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PETITIONER: WORKMEN EMPLOYED BY INDIAN OXYGEN LTD

       Vs.

RESPONDENT: INDIAN OXYGEN LTD.

DATE OF JUDGMENT02/05/1985

BENCH: DESAI, D.A. BENCH: DESAI, D.A. ERADI, V. BALAKRISHNA (J) KHALID, V. (J)

CITATION:  1986 AIR  125            1985 SCR  Supl. (1) 111  1985 SCC  (3) 177        1985 SCALE  (1)910  CITATOR INFO :  RF         1986 SC1794  (7)

ACT:      Labour and  Services-U.P. Industrial Disputes Act 1947- Industrial Undertaking an all-India concern-Unit of a multi- national Company-Dearness  allowance-Uniformity in  dearness allowances for  workmen of  various units based on all-India average consumer  price index-Whether destructive concept of ‘equality’.      ‘Dearness  allowance-Formula   for  a   fair  and  just dearness  allowance   Principles  of-Revision   of  dearness allowance-When     arises-Industry-cum-region     principle- Application  of-Adjudication   and  linking   of  conversion factor-emphasised.      Settlement between  management and  one of  the Unions- Whether could  be starting  point of  revision  of  dearness formula-Dearness allowance-Linked to cost of living index in the centre  where  the  workman  is  employed-Neutralisation Application of industry-cum-region principle.

HEADNOTE:      In the  respondent-Company there  were two rival Unions of workmen,  namely, Karamchari Union and Sharmik Sangh. The Karamchari Union espoused the demand of the workmen employed by the  Company in  its Kanpur  unit for  upward revision of dearness allowance  following an  award  of  the  Industrial Tribunal Delhi  by  which  the  dearness  allowance  of  the workmen employed  in  the  Delhi  unit  was  linked  to  the consumer price  index for  Delhi prepared  by Labour Bureau, Simla, which  substantially increased the dearness allowance of workmen  posted at  Delhi. The  Company in its attempt to thwart the  demand being  pursued by  the Karamchari  Union, entered into  a settlement with the Shramik Sangh in respect of  dearness   allowance  and  then  approached  the  Labour Commissioner  for  registering  the  settlement  Failing  to obtain the  registration, the  Company utilaterally enforced the new  scheme of  dearness allowance  linked to  all-India average consumer  price index  prepared  by  Labour  Bureau, Simla. The  Karamchari Union  did  not  accept  the  revised formula and pressed its demand. The dispute was referred for adjudication.

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    Before the Tribunal the Company contended: (1) that the settlement would be binding on the members of the Karamchari Union and  the dispute  does  not  require  adjudication  on merits, and  (2) that  the Company  is desirous  of  linking dearness allowance to all-India average consumer price index for 112 working class  with base  1960-100 and  the Tribunal  should avoid accepting the demand of a few workmen.      The tribunal  directed that  the workmen  of the Kanpur unit of the Company should be paid dearness allowance linked to the  all-India consumer price index (1960-100) for Kanpur Centre compiled by the Labour Bureau, Simla. On the question of neutralisation, no change was allowed.      Partly allowing the appeal of the workmen, ^      HELD: 1.  The workmen of the Kanpur unit of the Company should be paid the dearness allowance according to all-India consumer price  index number  for Kanpur (1960-100) compiled by Labour Bureau Simla after applying conversion factor also called the  linking factor of 4.83. Their dearness allowance cannot be  linked to all-India average consumer price index. [125 B-C]      2. The  Tribunal Committed  a grave  error in accepting collusive settlement  as the starting point of the revision. [122 H]      3, Uniformity,  to an  uninformed mind,  appears to  be attractive. But,  sometimes  uniformity  amongst  dissimilar persons becomes  counter-productive. Uniformity and equality have to  be amongst equals measured by a common denominator. The  implementation  of  the  Constitutional  aspiration  of ‘equal pay for equal work’ can be appreciated. In the matter of basic  wages it is a consummation devotedly to be wished. But when  it comes  to dearness  allowance  any  attempt  at uniformity between  workmen in  metropolitan  areas  and  in smaller centres  would be  destructive  of  the  concept  of dearness allowance. [116 G-H]      Dearness allowance  is directly  related to the erosion of real  wages by constant upward spiraling of the prices of basic necessities and as a sequal to the inflationary input, the fall  in the  purchasing power  of the  rupee. It  is  a notorious phenomenon  hitherto unquestioned  that price rise variee from centre to centre, [117 A]      Dearness allowance  is  inextricably  intertwined  with price rise,  it being  an attempt to compensate loss in real wages on  account of  price rise  considered  as  a  passing phenomenon  by  compensation.  That  is  why  it  is  called variable dearness allowance. Any uniformity in the matter of dearness allowance  may confer a boon on persons employed in smaller centres and those in bigger metropolitan areas would be hard  hit. Dearness  allowance by  its very form and name has an  intimate relation  to the prevailing price structure of basic  necessities at  the centre in which the workman is employed. [117 B-C]      Dearness allowance  to workmen  at a  particular  place should therefore  depend upon the place where the workman is working  irrespective   of  the  fact  that  the  industrial undertaking in which the workman is employed is a unit of an industrial enterprises  having an  all-India or  inter-State operations. [117 E] 113      4. In the matter of dearness allowance the Court should lean in  favour of  adjudication of dispute on the principle of industry-cum-region  because dearness allowance is linked to cost  of living  index of a particular centre which has a

