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PETITIONER: SHIVRAJ FINE ART LITHO WORKS

       Vs.

RESPONDENT: THE STATE INDUSTRIAL COURT, NAGPUR & ORS,

DATE OF JUDGMENT28/02/1978

BENCH: KAILASAM, P.S. BENCH: KAILASAM, P.S. UNTWALIA, N.L. SINGH, JASWANT

CITATION:  1978 AIR 1113            1978 SCR  (3) 411  1978 SCC  (2) 601  CITATOR INFO :  R          1980 SC  31  (8,25)

ACT: Industrial  Disputes  Act,  1947-Powers  of  the  Industrial Tribunal  to fix Industrial Minimum savage-In  the  absence, Minimum  Wage fixed under Minimum Wages Act 11 of 1948  will prevail-Factors  to  be reckoned for  computting  Fair  Wage Dearness Allowance etc.

HEADNOTE: An industrial award known as Puranik Award dated  26-10-1956 which  fixed  Rs.  35/- as the minimum  wage  in  the  Litho Industry in the Vidarbha region stood terminated with effect from  July 22, 1958 as per a notice dated January  22,  1958 from the employees of Litho Industry.  Pending the  decision in  the  reference made under s. 31A of the C.P.  and  Berar Industrial Disputes Settlement Act, 1947 arising out of  the demands of the employees of the Litho Industry, an agreement was entered into on February 21, 1966 between the  employers and the employees of various concerns requesting the  St-ate Government  to exercise its power u/s 39 of the Act  and  to refer  to the arbitration of the State Industrial Court  the disputes  mentioned in the agreement.  By  the  notification dated  7-1-1965  the  Government referred  the  disputes  in respect of the demands of the employees set out in  Schedule 11  to  the  Notification  made  against  the  10  employers specifically  mentioned in Schedule I to  the  notification, being  the  employers  in the Litho Press  Industry  in  the Vidarbha  region.   The demands in particular  were  to  the disputes as to the living wage, for fitment of the employees already  in  service at the date of the demand  for  revised scales of wages with retrospective effect from 1956, and for the  dearness allowance with retrospective effect from  1959 to  be linked with the index number at the rate of  8  paise per  point  with 1956 as 100.  The State Government  by  its notification  dated  December 31, 1964 fixed  Rs,  70/-  per month as the minimum wage under the Minimum Wages Act.   The notification divided the employees into several classes.  It did  not attach any scale of pay to the minimum wages  fixed but provided that at interval of every six months the  State Government  may issue a notification fixing certain  amounts

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payable  in  addition  to  the  minimum  wages  as   special allowances. The  Industrial Court made its award on May 10.  1968.   The Award  divided the employers into two classes being Class  A and  Class B on the basis of the financial capacity  of  the employers to pay.  The award fixed rates and scales of wages for  the employees of the three employers in Class  A  being Shivraj  Shakti and Vasant Litho Works.  The award  did  not fix any rates and scales of wages in respect of other  units of  the  industry the reason being that they  did  not  have adequate  financial  capacity.  In the case of Class  A  the award  also  fixed  the employees  of  various  duration  of service  by way of fitment into the scales of wages  awarded in  the  award.  It also fixed the date from which  the  new rates  and  scales  of  wages were  to  be  deemed  to  have commenced. Against the, award six writ petition& were filed before  the High Court, three by the appellants in this Court and  other three by the employees.  The High Court agreed with the view of the Industrial Court and held that the award  classifying the  employers into two classes A & B on the basis of  their paying  capacity, determining the rates and scales of  wages and  the dearness allowance regarding Class A  employees  is valid. The  appellants  in these appeals by special  leave  contend that there is no warrant for the direction by the High Court to  the Industrial Court to fix an industrial  minimum  wage regardless  of  the paying capacity of the industry  or  the employer. 412 Allowing  the  appeals in part and modifying  the  order  of remand the Court HELD : 1. (a) It is permissible to divide the industry  into appropriate  classes and then deal with the capacity of  the industry to pay class-wise. [418 H, 419 Al Express  Newspapers  (P) Ltd. & Anr. v. Union of  India  and Ors. [1959] S.C.R. 12, followed. (b)  The extent of the business carried on by the  concerns, the  capital invested, the profits made, the nature  of  the business, their standing, the strength of labour force,  the dividends  declared  and the prospects about the  future  of business and other relevant factors have to be borne in mind for  the  purpose of comparison.  The principle is  that  in applying  the  industry-cumregion formula  for  fixing  wage scales. the Tribunal should lay stress on the industry  part of  the formula if there were a large number of concerns  in the same region carrying on the same industry, but where the number of industries of the same kind in a particular region were  small,  it was the region part of  the  formula  which assumed  importance.  In the former case in order that  pro- duction  cost  may  not be unequal and there  may  be  equal competition, wages should generally be fixed on the basis of the  comparable industries, namely, industries of  the  same kind. [419 B-C, G-H, 420 A] Williamsons  (India)  Pvt.  Ltd. v. The  Workmen,  [1962]  I L.L.J.  302;  French Motor Car Co. Ltd. v.  Workmen,  [1963] v.Their Workmen, [1964] 2 L.L.J. 123; v.     Balmer Lawrie & Co., [1964] 5 S.C.R.v.   Their Workmen, [1964] 5 S.C.R. 362; Workmen, [1972] 3 S.C.R. 567; The Silk v.    Mill    Mazdoor Sabha,  [1973] 11 S.C.R.Supp. (2)S.C.R. 16;  Cinema  Theatre Workmen  of Balmer Lawrie & Co. 344; Greaves Cotton & Co.  & Ors.  Unichem Laboratories Ltd. v. The and, Art Silk  Mills’ Association Ltd. 277 ;referred to. 2.  The dispute, in the instant case on the stand  taken  by the  employees related to fixation of a fair wage and not  a

