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PETITIONER: MONTHLY-RATED WORKMEN AT THE WADALAFACTORY OF THE INDIAN HUM

       Vs.

RESPONDENT: INDIAN HUME PIPE COMPANY LTD., BOMBAY

DATE OF JUDGMENT11/04/1986

BENCH: KHALID, V. (J) BENCH: KHALID, V. (J) REDDY, O. CHINNAPPA (J) NATRAJAN, S. (J)

CITATION:  1986 AIR 1794            1986 SCR  (2) 484  1986 SCC  Supl.    0     1986 SCALE  (1)1217  CITATOR INFO :  RF         1992 SC 504  (29)

ACT:      Service Conditions  of employees - Change from the slab system of  Dearness Allowance in vogue for eighteen years to the  textile   scale  of   D.A.  affording   115  per   cent neutralisation in  respect of  the head office staff and the monthly rated  factory staff  - Validity  of the  notice  of change dated  15.7.75 given  by the company under section 9A of the  Industrial Disputes  Act,  1947  -  Advisability  of Tribunals and Courts to revise the wage structure of workmen to their  prejudice when  a dispute arises - Burden of proof as to  necessity of  change, upon  whom lies  in a reference arising out of section 9A notice of change.

HEADNOTE:      The respondent  is an  Engineering concern owning sixty factories spread  throughout India.  In  Bombay,  it  has  a factory at  Wadala and  head office at Ballard Estate. There were  four   Industrial  Disputes  Awards  in  this  company pertaining to  the pay-scales  and dearness allowance of the workmen. By  the Award passed in reference No. IT 82 of 1950 pay-scales and fixed dearness allowance were introduced with effect from  1.7.50 with  the consumer price index in Bombay at 312  points in  1950. In 1957 the index rose by 55 points and stood  at 367  points as  a consequence  of which  by an Award passed  in reference IT No. 77 of 1958 dated 21st May, 1959 the  slab system  of dearness  allowance was introduced with effect  from 1.2.58.  This Award  was not challenged by the company  at any  time. By Award published on 30.12.65 in reference IT  No.47 of  1964 at  the instance  of the labour marginal increase  in the  basic  pay  scales  was  provided mainly on  the ground  that  the  slab  system  was  working satisfactorily. By an Award published on 7.7.77 in reference No. IT  42 of 1973 the clerical and subordinate staff in the head office  were also  given the slab system of D.A. It was categorically observed in this Award that there should not 485 be any  disparity in  the D.A.  between  the  monthly  rated factory staff and the head office staff.      While the  wage structure  stood thus, the company gave

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notice of  change for  doing away  with the  slab system  on 15.7.75 of  D.A. in  respect of  head office  staff and  the monthly rated factory staff. The notice of change in respect of head  office staff was not pressed since a Settlement was reached between  the parties,  in July  1976 whereunder  the D.A. at  consumer price  index 1380 points was merged in the revised consolidated  pay scale of different categories with effect  from   1.9.75.  Although  in  September,  1975,  the consumer price  index figure  was 1270  points, it was taken notionally as  1380 for the purpose of merger, providing for review of  consolidated pay  scales if  the  consumer  price index moved high. The notice of change in respect of monthly rated factory  staff was, however, referred to adjudication. The Industrial  Tribunal gave  its Award  on  27th  October, 1980, holding  that the  employer was  justified in  seeking abolition of  the slab  system of  D.A. and  substituting it with the  textile scale  of  D.A.  affording  115  per  cent neutralisation. The Tribunal held that the workmen should be paid D.A.  at 115%  of the  revised textile rate in the same manner in  which the daily rated workmen are paid their D.A. at the  prevalent cost  of living  index  in  the  month  of November, 1980  or if  such index number is not available at that time then at the index No. 1771-1780. While making this Award the  Tribunal was  conscious  of  the  fact  that  the workmen were  likely to  lose quite  a substantial amount of the D.A.  but it  was stated  that it  was  inevitable  when attempt was  made to bring about uniformity and parity among the workmen  of the  same company  working at the same place doing similar  work. The  Tribunal felt  that if  the parity scheme was  to come  into force  either from the date of the demand or  from the  date of  reference, another unfortunate happening would  take place  in that  the workmen  would  be liable to  refund a  lot of  amount excessively recovered by them as  and by  way of  D.A. on account of slab system. The Tribunal therefore  felt that  it would  be  too  harsh  and unkind to  such workmen  and held  that the Award would come into  force  prospectively  with  effect  from  1.11.80  and observed that the reduction in the monthly emoluments of the workmen should be a gradual process so that they are able to bear the  burden and  can learn  to adjust  themselves  with little less  income month  to month.  It therefore, directed the reduction to be spread 486 over equally  for a period of six months from 1.11.80. Hence the appeal by special leave.      Allowing the appeal, the Court, ^      HELD :  1. In  a reference arising out of the notice of change given by a company under section 9A of the Industrial Disputes Act,  1947 the  company should  make available  all evidence necessary  to justify  its stand  for a change from the existing  system. In  the instant  case, overlooking the circumstances under  which reference  was made such a burden was wrongly  cast on  the workmen  to prove that a change in the system was not necessary. [496 B-C]      2.1 Normally  it would be inadvisable for Tribunals and Courts to  revise the  wage structure  of workmen  to  their prejudice when  a dispute  arises.  However,  Tribunals  and Courts can  take judicial  notice of  one fact;  and that is that the  wages of  workmen, except  in  exceptionally  rare cases, fall  within the category of mere "subsisting wages", and as  such tinkering  with the  wage structure  of workmen cannot be  permitted except  under compelling circumstances. Employers have seldom displayed a cooperative attitude where wage structures  of workmen  are devised.  They  have  never