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local flavour.  A workman  is exposed to the vagaries of the market where  he resides and works, even though he may be an employee of  a  national,  multi-national  or  transnational industrial  empire.   Therefore.   the   region-cum-industry principle must  inform industrial adjudication in the matter of dearness  allowance. In the instant case the Tribunal has overlooked   this    important   principle   of   industrial adjudication. [117 G; 120 H; 121 A; 121 C]      Dunlop Rubber  Co. (India)  Ltd.  v.  Workmen  &  Ors., [1960] 2 S.C.R. 51, referred to.      Remington Rand  of India  Ltd. v.  The Workmen [1968] 1 S.C.R. 164, woolcombers of India Ltd. v. Woolcombers Workers Union &  Anr. [1974] S C.R. 504 and Greaves Cotton & Co. and Ors. 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, followed.      5. Any  attempt of  a company introducing uniformity in the matter  of dearness  allowance linked  to the  all-India average consumer  price index  prepared  by  Labour  Bureau, Simla would  be  destructive  of  the  concept  of  dearness allowance. Not  only unequals  will be treated as equals but the former  would suffer  irreparable harm. Such an approach would deal  a fatal blow to the well-recognised principle of industrial adjudication based on region-cum-industry because there cannot  be any uniformity in the dearness allowance of the workmen  working in  metropolitan areas  and the workmen working in smaller areas. [118 A-C]      6. Where  for a  certain industrial  centre a  dearness allowance formula  is in  vogue and  it is  linked  to  some consumer price  index number,  whenever the  base  year  for consumer price  index number  is changed,  a  fresh  linkage requires a  conversion ratio. In the absence of a conversion ratio, the  whole scheme  falls  out  of  gear  and  becomes unworkable, ineffective  and in  fact unjust. In the instant case the  conversion ratio  of 4.83 in valid and correct and the Tribunal ought to have accepted the same. [123 D; 124 F]      Ahmedabad Mill  Owners’ Association etc. v. The Textile Labour Association, [1966) 1 S.C.R. 382, followed.      7. In  the matter  of dearness  allowance  usually  the paying capacity  of the employer is examined. In the instant case, it  has not  at all been contended that the respondent company cannot bear the additional burden. [124 G]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 806 of 1982.      From the  Judgment and  order dated  27-7-1981  of  the Industrial Tribunal  (III) U.P.  in Adjudication Case No. 15 of 1977. 114      M. K.  Ramamurthy, Jitendra  Sharma and P. Gaur for the Appellants-      G.B.  Pai,   H.  K.  Puri  and  J.  K.  Mehra  for  the Respondent.      The Judgment of the Court was delivered by      DESAI, J.  In exercise of the power conferred by Sec. 4 (K) of  the U.P  Industrial Disputes  Act, 1947  (‘Act’  for short) the  Government of  Uttar Pradesh  by its order dated May  23,   1975  referred   the  following  dispute  to  the Industrial Tribunal  for adjudication.  The reference  is in Hindi. Agreed translation of the industrial dispute referred for adjudication reads as under:           "Whether the  variable dearness  allowance payable

