The court held that an employer cannot rely on an alleged understanding with the workmen that dearness allowance would remain the same after a recent agreement on wage scales, where there is no evidence to support such an understanding and the wage scales agreed upon did not take into consideration the question of keeping the dearness allowance at the same rate as before.

Headnote:
INDUSTRIAL DISPUTE - DEARNESS ALLOWANCE - REVISION - WAGE SCALES - UNDERSTANDING BETWEEN PARTIES - PRESUMPTION - FINANCIAL CAPACITY OF EMPLOYER - COST OF LIVING - EFFECTIVE DATE OF NEW RATES - BOMBAY INDUSTRIAL RELATIONS ACT, 1946, S. 73-A.
Fact of the Case:

The appellant, Phaltan Sugar Works Ltd., Sakharwadi, challenged the award of the Industrial Court, Bombay, which directed it to pay dearness allowance to its employees at the rates specified in the award. The workmen contended that the existing dearness allowance, along with the wages fixed by the Wage Board, was inadequate to meet their reasonable requirements, and the employer had the capacity to pay higher dearness allowance. The employer argued that the workmen should not have raised the claim for higher dearness allowance so soon after the recent agreement on wage scales, and that there was an understanding that dearness allowance would remain the same.
Finding of the Court:

The court found that there was no evidence to support the employer's claim that there was an understanding between the parties that dearness allowance would remain the same. It also found that the wage scales agreed upon in 1957 did not take into consideration the question of keeping the dearness allowance at the same rate as before. The court further found that the Tribunal had taken into consideration relevant factors such as the rise in the cost of living, the financial capacity of the company, and the rates of dearness allowance paid by other sugar factories in the region, in fixing the new rates of dearness allowance.
Issues: 1. Whether there was an understanding between the parties that dearness allowance would remain the same after the recent agreement on wage scales? 2. Whether the Tribunal erred in law in accepting the affidavit of Mr. Fauzdar for the purpose of showing prices at Sakharwadi? 3. Whether the Tribunal erred in not considering the fact that prices in the Nira Canal Division and the Nagar Division are not the same? 4. Whether the Tribunal erred in fixing dearness allowance higher than what the Belapur factory was paying? 5. Whether the Tribunal erred in making the new rates effective from March 1, 1958, instead of from the date of reference?
Ratio Decidendi: 1. The court held that there was no evidence to support the employer's claim that there was an understanding between the parties that dearness allowance would remain the same. It also found that the wage scales agreed upon in 1957 did not take into consideration the question of keeping the dearness allowance at the same rate as before. 2. The court held that the Tribunal did not err in law in accepting the affidavit of Mr. Fauzdar for the purpose of showing prices at Sakharwadi, as no prayer was made before the Tribunal on behalf of the appellant that Fauzdar should be produced for cross-examination. 3. The court held that there was no material on the record to support the appellant's contention that the cost of living in the Nira Canal Division was lower than the cost of living in the Nagar Division. 4. The court held that there was no evidence to show that Belapur was more prosperous than the appellant company, and that the fact that Belapur factory had increased the dearness allowance to its workmen shortly after the award under appeal was published was a good reason to think that the rates awarded by the Tribunal were reasonable. 5. The court held that the Tribunal did not err in making the new rates effective from March 1, 1958, instead of from the date of reference, as it could have made the new rates effective from the date of reference but chose to make them effective from a later date.
Final Decision: The appeal was dismissed with costs.

Judgment

DAS GUPTA, J. : This appeal is against the award of the Industrial Court, Bombay, in a reference made under S. 73-A of the Bombay Industrial Relations Act, 1946 asking the appellant, the Phaltan Sugar Works Ltd., Sakharwadi, to pay dearness allowance to its employees who are represented by Phaltan Taluka Sakhar Kamgar Union at the following rates :-

Monthly-rated Employees.

Employees whose basic wages are between Rs. 25 and Rs. 50 .. Rs. 45

Employees whose basic wages are between Rs. 51 and Rs. 100 .. Rs. 55

Employees whose basic wages are between Rs. 101 and Rs. 150 .. Rs. 62

Employees whose basic wages are between Rs. 151 and Rs. 200 .. Rs. 67

Employees whose basic wages are between Rs. 201 and Rs. 250 .. Rs. 72

Employees whose basic wages are Rs. 251 and above Rs. 77

Daily-rated Employees.

Employees whose basic wage is between Rs. 0-14-0 and Rs. 1-15-0 .. Rs. 1-11-0

Employees whose basic wage is between Rs. 2 and Rs. 3-14-0 .. Rs. 2-1-0

Employees whose basic wage is between Rs. 3-15-0 and Rs. 6 .. Rs. 2-4-0

2. At the time the reference was made the workmen were already in receipt of dearness allowance at a lower rate in pursuance of an agreement between the parties arrived at in 1951. In 1957 a reference as regards the fixation of wage scales for the workmen was pending before the Wage Board for the sugar industries in Bombay. On February 15, 1957, terms of agreement between the parties in respect of wage scales were submitted before the Board and an order was made in accordance therewith. By this order a time scale of wages came into operation, the starting pay being different for different categories. The lowest starting pay was 15 annas for office boy. The workmen s contention in the present dispute was that in view of the high cost of living the dearness allowance which they were already getting under the 1951 agreement added to the wages they are receiving under the Wage Board s order on the agreed basis would leave a considerable gap between their reasonable requirements and the means to satisfy them, and the dearness allowance ought to be raised to reduce the gap. Their case further was that the financial position of the industry was more than sound the employer had capacity to pay. The main plea in the employer s written statement was that the workmen should not be allowed to raise such a claim for higher dearness allowance so soon after their wages had been increased by agreement. It was said "that the workmen ought to have made the present demand at the time of the recent fixation of revised pay scales, that the employer agreed to the higher revised wage scales on the presumption that the workmen would not agitate for the revision of the existing scales of the dearness allowance. It was also urged that there was no justification for placing on the employer fresh burden in the shape of dearness allowance after it had acted liberally and generously in respect of its workmen in various matters.

3. Though it does not appear from the award that this plea that no dearness allowance should be allowed in view of the fact that no such claim had been raised prior to the recent agreement as regards wages and that the employer had agreed to the higher wage rate on the presumption that no claim for higher dearness allowance would be made was pressed at the hearing before the Tribunal, the main contention of the appellant before us has been based on this plea. It has been urged that when the higher wage rates were agreed upon, both the employer and the workmen took into consideration the total emoluments that the employer would have to pay and the workmen would receive in the shape of basic wage and dearness allowance together and that there was a tacit understanding between the parties that dearness allowance would continue at the old rates. It is said that but for this understanding the employer would not have agreed to the higher rate of wages. Learned Counsel for the appellant has suggested that the workmen after having

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1960 Supreme(SC) 117

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