AHMADI - (1.) .
(2.) SPECIAL leave granted in the aforesaid special leave petitions. . Five references bearing Nos. (i) 123 of 1977, (ii) 215 of 1979, (iii) 91 of 1984, (iv) 92 of 1984 and (v) 43 of 1985, the first three under Section 10(2 and the remaining two under Section 10(1(d) of the Industrial Disputes Act, 1947, hereinafter called 'the I.D. Act', arose out of certain demands made by the workmen-employees of Hindustan Lever Limited as well as the Management's Notice of Change for the imposition of a ceiling on dearness allowance. These disputes concerned the demands made by the monthly-rated clerical and technical staff working at the Sewree factory of the Company as well as the monthly-rated C and T categories of workmen employed at the Company's head office and branch office in Bombay, the former represented by Hindustan Lever Employees' Union, hereinafter called 'the Union' and the latter represented by Hindustan Lever Mazdoor Sabha, hereinafter called 'the Sabha'. The Company had desired placement of a 161 ceiling on dearss allowance based on the premise that in the absence of such a ceiling the neutralisation factor exceeded 100%. It may here be mentioned that both the clerical and technical staff of the Company was, at all material times classified into four categories, namely, C-1 to C-4 and T-1 to T-4 carrying different pay scales. The clerical staff worked for 36 hours a week, whereas the technical staff worked for 48 hours a week. It is not necessary for us to indicate the nature of demands made by the workmen in the aforesaid references because we are, in the present appeals, mainly concerned with the Company's demand for placing a ceiling on dearness allowance. The Industrial tribunal, Maharashtra, by its Award dated 18/12/19855 conceded the demand of the management for the placement of a ceiling on dearness allowance on basic pay exceeding Rs. 500.00 per month. The tribunal also granted certain demands of the workmen in regard to upward revision of pay scales, grant of special allowance, social security allowance, ad hoc allowance, automatic promotion scheme, etc., but since we are concerned with the limited question in regard to the placement of a ceiling on dearness allowance as demanded by the management, it is unnecessary for us to refer to the demands of the workmen which were not conceded by the tribunal and against which the workmen had approached the High court. The workmen had also challenged the tribunal's Award conceding the management's demand for placement of a ceiling on dearness allowance. The learned Single Judge who heard the writ petition upheld the order of the Industrial tribunal placing a ceiling on dearness allowance but modified the award with regard to certain other demands. Against the decision of the learned Single Judge appeals were carried to the division bench of the High court. In the said appeals the division bench was called upon to examine the correctness of the view taken by the Industrial tribunal in regard to the placement of a ceiling on dearness allowance which came to be affirmed by the learned Single Judge. In addition the division bench was also invited to deal with the demand for automatic promotion which was conceded by the tribunal but spurned by the learned Single Judge who substituted it by the grant of stagnation increment. The management also made a grievance before the division bench in regard to grant of stagnation increment and upward revision of wages. The division bench rejected the management's plea against stagnation increment but preferred to make a remand in respect of wage revision. The major issue was, however, in regard to ceiling fixed on dearness allowance where basic wage exceeded Rs. 500.00. . Under the extant scheme, the dearness allowance was linked to index 450 of the Consumer Price Index (CPI), Bombay 1934=100 at 635% of basic wage for the first Rs. 100.00, at 284.25% of basic wage for the second Rs. 100.00 and at 251% of basic wage where the salary exceeded Rs. 200.00 per month. This was the Fixed Dearness Allowance (FDA) payable to the workmen. However, on the CPI exceeding 1450, the VariableZ Dearness Allowance (VDA) was payable on every 10 points rise at 5% of basic wage for the first Rs. 100.00, 2.25% of basic wage for the second Rs. 100.00 and 2% of basic wage on salary exceeding Rs. 200.00 per month. The Company's demand 162 was that the existing scheme of dearness allowance should be applicable to workmen whose basic salary, inclusive of dearness allowance, did not exceed Rs. 1,500.00 per month. However, for those whose basic salary, inclusive of dearness allowance, exceeded the said figure of Rs. 1,500.00 per month, it was contended that the existing scheme should continue up to the CPI point of 1450 and for every 10 points rise above the same, 5% of basic wage should be allowed for first Rs. 100.00 and 1% of basic wage for the second Rs. 100.00 and to those whose basic wage exceeded Rs. 200.00 the workmen should not be paid any FDA. So far as VDA is concerned, it was contended that it should be subject to a maximum of R 1,310.00 for C-1, Rs. 1,535.00 for C-2, Rs. 1,725.00 for C-3, and Rs. 1,900.00 for C-4 categories of clerical employees and Rs. 1,385.00 for T-1, Rs. 1,600.00 