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    by the employers to their workmen should be revised and      it should  be linked  with the consumer price index for      industrial workers  at Kanpur computed by Labour Bureau      Simla ? If yes, then from what rate (sic) and with what      other details."      There are  two rival  unions of the workmen employed by the  Indian   Oxygen  Ltd.  (‘Company’  for  short)  in  its Industrial under  taking at  Kanpur.  They  are  the  Indian Oxygen Karamchari  Union (Karamchari  Union’ for  short) and the Indian  Oxygen  Sharamik  Sangh  (‘Sharamik  Sangh’  for short). There  is a  federation of  trade-unions  formed  at various  centres   where  the  Company  has  its  industrial undertaking. Sharamik Sangh is affiliated to the federation. Karamachari Union  claims to  represent the workmen employed by the  Company at  Kanpur. The  demand and  the  consequent industrial dispute  which led  to the reference was espoused by Karamchari Union.      The Karamchari  Union in  its statement of claim stated that the  Company is  a unit  of the  multi-national British Oxygen  Company.  The  Indian  Unit  of  the  multi-national corporation operates  under the name and style of M/s Indian Oxygen  Ltd.   The  industrial  activities  of  the  Company comprises manufacture  and sale  of industrial  and  medical gases etc.  It was  stated that  while the wage structure is uniform in  respect of  workmen employed  by the Company all over the  country the dearness allowance formula varies from centre to  centre. Briefly it was stated that the workmen of the Company employed at Bombay, Madras, Hyderabad, Bangalore and 115 Delhi are  in receipt  of higher dearness allowance compared to the  workmen  employed  in  Kanpur  Unit.  The  immediate provocation for  raising the  demand was  an  award  by  the Industrial Tribunal Delhi by which the dearness allowance of the workmen  employed in  Delhi unit  was linked to consumer price index  for Delhi  prepared by  the Labour Bureau Simla which resulted  in a  substantial increase  in the  dearness allowance available  to the  workmen posted  at Delhi.  Soon after  the   award  was  published,  the  Karamahcari  Union submitted a  demand on January 7, 1975 for revising the rate of dearness  allowance for  workmen employed  in Kanpur unit and as there was no adequate response from the employer, the matter was  taken into  conciliation.  The  Company  in  its attempt to  thwart the  demand being  pursued entered into a settlement  with  the  Sharamik  Sangh  in  respect  of  the dearness  allowance   and   then   approached   the   Labour Commissioner Kanpur  for registering the settlement. Failing to  obtain   the  registration,   the  Company  unilaterally enforced the  new scheme of dearness allowance linked to the all-India average  consumer price  index prepared  by Labour Bureau Simla.  The  Karamchari  Union  did  not  accept  the revised formula,  and pressed  its demand  that the dearness allowance should be linked to all-India consumer price index number prepared  by Labour  Bureau, Simla for Kanpur centre, after adopting  the linking  factor as  has been done in the award by  the Industrial  Tribunal at  Delhi. The conversion ratio was  suggested at  4.83 linked  to January  1970 index number.      The Company  consistent with  the employer  culture put forth number  of preliminary  objections so  as to delay the adjudication of  the demand.  All the preliminary objections failed as  per the  decision of  this Court in Indian Oxygen Ltd.  v.   The  Workmen  as  represented  by  Indian  Oxygen Karamachari  Union.(1)   After  the  matter  went  back  for adjudication on  merits it  was contended  on behalf  of the

