1. Industrial dispute regarding wages, dearness allowance, and production bonus — Appeal against Industrial Tribunal award concerning the application of industry-wide wage scales. (Para 1 )
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1962 Supreme(SC) 263
SUPREME COURT OF INDIA
J.R.Mudholkar : K.C.Das Gupta : P.B.Gajendragadkar
Workmen Of Hindusthan Motors
Versus
Hindusthan Motors
Case No. : 117 of 1962
Date of Decision : 8/13/62
Advocates Appeared: Bose S.K. : Ghari A.S.R. : Ghosh P.K. : Maheshwari B.P.
Industrial adjudication favors uniform wage scales for the same industry in the same region to ensure industrial peace and competitive equality, provided financial capacity exists. Dearness allowance should typically be on a sliding scale to neutralize cost-of-living fluctuations.
Headnote:(A) Industrial Adjudication - Wage-scales - Uniformity in wage-scales of different concerns of the same industry working in the same region is ordinarily desirable to maintain industrial peace and ensure equal footing in production struggle, provided financial capacity permits. (Para 8)
(B) Dearness Allowance - Purpose - The purpose of dearness allowance is to neutralize a portion of the increase in the cost of living; hence, it should ordinarily be on a sliding scale providing for increases on rise and decreases on fall in the cost of living index. (Para 10)
Facts of the case:
A dispute arose between workmen and an engineering concern regarding grades and scales of pay, dearness allowance, and production bonus. The industrial tribunal modified the pay scales instead of adopting the standardized scales used by other concerns in the same industry and region. Additionally, while the tribunal fixed dearness allowance rates, it did not provide for a sliding scale based on the cost of living index.
Findings of Court:
The court found that the respondent company's financial condition was satisfactory and there was no justification for treating its workmen differently from those in other concerns of the same industry in the same region. It further held that the difficulty of scientific classification of workmen is not a valid reason to avoid establishing pay grades. Regarding dearness allowance, the court found that the ordinary practice of using a sliding scale should have been followed to fulfill the allowance's purpose.
Issues: Whether the standardized grades and scales of pay applicable to other concerns in the same industry and region should be applied to the respondent company and whether the dearness allowance should be linked to a sliding scale.
Ratio Decidendi: Industrial adjudication seeks to secure uniform wage rates for concerns in the same industry and region to maintain industrial peace and competitive equality, provided financial capacity is available. Dearness allowance, by its nature, must be on a sliding scale to effectively neutralize cost-of-living fluctuations.
Result: Appeal allowed in part.
Legal Category Hierarchy
Table of Contents
2. Whether industry-standard wage scales and sliding dearness allowance scales should be applied to a specific engineering concern despite its unique workforce categories. (Para 2 , 3 , 8 , 10 , 11 )
3. Uniformity in wage-scales within the same industry and region promotes industrial peace and fair competition, provided the employer has the financial capacity to pay. (Para 8 )
4. Industry-wide wage standards should be applied to concerns in the same region and industry to ensure uniformity and industrial peace, absent financial incapacity. (Para 8 , 9 )
5. Appeal allowed in part — Award modified to implement industry-standard pay scales and a sliding scale for dearness allowance. (Para 12 )
6. Why is uniformity in wage-scales desirable for concerns within the same industry and region?
Uniformity in wage-scales tends to maintain industrial peace in the entire region and puts different companies of the same industry on a more equal footing in their production struggle, provided the company has the financial capacity to pay. (Para 8 )
7. Does the difficulty of scientifically classifying workmen into skill groups justify avoiding a standardized wage scale?
No. While scientific classification may be difficult, it is not a reason to avoid the task. Present pay can be used as the guiding factor to fit workers into standardized grades and slabs. (Para 3 , 7 )
8. Should dearness allowance be fixed at a static rate or a sliding scale?
Dearness allowance should ordinarily be on a sliding scale to neutralize a portion of the increase or decrease in the cost of living index. (Para 10 )
K.C.Das Gupta, J.
(1) SIX mattera in dispute between the respondent, Hindusthan Motors, Ltd., and their workmen were referred to the second Industrial tribunal, West Bengal. The first five were:
(1) grades and scales of pay,
(2) dearness allowance,
(3) production bonus,
(4) contract labour, and
(5) casual Leave.
The sixth was in respect of the termination of services of some workmen. The tribunal by its award decided that the workmen were not entitled to any relief as regards the third, fourth, fifth and the sixth of these matters. On the question of grades and scales of pay the tribunal laid down several slabs of annual increments for the time-rated workmen but refused to make any change in the rates of piece-rated workmen. On the question of dearness allowance it fixed the same rates as fixed by the Third Major Engineering tribunal award for the engineering concerns covered by its award but did not make any provision for any changes on account of changes in the cost of living index. The tribunal refused to modify the production bonus scheme which was already in operation in the concern and also to extend the scheme to the plant engineering, master mechanic and inspection and supply and stores departments for which claim was made by the workmen. The workmens claim for abolition of contract labour in some departments and their demand for ten days casual leave were also rejected. The workmen applied for special leave to appeal against the tribunals award on all these six matters. Special leave was however granted only la respect of the first five matters. At the hearing, the appeal was not pressed in respect of two matters, viz,, the contract labour and the casual leave. It would be necessary, therefore, to examine the award only in respect of the first three matters, viz.,
(1) grades and scales of pay,
(2) dearness allowance, and
(3) production bonus.
(2) THE arguments before us regarding the grades and scales of pay have centred round the question whether the tribunal was justified in not applying to the time-rated workers the grades and scales of pay awarded by the Third Major Engineering tribunal. It has to be noticed that the respondent company was originally made a party to the order of reference to the Third Major Engineering tribunal; but it got its name deleted from that reference by moving High court on the ground that the provisions made by another Industrial tribunal (ale) and its workers were at that time subsisting. At the hearing of the present reference the workmen appear to have contended that even though the respondent Is also an engineering concern It should; In view of Its exceptional prosperity, pay wages at a higher rate than was fixed by the Third Major Engineering tribunal for workmen in other engineering concerns. The present tribunal agreed that the respondent Is an engineering concern and addressed Itself to the question whether the grades and scales Introduced by the Third Major Engineering tribunal could reasonably be applied to this concern. 16 accepted however the respondents plea that In view of the numerous categories of the workmen of tbia concern no division In groups according to the skill was possible and so grades and scales of pay provided In the award of the Third Major Engineering tribunal had to be modified. In making the modification It fixed the slaba and rates thus:
" (1) The mazdoors and helpers will have an annual Increment of 4 naye patse per day for two years after they have completed one year of service on the rate of Bs. 1.34 fixed by the award provided that they have Improved In efficiency In respect of both nature and quality of the work.
(2) Between the dally wage rates of Ra. 1.54 and Rs. 1.75 there will be a Blab of 6 years with annual Increments at the rate of 4 naye palse per day for 4 years and at the rate of 5 naye palae per day for the fifth year.
(3) to (5) Between the crflly wage-rates of Rs. 1.75 and Rs
