Industrial courts must apply the industry-cum-region principle when considering wage structure, dearness allowance, and other conditions of service. Comparisons should be made with similar concerns in the region, taking into account relevant factors such as size, business nature, and financial standing.

Headnote:
INDUSTRIAL DISPUTE - WAGE STRUCTURE - INDUSTRY-CUM-REGION PRINCIPLE - COMPARISON OF WAGES - ADJUSTMENT - CLASSIFICATION - PROVIDENT FUND CONTRIBUTION - DEARNESS ALLOWANCE.
Fact of the Case:

The appellant, Messrs. French Motor Car Co. Limited, challenged an industrial tribunal's award revising wage scales, dearness allowance, and provident fund contributions for its employees. The tribunal had considered wage scales in similar concerns and increased the appellant's contribution to the provident fund.
Finding of the Court:

The Supreme Court held that the tribunal erred in comparing the appellant's wage scales with those of dissimilar and disproportionately larger concerns. It also found that the tribunal lacked justification for increasing the provident fund contribution beyond the rate generally prevalent in the region. However, the Court upheld the tribunal's decision to revise the dearness allowance and to grant adjustment in wages, subject to certain modifications.
Issues: 1. Whether the tribunal erred in comparing the appellant's wage scales with those of dissimilar and disproportionately larger concerns? 2. Whether the tribunal was justified in increasing the appellant's provident fund contribution beyond the rate generally prevalent in the region? 3. Whether the tribunal erred in revising the dearness allowance and granting adjustment in wages?
Ratio Decidendi: 1. The principle of industry-cum-region requires industrial courts to compare wage scales in similar concerns in the region. However, concerns should be comparable in terms of size, business nature, and other relevant factors. 2. The tribunal lacked justification for increasing the provident fund contribution beyond the rate generally prevalent in the region, especially in the absence of a law mandating such an increase. 3. The tribunal's decision to revise the dearness allowance and grant adjustment in wages was upheld, subject to certain modifications. The Court noted that adjustment is usually granted when wage scales are fixed for the first time, but it can be granted in other cases where the previous increments were particularly low.
Final Decision: The Supreme Court partly allowed the appeal. It set aside the tribunal's order regarding workshop employees and remanded the case for fixing their wages in accordance with the Court's observations. It also set aside the order regarding provident fund contribution and reduced it to the prevailing rate. The order regarding adjustment was also set aside, and a modified adjustment procedure was prescribed. The appeal regarding salary for clerical staff and subordinate staff (except for a modification regarding subordinate staff) and dearness allowance for clerical staff was dismissed.

Judgment

WANCHOO. J., This appeal by special leave arises out of an industrial dispute between the appellant, Messrs. French Motor Car Co. Limited and their workmen, who are the respondents before us. Four matters were referred for adjudication by the Government of Maharashtra under S. 10 of the Industrial Disputes Act, No. XIV of 1947, to the Industrial Tribunal, Maharashtra. Of these we are concerned in the present appeal with (i) wages and scales of pay for clerical staff workshop employees and subordinate staff {ii) dearness allowance for clerical staff, and (iii) provident fund.

2. The case of the respondents was that the appellant company was in a very flourishing condition and therefore the wage-scales should be revised. The appellant did not contend that its financial position was not good enough to bear an increased burden; it, however; contended that the wage scales had been revised only few years before and there was no ground for further revision so soon thereafter. The tribunal went into the financial capacity of the appellant to bear an increased burden of wage scales and found that its finances would be able to bear the burden which it was going to put on it by revision of wage scales. It also went into the history of the appellant company to consider whether a case had been made out for further revision of wages. That history shows that for the first time in 1948 there was an agreement between the appellant and its workmen by which scales of wages were fixed. Soon thereafter an award was made by another tribunal in the case of United Motors (India) Limited, which is a concern carrying on similar business as the appellant and much higher wage scales were found to exist in that concern and were confirmed by the award. These higher scales were later adopted by two other similar concerns in Bombay, namely, Dadajee Dhakjee and Metro Motors. Then followed another dispute between the appellant and its workmen in 1953 with respect to wage scales and an award was made by which practically the same wage scales were prescribed as in the other three concerns, with respect to workshop employees and subordinate staff. Then in 1954 there was another agreement between the appellant and its workmen for fixing wage scales for clerical staff. The present dispute started in 1958, and eventually reference was made by the Government of Maharashtra in 1960, and the contention of the appellant was that there was no reason to revise so soon the wage scales, which are expected to be long term arrangement. The tribunal has, however, pointed out that there has been a large increase in the cost of living since 1955 and the cost of living index number for workmen had gone up from 338 in 1955 to 420 in 1960. It had gone to 428 in 1961 when the award was made. In view of this change in economic conditions the tribunal was of the opinion that a case had been made out for a further revision of wage scales, particularly as the dearness allowance was also revised in 1954 by agreement and the effect of that was to reduce the dearness allowance. We see no reason in these circumstances to disagree with the view of the tribunal that a case has been made out for revising the wage structure.

3. The main contention on behalf of the appellant is that wages are fixed on industry-cum-region basis and the tribunal went wrong when it took into account for comparison industrial concerns which were entirely dissimilar to the appellant s. It is now well-settled that the principle of industry-cum-region has to be applied by an industrial Court, when it proceeds to consider question like wage structure dearness allowance and similar conditions of service. In applying that principle industrial Courts have to compare wage scales prevailing in similar concerns in the region with which it is dealing and generally speaking similar concerns would be those in the same line of business as the concern with respect to which the dispute is under consideration. Further even in

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1962 Supreme(SC) 360

Cases Referred (1)