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Company that  the settlement arrived at between the Sharamik Sangh and the Company would be binding on the members of the Karamachari Union and the Tribunal should not adjudicate the dispute on  merits. This  settlement has been stigmatized by this Court  to be  a collusive  one. (See  page 920). It was further contended  that the  Company is  desirous of linking dearness allowance to all-India average consumer price index for working  class with  base 1960=100 and that the Tribunal should avoid  accepting a  demand of  a few  workmen where a majority of the workmen have accepted and are satisfied with the revised formula introduced by the Company. 116      The  Company   employs  5,400   workmen  in   all   its establishments all  over the  country. Out of total strength of 5,400  workmen, 3030  are employed  in gas  manufacturing unit. The  employment strength  in Kanpur  unit  is  roughly about 200.  It is not in dispute that the basic wages of all workmen employed  all over  the country  by this Company are occupation wise  uniform but  the dearness allowance paid to workmen differs or varies from place to place. This ought to be so as will be presently pointed out.      Prior  to   1975  dearness  allowance  to  the  workmen employed in  the units  of the Company in North-Eastern Zone i.e. in  the States  of West  Bengal, Bihar,  Orissa,  U.P., Delhi and  Punjab was  linked to  the consumer  price  index number (middle-class)  prepared by  the  Bengal  Chamber  of Commerce for  Calcutta. It  may be mentioned that the Bengal index has  been discontinued  since 1975. It is important to note that  by the two awards of the Industrial Tribunal, the office staff  and the  workmen employed the Company at Delhi are being  paid dearness  allowance linked to consumer price index  compiled   by  Labour   Bureau   Simla   for   Delhi. Subsequently by a decision of this Court in Govardhan Prasad and others v. The Management of M/s Indian Oxygen Ltd.(1) 10 workmen employed  by the Company stationed at Ghaziabad were required to  be paid  dearness allowance  to the same extent and in the same manner as was being paid under the awards of the Industrial  Tribunal to  the workmen  of the  Company at Delhi.      Before we  delve into  the narrow contentions raised in this behalf  we would  remove the  gloss over the submission that the attempt of the company, having all-India operation, is  to  introduce  uniformity  in  the  matter  of  dearness allowance payable  to its  workmen  all  over  the  country. Uniformity, to  an  uninformed  mind,  appears  to  be  very attractive. But  let it not be forgotten that sometimes this uniformity  amongst   dissimilar  persons  becomes  counter- productive. Uniformity  and  equality  have  to  be  amongst equals measured  by a common denominator. One can appreciate the  implementation  of  the  constitutional  aspiration  of ‘equal pay  for equal work.’ In the matter of basic wages it is a  consummation devotedly to be wished. But when it comes to dearness  allowance any  attempt  at  uniformity  between workmen in  such  metropolitan  areas  like  Delhi,  Bombay, Madras, Calcutta and in smaller centres 117 would be  destructive of  the concept of dearness allowance. Dearness allowance  is directly  related to  the erosion  of real wages  by constant  upward spiraling  of the  prices of basic necessities and as a sequel to the inflationary input, the fall in purchasing power of the rupee. It is a notorious phenomenon hitherto unquestioned that price rise varies from centre  to   centre.  Dearness   allowance  is  inextricably intertwined  with   price  rise,  it  being  an  attempt  to compensate loss  in real  wages on  account  of  price  rise

