whiledetermining the capacity of an industry  to pay, it considered it to be wrong to  take  the capacity  of  a  particular  unit or  the  capacity  of  all industries  in  the country, into  account.   The  relative- criterion should be the capacity of a particular industry in a specified region and as far as possible same wages  should be  prescribed  for  all  units in  that  region.   It  will obviously  not  be possible for the wage fixation  Board  to measure the capacity of each of the units of an industry  in a region, as such the only practical method is to take  into consideration  a fair cross section of that industry.   This is what in fact the Board has don,--.  The minimum wage that has  to be paid is as interpreted by this Court  in  Express Newspapers  (Pvt.)  Ltd.  v. the Union of  India  &  Ors.(1) different  from  the subsistence wage "which has got  to  be paid  to  the workers irrespective of the  capacity  of  the industry  to  pay while the minimum wage is  something  more than the bare mini- (1) [1959] S.C.R. 12. 438 mum  or subsistence wage.  It further observed "The  minimum wage  thus  contemplated  postulates  the  capacity  of  the industry to pay and no fixation of wages which ignores  this essential  factor  of the capacity of the  industry  to  pay could  ever  be  supported".  In that case  the  Court  also observed  at page 90 : "that the capacity of an industry  to pay  should be gauged on an industry-cum-region basis  after taking  a fair cross section of that industry.  In  a  given case it may be even permissible to divide the industry  into appropriate  classes-and then deal with the capacity of  the industry to pay class-wise" the classification into classes, it  will  be seen is not an obligatory one but  is  required only  in  cases  where  otherwise  a  fair  wage  cannot  be determined.   Any injunction that the industry in  a  region should in all cases be divided into classes in determining a fair  wage for that industry would on the other hand  likely to introduce greater disparity. A reference has been made to the case of French Motor CarCo. Ltd.  v.  Workmen(1) for the proposition  that  large  units ought not be compared with small units even where the  Board is  considering  the wage structure  on  industry-cum-region basis.  No doubt in that case the Tribunal had gone into the history  of the wage revision in the undertaking and  having regard to- a large increase in the cost of living found that a case for further revision was made out notwithstanding the fact that wage scales were the highest in the industry.   In

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Appeal  this  Court  held that it was settled  law  that  in fixation  of  wage scales, dearness  allowance  and  similar conditions  of servic an industrial Court has to proceed  on industry-cum-region  basis and compare similar  concerns  in the region which would be those in the same line of business as the concern in dispute.  But such comparison must not  be between  a small struggling concern and a large  flourishing one. These  cases  were  considered in Worknen  v.  Bajrang  Jute Mills(2) to which one of us was a party (Vaidialingam,  J.). That case was considering the Report of the Jute Wage  Board which  in making recommendations for the industry adopted  a different approach.  The Wage Board took the whole of India. as  one  unit while in fact almost all the Jute  Mills  were situated  in West Bengal and a few in Bihar and still  fewer in Andhra Pradesh.  What the Wage Board did was to   compare 20 Mills from West Bengal and 9 mills from the rest of India as  representing a fair cross section of the industry.   The Respondents have a fairly small unit in Andhra Pradesh which was considered as a comparable unit with two larger mills in the  State  and with some of the prosperous  Mills  in  West Bengal.  The management of the Mill refused to accede to the demand of the workman (1) [1963] Supp. 2 S.C.R. 16. (2) [1969] 2 S.C.R. 593. 439 to  pay the wages in accordance with the recommendations  of the  Wage Board, fixing uniform wage scale for the  industry on the plea that the Mill had no financial capacity to  bear the burden of the wage scale’ On the dispute being  referred to the Tribunal it upheld the claim of the management.  This Court in Appeal sustained the Award of the Tribunal that the payment   of   the  workmen  for  implementation   of   the, recommendation of the Wage Board is not justified.  In  this connection  at page 609-610 it was observed by reference  to the  manner  in which the Wage Board had laid  down  uniform scales  for  the entire industry irrespective of  where  its several  units were situate and of the different  conditions prevailing in various areas, that it would have been  better if it had "considered the units in each area separately  and deter-’  mined the wage-scales for each such area by  taking from  that  area  a  representative  cross.-section  of  the industry  where possible or where that was not  possible  by taking  comparable units from mother industries within  that area, thus following the principle. of industry-cum-region". It was further observed :               "It  is  true that in doing so  uniformity  of               wage scales for the entire industry would  not               have  been  attained.  