Case Note & Summary
The judgment dealt with nine appeals by special leave arising out of awards of the Industrial Tribunal, Bombay, concerning industrial disputes between four appellant companies and their workmen. The disputes related to wages, dearness allowance, and gratuity. The four companies were Greaves Cotton and Co. (an investment company controlling the others), Greaves Cotton and Crompton Parkinson Private Limited (distribution and servicing), Konyon Greaves Private Limited (manufacturing high grade interstranded ropes), and Ruston and Hornsby (India) Private Limited (manufacturing oil engines and pumps). The wages and dearness allowance prevalent had continued since 1950 when the last award was made. The Tribunal dealt with clerical and subordinate staff separately from factory workmen. For clerical and subordinate staff, the Tribunal compared wages and dearness allowance with comparable concerns, revised them, provided for fitting into new scales with adjustments, and granted one to three extra increments depending on length of service between 1950 to 1959. The award was made effective from April 1, 1959. For factory workmen, the Tribunal prescribed certain wage rates, gave the same dearness allowance as clerical and subordinate staff, and directed adjustments on the same basis. Gratuity was provided up to a maximum of 20 months, with a provision that if an employee was dismissed or discharged for misconduct causing financial loss, gratuity to the extent of that loss would not be paid. The companies challenged the award on several grounds: the Tribunal was carried away by the recommendations of the Tripartite Conference suggesting need-based minimum wages; the industry-cum-region formula was not properly applied; comparisons were made with non-comparable concerns; wages awarded were higher than any comparable concern; the total effect of increase in basic wage and dearness allowance was not considered; the Tribunal increased minimum and maximum, increased annual rate of increment, and decreased the span; adjustments were attacked; the effective date was challenged; for factory workmen no comparison was made with comparable concerns; and a new category of higher unskilled was created which was not demanded or existing. The Supreme Court held that reference to the Tripartite Conference did not vitiate the award because the final decision was based on comparable concerns, not on the recommendations. On the industry-cum-region formula, the Court clarified that where there are many concerns of the same industry in a region, the industry part should be emphasized; where few, the region part assumes importance, particularly for clerical and subordinate staff. The Tribunal was right in leaning more on the region part. The Court held that the Tribunal was not justified in creating two classes of higher unskilled and lower unskilled among unskilled factory workmen. Employees getting same wages should get the same scales of dearness allowance irrespective of whether they are clerks, subordinate staff, or factory workmen. When fixing the same dearness allowance for factory workmen as clerical staff, the Tribunal must compare total wage packets with comparable concerns to arrive at a just basic wage for each category. Adjustments in revised wage scales can be granted sparingly, taking facts and circumstances into account. The appeals were disposed of accordingly, with the Supreme Court providing these clarifications and directions.
Headnote
A) Labour Law - Wage Fixation - Industry-cum-Region Formula - Not mentioned - The Tribunal rightly leaned more on region part of formula for clerical and subordinate staff because few industries of same kind in region; where large number of same industry, industry part more important. Held that no inconsistency between Hindusthan Motors and French Motor Car Co. cases. (Pages 4-6) B) Labour Law - Wage Fixation - Need-Based Minimum Wage - Not mentioned - Reference to Tripartite Conference recommendations did not vitiate award because final decision based on comparable concerns, not recommendations. Held that mere reference to recommendations in opening part was not irrelevant. (Pages 3-4) C) Labour Law - Dearness Allowance - Uniformity Across Categories - Not mentioned - Employees getting same wages should get same dearness allowance irrespective of whether clerical, subordinate staff, or factory workmen. Held that classification for dearness allowance based on category impermissible. (Pages 5-6) D) Labour Law - Fixation of Dearness Allowance - Total Wage Packet Comparison - Not mentioned - When fixing same dearness allowance for factory workmen as clerical staff, tribunal must compare total wage packet with comparable concerns. Held that basic wage for each category must be determined after such comparison. (Pages 7-8) E) Labour Law - Wage Scales - Adjustment in Revised Scales - Not mentioned - Industrial tribunal can grant adjustments even if previous pay-scales existed, but sparingly considering facts. Held that adjustments permissible. (Page 8) F) Labour Law - Classification of Workmen - Unskilled Factory Workmen - Not mentioned - Tribunal not justified in creating two classes of higher and lower unskilled in fixation of wage scales. Held that such artificial classification invalid. (Page 8)
Issue of Consideration
Whether Industrial Tribunal erred in wage fixation by misapplying industry-cum-region formula, relying on tripartite conference, creating two classes of unskilled factory workmen, granting uniform dearness allowance without comparing total wage packet, and ordering adjustments and effective date.
Final Decision
The Supreme Court held that reference to the Tripartite Conference did not vitiate the award since the final decision was based on comparable concerns. The Court clarified the industry-cum-region formula: where many same industry concerns exist in a region, industry part should be emphasized; where few, region part assumes importance. The Tribunal was right in leaning more on the region part for clerical and subordinate staff. The Court held that the Tribunal was not justified in creating two classes of higher and lower unskilled among unskilled factory workmen. Employees getting same wages should get same dearness allowance irrespective of category. While fixing same dearness allowance for factory workmen, total wage packet comparison was necessary. Adjustments in revised wage scales were permissible but sparingly. The appeals were disposed of accordingly with these findings.
Law Points
- Industry-cum-region formula requires greater emphasis on industry part when many same industry in region
- region part assumes importance when few same industry
- especially for clerical and subordinate staff
- tripartite conference recommendations do not bind wage fixation
- unskilled factory workmen cannot be divided into higher and lower classes
- employees getting same wages should get same dearness allowance irrespective of category
- while fixing same dearness allowance for factory workmen
- total wage packet must be compared with comparable concerns
- adjustments permissible sparingly