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considered as  a passing phenomenon by compensation. That is why it is called variable dearness allowance. Any uniformity in the  matter of  dearness allowance  may confer  a boon on persons  employed  in  smaller  centres  and  those  in  big metropolitan areas  would be hard hit. Dearness allowance by its very  form and  name has  an intimate  relation  to  the prevailing price  structure  of  basic  necessities  at  the centre in  which the  workman is  employed.  Therefore,  the claim in the written statement on behalf of the company that imbued  with   the  equitable   principle   of   introducing uniformity in  the matter of dearness allowance, the Company with the  easy availability  of consent of its protege union Sharamik Sangh introduced a new scheme of dearness allowance linked  to   the  all-India  average  consumer  price  index prepared by Labour Bureau, Simla is misleading. The Tribunal rightly  observed  that  it  is  by  now  well-settled  that dearness allowance  to workmen  at a particular place should depend  upon   the  place   where  the  workman  is  working irrespective of  the fact that the industrial undertaking in which the  workman is  employed is  a unit  of an industrial enterprise having an all-India or inter-State operations. In Dunlop Rubber  Co. (India)  Ltd  v.  Workmen  &  Ors.,(1)  a contention on  behalf of the employer that in the case of an all-India concern,  it would  be advisable  to have  uniform conditions  of   service  throughout   India  was   repelled observing that  ‘however desirable  uniformity may be in the case of all-India concerns, the tribunal cannot abstain from seeing that  fair  conditions  of  service  prevail  in  the industry with  which it  is concerned.’  This view  to  some extent was  affirmed in  the Remington  Rand of India Ltd v. The Workmen(2).  Leaving aside  basic wages in the matter of dearness allowance specially the Court should lean in favour of adjudication of dispute on the principle of industry cum- region because  dearness allowance  is  linked  to  cost  of living index  of a  particular  centre  which  has  a  local flavour. If  the concept of uniformity on an all-India basis is introduced  in the matter of dearness allowance, it would work havoc, because the price structure 118 in a market economy at places like Bombay, Madras, Calcutta, Delhi, Ahmedabad  has  little  or  no  relation  to  smaller centres like  Kanpur, Varanasi  etc. If  workmen working  in such disparate  centres are  put on  par in  the  matter  of dearness allowance  in  the  name  of  proclaimed  all-India uniformity, not  only unequals will be treated as equals but the former  would suffer  irreparable harm. Such an approach would deal  a fatal blow to the well-recognised principle of industrial   adjudication   based   on   region-cum-industry developed by courts by a catena of decisions. Realising this situation courts  have learned in favour of determination of dearness allowance  linked  to  cost  of  living  index,  if available for  the centre  where the workman employed and in the matter  of  neutralisation  on  the  industry-cum-region principle.  The   Tribunal  having  rejected  this  approach committed an error apparent on the record.      At this  stage, it  is necessary  to have  some idea of what is  consumer  price  index  number,  how  it  is  being complied and what is its relevance in the matter of dearness allowance ?  Pursuant to the recommendations of the Planning Commission for  the Second Five Year Plan the Labour Bureau, Simla and  the Industrial  Statistical Organisation  of  the Government of  India took  steps  to  conduct  fresh  family living  surveys   among  working   class  and  middle  class population respectively  with a view to constructing the new series of  consumer price  index numbers.  The working class

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surveys were conducted at 50 selected centres and the middle class surveys  at 45  centres, 18  centres being  common  to both. The  work of  this survey  was commenced in the second half of  1958 and  was concluded  by September, 1959. One of the centres  selected for  survey was  Kanpur (See Ahmedabad Mill  Owners’   Association  etc.   v.  The  Textile  Labour Association(1)      What materials  and statistical  information enter into the compilation  of  consumer  price  index  number  may  be briefly noticed.      The consumer  price index number for industrial workers (base 1960=100)  are being  compiled and  published  by  the Labour Bureau, Simla every month in respect of 50 industrial centres scattered  all over  the country.  Amongst  them  is Kanpur. The material collected is through the family surveys of working  class families.  There are  six main  groups for which indices for each centre are being compiled besides the general index. They are: 119       (i) Food      (ii) Pan, Supari, Tobacco and intoxicants     (iii) Fuel and light      (iv) Housing       (v) Clothing, bedding and footwear, and      (vi) Miscellaneous Consumer  price   index  numbers  are  intended  to  measure relative temporal (overtime) changes in the price of a fixed basket  of   goods  and   services  consumed  by  the  index population in  a current  period in  relation  to  the  base period. The  index numbers  are compiled by using Laspeyers’ Formula. The  Broadly stated this formula takes note of base and current  prices for a particular item, quantity consumed of that  item during  the base  period. It would appear that for the  compilation of  an index, there are three essential requirements namely:  (1) weighting  diagram  which  is  the relative  percentage   share  of   the   total   consumption expenditure as  revealed by  the basic family budget enquiry in respect  of different  items,  (2)  Base  prices  of  the different items  which go  into the  index  basket  and  (3) current prices in respect of each one of the items featuring in the  index basket.  The weighting diagram for a centre is derived on  the basis  of the  data collected through family budget enquiries which were conducted in the 1958-59 at each one of  the 50  centres. The  survey was conducted by taking all samples  of working  class families  in each  of the  50 centres and  the data  was collected  by interviewing  these families.  Based   on  the  results  of  the  family  budget enquiries, the  average expenditure of a family per month on different items  of consumption  was arrived  at.  All-India average consumer price index number is a weighted average of the 50  centres’ indices.  This is  compiled  and  published alongwith the index number for each centre (Source: Consumer Price Index: An anatomy published by Labour Bureau, Simla).      It would  appear at  a glance  that there  would  be  a noticeable  difference  between  the  consumer  price  index number for  a centre and its weighted average for 50 centres which would  be the  all-India average  consumer price index number, the  latter would generally be lower than the former in some cases. 120      Reverting to  the demand  in this  case, the Karamchari Union raised  a demand  that the variable dearness allowance payable to  the workmen  should not  only be  revised but it should  be   linked  with   the  consumer  price  index  for industrial workers  at Kanpur.  The Tribunal  by  its  award