But in a  vast  country               like  ours,  where  conditions  differ   often               radically  from region to region and even  the               index  of living differs within a fairly  wide               range, such a target cannot always be just  or               equitable.   If  the  wage  scales  had   been               determined   by  the  Board  in   the   manner               aforesaid,  even  though the Board  is  not  a               statutory  body and consequently its  decision               are of a recommendatory character, it would be               possible for industrial tribunals to give  due               weight   to   its  recommendations   as   such               recommendations would have been in  conformity               with  the principle of industry-cum-region,  a               principle binding on the tribunals.  It  would               be difficult in that event for any unit in the               industry   in  that  region  to   propound   a

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             grievance  that  its capacity to pay  was  not               taken  into  account as the scales  so  framed               would  have been determined after taking  into               consideration scales prevailing in  comparable               units,  whether  in  that  industry  or  other               industries in that region depending on whether               in a particular area the accent was on the in-               dustry   part  or  the  region  part  of   the               principle of industry-cum-region". The learned Advocate for the Appellant lays stress upon  the observation  contained at page 607 where while dealing  with the Express Newspapers case, this Court had observed :               the requirement of considering the capacity of               each  individual  unit to pay may  not  become               neces-               440               sary if the industry is divided into different               classes.  Even if the industry is divided into               different  classes it will AM be necessary  to               consider  the  capacity  of  the   respective,               classes  to bear the burden imposed  on  them.               For  this  purpose a  cross-section  of  these               respective  classes may have to be  taken  for               careful consideration for deciding what burden               the class considered as a whole can bear". These  observations  must be read in the light of  what  was earlier  stated namely "as the Wage Board was fixing a  fair wage  for  the  entire jute industry it may  not  have  been strictly  necessary  to consider the financial  capacity  of each individual unit".  There is nothing in the Bajrang Jute Mills  case(1) which makes it obligatory on a Wage Board  to divide  the industry into regions as well as classes  or  to examine  the  financial  capacity  of  every  unit  in  that industry  in  the  region, irrespective  of  the  conditions prevailing  in the different regions of that  industry.   As long as all relevant factors appertaining to that ’industry, industry-wise  and region-wise have been considered and  the capacity of a fair cross section of that industry to pay  in that  region has been ascertained, ,the  recommendations  of the  Wage Board cannot be held to be invalid.  It is not  in every case that a division into classes in the same  region, on   a  unit-wise  capacity  should  be  made   before   re- commendations  of the Wage structure, dearness allowance  or other  conditions of service in that industry could be  held to be fair and within the financial capacity of the industry in  that region.  The criteria on which the  recommendations of  the  Jute Wage Board were held not to be  in  accordance with the principle laid down by this Court in Bajrang  Mills case  do  not form the basis of the recommendations  of  the Sugar Wage Board.  The Sugar Wage Board not only divided the industry  into  regions as already pointed out  but  on  the other  hand found that there was no great disparity  in  the region nor did the size of the unit make any difference.  It standardised    the   wage   structure,   it    adopted    a standardisation  of  nomenclature  by  taking  note  of  the various  nomenclatures used in the industry and defined  the qualification  for each of the categories.  The  predominant conditions  for wage structure which weighed with the  Board were that firstly in view of the great unemployment  nothing should be done to reduce the existing employment but on  the other hand efforts should be made to increase it.   Secondly the  need for increase in production was paramount  and  any action  likely to reduce it should be studiously avoided  as far as possible.  Thirdly the capital should not be idle for if a wage structure is evolved which leads to the closure of