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minimum   wage.   In  fact,  the  employees  requested   the Government  to  fix  a minimum wage  which  was  accordingly fixed.   Fair  wage is a mean between the  living  wage  and minimum  wage.   The  minimum  wage  contemplated  above  is something  more  than the bare minimum of  the  subsistence, wage  sufficient  to cover the bare physical  needs  of  the worker and his family, providing also for the  preservation- of  the  efficiency of the worker and for  some  measure  of education,  medical requirements and amenities.  So  far  as the minimum wage is concerned it is to be fixed without  any reference to the paying capacity of the industry. [420  F-G, 421 A-D] Express  News  Papers  (P) Ltd. v. Union  of  India,  [1959] S.C.R.  12  and U. Unichoyi & Ors. v. The  State  of  Kerala [1962] 1 S.C.R. 946 referred to. 3(a) When a dispute is pending before any tribunal regarding the minimum wage, the award will bind and to that extent the provisions  of the Act will not be applicable but  in  other eases the Government is entitled under the Minimum Wages Act to  fix a minimum wage.  Section 5 prescribes the  procedure under  which  the minimum wage is to be fixed  and  revised. Provision   is  made  for  appointment  of  committees   and consultation  of  the persons concerned before  the  minimum wage  is fixed.  The procedure is that in the absence  of  a dispute  pending before the Tribunal regarding the  fixation of minimum wages, the minimum wages fixed by the  Government will bind the parties. [421 G-H, 422 A] (b)  In  an industrial dispute a basic minimum wage  can  be fixed  when  the  statute has not fixed  the  minimum  wage. Section  3(2A)  of the Minimum Wages  Act  does  contemplate fixation of minimum wages by the Tribunal.  In fixing such a minimum  wage  the Tribunal may take into  account  all  the facts  and fix a minimum wage which may be higher  than  the minimum  wage  contemplated under Minimum  Wages  Act.   The Industrial  Tribunal  was not called upon to fix  a  minimum wage  for  both  the  employers as  well  as  the  employees proceeded  on the basis that the tribunal was fixing a  fair wage.   In fact, the employees, requested the Government  to fix a minimum wage which was accordingly done.  In this view no further reference need be made 413 to  Section  3(2A) of the Minimum Wages Act.   The  tribunal proceeded on the basis that it was called upon to fix a fair wage.   In  the circumstances, the view taken  by  the  High Court  that  it  was incumbent on the  tribunal  to  fix  an industrial  wage apart from the minimum wage without  taking into  account  the  paying  capacity  of  the  Industry   is erroneous. [422 B-E] (c) In view of the finding that what the Tribunal was called upon  to  fix was a fair wage and not a  minimum  wage,  the financial  capacity  of the concerns classified under  B  is relevant and the finding of the Tribunal that their finances would  not  justify any provision for fair wages has  to  be accepted.   Further, it will be seen that the  employees  of the  concerns  classified  under B have  not  preferred  any appeal  and  the question cannot be gone into  the  appeals. [422 H, 423 A] 4.  The fixation of rate of wages which includes within  its compass  the  fixation  of scales of wages  and  fitment  of workmen  into wages scales will also depend upon the  paying capacity of the industry.  The tribunal dealing with  Demand No.  5 in its award accepted the suggestion that  the  Court may  grant  some increments in proportion to  the  years  of service  put in by an employee.  It provided two  increments for  persons who have put in 2 to 5 years of service,  three

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increments for persons who put in service of 5 to 10  years, four increments for persons who have put in service of 10 to 15 years and five increments who have put in service over 15 years.   The  Tribunal also directed that there shall  be  a fitment and the employee should be fitted into the scale  of pay  by placing him at the stage in the scale equal to  next above,  his basic pay. The award regarding the  fitment  and increment was accepted by the High court but in the order of remand the High Court directed a general revision as it  was not  satisfied  with  the  manner  in  which  the  financial capacity of the concerns was determined. [423 A-C] 5. (a) After fixing of the financial capacity, the fair wage which  would  include  fitment,  wage  scales  and  dearness allowances payable has to be determined.  The question as to the  period  during which retrospective effect  has  to  be given  for payment of fair wages has also to be  considered. A fair wage is related to the earning capacity and workload. While the lower limit of wage structure is the minimum  wage any increase over that will depend upon the capacity of  the industry  to pay.  The factors which determine the  capacity to  pay  will  be  the  productivity  of  the  labour,   the prevailing rates of wages in the same or similiar industries in the same or neighbouring localities, the present economic position  of  the  industry, its prospect as  in  the,  near future  etc.   The fair wage will grow with the  growth  and development of the national economyand   the   progress made by the industry and must approximate to the capacity of the industry to pay.  The claim of the employees for a  fair and  higher wage depends not only on the financial  capacity of the employer but also on to interests of the consumer and the State, the employers’ desire for a reasonable profit the rise in price which may effect the consumer and the national economy  which  may  have an adverse effect  on  the  labour itself. [423 D-H] (b) in order to determine the fair wage including the  scale of  pay,  the Price rise, the dearness allowance  etc.,  the financial  capacity of the concern has The profit  and  loss account,  the prospects of the company improving  itself  in future and all other relevant matters will have to be  taken into  account.  The expenses properly incurred  for  working the  industry  such  as buying of  raw  materials,  expenses incurred in running the factory, office and other  transport expenses, the expenses incurred in marketing and other  such allowable  expenditure  has  to be  deducted.   Neither  the contention  of the respondents that the gross profits  alone has to be taken into account nor the pleas on behalf of  the appellants that the net profit alone should be the basis  of determining  the  financial capacity can be  accepted.   The determination of gross profit and net profit vary  according to the basis of accounting adopted. The provisionfor Income tax and forreserves  must take second place as  compared to provision for wagestructure   and   gratuity,   Which stands on the same footing is Provident Fund which is also a retiral benefit.The provisions ’for income-tax, 414 reserve and depreciation are not permitted.  The High Court, was  therefore  right  in its view that  no  rebate  can  be allowed towards payment of income-tax. [424 A-H, 425 A] Gramaphone Company Ltd. v. Its Workmen, [1964] 2 L.L.J.  131 and  Indian Link Chain Manufacturers Ltd. v. Their  Workmen, [1973] 1 S.C.R. 790; applied. (c)  The  High  Court is not correct in its  view  that  any amount  paid  a,,  bonus in addition to  the  minimum  bonus cannot be deducted as expenses.  The amount which is paid as bonus goes, in substance to augment the wages and as such is

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liable to be deducted in determining the paying capacity  of the  employer.  It seems that the High Court was  influenced by the fact that the additional bonus cannot be deducted  at the  beginning  of the year.  This fact will  not  make  any difference  for  the paying capacity of the concern  can  be ascertained  after  deducting the amount in  the  subsequent year. [425 B-D] 6. When a dearness allowance is fixed as a part of the  fair wage it will have to depend upon the paying capacity of  the employer.   Though  the  dearness  allowance  is  given   to compensate  for  the rise of cost of living, cent  per  cent neutralisation  is not given as it may, lead  to  inflation, and  therefore Dearness Allowance is often little less  than one-Hundred  per  cent  neutralisation.  In  fixing  of  the dearness  allowance,  the  principle  that  is  followed  in determining  the paying capacity for fixing wage  structure, is   equally  applicable.   In  determining   the   dearness allowance  increase  in the cost of  living,  the  resulting change  in  the  economic  conditions  and  the  pattern  of dearness allowance’ prevailing in other concerns in the same region  are  factors, to be taken into  consideration.   The increase  in  the  cost of living since the  time  when  the dearness,  allowance  was  last fixed  is  also  taken  into account.   Therefore  the  High Court is not  right  in  its observation that the dearness allowance should effect a cent per cent neutralisation. [425 F-H, 426 A-B] Clerks  of Calcutta Tramways v. Calcutta Tramways Co.  Ltd., [1956] S.C.R. 772, Hindustan Times Ltd.’ New Delhi v.  Their Workmen  [1964]  1  S.C.R. 234  and  Ahmedabad  Mill  Owners Association  v.  The Textile Labour  Association.  [1966]  1 S.C.R. 382, followed. 7.  In  granting  retrospective effect the  Tribunal  has  a discretion to fix the date taking into account the financial position of the Company. [426 G] 8.  The  High  Court is not correct in  its  view  that  the Industrial  Tribunal should fix an industrial  minimum  wage without  taking  into account, the paying  capacity  of  the employer. [427 A-B]

