Judgment

SUBBA RAO, CJI. : These two Cross Appeals raise the question, among others, whether the wage structure, including dearness allowance, of a Government undertaking in the public sector should be of a pattern different from that of an undertaking in the private sector.

2. The Hindustan Antibiotics Limited, hereinafter called "the Company", is a Government undertaking and is incorporated under the Indian Companies Act. Its registered office is at Pimpri, Poona District, State of Maharashtra, and its main business is the manufacture and distribution in bulk of antibiotics like penicillin, streptomycin, etc. The entire equity capital of the Company is held by the President of India and his nominees, and the entire Board of Directors of the Company is nominated by him. The conduct of the business of the Company is subject to the directives issued from time to time by the President of India and its accounts are audited by the auditors appointed by the Central Government on the advice of the Comptroller and Auditor-General of India. Service conditions of the workmen and other matters are subject to the approval of the President of India. The annual report of the working of the Company and its affairs along with the Audit Report has to be placed before the Parliament. There are no shareholders other than the Central Government or its nominees, with the result that the dividends declared by the Company entirely go to the coffers of the State, but the profits are ploughed back into the industry or kept as reserve for future requirements. In short, though the Company is a limited one and, therefore, has a distinct corporate existence, it is in effect financed entirely from the funds of the Central Government.

3. The Company employs about 2,000 workmen. A dispute arose between the workmen of the Company and the management thereof and the workmen presented a charter of fifteen demands to the Company. The Government of Maharashtra referred the said dispute to the Industrial Tribunal, Bombay, for adjudication under S. 10 (1) (d) of the Industrial Disputes Act, 1947 (XIV of 1947).

4. The Industrial Tribunal, after elaborately considering the conflicting contentions of the disputants, gave an award, dated October 8, 1963. In making the said Award the Industrial Tribunal postponed its decision on the question of linking dearness allowance with the cost of living index which had not then been prepared for Poona. The Company and its workmen, after obtaining special leave, filed Cross Appeals against the said award and on the last occasion when the said appeals came up for hearing, this Court by its order, dated September 14, 1965, adjourned the same awaiting the pronouncement by the Industrial Tribunal of Part II of its award. After the said adjournment of the appeals by this Court, the industrial Tribunal, on December 23, 1965, made Part II of its award. These appeals are now before us for disposal.

5. The Industrial Tribunal made the following findings among others: Rejecting the contention of the Company that in fixing the wage scales different considerations and standards should apply to public sector undertakings as distinct from private sector undertakings, the Tribunal fixed the wage scales on region-cum-industry basis. On a scrutiny of the comparative study of the wage structures of companies in the region, it found that the Company was a very large and prosperous concern and its wage scales were on the low side, particularly in regard to the lower categories of workers, taking into consideration the duties and qualifications prescribed for them. The Tribunal fixed the wage scales, having regard to the Company s financial position, its productive capacity, a comparative study of its wage structure with that in the neighbouring industries, and similar other relevant factors. It retained the existing dearness allowance scheme except for a small alteration in the slab of dearness allowance for the pay group Rs. 301-500; it merged a proport