Industrial Disputes Act, 1947 - Section 12(5); Bombay Municipal Boroughs Act, 1925 - Section 58
1. This industrial dispute between the Baroda Borough Municipality, Baroda, and the workmen (Bhangi Kamdars) employed under it, was referred under Sub-section (5) of S. 12 of the Industrial Disputes Act, 1947, by the Government of Bombay, Development Department Order No. AJB. 2555, dated 19 April, 1955, for adjudication to the tribunal consisting of Sri Salim M. Merchant. As the services of Sri Merchant have ceased to be available the Government, in exercise of the powers conferred by Sub-section (2) of S. 8 of the Act, was pleased to appoint me in his place. The demand of the workmen is stated in the schedule annexed to the said order of reference and it is as follows :-
Provident fund should be deducted on the basis 1/12 of yearly wages.
2. After the usual notices were issued the statement of claim on behalf of the workmen concerned was filed on 27 May 1955 by the secretary of the Baroda City Bhangi Workers' Union. The written statement was filed by the president of the Baroda Borough Municipality on 18 June 1955 on behalf of the municipality.
3. The present dispute is as regards contribution of provident fund at the rate of 1/12 of the yearly wages. The contentions raised by the municipality are briefly as follows. That contribution at the rate of one anna in a rupee towards the provident fund is reasonable and forms a substantial retirement benefit; that under the provisions of the Bombay Municipal Boroughs Act the municipality has got to get its rules or amendments or variations thereof duly sanctioned by the Provincial Government; that the financial position of the municipality is so precarious that it can ill-afford to bear any more financial burden; that the demand of the union for contribution at 1/12 of the annual wages including dearness allowance if granted would cripple the municipality and disable it from functioning; that if the demand is awarded the municipality will be obliged to make contributions at the same rate in respect of the other employees serving under it, and that would cast a burden on the municipality which it would be unable to bear, and that a long-range scheme such as a scheme for provident fund should not be lightly disturbed.
4. I shall now proceed to consider the demand. It may be stated that the demand in the order of reference is not happily worded. The demand really is that provident fund shall be contributed by the employer at the rate of 1/12 of the wages (basic wages plus dearness allowance). Of course as a corollary from this demand it would follow that the deductions from the wages of the employee shall also be made at the same rate. At present the municipality contributes 6(1/4) per cent or 1/16 of the basic salary towards the provident fund. The workmen with whom we are concerned in this reference are not awarded any other retirement benefits such as gratuity or pension. Now, the demand is that contribution payable by the employer to the provident fund shall be at the rate of 1/12 of the basic wages plus dearness allowance. At the outset it may be stated that the demand for contribution of a percentage of salary as well as dearness allowance is quite unreasonable. It is the contention of the municipality that in no award so far contribution is allowed on dearness allowance also. Sri Gokhale who appeared on behalf of the union was unable to cite any award in which contributions on basic salary as well as dearness allowance have been awarded. In fact he did not very seriously press the demand for contribution on dearness allowance also. We have, therefore, to consider whether the workmen concerned should be allowed contributions at the rate claimed on basic salary only. It will be seen that the workmen are claiming an increase of four pies in a rupee only as they are already getting 1/16 of their basic wages by way of contribution from the municipality and they themselves are contributing the same amount. Now, they want that the contribution and the deduction should be at the rate of 1/12 of their wages. The union has filed a statement (Ex. U. 2) showing the incidence of the financial burden on the municipality if the rate of contribution is increased. It appears from this statement that the municipality's contribution at the present rate amounts to Rs. 21,362 in respect of the Harijan employees with whom we are concerned in the present reference. If the municipality is asked to contribute at the rate of 1/12 of the basic salary only the annual additional burden would amount to Rs. 7,120. But the annual additional burden would amount to Rs. 43,186 if the demand of the workmen is fully awarded, that is, if contributions at the rate of 1/12 of salary and dearness allowance are awarded. It also appears from this statement that if contribution at the rate of 1/12 of the basic salary is paid by the municipality for the entire establishment including the Harijan employees the annual additional burden would amount to Rs. 14,000 whereas it would be Rs. 82,333 if contributions are paid to the accounts of all the employees at 1/12 of their salary and dearness allowance. The figures in this statement are not disputed on behalf of the municipality. It will thus be seen that if contribution is allowed at 1/12 of the basic salary only the additional liability will amount to Rs. 14,000 per year only even if all the employees of the municipality are allowed this benefit. It cannot be said that this municipality cannot bear this much additional burden. It is contended in the written statement that the financial position of the municipality is precarious and that if the demand of the union is granted it would simply be crippled. I am not sure if an additional burden of Rs. 82,333 would cripple the finances of the municipality but an additional burden of Rs. 14,000 only is certainly not going to produce any such result. It cannot be seriously urged by the municipality that it cannot bear this small extra burden. That the demand for an increase of four pies in a rupee on the basic salary is just and reasonable cannot be gain-said. The union has filed the statement Ex. U. 1 to show that several other municipalities are paying contributions at the rate of 16 pies in a rupee. In some municipalities the workmen are awarded other benefits over and above these contributions. Therefore deduction at the rate of 16 pies in a rupee appears to be the normal rate and there is absolutely no reason why the present workmen should not be awarded contribution at this rate. As I am awarding an increase of four pies in a rupee on the basic salary only it is hardly necessary to go into the question of the financial position of the municipality. This small rise in the rate of contribution would involve the municipality in an additional burden of about Rs. 7,000 only if we take into account only the workmen covered by the present reference and of Rs. 14,000 only if all the workmen were to be awarded this benefit. However, from the statistical data filed by the parties it can reasonably be concluded that the financial position of the municipality is quite sound. This is one of the major municipalities and its estimated income for 1955-56 is more than half a crore of rupees. It is true that during the last few yeas the expenditure of the municipality has exceeded its income but no conclusion regarding the financial stability of the municipality can be drawn from this fact alone. Excess of expenditure over income by itself is no infallible criterion of the soundness or otherwise of a concern or an institution.