JUDGMENT: CIVIL APPELLATE JURISDICTION :Civil Appeal No. 2418 of 972. Appeal by special leave from the Judgment and Order dt.  25- 11-71  of  the Bombay High Court (Nagpur Bench)  in  Special Civil Application No. 640 of 1968. Civil Appeal No. 2419 of 1972 Appeal  by Special Leave from the Judgment and  Order  dated 23-12-1971  of  the  Bombay High  Court  (Nagpur  Bench)  in Special Civil Application No. 614/68. And Civil Appeal No. 2643 of 1972 Appeal  by Special Leave from the Judgment and  Order  dated 25-11-71 of the Bombay High Court (Nagpur Bench) in Special Civil Application No. 641 of 1968. P.  N. Phadke, A. G. Menesses, J. N. Sinha & K. J. John  for the Appellants in CA Nos. 2418-2419/72. 415 M.  C.  Bhandare, V. P. Sathe & S. Bhandare  for  Respondent No.2. P. C. Bhartari for Respondent No. 8. C.A. No. 2418/72 set down exparte against RR 1, 3, 4, 7, 9 & II C.A.  No. 2419/72 set down exparte against RR 1, 3, 4,  6  & 12.

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Shankar  Anand & A. G. Ratnaparkhi for the appellant  in  CA No. 2643/72. V. P. Sathe & S. Bhandare for R2 in CA 2643/72. The Judgment of the Court was delivered by KAILASAM,  J. These three appeals are filed by  the  Shivraj Fine  Arts  Litho Works, Vasant Fine Arts  Litho  Works  and Shakti  Offset Works by special leave granted by this  Court against the decision of the Nagpur High Court.  The  history of the industrial dispute may be shortly stated. The  dispute relates to the Litho industry in  the  Vidarbha region.   An  award known as the Puranik Award was  made  on October  26,  1956.  The award fixed Rs. 35 as  the  minimum wage but did not attach any scale of pay to the basic pay of Rs.  35  for  the unskilled employees.  By  a  notice  dated January  22, 1958 the employees of the Hitho  industry  gave notice  of  change and as a result the Puranik  award  stood terminated as from July 22, 1958.  The employees of Shivraj, Shakti and Raj gave notice of change dated September 8, 1960 making  certain demands against their respective  employers. On  March  13, 1.961 the employees of the said  three  Units filed  three references under section 38A of the C.  P.  and Berar  Industrial Disputes Settlement Act, 1947, before  the State Industrial Court, which were numbered as references 9, 10  and 11 of 1961.  When the three references were  pending employees of other industrial concerns made certain  demands against their employers.  Pending the decision in references 9,  10  and  11 of 1961 an agreement  was  entered  into  on February 21, 1964 between the employers and the employees of various concerns requesting the State Government to exercise its  powers under section 39 of the Act and to refer to  the arbitration  of  the  State Industrial  Court  the  disputes mentioned  in that agreement.  On January 7, 1965 the  State Government issued its notification making a reference lo the State,  Industrial  Court under section 39 of the  Act.   By tile  notification the Government referred the  disputes  in respect of the demands of the employees set out in  Schedule 11  to  the  notification  made  against  the  10  employers specifically  mentioned in Schedule I to  the  notification, being  the  employers  in the Litho Press  Industry  in  the Vidarbba  region.  The demands that are set out in  Schedule 11 are 15 in number but as we are concerned only demands  3, 4,  5, 6 and 7 we will leave the rest out of  consideration. Demand  No. 3 relates to the dispute as to living  wage  and Demand  No.  4 for ’scales of wages for  each  category  and occupation.   Demand No. 5 is for fitment of  the  employees already in service at the date of the demand.  Demand No.  6 is  that  the revised scales of wages should be  given  with retrospective  effect  from 1958, and Demand No.  7  is  for dearness  allowance with retrospective effect from 1959  and that the dearness allowance should be linked with the 416 index  number at the rate of 2 paise per point with 1955  as 100.   The  State  Government  by  the  notification   dated December 31 1964 fixed Rs. 70 per month as the minimum  wage under  the Minimum Wages Act.  The notification divided  the employees into several classes.  It did not attach any scale of  pay to the minimum wages fixed but provided that  at  an interval of every six months the State Government may  issue a notification fixing certain amounts payable in addition to the minimum wages as special allowances. The  Industrial Court made its award on May 10,  1963.   The award divided the employers into two classes being Classes A and  B  on  the  basis of  the  financial  capacity  of  the employers to pay.  The award fixed rates and scales of wages for  the employees of the three employers in Class  A  being