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any unit or units, a number of persons will be thrown out of employment, production will be (1) [1960] 2 S.C.R.595 441 reduced  and  capital  invested in them  will  become  idle. Keeping  these considerations in view the  Board  determined the  wage  Structure which it recognised may be  lower  than norms  laid down by the Fifteenth Labour Conference but  the fact  that  there  is a tremendous rush  for  employment  in factories  is  proof that the wages recommended  by  it  are higher  than the rates fixed under the minimum Wages Act  in industries to which that Act applies or those prevailing  in the  open  market.   It also  took  into  consideration  the economic  units in the regions which as accepted by it is  a unit having a crushing capacity of atleast 800 to 1000  tons thought  it has noted that the majority of  sugar  factories have  a  crushing capacity higher than this and  several  of those  having  uneconomic  size  have  already  applied  for expansion.   According  to  the Board  there  were  only  38 factories which were below 800 tons crushing capacity but  a good  many of them were making profits.  However, there  are some  which  are  running at loss and  for  them  the  Board recommended  that  some  consideration should  be  given  to adjust themselves which should be the same as these given to new  factories.   This is what the Board stated  in  Chapter XIII at page 111 :               "The  conclusion  is that  except  some  cases               other units below 800 tons are making profits.               The examination is set out in the Annexure  to               this  Chapter.  The Board is of the view  that               relaxation in wages is not the real remedy for               those  uneconomic  units.  They will  have  to               fall  in line with the scheme of wages  recom-               mended by the Board.  The real remedy for them               is to expand themselves into economic units". It would therefore appear that the Wage Board following  the principles  laid  down  by this  Court  has  considered  the capacity  of  the industry region-wise and  has  also  fixed wages  different from region to region having regard to  the difference  in  the capacity of  the  industry  region-wise. Further  it  has  given good reason  for  not  furnishing  a criteria  for further classification of the industry  within the  region.   In these circumstances prescribing  the  same wage for all units of industry in the same region is in  our view justified and the fact that the industry in the  region has  not  been  divided  into  classes  cannot  vitiate  the recommendations of the Wage Board. It  is contended on behalf of the Appellant that while  this is so and the wage fixed is a fair wage for the industry  in that  region  and  cannot  be  challenged  nonetheless   the Tribunal  is  not precluded from considering a plea  by  any particular unit that in fact its financial position is  such that   it  cannot  bear  the  burden  of  implementing   the recommendations of the Wage Board.  The learned Advocate for the Respondents however, counters this on 442 the ground that once a wage has been fixed by the Board as a fair wage on industry-cum-region basis, whether those recom- mendations  are  statutory  or otherwise,  no  plea  by  any individual  unit that it has not the capacity  to  implement the recommendations, can be entertained.  He asks whether an Industrial  Tribunal  to  which  a  dispute  regarding   the fixation  of wage is referred fixes a wage structure, is  it open to any particular unit to say that it is unable to  pay ?  If this is not so, on the same parity of reasoning it  is

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contended that no unit in a region can be permitted to plead that it has not the financial capacity to implement the Wage Board’s  recommendations.  It appears to us that if  in  law it,  is  open to the unit to plead  financial  inability  to implement   the  recommendations  of  the  Wage  Board   the hypothesis on which the question has been posed will not  be relevant because in such a contingency as is envisaged there would  be a specific issue and a determination of  the  wage structure  by the Tribunal will be on the evidence  produced before  it according to the financial capacity of the  unit. Once  this is finally determined, the unit cannot  continue to assert that it has no financial capacity to implement the Award. In  our  view  there is warrant for the  submission  of  the learned Advocate for the Appellant that notwithstanding  the fact  that  a fair wage has been fixed by  the  Board  which would be applicable to all the units in the region for which wage  has been fixed, it may be open to any particular  unit to  plead  that in fact its financial position is  not  such that   it   can  bear  the  burden   of   implementing   the recommendations.  In Ahmedabad Mill Owners’ Association etc. v.  The Textile Labour Association(1), the  observations  of this  Court  at page 421 lend support  to  our  conclusions. Gajendragadkar  J,  delivering the Judgment  of  this  Court observed at page 421               "The  other aspect of the matter which  cannot               be ignored is that if a fair wage structure is               constructed by industrial adjudication, and in               course  of  time, experience  shows  that  the               employer  cannot bear the burden of such  wage               structure, industrial adjudication can, and in               a   proper  case  should,  revise   the   wage               structure, though such revision may result  in               the  reduction  of  the  wages  paid  to   the               employees.   