Judgement

SHELAT, J.: The appellant company is a private limited company of which the authorized capital is Rs. 1 lac and the subscribed capital Rs. 50,000. 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. The Company is a small unit having on its roll 53 workmen.

2. In 1958, a reference was made under Section 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 May 27, 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 October 1, 1958. In 1961, another reference was made which also resulted in a settlement dated September 11, 1961. 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 April 1, 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:

Unskilled - Rs. 4.15-0.10-Rs. 5-15.

Semi Skilled - Rs. 4.75-0.15-Rs. 6.25.

Skilled II - Rs. 5.50-0.25-Rs. 8.00.

Skilled I - Rs. 6.50-0.30-Rs. 9.50.

Apprentices - Rs. 3.25-3.75-Rs. 4.25.

The award provided that the increments in the revised scales were to be annual and were to start from April 1, 1965. The award was made effective from November 9, 1964 which was the date of the reference. It, however, rejected the Union s demand to link up the wage scales with the index of cost of living. By April 1, 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.

3. On June 17, 1967, the Union served a notice of demand which called for (a) revised scale of wages with effect from July 1, 1966: (b) for certain adjustments; (c) for linking up the scales with 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 retiral gratuity should be reduced from ten to eight years and the qualifying period in case of termination of service