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Shivraj,  Shakti and Vacant Litho Works.  The award did  not fix any rates and scales of wages in respect of other  units of  the  industry the reason being that they  did  not  have adequate  financial  capacity.  In the case of class  A  the award  also  fixed  the employees  of  various  duration  of service  by way of fitment into the scales of wages  awarded in  the  award.  It also fixed the date from which  the  new rates  and  scales  of  wages were  to  be  deemed  to  have commenced. Against  the award six writ petitions were filed before  the High  Court, three by the appellants in this Court,  Shivraj Fine  Arts  Litho Works.. Vasant Fine Arts Litho  Works  and Shakti  Offset  Works.  Another three  writ  petitions  were filed   by   the  employees,  they   being   Special   Civil Applications Nos. 210 of 1969, 733 of 1969 and 734 of  1969. There are no appeals filed in this Court by the employees. The High Court agreed with the view of the Industrial  Court and  held that the award classifying the employers into  two classes  A  and  B on the basis  of  their  paying  capacity determining  the rates and scales of wages and the  dearness allowance regarding class ’A’ employers is valid.  The  High Court  set aside the award on Demands 3, 4, 5, 6 and  7  and directed  the  Industrial Court to reconsider  the  above  5 Demands and to make a fresh award in accordance with the law and principles laid down by the High Court.  In so directing the  High Court held that fixation of an industrial  minimum wage  is  necessary  and  that  in  fixing  such  industrial minimum,  wage the factor of employer’s capacity to  pay  is irrelevant  and the industry or the employer must pay it  or perish.  According to the High Court the industrial  minimum wage  should  be  fixed  on  a  consideration  of  different ingredients  which it seeks to provide for i.e. contents  of the  basket.  It was- possible that the  industrial  minimum wage can be higher in some cases than the current  statutory minimum wage and when the industrial minimum wage happens to be  higher  than  the  statutory minimum  wage  it  will  be industrial minimum wage which has to be paid because when it is  fixed by an industrial award it becomes  enforceable  at law.   The  High Court further held that the  provisions  of minimum  wages show that there is nothing in it  to  prevent payment  of anything more than the minimum wage fixed  under it.  The appellants in these appeals seriously challenge the direction  of the High Court to the Industrial Court to  fix an industrial minimum wage regardless of the paying capacity of  the industry or the employer.  Their contention is  that there is no warrant for such a conclusion.  417 The High Court went into the question as to how the capacity of an industry to pay a fair wage has to be determined.  For determining  the surplus for paying capacity the High  Court held that a sort of loss and profit account will have to  be prepared having a credit and debit side.  On the credit side will  appear  all  the  gross takings of  the  unit  of  the industry.   Gross taking will include gross realisations  by the  sale  of  the goods or services, the  income,  if  any, earned by way of rents, interest or dividends or investments and the income of, all other nature.  Dealing with the items of expenses that can be legitimately deducted from the gross income the High Court held that all the expenses incurred by the employer in connection with the working of the  industry will have to be deducted.  It accepted the plea on behalf of the  employers  that  the cost of raw  materials  which  are necessary for production and expenses in connection with the working  of the industry and sale of the  finished  products will have to be deducted, but not any other wage paid  apart

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from  the  minimum  wage  payable.   The  court  held   that appropriate  amount  for  depreciation  is  deductible   and interest on capital will also have to be deducted.  It  also held  that  a  fair amount of remuneration  payable  to  the partners can also be deducted.  Regarding the bonus the High Court  held that annual incidence of only the minimum  bonus can   be  deducted,  and  any  excess  bonus  paid  is   not deductible.   It  disallowed the claim of the  amounts  that were  paid as income-tax or other taxes in ascertaining  the paying capacity of the industry or the employer. Regarding  dearness allowance the High Court held  that  the industrial  minimum wage has got to be paid on the basis  of pay or perish and the neutralisation must be 100 per cent of the  rise in prices.  Regarding the claim for giving  effect to the enhanced rates of wage, scales of wages and  dearness allowance from the date of the order of reference i.e.  from 7th January, 1965 the court held that the provisions of  the award  should  ’take effect from January 7, 1965  being  the date  of  the order of reference.  While fixing  January  7, 1965  as the date of operation it gave a discretion  to  the Industrial Court for valid and lawful reasons to fix a later date in respect of all or any of the employer-units.  In the result  the  High Court found that the award in  respect  of Demands 3, 4, 6 and 7 was not in accordance with law and had to be set aside as the award did not ascertain the rates and scales  of wages and dearness allowance on the basis  of  an industrial minimum wage and that the industrial minimum wage should be ascertained without any reference to the  capacity of  the  industry or the employer to pay.   The  court  also found that the correctness and truthfulness of the  accounts and the balance-sheets of some of the employer-units has not been properly appreciated, investigated into and taken  into account.   The  financial  capacity  to  pay  has  not  been properly  evaluated.  The financial capacity to pay has  not been taken into consideration for the purpose of awarding  a fair  wage with corresponding dearness allowance.   Finally, the  question of giving retrospective effect and fixing  the date  from  which the wages and dearness  allowance  awarded should  become operative has not been  properly  considered. As  Demand No. 5 is also an integral part of the  award  the court also quashed the award on that Demand. 418 The appellants in these appeals challenge the correctness of the  order of the High Court remanding the award  for  fresh disposal according to the directions given in the  judgment. First and foremost the appellants questioned the correctness of  the  order of the Industrial Court as confirmed  by  the High  Court  classifying the employers into  two  categories Classes  A and B and directing that the employers  belonging to  Class  A should pay enhanced wages,  dearness  allowance etc.   Secondly,  it  was  submitted  that  the  High  Court misdirected  itself  in holding that  the  Industrial  Court ought to have fixed an industrial minimum wage and that such wage should have been fixed without taking into account  the paying  capacity of the industry or the employer.   Thirdly, it  was  contended that the court erred in holding  that  in determining  the  paying  capacity  certain  items  such  as minimum  wage and the minimum bonus can alone  be  deducted. The disallowance of the income-tax and other taxes that were paid  was  also questioned.  The method of fixation  of  the dearness  allowance  as  well  as  the  direction  to   give retrospective  effect  to  the payment  of  wages,  dearness allowance  etc. from the date of the order of reference  was challenged   as  imposing  an  intolerable  burden  on   the industry.   We  will now proceed to deal with  each  of  the

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above contentions. Mr Phadke, the learned counsel for the appellants, submitted that the classification of the employers into two categories A and B depending upon the profits is not justified in  law. He  submitted  that  the rule is that  the  wages,  dearness allowance,  scales of pay etc. should be fixed on the  basis of region-cum-industry the wages normally being the same  in all  industries  in the region.  The Tribunal in  its  award found  that the Industrial Court is entitled to fix  a  wage for every unit in accordance with its capacity to pay.  This view was affirmed by the High Court.  But the submission  of the  learned counsel is that this view is  unsustainable  in law. Before  the  High Court apart from the  proposition  of  law enunciated  that the classification should be fixed  on  the basis  of region-cum-industry, it was submitted that  as  on the  facts  of the present case no such  classification  was contemplated in the agreement between the parties or in  the reference by the Government, the Tribunal ought not to  have classified  the industry into two categories.  Reliance  was placed  on  the  wording of  the  agreement  requesting  the Government  to make an industrywise reference to the  entire region  and  the reference necessarily being  in  accordance with  the agreement it was submitted would not  justify  any such classification.  This argument was rejected by the High Court  on the ground that the Industrial Court had  inherent jurisdiction   to  classify  the  employers   into   several categories.   Reference  was made by the appellants  to  the demands and it was submitted flat the power to classify  was restricted  only in respect of employees and not as  regards employers.  This plea was rightly rejected by the High Court as  no  such express reference is necessary in view  of  the powers of the Industrial Court.  The third contention of the appellants before the High Court was that the pleadings  did not  refer to the classification of the employers.   It  was rightly  held  by  the High Court that the  absence  of  any reference  to  the classification of the  employers  in  the pleadings  would  not  affect the power  of  the  Industrial Court.  The other contentions put forward 419 before the High Court basing on the construction of  section 22  of the Industrial Disputes Act and Rule 238 of the  C.P. and  Berar Industrial Disputes Settlement Rules, 1949,  that the  increase or decrease of wages should be in an  industry as a whole and not differing from one industry to another is also without any basis. This  Court has clearly laid down in a series  of  decisions starting  from the, case of Express Newspapers (P) Ltd.  and Anr.  v.  The  Union  of India and  Others(1),  that  it  is permissible to divide the industry into appropriate  classes and  then  deal  with the capacity of the  industry  to  pay classwise.   At p. 20 of the, Reports this Court  in  laying down  the  principle  in  determining  the  capacity  of  an industry  observed : "The relevant criterion should  be  the capacity of a particular industry in a specified region, and as  far as possible the same wages should be prescribed  for all  units of that industry in that region." But  the  Court qualified  the rule by stating "It is clear  therefore  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 classwise." In  Williamsons (India) Private Ltd. v. The Workmen(2)  this