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showed a  willingness for the involvement of the labour with the capital so as to engender a participative labour capital relationship. Reckoning  with this  reality, the  Courts and Tribunals have  necessarily to  keep their  hands  off  from upsetting a  wage structure  that has  satisfactorily worked for a  long time. The sweat of the labour is never reflected in any balance sheet, although the latent force behind every successful industry  is this  sweat. With their present wage structure, the  labour just exist. No one should try to deny them even this bare source of existence. [503 G-H; 504 A-C]      Crown Aluminimum  Works v. Their Workmen, [1958] S.C.R. 651, followed.      2.2 The  Supreme Court  often times emphasised the need for a  living wage  to workmen instead of a subsisting wage. It is indeed a matter of concern and mortification that even today the  aspirations of a living wage for workmen remain a mirage and  a distant  dream. Nothing short of a living wage can 487 be a  fair wage.  It should  be the  combined effort  of all concerned including  the  Courts  to  extend  to  workmen  a helping hand so that they get a living wage which would keep them to  some extent at least free from want. Viewed against this background  no case has been made out by the respondent in the  instant case,  for a  change of  the slab  system of dearness allowance  to the  revised Textile rate of dearness allowance. [503 D-F]      The slab  system which  has been  approved by Tribunals and by  Courts was  available at the head office and for the daily rated  workmen at Wadala upto the year 1976 and worked satisfactorily for  over 17  years. In  the absense  of  any demand  from   any  region   for  the   slab   system,   the applicability of  well-settled  principle  of  industry-cum- region, and  the sound  financial position of the company it cannot be said that if the slab system was introduced in all the factories  it would  result in  the closing of the whole company itself.  The question that it would work against the principle of parity and uniformity and that there would be a change of the subordinate staff getting more emoluments than their officers  who might  be  recently  employed  does  not arise. [496 C-E]      2.3 The  theory of  ceiling on  the quantum of dearness allowance cannot  be accepted  since  under  the  prevailing conditions there  is no control over the prices of essential commodities and  as such a ceiling would not give sufficient cushion when  prices of  essential commodities  continuously rise. [506 F-G]      Killick  Nixon  Ltd.  v.  Killick  &  Allied  Companies Employees Union, [1975] Supp. S.C.R. 453, distinguished.      Unichem Laboratories  Ltd. v.  The  Workmen,  [1972]  3 S.C.R. 567;  Greeves  Cotton  and  Co.  and  Ors.  v.  Their Workmen, [1964] 5 S.C.R. 362; Bengal Chemical Pharmaceutical Works Ltd.  v. Its  Workmen, [1969]  2 S.C.R. 113 and Kamini Metals and  Alloys Ltd.  v. Their  Workmen, [1967]  2 S.C.R. 463, referred to.

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3040 of 1986.      From the  Award  dated  27.10.1980  of  the  Industrial Tribunal Maharashtra in Reference (IT) No. 531 of 1975. 488      N.B. Shetye,  Dr. Y.S.  Chitale, Mukul  Mudgal and Atul

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Chitale for the Appellants.      G.B. Pai,  P. Ramaswami, H.S. Parihar and Vipin Chandra for the Respondent.      J.P. Cama and Mukul Mudgal for the Intervener.      The Judgment of the Court was delivered by      KHALID, J.  This appeal,  by special leave, is directed against the  award of  the Industrial Tribunal in IT No. 531 of 1975,  dated 27th  October, 1980.  The appellants are the monthly-rated workmen  at Wadala  Factory of the Indian Hume Pipe Company  Ltd., Bombay  and the  respondent the  Company mentioned above.      We will  briefly refer to the history of the demands of the workmen  in this  Company to  appreciate how the dispute involved  in   this  appeal   originated.   The   respondent (hereinafter referred  to as  the Company) is an Engineering concern owning  sixty factories  spread throughout India. In Bombay, it  has a  factory at  Wadala  and  head  office  at Ballard Estate.  In this  appeal, we  are concerned with the monthly rated workmen at the Wadala Factory. In this factory there are about 375 daily rated workers and 80 monthly rated clerical and  subordinate staff.  The total  labour strength all over  India is  about 3000  daily rated workers and 1000 monthly rated clerical and subordinate staff.      In the  year 1950,  there  was  an  industrial  dispute pertaining to  the pay  scales and dearness allowance of the workmen in this factory. An award was passed in this dispute by the  concerned Industrial Tribunal in reference No. IT 82 of 1950.  By  this  award  pay  scales  and  fixed  dearness allowance were introduced w.e.f. 1-7-1950, with the consumer price index  in Bombay  at 312  points in 1950. In 1957, the index rose  by 55  points and stood at 367 points. There was another industrial dispute in 1958 in reference IT No. 77 of 1958 resulting in the award published on the 21st May, 1959, introducing the  slab system  of D.A.  w.e.f. 1-2-1958. This award was not challenged by the Company at any time.      In 1964,  the labour  sought revision in the pay scales 489 for the  monthly rated  clerical and subordinate staff, as a consequence of  which reference  IT No.  47 of 1964 was made resulting  in   an  award  published  on  30-12-1965,  which provided marginal  increase in  the basic pay scales, mainly on  the   ground  that   the   slab   system   was   working satisfactorily.      2. In  this Company  the daily  rated  operatives  were getting the  old textile scale since the year 1942 which was raised to  the revised  textile scale  as D.A.  by an award. Thus, the  daily rated  operatives  and  the  monthly  rated clerical and  subordinate staff  were paid D.A. on different basis and  at different  rates in this Company. As there was no revision  in the pay scales from 1950, for about 22 years a demand  was made  for revision  in pay  scales for monthly rated clerical  and subordinate staff in the year 1972. This demand was  referred to  adjudication in reference IT No. 42 of 1973  as a consequence of which an award was published on 7-7-1977. The  clerical and  subordinate staff  in the  head office of this Company were also being given the slab system of D.A.  This award  observed that  there should  not be any disparity in  the D.A.  between the  monthly  rated  factory staff and the head office staff.      3. While  the wage  structure stood  thus, the  Company gave notice  of change  for doing  away with  slab system of D.A. by  notice dated  15-7-1975, in  respect  of  the  head office staff and the monthly rated factory staff. The notice of change  in respect  of the  head  office  staff  was  not pressed since  a settlement was reached between the parties.