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directed the  employer to  pay dearness  allowance linked to the all-India  consumer price  index  (1960=  100)  for  the Kanpur Centre  compiled by  Labour  Bureau,  Simla.  On  the question of  neuturalisation, the Tribunal directed that the calculation in  the rate  of dearness  allowance will remain the same  as presently  operative and  no change is required therein. In reaching this conclusion, the Tribunal committed two manifest errors apparent on the record.      The  company   introduced  as  stated  in  its  written statement, a  new scheme of dearness allowance linked to the all-India consumer  price index  prepared by  Labour Bureau, Simla. That  was a  very recent innovation introduced by way of a  counter blast  to the  demand raised by the Karamchari Union. Prior  thereto, it  is an  admitted position that the workmen at  Kanpur were being paid dearness allowance linked to  Bengal  Chamber  of  Commerce  Index  Number.  That  was unilaterally given  up by  the Company. There appeared to be at least two valid reasons for scrapping that scheme: one is that since  1975 Bengal  Chamber of Commerce Index which was compiled  for   middle  class   families   and   was   being artificially  applied   to  industrial   workers  has   been scrapped. In  other  words,  the  index  is  no  more  being compiled. Secondly,  the constituent  members of  the Bengal Chamber of Commerce had started their business in India long before  the   present  century   and  most   of  them   were incorporated in England or other Western countries while the Company in  the present  case has been started a few decades back and therefore, re-induction of the Bengal Chamber Index Number would not be relevant.      On behalf  of the  Karamchari 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  trans-national industrial  empire.   The  workman  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 121 cum-industry principle  must inform  industrial adjudication in the matter of dearness allowance. In Woolcombers of India Ltd. v.  Woolcombers Workers  Union &  Anr. (1)  this  Court following its  earlier decision  in Greaves Cotton & Co. and Ors v.  Their Workmen  (2) held that in devising basic wages and dearness  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 industrial adjudication cannot be given a go-by 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.      Before we  examine the  second manifest error committed by  the   Tribunal  in  narrowly  construing  the  terms  of reference, it  would be advantageous to briefly recapitulate what relevant  considerations have  to be  kept in  view  in devising dearness  allowance formula. This aspect is no more res integra.  In Bengal  Chemical and  Pharmaceutical  Works Ltd. v.  Its workmen  (3), after  reviewing all  the earlier decisions, the court restated the principles on which a fair and just  dearness allowance  formula must  be devised. They are:

