MITTER, J.: - (1.) THE following Judgment of the court was delivered by
(2.) THIS is an appeal by special leave from the award of the Industrial tribunal, Dhanbad dated 25/04/1964. No less than 13 issues were referred to the tribunal under s. 10(1)(d) of the Industrial Disputes Act, 1947 for adjudication. Before this court, however, the company which has come up in appeal limited its -grievance against the award on only a very few of them. These -are JUDGEMENT_1286_AIR(SC)_1967Html1.htm In order to appreciate the proper scope of the dispute between the,parties and the extent to which amelioration of the conditions of service of the workmen with regard to the matters mentioned above was justified, it is necessary to refer, in brief, to the past .history of the company and its prospects as they have come to light before us. This is all the more necessary because learned counsel for the appellant made a very strong comment on the tribunal having fixed the scales of pay, the dearness allowance etc., at considerably higher figures than those prevalent without estimating the impact thereof on the finances of the company. The tribunal, as -a matter, of fact, expressly mentioned in its award that it had before it no estimates as to the burden which the award would bring about in the finances of the company. The tribunal had before it the balance sheets and the profit and loss accounts of the company from the year 1958 to the year 1962. In order to be able to determine whether the company was in a position to bear the additional burden, we requested counsel for the parties to produce before us the balance sheets and the profit and loss accounts of the company for the subsequent years and these were made available to us. We thus had an opportunity of judging the financial condition of the company for the years 1963, 1964 and 1965 to find out for ourselves whether the burden was such that the company could bear if we were of the view that the increase n the scales of pay and the dearness allowance awarded by the tribunal were not unreasonable. Mr. Sen, learned counsel for the; appellant, stated more than once and even in the early stages of the opening of the appeal that 'his ,client did not intend to take exception to the increase in the scales of pay and the dearness allowance but the real grievance of the -company was regarding the adjustment or fitment of the workmen in the new scales of pay and dearness allowance which, according to .him, would greatly increase the burden of the company. Mr. Sen further argued that in all such awards it was usual to fit the workers in the new scales of pay and dearness allowance giving them one or two lifts in the new scales but, ;what the tribunal had done in this ,me was to fit the workmen in the new scales on the basis of the total length of their service with the company. The argument put in this form certainly suggests that the tribunal had transgressed the usual limits of such increases and we therefore have to find out whether there are any exceptional circumstances in this case which justify the tribunal in granting the increases it did and whether the finances of the company warrant such increases. There is no doubt that the appellant is one of the smallest units of the insurance companies undertaking Are, marine and miscellaneous insurance work in India. This is borne out by the Indian Insurance Books for the years 1963 and 1964 to which our attention was drawn by learned counsel. The company was founded in the year 1923 and was doing exclusively life insurance business until 1948. Thereafter it started general insurance business on a very small scale. After the passing of the Life Insurance Corporation Act of 1956 and the taking over of the life insurance business of the company by the Corporation, its activities were very much reduced. The paid-up capital of the company was only Rs. 6,54,190.00. At the end of the year 1961 it was left with loss of Rs. 1,91,472.00 as disclosed by its balance sheet as at 31/12/1961. It does not appear that the company had been able to declare any dividends to its shareholders for some years. As a result of the working in the year 1962, it was able to wipe out the. loss which was being carried forward and to propose a dividend to the shareholders at the rate of 30 paise per share totalling Rs. 19,645.00. The balance sheet as at 31/12/1962 disclosed a general reserve of Rs. 1,50,000.00 and an investment reserve of Rs. 68,000.00. For the year ending 31/12/1962 the company earned a profit of Rs. 2,33,052.33 which enabled it to wipe out the loss. The annual report and the balance sheet for the year ending 31st December, 1963 show t that the profits for the year including the balance brought forward from the previous account amounted to Rs. 1,91,025.86 making provision for taxation amounting to Rs. 98,400.00. There was thus a surplus of Rs. 92,718.00. Out of this the company transferred Rs. 15,000.00 to general reserve, Rs. 5,000.00 to dividend equalisation fund, Rs. 10,000.00 to the gratuity fund and Rs. 40,000.00 for payment to shareholders. All this loft a sum of Rs. 22,718.00 to be carried forward to the next year. The report for the year ending 31/12/1964 shows a considerable improvement in the company's working. The profits for the year including the balance brought forward amounted to Rs. 2,62,198.00. The provision for taxation amounted to Rs. 97,600.00 leaving a surplus of Rs. 1,64,598.00. This was, sought to be disposed of as follows: JUDGEMENT_1286_AIR(SC)_1967Html2.htm The report for the year ending 31/12/1965 is even better than that for the year ending 31/12/1964. The total profit of the company including the balance of Rs. 8,553.00 came to Rs. 3,23,630.00 out of which, provision for taxation was Rs. 1,03,000.00 leaving a surplus of Rs. 2,20,630.00. The companysought to disPose of this in the following manner: JUDGEMENT_1286_AIR(SC)_1967Html3.htm It will therefore be seen that during the years 1963-65 the company was in a position to increase its general reserve by Rs. 1,68,000.00. -It built up an investment reserve of Rs. 99,000.00 and was transferring Rs. 5,000.00 per year to a dividend reserve. It also made a provision of Rs. 10,000.00 each year for payment of gratuity which we shall have to consider later.