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Court held that the extent of the business carried on by the concerns  the capital invested by them, the profits made  by them, ’the nature of the business carried on by them,  their standing, the strength of their labour force, the  dividends declared by them and the prospects about the future of their business and other relevant factors have to be borne in mind for the purpose of comparison.  Approving the view expressed in  the  above decision in French.  Motor Car  Co.  Ltd.  v. Workmen,  (3) this Court observed at p. 20  that  comparison should  be  made in the same line of business  and  a  small concern cannot be compared even in the same line of business with  a large concern.  When there is a large  disparity  in the two concerns in the same business, it would not be  safe to  fix  the  same wage structure as in  the  large  concern without any other consideration. In Cinema Theatres v. Their Workmen, (4) this Court approved the  classification of the Tribunal of the Cinemas into  two classes  based on gross revenue.  The’ Court  observed  that the  gross  revenue taken by the Tribunal as the  basis  for classification appears to be a satisfactory criterion. In  Workmen  of Balmer Lawrie and Co. v. Balmer  Lawrie  and Co.,(")  at P. 353 this Court held that in  determining  the question  whether one concern is comparable with another  in the  matter of fixing wages, the total capital  invested  by the  concern,  the "tent of its business, the order  of  the profits made by the concern, the dividends paid, the  number of  employees employed in the concern, the standing  in  the industry  to which it belongs and other matters have  to  be "ameed.  In (1)  [1959] S.C.R. 12. (2)  [1962] 1 L.L.J. 302. (3)   [1963] Supp. 2 S.C.R. 16. (4)  [1964] 2 L.L.J. 128. (5)  [1964] 3 S.C.R.344. 420 Greaves Cotton and Co. and Others v. Their Workmen(1)  after referring  to the decision in French Motor Car Co.  Ltd.  v. Workmen  (supra) this Court held that the principle is  that in applaying the industry-cum-region formula for fixing wage scales the Tribunal should the industry part of the  formula if there were a large number of concerns in the same  region carrying  on  the same, industry, but where  the  number  of industries  of  the  same kind in a  particular  region  was small,  it was the region part of the formula which  assumed importance.   In  the former case in order  that  production cost may not be unequal and there may be equal  competition, wages  should  generally  be,, fixed on  the  basis  of  the comparable industries, namely, industries of the same kind. In  Unichem Laboratories Ltd. v. The Workmen(2)  this  Court after  referring to the cases cited above held that  in  the fixation of wages and dearness allowance the legal  position is well-established that it has to be done on  industry-cum- region basis having due regard to the financial capacity  of the unit under consideration.  The same view was  reiterated in  The  Silk and Art Silk Mills Association  Ltd.  v.  Mill Mazdoor  Sabha(3) at p. 288, where the  Court  re-emphasised the  principles  laid down in the earlier cases.   There  is thus  ample  authority in support of the view taken  by  the Tribunal  and  the  High  Court that  the  employer  can  be classified according to his paying capacity. The  second  contention  of  the  learned  counsel  for  the appellants  is that the High Court was in error  in  holding that the Tribunal ought to have fixed an industrial  minimum wage  without  any reference to the paying capacity  of  the employer.  According to the High Court even when a statutory

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minimum wage is payable an industrial minimum wage has to be ascertained  to  find out which is high because  it  is  the higher of the two which has to be paid.  The High Court also held that the industrial minimum wage will have to be  fixed without reference to the paying capacity of the industry. The  agreement dated July 30, 1968 entered into between  the parties which led to the reference by the Government  states that  both  the  parties also requested  the  Government  to expedite fixation of minimum wages in the Litho Industry  in the  Vidarbha  region  if necessary  by  appointing  a  sub- committee  for this purpose.  In pursuance of the  agreement the notification was issued by the Government on January  7, 1965.  Schedule II lists the demands of the employees.   The demands  with  which we are concerned in  this  appeal  have already  been referred to. The demand is that the  employees should be paid a living wage.  In pursuance of the agreement the  Government  fixed a minimum wage on December  30,  1964 under the Minimum Wages Act, 11 of 1948 and again revised it pending the appeal before this Court on May 7, 1966.  It was conceded before the Tribunal by the employees that there was no  justification for demanding a living wage but  that  the units  had the capacity to pay fair wages.  On the basis  of the stand taken by the employees, the Tribunal proceeded  to fix  a fair wage taking into account the paying capacity  of the industry.  The dispute therefore related (1)  [1964] 5 S.C.R. 362. (2)  [1972] 3 S.C.R. 367. (3)  [1973] 1 S C.R. 277 421 to fixation of a fair wage and not a minimum wage.  In fact, the employees requested the Government to fix a minimum wage which  was accordingly fixed.  The High Court relied  mainly on  two  decisions of this Court in Express  Newspapers  (P) Ltd.  and Anr. v. The Union of India and Others (supra)  and U. Unichoyi and Others v. The State of Kerala,(1) for coming to  the  conclusion  that the Tribunal is bound  to  fix  an industrial  minimum  wage.  In the former  case  this  Court stated that broadly speaking the wages have been  classified into  three categories, the living wage, the fair  wage  and the minimum wage.  After elaborately setting out the concept of  living wage at p. 79, the concept of minimum wage at  p. 82  and the concept of a fair wage at p. 84 of the  Reports, this Court observed that fair wage is a mean between  living wage and minimum wage and even the minimum wage contemplated above is something more than the bare minimum of the subsis- tence  wage  which  would be sufficient to  cover  the  bare physical  needs of the worker and his family, a  wage  which would provide also for the preservation of the efficiency of the  worker  and  for some  measure  of  education,  medical requirements and amenities.  The Court further observed that it  must  be remembered that whereas the  bare  mini-mum  or subsistence wage would have to be fixed irrespective of  the capacity  of  the  industry  to pay,  a  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.  This view is explained in U. Unichoyi and Others v. The State of Kerala (supra).  The Court in rejecting  the contention on behalf of the employers that the minimum  wage prescribed  under  the Minimum Wages Act can only  be  fixed taking into account the capacity of the industry to pay held that  it  had no hesitation in rejecting the  argument  that because  the  Act prescribed the minimum wage  rates  it  is necessary  that  the capacity of the employer  to  bear  the burden of the wage structure must be considered.  It is  now

