Per Sinha - (1.) JUDGMENT
(2.) THIS appeal by special leave is directed against the decision of the Labour Appellate tribunal, dated 13/09/1955, modifying the award dated 29/06/1954, of the Third Industrial tribunal of Calcutta, in respect of an industrial dispute 1 between the appellant-company and its workers. The facts and circumstances leading up to this appeal are as follows: The appellant is an engineering company incorporated in India with its head office in Calcutta. It is 534 under the managing: agency of Balmer Lawrie & Co., Ltd., which .manages a number of other concerns also. Prior to 19/03/1947, the appellant used to pay dearness allowance to its workmen at a flat rate of Rs. 20.00 per month plus food concession, cost-of-living bonuses, etc. The practice of the appellant-company has been to regulate the wages including basic pay plus dearness allowance, by issuing circulars from time to time. One such circular is dated 18/02/1947, issued by the managing agents aforesaid, replacing the system of dearness allowance then prevailing with a consolidated monthly cash allowance based on Bengal Chamber of Commerce middle class cost of living figures as published from time to time. The new system was to come into force from 1/03/1947. Indus- trial disputes were apprehended in a large number of engineering concerns. The Government of West Bengal referred those disputes, between 119 engineering firms specified in the order of reference and their workmen to an industrial tribunal. In that reference, the appellant and its workmen were also parties. The award given by this tribunal, which will hereinafter be referred to as the first award, was published in the Calcutta Gazette Extra- ordinary, bearing the date 3/07/1948. The award was to be effective from 1/04/1948 for one year. The award fixed the dearness allowance payable to workmen of those engineering concerns at the following rates: JUDGEMENT_533_LLJ1_1958Html1.htm It will, thus, be seen that the tribunal did not accede to the claim made on behalf of the workmen, of a minimum dearness allowance of Rs. 45.00 per month. The minimum they fixed at Rs. 25.00 per month, and then prescribed a graduated scale of dearness allowance subject to a maximum of Rs. 50.00 per month The tribunal also took notice of the fact that so me of the engineering firms which were members of the Bengal Chamber of Commerce were paying dearness allowance at higher rates than those prescribed by the award. The tribunal fixed the minimum scale but did not in any way affect the higher rate of dearness allowance actually paid by some of the firms aforesaid. In order to safeguard the interests of the workmen of such firms which were more generous to their workmen, the award contained the following reservations :- " Where the existing minimum basic pay plus dearness allowance in a particular firm is higher than the minimum basic pay plus dearness allowance fixed by this award, the total remuneration for the present employees will not be adversely affected by this award. Where the existing total remuneration is more but the minimum basic pay is less than that fixed by this award, the basic pay should be increased to the minimum fixed, and the dearness allowance reduced by the same amount, keeping the total remuneration unaltered. This is necessary for the purpose of calculating the contribution to the provident fund and calculating gratuity. We desire that the rules for holidays and leave should be standardized by all the firms as soon as possible, in order, to eliminate one of the important causes of labour trouble. If, however, any firm has already announced leave and holidays for the current year at a scale more liberal than what the award provides, the right to such leave and holidays should not be affected by this award. Further, leave at credit of any person under the existing leave rules of a firm will not lapse in spite of any provision as to leave contained in this award. This award will not affect adversely any other kind of existing advantage which the employees of a firm may be enjoying in excess of the benefits given by this award, unless an express provision has been made in this award concerning such advantage." As a matter of fact, at the time of the publication of the award, the appellant was paying dearness allowance to its general and clerical staff at the factory at the following rates based on the then current Bengal Chamber of Commerce middle class cost of living index of 311-32: 70 per cent on the first 100 rupees. 35 per cent on the second 100 rupees, and 171 per cent on the remainder of salary. 535 The appellant was also paying dearness allowance at the flat rate of Rs. 43.00 per month to its subordinate staff at the factory. It is, thus clear that the appellant used to pay to its workers at rates much higher than those fixed by the award. Soon after the publication of the award, in July 1948, the appellant, through its managing agents, Balmer Lawrie & C., Ltd., issued a letter in these terms: " 21/08/1948 To All works managers (B.I.E. C.Co., Ltd.) [Dearness allowance-Bengal Chamber scale.] Please note that the above scale does not apply to clerical staff at works covered by the Engineering Trades tribunal award. There will, therefore, be no increase in the dearness allowance paid to clerical staff at works, all of whom are at present on a scale considerably in excess of that laid down by the tribunal." The appellant, thus, gave an unequivocal notice to all its employees concerned, through the works manager, that the current rate of dearness allowance which was considerably in excess of the dearness allowance prescribed by the award aforesaid, shall not be increased so as to be on the same level with the rate of dearness allowance prescribed by the Bengal Chamber of Commerce, which will hereinafter be referred to as the "chamber scale," for the sake of brevity. The result of the letter aforesaid, quoted above, dated 21/08/1948, was that the rate of dearness allowance was freezed at the scale at which it stood at the date. Even after 1/04/1949, on which date the award had ceased to be operative, the appellant continued to pay its employees at the same enhanced rate of dearness allowance though it was not legally bound to do so. At the same time, the appellant did not increase the rate of dearness allowance after that date even though the cost of living index rose higher and the " chamber scale " called for payment at a higher percentage as dearness allowance. On 25/02/1949, the Labour Commissioner, West Bengal, addressed a letter to the works manager of the appellant company, drawing its attention to the demands of the workers' union, for increased dearness allowance according to the " chamber scale." He also pointed out that though the award had no force after 31/03/1949 except of a recommendation on the question of dearness allowance, the appellant might reconsider its position and see if it could adjust the allowance with the rise in the cost of living. The letter was answered by the appellant's letter dated 11/03/1949, to the effect that the appellant could find no reasons for modifying its conclusions already conveyed to the government in its previous letters. The government, thereafter, made a second reference to the industrial tribunal on the question of dearness allowance between 64 engineering firms including the appellant and their workmen. The award of the second tribunal was published in the Calcutta Gazette Extraordinary in September 1950. It will be referred to hereafter as the " second award." It fixed the dearness allowance for all categories of employees on the following scale :- JUDGEMENT_533_LLJ1_1958Html2.htm As compared to the first award, the second award, in all the pay ranges, allowed a higher rate of dearness allowance.