It is true that normally, once  a               wage   structure  is  fixed,   employees   are               reluctant  to face a reduction in the  content               of  their  wage  packet  but  like  all  major               problems     associated    with     industrial               adjudication,  the  decision of  this  problem               must also be- based on the major consideration               that               (1)   [1966] 1 S.C.R. 392               443               the  conflicting claims of labour and  capital               must be harmonised on a reasonable basis;  and               so, if appears that the employer cannot really               bear the burden of the increasing wag.-, bill,               industrial adjudication, on principle,  cannot               refuse  to  examine the  employer’s  case  and               should not hesitate to give him relief, if  it               is satisfied that if such relief is not  given               the  employer  may  have  to  close  down  his               business.  It is unlikely that such  situation               would  frequently arise but, on principle,  if                             such situations arise, a claim by the  employer               for the reduction of the wage structure cannot               be rejected summarily". Of course the justification of the plea of want of financial capacity  will  depend upon the evidence  of  its  financial position over a period of years, to show that it cannot bear the  burden  or that it is only a  temporary  or  fortuitous situation with every possibility of financial improvement in the  immediate future. It is accordingly contended  that  an

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examination  of the financial position would show  that  the Appellant   is   not  in  a  position   to   implement   the recommendations  and that even the Tribunal  had  recognised this  position when it refused to implement an  increase  of Rs.  10/-  to  all  the workers over  the  basic  wage  and’ dearness  allowance,  and Rs. 5/- as  weightage  to  certain categories  of workers.  It would appear from the  statement of  the,  Company  as evidenced by Ex.  M. 51  that  it  had secured  and unsecured debts for each of the four  years  as follows ----------------------------------------------------------                                         Debts     Debts                                        secured    unsecured -----------------------------------------------------------                                            Rs.    Rs.      1960-61                          73,59,3448,13,263      1961-62                          67,78,2702,64,982      1962-63                          32,31,43828,06,000’      1963-64                          32,99,59918,71,522 ---------------------------------------------------------                                       207,68,651  57,55,767 ----------------------------------------------------------- The details of debts would show that they are far in  excess of the paid up share capital and even taking the profit  and development rebate reserves and other reserves into  account the  financial position of the Company is certainly bad.   A reference  has also been made to the notices issued  by  the Revenue  Divisional Officer, Ex.  M. 53 for showing that  on 30th  December 1962, a sum of Rs. 15,91,777-11 ps.  was  due towards Sugar cane cess for 1958-62 and a sum of Rs.  11.66, 718.37 ps. towards cane price in accordance with the details given thereunder.  Subsequently it would appear from Ex.  M. 53/1 that notices under Sec. 53 of 444 the  Revenue  Recovery Act were also issued by  the  Revenue Divisional  Officer,  Kakinada  for the  recovery  of  these amounts.   There  were also other notices and a  press  note published in the Indian Express showing that the  Government was  going  to auction the Sugar Mills  for  recovering  its dues.  The Minister concerned is reported to have said  that its  Department  was taking action to collect  its  dues  as arrears of land revenue. It is on the other hand contended that the Appellant’s  unit is  an economic unit and has been expanded into a  1000  ton unit  in 1956 and there is nothing to show  thereafter  what its  financial  ,position was.  In any case the  profit  and loss  figures  for the four years starting with  1960  would indicate that there was loss only in one year whereas in all the other three years there was profit and from this we  are asked to conclude that the Appellant company was in a  sound financial position.  No doubt any unusual profits or  losses in any year due to advantageous circumstances should not  be allowed  to  cloud the decision one way or  the  other.   In Ahmedabad  Mill Owners Association case it was  observed  at ,page 420-421 as follows               "It  is a long-range plan; and so, in  dealing               with  this problem, the financial position  of               the employer must be carefully examined.  What               has  been  the  progress of  the  industry  in               question;  what  are  the  prospects  of   the               industry  in  future; has  the  industry  been               making profits; and if yes, what is the extent               of profits; what is the nature of demand which               the industry expects to secure; what would  be               the  extent  of  the burden  and  its  gradual