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not  in dispute that so far as minimum wage is concerned  it is to be fixed without any reference to the paying  capacity of the industry.   The Minimum Wages Act, Act 11 of 1948, secures the payment of  the minimum wage.  This Act was enacted with a  view  to provide  for  fixing  minimum  rates  of  wages  in  certain employments.    It  provides  under  section  3   that   the appropriate Government shall fix the minimum rates of  wages according  to  the  provisions of the  section.   Section  4 provides that the minimum rate of wages fixed or revised  by the  Government  in respect of scheduled  employments  under section 3 may consist ,of basic rate of wages and a  special allowance at a rate to be adjusted, at such intervals and in such  manner  as the appropriate Government may  direct,  to accord  as nearly as practicable with the variation  in  the cost of living index.  Section 5 provides the procedure  for fixing  and revising minimum wages.  Section 3(2A)  provides that  when  an industrial dispute relating to the  rates  of wages  payable  to  any  of  the  employees  employed  in  a scheduled  employment  is  pending  before  a  Tribunal   or National Tribunal under the Industrial Disputes Act, 1947 or before  any like authority under any other law for the  time being  in force, or an award made by any Tribunal,  National Tribunal or such authority is in (1)  [1962] 1 S.C.R. 946, 422 operation, and a notification fixing or revising the minimum rates  of  wages  is  issued during  the  pendency  of  such proceeding   or   the   operation  of   the   award,   then, notwithstanding anything contained in the Act, the,  minimum rates  of  wages so fixed or so revised shall not  apply  to those employees during the period in which the proceeding is pending  and the award is made.  It is therefore clear  that when a dispute is pending before any Tribunal regarding  the minimum  wage,  the award will bind and to that  extent  the provisions  of the Act will not be applicable but  in  other cases the Government is entitled under the Minimum Wages Act to  fix a minimum wage.  Section 5 prescribes the  procedure under  which  the minimum wage is to be fixed  and  revised. Provision   is  made  for  appointment  of  committees   and consultation  of  the persons concerned before  the  minimum wage  is fixed.  The procedure is that in the absence  of  a dispute  pending before the Tribunal regarding the  fixation of  minimum wages the minimum wages fixed by the  Government will  bind  the parties.  It has been decided  in  Ahmedabad Mill    Owners’   Association   v.   The   Textile    Labour Association(1),  that  in  an  industrial  dispute  a  basic minimum wage can be fixed when the statute has not fixed the minimum  wage.  Section 3(2A) of the Minimum Wages Act  does contemplated fixation of minimum wages by the Tribunal.   In fixing  such  a  minimum wage the  Tribunal  may  take  into account  all the facts and fix a minimum wage which  may  be higher than the minimum wage contemplated under the  Minimum Wages  Act.   We  have already  found  that  the  Industrial Tribunal was not called upon to fix a minimum wage for  both the  employers  as well as the employees  proceeded  on  the basis  that the Tribunal was fixing a fair wage.   In  fact, the employees requested the Government to fix a minimum wage which  was  accordingly  done.   In  this  view  no  further reference  need  be made to section 3 (2A)  of  the  Minimum Wages Act.  The Tribunal proceeded on the basis that it  was called upon to fix a fair wage.  In the circumstances, we do not  find any support in law for the view taken by the  High Court  that  it  was incumbent on the  Tribunal  to  fix  an industrial  wage apart from the minimum wage without  taking

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into account the paying capacity of the industry. The  Tribunal was not called upon to fix the  minimum  wage. The demand by the employees was for a living wage and  after observing  that living wage cannot be secured  the  Tribunal proceeded to determine the fair wage.  In the circumstances, there is no substance in the plea of the respondent that the Tribunal  was only filing a minimum wage.  The plea  of  the respondents that the cases under appeal fall under section 3 (2A) in that the dispute as to fixation of minimum wage  wag pending before the Tribunal and it was a continuation of the proceedings  in reference 9, 10 and 11 cannot  be  accepted, for  the  three  references in question got  merged  in  the reference by the Government under section 39 which  included not  only  demands which were not included in  the  original reference  but also disputes relating to either  industries. The  reference  as it has been pointed out earlier  did  not relate  to the fixation of minimum wages as shown either  in the   agreement  or  in  the  order  of  reference  by   the Government. (1) [1966] 1 S.C.R. 382. 423 At  this stage it will be, proper to deal with the  plea  of the  respondents that the Tribunal was in error  in  stating that  so,  far  as  the  industries  classified  as  B   are concerned,  the employees are not entitled to any relief  by way of fair wage fixation, fitment or dearness allowance  as the  concerns did not have the financial capacity.  In  view of our finding that what the Tribunal was called upon to fix was  a  fair  wage and not a  minimum  wage,  the  financial capacity of the concerns classified under B is relevant  and the  finding of the Tribunal that their finances  would  not justify  any provision for’ fair wages has to  be  accepted. Further, it will be seen that the employees of the  concerns classified  under  B have not preferred any appeal  and  the question cannot be gone into in these appeals. The  fixation  of rate of wages which  includes  within  its compass  the  fixation  of scales of wages  and  fitment  of workmen  into wage scales will also depend upon  the  paying capacity of the industry.  The Tribunal dealing with  Demand No.  5 in its award accepted the suggestion that  the  Court may  grant  some increments in proportion to  the  years  of service  put in by an employee.  It provided two  increments for  persons who have put in 2 to 5 years of service,  three increments for persons who put in service of 5 to 10  years, four increments for persons who have put in service of 10 to 15 years and five increments who have put in service over 15 years.   The  Tribunal also directed that there shall  be  a fitment and the employee should be fitted into the scale  of pay  by placing him at the stage in the scale equal to  next above,  his basic pay.  The award regarding the fitment  and increment was accepted by the High Court but in the order of remand the High Court directed a general revision as it  was not  satisfied  with  the  manner  in  which  the  financial capacity of the concerns was determined. This  leaves  us with the question as to how  the  financial capacity of the concerns is to, be determined.  After fixing of the financial capacity the fair wage which would  include fitment, wage scales and dearness, allowance payable has  to be  determined.  The question as to the period during  which retrospective  effect  has to be given for payment  of  fair wages has also to be considered. A  fair  wage  is a mean between the  living  wage  and  the minimum   wage.   Wages  must  be  fair,  that  is  to   say sufficiently  high to provide a standard family  with  food, shelter,  clothing, medical care and education  of  children