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As per  this settlement arrived at in July 1976, the D.A. at consumer price  index 1380  points was merged in the revised consolidated pay  scale of  different categories w.e.f. 1-9- 1975. Although  in September, 1975, the consumer price index figure was  1270 points, it was taken notionally as 1380 for the purpose of merger, indicated above, providing for review of consolidated pay scales if the consumer price index moved high. The  notice of  change in  respect  of  monthly  rated factory staff  was, however,  referred to  adjudication. The Company’s claim  was to do away with the slab system of D.A. and to  substitute it  by revised  textile scale.  The Union filed a  written statement justifying continuity of the slab system which  was in  vogue for  17  years.  The  Industrial Tribunal gave  the award,  impuged in  this appeal,  on 27th October, 1980. The Tribunal came to 490 the conclusion  that the  employer was  justified in seeking abolition of  the slab  system of  D.A. and  substituting it with the  textile scale  of  D.A.  affording  115  per  cent neutralisation.      4. The  Tribunal said  that the  workmen should be paid D.A. at 115 per cent of the revised textile rate in the same manner in which "the daily rated workmen are paid their D.A. at the  prevalent cost  of living  index  in  the  month  of November, 1980  or if  such index number is not available at that time  then at  the index  No. 1771-1780."  While making this award  the Tribunal  was conscious of the fact that the workmen were  likely to  lose quite  a substantial amount of their D.A.  However, the  Tribunal  got  over  this  concern stating that  it was  inevitable, when  attempt was  made to bring about  uniformity and  parity among the workmen of the same company  working at  the same place doing similar work. The Tribunal felt conscious of another distressing result of the award.  The Tribunal  felt that if the parity scheme was to come  into force  "either from  the date of the demand or from the  date of  reference, another  unfortunate happening would take  place in  that the  workmen would  be liable  to refund a  lot of amount excessively recovered by them as and by way of D.A. on account of slab system." The Tribunal felt that "it  would be too harsh and unkind to such workmen" and therefore  held   that  the  award  would  come  into  force prospectively  w.e.f.  1-11-1980.  The  Tribunal,  not  rest content with  the expression  of concern  for workmen,  gave another palliative  to them lest the reduction in their D.A. should cause  them dislocation  financially all  of a sudden and therefore  observed that  the reduction  in the  monthly emoluments of  the workmen  should be  a gradual process "so that they  are able  to bear  the burden  and can  learn  to adjust themselves  with little  less income month to month." The reduction  was, therefore,  directed to  be spread  over equally for a period of six months from 1-11-1980.      5. When  the matter came up before this Court on 15-12- 1980, special  leave was  granted and  the following interim relief was given to the appellants.           "Special leave  granted. By  way of interim relief           it is  hereby directed  that the difference in the           D.A. awarded by the Industrial Tribunal and the 491           D.A. being  paid on  slab system which is directed           to be reduced phasewise on monthly basis of 1/6th,           reduction will  be implemented  in payments  to be           made in  the months of December, 1980 and January,           February, March, April and May, 1981, but shall be           based on monthly wages thereafter from payments in           the subsequent  months and this will be subject to

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         the further  direction of  this Court.  Appeal  be           expedited..............." This interim order was modified by the Vacation Judge on 14- 3-1981, as follows :           "The order  passed by  this Court  on 15.12.80  to           continue till  the end  of  August,  1981  on  the           appellants agreeing to reimburse the management in           case they  fail in  the appeal which reimbursement           will be by way of deduction from their dues."      6.  We   will  now   proceed  to   consider  the  rival contentions put  forward by  the parties  in support  of and against the  award. The  Company, in  justification of their change of notice and defending the award passed, put forward their case as follows:      The Company manufactures various pipes, cement concrete pipes as  well as  steel pipes  for Hydro Electric Projects. These products  are manufactured  as per definite orders and specifications  by   governmental  bodies  and  other  local authorities, unlike  other industrial  units  which  are  at liberty to manufacture their products and market them. Their products are  usually  bulky  in  nature,  making  transport difficult and  costly. For  easy transport  of  these  bulky products, the  Company decided to establish as many as sixty factories all  over India to cater to the needs of the local markets and  to make  them easily accessible to avoid damage to  their  products  and  heavy  transporting  charges.  The products of  the Company  have only  a  limited  market  and therefore, has  to  face  keen  competition  unlike  cement, steel, sugar,  chemicals etc. which have an expanding market and which can be programmed in anticipation of sale.      The Company  has three  thousand daily paid workmen and thousand monthly paid workmen all over India. Out of these, 492 the appellants  form only  80 monthly paid workmen, employed in Wadala manufacturing factory. The slab system of dearness allowance, according  to the  Company, has  been universally condemned by  successive Tribunals.  The appellant  -  Union enjoys a  privileged position  out  of  this  four  thousand workmen of  the Company all over India. While conceding that the appellant  - Union  had been enjoying the slab system of dearness allowance till the reference was made, it is stated that at the time the slab system was introduced it was never conceived by  the Tribunals  that the  cost of  living index would spiral  upto such  great heights  as to  make payments difficult. The dearness allowance enjoyed by the appellant - Union is  so high in certain cases that neutralisation is at rates much higher than 100 per cent which is discouraged and is  disapproved   consistently  by   this  Court  and  other Industrial Tribunals.  It is further stated that the Company does not  have the  capacity  to  pay  the  slab  system  of dearness allowance  and in  case the remaining monthly rated workmen put  forward such  a claim,  the respondents will be forced to close down their factories.      The appellant  - Union  pleaded that  the award  of the Tribunal was  defective  both  in  law  and  on  facts.  The Tribunal did  not have  any material before it compelling it to change  a system  that had  satisfactorily worked  for 18 years and  in effect  had become  part  and  parcel  of  the service conditions  of the  workmen.  The  findings  of  the Tribunal that  the slab  system had  become unscientific and improper, that continuance of the system was not in national interest or  in public interest, that ever since slab system was introduced  neutralisation had  become more than 100 per cent and  that the  slab system  confined to  the  appellant alone would  create disparity  and discontent  among workmen