(3.) BEFORE the industrial tribunal which gave the second award, the " chamber scale " was being insisted upon by the employees. The tribunal went carefully into the matter and made the following observations giving reasons why they did not recommend that scale for all employees :- " The Bengal Chamber of Commerce scheme is meant essentially for commercial establishments which employ middle class clerical employees and subordinate (menial) staff and have nothing to do with such manual labour as nothing to do employed in manufacturing concerns. Commercial establishments ordinarily employ a much lesser number of persons than manufacturing concerns like engineering firms. What can be done in respect of a smaller personnel doing' an entirely different type of work in commercial offices cannot necessarily be done in respect of a large number of employees-manual, clerical and otherwise working in engineering concerns. The cost of production must necessarily be a big factor for consideration in dealing with engineering firms as distinguished from pure mercantile firms. We are of opinion that the conditions of service on the basis of the Bengal Chamber of Commerce scheme cannot be reasonably applied to engineering firms which have no function in a competitive market and have to sell their products to consumers in this country and abroad. We have come to the conclusion that we should not make any distinction between the factory office and the head office attached to engineering firms. It has been pointed out to us that the Bengal Chamber of Commerce scheme of dearness allowance is actually being applied in the head offices of some engineering concerns. We have no desire to interfere with the policy of those concerns who have chosen to be generous, but we are unable to compel anyone to be equally generous and we think our task is to determine the minimum standard applicable to all concerns, leaving it open to individual concerns to pursue a more liberal policy if they so desire. Where a more liberal policy is already being pursued as regards dearness allowance, we shall direct that the existing scale of dearness allowance, whether based on the Bengal Chamber of Commerce scheme or anything else, shall not be reduced. We are unable to direct that, generally speaking, the Bengal Chamber of Commerce scheme of dearness allowance should be adopted for clerical employees in the head office, the factory office, or the factory of any engineering firm or for the manual workers, skilled or unskilled, working under it." It is noteworthy that even after the second award came into operation, the appellant- company was paying to its employees dearness allowance at a rate higher than that fixed by the second award. At pp. 19-20 of part 2 of the paper book are set out the names of the 58 employees of the company on the clerical staff, as in April 1954, showing Their basic pay, dearness allowance actually being paid to them, and the dearness allowance as it would work out at the rates prescribed by the second award. Comparing the two rates of dearness allowance, we find that in every case the dearness allowance actually paid by the appellant to its clerical staff was considerably higher than that prescribed by the second award. In aggregate, the figure monthly paid by way of dearness allowance, came to Rs. 4,063.00 omitting annas, whereas the aggregate figure at the rate given by the second award would come to Rs. 2,616.00. Thus, the company was paying by way of dearness allowance Rs. 1,447.00 more than the prescribed rate of dearness allowance. it may also be added that the workers of the appellant-company did not, in terms, raise the question during the pendency of the proceedings before the second tribunal aforesaid that the "chamber scale" was apart and parcel of their conditions of service, and, as such, they were entitled to that scale in all respects. Naturally, therefore, the second award did not deal with that aspect of the matter. It only considered, as stated above, the desirability and feasibility of making that scale applicable to all grades of employees, irrespective of other considerations. During the currency of the second award, an event of great importance occurred, as will presently appear, which created further complications and differences between the appellant and its employees. The Indian Galvanizing Company 1926), Ltd., is one of the engineering firms managed by Balmer Lawrie & Co., Ltd., with its head office at Calcutta. In 1949, the government of West Bengal had made a reference of the disputes between the company and its employees to an industrial tribunal. It gave its award which was published officially in August 1951. On the question of dearness allowance, the industrial tribunal considered the rates paid by the company as compared to the rates prescribed by the second award. It considered the rates actually paid by the company, which were the same as in the present case, to be fair, and naturally, directed the dearness allowance to be continued to be paid according to the existing scale. But the workmen preferred an appeal to the Appellate tribunal which allowed the appeal by its decision dated 16/10/1952, holding that the "chamber scale" had become one of the conditions of service as a matter of interpretation of the first award with particular reference to the reservations made therein, as set out herein above. This interpretation gives rise to the main controversies which we have to determine in the present case. It decided that the dearness allowance according to the "chamber scale" was an "existing advantage" within the meaning of the last paragraph of the reservations made in the first award. It directed the Indian Galvanizing Company aforesaid to pay to its clerks employed in the factory dearness allowance according to that scale with retrospective effect from August 1948. From this award an application for special leave to appeal to this court was dismissed in limine on 17/04/1953. ;