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appropriate  to the workmen but not at a rate exceeding  its wage earning capacity in the class of establishment to which he  belongs.   A fair wage is thus related  to  the  earning capacity  and  workload.   While the  lower  limit  of  wage structure  is the minimum wage any increase over  that  will depend  upon  the  capacity of the  industry  to  pay.   The factors  which  determine the capacity to pay  will  be  the productivity of the labour, the prevailing rates of wages in the same or similar industries. in the same or  neighbouring localities,  the present economic position of the  industry, prospects  in the near future etc.  The fair wage will  grow with the growth and development of the national economy  and the  progress made by the industry and must  approximate  to the  capacity  of  the industry to pay.  As  stated  by  the National  Commission  on Labour a policy dealing  with  this chronic problem cannot be simply 424 economic as it is to reckon With relative multi-dimensional, social  Phenomena in which the workers and  the  management, the consumer and the society at large and in consequence the State  are  all  vitally  interested.   The  claim  of  the employees for a fair and higher wage depends not only on the financial capacity of the employer but also on the interests of  the consumer and the State, the employers’ desire for  a reasonable  Profit, the rise in price which may  affect  the consumer and the national economy which may have an  adverse effect on the labour itself. In  Order to determine the fair wage including the scale  of pay,  the  Price  rise, the  dearness  allowance  etc.,  the financial  capacity of the concern has to be determined.   A close scrutiny of the concern’s working has to be made.  The profit  and  loss  account, the  prospects  of  the  Company improving  itself ’in future and all other relevant  matters will  have to be taken into account. The  expenses  properly incurred for working the industry such as buying of the  raw materials, expenses incurred in running the factory,  office and  other  transport  expenses, the  expenses  incurred  in marketing  and other such allowable expenditure has  to,  be deducted.   We are unable to accept the contention  of  the learned  counsel for the respondents that the gross  profit alone  has to be taken into account.  Equally we are  unable to  accept  the pleas on behalf of the appellants  that  net profit  alone  should  be  the  basis  of  determining   the financial  capacity.. The determination of gross profit  and net  profit  vary  according  to  the  basis  of  accounting adopted. in Gramophone Company Ltd. v. Its Workmen(1),  this Court held that "When an industrial tribunal is  considering the  question of wage structure and gratuity which,  in  our opinion,  stands more or less on the same footing  as  wage- structure,  it  has  to look at  the  profits  made  without considering  provision for taxation in the shape of  income- tax and for reserves.  The provision for income-tax and  for reserves must, in our opinion, take second place as compared to  provision for wage-structure and gratuity, which  stands on  the  same  footing as provident fund  which  is  also  a retiral   benefit.   Payment  towards  provident  fund   and gratuity is expense to be met by an employer like any  other expense including wages and if the financial position  shows that  the burden of payment of gratuity, and provident  fund can be met without undue strain on the financial position of the employer, that burden must be borne by the  employer.... While  on  the one hand casting of his  burden  reduces  the margin  of  profit  , on the other it  will  result  in  the reduction  of  taxation in the shape of  Income-tax".   This court  affirmed  the view taken in the case in  Indian  Link

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Chain  Manufacturers Ltd. v. Their Workmen(2).  The law  was stated in Unichem Laboratories Ltd.  V. The Workmen  (supra) at P. 583 as follows :-               "From  the above decision it is clear  that  :               (1) Fixation of wage-Structure stands more  or               less  on  the  same footing as  framing  of  a               gratuity scheme and the principles  applicable               for  ascertaining the pro-fits are  the  same;               (2)  Provision for taxation and provision  for               reserves cannot take precedence over (1)  [1964] 2 L.L.J. 131. (2)  [1973] 1 S.C.R. 790.. 425               for  gratuity and fixation of wages;  and  (3)               the provision for income tax-and for  reserves               must   take  second  place  as   compared   to               provision for wage-structure and gratuity." Summing  up  the  position the Court  held  that  the  above decision   (Gramaphone   Company  Ltd.   v.   Its   Workmen) categorically rules out any deduction of taxation.  It  also excludes  from  deduction all provision for  reserves  which will take in depreciation reserve also.  The decision  makes it  clear  that provisions for taxation and  reserve  cannot take  precedence over gratuity and fixation of  wages.   The provisions for income-tax, reserve and depreciation are  not permitted.   The High Court was therefore right in its  view that no rebate can be allowed towards payment of income-tax. After  allowing certain deductions the High Court held  that so  far  as  bonus  is concerned as  the  minimum  bonus  is compulsorily  payable it can be deducted in determining  the financial capacity of the employer.  But the High Court  was of the view that in the case of any amount which was paid as bonus  in addition to the minimum bonus fixed,  such  amount cannot  be deducted.  The reason given by the High Court  is that  the incidence of minimum bonus like the  incidence  of basic  wage  is fixed and is known at the beginning  of  the financial  year of the employer and is not to be  calculated unlike  in  the case of excess bonus after the end  of  that year when the amount of profit that is available surplus  is determined.   We are unable to agree with the view taken  by the High Court that any amount paid as bonus in addition  to the  minimum  bonus  cannot be deducted  as  expenses.   The amount  which  is  paid  as bonus  goes,  in  substance,  to argument  the wages and as such is liable to be deducted  in determining  the paying capacity of the employer.  It  seems that  the  High Court was influenced by the  fact  that  the additional bonus cannot be deducted at the beginning of  the year.  We do not think that it will make any difference for, the paying capacity of the concern can be ascertained  after deducting the amount in the subsequent year. The two questions that now remain for consideration are  the fixation  of dearness allowance and the date from which  the dearness  allowance  and the wage  structure  as  determined should  be  given effect to.  The Government in  fixing  the minimum rate of wages under the Minimum Wages Act also makes a provision for special allowance to be paid along with  the basic rate of wages.  The special allowance is fixed by  the Government  to  accord  as nearly as  practicable  with  the variation  in the cost of living index number applicable  to such workers.  So far as provisions under the, Minimum Wages Act relating to the minimum wages and special allowances are concerned they are fixed without any reference to the paying capacity  of the employer, but when a dearness allowance  is fixed as a part of the fair wage it will have to depend upon the paying capacity of the employer.  It has been held  that