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are according  to the  appellants not based on evidence. The observation in  the award  that the  Union did  not bring on record any evidence to show that wages paid to them were far below the  living wage  or to  show  that  the  modification sought would  cause them  hardship which  they would  not be able to  stand  is  incorrect  and  is  made  without  being faithful to  the facts  and evidence in the case. With these rival contentions  in view,  we will now proceed to consider the award.      7. The dispute arose when the respondent-Company served a 493 notice under Section 9-A of the Industrial Disputes Act. The dispute referred to arbitration reads as follows :           "The rate of payment of Dearness Allowance payable           to monthly  rated clerical  and subordinate  staff           working at  the Wadala factory will be changed and           will be  worked out  as per  revised Textile scale           calculated on  the basis  of working  days in  the           month with a ceiling on dearness allowance payment           at consumer  price index  number for working class           of Bombay  at 800 (base 1933-34 : 100) with effect           from 1975." It was  the Tribunal presided over by Shri Sawarkar, in I.T. No. 77/58  by its  award dated 21.5.1959 that introduced the slab system  of dearness  allowance first. Before making the award, the  Tribunal considered  the various contentions put forward by  the company.  The Tribunal considered the nature of this  industry  and  held  that  it  was  an  Engineering concern, and  a member  of the  Engineering  Association  of India.  The   Tribunal  examined   the  scales  of  dearness allowance  in  eight  different  units  of  the  Engineering Industry and  concluded that  the total  emoluments  of  the monthly rated staff of the Indian Hume Pipe Company Ltd., at its Wadala  factory (i.e. Rs. 125 to Rs. 385) were far lower than those  of the  other  concerns  with  which  they  were compared. This  Tribunal repelled  the plea that an increase in dearness  allowance would  cause  disparity  between  the workmen at the head office and at the factory and passed the award introducing the slab system as follows :      Slab       D.A. at cost of living         VARIATION                 index 311-320.                 per 10 pts. 1 - 100    65% of the basic salary or             5%            Textile scale calculated on the            basis of the number of days in            the month whichever is higher. 101 - 200      30% -do-                           2% 202 - 300      15% -do-                           1% 301 & above    10% -do-                           1% 494      Dearness allowance  was being paid to the appellants at this rate  without any  objection by  the Company  till  the notice of  change was given. It has to be borne in mind even at the  outset that  the reference was occasioned because of the notice  of change given by the Company. It was therefore necessary for  the Company  to  make  available  before  the Tribunal all  evidence necessary  to justify its stand for a change from  the existing  system. We were taken through the award in full by the learned Counsel for the appellants. All that we  find in the award, by way of justification for this change, is that the Company would be confronted with similar demands by  the workers  in its other factories, that it has no capacity to pay the dearness allowance at this rate, that it would result in more than 100 per cent neucralisation and that this  system had  not found  favour with  many  of  the

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Tribunals  who  considered  the  question  of  the  dearness allowance in Maharashtra.      We will  presently refer  to some portions of the award to see whether the Tribunal was justified in doing away with the existing  scheme and  thus denying  to the  workmen what they were  getting till the award was made. But before we do so, we  would like  to show  the effect  of the award on the emoluments of the workmen involved in this case if the award were to be implemented.                           TABLE -I Monthly Pay at    Monthly Pay at Index      Reduction in Index 1771-1780   1771-1780 that would      the monthly available prior   be available as per       emoluments. to the award      the award. under challenge. Basic     D.A.     Total     Basic     D.A.     Total   Rs.     Rs.      Rs.       Rs.       Rs.      Rs.      Rs. 500       1,590    2,090     500       542      1,042  1,048 400       1,434    1,834     400       542        942    892 300       1,278    1,578     300       542        842    736 200       1,117    1,317     200       542        742    575 100         795      895     100       542        642    253  40         544      584      40       542        582      2      The table  below shows  the total  monthly pay  of  the above workmen and the consolidated pay that similarly placed workmen get at the head office. 495                           TABLE II ____________________________________________________________ Basic   Dearness     Total     Total     Monthly  Difference pay     allowance    monthly   monthly   consoli- between         as per       pay       pay       dated    total pay         slab sys-              packet    pay      packet of         tem D.A.               of        packet   head         applica-               Wadala    at head  office         ble at                 Factory   office    workmen         Index                  work-     as per    and total         1771-1780              men as    state-    paypacket         prior to               per the   ment     of similar         the award              award     submit-  workmen at                                          ted by      Wadala                                          the         Factory                                          company     awarded                                          before the                                          Tribunal ____________________________________________________________ Rs.       Rs.       Rs.       Rs.       Rs.       Rs. 500       1,590     2,090     1,042     1,815     773 400       1,434     1,634       942     1,635     693 300       1,278     1,578       842     1,380     538 200       1,133     1,347       742     1,185     443 100         795       895       642       790     148 ____________________________________________________________      The first  table glares  one in the face. The reduction is substantial  in most  of the  cases. Mr. Pai, the learned counsel for  the company  had to agree that as per the award the difference in the dearness allowance was substantial and the damage  to the workmen was not inconsequential. However, he tried  to get  over this  inconvenient position  with the plea that  continuance of  the scheme  would spiral  up  the dearness allowance  so much that it would render the working of the  Company difficult  and create wide disparity between these workmen  and others.  The second table which shows the difference between  the pay packet of Wadala Factory workmen and the  head office  was explained away by Mr. Pai with the

