R. S. PATHAK, J. - (1.) THIS appeal by special leave has been preferred by Tata Consultancy Engineers against an award dated 20/12/1978 of the Industrial Tribunal, Maharashtra, Bombay revising the wage scales of certain categories of employees and granting various other benefits.
(2.) TATA Consultant Engineers, at its inception, was a partnership firm but subsequently the partnership was dissolved and in 1974 the undertaking became one of the divisions of TATA Sons Limited. It functions as a consulting organisation and a service industry, and does not manufacture any product or carry on trade. Its work force consists of engineers and supervisors and different categories of workmen. Out of 665 employees at Bombay, the draftsmen and the administrative staff number 306. These workmen are members of the TATA Consultant Employees Union. They served a Charter of Demands in July. 1974, on the appellant, and as their demands were not accepted and conciliation proceedings proved fruitless, the State Government made a reference of the dispute under Section 10 (1) (d), Industrial Tribunal, Maharashtra for adjudication. The Reference was numbered I. T. No. 292 of 1975. The Union filed a statement before the Tribunal claiming an upward revision of the wage scales and dearness allowance and an increase from fifteen years to twenty years in the span for earning annual increments. It was urged that the Efficiency Bar, as a feature of the wage scales, should be removed. The dearness allowance, it was claimed, should be granted on a slab system. The claim of Union was resisted by the appellant. who maintained that the existing wage scales were fair and reasonable on a region-cum-industry basis and that it would not be possible for the appellant to bear the additional financial burden if the demands of the Union were accepted. Reference was made to the political uncertainty in Iran which had placed an appreciable part of the appellant's business in jeopardy and to various other factors, peculiar to an engineering consultancy business, beyond the appellant's control. There was fierce competition also, it was asserted, from other similar organisations. The appellant had introduced various pay scales in 1973 and some time later they were revised. There was no separate dearness allowance until January, 1977 when it was introduced for the first time. House rent allowance was also paid. Dearness allowance became payable at 10 Per Cent of the basic wage subject to a minimum of Rs. 50.00 and house rent allowance at 30 Per Cent of the basic salary. Noting those facts, the Tribunal observed that compared with the increased paying capacity of the appellant, an inference drawn from the prosperity enjoyed by the appellant over the years, there was definite need for revising the wage scales. It was pointed out that the dearness allowance and house rent allowance granted by the appellant made little impact in neutralising the cost of living. The need for revising the wage scales was not disputed by the appellant. In proceeding to revise the wage structure the Tribunal took into account the two principles involved in the process, the financial capacity of the industry to bear the burden of an increased wage bill, and the prevailing wage structure on an industry-cum-region basis. Wage Scale statements were filed by the parties before the Tribunal pertaining to several engineering consultancy organisations but in the absence of pertinent information concerning the strength of their labour force, the extent of their business, the financial position for some years, the capital invested, the precise nature of the business the position regarding reserves, dividends declared and future prospects of the company, the Tribunal found that it was unable to rely on them as comparable concerns. Holding it impossible in the circumstances to apply the principle of industry-cum-region basis, the Tribunal turned to a consideration of the financial capacity of the company to bear an additional burden. In this connection, it proceeded on the footing that the appellant was a separate and independent division of Tata Sons Limited and had no "functional integrality" with the other divisions. Having regard to the net profits earned by the appellant from 1968 to 1977 it found that the acceptance of the demands of the Union would result in an increased burden of Rs. 7 crores, a burden which would dry up the appellant's resources and would be impossible for it to bear. The Union modified its demands but even the modified terms, according to the Tribunal, appeared to be on the high side inasmuch as the resulting total burden of Rs. 1.70 crores was much higher than the average profits could sustain. The particular character of the appellant that it was a service industry and not a manufacturing concern, was taken into account and it was observed that unlike a manufacturing business there was little scope for diversification in the case of an engineering consultancy. Nonetheless, the Tribunal observed, there was every reason to expect that the appellant would be able to earn sound profits in the future, and the instability in its business activities occasioned by the turbulent political situation in Iran, would be, it was expected, compensated by contracts secured in different developing countries. For the purpose of determining the financial capacity of the appellant, the Tribunal followed Unichem Laboratories v. Their Workmen, (1972) 1 Lab LJ 576 : (AIR 1972 SC 2332) where it was held that the gross profits should be computed without making deductions on account of taxation, development rebate and depreciation. It decided also that there was no ground for deducting the notional value of gratuity. Revising the figures on that basis, it computed the annual gross profits for the years 1968 to 1977 and determined the annual average at Rs. 26.69 lakhs.
(3.) THE Tribunal took note of the elaborate scales of wages already existing in the wage structure of the appellant and decided "to modify the existing structure of the scales with flat increases in each category." It also observed that the category of Draughtsmen needed a special increase. But it rejected the demand of the Union for dearness allowance on the basis of a slab system, because that would have imposed an unacceptable burden on the appellant's financial capacity and there was no reason why the existing scheme of dearness allowance should be disturbed when a substantial increase was being made in the level of the basic wage. Taking into account the circumstance that besides the staff of 306 workmen represented by the Union there were several other employees who would also have to be paid, the Tribunal considered it fair, in paragraph 23 of the award, to give a flat increase of Rs. 150.00 in the category of Draughtsmen and Rs. 100.00 in the case of other categories. It rejected the demand of the Union for abolishing the Efficiency Bar, but the span of 15 years for earning increment was expanded in some grades to 20 years and some adjustments were also made in specific grades. THE Tribunal also noted that after the salaries of the employees had been fixed in the respective scales, senior employees would have to be given some more increments in the new scales according to their completed years of service. Taking all these factors into consideration, it made an award dated 20/12/1978 prescribing the following revision in the existing scales of wages : JUDGEMENT_627_SUPP1_1980Html1.htm The Tribunal maintained the existing schemes of dearness allowance and house rent allowance, and observed that in view of the revised basic wages there would be a resultant increase in the dearness allowance and house rent allowance.;