5. In reference (I.T.) No. 135 of 1950 between the Baroda Borough Municipality, Baroda, and the workmen (other than Bhangi Kamdars) employed under it (Bombay Government Gazette, Part I-L, dated 30 August 1951, p. 4480], the financial condition of the municipality has been discussed by the learned industrial tribunal, Sri Salim M. Merchant and he has observed as follows on this point :-
'After a careful consideration of the statements filed and the submissions urged at the hearing by both parties, I am of the opinion that with the assistance which the municipality has so far received from Government and which it will receive till 1952-53, if it increased the rates of taxation to the level suggested by Government in its resolution, Health and Local Government Department, No. 4514/33, dated 29 May, 1949, the financial position of the municipality will be sound enough and that its financial difficulties are only temporary and not such as to make it unable to bear the financial burden of the demands made herein.' (P. 4485.)
It cannot, therefore, be said that the demand for an increase in the rate of contribution should be disallowed on the ground of the financial condition of the municipality. But it was strenuously argued by Sri Hathi on behalf of the municipality that the existing provident fund scheme was introduced as early as 1936, and hence such a longstanding scheme should not be lightly disturbed. I am unable to accept this argument. A scheme does not acquire any particular sanctity or rigidity merely by lapse of time. If it is found to be unsatisfactory or inadequate it has got to be changed. In the dispute between the Ghatkopar-Kirol Municipality and sweepers, scavengers, etc., employed under it 1949 I.C.R. 62, there was a demand for an increase of one pie in a rupee only in contribution. This demand was not opposed by the municipality and the learned tribunal awarded it. The same was the position in the dispute between the Suburban Municipalities and the workmen employed under them 1949 I.C.R. 157. Therefore, the argument that a provident fund scheme should not be disturbed because it is of long standing has no force. When a dispute is before a tribunal it has to consider it on merits and if it comes to the conclusion that there is need for a change in the existing scheme it is its duty to make the necessary change. In the present case I am satisfied that the existing rate of one anna in a rupee is not quite adequate as compared to what is being contributed by the other municipalities. This municipality must fall in line with the other municipalities in the matter of making contributions to the provident fund. The demand is a very modest one. I, therefore, direct that this municipality shall pay contribution to the provident fund at the rate of 1/12 of the basic salary of the present workmen and the same shall be the rate of deduction from the salary of the workmen. Effect shall be given to this direction from 1 April 1956.
6. It was argued by Sri Hathi that no award making a change in the provident fund rules could be made by this tribunal in view of S. 58(i) of the Bombay Municipal Boroughs Act, 1925. This section so far as material provides as follows :-
'A municipality shall make rules not inconsistent with this Act and may from time to time alter or rescind them -
(i) authorizing the payment of contributions at such rates and subject to such conditions as may be prescribed in such rules, to any pension or provident fund which may be established by the municipality or, with the approval of the municipality, by its officers and servants.' Clause (a) of the proviso to this section is as follows :-
'(a) no rule or alteration or rescission of a rule made under this section shall have effect unless and until it has been approved by the Provincial Government.'
It was, therefore, argued by Sri Hathi that in view of the aforesaid provisions of the Bombay Municipal Boroughs Act, no change could be effected in the provident fund rules without the approval of the Government and hence at the most this tribunal can direct that the award shall come into force only on the Government approving the alteration in the rule. This argument cannot be accepted. This dispute has been referred to this tribunal by the Government under S. 12(5) of the Industrial Disputes Act and this tribunal has to pronounce its final decision on it under S. 15 of the Act. This tribunal's jurisdiction is not ousted merely because the rules framed by the municipality or the alteration or rescission of the rules made by it in exercise of the powers vested in it by S. 58 of the Bombay Municipal Boroughs Act, 1925, cannot be made effective without the approval of the Government. Here there is no question of the municipality itself framing any rule or altering or rescinding any rule. If the municipality of its own volition seeks to alter any of the provident fund rules it could not do so without the approval of the Government. But such is not the case here. There is, therefore, no substance in the argument advanced by Sri Hathi. This tribunal has jurisdiction to adjudicate upon the matter referred to it by the Government.
7. I make no order as to the costs of this reference.