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though the dearness allowance is Oven to compensate for  the rise of cost of living, cent per cent neutralisation is  not given as it may tend to inflation.  It was held in Clerks of Calcutta Tramways v. Calcutta Tramways Co. Ltd.(1), "We  can now take it as settled that in matters of the grant of (1)  [1956] S.C.R.. 772. 426 Dearness Allowance accept to the very lowest class of manual labourers  whose income is just sufficient to keep body  and soul together, it is impolitic and unwise to neutralise  the entire rise in the cost of living by Dearness Allowance." In Hindustan Times Ltd., New Delhi v. Their Workmen(2), it  was held   that  the  purpose  of  Dearness  Allowance  was   to neutralise a portion of the increase in the cost of  living. The same view was expressed in Kamani Metals and Alloys Ltd. v. Their Workmen(2).  It was noted that one-hundred per cent neutralisation is not advisable as it will lead to inflation and therefore Dearness Allowance is often a little less than one-hundred per cent neutralisation.  In fixing the dearness allowance, the principle that is followed in determining the paying  capacity  for  fixing  wage  structure,  is  equally applicable.  In determining the dearness allowance, increase in the cost of living, the resulting change in the  economic conditions and the pattern of dearness allowance  prevailing in other concerns in the same region are factors to be taken into  consideration.   The increase in the  cost  of  living since the time when the dearness allowance was last fixed is also   taken  into  account.   In  Ahmedabad  Mill   Owners’ Association v. The Textile Labour Association (supra) it has been  held  that in giving effect to the demand for  a  fair wage including the payment of Dearness Allowance to  provide for  adequate neutralisation, industrial  adjudication  must always  ’take  into account the problem  of  the  additional burden  which  such  wage-structure would  impose  upon  the employer and ask itself whether the employer can  reasonably be called upon to bear such burden.  The Tribunal has  taken into account the paying capacity of the three concerns which it  has  classified as A and fixed  the  dearness  allowance payable  by  them.  But the High Court has  found  that  the Tribunal has not adopted the correct principles in  arriving at  the paying capacity.  The learned counsel appearing  for the  respondents  also  pointed  out  that  even  a  cursory examination  of the profit and loss account would show  that the  three companies which are classified as A had a  larger income  than  was  taken  into  account  by  the  Industrial Tribunal.   The High Court is not right in  its  observation that  the dearness allowance should, effect a cent per  cent neutralisation as it is not in conformity with the decisions cited above. Regarding the date from which retrospective effect should be given  the  High Court has observed that the  reference  was made  on 7th January, 1965 and the award was given  on  10th May,  1968, that is after a lapse of about three and a  half years.   Taking all the circumstances into account the  High Court  directed  that subject to  any  other  consideration which  may require to the contrary effect should have’  been given  to the provisions of the award relating to the  rates and  scales of wages and dearness allowance as and from  7th January,  1965  being  the date of  the  general  reference. Having  observed  so  the High Court left  it  open  to  the Tribunal  to  examine whether there are  any  other  circum- stances  which would require the later date to be fixed  in’ the  case  of  all of any of  the  employers.   In  granting retrospective  effect the Tribunal has a discretion  to  fix the  date taking into account the financial position of  the

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company.   The delay in giving the award and the  subsequent proceedings  in the High Court and in the Supreme Court  has caused (1)  [1964] 1 S.C.R.234. (2)  [1967] 2 S.C.R.463. 427 a lapse of several years.  Though the employees are entitled to be given the increase in wages from the date of reference it   may  not  be  practicable  taking  into   account   the considerable lapse of time.  The employers may not-have  the capacity to pay the entire arrears.  It may be that in  some cases the employer may be able to do so if it is directed to make the payment in instalments.  These questions will  have to  be  taken  into account depending  upon  the  facts  and circumstances of each case. To  sum up we agree with the view taken by the Tribunal  and the High Court that the appellants belong to A category  and are liable to pay fair wages. We  do not agree with the view taken by the High Court  that the  Industrial  Tribunal should fix an  industrial  minimum wage without taking into account the paying capacity of  the employer.   To this extent the order of the High Court  will have to be set aside. Mr.   Phadke,  the  learned  counsel  for  the   appellants, submitted  that  as  the employees have  not  preferred  any appeal  against  the  judgment of the High  Court  no  order adverse to the industry can be passed in these appeals.   As we  have not agreed with the view of the High Court that  an industrial minimum wage should be fixed by the Tribunal even through  it  was fixed by the Government under  the  Minimum Wages  Act,  the  judgment  of  the  High  Court  cannot  be sustained.  As in the absence of an appeal by the  employees final  decision can only be by the Tribunal, we confirm  the order  of  the High Court remanding the  matter  for  afresh disposal by the Tribunal.  But as we do not agree with  some of  the conclusions arrived at by the High Court  we  modify the  order of remand.  We confirm the classification of  the industries into class A and B as determined by the  Tribunal and  the High Court.  We also find that the  appellants  and industries  belonging  to class A are in a position  to  pay fair  wages.  We also find that so far as the order  of  the Industrial  Tribunal ,is confirmed by the High  Court  that the industries classified as B are not in a position to  pay anything more than the minimum wages under the Minimum Wages Act is concerned, it will have to be confirmed, The  High  Court  has found that the  determination  of  the paying  capacity of the industry has not been  satisfactory. It  has  found that some of the accounts maintained  by  the industry  are  suspicious  and  cannot  be  accepted.    The Tribunal  will  have  to examine  the  accounts  afresh  and determine  the  paying  capacity.   In  fixing  the   paying capacity the Tribunal will have to fix the income as well as permitted  deductions  and  allowances  properly   incurred. There can be no dispute that expenses incurred for  purchase of  raw  material,  maintenance  of  the  factory   expenses incurred towards rent, public charge,-,, maintenance of  the establishment  and  expenses incurred in  marketing  of  the produce  should be deducted.  The items mentioned above  are not  exhaustive.   As  to  whether  a  particular  item   of expenditure is liable to be deducted or not will have to  be determined on the facts of the case.  This Court has clearly laid down that no deduction should be allowed for payment of income-tax  or for allowances made for depreciation  or  for making 428

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provision for reserves.  So far as expenses incurred towards payment & wage bill inclusive of dearness allowance,  bonus, gratuity  etc are concerned they will have to  be  deducted. After  properly  determining  the  paying  capacity  of  the industry the Tribunal will have to proceed to fix fair wages which would include the fitment, scale of wages and dearness allowance.   While after fixing the above the Tribunal  will have to determine as to from which date retrospective effect will  have to be given for payment of the wages thus  fixed. As  the  paying capacity will have to be  re-determined  the wage  structure including fitment, scale of wages,  dearness allowance, period during which retrospective effect is to be given will have to be determined afresh. We, accordingly, allow these appeals in part and modify  the order of remand made by, the High Court to the extent and in the  manner indicated above.  We make no order as to  costs. As there has been enormous delay, the tribunal will  dispose of  the  case as expeditiously as possible  preferably  more than six months. S.R.                       Appeals allowed in part. 429