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             increase which the employer may have to face ?               These and similar other considerations have to               be  carefully  weighed before  a  proper  wage               structure  can  be reasonably  constructed  by               industrial    adjudication,    vide    Express               Newspapers  (Private)  Ltd.,  and  Another  v.               Union of India & Others.  Unusual profit  made               by the industry for a single year as a  result               of adventitious circumstances, or unusual loss               incurred by it for similar reasons, should not               be  allowed  to  play  a  major  role  in  the               calculations  which  industrial   adjudication               would make in regard to the construction of  a               wage  structure.  A broad and overall view  of               the financial position of the employer must be               taken  into account and attempt should  always               be  made  to reconcile the  natural  and  just               claims of the employees for a fair and  higher               wage with the capacity of the employer to  pay               it;   and   in  determining   such   capacity,               allowance  must  be  made  ,for  a  legitimate               desire  of the employer to make  a  reasonable               profit".               445 Bearing  these  observations  in mind, it  is  necessary  to determine  what  the  position of the  Appellant  is  ?  The conclusion  of  the  Tribunal in respect of  the  claim  for increase  of Rs. 10/- is that having regard to the  balance- sheets  ",the  profits made in the 4 years are about  Rs.  4 lakhs  and the loss sustained in 1962-63 is of Rs. 16  lakhs and after wiping it off to some extent by sale of debentures it is about Rs. 9 lakhs.  This will show that the  financial position of the concern is not satisfactory".  After  noting that  except for this one year the concern has  always  been making profits, it went on to observe : "Still, to judge the financial  position of a concern, it is always  relevant  to see  what  are its reserves.  It appears from  the  balance- sheet that the reserves have never risen beyond Rs. 8  lakhs or so.  In the circumstances, it appears to me that it  will be  difficult  to hold that the financial  position  of  the Company is sound. 1, therefore, agree with learned Advocate, that  it  has not the financial capacity to  implement  this increase of Rs. 10/- over and above the fitment in the grade recommended by the Board.  I hold accordingly".  The comment of  the  learned Advocate for the Respondent is  that  these losses  did not preclude the management from  accepting  the recommendations of the Wage Board and willingly agreeing  to its implementation.  In a letter dated the 18th December ’61 to the President of the Workers Union, the Management stated that as per their talks on 10th December ’61, it accepts the implementation  of the Wage Board recommendations  and  will pay from December ’61 onwards salary as per fitments made by it.   Final  figures  and fitments will be  made  after  the Government Tripartite Committee comes and discusses with  it and  the Union and arrives at a decision.  It also  promised to pay the difference in the wage as per wages paid till the month  of November 1961 and the Wage Board fitments as  made by them will be paid to the workers before the end of  March 1962.  Again in the agreement between the Management and the employees  under see. 18(1) of the Industrial  Disputes  Act dated 19-9-63 it was Specifically stated that "the  question of  fitments  will  be taken up as  per  the  Sugar  Board’s recommendations  in the month of January 1964  and  finalise before  the end of the 1963-64".  Even at that stage it  was never  the  case  of the Management that  the  Wage  Board’s

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recommendations  could  not be implemented.   Even  the  new management  in its letter of September 5, 1964 addressed  to the Union (Ex.  W. 36) stated:               "With   a  view  to  arrive  at  an   amicable               settlement   with   regard   to   fitments   a               discussion had taken place between the members               of the Tripartite Committee constituted by the               Commissioner  of  Labour  and  it  was  agreed               during  the discussions among  other  matters,               that               10-LI340 Sup.  CI/71               446               (1)Wherever    there    is    a    standard               nomenclature   in   the  Wage   Board   Report               corresponding to the previous designation held               by an individual before November 1960, he will               be given that designation provided the  duties               and  responsibilities  of the  individual  are               similar  to  the duties assigned by  the  Wage               Board.               (2)In   other  cases,  where  no   standard               nomenclature  can be applied to  the  existing               cadre, the cadre will be fixed with  reference               to  duties and responsibilities and  the  time               scale of pay attached to the cadre in  factory               before November 1960". From the several exhibits it would appear that both old  and the  new  management  were anxious  to  implement  the  Wage Board’s recommendation but according to the fitments made by it.  But the employees as represented by the  Workers  Union were  not  prepared  to accept  those  fitments  and  wanted fitments in a higher cadre and other advantages according to their reading of the Wage Board’s recommendations which  the management  felt,  it is not able to  accommodate  not  only because those recommendations did not justify it but on  the ground of financial incapacity. No doubt it is for the management to show what its financial position is and how it is going to place undue or impossible burden  upon  it  to implement  the  recommendations.   That burden  it seeks to discharge by production of the  balance- sheets  which have not been challenged and the  contents  of which are, therefore deemed to have been accepted.  We  find from  the  balance sheet and the Directors  Report  for  the period ending 30-6-60 that a sum of Rs. 6,15,254/- had to be written off against the old losses leaving a balance of  Rs. 40,774/-  in  the profit and loss  account.   The  Directors thought  that the Company’s financial position has now  been stabilised  and all the old losses have been wiped  off  but that  hope was only short lived as the  subsequent  balance- sheets  for  the period ending 30th June  ’61  would show. According  to  the report for 1961 though there  was  a  net profit  of  Rs.  1,08,005/- which together  with  the  carry forward profit of the previous year of Rs. 40,774/- amounted to Rs. 1,48,779/- and after making provision for reserve for development  rebate  of  Rs.  38,788/-  a  balance  of   Rs. 1,09,991/- was ,carried forward to next year’s account.  For that year no dividends were declared and the Managing Agents also  waived their remuneration.  For the year  ending  30th June  1962,  the position is more or less the  same-the  net profit for the year amounted to Rs- 30,616/- which together with  the  profits of the previous year of  Rs.  1,09,991/- amounted to Rs. 1,40,607/-.  This 447 amount was again recommended by the Directors to be  carried forward for the next year.  No dividend was declared and the

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Managing Agents also waived their remuneration.  In 1963 the position  had  become  critical the loss  incurred  was  Rs. 16,12,196  which  wiped  out the  previous  year’s  profits. There  was no question of declaration of any  dividends  but Managing Agent’s remuneration of Rs. 30,000/- (minimum)  was drawn.   These losses would have the effect of  eating  into the capital of the Company, unless it could borrow and  tide over  them.  In the year ending 30th June ’64 a loss of  Rs. 6,61,386/-  was  carried forward to next year.   It  may  be noted that in that year in June 1964 the Government of India had approved the change in the Constitution of the  Managing Agency  of the Company and it is stated that because of  the efforts  of  the new Management who borrowed large  sums  on their personal security for putting the Appellant in  better shape, large sums were in fact advanced to the Appellant. As could be seen from the statement M. 51 that for the years 1960-61,  1961-62, 1962-63 and 1963-64 the Secured  and  un- secured debts were approximately Rs. 81 lakhs, Rs. 70 lakhs, Rs.  61 lakhs and Rs. 51 lakhs respectively.  It  is  stated that the losses were coming down and therefore the financial position  is getting better but in our view this  by  itself does  not  mean that ,the Company is in  a  sound  financial position.   What was happening evidently is as suggested  by the learned Advocate for the Appellant that the Sugar stocks pledged were being sold and therefore the debts were getting less.  It is no doubt true that attachment orders which were made  in  1962 must have been paid off  and  the  attachment withdrawn.  That again is not an indication of the soundness of its financial position because there is evidence to  show that the new management had to secure a large loan of  about Rs.  30 lakhs on its personal security to pay these  demands and  that is why Rs. 16 lakhs loss is paid off and hence  in the  year  1962-63  the unsecured debt is shown  as  Rs.  28 lakhs.   The Tribunal was therefore justified in  coming  to the conclusion that the Company was not in a sound financial position to implement the recommendations of the Wage Board- to  increase  Rs. 10/- on the basic wage  and  the  dearness allowance or Rs. 51- as weightage.  Apart from these  losses the general reserves are very negligible.  Each year  about Rs.  3,000/-  is  being provided for.  In all  Rs.  8  lakhs reserves  were accumulated from its inception which  is  not very encouraging. While this is so having regard to its working we had  called for  the balance-sheets subsequent to 1964-65 to assess  the financial  prospects  of the Appellant during  this  period. These reveal the following position 448 The  balance-sheet  for  the year ending  30-6-65  Showed  a profit  of  Rs.  12,72,126/-  before  depreciation.    