SHELAT, J.: - (1.) THE following Judgment of the court was delivered by
(2.) THE appellant company is a private limited company of which the authorised capital is Rs. 1 lac and the subs, cribed capital Rs. 50,000.00. Its business is to manufacture milk cans. According to the Company, it has not been able to maintain, much less, increase, its production owing to the control orders restricting the import of raw materials required for its manufacturing process. THE Company was started in 1942 but except for a few years when it made some profits, it has had to suffer losses during the rest of the years, the total loss suffered up to 1964-65 being Rs. 1,66,912.00. THE Company is a small unit having on its roll 53 workmen. In 1958, a reference was made under s. 10(1)(d) of the Industrial Disputes Act, 1947 in respect of the demands made by its employees for increase in the wage scales. The reference ended in a settlement dated 27/05/1959 whereunder a slight increase in the wage scales was made. It also provided for an ad hoc increase in the wages of those getting Rs. 2.44 or more per day. The revised wages were to come into force retrospectively from 1/10/1958. In 1961, another reference was made which also resulted in a settlement dated September 11, Under that settlement, the workmen were classified into four categories and consolidated wage scales for each of the categories with a provision for increments were agreed upon. Since these were consolidated wage scales, the demand for dearness allowance was not pressed. An award was made in terms of the said settlement with retrospective effect from 1/04/1961. In 1964, the Union once again demanded revision of wage scales. The dispute was referred to the Industrial tribunal which made what has been referred to as the Bilgrami award. The tribunal retained the same categories and the only modification it made was to increase the wage scales previously fixed, taking into consideration the rise in the index of cost of living in the meantime from 450 to 538. The said award fixed the wage scales as follows JUDGEMENT_182_AIR(SC)_1969Html1.htm The award provided that the increments in the revised scales were to be annual and were to start from 1/04/1965. The award was made effective from 9/11/1964 which was the date of the reference. It however, rejected the Union's demand to up the wage scales with the index of cost of living. By 1/04/1967, therefore, the workmen had received two annual increments and consequently the wages paid to the first four categories were Rs. 4.35, 5.05, 6.00 and 7.10 per day respectively. It is thus clear that the Bilgrami award took the scales previously fixed as its basis when the cost of living index stood at 450 and increased them taking into consideration the fact that the said figure had gone up by about 94, that is, by raising it by 1 n.p. for every point. On 17/06/1967, the Union served a notice of demand which called for (a) revised scale of wages with effect from 1/07/1966; (b) for certain adjustments; (c) for linking up the scales with the cost of living index; (d) revision in the existing gratuity scheme; and (e) for bonus for the year 1964-65. We are not concerned in this appeal with the last demand as the impugned award does not deal with that demand. The demand for revision of wage scales was based on the fact that the Bilgrami award had fixed the wage scales on the footing of the cost of living index being then 538 while that figure had shot up since then to 675 and that if the rise were to be neutralised as it was done by the Bilgrami award, the scale of unskilled workmen would come to Rs. 5.30 per day. So far as the gratuity scheme was concerned, the demand required that the qualifying period for the retrial gratuity should be reduced from ten to eight years and the qualifying period in case of termination of service by the employer should be done away with. The Company resisted the demand and the conciliation proceeding having failed, the State government referred the dispute to the tribunal.
(3.) THE tribunal took note while considering the demand for revision of scales and their linking up with the index of cost of living of the fact (a) that the Bilgrami award itself had sought to neutralise the rise in the living cost by raising the scales in proportion to the rise in the cost of living by then; and (b) that though that award was made in 1964, the wage scales thereunder fixed had already become unreal in the sense that the index had gone up to 675 by the time the Union filed its statement of claim, that is, 25/03/1967 and had reached the figure of 710 in July 1967 when the award was made. In these circumstances, the tribunal thought that the Union had made out a case for revision, that it was necessary to make the wage scales realistic and therefore to link them up with cost of living index though the Bilgrami award had declined to do so. What the tribunal did, therefore, was to retain the scales fixed by Mr. Bilgrami and treating them on the basis of 538 index of living cost, directed that they should be linked up with the index so that the scales would automatically go up as the index rose or fell. THE award also directed that effect should be given to it as from 1/07/1966, the notice of demand having been served on 17/06/1966. THE gratuity scheme framed in 1961 provided that ten days' wages for every year of service should be paid as gratuity in case of death, retirement or resignation, provided the workmen had put in the minimum period of ten years of service. For the workmen whose services would be terminated by the employer the qualifying period was four years of service. THE tribunal revised the scheme in two particulars; (a) it reduced the period from ten to eight years in case where the workmen has' died or resigned or retired; and (b) it deleted the qualifying period of four years altogether where his service has been terminated by the employer. THE tribunal considered the financial position of the Company and came to the conclusion that though it had been making losses, it was of a fairly long standing, that the losses incurred in the past years were a temporary phase, that the Company's future was not bleak and, though not prosperous, it was in a satisfactory financial position. This appeal by special leave disputes the correctness of the award made by the tribunal. Counsel for the Company objected to the aforesaid observation regarding the Company's financial position and pointed out that its position cannot at all be said to be satisfactory in view of the fact that, barring only a few years, it had made substantial losses all throughout. Taking a cue from this fact, he contended that (1) the reason which impelled the Bilgrami tribunal to refuse to link up the wage scales with the cost of living index still held good; (2) the tribunal took a wrong view as to what would constitute a minimum wage; (3) it ignored the financial capacity of the Company; (4) it failed to take into consideration the principle of region-cum-industry; and (5) there was no justification in reducing the qualifying period for the retiral benefit of gratuity from ten to eight years and for deleting the qualifying period in the case of termination of service by the employer. We propose to deal with contentions 1 to 4 first and consider separately the changes made by the tribunal in the existing gratuity scheme.;