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plea   that    the   head    office   workmen   had   bigger responsibilities and  did better  work. These justifications put forward by him, have been echoed by the Tribunal also.      As indicated earlier, we will now refer to the award 496 under challenge.  The company  had a  case that  out of  its sixty factories,  each  factory  should  be  treated  as  an independent unit.  This contention  did not find favour with the Tribunal.  According to  us, the  Tribunal rightly  held that since  there was  no functional  integrality, the units had to  be taken  as one.  The Tribunal  also found that the Company’s financial  position taken  as a whole was not only satisfactory but quite sound till 1979.      The Tribunal  committed an  error  by  overlooking  the circumstances under which reference was made and casting the burden wrongly  on the workmen to prove that a change in the system was  not necessary.  The Tribunal assumed that so far as the  Bombay Region was concerned, it was an admitted fact that the daily rated workmen at Wadala factory and the staff at the  head office  were not  paid wages  as per  the  slab system. This assumption is wrong because the slab system was available at the head office and for the daily rated workmen at Wadala  upto the  year 1976. The Tribunal apprehends that if the  slab system  was introduced in all the factories the net result  would be  that the whole company will have to be closed down.  This apprehension  is without  any  foundation because at  the time  the Tribunal  considered  the  dispute there was no demand from any region for the slab system. The Tribunal admits  that the  slab system had been in vogue for 18 years  and that  it had  worked  satisfactorily  and  had become part  of the  service conditions of the monthly rated workmen. However,  the Tribunal  observes  that  the  system could be  revised if  it was  shown that the system had out- lived its utility. The justification for this observation is that at the time the slab system was introduced no one fore- saw the spiralling rise in the cost of living index and that it would work against the principle of parity and uniformity and  the  danger  of  the  subordinate  staff  getting  more emoluments  than   their  officers  who  might  be  recently employed.  These   are  all  assumptions  without  necessary materials  and   this  is  the  second  error  committed  by Tribunals. It  is not  uncommon  that  even  in  prestigious institutions recently  employed officers get emoluments less than the  subordinate staff. On this plea, the benefits that the workmen  were enjoying till then should not be denied to them. To  say that  the system had become ’unscientific’ and ’improper’ because the workmen were getting fantastic amount of dearness  allowance was again without necessary material. The Tribunal 497 then proceeded  to say  that change  in the  slab system was necessary in  the "larger  interest of the country", "in the interest of social justice", "in the interest of justice and fair play",  "to avoid industrial unrest", "general interest of the  company and  in the  larger interest of the nation." These are  empty verbiage  without any basis on the facts of the case.  The discussion  in the award that continuation of the dearness  allowance  would  bring  about  neutralisation above 100  per cent  is also  not  supported  by  sufficient materials. The  Tribunal  has  devoted  some  discussion  in support of  the highly  placed officers  and went  to  their rescue with  the plea  that they  were subject  to  taxation rendering their  salaries modest.  We wish to state that all these statements  could have  been avoided in a matter where the Tribunal had only to consider whether the management was

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justified in  trying to  upset  a  scheme  that  had  worked satisfactorily for  a period  of 18 years. We do not propose to make  further comments  upon the  award of  the Tribunal. Suffice it  to say  that the whole approach is erroneous and the conclusions  were  arrived  at  on  assumptions  without acceptable evidence.  The management had not produced before the Tribunal  sufficient evidence  to persuade  it to change the existing  system. It may be that the slab system did not find favour with some other Tribunals. But that is no reason why a  system that  had existed  for a  long period  of time should be  stopped to  the detriment  of the workmen without compelling reasons.      Notice of  change was  given by  the company  to  bring about parity  or  uniformity  of  D.A.  in  respect  of  its workmen. The  Tribunal accepted  this case of the company in passing the  award. A  close scrutiny  of the  facts of  the case, however,  would indicate  that such  a parity  was not possible and  that the  company also  knew that  parity  was impossible of  achievement. This  is evident  from the  fact that notice  of change  did not relate to all the workmen in the company.  It will  be seen  that the  company had  three systems for  payment of  dearness allowance  i.e.,  dearness allowance based  on revised  textile for daily rated factory workers; dearness  allowance  without  ceiling  for  monthly rated factory  staff and  consolidated  wages  and  dearness allowance for  monthly rated  Head Office staff. The Company has not  shown  that  it  had  adopted  a  uniform  dearness allowance system  for all  its workmen  even in  the  Bombay region. Therefore, the Tribunal’s 498 conclusion based  on the  object of  achieving uniformity in dearness allowance does not appear to be correct.      Mr. Pai learned counsel for the respondent-company took us through  the various awards passed by different Tribunals in his  attempt to  impress  upon  us  the  fact  that  such Tribunal  had  not  only  discouraged  the  slab  system  of dearness allowance but had even condemned it.      In the  case of Hind Cycles Ltd., an award was given by Mr. M.R.  Mehar, Industrial Tribunal, Bombay, wherein it was observed as follows :           ".....The slab  system was devised when it was not           expected that the consumer price index would shoot           up to  the extent that it has with the result that           where the  slab system  is  followed  (as  in  the           concerns  listed  in  Exhibit  U-3)  the  dearness           allowance of  monthly  paid  staff  have  shot  up           completely out  of proportion  to basic wages with           the result  that in  industries and occupations in           which that  system is  not followed but some other           system is  followed the  dearness allowances, even           though linked  with the index, are much lower than           the dearness  allowance in  the concerns listed in           Exhibit U-3............"      In the  case of Shaw Wallace & Co. Ltd., the Industrial Tribunal, presided  over by  Mr.  M.R.  Mehar,  observed  as follows :           ".......I have  made  reference  to  the  dearness           allowance  in   Banks,  Mill   companies  and   in           Government offices  not because these are concerns           comparable with Hind Cycle but to show the varying           systems of  dearness allowance  and to  illustrate           how  the   total  emoluments   of   employees   in           industrial employments  in which  the slab  system           referred to  above prevails  have shot up so as to           be  completely   out  of   proportion  with  those