for T-2, Rs. 1,775.00 for T-3 and Rs2025 for T-4 categories of technical employees. The tribunal while continuing the existing scheme directed that the maximum dearness allowance payable to the workmen shall be that which is payable to a workman drawing a basic salary of Rs. 500.00. To put it differently the tribunal directed that those workmen drawing a salary exceeding Rs. 500.00 per month will get the same dearness allowance as admissible to those drawing a basic salary of Rs. 500.00 per month without their being any variation in the dearness allowance for salary slabs exceeding Rs. 500.00 per month. This direction given by the tribunal was made retrospective from 1/10/1979. Those workmen who received dearness allowance in excess of the scheme worked by the tribunal between 1/10/1979 and 30/12/1985, the date of the award, were directed to refund the excess amount by adjusting the same against dearness allowance payable to them subsequent to 30/12/1985. Thus the dearness allowance scheme worked out by the tribunal immediately affected those workmen whose basic salary exceeded Rs. 500.00 per month and was likely to affect those who crossed the Rs. 500.00 mark at a future date. The contention of the management before the tribunal was that the slab system of dearness allowance was unrealistic as it had the effect of distorting the entire wage-structure as it exceeded the 100% neutralisation factor which has always been the justification for the introduction of the dearness allowance formula.
(3.) . Indisputably the existing dearness allowance formula was in vogue for many years before the Company gave a Notice of Change under Section 9-A of the 1.D. Act sometime in 1976. The Company had entered into settlements in 1979 and 1983 with a section of the workmen whereunder it had agreed to continue the existing dearness allowance formula at certain levels of salary. It is unnecessary to go into the details in regard to the said settlements but it would be sufficient to say that the extant scheme provided neutralisation at the lowest level varying between 95% and 100% whereas for those drawing higher pay the neutralisation was much more than ordinarily granted to that class of employees. The main justification for imposition of a ceiling on dearness allowance payable to workmen drawing a basic salary exceeding Rs. 500.00 per month was that it exceeded what other comparable companies paid by way of dearness allowance to those whose basic wage exceeded Rs. 500.00 per month. The tribunal noted that in such comparable companies, 163 having no ceiling on VDA, the percentage of dearness allowance was quite low and, therefore, it did not result in any distortion in the wage-structure. The learned Single Judge while examining the impact of the dearness allowance formula on the wage-structure pointed out that the emoluments of workmen exceed the emoluments received by the junior executive staff of the Company notwithstanding the fact that the latter are promotion posts. Due to this reason workmen are unwilling to accept promotions as that would result in a shrinkage in their total emoluments. Such a situation, points out the learned Single Judge, is not conducive to efficient working of the Company. In this view of the matter the learned Single Judge upheld the award insofar as it placed a ceiling on dearness allowance as explained earlier. It also upheld the tribunal's decision making the same retrospective w.e.f. 1/10/1979. . It may be mentioned that the tribunal while placing a ceiling on dearness allowance granted an upward revision in the wages. One of the justifications for the upward revision of basic salary was the placement of a ceiling on dearness allowance, vide paragraph 53 of the Award. The second reason was that the basic wage paid to workmen in TOMCO was higher at the maximum levels and, therefore, there was justification for increasing the maxima of the scales applicable to each category of workmen of the Company. In that view of the matter the tribunal revised the basic wage of the workmen belonging to C-1 to C-4 categories and T-1 to T-4 categories as is evident from paragraph 53 of the Award. The revised wage-structure was also brought into force from 1/10/1979. It will thus be seen that the placement of a ceiling on dearness allowance had a direct nexus to the tribunal revising the salary structure of the aforesaid categories of employees. Secondly the tribunal also opted in favour of time-bound automatic promotion. The other demands conceded by the tribunal have no direct bearing on the question of placement of a ceiling on dearness allowance and, therefore, need not be adverted to. The learned Single Judge while affirming the tribunal's decision in regard to placement of a ceiling on dearness allowance granted stagnation increment in lieu of the tribunal's formula in regard to time-bound automatic promotion. It will thus be seen that over and above the upward revision of the salaries sanctioned by the tribunal, the learned Single Judge granted stagnation increment as a substitute for the automatic promotion scheme introduced by the tribunal. The grant of stagnation increment, therefore, it is contended has a direct nexus to the ceiling on dearness allowance.;