After deducting  Rs.  5,25,545/-  towards  depreciation  and   Rs. 1,16,138/-  as reserve towards development rebate and  after adjusting the loss brought forward from last year, a loss of Rs. 30,943/- was carried forward to the next year. The balance-sheet for the year ending 30-6-66 showed a  pro- fit  of Rs. 3,23,789/-.  After setting apart depreciation  a sum  of Rs. 2 .27,942/- was the loss carried forward and  in the  balance sheet for the period ending 30-6-67  there  was shown  a  loss  of Rs. 5,10,771/- and  after  providing  for depreciation  there  was a loss of Rs. 9,90,526/-.   It  may also be noticed that in the year of account the Company  had to  provide  a sum of Rs. 2,16,353/towards  additional  cane price  payable to the cane growers for the  seasons  1958-59 and 1959-60.  After allowing for this there was a total loss of  Rs. 14,23,505/- which was carried forward ,to  the  next year.   In  the balance-sheet for the  year  ending  30-6-68

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there  was  a  gross profit of  Rs.  13,22,932/-  and  after providing  for depreciation and adjustment of  loss  brought forward  there  was  a balance, of loss  of  Rs.  5,93,620/- carried  forward to the next year.  The year ending  30-6-69 was  one year in which dividend of 7.15% was paid on the  5- 1/2%  income-tax  Free Cumulative  Preference  shares.   The profits  for  the year after adjusting all  the  losses  and providing  for depreciation, payment of bonus to  staff  and taxation it showed a balance of Rs. 2,27,430/- out of  which dividend  was  declared as aforesaid.  For the  year  ending June  ’70  there was again a loss of  Rs.  5,96,913/-  after providing  for depreciation.  The Directors  explained  this loss due mainly to high rates of interest charges, provision for depreciation and the passing on of the entire realisable profit  on 1968-69 season production for the benefit of  the cane growers in that year. The  balance-sheets for the years 1960 to 1970-for a  period of 10 years show that except for the year ending 30-6-69 the Company  was  not in a position to  declare  any  dividends. ,Though the factory appears to have been expanded after 1964 to  1300 tons capacity it did not show uniform net  profits; on  the  other hand losses continued.  The profits  that  it made  in  any  year seem to be consumed  by  losses  of  the previous years.  In some years the yield of cane seem to  be slightly over 100% the average being a little over 9%  which no doubt is encouraging but in spite of it there are various factors   which   seem  to  contribute  to   its   financial unsteadiness. This  being  the  position we think that  the  Tribunal  was justified  in  holding that the Appellant did not  have  the financial 449 capacity to bear the burden of payment of Rs. 10/-  increase and Rs. 51- as weightage in accordance with the  recommenda- tions of the Sugar Wage Board.  On this conclusion and  also on  an  examination of the relevant material it  is  evident that the Company is not in a financial position to meet  the burden  of  implementing  the recommendations  of  the  Wage Board.   The claim of the Respondent for categorisation  and fitment in accordance therewith cannot in the  circumstances be accepted.  The Appeal of the Respondents which challenges the  Award  of the Tribunal rejecting their  claim,  for  an increase  of Rs. 10/and a weightage of Rs. 5/- and  for  the categorisation  and fitments in respect of the heirarchy  of supervising  category  namely  Assistant  Cane   Organisers, Liaison  Field Supervisors and Field Supervisors as also  in respect  of  Head  Panman, and  Panman  Incharge  of  shift, Panman,  Asstt.  Panman, Bench Chemists and Cane  analysists and Canteen Supervisor are all dependent upon the  financial capacity  of  the Respondent Company to implement  the  Wage Board’s  recommendations which we have held it has not.   As stated  earlier the Company which is the Appellant in  Civil Appeal No. 1602 of 1966 has already implemented the Award of the Tribunal in respect of a large number of workers both as to categorisation and fitment.  It is in respect of  fitment of only four categories that it has not implemented,  namely Welders, Turbine Engine Drivers, Switch Board Attendants and Boiler Mason’s that the Appellant has objected to the  award on  the ground that the Tribunal has acted without  evidence and  in  some cases contrary to  the  recommendations.   The learned Advocate for the Respondents felt that he could  not really  challenge  the contention in respect of  the  Switch Board  Attendants  and Turbine Engine Driver,  as  it  would appear  that  the Tribunal has acted without  any  evidence. Why we have referred to these specific cases objected to  by

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the   Company   in  their  Appeal  is  to   indicate   that, notwithstanding   the   finding  that   the   Wage   Board’s recommendations in the circumstances, cannot be implemented, the  Company has given effect to the Tribunals Award,  which will  remain in force till a revision takes place.   In  the view  we have taken the Appeal of the Appellant  is  allowed subiect to the above directions and that of the  Respondents dismissed.  We make no order as to costs. G.C.        Appeal No. 1602 of 1966 allowed,             Appeal No. 1603 of 1966 dismissed. 450