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         employees doing  similar work  in  employments  in           which there  is either fixed dearness allowance or           the dearness  allowance  though  linked  with  the           index, is not on 499           the slab  system.  Thus,  by  the  slab  system  a           certain class  of fortunate  employees  have  been           absolutely  protected  against  rise  in  cost  of           living and  have not to bear hardships which other           larger sections  of employees  have to  suffer  on           account of inflation...." The same  Tribunal has this to say in the case of the Wadala factory, with which we are concerned, in its award dated 6th December, 1965 :           "This dispute  concerns  only  the  monthly  rated           staff of the factory. The demands concerning daily           rated  staff   is  pending   before  a   Board  of           Conciliation.......... I  have therefore  to  make           the award having in mind the total emoluments i.e.           wage scales  and dearness  allowance prevailing in           factories of  this size in the region belonging to           other  prosperous   concerns  in  the  engineering           industry.           In  considering  the  demands  for  improved  wage           scales the  total emoluments  have to  be borne in           mind. While  the daily rated staff get the textile           rate of dearness allowance the monthly rated staff           get  dearness  allowance  according  to  the  slab           system at  the same  rate as  for the Head Office,           and   which    dearness    allowance    is    very           satisfactory.........." The  Tribunal   did  not  interfere  with  the  slab  system prevalent in the Company.      In the case of Central Tin Works, a demand was made for the intorduction  of the  slab system.  But  the  Industrial Tribunal, Bombay,  presided over  by K.R.  Pawar, raised the rate of  dearness allowance  to 100  per cent  of the cotton textile rate.      In the case of Voltas Limited, in an award given on the 30th September,  1965, the Industrial Tribunal presided over by  Mr.   V.A.  Naik  raised  ceiling  of  maximum  dearness allowance from  Rs. 400 to Rs. 450. Fixation of the ceiling, according to  Mr. Pai, is to contain the rigours of the slab system. 500      In Forbes  Forbes Compbell  & Co.  Ltd., an  award  was passed by  the Industrial Tribunal presided over by Mr. V.A. Naik on  23-12-1969, on  the claim  for raising the dearness allowance declining the demand.      Mr. R.D. Tulpule, Industrial Tribunal Bombay, passed an award in  the case  of Polychem  Ltd., on 9th June, 1970. In this case,  the Tribunal  noticed the  criticism of the slab system of  dearness allowance  and sought  to rectify  it by granting 110  per  cent  of  the  revised  textile  dearness allowance along  with fixed  ad-hoc  payment  tapering  with increase of the slab of the salary.      Considerable  stress   was  made  by  Mr.  Pai  on  the following observation  of the Tribunal at page 246 of Volume VII paper book :           "I have  not come across a case where slab rate of           dearness allowance  was introduced  for the  first           time." The answer  to this  observation is  that in the case of the Company with  which we  are concerned  it was introduced for the first  time in  1958. We may also state that we have not

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come  across   any  award   wherein  the  slab  system  once introduced was abolished except in one case.      In the  case of  Mazagaon Docks, an award was passed by the Industrial  Tribunal presided over by Shri S.A. Patel on 13th December,  1984, substituting  the existing  scheme  of dearness allowance  based on  the slab  system by  a revised textile scale of dearness allowance. This was done following the decision  of this Court in Killick Nixon Ltd. v. Killick & Allied  Companies Employees Union, [1975] Supp. S.C.R. 453 rendered  on   May  2,  1975.  It  can  be  argued,  perhaps justifiably, that  in this  case  this  Court  introduced  a ceiling on  dearness  allowance  in  place  of  slab  system available in  the Mazagaon  Docks. This decision was pressed into service in support of the submission that the situation obtaining in  the company  with which  we are dealing is the same as  in the  above case  and to  contend that  the  slab system should  yield place to at least a ceiling on dearness allowance. 501      We have  no quarrel  with the  conclusion arrived at in the above  case on  the facts  of that  case.  However,  the conclusion arrived  at in that decision cannot be applied in a general  manner in all cases. In that case, the employer’s grievance was  this: The  post of  junior  executives  is  a promotional post  for supervisors.  Still  the  former  were drawing less  emoluments than  the latter.  This is  because there was  no ceiling  on dearness  allowance in  respect of workmen and  supervisors. The  employer produced  a chart in support of  his case and contended that this would result in indiscipline and  unrest in  this industry.  It was  in this context  that   this  Court  laid  down  fourteen  different aspects, not  exhaustive in  their scope,  which had  to  be taken  into  account  before  tinkering  with  the  dearness allowance. The  Mazagaon Docks  case has  taken support from Killick Nixon  Ltd.  case  without  sufficient  material  to sustain its  conclusion that slab system should be abolished to avoid  huge distortion  of  wage  differences  among  the persons employed  in that  concern. A close study of Killick Nixon Ltd.  case will  bear out  that this Court did not lay down that  in all  cases slab  system of  dearness allowance should be  abolished or  done away  with to the detriment of the workers.  All that this Court held in that case was that the employer having made out a case for putting a ceiling on dearness allowance,  it was  for the  Tribunal to  decide at what particular amount there should be a ceiling on dearness allowance. An  attempt was made by the employer in that case to press  into service the view of the National Commissioner of Labour  to ascertain  the minimum  wage in the Company at which a  worker would require complete neutralisation of the cost of  living and  then find  the amount  necessary  as  a protection against  his real wages. This was not accepted by this Court. The Court observed :           "....We do  not wish  to lay down as an invariable           rule that  in all cases there should be ceiling on           D.A. Whenever  a case  of this  nature  comes  for           industrial  adjudication,  it  will  always  be  a           delicate task for the Tribunal to strike a balance           keeping in view the above principles, weightage of           each one  of which  being  variable  according  to           conditions obtaining.  Whether or not there should           be a ceiling on dearness allowance in a given case           must depend on the facts and circumstances of that 502           case. There  can be  no inexorable  rule  in  that           respect. We have formulated the various principles