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         "1. Full  neutralisation is  not  normally  given,      except to the very lowest class of employees.      2.  The   purpose  of   dearness  allowance   being  to      neutralise a  portion of  the increase  in the  cost of      living, it  should ordinarily be on a sliding scale and      provide for  an increase  on the  rise in  the cost  of      living and a decrease on a fall in the cost of living.      3.  The   basis  of  fixation  of  wages  and  dearness      allowance is industry-cum-region.      4. Employees getting the same wages should get the same      dearness allowance,  irrespective of  whether they  are      working as  clerks or  members of  subordinate staff or      factory workmen. 122      5. The  additional financial burden which a revision of      the wage  structure or  dearness allowance would impose      upon an  employer, and his ability to bear such burden,      are very material and relevant factors to be taken into      account."      We need  not examine  whether  the  dearness  allowance formula as  at present  existing is  valid according  to the principles herein  extracted because  we are  not devising a dearness formula  for the  workmen working in the industrial undertaking of the company at Kanpur for the first time. The demand is  for upward  revision of  the  dearness  allowance formula and its linkage.      The   terms   of   reference   extracted   hereinbefore unmistakable show that the workmen sought upward revision of the  variable  dearness  allowance  by  linking  it  to  the consumer price index number for industrial workers at Kanpur computed by  Labour Bureau,  Simla. If  the demand  is to be granted, the  Tribunal was requested to specify the rate and other details.  Interpreting  this  reference  the  Tribunal observed that  the new  dearness allowance formula which was in vogue  at the  time of  the reference as being related to all-India average consumer price index number for industrial workers in  accordance with  the settlement with the Shramik Sangh which  settlement was  found to  be collusive  by this Court yet  the Tribunal  must  proceed  on  the  basis  that dearness allowance  was being  paid to the workmen at Kanpur as per  the settlement  and that cannot be wished away. This approach overlooks a vital fact that the introduction of the new formula  under a  collusive settlement led to the demand for revision.  The Tribunal  rejected the submission that it must examine  and devise  a new  formula in  relation to the Bengal Chamber  of Commerce  Index Scheme which was in vogue before the  formula as  per  the  collusive  settlement  was introduced. If  the settlement  between the company which is found to  be collusive  by this  Court is to be the starting point of  revision of  the dearness allowance formula as has been done  by the  Tribunal, the  conclusion is  inescapable that the  Tribunal started  from a  wrong premise and landed itself into an utterly unsustainable conclusion. This is the second apparent  error in the face of the record which would impoll us  to interfere.  Mere so because the genesis of the demand for  a revision  of the  dearness allowance  was  the collusive settlement.  The Tribunal  committed a grave error in accepting  the settlement  as the  starting point  of the revision. 123      The  demand  of  the  Karamchari  Union  was  that  the Tribunal should  first take  into  account,  relevant  to  a certain date,  the all-India consumer price index number for Kanpur centre (1960=100) and then the index figure should be multiplied  by  the  conversion  factor  of  4.83  and  then

