Judgment

SHELAT, J. This appeal, by special leave,, is against the judgment of the High Court of Bombay allowing the writ petition filed by respondent 1 against the dismissal by the Labour Court of his application for dearness allowance made against the appellant company under section 33C (2) of the Industrial Disputes Act, 1947.

2. The facts leading to the said application are as follows:

Respondent 1 first joined the service of M/s Volkart Bros. on March 3, 1930. On merger of that concern with the appellant-company in September 1954, he became the employee of the latter. In September 1954, the appellant-company took over the staff of M/s Volkart Bros. on the same terms and conditions as were applicable to them when they were the employees of Volkart Bros. During the period when respondent 1 was in the employment of M/s Volkart Bros., he was governed by a scheme of Dearness Allowance framed with the consent of the parties and incorporated in an award (hereinafter referred to as the Bakhale Award) dated May 26, 1951 in I. T. No. 76 of 1950. The scheme provided both maximum and minimum dearness allowance, viz. Rs. 165 and Rs. 60/- respectively, and subject to them the dearness allowance payable was 75% for the first hundred, 37 1/2 per cent for the second hundred and 18 per cent for the balance of the wages.

3. The said scheme was altered by a circular, dated November 16, 1953. The two principal changes in the altered scheme were:

(1) an increase in the minimum and maximum from Rs. 60/- and Rs. 165/- to Rs. 70/- and Rs. 300/- per month respectively, and

(2) linking the dearness allowance to the cost of living index in the bracket 371-380 and providing for adjustment of dearness allowance by certain percentages whenever the index moved by ten points.

On August 18, 1956, a charter of demands was served on the company on behalf of the workmen. Demand No. 5 related to dearness allowance and was as follows:

"The scheme of dearness allowance at present in force should be revised on the following lines with effect from 1st, January, 1956."

Then followed the lines on which the scheme was sought to be revised, namely, the percentages at which the dearness allowance should be paid. The parties arrived at a settlement dated August 30, 1957, under which the company agreed to pay dearness allowance at 100% on the first hundred with 4% on every ten points movement in the index, 50 per cent on the second hundred with 2 per cent on every ten points movement in the index and 25 per cent for the balance with 1 per cent on every ten points movement in the index of cost of living. The minimum dearness allowance was raised to Rs. 75/-.

4. It may be noted that there was no reference as to the maximum either in demand No. 5 or in the settlement. The case of respondent 1 was that the scheme of dearness allowance as prevalent till then was abandoned, a fresh scheme was devised in which there was no provision for any maximum and it was, therefore, that no reference to any such maximum was made in the settlement. The company s case, on the other hand, was that the scheme of dearness allowance was not given up, that the demand was only for revision of the existing scheme, viz., to the extent of revising the percentages only on the three slabs of wages, and therefore, the settlement mentioned the alterations made in the scheme, but not the maximum as there was neither a demand for its deletion, and consequently, no settlement regarding it.

5. According to the company, the maximum was raised from Rupees 300/- to Rs. 350/- by a circular, dated March 12, 1959. That circular was as follows;

"It has been decided to raise the present maximum Dearness Allowance payable to Rs. 350/- per month which will apply uniformly to all Offices in India with effect from 1st April 1959.

Dearness Allowance will continue to be paid on the usual basis at the rates applicable at each place subject to the maximum stated above.

x x x x x x x "

The case, however, of respondent I was that the