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         which must  be taken  into account by the Tribunal           in  determining   this  question,   but  the  most           dominant of  these must  always be  that of social           justice, for  that is  the  ideal  which  we  have           resolved   to   achieve   when   we   framed   our           Constitution........."      Thus, the  ratio of  that case  cannot be  extended  to every case to interfere with the existing D.A. Scheme, which is beneficial to the workmen.      Mr. P.S. Mavalenkar, Industrial Tribunal, Bombay, in an award dated  30-11-1976, imposed a ceiling of Rs. 700 on the slab system of dearness allowance.      We thought  it necessary to refer to the various awards read by  Mr. Pai  only for the completeness of the Judgment. It has  to be  borne in  mind that  in most  of these cases, awards were  passed at  the instance  of the  employees when demands were made for raising the dearness allowance paid to them. Here,  we have  the case of the employer trying to get over  a  system  of  dearness  allowance  which  had  worked smoothly for 18 years, on the specious plea that at the time the  slab   system  was   introduced,  it  was  not  in  the expectation of  anyone that  the cost  of price  index would spiral up  so much  as to make it impossible for the Company to  pay   according  to  this  scheme.  From  the  materials available we do not find that this plea can be accepted. The records produced  show that  despite this system of dearness allowance the  Company has  been making profits and has been improving its position year by year.      At page 103 of Volume I paper book, the appellants have produced a  table showing  dearness allowance  paid by seven companies including  the  respondent  company  at  the  slab system to  show that  other companies  have been paying more dearness allowance  to their  workmen  than  the  respondent company with  inconsequential  differences  in  certain  pay scales. They have also given a comparative statement showing how the increase in total wages including dearness allowance as per  slab system,  for pay scale of Rs. 100 to Rs. 500 is less than  the percentage  of  increase  in  consumer  price index. The percentage of increase in consumer price index of 2642 over CPI 320 in 503 1958 is  826 while  the percentage  of increase in wages for the same CPI is only 806.      In reply  to the Company’s case of capacity to pay, the appellants have produced at page 101, Volume V paper book, a table showing  the net  profit and  the gross  profit of the Company from 1979 to 1984. The net profit has increased from a sum  of Rs.  19.65 lakhs  in 1978  to a  sum of Rs. 176.38 lakhs in  1984 and the gorss profit from Rs. 115.60 lakhs to Rs. 439.11  lakhs, after  paying the slab system of dearness allowance to the appellants. They have also produced a table showing the  financial position of the Company from the year 1979 to 1984. Sales have increased from Rs. 1221.56 lakhs in the year  1979 to Rs. 2193.94 lakhs in the year 1984 and the dividend on equity capital from 12.80 per cent in 1979 to 18 per cent in 1984.      We do  not think  it necessary  to deal at length about the evolution  of the concept of dearness allowance. Suffice it to  say that  this Court has, often times, emphasised the need for  a living  wage to  workmen instead of a subsisting wage. It  is indeed  a matter  of concern  and mortification that even today the aspirations of a living wage for workmen remain a  mirage and  a distant  dream. Nothing  short of  a living wage  can be  a fair  wage. It should be the combined effort of  all concerned  including the  Courts to extend to

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workmen a  helping hand so that they get a living wage which would keep  them to  some extent at least free from want. It is against  this background  that a  claim by  employers  to change  the  conditions  of  service  of  workmen  to  their detriment has  to be  considered  and  it  is  against  this background that  we have considered the award review. We are not satisfied  that a  case has  been made  out on the facts available, for a change.      The question  is often  asked as to whether it would be advisable for  Tribunals  and  Courts  to  revise  the  wage structure of  workmen to  their  prejudice  when  a  dispute arises. Normally  the  answer  would  be  in  the  negative. Tribunals and  Courts can  take judicial notice of one fact; and  that   is  that   the  wages   of  workmen,  except  in exceptionally rare  cases, fall  within the category of mere "subsisting wages".  That being  so, it would be inadvisable to tinker  with the  wage structure  of workmen except under compelling circumstances. Employers have 504 seldom displayed a cooperative attitude where wage structure of workmen are devised. They have never showed a willingness for the  involvement of the labour with the capital so as to engender a  participative labour  capital relationship. This is a  reality that  Tribunals and Courts have to reckon with that being so, Courts and Tribunals have necessarily to keep their hands  off from  upsetting a  wage structure  that has satisfactorily worked  for a  long time.  The sweat  of  the labour is never reflected in any balance sheet, although the latent force behind every successful industry is this sweat. With their present wage structure, the labour just exist. No one should  try to  deny  them  even  this  bare  source  of existence.      In re-inforcement  of our  conclusion, we will refer to the following  passage in  the case of Crown Aluminium Works v. Their Workmen, [1958] S.C.R. 65] :           "The question  posed before us by Mr. Sen is : Can           the wage  structure fixed  in a  given industry be           never revised  to the  prejudice of  its workmen ?           Considered as  a general  question in the abstract           it must  be answered  in favour  of Mr. Sen. We do           not think  it would  be correct  to say that in no           conceivable circumstances  can the  wage structure           be revised  to the  prejudice of  workmen. When we           make this  observation,  we  must  add  that  even           theoretically no  wage structure  can or should be           revised  to   the  prejudice  of  workmen  if  the           structure in question falls in the category of the           bare subsistence  or the minimum wage. If the wage           structure in  question falls in a higher category,           then it would be open to the employer to claim its           revision even  to the  prejudice  of  the  workmen           provided a  case for  such revision is made out on           the   merits    to   the   satisfaction   of   the           tribunal..........It  would   be  interesting   to           notice in  this connection  that all the tribunals           that have  dealt with  the  present  dispute  have           consistently directed  that existing  wages should           not be reduced to the prejudice of the workmen. In           other words,  though each  tribunal  attempted  to           constitute  a  wage  structure  in  the  light  of           materials furnished  to it,  a saving  clause  has           been added every time 505           protecting the  interests of  such workmen as were           drawing higher  wages before. Even so it would not