(3.) THE company had, at all material times, about 60 workmen employed at the registered office at Calcutta and its branches at Delhi, Madras, Kanpur, Meerut and Dhubri. Besides this, the -company also had 100 persons 'described as field staff. In 1957 there were in existence certain grades and scales of pay for different categories of employees at the head office and branch offices. THE employees were also getting some dearness allowance as also bonus at the rate of one month's basic wage at the time of the Durga Pooja festival. THE field staff had no pay scale. As soon as the .company engaged itself in exclusive general insurance business and its prospects seemed to brighten up, the employees presented a charter of demands. Ultimately the company and its workmen entered into an agreement on 29/04/1958 which was to be in force for five years commencing from Janu 1/01/1958. THE employees were divided into two categories, viz., (1) filing assistants and substaff and (2) assistants. THE scales of the former were to be Rs. 20-2-32-3-50 EB-5-75 while, that of the latter was Rs. 55-5-757/8-150-FB-10-200-EB-15-305. THEre was to be no adjustment in salary for fitting in the grade. THE sub-staff were to be paid dearness allowance at Rs. 38.00 p.m. at a flat rate; filing assistants were to be paid dearness allowance at Rs. 37.00 p.m. and assistants at Rs. 55.00 p.m. THE bonus was to remain as before as was the case with provident fund. THE agreement provided for gratuity as follows 'Gratuity shall be payable where (a) an employee who has been in continuous service for not less than 15 years, and (i) his services are terminated for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action; or (ii) he voluntarily resigns from the service. (b) An employee (i) dies while he is in service, or (ii) retires from service on his reaching superannuation, or (iii) his services are terminated as a measure of retrenchment or consequent on the abolition of his post; THE employee or his heirs, as the case may be, shall be paid on such termination, retrenchment, resignation or death gratuity which shall be equivalent to one month's basic pay for every completed year of service or any part thereof in excess of six months subject to a maximum of fifteen months' basic pay........ THE leave rules were to be left as before. THEre was an attempt at conciliation which however came to nothing and ultimately the matter was referred to the Industrial tribunal. THE tribunal after taking evidence, both oral and documentary, and referring to the accounts of the company from 1958 to 1962 concluded that the company was making profit at least since 1961 and was in a prosperous condition with the capacity to bear additional financial liability if the pay scales and other demands of the union were allowed to some reasonable extent. As regards the pay scales and dearness allowance, the same were increased by the award as follows: JUDGEMENT_1286_AIR(SC)_1967Html4.htm THE dearness allowance of subordinate staff was increased to Rs. 40.00 flat rate per month; that of filing assistants to Rs. 50.00 per month and that of assistants to Rs. 70.00 per month. With regard to the adjustment in the scales, the tribunal concluded that the length of service was to be the real basis on which adjustment in the new revised scales of pay would be made and the employees for whom there was an existing pay, scale which was being revised and increased will be pulled up to fit in the revised scales of pay taking into account their length of service. We were handed up certain charts 'by counsel on both sides. It is admitted that the paid-up capital of the company and its premium income are comparable only to All India General Insurance Company and operative General Insurance Company out of the companies mentioned in the Indian Insurance Year Books. The free reserves of three companies were also comparable as also the paid-up capital and reserve. The scales of salary as fixed by the tribunal in this case are also comparable to those in the All India General Insurance Company and Co-operative General Insurance Company. The position of these three companies according to the chart made over to us are as follows:- Comparative Chart to show salaries receivable at different stages in three following Companies as compiled from figures at pages 120 and 40 of the Paper Book. JUDGEMENT_1286_AIR(SC)_1967Html5.htm Mr Sen also handed up another chart which showed that the total increase in the basic salary of all the employees of the company as a result of the award would be Rs. 853.00 per month while the total increase in dearness allowance per month would be Rs. 889.00. As a result of the increase in the provident fund contribution of the company to 8 1/3 per cent the total increase of burden imposed on the company thereby would be Rs. 340.00 per month. In other words, these three increases would result in the outgoing being augmented by Rs. 2,000.00 p.m. or Rs. 24,000.00 annually. It is to be borne in mind that if the company were to pay to the staff an additional Rs. 24,000.00 per year it would save approximately income-tax of Rs. 12,000.00 per year. The total burden of the company would, therefore, be only Rs. 12,000.00 per year or Rs. 1,000.00 per month. In view of the general improvement in the working of the company for the three years after 1962, there is no reason to hold that the impact of the additional burden on the company by the award will be such that it were difficult for it to meet. Afterall if the company's position keeps on improving, there is no reason why the men who work for it should not come in for a share of the balance of the profits in common with the shareholders of the company. Of course, this does not mean that any increase in the scales of pay and dearness allowance will be upheld because the company is showing a profit. We have to take into consideration the scales of pay and dearness allowance prevalent in other companies of a comparable status as also keep in mind the present day increase in prices all round and the difficulty which men with slender means have to face in order to make both ends meet (if they can be met at all). We find that the scales prevalent in this company were unusually low compared to those of other comparable concerns before the date of the award. We cannot also ignore the fact that unless the length of service of the workman is taken into consideration great hardship will be inflicted on the existing workmen compared to the salary and dearness allowance which new workers will get. It cannot be disputed that on the old scale a member of the sub-staff who has been in the company for five years would get a basic salary of Rs. 30.00 per month if his length of service was to be ignored. This would be the same as that of a new entrant. By fitting the workers in the new scales of pay taking into account their length of service, the company would be rehabilitating them to a certain extent even though they may have suffered in the past on account of the inadequacy of the scales of pay and dearness allowance. The pay and dearness allowance of the workmen as a result of the award would be comparable to those workmen working in other comparable concerns. The financial burden can without any difficulty 1291 be met by the company in view of its improved working.;