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dearness allowance  should be linked to the figure so worked out. The Tribunal rejected this demand on the ground that in the statement  of claim,  the  Karamchari    Union  demanded payment of  dearness  allowance  according  to  Simla  Index Number for Kanpur. The Tribunal took note of the fact of the linking factor  but observed  that  as  the  same  has  been discontinued by  the Labour  Commissioner, U.P.,  the demand has been essentially for dearness allowance according to the Simla Index for Kanpur. This reasoning manifests an error in approaching, appreciating  and  evaluating  the  demand  for revision of dearness allowance.      Before we  examine the error, let it be made clear that where for  a certain industrial centre, a dearness allowance formula is  in vogue and it is linked to some consumer price index number,  whenever the  base year  for  consumer  price index  number   is  changed,  a  fresh  linkage  requires  a conversion ratio.  In the absence of a conversion ratio, the whole scheme  falls out  of gear  and becomes unworkable. To illustrate, in  the textile  industry,  the  consumer  price index  number  was  compiled  on  the  basis  of  base  year 1939=100. The  year 1939 was chosen as the year in which the second  world   was  engulfed  the  world  which  completely overhauled the  consumer pattern and the prices of essential articles. Over  years the  price spiral  relentlessly  moved upward  and  that  too  so  rapidly  that  in  most  of  the industries where  even though  100% neutralisation  was  not given by  devising a  dearness allowance  yet  the  dearness allowance for  a given  month  was  occasionally  double  or triable of  the basis wage. This was unjust, unfair and from an economist’s  point  of  view,  imprudent.  Therefore,  as pointed out  earlier, a  fresh survey was undertaken in 1958 with the  base year 1960=100. A fresh index was compiled and continues to be compiled with 1960=100 as base year. In fact the 1960=100  base year  is being replaced. We will however, confine ourselves  in  this  appeal  to  the  base  year  of 1960=100. Now  if those  industrial  undertakings  in  which dearness allowance  formula was  linked  to  the  base  year 1939=100 are to be delinked and relinked to the index number compiled on  the base year 1960=100, before the fresh number is adopted, a linking or a conversion ratio between 1939-100 and 1960=100  will have  to be  computed. Only  then a fresh linkage 124 can be  devised. This  very obvious  fact  has  been  wholly overlooked by  the Tribunal  when it merely awarded that the workmen of  the company  at Kanpur  should be  paid dearness allowance linked  to  the  all-India  consumer  price  index number (1960=100)  for  Kanpur  Centre  compiled  by  Labour Bureau, Simla.  This approach  overlooks the linking factor. The rejection  of the linking or conversion factor makes the scheme devised  by the  award unworkable, ineffective and in fact unjust.  In  this  connection,  we  may  refer  to  the Ahmedabad Mill  Owner’s Association case in which this Court after noting  the fact  that the  base year  having changed, pointed out that the question of linking factor loomed large and assumed importance. The court had before it the admitted position that there was only one index existing in Ahmedabad which was  based on  the new  series (1960=100)  and the old series (1939=100) has rightly gone out of existence since it had become  antiquated. Two  alternatives were  submitted to the court  for its  consideration. It  was submitted that an entirely new  scheme of basic wages based not on the pre-war level of  1939, but  based on  the cost of living of 1960 as the base  year be  devised and then award dearness allowance in relation  thereto. In  the alternative,  it was submitted

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that an  arithmetical method  of linking the old and the new series be  devised. The Tribunal had accepted the conversion ratio at  3.17. This  was attacked on diverse grounds. After examining the whole gamut of arguments, this Court held that the linking factor of 3.17 was valid and correct      Approaching  the   matter  from  the  same  angle,  and avoiding the  arguments which  have been  rejected  by  this Court in  the aforementioned judgment, we are of the opinion that the  conversion ratio  of 4.83 is valid and correct and the Tribunal ought to have accepted the same.      It is  usual in  the matter  of dearness  allowance  to examine the paying capacity of the employer. Rightly Mr. Pai did not  at all  contend that this employer can not bear the additional burden.  We therefore,  need not  stray into this aspect at all.      On behalf  of the  Karamchari Union,  it was  seriously contended that the award of the Industrial Tribunal at Delhi between this  very Company  and  its  Workmen  at  Delhi  be accepted. We  need not  examine the  same as  the comparison between Delhi  and Kanpur  is ill-conceived  and  untenable. Delhi is  the capital  of the  sub-continent and  it is fast growing. Kanpur is at best a district town though 125 undoubtedly an  important industrial  centre in U.P. But the comparison would be invidious.      Accordingly,  this   appeal  partly   succeeds  and  is allowed. The  award of  the  Industrial  Tribunal  that  the workmen of  the Kanpur unit of the Indian Oxygen Ltd. should be paid  dearness allowance  linked  to  all-India  consumer price index  (1960=100) for  Kanpur centre  compiled by  the Labour Bureau,  Simla is modified to read that ’the dearness allowance should  be paid  according to  all-India  consumer price index  number for Kanpur (1960=100) compiled by Labour Bureau, Simla  after applying  conversion factor also called linking factor of 4.83.’ In all other respects i.e. the date of enforceability  etc. the  award remains  unaltered except for the  modification herein  granted. The appeal is allowed to this extent with costs quantified at Rs. 3,000. A.P.J.    Appeal partly allowed. 126