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         be right  to  hold  that  there  is  a  rigid  and           inexorable convention that the wage structure once           fixed by industrial tribunals can never be changed           to the  prejudice  of  workmen.  In  our  opinion,           therefore, the  point raised  by Mr.  Sen must  be           answered in  his favour  subject to  such relevant           considerations and  limitations as we have briefly           indicated."      We are  not prepared  to accept  the submission made by the learned  counsel for the respondent that the slab system has not  been approved either by Tribunals or by Courts, not to say that they have been condemned. In the case of Unichem Laboratories Ltd.  v. The  Workmen, [1972] 3 S.C.R. 567 this Court has  occasion to  consider the  slab system  and  this Court gave  its seal  of approval to this system. This Court after considering  the various  materials placed  before  it observed that  in  the  Bombay  region  there  were  several Pharmaceutical  units   adopting  slab  system  of  dearness allowance. We  read the  following passage in support of our conclusion that  the slab  system did  find favour with this Court on more than one occasion :           "....When  once  such  units  can  be  taken  into           account  as   comparable  units,  the  pattern  of           dearness allowance obtaining therein can very well           be considered  to ascertain  the system adopted by           the industry  as that  will show  the trend in the           region. As  pointed out  above at  least 11 units,           referred to  in Ex.  DU.1 have  adopted the system           now introduced in the case of the appellant by the           Tribunal. Under  those  circumstances,  when  such           system is  prevailing in  the industry in the same           region, it  cannot be  held that  the Tribunal has           committed  an  error,  in  introducing  a  similar           pattern in  the case  of the  appellant. The  slab           system has  been approved by this Court as will be           seen by  the decisions  in Greeves  Cotton and Co.           and Others  v. Their  workmen, [1964] 5 S.C.R. 362           and Bengal  Chemical and Pharmaceutical Works Ltd.           v. Its  workmen, [1969]  2  S.C.R.  113.  Even  in           Bombay that  such a  pattern of dearness allowance           as the one introduced in the case of the 506           appellant is existing, is seen by the decisions of           this Court in Greeves Cotton and Co. and others v.           Their workmen and Kamini Metals and Alloys Ltd. v.           Their workmen,  [1967] 2  S.C.R. 463. No doubt the           industries therein  were not pharmaceutical units.           But that  such a system exists in Bombay region is           clear from the above decisions." This Court  then noticed that in a number of awards rendered during the  year 1965  to 1968  the slab  system of dearness allowance was adopted and wound up by saying :           "These facts  clearly  show  that  the  scheme  of           dearness allowance provided in the award before us           in respect of the appellants is not anything new."                                                     (at page 604) The only  grievance that  the respondent’s  counsel can have against these  observations is that the Court in those cases were  considering   pharmaceutical  units   which  were  not comparable with  the unit  in question. We do not agree that this distinction  can be  pressed into  service to  deny the workmen the  slab system existing in this unit. The Tribunal has found  this unit  to be an engineering unit which is not in a  far less  disadvantageous position than pharmaceutical

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units.      The learned  Counsel for  the respondent  made a strong plea for  substitution of  the exising  system  of  dearness allowance with ceiling on the quantum of dearness allowance. We have  already indicated that in the absence of compelling materials a  system that gives benefit to the workmen cannot lightly be interfered with to their detriment. The theory of ceiling on  the quantum  of  dearness  allowance  cannot  be accepted since  under the  prevailing conditions there is no control over the prices of essential commodities and as such a ceiling  would not  give sufficient cushion when prices of essential commodities continuously rise.      Mr. Pai  apprehended the  possibility of similar demand by the  workers in  other factories  which would  render the working of the factory itself difficult and sometimes compel it to  close them  down. He  has  made  available  to  us  a statement 507 showing the  amounts that  the company will have to dole out if the  present system  is to  continue. In  respect  of  80 monthly rated  workmen the  difference payable  will be  Rs. 75,000 per  month, which works out to Rs. 9,00,000 per year. If this  slab system is to be introduced for 4000 employees, the liability  will be  about Rs. 4,50,00,000. Though at the first flush  one would be tempted to agree with Mr. Pai, the temptation will  disappear when  we inform  ourselves of the fact that  in a catena of decisions this Court has laid down the industry-cum-region  basis as the acceptable basis while working out  dearness allowance.  This is the usual alarmist cry  of   the  employers.   Uniformity  of   wage  structure throughout the country if accepted will be giving a go-by to the well  settled  principle  of  industry-cum-region.  This Court has  time and  again laid down the industry-cum-region principle whenever the question of wage structure arose.      As an  answer to  this plea  of the respondent, we will only read  the following  passage from  the Judgment  in the case of  Workmen v.  Indian Oxygen  Ltd., to which one of us was a  party. Desai  J. while  repelling the plea that in an industrial undertaking which has an all India operation, the unit as a whole should be considered, observed thus :           "14. On  behalf of  the Karmachari  Union, it  was           contended that  in devising  a dearness  allowance           formula, the  region-cum-industry principle should           ordinarily be  accepted. As  pointed  out  earlier           dearness allowance  generally has a local flavour.           A man  is exposed  to the  vagaries of  the market           where he  resides and works, even though he may be           an  employee   of  a  national,  multinational  or           transnational industrial  empire. The  workmen  is           concerned with  the vagaries  of price fluctuation           in the area in which he resides and works for gain           and to which he is exposed. Therefore, the region-           cum-industry  principle   must  inform  industrial           adjudication in  the matter of dearness allowance.           In  Woolcombers   of  India  Ltd.  v.  Woolcombers           Workers Union,  [1974] 1  S.C.R. 504,  this  Court           following its  earlier decision  in Greeves Cotton           and Co.  v. Workmen, [1964] 5 S.C.R. 362 held that           in devising basic wages and dearness 508           allowance   structure,   industrial   adjudication           sometimes  leans  on  the  industry  part  of  the           industry-cum-region formula and at other times, on           the region  part of  the formula  as the situation           demands.  This   well  recognised   principle   of

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         industrial adjudication  cannot be given a goby on           the specious plea that the workmen are employed by           an industrial  undertaking which  has an all India           operation.  In   this  case,   the  Tribunal   has           overlooked this  important principle of industrial           adjudication..........."      We have  extracted  the  above  passage  to  repel  the argument that  if the  status quo  is allowed to continue in this case,  there will  be demands  from other  sectors  and other factories.  This is  only a  theoretical  apprehension with which  we are  not concerned. We have repeatedly stated that in  this case reference to adjudication was made not at the instance  of the  workmen, but  at the  instance of  the employer who  wanted to bring about a change in the existing system which had satisfactorily worked for 18 years, without producing compelling materials, in support of their claim.      On a  careful consideration  of the  various  questions involved in  this case, we are of the view that the Tribunal erred grossly in its approach to the questions raised and in answering the  reference in  favour  of  the  employer.  We, therefore, allow  the appeal, set aside the award and direct that  the   existing  slab  system  will  continue  for  the appellant unit.  The interim  order passed  on 14.3.1981  is hereby vacated.  The respondent  is directed to pay the cost of the appellant, quantified at Rs. 5,000.      The Construction  Employees Union  of  the  respondent- company intervened  in the  case  and  filed  their  written arguments  as   directed  by  this  Court.  In  the  written arguments, the said Union supported the appellant’s case. S.R.                                         Appeal allowed. 509